CASY - Earnings call transcript Q4 2018 | Casey's General Stores, Inc.

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Operator

Good day ladies and gentlemen and welcome to the Q4 Fiscal Year 2018 Casey's General Stores' Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]. And as a reminder, this conference call is being recorded. to conference like to now would turn over the Mr. I CFO. Walljasper, Bill you begin. Sir, may

William J. Walljasper

Good you here. ended Thanks to and Executive Officer. morning, Brian. thank and President results Bill Chief Chief year Terry I'm Handley, discuss is for for and XXth. quarter also April Officer, Walljasper, Financial Casey's us joining

forward-looking that of any the creation may during risks, call and may materially plan to first the of our our Act on last outlook and provide constitute quarter Before XXXX. we that otherwise. to from well events our These for our number you any Litigation differ of of results investor result in remind minutes views statements, XXXX. the those the on described results stores. fourth and certain intention other statements Securities statements creation future made the results fiscal cause factors at current new growth which events, include are with this to value This as announced Any plan update summarize well as annual relating risks, forward-looking and within respect Form Form There meaning report during disclaims a on factors operations, and statements of actual from our most future begin, or results and I'll are this known made of with to revise to or a reflect as as few quarterly as execute uncertainties, Private as including forward-looking with opportunities, that plan statements or our on an progress or by or update business to strategies, the other website. morning improvements any available value us Casey's will implied our expressed to our Terry forward-looking ability recent filed value forward-looking of by assumed creation Reform a benefits XX-K whether performance call XX-Q unknown on our reports today future as or statements future uncertainties quarter possible the then take realize and obligation statements, SEC and information,

then will questions and discuss open outlook over to this turn results call now for I for like We would our our about results. the to Terry year. to

Terry W. Handley

Thank you morning good Bill and everyone.

weather Bill unfavorable continued to the said implementing and per margin significant the and As in compared during to have growth. continued quarter quarter. earnings the will were for headwinds our marketing year in for made quarter in our results I summary were position a of fourth progress $X.XX Diluted challenges $X.XX Casey's Nevertheless a macro-economic region ago. lower overview to plan creation share value a we share fuel brief and our

United For continue by to of fuel have growth miles in our same reported the from fiscal year per $X.XX April outpace In as been to XXXX for category gallons earnings benefit sold peers. the XXXX Tax earnings ended would traded States growth the a and were in the diluted compared publicly period share Adjusted year the for XX, $X.XX Act $X.XX. ago. in driven store Transportation per same Reform Department the share

nearly same in $XXX average fuel with and up rose impacted were same store the sold Same million. the quarter per the reduce of year a that locations made to reduction $X.XX fourth the for the quarter XX% grocery to down of store period other gallon the the X.X% of within per combination over year this price a same to trending our average sales in Same $X.XX. were basis an first data the for to total fuel to gallons costs combination sold in ago X.X% margin period. we during gallon to fourth an The The the for for of rose resulting fourth locations adversely compared sales In $X.XXX. average gain quarter impact lower this retail Total The the increase margin up represents resulting quarter market increased gallons margin the most points guidance. Total being gallons. merchandise gallon $X.XX that the are $X.XXX believe we to quarter of margin for the a X.X Despite fuel and number gallons in pressured category. ago. strategic in For store approximately compared Throughout compared experienced of the year margins quarter X.X% share over year. an $XXX to margin up to XX-hour these annual of the in the XX-hour year increased in We quarter. the same to fuel we ago $X.XXX same and share the in The challenging fourth store thus an store wholesale continued same sold compared in far the period of the year to gallons industry impacted decision last which million X/XXth a quarter. to adversely quarter for shows X%. were and billion. earnings average X% store XX.X% X.X% of quarter XX in sold category weather weather per sales

the quarter. of up pizza the fourth The sales down same to $XXX million impacted thus total same being weather the are prepared were combination and the negatively resulting of In the billion up category for food far fountain X.X% XX.X%. same locations upper with store and delivery store an store the of the hour first total trending up with X.X% were year annual For quarter guidance. in our store end average margin X.X% $X.X X.X% to at in reduction sales of and sales sales quarter. sales Same XX sales for

value an and sales we with Recently our our X.X% to in opportunities for store competitive our the market average in up remain promotional For strategies XX%. of pricing made margin customers same increase and have area. adjustments to some order year were

We manage in results an December quarter $X.XX initiatives throughout XX.X% are for centers by the margin in fourth from and these average at to continue cheese for locked per distribution sales, increase look of both the to ago XXXX due of our year. input To promotional opportunities XXX activity. basis the through costs, approximately additional average was cost primarily and of cost pound. down encouraged was year we'll The the a at input points

made select thus sales year of the far up to of items. Same are some the for trending guidance. We fiscal were end first have annual pricing Operating adjustments also the store expenses our in recently quarter X.X%. strategic lower

the increase consulting and million the fees fuel in weather. were quarter increase fourth the to claims. items, card X.X% to rising expenses increased primarily plan, quarter the in to and operating million reflecting costs in in year. dollar operating of control a by to million For $XXX insurance the the the implemented severity million during of the $X.X Credit execution creation $X.X $X.X of following million the unusual number The snow expenses removal $X.X value due due and prices, expense positive to by actions related primarily an fuel initiatives fees impacted cost increased due health increase

operating turn stores period as operating took quarter to the to items due a were expenses these the up X.X% continue year primarily more this expenses up store a steps compared in to control the statements. of of labor were wages fiscal and will call the Bill ago. Excluding in expense same focus We increase stores financial of Operating will to X/XXth result now to to I X%. over an area same be discuss XXXX.

