Good day. Thank you for standing by. Welcome to the third quarter ended January 31st, 2023, 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 one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Brian Johnson, Senior Vice President of Investor Relations and Business Development. Please go ahead. Good morning. Thank you for joining us to discuss the results from our third quarter ended January 31, 2023. I am Brian Johnson, Senior Vice President, Investor Relations and Business Development. With me today are Darren Rebelez, President and Chief Executive Officer, and Steve Bramlage, Chief Financial Officer. Before we begin, I'll remind you that certain statements made by us during this investor call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include any statements relating to expectations for future periods, possible or assumed future results of operations, financial conditions, liquidity and related sources or needs, the company's supply chain, business and integration strategies, plans and synergies, growth opportunities, and performance at our stores. There are a number of known and unknown risks, 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 which are described in our most recent 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, Casey's disclaims any intention or obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise. A reconciliation of non-GAAP to GAAP financial measures referenced in this call, as well as a detailed breakdown of the operating expense increase for the third quarter, can be found on our website at www.caseys.com under the Investor Relations link. With that said, I'd now like to turn the call over to Darren to discuss our third quarter results. Darren? Thanks, Brian. Good morning, everyone. We'll get to the strong third quarter results in a moment. First, I wanna thank our team for their dedication during a great quarter. They continue to show their resilience in a challenging operating environment. Our team is also here for good in the communities we serve, like Dawson Springs, Kentucky, as the community continues to recover from last year's devastating tornadoes and storms. Joining forces with Gatorade, we provided $100,000 towards the rebuilding of the local youth sports field in town. We're looking forward to seeing the kids playing on them next year. Thank you to our team and guests who help make our communities better and support these local initiatives that make Casey's here for good. Now let's discuss the results from the quarter. As you've seen in the press release, we had an excellent third quarter, further building on a strong first half of the fiscal year. Diluted earnings per share finished at $2.67 per share, a 56% increase from the prior year. As we communicated previously, diluted EPS benefited by $0.31 per share due to a one-time operating expense reduction of approximately $15 million from the resolution of a legal matter. Excluding this adjustment, diluted earnings per share was still up an impressive 38%. Inside sales remained strong, driving inside gross profit up over 11% to $451 million. The company generated $100 million in net income, an increase of 56%, and $220 million in EBITDA, an increase of 28% from the prior year. We know our differentiated business model can succeed in a variety of economic conditions. We continue to effectively implement our strategic plan across grocery and general merchandise, prepared food and dispensed beverage, and fuel, with excellent execution and outcomes from store operations. I'd now like to go over our results and share some of the details in each of the categories. Inside same-store sales were up 5.6% for the third quarter, or 13.6% on a two-year stack basis, with an average margin of 40.6%. Our team did a wonderful job managing the product mix and in-stock levels, as well as implementing the joint business plans we developed with our vendor partners. We saw notably strong performance in pizza slices and bakery, as well as alcoholic and non-alcoholic beverages. Same-store grocery and general merchandise sales were up 5.8% or 13.9% on a two-year stack basis, with an average margin of 34%, an increase of approximately 200 basis points from the prior year. The third quarter showed positive momentum in alcoholic beverage sales as we continue to see great results by leveraging our approximately 1,500 stores with liquor licenses. We also saw strong performance in non-alcoholic beverage and private label sales. Margin was favorably impacted by a product mix shift towards higher margin items like energy drinks and candy, as well as further penetration from private label. Same-store prepared food and dispensed beverage sales were up 5% or 12.8% on a two-year stack basis, with an average margin of 57.3% versus 58% a year ago. Sales were up due to strong performance in pizza slices as well as bakery, and we continued to have better product availability throughout the category. The third quarter had sequential improvement in margin versus the first and second quarters, but cheese costs continued to pressure profit margins. For fuel, same store gallons sold decreased 0.5% with a fuel margin of $0.407 per gallon. While we did see gallons go back slightly, we should note that in yet another volatile quarter for fuel, we compared favorably to the relevant OPIS geographic data, and we believe we are continuing to take