Casey's General Stores (CASY) 12 Mar 242024 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to Casey's General Stores Third Quarter Fiscal Year 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Brian Johnson, Senior Vice President, Investor Relations and Business Development. sir. ahead, go Please

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

strategies, the us meaning to financial you and include during I'll the and These opportunities at we remind that forward-looking possible conditions, certain periods, statements made needs, XXXX. constitute synergies, or begin, our Litigation operations, related within performance stores. and investor results integration sources or this any Securities of chain, expectations by plans of call Private for of Reform may Before liquidity supply the statements statements growth Act assumed future relating company's statements forward-looking future and business

report on and Form realize which SEC and the the related uncertainties our benefits as with XX-Q the our are from and and known to any There impact that the ability future are from described limited strategic website. our those of or our number as of Form results in factors, materially annual conflict on of may execute forward-looking strategic quarterly a well most risks, risks, plan, on and our other Ukraine expressed and and integration but recent implied the other available reports results differ to, not duration or including, filed governmental as in cause to acquisitions, by factors actual to statements, plan XX-K actions uncertainties the unknown on

obligation views today or new call a as referenced as update future on future Any website Relations to result as a operating the our reflect financial third respect this this or of expense of or disclaims Casey's at detailed our A the during the in to forward-looking increase any forward-looking revise whether found as GAAP intention well of statements statements under of current reconciliation events, non-GAAP and be to information, for with Investor call www.caseys.com measures made otherwise. breakdown can link. events quarter

I like our that quarter call results. over to With now turn Darren to would to the third said, discuss Darren?

and Brian, Casey's third the team thrilled everyone. good once demonstrated morning, of model. Thanks, the resilience our We're the quarter of to business and again strength discuss

let's and a review decrease $XX The per Now prior year. $XXX results. decrease XX% from year. share, generated the from the decrease in $X.XX company of million EBITDA, at income, prior net in EPS the Diluted X% a finished XX% million of

legal release, As a quarter's call of in of press the due to were last included to year reduction the we comparing all resolution a onetime metrics and against expense operating mentioned these prior matter.

$XX by benefited producing resolution approximately results. for the members This proud team year per $X.XX million solid quarter or share. our I'm prior of third

weather in team As the footprint less in year fuel than environment of as cost the a our well challenging as January. favorable navigated most past

Food average with strong on Sandwiches well also basis details the performed pies X.X% particularly performance prior year. stack to with go results third basis an X.X% points were margin basis the X.X% our saw I'd margin Same-store and of each or some Inside XXX in a XX.X%, the X-year X-year average or up a sales was same-store XX.X%. now quarter like on XX.X% the quarter, from strong as over Dispensed the approximately of Dispensed of were share sales Beverages. categories. Beverage Prepared Hot an for a and up stack and and of up in with we Whole

differentiator growth Prepared basis Food on for impacted margin stack well Casey's prior a modest an were up during sales a of year. key as X-year average as General or favorably X.X% menu the very the and from basis to Merchandise margins. of cheese with approximately pricing X.X% notably adjustments I'm Grocery by sales softening was and pleased the XX XX.X%, points quarter. with Same-store Margin be commodity and a costs, decrease continues

saw category, in with our bottled beverages private We value both nonalcoholic be the program and alcoholic water the chips and quarter. positive our in option momentum in and well for label great to performing continues guests notably a Casey's

$X.XXX marked same-store margins above XXth fuel, nearly a the quarter flat per per gallons For of This consecutive $X.XXX gallon. with with fuel sold fuel were margin gallon.

the OPIS Our quarter. volume down shows approximately sold continues fuel X% to outperform data market in as as region gallons well the Mid-Continent our geographic

were Our volume year, fuel balancing credit same-store, prior and to and it. margin results team fee is up job grew expenses show XX.X% basis. Operating a the on excluding doing growth X.X% an versus card the continue exceptional

maturity more Our team integrating outstanding time, testament of team. integration more same This the multiple a continues while to at operating and to the get and efficient our stores, is work acquisitions.

over the results quarter. I'd the Steve call to third to turn financial now the like discuss for Steve? to

great for and quarter. Thank good the work to also like you, Darren, morning. the their during thank I'd team

Our a operational and Overall, is expand continue XXXX. quarter shaping the This grow our across of were accomplished of to what was great solid, especially margin. stores effective integration be execution sales was to acquired this results fiscal quarter and inside footprint. store we of heavy during up where a another

primarily prior quarter X.X% for quarter from $X.X were sales lower the $XXX fuel. retail or billion, of inside the billion, due Total year price $X.X from for a or decrease of an of year. the X.X% Total revenue to the million prior the increase was million $X

and Food X% Grocery Prepared increase by more $XXX an XX.X%. Merchandise by General quarter, $XX basis. million to to Results of X.X%. operating impacted also the a million, and increase million were an sales stores approximately Dispensed $XXX $XX million, increased by year-over-year of favorably rose Beverage on sales For

offset sold, but less by by down cost $XX had X%. during gross fuel gallons excluding average offset was by profit decline this This of a fuel partially price were third was profit primarily $XXX of inside gross $X.XX sales in or gallon prior X.X% million increase gross third fuel revenue compared We gallon million driven $X.X the a profit The of quarter retail $X.XX million as is the an amortization. X in X.X% year increase of fuel and of in or year. gross period Casey's XX.X%, price million in define as retail of or million fuel a from Retail ago. quarter, to average depreciation $XXX sold. an higher goods the profit $XX.X lower of XX%

