CASY - Earnings call transcript Q2 2019 | Casey's General Stores, Inc.

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Operator

Good day, ladies and gentlemen and welcome to Casey's General Stores' Second Quarter Fiscal Year 2019 Earnings Conference Call. At this time all participants are in a listen-only mode and later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to Mr. Bill Walljasper, Chief Financial Officer.

begin. may You

William Walljasper

Chief thank results and am joining to President us Walljasper, also Good the you quarter Casey's and Handley, Terry for Financial I Officer, ended discuss is Chief here. morning, Officer. for Executive October Bill XXst.

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

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

Terry Handley

Thanks, Bill, morning, and good everyone.

were you quarter expenses, by for over $X.XX, inside primarily of The a up seen year and press gains well XX% at per the as last first pump driven on operating quarter store, compared the most as increased stores have results additional release, control operating in share were to margin XX earnings the the to diluted As $X.XX second year. the ago. from both

the retail execution the sold would with gallons summarize $X.XX each to share and in category. fuel down plan optimization X.X% retail current previous out working per Despite price conclusion operations October We from gallon fuel as team from year. well due up a X%. balanced on XXX approach pricing replacements. down this underway. these the for in the the demand. like a for launch efforts and The X.X% traveled were to traveled were gross an Same-store believe to store our XXX resulting cents dollars per the being store environment recent gallons contributing to due categories. million months quarter, sold higher are team progress million. to in sold schedule preliminary in dollars the as fuel a XX.X miles for Vehicle commentary. as of fuels price to X.X% X.X% contribution acquisitions, our for average very some downward fuel from an proactive already category, to per We creation of September now margin of the was to that the average over pilot the as up of approximately in year-to-date vehicle of and closely nearly is of average the the during to value $X.XX margin is pleased six softer our past fuel down details The of the of retail increase results X.X% trend during gallons miles the an over gallon in quarter to strategy. new Fuel gallon Same-store quarter will strong continued XX% and down quarter decline $XXX.X achieved assume and during with profit drove our same-store with primarily the total estimates the stores, were retail We our the in I the quarter program continued in late profit were In in and build price we formal increase optimization with category, gallons, in the gross with I over the preparation $X.XX period. following

to for card efforts We As continued gross dollars have back we sold discussed potentially to the same-store when of noted our year. gallons in program, same through time; the the due impact fiscal our and softer have the press the demand guidance still due the lowered profit optimize margin at guidance our also the release, half fuel we fleet same the efforts previously. started launch to the we expect of to increased we anticipated as we

for category, Other well period range. category. as category, as ago increase Grocery our a margin the significantly higher Same-store have current is X.X% shift basis to in of annual was average mix XX were period. to annual The the Other nearly with the an gross XX.X%, million of trending year a The Grocery As partly promotion same were sales fuel sales up current up sold margin quarter. internal margin during November within items second product up X.X% the and expectations gallons margin half due are result, from Same-store In November the towards in dollars our the the Merchandize points total a optimization. in in back the profit above $XXX.X and increased average across same the in in year we Fuel range. Merchandize

the were due up favorable X.X%. increases, second points X% year promotion gross to million. the and were trending was profit are food November mix, over sales optimization $XXX were product average dollars a total our to the basis the for up As the The mix strategic quarter XXX the Same-store in million for $XXX.X sales X.X% shift, the increased current quarter. last of from commodity for sales quarter price up within category, fountain sales result quarter In primarily to annual prepared favorable in and Same-store category prices. margin guidance. and product XX.X%, up second

sales quarter quarter, the gross over of thus XX% food end the trending dollars the result lower increased and annual million. in margin the a to $XXX.X profit As our in current far at are sales expansion of Same-store prepared up were guidance.

operating are We control results encouraged to by efforts expenses. from continued the

The expenses driven operating quarter, These year of increased to same-store card driven $XXX.X million. increase expenses excluding XX fees this to in operating hours. quarter by X.X% in a of the by were is ago. compared total expense For labor percent. results were one operating down mainly tenth Same-store credit X.X% a decrease operating more stores one

call expenses. emphasize opportunities for discuss better financial to I to over the statements. the process continue to to operating turn will would manage Bill to now like We improvement

William Walljasper

Terry. Thanks,

number due On to this prices, fuel XX.X% same to stores tax Depreciation the due income $X.X effective the in due rising and billion, quarter retail for rate year increase primarily past The was total down the to to in compared XX.X%, period to reform. the statement, quarter up up in operation ago. growth for Tax the revenue XX was an from the a XX.X%, months. year over quarter quarter the Federal of was in ago primarily capital in a expenditures the

rate to and XX%. be our tax effective fiscal for XXXX to between expect We continue XX%

current balance Our be maturities to Long-term equivalents continues billion. debt $XX.X October and net strong. At was XX, $X.X were million. sheet cash cash of

dropped $XXX.X month quarter year-to-date. $XXX flow X.X improvements XX in At growth a Adjusted grew EBITDA. is million cash compared mark, times as in stores openings X.X% contribute in generated store to and period. the million recent capital with same expenditures Our EBITDA from the XX% six nearly year-ago trailing operations the to we at new and in up million operational mentioned $XXX.X the to ratio existing our months previously at debt-to-EBITDA

store capital in increase quarters expect to subsequent expenditures continues. new construction as We

like Our estimate expenditure capital turn the to growth fiscal now and back our XXXX. to at call update over remains to Terry would the with I value $XXX our million for unit creation plan. progress on you

