CASY - Earnings call transcript Q4 2021 | Casey's General Stores, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Q4 FY 2021 Casey’s General Stores Earnings Call. At this time, all participants are in listen only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the call over to Brian Johnson, Senior VP.

sir. begin may You

Brian Johnson

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

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

to over Darren Darren? like I’d to the turn Now discuss the call fiscal year to results.

Darren Rebelez

before every go our and this ever This to business on day. lives better We you. communities our team our share morning, every without yielded been which past cannot good passion more our guests people I how results make progress everyone. XX,XXX and year reflected we that and day dedicated communities. of our Brian, who to results, other make members months I includes no members the over than history and we’re our our Thanks, to phenomenal pleased environment XX today. by like want to on that serving financial XXXX remain past in Casey’s challenging and lifetimes. fiscal frontlines have are performance most the to our what astounding personally one our you comments year recognizing of the remained of team the they share strongest to The guests serving arguably be deliver the the XX-year safety gets with the today. my this and delivered humbled committed begin local am that health We the was

we’ve this throughout and effort. have a the bonus In addition for seen pay vaccinated recently pandemic, incentives from encouraging the provided many to fully we’ve and safety team implemented wellness measures members results

and schools this our for and $X million families projects a spring, teachers year brighter contribution support difficult guests. have the classrooms Beyond grant a our local Thanks and wrapped Casey’s Students, to to that of the support announced school up program generous at class Casey’s our future. communities. team

We an with an The fiscal also the the past of tremendous considering increase finished fiscal all this prior This $X.XX adjusted XXXX is Fuel a offsetting pressures a extreme of the through start share, of XX% year result pandemic with gallons an of the company discuss primary diluted down from a environment time finished all gallon. gross let’s sold. on year. helped nearly EBITDA fuel $XXX We navigated the gallons Now drive year. $XX.XX per high annual in profit with time EPS high the driver time of while accomplishment an million. record as all a increase margin since fuel March. sold team COVID last driven profitability centralized our of finished X.X% same-store was XX%, companies

as Our to were as merchandise react had they be to forced just team guest needs. changing constantly agile, to

to and We restaurants single have as as where needs, consumer beer home at and PPE higher we well for replaced sizes been grocery larger began bars. doing and alcohol serve versus items more the pack demand people as

For the grocery of X% up led a on year margin slightly mix sizes food pack higher the a and other Inside X.X% from increase sales same-store to year, inside by dipped prior due XX% shift same-store lower merchandise. to were prepared sales. and primarily

dispensed the seeing world now routines. our Fortunately, and guests a rising is pizza traffic a returns traffic towards and we’re resurgence patterns. and in slices, we’re as in bakeries, business, in our recovery beverages moves prepared seeing normal This fountain food normal daily as

not part our after our that create business will tailwind such peers large a of prepared that fact will pandemic enjoy. mix In of food our the a many in

also long-term great financial plan. results, In addition company on strategic global pandemic through to a our a navigate a job executing delivering and did record the

plan All investment the the strategic impact is We and through significant guest capacities supported experience, digital and with pillars where of being growth. made by respect talent. are a the reinventing guest create our efficiencies experience, reminder, a to an our disciplined are, on pillars the via store As three particularly guest three engagement.

now pandemic the and prior stores. have delivery service now XXX to DoorDash to launched just X.X we and over Eats Uber includes offered launched stores that We Program more to Rewards million just another recently members grow. than Casey’s Our XXX continues

on is for to built great and outperforming a will that equity the our over initiative years. sales capitalizing start, have our fiscal company set private We other our operate XX grocery goal of we of This XXXX. off X% merchandised label capabilities X% several up for year significantly Finally, eclipsed recently brand past efficiently. we more help

expected Missouri year. by open distribution third miles miles center over operating, in driven and now Our and approximately reduce stores X.X Joplin, per XXX million servicing to is

newly company’s now to the prevention utilizes sourcing great centralized team tactics fuel dedicated contemporary team formed procurement and strategic our that a finally, provides continues throughout more leverages organization. effectively And protection Our results. savings. scale, We entire support and centralized deliver have team our to drive

the to profitability extremely times. and geography Our industry volumes volatile performance in during excelled our relative

continue stores add see tremendous over opportunities We in to next business XXX three years. growth bullish our remain the to and

way as stores. just perfect We’re pair on the our Buchanan program largest company’s on our transaction our and well outstanding is located we strategic closed pizza will a acquisition in The fit with recently volume high well Energy history. their

expect June. the closed Circle completed or to of be We in Oklahoma K end rather by the acquisition

XXXX also delays. We fiscal pandemic XX in despite new built stores

the and on and capital great generated which Our and year made organic capability the our two way pronged selective and believe years We’ve returns disciplined, build we the strides us building to and shareholder three EBITDA to is growth, diversity team. effective investment. to be approach store value acquisitions out also enables this most balanced drive of in leadership

and of protection. guests resources, capabilities include insights technology, these asset Some new procurement, human

us over cover fresh detail. Bramlage outside the plan, a Our strategic like has call turn quarter of leadership in execute to unprecedented to mix I’d Steve plan This leadership. perspective, these fourth incredible effective for an to is during the team times. veteran the Casey’s to more Steve? on alongside now talent

Steve Bramlage

Darren, you reporting my to company. too good I Thanks, year and with today, marked the I share performance to am some first able and as with remarkable morning. be pleased

most before extremely showed first Sales weather strong cold Our two of team not was they’ve challenging the year dedication that the company’s throughout could February past COVID-XX the of in and were credit, deserves year. a by all agility this given performers tale last comparisons same-store the fourth quarters. prouder right The really the half exhibited and quarter be were up. of muted we