Beverage Food that's margin prior from basis points margin was profit and XX X and basis up XXX from margin The XX.X%, category was Dispensed up gross XX.X%, year. points Inside ago. year pound pound Prepared benefited $X.XX of cheese from year, compared quarter lower $X.XX approximately per which specifically or per XX% XX commodity decrease points. a to last the basis costs, was for

LIFO by due of its basis and funded to XX prior also input benefited the year label broader XX.X%, as charge in charge points The lapping partially primarily decrease year. increase year margin from prior softened, prior lower promotions change margin private continuing our Merchandise helps. a points. lower offset and LIFO than a our also to from General The basis a in share of by benefiting pricing costs mix. vendor XX favorable menu Grocery adjustments was over the the Margin Modest was

$XX.X profit gallon or expenses of Total the from $X.XXX $X.X by down $X.XXX from were the prior up for in quarter operating gross $X.X was per gallon the the that's the and XX.X% million quarter that's per benefited quarter. prior Fuel up million margin from RINs, the year. third Fuel million sale same in year.

operating onetime increase expense partially up rates to prior X% as million hours. for of increased and offset reduction year. Depreciation to growth due That's the quarter Approximately by X% employee of to million. the total the operating million integration a benefit that's Same-store Approximately to operated the modest the more was of a is in unit versus year as prior X% and is due increase from legal approximately the last operating the $XX expense wage stores lapping same-store XXX $XX.X stores. accounted year, were than in due matter. more increases primarily the spending we $XX expense in of resolution

$XXX.X versus That's we quarter quarter consistent million, the down $XX.X prior primarily income XX.X%, X.X%. out was several a tax million decrease in rate as of interest year funded Net decrease to the due to for The of cash that's X on the less was the for ago, was quarter. EBITDA million income year with prior prior $XXX.X Net $X.X the year. compared versus million interest in $XX.X to year, acquisitions expense XX.X%. effective million up the quarter was hand. a of the

our of liquidity have significant January significant remains due have total maturities sheet XXXX. On balance available we $X.X had excellent in Our XX, financial fiscal billion. and coming until we no we flexibility. Furthermore, condition

calculated Our our leverage in with ratio, accordance X.Xx. notes senior is

be seasonal tends our trough quarter generation. cash The third for to flow

For net of $XX generated free in generation that of million flows, in and that of million cash operating compares by to $XXX equipment $XX year. less $XXX million activities plant company property, million a cash the purchases prior using quarter, resulted and in of the

$X.XX to At quarterly the dividend of maintain Directors the the per voted Board of March meeting, share.

stock, the on remaining $XX we have existing authorization. quarter, During and share million we of repurchase repurchased approximately million our $XXX

more low and but ROIC currently, strong flow, priority growth levels and accretive are -- investments the repurchasing remains cash primary than shares in past. EBITDA in our we Investing capital our allocation given leverage

excellent We an M&A. especially year far, growth had have unit so with

our third quarter, have the stores. end Texas. transaction XXX on And quarter, we of enter a XXth the closed to acquired we through During built over or in the state

both year to and fourth our reminder into finish OpEx the an the and February point basis As leap fourth third the quarter. results press reaffirming a equate guidance, release. as quarter fiscal outlined year, our for fiscal due day year will that just before all increase in an get to to we same-store And that approximate we to 'XX, prepare are to experience extra XXX quarter date, we of had total

were that below a low fuel profitability couple cents annual a the sales tends note is inside near February are the annual gallon to the period top Our result was February, the the last per were the Please as outlook that same-store range. seasonally CPG outlook year. Fuel our range. results February's end than Day of mid-XXs. this end near terms in higher the impact touch and gallons for same follows: of be of of low excluding Leap of

year. one last cheese on operating the are modestly costs versus Current And total expenses. favorable prior comment

at outlook the the company's We due expect year-end strong incremental incentive year will some quarter fourth that expense be to compensation as charitable by of discretionary to well our annual contributions the as high finish end and performance. driven range,

over to back Darren. I'd call to the turn now like

the Steve. quarter. strong to entire like another Thanks, I'd for team thank Casey's

Chief new from our may and Nebraska applicants You member, Joe to Pizza recently we new have and was added a Cruz. over selected Joe Beer have seen him. XXX thrilled Officer, team native, we're

and our media Now work he's busy on cold pizza you the which our hard pairings, tasting handmade begins ice beer refreshing our can social follow as along with delicious channels.

the continue and team hard that Our across plan strategic off. members results our is well organization are to paying proving the extremely execute work the

We waste the make effectively programs reduce launch production continue tool use time. technology roll digital of to our more data run allows robust including out and food efficiently the more analytics order manage save stores members' give team our This in to capabilities the to team members us planner. and and to to production

evidenced strength and sales, with X-year gravitating This in and sandwich already chicken continues our innovation. basis. Casey's in label quarter towards. strong our our offering And robust allows by food rolled January, brand, for prepared support inside as same-store guests guest a food the both be private prove to out and the for industry stack both are Cheeseburger we on that refreshed a in to

guests Just another of will Casey's deliver. trusting example that

industry. a Food advantage to Our to members a results continues team translated our to with products high-quality results. us at strong serve competitive the and The great commitment unique value Prepared guests gives in of stores program drive in has

continue growth million today, program to campaign. More join X.X as of accelerated in gross in shine members as versus positive the Casey's by we year. units Casey's Rewards more the label have was over as prior guests we and growth and Our third our XX profit quarter to saw continues private days

