Caseys General Stores, Inc.

I'm Brian Johnson, Senior Vice President of Investor Relations and Business Development. With me today are Darren Rebellos, Chairman, 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 the potential impact of the FIX transaction, 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 and uncertainties and other factors that may defer 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 conflicts in oil-producing regions and related governmental actions, as well as other risks, uncertainties and court 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'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 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 on our website at Casey.com under the investor relations link. With that said, I'd like to turn the call over to Darren to discuss our second quarter results. Darren.

Thanks Brian. And good morning everyone. Before we dive into our excellent second quarter performance, I'd like to congratulate the entire Casey's team for their hard work throughout the quarter to serve our guests and our communities. In addition, I want to highlight the positive impact Casey's is making with veterans and their families. For more than a decade, Casey's has partnered with two veteran-focused nonprofits for our annual Roundup campaign, Children of Fallen Patriots and Hope for the Warriors. Each year, it's humbling to see the support from our guests, team members, and partners at PepsiCo, and I'm proud to share that this November, we raised $1.2 million for these two outstanding organizations. As a veteran myself, I'm grateful to those who stand with our military community and support them when shopping at Casey's. Now let's discuss the results from the quarter. Diluted EPS finished at $5.53 per share, and net income was $206 million, both of which are an increase of 14% from the prior year. The company generated $410 million in EBITDA, a 17.5% increase from the prior year. Inside the store, the prepared food and dispensed beverage category saw guests responding well to our innovation and promotional activity within the category. We also saw margin expansion, which is primarily driven by the grocery and general merchandise category. This was underpinned by increased guest traffic as effective merchandising along with solid store-level execution is leading to more guests shopping our stores. Strong execution of our fuel strategy by the fuel team, coupled with our robust store offer, resulted in our fourth consecutive quarter of fuel gallon growth. This was accomplished while also growing cents per gallon margin. 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 3.3% for the second quarter, or 7.5% on a two-year stack basis, with an average margin of 42.4%. The two-year stack was an acceleration from the first quarter. Same-store prepared food and dispensed beverage was quite strong, as sales were up 4.8% or 10.3% on a two-year stack basis, with an average margin of 58.6%. Whole pies and hot sandwiches and all-day parts performed well in the quarter. Breakfast performed exceptionally well, with our maple waffle breakfast sandwich highlighting the innovation our culinary team is bringing to the category. Margin was down approximately 10 basis points from the prior year, as the lower margin from the Sefco stores was nearly offset by improvement in waste and cost of goods management. Same-store grocery and general merchandise sales were up 2.7% or 6.4% on the two-year stack basis, with an average margin of 36%, an increase of approximately 40 basis points from the prior year primarily due to favorable mixed shift to higher margin items such as energy drinks and nicotine alternatives within their categories. On the fuel side, same-store gallons sold were up 0.8% with a fuel margin of 41.6 cents per gallon. According to Opus Fuel Gallon Sold data, the mid-continent region saw an approximate 2% decline this quarter, so we believe we are continuing to grow market share. Fuel performance remained robust, supported by strong premium and mid-grade demand, stable diesel sales, consistent pricing discipline, and solid gains in fleet volumes. The organization remains mindful of effectively managing operating expenses while maintaining or improving team member engagement and guest satisfaction. In the second quarter, same-store operating expense excluding credit card fees increased 4.5%, lapping a 2.3% increase in the prior year. Same store labor hours were flat, even as we invested more labor hours to the kitchens appropriately to meet the strong pizza demand during the quarter. I would now like to turn the call over to Steve to discuss the financial results from the second quarter. Steve?

