CASY - Earnings call transcript Q1 2020 | Casey's General Stores, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to Casey's General Stores First Quarter Fiscal Year 2020 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I'd now like to turn the conference over to Bill Walljasper, Chief Financial Officer. Sir, you may begin.

Bill Walljasper

Good morning, and thank you for joining us to discuss Casey's results for the quarter ended July 31. Chief Walljasper, Bill am Financial Officer. I President Rebelez, and Chief here. also is Officer, Executive Darren

our I'll performance that any results forward-looking strategies, remind by begin, These assumed Securities we Before you future of Act to improvements the meaning the opportunities stores. XXXX. call growth our Litigation the or Reform us statements certain business investor may related within of constitute include at operations, statements forward-looking of and Private statements during made statements possible

that There results reports well a Report realize and as future Form and risks, materially our value risks, or uncertainties are described to by as quarterly which Annual of filed most number on the recent unknown ability on may and any our implied creation execute and uncertainties known other on plan that plan to factors factors XX-K the are those cause as and including are available creation in SEC forward-looking our results XX-Q from to website. other expressed or with Form our statements, benefits actual on differ value from

or and or today forward-looking Any during views disclaims of reflect future otherwise. as this a with whether statements obligation information, intention Casey's events, events respect new our forward-looking as any future to update to revise current call made statements or of result

of the plan. with and will take progress to quarter first the a first Darren morning, results provide minutes This creation on an few then value our the update summarize

questions then open results. for will We our about

discuss to call those Darren like to the to turn now would I results. over

Darren Rebelez

everyone. good and Bill, Thanks, morning,

like of how I the team. the into am results to I'd to by start saying part get excited we Casey's be of the Before quarter,

convenience in restaurant the the opportunity the always the store not During space, be me and Casey's and admired but felt industries. my only fuel for given in ideal and this store background also would I've my respected industry, time convenience

months, hopefully forward three in at the for the the you us look person of been the underway and all on for now and opportunities to initiatives about meeting I'm time future. I I've about job some in optimistic forward. going

As a year, XX% to diluted year were control per compared first continued earnings $X.XX expense press $X.XX the ago. up a last to gains the inside quarter versus the driven in seen operating were share The strong you've a share by the first primarily fuel margin and sale release, quarter store. results for

like quarter, and several each XXXX. creation the us on fiscal We key this past categories. performance up in value I'd plan to executed now our milestones over the setting details go our continued strong of of in results of for some

X% fuel an ago. down due gross optimization gallon gallons retail line category enable price same demand factors the the fuel our ability the The and our fuel first This to the the $X.XXX of fuel fuel compared in declined. range. from as a in was margin miles to PriceAdvantage, price traveled our period Midwest but vehicle dollars from environment $X.XX $X.XX fuel points softer for this guidance quarter to which nearly efforts tool. margin of optimization in in we average increase is per during year our drove to primarily achieve for These quarter than period year. was a During were our combined leverage expectations a us XX% favorable gallon, in the implementation basis a annual category. over the This with Same-store up with average the quarter, lower profit experienced XXX last

were months. to were from XXX nearly strong ahead due is below new average opened range. XX annual fuel the guidance gallons guidance. August total X% for our Despite up in gallons trending quarter sold annual contribution in the of stores August our in margin to last decline in the gallons same-store The million gallons, the the Same-store

store. Moving grocery quarter. X.X% line merchandise million up Total the with during sales the to our were Same-store inside guidance. $XXX quarter, sales the and up in the in other first X.X% category to in were annual

Excluding were inventory year adverse account how up impact. average primarily adjustment transit, the $X.X margin million had an cigarettes, in same-store to due sales down quarter XX.X%, related from X.X%. to was in inventory a The a which we ago out-of-period for

the X.X%, dollars in approximately $XXX.X in annual the profit would up sales to program gain later are This X.X%. our Without upcoming up were the impacted dollars quarter. the million the category, In mobile prepared well sales basis and this launch were total same-store August about gross been sales upcoming and in trending the and by We we as quarter million. X.X% category points, app new X.X% platform fountain loyalty for profit of of have Same-store acceleration our anticipate the margin XXX previously up for as our were the traction guidance. as to and fiscal launch $XXX gross same-store in the sales adjustment, year. e-commerce from food quarters mentioned within

average cycling looking We're was cost gross the The from quarter ago. versus year this dollars closely In was first for to rose XXth up profit opportunities. average for on basis XX the is points and first the monitor due anniversary ago and a quarter buying promotions of mix market to shift year XX.X% product quarter, margin quarter currently to spot million. over primarily a in $X.XX the the trending cheese food The a buying prepared $XXX X.X% up. for

digital below trending as traction gain sequentially but Same-store new we sales in platform. up guidance our with are have trending our annual been August