With and team, the store improvement team effectively continues help operate the more our operations continuous stores efficiently. from to

make scores. reducing labor hours, team while had There's pipeline same-store of we in experience. satisfaction we're for forward a as another marking engagement even seventh same-store efforts, excited XX about quarter store simplification. consecutive guest giving increasing the to great what's our tools months to the XX labor next the more guest We come, quarter regarding team hour both and reduction their more member With to members to look

business, less but fuel highly a our capabilities up. lapping price with while performed well margin quarter On per despite the environment we was geography $X.XXX the in year. a we this positioned outpacing movement thrive sold. and the Wholesale posted that last profitable fuel gallon We're of our side to still on stood gallons team we've favorable,

Regarding store of off XXX fiscal growth, commitment our a start the great add stores end by we're to on XXXX. to

Our as M&A grow as X-pronged construction ratably acquisitions. without allows well company store approach reaching new of for the to

excited As we fiscal the started the X-year strategic outlook we approach proud I'm how end of about the business. I'm extremely XXXX, of of our plan.

Now both post-pandemic model unique industry environment, highly our normalized that proving and a our more the has differentiated resilient. and world to be to evolved business is

and gives team the We'll now confidence team sheet This me and questions. take have ability on your to plan. capitalize We them. growth abundant great the horizon and our on balance our in execute strategic to opportunities the

Our Bienvenu line question come first of Stephens. Instructions] with [Operator the from will Ben

ask of sales to the Food Prepared same-store the very the a how bit you much sales is that ticket results to want strong growth love composition the about versus little in quarter, Very about I during strong saw hear results, I'd business. traffic. first the margins. same-store

impact Foods look you more have innovations forward in business store simplification, and new of the rest store of And that you versus as have on to business what broadly? the some Prepared the the might that the think product you

old strength up a were XX% about ties old We few Ben, the in is Yes, Sales quarter. were this by real ties, and Darren. had driven things.

then as items up bakery about products saw apps we around well Our and were and XX%, up side X%.

Sounds pretty good.

Overall, X.X% check. you and work in mix. X.X% a the how at I happy transactions out quarter, inside it about look in nice up when sales inside was struck really balance. this really with about We're

spot see you from bit that's a So also in really, really you little modest to some a strength the but of traffic good -- see And be coming from perspective. that stores. driving inflation, the to

And stride basically innovation, With had up-leveling job to platforms. really that able rebuilding better sandwich, and changing our quality quality and those to by this builds, respect starting has and I'll team more chicken fantastic really you, we're that, our accelerated, and of resonated our making in The a leveling were hit the we crispy, the and sandwich almost doing chicken compelling which adding raise those did the goods, up new think of a ingredients, that a about burger I culinary well. price negotiating tell quarter impact triple unit of cost spicy velocity of digits. also to $X.XX and the all with some products

we're nice And there. results so seeing some really

same the not can the the innovation on also impact velocity but margin at that so an really And have only impact on have time. an

update that That's balance how is margins that the Spot the costs you the considerably. share also cheese last locked of Is that great. the but down quarter. cheese thinking be is the afford were Prepared your think of we Casey's? that about year, the with can would you're segment, forward cheese. My 'XX respect second Steve, and XX% potential you fiscal needs to question fourth anything relates for what for are might that there benefit to buying Foods so for as and on particular, the cost it in I more got

locked Ben, Sure. buy. quarter our the as to quarter about it first, for now fourth XX% we're relates fourth

favorable, good compare X% cost third that. us year-over-year favorable basis to so cheese, would that or quarter, lot less a for about enter XX% so be we that to a we visibility on modestly but will like 'XX the to as a got had benefit so buy FY all-in And into expect as can be opportunistic of of would in think favorable we forward we I a to something how we into continue on basis. we about the the cheese or X% I think

is on. that -- what opportunity to can year-over-year deflation. we lock in an If take so of we buy sourcing advantage that's we'll basis, that, team a get focused it our On forward and we have

certainly we forward give will of 'XX, we'll the locked 'XX. the take as And we for continue to that fiscal we going not forward. so year to the get this exactly advantage level visibility are FY we When to of some end but positions that are opportunity FY into those year, entering what more are

Our with next line the question Fargo. comes from Bonadio of Anthony Wells

guys what drove below came you bit guys had now? And you to planning? like bit growth it So in about versus side QX the more quarter. more looks guided you're doing last on what what what that's were a that then just in for OpEx maybe Can a talk upside cost you broadly, little quite looking

in had that was well job taking labor it's the for labor more the favorability say strong Yes, simple the with exceptionally Anthony, was stores somewhat OpEx, cycle the and people in on to -- I'd and another stores driven make we out. a in to of really the we -- that's really quarter continue virtuous management as perform hours unproductive And execute. stores

hours and stay longer. jobs time, reduces you in productive over they reduce less do get because but in their reduce the them turnover, more to jobs When it reduce takes It also you hours people training you turnover.

