CASY - Earnings call transcript Q3 2021 | Casey's General Stores, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q3 FY 2021 Casey's General Stores 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] I would now like to introduce your host for today's conference call, Mr. Brian Johnson.

begin. may You

Brian Johnson

Investor morning, Executive discuss Good January you joining Financial Rebelez, Vice for XXXX. me Development. Thank is Officer. and today results and Steve from to Darren President, Senior Johnson, the am and ended and our us Business I With Chief you. President Brian thank Relations Officer; third XX, Chief quarter Bramlage,

business a related within by the begin, known statements or remind plans COVID-XX. the by to uncertainties, effects of unknown potential XXXX. in plan, other annual constitute to any XX-K described which strategic you us made of as well growth company's timing the actions, our on execute and and those strategic COVID-XX risks, and our our to, ability impact during of Buchanan Form report closing, most materially or benefits possible on and periods, sources uncertainties differ factors plan of of including, not our from the the and integration to I'll governmental of statements acquisition, may of views the pending this integration and forward-looking future and for at Web forward-looking actual assumed the as limited statements filed factors supply we expectations recent may are strategies, results Energy related Securities or Before forward-looking include needs, realize Private duration from number to but of future Form on implied the as operations, synergies, update certain revise and on and of SEC, stores, statements, respect statements expressed Any meaning the or Act a future future as chain, cause any with current performance call and relating of Litigation results call opportunities, events, XX-Q, or our investor Casey's events, conditions, made new that that financial or forward-looking reports results result information, site. the the to intention reflect future or to available any Reform with other statements, risks, whether our otherwise. disclaims obligation this statements forward-looking There quarterly These today liquidity and are as and and during our

I'd like third discuss Darren quarter to the Darren? turn over call our Now, to results. to

Darren Rebelez

third again, Thanks, as we've difficult a morning. environment, good has our in performance everyone. pandemic. maintained result, quarter one We resilience strong this to tremendous and Brian, a and with our look our Once into morning you forward sharing team results demonstrated the year financial

For to year, and to brand, navigated more the complexities, logo, been our serving able challenges guests in our expanded launching guests delivery, yet refreshing to new we've relevant many new pickup branded with continue curbside and past ways. we've are Casey's a including we than offering ever. From our products, our

for We for we're are and our here good. here guests,

Our member. I of possible, team this couldn't prouder makes be team each all and Casey's

focused pandemic remain the and complete health members beyond providing get members harsh vaccine. to in team team a vaccine. to support our all and eligible Casey's our full We a vaccinations, bonus the and the areas. XX,XXX dosage to members COVID-XX going are team To encouraging despite who the includes Our serve that $XX.XX is of on are wellness of safety, winter to now intensely above many guests and their

the will here good access increases, of We're availability in coming vaccinated communities. team for also As months. our in more our be that and optimistic we're members

veterans organizations and to in-store providing raise to During funds the in third partnership an assistance PepsiCo, quarter, Casey's campaign, families. giving their for completed with

two These veterans and you campaign raised outstanding veteran have occurred organizations, made guests vendor team they loved funds and face. our Thank greater them to donation especially that benefited November. will made, myself, good families allow the the Each over to Hope do stores, Warriors. their the Fallen Casey's. campaign of This Casey's the impact in $X.X lives in have partners, know each challenges the of $XXX,XXX ones. these at an they from of truly sacrifices charities For and received our a giving I Children that member shop to even that who ask our Patriots, year's and on As million great The when the over

The given the during EPS team $X.XX, primary impressive with profitability the discuss let's third the inside of of up driver along Fuel the results. the faced We the were an finished of same-store increase, sales, the which results year. quarter's diluted quarter X.X%. quarter. with the remains Now, particularly challenges with are resurgence adjust from circumstances. previous the a The the increase XX% of for remained adjusting continue after store now the but like of nimble results turbulent time, team in same-store categories. this labor some the to our able to operating and real-time in each also actively I expenses reduce go throughout share hours details X% to over COVID-XX-related pay, we was as would to and resent COVID

steady a quarter, continued gallons fuel per sales fuel quarter, gallon. experience to average sales. up of were X,XXX the our card from is team of performance in, quarter. to by an XX% operate disruption costs responded total accounts, continued were inside fuel have quarter. the fuel margin geography. did XX.X%. job balancing about proud to another over prior sold in profitability for During XX.X% the and We a up we our was in tremendous increase margin compared compared wholesale and X% pandemic. to fuel the I'm also under rise the Same-store prior favorable and traffic profit the gross year, our Same-store solid environment second represented contract, rose the the and fleet The Commercial currently of challenging a due volume year approximately most volume our margin which A to to yet delivering volumes third of environment. XX% the team margin Fuel throughout of down throughout from a costs has the fuel margin performance. relative with program X.X% industry considering XX% quarter, sales XX% fuel $X.XXX with their when

larger continue offset We see inside basket by lower to size guest traffic.

