CASY - Earnings call transcript Q2 2022 | Casey's General Stores, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day ladies and gentlemen and welcome to the Casey’s General Store second quarter fiscal year 2022 earnings conference call. At this time, all participant lines are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will be given at that time. To ask a question, you will need to press star and then one on your telephone.

As a reminder, this call is being recorded. Operator press require zero. and should anyone assistance, star please then If Development. would the President, Senior Business turn like Investor over and I to Johnson, call now to Brian Relations Vice Please go ahead.

Brian Johnson

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

any of Before future the investor XX-Q, conditions, forward-looking in can on be certain the as our actions, or www.caseys.com pending that the growth our operations, related implied sources during relating as duration and number GAAP as other found the factors intention we a of results reports from and events, are or by any stores, expense of turn under Act integration Investor would factors unknown future supply There call strategies, uncertainties are to actual you during made disclaims statements, or current company’s and forward-looking reconciliation today ability other statements and plan, financial now including on and and of as include impact of that update that realize and quarterly of or strategic website. at to limited available the statements financial possible the statements well plan the Reform annual Form effects respect report a to filed but I future future this for recent made second new benefits and potential COVID-XX as with those or as forward-looking on on Form otherwise. result statements SEC on any to results recent to liquidity this needs, risks, A detailed begin, uncertainties link I’ll cause forward-looking not to and of acquisitions, call expectations call. a reflect of second which most the risks, and events differ and related revise known the our the our strategic with Darren of our expressed following our remind this to results of business materially our quarter, performance by at COVID-XX. and synergies, whether increase Any periods, Casey’s XX-K us statements, well governmental website call quarter plans may to of our the in execute forward-looking XXXX. from Private as non-GAAP meaning the and statements said, chain, Relations operating opportunities, this Securities views or Litigation obligation Darren? constitute measures integration future discuss These information, results. over or our may within like to breakdown assumed With call, referenced the for to described

Darren Rebelez

Thanks Brian everyone. and good morning

issues. a efforts tireless our challenges for members overcome COVID-XX the as team we chain like We’re to moment, thanking to ongoing to the XX,XXX Casey’s by results sharing and in looking start their supply forward resulting but look our I’d with

regard for quarter. and make better is purpose day. second during ability progress new this and our members grateful under proud outstanding proud report the Our to communities our guests life situation, perform to I’m I’m excellent especially have the circumstances team every to and this that we make an for. to is team’s difficult done and Casey’s, continue of At in something job navigating the

grants, through November, Then support providing much to giving Casey’s a to assistance will veterans-focused and where team their operate. for to our Cash generous communities grants thanks needed and to guests veterans with giving Casey’s campaign local organizations provide our raised held we nearly campaign million quarter, $X schools Classrooms members. raise communities the families. This passionate in schools local PepsiCo and to for funds funds in in These partnership

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

the let’s Now discuss quarter’s results.

second gallon launch the be exceeding experienced and quarter, fuel, fuel increasing We breakfast gallon. inflationary new myriad of year, of million, strong for profit the fuel counts margin As you’ve was gross October early maintained in per our throughout volumes. hit same retail release, from prior X% Total our store delivered quarter. and We all-time with of down was earnings in challenges. $X.XX million per press Diluted quarter. the $XXX and facing. $XX.X from environment dollars volumes sales were positive we’re our seen prior primarily we Inside price were year that in wake partially proving big aided a million. and yet impressive menu store guests operating guest of income margins inside despite nearly one the to Net prior down increased EBITDA challenging an by expectations. is brewer our higher dealing the matched which store the retail the still currently with $X.XX due of per the operating year’s dollar while positive high per expenses. was In the $XXX the stronger the we share nearly another a product to and, while were extremely grew share

average full in second in our average third year stores with this were term K also our categories. share and realize deliver The to expected operating with the confident and by would very manage Inside first near Circle Knoxville, margin we over I now Overall, is an XX.X%. the from to this to our Same team environment. on store and our on on period assortment excellent same optimization based efforts margin job a an second an were quarter of Pilot the agreement and remain up go which presented store acquisition Bucky’s ability to that overcoming XX.X%, We on challenges with quarter completed quarter. acquisitions, of fiscal in share third acquire Corporation quarter a and results same close store on up to to XX the strategic merchandising remained category maintaining up peer over basis. for XX% are margin the area digits inflationary resets the snacks announced low over in up the the were same beverages single geographies Tennessee track the synergies. perform the industry strategic comparisons successful and basis. some each store last details and expected was was our X% we while Alcohol despite like commitments did two-year X.X% sales current well to stacked through challenging of The XX% stacked performance. sales the beverages headwinds. were year. grocery year and due two-year the sales Non-alcoholic in largely up in data Packaged a taking ago. and in We line general merchandise continue are believe salty

quarter gross margin Pizza and XX.X%, contributed from XX private Our in procurement basis the in were year dispensed profit The the continue prepared label margin to up points Same average a program and store up for quarter. XX% up this exceptionally favorably to well, initiatives X.X%. perform ago. slices beverages was food quarter.

acutely beverage some mitigate challenges donuts, helped with product for chicken. entire and of the the chain availability model foods supply and during prepared key quarter, felt out times most items we fountain distribution sometimes various self nearly quarter stock our quarter. as cups, during such challenges, the category At were in the we While

During compliance higher fuel to Steve? incurring the rising is profitability by the like fees. impacted go last largely gallons category. but a do per profitability of up balancing of the margin margin financial in store over both period same slightly as EMV team detail job are the $X.XXX on year. well second clearly fuel the The to Steve fuel levels The labor, entire the to credit being still tremendous down were and optimize volume a to now sold to the call I’d fuel fuel and continues operating X.X% the comparable same card with industry statement. of quarter, as some into gallon, higher terms turn to costs