all Overall satisfaction those then And seen are of highest which happen both go up, in seeing the great benefit team things go scores we're all that the company. member of our scores ever engagement of so and we've is side up.

reduction. primary on working is driver hour well the pretty that. But So everything was labor

as softness uniquely Can we're to good talk guys in I I looking And price deals. you have just know on tuck-in there's of of these at there seeing just given sort what the to on also the impact dig a lot health we on But sort chains those read wanted of about operator, fuel element marginal late. bit more the you breakeven little a Got players. fuel realize seeing you're bit. I margin look a as potential margins little a the it. of assess of That's maybe helpful. you're a to then for

operators Yes, margin than EBITDA operators in cases, we'll prior with higher the respect other stores we're their it taking than operators. I year. more The to at in fuel are and lower margin. that are we look fuel seeing see be is as year. acquiring, we margin, will But other fuel mean prior it was was many that

having fuel, take raise they're to more is price what margin. do on so And

term, or gallons works they're to experiencing the operators they're services they tobacco category over-indexed smaller short cover don't that They're inflation the in ultimately chasing off in the period and time, over term, service that because the negotiate that in losses the scale short sustained a math have that still cigarette and our impacts enough doesn't are OpEx experiencing in to to better providers it not OpEx. any these of work with agreements typically, and that's

So of front. we're that's what that kind seeing on

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

your traffic guess strong, I pump in of very I question were driving I was what terms you're earn well. is sales the in But about the inside you're executing quite store. maybe and had at which a strategy changing versus your great, bit really wondering a you if

they asking strong, margins year. I'm your sequentially this but guess have I decelerated because were fuel

sense And few the it's is or give margins over can maybe shift -- us in have this industry been more pressures? of on of maybe why industry end then a last strategy some latter, So just if your a months? the declining function a you

us in try always And to I is in in a that, that no Bonnie, between and there optimize profit to change we balance consistent fuel. we've margin gross dollars would very say, strategy been equation. first, volume and strive maintain for on Yes,

And over or fiscal points toggles -- quarter margin. positive And if look pretty a XX, has negative XX good basis XX by every about past been year, XX, or we've you had really this range tight either favorable it around we've points, flat. within basis

sort was was those margin, of year goal the achieve obviously, frankly, margin really a had gross profit any margin The $X.XX over year. quarter, to really never We've dollars. than maximize This it's lower to prior gallon. prior a

strategy. in change no So

We at still we industry than fact data basis about from the points from XXX pleased gallon volume actually a a really standpoint, Mid-Continent were when that north we're with margins. that better on of the look the $X.XX fuel OPIS we're

the is, which have where that store, when like positive true the math and and we real we store, traffic maintains So especially margin all it in differentiator. the traffic strength is that's into our

would So the ascribe model work. is we working to as exactly it

then price because you maybe adjustments. makes some retail definitely It Okay. made you've think that sense. just follow-up modest mentioned a Darren, that on I quick And

maybe the said. would is love what bit little just the context So and ability to about more I'm pricing a of pump what more in about color this. your then you to sort hear future talking around just the even of And in take

and Yes. on tobacco We a in General some guest. I'd Merchandise. and modest Grocery it's pricing, to that how those We took cost The know you aside increases quarterly pricing cadence. set works, pass Bonnie, the

had little Outside a good vis-a-vis driving a quarter of of that really last And and like that, mentioned inflation a categories, to year, calendar in mix we large, we cost to year non-alc X%. not to stores goods a outcome on. had compared those primarily were beverage little we've and storing inflationary check increases on some over before, traffic turn the some to that just the in by able was a balance I But several good pretty get the or we experienced. the as the at this bit the to real page pass of we of

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

talk and in a the good little on want wholesale a tough recent maybe I me, environment. for M&A. switch guess, to about Congrats a bit first I quarter gears up

recent versus just times years of a integration is like maybe early, you bit just bigger, a have last stores it's from is ones talk XX tuck-in then of of little I you the acquisitions maybe these on those? in past? over kind the months, but in with interesting larger about side of Any learnings did versus the the think how acquired know XXX couple guys Texas going. about Can I touch ago. the more -- Bucky's some And going on expansion the with how you

Bobby. team That M&A a active it's environment said, we with on also being discussions gotten just M&A we're been fantastic over is these having the Yes, Yes, lot acquisitions. larger our line potential a a job recently, anything deals, of yet. doing finish real tuck-in and but haven't

So more to come that. on

I'd But store now, done we've them, yes, say XXX acquisitions. of call size -- these, under I'll many these so

