CASY - Earnings call transcript Q3 2020 | Casey's General Stores, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Casey's General Stores' Third Quarter Fiscal Year 2020 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

to Walljasper, conference Chief like speaker to now Bill today Financial would hand over the your I Officer. Please go ahead.

Bill Walljasper

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

XXXX. this meaning I'll constitute of forward-looking may begin, certain of we Reform call Private you Before Litigation statements made within the investor that remind by the Securities us during statements Act

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

third those for summarize the first or quarter This or disclaims the we’ll intention to views a today information, take few with whether of any as events future result respect of statements to statements forward-looking current open results. minutes questions revise events, and call during made and then future our new Any as update otherwise. of a forward-looking about Casey's reflect this to results or morning, obligation

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

Darren Rebelez

morning, good and everyone. Bill, Thanks,

by were were year seen as operating $X.XX $X.XX The we last cycled in third and quarter reductions expenses results share significant the per the year. versus prior share a per for fuel diluted ago. press margin over compared lower per earnings third the release, As impacted quarter year share up operating you've in with expense higher the

timing in performance target compensation quarter third a experienced to quarter. for the shift approval the also first the We a from equity of

were Year-to-date, earnings XX% ago. a over share per same $X.XX, from up diluted year the period

We elements continue like on to growth. this the I well key now details future each of past our of positioning the execute to plan results our long-term go for categories. quarter over some of would and and us

while we category, gallons were During current navigate the the were to environment the same price a us year strongest period ago. demand margin in quarter comparing and quarter. time ability were Same-store with in through fuel of achieve our against procurement the challenging These $X.XXX at factors a sold pleased our We we experienced margin per leverage optimization to gallon. an X% this. down enable programs fuel average our to from

up X.X% during same-store the the The months. our million contribution in $X.XX the XX opened period gallons quarter a gallons, to to of to price due stores compared XXX Despite last total sold a were strong gallon, $X.XX year ago. average retail gallon decline was fuel new per the in for gallons, this from

ago. a gross gallon. Same-store Through fuel margin gross months, the in average the $X.XX an X.X% same year first in result, down the dollars quarter the year-to-date up are XX% profit compared nine category. a profit to increased period were fuel As with category dollars in fuel sold the X% of over gallons per

Our continues effort positive to a have category. and optimization the our effect on overall in fuel price profitability

our point of integration sale of we quarter, the this During full with system. completed the tool

and fuel of stores to rapidly react converted be price fully sign This changing by We'll converted provide to the conversion quickly also we of end integration will this, increased to to the signage prices flexibility digital in retail environment. digital adjusting fiscal signage. addition over more In XXX price us year. the

volume with total Currently, half volume. to pleased XX% the fuel quarter. also of the our about in of contract made progress year. the We're pace represents fuel volume we fiscal the We're in on fuel our under by have contracted end our of procurement approximately fuel third

Lastly card fuel our category, gain traction fleet in the we in to continue program.

of over new add course we X,XXX continue have Over accounts to card the we and now XX,XXX holders. the holders. Today, third card approaching quarter,

efforts these extra additional our all Same-store card X% the benefit has day for cards our the the with month. the guidance forward. annual fleet combined from in gallons current potential optimistic of in February about driven program the universal types We initiatives third remain and going fleet above range This the of other quarter. trended excluding

to X.X% Moving third Total other store. sales the to guidance. in towards our merchandise Same-store the the were category up during and up X.X% in sales of $XXX.X the upper were inside end annual grocery quarter. million quarter

was shift up a quarter up were margin items. due XXX points favorable ago period higher mix The margin to year same average sales XX.X%, the in same-store due a in product cigarettes, Excluding X.X%. from the primarily basis

Gross profit XX.X% were the up for $XXX.X dollars million. category quarter to in the

first XX.X%. the sales margin were up average same-store nine X.X% an of months, For with

quarter. $X.X first dollars one-time gross in was margin As occurred recall, that year-to-date you nine adversely the up profit X% million. months the the a first adjustment impacted margin was the may Without to $XXX.X adjustment, were and nearly million for XX.X% by that

of from month. annual the excluding Same-store the sales within day extra our trended the the in guidance, range benefit for February