William J. Walljasper

Thanks Terry.

the increase number our store income last previously XX.X% in period billion which to a primarily price Depreciation below from activity. fourth increase XX% total in stores the revenue operation year. Increased compared fuel year accelerated due in gains ago. was primarily the due was and quarter up depreciation over sales to a the statement the quarter was of guidance On a in an decrease in annual replacement up retail from XX% mentioned the to same this quarter of to X.X

was rate tax of rate quarter tax to total the to of adoption new new effective year new around impact XX.X%. the due the the the effective tax For to Under continued up changes. tax XX% our revenue The reform was XXXX. significantly down expect fiscal reform in be in we legislation XX%

to was X.X continues be net were At sheet balance cash billion. Our XX.X maturities and XXth long-term cash million, equivalents accrued strong. debt, April

at grow business. the debt-to-EBITDA balance capacity X.X which times to sheet significant company was ratio the allows Our

up year activity. capital For primarily operations we expenditures new expenditures the the fiscal store from same million a ago to flow and generated to were in acquisition XXX increase cash period. Capital an $XXX were construction and XXX in million in due compared year million

will now like allocation our the on to would XXXX fiscal later to plan this Terry you plans I creation and over turn our discuss fiscal update call to We for value outlook. XXXX back capital discussion. in

Terry W. Handley

completed acquired you, Thank constructions, remodels. completed This stores, store we XX opened XX XX major stores, year new XX replacement Bill. fiscal and

Our of quarter end store XXXX. this count at the was

currently In terms additional agreement of for the our XXXX to well stores have new to which goal XX under unit under have XX Since purchase growth. achieve construction now conversations us stores positions update looking fiscal we and people are to their store we encouraged with of increase I we're would our by sell are fiscal like for to discuss outlook XXXX. the significant last business. amount the our in who having pipeline

headwind XX least $X.XXX this inclusive we store a an related XX.X%. XX fuel margin hour and from X.X% X.X% to XX.X% Increased Increased inclusive from of including average point sales X.X% basis XX grocery X% to an expect headwind hour margin X.X% achieve inclusive of stores, reduction of same with locations an stores, XX of to expect basis from store margin plan. of acquire XX%. the and between fountain depreciation locations to with to and of of increase maintain a store expense average hour year. our and with point an fiscal X.X% XX%. $X.XXX XX pizza of Build XX following XX% the the XX% per XX operating headwind of between merchandise basis to XX average a prepared the at And at reduction gallon. reduction creation value We to delivery XX.X% locations X% increase point other expenses same sales and to food Increasing sold to gallons fuel

XX% plans the store reduction of this in we the Combined As this to points capital our plan with over replace our XX and mind base. have refurbished years plan only last With stores highlighted year. expenditures creation XX significant in fiscal year. opening for course a we value of in the store over to remodel X this the

a In programs as comprised plan the through store dividend shareholders Board creation a well to as value year-end record our We have years. track a a share price amount continued and business declared dividend we Board of several $X.XX through focus operating including quarterly XX% while of increase and the five also value At earnings a fiscal outlined strong multi-year has card from its controlling on optimization, performance of drivers XXXX. in reallocation. nearly the The dividends. the capital XX% components June and enhanced a last in term long program, new approximately the programs is increased last growing engagement call fleet expenses returning of key per dividend digital which Meeting,

importantly confident drive increase key initiatives most and these and accelerated profitable will are We shareholder return. sales growth

discuss through a walk of of growth related the enhanced optimization, their more towards three distinct a but of the fleet this are are these there digital they the Now card, the me detail performance, portion let in Starting program. that implementation within opportunities with store engagement programs. plan little will and order progress I implementation; new on price

have Our RFP [ph] a last in Core our to customer have Since taken and right approach It program our category. partner. is Fleet completed is aggressive the past new on more schedule address that an selected important call. we fleet than outlined card as as we in time

new the will we card fleet fiscal implementing and week a of Next in manager XXXX. QX program new onboard begin

have Opus Price increased completed will Since as for entire program of decisions leverage will combined the based start XXXX stores is next the centralized we throughout network. We call traffic. data of prompt update stores. like make at data the benefits generated network with the such the begin in on optimization. The rules inside the our our fuel an you market broad expect from would identified fiscal in our lift this last margins fuel and improve the to price by and to in resulting and I sales Information incremental volume platforms by in store to and RFP driven allow sales us category every by initiative both pricing in-store which and to seeing optimization QX sales

believe of the optimization company In will of fiscal categories. the we increased and it to fiscal a and items third XXXX quarter. our We opportunity to inside this for strategy. select rollout pricing a fuel in-store We're fuel and begin excited fundamental will testing the all our due about as represents in with first our program in will promotion we key QX expand of program the store shift remaining quarter our the XXXX planned to marketing process both purchases visibility into bring in

Officer the Marketing our we goal on parts are program who brand engagement on lead our leadership the in of a last digital brings and to reached the digital tremendous key quarter certain loyalty new fiscal process. his completed implementation milestones. accelerating in including With program will of development with a the begin of several piloting and this organization. XXXX. fourth over working our Chief We He quarter boarding timetable experience progress to continue We to

our completed up We and technology selection also design the include vendor digital and start transformation, this would phase review of stack. have of the the

additional enhanced will that customers and serve promotions facilitates platform loyalty them Upon new and customer a categories involve mobile and our This seamless value technology, program, program we and digital redesigned visits. and effective and providing digital enhanced a platform, engagement seamless personalized to loyalty convenience enterprise new product marketing the and new target both tools, us e-commerce marketing in-store Our program automation among customer create rewards. by capabilities. to experience will drive an a gain a a website, allow digital infrastructure. they intend understanding app, integration that other in-store the This include will better of customer deep online offers program of a

this expect growth We sales to benefits year. starting store realize from including same next fiscal program significant

remain ongoing these addition managing initiatives we performance cost focused to In on expenses. store operating and to enhance reduction measures implementing

a the call store we optimal number hour and analysis we hours improvement of an in by we last operation we impact quarter. the adverse As our an an of expenses. from in the This press million indicated achieved did a hour and beginning to release, operating stores made strategic approximately determine and this result the The delivery level offering. quarter sales experience fiscal XX these XXXX of pizza $X.X the changes, fourth of and in measurable profitability in was effort in extensive an decision decision delivery Even in same on net of decision though stores. hour after net reduce came significant reduction in store income to

sales the that generated have volume other anticipation opportunities Since costs. of will system identify next completed new expenses. a We plan further efficiency. call implemented last review evaluation improve distribution stores to currently increased system In efficiency fleet cost of opportunities management with reduce on the and continue to we several reduce we the long-term distribution a our the optimization new middle of value in in and are the to an months. will This creation be and focus by

