Caseys General Stores, Inc.

Good day, and thank you for standing by. Welcome to the Casey's General Store's second quarter fiscal year 2023 earnings conference call. At this time, all participants are in listening mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 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, Senior Vice President, Investor Relations and Business Development. Please go ahead.

Good morning, and thank you for joining us to discuss the results from our second quarter ended October 31, 2022. I'm Brian Johnson, Senior Vice President, Investor Relations and Business Development. With me today are Darren Rebellus, 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, and performance at our stores. 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 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 cases, 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 to GAAP financial measures referenced in this call, as well as a detailed breakdown of the operating expense increase for the second quarter, can be found at our website at www.caseys.com under the Investor Relations link. With that said, I'd now like to turn the call over to Darren to discuss our second quarter results. Darren?

Thanks, Brian, and good morning, everyone. We'll dive into the strong second quarter results in a moment. But first, I want to thank our team for their commitment to our guests. And especially during the holiday season, I'm so grateful for what we've accomplished this quarter and so far this year. This fall, we saw our guests head to Casey's for everything they need, from our fast, delicious breakfast offering, including fresh bean-to-cup coffee, to a convenient fill-up or a delicious pizza meal occasion. On the heels of last year's breakfast relaunch, our breakfast offering pulled guests in with a fan favorite, our Loaded Breakfast Burrito, as well as our buzz-worthy LTO, the Ultimate Beer Cheese Breakfast Pizza, featuring Bush Light Beer Cheese Sauce. This, only at Casey's offerings, generated store traffic, online pizza orders, and a lot of conversation about Casey's this fall. In November, we held our annual Veterans Giving Campaign across all our stores to raise funds for organizations to support veterans and their families. As a veteran myself, I know the great sacrifices these families have made and the challenges they face. With the help of our generous guests and partners at PepsiCo, we raised over $1 million to help two outstanding organizations, the Children of Fallen Patriots and Hope for the Warriors. 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 results from the quarter. As you've seen in the press release, we had an excellent second quarter. Diluted EPS finished at $3.67 per share, a 42% increase from the prior year, and was a record high for the second quarter. Inside sales remained strong despite the challenging economic environment, driving inside gross profit up almost 9% to $504 million. The company generated $138 million in net income, an increase of 42%, and $272 million in EBITDA, an increase of 25% from the prior year. Our differentiated business model is resilient in these challenging economic conditions as we have strong execution of our strategic plan across grocery and general merchandise, prepared food and dispensed beverage, and fuel with excellent execution by 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 7.9% from second quarter, or 14.4% on a two-year stack basis, with an average margin of 39.8%. Our team did a tremendous job with our vendor partners managing the product mix, in-stock levels, and retail price point adjustments. We saw strong performance in pizza, both slices and whole pies, as well as alcoholic and non-alcoholic beverages. We were able to partially offset some inside margin pressure in the prepared food and dispensed beverage category through select pricing adjustments and finding the right product mix within the grocery and general merchandise category. Same-store prepared food and dispensed beverage sales were up 10.5% or 15% on a two-year stack basis, with an average margin of 56.7% versus 60.6% a year ago. Sales were up due to strong performance in pizza slices and whole pies, as well as cold dispensed beverages. We had better product availability in both cups and donuts, which led to improved performance within the bakery and dispensed beverage categories. We had sequential improvement with margin versus first quarter, but ingredient costs, particularly cheese, continued to pressure profit margins. Same-store grocery and general merchandise sales were up 6.9%, or 14.2% on a two-year stack basis, with an average margin of 33.3%, which is the same as it was for the year-ago period. The second quarter showed excellent results in both non-alcoholic and alcoholic beverages, as we continue to see great results by leveraging our approximately 1,500 stores with a liquor license and growing our private label sales. For fuel, same store gallons sold increased 0.3% with a fuel margin of 40.5 cents per gallon. Our diesel business had a great quarter with low double digit volume growth. We saw cost volatility throughout the quarter and the fuel team navigated through it well and continues to appropriately balance profitability and volume as we optimize gross profit dollars. Fuel margin was also positively impacted by the sale of $11.1 million worth of RINs during the quarter. I'd now like to turn the call over to Steve to discuss the financial results for the second quarter.