Q4 2025 Casey's General Stores Inc Earnings Call
Okay.
Unknown Executive: Good day and thank you for standing by.
Speaker Change: Good day and thank you for standing by welcome to the Q4 fiscal year 2025, 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 will need to press star one.
Unknown Executive: Welcome to the Q4 Fiscal Year 2025 Caseys 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.
Unknown Executive: To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again.
Speaker Change: On your telephone you will then hear an automated message it buys into your hand is raised to withdraw your question. Please press star one again, please be advised but today's conference is being recorded I would now like to hand, the conference over to your first speaker today, Brian Johnson Senior Vice President of business development and Investor Relations. Please begin.
Unknown Executive: Please be advised that today's conference is being recorded.
Unknown Executive: I would now like to hand the conference over to your first speaker today, Brian Johnson, Senior Vice President of Business Development and Investor Relations. Please begin.
Brian Johnson: Good morning and thank you for joining us to discuss the results from our fourth quarter and fiscal year ended April 30, 2025. I am Brian Johnson, Senior Vice President, Investor Relations and Business Development.
Speaker Change: Good morning, and thank you for joining us to discuss the results of our fourth quarter fiscal year ended April 32025, I'm, Brian Johnson Senior Vice President of Investor Relations and business development.
Brian Johnson: With me today are Darren Rebelez, Chairman, President and Chief Executive Officer, and Stephen 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 FIPS 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.
Daniel: We today are Daniel <unk>, Chairman, President and Chief Executive Officer, Brian Lynch, Chief Financial Officer.
Speaker Change: Before we begin I'll remind you that certain statements made by us during this investor call may constitute forward looking statements.
Daniel: Private Securities Litigation Reform Act of 90 95.
Daniel: These forward looking statements.
Daniel: Relating to the potential impact of the <unk>.
Daniel: Action expectations for future periods possible or assumed future results of operations financial conditions liquidity and related sources.
Daniel: The company's supply chain business and integration strategies plans and synergies growth opportunities and performance at our stores.
Brian Johnson: 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 that are described in our most recent annual report on Form 10-K and quarterly reports on Form 10-Q, as followed with the SEC, and available on our website.
Daniel: 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 recent acquisitions, our ability to execute on our strategic plan or to realize benefits from the strategic plan.
Daniel: The duration of the conflict in Ukraine and related governmental actions as well as other risks uncertainties and factors that are described in our most recent.
Daniel: <unk> 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 it's.
Brian Johnson: Any forward-looking statements made during this call reflect our current views as of today with respect to future events.
Brian Johnson: In case it disclaims any intention or obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.
Daniel: So of new information future events or otherwise.
Brian Johnson: 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 fourth quarter, can be found on our website at www.caseys.com under the investor relations link.
Daniel: A reconciliation of non-GAAP to GAAP financial measures referenced in this call as well as the detailed breakdown of the operating expense increase for the fourth quarter can be found on our website at www Dot <unk> dot com under the Investor Relations link.
Daniel: That said I'd now like to turn the call over to Darren to discuss our fourth quarter fiscal year results.
Darren: Thanks, Brian and good morning, everyone. We're excited to share our outstanding results, but before I begin I would like to talk about some of the good cases is doing.
Brian Johnson: Caseys is here to make life better for our guests and communities every day. That's our purpose. And it shows in the positive guest feedback we receive, the delicious food we make and the impact we have on our community.
Darren: Casey's is here to make life better for our guests and communities every day.
Darren: Purpose and it shows a positive guest feedback we receive the delicious food, we made and the impact we have on our communities.
Brian Joseph Johnson: This fiscal year, Caseys and our partners gave back $6 million in our communities in the areas of education, veterans and first responders, and food insecurity. This resulted in thousands of donations to schools, PTOs, 4-H clubs, veterans organizations, food pantries, and more. Local teachers and students benefited from the 80 Cash for Classrooms grants we were able to give, and we helped provide 8 million meals to those in need.
Darren: This fiscal year Casey then our partners gave back $6 million in our communities in the areas of education veterans and first responders and food insecurity.
Darren: This resulted in thousands of donations to schools Ptos forage clubs veterans organizations food pantries and more.
Darren: Local teachers and students benefited from the AE cash for classrooms grants, we were able to get can we help to provide 8 million meals to those in need.
Brian Johnson: Thank you to our 49,000 team members, guests, supplier partners, and the nonprofits that make this all possible.
Darren: Thank you to our 49000 team members guests supplier partners in the nonprofit that make this all possible.
Darren: I know I speak for the entire Casey's team when I say, we are proud to be part of the fabric of the talents recall at home.
Brian Johnson: Before we dive deeper into the financial results for the year, I want to highlight our strategic pillar of UNIQRO. Fiscal 2025 was the largest store growth year in the company's history, with 35 new bills and 235 units acquired. This included the largest transaction in Casey's history, with the five wholesale acquisitions, and it's 198 SEFCO convened.
Darren: Before we dive deeper into the financial results for the year I want to highlight our strategic pillar of unit growth.
Darren: Fiscal 2025 was the largest store growth year in the company's history with.
Darren: With 35, new builds in 235 units acquired.
Darren: This included the largest transaction in <unk> history, with the <unk> wholesale acquisition and its 198 KEPCO convenient stores.
Brian Johnson: I'm incredibly proud of our team's ability to produce record financial results while also integrating the new unit. Fiscal 2025 is a testament to our two pronged approach of both building and acquiring stores, which ensures predictable, rateable growth, while still capitalizing on great opportunities like FIPEs when they come along.
Darren: I am incredibly proud of our team's ability to produce record financial results. While also integrating the new units.
Darren: Fiscal 2025 is a testament to our two pronged approach for both building and acquiring stores, which ensures predictable ratable growth. While also capitalizing on great opportunities like Fox when they come along.
Brian Johnson: Now let's discuss the results of this past fiscal year. Fiscal 2025 was another record year for diluted earnings per share, finishing at $14.64, a 9% increase from the prior year. The company also generated a record $547 million in net income and $1.2 billion in EBITDA, an increase of 13% from the prior year.
Darren: Now, let's discuss the results of this past fiscal year.
Darren: Fiscal 2025 was another record year for diluted earnings per share, finishing at $14 64.
Darren: A 9% increase from the prior year.
Darren: The company also generated a record $547 million and net income and $1 2 billion in EBITDA, an increase of 13% from the prior year.
Brian Johnson: Our top line growth was impressive. Total inside sales grew 10.9% during the year, while inside same-store sales were up 2.6%, or 7.1% on a two-year stack. Total prepared food and dispensed beverage sales grew 10.3%, and same-store sales were up 3.5%, or 10.5% on a two-year stack basis. Total grocery and general merchandise sales were 11.2%, and same-store sales were up 2.3%, or 5.8% on the two-year stat data. inside margin expanded 50 basis points year over year to 41.5 percent as our merchants have done a tremendous job working with our vendor partners to get the right products on the shelves while maintaining a strong value proposition for our guests.
Darren: Our topline growth was impressive.
Darren: Total inside sales grew 10, 9% during the year, while inside same store sales were up two 6% or seven 1% on a two year stack basis.
Darren: Total prepared food and dispense beverage sales grew 10, 3% and same store sales were up three 5% or 10, 5% on a two year stack basis.
Darren: Total grocery and general merchandise sales grew 11, 2% and same store sales were up two 3% or five 8% on a two year stack basis.
Darren: Inside margin expanded 50 basis points year over year to 41, 5% as our merchants have done a tremendous job working with our vendor partners to get the right products on the shelves, while maintaining a strong value proposition for our guests.
Brian Johnson: We saw excellent results throughout the year in non-alcoholic beverages as well as hot sandwiches. Our food innovation team remain hard at work, both creating new menu items and improving existing. A great example of this is the chicken wing and fry platform we're currently testing with encouraging early results. Our fuel team continues to grow market share, focusing on gross profit dollars while balancing fuel volume and margin. Our operations team continues to run the stores efficiently while integrating a significant number of new stores. same store operating expenses, excluding credit card fees, were up only 1.7% for the year, impacted favorably by a reduction of same store labor hours of 2.4%.
Darren: We saw excellent results throughout the year in non alcoholic beverages as well as cost sandwiches.
Darren: Our food innovation team remains hard at work for <unk>.
Darren: Creating new menu items and improving existing ones.
Darren: A great example of this is the chicken wing price platform. We're currently testing with encouraging early results.
Darren: Fuel gross profit was up 11% with total fuel gallons sold up 13% and a fuel margin averaging $38 seven per gallon over the course of the year.
Darren: Our field team continues to grow market share focusing on gross profit dollars, while balancing fuel volume and margin.
Darren: Our operations team continues to run the stores efficiently, while integrating a significant number of new stores. This year.
Darren: Same store operating expenses, excluding credit card fees were up only one 7% for the year impacted favorably by a reduction of same store labor hours of two 4%.
Brian Johnson: The fourth quarter marked the 12th consecutive quarter of same store labor hour reduction.
Darren: The fourth quarter marked the 12th consecutive quarter of same store labor hour reduction at the same time guest satisfaction scores improved and team member engagement scores hit an all time high once again, showing that operational excellence and store simplification efforts are driving efficiency to benefit guests and team.
Brian Johnson: At the same time, guest satisfaction scores improved, and team member engagement scores hit an all-time high, once again showing that operational excellence and store simplification efforts are driving efficiency to benefit guests and team members alike. The strong results in fiscal 2025 show the strength and durability that are a strategic advantage of Casey's business model, and we're confident that we can succeed in a variety of economic climates.
Darren: Zoe.
Darren: The strong results in fiscal 2025 show the strength and durability that our strategic advantage of Casey's business model and we're confident that we can succeed in a variety of economic climates.
Darren Rebelez: I'd now like to turn the call over to Steve to discuss the fourth quarter and our outlook for fiscal 2026. Steve?
Darren: I'd now like to turn the call over to Steve to discuss the fourth quarter and our outlook for fiscal 2026, Steve.
Stephen Bramlage: Thank you, Darren, and good morning.
Steve: Thank you Darren and good morning.
Stephen Bramlage: Prior to going over the fourth quarter financials, I'd also like to take a minute and recognize the hard work and the dedication of the KC team. The excellent financial results for the quarter and the full year shine a bright light on the entire organization and the outstanding team members that we have that make it all possible.
Darren: Prior to going out of the fourth quarter financials, I'd also like to take a minute and recognize the hard work and dedication of KCG.
Darren: The excellent financial results for the quarter and the full year Shine a bright light on the entire organization. The outstanding team members that we have that makes it all possible.