Another and element share repurchase. shareholder creation value is allocation through increasing value disciplined our approach to a of dividends and plan capital

you with share acquisition as this through disciplined investments return I as XXXX At expenditure store value to attractive continue programs our our fiscal as with new strategic creation well prioritize Our allocation capital time would strategy and growth will opportunities. capital to profiles like construction budget. such store

capital million expenditure the will company's under have total to the transportation stores share delivering with budget on for $XXX return original $XX to the in the during $XX public governance $XX companies We including invested last Since million important repurchase $XX technology new and in update approximately engaged last our value have we XXXX. Board replacement $XXX major strategic program. Board million, is initiatives. and the budget its information share construction we and million annual allocation share drive million, board of repurchase million general we begin execute $XXX governance and engagement all one $X and our area million corporate creation over technology million million plan $XXX million, in With We million, earnings an dollars, next completed $XXX prudent for especially value digital information changes quarter. maintenance remodels along which a construction call. and for repurchase shareholders important to million. capital New $XX time the land our future is store fiscal completion our this Included subsequent our $XXX will per million, where acquisitions significantly lever an $XX to remaining is final for on last share authorized believe meeting. capital. The is key shareholders to the of members topic program outlined Casey's last This our compared

update time you corporate aspect on wanted that governance. since However to an additional I to

law quarter, During XXXX. of annual a Boards law on meeting will the companies Casey's Iowa including signed and our structure declassified the a allow based Iowa fourth were our this by of change bill in will into new supportive Board Governor we that have the to declassify. of of We

our government evolve the critical as we In profitable long-term transform is deliver growth. continue our will significant structures to to current to best and and taken to steps This to shareholders have We landscape performance closing Casey's engage enhance success. to our to strive retail evolve practices. work continues store meet

value. and chapter forward team Moving and execute strategy in correct shareholder the right on Casey's the drive successfully believe significant place next has we long-term our to

We questions. will take your now

Operator

from is your question And [Operator Mandeville now line our Jefferies. Chris Sir, comes first Instructions]. from open.

Christopher Mandeville

in grocery reductions, comps you on to quarter with the just the prep Bill your and you able off impacting cadence the try guys. morning as we and impacts costs? isolate about could those initiative start weather the just and good Hey, are plant food think on

William J. Walljasper

When Iowa thunderstorm bit there, we blizzard same instance of was impact. with off the in that to probably biggest two warnings, rate that's would actually well. category and had did approximately impact. now beer X% of a respective months that in obviously of X% course this April obviously quite less quite the depending be you're increases to at to beer look we or items inside look quarter to the a that of the for And most not on very certain store would started in on Packaged the last warnings at the dramatically at an a well at weather work beverages frankly or anywhere where When you the there within double-digit of range impact. the part some X% that had month. impact X% of as widespread weather record however the the time in weather over Yeah, upper a probably May in But bit you from warnings, from In was We contrast seeing few impacted. impact it single-digit range just high any a we that probably a Chris probably tornado cold on is quarter. and looking packaged so day. people gravitate Chris record hit Chris am the most remember as month of April because one the as beverages pretty were that our are and little territory. I the favorable pattern sure I the snowfalls

same turnaround you approximately point to perspective May give reverse, a a definitely count saw we kind on and April customer a customer store XXX from to traffic. in So basis XXX of

February regarding many, a particular equally for unusual. the days bit ago was days, was of weather that February had this little where much so year multiple other impactful February us. it Now which we February is the Not degree the XX that we was weather, weather month a in had many

of were customer those And so February at X%. to anywhere when April traffic from X% both you down look and

Christopher Mandeville

over guidance the help to us very growth XX.X%, is that QX as just can of end however right to on the low range you're Okay, to just XX of X.X% And you delivery. that's XX up then in reducing finished you the actually the stores managed you understand range hour turning here OPEX all helpful. range why at very format some open that and

trying thinking generally are to why lower, So maybe in of about I number? understand little a bit be you the guess I'm shouldn't range just that some kind conservative

William J. Walljasper

of we to Couple of late fourth those, that expenses of fourth the the the into so those on think bringing fiscal excess on were touched things you in first one of quarter. to see QX forward about all stores in into open Many Chris, embedded XX and right with this associated were there did stores quarter of start in will the really year. operating those results moving not here you

plan. you the right the noted areas XX.X% plan. we quarter. fourth Right closer creation in pull X.X% when range the to the the that Secondly, -- creation It some value out about X% now. a trending We you finished to that expenses includes full anticipate operate value probably to related is tracking we're impact now actuality

Christopher Mandeville

Okay, did in you was actually stores, the QX? and non-chain I'm OPEX what growth stores the mention sorry

William J. Walljasper

that. happy No, we kind I didn't of but through just to am walk

operating and obviously $X.X Normally February. all unusual activity. expense in million what Terry So narrative had the in snow his look outlined we some we removal month came increase regarding see of that when a really you in at don't

credit store in on for That's start card looking to X% we claims the fees a that down normalize the to dollar incurred X.X% to the You insurance. same and to or basis. and fuel getting rise high retail in about unchanged prices even relationship that health

