Caseys General Stores, Inc.

Good day and thank you for standing by. Welcome to the first quarter 2023 Casey's General Store 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 this session, you will need to press star 1-1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Brian Johnson. Please go ahead, sir.

Thank you. Good morning and thank you for joining us to discuss the results from our first quarter ended July 31, 2022. I am Brian Johnson, Senior Vice President, Investor Relations and Business Development. With me today are Darren Rabelas, President and Chief Executive Officer, and Steve Bramlage, Chief Financial Officer. Before we begin, I would 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 integration of the recent acquisitions, our ability to execute on our strategic plan or to realize benefits from the strategic plan, the impact and duration of the conflict in Ukraine 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 made 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's disclaims any intention or obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise. A reconciliation of non-GAAP and GAAP financial measures referenced in this call, as well as a detailed breakdown of the operating expense increase for the quarter, can be found on our website at www.caseys.com under the investor relations link. With that said, I would now like to turn the call over to Darren to discuss our first quarter results. Darren?

Thanks, Brian, and good morning, everyone. We're looking forward to sharing our results in a moment. But I'd like to start by thanking our 43,000 team members for their commitment to our guests and our communities throughout the busy summer season. Our team is performing exceptionally well, and we certainly would not have delivered another strong quarter without their unwavering efforts. Food innovation remains a top priority at Casey's. This summer we launched our newest specialty pizza, the delicious barbecue brisket pizza. Although we had planned to make it a limited-time offering, we're now keeping it on the menu because of positive guest feedback and strong demand that far exceeded our expectations. This fall, our team is celebrating the 21st birthday of Casey's legendary breakfast pizza by rolling out a new beer cheese breakfast pizza made with a Midwest staple, Bush Light. The new product will be a lot of fun for our guests. It will be available just in time for tailgating parties this football season. As our guests shift into their fall routines and head back to work or school, Casey's will be here ready to serve them. Casey's is proud to support the communities we call home, and we aim to have a positive local impact by supporting fundamental needs. In August, Casey's Cash for Classrooms giving campaign raised over $700,000 thanks to our generous guests and passionate team members. These funds will support grants to local schools in our footprint. The grant application process opens in October, and we encourage schools, teachers, and parent-led organizations to apply. In July, we published our second annual Environmental, Social, and Governance, or ESG, report. You'll see other community giving initiatives beyond our Cash for Classrooms program highlighted in this report. We're proud of the progress we've made not only in supporting our communities through charitable giving, but also through environmental initiatives. We're confident that our ESG efforts are the right thing to do for Casey's business, as well as for our team members, guests, communities, and stakeholders. Please visit our website under the investor relations section to read the report. With respect to our board of directors, we're pleased to welcome two new members to the Casey's board. Sri Danti currently serves as Executive Vice President and Chief Technology Officer at Advance Auto Parts. and has deep experience leading teams to advance technology integration and evolution at consumer-focused businesses like Casey's. We're confident that he'll bring a valuable perspective to help Casey's continue to accelerate our information technology and digital transformations. Mike Spanos brings significant leadership experience to the board, most recently serving as the president and CEO of Six Flags Entertainment. Prior to Six Flags, he served approximately 25 years at PepsiCo, in a variety of senior executive roles. Mike's expertise in both the entertainment and the consumer packaged goods industries make him a tremendous fit with Casey's. We're excited to welcome both Sri and Mike to the board. Now let's discuss the results from the quarter. As you've seen in the press release, we had an outstanding first quarter for diluted EPS, finishing at $4.09 a share, a 28% increase from the prior year, and a record high for the first quarter. The company generated $153 million in net income and $293 million in EBITDA, an increase of 20% from the prior year. Inside sales remain strong despite the challenging economic environment, driving inside gross profit up 9% to $504 million. Our differentiated business model allows Casey to succeed in a variety of economic conditions through strong execution across grocery and general merchandise, prepared food and dispensed beverage, and fuel with support from store operations. I would now like to go over our results and share some of the details in each of the categories. Inside, same-store sales were up 6.3% for the first quarter, or 14.9% on a two-year stack basis, with an average margin of 39.8%, down 70 basis points from the prior year. We saw strong performance in grab-and-go items like pizza slices and breakfast burritos, as well as alcoholic and non-alcoholic beverages. We were able to offset some inside margin pressure in the prepared food and dispense beverage category through strategic sourcing initiatives and the private label program within the grocery and general merchandise category. Same store grocery and general merchandise sales were up 5.5% with an average margin of 33.9% compared to 33% for the same period a year ago. This is a great start to the fiscal year as our guests navigated through accelerating inflation and high fuel prices. Our procurement team and self-distribution network have allowed us to have better product availability than the prior year. We continue to see great results by leveraging our approximately 1,500 stores with a liquor license, which is a unique competitive advantage within the convenience store space. Same-store prepared food and dispensed beverage inside sales were up 8.4%, or 20.1% on a two-year stack basis, with an average margin of 55.6% versus 61% a year ago. Sales were up due to strong performance in pizza slices and cold dispensed beverages. The breakfast relaunch from the fall of 2021 has proven to be a success as we have taken market share in the breakfast day part within our geography. Prepared food and dispensed beverage margins were negatively impacted by higher ingredient costs, especially cheese. For fuel, same-store gallons sold decreased 2.3%, with a fuel margin of 44.7 cents per gallon. We did see fuel volumes and margins tighten when wholesale costs and retail prices hit record highs, and our margin benefited from the steady fall in wholesale costs in the back half of the quarter. Our fuel team did a great job optimizing fuel margin during this favorable environment. Fuel margin was also positively impacted by the sale of $17.7 million worth of rent during the quarter. I'd now like to turn the call over to Steve to discuss the financial results from the first quarter. Steve?