Casey’s General Stores, Inc. (NASDAQ:CASY) Q3 2024 Earnings Call Transcript

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Steve Bramlage: Yeah, I think John, I would add that on the fuel over the last two years, we’ve been talking a lot about the sustainability of higher fuel margins in the industry. I think broadly speaking, in M&A, as a potential buyer, there’s a general recognition that higher fuel margins and LTM EBITDAs are more reasonable than they might have seemed two years ago just because of the dynamics in the industry and people adjust accordingly. Again, fuel margin for the smaller players is often the only lever they have to drive EBITDA to wherever it’s going to be. So I would say it’s a little bit more the tail on the dog and that the small operator remains under pressure for all the reasons we’ve talked about inside the store and with operating expense. And they are pulling a lever on fuel that’s really trying to help them right-size what’s happening inside as opposed to having a strategic point of view on what they are doing with fuel within their own business.

John Lawrence : Great, thanks. Just one follow-up. You mentioned chips and water on the private label side. What can you say of – how does a brand name in those large categories, the brand name provider respond? And what have you seen as you’ve grown those private label categories to the competitive response?

Darren Rebelez: Yeah, it’s a little bit of a mixed bag. In some cases, we have national brand manufacturers that are producing our private label products for us. And others, like you mentioned, with chips, that’s not the case. Look, I think we have pretty candid discussions with them. Our goal isn’t to win with private label at the expense of national brands. Our goal is to grow the categories. And so what we do within those categories is we try to offer guests an alternative for something that in some cases is more affordable or maybe has a flavor profile that the national brand doesn’t offer or a pack size that they don’t offer. And so there’s a few different things that we do with private label that makes it complementary to the national brand assortment.

And I would say in the case of snack chips in particular, we’ve had really good growth in our private label snack chips. Our national brand partner has also had really good growth in our stores with their chips. And so this doesn’t have to be a win-lose. This can be a win-win when we approach it from a category perspective, and that’s what we try to do. And so I think it’s working pretty well so far.

Operator: Thank you. This completes our Q&A portion. I’ll now turn the call back over to Darren Rebelez, Chairman, President and Chief Executive Officer for closing remarks.

Darren Rebelez : Alright, thank you and thanks again for taking the time today to join us on the call. And before we sign off, I just want to, again, thank our team members for all the hard work this quarter, and they did a fantastic job. So I hope everyone has a great week. Thank you.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.

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