Stephen Bramlage: Now, as a reminder, during the prior fourth quarter, Casey's had one additional operating day due to the leap year. This unfavorably impacted the same store and total results for the current quarter by approximately 100 basis points. The current full-year impact was approximately 25. The fourth quarter financial results were nonetheless outstanding as diluted EPS was $2.63, a 12% increase from the prior year. Total inside sales rose 12.4% from the prior year to over $1.4 billion, with an average margin of 41.2%, which resulted in total inside gross profit dollars of $64.8 million, or 12.5% from the prior year.
Darren: Now as a reminder, during the prior fourth quarter <unk> had one additional operating day due to leap year.
Darren: This unfavorably impacted same store and total results for the current quarter by approximately 100 basis points.
Darren: Our current full year impact was approximately 25 basis points.
Darren: The fourth quarter financial results were nonetheless outstanding as diluted EPS was $2 63.
Darren: A 12% increase from the prior year.
Darren: Total inside sales rose 12, 4% from the prior year to over $1 4 billion with an average margin of 41, 2%.
Darren: Which resulted in total inside gross profit dollars.
Darren: $64 8 million or 12, 5% from the prior year.
Stephen Bramlage: Total prepared food and dispensed beverage sales rose by $34.8 million to $392 million, an increase of 9.7%, and total grocery and general merchandise sales increased by $121 million to $1.02 billion, an increase of 13.5%.
Darren: Total prepared food and beverage sales rose by $34 8 million to $392 million, an increase of nine 7%.
Darren: And total grocery and general merchandise sales increased by 121 million to one point or $2 billion.
Darren: An increase of 13, 5%.
Stephen Bramlage: As a reminder, we have low exposure to tariffs if less than 5% of what we sell inside the store is imported. same store prepared food and dispensed beverage sales were up one and a half percent in the quarter. The average margin for the quarter was 57.8% and that's down 30 basis points from a year ago. Hot Sandwiches and Bakery performed well in the court. Our margin was unfavorably impacted by the lower margin, SEPCO stores, by approximately 160 basis points. which was partially offset by improvements in waste and cheese costs, which were also down 6 cents per pound from the prior year to $2.06.
Darren: As a reminder, we have low exposure to tariffs is less than 5% of what we sell inside the store is important.
Darren: Same store prepared food <unk> beverage sales were up one 5% for the quarter.
Darren: The average margin for the quarter was 57, 8% and Thats down 30 basis points from a year ago.
Darren: Hot sandwiches and bakery performed well in the quarter.
Darren: Our margin was unfavorably impacted by the lower margin set their stores by approximately 160 basis points, which was partially offset by improvements in waves and cheese costs, which were also down six cents per pound from the prior year to $2 six.
Stephen Bramlage: Chiefs therefore have an approximate 15 basis point benefit to mark. Sinks for grocery and general merchandise sales were up 1.8%, and the average margin was 34.8%. That's an increase of 40 basis points from the same period a year ago. Sales were particularly strong in our non-alcoholic beverages, specifically energy drinks.
Darren: Cheap therefore had an approximate 15 basis point benefit margin.
Darren: Same store grocery and general merchandise sales were up one 8% and the average margin was 34, 8% that could increase of 40 basis points from the same period a year ago.
Darren: Sales were particularly strong in our nonalcoholic beverages, specifically energy credits.
Darren: Margin expansion was primarily driven by product mix.
Stephen Bramlage: During the fourth quarter, St. George fuel gallons sold were up 0.1% with a fuel margin of $0.376 per gallon. That's up approximately $0.01 per gallon compared to the same period last year. This is inclusive of a nearly $0.02 per gallon headwind due to the septic tank. Retail fuel sales were up $162 million in the fourth quarter, due primarily to a 17.8% increase, and the total gallon sold to $819 million, which was partially offset by a 90% decline in average retail price from $3.28 per gallon last year to $2.98 this year. In this lower retail fuel cost environment, we believe that our inside offering, coupled with consistently competitive fuel prices, is helping our comps, both at the pump and inside the store.
Darren: During the fourth quarter same store fuel gallons sold were up zero to 1% with a fuel margin of 37 six cents per gallon thats up approximately $1 one per gallon compared to the same period last year.
Darren: This is inclusive of a nearly two.
Darren: Per gallon headwind due to the <unk> stores.
Darren: Retail fuel sales were up $162 million of fourth quarter due primarily to a 17, 8% increase in total gallons sold to $819 million, which was partially offset by a 9% decline in average retail price from $3 28 per <unk>.
Darren: Gallon last year to $2 98 this year.
Darren: In this lower retail fuel cost environment.
Darren: We believe that our insight offering coupled with consistently competitive fuel prices is helping our cost both at the pump and inside of the store.
Stephen Bramlage: Total operating expenses were up 14.5%, or $84 million in the fourth quarter. Approximately 12% of the total operating expense increase is due to unit growth, as we operated 246 more stores in the prior year. Included in this increase was approximately $4 million in one-time deal and integration costs associated with the Bikes transaction. Insurance expense contributed approximately 3% to the increase. Same-store employee expense was approximately flat as the increases in labor rates were largely offset by a reduction in same-store labor hours. Net interest expense in the quarter was $27.9 million. That's up $13.4 million from the prior year.
Darren: Total operating expenses were up 14, 5% for $84 million in the fourth quarter.
Darren: Approximately 12% of the total operating expense increase is due to unit growth because we operated 246 more stores than the prior year.
Darren: And this increase was approximately $4 million in one time deal and integration costs associated with the <unk> transaction.
Darren: Insurance expense contributed approximately 3% to the increase.
Darren: Same store employee expense was approximately flat with the increases in labor rates were largely offset by a reduction in same store labor hours.
Darren: Net interest expense in the quarter was $27 9 million, that's up $13 4 million from the prior year is primarily due to the financing associated with the <unk> transaction.
Stephen Bramlage: That's primarily due to the financing associated with the FICE transaction. Depreciation of the quarter was $107.4 million of $15.1 million versus prior year, primarily due to operating more stores. The effective tax rate for the quarter was 23%, that compares to 22.4% in the prior year, due to a slight decrease in favorable permanent debt. Net income was up versus the prior year to $98.3 million, an increase of 13%. Even docket quarter was $263 million, an increase of 20.1%.
Darren: Depreciation in the quarter was $107 4 million up $15 1 million versus prior year, primarily due to operating more stores.
Darren: Effective tax rate for the quarter was 23% that compares to 22, 4% in the prior year due to a slight decrease in favorable permanent differences.
Darren: Net income was up versus the prior year to $98 $3 million, an increase of 13% EBITDA.
Darren: EBITDA for the quarter was $263 million an increase of 21%.
Stephen Bramlage: Our balance sheet remains in excellent condition, and we have more than ample financial flexibility. On April 30th, we had a total available of $1.2 billion. Our debt-to-debt ratio was 1.9 times calculated under the company's credit facility. The company has been able to de-lever from the additional debt taken on for the FIPEs acquisition faster than originally anticipated due to strong operating performance and cash flow generation. For the quarter, net cash generated by operating activities of $334 million plus purchases of PP&E of $181 million resulted in the company generating $153 million in free cash flow. This brings our total free cash flow for the year to $585 million.
Darren: Our balance sheet remains in excellent condition, and we have more than ample financial flexibility on April 30, we have total available liquidity of $1 2 billion our debt to EBITDA ratio was one nine times calculated under the company's credit facilities.
Darren: The company has been able to de lever from the additional debt taken after the <unk> acquisition faster than originally anticipated due to strong operating performance and cash flow generation.
Darren: For the quarter net cash generated by operating activities of $334 million less purchases of PP&E and $181 million.
Darren: I'll give it a company generating $153 million of free cash flow.
Darren: This brings our total free cash flow for the year to $585 million.
Stephen Bramlage: Return on investment capital for the fiscal year finished at 11.5%, down 60 basis points from the prior year, and that's due to the capital required for the FISA acquisition.
Darren: Return on invested capital for the fiscal year finished at 11, 5%.
Darren: 60 basis points from the prior year and that's due to the capital required.
Darren: For the <unk> acquisition.
Stephen Bramlage: At the June meeting, the Board of Directors voted to increase the dividends of 57 cents per share.
Darren: At the June meeting the board of directors voted to increase the dividend to <unk> 57 cents per share.
Stephen Bramlage: a 14% increase, marking the 26th consecutive year that the dividend has been increased. Our first priority in capital allocation remains EBITDA, the creative grip.
Darren: A 14% increase marking the 26th consecutive year.
Darren: Dividend has been increased.
Darren: Our first priority in capital allocation remains EBITDA accretive growth.
Stephen Bramlage: However, now that we've arrived at a leverage level a touch below our long-term target of two times, and we've raised the dividend, we do also anticipate approximately $125 million in share repurchases during our fiscal 26.
Darren: However, now that we've arrived at a leverage level a touch below our long term target of two times and we've raised the dividend.
Darren: We do ultimately anticipate approximately $125 million in share repurchases during our fiscal 2006.
Stephen Bramlage: In addition, we're providing the following Fiscal 26 Outlook. The company expects EBITDA to increase between 10 to 12 percent. We expect inside Sandshore sales to increase 2-5%, an inside margin of approximately 41%. The company expects the same store fuel gallons sold to be between negative 1% to positive 1%. Total operating expenses are expected to increase approximately 8 to 10 percent.
Darren: In addition, we are providing the following fiscal 'twenty six outlook.
Darren: The company expect EBITDA to increase between 10% to 12%.
Darren: We expect inside same store sales to increase 2% to 5% and in fact margin of approximately 41% comp.
Darren: Company expects same store fuel gallons sold to be between negative 1% to positive 1%.
Darren: Total operating expenses are expected to increase approximately 8% to 10%.
Stephen Bramlage: We expect to open at least 80 stores in fiscal 2026 through a mix of M&A and new store construction, and that will bring the three-year strategic plan period total, as previously communicated, to approximately 500 stores. Net Interest Expense is expected to be approximately $110 million. Depreciation and Amortization is expected to be approximately $450 million. And the purchase of property and equipment is expected to be approximately $600 million. The tax rate is expected to be between 24 to 26% for the year.
Darren: We expect to open at least 80 stores in fiscal 2026 through a mix of M&A and new store construction and that will bring the three year strategic plan period total as previously communicated to approximately 500 stores.
Darren: Net interest expense is expected to be approximately $110 million depreciation and amortization is expected to be approximately $450 million and the purchase of property and equipment is expected to be approximately $600 million.
Darren: The tax rate is expected to be between 24% to 26% for the year.
Stephen Bramlage: Now, consistent with our past practice, we're not guiding to a fuel margin CPG, nor are we providing earnings per share.