During the data alcohol at the continue currently point. this of working saw the third forecasting. promotion are this on rollout to to limited a our price integrate and platform platform We integration and inside We stores. we optimization categories of our the quarter, beer completed

of margin in to this and expansion program. move continue we We forward these of our early as seen signs We'll you update have categories. several progress monitor with

sales quarter. the prepared above accelerated the $XXX.X January food quarter, the were of the we with in to for throughout In the and rolling delayed platform for the the sales area, the as category potential increase in gains category, sales annual changes month regulatory in Same-store this evaluate total each fountain same-store recent X.X% Given impact. our this resulted This guidance. we tobacco million X.X% quarter. in

from acceleration Excluding with program to our heading gained the the quarter. impact our X%. quarter pleased rewards up fourth in the revenue recently We momentum launched were sales same-store for we've comps accounting due deferred the were throughout and the into

in Although early, members. nearly guests million that the approaching Day X.X recently Currently, we expectations. every inclining our million active we indicated new day. that were At number Investor launched as X members rewards is exceeding enrolled program our we January, is

orders to excited platform We're program. gaining nearly will guests engage we're database with the to about of Overall, rewards all guest are million. about our our digital over them has conducted better. allow our our transactions look of identifiable to traction XX% preferences, all XX% how grown our have and even opportunity X.X responding participation. pizza Approximately digitally of us We guests our rewards forward which for and and of learn more to the serve are

the year the cheese down quarter margin was the compared margin average coffee launch sales cost in to believe was platforms November to a XX.X%. costs program. cheese year. our for continue digital due third additional that Both these combination average were from were from traffic. The for Year-to-date, of impact XX.X%. The as with we new $X.XX of $X.XX suite an a the average per the ago, same-store X.X% in as the well of quarter We of same will up special higher per pound new to same primarily period quarter of adverse the drive ran promotion pound, to last

closely looking With cheese costs market trending for the monitoring buying down, opportunities. we're currently

For ahead prepared guidance, X.X% million. experienced acceleration the the food's the of optimistic We're about this food our excited for annual we've remain prepared to excluding about the benefits gross in dollars from moving trended profit prepared quarter, day the rose and the Same-store February category fountain foods category forward. extra in and in $XXX.X month. sales

to now discuss statements. and operating financial the to I'll to the call like expenses Bill? turn over Bill

Bill Walljasper

Darren. Thanks

We control stay expenses. to operating on focused continue

stores mainly year implementation quarter expenses as as operating to in million. For this the operating systems. a was than our quarter, total an This by the ago, with costs XX.X% XX digital increased driven technology more of XXX.X increase well

impacted the credit compensation performance shift targets the third prices. retail quarter from expenses higher the fuel of to the first And affecting tiny addition, in In in from were rise a fees costs. operating approval the card a by quarter

operating Same-store basis, fees stack quarter, excluding the credit were they were card expenses a On for up two-year X.X%. up X.X%.

fiscal initiatives this So, the scheduling of our study in refine in nearly was process. from a cycle significant as with refinements we hours our this time motion later third in Last a reduction and as look reduction quarter, our expense to ago. we the year store We year to continue to with we this labor labor X% of had completion over process made year. expectations line

inside impact one-time up X.X%. from the statement, On This store. the this the the depreciation on the the X.X% Year-to-date more activity. prices is expenses were Depreciation same the higher ago underground operating appreciation Year-to-date income primarily compared fuel slightly sales from up life tanks total store quarter guidance. and of a deferral was was in revenue storage to period gains adjustment due earlier for up useful stores ago. year in to a and to quarter the replacement positive the Operating $X.X line due billion, some to year related to taken primarily up X.X%. retail was year annual

year tax primarily rate of The to down the due an for numerous effective increase Appropriations resulting provisions. further the permanent quarter from in consolidate to XX.X%, which from extended Act ago tax XXXX, differences decreased a favorable

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

continues sheet be to balance strong. Our

our million. locking XXX payment successful that of cash this to interest $XXX bullet last cash for XXst, in X.X%. week August all down We're refinancing January and million to at as announce net moved we're At this rate a in XX excited current current debt maturities rates liability. an was of Long-term million due were to in equivalents

in average the the refinancing, purchase to on cost the over quarters. approximately this note of will our plan We decrease course total the agreement few finalizing With of X.X%. next debt

higher million months, quarter fuel operating from XXX.X we same flow cash expenditures compared in to year and million, in compared For same the due from discussed the Adjusted ago period lower expenses the XXX decreased year in operations capital the previously. to nine were X.X% ago, a and a the to EBITDA generated contribution million period. XXX.X

expenditure estimate Our is XXX XXXX for capital million. fiscal

like call to unit on I Darren to update the growth. turn back over our you would now