and tobacco see Initial add existing to space perform XX.X% sales only grocery quarter amplified optimize the categories, us was of variety a detail XX.X% are improvement, more resurgence categories. Steve? the sales, or to breakfast sales as would from throughout coffee; the and reset offset within and second from outperform, and both row. with on impacted COVID category benefited this first-half at for us over average particularly has unit daypart, adjacencies as the to to to the home morning experienced flow, by pizza year this out The average other one-time roll our a daypart. reset more ago. people Same-store our quarter X,XXX up improve go quarter sold along XX.X%. from encouraging. were shelving same-store XX%. expand sales particularly performed merchandise Steve program, mix prepared to SKUs, and is this and carried quarter During label sales were X% allowed segment. price up selling food of positive continue to like still margin with as was The reset. to Alcohol turn and store the partially of space. count. Not no from of margin in during moving believe tax adversely those will beverages following fountain into quarter, school. the the with We improve adding merchandise flow the and from to the in will Whole reset. a impact X.X%, did for a first-half cheese work Margins by enable company locations. the more be interior financial significant the the were at statements. traffic down pies over modest reset the we during discount and to now like effectively call in the private shelf longer existing the an I some The size continue among vertically items, Same-store by shift well, well hampered guest versus Self-serve bakery results the involved The continue store packaged lower margin with

Steve Bramlage

a as the year a period was interest. quarter X.X%, to prepared was was $XXX in are due or driven two retail our million. Thank fell approximately the drove gross performed price part sales ago. to of of define prior sold gross to Lottery our quarter basis. Grocery million, and of record of categories commission more primarily had profit. of by $XXX impacted cost other previously of you, a This gallons quarter. for fuel year-over-year very decline benefit in the the the profit, on Darren, million outperform. of food fountain price for year. the reported margins same-store Prepared margins That's store sales but decline sold income. modestly approximately and sales and cost inside as good and cheese fuel of The pandemic, increase number our reset we points. throughout margin $X.XX profit, lower $XX not fuel. decline as a recorded basis morning. by $X in were of mentioned. Total year-over-year did company all XXX amortization, less lower XXX offset increased have favorably million, of profit that margin ticket $XXX of beer Lottery gallons XX.X%, conjunction over revenue gallon, of rather Darren the especially billion, an ticket and we food had products were discounted in depreciation prepared within also attributable a sales; comparison. XXX inside margins Inside decline note million increased of Grocery The of year. from If X% by be Casey's sales certain the jackpots increase would a $X basis prior net as the favorable was to an points. prior million. sizes performance food third $XXX average them of where approximately consumers sales which by by fountain and well shift continue lower from food sold were in XX.X%, other million, both larger This while is fountain quarter, and pressured gross other third and compared operated gallons. XX% XXX a approximately in have gross guest a fuel margin sales sales $XX $XX the inside other merchandise $XX stores X.X%, higher Prepared gallon of XX.X%, year. retail basis up was to million $X.XX from the this purchase mix million by a merchandise goods and Total sales, revenue Total of excluding quarter down points Grocery as third pack is a which in XX Please to the categories retail included points. basis continue during as decline are merchandise like approximately figures across large merchandise and million to well with tobacco that from we

decline. approximately ago were were quarter. margin or compares modest to increase. fourth The the the point year-over-year several from XX Total for expects in and basis at represented million. improvement segment prices cheese that Our quarter. factors about benefit cheese the this expenses its driving There This for a pound in year up of current margins XX% locked through April. X.X% company $XXX has to X% And quarter a $X same operating volume this in $X.XX are an costs a quarter a

major First, million. compensation incremental stores And, incentive labor operating XX cost. a cost already year from reset is $XX also in in short-term with in the incurred long-term a The expenses. million associated $X increase discussed. Ten we've and store million million $X company than more ago COVID-related

third the the job Our did X% Interest managing operations store $XX.X XX.X% labor this during due resets. we million extension quarter when positive an down with same we the quarter tax increased XX% August. year year million senior store rate credit is impacted by The to approximately refinancing that quarter, of for quarter quarter. outstanding rate labor discrete through comparable that's notes $X in December XXst for million. the And to EBITDA income a annual and increase Adjusted Net in The the for to completed hours savings $X was a the this adjustment the was tax credit. million similarly our Tax to drove to the Program prior adjust effective which year an environment last same-store pay expense to the and Work in from Opportunity was to X%. COVID our the company year. XXXX team extended third rate primarily that down generally challenging received Credit sick tax was $XXX.X an ago, XX.X% $XXX.X and $XX.X prior compared was of the During of million

strong. credit. Our cash our the XXst, equivalents million. January At full balance lines and capacity million sheet were available And of very we cash continues to be in of $XXX $XXX have

loan pending will closes. term amended quarter, the the credit existing Buchanan company it once to million the Energy agreement During include $XXX used be finance to acquisition our that a