Our integration team has Historically, And to time get really acquisitions how got to a good effective process Prepared a down, into long and we doing at quickly. more learned has our they're think do. Foods really efficient that. and taken these this I us

that really and And synergy has in equipment gotten some stores stores same-store effective and getting to team those of acquisitions. capture level available. the kitchen the we have capture these We've early at extent sales the the -- the some acquire food space into that of obviously which getting our in accelerates quicker,

we every get smarter, that little think do. bit bit I on yes, we little So one better a a

then, And Darren, just pie growth, the whole XX%. I mean, on

what's pie that driving compelling becoming a anything Casey's or on pricing the growth? curious versus the as we can your core haven't that? of I whole what is any obviously Or you lapped part bigger believe? adding that from is just a unpack given more on do have driving Just talk getting size Or about Thin Crust is fully in else markets details there little? Is just to like carryover basis, you yet, maybe peers that

now helped. won't a about of it's there And incremental. Crust things. combination we think that portion I a in of mix until the at about Bobby, hanging was It's and that June. the Yes. has lap of XX% Certainly, Thin good

topping definitely really in value single we a favorability of some that be play. We've pizzas growth and tends seen have So also there. more strong to

less about And our we're make are consumer, one exposed although dig spending seeing insights, makes really Prepared we're compelling. they $XX,XXX the things that more into Foods. really of that not value finding $XX,XXX, money of cohort that X/X guest to That over the they're just we're lower other year. overly our a interesting we on finding than And as income proposition

And so interesting been an dynamic. it's

them are the quality lower And right I we the income lot a value franchisees taken a pizza Foods, frankly, try they cohorts when up are relation of other of compare you Prepared is players, income the going to of equation. well I from have a demographic to mean, franchised price. think other that to lot our coming the of when And in them. the but but pizza other growth numbers and also really traded a fastest lot publicly look we and find of any lot at as stack to those competitors,

I think that's equation our result we're in and it. that a that growth because of the ability maintain to seeing right space, of value as

of next the line Michael our Evercore And Montani comes question with from ISI.

outlook ask, into discuss to wanted Just margin the inside fourth quarter. if I could, to a little the bit

there the full less of terms expansion suggests be went up midpoint sure. year we guide, if pressure that in of could it coming some to So there, the for

I that. wanted to think about how get of kind to a just So sense

bottoming have should how could kind some and this we of visibility Or there I potentially, we're this pricing, secondly, then on that? about guess, you And to a be there? And the of at do seeing point? you inflation think input extent think uptick costs

is Steve. try Yes, I'll start this to that. with

I halfway question. what's don't we around earlier had a think I in radical input mentioned broadly think costs quarters, on experience of last sit the fourth an we've and the as quarter, through here change we happened as the here couple there's today, vis-a-vis

broadly worst the for the it Food usually the favorable quarter the business food have commodity on Prepared a -- of exception with Cheese us be of favorable categories still in most deflation in speaking year-over-year we on less may than was, of side beef. prepared the fourth touch will be to continue year-over-year, but disinflation it at

stick those on us to with And categories. And continue a the likely we on do then while little here to for a so us. I side, grocery for tailwind think have business a that's that's contractual

calendar input at And for and to year, so of as prices of most accordingly. adjustments those able most those mentioned the of -- reset reset the us costs retail had were make for earlier, Darren price we beginning

I in seen expect finish would with what margins category to so preserve to the we've as year. position of us the be for consistent out we most here year a grocery And pretty this

And should front. it. into fourth quarter? just on in LIFO the sneak about think if more that one Got we then the How could I

the LIFO what input our just and inventory way have -- are costs of make adjustments balances. rules ultimately is it's reflective to us the accounting

And follow costs. LIFO of input charges will generally, with happening so direction the what's

charges consistently where we're tobacco, And we so exception with of getting taking the are price be increases. because consistently LIFO going to

a Generally be the Prepared for to deflation on less continue as on we of speaking, see Food side. headwind year-over-year basis LIFO will us a

so we on be a sit fourth to And consistently quarter. finish we today, probably would for LIFO as out year-over-year I the favorable expect us basis here as modestly

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

talk we I could if was wondering just gallons. about

You're gains tracking share flattish, region. market significant in which sounds like some your pretty

wondering going of gallons. where you anticipate quarters talk And maintain And the that's are strategy row in of industry? It normal maybe that, Just you across in seems new kind could to forward? kind do the if decline driving your there what's flattish now. gallons the gallons broader about weaker several a is

was Kelly, saying back Yes, I think to goes before. I this what

the operators, you If of look you smaller to look the got business. their composition at of at some

they're a inside is XX%. for Typically side gasoline ours inside the more said to tobacco, you if is business, XX% the tobacco. mix or of in their leveraged So about second of heavily

leverage. X% lot it, is rewards. They have a have of XX% typically foods. category to year. have They declining, don't to call a don't They don't that prepared And scale

tobacco the don't levers offset they and lot try decline the overall. category pull to have a So to pressures inside the inflationary and to of in

raising to that. try to fuel they're So on offset price

fuel simply and price chasing is we do to have we that more we're inside those a things rewards away balanced raising strong do prepared and approach we offering we scale, that that have have because those of of gallons. a some a And have consequence on lot they do don't. and have the able of foods, other have to But we such and

make So we way. can money another

for XX% of anyway. nonfuel transactions remember, us, And about are our

in some of some other areas of of other stores a got we've us business helps to So lot coming the those softness that the categories. of offset

we're margin. volume balance to to So of afford fuel and a able have better

with things the pressure time, on some overall. there that some structural fuel same going At that would are put are gallons on

vehicles think and efficiency year and drop an off age car XX oldest, with vehicles of every least-efficient about overall, made. that been in just with the the you in them vehicles fuel you have replace the efficient average newest fleet years, If about most

some so be industry. gallons on pressure the And always consumed going there's to in

for us, And that and we we in that fuel up profitability. which margin, flat traffic if and is kind that where type convert the traffic, slightly really of strong most environment, good on into store so margins have and we're have we a the that's of balance to feel gallons, strongest we

with wanted just to Thank ask simplification. store you. Also

mentioned X think I declining. a you quarters hours in in same-store row

how if more talk you some there's It give where much curious there? but about the us can opportunity come, can opportunity Just color just is more to maybe sounds like is. you

after an on you Frankly, whenever is Yes, issue go more think some we the start to fruit do low-hanging off first. come. this, like you there