XX% the same-store given due along fuel, to impact, day back number due the began an is note from to price an approximately of sales we for and once the increase the but Please the retail billion, or shutdowns pandemic’s revenue of higher retail increase was As an an prior Total the fuel X.X% increase to sales lapping year, it’s $XXX have comps by anticipated, were gallons. of comparisons. in size of pandemic. the driven not to from Total same year. million $X.X year roaring extra the sales year period XXX gallons material the million in of XX% leap gallons ago. sold then an a came up gallon $XXX of that in This $XXX with fuel our to inside the increase was sold year-over-year which up sold quarter million prior Same-store million. were compared

fourth a $X.XX this ago. grow during start counts period Our we RINs the retail profit Casey’s inside the volumes compared $X.XX year inside not up The was per during gallon for gallon the to sales aim company $X.XX average quarter the dollars. did balance million. $XXX a to improved of in margin XX.X% centralized sell Same-store as fuel rose pandemic. prior Total the fuel as to sales The fuel versus year. compared team continues to XX.X% price $X.XX were gross per was and successfully gallon, margin, to guest any traffic quarter of quarter. of

ago. XXX fountain same-store time the quarter. food sales context, up XX.X%. XX.X%. Inside were beverages sales Groceries quarter Grab as bakery up sales average food XX.X% such increase as dispensed basis with commutes fountain in to Total sales of pizza quarter to grocery began up to slices, was prepared the rebounded with our XX.X%. for were two-year up Total XX.X% to and fourth were margin other more and go $XXX a this to patterns other normal prepared merchandised fourth million. fourth rose million margin an inside sales year in and quarter relative $XXX quarter merchandised growth same-store and XX.X% the to and return items is For some same-store X.X%. and the points stacked Leading additional

store increased labor, million, XX%, offset traditional during fact us excluding versus up less the cost were were a the improvement drinks drinks, completed Our the along more well, and increase incremental margins quarter $X incentive also X% open million. higher are the to due due such about million for as million which profit. quarter, million. Casey’s compensation credit define third financial year items is decline water snack well. open expenses card The $XXX performing to reduced in merchandised than the which of advertising The depreciation points. an in inside $XX XX fees $X the resets of with is goods bottled serving or items in Packaged and as retail and XX.X% are we $XX million strong fourth beverage times million $XX is up of and This amortization pandemic incurred increase a sports fuel was revenue to sales profit such an energy the due ago level and operating chips, which but include of primarily company of brands, over candy. with X% which prior year. other to category performance, by of or now in of maintenance, mix, units operating increased which penetration gross fourth fuel. of the gross snacks things of such long-term are the and expenses, meat more and basis short-term The were along helped at is of largely $XX Store quarter, our and initiatives, to the which improve XXX last favorable strategic to an as costs sourcing the price volumes million million volumes grocery of higher $X increase year. sold, higher $XX as $XXX Total insurance profit, hours million from operating operating attributable from of stores private gross stores

was offset fuel in income the $XX.X and decreased the EBITDA COVID was tax on adjusted significant XX. the costs. August. was effective Net both XX.X%, line and and EBITDA demand was that prior tax Finally, compared differences year Adjusted that’s in obviously earnings the to pandemic, decrease for brought quarter to quarter charges in $XXX quarter rate measure a the largely favorable of also million and The to permanent supply refinancing state a margin company The were in the million expense. XX.X%. $XX.X year at notes primarily expense prior the credit both the $X compared upgrade for of reduction the outside on ago year year by company entering incurred due in to start the an of due fuel ago XX% precautionary fourth repaid. which for Interest retrofit related drew $XXX.X excess equipment a decline been from to shock due as to of in additional the reduction to has price the by down quarter wholesale the million, XX.X% XX% was compliance to in million. million the that decline completed a due senior at to EMV impairment $XXX a million and The

$XX remains well our excellent due in and negative This million, million XXXX. was flow per cash of and of and At equipment and $XXX construction $XXX flow most year coming healthy, XXth, have funded flexibility the in to the fiscal activities the fourth up pay share. hand positive from of driven meeting was as financial available Energy liquidity with free January in bank construction flow the equivalents on loan after The new as million. that of to and operations at we prior term ramps $XXX acquisition had of material balance XXth closed pausing compares company year is that spending $X.XX cash million. million voted Board was primarily no purchases pandemic. the $XXX debt that and May Our a our over matures and cash the The timing the million cash XXXX. very quarter our in At the by cash dividend quarterly as define on we Buchanan million capital $XX sheet difference store company of -- of cash operating April of with of property $XXX activity June less a maturities until throughout the we were amount Directors, start the as the

due and of the payment terms in additional five Our free FICA the year-to-date stores higher million be efforts this working and capital cash to extend continued stores. of proactive prices record The flow by strong $XXX payments to increase and earnings fuel to favorably acquisition deferral CARES under completed our company performance impacted of new-to-industry the and Act. opened XX year