We focused continue on operating stay to controlling expenses.

was this increased year mainly expenses excluding to $XXX.X million. expenses, operating more operating driven a increase operating fees, total The quarter, X.X% up Same-store the ago. credit X.X%. than For were stores card by XX quarter

call I'd now statements. the to over to the like financial to turn Bill discuss

Bill Walljasper

Thanks, Darren.

annual in in $X.X to was X.X% operation period a increase quarter billion gains offset same On in year ago this previously, the mentioned up primarily X.X%, compared a related the approximately would was to stores $X.X Without storage the was have to been the revenue Depreciation due underground an total guidance, tanks. depreciation by up up and sales of prices. the to income adjustment our number to of below fuel in which statement, adjustment, quarter onetime useful onetime million X.X%. lives due quarter lower the the primarily retail

onetime adverse up a net mentioned, year per law diluted of quarter. have that rate we state impact share. to ago, a As to XX.X%, quarter earnings a last The primarily related year due impact this for changes. items effective there from several was occurred were onetime this $X.XX was approximately tax The adjustment the to

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

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

XXXX as Our moving execute fiscal trailing XX-month debt-to-EBITDA continue on anticipate We was our downward we plan. ratio to this X.X operating time.

For ago. compared to the $XXX.X to the million year million flow EBITDA cash and $XX.X a same in operations the ago generated period. for the a from Adjusted in $XXX.X same quarter, we year grew million quarter compared period in capital expenditure XX.X%

million. fiscal Our estimate is $XXX XXXX capital for expenditure

our back would unit now creation Darren over to on turn to I you plan. value update call our the progress growth with like and the to

Darren Rebelez

Thanks, Bill.

fiscal XX is approximately to this Our target build acquire XX stores stores. and year additional

under acquired stores to agreement new stores, and quarter, stores This XX additional opened X have purchase. XX we

this store of relatively You should expect distribution a year. new even openings fiscal

pipeline, XXX we which under Currently, well have for sites growth. including us future XX in positions our construction,

a As evaluating in we grow and location our the of our distribution ways look for store continue efficiency. our for final to center. third stages We're base, we to increase design

the efficient. new expand allow will enabling our As the This a alleviate us will of also on result, new distribution our facility more become ability ground current entire to this to breaking pressure It efficiently we markets. off the network into anticipate fall. centers,

creation turn I update would regarding value the now like an to plan. provide

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

the on feel value plan of areas we the that opportunity all our plan of in appropriate an had the the to that I've focus should the review attention and near-term. components creation are

clear plan, increasing confident per that return this share was expectation. the while EBITDA I I'm capital. deliver that will plan strong invested reviewed growth to on annual was and intent earnings the deliver on the As it collectively

I'd course in the mind, milestones key you With to of the share over like some the this quarter. of we accomplished with last that

last with card the begin year. We this in We fleet XX,XXX with new over cards issued. October approximately late have accounts currently X,XXX launched I'll new program program. new

of utilization as we the program. than the recently gained expected, up momentum we slower ramped around additional resources focused it's cards Although these

card fleet about our potential the grew part compared year program engage forward. universal gallons to In to the to addition, fleet card We we X% the The overall of fleet first as our approach optimistic going overall remain providers ago. in total quarter approximately a of continue strategy.

optimization enable program our our in another broad anticipate profit network rules-based of generated throughout centralized decision market the creation across store, make to value the data dollars we at to our will improve plan. combined is which network. will by and stores This gross us Price in key sales pricing categories data the leverage all with pump

optimization. As of we stores the our we of price to mentioned implementation assist fuel last all call, to PriceAdvantage in our completed in

give us directly integration first September. the the We point-of-sale agility having in greater prices the end response adjusting of of During tool with quarter, anticipate in ever-changing completed we to our will this phase retail This this fuel environment. system. the by began

price utilizing as we As we're our mentioned platform our before, dunnhumby inside optimization stores.

test-and-learn in created distinct provided last the zones. quarter pilot lift geographic profit and gross revenue in control pricing an the a fourth we've The group. fiscal versus completing successful After pilot year, X incremental

our rolled the we We're over store, these company. to we'll the the of the benefit During integration continue programs about quarter, rest will of platform our quarter. and course the the second to first this of the bring to our excited out center store

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

call, our in the our e-commerce mentioned website As new at first quarter. of we earnings the we integration completed of last the start

rolled This addition guests mobile provides platform first ordering pay an by online. the to In process to allowing the and quarter. our streamlining new out app the and enhanced during experience we guest this, checkout

from These In approximately the the up pizza automatically for opportunities every to transacted Currently, better provide opportunities cross-sell us online, are addition, will engages year during of over to preferences of XX% new XX% buying system guests. our ago. our order. tools a orders guest understand the

our in currently out building insight these data and process the to and We're analytics team of consumer leverage insights. better

the fiscal our launch to we'll loyalty During begin our process quarter, program. second

stores. our Building then we'll new move We pilots, an followed forward select implementing will program pilot geography. the to all by loyalty upon from of of a what start in these with learn the pilot, employee a by expansion we

We approach this are provide program. for the full guests our best us to of will experience upon confident launch enable the the

The in-store to integration digital both platform facilitates of serve and the experience gain guest and will understanding allows our digital This guests seamless for behavior and better shopping enhances our new platforms a capabilities suite digital a to marketing our rewards. personalized us and of of them. create online better

platform average and additional this size expect basket our drive will We increase traffic.

