Casey's General Stores (CASY) 12 Mar 192019 Q3 Earnings call transcript

Company Profile

Participants

Bill Walljasper	Senior Vice President and Chief Financial Officer
Terry Handley	President and Chief Executive Officer
Karen Short	Barclays
Blake Anderson	Jefferies
Chuck Cerankosky	Northcoast Research
Bonnie Herzog	Wells Fargo
Paul Trussell	Deutsche Bank
Ben Bienvenu	Stephens Inc.
Irene Nattel	RBC Capital Markets
Kelly Bania	BMO Capital Markets
Anthony Lebiedzinski	Sidoti & Company
Damian Witkowski	Gabelli & Company

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to the Q3 Fiscal 2019 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. If anyone should require assistance during the conference, please press "*0" on your touchtone telephone.

As a reminder, this conference is being recorded. to Financial host Officer. like Bill today's now Chief Walljasper, would introduce for your conference, I

You begin. may

Bill Walljasper

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

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

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

Terry Handley

and everyone. Thank you, Bill, morning, good

you one-time XXX% for As most to tax primarily up a margin of operating diluted in and up year. when press a have were ago benefit the reform, last XX% from seen driven $X.XX, results The to to due quarter year over benefit compared per third last effective to release, exclude over tax $X.XX control year the earnings by you were third quarter to the share the the stronger reform. year-to-date on compared one-time fuel excluding and $X.XX expenses

creation This third to dollars of the gallon fuel effort, work from environment, the of achieve well of X.X%. the our in execution I profit to now are with these fuel down related pleased fuel per store gross fuel ago. operations XX.X% gallons quarter and to as schedule the our was value XX-hour efforts. dollars. plan to later previous strategic reduce a $X.XXX gallon very drove compared like same-store year are with of I margin number decision gross were Approximately optimization as the locations average Same-store the of our with optimize continues sold summarize progress fuel the We us and our X% the categories. a to allowed same an a in period margin for and increase the the some quarter category the team decline combined this in of In will would results category, retail to our to profit each commentary. with favorable share on and in details

XXX $X.XX same-store also In gallons, retail in the addition, sold per price Despite the resulting the strong total nearly months. in to traveled was gallons million, demand XX% experienced fuel nearly previous of X.X% due The decline for $XXX.X up gallons primarily an dollars quarter million. XX down of year. from gross down. with Midwest increase $X.XX during of vehicle were year-to-date quarter X.X% average as softer the contribution we to new an in $X.XXX margin in from down were gallon miles the Same-store a last per the to opened stores profit fuel sold were to average gallon, in

our weather dollars Same-store As in same-store a gallons the are impacted we range. in have of in inclement a adversely softer marketing have result by combined lowered of our demand to our million February In part fuel range. optimize and profit current year large February X.X% line area same average below $XXX.X sold in period. territory, also with merchandise during our margin gross grocery our annual estimate. in The annual current same marketing continued efforts been in category, X.X% were sales quarter. third margin is in an up the the the annual Same-store to a total up from period ago the average with other XX.X%, sales were below of and gallon

XX category, was For up same period margin higher profit to an were The million. due category margin XX.X%, $XXX.X other and year. well X.X% same-store up nine toward the as year-to-date were in primarily basis items optimization. increase for a with across dollars months, points the shift merchandise the from the to promotion average first margin last X% grocery sales up as quarter of the mix Gross product

average XX.X%, prices. for commodity up primarily million up to product from for Same-store to end due increases, sales shift, and our the prepared are guidance. to In strategic quarter were annual over sales were third XXX the For February the last was sales quarter. third up the current of the Same-store X.X%. category, food The basis year, quarter the total and fountain mix price favorable gross points $XXX.X X.X% were margin high X.X% year, profit trending at in dollars $XXX million. up

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

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

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

impact total up are operating reduction Excluding pizza X%. delivery the Year-to-date down XX-hour X.X%. and approximately the same-store expenses from were of hours locations,

lowered this in As area. a guidance result our of our progress, have annual we

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

Bill Walljasper

Terry. Thanks,

up to effective was in expenditures of this was revenue down primarily to primarily to was same tax stores the $X On a the quarter tax to operation The the in prior Depreciation over of quarter year. growth due increase in quarter the months. The Reform effective due slightly past capital due Act rate in decrease for the in the in Tax a retail rate increase adoption the the income an XX billion, by the statement, X.X%, to the was quarter offset number the in fuel total period prices ago. compared XX.X%. for year

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

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

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

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

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

Terry Handley

you, acquired Thank had the nine at opened we the additional XX stores. XX and our beginning have remain was future stores, in least agreement to fiscal growth build our of Bill. month including pipeline, stores mark, under year, to for purchase. At Currently, additional stores, new well-positioned We under XX target the XX XXX At stores stores store acquire XX construction. XX have and growth. we

We target. overall are on unit our track to growth achieve

of However, may regarding a new store inclement weather, have now May. creation over handful constructions an update like to roll I the plan. provide the would into due value to recent we

digital controlling fleet price platforms drivers, card comprised as As a of several a optimization, operating key new suite our expenses a focus allocation. the of a plan and on long-term as programs including customers, is retail capital continued program, new well multiyear, for and value reminder,