The XXX amortization. retail charges million tax expected of tax the also existing million apportionment operate of modeling associated the Depreciation Now, increase based upon profitability the know The we be we The around in we includes non-cash outlook XXX as XXXX, fiscal will including currently million difficult for as while approximately before to provide to mid well during makes inclusive expects quarter operating costs. fiscal transaction, in of one-time is that’s the in pace to some Annual million charge incur $XXX acquisition price EBITDA mentioned as expect incur approximately The expense $X be discrete as and into year add economy and driven closing closing K of labor expected additional both units, tax the of by the approximately of gallons And as pandemic the Buchanan $XX full of as post million COVID-related a for be by that in recovery it This remodel operating maintaining these should is in price that of fuel tax fiscal amount higher revaluing purchase expected our it to for well approximately sales footprint. year, change. $X earnings compensation $XXX million spend rates now. hours to million rate add for Joplin capital our will estimates be be forecast the primarily percentages and be that’s of experiencing next first with to Buchanan liabilities projects is increase and $XX interest for on synergies. in it with to lower acquisition to should inside acquisition dilutive state acquisitions not and but information purchase by accretive acquisition to that our These is sales Energy does million what the the XX% in approximately right earlier. approximately pay the can associated entire of for expects and sales $XX expense amortization single-digit percentages. stores spending. invest other million are Energy center the $XXX related operations the offset approximately will to accruals equipment. we’re in inside purchase Circle pre-COVID are costs to the company will acquisition same-store company sales the increase We both please on property we include sales but and approximately in keep service, distribution and year. incentive expected is hours fiscal mind and the year, expected X% fact of included excludes and partially any million same-store expenses $XX quarter. and Total mid-teen more the being across placed That and XXXX. deferred effective Buchanan Energy the The acquisitions. first

expenses, unfavorable to fuel the to closing the to Looking well margin lower Energy. QX comparisons, we quarter, specifically Buchanan expect first earnings related the operating higher as due as be to costs year-over-year

in digits over experiencing high-single the the the likely inside volumes that, finish we’re the $X.XX will turn in low for up same-store and in With sales fuel back quarter I’ll Darren. fuel margins Our gallons to and call currently range.

Darren Rebelez

Thanks, Steve.

like entire and as congratulate and record and year Casey’s and XXXX. we our be are look Why, the impressive Their well-positioned results. our accelerate once again but couldn’t called going to of to food advantage is with our the is just and First, uniquely plan would year. to take to to about again compete that fiscal this our sheet. team momentum of be dedication our M&A moment, strength work recent positioned milestones excited strategic given I our growth. to win for because balance not business, I model more hard of delivering specifically a for coming opportunities fiscal Casey’s the upon ahead business ahead this Casey’s differentiated the are

We’re product Breadstick prepared a continue. fountain from has innovation and years. food pizza out Color with been April, are made-from-scratch What’s will using Cheesy on that for our made-from-scratch In is for positive food rolled that dough within funny this our about to a trend pizza expect we’ve seeing particularly and in category we to items, drive we prepared XXXX. also bakery that momentum our pizza been beverages hit and fiscal new many our product big leverages guests. that results

dough, too future. to in differentiator innovation springboard the the this distant not key leverage Our strength will competitors our from other

of optimize well more offerings, summer never in store. for key time sales placement deliver working we’ve and just guest-ready as the the private In to products. meat our volume harder stores store brand in our even We’ve merchandised reached bakery, for peak number was snacks, has experience, alleviating our velocity. one label nuts us in our resulted the component packaged been and stores to to in seeds product traffic. Resetting addition and as for food have that already become A that

brand rolling to offered Casey’s keep plan double SKUs this number of we the to under momentum on the ahead, the Looking initiative.

for members communicate X.X effectively guest. for guest and shop program building target into audience typical robust actively spend over than greater guest to Using deeper can serve understanding per influence those have that to promotions will a analytics we’re and don’t. significantly redeem members, who a customer’s that to will behavior. guests them. us insights than new, Through and With be and enable million frequency guests even Casey’s guests then needs our segmented data, our listening have tailor and visibility capability, our our more before. transaction ever offers, to preferences allows and we higher knowledge Casey’s our We’re better a more Casey loyalty relationships campaigns captive will Reward of more that us Also, Rewards promotional effective. will at growing

recently the sheet and grow the very completed our ability am Finally, have to pressures store I center given our difficulty bullish strong our operators on distribution navigating macroeconomic smaller balance through. may count. Joplin

the team environment, the right M&A likely be the that operators exit is dedicated might making considerable and Our timing tax average for those given changing industry.

be future. closing, businesses you their to We time and very business assist the compared performance add and to we long-term could their stewards proud our we’re believe will transition team’s we immediate right as the ready our stores. in excellent remain when as company’s am them and our is In foods of extremely I optimistic for to see,

Of be our there working course, team this hard to other our out for Thank day for do each serve and you Casey’s. XX,XXX extremely communities. our members all every possible none of without guests are you and will who

questions. We will your now take

Operator

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

Karen Short

to want clarify, that just that -- commentary you your then and terms is trending gallons of on quarter-to-date just a are picture is in bigger clarify, store where had I today and Housekeeping, comps to in question.

Steve Bramlage

land No. the entire That’s for we where to quarter. expect

that and function year that’s of the of and the the today quarter-to-date prior We’re re-openings. ahead actually timing just little of shutdowns in a the

It’s first So at year. beginning of a last quarter shutdowns the were comp. little easier the significant more the

So, where to for the that we number quarter. is that we expect land gave first

Karen Short

wanted mid-teen just on a I OpEx. guess, little I bit talk commentary your on so then, And Okay.

to of and single-digit OpEx to the But pointed this the guidance have guidance okay, in order I kind are getting EBITDA year. algorithm high for I with single-digit growth. your mid-teen you decline for obviously, what on am XX% in guess, of and factors mid growth contributing to guidance obviously, we’re rank assuming an out, comp So, the of EBITDA you X%

guess, of more, doesn’t you the you be growth, could if out you’re I it a that wondering like, should little guiding So kind to? for that sales higher push seem because OpEx bit getting

Steve Bramlage

maybe with that. start I’ll

there So embedded things of is couple Karen. in a there,

OpEx we’re get of way easiest have is, more me the the coming We to OpEx XX% the with now, for and already of going going easiest that So, come first, of approximately stores the to X% the the think Buchanan. closed to units units about way in those are right? essentially components XXX