share while balancing volume and margin to drive gross profit dollars. I'd now like to turn the call over to Steve to discuss the financial results from the third quarter. Steve? Thank you, Darren, and good morning. I'd like to start with crediting our fuel, merchandise, and store teams for their continued ability to execute on the plan and drive strong performance across all facets of our business. Each of the three areas of the business performed well in the quarter, and our model has proved to be resilient in this challenging environment. Total revenue for the quarter was $3.3 billion, an increase of $284 million or 9% from the prior year. Total inside sales for the quarter were $1.1 billion, an increase of $84 million or 8% from the prior year. For the quarter, grocery and general merchandise sales increased by $63 million to $796 million, an increase of 8.6%. Prepared food and dispensed beverage sales rose by $21 million to $314 million, an increase of 7%. Results were favorably impacted by operating approximately 2% more stores on a year-over-year basis. Retail fuel sales were up $206 million in the second quarter to a 3.7% increase in gallons sold to 645 million, as well as a 6% increase in the average retail price per gallon. That average retail price of fuel during this period for us was $3.34 a gallon, compared to $3.14 a year ago. We define gross profit as revenue less cost of goods sold, but excluding depreciation and amortization. Casey's had gross profit of $737 million in the third quarter, an increase of $73 million or 11% from the prior year. This is driven by higher inside gross profit of $46.7 million or 11.6%, as well as an increase of $24.7 million or 10.4% in fuel gross profit. Inside gross profit margin was 40.6%, a 120 basis point increase from a year ago. The grocery and general merchandise margin was 34%, an increase of 200 basis points from prior year. We saw continued margin expansion in alcohol, grocery, and packaged beverage, as the merchandising team has done an excellent job of lining up our offering with our guests' wants and needs. In addition to the favorable mix shift, the margin was aided by approximately 75 basis points from a combination of a smaller year-over-year LIFO charge, as well as the achievement of higher than expected calendar year vendor rebates. Prepared food and dispensed beverage margin was 57.3%, down 70 basis points from the prior year, but sequentially improving versus the first and second quarters. Consistent with the entire fiscal year, the category margin was negatively impacted by commodity costs, specifically cheese, which was $2.30 per pound for the quarter, compared to $1.99 per pound last year, an increase of nearly 16%. This negatively impacted the prepared food and dispensed beverage margin by approximately 100 basis points. Excluding the impact of cheese inflation, we would have outperformed margin from the prior year as our actions to balance protecting our margins while delivering a strong value proposition for our guests continued to make a difference for both. Fuel margin for the quarter was $0.407 per gallon. That's up $0.024 per gallon from the prior year, and fuel gross profit benefited by $2.9 million from the sale of RINs. Total operating expenses were up 5% or $25 million in the third quarter. There was the one-time operating expense reduction of approximately $15 million that Darren mentioned, and that was disclosed in our recent business update. Excluding this reduction, total operating expense would have increased by approximately 8%. Over 2% of the total operating expense increase is due to unit growth as we operated 41 more stores than the prior year. Same- store operating expenses, excluding credit card fees, rose 4.6%. Same store employee expenses were up by only 1%, benefiting from a 1% reduction in same- store labor hours. Our store operations team continues to do outstanding work operating our stores more efficiently without compromising the experience of our guests. Approximately 2% of the same-store increase is related to non-employee operating expenses, with repair and maintenance and utilities being the largest contributors. Insurance expense accounted for another 1% of the same-store increase, driven primarily by higher general liability and health insurance costs. Depreciation in the quarter was up only modestly. Net interest expense was $11.7 million in the quarter, down $2.7 million versus the prior year. That's aided by rising interest rates on our cash balances. As a reminder, only 17% of our debt is floating rate. The effective tax rate for the quarter was 24.1%, compared to 23.4% in the prior year. The increase was driven by a one-time benefit in the prior year to update the state and deferred tax rate following the acquisition of the Pilot stores. Net income was up versus the prior year to $100.1 million, an increase of 56%. EBITDA for the quarter was $221.7 million, compared to $173.5 million a year ago, an increase of 28%. Each of these measures benefited from the one-time $15.3 million operating expense reduction. Our balance sheet remains in excellent condition. On January 31st, cash and cash equivalents were $413 million, and we have remaining capacity of $463 million on our lines of credit, giving us ample available liquidity of $876 million. Furthermore, we have no significant maturities coming due until