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

We the October. launched are adding card results We XXX will have we of new cards several with in fleet with key accounts new We new had quarter. accounts cardholders. with issued. over currently have Early that and completed I course begin the last approximately card the fleet milestones on X,XXX program. program late the over show target

end part, up year. toward expected of of ramping the However, the timing in the the we utilization these calendar of to than due, is cards slower launch the

for to out new expertise continue with strategy. card build by as new continues about providers Our We fleet leverage we the rollout, their campaigns potential members engage approach overall program. partner fleet the this well as team. card part to universal fleet card of as remain card ongoing the marketing optimistic of of our utilizing sales additional In conjunction an their to

fuel changes margin XXX other converted Diesel, the to biodiesel. combine the to optimization the us which Year-to-date, our creation completed key converted optimization new gross the our We XXX network. network we store, to in to this conversion third pricing products. these at leverage carry stores throughout pump our stores rules-based market our of categories all broad bringing our a have total the positive a to fleet stores will will and card impact decisions we plan. anticipate We execution also is to fiscal our overall to in profit across year dollars all quarter, value fuel In addition and the with higher XXX. product fuel generated This data centralized fuel will during than improve forward. margin by fuel allow have plan. more sales believe program, another premium Price going we data make premium to program of biodiesel,

and QX would we grocery optimization began pilot the end by of categories be in in for the fourth of finalize all foods, rollout February platform our quarter. and phased the used continue as the broader stores scheduled and in pilot, inside category that completed prepared stores Leveraging the of identify a a program price this fiscal completion occur in the test fuel the of have and price to rollout The scheduled Dunnhumby price optimization began the to for QX through We optimization advantage recently will the 'XX. began help price utilizing fiscal with is to year. which

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

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

our to last quarter. We digital several progress and with over key the reached engagement milestones program have continue

integration the the the targeting acceptance we the We systems completion our development during of middle are and have currently in to e-commerce of Upon of a site new user completed platform are testing, quarter. launch testing. our fourth successful

providing new a customer e-commerce, digital QX the are Pending will will fiscal and both to app and digital develop program to to we of additional customers including loyalty platforms customers, experience, customers seamless these in This the will promotions of for new our outcome and these continue of platform create in pilot value of platforms fiscal of that platforms The planning the integration of to allow online in pilot, store, gain QX and visits. understanding better better will drive facilitates the 'XX. 'XX. We mobile and by expand rewards. a capabilities that them target-effective us digital customer serve our personalized enhances and and marketing suite

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

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

your will We questions. take now

Operator

first is Barclays. from our Short And Karen [Operator Instructions]. from question

open. now Your line is

Karen Short

on questions couple your guidance A the for quarter. fourth guidance. I Hey. guess, implied your

wide gross you So, very as in I dollars well realize February of in quarter. sales category, was choppy fourth terms as a the by profit implied range, but have

talk So, maybe that if could you just bit. little to a

Bill Walljasper

Yes.

range be make on that have we discuss We the as we fourth finished. we range. had the currently on same decision outside process ranges, still the felt, based thought changes, to those outside the to obligated happy we any of of were range. there. that's of range, mentioned spread, to some specific like a the but So, you'd kind we where to of chance forecast we quarter, that you that if we those the in area felt And adjust -- felt I'm kept if the

Karen Short

$XX prepared well at plus, looking end, in getting I the that's Well, gross implied range, gross high I'm easily, range profit. to low as guess, as dollars I for million mean, the profit grocery, in food, specifically,

would So, give great. any color you there be could

Bill Walljasper

Sure. Sure.

start me currently. merchandise and where we're general and kind with think about Let of grocery at

are So, of guidance on upper impacted mentioned, the February. by That was, mentioned, on sales. Terry adversely as current we the trending currently as he same-store end

area here You very in month our market might severe we recall of in had February. that the some weather

we on the and margin quarters of we a very of fourth calendar us easier April third general ago the some margin to respect merchandise, be the lower severe we tend quarter some to because With year, typically, for weather. grocery quarter inclement and side have our had an seasonality. based that do the remaining head comparing As part year against comparisons into are

year. pizza to roughly at didn't that's the until the probably trending I that well. most by really the foods, With so though changes making can impacted you we're that that adversely weather start category, end respect in on and was particular give mind, March guidance prepared as low category. even And XX-hour the last we Keep of delivery again,

that lower think Obviously, the by the be comping April in in to margin due And still being We month weather of as against a adversely in benefiting are that same-store still it's are ago. in the a few took benefiting back one, so just well. months. May prepared pattern And, impacted we'll some foods, I reminder, several we going we're We us. price year cycle as that here again, the things. a to increases have from against numbers

in donuts also of took We month July. on one the

commodity know, from As Karen, you benefiting probably we are costs.

cheese. We us a we the spot We are to market us believe will on not conscious the the locked well. and in decision on benefit to benefited our here has made that fourth quarter buy tremendously in as in and third continue quarter

still, look our in of as helps. opportunities a we will at We portion to Hopefully, however, move that lock continue to forward. cheese

Karen Short

for have grocery helpful. that comp I the test, store, the that's just of terms any sense the pricing of of And then, what pricing color you in quarter? Yes, done the inside a And items or on the in how give guess, terms test, might then are many can in-store in this

Bill Walljasper

price the small you're didn't any price off kicking in just, the test impact optimization The store month pilot have think the about really, really I store. Yeah, was inside in that's optimization of really, a talking currently. Yes, February. here

about plan, so QX. piece impact value creation small might here we When we impact products optimization head we And of a to we that do into in that off There kicked XX% be going roughly the first some no price we QX. the when test, would as It's however. be started. indicated of

kind that's would get I around so And your head of where probably it.

area, then rolling about be wave initial roughly and in will items QX/QX into the more XX% in, more first The store. and

Karen Short

year, growth question. think about And thoughts so next Any are how there then preliminary on parts? should that given just we moving many last ex op just Okay. Thanks.

