Good day, ladies and gentlemen, and welcome to the First Quarter Fiscal 2014 Casey's General Stores Earnings Conference Call. My name is Lacey, I'll be your coordinator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today, Bill Walljasper, Chief Financial Officer. Please proceed.

Thank you, Lacey. Good morning, and thank you for joining us to discuss Casey's results for the quarter ended July 31. I'm Bill Walljasper, Chief Financial Officer; Bob Myers, President and Chief Executive Officer, is also here. Before we begin, I'll remind you that certain statements may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. As discussed in the press release and the 2000 Annual Report, such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from future results, expressed or implied by those statements. Casey disclaims any intention or obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise. I'll take a few minutes to summarize the results of the first quarter, and then afterwards, we'll open it up for questions about our results and outlook. We were off to a great start in fiscal 2014. Diluted earnings per share for the first quarter were $1.43 compared to $1.01 for the same quarter a year ago. The results reflect strong gains throughout all categories, resulting in over a 20% increase in gross profit compared to the same quarter a year ago. Before we go over each category to give more detail on what is driving these results, I will remind everyone that we will release details of August same-store sales on Monday, September 16. However, all categories in August continue to trend positive. We experienced a very favorable fuel margin environment for the quarter, resulting in a record fuel margin of $0.221 per gallon. Our average margin for the past 4 years has been $0.145 per gallon. The margin benefited from a rise in the value of renewable fuel credits, commonly known as RINs,…

[Operator Instructions] And our first question will come from the line of Karen Short with Deutsche Bank.

Just a couple of questions on some -- on margins. First question on your grocery margins. I'm looking at the up, kind of 20, approximately 20 basis points when you back out the one-time last year. Was there any inventory gain or anything? I know in the last quarter, there were some discussion about some benefit on the inventory side from the increase in pricing.

No. We did not have any price increase that ran through the Grocery and General Merchandise category. I mean, when you pull out that one-time benefit, you're correct, our margin would have been up about 20 basis points in spite of all the pricing decreases that we took in the prior year. Really, what's driving that is increased margin and contribution for ice, salty snacks, bread, cakes, just a number of things that are driving the overall margin even in light of those price decreases.

Okay. So that -- I mean, depending on the weather and things like that and sales, that should continue into the second quarter like we've cycled the tobacco pressures?

Yes. The big chunk of the price decreases that we took last fiscal year occurred in October and November. So once we cycle those, we won't necessarily have that comparative headwind. It just have been pretty modest towards price decreases, such a coincidence at that time period.

Okay. And then on the Prepared Foods side, by my math, I guess, dairy or cheese kind of negatively impacted margins by about 90 basis points. I know there was some offset from coffee benefit. But anything else to point to in terms of Prepared Food margin pressure?

There are a couple more items, albeit smaller than the cheese impact. But we had supplies that went up in the period as well as some meat costs that went up. And so the combination of all those would get you to that 165 bps down.

Okay. And then in terms of the RIN accounting, I guess if prices peaked in July, that's something that you would be showing in your August scuff [ph] margin, correct?

Yes. The trigger and just to clarify, just the trigger for us as far as the timing goes, as we enter into the contract to sell at a definite price, that would be the period that, that benefit will go into. Now I will say it, in the month of July, as you probably know and many of you know, RINs spiked up to about $1.48. We did take advantage and did a mid-month sale in July and took advantage of that, which is why you got to that $1.02 average. Now they've since come back down that $0.70 range.

Okay, got it. That's helpful. And then just the last question. What was the absolute dollar of credit card fees in the quarter?

Just about $3.2 million -- oh I'm sorry, yes, the $25.6 million.

$25.6 million, okay.

And our next question will come from the line of Ben Brownlow with Raymond James. Benjamin Brownlow - Raymond James & Associates, Inc., Research Division: On the Hy-Vee program, that's obviously been extremely successful. Is there an opportunity to implement a similar program with another grocery? You guys looking into that at all?

That's a great question, Ben. And I guess the answer would be, we're always looking for opportunity to grow our business. And so the Hy-Vee Fuel Saver program does have a pretty wide reach in impact. We have about roughly 1,200 stores that technically would be in the program, which leaves a significant amount that are not in the program. So we are continuing to look at opportunities to partner in and try to facilitate that area. Benjamin Brownlow - Raymond James & Associates, Inc., Research Division: Okay. And I know you weren't previously seeing any carryover into a nonfuel transaction growth with that program. Is that still the case or has that changed at all?