Darren Rebelez

Bill. Thanks

and the target stores our of Through which under as end fiscal construction, build was XX coming our acquire fall we our new well fiscal quarter, we of opening to new future but stores common in under due this meeting purchase. stores considerations additional stores. XX for XX will anticipate year, have XX short target opened by acquire have year including XX and stores have are this Currently, to approximately target additional For third agreement acquisition sites We to XX into in XX pipeline, positions slightly timing growth. that store area. the the

stand strong part is We team M&A a believe accelerate we of our strategic activity opportunity our up plan. have our dedicated acquisition long-term as to we new

we the of health and be not I for about stores. which if our our to communities the moments remiss is members, operate Before speak questions, well a we did being team open to coronavirus. I'd Casey's our guests take and in few committed

presence in monitoring insulated a and create from recent the this and this to response continuously. ensure we this team our operations. to to oversee others, are mind, taking functional exposure rural continuation of issue Even we more stable the business With seriously cross are safe geographic situation be very though, we due developments may our than

and and will skill and capabilities driving to will which unit deliver the we begun long-term opportunity during on add progress to growth, shareholder performance continue current capabilities, on transformational enhance our steps continue profitable make growth. initiatives plan. new closing, our successfully to value. will we review have current have In stand and sets We a accelerate tremendous time store we believe we These new on up underway long-term execute enhance have execute strategic to to

We'll now it up open for questions.

Operator

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

Christopher Mandeville

degree, last you if significant you hours, Can how converting pace just you pricing are declines I given the healthy ability been how of your today's now competitive the kind contracted of some what still crude subsequent about contracts and of XX to pricing to thinking bounce ask we has guys will, thinking should gallons of about and in now those kind of for on be a out, capturing gallons? and terms to remain short-term margin back

Darren Rebelez

is Yes. Darren. Chris, this

capture it gallon. with Fuel. I us at does margin, to afford And opportunity it a experiencing think, affords some very environment to us obviously, some grow this opportunity volatile to we're right time the is now respect same

with day right So day new that's how working. now a is respect to every

mentioned, about to right maximize under XXX% give contract between a XX% like our a of we volume toggle of have volume we don't I we, it now, does and under latitude volume contracts that to With contract, spot contract our opportunity. us have because and our

we're So how that's of managing now. it kind right

Christopher Mandeville

appreciate -- think actually being the looks margin? But to And amplified volatility an in the comment you guess Okay. to even like? see I think I trying fuel last about did allow I'm February and to comps the February more how about margin might for days above recent your you what few currently. relative guidance that February still gallon reference figure, I just

Bill Walljasper

Chris, is Yes. Bill. this

is annual within So respect the yes, February with currently the margin guidance. the to margins,

developments, above experiencing certainly range. are as recent you we this to just the significantly However, margins alluded

won't certainly continue, is the and we now how drive margin environment to we necessarily we're right volume now maybe that don't this -- a very to but necessarily elsewhere. and in even know some Now, capture margin robust utilize also so position will of perhaps long

the mentioned, certainly you extra in Darren above we're February for the as So we are same-store trending the a that. point day. gallon that when in gallons well make comment trending single-digits of I'll the on high month the include point are

Christopher Mandeville

the Okay. in stand cost very margin. XX to program promotion basis one then last me, That's Bill the to points cheese prep impact the And of that just breaking to way is any down kind versus coffee your a of as there loyalty? new of up for relates of terms and it helpful. food

Bill Walljasper

Absolutely. Yes.

going to there. cheese is factor So be predominant the

cost be decrease. driver about XX margin cheese the points just but the So $X.XX primary of as every will reference, the pound That in a basis is XX basis per to swing of points.

And basis of neighborhood, point points impact. you're about the cost So be Chris, from if cheese you out, somewhere it'll basis of that XXX million, about the probably $X.X XXX impact. roll XX kind to so XX impact basis coffee about was relative point to to in basis points a the

So remaining most doing that just activity The the of as wrap piece program. in we that that up. is we're progress promotional will of digital it

Operator

Thank you.

the line with Our next question from of Short Karen comes Barclays.

is line Your open. now

Karen Short

A range items categories guidance. the provide. XQ -- questions you across couple all very line across all related of implied The was to that wide for

can because -- benefit at range appreciate I the February, So I of on the comps just we're kind maybe category you give have Fuel, equal mean margins color, a But like extra for is very little day. you every wide? X.X% of X.X% and to

Bill Walljasper

No. Yes.