Bill Walljasper

the planning Yes. fiscal We're process every the expenses. to currently of in with operating 'XX business, including respect aspect our

X.X%. in we've Terry As labor totality, The strides out a of in mentioned, made areas. the great of was some called hours, down, one number he being reduction really store

don't cycle we're of year to we over that's mentioned, so, X.X%. to that and you he fourth from kind going it you as XX-hour/pizza we're as as if reductions roughly where trending the for but, exclude far year run delivery that creation rate, into into focus quarter. this I And obviously, to move area the really, about us as at point is information to part it's move of Now, give X% because any have 'XX going a be as we ago fiscal the a fiscal out key of value that the plan.

Operator

Thank you.

from from question Mandeville Christopher Jefferies. is next Our

open. now is line Your

Blake Anderson

morning. for Good on for is questions. Chris. Blake taking Thanks This my

think of in-store I had traffic categories, and on then, continue about like split First, a tobacco. do you the Did give beverage more mentioned on quarter, those any quarter? for comp versus quarter? to generally, little talk other the the grocery, can you during bit packaged drivers just ticket And last you in strength any some can well?

Bill Walljasper

help Yes, I'd be to you Blake. happy out there,

couple all, of other merchandise. grocery the are a and moving first areas So, in of that

exactly of to go FDA the year it popular the is but that We the sure that an moving The popular. product for has product into been the very would last fiscal exceptionally in how the First us. be half one Juul talked forward other about the with weren't successful. we quarter, to into very tobacco all, category of continues be quarter. Coming that regulations continues back

us. demands. Also, customers liquor, comp. areas that particular So, been selections in Those Changing adding of up that a successful racks very wine made for different the have been liquor our well. match their for extremely is for areas the have and some to call-outs better we Those the moving out are changes doing wine there. significantly to couple

traffic, to traffic respect so with the really, ticket. there, question your of half it is back it's as the as much far not As

down bit count same-store I fuel this customer That's issue. single low to exclude prior a we're inside say the As consistent. quarters. really we're little and you When we tracking more quarter digits versus store weather for been quarter sequentially the other of a relative this quarters, commissions It's relatively purchases. look at down consistent, when

And margin that of in pleased so and really revenue to light drive that. we're

you So, Blake. out, I that hope helps

Blake Anderson

you're you. gross thank seems you the in then -- progress data question in And obviously, Yes, Great. Any terms my of, good on more growing last can like dollars. share it of is profit side. terms fuel making

can getting where commentary more expect to comp any cost in terms per fuel that the closer right are gallon? on you we the to Just balance finding go versus of

Terry Handley

Terry. Blake. Yes, is This

question. general, optimization and we fuel, the versus as BI we're working make particular Let for at shot operations dollar and me volume profit that pleased with price are at in team that fuel. maximize team markets the our very to you In finding a Nathaniel gross our team borders, our look we're Doddridge outstanding take terms in if his order job doing an price store format progress. of leadership sure impact to will, those from in in

we is rules-based disciplined there. as optimization we some well. margin gallons to strategy very can in and dollars more So, increase where through fine-tune price increase and what category we pricing within from we profit can to as have Because, continue other know our areas of day, we price the we're opportunities options in that really here here the trying efforts confident work we through markets gross to know but drive continue also do the we out the optimization at on we roll end feel we'll remainder will the fourth of quarter, the

Bill Walljasper

going Bill. perspective that, give just a just I'm add Blake, this of fuel. things some couple to is around to to

he But excuse the the as in about mentioned. piece -- Our were being XXX they market X.X% the store in impact a of we the or, roughly roughly out weather something in basis call comps, down month being you January. month same-store Obviously, piece our adversely inside quarter, about points. in did recall, did me, XX-hour gallons have area. but called polar That not only fuel might of vortex January, the Terry the

anywhere When relative the you respect of from comps traveled, to at That's the states is look have to the a the they're Missouri, data at you only area, least in of basis. The and month VMT we point. from to miles look Iowa, other down at that X% vehicle national significantly when are down in X% core with updated our Illinois, at piece it November. the market this

But up in there. the are and on we coming up that stacked headed that. a So, category are the direction we X.X% think two-year right we basis, we're against in fuel

Operator

you. Thank

Cerankosky Our from next Research. question from Chuck Northcoast is

Your line is now open.

Chuck Cerankosky

morning, Nice everyone. quarter. Good

closer the Terry, Going is when extreme the back of fuel gallons of to due $X.XX the obviously, negative sort the gallons is and that be But little of we you speak? to what Should the kind optimization, to plus borders? and gallons drop look third about a in per at that going so hours. profit reduced you a mean to fine-tuning gallon, or together, numbers extreme? by Maybe positive the see of those less are

Terry Handley

look in I to Chuck, optimization in opportunity, margin. If product steady totality. gallons and within need of it and the forth, optimization, other fuel Well, well balance a can price we which elements the see gallons fleet as we our at than opportunity, margin. But increased 'XX price but optimization, of as terms strategy margin the would terms we beyond, fuel price more to card we remember that in think, influence there should the need to just certainly, optimization the include quarter-to-quarter, believe so several fiscal for are looking at we're only not strategy,