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

new Our acquisition capital growth our and disciplined return investments strategic with including strategy allocation programs opportunities. to continue as store creation well through value will prioritize as profiles, attractive store construction

transformational closing, performance store long-term In to we profitable to growth. take and enhance deliver steps continue

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

We will questions. now take your

Operator

[Operator comes with Mandeville Instructions] Chris first question Jefferies. Our from

Chris Mandeville

Bill, with how what in the at to the in quarter? proactively extent? to just comments could influence on pricing rising the if start if And then quarter, consumer you much all? this offset prices, cheese maybe so, off any did maybe that did pressure And we if take elasticity

Bill Walljasper

offset answer to didn't proactively to any No, take question, price your Yes. we increases Chris, that.

in we're a our that business, pricing particular that in we value As to you of competitive want guests. make area and to certainly continue the so we offer sure proposition environment know, to

the just for Chris, $X.XX pound cyclical pound a we're comparative a the We're every about to is perspective, us. overall standpoint, year, per it's the a quarter. back XX pound. half of $X.XX been of prepared always margin. calendar from $X.XX a And QX, respect This a about points basis Currently, the reminder, year. as about pound. We cost $X.XX With roughly in to towards for give this XX the has anticipate food to to a last this product about declining -- you kind cheese

a so these contracts in And place, school look typically and for after get we downward see opportunities. movement

Chris Mandeville

by assumption you be can what today? to gallon buying extent procurement versus short-term then contracts the your And think year-end? we guidance to understand And that Okay. reasonable about what over a practices, as enhanced spot comes to help about think us fiscal reflected in it fuel to transitioning when may

Bill Walljasper

Yes.

of So there. directional you I'll give little comments bit a

very of And margin impact all, no first so in fuel the the in first little procurement had quarter. to

executed buying on to Roughly, the in or start spot market. on a now, then volume you a see the rest than multitude have different very is year. company that right of which short-term XX% fuel here will about than have We the contract, the XX% and under fiscal benefit contracts second structure we when we're quarter of here our of obviously our

a of kind year. on through I fuel remaining benefit Now moving as where But basis. determine that the of have definitely that. and some to we're future, to more goes gallons of progress we definitely, progressing contract be I see in guess fiscal this with forward We think we'll our the part more

Chris Mandeville

just the ago, the for guys averaging you've me, outlined some plan on healthy average. around value last actually then pretty growth are since, And of XX% you six creation one you've Okay. quarters EBITDA

based that maybe such creation in of price and optimization there you front value is won't hold? the just actually lies procurements, any various what to line? additional remainder So growth marketing reason with If fuel loyalty, the believe time initiatives, on not, improve for of

Bill Walljasper

mentioned of short of I giving year. in well. Later started the any to think of the e-commerce year. year this, area about that program. rest take regard. quarter, to loyalty launched of start going forward-looking and off we beginning right this I platform next back We then procurement the alluded half And certainly that the forward I'd We're of expectation fiscal mobile the path. fuel that fiscal year, cadence begin escalate you're orders But seeing previously, we fiscal on the just probably in thinking the this as app. as to the fall off type directionally, kicked have in we'll Well, online just the will of you launch Darren that of the some

about all us. excited the those we're So the direction with to company of benefit of

Operator

question from with next James. comes Griffin Bobby Raymond Our

Bobby Griffin

to the When for and a a cost at maybe you I fountain, store. color on of give question inside first Chris' follow-up just baked can in guidance cost cheese the look prepared year kind environment environment us on the little on we general and for want from margin the inflation-wise? food what's there

Bill Walljasper

consideration. issues. it's cost, cheese Well, would I the macro margin from we cost have be of and external what be combination those lot formulate but the guidance, things, cheese It's issues. expectation at would wouldn't a of environment that's When a looking of a taken that one Cheese in Bob.

at be case, You looking in could that forthcoming. have our also we promotional this probably activity more,

proposition. landscape regard. the that speaking, sure Generally that you think I when a some we margin value is in promotional foods. so there as have offer activity to be to competitive detriment one And mentioned, a of about coming, going make for we want questions first We prepared that's

would for be with the might benefit us optimization maybe margin. say respect boosting to kind price However, of a I