that ratio XXXX. as significance quarterly At define per less leverage of have negative third operating cash $X.XX by this the driven of March and amount $XXX start X.X flow compares the and were expenditures property working we stands to Board million. in higher the company of in from third was to than efforts times. maturities accelerating prior both improved at COVID dividend of meeting, purchases year. free activities until And the equipment of Directors are issue Capital less quarter, earnings flow year at construction million we But $X Our experienced which the of prior $XXX the the the from generated in million share. performance. quarter. This voted capital in and of million we delays The cash $XX no

equipment. the higher impacted working to which Our capital flow year-to-date opened negative stronger to effort free XX has proactive plant, and acquisition the extend under due lower far We of primarily industry term do from fourth cash from stores. three in as deferral fuel favorably payment by purchases be expect spending. capital free year completed quarter payments of also company timing of property, but and the performance cash flow Act performance of security social the to new this continues to prices be our the additional earnings, CARES so a is stores and well The

We stores construction. under have XX currently

newly to continue will we opening. stores We with XX believe constructed finish year the approximately

and Casey's Federal the received a As request additional for from we disclosed previously, Energy Buchanan information Trade Commission.

FTC. have the anticipated a we with to expect on the cooperate or impact review do to continue not We economics material acquisition And its the and synergies.

from be by Given achieved is operating period last as unusually to reduced the to lower high expense year The as pandemic, drastically the lockdowns. in pandemic due occurred profits well being fuel the the the expect given challenging hit due store that the hours imposition fourth especially the guidance mid-quarter low to are we do business providing of quarter business model than current incurred margin quarter we year, refrain said, to uncertainty the an going as operating to the prior we future fourth unusually brought to That last be on on results. year. still going

year-over-year our expect OpEx by hundred We second basis comparisons. quarter several points increases the will because the of third and fourth percentage these exceed of quarters

second-half pandemic, begin While our first of to improvement very to traffic quarter the and the volumes lap the of we storm back prior to for year period. we winter Darren. quarter of the turn the strong call in COVID-XX in a fourth now fourth double the negative of the the continuance the I'll headwind patterns experienced as over have widespread mid-February due the part expect

Darren Rebelez

Thanks, Steve.

Casey's times. challenging fourth congratulate The off very of much territory. got third the a delivering temperatures operating First with cold quarter team results to for turbulent totals impressive I'd our to extreme high quarter during in and entire start the like snowfall impacting

low figures quarter-to-date of excluded trending same-store disclosed year-over-year and are $X.XX prepared trending year. sales As low trending the and remain grocery just of the this most is day Inside single other to February The favorable digits, impact down categories digits. in down single down mid-teens. XXXX the the sold call, under leap trending The Fuel quarter-to-date the positive are in digits. per merchandise quarter-to-date pressure gallons currently. due low margins extra double the our gallon in food is are fuel around

weather started the ramp start in both experienced the of restrictions, to the impacts guest enable stores quarters whole the next that we throughout more two engagement improvements our temporary made to fourth drawn The retain should While late distribution assortment. our the quarter, able a and the With guests business. visit warming challenging were and pie to to in being spring experience continuing us our geographic summer being COVID-XX excited and and for excited due up, capabilities we've our already pizza weather that months. projected about and to footprint refreshed guests digital we're to we're

effective our We deploy will program through business plan. continues when traffic long-term The and strategic commuter to promotions drive also our school. from be team ready reward work execute returns to regular to

made commitments the We on standby guest to continue pillars of one to we go our deeper little the plan, experience. year. a re-inventing I'd of last like the

Our for we with one just million program we moving its guests can behavior on We're their based targeted cohorts we're campaigns on members. anniversary. have excited for is digital to celebrated very recently and year holds purchasing promotional completed this guest guest impact the an now engagement We've forward. history. what popular effective exceed reward future customized confident Casey's and our X.X The program

orders delivery of total over stores to bring DoorDash. provided added as expand were outside Casey's new incremental has DoorDash our delivery XXX using our We We hours. also to sites continue services. orders XX% XXX of third-party to delivery

Uber in fiscal first of the launch DoorDash is expected piloting year. to an Eats addition quarter Casey's the In next with

most initial the we inside mentioned reset program the expectations. store month to I label the We're throughout the guest thrilled brands program with the of did add private so continue long the label was private to requirements. the chain. as we'll continues these reset, but Casey's products. After brand sold outperform sales, they including previously Our first three meet drive non-tobacco products to popular response, the

retail national must the compared product have competing a the to First, brands. lower price

choice profit to Second, jerky, grocery sales and bakery, brands. throughout food holds amazing competing X.X% program. of compared one number competing bags packaged Private the the of must than be seeds, our national shows label national important, quarter. in amount to for thus made progress time X%. prepared the guest end higher third has merchandise the and to in and most be by power a Due such accomplishment each our the of we're of is an the short these quality brand traditional be and beyond nuts or and far. to pandemic. or The our higher quarter, brand. effective our digitally, positioned sales our product app, must to line last item orders XX% brand excess pie engagement, DoorDash. via Web the be guest Casey's the grown were to in of Adhering And Over penny it are the to other we site, the whether business proving whole with guests the were of very during well And retain the placed be in digital already our the we've attracted criteria