As can you see historically, know, gallons. you in fluctuation those some

last up back month you year, and of If and X%. a the X.X% the in third quarter compare for to look gallons was same-store increase quarter January

on that in what market we're to market. that every looking so, going will, doing if those And strategy the to going a we're in to market gallons approach, a we're more as going understand And you basis. of terms look every so is in for margin. And work as well by balanced is not at

market, that within also but other not strategy on the of so make time sure markets. are competitors only knowing we may some to the And competitors, that our depending rules in we'll to to understood what reaction take each change those those rules

some in the in that future. we're what near point hope at the would day, gross and driving I going here time, that, that, think certainly from the starting to very short, we're for of see in of profit is So, results to really balance end the I QX. we're find certainly, But dollars at

Chuck Cerankosky

was from significant fuel during impact the product like and mix any improving there lines, the quarter, more biodiesel premium? those Along

Terry Handley

probably fiscal I and until complete rollout into wouldn't we see or coming next transition, that year, as QX this this Chuck.

we'll So, I'm to that talk about detail in QX. greater sure have

Chuck Cerankosky

a for Okay. you. And, Bill, question

Looking at the last yet quarter what looks pay the with of the year and with a cash piece flow, share what to budget regard capex repo come? like can and big you talk debt about of to down

Bill Walljasper

Yes.

So, to certainly, about stores here have of We back the fair the half of there, think a a couple of amount in new do year. things Chuck. open to

So, quarter there in us. crimp on the generally certainly cash that through for fourth But, quarters are capex put the speaking, flow cash lowest will QX coming be some will flow. QX a and the

back into the we year, think cash in are this were direction. making of do sure we we fiscal have of we'll lot and, of I fiscal fiscal certainly, we're kicking that year off for one mentioned, toward fiscal as on free into focused coming year flow we end for ahead, positive is next that things year cash the But, flow. be that the out as this things that a here look Now, and heading I

did it So, this time ago. factor, year unfortunately, can a of like year, just a weather play

Operator

you. Thank

Bonnie Our from is next Wells Herzog Fargo. from question

now open. Your line is

Bonnie Herzog

and about, to goal gallons of circle of balance maximize about gross sold were talking something to you're to the a Hi. between trying that just It sort a you fuel strike follow-on your sense to makes dollars. margins. right lot profit back certainly wanted I question

that you little expect confirm love I a going of in but forward. first, you or progress stayed to context it I'm So, a wanted bit you about which I pretty increase comp maybe then, how guys in under into has would because thinking work that be And to growth, prepared food balance for the of conversion better a think to still hear second, asking to, get about your I'm pressure. that's this stores. trying

Bill Walljasper

off there. one a in certainly, kicking that it process certainly know here we and We will of balance. kick yeah, fuel to that the just trying I'll Bonnie. is tool off are strike work be find progress, and this advantage a so that price right Yes, optimization fluid And,

The talked to us flexibility is that really thing other I about that will some balance in say we any -- it call haven't procurement. -- yet degree on think great I and this would allow is

And on opportunities the just procured Director have in and so are fiscal optimistic looking had benefit Fuel change next we that year. We Procurement fact, think a historically. move there there be a of way fuel brought -- as really recently so we to to at we we're that into we is

part fiscal of that's so And I planning previous 'XX that process described in a question.

and bit So, I think little of that a that will balance. help us strike to maybe flexibility

conversion, point, store. fuel very movement inside this dynamic and respect were obviously, degradation that balance and to the any on relative same-store your with we category store to cognizant to inside the gallon the So, about in

had be but by traffic any positive. seen, this degradation not have you That's obviously, to As same-store haven't sequentially. numbers we our necessarily point here traffic in at really continue driven

continue then QX to that can that year. as acceleration prepared and the anticipating to fiscal to next QX, that I digital into balance going the for that off about continue in we talked as so sales kicks drive foods we're as same-store substantial growth are we prepared And you see. to certainly, a we transformation Terry tell long you that's With to that, direction, alluded food Bonnie, to respect look comps,

Bonnie Herzog

and has for Okay. pressured of for think, the that about kind that That is Thank because certainly gets margins. has you you've been the drivers and of which certainly prepared then about that. into of SSS increases, been them helping, I I'm foods price my question next talked your thinking one

much, your pricing how you've that on I'm the So, do line. factor top has area that's in to the taken just opinion, of been much think of this some in think sticking? trying through how you a been wondering

Bill Walljasper

Yes.

as elasticity think is as think at the don't -- overall termed products it. result think any the have price in answer are for the seen point, very those price a increases we this increases. and you answer So, they been We've selected sticking I yes. I of our deliberate we've that

We we and the other opportunities new I at there's store. look 'XX if next opportunities key in process year year fiscal in planning we prepared will continue to more digital on for to But increases really from foods loyalty finish any think driven mobile acceleration next the products comps in as fiscal the is any see price transformation. anticipate the whole

Bonnie Herzog

guys guess your want you to them. it's since around long-term a then ask been Okay. did year set targets. And about I you I

how is about confident now hit the how are stands feeling And you that you're we're talking you're what just from prepared wondering wanted that about to thinking. me, I guess, the target them. think still you're going XX%-plus 'XX. I FY a those the to you for which out of comp now, one So, is by food targets, right right one I get sense

Bill Walljasper

great no, No, Yes. question.

we grocery, prepared our And it it and on give a you guidance X%, with of that year more X%, really put you'll comps post so do to what the categories XX% respect fuel, kind to pretty was here the detail three creation to of the really, call the as us the and foods. respect With and plan, at major guidance out, a of bit with had where and that. in we limited business talk we're hear value about we are, earnings next head into little rollout and call, I'll

foods. XX% the specifically prepared about think on the talking is you're one I

a sales that So, sure would we margin play out more be we that because optimization take exactly take whether a about a were where of would we year will look when a of play. ago, put or at more same-store price us, hard those not

the as see as than may the of less further a may we in anticipated. that gross perhaps still the gain benefit price anticipated down pivot And gain. At what to optimization, in we dollar growing we of so we're seeing road, sales more the the profit and day, margin because overall and end there get same we be business talk direction communication the same-store direction

Operator

Thank you.