Terry Handley

Thank you, Bill.

with bank. construction at to stores XX additional had purchase. build store this acquire the land and At under sites XX new our have stores, stores mark, three XX fiscal Currently, XX stores, to we six Our and additional we acquired XX least store have constructions, months opened stores. in year under XX target additional agreement is growth an

unit positioned I our we We regarding target are well achieve on like the an provide would now growth update to and track plan. believe value for creation growth. to future are

reminder, a the key program, controlling continued fleet as price retail optimization allocation. of transformation, including is value as and programs digital long-term focus comprised and card multi-year As operating well several plan a capital new drives on expenses engagement and

deliver drive We and key profitability of for accelerated shareholders. focus are growth increased will areas and confident these return

October. the program. We new last begin the new several We will of card over have course launched key I the late fleet in the with completed milestones quarter. program

new accounts we preliminary early still target XXX or and X,XXX the excuse results Although that are in cardholders. the on XXX show me, over with process,

expect begin this We to of in to fiscal QX XXXX. benefits from see program the

our the make completion than combined on price overall key stores all stores we to Price the pump we this are by data add in across XXX diesel categories a price ongoing optimization This the end the XXX We utilizing we plan. us additional category Upon to optimization the store and broad will QX, we network positive is we sales all of our which to the utilize scheduled or margins market price to addition will plan plan. of fiscal product products. premium platform centralized, the in fuel to converted in allow decisions to rules-based higher and generated have the a phased will program of impact of an rollout program premium the fleet the margins will or our stores this improve anticipate program, card our carry XXX to at fuel value is inside biodiesel We In have with all premium year. leverage with other begin sales another a diesel. have currently executing optimization and By advantage. to Diesel, creation pilot completion, biodiesel our margin and stores. store. by stores a network. we data fuel optimization Dunnhumby for will throughout end fuel to busy believe going these fuel, Year-to-date, forward.

be hired and pricing finalize manager recently will to begin next to build In identify of and will fiscal price team. out for retail have the and we currently broader a optimization will We in that is scheduled most to categories in test of likely learn analytics phase QX, and begin continue used will we a the the fourth occur rollout which pilot QX quarter. the store year. that inside The help

the However outcome on our the pilot. will and of in-store for pricing in fundamental shift process timing our visibility marketing promotion depend the into by strategy. an represents fuel and purchases, supported increased the This both program

programs company. to and bring the these it the in confident are will benefit We

have with Director of digital to hired We sales President quarter. reached have X.X milestones continue our million. marketing last increase we a have to gone to cloud over base addressable us program Since we Marketing, customer this live and our progress hired Digital over we Experience, several have enabling and key Customer last force of our a Digital XXX% Vice our engagement call, with

them customer campaign quarter We first begun In we automated we during planned and two coincide of the program fiscal enhanced that an launch rewards. technology facilitates promotions platform. a platform, and Upon to an new allow in-store redesigned experience to marketing next program, and identify of have long-term by us will we evaluating rollout cost loyalty drive also anticipation mobile which value distribution digital digital to to will new digital and creation our and This year, serve volume next of focus seamless both including increased efficiency. process the our customer create pilot and intend of enhances on will by engagement of will App, This ecommerce visits. a and additional and better and the to with understanding infrastructure. system optimization of In our the pilot plan capabilities a already integration sales new a to the ordering involve generated the program. marketing quarters, online in-store is a value customers gain a website, a new undertook digital store opportunities plan rollout we and growth, Casey's our App, platform loyalty providing mobile personalized consumers with better enterprise the enhanced target-effective subsequent that and a

of and advantage. enabled We is have strategic our alternatives suburbs review our this serve to better communities locations. distribution business completed We model this quarter. confirm evaluation past comprehensive model distribution rural sales This us serving small a believe to is in those

optimal cannot core distributor chain Our that as efficiency self-distribution distributor. to as be of and has shareholder that role the replicated with move both confident a level financial the creates increase wholesaler third-party our to We the advantage strategy value. remain supply

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

capital our through creation program, closing, as store and disciplined transformational to In attractive well will continue prioritize strategy strategic profiles deliver growth. to store acquisition construction value continue Our profitable opportunities. growth store to performance investments enhance with allocation task as including long-term steps take we and return new

review to strategy to add value. significant successfully to continue drive skillsets and our shareholder long-term will execute We

now take questions. your will We

Operator

Mandeville Instructions] from from first Our the Christopher question [Operator is of line Jefferies.

line Your is open.