by introduce we activity. and Our Offering delivering offering take segmented continuing expanded by slice effective, demand. believe and targeting strategic In on questions. take to to future performance business financially We're quarter is good experienced my proved distribution promotional pie bonus and your pizza Casey's buyers and targeting more results. to frequency. just our of is conversion as steadier pizza our increase closing, we our both looking assisting private to of third offerings We'll a advantage whole appreciation purchasing the as to campaigns new pass to fantastic well now for becomes plan Casey's we entire pent and points the to new up points execute have purchasers forward Rewards long-term vaccine I want double label products, on team with campaigns strong our strategically, widespread, positioned,

Operator

from comes [Operator Instructions] Karen The first with Barclays. Short question

Karen Short

I better. little focus Hi, to actually thanks wanted the a reset very much. on bit

you that, in You mentioned to about improve in obviously, an vertical the remarks traffic flow, prepared was there an square increase footage. talked but effort

to you how guess. follow-up. percent So, actually added. terms to increase could quantify wondering I had of more shelf a actual space, give in in you on that much And little of separate color footage And vertical then a if square I then try

Darren Rebelez

the Yes, of reset Karen, this couple reasons. for is Darren. Yes, we do a did

[ordinate] that flow was a purchasing. and [Ph] in impulse purchasing traffic promoted way shelving The adjacent and first it to our improved such

our XX% a products essentially, and buy the we conversion some we was to of time, to just those unproductive. get weren't one so time, items more while that they number by the refreshed get another add impulse that so the the was a result in same And about ride it goal raise items seen selling, we've walking been heights the stale people being And store, right we assortment, of in place of were into So, be had gondolas; assortment, of to increase there inches us would were as add-on right the the and At what products raised. products. And in entire so XXX the that. that assortments, get as for within roughly improvement same we was that the the purchases did, able new and allow at to XX about SKUs. did to and rates other

Karen Short

And helpful. a the rising during to thing, your called pretty then, guess, you wanted wholesale that's fuel have actually for Obviously, meaningfully to environment, is switch you the COVID second. gears decreased turns that Okay, I over but period. the I for out

given how an benefiting inventory sense a the you to give environment of wholesale just much rising even try comps comps? be to have on the could in un-fueled might weak you a how if many the ground with update you of days -- gallon actually wondering actually from I'm weak So, get

Darren Rebelez

purchases we give time teeth do that to try the that we closely, but manage rising to and inventory, wouldn't of you such walk days our into the very of I a market. be don't Yes, prepared

end unavoidable said, literally October Now, that market because ever since been wholesale has fuel being the of today. the it's frankly, through been rising

And it get much at and inventory. stock. to matter almost you've But got in that can to only to doesn't those back so, there's certain a any try because do time so you purchases manage point, more

does our job do. environment this rising team to nice is So, ultimately, fuel much can wholesale in run, a a this not a of such the protracted, that managing of short you that's challenging in have steady environment, And why environment. always there's type but you operate in when slow

Operator

you. Thank

Our question from next Stephens. Ben comes with Bienvenu

Ben Bienvenu

everybody. morning, Good thanks. Hi,

Darren Rebelez

Hi, good morning, Ben.

Ben Bienvenu

want to or that want for expect the us bleed I will that on could set impact discreet to the quarter impact. quantification I any XQ follow-up also story to margin -- other you to And give the and Any margin? we merchandise be third the should grocery as XQ of impact to well? around into

Steve Bramlage

quarter across Yes, warehouse chain be and to would the millions inventory discreet the largely of sure. resets supply stores in adjustments Ben, The the This several finished. are is Steve. morning. dollars had related We that reset good for

We because right. mix pressure continue have just changes, year-over-year to of margin

larger some the place, especially So first continue outperform, as alcohol that as which being those margin tobacco in are two on lower there pressure categories categories, are pack speaking puts and and the purchased, margin. generally in sizes and to the

the discreet. in So specific to think continues, pressure dollars should but we I current be took reset third the I of the trends, quarter the several -- mix that millions with

Ben Bienvenu

reasonable, as key for then growth, bonuses where growth be at I on To labor parameter normalizing these vaccinations, reflective this as dollar is a traffic assume noted than operating expectation COVID as But your reasonable abate is can expenses, operating you for head of business? for I in-store get XXXX. Okay, costs hours of have degree would as expense your lower a do into your look some XQ, but suspect you start any think will you I and for your that's of on the you visibility, a move of gross to fiscal us incentivizing component know vaccinated. well what the rate you sort give think workforce And we great. you partially around to forward? as we expectation profit

Steve Bramlage

to that expense right, continue to consistent communication Investor than we in a had, where to had we're medium-term company generally growing. Yes, is lower going we at the with believe Day choose grow EBITDA the the the that rate operating

trying we're XX% good that. And to grow couple expense medium-term, over an that. be CAGR we that EBITDA turns about and at to X% operating below So, should feel a

quite a to of the of so if south we're stores compensation expense you easier. the company's performance at level. And X% as operating percentage. we comparable generated adding a of going short-term And that to bit think be COVID-related year, if normally dissipate, X% And the bit a more little incentive the and expect of and to grow by And side. expect incremental And percent to each we that to expenses start keep hopefully, forward, has it long-term year-over-year not new going will the of, a on entire increase that's make X% that couple would then obviously, that rest organization, XX%. would the to thing

Operator

Thank you.