And point, the to so, the to not your categories. so narrow made decision we

that we not fourth still quarter. a believe are kind going is and community, annual I in quarterly. keep that's the we decision range, that took was within the here guidance, we the to would the we the so annual make investment be guidance range of maybe this mantra that annual for the we adjust guidance, So in to If believe reference if the in mind not way

did that because adjust only of going that outside the was were to the side. depreciation, range we low on fall we range So

felt had we So to adjustment. we that make

respect quarter, give with which out month necessarily give comp bit a day. to more I don't extra quarterly color maybe the the guidance, So February, can but in little include would you of the we

general single-digit, in February. is a would day, the merchandise comp Fountain single-digit digit month category, a every so Again, includes Prepared be was high Food and and Fuel February. in would that of extra mentioned approximately the and a just the high category, of X% high-single Grocery I the which month And be also

Karen Short

Thanks. That's helpful. Okay. then... And

Bill Walljasper

welcome. You're

Karen Short

helpful? do have get and introductions, just of the related to guess, little would an you and savings still rolled when get that also be too color have I that a but more little menu product to too it? a if just terms simplification you'll a on on think ability -- And wanted in talk And update could then out? to any little study to maybe and/or time-motion new early, you anything you then And potential

Darren Rebelez

study what to Yes. sharper implement stores, wrap I Karen, by quarter stores, of amount of the taking I we're the working looking first With this needs. this will of labor we'll quarter, to that the in We'll that is focused Darren. And happening of stores. labor We satisfying what some think increase the out the through impact is respect the is, still an year. labor And up on I have day fully much the process. still of at putting the hours. overall it way that In to determine of make to study right that time-motion stores, end fiscal in this against the more be. think virtually is other next But during the would parts yet see necessarily stores, about we're going to putting is in may a get not see reduction hours. hours we in labor sure right all we anticipate guest right

as necessarily cutting effectiveness labor much So a this exercise. exercise it is, as isn't cost deployment

to So your menu Then was see all plays we'll on have other out. how question simplification? that

Karen Short

yes, Day? The of yes. opposed abundance from Well, think the Analyst SKUs as I on higher to focus menu, was velocity SKUs the maybe

Darren Rebelez

the Yes. where make That's some And want -- changes we're assessing to there. we right. still

leader of in still search new are a Service. our for the at We process Food

to We have candidates people as several in we speaking pipeline. the We're speak.

we analytical person some that new of work ongoing on a accelerate probably standpoint, board. So once it'll is from get an

Karen Short

talk in same-store and Okay. you of about SG&A. terms And I -- then me just last question know from

gap does you amount but if same-store versus gave right, and I'd it fees on look it, seem credit growth So widening dollar that growth to the on credit at basis. absolute look be a an sorry, you at I missed profit basis, gross it just if SG&A at don't dollar fee looking -- card card could excluding

you when a aligned? those on might two think color any little become So more

Bill Walljasper

Yes.

first the Karen Bill. part, this So is

credit your growth. think gross part, and about, -- And first answer million what I $XX was maybe between the expense The you're operating it's question profit growth is fee to expense about quarter. card a the to a in disconnect referring

there probably from did And so cheese I've time. a all, only year, highest not perspective, but from several about a so, in also of seen cost in and things think that have, to year-to-date we long the first perspective, a very the quarter

particular anticipate path that waning as don't prices speak. continue Certainly cheese as are to we

comparable we did challenging quarter, in year. with to last third Specifically a margin have a very the fuel respect

primarily November, very we the margin fuel margin You had the favorable a, month might of recall elevated in fuel that QX. with

QX that's the of So part differential.

that Another piece you of we about the in in or first underground UST, a that mentioned it gross storage met the just recall had too, inventory year-to-date in would had a might think that benefit perspective, in we back tank here EPS. you the affect from change narrative, but we lives. EBITDA Also, lines. That a million an useful adjustment QX was -- to $X.X quarter net profit back we

to piece in about it benefit to $X.X to One was going EPS. a though we offsetting going net the increase related depreciation, million an a had expense, even that, to an the expense other so

So year-to-date right-sized. all at of but these things our anticipated creates we the of bit a will it a the have are kind that year, disconnect, of the going end on of quarter, in little fully

Operator

Thank you.

line Trussell with Our of from next question Deutsche Bank. comes Paul the

Your open. is line now

Paul Trussell

examples say, the the such driving? being So, a Maybe your the that early little to kind just bit a you insulated others, of give is of customers, to finding anything business engaging circle your there impact that about mean, to is also then that what's in maybe coronavirus little how can would of like you're mentioned detail give you you coronavirus, terms Rewards attribute back and Thank near-term, more an And maybe bit Program on just so than I be any just more some far behavior you. might see? app you but with on happening you success. just

Darren Rebelez

is Well, Paul right. All Darren.

here nearly happy the already. -- the absolute goal move a on X.X million pretty with so today with just seeing how significantly, that been that's we sit year I the One progressing think being up far and that as that members we're enrollment that was Program, to really couple respect our fronts. of and exceeded for Rewards number