Darren: Now consistent with our past practice, we're not guiding to a fuel margin CPG, nor are we providing earnings per share.
Stephen Bramlage: As a reminder, for fiscal 26, the FITES acquisition will be agreed to be dissolved and diluted to earnings per share, and that will be the case in each quarter as well.
Darren: As a reminder for fiscal 'twenty, six, but <unk> acquisition will be accretive to EBITDA and dilutive to earnings per share and that will be the case in each quarter as well.
Stephen P. Bramlage: Our May experience was as follows. Inside the same store sales and the same store gowns sold were within the range of our annual guidance expectations.
Darren: Our may experience was as follows.
Darren: Same store sales and same store gallons sold were within the range of our annual guidance expectations.
Stephen Bramlage: Fueled CPG margin for May was approximately $0.40, and that is inclusive of the bike's headwind of approximately $0.02. Current cheese costs are modestly unfavorable versus the prior.
Darren: CPG margin for May was approximately 40%.
Darren: And that is inclusive of the Forex headwind of approximately <unk> <unk>.
Darren: Current chief costs are modestly unfavorable versus the prior year.
Stephen Bramlage: And we do expect first quarter total operating expense to be up in the mid-teens, and that's due primarily to the timing associated with lapping the prior year end.
Darren: And we do expect first quarter total operating expense to be up in the mid teens and half due primarily to the timing associated with lapping prior year acquisitions, I'll now turn the call back over to Darren.
Darren Rebelez: I'll now turn the call back over to Stan. Thank you.
Darren: Thanks, Steve.
Darren Rebelez: I would like to again express my gratitude and congratulate the entire Casey's team for delivering another record year. The hard work and dedication to executing our three-year strategic plan continues to show up in our outstanding financial results. In June of 2023, we laid out a plan that had three pillars, accelerate the food business, grow the number of units, and enhance operational efficiency. We are now through two years of the plan, and the entire organization is working hard to execute on our commitment. Inside the store, a robust inside offering continues to be a differentiator for cases.
Darren: I would like to again express my gratitude and congratulate the entire cases team for delivering another record year for <unk>.
Darren: Art work and dedication to executing our three year strategic plan continues to show up in our outstanding financial results.
Darren: In June of 2023, we laid out a plan to add three pillars accelerate food business grow the number of units.
Darren: Hans operational efficiency.
Darren: We are now through two years of the plan and the entire organization is working hard to execute on our commitment.
Darren: Inside the store from robust insight offering continues to be a differentiator for cases.
Darren Rebelez: to drive store traffic as approximately three-quarters of our inside transactions are not tied to fuel. This, coupled with unit growth, has shown up in the financial results as total inside sales grew nearly 11% in the fiscal year and 2.6% on a same-store basis.
Darren: <unk> store traffic is approximately three quarters of our insight transactions are not tied to fuel.
Darren: This coupled with the unit growth is showing up in the financial results as total inside sales grew nearly 11% in the fiscal year and two 6% on a same store basis.
Darren Rebelez: And now we have a familiar favorite back this summer with a barbecue brisket pizza, our most popular limited time offer of all time for our guests to enjoy. In fiscal 2025, with the continuation of Casey's commitment to operating the business more efficiently. Our operational excellence team has done a terrific job identifying improvement areas to make the stores more efficient while also focusing on improving guest satisfaction and team member engagement.
Darren: And now we have a familiar favorite back this summer with a Bbq brisket pizza, our most popular limited time offer of all time for our guests to enjoy.
Darren: In fiscal 2025 was a continuation of cases commitment to operating the business more efficiently.
Darren: Our operational excellence team has done a terrific job of identifying improvement areas to make the stores more efficient while also focusing on improving guest satisfaction and team member engagement.
Darren Rebelez: We're looking forward to fiscal 2026 and are excited about what the team has in store.
Darren: We're looking forward to fiscal 2026 and are excited about what the team has in store.
Darren Rebelez: Turning to the guests, Caseys Rewards now has over 9 million members. Our guests are taking advantage of Casey's Value Promise. is we're able to offer great products at a competitive price. Both in our prepared foods program, we're single topping pizzas, $1 to $2 less than the national competitor. And on the grocery and general merchandise side, where we offer guests a great value with our private label products. At the pump, our same-store gallon growth continues to outpace the OPUS data in our geography. We printed a healthy fuel margin of 38.7 cents per gallon. The new stores that we're building and buying are typically higher volume than the chain average, as evidenced by total gallon growth of 13% on the year.
Darren: Turning to the guests Casey's rewards now has over 9 million members.
Darren: Our guests are taking advantage of cases value proposition is we're able to offer great products at a competitive price both in our prepared foods program, where single topping pizza is 1% to $2 less than the national competitor Telemundo.
Darren: Rotary and general merchandise side, where we offer our guests a great value with our private label products.
Darren: At the pump are same store gallon growth continues to outpace the opus data in our geography.
Darren: We printed a healthy fuel margin of $38 seven per gallon.
Darren: The new stores that we're building and buying are typically higher volume than the chain average.
Darren: Evidenced by total gallon growth of 13% on the year.
Darren: I've already discussed our record breaking store growth in fiscal 2025 with that said, we're excited about our ability to continue to execute our store growth strategy. That's been so effective for us.
Darren Rebelez: As we look forward to fiscal 2026 and beyond, I'm very excited about the future of KC. In 2023, we shared our strategic plan and our team is executing on that vision. Caseys still has our best-in-class food program, our rural footprint, our self-distribution, and our scale that has made Caseys a great company for so many years.
Darren: As we look forward to fiscal 2026 and beyond I'm very excited about the future of cases in.
Darren: In 2023, we've shared our strategic plan and our team is executing on that vision.
Darren: Casey still has our best in class food program, our rural footprint, our self distribution and our scale is made cases, a great company for so many years.
Darren Rebelez: We've made it a priority to improve operating expense management, generate more free cash flow, and improve return on invested capital, all of which was on full display this fiscal year. In short, we've become a better version of ourselves and with our financial resources, people, and leadership, we'll continue to drive shareholder value.
Darren: We've made it a priority to improve operating expense management generate more free cash flow and improve return on invested capital all of which was on full display this fiscal year <unk>.
Darren: In short, we become a better version of ourselves and with our financial resources people and leadership will continue to drive shareholder value.
Unknown Executive: We will now take your questions. Certainly.
Darren: We will now take your questions.
Darren: Certainly as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
Unknown Executive: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please limit yourself to one question and one follow-up and one moment for our first question.
Darren: To withdraw your question. Please press star one again, please limit yourself to one question and one follow up.
Darren: And one moment for your first question.
Anthony Bonadio: Our next question, our first question will be coming from Anthony Bonadio of Wells Fargo, your line is open. Yeah, hey, good morning, guys. Thanks for taking our question. So I just wanted to start off with fuel margins. Fuel margins came in, I think quite a bit better than many were expecting despite that SEFCO headwind that I believe you said was around two cents per gallon. So can you just speak to progress on synergies there? How you expect that headwind to trend in 26? And just anything else that contributed to that output?
Speaker Change: Our next question. Our first question will be coming from Anthony <unk> of Wells Fargo. Your line is open.
Anthony: Yes, Hey, good morning, guys. Thanks for taking our question. So I just wanted to start on fuel margins.
Anthony: Fuel margins came in I think quite a bit better than many were expecting despite.
Anthony: Cisco headwind then I believe you said was around two cents per gallon.
Anthony: So can you just speak to progress on synergies there how you expect that headwind to trend in 2006, and just anything else that contributed to that outperformance.
Darren Rebelez: Yeah, to me, this is Darren. I think... You know, again, our team really managed the fuel pricing environment really well during the quarter. And we had a nice run up in wholesale costs in March and then a subsequent drop off in April. And I think that that environment typically allows for us to capture a little bit more margin. I'd say the team did an excellent job of doing just that. And if you couple that with some of the progress we've made on our upstream fuel procurement capabilities, I think that overall blended us up to have a little bit stronger margin than perhaps people were expecting.
Darren: Yes, Anthony this is Darren I think.
Darren: Again, our team really managed the fuel pricing environment really well during the quarter in.
Darren: We had a.
Darren: We had a nice run up in wholesale costs in March and then a subsequent drop off in April and I think.
Darren: That environment typically allows for us to capture a little bit more margin I'd say the team did an excellent job of doing just that.
Darren: If you couple that with some of the progress we've made on our upstream fuel procurement capabilities I think that overall blended us up too.
Darren: Little bit stronger margin that perhaps people were expecting.
Anthony Bonadio: Got it.
Darren: Got it.
Stephen Bramlage: And then just on guidance, sort of thinking beyond the components you gave in the press release, can you just talk us through the build as we think about the remaining contribution from bikes, the lap of one-time costs, and assumptions around synergies? And then as we sort of stack all those together, can you speak to the level of conservatism and guidance more broadly?
Darren: And then just on guidance.
Darren: Sort of thinking beyond the components you gave in the press release can you just talk us through the build as we think about the remaining contribution from bikes lack of onetime costs in assumptions around synergies and.
Darren: And then as we sort of stack all those together can you speak to the level of conservatism in guidance more broadly.
Stephen Bramlage: Good morning, Anthony. This is Stephen. Specific to the assumptions around bikes from a modeling standpoint. You know, it'll obviously will continue in the 1st half of the year.
Anthony: Yeah, Hey, good morning, Anthony just specific to the <unk>.
Darren: Assumptions around around bikes from a modeling standpoint.
Darren: It will.
Darren: Obviously, we will continue in the first half of the year, we're going to have more of an operating expense headwind on a year over year basis, just because we did buy that October the third quarter of fiscal 25% and so you'll get a little bit of a sequential difference between that we certainly are starting to gather synergy.
Stephen Bramlage: We're going to have more of an operating expense headwind on a year-to-year basis just because we didn't buy them until the 3rd quarter of fiscal 25. And so you'll get a little bit of a We certainly are starting to gather synergies from the transaction. If you think of the buckets of synergies, we're assuming, you know, price and I'm sorry, fuel synergies would be the 1st where we've, to Darren's point, we've started pricing. Really, from day 1, the fuel in the SEPCO stores, we certainly are looking at overhead. Rationalization opportunities, as you would expect as the 2nd bucket.
Darren: <unk> from the transaction and if you think of the buckets of synergies, we're assuming price and or I'm, sorry fuel synergies.
Darren: It would be the first where we to <unk> point, we started pricing.
Darren: Really from day one.
Darren: And the <unk> stores, we certainly are looking at overhead.
Darren: Rationalization opportunities as you would expect as the second bucket.