Christopher Mandeville

hours, be morning. basis just a taking Thanks I just for there same-store questions. dig you was results. itself, labor the good number really the growth for appreciate into could of a on quarter on bit sales OpEx units? X.X% starting my maybe total back would classified the anything adjust the but reason And Hey, Bill, any to OpEx Can or decline X.X%, little the that actually What to impressive and for OpEx further, if suppose, us as of X.X% the XX.X% to timing? related of of beyond to think just didn’t simple think accelerate addition growth? a half your one-off you for or will believe you simply growth then, that about I to new year help necessarily meaningfully the full year guidance that

William Walljasper

online. those Chris. The see will right. labor that X.X% the that The about to grab of all I roughly same-store has Yes, questions with new do the the Yes, in is X% really of was has that coming reduction part store in X.X% if for quarter and X.X% combined. exactly majority to reduction remaining with do driver units about, can I you store hours. to of are that there, that

part to that in changes hour fourth of Chris, also, the keep mind, we reductions. that delivery Now in XX in was undertook the back quarter respect pizza with reductions

if actually those of were delivered about X.X%. X.X% So those that out hours same-store excluding pizza hours you exclude XX

the we that part the answer over be of there, so to question in So, cycling your will fourth quarter. second

of that that that, over And cycle seeing the we benefit expense on we’ll so, in again operating side because QX. are

operating there. events, quarter in any ran do were normalized. we events Insurance I would no up one-time X.X% of are So, within anticipate from say, that that. coming through one-time for expenses really other that relation Outside there the to

out called at an somewhat in You might anomaly. of QX we recall, that

to as flow. back little harder operating That’s a that can basis. some to move that’s forward. bit a and we was expenses. more for But that highlights Again, So predict normalized ebb

Christopher Mandeville

Okay. And fees out follow-up that the a be credit then, guess, would just I quarter? to on card where fell

William Walljasper

of a from XX.X%. towards a Yes, were retail particular a fuel credit roughly this mid-October. they back started dollar me, back $XX.X the Excuse perspective as percentage. mid-teens million, fees up moderated actually were about price about from pulling card quarter They half

moderate, see moderation could in the line price that that be benefit retail some certainly item operating continues a fuel will particular expense. of if we the – to So yes, in

Christopher Mandeville

in here, or we of And at anniversaries $X.XX year-to-date, terms both today thinking Okay. should in previous either in we should anything well? high-end in-store, and your at, with standing the the grocery per How the about year pricing? your like more margins, just in are that about lock think as And range half in-store and mindful and of to favorable a in above guidance of ability prices be pound. back about the actual looks where dynamics then, cheese it

William Walljasper

Right through Right we on now that’s Cheese some I right you good the now called out. as now, call in didn’t know, our the end of is Yes, a out mean, prices. commodity cheese month. pricing this we locked Terry point. market favorable. are

extend looking of currently report to are at to point. our opportunities lots We Have cheese. nothing at this

to will continue monitor We that.

say, the The nature. is other our contributor margins. a of favorable, more will to commodity that. were margin definitely inside I prices are store the in more secondary seasonality But there side from

we that look and in one guidance QX, the back prepared margin and Grocery the of didn’t food if we General lower QX and which of in you Merchandize So, margin pull respective typically is why categories. a reasons had at those factor, two down because

Christopher Mandeville

That sense. me. from Sure. one Last makes

robust they’ve say to Have margins respect little is market everyone within $X.XX traffic? of you of the drive in with $X.XX competition quarter aggressive to even the were Just more and bit on quarter-to-date. been in largely becoming they a fuel to now type pretty off how of, Or and seen discounts terms rational? strengthened promos anything

William Walljasper

pressure I of probably general the environment. There would and rational the to some in or that bit little of industry be will offset other fuel continues area where pricing the more say typically latter pressure. operators is in Chris. smaller there, correct, the operators It’s a is

guidance. of in as continue that haven’t that’s going to I change we in response substantially are is, would fuel certainly, certainly are the to that the So, November, current actions going margin But at point. mentioned, marked taking And something some above monitor Terry did we to a seen any this our we forward. say

Christopher Mandeville

in half year. Well, appreciated. of Congrats back the of luck the much right. All best and

William Walljasper

Chris. Thanks,

Operator

of from Kelly line of the Bania Capital Markets. you. Thank is BMO next The question

open. line Your is

David Lantz

taking on questions. Bania. Thanks Lantz Kelly for David is this our for Hi,

William Walljasper

David. bet, You

David Lantz

quarter I solid another gallon a And the really wondering with the kind fuel comps. you that maybe the past on how that between relationship? guys margins trade-off fuel if could you’ve more in initiatives margin explain could little bit fuel give So, of into on color and of some was they about bit you little talked margins, of if and play

William Walljasper

Yes, great question, Dave.

fuel sometimes is at look lost when dynamic category. we this that a the that So gets

And gallon press our did from our increase know, reduce margin the you same-store so, did release, guidance. guidance, we but we as

margin, X% one gain us, to And think is up to volume this, roughly fuel same-store in what so, to give breakeven. fuel I X% are you actually to in penny could for we

this So, pilot undergoing Terry find little we are thing will is out right that inside bit now, same-store trying through and I softer continues relative to same-store that XXXX, be here honestly One quarter though this same. really the to previous QX had maybe in program in back optimal a some roughly gallon mentioned we’ve fiscal point balance. even in quite movement quarters to traffic

So, we that. are monitoring

inside degradation So our certainly haven’t want seeming any that we of in movement same-store and pullback stores we don’t seen in certainly any regard.

that are So, in to category. question. that’s what we your the answers Hopefully trying achieve fuel

David Lantz

us you. benefit come kind converted? quarter. some biodiesel, the you Could know to conversion to are with and the not great. been to specifically how – just this think quantifying the versus performing stores I like of kind of Thank think to of stores XXX margins stores that have that about that’s you’ve help – premium XXX of diesel another or Yes, said And and so far on I you said XXX another

William Walljasper

basis. of about on of Well, margin give the store-by-store optimization improvement. fiscal But coming roughly the with Terry driving comments fiscal not result points into this basis respect mentioned, a those XXXX you product the that be specific information in year, I may XX the anticipate initiative we able to to

David Lantz

you thank much. very Okay,

William Walljasper

welcome. are You

Operator

Short is Thank from you. And question our line Karen Barclays. of the of next

open. is line Your

Karen Short

taking thanks my for Hey, question.

is quick at? traffic a your inside clarification. today Just What running

William Walljasper

flat is down. Inside slightly traffic to

Karen Short

Okay.