I chunks So were us, the that of taken. some think available big we've to

to a really the the challenging, But real slack pipeline don't members we management to So in some have but the hours we've work, make that some the a work we in the benefit in will giving it necessarily But difference. little eliminated hours we'll sophisticated. team take more we of changes overall, which makes is a store the little back see some it, got I where out, initiatives job we've what process easier. store, think get simplifying tools call the we is gets the workforce think stores just where and good from more

job. That in over less you spend has more on get spend time, turnover you less in productive impact with training, turnover, you less positive a your on

All of that to helps reduce labor.

still So think we of our years, it have more we'll we on little we opportunity look guidance next suffice going that to sharper haven't on we given fiscal any guidance get what there, that. that's after we'll to next couple a like go probably quarter over But for say, and give 'XX. continue when in the to

from Irene Nattel come the question next with Capital our line And RBC will of Markets.

to recent little understand of recent the think in weeks sort we've back are of compression why more coming struggling sort seen that fuel bit to weeks. just a Just this recent I margins, relative to prior investors

would that trend are Or in those asking you seeing that do different for lower slightly more is, our set margins? the it's you my in So I way fundamentally fuel guess into and they're sort question play -- anything just competitive of the to you think seasonal a issue?

dramatic. same always us. they flow competitors their in we we're do anything Irene, react the and that and not to with ebb seeing and mean behavior Yes, I

I'm -- a in seeing wholesale not any would any that anybody make scale difference. changes of So but

margins little know of And a a just the than yes, have, margins remind off I being banking though. normal. Nobody talking were our everybody $X.XX really I is of we're they fuel would thinner -- new and bit on least gallon at that $X.XX

fact up outcome. not definitely $X.XX, good pretty no, outcome $X.XX, I so it's but a it's we And the a think, good at that pretty ended is --

I into turnaround, goes I of curve have the tighter, the of as year, $X.XX And a costs beginning little that refinery go risen cost up, in year, a start the a general, this calendar the time think to mean, we get wholesale to starts gallon. since supply bit

what the going online. come come do the curve is down inflect that cost refineries point, that is and will Now back at as some curve we know to

run to we'll curve the have going to X know is as the because now, course out. it's cost margins. comes to It matter don't fuel What we're of in have X-week before inflect will down, day, At is And widening weeks not make. margin and that run margins end of supposed It curve only the next and we'll we'll make X can inflect nice and that a quarter week, tend inflect. that the could curve when of its widen end we in going the weeks the from the quarter. to

The original and with not at point. not anybody's this to timing margins But back when is this into get seeing it quarter at anything fuel a different really of point. we're point, or it your guess structurally to neatly lands

of really That's consumer helpful. And sort then the just behavior. coming back to

what is you're of behavior? better consumer around promotional out on of sort like lowest sensitivity you're sort But Prepared seeing your it spending -- called wondering XX%, speaking, around or heightened just sort anything You or any And broadly results seeing that Food. more that? sort of of

have Yes, fuel right be say to less seeing pretty Irene, the changes lot times consumer of to really, blends, proven overall, I'd ethanol premium. We're that not of to not has any resilient. now. a I real when switch We're tied, in heavier they'll seeing more they'll that think to changes. get buy We tend see

in But would cohorts satisfy brands. to and little income up same-store need. growth income our been. the I you was good do, huge Foods which but shift. seen gravitate more have a X.X% private That doing or a mentioned, lower our like expect lower the not quarter, what the to We've they're label in continuing other Like are cohorts, income Prepared they towards that value private is with spend cohorts

so And anything not point. this seeing different we're really at

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

My congratulations on good quarter. a

sandwiches. launches, I Thin new the follow-up about Crust, thinking recent Prepared Foods on of the a had question So and X some

about to X that X year you And competition, further just that perspective you market So competition ago? you to in various for QSR contextualize relative could share could make or also see doing they're you could gain a about opportunity also where Casey's looking from any the if an share. if you the broader pricing today you market compared comments maybe us give see just to if your could providing what talk value Casey's at dayparts

with quality of dollars a Yes, significantly take category, cheaper. still you particular, But standard, couple are recent comparable Krisztina, we mentioned, some below in the the QSR what points for a would I innovation, in of price. some I in mean, price were sandwich find able the our like think to I

is layer value had the some builds a them that the before, quality of of some look, a hopefully already products ingredient every then along them in quality mentioned and culinary a and And like product to taking with making a think tearing it and and team, those we to really think buy in guest on innovation going job maximize I price. the and down on first better So unique did nice build. with we new improving then studs, to poses our I try

a good take when do players. I tend share it's today. know data the and here something like to in share subcategories don't from this, historically, value. recipe And we much a some as I good But have those right we speak very we largest market