Bank. from Trussell Our is next Paul question from Deutsche

now is Your line open.

Paul Trussell

to back And more next you team of circle you utilization to there few on months. of that bit over your just on I a can the you detail ramp made how perhaps and up focused give some is the comments kind just wanted the to about expect little fleet accomplishing what maybe card.

Terry Handley

With card, Paul. as the terms certainly, doing we program. at regards necessarily anticipation year-end impact, timing. the had fleet narrative, gallon and have the up, in the the new been, a turn might quicker some year wanting the been fleet Certainly, timing as over in end from we a customers the calendar have it have may card, of not said fleet This specifically so are may challenged. maybe, ramp is Terry. Yes, to been that the And of at to a being best

obviously, into However, the accounts of February and the we ramping, from customers. part of the to will, latter fleet the also great cards interest we're beginning gallons new with January of being regards issued. of seeing as those is card new fleet the the of what the that seeing if stated have in you deal of and we card, And are through the we what narrative, a number in number

set programs, deal the card regards them So, hard to we that necessarily targets as will fleet programs also we continue, growth that from have well. hit with I universal fleet to some may of while, Voyager, we certainly fiscal very partner by ramping work with And say such fiscal during that, seen a not directly and year, from WEX the would 'XX. see those as that as great we believe, we a end had up of perspective, we card

and will a takes So, there think as sales great of be that also that benefit this to certainly believe there's program off. here we inside still program I with deal upside a

Paul Trussell

bit to get Thank update we outlook for are on app, being would that. Thanks. the the And value of creation give of great journey my lot implement, follow-up digital design, be your steps, just utilize of program. in-store transformation. It is and plan, the you. how customer When mobile commerce just an and had analytics, to on was you on from there where the us digital in a integrated, update platform the original build, all a an Maybe outlined a technology little all outlined. that broad loyalty pilot, standpoint, ability terms you or that's

Terry Handley

Yes.

automization tell for this and So, is I marketing our is development customer, and e-commerce, Terry would layer. you complete integration the that

within teams on the development friction have some We points focused platform. are fixing that c-commerce of that

testing e-commerce also the month the well OMS during e-commerce our kitchen of have we with the during And we have integration an as April. of now finalize so month for we'll development And system and platform ongoing April. right the of platform live anticipation going

do And digital we there And we loyalty go that until So, look our go if at you are mobile that to why timelines within that's time, originally when we we within you we live points absolutely be overall well but this seamless program and not are had in But fact to are live, will, a timelines. friction as ready. we transition. and of are here we strategy, very you the some 'XX, ready. fiscal to live, the with go going will point very feel Not that we platform we to certainly haven't the probably in established. the confident regards part the you that ensure the app are when testing, early

Operator

Thank you.

from Bienvenu Ben from Stephens Inc. is question next Our

Your line is now open.

Ben Bienvenu

will opportunity, to the might should wanted results. how year the to or calendar at understand of point I or Just over for expectation help it this respect contracts in time happen we particular in realization the that the any year? in us episodically to the tranches itself course evidence in benefits? ask, start to see negotiate the So, fuel be or renegotiate procurement potential our able you with of Are what

Terry Handley

Procurement through of But, and Yes, suppliers, our Phillips she others within fuel recognizes very establish acquisition team in together. and has in opportunities members agreement working pulling well with some Fuel haven't the other well She had with February Ben. our to you month tell instrumental, I necessarily Director as current hard an been was already opportunities working and with relationships additional some here we ground This understands as hit a that as past. Omaha, have XX. maybe of very as we that the is certainly, that March. of operations the store the Terry. fuel that during in new market area running is we Fantasy's would into and

to this terms for a believe opportunity, us we impactful, going strategy margin to procurement our gallon continue for a is confident in that is up this are we but and us that ramp we'll in can not great be fuel be of to direction So, throughout 'XX. very fiscal opportunity, very develop continue 'XX and only fiscal

Ben Bienvenu

mutually and that should dynamic. noise process smaller I What And this as comps in-store Great. customer fuel happening back why the you've optimization not have to to gallon sure right. customer, you're is type the two exclusive but at to one look this are but are All Or the suggest those we're is about price this us what's fuel belabor they Is of as reduction as point, impacted? shifting then want the of help weather, Is if be? gears quarter, might you make the understand. that the not materially you're seeing in-store seeing what's impacted initiative? happening, fuel another? they kind fill-ups I implemented traffic understand learned Just excluding not meaningfully sets, from gallons, and from just I getting

Bill Walljasper

This is Ben. Bill. Yes,

the down. is answer gallons And so question, to retail your prices as come the per actually elevating transaction

with an it earlier to or think customer transactions. I respect comment traffic to back we comes that made

a this low in for negative of time they've year, During fiscal of the in single period the digits good and quarters. part been actually, and,

And specifically, to And the anywhere core of so it's in from vehicle miles that. part least of early quarter, we down so states, X%. of to, a X% traveled, function at our alluded in really far the more as are