William Walljasper

fuel Now excludes that that clarify commission that Karen, excludes, – excludes sales. same-store traffic to Overall that, customer sales slightly up. and is

Karen Short

sense. makes Okay, okay. That

So, fuel I a a little guess, bit second. I wanted to for focus on

I the potential from in-store cardholders, the biodiesel in fleet read benefit new You users? the to obviously card? So, which with any fuel, on us premium? accounts And margins then, lift any second is, early to these gave had the but on comp color gas of the on on rollout and any read

William Walljasper

new so October, that, of Yes, card the first program – roughly part launch started of the we new October in XX. fleet the our

benefits of So, were obviously, the not quarter this in second fiscal being the year.

that start program QX beyond. As and Terry QX some gallons so a Coming lifting basically fleet basis we of we to rolling of XX about card roughly the points. into QX seeing next month having on program mentioned, just benefits the over XXX year, those period, into planned

macro forward. tell XXX we and a worth are It’s in up harder Now track that be will softer, continues call just you in certainly comments, reiterate I I be number to underlying keep have on X,XXX one achieve that move to Terry’s those as mind to the demand if that will to out to that we mentioned. expect plus just cardholders we to to accounts over signed that what see.

Karen Short

a the lift think because competitors some about metric. think lift actually what typically in would I I to that what a food X% asking But I in-store prepared result don’t that with was offer obviously, about, in-store you’ve X% metrics am that is given

William Walljasper

right Yes, - not that as early. now, roughly nothing But, anything are call we pause, in would now going month really only so point. there this program. is an out can’t get that give a Real program, in roughly inside in lift being too we see that traction at more to we us right the

Karen Short

And I guess… Okay.

William Walljasper

at the I conference call. next have would expect commentary to But say that more on this, Karen, us

Karen Short

the to I fuel, metrics are fuel margins the pump you’ve conversion Okay. than the into mean, the heavily on fuel is coming fuel store And of managing in and for you concern in-store pretty is versus the you obviously, overall, but I more store. exclusively then, just terms relied customer more guess your past, the at comps the that looking maybe guess, I be, purchase in getting would managing are that from

the been seems that past. than concern So, to is my less I has today question in a be it for that, you guess, of

your bigger context achieve in that? you rest picture, prepared you little And if comps, guess, goal the food and of XXXX? So, fuel goals I then, on of you really X% terms comp maybe merchandize can for your can general a make comps give don’t

William Walljasper

Yes, we that coming movement of the was more Whether sure weren’t would bring. bring one it or same-store items bring whether the that quite so, creation would gave I it value enhancement. what more those optimization guidance we think, into for plan, that will margin product

And to in we to along of the profit fuel and get both realize optimization began price there margin gross size, is so, the as the further dollars. that we side the piling of the optimization probably more on opportunity drive

So, key gross have dollars the store. the is the balance to profit fuel managing us category the now, right degregate of for inside the to within not

next that’s what the we our that opinion. right quite two in balance. other several to And over will looking play-off are find nicely quarters The so each to

Karen Short

helpful. That’s Thanks. Okay.

William Walljasper

you. Thank

Operator

Thank the line Wells Fargo. you. from Bonnie And is Herzog our of next of question

Your line is open.

Bonnie Herzog

All right. Thank you. Good morning.

William Walljasper

Hi, Bonnie.

Bonnie Herzog

a had in outlook. then the maybe and I quarter fuel the question gallons lower Hi. also your on

fuel demand. the your consumer of as due much was optimization to mentioned, you think some well softness I First, as weak

wanted if what then, you I before. same impact So to you to bigger fleet on lower had impact program still And your you gallons? guys, fuel I could have expect mentioned the the just card see as the new hear from

lower consumer terms So what you I the understand this trying to of you reconcile seeing just guess, are in with, I demand? am how maybe

William Walljasper

question. earlier I’ll so, try Yes, a together, to pull to Karen’s all even Bonnie that to and I’ll try follow-up probably –

the I the made to same-store reiterate you we is, things XX to reduction one want look delivery downward, that move do of of movement the back at in stores. pizza the stores hour So, gallon QX when that with

with gallons half excuse that roughly has my look look QX, I XX the – and QX fast-forward reduction. hour when X.X% so, in And of of at do me, to same-store decline the

remaining those step to hour that X.X% about mentioned to softer ago, piece other year split a even question that two comp the comp cadence optimization question And made guess. and demand. the that in food forward, with so almost do six grocery and ago, same-store is dynamics your you pizza has Karen’s further XX sales months equal downward the moving taken between roughly movement merchandize on a movement delivery the a And roughly price or relatively both prepared and and I we of

the see is, and expenses over we to as a expense bring will So, even that a the in flip half reason for as in QX, obviously so, when I so, get well that, operating are with that year that rollover. operating getting into going the we you are up now of benefit flip cycle that you back on the