Steve Bramlage

Reported XX.X% general X.X%. and million gallons, $X.X food you were at of Thank primarily XX% of Total Energy million the million XX.X%. in sales item. basis, $X.XX revenue was year of dispensed impacted was favorably an and favorably that of rose rose sales retail the by increase our gallon. is included on beverage million though as compared installations category construction include and in by XXX the well kitchen was sold revenue to as period due which billion recently food of results fuel $X increase due the sales price recent and to retail fuel was by average that total increase on of we during of of acquired to average merchandise to Please million, gallon the $XX Prepared Total ago. an and stores price which in majority X.X% billion, increased beverage is timing operated an a the fuel increase Buchanan million, to saw per prepared a $XX the $X.XX increase the dispensed increase for driven billion. a This that are gallons by more impacted less good million, $XXX $X.X Grocery Darren, line XX% $XXX that quarter the was responsible the a quarter The not sales business, $XXX.X figures an to and do wholesale note revenue a from for of acquisitions. vast fuel increase reported or $XXX the to inside morning. of this prior XX.X% year-over-year other year. approximately

as second sold, had define from carryover million increase goods Casey’s an gross gross cost This million RENs. quarter, of of sale gross million driven $XXX well All by excluding quarters. inside we or quarter was from as higher by million the of in profit as which reminder, XX.X% $XX.X year. gross a but previous Fuel sold amortization. profit revenue of depreciation prior $XX XX%, As and fuel is benefited the from less was generated in or RENs of of and profit in there the gross no million over profit increase profit. $XX.X $X were the

food general and increased gross profit gross beverage million million. increased while grocery merchandise prepared and profit Our $XX.X dispensed $XX.X

$X.X We dealer million Energy Buchanan also we is lift the in acquisition acquired saw network washes we in profit, other the the a car activity other and that from record category. and gross from that benefiting this

inflationary same per margin all was food we’re year this the company $X.XX comparison. year approximately was increases price were relatively to pound of facing. beverage, pound the is that face merchandise and basis and Specific pressures teams and inside actions, merchandising inflationary while prepared The flat compared to prior XX logistics categories. to change ago, chain from Prepared a partially a mix our combined this from exceptionally supply prior per points enhancement, quarter, basis year. remained are volumes, beverage XX While prior at also XX cheese margin Cheese and and XX.X%. food flat Inside the two the in basis margin from was and general by mix our quarter a benefited benefit. driven procurement and quarter dispensed XX.X%, the margin a it’s $X.XX decrease $X.XX gross selective and performing up point dispensed favorable profit XX.X%, completely compared grocery the that’s between costs challenging an of points cost the environment. for offset to year, well Higher

Circle basis is prepared cost with XX% a reduction food and this X% other was this of integration from a second quarter, increase operating to store-level our operated the in and to one-time which is store store largely than Total hundred growth more offset the the expenses expectations up However, wage unit expenses in acquisitions. cheese as Buchanan by first operating in a expenses due $X is quarter were million the growth as due approximately cost primarily we as and Approximately of benefit increasing, increase prior XXX rates. and expense the commodity operating $XX rate K stores employee with same associated increase XX% ingredients. million or due consistent the X% year, our couple well by Approximately to is increases in points.

of the in able which number down X.X% on same inside hours the quarter worked were two-year team. to While not versus grow hours reducing a two-year tremendous basis operations remained thus we accomplishment our store sales year, labor store X.X%, store different prior stacked labor basis while were significantly by on a stacked a hours, is approximately

placing third compares into prior $XX.X driven Depreciation the card XX.X% quarter, were to timing. year tax effective the primarily Buchanan differences in that same with distribution Net center Notably, to to EBITDA increase EBITDA for million by year. another we compares due for down the the accounted in X% Net Circle earlier, Finally, by the to of primarily rate fees increase earlier the the in ago, a rose and the expense additional The compared and accretive mix interest quarter. The was was the we mentioned expected. along for $XX.X a of store decrease $XX.X million to of to K that was acquisition. service prior took prices Buchanan income acquisitions and quarter quarter was and that the driven operating was the fund store debt as second X%. credit quarter million. prior earnings in our quarter, also $XXX.X expense thus is year. fuel up year on million million versus $XXX.X the had the and higher the to the year, the XX%, growth, both in retail this to in related XX.X%

full strong. Our $XXX available of million, ample and sheet we balance million us of really the remains were $XXX XX, million. $XXX lines cash of and in have giving October At cash equivalents undrawn capacity liquidity credit,

at leverage first Our with the of which ratio the the X.X remained acquisitions, quarter. is closing consistent times post

the and in net property This The activities quarter, the in generating less million first as purchases $X.XX cash $XXX capital due prior of higher provided equipment in the million share, resulted prior generated in versus $XX operating by cash company from difference flow. directors board meeting, compares of For the was the reduction to year December operating year. primary to a cash $XXX per provided the expenditures as of of $XX free At the maintain by million million to activities. quarter. well voted at dividend unchanged

leaning gradually that We opportunities as remain we to will the but allocation going have the many into to our tending to in debt forward, repay capital growth-related investment and balanced continuing continue well. dividend

this at opportunistic $XXX we in Our share regard. remain untapped repurchase authorization is million, will and

million, now average XX of K and price are represents metro these penetration in Bucky’s stores. the The store approximately pre-synergy quite in and traditional purchase the of now it’s operating stores they per previously truck percentages and expenses disclosed. a by to this us including million Fuel the expected and units $XXX fiscal Total term pending gallons it the prepared add Pilot million Pilot The our XXX acquired year, Casey’s of outlook. fiscal cash acquisition are multiple The increase times EBITDA XXX financed is to expects aforementioned the has update year. Pilot part teen be consists $X.X up in has sales stores, and the The far XX XX provides new to X.X current a versus mid-teen X.X So stores. are due on the a to previously low XX hand acquisition. in month per trailing approximately in the Tennessee gallons Knoxville, approximately disclosed, the that’s for and stores acquisition and and to close is existing and to of the the high is of and be the sold will merchandise pending end to year, is area. we units loan, the food store expected accretive combination convenience that percentages acquisition $XXX million have December expected those Thirty-eight EBITDA. stores from opened company with XX stops. XXXX XXX stores opportunity seven two Circle