And so we're resetting targets that and we're engagement. seeing

them virtually all of have was I The in the of would and rewards narrative is thing of ahead we other be. where just our some in participation that, XX% transactions that we now mentioned also thought

the active being they very have that. and consistently, that So inside growing that's people enrolled are of

with we like new that a we the how -- and been it's us opportunity a giving able so it's we're in engage So to moving far, before. haven't guests to way

to due to fall still have difficult say going starting that I was is cost I concerns With I gasoline say on based oil off some this down guess, what demand and would say that respect the prior be. near to crude OPEC to in really the coronavirus, in real with to marketplace. the to it's come term impact already issue, would to

any seen we but in what haven't demand, erosion in reduction We have the cost. is seen

So grow same us at gallons be to harvest time to some margin. that's able the enabled to continue

far. that's impacts. But we've seen day, for so any looking significant probably happen. impact at this of this top But virtually else right all we anything So had now, haven't to other point on most we're everyday the

Bill Walljasper

Hey, this Yes. is Paul, Bill.

mentioned. to comment Darren back the Just swing rewards on maybe that

longer or term I see One bit benefit. a little things maybe mid-term more of the that

-- certainly results activity the the As our we mentioned, is expectations. exceeding

a means we to from here data, that better. make sure capture end perspective game them so engage the what can long-term is that we customer So is serve and

that or quicker marketing so than expected should we to higher And there quicker have the on target quicker say. more data or have the the we expected basis a ability I than

marketing. another So in get that benefit next accelerated us to will the year do fiscal that might able be for be to that target

Operator

you. Thank

of the Inc. with from Stephens comes question line Ben next Bienvenu Our

is line open. now Your

Ben Bienvenu

optimization. ask to price want about I

the then the of some be initiative the be with to for elements considering Merchandise of move I'd and to respect to hear are should How results the and be rest runway kind Fountain and the are kind You contributive on Grocery that? where of we curious we we improve talked what Beer forward category that category. and about of category? should Prepared the as Other Food

Bill Walljasper

this Yes. Ben, Bill. is

from So from just started little rolling categories a the of the in back out perspective, platform to bit kind we second stepping quarter. a a timeline

so on the quarter. call packaged adding what and the I'll most central the calendar platform, year during of beverages or end so third the we the toward by And probably had store working

As Alcohol we Beer the add and also quarter. will mentioned in third

So mid-innings from probably -- perspective, as roll in a far put out. baseball the into a as here we're the

As light activity we mentioned chose to cigarettes we of all the on. the going defer in

of you very at the But probably So when at same-store preliminary look results sales so two point at efforts and we're this because same General on of accelerate there's little in in category hard there. at piece some the information far, because quarters margin. some albeit point the than out time It's we less reflected Grocery Certainly nevertheless, a it's improving to this we're are and Ben, categories. less as Merchandise noise. the

in uptick once categories we some see roll margin Beer those definitely traction But the out some and quarter. third Alcohol on more immediate we there. specifically, the saw did We

so feel not we completely as out. we of categories. the some rest has Foods opportunities been rolled And Prepared roll the out that we have

will Probably promotion aspect one as significant is be area, very well. forecasting this I think

do our the will promotions the us of ability give network. more a run much we on perspective throughout granular this so to some And that

still but point, heading just the come to more this right at we we're in little bit feel early, direction. probably a So

Ben Bienvenu

thankfully Is of But I of margin and of wash around RIN is higher there a cost you to is largely seen in in factor had lot that a your provide now. question related RIN capture suddenly Okay, ask then anything goods, want my sell when neutral the higher the a even when for but and to that is a and know we or have about, move you that kind still incremental to seen? go the of Did benefit we've while which still mind? great. now reflected like prices haven't the RINs, back RINs. a turn I we for up. that's prices ask market second bread in crack to

Bill Walljasper

Yes.

pre-blended. them whether always that are the So, or we embedded buy we somewhat as separately stated, do blending a we've cost splash feel we buy in our and whether RINs

contract, Now, I and are would under which buying pre-blended more fuel, say this, that. are embedded believe more become we more more as we and into we

we quarter. So aspect have, sold you X million say see RIN's -- that the roughly X.X the RINs we about million in

or reason for that value the conscious you were defer of the is down. relatively into we The more from just is the some low the number but a probably reasons -- just that two One, contracted the activity make there's of RIN why of decision was to other $X.XX unit Part fuel, so. units I did reason mentioned doing March. mentioned February

third And say decision. fuel so the relative did potential we do margin small quarter so sense in have a to would in we that have, I lighter that

Operator

Thank you.