We're starting to gain a little bit of traction in that area, Ben. We're starting to see a little bit of uptick inside the store in relationship to the -- what I'll say, the fuel saver stores and the non-fuel saver stores. So we're encouraged by that type of uptick. We'll keep you posted as we go forward in that regard. Benjamin Brownlow - Raymond James & Associates, Inc., Research Division: Okay, great. And just one more from me on the OpEx side. Can you just update us on your thoughts? Obviously, I guess if you back out the bonus accrual and the credit card fees, that up roughly 10.8% or 11%, was in line with your kind of low double-digit guidance for the year. Are you still comfortable with that low double-digit OpEx growth for the year? And just update us based on where you trended for the first quarter, how you're thinking about the outlook?

Yes. To answer your question, yes, we still are comfortable with that outlook for the fiscal year. We just had -- as you might expect, as we have a very solid quarter, obviously, we have a bonus structure to reward our employees and that's part of that. So that's the piece of it. The credit card fee -- the retail fuel price only went up about 5%. Typically, when you see a spike in retail fuel price, you would see an increase in credit card utilization. But in this regard, with the RINs escalating as they did in the quarter, certainly, people are paying for the gasoline more with credit cards. And our transactions went up about 16% in the quarter. And so we will cycle over the implementation of the Fuel Saver program in December. And so you might see a little moderation there. Now the retail fuel price, Ben, could go any direction so it's hard to predict that. But to answer your question, overall, we feel pretty good about that low double-digit comment that you made.

And our next question will come from the line of Ronald Bookbinder with The Benchmark Company.

Could you talk about a little bit more about the Fuel Saver program? Are you continuing to see that ramp up on your gallon comp even more than it was in the prior couple of quarters?

We are, we are, Ron. As I mentioned, we implemented that back in December. And obviously, it takes a little bit of time to gain traction out there. But we have seen as, I would say, significant increases month over month since the Fuel Saver program was implemented. And so we're encouraged by that. I think the word's just getting out. The average savings on that program is roughly about $0.38 per gallon, so people are getting more and more excited about it. I think our partners there at Hy-Vee are also excited about the program. And so it's gone very well with respect to how we anticipated it rolling out.

And you mentioned the RIN contracts in mid-July. Was there -- so was there any pull forward or a shift of RINs from August into July as you took that contract?

Yes. Well, typically speaking, prior to this, we'd always sold roughly the first business day of the month, which would mean, for instance, say, we sold the first business day of July, those would be RINs that were acquired in the month of June. Now they would go into the July period because of that's when we got the agreement set up with the refiner. And so we are now looking to sell RINs more on, like a every 2-week basis. And so to answer your question, no, they wouldn't be necessarily in the month of August since we're doing what we're doing now.

Okay. And could you talk a bit about your freestanding pizza format and how you think that might improve the branding of the pizza going forward and also help expand the delivery?

Sure. I assumed you're referring to the Casey's Pizza Express?

Yes.

Yes. It's very new, Ron, as you know. I mean, we only have 1 store right now in a test mode. And many but that's not familiar with this. It's a concept where we pull out our Prepared Food operation out of our store, put it in a standalone operation, in this case, it happens to be within a strip mall. And so it is purely a carryout and delivery of the product. And our thought process on this, Ron, is basically trying to get the product into more people's hands. And I would say, we started that August 1, so we really only have about 1 month under our belt. We're encouraged certainly by the top line growth in that particular unit. Now for us, we need to make sure that we manage the wages in relationship to that concept. So we'll continue to monitor that, no different than we monitored, when we started rolling out the pizza delivery program. And to the extent that we see success in that, certainly anticipate continuing to roll that initiative out. It offers up a wide variety of opportunity we believe in the current market areas where we serve. So stay tuned on that. We'll give you more information as we get a little more time behind us.

Okay. And just one last question. On fuel margin, could you give us any idea as to how things have been trending quarter-to-date?

You mean in the second quarter?

Yes.

Yes, I wouldn't be able to give you any information in that regard. But certainly, you have to wait probably until Monday to get that statement.

And our next question will come from the line of Anthony Lebiedzinski with Sidoti & Company. Anthony C. Lebiedzinski - Sidoti & Company, LLC: A couple of questions first on, on cigarettes. Can you give us what the Grocery & Other Merchandise comp would have been excluding cigarettes?