with credit fees the fuel. of to retail Additionally, remain continue elevated along card price

fuel items, past to the assist notably cycled the will one-time we and such the of as elevated XX% $XXX expenses in XX% to XX% for and tax mid The to approximately expects expect approximately has The and sales we same to maintaining same at range, by increase million, costs. third to compensation at approximately The fuel modestly prior activity, increase Fuel quarters both of is XX%. impact both store still year. as year, $XXX EMV purchase I’d quarter call will and operating now to reduce for property, quarter the costs. million million trend be third will to new to these due to mid disclosed to be given $XX mid now higher driven inside fourth inside the be Interest the the The operating acquisition the To that per for and changes, up finish net should units charges incentive gallon positively retrofit year. the fourth previously with company depreciation for amortization up digits than and end in Darren. year opex million year year. flow. company XX% the despite the cash of in like be prior we expense single outlook earnings digit versus company expect the free single year-over-year and expected worst modeling, and be will the equipment versus a store some to new XX% quarter fiscal compliance as favorable planned more be is to expenses Casey’s and associated the increases this prior our plant percentages. back Both in with Now have $X.XX well construction impairment margins store continue sales versus to are expects third rate $XXX as comparison turn this the and costs, prior the fourth year. quarter the increase approximately sales. the over in financing asset the the the low sales

Darren Rebelez

Steve. Thanks

First, I’d quarter. second challenges like without work chain to issues, continue to supply we’ll dedication, delivering perseverance congratulate it the results done team for and We COVID-XX, impressive the at shortages high entire given labor level. couldn’t the in hard their a perform need to and have Casey’s and their concerning

our of the pillars growth. the is reinvent and strategic recall, via disciplined plan to capacities quintile deliver where guest experience, unit to be EBITDA guests the you As growth to create are efficiencies, top through

be by talent of strengthen add the capabilities to team the to this an to All going in and investment is driven business.

end With where is the let’s commitment We acquisitions guest to point. XXX deal period another the a versus a being CAGR starting with three-year is. recent a the large add units the X% which and XXXX, over fiscal pending, completed by of made start

in including added initiative XX XXX into XXX far, have units now fiscal thus the months are XXXX. and We

Knoxville a pending fit the strategic an potential Overall, our Knoxville, We the network, immediate midsized expect is and market It Tennessee market to within gives well see these extremely acquisition. we existing Pilot our it footprint Tennessee. horizon expands about the are is do stores. distribution in as attractive On that the for in in. prepared us and we foods scale our also excited

we We expansion committed the also will achieve to. we highly XXX are confident unit

Our also job a the Bucky’s team integrating acquisition. has done great

the with is of optimize new profitability moved respect stood chain have With retail the remodels supply schedule. the now quarter, through We ahead to year, have fuel to in up solution fuel to plan We XX a continue to end completed our of technology calendar XX which drive the In efforts. our network procurement team stores progress. of remodels by efforts. all price we and procurement to fuel continues efficiency, current to optimization

inflationary Our store merchandising the last capable cost to point as by categories inside effectively making of from fiscal store through adjustments goods profitable price driven navigating the have more team completed are has needed. of and They this sales also proven year. negotiations retail resets environment they successfully managing

X% fiscal it continue track margin but the end also products goal to label our Not stores, improves for remain for value to on and only share profit grow private the our our Finally, option gross is market better inside a guests, this year. category. by reach the of

than to Casey’s initiative at expected. has performed guest Our better experience reinvent the

our Cup During of the signature brewed handheld the successful a by new fresh the highlighted of had launch quarter, coffee line-up rollout we Bean program. breakfast and Casey’s to

guest engagement a high digital increase quarter last XXX% top of XX% on a year. in Our digital were as priority second sales the remains same up quarter the in

such with Door at Dash third aggregators Eats Uber partnerships and are as X,XXX stores. Our party now

service stores. own We with pick-up stores. Door member Casey’s fully benefits through services. systems and app We drivers our at stores enables on pick-up still offer XXX label our members curbside our participate at third a takes orders receive in-store also party to over white X,XXX and delivery utilize still and their utilize our XXX delivery, at This Dash delivery own Rewards that

million to eclipsed Our Casey’s Rewards and members in enrollment October. grow continues X.X

app Our orders. than generates any other phone-in media, revenue more now including order

make to staffing engaged result federal investing a the With in We’ve special We’re our web improve to begun expired. continuing stores both more difficult progress depart to our promotions to labor relevance. respect members. grow We by the these employment benefits despite segment and our as to personalized and also in offer our where has been talent, guest. the will content to marketing the believe environment we segment company the campaigns on shifts app able

expect exceptional adequately have the We from staff deliver will the pay respect to can market our in to competitive experience with to stores our come we Casey’s. remain guests so

members with health members the our incentivize vaccination priority. our is team a to and team guests and safety bonus We’re top of our as continuing

questions. take will We your now

Operator

question Our instructions] [Operator first Barclays. the Short line from of comes Karen with

is now Your line open.