Stephen Bramlage: Both the 3rd and 4th buckets for us, which would be within the inside the store, some of the procurement. And mix synergies, there won't be significant capture of those in this fiscal year. That's primarily due to. The fact we've inherited with the transaction, an existing supply chain agreement, which just makes it a little more complicated. For us to immediately run a traditional cases play inside the stores and then the largest bucket of synergies. Is coming from obviously getting kitchens into those stores so that we can put pizza and that's going to be subject to remodeling timelines and.
Darren: Both the third and fourth buckets for us which would be.
Darren: Within the inside the store some of the procurement and mix synergies there won't be significant capture of those in this fiscal year.
Darren: Primarily due to the.
Darren: The fact, we've inherited with the transaction and existing supply chain agreement, which just makes it a little more complicated for us to immediately run a traditional casey's play inside the stores and then our largest bucket of synergies.
Darren: Is coming from obviously getting kitchens into those stores. So that we can put pizza.
Darren: That's going to be subject to remodeling timelines with.
Stephen Bramlage: With the lead times there, there won't be significant synergy capture and 26 for that bucket and all of that would be totally consistent. With with how we had expected the deal at the time of the time of close.
Darren: With the lead times, there won't be significant synergy capture in FY 2006 for that bucket and all of that would be totally consistent.
Darren: With with how we had expected the deal at the time of the final closing.
Darren: Okay.
Darren: And one moment our next question.
Chuck Grom: Our next question will be coming from Chuck Grom of Gordon Haskett. Hey, thanks. Good morning. Great quarter. You got it to 41% combined inside margins. I was hoping you could unpack that for us both for the grocery business and prepared food.
Speaker Change: Our next question will be coming from Chuck Grom of.
Speaker Change: Gordon Haskett your line is open.
Chuck Grom: Hey, Thanks, Good morning, Great quarter, you guided to 41% combined inside margins I was hoping.
Darren: If you could unpack that.
Darren: For us both for the grocery business and prepared foods.
Stephen Bramlage: Good morning, this is Steve. You know, we obviously are going to stay from a guidance perspective at the inside margin level. I mean, directionally what's happening, certainly, as we have 12 months of fights mixing in, that in and of itself would put some downward pressure on the margins, specifically in the prepared food category more so because of their lack of pizza business. Most of the prepared food business they have now is more protein centric than what we have. And so fights all by itself will mix down inside margin and would mix down prepared food margin even a little bit more.
Darren: Hey, Chuck Good morning, this is Steve.
Darren: We obviously are going to stay from a guidance perspective at the at the inside margin level, I mean, directionally, what's happening certainly.
Darren: As we have 12 months of spikes mixing in there.
Darren: That in and of itself would.
Darren: Put some downward pressure on the margin specifically in the prepared food.
Darren: <unk> category more so because of their lack of pizza business most of our prepared food business. They have now has more protein centric and what we have and so fights all by itself will mix down.
Darren: <unk> margin and mix down prepared food margin, even a little bit more.
Stephen Bramlage: We've done a great job on the grocery side. We've seen that in the 4th quarter of offsetting some of that mixed pressure for fights in the grocery business specifically where, you know, things like product mix enhancements. For us, the reality of what's happening in tobacco inside the stores, cigarettes decline, and nicotine alternatives continue to grow strongly. That's a mix enhancement for us. And so long story short. The progress within the mothership with all of the existing initiatives we have will largely offset most of the pressure mechanically we would have with bikes, and so we feel like it's prudent to say around 41.
Darren: We've done a great job on the grocery side, we've seen that in the fourth quarter of offsetting some of that mix pressure from <unk>.
Darren: Fix in our grocery business, specifically, where things like product mix enhancements.
Darren: For us.
Darren: The reality of what's happening in tobacco inside the store in cigarettes decline nicotine alternatives continue to grow strongly that's a mix enhancement for us and so long story short.
Darren: Progress within the mother ship with all of the existing initiatives, we have will largely offset most of the pressure mechanically we would have with bikes and so we feel like it's prudent to stay around 41 were up what we can do a little bit better than that but I think 41 is a very safe place for us to start with.
Stephen Bramlage: We're hopeful we can do a little bit better than that, but I think 41 is a very safe place for us to start with.
Speaker Change: Okay, Great. That's helpful. And then just to circle back on Anthony's question do you feel like the the <unk> drag from Cisco is something we should be continuing to model out.
Chuck Grom: Okay, great, that's helpful. And then just to circle back on Anthony's question, do you feel like the two cent drag from SEFCO is something we should be continuing to model out over fiscal 26? And then when gas prices drop historically as quickly as they did over the past couple of months, does that tend to be a profit source for you like it is historically for like, say, the warehouse clubs?
Darren: Over over fiscal 'twenty, six and then when gas prices drop historically as quickly as they as they did over the past couple of months does that tend to be.
Darren: A profit source for you like it like it has historically for like say the warehouse clubs.
Darren: Yes.
Darren Rebelez: Yeah, Chuck, this is Darren. Yeah, in terms of the expectations on FICE for the year, I would still anticipate that $0.02 drag to carry through throughout the year, and we'll continue to work on that over the course of the year. But yeah, where we're looking at it is about $0.02 impact to the overall margin of the company.
Darren: Yes sure.
Darren: This is Darren yes in terms of the expectations on <unk> for the year I would.
Darren: Still anticipate that <unk> drag.
Darren: To carry through throughout the year.
Darren: We will continue to work on that over the course of the year, but yes.
Darren: We're looking at it it's about <unk> <unk> impact to the overall margin of the company.
Darren Rebelez: In terms of how margins tend to behave when retail prices drop, that is – it is in fact the case that typically when those retail prices drop, the margins do expand because the underlying wholesale cost is typically falling faster than that retail price is dropping, and so those margins tend to widen out. Now, the opposite is also true when wholesale costs are increasing. Retail prices tend to not move up as fast as the wholesale cost, and so you have a little bit of compression on the front end.
Darren: In terms of how margins tend to behave when retail prices drop.
Darren: That is it is in fact, the case that typically when those retail prices drop to margins do expand because the underlying wholesale costs typically falling faster than that retail prices dropping and so those margins tend to widen out now the opposite is also true.
Darren: When wholesale costs are increasing retail prices tend to not move up as fast as the wholesale cost and so yeah, a little bit of compression on the front end.
Unknown Executive: And one moment for our next question.
Darren: And one moment our next question.
Kelly Bania: Our next question will be coming from Kelly Bania of BMO Capital Markets. Your line is open. Good morning, and thanks for taking our questions. Just wanted to talk about the same store sales outlook for fiscal 26 in that 2 to 5 range. I guess it's just a little lower on the low end there than the past several years, I believe. I'm just wondering if that's just some conservatism or if there's anything you're seeing from your customers that suggests that that lower end is possible.
Speaker Change: Our next question will be coming from Kelly Bania of BMO capital markets. Your line is open county.
Kelly Bania: Good morning, and thanks for taking our question.
Darren: Just wanted to talk about the same store sales.
Darren: For fiscal 'twenty six in that two to five range I guess, it's just a little lower on the low end there.
Darren: In the past.
Speaker Change: Yes, I believe I just wondering is that just some conservatism or if there's anything you're seeing from your customers that suggest that that lower end as possible.
Kelly Bania: And can you elaborate more on the WINGS test? I think I heard the word encouraging there, but what have you learned with that?
Speaker Change: Can you elaborate more on the wing cost I think I heard the word encouraging there but.
Darren: What have you learned with that and is there any.
Kelly Bania: And is there any meaningful contribution from that built into the fiscal 26 plan?
Darren: Meaningful contribution from that built into that fiscal 'twenty six plan.
Speaker Change: Yes, Kelly this is Darren.
Speaker Change: First on the same store sales outlook I think.
Speaker Change: We feel really comfortable with the range that we've been given the business is performing well as you heard.
Speaker Change: Sure May progress.
Speaker Change: So we can get into the cadence of the quarter was in terms of same store sales, but we feel good about that I do think with everything going on in the world.
Speaker Change: It's reasonable to have a little bit of conservatism there on the low end and so we factor that into the guidance but.
Speaker Change: We feel comfortable with where we're at right now.
Speaker Change: With respect to the wings.
Speaker Change: As a test that's only about 225 stores in total so.
Speaker Change: We're very encouraged with what we're seeing so far guests.
Speaker Change: Guest feedback has been really strong.
Speaker Change: We're continuing to learn and we're making some modifications as we look forward and.
Speaker Change: There'll be more to come on that later.
Kelly Bania: Okay, that's helpful.
Speaker Change: Okay. That's helpful.
Kelly Bania: And just one wanted to ask about the EBITDA contribution from SEFCO in the quarter and what's embedded in the fiscal 26 outlook from from the deal there. Yeah.
Speaker Change: Just wanted to ask about the EBITDA contribution from tobacco in the quarter and what's embedded in the fiscal 'twenty six outlook from from the deal there.
Speaker Change: Okay.
Kelly Bania: Hey, Kelly, good morning. This is Steve. We do, as we have said, or Steve, I just want to say, we do expect it to be EBITDA accreted. We talked about at the time we did the transaction that the valuation multiple was based on a kind of a high $80 million pro forma EBITDA number.
Speaker Change: Yes.
Speaker Change: Hello, Good morning, this is business.
Speaker Change: We do as we have said.
Speaker Change: The FY 'twenty.
Speaker Change: We do expect it to be EBITDA accretive.
Speaker Change: We talked about at the time, we did the transaction.
Speaker Change: <unk> multiple was based on a kind of a high $8 million.
Speaker Change: Pro forma EBITDA number it's not going to beat that accretive for us in the year because that was that was assuming all of their relatively new stores some of which having opened at the time of the deal for a full maturity. So it's going to be less about $80 million, but it will be consistently kind of double digit.
Stephen Bramlage: It's not going to be that accretive for us in the year because that was assuming all of their relatively new stores, some of which hadn't even opened at the time of the deal, were at full maturity. So it's going to be less than that $80 million, but it will be consistently kind of double digit millions accretive each quarter from an EBITDA perspective over the course of the year. And it was EBITDA accretive for us in the fourth quarter as we expected it to be in that place at the time.
Speaker Change: Millions of accretive each quarter from an EBITDA perspective over over the course of the year and it was EBITDA accretive for us.
Speaker Change: In the fourth quarter as we expected it to be in FY 'twenty.
Unknown Executive: And one moment for our next question.
Speaker Change: And one moment our next question.
Jacob Aiken-Phillips: Our next question will be coming from Jacob Aiken-Phillips. of Mellius Research, your line is open.
Speaker Change: Our next question will be coming from Jacob Aiken Phillips.
Speaker Change: Melius Research your line is open Jacob.
Speaker Change: Okay.
Unknown Executive: And moving forward to our next question.