Darren Rebelez

Bill Darren. on to would have help is be this the more degrading approach little I to platform try more as activity traffic. towards of guests to to and only we able effective is in guess should that Bobby, add as said not I drive target our the opposed blanket having to that a thing us margin as and be a specific promotional digital activity promotional ability to be to what go

Bobby Griffin

expand illustrates guys the in on either platform upon opportunity some I helpful. on what the have early you're the us maybe some That's year to sales what the mobile or the same-store are versus of accelerating the app right actually, the like was can online question size Or in-store? things digitally. you better in grasp that ticket that. a of doing confidence next my Appreciate just help anything And learnings some the is? you that e-commerce get seeing you from was of maybe through Okay. exciting there

Darren Rebelez

positive far. Yes. accelerate again. the on uptick versus volume having seeing the or really, digital average seen size. so we've good year order conversion some we're And across-the-board, is rates. positively And transactions pretty our Darren in success some platform. also on We're And results yes, average This seeing we're order prior

of the kind XX% I platform, across about And our where so, So coming that as orders are we're for online digitally. seeing or growth. mentioned earlier of pizza

that grow. stages to so continue continue can that early we'll believe in very and fairly, to that. forward we So just move with process We're

Operator

Our Sharma next question Pooran from with Stephens. comes

Pooran Sharma

growth about this to sustainable operating ask Just at growth. expense OpEx How level? is wanted

Bill Walljasper

one that off I'll start here. Yes.

this increases with and quite to had and some So the was hours credit it's to our in focus we've continued experience. match the in time, labor team a the guest obviously, operations the lowest of trying one that store

respect didn't operating expense. Obviously, going so you we an that And across-the-board. noticed to in with comps we change forward anything in acceleration anticipate the range

And hours to anticipate match increasing that of kind guest experience. we labor with that, certainly

about at think a is a getting would look be you it expense of high look about that about. a this thinking X%, rate level, operating at a run same-store from that should growth you kind in basis low-single-digit, on you're unit you when probably So a high-single-digit normalized in I so that maybe way, it

Pooran Sharma

cadence And platform lift Great. to food kind cadence. a wondering to us prepared obviously, of but and was then -- the e-commerce wanted Okay. provide progresses, you I know you of get comps. to as if comps just were prepared grocery expecting take off the food your on the able I

Bill Walljasper

Great.

to? going You're

Darren Rebelez

in improvements sequential throughout ahead we're bit the we another improvement. the take Yes, in quarter. soft little a saw we quarter, go obviously, I'll again, saw And Yes. August, but that. first and

accelerating year look as on you we and fountain throughout growth So as set the the up prepared that platform. the was through along we the digital food year had intent all

would I think So just it about that. like

penetration As to program, should expect prepared move get food launch see our year. of to the through loyalty we some ultimately, digital you and and then comps we our continue as in forward the fountain higher platform acceleration

Operator

comes from next Our question Fargo. Herzog Wells with Bonnie

Patty Kanada

for Patty is on Bonnie. This

tool mentioned of and ongoing to expect terms you You grocery, ask do comps? it fully think your inside on rolled what your to of in price And when be optimism wanted kind store the do I you just about lift an optimization out? tool contribute could basis to

same-store on if And wanted X.X% above ask momentum was specifically so, of pretty own price more optimization? sales to your street was versus you it internal above was category the quarter, then from nicely And the posted much expectations, how if that expectations? that

Bill Walljasper

Yes.

So for questions. price answer op, I'll all those try to of

more with noticed if we price of back control a an the greater definitely We we don't circle revenue please this. things. extent, We we to hit our inside saw optimization pilot we But saw our did alluded margin probably So testing, us. a increase, to that, on increase significant, on the Patty, But test, an store, group. the side. in couple

we're so areas. out inside of being optimization see anticipating to price sequential from both in rolled of those in back year the That's And the moving forward. part benefit half the the of of store comps movement

did of popularity fiscal the so in to sure we weren't same product sure we lapping year year, things trajectory continue merchandise, going were that last this was respect the JUUL it momentum be one that that general quite the we We with to of will coming that and Now comp be continues that relatively out surprised rolled were in and certainly to last that in the grocery product fiscal that pleasantly year. X.X% robust. of fiscal weren't

with? other circle some have there back maybe can you we questions do So

Patty Kanada

leave No. Actually, I'll just there. it

Operator

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

Irene Nattel

prepared Darren, it grocery the you categories, questioning was maybe inside cigarettes, of it category. in talk what mentioned was you're the the seeing think other and ex I it please, your remarks, category Just was you strong. seemed ex continuing cigarettes? about key beverage really Bill, in with that line Can around