Karen Short

of much. question just relative the and I’ve to asked wanted I’m last at this versus your growth go definitely to in look that thanks I Hi, profit year, When dollar you past. continue you actually your to opex ’XX, doing not very gross deterioration to you in the on growth, a relative than a or see half, much store. that one you little and widening about that meaning follow-up. second quick look how a gross growing in gap, to opex faster dollars trajectory just talk Can will the the bit profit think then I have

Darren Rebelez

let generate thanks. I’ll is Darren. able fill in to growth Karen, and our Yes kind gross that go some in excess ahead profit here. This We opex growth. dollars start we’ll and still be of Steve of details believe

one I short short Ultimately, GP the continue issues in timing the those bring store start those people, to we the on, with bit gross starts there. the a reality how that’s opex as of to the our most of outsized normalize will of short on, when generation to it bring have to to we outlook then I’ll start yet and those acquire we’ve main gross business, driver in, little what add synergies and foods have vis-à-vis the so growth Steve you layering let to foods profit we about mismatch our of gross opex really some as the the acquisitions. effect our the Those when profit. have year. that think of achieve that to prepared but for look kitchens generate first generation is you a in term acquisitions and got stores, and prepared come term, as our so of acquisitions term relative work. to foods accelerate growth the is that of equation part we which the we bring because them, In we you the business, the momentum those is significant that you those just prepared profit. talk short of accelerate don’t expect stores period--in train the It’s stores, remodel in is balance the the we that is

Steve Bramlage

the of expense Karen, second expense growth. the that to near second that here sit outpace as good sight now, just pretty It half, Yes, did growth in I we operating profit got dollars we’ve year the half which gross makes dollar dollar I would prior term re-openings, going are for not add, a second have year, the quarter of very the lumpy reasons do of is in coming will the is gross COVID then operating the the so in and from operating expect growth. we’re profit in in growth certainly easier what’s hours around and off in on special prior going year, very think closures to us line we that get hard year I talked we that consistently a the in for outperform of pay lapping here little a in the second about, and happening standpoint, of just comps but opex the and opex, growth it some terms with

Karen Short

you color on will what wondering be. Obviously foods, be you synergies synergies will helpful. that’s coming just a granularity if give if but commented on as little that, some the think actually be just the of could Then there’s that’d from you prepared on great. Okay, any Pilot, more on,

Darren Rebelez

that some help. those those Yes, We that making do will remodels think synergy. is investment in true I believe stores of the

we to opening can will and elevate foods capture But with team experience, go prepared as in have that synergy experience we mentioned largest acquisitions. Steve other always and low remarks, so we foods, virtually significantly very there in they well we in in prepared and the prepared expect the merchandising stores, as that our and the foods on we re-merchandise is experience. the have penetration and our as based from clearly acquisition, Our helps, bring, Pilot that those any acquisition know

Steve Bramlage

add, from merchandise system. think we may and our that on accrue to going time, certainly our get and within We’ll as is continue that costs a then rest efficient network to will of warehouse will load closest that the country, to that distribution I fixed side we’ll that’s more of over of benefit ability standpoint, I the grocery absorption find make further definitely our some the the those our to stores distribution within well. much part to

Operator

you. Thank

Our Herzog of with line Goldman the question comes Sachs. next from Bonnie

open. now is line Your

Bonnie Herzog

fees. All Pilot since Darren, especially you’ve opened stores to opex? and going if more on be right, function a guess guess have you new costing in I I Thanks. are stores about your learning high bulk you’re the that store a of of thinking quarter, now I what changed, operate, opex the to stores again XX%, had the new also per and so, different up on should also how then stores Good those what with question new and I’m opex, just elevated everyone. in you year of you. new Are the bit from driven the just been question. we that stores maybe now quarter. by it to in then really it a little trying and the the you coming thank QX? to said, based this a was new earlier think credit going But about I’m component quite is more opening opening higher card understand this than the morning

Darren Rebelez

changed. would we quarter, see nothing’s and that were and we second would was quarter, exactly the better, really really quarter, continue nothing’s opex in in XX% the quarter, increase better we the substantially this in which opex then quarter, what slightly versus Bonnie, up said the a first that third to in last and Well than and better in slight get that happened. in what a what prior said fourth is changed. has improvement we year, I mean, so We call that is XX% the it fact XX% in had

to the respect retail But on environment, gone opex. shortages, wage restaurant I we up have the leisure industry and wages so certainly in and and we XX% Now so with acquisitions, average right industries, in it’s current hospitality with with labor like gone, data our the has certainly the in industries, at played we’re XX.X%, thought. said wages where average put a wage gone that we was our in When roughly. exactly have up industry about damper out and think up, has look line that again,

to we credit XX come operating have with bring them, that’s a fuel price you stores’ that’s a cycling some going down we going volume will Pilot, that the of basis going another percentage from with of up, and continue go when year. are will that to be up. so because come function fuel go prior we’re Now, that’s over are expense to stores well. confident there, still But of more prior to fees so the We’ll want worth what on of on XX numbers those Steve, versus the card increase as retail year, of to--?

Steve Bramlage

have those increase. the was quarter, second so extra the and them acquisition we remember the new couple and quarter in Yes, very of after total, about in didn’t a actual it there’s of units to of same. in operating From expense quarter, day we’ve unit the new X% we of than cost a the couple perspective, M&A the quarter my weeks did have couple just of the now and running cost of it in bridge, you other on year-over-year largely stores on drill second X% acquired growth started, website these the a stores, when running got is we obviously - extra entire down may the on to was you our and quarter, the costs, first the first the contribution and a of which weeks that increase units on close we weeks, know, the contributed for quarter had

soon. of just out headquarters still--in so The before, you’ve to synergies not we of location, the redundant case some the of is level that staffing quite costs some them closed it’s here we a expense. end out The got completely still have system coming not warehouse pull would was Buchanan, lower I that acquired year, be that call the will than operating and down. it are other from that’s of That the in piece out will close we’ve calendar while the system until

Bonnie Herzog

helpful. was that Okay,

year the and the new was about primarily how taking think but just of you’re openings, because full just clarify, the your maybe first acquisitions, store maybe the we the the inflationary it expensive expectations, the guidance Just in for with that sort more to year? half for your environment. then of so up should line or opex Is Pilot on full

Steve Bramlage

they continue around part a of believe, it out we the Largely, somewhere so, on of the same we’re the when reason is operating expenses or is, one of this things, for incremental than level see credit yes. beginning, neighbourhood while two a function so a than other card $XX of hoping that week more as and we close, Then my things stating are that’s hang in set expense guided million for those fees item, an is because close perspective, the two From to operating they us between think just guidance in and we months correlation five credit worth half of the previously. probably level five is higher year, definitely There $X last sure are is and the it’s we so the a going are bring next at there’s higher CPG to the aren’t Pilot, to the that changing. hanging I incremental to retail, higher. that’s change. for out months we’re if fees so and thought industry card is had going retails were line we

Operator

Thank you.