fiscal 2026. Our leverage ratio, calculated in accordance with our senior notes, is now 1.8x, which is generally in line with our preferred longer-term target of 2.0x. Our balance sheet has plenty of capacity to make sound strategic and EBITDA and ROIC accretive investments that present themselves, and we will remain opportunistic in doing so. For the quarter, net cash generated by operating activities of $150 million, plus purchases of property and equipment of $123 million, resulted in the company generating $27 million in free cash flow. This compares to a use of $24 million in the prior year. As a reminder, the third quarter is a seasonally low quarter for the company in terms of free cash flow generation. At the most recent board meeting, the Board of Directors voted to maintain the dividend at $0.38 per share. We will continue to remain balanced in our capital allocation going forward. We're gonna remain opportunistic related to our $400 million share repurchase authorization, though again, we did not purchase any shares this quarter. The company is modifying its fiscal 2023 outlook based on our performance through the first three quarters and our experience so far in the fourth quarter. The company now expects same-store inside sales to increase approximately 6%-7% versus our prior guidance of increasing 5%-7%. The company also now expects same-store fuel gallons to be down 1% to up 1% versus our prior guidance of flat to up 2%. We are not updating our outlook on the following annual metrics. Inside margin is still expected to be approximately 40%. The total operating expense increase, excluding the one-time benefit received this quarter, is expected to be near the low end of up approximately 9%-10%. Based on our construction schedule and our signed purchase agreements, the company continues to expect to add approximately 80 stores in fiscal 2023 and expects to exceed our stated three-year commitment of 345 units added. Interest expense is expected to be approximately $55 million. Depreciation and amortization expected to be approximately $320 million. The purchase of property, plant, and equipment is expected to be approximately $450 million-$500 million. That will include approximately $135 million in one-time store remodeling costs for the recently acquired stores. The tax rate is expected to be approximately 24%-25% for the year. I would note that capital spending on store openings and remodels are clearly back end-weighted versus our initial expectations due to ongoing construction delays, supply chain challenge, and especially local licensing inspection timelines. As for our February results and our expectations for the current quarter, inside same-store sales and fuel same-store gallons are both consistent with levels that will deliver our annual expectations for these metrics. Fuel CPGs in February were in the mid-30s. Fourth quarter total operating expenses are still expected to be near the low end of our annual guidance. With that, I turn the call back over to Darren. All right. Thanks, Steve. I would like again to say thank you and congratulations to the entire Casey's team for delivering another great quarter. During the first three quarters of the year, our merchandising team has driven business inside the store by optimizing assortment and value prices, especially our private label program. The store operations team is doing an excellent job efficiently managing operating expenses while executing on initiatives such as store simplification as we reduced same-store labor hours by 1%. We've had sequential growth in prepared food and dispensed beverage margin in every quarter in fiscal 2023, as we continue to manage both commodity and other costs prudently while holding our relative value proposition for guests. We continue to lean into our prepared food and have a number of different innovative food products that are now at Casey's. In the third quarter, we launched a refreshed chicken wing offering, as well as introduced Bacon Mac and Cheese. We are launching a PEPPERONI PEPPERONI PEPPERONI pizza just in time for the NCAA tournaments while securing NIL deals with three college basketball standouts in our footprint. All of these new offerings, coupled with our existing guest favorites, strengthen our best-in-class prepared food offerings and our robust assortment of grocery and general merchandise products. Casey's is a one-stop shop for any occasion. Our business development team has stayed busy evaluating potential deals, both large and small. Will remain diligent with respect to valuation. Our two-pronged approach to growth allows us to remain flexible. Our balance sheet is strong, which puts us in a position of strength when the right opportunity presents itself. This is especially true as the cost to operate, maintain, and grow is challenging for the industry in the current macroeconomic landscape. Casey's has historically been resilient in recessionary times, as the business model allows for our guests to find quality and value conveniently. Our integration team has done an excellent job executing on the Buchanan Energy acquisition, and we now have kitchens at substantially all Bucky's locations where we planned on adding kitchens. One of the pillars of our strategic plan was to reinvent the guest experience. As part of those initiatives, we've been surveying our guests to try to evaluate