K Circle month. closing this We’re

that’s the fully of So, little of coming and of so to OpEx of increase for and X% the got the of this in the have new hours loaded of that mothership. unit so in way units year the if have in timing system, of versus doing averaging back we that’s the to And on somewhere that increases early and the rest you coming facts rising to essentially would the the if just the because first COVID more we’re the you’re quarter bit X% the big component a a leaves scheduling X% we rest wages. you go X% in will what and call fact on definitely

XX% fully any that. comments behind are medium You’re have EBITDA made growth expectations. terribly far over our with actually term would off which up where in EBITDA around X% acquisitions mid-to-low to the specifically to aligned algorithm is associated is commitment bringing OpEx we’re that that and obviously, single-digit incremental our the not, somewhere number, you have we them. high have -- from Clearly, EBITDA be medium-term us not to going But

in good at just year. I coming think very, our of happen a acquisition-related operating about we time ability system feel expense the that. into to pretty to the We achieve very fiscal big all have same this slug

Karen Short

on clarify to into X% or year-out, this still being year about? of think, number just the wages, I typically the think standard kind is that right kind changed pressure of has about is to -- that year talked But that Okay. you’ve in, a

Steve Bramlage

have year. think I higher than that we’ll this

current with all than basis same the you’re currently There the or paper higher rates our terms the so number I in think dealing both XXX about in wage labor clearly we’re forecast, points and retailers. reading running in the of We’re right? for about availability pressure is dynamic system. that with that

So we in we a than that reflective last of would it’s or the today be know I for had sure. think higher two and touch what what year

Karen Short

queue. Thanks go the much. so Okay. I’ll back in

Operator

Our next Bonnie Herzog Goldman with comes question from Sachs.

Bonnie Herzog

I I negative. prepared guess, up had much on morning, the Good where your you. trending this were quarter a morning same-store stronger question on than foods I It your actually sales. everyone. think was Thank ended in early it trends

May especially Has behavior lot sizes basket about you. So, the has has months really increasing and turned and sales think last in trending quarter in and am trending Thank that comments us so could could what would resulting provide increasing. counts if how be conversion you were hours? I couple each being how a on some consumer share evolved in months, vaccine for how things then positive maybe of you And of shopping the the with really helpful/ I curious also in hear business far early when maybe up to and XX.X%? June, been this been

Darren Rebelez

I Darren. is in were this guess, quarter. the Bonnie, up Yeah. trends

foods If had were call. we some call, that over going recall February. adverse on our really into we were throughout prepared fact prepared coming prior depressed we a just in you performance March In strong the the bit we’re so out the February weather so a year compounded of really that the by foods little Midwest and got situation cycling and

half the shutdowns took that, after we’re Of the cycling of over April of all course, from we and March right back COVID.

that by were So relax. a certain the bit and things fact materially re-open shifted and things starting was accelerated. also little extent a to to That

and a the in momentum great forward to a momentum is standpoint saw see we So a trying day that from bit. prepared part moving and behavior consumer the we’re seeing so we what business continue foods to morning recover is,

well. all look work, the day way the the the are of People course, pre-COVID schools if at in significant the in to part as you in now part, overnight breakfast some back which We’re patterns levels, out. and day affects are we’re but traffic not back to category to go morning summers, our have improvement starting had we

think when that schools the day going throughout the we the we some don’t increases prepared the summer. and moment, experiencing expect morning fall until the to So kick is nice in back full in we’re part the session. recovery to in foods But continue really momentum at the in

Bonnie Herzog

Okay. Thank you.

Operator

Griffin next James. Our with from Bobby question comes Raymond

Bobby Griffin

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

housekeeping, million mid the XXXX OpEx. check $XX FY want Does of the one for commentary I quick the Just to acquisition includes on teens costs?

Steve Bramlage

loaded Yes. number. a Yes. It’s full it’s fully --

Bobby Griffin

going that out you basis, just the to be get a that going in, arrive model first to make we GAAP when include are apples-in on quarter? want to one-time And we everything’s we cost apples-to should sure Okay. and or the

Steve Bramlage

We to report all of the basis just transaction-related and quantify a will the GAAP impact activity. on our convert

Bobby Griffin

I crude believe wise a margin fuel in detail. of had quarter you bigger versus And the pretty bit. me, going guess, a environment Perfect. I as industry, this -- a picture a the rising as little then, quarter. in Fourth I for just a outperformance well well as into appreciate kind row on diving the material

team sustainable really and this of that’s do So you point, work, of look still when forward? just type been outperformance somewhat that you the function function is curious environment be outperformance a a fuel at is, of quote-unquote sourcing doing COVID going somewhat could the all or the the at and believe of that on pricing has

Darren Rebelez

side, fees very have executing operators smaller XX% a that there. say, continue of talked combination has labor to of this going on done would pressures is things at But pressures of year we a is to just procurement we’re well. that fuel say operators shift to environment it’s But certainly don’t certainly not levers point, at a volume to and coming, this environment a of have I of and some navigating we just would still I under have challenging team think, are that both happening, you’re refresh renew contract there constructive kind have Bobby, of margins forcing lot which on fuel job our industry. that the credit we team are some fantastic have the those a arising, after that’s and simply a of and the opportunities to to they’re I liability and these it’s doing believe on pressures away and this And for those is about and pricing where then the well at and to to all this that’s think taking great pricing the those mitigate point EMV favorability our as fuel card contracts of the margins, the occurred, least. are Yeah. we going, job that in so are say, we I smaller Darren.