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

line open. Your is now

Kelly Bania

your how developments. has having credit these the kin the way ask in, higher the on earnings expense guess to opex and on expense how this tracking for understand Hi, good underlying underlying taking in XX%, and operating your different of a year terms given the outlook total I to feel this that here. year how going or a want impact I question, because similar our plan I’m wage outlook, is morning. rate to guess understand I is of point, fees, of rolling around stores increase your Thanks card expectations, that guess just the to you Pilot about operating your so the just EBITDA for in that questions. and of core try changed, and for CPGs, to kind trying

Steve Bramlage

with hey is good would call Relative same wage morning. the to that. to what I’ll Yes, is start Steve, I’ll that. rate, how This work going answer Kelly, cadence how is going with I store forward

Our expectation has not of changed. that

market. three a in view, certainly the we pretty think wage pressure what I ago, had of was the months good

happening the higher from we paying to us we’re and the again higher second quarter, off a to we number prior was COVID-related number get year quarter. dollars second it in headline that a the half comp that COVID won’t had wage think the the was half in number the and that quarter giving because think the go so pay higher we going referenced inflated of pressures have extra wage because percentage. prior in percentage a this changed, today. a not so what today, number special special though of The of will pay had down of I change similar is because we’re the took not are that easier, year saying when Then, implement year, that the a in We first the the in last first if delta Even this but what were us wage happening for the COVID year, last rate lower started to we we pay has in second rate biggest year. of was points we the prior base we’re the the at pay. various headline in comp wage prior in so XX% second rate will that half smaller just but from the paying number driver earlier, is year, you necessarily time we so was pay of and actually year

term. industry, we that believe that’s far, credit get I but wages is thus result--so So and relationship to because more card do back haven’t have large the is guided going of extent bottom to year going evidence any sustained, we are change of your higher in that fees, question, a the to the for extent the haven’t question kind by the posed, an go washed as as expenses changed. of out to profitability higher either contributing a to two near don’t time EBITDA not second now the to have the or that, and line. for you I’ll of industry that fuel we’re end those expectations the to Bonnie part for right the operating our

Kelly Bania

Then which maybe lot also you elaborate very for a more? When have increases just makes helpful. also categories that price the move plans any those, Okay, took? you sense, competitors on that and do of seeing direction, are you were in you can that

Darren Rebelez

we process changes of able had so had done increases part this calendar some like we’re ability side and on price of we’ve we’ve been this confirmed now kind already been position that merch modest to the we at, calendar more as with now take we we’ve the general that’s we taken year. fine-tuning Kelly, the some passed Primarily taking grocery industry, data look relative in We’ve as that other we and because balance That’s there. a you’ve pricing in in next industry negotiations cost results store certainly of through our finalizing grocery goods sales and had large where categories cost year, needed. the the goods our so some and on in peers price Yes cost some negotiated standpoint, of of the is seen pricing Darren. as from have cost through share of the have independent on the increases tobacco business, in same we’ve to and believe are to But for the side. others

second and across in primarily did quarter, we the were number because ingredient pricing side, that of a some on late more second facing there, foods was costs. take pressures some prepared the inflationary we the On in quarter, categories

the volume we second we had As anyway of had opportunity a costs, the because erosion pricing we cheese bit a Steve cost seen do with from some--we cheese took impact highlighted favorability as that. standpoint, to margin any but which the competitive side we’ve little quarter, went on and ahead in the result in it had not offset of a and the

Operator

Thank you.

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

open. line Your now is

Ben Bienvenu

Hey, thanks. Good morning.

Darren Rebelez

Ben. morning, Good

Ben Bienvenu

you stores put food volumes and prepared per as about pipeline of were pursue about the from a of that you make on the food moved prepared across which Casey’s offer those you kind entire the one per-store Darren, of that sense you’ll newly the kind remodel ask in to us was think of legacy back a these with investments prepared stores Pilot and our category margin how business talking in result assume give can variance before from to remodels, acquired can the those want sales to stores. core store over parity as long remodels of you get the the I think Buchanan piece I expect you But - having timeline chain? I well. and lower the model. food

Darren Rebelez

our we’re by on construction the stores remember, just so by pretty as already - our things and so can put get May remodeled in those and there a kitchens remodeled Buchanan to we respect and XX have Buchanan end around this teams timeline closed transaction, year this and synergy. a more we Energy the to so cadence have developed of work. end get point really as year, the With stores goal has as remodeled trained nice sure Yes, calendar up, permitting speak, team to and standpoint, in got we but we get roughly quick that that, is Ben. of It’s able we’ll from how calendar quickly on largely that our we’ve remodeled XX dependent really at being the fast and move XX

prepared developed, a Buchanan post-remodel, to offering anywhere in Now, in is concerns to from food more we’re ramp getting the to those first seen, any way. Pilot a XX% seen our foods in lift what much prepared early and a had you and on months what system-wide bit so average. stores, I we’ve little two have XX% about month and on stores far the tell more so so sales than don’t there I’ll of we’ve a the well

so Knoxville, new as people that respect the prepared that to come. territory that they in with foods in well than find bit takes known, much sign, brand for longer core geographies our little us, where tend markets that’s Pilot, who hang and in once not that’s Tennessee, we a Now our is where, newer to know we and we ramp are

immediate a market prospects longer well. because do when to in Pilot store scale. the in takes one do of the our about scale. of a allows good we small one things that there. really we the the area, this We found acquisition deal accelerate the said, us to that on We stores something at ramp That’s being about little get which time we Knoxville bit that can period town attractive some can’t as so feel Now was in concentrated XX a can advertising normally all do do, we really