Speaker Change: And moving forward to our next question.
Bonnie Herzog: Our next question will be coming from Bonnie Herzog of Goldman Sachs.
Speaker Change: Our next question will be coming from Bonnie Herzog of Goldman Sachs. Your line is open.
Bonnie Herzog: Your line is open. All right. Thank you. Good morning. I had a quick follow-up question on inside sales. I guess I'm hoping to hear a little bit more color on your inside sales for the full year of FY25, which I guess fell a little short of your lowered full year guidance. Could you talk through some of the drivers of this and maybe what fell short of your expectations? And curious to hear how much illicit vape is possibly negatively impacting traffic and your sales.
Bonnie Herzog: Alright, Thank you good morning.
Bonnie Herzog: A quick follow up question on inside sales I guess I'm, hoping to hear a little bit more color on your inside sales for the full year of FY, 'twenty, five, which I guess fell a little short of your lowered full year guidance could you talk through some of the drivers of this and maybe what fell short of your expectations.
Speaker Change: Just to hear how much.
Speaker Change: Elisa is possibly negatively impacting traffic and yourself.
Darren Rebelez: Yeah, Bonnie, this is Darren. I'd say for the year, we're pretty happy with where we ultimately ended up. Yeah, it was a little bit below the original guide, and I attribute that to a couple of things. I'd say our first quarter of the fiscal year came out of the gate a little bit softer than we had anticipated, and so still positive, still outpacing the industry by a fairly wide margin, but just a little bit shy of our expectations. And, as you know, our business is heavily skewed towards those first two quarters of the year, and so if we have a little bit of a softer start, that's going to impact the full year numbers.
Darrin: Yes, Bonnie this is darrin I'd say.
Darrin: For the year.
Darrin: We're pretty happy with where we ultimately ended up Ed yes, it was a little bit below that.
Darrin: The original guide.
Darrin: Attribute that to a couple of things I'd say first our.
Darrin: Our first quarter.
Darrin: So the fiscal year came out of the gate, a little bit softer than we had anticipated and.
Speaker Change: And so still positive still outpacing the industry by a fairly wide margin, but just a little bit shy of our expectations and.
Speaker Change: As you know our business is heavily skewed towards those first two quarters of the year.
Speaker Change: So we have a little bit of a softer start that's going to impact the full year numbers and so.
Darren Rebelez: And so we had hoped to claw that back, and we did make some progress on that, but we just didn't get all the way there.
Speaker Change: We had hoped to claw that back and we did make some progress on that but we just didn't get all the way there.
Darren Rebelez: The 2nd piece I'd say is when you look at the 4th quarter, I think this is important. Obviously, February was a tough month for us. And really, for the rest of the industry, I think it's been widely reported about the adverse weather and we were certainly not immune to that.
Speaker Change: The second piece I would say is when you look at the fourth quarter and I think this is important.
Speaker Change: Obviously February was a tough month for us.
Speaker Change: And really for the rest of the industry I think it's been widely reported about the adverse weather, we were certainly not immune to that and then the.
Darren Rebelez: And then the. The leap day effect had about a 300 basis point impact on February comps. As you look at the cadence for the rest of the quarter, March came back at 3.7%, April came back at 5%, and May was in the guidance range, as we alluded to earlier. So, we feel very good about the momentum in the business, and we all chalk it up to a tough month in February.
Speaker Change: The leap day effect.
Speaker Change: At about a 300 basis point impact on February comps, yes, if you look at the cadence for the rest of the quarter March came back at three 7% April came back at 5% and May was in the guidance range as we alluded to earlier. So we feel very good about the momentum in the business.
Speaker Change: And we will.
Speaker Change: I'll chalk it up to a tough month in February and just as a.
Darren Rebelez: And just as a fun fact, the last time we had a negative same-store sales month was four years ago. In February of 2021, we'll cycle over another leap day. So I think that is pretty much an anomaly for us and really speaks to the strength of the business.
Speaker Change: This is a fun fact.
Speaker Change: The last time, we had a negative same store sales month was four years ago.
Speaker Change: In February of 2021 months cycled over another leap day. So I think that is very much a number will be for us.
Speaker Change: Really speaks to the strength of the business.
Darren Rebelez: Okay, that's helpful. And Darren, just in terms of, you know, illicit vape, is that, have you been negatively impacted by that, like so many of your peers, or not necessarily? Just curious. That's pulling. Yeah. Yeah, we believe it is impacting the vape category. I mean, we have, we have seen the vape decline as a result of that.
Speaker Change: That's helpful and Darren just in terms of.
Speaker Change: Illicit vapes is that have you been negatively impacted by that like so many of your peers are not necessarily just.
Speaker Change: Just curious.
Speaker Change: Yes.
Speaker Change: No.
Speaker Change: Yes, we believe it is impacting the vape category I mean, we have we have seen the same decline.
Speaker Change: As a as a result of that.
Darren Rebelez: And we were talking to the tobacco manufacturers and working on trying to help influence increased enforcement. in that space. But yeah, it is having a bit of an impact. I'd say the counter to that has been the acceleration of nicotine alternatives, especially the pouch business. And for us in the quarter, we were up about 54% in that business. And that was due to a lot of work from the merchandising team in terms of resetting stores and giving more space allocation to those products and really leaning in.
Speaker Change: Talking to the tobacco manufacturers and they are working on trying to help influence increased enforcement.
Speaker Change: In that space, but yes, it is having a bit of an impact.
Speaker Change: I would say the counter to that has been the acceleration of nicotine alternatives, especially the pouch business.
Speaker Change: For us in the quarter, we were up about 54% in that business and also due to a lot of work from the merchandising team in terms of resetting stores and giving more space allocation to those products and really leaning in there.
Speaker Change: Okay.
Irene Nattel: And our next question will be coming from Irene Nattel of RBC Capital Markets. Irene, your line is open. Good morning, everyone. I'm just continuing along with the discussion around the inside store. Obviously, lots of discussion around low income consumers, and we know you under index, but just what are you seeing in terms of consumer behavior? What is your, you know, what is the rewards program telling you about spending? And what kind of promotions are you creating? Yeah, Irene, what I'd say overall is, I would say the consumer is really hanging in there and continuing to visit our stores as frequently as they have historically.
Speaker Change: And our next question will be coming from Irene Mattel.
Speaker Change: RBC capital markets Irene Your line is open.
Irene Mattel: Thank you Ken good morning, everyone.
Speaker Change: Continuing along with the discussion around the inside store.
Speaker Change: Obviously lots of discussion around low income consumers and we know you lender index.
Speaker Change: What are you seeing in terms of consumer behavior. What is your what is the rewards program, telling you about spending.
Speaker Change: And what kind of promotions are you creating.
Speaker Change: Sure that traffic.
Irene Mattel: Yes Irene.
Speaker Change: What I'd say overall is I would I would say the consumer is really hanging in there and continuing to visit our stores as frequently as they have historically.
Darren Rebelez: We're seeing good strength from the higher income consumers, those making over $100,000 a year, and then even on the low end, we are seeing that traffic hang in there. They are modifying some purchasing behavior. I think what's interesting as we dug into this, there's two types of low income consumers. I think there's a cohort of consumers who perhaps have a family and they're really stretched to make ends meet, but we're also finding in that low income cohort, those are a lot of younger folks that are early on in their careers. They are lower income, but they don't behave like folks that are really stretched to make ends meet.
Speaker Change: We're seeing good strength.
Speaker Change: The higher income consumers.
Speaker Change: Those making over 100000, a year and.
Speaker Change: And then even on the low end, we are seeing that traffic hanging in there they are modifying some some purchasing behavior I.
Speaker Change: I think with <unk>.
Speaker Change: Interesting that as we've dug into this there is there is two types of low income consumers I think there is a cohort of consumers who.
Speaker Change: Perhaps have a family and there really <unk>.
Speaker Change: Stretch to make ends meet.
Speaker Change: We're also finding in that low income cohort those are a lot of younger folks that are early on in their careers and so there.
Speaker Change: Our lower income, but they don't behave like folks that are really stretched too to make ends meet and so think more gen Z and younger millennials and so the purchasing habits for those folks are very different than.
Darren Rebelez: So think more Gen Z and younger millennials. So the purchasing habits for those folks are very different than What you have for some other maybe more mature people in in that income cohort. And so, you know, it's up to us to make sure we have the relevant assortment in the stores to meet the needs of both. And I think we're doing that pretty effectively. Right?
Speaker Change: What you would have for some other maybe more mature people in in that income cohort and so.
Speaker Change: Up to us to make sure we have the relevant assortment in the stores to meet the needs of Bowl and I think we're doing that pretty effectively right now.
Irene Nattel: That's really, really interesting. Thank you.
Speaker Change: That's really really interesting thank you.
Irene Nattel: And just as a follow on, as you're thinking about your promotional program for F-26, and as we head into the summer months, are there particular elements that we should be looking for and that you're planning on launching to target these different cohorts? You know, we've, you know, we've worked with our supplier partners through our joint business planning process to create promotional plans that are focused on driving traffic. And bringing people into the store, you know, our food proposition. Is usually the tip of the spear on that and we've got a lot of. Of great stuff going on there, primarily with pizza, as I mentioned.
Speaker Change: And just.
Speaker Change: As a follow on as you're thinking about your promotional program for for F. 'twenty, six and as we head into the summer months.
Speaker Change: Why do you are there particular elements that we should be looking for and that you are planning on launching to target these different cohorts.
Speaker Change: We've.
Speaker Change: We've worked with our supplier partners through our joint business planning process to create.
Speaker Change: Promotional plans that are focused on driving traffic.
Speaker Change: And bringing people into the store.
Speaker Change: Our food proposition is usually the tip of the spear on that and we've got a lot of folks.
Speaker Change: So great stuff going on there primarily with pizza as I mentioned.
Darren Rebelez: In the prepared remarks, we brought back our barbecue brisket limited time offer, which has been a. A fan favorite and our best performing LTO and we're seeing. Good results from that so far. We've also worked on that hot sandwich category. And even though we had really strong results last year, we just started to cycle over that. And we're still up double digits in that category and so really strong performance there. We're also seeing strong performance in bakery. As I think consumers are looking to satisfy sweet tooth, but. With a little bit more of a value orientation and with.
Speaker Change: In the prepared remarks, we brought back our Bbq Brisket limited time offer which has been a big fan.
Speaker Change: <unk> fabric and our best performing <unk> and we're seeing good results from that so far.
Speaker Change: We've also worked on that hot Sandwich category, and even though we have really strong results last year were just starting to cycle over that and we're still up double digits in that category and so really strong performance. There. We're also seeing strong performance in bakery.