Excluding cigarettes, see if I have it real handy here. I do not have that handy for you, but we certainly can get that up. Anthony C. Lebiedzinski - Sidoti & Company, LLC: That's okay. And also you did mention in your press release you have been able to increase your market share for cigarettes. Is there anything you can quantify as far as what's your market share you believe to be at this point?

Well, I -- maybe give you a little insight in that regard. The 2 big states that you might recall where we saw the largest impact was the State of Illinois and Missouri. Those 2 happen to be non-fair trade states. Illinois obviously is the one that had the Illinois state tax impact. We are now back -- we had about a 25%, 30% reduction in cartons in the State of Illinois. And so we are now with the price reductions that we took are back on pace with what we were prior to the Illinois state tax implementation. So we're encouraged by that. Now we have seen significant gains in carton movement in the state of Missouri subsequent to the price decreases that we took. Again, the majority of those occurred in October, November of last year. So I can tell you that cigarette same-store sales have been trending very strong in the past, probably I would say, 3 to 6 months. We anticipate that will continue going forward here. Anthony C. Lebiedzinski - Sidoti & Company, LLC: Got it, okay. And with respect to cheese prices, I assume you have not locked in any cheese prices at this point, right?

No, we have not. And just as a point of comparative, here in Q2, we'll be comparing against the $2.11 cheese cost a year ago. And then in Q3, we'll compare against $2.09 a year ago. So there's a potential slight tailwind in that comparative. Anthony C. Lebiedzinski - Sidoti & Company, LLC: Got it, okay. And also I think for the quarter, you guys closed 7 stores. Any sort of rough figure as to what you expect as far as store closures for fiscal '14?

We don't have any plans to close any stores at this point. Now there always could be a situation though when we do acquire small chains, we do tend to close some of those from time to time. But for existing store base, we don't have any plans in that regard. Anthony C. Lebiedzinski - Sidoti & Company, LLC: Okay. And as far as your plans for a second distribution center, do you have any other updates on that?

Well, we're in the final stages of that due diligence as far as location timing. I would expect in the next conference call, you'll hear quite a bit more detail on that. We should have that final due diligence piece wrapped up by that time and give you some more insight that time. But certainly, we're still on track.

[Operator Instructions] And our next question will come from the line of John Lawrence with Stephens.

Bill, would you comment a little bit, I guess, to follow on Ben's question about Hy-Vee, could you give us a little bit more as far as that traction goes, what's the first thing as they move from outside with the [ph] gas program and move inside? What are the first -- what does that basket look like initially? Is it food? Is it just drinks or a little clarity there.

Well, I won't be able to give you a tremendous detail on that because it is preliminary, and I hate to mislead anybody in that direction. But some of the preliminary indications that we are seeing is, it's truly in the snack areas, the beverage package beverage areas that we're seeing traction. And so definitely look at fuel saver versus non-fuel saver. That's what's where we are seeing the immediate growth, I mean, we're -- primarily growth in the General Merchandise categories where we're seeing the uptick.

Okay, great. And secondly, to get to the rest of the store base from 1,200, what are the factors related to that? Does it have to do with competitiveness in the marketplace, pricing or et cetera?

Are you talking about the Fuel Saver program?

Yes.

You're talking about the Fuel Saver program?

Right.

Yes. Really, for us to expand the Fuel Saver program beyond the current store base that we have, it would appear that either 1 or several things that have to happen and either our current partnership with Hy-Vee would have to accelerate their units in other parts of our market area, or else we would have to venture outside of our current market area, that is within the Hy-Vee Fuel Saver program, and look for another partner in that regard to utilize to do a similar-type program.

And last question, just competitively, you pretty much had a full summer now competing in some of those new markets like Northwest Arkansas, et cetera, with a pretty good competitor. I would assume that your feedback and results are solid, and you like what you see out of those markets.

Yes, we definitely like what we see out of those markets. The comment that was made earlier in the narrative about 40 to 45 new stores by the end of the fiscal year as far as new store constructions go. We see a lot of those stores planned in the Arkansas area. We think the new markets that we began to penetrate last fiscal year, that being in Tennessee, Kentucky, a little bit more penetration in Arkansas and North Dakota, offer up a wide opportunity for us. So look for some penetration in those states going forward here in the next -- this fiscal year as well as next fiscal year.

Yes. And the last question and I know you said you'll give us some of this over the next call as far as the DC. But just in theory with distribution, and if you draw the circle for the right radius and distance for trucking, how far south and how far to the -- can you really get? Can you get all the way to the south end of Tennessee or into Alabama?