Thanks, Darren, and good morning. Before I begin, I also want to acknowledge the hard work and the great results from our team members. Total revenue for the quarter. was $4.51 billion, an increase of $559 million, or 14.2% from the prior year, due primarily to higher inside sales as well as higher fuel gallons sold, partially offset by a lower retail fuel price. Results were also favorably impacted by operating approximately 9% more stores on a year-over-year basis. Total inside sales for the quarter, For $1.66 billion, an increase of $190 million, or 13% from the prior year. For the quarter, prepared food and dispensed beverage sales rose by $50 million to $468 million, an increase of 12%. And grocery and general merchandise sales increased by $141 million to $1.19 billion, an increase of 13.4%. Retail fuel sales were up $273 million in the quarter as a 16.8% increase in fuel gallons sold was partially offset by a 4.8% decline in the average retail price. The average retail price of fuel during the period was $2.96 a gallon, and that compares to $3.11 a year ago. We define gross profit as revenue less cost of goods sold, but excluding depreciation and amortization. Casey's had gross profit of $1.12 billion in the quarter, an increase of $163 million, or 17% from the prior year. This is driven by both higher inside gross profit of $83.8 million, or 13.5%, as well as higher fuel gross profit of $65.1 million, or 20.9%. Inside gross profit margin was 42.4%, and that's up 20 basis points from a year ago. Prepared food and dispensed beverage margin was 58.6%, down 10 basis points from prior year. Cheese was $2.11 per pound through the quarter, That compares to $2.25 a pound last year, a decrease of 6% for an approximately 35 basis point benefit margin. There was an approximate 130 basis point headwind from the SEFCO stores that were partially offset by improved waste, accretive mix, and the favorable cheese cost comparison. The grocery and general merchandise margin was 36%. an increase of 40 basis points from the prior year. The change was impacted by a favorable mixed shift within the category, as well as cost of goods management, and that includes manufacturer-funded promotional activity associated with alternative nicotine products. Fuel margin for the quarter was 41.6 cents per gallon, and that's up 1.4 cents per gallon from prior year. This is inclusive of an approximately one and a half cent per gallon drag from the Sefco stores. Other income was $40.9 million, and that's an increase of 14.2 million, or 53.4%. The increase primarily was due to wholesale fuel gross profit from the Fikes acquisition, but it did also include a one-time $8 million benefit which is the result of a perspective change in the way that we will administer our gift card program. Total operating expenses were up 16.7% or $101.9 million in the quarter. Approximately 10.5% of the increase is due to unit growth. Same store employee expense accounted for approximately 2% of the increase due to increases in labor rates which were offset by flat same store labor hours. Higher variable incentive compensation contributed to approximately 1% of the increase. Net interest expense was $24.7 million in the quarter. That's up $12.1 million versus the prior year, which is primarily from financing the FIKES transaction. Depreciation in the quarter was $109 million. That's up $14.6 million versus prior year, primarily due to more stores. The effective tax rate for the quarter was 24.7%, nearly comparable to the prior year. Net income was up versus prior year to $206.3 million, an increase of 14%. EBITDA for the quarter was $410.1 million compared to $348.9 million a year ago, and that's an increase of 17.5%. Our financial flexibility remains excellent. On October 31st, we had total available liquidity of $1.4 billion. Also, our credit facility debt to EBITDA ratio was 1.7 times. For the quarter, net cash generated by operating activities of $347 million plus purchases of PP&E of $171 million resulted in the company generating $176 million in free cash flow compared to $160 million in the prior year. In December, the Board of Directors voted to maintain the quarterly dividend at $0.57 per share. During the second quarter, we repurchased approximately $31 million in shares, and we now expect to repurchase approximately $200 million in the fiscal year in total, up from our previous expectation of approximately $125 million, and that's due to stronger earnings and higher cash flows. Consistent with our normal second quarter call practice, we are updating certain full-year financial metrics. Fiscal 2026 EBITDA is now expected to increase 15% to 17%. The company now expects inside same-store sales to increase between 3% to 4%, and we expect an inside margin of 41% to 42%. The tax rate is now expected to be 24% to 25%. The remainder of our annual guidance provided at the beginning of fiscal 26 remains unchanged. Our results for November were as follows. Same store volumes, both inside and outside the store, were consistent with our revised annual guidance expectations. Fuel CPG was in the low 40s. and current cheese costs are slightly favorable versus the prior year. As a reminder, we will now have lapped the closing of a FIX acquisition, and therefore the third quarter will have FIX results in both periods. As such, we expect third quarter operating expense to be up mid-single digits. I'd now like to turn the call back over to Darren.