Terry that impacted And of we just the back reduce that in are So, we're well. made the everybody think locations fourth number impact. again, that and as I'll also last an impacted the being having remind adversely to by we decision mentioned, from XX-hour that comps we as being still quarter that's

the we're shape So, believe right I the case. that we haven't good store any inside now, still degradation there we think and, that had in that's

give us next And so that we'll pump, will and that able insight -- off come respect on off be with behaviors market -- program year of fiscal to to the that. store their certainly the come we'll and customer tremendous here be play be it the into dynamics loyalty kicking to

Ben Bienvenu

Okay. just Great. one And that. quick follow-up on

increasing from pricing in-store been haven't comps particular, think ticket in food perhaps, you've impacted increases. that is materially? implemented prepared it increases. pricing is as benefiting mentioned the But category the why benefiting well? On a I as category, that, you was is as The reason

Bill Walljasper

prepared because adversely XX-hour I that's promotional you're is of impacting and and down a an it. landscape are category food across is be food customer traffic competitive yes, think being to Yes, also, continue category. so it we well. of Obviously, all our currently. then, categories the specifically part That's right. the so, of And business delivery part certainly, as exactly I it the in mean, impact prepared pizza and

can the head to to respect add we anticipate anywhere the acceleration the rollout certainly delivery. category mentioned, But, of And the you XX XX-hour/pizza at we transformation so that a you comps I in into as food basis comps, about. look when digital with talked from impact the respect to prepared as points XXX substantial Terry with

Ben Bienvenu

of and a competitive your that on profit question increases How thinking prepared dollar one up also that commodity And margins pizza, the food. competitive? commodity little that is you cost bit Great. think since about I it, into categories final particular, pricing are were is Okay. for and costs. certain The about you balance where focused tactical of nicely that in lower you are lower particularly lower lower reinvesting in part gross list about about advantage? help category prices you using landscape growth. prices how mentioned Can you're there us know but to talk Just

Bill Walljasper

this Yes, that's because too. insight, fuel do also to side actually, has good the with

does customer this from prices see we maybe due variety some give help margin -- commodity pricing of movement. lower a in gain -- areas and case, to us As promotion the it flexibility to on drive specifically some

what respect to specifics intuitively, well. have have take. is direction a as our know done I that can't ability gain market with as give that's I the when that any they that but, we I to you regard, you So, in working that team think with to

look And to those so for we'll opportunities. continue

Operator

Thank you.

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

open. now is line Your

Irene Nattel

Hey, guys.

give this you on what's a speaking, talk you about competitive prepared when foods. going up talk And the an so of could they continuing to gas general margins, bit can about just sort the side? in that you table of the Just of little everyone a kind up? does a favorable it through, on that's intensity merchandise, give broadly please. just on talked in on just that, thinking so you're as environment afford vein, little bit bit more there's If gas little to because kind well Can about in much as more

Bill Walljasper

Yes.

be of our and of quite fuel our So, it are would market competitive stores have. "giving technology the not would have optimization for two-thirds operators is up," dynamic The where there about forward not restaurant would probably, I some think but dynamics form category in of more optimization, higher a the food fuel But so different when for think and competitive. I'm certainly, relative is the optimization. interesting margins, XX with continues our at But prepared flexibilities be have prior anything particular the The a but, will I don't the less, as that be that characterize we landscape. the aware because can to competitive price when are to I know about would just I don't be if continues opportunities think price industry this certainly pricing I competitors make. in I area, you think unusual competitor of will when competitors, like an competitive you landscape. that's of us they always, of or because price look a one quarters quarter of serve of from been third the accelerated think quick to there market public. being going them, many larger

a do of direction. operators And loyalty may with go even day-in-day-out program, to Coupled though we that program, up most on the we that, compete edge when not. loyalty an competitors Irene, have small many against so we that our I large have basis the a think of

think the so we're why into rollout the fiscal this I about year. programs So, next of as we head optimistic that's

Irene Nattel

Yes. that a makes certainly, lot mean, sense. I of

last talked Just a you bit little traffic-driving about of on categories, the e-cigarettes through and one. key on call this thinking kind

is tobacco just of and what's happening could that think looks do terms behind what experience like in on core that? of you kind January. you calendar update If penetration. strong also was there us you in it and But Did QX

Bill Walljasper

Yes.

So, cigarette tobacco me trends. are sales of some still changed I our XX% mean, still much. just really That about let hasn't you we Roughly metrics. -- in give the pack.

dynamics grocery and I as that say the is, One of the quarter, comps reported, general third would our in X.X%. we merchandise were

course If over you exclusion exclude been cigarettes about this roughly That year. has X%. out fiscal of of you're accelerating the calculation, that

very to helping think, the I other To So, the of grocery that's that merchandise, Irene, tobacco be here core continues the things is recently line. general and drive the one in your solid. point, business,

the popularity And profiles. though on to earlier, as here flavor been from with wane popular. quarter that some very Juul not so, specifically, last It alluded we to out has seems they even regulations came product,

to very get your Did all answered I positive And continue so for that does be questions us. Irene? there,

Irene Nattel

actually think you getting when at come Yes. look in have of from When that the the just that's the follow-up products Juul. it Actually, as different. there slightly profile relates helping today? you those do I just purchasers sales it's a store of buyer, some your ancillary sales to Juul more you're And

Bill Walljasper

Yes.

mean, I that there regarding consumers product. but think our product incrementality so I think to things. I think the from think some also in over basket product it's that seeing you I of And a particular switching in some there is so, doing high-dollar that is of and pretty up ring. couple I that's a cigarettes are picked