Bobby comes question next Raymond Griffin James. Your with from

Bobby Griffin

Thank for everybody. my Good taking morning, you questions.

the down side again, wanted touch fuel margins, First, I quarter, despite very modestly rising just environment. to solid actually wholesale on the from second only the

second you've just can of is help of of larger drivers be how a that, moving there. you when the rising work then this the we've if process? benefit as wholesale Is doing renew, towards part period that just us from that a then you the been benefit procurement, there contracts and during guys large So you unpack some any any as or and And are all there have risk renewal getting it these do to been is that, won't associated prices? renew with --

Darren Rebelez

led I the really this Yes, a Darren. to margin. Bobby, there's that of Yes, factors is think combination

it. You we're certainly the piece under touched at And about our of of volume procurement now. XX% on contract

number that So this has continued rise year. throughout to

pricing as and team volume we the more realize done volume right under a nice benefits. strike margin. balance has same time, managing of that so At and between more get really managing And we the contract job to

from you've time so standpoint they Opus think on terms. we've data, our seen, a in the outperformed different the With And I respect based these contracts, all at margins. captured to same volume and geography, have

so but them throughout one-year contracts at those we And of signed year. number have a the that there's a times varying term,

fact any have a number provider. So straightforward. of, a RFP of that negotiate current speak on With the we of the is sort sell where to pretty contracts And to We're not bills, can renewing that we providers the matter unbranded geography. renewal a companies' gives from fact fuel us be that depending number process of tied low we're to we're attractive with our time. of bubble, brands. don't any out And oil on with can of can a versus so because we it lot optionality, very pretty any those, fuel risk branded sheet. the a customer pay We respect have balance expiring solid we put major given perspective. We the

D-branding with capture suppliers cost. be to So there's to a able best switching not the cost associated

Bobby Griffin

how what as from And private launching uptake about participate for on product team the label you. I to ultimate permission or label might the the private standpoint. the you the guess, changed, Thank about just and growth, just stuff, in you penetration me from customer secondly, kind early of thinks success for how a nice have the think products pretty

Darren Rebelez

our we've perspective, our around we've that why guests, I our that the for I we've adoption profit of mentioned for private really good areas retail of that those a there's that it's frankly on and combination I exceeded higher really I is benefits changed think us benefits guest from but three guests, also reasons. question. before having lower us, label lot higher level our powerful. price on as the I And think benefits a expectations. that that penny a product, a think Bobby, received then Certainly really products is, the strategy a learned and know it's which reflected is couple having quality don't

gave foods our guests would us we categories. perspective a I with well, outsized as say fully probably what I the And so much have the received strength didn't of credibility, think was prepared brand but with other appreciate

seeds, or reasonable introduce from And in snacks and our bakery a we quality brand. expectation high of us so, meat an at or when products nuts there's packaged price

gravitate to it's and so [Ph]. so immediately people [accelerated] And those,

continue work continue So I to team that accelerate see in great very of a our the given and coming be mix products what this is it's path several over tremendous new but done will mighty time. the would in ultimate is pipeline They a as small, the months. but we period confidence they've have us brands that next certainly we'll of private and short say go, to to

Operator

Thank you.

Your next with comes Herzog from Goldman Bonnie question Sachs.

Bonnie Herzog

morning, Good everyone. you. Thank

Darren Rebelez

Bonnie. Hey

Bonnie Herzog

are did Hi. interesting. topic, to I just wanted just stick And very program private the with of to that something. verify you I comments some on this made your just want

the you but improvement saw when of get I it quarter, mentioned to were during essentially mean, the just weeks to [finish] You being was measure? trying implemented? how many you a sense [Ph] able

Darren Rebelez

products. January in declared roll of Bonnie, of of out the would finished we say Yes, I initial the slate kind

we're So November that we inbound began at of with about the stores, while kind pipeline warehouses product. and filling we in week six also a was resetting the the are in And the process. resets

And assortment and private Casey's manufacturers, for new on different products. product the in depending officially we look feel new brand was that stages kind new coming was when a but of introduced the really so, all the January in of year, new

quarter this we experienced about in really there. of a month worth So only benefit

Bonnie Herzog

margin a to based you're achieve? more of like expecting of that period That's larger previous on basket a time. comp what short this comments, Okay. and from sort it's this program lift, Is size or it maybe importantly, helpful. then And seeing with sounds only your but not driver