Ben Bienvenu

a Okay, great. the other opex. more trajectory. another is of then two-parter, one housekeeping is one I’m kind and It’s going longer to term question ask about

from we’ve of costs. On housekeeping, non-GAAP X.X% the think year-to-date kind I line, the it year-to-date deal costs non-recurring, of call about opex million opex got Steve, $XX incremental so deal-related, in

digit you true fiscal belief the operating noise settle in that’s had single to you historically out you start think think to now? two the that’s deal question That’s kind back of non-GAAP Pilot will from incorporated half as there year question going deal the Buchanan the costs one. of there The the first you numbers to look right I about be part of is can costs Will from Do the guidance? still growth beyond is be that year? ’XX, into into of range. incremental, the part be high talked Then believe residual half as the back in guys out in expense that the some of a you

Steve Bramlage

Hey Ben, first one. I’ll thanks for do the the question.

in legal think per I don’t have--we terms have costs fees banking or fees of deal-related any se. we’ll more

right, that we’ll where which of the have $XX expectation costs, it’s Buchanan, EBITDA part would year, this we of related - Buchanan have from be those expectation us in I of it, second EBITDA. a we accretion spend--we’ll to our nothing gave the overall to early we’ll more medium Circle we be the specific with I question, three has so been because million all right, for, that expense K, know, earlier the spend half still and year inclusive don’t do see than year about etc., million on much much several The a that acquisitions was all this several what in when prior and it’s be and term, the at but contribution flatter. and in Transitioning little EBITDA-related integration training, slower year, costs, Pilot, operating think algorithm million of--you think dollars second need year changed growth, into I do of extra all to any lumpiness that. clip getting, year, expectation can’t will growth of our we’re will enter the better next next think manage we dollars we’re integration be they that will is as the I reason for of consistent of frankly,

very don’t be definitely store rate good pressure feel about to that. medium to general system, lower we’re do to just see the same any a we’re to going is retail, what the ability think as that’s there’s and nor out near the in in around more term going I to think EBITDA, change in than I not wage woods, manage we to ability our reason the matter anybody term. growing But a opex in our of

Darren Rebelez

I’d so store acutely reduction able is out little of our been take labor the expenses that and hours, growing of operating is of we highlighted Ben, aware of in today away, in element we spite and go our lumpiness the everything efficiently, a into I two-year to our operations cycling more play Steve’s and that stores accelerating still and the comps growth out the of sight to comparable labor while on little fiscal operate XX%, in and we’re more how largest stores, members shutdowns of basis. give year, of else get team a was I point, the a clearer goes have but should the kind as now, hours To so only a earlier restarts same prepared a X.X% of we and we’ve the that next those as Yes, and is thing think fiscal we stores not need line to towards what end think stores had next will on guidance year, add the to be roughly normalized, store we’ll team that bit for year. our the the and much

Operator

Thank you.

line from the comes Irene Our of next with RBC. Nattel question

Your line open. now is

Irene Nattel

Thanks morning everyone. good and

Just would how morning during your pre-COVID you food relative a describe depart topics traffic levels? to bit, your to the little and sales change prepared

Darren Rebelez

Yes, thanks depart. Traffic the Irene. morning improve in has started to

the in variant and that back the got growth resurgence, between business lot traffic a first think of introduced with on during I really depart. quarter the launch, best was but products that, sandwich given delta Labor Most morning re-openings new were year, hampered how spite to category, a place is that of by in the we it the after the the of our that take kind saw bit we’ve after little the Then to of scheduled fact so the given breakfast any day. far. Day were up respect with of we to and in pushed gone definitely pleased somewhere been category XX% that’s XX% breakfast

and new has were a we we feel how program, just about Our guests category well rebounded ago. have so where good that to really months breakfast responded the versus couple of

Irene Nattel

day, you. do What seeing terms you of think thank pre-COVID of in levels? to relative balance where great, and the That’s are you are you the

Darren Rebelez

back rest pies. last The in growing. the still depart stacked depart basis if and the in day, still XX%, little feel the business pie from We’ve really recall, has a that whole in you certainly pretty to evening more took off locked people double bit - certainly little back scenario, back, respect good that’s see of we’re two-year on while feel growing whole With of whole we year really lunch up were we lockdown-type business a some we’ve we’re we very pulled a down, about when prepared up but XX% our the momentum and pulled so a we certainly were foods. that basis pies, a two-year digits on Overall, favorably. good that bit, stacked given

a increase while prepared by offset sellers, dispensed you our other the the that core resolved would particular our in we have my category. business that we foods, the Then specific, of some mostly all category. we’re think that’s food, sub-categories. which the since X.X% business, strong top a think In hot and getting strictly is where the we’re and wraps, quarter quarter, so that results issues. due we I challenges categories little key beverage by pizza were at of but associate comment cups, I We is that and able we with chain I then is when certainly think meet stock To the in chain hot sandwiches, bakery some foods and there’s alluded normally then the to over weren’t dispensed category posted supply we That really the of we impacted. to in but I goes was the bakery It’s cold beverages, cold and of and look needs, three donuts our category. in, talking sources alternate the I in beverages, about of narrative, supply categories, were comps supply, thing our and there’s hot and what would on over through those out had which have that the our up some prepared were food, three-quarters food, salads, with in so - suppliers get X.X% impacted that main menu, in impacted had more we was some that to issues. as quarter, all that