Irene Nattel

inevitable of need users fill that your road out, one card just question, kind really are their to will cards that it the they come of volume fleet simple? they've Is card. on Is they a I the the got in once Thank may, Understood. finally, these roll this and because just kind on now you. of the then, matter if it's hand? of And up and

Bill Walljasper

would they Well, have it and as go disposal. simple may that I'm I because quite not describe cards sure fleet at their other

I of to helps well. provide continue holders. Obviously, a those in on with just part, And the in to level right them. think effort that getting then having the our entices marketing that cards continued it's discount locations partner, our conjunction as right continuing,

continue in well. which he like WEX have Voyager, the acceleration touched cards, seen be them card communicating Now, card, program universal as fleet Terry very on and with we to aggressive fleet mentioned, other as in the and we are and

gallons quarter, in And quarter, third look single are time see a same-store at high when the at in gallons fleet so you to anywhere the digits. period and up when our third even we double our universal digits late negative, the

encouraged so on And roll we're we're Irene, card is kind is of certainly fleet there universal a having that. program of so part big the that this some a timing And really have overall in that this fleet by gain card about down, that. and issue It fleet card we out. comes talked with

year. was As the Terry Maybe launched mentioned, calendar the impacted that year. half back of by that in we

it's And of maybe benefit. we that a receive so issue just when timing

Operator

you. Thank

Kelly from Bania from is question BMO next Capital. Our

Your now line is open.

Kelly Bania

about the ticket of as improvement traffic from think more or comps, the and in between digital And, in you you an Curious categories. morning. each improvement ticket Good in substantial the go in split in-store you driving on if bit could that a particularly, detail expecting traffic initiative? transformation are little

Bill Walljasper

Yes.

We in roll side that the out. as we are lift that anticipating traffic of a

about happening in are to what's question currently, answer we specifically, your ticket the traffic. the lift I seeing a Now, mean, to certainly, relative

has quarters. As last our in slightly the been traffic we here three mentioned, off

as we we but items some more are three maybe that what found of the of are gaining that or have so are one buying dig is on some or items. And item are into customers buying losing two the customers detail we we

to in the that Juul respect overall so And addition comp previous what that in is helping to I lift the with question. comment mentioned

across that consistent would think the be category I inside.

Kelly Bania

from think or reductions. any XX-hour the to maybe pizza do I'm point you are you those? impact basis complete XXX I just delivery Okay. XX is more a expecting curious, And of and then that to mentioned

Bill Walljasper

No. hear We'll us you'll a I wave don't unless of those XX-hour with either think The and handful tend quarter, big of that. going probably direction changes us. out. each delivery to because be handful. We'll off changes movements a move significant always add tinker other pizza that a in pull wash to is behind kind talk it's about we'll a

Kelly Bania

a then questions. more couple And Okay.

profit of outlook. creation the value a food, sort the plan, talked On toward outlook, about you less, maybe at shifting bit least more comp a prepared little just on gross

gross if we line? think plans result lower so of last kind profit and new looking higher comps, of just a or the that And instead at you're as out for X%, the XX% way kind laid the top profit of the X%, year is of you gross this about just

Bill Walljasper

the to Street want still but out being our as our mean, message shift subsequent try 'XX and transparent the the is we sure to I we working we Well, to again, planning to that that -- on be make and, guidance are give we fiscal as heard. can

opportunity behavior margin to a still but changes changes profit or your profit I improvement. predict a a that with gross expectation dollar with when gross drive can to in we whether we that's detailed answer to hard any expectations year next dollars regarding have the fiscal we So, make, tremendous always relative to consumer we years I question, it's to sales advance and out respect answer same-store ago. give our don't year think think Obviously, put

Kelly Bania

savings in that then, are tracking goal. I'm anything at that changed million far your I expense And that's $XXX if and was you in where curious or Okay. savings. terms think so savings cumulative against of just there's your that cost around against plan,

Bill Walljasper

nothing our some one know, that's goal. this next us, number expenses. that earnings and that call. to and that continue changed the made, very of Yes, the to balance obviously there's strides trying relationship in here we're company. the year to you end fiscal We'll day, think against up strong to in operating areas very of of we And mindful roll report on a We've of the as in the expenses operating growth for at there's be opportunities

situations we sales with when so the make operating the match with where want we that And have time expect, be slower periods we that our we same-store or sure than to may expense. company

overall sales recall, line start different, probably you top to XXXX, say expenses will would also accelerate. gross our Kelly, you coming if profit. same-store see up operating might the I as to that back increased No significantly. So, with in drive Operating expenses accelerate, we were

to very mindful balance So, conjunction another. with that in just trying find to be right one

Operator

Thank you.

from Lebiedzinski Our Sidoti & next Anthony question Company. is from

Your now open. is line

Anthony Lebiedzinski

Good thank you morning, for the everyone, taking questions. and

So, Bill, have comps. just I fuel far to you'll into you degradation mentioned your gallon that momentum think know as stores being That in negative need there's do order in positive no same-store positive fiscal even sustain you as you been sales, as with inside? 'XX, inside guidance but you're your look giving yet, not to comps said,