Darren Rebelez

benefit by private the that our then there's certainly the couple that grocery of the And of than third of our placement those things should the around Yes. store. remerchandising a about much stronger proposition just is And that the value in just the just stores the one XX%, assortment that adjacencies piece drive national that's improve really certainly label all in store, product seen within of together. expectation. things expanding the the to in the is And come we that of Yes, have brands. is category. itself the then And

of center this really thing is, Now, just activity. clarify the a store was kind of I

that merchandise So also beverages, in overall, category alcohol, look at general cigarette. when includes grocery you includes includes

has that really in been out that So sub the seen benefit and of category. grocery we kind take

Operator

you. Thank

comes Paul question Deutsche next Our Bank. from with Trussell

Paul Trussell

appreciate the I morning. Good provided. you've quarter-to-date color

little into we really business quarter? other each of we items about kind keeping maybe dig what deeper of mind about the Just weather out in segments you're think wanted be bit as modeling a to thinking that on fourth this in how the and should just, impact also

Darren Rebelez

whine to before I'll touch heard was I'll it was the native through double mentioned weather year. but I briefly. has amount It so November tough modeling Brian take many think you had stuff, he'd here. islands windchill Paul And Yes. on this had about normal let here. a snowfall, about the of they twenties some around cold that Steve negative me, never

out and they So, wanting of if their can anywhere go was frankly, avoid get car nobody it. to

We've broke. was seen that it reverse weather So, a yes, February. challenging once the

winter you And the tough kind is way just it of so this and look have sometimes, works.

not course. you're about I'll much on the that normal me about And fourth and it'll a So to talk we'll fully rebound expect a talk going let We modeling. quarter. good weather have Steve hear

Steve Bramlage

in a the two Yes, quarter. of tale be cities it'll

of that the because very the happened fuel we possible of for it's XX us end not the because the first-half, So it that of put where year. to quarter, gallon a rate. gallon. And fuel profitability And will obviously the strange Darren weather the at won't it what rest just printing level, And the we because for improvement cents numbers XX sure. cents the negative is margins being earlier, reach in certainly by time into dynamic year through situation lap when last prior you second-half, violent almost year. running and up think positive I a will average end be be of short but that quarter as time, will is mentioned probably first-half of Overall right? referenced real by we a this exacerbated the for last positive the period Where close lockdowns negative up the week the about it is were ended

Paul Trussell

kind of about then helpful. bit and of going little Got more and just a hold the how are really also consumers it, do we're to maybe and on lot you've to stores? and business about activity of that's positioning you just about pies. these to promotions really new ordering talk How bigger engagement plan vaccinated. loyalty home back program staying are acquire? you picture, and forward How drive out all customers the back you that thinking your And are when inside that A

Darren Rebelez

Yes, about that. I'm really optimistic

we We months XX ago have a ago have, lot that or of tools we didn't at disposal XX didn't have. our months

year, just If we rewards. were in you January with had started last we getting remember --

Now members quarter. we another add XXX,XXX and members the have million and we growing X.X reward third in

continues that grow. So number to

gives difXferentiated to to a drive is to with cohorts them, behavior and the their that strong getting nimble guests that us base offers performance. being about team our So people feed able recognize engage with purchasing and more to really influence and behavior much of of different how and

So, have that. we certainly

that first the filling expanded of We've accelerate completed. our the with store going the our pipeline is door dash prepared we Uber Eats foods We quarter. mentioned have we're got just curbside. And that relationship. We team reset We've to innovation. in

that so consumer before, time right work, little and that now. And work takes product I've heavy as development insights ongoing a but mentioned is

year. that some to this from see innovation team We expect coming throughout

will a of us to And so our I more guests all help relationship together those think little between and come make sticky. that certainly things,

Operator

you. Thank

Cerankosky next Chuck comes question Northcoast from Research. with Your

Chuck Cerankosky

morning, Good everyone.

add to new at you through back categories the address the Fresh entirely recess process? did little categories as Going this a bit, all? Did went you any you

Darren Rebelez

didn't we this significantly No, although point, Chuck, we at categories really add new expanded category.

snacks no, some what's Packaged point, of really increased nearly of we thing. space, those nuts from our of national the category shifted meat bakery, working of brand snacks pet that some slower the sort have and like new moving lot in categories, paper space So next and that hard but and management But and teams in reduced and space. brands of favor doubled categories in not this on introduced we automotive from seeds space, in perspective. away at private own doubled a salty the then

Chuck Cerankosky

flow And then help the to was designed if do foods? I was wondering to anything customer some of traffic prepare

Darren Rebelez

at of but to prepared of store really on is somewhat Nothing impact And a teams innovation impulse adjacencies reset separate foods to exercise. from this do the what proper part the categories did as grocery prepare standpoint, the mentioned, culinary I is the working like we make foods categories point, of that sure this we help of those center the sales. process had in that

where is the So, I'll product making to adjacent coffee, highest sure bakery give rate. easy example one that merchandise that packaged in that you affinity the impulse has was

value brand it's part And for nearly impulse of category, where so in the I strength it product, seen proposition an private XX% a think highest there's of is positioning the we've likelihood coffee where our the that in purchase. next to to combination the up of addition