Bill Walljasper

take that one. Yes. I'll Darren let

Darren Rebelez

but throughout somewhat did growth strong quarter. saw Yes, grocery we category across-the-board. the sequential also alcohol pretty in the that the quarter in particular, move saw really and as and through We correct. was in We packaged see improvement in it Irene. was ex beverage Yes, overall growth cigarettes,

really cigarette that it we by So those main our was were areas offset the the three performance. somewhat and saw then growth,

Irene Nattel

tactics? the and deliberate a And that in able strength And and to any are, in during helpful. you That's that weather both of result correlation were a packaged, is, between seeing of the the quarter? is sort strategy, alcohol of sort see you're that shift promotional trends

Darren Rebelez

seeing it was some answer in strong so with to with wine, stores your of We've and through seeing of a deliberate a growth within activity, with liquor like first, that think we're in we're categories, and the Well, well smaller beverages, alcohol. first particularly expanded so question, the combination a basis. sort number as very hard I then of those X seltzers alternative momentum category. albeit somewhat on flavored thing beer And the and

just not packaged me, years the we're help although to On beverage strong other seeing in going as it as continued have strength to Irene, side, in what past. question? your you're And was energy had been

Irene Nattel

weather in was what that, that had. impact what other around might really My just the quarter have question and

Darren Rebelez

Definitely, impact every us, And weather as you well. better there's and improve, it categories there. an in the was had to Yes. definitely May got the alcohol so packaged as beverage month and month. That our fountain sequentially then correlation across-the-board, started toughest in a see beverage on

Bill Walljasper

of They're to from with that now first Kansas. and going boost in been able also stronger add to Oklahoma respect law sell category, beer, alcohol that states of part benefited nice content just us. couple a X for was changes a I question the beer in and we a to your on those has state

Irene Nattel

sort of was I then the wondering, more And great. bit around if little a the just color could pilot. of zone give you That's results us

more lift of foods about to some differential kind What categories make it? that are does terms about but prepared little category? to in do think top which perhaps you some to the And particular in lift you talking you line, of bit mentioned pricing? margin, a extending see You

Bill Walljasper

starting group, us the to for to when items, answer, from now specific a a way we maybe probably up. higher revenue that the are gross to the best preliminary pilot is, little stand did to characterize without much as previous reiterate mentioning that Irene, side of give saw we now, that. Yes. this margin did definitely But right impact a to that, control we than It's we the definitely results probably

I is think to this more get we us as forward respect hear on one going how you would this I traction, to zones. expect performing those that's and from with

we'll the some do So in those the get of like competitive we're quarter some we of moving up off be moving to on But landscape we're pricing be cases, certain that anxious in those on cases, products zones, able really key categories. depend report some In every That'll progress. to there. down. and kicked

Irene Nattel

That's great. store inside with your at your of thinking similar something category, sort foods doing prepared sorry, about And all are you with category?

Bill Walljasper

that we'll Yes, that, impacted. of certainly and the do you progress all update with Yes. categories the

Operator

next Barclays. Karen Our question comes Short, from

Karen Short

First, housekeeping.

card credit Housekeeping. the in quarter? the Just fees

Bill Walljasper

$XX.X million.

Karen Short

Okay.

on you kind margins gas for are you'll conservatism think fuel the on guidance? year-end? contract, And with the percent do stronger on your little then a in that any that, bit gas your guidance what wanted purchasing thoughts your is percent on front. Obviously, year color side, you're of margins the could quarter, have give you stage on year for than contract talk this contract terms of so just the on and the really wondering you're what were early only by margin just I guidance about gas to So of fuel the the of

Darren Rebelez

this is Yes. Darren. Karen,

environment. margin because in the building to the that respect on capabilities capitalize helped we a that with that the we're QX I think better margin price it's year. factors guidance, fuel been combination to Obviously, And able optimization past fuel we've us. had over of favorable a I of think

I rest wouldn't want that to take difficulty] margin to the and extrapolate So that [Technical of

Operator

Once Ladies by. please and stand gentlemen, please again, stand by.

conference will call momentarily. resume Your

Darren Rebelez

Okay. Hello.

you now? about Sorry there are Karen, that.

Karen Short

here, hear I me. can am you if

Bill Walljasper

not Karen, so It's you just intentional, know.

Karen Short

No worries.

Darren Rebelez

answer to question, the a by You missed the brilliant way.

