Caseys General Stores Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Michael Montani - Evercore ISI - Analyst : Yes. Hi, and thank you for taking the question. Just wanted to ask a two-part, if I could. First, I was hoping that you all could discuss the underlying health of your consumer in light of some of the crosscurrents that we've been seeing lately. And then secondly, on the gross margin front, I just wanted to dig a little deeper into the second quarter on prepared meal and grocery margin. Is it possible to enact hedging or take modest pricing to offset what we're seeing with cheese costs, Steve?

Question: Michael Montani - Evercore ISI - Analyst : Thank you and good luck.

Question: Bobby Griffin - Raymond James - Analyst : Hey, guys. Good morning. Thanks for taking the question. Another good quarter. So Dan, I guess, first, I wanted to move over to the OpEx side and maybe talk a little bit more about the continuous improvements you guys are seeing, been a strong success story. Can you just unpack some newer examples of what's driving it? I think in the past, we've used examples of taken the cash of the bank or maybe the laundry, but just it seems that the team continues to find nuggets to drop down for savings. So just curious kind of what is on the kind of cards today and what is left there?

Question: Bobby Griffin - Raymond James - Analyst : Very good. That's helpful. And I guess, secondly for my follow-up. When you look at the prepared food business, are you seeing any notable difference in your different geographic markets by population. And I guess I'm just asking in the context of some of the fears around QSR pricing investments that are taking place. So in the markets where you operate with a little bit larger population go up against more of the named QSRs that we know. Are you seeing any type of difference in the performance of the Prepared Foods business?

Question: Bobby Griffin - Raymond James - Analyst : Very good. Appreciate the details. Best of luck going forward.

Question: Bonnie Herzog - Goldman Sachs & Co. LLC - Analyst : Thank you. Good morning, everyone. I just had a question on inside same-store sales, which I guess, grew 2.3%, but maybe it was a little softer than we were expecting, especially in grocery and general merchandise, which I guess, same-store sales growth for that was up just 1.6%. So hoping you guys could just maybe lay out some of the puts and takes there? And maybe any changes to how value is being perceived in the store, given the signs of the pressure on the consumer and actually maybe even more pressures building on the middle-income consumer?

Question: Bonnie Herzog - Goldman Sachs & Co. LLC - Analyst : Okay. That's helpful. And if I may, just a quick follow-up question, just maybe more in private label. Just curious to hear a little more color on how your private label business has been performing. Are you still getting the same lift in the store? Have you, I guess, made any more progress on building out your tiered offering? I'm just thinking about whether it's a little more premium or value, etc.? Thank you.

Question: Chuck Cerankosky - Northcoast Research - Analyst : Good morning, everyone. Great quarter. When you look at this period ahead of closing on the Fikes acquisition, will you be looking at any other deals?

Question: Chuck Cerankosky - Northcoast Research - Analyst : As a follow-up, Darren, what kind of CapEx will Fikes need to update kitchens, et cetera? And we'll also continue our organic growth on our new-to-industry stores are we'll we'll pull back a little bit just to help us manage the on the balance sheet a little bit. But aside from that, we're going to continue on the trajectory and no deals take time and you have to be in the market to be in the market, so to speak. So so we will continue to be looking in and see what's out there as a follow up there. And Bob would kind of CapEx will flakes need to update kitchens, et cetera?

Question: Chuck Cerankosky - Northcoast Research - Analyst : Great. Thank you.

Question: Krisztina Katai - Deutsche Bank - Analyst : Hi. Good morning. Thank you for taking the question. I wanted to ask about some of the recent retail price adjustments that you took in grocery and general merchandise. As consumers are increasingly gravitating towards value, just how do you see Casey's position pricing product-wise today to continue that positive traffic growth to stores? And how are you leveraging the loyalty program and then increasingly private label to help reinforce that value proposition? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 12:30PM, CASY.OQ - Q1 2025 Caseys General Stores Inc Earnings Call

Question: Krisztina Katai - Deutsche Bank - Analyst : Got it. That's helpful. And then just as a follow-up, and I know your geographies have a bit different competition, but one of your larger dollar store peers announced some pricing actions that they're taking in order to be more price competitive. So how do you see promotions and markdowns playing out in the food and consumables industry? And how do you think that is potentially going to impact Casey's, if at all? Thank you.

Question: Krisztina Katai - Deutsche Bank - Analyst : Thank you.

Question: Corey Tarlowe - Jefferies LLC - Analyst : Great. Thanks. Darren, I was keen to get your perspective just on the broader M&A that we've seen in the industry. Obviously, you recently announced the Fikes wholesale and CEFCO acquisition. But I'm curious as to hear your perspective on sort of the runway here for acquisitions in the space, why you think we've been seeing so much recently? And any other color you can provide on what you're seeing largely as it relates to M&A? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 12:30PM, CASY.OQ - Q1 2025 Caseys General Stores Inc Earnings Call

Question: Corey Tarlowe - Jefferies LLC - Analyst : Great. Thanks. That's very helpful. And then just on labor, I wanted to ask about your perspective there as well. And I know you've mentioned some wage inflation yet continued reduction in, I believe, labor hours. Curious what you've seen from a wage inflation perspective and if you expect that to moderate as we go forward?

Question: Corey Tarlowe - Jefferies LLC - Analyst : Great. Thank you very much and best of luck.

Question: Jacob Aiken-Phillips - Melius Research - Analyst : Hi, everyone. This is Jacob Aiken-Phillips on for Karen. So we just have two questions. The first is on the fuel supply chain. Any update or color you can give on the upstream pipeline and capabilities you've been developing and maybe how the Fikes team will fold into that? And then the second is any update you can give on pounds of cheese used in the Prepared Foods business?

Question: Jacob Aiken-Phillips - Melius Research - Analyst : Update on pounds of cheese in the Prepared Foods business that you use?

Question: Anthony Bonadio - Wells Fargo Securities, LLC - Analyst : Hey. Good morning, guys. So sort of piggybacking on the labor questions. I know same-store OpEx has continued to trend pretty strongly. But I did want to ask about the Department of Labor overtime rule. I believe that's set to step up in January. I know there's a lot of uncertainty still around what that ultimately looks like. But just maybe some thoughts on possible impact to your business if that does go into effect and how you're thinking about mitigating?

Question: Anthony Bonadio - Wells Fargo Securities, LLC - Analyst : Got it. That's helpful. And then just on gallon trends. Obviously, you guys continue to underperform or outperform versus what we've seen in a lot of your peers. Just maybe some more thoughts on what's driving that and how you think about maybe the halo effect from what the strong insight store proposition driving traffic to the pump?

Question: Anthony Bonadio - Wells Fargo Securities, LLC - Analyst : Helpful. Thanks, guys.