Our next Bobby question comes from the line of Griffin with James. Raymond

line now open. is Your

Bobby Griffin

is Is results you're of back comments that the product about your circle that seeing, what ebbs the the the exactly now? favorable optimization in buying it or pricing different margin that that to to consumers right pricing is from just Just just driving get an is the of trying points purchasing? consumer business. is Or mix Bill Grocery flows offering a seeing improvement? mix just of what we're the and basis was the XXX driving? question understanding product first on Is My that is

Darren Rebelez

assortment Bobby, mix shift I Yes. Darren. the product the the been less in activity. has and more say store pricing would that around is around this the

one, the that with overall some rate. of shift, a of Now, product some of declining bit activity benefit. accretive product able relative margin been mix to obviously the just the to gain margin to mix cigarettes But we've the some is pricing assortment

higher we which thing obviously category, carries in Then well. margins significant pretty as saw was energy the second drink growth with the it

a of seeing And of velocity so resets some some the good assortment stores, we're items that doing that. direct in that door the of was really result from expanding higher contribution a some within

Bobby Griffin

do mix think you of -- benefit I that forward that Okay. in mix is sustainable And type is degree guess? going some

Darren Rebelez

we're really more is adjust it ebb preferences assortment. product building capability And as being assortment And that out then the and flow product of for the right. with the is the accordingly. Well, nimble something moment, we'll consumer that's

adapt we're the in So needs. so come just preferences in those needs as assortment change, to happens of to those that it case that guest this meet form able items. margin And higher

And that so mix margin blends rate. the higher as up around we margin shift to those that items

Bill Walljasper

Yes. Bill. Hey, is Bobby, this

the think category. a unknown of now play about with that how other that's we is right bit things a will cigarette an and to because of out information have of that H 'XX little just One lot

they do is to demand extent obviously become could continue margin part is shift so expansion, to to product little some other about mix with just the from that if So combined a about. that the of think that something cigarettes, a activity perspective, and have that pressure Darren that -- talking under bit

Bobby Griffin

message few seeing and expect the that you you for with adjust I if very that's I And that's Yes, is quarters of the increased we promotional impacted hit me, understand should drag where you drag something much appreciate that that think it. kind I opportunity Prepared from promotional activity, commodity the Food, until as and do the lastly you're it? comfortable look you from to next but not then Okay. guess for helpful. now there's or are an just at lap

Darren Rebelez

new that that This Darren. coffee activity a Yes. promotional was of event more our is launched when one-time we I'd platform. say

for would So be to aggressive velocity trial. drive coffee we an and that and the margin we were size investment in any that did knowing $X

pulsing a basis. time to may routine we're items. new going But it product is a in from not something launching we're do if time So to we're and new we that's do something on that

wouldn't I routine on into a any expectation basis. bake So that

Operator

Thank you.

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

Your line now is open.

Kelly Bania

sure and inside can trends want just is gallons that some questions, us just an the you traffic just the you some to of help make of February. day just the or the comments you're underlying could just in understanding the acceleration back on can what And same-store and sales couple that. Are to understand I'm Maybe you that extra message seeing clarify, customer seeing on a you tie-in go impact? guess, And I of in then, store?

Bill Walljasper

Yes.

going the categories. even -- about to probably on that X% to February. make just impact in the month across last We clear comps we do from this day try extra absolutely, for underlying seeing very the sure a acceleration want a underlying So, are have several with comps, been the that And we we're of months. on in we -- acceleration an did has the all roughly

so you all those high are roll we three two together, And those the in when categories. single-digits across

with So, as yes, true well. and think holds definitely traffic seen that I acceleration

So, as traffic we have seen well. some acceleration

the Rewards and so, elevation that's some is the But things some seeing to also the believe favorable number weather as And matter. helping and have we Obviously, movement of there a in did we of ring Program basket quarter toward see that. well. around the we're is traffic there starting end comparisons

ago. the compare a polar did year vortex remember, we might You against

And as that so just bit is little well. to be of fair, there a

Kelly Bania

impact And Can terms you helpful. Okay, twice-a-week you're bit on that's on what deliveries. stores. elaborate seeing the little business? very talk XXX can a about the of believe in I you already there the the you're testing

Bill Walljasper

Yes.

us just for started that months early a bit We little in just a to ago regard. it's information. give few you So any

And this more year so to the playing of that. the come and with through we'll out fiscal on more end be

to from to product So, fresh the more is we the of not of into but really thrust we feel trying ability bring point, a significantly basis. look out really any the at this of the And probably for here as of information things number ranging on kind that's store the direction this company more timely control at a that. stocks, is the

Kelly Bania

talk and wanted also that then to forward to about Look category. great. just nicotine Okay, the

with talked Merchandise and seeing bit what there? little about impacting are General comps noise the How I are the cigarettes, You just Grocery those and and you e-cigarettes, have or combustible trends on margins? changed electronic but a think

Darren Rebelez

category, Darren. have is seen little age the a we thought have but obviously, the What in cigarettes overall this Kelly, Yes. not you might have restriction. much as as been softer, given

bit, On that softened has growing. side still the vaping it's little but a

at So was a than just it growing slower previously. rate

then So been the same there a of a from a bit about margin has softened. smokeless out And well. the it's definitely as but items shift to standpoint, blending has

Operator

Thank you.