Bill Walljasper

way. to going think it a forward characterize But here. Well, would this tough question about that's probably I

process. think still and is price better into price fiscal we -- that rolling 'XX. whole Something better, advantage to optimization market out forward and this a market, about, very we is as move get tool fluid by Anthony, we'll here We're

so gallon we to whether pulled together. we're negative haven't And not, be going quite everything movement or

question, as to at fiscal have their preferences. in drive your disposal Anthony, that program. the one still However, of out and next have to year market that we'll more is customers, utilize we'll inside the the And customer data area loyalty that dollars stores. our mind, we I Keep a can around be roll and movement toward individual positive we gross profit our answer things data think in to specifically

we have the I that board drive opportunity regard. comps so think in to across And an

as get more especially we So, points. data

Anthony Lebiedzinski

Got it.

makes That Okay. sense.

done expenses. you've job with very So, a operating your good

there other as Are You labor think, as it this of or as opportunities, as labor down. store called good any the store gets, out you management? being far kind is

Bill Walljasper

good always can to expense. a uncover we there Well, gets. it what as to operating or do say I I rock here as we're with mean, wouldn't it's striving see

job a we our to as think QX better couple a labor we I taking things, a a expenses process move the are reasons because demand. labor saw one customer hour of forward, relationship doing operating One about, the is to look and think, deceleration store to in in the hours the that our hard much at in of of things match you

seeing that reflection so And you're QX. in

I QX, far, in And the to in alluded as that so earlier call, continues.

increased and there. as motion up fiscal opportunities Now, time we with at more coming into start looking that's a study when detailed we move and 'XX,

Anthony Lebiedzinski

it. Got

as distribution about, talked are that looking thoughts Okay. any your And subject? have also, updated think distribution as longer your network? Do at a term, on you what thoughts I far center. previously, you've third

Bill Walljasper

Yes.

a We continue for to location distribution center. move forward third to finding that

a we feel optimal mentioned in like the this the and went appropriate deep As and you call, on know the this third efficiency as path last dive for us did we is down party path very before forward. distribution moving to we maintain

to particular you where of to And at project. a next what expect as kind so the give we are we'll timetable, that hopeful least call, earnings with be timetable, announce that preliminary location at will and

Anthony Lebiedzinski

Got it.

remarks card customers that? you've the how for cards sense that you have X,XXX guys may mentioned the you Terry, any gained Okay. incremental from to And, new opening Casey's have as you lastly, many during Do fleet new up program. to signed

Terry Handley

customers as can't here tell to you Anthony, narrative. feel new in fact is very short have this or X,XXX of actually sit accounts. of response. that the We number on of Well, certainly just exactly I file but excited we new We're accounts the about very and we and date, terms approach in incremental confident the customers in a mentioned new positive

on fuels and new continue team we certainly opportunities of the our between take stores great XX a the effort grow fleet we to take with work to coordinated the believe, accounts states, core to team retail density to as across with core team it'll team, we and have customer So, that our fleet continue opportunity.

Operator

Instructions]. question Witkowski from our next from [Operator And Research. G is Damian

open. now is line Your

Damian Witkowski

increase Did Hi, Terry. you of I through I of Bill. food see accelerating they Did were Hi, all? ones. kind have there? quick an couple stamps January. help at a think

Bill Walljasper

specific aware the in not a quarter. was on utilization material that data impact stamp Yes. third the have I'm I don't that any but food

Damian Witkowski

big be it? part must pretty of your a isn't This business,

Bill Walljasper

I $XX wouldn't a part. over say million year. the about It's to of it's a huge million $XX course

service need be a part. So, it's not of. that make and continue we to certainly, But, to something we huge it's a mindful sure that

Damian Witkowski

know is, And reasons? mind, your but driving what miles causing figure it's that single everybody's the Tesla? in to digits is mean, it just driven only in decline? Is driving simply less your I'm areas, out. I I trying it a low for still. people it economic just

Bill Walljasper

have on yet an I are than state. why least, to coast. it in to necessarily, of answer it's be, the November, at like depending would as Illinois, data the as was down down again, tune Well, the the certainly But latter. that in not of and But I'm the in on Iowa, we miles states a month vehicles of X% the vehicle they not the Missouri electric X% not Midwest the significantly on supports lot mentioned, of in differently the to There the you the might coast. here see traveled were sure Midwest

Damian Witkowski

many just right? in fuel the the all currently? is them, optimization How that lastly, side. And, of price stores Not

Bill Walljasper

out fourth and are out rest now the We that somewhere this into think and that can up stores. stores we our we majority first currently by had and we quarter roll to the our We rolling No. have of that the store it of the end XXX concluded to this quarter pilot of operational.

Operator

Thank you.

Karen from is Barclays. question from next Short Our

Your now line is open.

Karen Short

I just Sorry, us Can just card the quarter? question. housekeeping. give you And then had credit a just fees one other in

Bill Walljasper

$XX.X quarter. in million Yes, the

Karen Short

maybe I then, just fuel of not? fuel And more move will contemplation procurement, you is Okay. your or be it -- within might Phillips wasn't Fantasy I I'm And bannered some with to terms there in some procurement, that guess sure. will actually bannered curious, gas?

Terry Handley

in opposed as Phillips Casey's Casey. agreement be With don't with believe will is purely agreements banner well. Yes, any regards banner. a procurement This or is that contractual any reason there the Karen, a to only primacy XX. to banner. this somebody This banner no, and XX as fly is this see Fantasy strictly Terry. procurement is acquisition, fuel And, certainly, will be a go-forward fly preference benefit our the takes on We that no Phillips market looking to else's we to a

Operator

to to this am no back showing Thank CEO, President I closing over At Handley, you. for turn I questions. call and like remarks. would further time, Terry the

Terry Handley

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

Operator

thank your for participation gentlemen, and concludes in you the program. This today's Ladies conference.

You disconnect. may now

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