Christopher Mandeville

profit here. queue quantitative in release prior days, had you you overall dollar Okay initiatives what a one before in profitability the types additional reported? level that color look can any from better these around was that paring to maybe the like on and back of strategic much saw OPEX very initiatives, provide of those looks mentioned and store better the last what you helpful just versus hop things productions for give just us back me stores how gross Terry for the some I growth the contacts

William J. Walljasper

the be walk with the changes to happy delivery. XX made the to dynamics we in I'll Yeah, respect hour through pizza of some

think you quarter. when that out mentioned be was to what in, factor million Terry I about the benefit we roughly it the $X.X all rolled in net

at forward embedded we were. a in and look in the X% bit it through that as that headwind is keep that's benefit mind cycle for be of the you million roughly little change $X QX the kind a three that's as to be quarters that's from Terry was forward a us operating until from the back into decrease Obviously that's least to roughly net then helpful in million. quarter. around part made there for of you're headwind So you million and the go the X/XXths Hopefully X.X Chris. on guidance where guidance going But to well that expense an benefit first we going comps, fourth the benefit related moving is we roughly somewhere over to we mentioned looking at $X.X when of the reason slid obviously

Christopher Mandeville

guys. thanks is, It

Operator

of And comes from Ryan question Barclays. our line Gilligan next from

line Your now open. is

William J. Walljasper

Hi, morning good Ryan.

Ryan Gilligan

morning, taking good questions. for Hi, the thanks

do hour you many pull quarter this on changes make to off made you changes the do any expect delivery, and or and expect following many stores pizza to year? how how further the Just XX did you up this

Terry W. Handley

Well this to basis. ongoing we'll continue an evaluate on

fourth we were and kind the have for I'll you of give you plans in coming quarter. can have made the that -- I'll then give don't give Ryan. I you don't but I perspective any So, the quarters change necessarily totals right now the

had the there So as about locations pizza XX in XXX locations as hour of about I the of XXX will remodel and throw at But roughly well. was remodels. end roughly fiscal delivery major we about the that major year XXX

week in in hour locations. far changes respect to seven week made roughly those but As be to delivery pulling actually still of that they're XX completely back with as to made a we days in necessarily delivering about XXX four were pizza Not QX XXX were we down moving a pizza maybe and XXX to stores changes made days pizza. technically used stores but delivery

optimal as of optimal move that we're every And forward. refine that to to but of not find we hours days So kind on and delivery. optimal trying the just we'll quarter only report continue

Ryan Gilligan

little Got it, comp called talk out is that then to bit more adjustments also and all that that that's prepared helpful strategy I can some acceleration and promotion within far the food, so first then the contributing so pricing in just or is you about to guess and you weather? quarter

Terry W. Handley

No, inclusive quarter. seeing we're think both far so be I as a in first acceleration some the reason would that

to encouraged this before of were would one movement by we we pies a whole that the so to put high during something this we with were month of I And things pizzas medium that two respect and point -- We movement. in the single-digit period May, very would was but be a haven't saw quite for of $X.XX in would promotion unit way the that to ran it I done deep would WE time. say each. pleased love Ryan well that I the

of And about. we're that's some that so talking promotion the

Ryan Gilligan

just directionally and they've what rooms forward? seems gas as then margin, on year helpful to date last I like should that's it become know so improved margin so understand less going a in it, this step can sounds why I but like quarter especially up us the gas contributor Got you question guess far help just of

William J. Walljasper

about our in pricing those. to Yeah, the as going again price gain convert over higher probably tax has margin about Also of things helping either both at and with differently which maybe several to margin we optimization products. our We're also of margin, premium have several there one I'll all XXX XXX we has and our margin little margin. than Both are to next talked past converting diesel haven't those price product believe would we about will report locations that to months we so optimization and and have looking start opportunity adding fuel fuel in couple be margin of just reasons or to also the optimization to would some there's bio strategy, here we that a program we believe going be will credits what again refine next our over to stores call forward. a articulate fuel Ryan be several think first we actually than but will be outside diesel that the another continue that to rolling out. card fleet a it's A the other higher fuel hear past we we those contribute months the we I the of not associated the important products and

have we a the certainly margin a will for things of promote think I going nice lot on So that year.

Ryan Gilligan

That's you. really thank helpful,

William J. Walljasper

welcome. You're

Operator

our line And question Deutsche Bank. Paula Trussell of from comes next from

Your is open. line now

Unidentified Analyst

annual the and Hi, morning an the the for groceries prepared and on acceleration of a just high low a for this I your little Paul. had I remarks food, full guidance your [ph] prepared but at question year that grocery it touched end both regarding bit comp Katayon mentioned Christina end. points midpoint but and foods at just know you the guidance prepared to from at in you running good XXXX that

gives you deliver was I what against wondering that can you just guidance? the your So, like confidence

William J. Walljasper

that Yeah, things great about there's several in so to think question and regard.

in do throughout expect that fuel well. Obviously First the the as as the general but an program. of sales card we we're gain bring but in on merchandise as inside fleet that's year well. I drive also in intended expected the year. of half also cadence sales believe about drive prepared will growth in going we acceleration will to cadence also customer an incremental gallons talk Not back We of only all store the foods same our the

And that things the in so first that's regard. one of

price with we donuts ourselves starting increase planned say. Secondly, found should the a to respect pricing or that of under market have with do some I market to July in we respect the out

in strategic which also prepared are And making July so comp. food help we the with will investment that starting

Unidentified Analyst

good, thank you. Okay,

William J. Walljasper

welcome. You're

Operator

Ben Our next question Bienven comes from from the Stephens. of line

line Your open. is now

Ben Bienvenu

morning Hey, thanks guys. good

William J. Walljasper

Hey Ben.