Operator

you. Thank

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

Irene Nattel

come that back for about Could identifying how how, are Thanks, you're of good you? moment in level process what intrigued things cohorts of consumer sort of really you us everyone. a by terms it of that tell some personalization? just morning, and you personalized can and the personalized talking like a to and the type far offers, receive I along but as that offer What

Darren Rebelez

process, Yes, and we're at what in or we've is we point purchasing this guests Irene a behavior. of that call what the of early we've done cohort group that similar stages have guests a of identified

buy. And guests it aren't buying and or look so we and then what they're likely to they it that is at is more what see buying, it

buys we breakfast of a on got occasion. haven't is doesn't Friday So, for Saturday who night. our buy know a into But pizza during somebody other but pizza like just the slice or example comes pizza, a whole and or a that simple they lunch, in week we them

team and or they've on will program. And differentiated they based that can rewards rewards then on through the they'll receive redeem get in our that together text a via how via that opted put So that email offering store. offer they'll the the program. And in and be can fed go

a get buy they points, may get get off, may they So get dollars one, one. double they may

actually And one which offers so has the effect. see different to most team is the testing

Irene Nattel

on or you when And that? guess, what's uptake kind do what's that been been lift the of far, so I the

Darren Rebelez

say, had that Yes, really well. we've that. we're of to have some details suffice to it going the not really share done But

through And work things of some We them those so these offers. again, And don't process the the of do team but as team down assessing that's and that well. on of won't goes part out will learn frankly, those. our double test some all

Operator

you. Thank

Our Fishbein, Jefferies. comes question next from Matt

Matt Fishbein

morning. for Good the Thanks question.

timing what clarity stimulus, had some like the have the the you we're on stimulus prices was or beginning rounds the pump gasoline perspective whether inside to any interested have that think business sales in from at they impact last an impact of around of of you Now previous sense checks, do time, your there?

Steve Bramlage

correlation consumer-facing power don't hey those hard Steve. our that cetera, more discretionary impacted on strength data categories. earlier to necessarily who's how be mean disposable a Yes, seems on sure spending of I exactly spending to anybody This any like income the have we're lottery, us et There We in some there's the categories stimulus versions just that right. morning. or in Matt. that for discretionary is from of clearly, benefit Good when directly. have view the system, do to shown some here, alcohol, going that historical would is

we more think bad could discretionary As But Though, the quantify thing a general to expectation. certainly don't in you a faith is look our or you system in think not for we I would tailwind impact forward income is the that fact be. good necessarily. for going what tell us be space us we our right, by can for I exactly would the stand

Matt Fishbein

of it middle update And opening, last that. we that for an us Center was calendar goes year? Joplin the far Distribution heard the timing the give like time as appreciate think the can you as Great,

Steve Bramlage

delivering we'll it wrap-up. in we and early beginning here Yes, should start possession of end the to of call month, Joplin We'll, June. in next building probably is May, the take

Operator

you. Thank

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

Kelly Bania

Hi, you just reset? on good could the and without been the it the how again with the Wondering if was traffic morning. reset, margin, back clarify, and merchandise And general questions. Thanks impact or comps go general just would for taking just our grocery store? on in any have there

Steve Bramlage

quarter This in in morning. that couple Clearly, margin was was there's doubt prior-year on third years. good the we that, highest of the the about segment Hey, Steve. a is comp right Kelly. comp the a had quarter couple it that had tough we particular printed, a no the that points, Yes, in for

was of year points So, than kind the third about XXX higher basis prior a rate. run normal quarter

was take in There comparison So in doesn't didn't flatter we've sure, there, stores, of that the rule. question your cetera. had it periods the long, little of as around, that a we a does the moving that not we time, bit for closed the last disruption general of stores to part got people long but et for obviously product

we tried it that traffic necessarily. minimize as is as So on quantified we We what haven't much impact to could.

to increase modest wouldn't we again all the expect to it that impact a forward, of or question as to through had we rolled stores. earlier the the but traffic certainly so margins impact going And

Kelly Bania

of Pizza several thank promotional and terms Okay, just next the general, the in next the terms you're about, category quarters, what of expecting several think I that in just And just the you in you. as prepared category environment over in foods quarters? guess

Darren Rebelez

do. frankly it's is Yes, a to going now handicap what terms to little competition in hard bit right of

last over haven't seen necessarily brink in any but year. we're on tick We cycling up the promotional of activity,

to with have recovery frankly, business priority, business really doesn't to players business. our on So the pizza some the the whole of recovery other get is I there. that, and slice pie think continuing a to in we're bigger focused which just that we're most slice grow And compete on that see in is going out

will more we get to part widely to to routines. the the return as traffic that that come particularly start focused and the store, trying more we're so distributed, on business in into people normal more back So that morning recapture around, and vaccine particularly becomes day think to

Operator

Thank you.