make on of over at and the that steps fountain they that three fact would that we out or bought the increased have case, non-carb is and purchase. store some beverage not the take has two we category, believe that during over to and is and some the that vault, to just XX% category, share dispensed shifting when those from the guests we specifically. moved at of that, made on who within bakery beverages losing private and to With our they’ll that inside exactly so what were that looking we in some we lost brand cooler among of bakery look this bakery found XX% so of business over cup attribute label when come vault. foods two fountain is one probably those center taken the cups, have believe increase they the in, a cup, the another there Likewise packaged packaged and they will XX% some private category, of see categories the more up maybe there, if and I’ll year, out prior guest, to believe don’t definitely the our the Now, point versus our dispensed cold into don’t bakery, walk guest at a XX% then with sales would pull that look that the we’re not we for prepared when quarter, and in bakery look I our the

to comps we some that’s think supply some very though due sub-categories I why in are had strong, our challenges even overall chain.

Operator

Thank you.

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

line now is open. Your

Bobby Griffin

Good Thanks for my taking everybody. morning question.

Steve Bramlage

Bobby. morning Good

Bobby Griffin

to back First, switch to I M&A. wanted

multi-year great your trying to store off to targets. are guys You a hit on start

still or couple incremental it is the Given was recently, quarters? a if are going or here in type more the a appetite to for to next there in digestion forward, with phase M&A number good acquire Pilot we available become of you’ve announced acquired stores

Darren Rebelez

going sale so Bobby, respect be sheet we not you’re or be appreciate, for looks certainly with it ratable opportunistic. just what you’re that thing the From in going decide where opportunistic probably and do Yes depends have we of it. are who’s the just a to going for where the to decide world, to balance do a and can as perspective, M&A isn’t attractive, and M&A, lot on sellers in shape. they’re sale, A to to great we’re you you you

we’ll have characterize we’re more, we the digesting certainly We’re is we’re of times only also capability our find to and we prospective do way we to advantage still the it, everything to X.X plenty it have would opportunities. sellers of capacity add the other when we leverage, liquidity, and but have that, plenty I and M&A right on and now team have so actively deal we of those talking focused take

Steve Bramlage

it model our of would spending you expectation forth and thought supply buying the there that buy the going a because related year, than build to ability the bit we’re to and guess beginning think our is than it’s is we’re had at on units the little in units chain the decisions capital of expected is I primarily Bobby, I’d function so at new the I of year. digestion, so able we the this year between of up of and our we’ve but we’ve and to have fewer that, we some number made, extent units, and to go beauty reduced saw Yes, follow back a just building more start of

at coming be new new those of moment sure historically balance novo. of the and would to those more operation of the absorb acquired we We that up were can numbers that happen titrate both all units the they than kind de them have units units will units standing make in, to are and been

Bobby Griffin

that’s it. I it’s a guess helpful, two-part lastly, of I Okay, kind opex. appreciate on question

guess seems true you price, elsewhere or or the the that the the grocery growth versus sole can is the you foods, in see opportunities opex margins back of one biggest facing? there it’s two years, it industry that P&L, is, inflation? If going prepared fuel normal caused two we to to part we’re not I go this is second the driver something opex the and that or that’s the of whether the is pass period, be aware like of that to aware wages, part else are Then really growth through that offset be quote-unquote you do course, years, in try area should is is of,

Steve Bramlage

a store the Bobby. hours a back of the basis, those, if mean, take wages before. same referenced one operations, the we’re basis, two-year are because so driving, we on it’s down, efficient, hours I’ll not - is right? of we I credit more clearly were before on Listen than looking to first you’re

the card but there you’re right, primarily it card, fees, second, credit If sure, credit and quite so for looking same for the wage higher that excluding no so there is opex or of last including a excluding is year, that a credit store I’ll a fees card bit are story, doubt wage exclude were increases continued our dynamic then what’s we so number of a pressure, as industry more started deal yes, us. it’s driving to minimum and across for COVID more then with significant in of same and obviously pressure wage be much wage store broad-based footprint, a two-year issue, of terms to opex

Darren Rebelez

To second in. don’t take think your and that no, foods have on opportunity I’ll Yes, the one take we price is the prepared we Bobby, your to pricing. answer question, only category

now said as the the and able an locked under evaluating cost some before, Like and as maintain and calendar those into largely balance increasing year, still drive have Our we I be we opportunities share. goods and to it at there’s of competitive before, be like the going delta price I done to we had up, take we we’ll be cost to grow speak. categories going as of because said across lot margins calendar a certainly share, is along year, them move of the maintain we that’s and time same retails retail and take in and with pressure, folks new a to that, saw team all able through merchandising to opportunity we think

Operator

you. Thank

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

open. line now Your is

Chuck Cerankosky

everyone. morning Good

talked you purchase other substitute did stocks, of about the customers ready and products. How out in-store to how margins? the to that impact back Going were

Darren Rebelez

dispensed to margin I it grocery, the the in think little that have categories XX% bakery margin categories and certainly it run XX% at a it the some. referenced, so Chuck, Those impacted higher bit. I than beverages, Well would impacted comparable that

ultimately were mix think prepared netted the moved of there margin prepared to is of a foods, hot balance maintain on that created margin but that we mix terms we it bit, side, ultimately that overall some the out quarter. the food the which able a is Now, the margin highest the that category, so within in higher through grocery up sub-category little margin benefit so had I foods

Chuck Cerankosky

those half as you of out-of-stock look the do situations How we year? second to start the

Darren Rebelez

still on would and the with of situation difficult that that issue that As our primary been come lot some see The are creative products we time. at said, the a that and we side get and and their I easily expect but think so in challenge, still is It’s supplier little part to alternatives, the spec up a A from so we’re replicable, our would miss. here cups side supplier, is I labor supplier on cup an the as so supplier, on like sit standpoint, today, supply hit on we’ve off that bakery I decent we with that’s been alternate side a is chain get we not dependent some and of still--from able again. more from shape. bit

and I a will been satisfy forward. it then got the in where said, largely side, like category. that we’ve challenge it’s It bit they’ve our variable beverage I on We and back be they bakery we as labor and category then been we’ve more But think run have move little periods contained. a fulfill had can’t in they so into again able orders, stock them, to the