So I have said all along.

we’re we as that level between back levels going I margin there. we’re won’t be see at continue think stay more pre-COVID think But challenge long that the But elevated I of to this this we will fuel reflected to think I going industry in somewhere don’t in probably margin. margins. to either, persists as in of

Bobby Griffin

prepared on trends for really lastly reopens. me to sales guess, great start and country to these pick see food, comparisons we I the quick as And to real lap start the up Great. Okay.

range, about some us return kind can or we that anything a think pricing to back the the inputs, margin of to how gross of gross is and it before of like was business just back business, pathway COVID? XX% that of function margin pre-COVID that there range? to mix if Is volume given then the just Just all help

Darren Rebelez

Yeah.

of and percentage the the sales there’s helps think certainly couple the volume margins write-offs things I a of a decrease. there as velocity as

component had a we the -- higher in of day part velocity as completely losing-- bit losing regained mixed margin, haven’t we’re but it. we not breakfast, but to component a we’re tends where day the a little morning or that we’re that’s once certainly, be well, part So, There’s the before.

that the So to working have retail pricing think getting levels. historic But there those that. all we and we’re on back still But as more -- -- we part well. of whether opportunities is we’re assessing to then equation of margins

Operator

Thank you.

with Bienvenu Ben Stephens. question next from Our comes

Ben Bienvenu

morning, guys. Thanks. Hi. Good

Darren Rebelez

morning. Good

Steve Bramlage

Good morning.

Ben Bienvenu

to on piggy back Karen’s want about I OpEx. questions

impair also accelerates I environment, think if to your expect to? you high that sales you the deliver targeted we wage as variability same-store upside continue you’ve ability growth curious, EBITDA. better you would could EBITDA to growth your be If you deliver the would growth you’ve potentially to your I OpEx that an a than you that I and You year, sales, OpEx And expect? think level am your the then to bit little within inflationary component about long-term stated see leverage or more a that on a if that, like same-store of this we you growth OpEx to curious, on get am would -- higher your growth single-digit growth expect as accelerate commitment would algorithm. the as to EBITDA well

Steve Bramlage

first. morning, is start question Good Steve. handle to Yeah. Ben. maybe the I’ll first This

walking algorithm at all. commitment not from away We’re our

We’ll continue expect that CAGR sure before. about go What I to right? us there X% there incremental feel can-- to of in think scale do the our schedule about counteract right? that. over would that EBITDA we smarter. our XX% have given ability back do, to medium-term talked mean we tools long-term range. the for a we to you will and consistently Darren in generate pressure is, to that and wage the how I extent, lot We about good we what system to is feel good to very We

labor will you We within will so of actions obviously pricing a to cost then, has of take. take. are take, store at for levers available environment. you their sales size ways of the price expect, more automate look points component decent the to There certain us take anyone all we And to would for of to

in aren’t into the offset. of feel on any to us, puts don’t situation And to period a available time, us able pressure that OpEx like other all discrete of so levers I

have in I play, our targets sure, to run there’s EBITDA have. slightly we but a plenty path we optionality the the different that of keep think for generating of on us may to model

Darren Rebelez

X% Ben, to And add to growth, those Those I numbers. are EBITDA would CAGR that. targets, XX% mean, Yeah. I just

lot some all wrapping acquisitions there’s associated costs stores those early of we’re big into timing got that strong goes this a over we’re things hit those going so up. with of a period year, a past into there’s very on, that unique early and closing too We’ve time, on. year this And that. where year had Obviously, we

all. There well. the experiencing is I around it. the are unique just to that to don’t industry are point, that -- a And Steve’s cost pressures pressures think So element that sequencing entire the as is to This timing algorithm lot and increased cost risk we’re not the is at Casey’s. of at experiencing cost. costs is These

So goes to we what there’s be think inflationary do an going component to on.

-- fiscal currently that in We’re were good that. of calendar we so this goods for news The this assessing proactive rather. or is for us for year, negotiating year, cost

year end costs lot So calendar in categories. our locked in of got we’ve the major already of the a through for

to categories, -- to the we that’s So -- we’re coming be. certain in-store cost pressure the not our a extent on some may immune rest the industry but of of

experiencing. cost And so we’re leverage some of the up, and to that up move that to move able be counteract prices well we’ll as pressures able able be and to as we’ll be

Steve Bramlage

larger we’re expect, is to need store that, same flat, and of to overhead the add and work provide right? I of so that stores, not keep a offset adding so I point, will very on know, that the field. in component at right? I’d anything OpEx some our that benefit hard base natural the that would related think maybe rate we’ll add, quarter We’ll business of fully over overhead the and happening that last reminder a the larger just get you to spreading a thing that of Ben, is is units don’t store We to

Ben Bienvenu

a helpful. and am quarter, contracted in very any expecting ask you’re the quarters? increased that that price bearing inflationary fill? obviously, the RIN Very have curious are environment, to your market. didn’t bay holding future your your does want about is that them RINs able on of you Understood. the your RINs And ability how S&D impacting in I same generate commentary to in tight to I you number at levels any on RINs Okay. is lines, that sell we’re sell fuel to RINs, in

Darren Rebelez

Yeah. with the start I’ll part first. second

RINs of the really collect. impact Our doesn’t contracts suppliers number we with that our

really the monitors the going no there’s quarter. With So ratably RIN RINs, our was every prices respect throughout RIN of market to And -- there. fact the pretty impact matter day. team the and up entire the closely were selling

rising we see a a So need didn’t to market. into sell

We RIN when on the price. protect ourselves values held slide we them out. -- at if sell to -- we just opportunistically we were could them can of onto we’re kind certain and we do So start waiting And assess they -- leveling those that back. a downside, to then

kind continue on that’s opportunistically we’re where that’s do We’ll at it. So that approached of how that to so we’ve and one.

Operator

you. Thank

from Royall Our next Morgan. question with comes John JP

John Royall

question. Hey. Good morning for guys. Thanks my taking

Steve Bramlage

good John, morning.

John Royall

first Can you XXXX now, K cadence And do synergy estimate the year? an you hitting suggests have I much about the capture fiscal the speak can EBITDA stores not we in years see of on talk it probably you Bucky’s first the Circle as on your then in three think guide to?