Karen Short

think want it year. to I wouldn't the caught we extrapolate at whole for

Darren Rebelez

Okay.

margin on side. fuel that okay, So yes, the so was

under And that then about got we So I with contracted think expect overall answer. our respect XX% contract year. our to you've volume, XX% of this volume fuel to have

Karen Short

about purchases. stage, in-store I what ticket And this obviously, app? you, the that on online of the Wondering question if I ability rate now XX% was could know my it's Okay. and then that the you color in average on you've online, to attachment second give have early little terms versus cross-sell but a you talked is the now guess,

Bill Walljasper

Yes. to The conversion on continues that. rate climb

as order the we've dollar and that months, the a to about average that. in full X far over As probably volume last strides increased make X to continue

So the with all as opportunity integrated for get we us fully what we're excited digital. about presents the

Karen Short

would be what so difference And online the the on versus in-store?

Bill Walljasper

average the For order volume?

Karen Short

Yes. Total, ticket? the what actual is

Bill Walljasper

online It's online. about, going about $X. $XX is ticket to a well, difference over about little be the The $XX, average is

Karen Short

and then new just little you Okay. that on a expense changing bit, comments efficiencies wondering Like, also new DC? what's you to that made And could then give a what the you plan accomplish of just, to some on was wondering if little at kind color able areas greater of management on specifically? opportunities. elaborate be I DC with

Bill Walljasper

DC with can on Darren question. the operating Yes. I'll expense, start and dovetail and I the

probably motion and that one, far study. as things So that stands the time as undertaking we're of finalizing the an initiative out one is

of so And will because tasks provide across the this an opportunity our are XX-state chain. all replicable very

labor of to so top it should we'll scheduler a out provide take and take site-by-site better so a then the of perspective staffing trash on, the a information be to the match going hours a that so labor we our of and in make basis and understanding sit on that's efficient think of a And probably it better activity a, that the hours able once basis. on pizza, particular have to take time guest forth of to more be experience scheduling site-by-site We to that on from a store.

in regard. So the that things that's would one of stand out that

Darren respect center, to that. the Now take I'll with third let distribution

Darren Rebelez

Yes, the bit is inefficiency and network. distribution what's Karen, distribute. see geography in per stores. we've that from we further going those And distribution driving on that develop the up we cost centers, measure as what, our into further today pound to what as with resulted got to of south essentially, started try we center, our that that support a X started to self-distribute per cost And to because pound to we're we by

deliveries take So southwest script third to towards is those geography distribution off to our The able part space create of the as as efficiency some center I Ankeny. support of center. some in we're more extra to And to other lease overcapacity just the looking be in distribution and that far particularly stores efficient my distribution mentioned the that more will those will stores. of place essentially the right the we've Ankeny had so inefficiency centers, be now, to

that and center it to see that as expect will gets cost per up we and of to distribute to once well grow geography. go ability that as running, all our So enabling further in pressure, down distribution pound more relieve effectively

Karen Short

any Is what quantify saving to there the might cost way be?

Darren Rebelez

that but this we're point. prepared Yes, share to at not

Operator

next Our question Kelly Bania comes Capital. from with BMO

Kelly Bania

in And what there? out Just that competitors later just work, year? can maybe on then general would of of some testing the you trends compared how differentiated Just is share to just be that me will wanted on timing, details to about And that then clarification you've store, couple and loyalty the the this just seen in program, you on customer the quarter the quarters? are remind traffic us what inside how some helpful. in that terms they ask versus about with last QX also, rolling

Bill Walljasper

Sure.

your multiple in all, you there, had questions there. question of first First

were down respect to yes, traffic, [indiscernible] So slightly. so with we

been slightly, pressured movement look excluding customer a in slightly kind has Midwest environment continued time. you the fuel here If some were inside store, down of we're as you been commissions have the due and the for a we know, to in We, and at down of farm income. they that account, downward

has of However, it been customer moved we for We've that's with of becoming us. impact better getting to digital. and account, better the and that less process been a part

digital Darren to so With the And that. the loyalty have question. launch, that's take respect I'll launch,

Darren Rebelez

for Kelly, things. think asked I Yes. of loyalty the a you couple program,

testing that. timing. and of the mentioned tackle in to script, we're I'll I begin First, the pilot Like about our

on everything it'll launch late how the works loyalty contingent would works largely when QX, assuming that pilot, program be early So we in out. QX that's going to but everything we anticipate be that

what a might else, say, we at prepared for point I'm it value we But find resonate our incremental with other guests that they that competitive and what way versus share anybody as differentiates will in far believe suffice beyond not and As the uniquely this have places. above program to to provide reasons.

feel pilot get and through good launched. to we itself before got platform we it the the we've get So can about process just really

Kelly Bania

time distribution of thoughts the there just over capabilities time Okay. on I any to maybe more that fresh in more I kind DC. the a another That's little deliveries? had frequent evaluate Darren, of kind now fair. thoughts follow-up is guess, terms just adding more of focusing that with any third updated adding on more now guess that. thoughts you've Just around

Darren Rebelez

Sure. Yes.