Speaker Change: I think consumers are looking to satisfy sweet tooth, but.
Speaker Change: With a little bit more of a value orientation and with.
Darren Rebelez: Cocoa prices and therefore candy prices moving up. Pretty, pretty significantly, our guests are finding alternatives in our bakery category to satisfy that need.
Speaker Change: Cocoa prices and therefore kandi prices moving up.
Speaker Change: Pretty pretty significantly.
Speaker Change: Our funding alternatives and our bakery category to satisfy that need.
Speaker Change: One moment for our next question.
Pooran Sharma: Our next question will be coming from Paran Sharma of Stevens, your line is open. Great, thanks for the question and congrats on the quarter. Yeah, I just wanted to ask about OPEX and really guidance. I think in the prepared comments, expecting one Q to be up about mid-teens. And I think guidance calls for about 9% at the midpoint. So I was just wondering if you could help unpack that a little bit. What kind of cadence maybe should we expect through the year? Is it kind of an even cadence downwards to hit that 9%? Any color regarding OPEX and FY26 would help.
Speaker Change: Our next question will be coming from <unk> Sharma of Stephens. Your line is open.
Speaker Change: Great. Thanks for the question and congrats on the quarter.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes, just wanted to ask about Opex and really guidance I think in the prepared comments expecting <unk> to be up about mid teens.
Speaker Change: And.
Speaker Change: I think guidance calls for about 9% at the midpoint. So I was just wondering if you could help unpack that a little bit what kind of cadence maybe.
Speaker Change: Should we expect through the year as it is it kind of in an even cadence downwards to hit that 9%.
Speaker Change: Any color regarding opex in FY 'twenty six would help.
Stephen Bramlage: Yeah, this is Steve. You know, the cadence is almost exclusively driven by just the year-over-year consolidation of FITES, so in both the first and the second quarter of FY26, it'll be mid-teens, and that's purely a function of, you know, we had all of the FITES Off-X this year in the first and second quarter, and we didn't have any of the FITES Off-X because we didn't own them in the first and second quarter of last year. It will drop quite a bit in the third quarter to, you know, a very low single-digit kind of number, and that's a function of, in the third quarter of FY25, we were cycling all of the one-time deal-related costs, and then so we had a bunch of that roll through total Off-X that will not repeat this year, and so the first half year in mid-teens, the second half, as a result of that cage, your kind of low single digits and all of that, you know, we would expect would land us in the middle of that Off-X range that we have for the guide.
Speaker Change: Yes.
Steve: This is Steve.
Speaker Change: Those cases is almost exclusively driven by just the year over year consolidation of sites in both the first and the second quarter of FY 'twenty six.
Speaker Change: <unk> and <unk>.
Speaker Change: It's purely a function of we have all of the flex Opex this year and the first and second quarter and we didn't have any of the <unk> opex, because we didn't known them in the first and second quarter of last year. It.
Speaker Change: It will drop.
Speaker Change: Quite a bit in the third quarter.
Speaker Change: A very low single digit kind of number and thats a function of.
Speaker Change: In the third quarter of FY 'twenty five.
Speaker Change: We were cycling all of the integral are the onetime deal related costs and so we had a bunch of that.
Speaker Change: Through total Opex that will not repeat this year. So the first half year and mid teens. The second half as a result of that cadence you're kind of low single digits and all of that.
Speaker Change: We would expect with Rambus.
Speaker Change: And in the middle of that Opex range that we have for the guidance.
Pooran Sharma: Okay, great. Appreciate that caller.
Speaker Change: Okay, great appreciate that color.
Darren Rebelez: And just I guess my follow up would be on expansion. Last couple of years seems that the lever is really more tilted on M&A. And as you look out to FY26, looks like you're targeting 80. I was wondering, do you see any change in the landscape? Is it still kind of high inflationary construction costs? Are you still facing that? Is it better to lean in on M&A?
Speaker Change: <unk>.
Speaker Change: Just.
Speaker Change: I guess my follow up would be on expansion.
Speaker Change: Last couple of years.
Speaker Change: Seems that the lever is really more tilted on M&A.
Speaker Change: <unk>.
Speaker Change: As you look out to FY 'twenty six it looks like you're targeting 80.
Speaker Change: I was wondering if do you see any change in the landscape as it is it still kind of.
Speaker Change: High inflation inflationary construction costs or are you still facing that is it better to lean in on M&A.
Darren Rebelez: We'd just love some color as we look out to FY20. Yeah. You know, all things being equal, as we sit here today, M&A has been a very effective play for us, because of what you mentioned, you know, construction costs have been higher in the last couple of years, and we've been able to pretty effectively acquire stores, put capital in them to remodel them, add kitchens and make them a essentially a new Casey's at below replacement cost. And so we continue to look at that. But every year when we give our guidance for new store development, we make an assumption that we're about 50 50 new to industry stores, and then the other half, small deal M&A, what we would call single-size twos and threes.
Speaker Change: Just love some color as we look out to FY 'twenty six.
Speaker Change: Yes.
Speaker Change: All things being equal as we sit here today M&A has been very effective play for us because of what you mentioned construction costs have been higher in the last couple of years and we've.
Speaker Change: We've been able to pretty effectively acquire stores put capital in them to remodel them add kitchens that make them up.
Speaker Change: Essentially a new cases.
Speaker Change: Below replacement cost and so we continue to look at that but every year when we give our guidance for new store development, we make an assumption that we're about 50 50.
Speaker Change: New to industry stores and then the.
Speaker Change: The other half small deal M&A, what we call a single side.
Speaker Change: Twos and threes.
Darren Rebelez: The larger deals are more opportunistic, and those come along when they come along, and then we evaluate those and see if we want to participate in that process or not. But yeah, to your point, it has been a little bit more efficient on the acquisition side, but if that changes, we can lean heavier on the organic side because we have a pretty developed land bank that gives us that optionality either way.
Speaker Change: The larger deals are more opportunistic and those come along when they come along and then we.
Speaker Change: We evaluate those and see if we want to participate in that process or not but.
Speaker Change: But yes to your point it has been a little bit more efficient on the acquisition side, but.
Speaker Change: If that changes we can lean heavier on the <unk>.
Speaker Change: The organic side, because we have a pretty developed land bank that gives us that optionality either way.
Unknown Executive: Thank you. One moment for our next question.
Speaker Change: Thank you one moment our next question.
Charles Cerankosky: Our next question will be coming from Charles Cerankosky of North Coast Research, Charles Earline Institute. Good morning, guys. Great quarter.
Speaker Change: Our next question will be coming from Charles Karen Koski Northcoast Research Charles Your line is open.
Speaker Change: Good morning, guys great quarter.
Darren Rebelez: If we look at the pace of kitchen installations at the acquired Cefco stores, can you give us an idea where you're at on that? And how how rapidly you can go during the next few fiscal years because you've got a lot in the pipeline. Yeah, sure. You know, in our assumptions, we haven't built in any conversions this year for kitchens, and a lot of it's driven on permitting timeline. And, you know, because some of these stores had a food program in that, you know, we've been very deliberate in terms of understanding how that food program behaves and how adding our pizza and some of our prepared foods into that mix ultimately works.
Speaker Change: If we look at the.
Speaker Change: Pace of kitchen installations, do you acquired South coast stores could you give us an idea of where you're at on that and how.
Speaker Change: Rapidly you can go during.
Speaker Change: The next few fiscal years, because you've got a lot in the pipeline.
Chuck Grom: Yes Chuck.
Speaker Change: And our assumptions, we haven't built in any conversions this year.
Speaker Change: For kitchens, and a lot of it's driven on on.
Speaker Change: Permitting timeline.
Speaker Change: Because some of these stores had had.
Speaker Change: We had a food program in that we've been very deliberate in terms of understanding how that food program behaves and how.
Speaker Change: Adding our pizza and some of our prepared foods into that mix. Ultimately works. So we're in the process of assessing that once we have that then we'll be in a position to develop the full scopes of work for that remodel activity because we want to make sure. We've got it right and then the permitting time will take.
Darren Rebelez: So, we're in the process of assessing that. Once we have that, then we'll be in a position to develop the full scopes of work for that remodel activity, because we want to make sure we've got it right. And then that permitting time will take as long as it takes before we can start with remodeling. Again, for our assumptions, we didn't make in anything for this fiscal year, and there probably wouldn't be anything material, because that would mostly probably end up near the end of this fiscal year, if anything at all.
Speaker Change: Take as long as it takes before we can start.
Speaker Change: Start with the remodeling so.
Speaker Change: Again for for our assumptions, we didn't bake in anything for this fiscal year and there probably wouldn't be anything material because they were mostly probably end up near the end of this fiscal year, if anything at all and really the next two years after that would be when the bulk of the remodel activity would occur.
Darren Rebelez: And really, the next two years after that would be when the bulk of the remodeling activity would occur.
Darren Rebelez: And can you refresh us, please, on the existing supply contract the South Coast stores have when it expires and what the conversion process to self-distribution will involve? Yeah, that's, I believe that contract ends at the end of 27. So we've got a couple of years left on that. We're working with the incumbent supplier right now on that agreement and so we'll see what we can do. There will be more to come on that as we progress through.
Speaker Change: And could you refresh us please on the existing supply contract to serve south coast stores have when it expires.
Speaker Change: The conversion process to self distribution will involve.
Speaker Change: Yes, that's it.
Speaker Change: I believe that contract ends at the end of 2007.
Speaker Change: So we've got a couple of years left on that and we're working with.
Speaker Change: The incumbent supplier right now on that.
Speaker Change: That agreement end and so.
Speaker Change: Sure there'll be more to come on that as we progress through.
Darren Rebelez: Oh, I'm sorry, Chuck. I stand corrected. It's at the end of 2026, not 2021.
Speaker Change: Well I'm sorry.
Speaker Change: Chuck.
Speaker Change: It's been corrected as at the end of 2026 not 2027.
Unknown Executive: Yes, and one moment for our next question, which will be coming from Krisztina Katai of Doji Bank. Krisztina, your line is open. Hi, good morning and congrats on a really nice quarter. Across food retail, this continues to be a source of strength. So can you dig into maybe how your private brands have been performing? Are you seeing any new opportunities across categories as we think about some of the CPGs that still struggle with with volume recovery? And just any update on the work that you're doing for your tiered office? Yeah, Krisztina, we've got a lot of work going on with our private label products right now, and when we first launched our private label several years ago, we really kind of targeted national brand equivalent, and it was really somewhat of a one-size-fits-all, and we had some really good success with that.
Speaker Change: Can you give me one moment, our next question, which will be coming from Cristina <unk> of Deutsche Bank. Your line is open.