satisfaction, with guest satisfaction scores increasing throughout the fiscal year. The third quarter results show that we can operate stores more efficiently without sacrificing a quality guest experience. In fact, we've reached the highest scores in guest satisfaction since the onset of the COVID-19 pandemic. As the industry continues to trend towards a more frictionless environment, we started piloting self-checkout in select stores. The ability to add even more convenient checkout options for our guests while allowing guests to continue to earn Casey's Rewards is another promising addition to our ability to better serve our guests and communities. Our digital team's hard work continues to pay off as we surpass 6.1 million Rewards members as of January 31st. Digital revenue is growing rapidly, up 12% versus the prior year and 25% on a two-year stack basis. Our guests are taking advantage of our ability to deliver grocery and general merchandise products, as delivery is overindexed versus other digital grocery and general merchandise transaction types, such as pickup. We continued growth on the mobile side, as mobile app orders now represent 69% of all digital orders. As we look ahead to the final quarter of fiscal 2023 and beyond, I'm excited for the outlook of the business, with capabilities and talent to execute Casey's business model in the face of uncertain times and challenging economic environments. We have ample flexibility due to the strength of our balance sheet that allows us to act on attractive growth opportunities when they arise. As we close fiscal 2023 and look forward to the next three years' strategic plan, we're excited about the hand we're holding. We'll now take your questions. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again, please limit to one question and one follow-up question. Please stand by while we compile the Q&A roster. Our first question comes from Patrice Kanada with Goldman Sachs. Your line is now open. Hi, it's actually Bonnie Herzog from Goldman. I had a question about your fuel margins. I was hoping you could talk about how the margins have trended, you know, monthly, you know, over the quarter. Any color on February and, you know, very early March trends would be helpful. There's just such a big debate about, you know, margins and the sustainability of your fuel margins and the industries for that matter. Just curious to maybe understand where you guys are seeing, you know, break even margins for the marginal player. Are they, you know, possibly moving lower? Thank you. Hey, Bonnie, this is Darren. Yeah, I'll take that one. You know, as we look through the quarter, this past quarter, we actually saw a lot of volatility on the cost side, which translated into some volatility on the margin side. I guess the cadence through the quarter, we saw costs drop about $0.60 a gallon in November, which resulted in really strong margins. December rebounded and went up about $0.22, margins started to moderate a little bit. December, or January rather, went up another $0.10, margins got a little bit squeezed in the month of January to around $0.30 a gallon. Overall, we landed at $0.40, but it was a little bit of a rocky ride to get there. What we're seeing now, well, through February, was about mid- $0.30s per gallon. That's about where the run rate had been prior to a lot of the volatility with the war in Ukraine and that sort of thing. We kind of think that's a little bit more of a representative baseline of where margins go. Then again, as we've looked at the marginal operator, that has higher breakevens, you know, we expect that margins will continue to gradually expand over time as the cost pressures continue to fall on that operator. That's about the cadence that we've seen so far. Okay. That's super helpful. Just maybe a quick follow-up, if I may. Just, I was curious about your store builds, and you touched on this, that it's gonna, you know, ramp pretty aggressively in Q4 just to hit your full year guidance. I just have maybe more of a strategic question on how you're thinking about store builds and wondering why you couldn't ramp your new store builds, you know, just much more aggressively or maybe even M&A for that matter, to take advantage of the, you know, really the white space opportunities you've highlighted. Thanks. Yeah, sure. You know, we certainly have the balance sheet ability to ramp up in either direction. Really, we like to have the optionality to adapt to what the playing field is giving us. What I'd tell you right now is that in this current environment, we're seeing a lot of potential acquisition activity. You know, our business development team is really busy talking to a lot of folks. As we mentioned with our current year, we have a number of smaller deals under agreement right now that will close before the end of the fiscal year. We're, we're very confident we'll get to the number for this year. Really, we'll go either way. Frankly, right now the environment is probably leaning a little bit more favorably towards M&A at the moment. We're looking at a number of deals, but we're also going to remain disciplined with respect to the valuation and what we pay for those deals. We need to let that process play out. What I'd also tell you, Bonnie, is that we have not in any way told our real estate team to slow down on finding new sites. We'll keep that