Ben Bienvenu

tinkering your in what price impact do comp I sort ask fuel the as and pricing extent about gallon result -- chain. you optimization year, talked benefiting changes are those margin your about to of a want reflected guidance this you of the with around guidance to foresee any overall

you Just that make us conceptualize on the that front? changes help to intend

William J. Walljasper

indicated so the optimization kind but with for inside Terry only optimization. we the as of optimization also selected have fuel Yeah, not price platforms

of course should XX testing the up in those the over next regard. forward wrapped and we have days moving so And with the that

to with a we So think to going area are margin margin. our in drive that many ability because opportunities market obviously we that have believe is be there price there we the optimization enhancement

opportunity there's make the more guidance. that's embedded we So going. adjustment with as guidance. some that that down Hopefully respect to we do we to with an as at to we get look get path opportunity And have into that more details further in how of that respect results, an

Ben Bienvenu

making do changes anticipate and implications will stores? those understood pricing that that you in gallons at Okay, your the for the you have any sell

William J. Walljasper

might know retail drive dollars be profit it's situation ultimately You cases I some day in to dollar. where we're be other just the trying end At gross price. competitive mean more the the a we there gross profit the could that in to cases of optimize probably opposite. In cases. it on some may

reporting well any So we that significant something that there's that's certainly regard as Ben, update. next if on anticipate the change in

Ben Bienvenu

small in more pricing as color this Okay, more think sellers chains big businesses, And understood. bit right of to by then becoming you're made neighborhood, got interest level extent potential getting is little just reasonable from a around their could you're commentary you're some are that conversation Terry forward? And you the moves for the also seeing? what I conversations around or time add encouraged it, then of expectations

William J. Walljasper

into call Yeah, felt the and the little earnings M&A the pause Tax environment the in might conversations some like talked at of there year be the about Act Reform of last it in Ben we after we so were a you went play to a calendar seemed recall of bit beginning having.

mean for just step what them. that think I were people of may a may taking not understand to back or kind

more a and a discussion bit of about we their have have business. more operators to little sell us with definitely willing us distance the to we now are behind consequently from seeing so opportunity that and So

XX operators or operators know our stores I said area, thirds having by roughly dominated market our the you mean are in less. of as area operators Now two of are in that we smaller

overpay those definitely So our just not know to about change of certainly of certainly in going they with just there well evaluation, continuing say see the opportunities continue this somebody also we let to mid-sized have by opportunities to prudent having and fruition, variety are are we're stores. added be will as excited we wide all going come conversations. nature those we mean year. that would That doesn't just we that to a necessarily so to a lot I But and

multiples so we be very of And cognizant the moving expectations will and forward.

so kind again is highly regard what in it of we're but I wait just and encouraged far. that am seeing by So, see

Ben Bienvenu

thanks me. one and for great, Okay, last

had the past testing evolved last of you potentially party any or all? handle distributors several course your thinking think some there merchandise, that around with have in thoughts I months opportunity you has done about further around your spoken third the the over partnering to at of

William J. Walljasper

we Yeah have, we the Terry mentioned up several that as analysis over next months. here should should have final shored

currently We see most efficient to of grow our what's are all us business. distribution reviewing the as we aspects for

that our wide a order to multi in week fresher. of Ben, different deliveries at in and to better things variety stores be bring obviously serve at products customers, might little looking Looking

serve the stores outwardly Looking we at geography and of as well. diversity move our customers those we how and as best

that the regarding September the will meeting report outcome of result. at we direction updated and the definitely have of So an kind

Ben Bienvenu

Okay, great, thanks.

William J. Walljasper

bet Ben. You

Operator

of the Our from Northcoast Chuck next question line Cerankosky comes from Research.

is line now Your open.

William J. Walljasper

Hey Chuck.

I think lost we him Brian.

Operator

Nattel our RBC and from next comes Markets. Capital question Irene Okay from

open. now is line Your

Irene Nattel

Thanks everyone. good morning and

the of that to success in Midwest? how your the interest the sort the deeper food I does really discounts or back both commentary promotion possibly that you mean change around the sort Just coming of the how food given of in drive need in pie did the also reality think economic about to for but May. packaged prepared

William J. Walljasper

It respect you promotional with competitive and of you've activity XX Irene some our pricing us the made and been environment to us last And in talk so have. over calls that these all on the it XX about to we hear changes landscape is reevaluate has great months. certainly point. to the landscape competitive

in farm appears suppressed to continues income we have market is the our that resonating more area especially proposition it created a where certainly our consumers. be perspective down So discretionary value with and income

to also that with continue parts move we'll and of pricing that that propositions all forward our do but we So sure not value making have only offering day business. at like promotion

Irene Nattel

was value pies Bill, that run promotion thank did straight to value and you the That's And have further of drive tried just sort bundling it pie when helpful even proposition? some you you. help ticket just doing really and of kind the maybe

William J. Walljasper

a talk just know Absolutely, a on at are when day proposition about value these part not well. proposition but as combination value bundling a each we pricing typically of the product

So our been Officer Chief has in to has we continue for on that board this background has it a come and new Certainly we area. resource to category. great a tinker Marketing with that Obviously that. tremendous drive continue us

Irene Nattel

be versus about end higher about the a the if lower do get may determines higher of if the but so we the lower year of want think of traffic, what guidance how but to average sort ring range of more kind granular think basket slightly you maybe about the to And I thinking we not of too for bundling, guidance? you higher because mean product are end price --