the on the centers. situation, At that We our an multiple we're moment, to We overcapacity to we're evaluate given stores, option. distribution deliveries assessment as per an week really position have that a done better in and be position running, to we'll opportunity. at in then once distribution the that and we this aren't center in to perhaps get point. third on capitalize up But a start continuing

Kelly Bania

one And last That's Okay. for me. helpful. maybe

outlook, cash approaches free more talked CapEx. maybe flow of I any us curious the couple some may think, could I with just more of details was months goal? be terms had Darren, to you if you how that you able accomplish you ago about share on to a efficient In that And

Darren Rebelez

that. all of time, phase stores operate opportunity planning cost taking our things opportunities to the degrading At we time at where the geographies a a at I we in in pockets build the guest look fill-in how and taking still look sites nonfuel take potentially without just we're were as potential last unmet today the We're already But mentioned a Yes. but same demand. the out experience. of have we of

assessing and we're updated those of And so that. right opportunities on keep now you both we'll

Operator

from with [Operator Cerankosky Instructions] Research. Our next Charles question Northcoast comes

Charles Cerankosky

point? quarter, the of during the an I at indicative a closer or base noticed six that anomaly store taking at look is closed stores this you just

Bill Walljasper

better Yes. of of an community. where we an that can do with at Most capacity, assessment replacement to of looking overall serve has stores the kind network

the two of a more stores, build of stores footprint. as and stores. That's we instance, larger For a the function so close performance may not much that, like

Charles Cerankosky

to given Okay. stock dilution you And thinking of that think free at Are option the on going at, more looking moved least has you have then, and bite cash et shares? Is cetera? Bill, the the year, feel flow up? the you fuel, have looking do back stock How repurchase I'm optimization prices that bullet success from in at that offsetting grants, the something you're the to guys about you buy to next this price year. especially dividend,

Bill Walljasper

let I'll one. that go take Darren and

Darren Rebelez

becomes to buy $XXX Yes. respect share going stock with for. repurchases, our share we our option focus to have back And to want can always that to returns we Chuck, a growth opportunistically when the when we is always attractive opportunity. that's available, our prioritize investments us. and over we're an get so we're attractive authorization that But that growth, keep available to so million aiming repurchases investment we're on going

that right And focus mode the investing it capital the have greater our use growth really we authorization that's we're shareholder So our We'll drive to is there. in now. on initiatives but opportunistically, return. and again,

Operator

comes Royall next John Our JPMorgan. with from question

John Royall

below more if of XQ throughout? run guidance was But in On rest bit think and at a second should levels, rateable unusual rateable to look which is half about more or XQ XXX, how CapEx, ramp I for rate it hit the the cadence of historically. well the year the the XQ in the of we isn't kind

Bill Walljasper

Yes.

spend. You're the year the a to back up And XX first CapEx correct. fiscal little the in as in more Typically, quarter. it past, when of in half comes goal been you our have we bit We of have we stores XX. know, a lumpy opened

of expect relatively the cadence fiscal smooth the rest We a year.

Now, however, would little aggressively I up center. keep bit a in that center, distribution with CapEx we as into get more third mind, distribution ramping the anticipate

on have going currently as with an corporate here also facility well. our We addition

still up. to be that every would as expect So would think we that We well. update XXX move quarter I a one number. That's

John Royall

new about on out center southwest more when into expansion your Okay. the aren't Great. and the disclosing the of question you at look guys I next point, at this expansion the territory, your location exact distribution that appreciating of but would this should operating thinking or in like states we the already build you're be be for stores, Oklahoma? new further states radius of where Kansas or a And

Bill Walljasper

well have And sites distribution penetrated area. I to new and third or allow the going more geographies. year a in bring the that will would for Yes, we that of we new quite Oklahoma, state the that opportunity is so, the exceptionally think in center of center Right doing now, us us. few other last But certainly definitely, states. here the State will in up expand distribution efficiently about

John Royall

housekeeping. one, just And then is one Great. more last

On the the D&A, you was when adjustment guidance. out anticipated the rolled onetime

kind the about imply guidance the year. a Just thinking pretty increase substantial Is I thinking the rest about double-digit am that, correctly? of that year-over-year would flattish through then and of

Bill Walljasper

No, in not contemplated it was the guidance.

that's first for after that probably maybe as downward. quarter of felt Darren But we we prudent guidance the the So one intuitively, us. wasn't previously, adjust those could areas mentioned

that after So the look December us to for comment call. on

Operator

Witkowski Our Research. question from Damian with next G comes

Damian Witkowski

that of terms testing are rolling initiative. I think advanced question fuel of by roll geography? because the just most you it, in just there And you to have meaning on out optimization and And response a room that feedback have in there still the the from that's upside where back program I so a competitive and price getting obviously, and we is have geographies necessary, on perspective? it optimizing any in terms profit had