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

is open. Your line now

Bill Walljasper

you the Chuck Sarah maybe on question. next Chuck. there? Hey, move still to

Operator

you. Thank

Company. Our the with line Anthony of Lebiedzinski Sidoti question from next comes &

Your open. now line is

Anthony Lebiedzinski

with for your congratulations retirement, you time. for the working and Bill, pending Yes. thank pleasure certainly certainly a you And taking a been questions. Good it's morning long on

Bill Walljasper

well, as You Anthony.

Anthony Lebiedzinski

actually. the So just RINs far question wanted as to on follow up as

the hold your if any in margin idea -- RINs curious quarter, just what been what quarter? didn't selling you back gas on the the So, on margin in the the RINs could have

Bill Walljasper

Yes. couple $X.XX. a that at deferred a It million would RINs about talking about we have been very small. We're roughly only of

X it'd would points X very X that be basis in points, basis neighborhood. but points, be small, roughly basis So, it

an movement, So nevertheless, huge not but a impact.

Anthony Lebiedzinski

it. Got it, got

coronavirus. you thank follow-up just for on just Okay, And also a that.

of deliveries be that expect Foods perhaps to Prepared customers up would going that, to are surrounding out stores and wondering seeing more Just sort issues maybe their you more your not deliveries comfortable picking may if were the Prepared of perhaps the Foods? or you

Darren Rebelez

that a Anthony, Well, mean, I is possibility. potential

have seen at how be does. potential could out, point. But at to haven't as haven't we that Everything We'll normally We occurr point there this a but see this plays anything. to seems running be just seen this it impact. all

Anthony Lebiedzinski

also previously as And or Do non-fuel opportunity. have that then you you about updated as to stores any be? the could an being had thoughts talked what

Darren Rebelez

team looking for of is some process in sites. the Our non-fuel

working But have open expect calendar of this but to the year. have we're down We this point. the nothing purchased we by and one just the in end pipeline that through locked several process, to at

Operator

Markets. Instructions] RBC Irene Capital [Operator comes question the Our of from Nattel you. Thank line with next

open. now line is Your

Alex Carette

to strategy, contracts? what And you for time? over to expect Hi. what it with contracts? the Coming It's usually, regard would like on these to would the of fuel long-term goal proportion fluctuate Alex Or procurement be Carette filling volume the look back in Irene. term do the on

Darren Rebelez

hard as at don't give negotiate shorter We of this look process. length flexibility term we deal Initially maintain I term can total the right the so Darren. based take think directionally our side is all have to would more terms shorter some XX% each varying think vary, now, into on this it little contracts. maybe But of Alex, suppliers. point. so of a the we -- on XX% XX% contracts of to that's for or contract volume our of we opted with we've XX% Yes. we real we of type about work some how the our about goal, But way volume at under

Alex Carette

from just Is to the with internal new on expectations And two? of customers? like you staying program, for great. anything in Fuel, provide say Okay, can accounts in targets there or update year terms an you share next your with can card the regard existing let's pickup fleet or

Bill Walljasper

Yes.

So next point, give here, of we this that operating necessarily granularity when give on into don't plan for would expect to year. go out we'll call, type guidance detailed that next but I next fiscal forward at we moving out the

be that incorporated and program provide color into will fleet our time. we'll category about and card expectations So that expectations that the Fuel more around at

Operator

Thank you.

line comes Our Morgan. the John next from Royall JP question of with

is now Your line open.

John Royall

you So there M&A year? new quickly just we should around question DC on over be to Joplin? your kind the in space and around white opens activity, guess is expect And near-term can around when around current how next focus the I to bigger new-build the filling it of scale new

Darren Rebelez

different couple Yes. this within Darren. is in existing of We're our John, a geography. areas focused

a that pressure on although, going two you I'd part reason to other just the DC existing off not exclusively activity in distribution is So Joplin we're really of that DCs. is within I relieve what we do of Joplin, have the it's remind the of guess that our lot of radius, area. building

us we serve going when neighborhood in center we're the immediately to stores open of right of the out up XXX gate. So that somewhere distribution

And us as now efficient footprint attractive more our those so that some those in that more within we the geographies that in so pretty also stores developing well. or network allow entire right geography, distribution but develop will to will have other make and are

Operator

a We of follow-up you. have with the question Barclays. line from Short do Karen Thank

line Your is open. now

Karen Short

And it's Hey, to with this for years retirement and would almost XX I congratulating on you remiss Bill, you obviously working I be great not point. at your thanks. been think

talking to will we definitely So, miss you.