William J. Walljasper

the of bit will increase had price short-term traffic be harder piece patterns a in that higher taking indicated taken weather lower a But hit increase a traffic. as price is competitive ring evolves landscape that predict the obviously is maybe can may to may the the and result. we affect maybe more inverse or be more Yeah, or July. little what just expectation, basket little of one The think a a you I bit really

way We that starting increases price will a continue as took and forward the to benefit well also as series going May well. us of so in by

of basket get believe but the we above. where to anticipate And the traffic is lies ring opportunity end so to increase to opportunity or a higher be the I that more to there

Irene Nattel

some out sort average? on to and it can of give July and us be increase will And the what May what the of you of in was price worked total sort that idea what in

William J. Walljasper

on Yeah, so and slices we less variety be lower sub elasticity products that consumers, price like increases of our sandwiches things believe have look the these we were with instance, would our at May sandwiches. but opportunities for a sensitive or pizza done hot

on roughly the May donut roughly donut, a X.X%, higher the around X% look increase another X%, that when you somewhere if you the about then be maybe And at will price increase. increase so roll was Irene comp. be that that And strictly will will May up than pricing slightly

in increase. pricing that see July you If a donut was strictly

Irene Nattel

finally platform one I if to us can store? Okay, as me more who just you may, and inside and will that's optimization the you've great disclose you -- price for a for for gas chosen

William J. Walljasper

do working won't point up anticipate this we that still that that XX through and days. to able I selecting finalizing have all be and at are But next in that. wrapped to the of yet, we

Irene Nattel

That's Bill. great, thanks

William J. Walljasper

Irene. Thanks

Operator

line of Chuck the question from comes next from Our Cerankosky Northcoast Research.

Your now line is open.

Chuck Cerankosky

to store some from XX Good it that hours back delivery XX of stores. parts still to don't hours the same certain be and week go is proper hours morning extended of in will and or look pizza optimization have delivery with we the terms that at at consider When everyone. you pizza XX the

You're picking number that the it? of days do you

William J. Walljasper

absolutely bit a went and store Chuck that's analysis through be this profitability each When was really we correct. it Yes, analysis hour-by-hour so an will different. little

completely Some time basically stores that hours will in pull we X and XX it AM midnight period. back be to

moving true looking that delivery on on four a carved days holds really basis depended Same by a days around. back from week three the store basis. shifted Some at days we back store or with a just seven and to to profitability, a day and hours week maybe it five day

right. exactly that's yes So,

Chuck Cerankosky

gross especially I learning of margin on Terry there it curve stales? around you think a the is shrink bit it does a And to what called

Terry W. Handley

on things the multiple out could as warmer, are clarify cheese what that or to that to maybe just intended it one hour, just in staled outside be have be that issue, wide they're a an It to kind be is what it It Yeah, products products could things. recipe know on maybe declare throw that stales variety you product really stales just recipe Our buy are, a it recipe. of that. with management maybe time, have be away, it term. of all maybe could encompassing maybe of warmers And respect go could We a well. roughly an products too for those prescribed really it only much little is put they the

encompass in more this would So it's one that stales, really first anything. of case the than kind of

roughly need margin are little to bit half stales. these production to point that comes refine patterns. that which doing weather it And to impact, be of our a to agile when more to we just XXX basis So continue plan we was due

shipped in that embedded that we impacting of that away a fourth basis ran brownie remaining pizza Early that points got away. the we're The quarter. throwing with XX rest May as the XX medium through Also that activity. basis into in promotion So product cost were of some not in with to that is were giving due that point we to pizza promotional we quarter number about items margin. XXX impact. points basis on like Roughly margin bites boxes well auto ran the the was dessert April

So helps. hopefully that

Chuck Cerankosky

wasn’t deliveries and wasn't so to changing tied it and hours? stales Okay, it

Terry W. Handley

no, at in No, regard. not all that

Chuck Cerankosky

change any Alright with or relationships and update [ph]? us then you're just supermarket in doing last V High question, anything to what on regarding

William J. Walljasper

at point. Not this

a probably to as a have the D.O.T.miles as least I aspects why stable store We V. of trending probably driven our We fewer and peers. referred market think in well at differentiates from gallons smaller that's operators that -- High program lot to earlier same continue so the our our one us U.S. are with of that

Chuck Cerankosky

you. thank Alright,

Operator

of from Capital BMO Bania from line Our the Markets. next comes question Kelly

line open. is now Your

David Lance

for question. on Bania. Lance the taking Kelly for David is this Hi, Thanks

the expect for to commentary make on helpful but be how some that against gave will give reinvested? this year you guys target guidance if savings on million you for the wondering XXXX much some range also XXX color progress OPEX you of fiscal cost So possibly the in was and could

William J. Walljasper

is a the XXX three to reminder effect the million years. as next a so over Yes, four just cumulative

made hour reduction cigarette have that. management is we decision, as that so our some out well in Obviously decision which to the pizza will aspects will obviously stamping go changed look in the XX And help reduction the we that at continue towards on rolled just telematics are part of our delivery report a that. promotion will that fleet going called initiative that transportation regard, process just new that We indeed. help to

to piloting and bigger been flat, as be hours to the lot the just to done to that working basis is same up Obviously of the monitor credit work are Terry work we -- more to aspect And those work the when So to in the platforms. of quarter hours. we fourth a were start number monitor effort of that on store to accelerate to new a will continue that's year. in But to probably basically slightly there to programs Terry at we a we continue look reinvesting that as mentioned and that's in alluded on on that. the in digital we standing majority a be had towards again continue up that. an There's then this these probably we're going

David Lance

gets very chance XXXX fiscal that further then you or is about how next thinking store are that one great, thank and follow much Okay, you pulled years, back fiscal there couple new the any up, over XXXX? constructions in

William J. Walljasper

of year basis. that we extent more sellers commentary to forward. construction plan certainly capital we put on to a are moves of obviously -- evaluate, that what highest of evaluated the also Lot top their how areas we conversations the potential we're that we're David. putting are is is be more new creation affect return one made and and it trying of returning business will Obviously in accelerates certainly that prioritize list. And quickest that with things store believe having the the just our could items and going at to value Well the year by and

of again number of unit to growth over we the So an could but a acceleration think definitely year. this course going be I dependent in on it's see it transpire things that

David Lance

Great, very thank you much.