Cristina: Hi, good morning, and congrats on a really nice quarter.
Speaker Change: I wanted to ask on private label.
Speaker Change: Across food retail continues to be a source of strength. So can you dig into maybe how your private brands have been performing are you seeing any new opportunities across categories. As we think about some of the CPG that those struggled with this volume recovery and just any update on the work that youre doing for your tiered offering.
Speaker Change: Yes, Kristina, we've got a lot of work going on with.
Speaker Change: Our private label products right now.
Speaker Change: When we first launched our private label several years ago, we really kind of targeted national brand equivalent.
Speaker Change: And it was really somewhat of a one size fits all and we have some really good success with that.
Krisztina Katai: We're evolving that assortment and that approach to more of a tiered approach, where we'll have a premium tier, so more premium products, higher quality ingredients, more differentiated products in that premium tier.
Speaker Change: Evolving that assortment and that approach to more of a tiered approach, where we'll have a premium tier so more premium products higher quality ingredients more differentiated.
Speaker Change: Products in that premium tier.
Darren Rebelez: The middle tier will be more of that national brand equivalent, and that will have a more value-oriented tier that would be more commoditized, and so we're in the process of refreshing the assortment across all of those tiers, and I think that gives us some really good opportunity to drive incremental business, drive some margin at the same time. Great, thank you for that. And just to follow up on the strong fuel profitability, you continue to you're working on fuel 3.0. And as you buy fuel further upstream, just can you update us where you are on that work?
Speaker Change: The middle tier will be more of that national brand equivalent.
Speaker Change: We will have.
Speaker Change: A more value oriented tier there would be more commoditized and so.
Speaker Change: We're in the process of refreshing the assortment.
Speaker Change: Cross all of those tiers, and we think that gives us some really good opportunity to drive incremental business drive some some margin at the same time.
Speaker Change: Great. Thank you for that and then just a follow up on the strong fuel profitability.
Speaker Change: You continue to Youre working on fewer three point Owen you buy fuel further upstream.
Speaker Change: Can you update us where you are on that work and just how is the team performing thank you.
Darren Rebelez: And just how is the site team performing? Thank you.
Darren Rebelez: Yeah, the, you know, everything's been going according to plan on the fuel 3.0, as we call it. And, and really, I think we've mentioned on previous calls that the FIKES fuel supply team has been doing this for a very long time. And so We've really integrated those folks into the CASEYS team and working together on that supply. So I think it's been working well so far.
Speaker Change: Yes.
Speaker Change: Everything has been going according to plan on the fuel a 3.0 as we call. It in and really I think we've mentioned on previous calls that the fix.
Speaker Change: Fuel supply team has been doing this for a very long time and so.
Speaker Change: We've really.
Speaker Change: Integrated those folks into the Casey's team working together on that supply and so I think it's been working well. So far there is tremendous opportunity to continue to grow that but.
Darren Rebelez: There's tremendous opportunity to continue to grow that. But first things first, we wanted to make sure we were able to get our own capabilities solid and then integrate that team. But we have about 3% of our fuel supply was through that in the quarter. So making progress and we'll continue to grow that as time goes on.
Speaker Change: First things first we wanted to make sure we were able to get our own capabilities solid and then integrate that team, but we have about 3% of our fuel supply was through that in the quarter, So making progress and we will continue to grow that as time goes on.
Speaker Change: One moment for our next question.
Bobby Griffith: Our next question will be coming from Bobby Griffith, Raymond James. Bobby, your line is open. Good morning, everybody. Thanks for taking my questions.
Speaker Change: Our next question will be coming from Bobby Griffin with Raymond James Bobby Your line is open.
Bobby Griffin: Good morning, everybody. Thanks for taking my questions I.
Stephen Bramlage: I guess first, oh and congrats on a great quarter too, I guess first I just wanted to touch quickly on the OPEX, just two follow-ups, do you get the $26 million in one-time and integration costs back in FY26 or is there a little carryover that will impact the first and second quarter? There'll be a little bit of an impact, Bobby, I mean, I... Probably be, you know, somewhere in the neighborhood of five to seven million dollars over the course of a year on integration related costs. And that's probably radical. There's a lot of that is kind of ongoing integration work.
Speaker Change: I guess first.
Speaker Change: And congrats on a great quarter too I.
Speaker Change: I guess first I just wanted to touch quickly on the Opex of two follow ups do you get the $26 million in one time integration costs back in FY 'twenty six or is there a little carryover that will impact the first and second quarter.
Speaker Change: There'll be a little bit of impact Bob.
Speaker Change: We'll probably be somewhere in the neighborhood of $5 million to $7 million over the course of the year.
Speaker Change: On integration.
Speaker Change: Related cost and that probably radical.
Speaker Change: There's a lot of that is kind of ongoing integration work, so not zero, but a lot less.
Stephen Bramlage: So not zero, but a lot less.
Bobby Griffith: Okay, good. That's helpful.
Speaker Change: Okay. Good that's helpful. And then does the plan assume a labor hour reduction again are we kind of at the point, where we've pulled out there and we're kind of just flattish labors or even modest growth in labor hours.
Bobby Griffith: And then does the plan assume a labor hour reduction again? Or are we kind of at the point where we've pulled out there and we're kind of just sladdish labors or even modest growth in labor hours? Bobby, yeah, there is a modest labor hour reduction assumption built into the plan that, you know, I would remind everybody that when we started this fiscal year, we said we would have about a 1% reduction each year over the three-year period, and we've been well ahead of that pace. We were over 2% last year, so we're running a little bit ahead of schedule, so it probably won't be as much as we had been the last couple of years, but there will still be some improvement over the course of the year.
Speaker Change: Bob Yes, there is a modest labor hour reduction assumption built into the plan.
Speaker Change: I would remind everybody that when we started this fiscal year. We said, we would have about a 1% reduction.
Speaker Change: Each year over the three year period, and we've been well ahead of that pace. We are over 2% last year. So we're running a little bit ahead of schedule. So it probably won't be as much as we had been in the last couple of years, but there will.
Speaker Change: We will still be some improvement over the course of the year.
Unknown Executive: Thank you.
Speaker Change: Thank you our.
John Royall: We'll move on to our next question. Our next question will be coming from John Royall of J.P. Morgan. Your line is open. Hi, good morning. Thanks for taking my question. So my first question is just on the 125 million of share buybacks.
Speaker Change: Next question.
Speaker Change: Our next question will be coming from John Royall of Jpmorgan. Your line is open.
John Royall: Hi, good morning, Thanks for taking my question.
Speaker Change: So my first question's just on the $125 million of share buybacks.
Stephen Bramlage: If that number comes to fruition, it's the largest number I think we've seen since fiscal 18. So my question is, how do you arrive at that number? Is the idea to kind of, you know, allocate capital fully within cash flows and sort of plug the buyback? Is there any cash draw in the assumptions? And should we expect that number to flex up and down depending on where you shake out in the EBITDA guidance range?
Speaker Change: That number comes to fruition, it's the largest number I think we've seen since <unk>.
Speaker Change: <unk>. So my question is how do you arrive at that number is the idea to kind of allocate capital fully within cash flows and sort of plug the buyback.
Speaker Change: Is there any cash draw in the assumptions and how should we expect that number to flex up and down depending on where you shake out on the EBITDA guidance range.
Stephen Bramlage: Good morning, this is Steve. When we think about capital allocation, I think it's just a, it's a function of how we prioritize, right? So we've, we've tried to be very consistent with saying that if we have opportunities to make EBITDA and ROIC enhancing investments from a growth perspective, we'll do that first and foremost, that, you know, the 80 units would be reflective of that and the FY26 guide. We're at the target leverage level already, a touch below that. So we're not going to proactively look to take that down faster than it normally would happen. We don't feel like that's the right cost of capital answer for us.
Speaker Change: Hi, Good morning. This is Steve when we think about capital allocation I think it's just.
Speaker Change: It's a function of how we prioritize right so.
Speaker Change: We've tried to be very consistent with saying, if we have opportunities to make EBITDA and ROIC.
Speaker Change: Canceling investments from a growth perspective, we'll do that first and foremost.
Speaker Change: The 80 units would be reflective of that and the FY 'twenty six.
Speaker Change: Got it.
Speaker Change: Target leverage level already a touch below that so.
Speaker Change: So we're not going to proactively look to take that down faster than it normally would happen. We don't feel like thats. The right cost of capital answer for US, we're really proud of increasing the dividend for the 26th.
Stephen Bramlage: We're really proud of increasing the dividend for the 26th consecutive year. And so that's something that will, you know, continue to tend. And then the reality is, as the company grows, we're throwing off more operating cash flow. And in a, In a particular year that doesn't have a significant transaction included in it, a la Fikes, we will throw off more operating cash flow than we can reinvest within, you know, a discrete period of time, and we've tried to message that when that happens, we will return capital in the form of share repurchase, and so that's what you're seeing.
Speaker Change: Consecutive year.
Speaker Change: And so that's something that we'll continue to turn and then the reality is as the company grows.
Speaker Change: Selling off more operating cash flow and M&A.
Speaker Change: In a particular year that doesn't have a significant transaction included in at all sites.
Speaker Change: We will throw off more operating cash flow than we can reinvest within a discrete period of time and we've tried to message that when that happens.
Speaker Change: We will return capital in the form of share repurchase and so thats, what youre seeing in the FY 'twenty six assumption there is no draw from a debt standpoint to fund that that would all be funded with operating cash flow on hand, and it would essentially be non dilutive for us.
Stephen Bramlage: In the FY26 assumption, there is no draw from a debt standpoint to fund that. That would all be funded with operating cash flow on hand, and it would essentially be non-diluted for us for both FY26 and going back into FY25 and mopping up dilution from FY25 when we didn't do any share repurchase either.
Speaker Change: For both FY, 'twenty, six and going back into FY, 'twenty, five and mopping up dilution from FY 'twenty five when we didn't do any share repurchase either.
John Royall: Very helpful. Thank you.
Speaker Change: That's very helpful. Thank you and then my follow ups just on the diesel side I know, it's not a huge needle mover for you always but it was called out as a source of strength on the on the volume side in the third quarter. So just wondering how those trends are evolving this quarter.
Darren Rebelez: And then my follow ups just on the diesel side. I know it's not a huge needle mover for you always, but it was called out as a source of strength on the on the volume side in the third quarter. So just wondering how those trends are evolving this quarter. Yeah, well, last quarter diesel was positive for us. But again, it's only about 16% of our mix. So it's not a huge contributor, but it does help move the needle. And we did see some, you know, increased traffic from over the road. Truckers, we have a little bit of softness in February with the weather conditions, like I mentioned before, but overall, it's been it's been trending up and we continue to lean in on that for a source of incremental volume.