Bill Walljasper

Yes. Thank Karen. you

Karen Short

a of on be couple would more calls, You'll right? think, I

Bill Walljasper

least definitely more. Yes, at one

Karen Short

Yes.

Okay.

of one I year-end. actually like low, would was materially does But then on guess things, extreme I to to XX% -- risk this guess swings the or by from of -- light I And and to I question again, I is, the -- contract volatility because today on that's whether be wanted a is you benefiting the a does a had contract, the revisit week, go you two wanted from contract the and one And is margins that percent like margin I said high consider XX% in perspective and obviously, week just So day or I back then question? higher other. a something explore know, And -- not perspective. percent.

Darren Rebelez

Karen, the indexed that gain Darren. Yes, of this is benchmarks, this kind other or in really ability that to don't the typically our Argus think I of environment. contracts margin Platts. either to inhibit one They're so

And so rather. Argus or or OPIS

environment coming that's this, lower than we have those in usually as down a are And like so that. differential an numbers

like it this. incremental So, us actually in environment margin to an allows gain

then And volume, of half not time-to-time, of a does our contracted. which We little even still this. same at like displacement, have happen our reason contract than the token, bit a if a from some have half with do we for volume more

look the is or XX% keep we ability give give that contract abnormal. like contract If to that So us under our XX% that. volume on but situation it flex would the XX% this to flexibility, us of that's reason off to term that a does very longer we

to And anomaly. strategy so every fuel one our build wouldn't we a procurement entire while around once want -- in

Karen Short

terms little you give customers new the benefited along just might of from Okay. color And if could coffee how those of on That's reception color could anything give a wondering traffic bit have on lines? it like or in the program, helpful. then impacted you or any

Darren Rebelez

traffic Yes. to but unit It would of coffee the hard increases, program actual reception be the to is up. velocity tie

with they like the coffee anecdotal and it's gotten really people the like We've resonating guests. that experience. we So the good believe feedback that

good. build. Coffee those So, a long so time to it is of takes things, far one

future. we're So few into months to will a and for all indicators But grow positive. it are continue the the it foreseeable

Operator

Thank you.

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

now is line open. Your

Chuck Cerankosky

here gallons X% what away ongoing the adjust you and do in at the continue the that quarter negative margin take to move an where recent and as basis? looking lessons you most on was, price In forward from

Darren Rebelez

learned, this year. we're in margin. is still striking if right I and roll of between but of kinds guess mean, all that optimization and quarter really volume this that balance this for be we the can really in fuel out of there Chuck, And Darren. is recall, I process first you process lessons balancing that price

believe we're before, They're our So that they to would markets of price stages know respond did our really maybe actions. is getting to I relatively team intimately in still understanding tell more that. competitors I our much you memory early these muscle but than it, that around building

think And we're now to think getting we're starting under little starting see how the a situations. three more recent growth. so, execute it we're we're on day -- And every to trend reflect I I bit that's with gallon sharper to quarters our some against able call different belt in and

margin the multiple balance that right these the where how all little footing find bit we to geographies, starting we're and a because think to I differently. know behave across volume geographies

think And just knowledge, better that institutional I we're getting we at as build it. so

Chuck Cerankosky

last more months provide the Gas choices what the and is degree helping the XX that fuel Clear in for and volume? To margin EXX the pumps customers. more and diesel added you've And

Darren Rebelez

Yes.

really has I mix materially. impacted that Chuck. I think it'd that be very pretty overall small, margin don't our know

Operator

back like you. Darren session. to Rebelez for closing now turn the remarks. concludes I would over question-and-answer today's Thank This to call

Darren Rebelez

this next results Okay. the And value. we'll EBITDA, looking on at strategic our designed a our in return updating with you we to by joining call believe We we plan much to strong is as track the the very years. capital. Thank us Well maintain of our continue is our to record drive We're through progress think you you. that driving forward three thank this for shareholder plan long-term morning. well-balanced growth invested I'll time same close reiterating

Operator

today’s you concludes Thank call. this gentlemen, conference and for participating. Ladies

You may now disconnect.

Casey's General Stores (CASY) 10 Mar 202020 Q3 Earnings call transcript