Bonnie Herzog

Okay.

recently? Now, And then, you been curious in helpful any that’s coming prices a gas from you, hear as have trends traffic, seen have color. change consumer to down

William Walljasper

change It’s an know we the part to I in pretty of November. so continue into we October definitely and monitor early, because are gallons that. of that transaction, But seeing you and as just happened upwards the movement say and latter will half per will towards here back November

potential be head of respect year. into to could gallons the an the same-store back as upside definitely with there half So we

Bonnie Herzog

e-cigs I recent be FDA then, on my on some And would guess, regulations flavors. by Okay. our restricting final question

gets how stores impacting implemented? curious you in traffic be to see I’d So, hear you that guys as and/or your basket size this from potentially

William Walljasper

couple yes, Yes, questions there. good

potential so. the is menthol. are main think around then you product to question I think commentary some and you Juul Juul’s referring also I are But asking,

Bonnie Herzog

Yes.

William Walljasper

say, Juul certainly roll respect I quite has it’s an that a annual overall, year. bit been to category a this material has gained a other our over not number. tobacco when you of with amount would traction line up that in fiscal product

of of the side that. of seeing we that the it’s some on are is piece However, comp a gains certainly

we the our of the and and expectations. some flavor updated the certainly move some this we of this So, with year, as half profiles of guidance have back will update with into we reflect respect that end our to guidance Juul to in

fruition. plan, we our particular take a menthol the things impact particular incorporate if I have fiscal at us look year. one next of to that going one quite fiscal in the at we XXXX to fiscal will may operating and changes But now, it’s all that’s as that XXXX might while On right those coming any think, side, product in

Bonnie Herzog

exactly. then, down your I And Yes, categories. on just maybe some key Correct. merchandize drill of finally, guess,

out I specifically both You in other Any that you performed quite beverages tobacco well color performed did packaged well? quarter. what and really on for believe call the

William Walljasper

colors. Yes, yes, certainly couple yes,

On the the product high-single-digits a getting significantly when up two side, the were which we in to all is in and as tea, drinks, a the packaged of mentioned mid same-store beverage carry basis that about whole to sports to higher Terry shift in look margin the that quarter. energy at Those commentary on these sales category drinks margin.

mix also as product part of As of that that, part will well. Juul shift be be

that quarter. if at in same-store we you Just cigarettes, commentary, X.X% cigarettes, have sales, look about been up excluding second the excluding would

Bonnie Herzog

All Thank much. you Okay. very right.

William Walljasper

Yes, you bet.

Operator

Thank next of the line you. Trussell Paul question comes And our of Bank. from Deutsche

is Your open. line

Paul Trussell

could also increases areas? on, the from good you circle you are Hey, I made strategic grocery the comments seeing in earlier other more the and around you product with on some optimization and out with you if I favorable foods think up margins some of what wanted mix morning. and price of helping promotion touch guys in in made to you prepared year

William Walljasper

those just the some well quarter. popularity be months. merchandize has from certainly Okay. the really about as areas. energy packaged certainly three last Also, the a tobacco shift that beverage the for other the the in as drinks, some mix – six Yes, mentioned the two on area products months, the and grocery last movement our Juul One in product comes this have would area, seen and talking over that of we drinks movement the product gained last called strong the general a sports we in tea business over areas are

shift. combined, two the And in primary product those talked we mix so, the reasons that about certainly probably

are type these the grocery at movement. and dollar driving the These two, of just type that with get optimization, formal not ahead are things like profit of general that activity of really the whether any On looking inside store our these free doing price Dunnhumby for promotions we promotion buy merchandize. or the one seeing and things are optimization promotion some gross

periods. of we so, we because and bit job from little are And those seeing doing are of less degradation better managing that, prior margin a

the was to increases, was July One And strategic elevated that two the We’ve we prepared the took food of there. pizza those category. far price piece and have As our price year. specifically at in same That in in We the donuts. was we the fiscal then donuts this on the main value we May size slices. on are the a as taken proposition to time, of our actually to one took one increased the main consumer. those

right continue increases. of But we price so, type monitor those any that. seen we’ll elasticity And haven’t to with now,

Paul Trussell

program. obviously Helpful. the And redesigned and loyalty roll will are out rolling the out App you

a once you if loyalty more curious your color it’s bit expectations little on and are, program what that fully can Just out? give rolled

William Walljasper

half plan. the into the Well, transformation back the look for certainly digital and lifts key future XXXX. comes you in us when area creation is into value And of fiscal XXXX and to fiscal it the revenue if then

a program to in from local the areas so relative we a offer program, peers have excited probably back, a could We to six take I similar we feel store that program saw program do rolled fuel have very a a we resonated program consumers, roughly would the grocery will think have with areas loyalty when to loyalty in that the fact currently play-off. type with and And And our five, – three really years we from have and not that inside a loyalty about I partnership of say, loyalty that are how one loyalty like bring. our type other products. unique step some opportunity the saver the of main chain. program We of that out felt of store thereabouts we Paul, I'll

have the play-off category of. fuel We to

maybe offering, bit merchandize food one comes when a their it have is a different program. fast-food that chain casual relies prepared and and general or We which little food a we to on grocery a just being have that fast dynamic, chain

the And that. So back want we We to pilot prepared in this of sure fiscal get right. we are why to time year make the are excited be taking half for in QX. in about rollout that’s it the we

Paul Trussell

Best of Thanks. Great. luck.