most similar saw exercise from player. most we or believe the So not. and the it they're breakfast, have because presence actually last McDonald's, time primarily that's biggest on a when share the the come And they we did

imagine at that data similar look in something but it platform, would I may get fingertips right data don't I So my that, we just the have sandwich now. once on the to the

that you to positive, XX how And you then And SKU months? product about X it. penetration just that private you're did are quick quarter? thinking where the the Got broadly, but That's follow-up. were launches of helpful. On number Darren, launches then I volumes a just or label, new playing think, said ended the provide next in you over

had profit right in and quarter the units XX% is been The gross about where around dollars. it penetration Yes. was in

you beverages, softest for big for beverage that third a the private it's products. and label softest because quarter we Just quarter have with to label private quarter our remind seasonally presence is

the we're prepared really some the being pretty we to of So in months, not it's to of it question products what XX going little biggest details be of new than other bit a got always of We've in to oh, be we're are Krisztina, several the summer. phased to pipeline what over less the planning excited assortment, those, few the would the time got sorry, new part any quarters. a here about coming penetrated going of we're was this next -- or of discuss next XX part year that your enter products. but I'm this into about it,

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

it into back, is hold business? your And Food And you of Prepared your private that care Foods at the And the redeeming get can they've what part Prepared on looking comment, In upward. trending been the margin would to XXs. margins, the about will role back I'm of curious label back. you rewards

of I'll of is -- maybe kind in this start broadly we're Foods. first of margin the Prepared think, all, recovery that. We're with with pleased Chuck, progress Steve. I

that by of you the commodity category trying of As position pricing kind have improve in margins taken know, consciously a we through to cycle.

so And business contractual. grocery is the unlike which that

of got lot commodities. We've a

up the not a at increases to point. when commodities years dollar couple went so ago, the we at that with chose same for price dollar of And all time, chase

as that ultimately, right input costs that So time, course hold and and think experience, I that's we and over recapture go inflect the happening commodities the not on and prices, much raised we over what's the downside cycle, prices our of got went as will but we further expect, up, in as we've to we'll direction. and the margin now exactly retail steady,

The particular So margin. watermark did in structurally point the you, was higher it We a the time at have you in bit points kind XX% rewards reduction that have cost changed hinted number of not would rewards accrued right? high a of a that of I and that, a is of the are at years now. for terms than Prepared close program in to program couple of things little XX%. remind ago a we're Foods, and couple

It's Prepared today. Foods XX we in point as on reduction basis here margin a sit about

We the also third-party not time. did aggregator any delivery have of significance at

the out delivered expense now And so it's we a product that stores. previously fees. And of cost of where was in an the operating

have so changed. those And things structurally

watermark accordingly. And has been so probably will -- the reset high

glide regard. the maximize I favorable. I feel inside cost we'll continue to allowed it to and we about value profit the that we've we I play feel the remains taken on a then right run expect would to the store approach think that Input proposition. But good path And XX. We're And us think good dollars gross in maintain has now.

from come will question Jefferies. next Corey the with line Tarlowe of our And

become about view curious traffic ask wanted going what peers growing it are through a to acquisitions. little outlook M&A, that you think about grow how bit environment facing. I to is informs forward by like EBITDA pressured through cents conducive and that marginal as the given has been sounds more your these versus on versus organic to growing sounds that through levers those gallon I'm if as M&A? has per your headwinds elicited get and organically It the player X

put Corey, the change. to situations we I Yes, of We in between our to is either Darren. can first one balance ever this eggs organic don't growth because all like want M&A. strike those that say baskets Yes, and

so is cost And has now we're attractive. up. gone of environment that The what right pretty seeing is the construction M&A

time, -- And smaller gone have so and for up at as operators the the same well. the challenges

able essentially cost we're And than so And close invest less for putting have those finding remodeling to in things. all a is kitchens it in and million buy brand and fixing what we're new. assets other $X build store some us good assets, deferred pretty to quality and it would than replacement brand-new maintenance to cost

is we're checks we it at it on mean replacement that math. a and fix those but like build than it And of one M&A, cost. we assessing we so up. can valuation things of cheaper buy lot look can I And we

And so on disciplined stay that. we pretty

So all buy We've been it's favorable. lot of cost very for replacement right now, a to in. stuff able below been

could land little from we if maintain bit a organic and a real estate of I being and to still if -- and build. steady continues land continue counting always organically turns that over the And M&A back bank of us. that new ratable on have pivot in have neighborhood are And have the grow M&A. on And year. pipeline That growth just our to then build to growth this think to continue people said, we when option bank market soft, lot our We of to XX we're the M&A. going we stores a

business intentions as leveraging only to well about you follow-up, And could as that AI ask not but think how there wanted then how and to hours I a those just technology forward? you that about same-store improve pointed going you benefit your out, the are thinking and

Yes.

couple there. a of things So

our paper-based make manual automated. some digital recently, think side. was take which launched technology, a technology are help us the More production planner, fully on that to labor what using I enables just we we the to process and

to to production against. having for to -- So managers, particular, people plan manually on manually a kitchens saves to and things down write that execute store time calculations in get the or do

labor here So deployment even and get managers summertime, efficient we're before a allow one also a members and and our example, flexibility scheduling tool out rolling scheduling the to management our that from give team store will more workforce standpoint.