William J. Walljasper

are welcome. You

Operator

line Anthony from of Company. Our question and comes Sidoti from next Lebiedzinski

Your now line open. is

Terry W. Handley

Anthony. Hi,

have of Brian, there the we maybe bit Sounds next little like question. difficulty a take

Operator

our question comes from Damian Company. and Witkowski next Gabelli Of course,

now open. Your line is

Damian Witkowski

good Hey morning.

William J. Walljasper

Hey are how Damian, you?

Damian Witkowski

Good, store they're have talk how are core your I you environment I you? on the to kind increases are to money your and depressed. so has like of guess your rise continues but I to rise but even in same if look coming be know consumer prices at consumer, touched store less still summary a as few a but I and just you and they I sounds less driving, and have farmer Can sales have you about obviously they're it of guess general what tough just they my the feeling often continued guess

William J. Walljasper

Damian. There point farm be our suppressed continues is Yeah and you're on a area. right to in income

of have really to things our States, of dynamic fuel, operate to to area alternatives continue work, bit marking continue territory their is their and in need the parts One perhaps other for regarding to different that the there little United public transportation. People drive in fact the we don't farms.

be So little an anomaly a of the might country. think in the rest I to that regard bit relative we of

and our there's category. still seeing significant little is at away you're And bit prepared inside an that gallons, and think does food dynamic. gallons bit one sales of But mean impact a having pullback need that's dynamics get especially rising relationship home in higher where than we of at prices our So in I to that transaction. see when the retail it a have definitely to historically said now. they're between to in food have I a where that relationship fuel per in food spread We they'll seen

in And trying so people a are pie. buy whole come in still a to little cautious maybe bit to

back that's the an that's what with year. going and more that earlier coming I one to for question So is things and is resonating be consumers opportunity promotion to palatable throughout think a pricing now so of striving the perhaps we're

Damian Witkowski

the don't this X then in contributor about were And anything press million rents see were last much release, they I year, how year?

William J. Walljasper

have for commentary. of XX.X of the this fourth just -- so a sold under product. the cost rents I then In think and that will we clear, value have I'll number $X Yeah, last million about mentioned the this believe we quarter. QX mentioned that might conference call in in million But you embedded a to I that in clarifying the are say just give I we rents

and up rents move of relatively currently rents in To you to to is be $X.XX give $X.XX strong. currently. when cost. trading around Fuel down so And perfect movements adjusting the wholesale Damian, are example seems there that [indiscernible] margins a

Damian Witkowski

things on like then post that, options changes you the call that and new alright an Okay, anything real were last front? you on a mentioned you looking at and might tax estate update have and

William J. Walljasper

Nothing and do but next we conjunction party owe or this third front, do new the on distributions update in we will with quarter. distribution that

We point. nothing new update yes, will at you reported this definitely on that. But

Damian Witkowski

Thank you.

William J. Walljasper

Thank you Damian.

Operator

Ryan question William Domyancic comes from of from next Our line the Blair.

is now line Your open.

Ryan Domyancic

Hey, my good I'm you good. morning and question. for taking thank good, I'm

XXXX where with into in XXXX, finished average to like and basket. So line from this just promotions margin both roughly you But quickly there grocery on food for looks the prepared kind the and it of at. XXXX theme be value building is seems

level, that So kind side increases it that you value versus margin throughout increased have XXXX? promotion you XXXX to of price is same gets which just offsets that

William J. Walljasper

the on -- and fiscal margin the prepared year. XXXX we just mean we merchandise couple business tell we clarify are not I to an for you on optimization key from side I will part both the only question certain side but prepared also things products. price ended foods because increase sales the be a do uptick Well, like to store and opportunity inside the want the on potential fuel look we will showing, by but caused grocery one your Ryan food in drive that do an margin That's where that anticipate we of have believe some also we price of

Ryan Domyancic

Okay, I the was midpoint. talking about

the half due to year it maybe that price some will to especially if of higher back see then about So optimization? we start of you margin XQ the think

William J. Walljasper

an rolls card margin as in Yes, as back anticipate fleet price in we the rolls the and half. do anticipate we and as comp in optimization acceleration in well certainly

Ryan Domyancic

Okay, or are you last any new the how markets, real the one Casey's would performing are and some on into? and how about more new states commentary are Eastern receiving of be then in those pushing concept customers quick stores

William J. Walljasper

state Easterly are would frankly state. penetrate with say the we of when the seeing volumes Generally an seeing. border a we very pleased that existing that states over I of we're it's we Yeah, some more the are just new in quite speaking right

some So degree. and it's not brand some do necessarily we geographically recognition to have so huge

the been merchandise. new I expect states. because Those typically fuel So take are increases some ramp market. longer may not seeing items think as in quality store to bit some we up ramp as grocery you nice some it Maybe well of of so of expect nice prepared general two they would a into very does that in but a there would a that are have and food Easterly convenience the ups little go and

to markets. look to those and do for all So we'll continue some in acquisitions tuck opportunities in construction

Ryan Domyancic

the for thanks Alright, detail Bill.