William Walljasper

Paul. Thanks,

Operator

comes question from next our line Ben of And of you. Bienvenu Thank the Stephens.

is Your open. line

Ben Bienvenu

good Hey, morning guys.

William Walljasper

How Ben. Hey, are you?

Ben Bienvenu

wanted cheese follow-up I Chris’ about to good. ask cost. on a question question Pretty

some that put be price, would So, in to locking margin tactically about margin you there of a Maybe color flows of comps? are on advantageous your more successful some dollars in cheese in through? margin to think how the Or you deployment drive inclination promotion benefit that let event those into benefits?

William Walljasper

environment certainly favorable on That’s favorable is a market a up cheese for did not a lock it’s And Ben. question, if we great right now even spot went and in us. just

flow I the through say this, – have let that We are traditionally not margin. to likely we would to

activity direction a this the half. have have a of are but do still heading. officer any know utilize promotion the may of landscape. increased to a But, want chief new and marketing for competitive, in past has let that, there we now, do dramatic we not his that in we activity we back from been It’s quarter, will competitive we If promotional some seen he that’s certainly, Now, right everybody not change. as

that margin. And my the pass so is, hunch let we will through

Ben Bienvenu

then, premium. And Understood. and another follow-up on biodiesel

gave the You And added What’s you that counts of those just chain? what across chain? stores the offerings store you’ve gave broadly, number store across opportunity in total the entirety then the us are the – the us to.

William Walljasper

– once mentioned get the Iowa on with I quarter so third we Terry and for that only numbers mean, Yes, Illinois. is biodiesel now, the the the right really through

kind information at respect basis we forward. I much will get will we through, With to be pretty good are pivot don’t products. and they diesel going conversions, as a position the we two or from will from premium I to So, the that will are once but on, as-needed those There different we at. through get of decisions an meaningful be just make be we where few a field we think stores then, be add think point it QX, to

new Now But will think third stabilize stores good the have at spot kind end of going be in to of the forward, I a quarter. will those we products. it

Ben Bienvenu

amount And spend upgrade? that you expect with and have what earmarked for then, you pump? to And do the what at dollar EMV implement your timeframe EMV, CapEx of great. respect Okay, to then, kind over of,

William Walljasper

are fiscal not at the and the pump probably really I will trying correctly, where in whether determination more all or select and the we Ben, that risk when so, feel profile. be think whether or Right it’s so, appropriate remember of to just our assumption most not you make I have shifts Yes, now, XXXX just switch that of mandate it’s liability beyond. as a stores given at a will, one that, to are of flipped if we October know, XXXX, we is CapEx that the EMV EMV and need

Ben Bienvenu

Okay, thanks. Congrats, good luck.

William Walljasper

bet. You you. Thank

Operator

Thank you.

question next from Witkowski is G. Our Damian the Research. of of line

Your open. is line

William Walljasper

Hi, Damian.

Damian Witkowski

whatever big Hi. Juul overall? or How brand, is sales are of these of of store cigarettes sales inside tobacco your other you? e-cigarettes how a What Could you it days? or me, part as remind

William Walljasper

Are the Juul product just? you or about asking specifically

Damian Witkowski

mean, I guess, a how just of the percentage? e-cigarette products, big I

William Walljasper

be would low-single-digit overall to category. it Yes, a contributor the

why material – this So, that’s not point. amount But it’s very traction. gaining at

Damian Witkowski

them? then, is been that Dunnhumby, And how you’ve long that, working with

William Walljasper

We on Dunnhumby just months six last came with an this agreement period. within

Damian Witkowski

Okay.

William Walljasper

it’s so, new. relatively And

particular leaders so, this And about we in were area. the are they excited

move half the them inside to excited the year. forward on in back of the the price optimization partner are and we So with testing store

Damian Witkowski

that comes Is channel with convenient any exclusivity or? store that along there in the

William Walljasper

about obviously sure Well, I agreements. we’ve signed mean, I am not exclusivity.

of plan. them So, we piece value creation for the partnered this particular are with

Damian Witkowski

you do they in you up as a it Okay. positive of And draw do scenario the and you to will price price to markets. share? own do you Do their or as try market they go lose to you if certain think their move you could your it then, with moves pricing will are will lower along fuel than just leader think is the try response what from to competition? what sort they where where be the, think new optimization, lastly, looking up can the a be I mean,

William Walljasper

time, moving and part, of market an this, a standpoint optimization guess down have the from the area advantages think dynamic ten maybe would move some it They up, category are it’s little of I that’s adjustment I they – so bit the would that the about that would some mind, stores where think the in the strategic in of sometimes would they one have at area. C have moving over in of in I make two-thirds mind, will most will point sometimes optimization fuel to from in and they less. operators stores I keep the would I operators and make our upwards. in the have of we advantage forward. not different for And react how But But the some market-to-market that of one say sophistication or price point upward. of Damian, operators perspective venture a an will smaller we price moving price keep advantage say,

Damian Witkowski

you. Thank Congratulations. Okay.