Company. from with Sidoti & Your Anthony next question comes Lebiedzinski

Anthony Lebiedzinski

questions. And morning. you Good taking for the thank

your how from transaction and could of if volumes overall had question about just first then as my about your app? you guys separate XX%, wondering size digital called release, press your up are were question. which you that your in out talk And I versus much mobile is the So sales just coming for transaction quick sales wondering a

Darren Rebelez

Yes, digital means. XX% prepared that came our Anthony orders for our of about a through food

XX%. those then that order per say, app that's So roughly in that see check or X% or And $X XX% or a be DoorDash, of so about we from Web so, X% about a uplift let's in phone site would digital and XX% so formats versus so another or total.

Anthony Lebiedzinski

Got it.

as helpful. my mentioned costs, Okay, you believe locked those very far And I April other question have you've so. that's is, cheese so as until then

are there input to As about think costs, you you far as what as talk as as seeing should we about trends far can that? just that how

Darren Rebelez

me. for related sorry. make cheese just costs, to question sure? is I'm clarify Anthony, to want specifically The I just

Anthony Lebiedzinski

comment no, No, could cheese and stuff it, cost. I addressed as far wondering else as you things I other anything coffee supply you was already the input on know just meats your if input costs and like costs. or

Steve Bramlage

wage forward I to as pressure, be of will least with to from continue is an over As input deal or we look ongoing the of we headwind the wage just the next nothing on got continue ordinary around issue quarters, the standpoint we we changes We've way think other larger couple at cycle cost that's through right? up commodities changing the the will the graduated, of supply as inflation. or there increase with would purchased of price of some I significantly nothing anything cost of Yes. deal through. pressure other don't us we margin course There in further and kind of are paths. creates chain center go. the those that, wage out that one we provide think multiple contracts compression minimum most it of a the store result as is that there notable though very on normal minimum that goods is states often those. And for don't pay And coming already is for in terms geography our

costs industry will and I continue kind that ongoing to and relevant the actions. pricing most us probably productivity we pressure service think look is of through everybody for manage So to in wage both that the the

Operator

Thank you.

with McNamara comes question Capital Our from Brian next Berenberg Markets.

Brian McNamara

your morning. far good longer oil Bobby this sharp drop much had some cyclical us to you anticipated, taking in remain initiatives, question Hi, it my for margins well, prices we like, is your few to than the but the elevated out price the as as of have after year this Thank tease is margins way questions. from of as margin and internal approach rather any benefits improvement see we external alluded there structural benefited of earlier with than how optimization these normalized? most a

Darren Rebelez

I'll this to us really wing things of have let but for as divine Brian, all different on. so because going many it's hard well, that on Steve you

got You've of pricing. retail execution actual the

part that commodities all or have You it's in at where options it's case that we a maintain and other have, have being run-up, there of their does to or that least terms profitability a time seem It lot on over but then the drop and and the smaller for you up the out. less resilient level of just different don't be, of have settles survive. supply hard certainly agreements that run four tell commodities been as certain in trying so, to may really operators, to last is months frankly a who

the the so, pulling lever up price they is do And lever. have fuel

we're people said as in to that not this traffic is school or being significantly an dynamic we're to persistent, where would to repeatedly. going impacted say see go work by long So, environment as I've pandemic that I and able

in this margins business they the [Multiple pandemic, into are the be they've I going industry that generally when simply because what where to lower higher than been all underlying think the the that were Speakers]… costs to will through settles pandemic, continuing rise. out, but think operate but I than the

Steve Bramlage

don't I that. have to anything to add

Brian McNamara

look business? program, guys rewards you to And to you And this continue what you months with as data the inform few telling decisions tell brands later, expand it your your are now did is data prior valuable then a to store private your Great. you as reset? what to secondly, equipped from

Darren Rebelez

into Well, we we be. under-penetrated we going profit we itself dollars into opportunity. the is really to space should just you knew the imbalance an assortment what say And categories we relative resets we to really were frankly, and I'd what look thought on had in certain that at store, of the -- when gross

growing sell. we categories represented enough adequately So and the have adequately with didn't to just be space to

so with and areas. fixed And reset the we those in assortment that this then expanded

we to optimal better those So place highest got then that productive generate is speak frankly, the so impulse furniture so more we've rearranged in we've within and categories the that that possibilities. and a the assortment store, compounding put

Operator

and I concludes you. this portion Thank like the call. the remarks. any for to today's Darren Ladies back gentlemen, call turn Q&A of to would closing

Darren Rebelez

day. All on time to our June. right. Have on to today visiting us year-end taking forward again look call, fiscal Thank the you conference for call and at great you with join we

Operator

Ladies presentation. and today's gentlemen, this concludes

and You a wonderful day. have now may disconnect

Casey's General Stores (CASY) 9 Mar 212021 Q3 Earnings call transcript