answers we is assistant example out labor automated So call to that's in best couple what we on our we're phones we which just at call the as rolled the what AVA, her, respect stores. Probably different voice we the looking side. AI, of the essentially things. With or a have

to And leaves kitchen people that it's are order. store digital, having a an becomes to XX XX% store you phone of our people trying can about person kitchens into will noisy talk and And get to orders imagine, to that year though the are orders periods in when and that food the of and orders our place a and million disruptive during where food as disruptive. peak to come a they're call even close out stop take and still

So AVA takes care of that. all

natural with We've it and learning. language AI-driven. It's trained machine processing

it order the sell, take the build management right and into suggest when the system it goes comes can order, can in it that help to the could in, So order kitchen. it call

orders it the that come the by AVA And get handled So being kitchen, this at now are are out. the food we're the more XX% phone right of efficient makes calls drastically and about in point. reduced to at in

of the JPMorgan. John Royall comes with next from question And line the

kind we're know some any the I winter weather. pummeled January? know with impact one. time, from had Midwest Can in you I'll weather just you of short on ask I so discuss got

the You little, saw strong fuel very but comps inside off a comp. store

to impact through of weather just in was see little third impacts much talk quarter? not the there. material I any surprised I Can you guess So a a

a X of Yes. was parts. pretty December The really November, were tale It favorable.

And had November, positive December. in inside that good and turned fuel us. comps January, we comps And so in had we on

on were up January. think fuel. we We X.X% and in were in X.X% X.X% I December in November, down

December, negative. bit little out And over X.X% the January. X% in to and positive overall. X-ish X-ish so were in Netted we turned November, positive, little ended on We the up inside, a bit down we a never

home has don't certainly I this think or impact X the so weather again, XX temperatures above get So of was didn't where stay the telling and geography, to we outdoors. go about an and part news in had everybody days

great business. was. not But And how how came So really for a we strong quarter. January, I up with about felt considering it I really tough overall, it's ended good of think out

Benchmark question with Our Lawrence The final of come the John from Company. line

years you when past. you the Can how How acquisitions. as gas margin in looking talk make larger in look XXs? -- little Yes. talk at just leverage the that Great. witnessed Darren, you as chains at give at And about the that bit these on lot restructured making point obviously, larger? as a leverage you're this affect watched about you some chains? larger We've you points chain for all and math look does does another scale a you you -- the the

at mean, we're those these looking I when question. that your operators resilient. other are understand I isn't relying most heavily I still inside are margin fuel the as dynamics earlier chains, think I consistent if Well, on because described that business

assets experience going our to model when us, are an of For how Typically, our those price in we adjacent experience, we to we the the have how it. try because things, existing look previous necessarily geographies we fuel, to these not based approach or these at we're on owner secure fuel. to

and pretty markets understand how stores familiar there. the with we're perform these we dynamics in our So supply and pricing fuel

much it how to do too really We forward into -- today. So them we they don't put it how and moving credence going put in much operate more stock take model accordingly. more we much we're

Yes.

on fuel been higher last talking lot the in over of I the add, margins about John, sustainability X think, I would a industry. years, fuel we've the

more in speaking the industry general that fuel accordingly. might higher have as and seemed adjust ago X broadly years people of margins than think they EBITDAs reasonable a the just I M&A a there's LTM because and dynamics potential are in buyer, recognition

lever only it's fuel have they be. to to the then to often going wherever And EBITDA the drive is smaller margin again, for players

I all reasons and little the operating bit more tail would remains view own point really the on inside a they're and with say opposed happening so we've small pressure pulling them to that's operator the it's dog talked And under the as fuel to fuel for a that expense try doing the on to they're help what's with store and inside rightsize business. what of having strategic lever their within on and a about

Great. one And just follow-up.

seen brand name water and how provider grow side, large the chips as mentioned -- say private And competitive in You have categories, in can on label private label respond? name brand categories to what you a those the you've does the those what response? you

Yes. It's a little have the with national bit some mixed label for us. we cases, bag. manufacturers private And In that's case. producing mentioned, others, brand are of that our chips, you a like products not

think with I we Look, them. discussions pretty have candid

at to of Our goal isn't label win national expense private brands. with the

is grow to goal the categories. Our

more guests that to so they as we we try flavor alternative offer cases, is profile maybe And do doesn't a or offer. brand categories affordable within national an the some in what a something those pack offer that, size don't that for or

to that snack And of say we've few case assortment. particular, I we different in complementary so in would brand national private that our snack label chips. it a do the really growth And things the label private with makes had chips, there's good in

chips. with branded Our has good really their growth partner also stores national in had our

a to try a going what be and doesn't to a this it be do. that's we so win-lose. perspective, we is And from This category win-win when have approach to

And I well so far. so pretty it's working think

Chairman, portion. This completes remarks. the President closing over Rebelez, I Darren Executive will turn to our now back and Chief for call Officer, Q&A

members again thanks for you, before time off, they a thank all on I joining again Thank taking And All this the and us job. fantastic work right. want sign quarter the just the our and and for hard call. today did we team to

has a great you. So hope Thank week. I everyone

participation. concludes today's Thank call. you your This conference for

now You Everyone, have wonderful disconnect. day. may a