Steve Bramlage

I’ll Yeah. that. is with John. Steve. start Hey, morning. Good This

over capture obviously, us. half don’t under Certainly premise $XX associated significant not we think think procurement of the time. capture three-year be to fuel-related there’s in a get about our right. a to you of as synergy I we’ll Bucky’s. the million Your committed pieces, get number about total And and of had going of year, if some feet first the synergies. the synergy We period is with this G&A

will current to and kitchens for albeit, I think with takes some permit renovation. the not put inside be lot of it first associated of in probably, us that through majority going fiscal synergies into the do again, in But the to the of come mix to actual the a year and half. those we time around sites stores, those as the store uplift obviously, are

remodel reflects to our PP&E the year stores. extra fact be spending money I would those this number expect So we’ll

year, synergy the But item. that with get million we fiscal I a a more will back will half think that -- capture think I be XXXX of dollars loaded. associated but it is will couple spend this probably probably

Darren Rebelez

into believe you you thing on it. targets The get you add you you do to it, is, build once pro going And forma acquisitions, what based then under then then only I’ll own I’d Yeah. your these probably the that synergy you, ground the optimistic to about we team it. everything were is going that’s on And capture tell the even really going hood and you get into synergy see on. now our potential more when

of confident feel some our well on we synergy reach, targets both are and that have perhaps, very within that these So, upside. very, further even

John Royall

commentary the Okay. margins prepared Thank between maybe on had high level? XXXX, during the your you foods guidance you And And the pandemic? of off parse in can single-digit on then just and from coming side That’s drag you. mix any fiscal for sales helpful. this mid grocery then inside grocery just the

Steve Bramlage

just -- be would a of comp than directionally, what we’re a you, expect standpoint. year-over-year you the for from think number. tell I on grocery stronger mean, year the to a if food would lapping We’ve I prepared basis I number

If you back thinking you two, to average sales. to start just the have those of inside

going I of sorted of the here of set quarter cost right, going are mix us. general private Obviously, And of But a from frankly, We’re the feel grocery think, good margin fashion for is initiatives on good merchandise prepared a to contract side two. with we in very strategic than help penetration that and the brand of a of us. fourth about Darren for referenced, lot that, those a not year an in the have sourcing. going this business, think is comps, performance here. lot on right, us mathematically, grocery is should they’re around sold a sort easier only I side of favorable resets influence margin we to fiscal the quantify goods help role I The had to food the the think business. the perspective,

had it’s I the we behind grocery so momentum margin think time. accretion in about, like reasonable in outperformance there’s -- quarter-to-quarter sure the feel some pretty to fourth But would not I of we every we the going And quarter think side forward. business expect good

Operator

Thank you.

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

Anthony Lebiedzinski

thanks the taking morning Good and for question.

Steve Bramlage

morning. Good

Anthony Lebiedzinski

far little I everybody wage that terms and small as. on touched in are a your to else offset are ability as as as as that as increased seeing probably the too operators you that, the far the with bit mean, feeling [ph] So, of you pain far

about offset you’re to should we ability how pricing think looking the higher about stores, like whether Just gas wondering margins at or increasing that? inside that your

Darren Rebelez

what to a this get want we the pricing wide into I we Darren. But have we don’t mean, retail at our do of will Anthony, range do. that I have tools of pretty Yeah. specifics exactly we always Yeah. disposal. is can take.

We always manage. and we take that have fuel pricing can

the Those us. on meet of and right the business knowing categories the other presents category around some of of foods can we’re schedule other lot a lot sure what so optimizing amount guests. behind unique a we in the store our demand within -- for and prices make like effort right stores food are center prepared of that operations Our store not providing labor, put are the labor to our certain with -- categories. opportunity of a We and that be products of our for where with those general the commoditized consumer always perhaps versus more walks items efficient

as as a is efficiently pull operate there to again, we’ll continue levers can. of we monitor and we that So, and lot different

Anthony Lebiedzinski

it. Got

you’re and as as so or different a how visit for from frequency spending member loyalty then quantify as Thanks And just from per if members? you could that. the Program Okay. far far as as seeing is as wondering per Rewards far your far transact new Casey’s that that

Darren Rebelez

bit our on Rewards grocery food that, Program and points. about And when tend to category store come a our XX impact have frequent fountain, most little the more points, deferred most the often to with basis to and they higher, spend more loyal a guests guests. our are XX Yeah. about respect revenue on it’s certainly, and They money And do. they shoppers basis we prepared

been to that’s a we so as And real continue us database. grow for that positive

launched X.X frequency. pandemic up them and and that directly and But that from more and pleased about we can ramped habits up market We just cohorts their number with to continue right started. and we’re that more we we’re we grow continues just to really quickly million to the considering members, that -- them drive to their more learn how program

Operator

you. Thank

next Kelly from Capital. BMO Bania Our comes question with

Kelly Bania

taking Good questions. my Hi. for Thanks morning.

Darren Rebelez

Good morning.