William Walljasper

Thanks, Damian.

Operator

line our Thank you. Markets. is Irene Nattel question And from next of of Capital the RBC

open. Your line is

Irene Nattel

morning, questions good I and may. Couple Thanks if of everyone.

William Walljasper

Hi, Irene.

Irene Nattel

Good morning, Bill. Good Terry. morning,

more markets, foreign Any what markets challenges differential obviously, the a performance, are of in or the you at some looking are Just, going that you versus macro your income. perspective from into? performance newer established seeing with in

William Walljasper

bring I seeing, outer ahead I becoming in are of and the you overall perspective is are economic I that recognition of an territories. some volumes the above to call stores That some have that function as expectations. we you some our performing rim outer categories that relative total of our outer of the the if those probably believe newer Yes. is say, of mean, territory, this, primarily we guess, to brand certainly that across we leads same-stores – will of stronger our that been that were continue would from penetrate – outs to some strong that That’s one I would a the markets reported. noticed of newer the the the stronger us

for encouraging so, us. that very was And

Irene Nattel

what That’s helpful. some forecourt to of of kind those you backcourt you. seeing from in And, really conversion newer Thank are markets?

William Walljasper

we don’t program, better out fleet upon that moving connect and Right to out We is, and continued comes answer challenging digital a the that very to get a can’t the It’s that I and in and at the then customer that forward bit credit really now, be at the a for transaction until running. those. and up little play that But dynamic. have transformation roll it’s to card and say position in traction point. in pays probably digital of the program, loyalty and roll card identify of cash will much for for tell with this reason we hard answer, with Irene then an clears particular item. their concrete the the pump us we us And

Irene Nattel

That’s really you. Thank helpful.

William Walljasper

You are welcome.

Irene Nattel

back that the and customers Dunnhumby, of to then work to enabling analytics basket doing Are of coming And around really within is be things lot really, also with context you specific to well you of going but effectively well? all does kind the get without. Dunnhumby, through that classifying as Dunnhumby both and more really program, of loyalty

William Walljasper

the at gain. Actually, the that’s we looking are that of the day, to Absolutely. information end

can new demands we to the So really traffic. upon and take preferences be customers customers’ targeted a and drive to play marketing to able level to incremental

Irene Nattel

just great. helpful. one And may. question I That’s very, That’s final if very

the smokeless excluding category, other side? tobacco you seeing on Within the e-cigarettes, products what are are

William Walljasper

a is whole. it traction I cigarettes don’t well have a specific now. gaining right But, as certainly number above

three other very all which well. And some like tobacco so, those for when is the as are the performing at you Juul category, as well other, instance, obviously of cigars, of the look e-cigarette,

Irene Nattel

is you. Thank great. That

William Walljasper

welcome. are You

Operator

our from of Chuck question of Northcoast is next you. Research. Thank Cerankosky the And line

Your line open. is

Chuck Cerankosky

Nice everyone. morning, quarter. Good Congratulations.

William Walljasper

you. Thank

Chuck Cerankosky

the gallons percent for that? an controls? Bill Terry, are are is For in to sensitive the price aiming it better me program optimization Can you gas this aim stage, comp more when margin right you good got how say, instance, a and you in using are to and you decrease half now and idea for, at give point? what X.X% or of or were this sensitive able

William Walljasper

commentary. So, the that in of Terry that’s that pilot store addressed part XXX

is, pilot with results are tell going you, we of right is get to the have things are every seeing downs the from that So, can to now, quarter some we I that that and us to very sensitivity. margins. respect ups enabling preliminarily

this the more year and make adjustments, that we or last relative to movements quarter more as we mitigating margin. price so, of QX downward last are of valleys for instance, And the

course again, very get this so, dynamics the over be for to the identify are to talking see to you particular at we the that But look clearly targets about, particular pilot. as that of that each the And we will store. program

Chuck Cerankosky

so the the glean you beyond to are pilot But fleet? some in some this remaining at it stores. Bill, you relationships extending it to point applied XXX stores, are this effort from that of a trying

William Walljasper

is answer – short is yes. the answer The

that XXX And store there. are pilot, so certainly trying outliers we identify to

have pilot the number identify might of We forward. regionalities to be a better different target in help try around to or areas where that to moving our opportunities to network that us

three continue the we half probably, the months. back that start that fiscal out of will over as to two refine And towards the so, And next, we about, year. then roll talked

Chuck Cerankosky

in-store And I have affecting your it’s would how on eye traffic. conclude, at the same time you

William Walljasper

Yes, absolutely. sensitivity That’s a for us.

inside obviously, have want any to we the So, degradation volume don’t store. of

we look And fiscal so, you inside if quarters, fast-forward robust few year, and it’s actually movement, sales movement relatively pretty we at softer. the you last gallon are And probably and have where last had little comparable. to you of noticed, a Chuck, QX go same-store at bit look QX you back and

we give us anything at point. not this seeing are So, would that pause necessarily

Chuck Cerankosky

All right. much. Thank you very

William Walljasper

Thanks, Chuck.