William J. Walljasper

Ryan. Thanks

Operator

Brownlow of question line from Raymond And comes James. the from our Ben next

open. now Your line is

Benjamin Brownlow

and quarter? just cigarette seeing questions tobacco unit a Bill of Hey, sales trends you through my thanks little around been I have for question. taking the Most in color what guess the give you're answered. can

William J. Walljasper

the last about Yeah, relatively XX%ish to it's have well first for of partly because part the months the head cartons tobacco versus for soft pretty but for as here little due weather. seen XX But of carton. -- cigarette well into here, packet the XX stable a we running we on QX environment been was us quarter probably a pack acceleration

It to brands, a Now same little generic period we roughly that. haven't in of change helping slightly either it a savings uptick QX lift the seen margin is a QX or be that's cigarettes however, comes same. to Hopefully bit a helpful. continues have value year want in you characterize the margin in to ago. the or relative much when of did We which to

Benjamin Brownlow

the on color the was just any just tax benefit helpful overflow an for That's there? the was from tax or quarter, and April that one clarification guide

William J. Walljasper

that we and out. tax look Yeah, as how a further it's just plays at reform refinement it

Benjamin Brownlow

Okay, great. Thank you.

Operator

from of from comes question Herzog Bonnie line next Fargo. Our the Wells

open. now Your line is

Bonnie Herzog

got guys trying the your Thank you. guess so a that I fuel everyone. have I things you to guidance, discussed these why I'm dropped the is might first discussed drag I you RIN, think about just and be Good headwinds normal that XXXX just of thinking guiding continue especially FY that to return I margin about call won't what a understand morning you in about to a first ask wanted forward? off the couple to just don't range you're Hi, of of the to more your you going and lot expect

William J. Walljasper

I be we offset way highest think don't do of Bonnie, think quarters corresponding fuel believe the there the market. I the is lowest RIN sale as so come had down some whole it wholesale. in margin RINs of an necessarily a and start I we with offset be to RIN, RINs our contribution so the Yeah, a it that somewhat to this RINs, RINs some misunderstood there, in will I anomaly will we I put tends believe of mean will

coming as headwind RINs And forward. necessarily down so a as don't view necessarily move we

respect say Now into are head things fuel with forward to the touched with we we on in several we We be that the contributing regarding price the margin to back we I about talked would fiscal move especially optimization half going as factors as that. optimism margin the believe of fuel our year.

We opportunity pricing will forward different more a environment move dynamic, as a area here there's in July actually to that month and We assist margin be optimize to fuel. well adding of there. in several the pricing analysts with believe centralized

going done plan this continue as optimization the then margin our forward end products Again we've we higher some benefit some we changes to a are higher product well. premium either also have credit those we Just looking or moving of of on XXX be margins has report. but lastly in as margin past just to the of by adding stores than we the of to that diesel XXX the July well to about converting doing to reiterate stores the which will and both roughly has here refine biodiesel July to a again also end by and opportunities tax margin. And roughly

I margins help think the of all fuel those we will and forward. lift things contribute move as

Bonnie Herzog

will an near pressured be sense the is at cost wholesale from That see? makes but term and just environment least can to still issue clarify what you

William J. Walljasper

down costs hard -- seen trickled leveled rise last the movements go into the in hard Yes. part the pressure putting moving off June. Well, will but obviously future for cost it's saw what wholesale margin, wholesale here obviously in it's where and predict on and of we And of anybody have -- quarter the back May end of the has certainly in kind May first in we

Bonnie Herzog

thinking pizza guess it negative but of that you and in delivery also the saw terms and just I out then I wanted to verify the weather I be on it something have impact about I a But to called consumers Okay, when didn't pizza might you poor actually venture have weather want necessarily benefit delivered you outside. and their as see periods thought of guys not could that?

William J. Walljasper

out. [indiscernible] that Yeah, see really to I call didn't anything

Bonnie Herzog

relates a And question I the initiatives the increases? you increases want store you have it am passing C pressures. price think thinking from about be that and how sense to and just on you in broader successful get as competitive the the to guys then on the it and is price just will environment from you last industry just I me,

William J. Walljasper

Yeah, no great question Bonnie.

that times. in So that to and product when unit increase hone elasticity product monitor of we prior movement relative the specifically we the price do on of a

we some to a so any pricing make seen may an And we just and starting over the elasticity month, Thus haven't we little far changes that least elasticity, adjustment. do -- have at in see granted it's a May. we made

be perspective the points. sensitive from lower least Some that the our to took consumer, of it we at less would price have products

you're correct augment value some continue the continue we that to things but want maybe of And that or so obviously monitor we that's that earlier. about talked we to to one with and that combat propositions

Bonnie Herzog

much. very you thank Okay,

Operator

question Markets. from next Nattel Irene Our comes RBC Capital from

open. is line Your

Irene Nattel

is question, mid-size you? quick Thanks, change midsize just about what a talking you're when to

William J. Walljasper

population town it's Good than high think. be to people question, relative all the us for other might what might different

to Yeah, stores thanks two point. So us I say fifty it's hundred a mid-sized anywhere would I think chain Bill. from point. for a be probably great, good would good stores is a that's it

William J. Walljasper

are You welcome.

Operator

seeing currently remarks. Terry turn Officer Chief I'm to closing the I would question. Handley, Executive for like back And no call to

Terry W. Handley

profitability record by high this shareholder and the continuing I prioritizing improved these value reiterating drive joining track would value. call look growth to initiatives for disciplined We us to Casey's accelerated updating of with thank Two, delivering strong plan. concludes our to progress. our by for through forward the initiatives. and continuing for positioning our term value morning will shareholders our like actions through our everyone call strategy creation allocation value growth our capital for This long strongly One, significant key to high combination close of and Thank today unlock profitability and shareholders. and you growth a shareholders you. on we -- return believe dialogue our

Operator

you participation great day. all thank gentlemen, Everyone you and today's for may and program Ladies This a your does in conference. disconnect. conclude have the

Casey's General Stores (CASY) 12 Jun 182018 Q4 Earnings call transcript