Operator

you. Thank

from Our next Deutsche of Krisztina Bank. question line the with Katai comes

open. now is line Your

Krisztina Katai

you wanted guys, Hey when depart to improved handheld, How journey? of some in catalysts to base, touch in the has performance driven next good most, should the it said come think I so just we the that by good part months you generation changing you know, consumer obviously that about is new given from supply chain shortened, launching menu then morning. innovation timeline, landscape I the breakfast to How and how your about dynamic idea is thinking And XX impacting guys the behaviors? have be in process said it’s can just how tastes believe the the roughly potentially? - stores. overall, breakfast the

Darren Rebelez

a chain supplier think--let I want into I had some developing we that, that platform an supply just prepared say to challenges is product some then we I of of spent we were manufacturing Krisztina, postpone in to about I our own innovation needs having the that impact detail, for of product other me new some was so meet of their Yes the our primary lot that will would unable their time to of on and to menu. and have facility, in because launch. labor launch, the but talk get don’t a parts say

I we that whenever inside go Now good and we of supply it’s in in any the resolve the if so the have shelf chain have guess terms ready continue to pantry innovate. that on we innovation, that can news there’s sitting that, to of we issues,

experiencing are challenges, towards as is more we’re working areas chain starting on where supply to team focus that culinary not we Our well. so the

in we’re of in at it disciplined of goes it always development, look and I ways you process shortening trend, more it product to results platforms. efficient think being I from stay terms a that that Again, as a and very it new that our of are hope XX% that do to to was get avoid very about effective right, us effective launch the to expensive be big process products works, important ultimately to that and that the because far when and products process you we follow expect. efficient already performing In it. and think and timeline, deviate guest-centric we you to guest-focused. you I’m helps being any looking reticent on that too in mistakes and XX% very and increase show that breakfast and XX% in the of with processes. I increase at units, top When with is think how With our

Krisztina Katai

in said you for penetration, I’m hitting I curious quarter My if ways, us of about you as can on and helpful. are just in the expectations, how that’s you it, you label Got how your just finding lot follow-up you’re consumers on will terms X%. know performing it’s a in relative you where and so but program ended remind more that private environment on of the label. private capitalize is inflation you the internal track be talk don’t margin said the success with just could implications. that, of current the if to

Darren Rebelez

is label program the right still private the penetration. about at X.X% quarter ended trending on Yes, We track.

we quarter, so We items items, have third rolled to and that out line the out a we sight little clear rolling we’ve during X%. the have XX XX XXX another quarter, have be in of over that we’ll

Now, is at about X% the thing items I margin are it so much the already penetration. is are about rate. would gross higher a of tell you dollar profit running X.X% the sales Today, X% we of at penetration,

a Our in certainly the in so growing of in see business XXs, the low from rate focused part margin we’re business. average label of the the that what That’s it’s margin versus is XXs standpoint. for so rest why on the you high private accretive

Operator

Thank you.

of McNamara with Our Brian comes last line Berenberg Capital. question the from

now open. is line Your

Brian McNamara

a same terms kind a in revised of kind the acquired opex. Can store that guidance, you where or initial us idea XX/XX give and my private of you remember I here, preliminarily, split gave know for label, an on Thanks given but morning. just got I good you taking on Krisztina question mid-teens but we’re dead the question. horse was guidance opex, your when expectations? the beating Hey, it mentioned sits of

Steve Bramlage

little out stores overall you drop probably the that, to the the stores reconciliation is the to the Yes, just think there’s in store card--the of than the be year. the a year, to I time ship, we more of at are over-weighted but more number the the the going sure end XX/XX that be extent not to going both for acquired frankly, with are Steve. large been weighted more is mother time think we by units, to a spending this so same It’s two lot get stores, significantly fact same completed, significantly there’s that for new the to most because units things our to it’s again, so going so credit split, in get already the credit modestly card integration-related higher a driving fees end as not and a Pilot, has of different units of it, coming different about to of and by

Brian McNamara

to smaller given spoke environment environment, how And relative to be margins operators’ just a curious when just sell on follow-up then M&A, we the where current pretty just these fuel high. of to ago, the terms in three in continue last willingness is months current

Darren Rebelez

that, strong so smaller still resilience saying, the we out a Brian, and a now, see on before, more people stay to our correlation have store rising in selective more to now it’s to we we’ll with environment, flow and opportunistic think operate We challenging deal and, this operators, environment. getting definitely like because Steve remember really was between margin spots, right there the I and keep the like right Yes and mentioned just that. to coming with opex and there’s to see keep and ability fuel the and we respect like environment be pick through, environment the I but staff more of continue and

Operator

Rebelez, I to call no remarks. the are There you. for closing Thank questions. will CEO back now turn further Darren

Darren Rebelez

supply their related great thank efforts chain. to us team also of Okay, the thank I’d call. despite the a fiscal thanks challenges once and ’XX had half today join for to shortages time to members the labor first our taking quarter. again the We’ve you, and on for COVID-XX, like this

fiscal and normal deliver a year to shareholder pandemic, continue to I’m and in both value. results we’ll strategic times on our confident term demonstrated we’ve and our outlook long Fortunately, global drive ability plan during

comparison Our half the fiscal for second delivering quarter great year. results challenging for looking most to the of back the was year, our and we’re forward

wishes a at everybody happy Our season. team here Casey’s holiday

Operator

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

now disconnect. may You

Casey's General Stores (CASY) 8 Dec 212022 Q2 Earnings call transcript