Darren Rebelez

think about of had have we on Damian, rolled where automated I a the But terms over fluid very stores some year. completely technology the think optimization. lot in put the price to rollout just standpoint, Yes. I mean of place. on, signs, and that We out from of in fuel execution price dynamics, it's still the pricing we're I will obviously there's about get the XXX a against terms going course done here

continue So to our and position in adjustment. causes have then based approach that as optimize the on what to we're to that our continue us their to to doing marketplace, competitors pricing react to adjust we

react that of massaging see some So all new of expect of course or our the would and of we're to the I kind to normal. year over as going the positioning next us so, competitors

will expect so. so I to And the XX XX a be fluid months it would next over somewhat of or environment

Damian Witkowski

mostly mean the to back need because someone's and, trying just on, actually your competitors gross margin as they from Or market thoughts they steal happy moving you? general, dollars the I well? are the and in share up price are

Darren Rebelez

market-by-market. they But knowing about way no to that. competitor-by-competitor, what how going speculate feel doing of we're that's want nor to have I be on again, I

we depending competitive so position set. market-to-market may we're going take on to And the vary just, our position we the and take,

Damian Witkowski

time? sort down does you contract, then ability And sort when fuel of down those just that fuel, affect, a goes capture fuel have the away to on how all Okay. being affect opportunity does goes margin staying that that your margin. that under at and the Does periods and of during to take higher in of, price crude typically

Darren Rebelez

can there's going in It to downside two we're commodity enjoy when prices then under that we come think to doesn't I to any of Well, supply things get manage different from we price capture decreases way approach going how ability margin those on. to we down. do to standpoint we the contract retail When at elect have to influence cost that. our continue if retail, a so

Operator

from Jefferies. question next comes Chris with Mandeville Our

Chris Mandeville

Bill that then or looking pizza time? to menu or margin maybe a influence replaced board, chicken Darren, new prep we at got that over the introduced chicken you've just mystery possibility items to with and few might newness mix the fried least of Midwest further food, sandwich. or the also at how How rationalization should about you crispy think and

Darren Rebelez

called of Yes. Chris, right items food is now. well this out a that Yes, couple performing Darren. are you new for us pretty

have to to we begin. can you innovate our extent continue a opportunity do around assortment rationalize that work menu. but I to believe expect yet think an we'll has certain is I what the to

efficient little that standpoint. core and rationalize more and we've of of think prepared So to I get to expect with continue foods breadth But for on innovate we'll and to offering. effective lot a you got our do work should in a that around the items the look opportunities our near-term, from

Chris Mandeville

update Okay. something And then refi. you executed on peers similar possibility and timing your Bill, there? one doing on of debt a us potential recently of any Can

Bill Walljasper

you give color can bit I of Certainly, a there. little

to a a have we BOL have provisions $XXX a then. million We due BOL now with we Chris, know, between that payment make-whole you need as payment, next and contend August. So still

come And down and Treasuries tight. remained have so obviously spreads the have

year. the to And calendar I opportunity now here and we're in very we'll the so start and so end looking to good of begin at a that think refinance, between

on So come I there more but risk. refinancing to at our concern don't any this point, see

Chris Mandeville

your, Can that us your right. latest you one sets? indication an then that maybe the if what Is expand that maybe with skill range. walk size me, of background that you're board opted to on one through color you just few there respect process? certain with looking And of you've sort for? last want to filings to And just just All it's for thought actually add so, any is bodies a

Darren Rebelez

anything more wasn't members board. around Yes. that the is this to board Chris, Darren. adding No, really proactively

X last, pretty think the directors we have I guess, you're and new it's within well fairly years. aware had significant board refresh about I X that a just

an to our full help authorization facilitate was so because we succession capacity of board. our really more planning prior, were at from at transitioning, this we're and effort So

would was And have So I speed have overlap can to member. directors we new those another more up we we so practice a some if transition before lose could effectively. think to had to the we board, and add board it's intending get anybody off better that that them can retire to

the about. to So do is at getting time. just that that's really what us this It's the all bandwidth appropriate

Operator

further to And Rebelez like to you. Darren the I time. this no for remarks. Thank back call showing closing over at questions I'm turn

Darren Rebelez

call for the creation and through plan. joining on profitability and our this high-return are capital initiatives. long-term growth value growth allocation everyone to by us and you, thank Thank be for improve accelerated disciplined close our designed focuses profitable and I'd to will that like initiatives Casey's reiterating through morning key position This a prioritizing accomplished Okay. revenue strategy

thank like rest the day. everybody, to and great So of with a that, have I'd

Operator

day. a have concludes today's joining. Ladies Everyone, and gentlemen, you conference. for this wonderful Thank

Casey's General Stores (CASY) 12 Sep 192020 Q1 Earnings call transcript