Operator

question of the Company. Lebiedzinski is Instructions] Sidoti [Operator and next from you. Thank of line Our Anthony

line is open. Your

Anthony Lebiedzinski

Good thank questions. the for and morning you taking

William Walljasper

you? are How Anthony. bet, You

Anthony Lebiedzinski

yourself? and Good,

William Walljasper

Thanks. good. Very

Anthony Lebiedzinski

good. Very Okay.

I as are ask to to far planning any prepared do wanted if just price as additional So, foods, you increases.

William Walljasper

Currently, plan any the we the half don’t back have for year. of

we about planned. will decision probably come But right if that nothing opportunities. see is think I now, there

Anthony Lebiedzinski

Got it.

Okay.

of have fleet cardholders. to was how so up or far earlier know new the mentioned wondering you have many just I customers guys are you signed So, these that, incremental you X,XXX ability know to if Casey’s. new

William Walljasper

represent to accounts just so, cardholders. XXX have which over X,XXX roughly clarify, over we Yes,

we answer on to question, don’t that. exact your information have so, And

ask process, of General However, as or we information during they to whether application Casey's Stores. are current for the customer do a

earnings along card. at it’s transitioning incremental roll are of that point, up So, expect some over customers as get incremental. this, call. that, roll have – this certainly and your do the some we further that taken it’s report well to be out we detail of to going fleet most current to we But expect to we next on with that will the But,

Anthony Lebiedzinski

it. Got

Okay.

So, you are capturing that data, okay.

So, perfect.

was big Powerball these know stores? of wondering, your notable was lucky Okay. there if jackpots because Mega October, actually traffic impact one I the stores the Also, - to of the ticket. sold I was Millions just in on any your and

wanted to well. just as So, ask about that

William Walljasper

gets to reason to You there as is, times XX-Q answer that there. a to for are jackpots. correct. called actually large that in traffic your question foot going see more level, store. Many The it did jackpot to though, are pretty buy you out just Anytime Yes, We had into coming yes. those are we the some tickets. one a they we have

there. so, did And have in definitely traffic foot

And so, increased related and noticed you that QX-over-QX to look tickets. at the on category, the that was if probably you commission that’s other up sales lottery

Anthony Lebiedzinski

it. Got

Okay.

tight how as so, to store your store labor qualified market count, you find right expand able in now? that continue we managers are guys the are And in you to

William Walljasper

that’s all people been are for type I’ve at always the has to market been stores. managers time some and – been us around No, a years spent then in as I’ve find store quality human what XX and entry-level that’s challenge and resource conditions the matter quality no

it’s training And initiative transition. much so, a have always robust challenge. to a help more that We do

that. for will looking to well. to that forward we the at inside as focus a we are current times move at team have We that But close our continue now us. be area that in by stores well dedicated pool, and do Lot as manager try look and recruitment always system of to

Anthony Lebiedzinski

about Got share it. And lastly, how think we buybacks. should

active not half the expect Do did shares in just any you purchase back of to You this in quarter. XXXX? be fiscal reported

William Walljasper

the noted and areas invested on purchased is trailing that me. in we any continue excuse anticipating the analysts in – So, are shares focus one are is roll we you buybacks as rising certainly That’s upward. the Several traction. as QX cash we months we of to out In XX did have of not have, that not of share We also QX, Currently, return QX. correct. are any flow gain well. to free currently additional moving capital

was So, these authorization. as and to trajectory. still continue other are But reminder a areas out of that focus we there that two-year like have a we authorization

Anthony Lebiedzinski

you and thank best luck. of Well, Okay.

William Walljasper

Anthony. you, Thank

Operator

is James. Ben of line Brownlow the question next our And you. of Thank from Raymond

line is Your open.

Benjamin Brownlow

for morning question. Hey, thanks taking the good and

that healthcare previously and anticipated approach plan as reevaluating mentioned the year You program? plan the calendar XXXX. to we there change benefits Any or

William Walljasper

Yes.

rolls So, year. calendar on healthcare plan our a

are just rolling the up calendar We enrollment next for the period.

will report some on the some significant plan – will call. as back of we dynamics potential into a did that once that upside we year, We make up, next the next get could certainly for in that maybe move this make to the fiscal us of half we more the So we year. primarily have changes for

Benjamin Brownlow

Okay, great. And just want to number. one confirm

and X.X% previously down cut it cuts, I correct? think hour is you was excluding that labor hours the said to and the X.X%, delivery is XX

William Walljasper

yes. Yes, that’s correct,

Benjamin Brownlow

Great. for Thank Thanks you. that.

William Walljasper

you Yes, bet.

Operator

Thank our to remarks. over back would Terry session question answer for you. the Handley, Mr. like I does CEO that turn conclude closing and any to today. And call

Terry Handley

creation growth, revenue profitability like accelerated would improved our would I design of and plan. you. and long-term and This thank the will thank you. everyone Yes, capital by a will be actions high our position growth driving through for record believe combination on value. like Casey’s reiterating call our to allocation that We continue key initiatives, this these initiatives. prioritizing disciplined return shareholder close done joining profitable long-term track Thank morning us through for focuses value to the to strategy our of strongly

Operator

gentlemen, This thank today’s for conference. conclude you program. in and Ladies the participation does

a have great disconnect. may You day. Everyone now

Casey's General Stores (CASY) 11 Dec 182019 Q2 Earnings call transcript