optionality. If the M&A deals don't come to fruition, we'll just lean heavier on our organic growth to accelerate that store development. Please stand by for our next question. Our next question comes from Karen Short with Credit Suisse. Your line is now open. Thanks very much, good to talk to you. I wanted to just ask two questions. One, with respect to your implied guidance, I realize there's a wide range of guidance, you know, your 4Q implied expense operating expense, and this is excluding D&A and excluding credit card fees, kind of seems to be up around 9.4% versus gross profit dollars in store. Again, that's excluding gas, up 13%. I wanna just talk about that relationship, also wanna just talk separately about what your comments were on OpEx in general with respect to in-store hours. You know, a lot of retailers so far have been talking about wage pressures. I mean, almost, if I had to average it out, you know, there's like an 8%+ increase in wages across the board for many retailers that have reported. I just wanna parse that out a little bit and wondering if you could talk about if you're maybe cutting a little bit too deep into the meat, I guess, with respect to store labor. Yeah. Hey, Karen, good morning. This is Steve. It's nice to hear from you again. I'll take the first one, and then I'll let Darren address the second one. Related to the fourth quarter guide, specifically, on OpEx. You know, maybe just a reminder for our fourth quarter, we will do a variety of year-end adjustments on OpEx of things like incentive compensation, true-ups, et cetera. Given the company's continued strong performance this year, I think we, you know, are certainly gonna have incentive compensation above what we would've planned when we started the year. That's gonna happen kinda irrespective of whatever the trajectory may be within the business. I think if you're comparing it to just kind of the cadence of gross profit, the gross profit cadence certainly is heavily influenced by, you know, what is the fuel CPG at any point in time. As we sit here right now in the mid-30s, that's obviously gonna give you a different fourth quarter gross profit year-over-year comparison. Well, sorry. I was asking excluding fuel, in store only. Okay. Yeah. Okay. I would still tell you that with the year-end true-ups we have, we're also gonna start lapping on the inside of the store a lot of the price increases that we've taken over the course of the last year, especially in the prepared food category. We've taken three different price increases over the last 12 months, and most of those will lap for us during the fourth quarter. Okay. The store hour and labor question? Yeah. Yeah, Yeah, Karen, this is Darren. Nice to talk to you again. Welcome back. Thanks. Yeah. With respect to the hours, I'll tell you a little bit about how we're getting to the hour or decreases rather. This started really at the end of last year when we, you know, we were looking at our OpEx performance and really getting into the root causes of that, a lot of that really from a root cause perspective, was driven by turnover in our stores. We started digging into the turnover and started getting into our engagement scores, our engagement was a little bit off. We've really made a concerted effort around team member engagement. A lot of that had to do with simply removing complexity from the store. Meaning, we've added a lot of new capabilities into our stores from a merchandising and prepared food perspective over the last couple of years, but we really didn't take anything away. Our team members were telling us the job was just getting too hard. We've stood up a continuous improvement team, and their sole focus is identifying processes where we have bottlenecks or opportunities where we can remove complexity and remove hours out of the store without impacting the guest experience. We've done a number of those initiatives over the course of the year. What we've ended up with is removing hours from the store, reducing that turnover, which in turn has reduced overtime and training hours. In fact, in the third quarter, we are down 31% in overtime and about 20% in training hours just because we had reduced turnover. All of that's working in concert. Lo and behold, our guest satisfaction scores are the highest they've been since the beginning of the pandemic. Everything is working as it should. We don't think we're cutting deeply. In fact, we think we're cutting smart, and we're eliminating the non-value-added hours, and it's showing up in guest satisfaction as well. We feel really good about that and really good about the sustainability of it because we're doing it the right way. Please stand by for our next question. Our next question comes from Anthony Bonadio with Wells Fargo. Your line is now open. Yeah. Hey, good morning, guys. Congrats on the nice quarter. I just wanted to ask about grocery margins. Obviously, a very strong result there. You talked about mix and gallons and then your efforts in private label supportive. Can you dig in a little more on what drove that, the composition of non-controllables and controllables? Then we're now running well ahead of pre-COVID levels. Obviously, you've done a lot strategically over the last few years, but can you talk about how sustainable you think these levels are? Yeah, Anthony, this is Darren. I'll take the first crack at