Casey’s(US:CASY)2024-03-12 18:04Financial Data and Key Metrics Changes - Total revenue for the quarter was $3.3 billion, a decrease of $3 million or 0.1% from the prior year, primarily due to lower retail fuel prices [5] - Net income was $86.9 million, a decrease of 13.2% from the prior year, and EBITDA for the quarter was $217.6 million, a decrease of 1.9% [91] - Diluted EPS finished at $2.33 per share, a 13% decrease from the prior year [16] - Operating expenses were up 10.3% versus the prior year, but only 2.5% on a same-store basis excluding credit card fees [4] Business Line Data and Key Metrics Changes - Inside same-store sales were up 4.1% for the third quarter or 9.9% on a two-year stack basis, with an average margin of 41.3% [3] - Prepared food and dispensed beverage sales rose by $36 million to $349 million, an increase of 11.4% [89] - Same store grocery and general merchandise sales were up 2.8% or 8.8% on a two-year stack basis, with an average margin of 33.9%, a decrease of approximately 10 basis points from the prior year [17] Market Data and Key Metrics Changes - Retail fuel sales were down $106 million in the third quarter, as an 11% decline in the average retail price of fuel was partially offset by a 6.9% increase in fuel gallons sold [19] - Fuel margin for the quarter was 37.3 cents per gallon, down 3.4 cents per gallon from the prior year [20] - Same store gallons sold were nearly flat, with a fuel margin of 37.3 cents per gallon, marking the 11th consecutive quarter with fuel margins above 34.5 cents per gallon [103] Company Strategy and Development Direction - The company is committed to adding 350 stores by the end of fiscal 2026, utilizing both new store construction and M&A strategies [43] - The prepared food program continues to drive strong results, providing a unique competitive advantage in the industry [10] - The company is focused on operational efficiency, with a continuous improvement team working to reduce same-store labor hours for seven consecutive quarters [94] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute its strategic plan, highlighting abundant growth opportunities [95] - The company noted that the consumer has proven to be resilient, with no significant changes in spending behavior observed [145] - Management expects to finish the year at the high end of their annual outlook range, driven by discretionary fourth-quarter contributions and strong performance [9] Other Important Information - The company repurchased approximately $30 million of stock during the quarter, with $310 million remaining on its existing share repurchase authorization [8] - The balance sheet remains strong, with total available liquidity of $1.1 billion and no significant maturities until fiscal 2026 [21] Q&A Session Summary Question: Can you discuss the integration of recent acquisitions? - The integration team has developed an efficient process for integrating smaller acquisitions, allowing for quicker implementation of prepared foods [36] Question: What is the outlook for fuel margins? - Fuel margins have been slightly lower than the prior year, but the company maintains a balanced approach between volume and margin [31][56] Question: How is the company addressing input costs and pricing? - The company is focused on forward buying cheese to lock in favorable pricing, expecting modest benefits in the upcoming quarters [28][50] Question: What are the expectations for prepared food sales growth? - Recent innovations in the prepared food segment have driven strong sales, with a focus on maintaining competitive pricing compared to QSRs [124] Question: How is the company managing operating expenses? - The company has successfully reduced unproductive labor hours, contributing to lower operating expenses while maintaining high guest satisfaction [51][117]