Caseys General Stores, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Q3FY 2021 Casey's General Stores Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you need to press star 1 on your telephone. If you require any further assistance, please press star then 0. I would now like to do a series of conference calls. Mr. Brian Johnson, you may begin.

Thank you. Good morning, and thank you for joining us to discuss the results from our third quarter ended January 31st, 2021. I am Brian Johnson, Senior Vice President, Investor Relations and Business Development. With me today is Darren Rebellious, President and Chief Executive Officer, and Steve Bramlage, Chief Financial Officer. Before we begin, I'll remind you that certain statements made by us during this investor call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include any statements relating to expectations for future periods, possible or assumed future results of operations, financial conditions, liquidity and related sources or needs, the company's supply chain, business and integration strategies, plans and synergies, growth opportunities, performance at our stores, and the potential effects of COVID-19. There are a number of known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from any future results expressed or implied by those forward-looking statements, including but not limited to the timing of closing and the integration of the pending Buchanan energy acquisition, our ability to execute on our strategic plan or to realize benefits from the strategic plan, the impact and duration of COVID-19 and related governmental actions, as well as other risks, uncertainties, and factors which are described in our most recent annual report on Form 10-K and quarterly reports on Form 10-Q as filed with the SEC and available on our website. Any forward-looking statements made during this call reflect our current views as of today with respect to future events, and Casey disclaims any intention or obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise. Now I'd like to turn the call over to Darren to discuss our third quarter results. Darren.

Thanks, Brian, and good morning, everyone. We look forward to sharing our third quarter results with you this morning. Once again, our team has demonstrated tremendous resilience in a difficult environment, and as a result, we've maintained our strong financial performance one year into the pandemic. For the past year, we've navigated many challenges and complexities, yet we've been able to continue serving our guests in new ways, from offering curbside pickup and expanded delivery, to refreshing our brand, including a new logo, to launching our Casey's branded products, we are more relevant with our guests than ever. We are here for our guests and we're here for good. Our team makes this all possible, and I couldn't be prouder of each Casey's team member. Our 40,000 team members are going above and beyond to serve our guests despite the pandemic and a harsh winter in many areas. We remain intensely focused on their health and safety, And now that includes encouraging all our team members who are eligible to get the COVID-19 vaccine. To support vaccinations, Casey's is providing a wellness bonus of $50 to team members that complete the full dosage of the vaccine. As availability and access increases, we're optimistic that more of our team members will be vaccinated in the coming months. We're also here for good in our communities. During the third quarter, Casey's completed an in-store giving campaign in partnership with PepsiCo to raise funds for organizations providing assistance to veterans and their families. As a veteran myself, I know the great sacrifices these families have made and the challenges they face. This year's campaign raised over $1.4 million that benefited two outstanding organizations, Children of Fallen Patriots and Hope for the Warriors. Each of them received over $700,000 from the giving campaign that occurred in November. These funds will allow the charities to have an even greater impact on the lives of veterans and their loved ones. Thank you to our vendor partners, each Casey's team member that made the donation ask in our stores, and especially to our guests who truly do good when they shop at Casey's. Now let's discuss the quarter's results. We finished the third quarter with diluted EPS of $1.04, an increase of 14% from the previous year. The results are particularly impressive given the challenges the team faced with the COVID resurgence during the quarter. Fuel profitability remains a primary driver of the increase, along with inside same-store sales, which were up 2.1%. The team also remained nimble throughout this turbulent time and was able to reduce same-store labor hours 5% after adjusting for the store reset and COVID-19-related pay. as we continue to actively adjust operating expenses in real time to the circumstances. I would now like to go over our results and share some of the details in each of the categories. During the third quarter, we continued to experience a favorable fuel margin environment. Fuel gross profit was up 37% compared to the prior year, with a fuel margin of 32.9 cents per gallon. The fuel team did a tremendous job balancing volume and margin when considering wholesale fuel costs rose approximately 45 percent throughout the quarter. A steady rise in costs throughout the quarter is the most challenging fuel margin environment to operate in, and the team responded by delivering yet another solid performance. I'm also proud of their performance relative to industry volumes and profitability in our geography. Same-store gallons sold were down 12.1 percent compared to the prior year due to continued traffic disruption from the pandemic. We currently have 74% of our fuel volume under contract, and our fleet car program has over 8,900 accounts, which is a 3% increase from the second quarter. Commercial sales represent about 12% of our total fuel sales. Same store inside sales were up 2.1% for the quarter, with an average margin of 39.6%. We continue to see larger basket size offset by lower inside guest traffic. During the first half of the quarter, the company performed a significant store reset at over 2,200 locations. The reset involved moving interior shelving to improve traffic flow, as well as adding shelf space vertically to expand selling space. Not only will this enable us to more effectively roll out our private label program, we believe this will optimize category flow and adjacencies with existing SKUs and has allowed us to add more variety within existing categories. Initial results from the reset are encouraging. We did see grocery and other merchandise sales improve throughout the quarter following the reset. Alcohol and packaged beverages continued to perform well, and tobacco was positive for the second quarter in a row. Same-store sales were up 5.4%, with an average margin of 30.7%. The margin is still adversely impacted by both pack size and mix shift among the categories, along with the one-time impact of discounted merchandise no longer carried from the store reset. Same-store sales were down 5% in our prepared food and fountain segment. The average margin for the quarter was 60.6% versus 60.2% from a year ago. Self-serve items, particularly those sold during the breakfast day part, like bakery and coffee, continued to be hampered by lower guest count. The COVID resurgence experienced during the first half of the quarter amplified this as more people were at home from work or school. Whole pizza pies continued to outperform, with same-store unit sales up 17%. Margins benefited from a modest cheese price improvement partially offset by sales, particularly in the morning day part. I would now like to turn the call over to Steve to go into some detail on the financial statements.