Steve Bramlage

Kelly. Hi,

Kelly Bania

can growth Just growth are CAGR, think a back should algorithm off have EBITDA there the EBITDA, XXXX, a and base thinking continue is just, think, or ask to we that if to think want lot to that and XX% about is fuel fuel margin fiscal about I -- from better we anomalies think are of good look X% to or at the questions of that question that you to year maybe go that any prior that a earnings. driven algorithm the about a about Is the kind for year very but from? of way of more very to we you of can maybe volatility normalized

Darren Rebelez

this take Darren. I’ll Kelly, that. is

think resembling levels volumes the we’re as that’s of volumes over in start to I be And think ago we the levels to years for the year elevated fiscal necessarily us, from side, we when of the and the algorithm, will where would pre-pandemic more Again, last we pandemic. of throughout we the way at to on has couple you’re expect back. that, really but how they a to expect start equalize so I and course say, that to come at don’t algorithm then to works. certainly, about them year expect looking so maintain kind tailwind margins something is and the were we fuel margin been We then experienced recover the pre-pandemic. those think the favorable a store that

both kind we’ve the one the committed variables variable. is to a happen side things to. because at EBITDA commitment, shifts that standpoint. said I a when XX% of that So CAGR, X% of Certainly, created and these we planes ultimately, from it out same one made think pandemic was CAGR year-to-year things, to there but we again, the And other, from

the how very play as acquisition we sequencing out well. It’s and the integrations out about recovery timing that ultimately We integration going still algorithm creating idea be the and plays have works. acquisition another variable. bullish to feel But some that as to just

Kelly Bania

Okay. helpful. Thank you. That’s

my a questions couple Just end. more on of

that just for comp the In outlook mid just terms strategy gallons? how how tracking you of the gallon your the What of next in managing how maybe this of think seeing gallon single-digit, guess, looking higher just but comp and national kind maybe little kind a is? be maybe I we gallon you’re -- strategy what thinking year average curious of in would at I kind guess, that is share about at were your point? market curious data, you’re your

Steve Bramlage

gather. we’re What Yeah. the we all in our based seeing frankly, information -- on geography, is can

from competitors our a gallon outperforming as a as standpoint. standpoint, margin well We’re

So, profit that’s been dollars act gross profitable a gallons. recall optimize has getting our growing balancing to and between strategy

I we good job think that that so far. in done geography, based we’re we think indicators out a on see the so And with again, we’ve our And performing.

And I to market So dependent on regard going from resume talked that growth we be cadence how normal. we’re we share to with about. other that don’t piece things losing largely how believe more execute any is standpoint. The to is the of one, just

most and then be that still think to believe see going school that people to that to with is of out, And and but the so dynamic little recovery addressed of we the throughout starting there so are to back summer be will summer because virtual in so a think now we’re the of from are that geography coming would is we’ve is feather people in more so bit so out back work, And year. believe to to some work, school, we’ll going we’ll as seen and more a daycare been challenges probably we of about, appears person normalize course ultimately will get and a school back to fall. more people I will addition districts we’ve in to the some starting the heard to going in start to be work. work our have and go in bit back what to going and it far, people seen traffic back we’re in go improve, the is to

over that is to play have going dynamic to out So time.

from time. gallon fact cognizant we’re continue of So but standpoint, of take the we to certainly think that recovery a also a this to little we’ll that bit going is grow,

Operator

you. Thank

Your Fishbein Jefferies. comes next Matt question from with

Matt Fishbein

and store wage in more larger Thanks said the color the In OpEx stores probably -- me terms acquired per you up Good store and on mid-teens Joplin warehouses any is relative of total which contribution here. is total Hey. expected wages of to are year, or year is and think seeing remind pressure running? Can for how cost terms and quarter increase? not us now, morning. store store base is of terms of squeezing increase you distribution? could wage full much to the provide the generally of right it But maybe you a related owing in the is I also in in being pressure OpEx to where these company? next the the Just if of

Steve Bramlage

tight I we on it speaking, the think we Yeah. I question There Matt. your it staff. side I that. like of you’re using I average stores, To bigger now. us store is wage on if across the than between see as I less But it’s based market acquired think as draw a you, that. tell and try bit tough average a terms I’ll a side a certainly a what labor. the Steve. and think in salary distribution much the on deconstruct would typical I general an it sure not on seems of environment are to the just availability wages store looks lot system. right like -- store is mix. generally around warehouse just a little it just bit store am I would Hi, of Bucky’s This a distinction mean, little it’s as of labor is On rule pressure for is distribution a Casey’s

per in come going would per also than to average, stores what we store little number an EBITDA have with they’re hire higher those a OpEx generate store. So but

I our be have think would the those question other you point you there. one stores just that The that a be the conversation. probably deal to tend think side is I of there. smaller Buchanan me, there So on remind And average footprint would my more can Circle stores than generally in K

Darren Rebelez

Joplin. was It

Steve Bramlage

going Oh! -- our Joplin, we’re road. taking year-over-year miles just money a Joplin basis off Joplin the listen, to us on is the save because

on what’s is us XX% has Joplin So given we that a offset have several helping in million from distribution dollars That’s overall us number. in embedded XXXX, benefit fiscal OpEx that there. of savings non-store-related. Joplin that’s which

Operator

Thank you.

with Your Trussell next question Bank. comes from Paul Deutsche

Krisztina Katai

potential profit can think walk for in Hi. components the just might us earlier, a but this and inside on your planned sales against Good various puts morning. Krisztina as outlook mean margins range? you various for is promotions we have? touched any of gross through This you about follow-up I on takes that you you for really cost the about sort Thanks cheese like and actually be us inside And in sales want squeezing up Paul. mid that comp Katai I here. just single-digit for for talked to question.

Steve Bramlage

based the in first Right cheese. about now I’ll start with locked XX% on, quarter. we’re

we’ll that of have pennies couple cheese the on be a for I a of think quarter, margin. modest bit would little on pound in deflation a a us tailwind first

look As a of rest cost. for terms out the you turn total would of the and comfortable the cheese year, strip for year very be in

cost first the benefit the we’re back product think to on in product a bit way us when side will a of for be or quarter. well standpoint. it cheese I I impact on then And on margin the have cost inflation business, will other grocery basis So a the full of significant one year insulated a don’t from think on the you’re though little

probably to going be for category. I grocery think that a tailwind us that’s in

the to to pressure more business than cost we wage proteins, system today. a the than of inflationary more last inflation product that cheese sit et little of think product remarkable in side -- prepared there we’ve food don’t on beyond just side the we’ve on here with generally are But is as going is cetera, commodity pressure. exposed the in where side got We I bit today have I I our be think more dealt don’t couple on the more the cost years.