Speaker Change: Yes.
Speaker Change: Well last quarter diesel was.
Speaker Change: It was positive for us.
Speaker Change: But again, it's only about 16% of our mix so.
Speaker Change: It's not a huge contributor but it but it does help move the needle.
Speaker Change: And we did see some increased traffic from over the road.
Speaker Change: Truckers, we have a little bit of softness in February with the weather conditions like I've mentioned before but overall, it's been it's been trending up and.
Speaker Change: We continue to lean in on that for a source of incremental volume.
Unknown Executive: And one moment for our next question.
Speaker Change: And one moment our next question.
Michael Montani: Our next question will be coming from Michael Montani of Evercore ISI. Michael, your line is open. Yes, hi. Good morning. Congrats on the quarter and thanks for taking the question.
Speaker Change: Our next.
Speaker Change: <unk> will be coming from Michael <unk> of Evercore ISI, Michael Your line is open.
Michael Evercore: Hi, Yes, hi, good morning, congrats on the quarter and thanks for taking the question.
Speaker Change: Good morning.
Michael Montani: I just wanted to ask first off on top line and then at a margin follow-up so just on the top line front can you parse out a little bit traffic and ticket you know how that played out for the quarter and then for the year and then you know based on some of your early vendor negotiations etc you know how do you see that working into the two to five percent guidance that you've put forward for fiscal 26 Yeah, I'll start on the traffic and ticket in the quarter. Traffic in the quarter was a touch negative, but that's all because of February, right back to Darren's point.
Speaker Change: Just wanted to ask.
Speaker Change: First off on top line and then at a margin follow up so just on the top line front can you.
Speaker Change: Parse out a little bit traffic and ticket how that played out for the quarter.
Speaker Change: And then for the year and then.
Speaker Change: Based on some of your early vendor negotiations et cetera, how do you see that working into the 2% to 5% guidance that you've put forward for fiscal 'twenty six.
Speaker Change: Yes, I think Michael I'll start on the traffic and ticket.
Speaker Change: In the quarter.
Speaker Change: Traffic in the quarter was tough.
Speaker Change: Touch negative.
Derek: But that's all because of February right back to Derek's point, so traffic and weather.
Stephen Bramlage: So traffic, you know, the weather, it was kind of a single digit negative in the month of February because of weather, and then positive for us and progressively better in both March and April. But if you're looking at the total growth for the quarter, it was essentially ticket and very modestly negative traffic. But again, it's really a February dynamic for us.
Derek: It was kind of mid single digit negative in the month of February because of whether it's a net positive for us and progressively better in both March and April, but if youre looking at to kind of the total the total growth for the quarter. It was it was essentially ticket.
Derek: Very modestly negative traffic, but again, it's really a February dynamic for us.
Stephen Bramlage: Okay, and just the outlook for the year. Go ahead, Mike. Sorry, I was just saying, and then, you know, how does that inform your view for the year in the two to five guide? What are the assumptions for that? Yeah, positive traffic is built into that guide for the year. You know, we're trying to be conservative back to Darren's earlier conversation around the guests, but we do continue to have some ticket growth in there, more tickets and traffic as you would expect, right? We have good visibility into some of the inflationary pressures that we have right now in both grocery and the prepared food businesses, and we're trying to remain prudent in how we offset those and preserve margin and maintain the value proposition.
Derek: Okay.
Derek: For the year.
Derek: Sorry go ahead Mike.
Mike: Sorry, I was just saying and then how does that inform your view for the year in the two to five guide what are the assumptions for that.
Derek: Yes.
Speaker Change: Positive traffic.
Speaker Change: Is built into that.
Derek: Our guide for the year, we're trying to be.
Derek: Conservative back to Darren earlier conversation around the guests, but we do continue to have.
Derek: Some ticket growth and they're more for tickets and traffic as you would expect right.
Derek: Good visibility.
Derek: Again to some of the inflationary pressures that we have right now in both grocery and mass.
Derek: In our prepared food businesses, and we're trying to remain prudent and how we offset those and preserve margin and maintained that the value proposition, but we've got modestly positive traffic and a little bit more kind of ticket improvement through both mix and pricing within that guide.
Michael Montani: But we've got modestly positive traffic and a little bit more kind of ticket improvement through both mix and price and within that guide. Thank you.
Speaker Change: Thank you and our next question will be coming from the line of Brad Thomas of Keybanc capital markets. Brad Your line is open.
Brad Thomas: And our next question will be coming from the line of Brad Thomas of KeyBank Capital Markets. Brad, your line is open. Hi, thanks, good morning, and congrats on the strong quarter. I was hoping we could circle back to talking about the economy a bit more. You just alluded to this a little bit. But just as we think about inflation, what are you seeing? How are you thinking about that potentially impacting your consumer as tariffs continue to flow through?
Brad Thomas: Hi, Thanks, good morning, and congrats on the strong quarter.
Speaker Change: Was hoping we could circle back to talking about the economy a bit more.
Speaker Change: You just alluded to this a little bit, but just as we think about inflation. What are you seeing how are you thinking about that potentially impacting your consumers as tariffs continue to flow through and then the second part to that just wondering as you look at the house spending Bill.
Darren Rebelez: And then the second part to that, just wondering, as you look at the house spending bill, if there's any items in particular that you might you think might affect cases? Yeah, I'd say on the inflation front, we haven't seen a lot of inflation just yet on the commodity side of things. Actually, for the most part, we've ended up fairly flat, and that primarily impacts the prepared food and dispensed beverage business. On the grocery general merchandise business, outside of tobacco and almost exclusively cigarettes, we're not seeing a lot of inflation there either. So I would say at this point, we're not seeing any flow through of any sort of tariff impact.
Speaker Change: If theres any items in particular that you might think might affect cases. Thanks.
Speaker Change: Yes, I'd say on the on the inflation front, we haven't seen a lot of inflation just yet on the on the commodity side of things.
Speaker Change: Actually for the most part we've ended up fairly flat.
Speaker Change: And that primarily impacts the prepared food and dispense beverage business.
Speaker Change: On the grocery and general merchandise business outside of tobacco.
Speaker Change: Almost exclusively cigarettes.
Speaker Change: We're not seeing a lot of inflation there either so I would say at this point.
Speaker Change: We're not seeing a flow through of any sort of tariff impact.
Darren Rebelez: As of yet, and so. Right now, I think we're in in pretty good shape. And again, the, as I mentioned before, the fine behavior of most of our guests has stayed pretty consistent throughout, throughout the quarter. And I'm, I'm not aware of any specific house provisions. that that would really impact the consumer. There is some stuff on accelerated depreciation that would certainly be a tailwind for us if it were to to come to fruition. But but outside of that, I'm not aware of anything directly consumer related.
Speaker Change: As of yet and so.
Speaker Change: Right now I think we're in pretty good shape and again.
Speaker Change: So as I mentioned before.
Speaker Change: The fine behavior of most of our guests has stayed pretty consistent throughout.
Speaker Change: Throughout the quarter.
Speaker Change: I'm not aware of any specific house provisions.
Speaker Change: That that.
Speaker Change: It would really impact the consumer.
Speaker Change: There is some stuff on the accelerated depreciation that would certainly be a tailwind for us if it were to come to fruition, but.
Speaker Change: But outside of that I'm, not aware of anything directly consumer related.
Darren Rebelez: Great, and if I could follow up about Texas and Florida, these are obviously newer states for you where you're still learning a lot.
Speaker Change: Great and if I could follow up about.
Speaker Change: Texas and Florida. These are obviously newer states for you where you are still learning a lot I was wondering if you could talk about.
Darren Rebelez: I was wondering if you could talk about any new learnings on the likelihood that the Casey's models continue to be very successful as they go into those new states, and any new thoughts on if fuel margins can be as high in these states for you as they are in your prior states. Thanks. Yeah, I'd say with Texas and Florida, we're, they're behaving exactly as we thought they would. And so, you know, so far, I think in the three proof of concept stores that we have converted in Texas, they've been really well received, particularly our pizza has performed exceptionally well in those markets.
Speaker Change: Any new learnings on the likelihood that the cases models continued to be very successful as they go into those new states.
Speaker Change: Any any new thoughts on.
Speaker Change: If fuel margins can be as high in the states for you as they are in your and your prior states. Thanks.
Speaker Change: Yes, I'd say with Texas and Florida.
Speaker Change: They're behaving exactly as we thought they would.
Speaker Change: And so so far I think in the <unk>.
Speaker Change: Three proof of concept stores that we have converted in Texas, while they are.
Speaker Change: Been really well received.
Speaker Change: Particularly our pizza has performed exceptionally well in those markets and again.
Darren Rebelez: And again, while we're in different states, we are in, you know, we tend to be in those smaller towns and rural communities. And so that that is right in our wheelhouse. That is absolutely Casey's country. And there's a little bit of nuance between one state and another, but by and large, they're behaving exactly like we expected on the fuel side. Those margins in those geographies have tended to be a little bit thinner than what you get in the Midwest.
Speaker Change: While we are in different states we are in.
Speaker Change: We tend to be in those smaller.
Speaker Change: <unk> in rural communities and.
Speaker Change: And so that is right in our wheelhouse that is absolutely casey's country.
Speaker Change: There's a little bit of nuance between one state in another but by and large they're behaving exactly like we expected.
Speaker Change: On the fuel side.
Speaker Change: Those margins in those geographies have tended to be a little bit sooner than what you get in the Midwest.
Darren Rebelez: The counter to that is that the volumes have been much higher, and that is all exactly what we expected and what we modeled when we did the deal.
Speaker Change: The counter to that isn't the volumes have been much higher and that is all exactly what we expected and what we modeled when we did the deal. So we were expecting higher volumes and lower margins and that's exactly what we're getting right now.
Darren Rebelez: So we were expecting higher volumes and lower margins, and that's exactly what we're getting.
Dan Rebellion: And I would now like to turn the conference back to Dan Rebellion CEO for closing remarks.
Darren Rebelez: I would now like to turn the conference back to Darren Rebelez, CEO, for closing remarks. Okay. Thank you for taking the time today to join us on the call. I'd also like to thank our team members once again for their contributions in delivering another record year. Thank you.
Dan Rebellion: Okay. Thank you for taking the time today to join us on the call.
Speaker Change: Also like to thank our team members once again for their contributions in delivering another record year. Thank you.
Unknown Executive: And this concludes today's conference call. Thank you for participating. You may now disconnect. Goodbye.
Speaker Change: And this concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: Goodbye.
Speaker Change:
Speaker Change: [music].
Speaker Change: [music].
Speaker Change: Sure.
Speaker Change: [music].