Well, it's a great question, John. And you're right, I mean, logistically, looking at our current store base, the growth pattern, I mean, the second distribution center intuitively is going to be somewhere in the southeastern part of our region. That's still being finalized. But when that is finalized and the new distribution center is up and operational, definitely, you're going to be able to springboard further east into Tennessee and Kentucky and south for that matter. And really, it's going to be a situation of us looking at the competitive landscape dynamics in all of those areas to see where the opportunities present themselves, either acquisitions or new store construction. And we think -- we're excited about the future once that, that gets up and operational.

And our next question will come from the line of Damian Witkowski with Gabelli & Company. Damian Witkowski - Gabelli & Company, Inc.: Bill, 2 quick questions. First on -- you sold 12.5 million RINs, I think, in the first quarter. So if you annualize that, that's about 50 million. Do you actually have that much capacity or is this a high quarter?

It's a little bit inflated from the prior quarters because of that mid-July sale that we did. Now having said that, I'm going to step back a second and talk about that Fuel Saver program. And that Fuel Saver program, many of those stores -- the majority of those stores are located in the state of Iowa. And so to the extent that we're gaining traction in fuel sales in the state of Iowa, that will also increase the opportunity for RINs, because Iowa is really the only state where we secure the RINs because of the right blend legislation here. So that's a factor as to why you're seeing part of the acceleration. So over the last 3 fiscal years, we've averaged roughly about 43 million RINs sold. There's a good chance that we can obviously beat that number because of this program. Damian Witkowski - Gabelli & Company, Inc.: And then just looking at your cents per gallon earned, even if you back out the RINs, so you go from $0.22 to $0.19, that's still pretty much a record, I think, or close to it.

That's correct. Damian Witkowski - Gabelli & Company, Inc.: What's driving -- I mean, what's driving that? Is it the -- I mean, is the environment improving?

Well, we did have some volatility in cost throughout the period. And anytime that we do see a volatility in cost, it does provide opportunity to enhance your margin, especially in our market area where we see a little bit more rational retail pricing. And so what we're experiencing in a good share of our marketplace would be as the cost -- wholesale cost rises, our peers in our market area are very quick to respond with the retail price adjustments, and they're very delayed in their pullback when wholesale cost go down. So we have an environment that is, what I call much more rational, and we have that volatility, there's opportunities and that's what we really saw. And then on top of that obviously, it was a solid RINs environment.

[Operator Instructions] And our next question will come from the line of Craig Hoagland with Anderson Hoagland. Craig Hoagland - Anderson Hoagland & Co.: Could you comment a little on how returns on the remodel program are going and how aggressive you might be rolling that out going forward?

Well, returns are going much better than we -- in the first year that we rolled those out. And right now in the state of Illinois, we had a little bit of noise there with that Illinois state tax. So if you kind of exclude these -- the stores of Illinois impacted by that, we're in the double-digit after-tax returns for the remodels. So starting that program back a couple of years ago, coming into that, we were certainly anticipating that this initiative would have at least the same returns as acquisitions, which that would mean that your high single-digit after-tax return in the first year, to low double-digit in the second year, and that's what we're experiencing right now. So having said that, the remodel program was designed for a specific style of store, what we call E and G style stores. And we have roughly about 600 of those remaining. But not all of those would necessarily be candidates, but I guess the takeaway there is that we still have a vast opportunity for that program. Craig Hoagland - Anderson Hoagland & Co.: And how many of those have you done so far?

Right now, we're just a little over 220 right now, right in that area. Craig Hoagland - Anderson Hoagland & Co.: Yes, okay. And are there other store types that you might come up with a similar or analogous program for?

That's a great question, Craig, and yes, the answer is yes. We actually have taken this concept into C and D style stores, just a handful right now. So that's been pretty recent so we don't have a lot of ROI data on that. Craig Hoagland - Anderson Hoagland & Co.: Okay. And you'll see how that goes and then decide from there?

Correct.

Ladies and gentlemen, this concludes the question-and-answer portion of our call. I will now turn the call back over to Bill Walljasper for closing comments.

Well, I'd just like to thank everyone who joined us this morning on the conference call. Look forward to discussing our future results as we move forward. Have a great day.

Thank you for your participation in today's conference. This concludes the presentation. You may all disconnect. Good day, everyone.