Krisztina Katai

just have days. share Okay. will you we exit-COVID. Got it. do capital Obviously, ask prior your allocation your wanted Stores $XXX million just to you That’s accelerated as helpful. growth And secondly to-date. be But completed I have about here a largest authorization. acquisition buyback

about you So resuming program strategic how some your down paid think at the balance a between share of and point? initiatives, buyback all debt

Darren Rebelez

that. Darren. This start I’ll Yeah. with is

be has our strategy continues and to of to been going invest Our towards we’re growth. discretionary capital all that

what we’ll we’ll go continue and to And have opportunities growth that’s certainly that’s so, do from. after we what we the satisfied dividend, invest ahead and in and

there. growth So to It’s opportunities. as buyback is the we short of plans great those authorization have. We those as we term share have opportunities don’t advantage shape. a leverage have in sheet out balance From long take any present don’t standpoint, that the themselves,

Buchanan We’re about times X.X debt-to-EBITDA as the today here closing transaction. post we sit

over have that’s low X’s, down in aside it. year. the looking from the debt-to-EBITDA course We the how at of pay to down that like We but debt will we’re some

or authorization protect the sheet there a First invest price in on choose share and the if little use we and balance authorization to care take the it. we delever out We’ll share have Certainly, the dividend. repurchase growth. bit

Steve Bramlage

commentary creation reason see don’t with from of can in the dollars put for and see run capital the the near-term now. if our perspective improve for maybe like prepared couple us investments. a feels the value returns we growth marginal because Darren’s EBITDA standpoint, is drive can comments, in reinforce we a the the an And what and certainly end years that’s those to shareholder from growth incremental think from that to place so opportunities the we’re next right here index we to just right We on over based investment we and of on right play

Operator

Thank you.

from Cerankosky comes Research. question Northcoast next Your Chuck with

Chuck Cerankosky

Good morning, everyone.

Steve Bramlage

Chuck Hi,

Chuck Cerankosky

you margin, of out is of for some especially In i.e., the fuel? inflationary cost goods than looking at inside trends any area, these buying forward there opportunity to in help your other

Steve Bramlage

buying more you Just When can margin that said and one ask you time, question us? help to inside Chuck.

Chuck Cerankosky

buying. Forward

Steve Bramlage

Forward buying.

Chuck Cerankosky

Forward that heard part. not buying, have might I

Steve Bramlage

We with we We some of am of We with the occasionally do -- sorry. cheese year of obviously, the that those. for agreements calendar commodity. do Yeah. some with business, DSD locked supply commodities. in side the for locking calendar do the a we, lot for CPG Listen, that facto have other on grocery by will providers beyond several I de in cost of the right? goods and of the our the of year --

that by the that done there the on less of makes grocery is So contracts the forward side. But the have. on where sense it’s foods I business it nature side than we do side, us, on that have probably certainty on think we’ll grocery there’s today side we of the it essentially and for just the prepared

Chuck Cerankosky

you. Thank

Operator

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

Brian McNamara

Hey. taking question. Good morning. Thanks the for

see So there reset trending just and to at from relative it you’re quarter the brand out QX. a I now? rolled you a QX X% like you year a store stayed big you am How the removed private expectations, curious through your private seems from how penetration, penetration internal do exited brand

Darren Rebelez

this is Yeah. Brian, Darren.

water We’re into start more getting we some of and recently, category that progressed, to bit little we’re a and the months. We’ve Casey’s nearly brands with expect our in to over the to beverage that XX% that’s next we share six bottled items the another summertime as go got of XXX mix X% really pleased four for how the also private plus closer accelerate, we’re water, in stores particular, rollout pipeline to in within months brand.

like So that grow track we’re to feel we to well on continue business.

of real continued We for targets categories, haven’t to this good the the around But really year. pipeline say, feel given we rollout those the that have innovation suffice about it. any out and we

continue we at clip. pretty expect a to to meaningful So share that grow

Brian McNamara

C speaking to in at thoughts me of your drivers it. opportunities me, are in they recently, just opportunities? the on ever with curious Thank XXXX one consolidation. last then industry another well, be for And terms biggest year least I’d the quick be those seeing sounds you Got one that and like industry store M&A could optimistic on It you. but as of the participant guys you’re opined

Darren Rebelez

Yeah.

We’re about pressures, cost with the pressures. during the as have those call on of increased drivers opportunity well bullish industry the talked we within and increased regulatory pretty some

compete have need capability and really effectively the You in this to environment. scale to

think potential an standpoint I capital really from that going tax thing M&A to other a tailwind The gains. some create and is treatment is there of tax changes

that ultimately the to to of is independent and lot some probably discussion the they comes before now. And of operators are which double, There sell if margins -- a right looking gains pass right they these now. are on is so rates that were capital if

interest be some actively if to we seen there team having so we’re think will is now. to our see so out is opportunities And more We interest, conversations have geography increased our and right M&A to throughout there reaching come. candidates

Operator

Thank you. I’d to call This like today’s concludes of conference. the to turn Darren. portion over back the Q&A

Darren Rebelez

us All first in again the right. everybody -- Thank looking thanks with morning on Well, conference first and for joining we’re call conference on September. you this you. to quarter our visiting call forward

Operator

and presentation. Ladies today’s concludes gentlemen, this

wonderful and now may disconnect have You day. a

Casey's General Stores (CASY) 9 Jun 212021 Q4 Earnings call transcript