that. Yeah. With respect to the margin on grocery and general merch, there's a fair amount of that that had to do with mix shift. I'll kind of walk you through that a little bit. We had a couple of different categories, had some favorable mix shift and then some margin expansion within those categories. The first thing I'd point out is that in the tobacco category, and we put cigarettes and all the smokeless and vaping and everything else into that category. We saw a little bit of a falloff in mix from that category, about 170 basis points lower mix than it had been the prior year. That's obviously a lower margin category. That accrues to the benefit of the overall category when that mix goes lower. Where did that mix go? It went to alcohol. Alcohol increased and in particular, went to non-alcoholic beverages, which carries the highest margin rate. In fact, in non-alcoholic beverages, the margin rate in that category is about double what it is in tobacco. When that mix shift shifted up 90 basis points. When you take all those moving parts back and forth, the mix was favorably impacted. The second piece was, in non-alcoholic beverages, the actual margin rate was up about 110 basis points within the category. That's just really a function of a lot of good work that the merchandising team has done in concert with our vendor partners to come up with joint business plans that have allowed us to accelerate growth at the same time expand margin. I'd say the same thing on the grocery part of that, where, there's about 130 basis point improvement in margin, year-over-year, really due to the same thing. All of that was what led to grocery and general merchant. I'd say because those trends and plans are sustainable, I would expect that the margin improvement is sustainable as well. Got it. That's helpful. Thank you. Then, quickly on RINs, I know you guys talked about a $7 million, headwind year-over-year in the quarter. Can you just talk about how that flows through to earnings? It's obviously easy to do the math on, you know, if it flows through outright, but I believe some of that ends up getting priced into, what you buy from the refiners, so maybe comes through as higher retail margins. Just any thoughts on that dynamic would be helpful. Yeah. Hey, Anthony, this is Steve. I'll take a shot at that. You know, we are, we did sell or monetize fewer RINs in the third quarter this year than the third quarter last year, that was less of a positive impact on CPG for us on a year-over-year basis. We do not recognize any value associated with RINs until we actually physically transfer them out of the company, and that's really a timing issue. The generation of the RIN in the first place is more a byproduct of how we buy fuel at any particular point in time. And we don't have a point of view on how we should generate RINs. We're agnostic on RIN generation. We task our fuel team with go acquire the lowest cost fuel you can, and we generate RINs when we splash blend at a terminal and we're mixing ethanol with clear fuel. Sometimes we buy it pre-blended. So our view is that the net cost of the RIN is already gonna be baked into the cost of the fuel. Now when we do have the RINs, we do have a point of view on, you know, what's the value of a RIN in the market, and we do exercise some discretion on how we choose or when we choose to transfer those. So the year-over-year delta is a function of agnostic generation and timing on when we chose to transfer them this year versus last year. Please stand by for our next question. Our next question comes from Bobby Griffin with Raymond James. Your line is now open. Good morning, Bobby. Thanks for taking the questions and congrats on a very good quarter. I guess first- Thanks, Bobby. Darren, the field team's done a lot of nice work over the last couple years, you know, inside, you know, contract buying as well as pricing. Is there any other initiatives that the team's working on that could benefit, you know, the underlying margins, excluding the volatility of the industry, you know, over the next couple years? Yeah, Bobby. You know, as you know, we've been on a journey for the last few years in standing up different capabilities. Really the last step in that process that we're going to begin working on this next fiscal year is procuring fuel further upstream in the process. Buying at the refinery gate and shipping up pipelines into terminals. That's a capability that we needed to grow into. We stood up the systems, the technology solutions last year, to enable that. Now that those are stabilized, our team is looking forward to doing that. We do believe that that's an incremental opportunity to add some more margin and security of supply. That'll be work that's ongoing throughout the next fiscal year. Okay. Thank you. Then I guess secondly for me, just on the grocery and prepared food, can you give us any color, I guess, on how units have trended? You know, I understand there's some pricing flowing through on both sides of that business. Just any detail on, you know, the unit share and kinda what's been going on there. Yeah, Bobby, we've had a little bit of softness. If I was gonna make a broad statement, I'd say we have had a little bit of softness on units, not significant and not concerning, but a little bit of softness. Now that being said, within subcategories, it bounces around a bit. So we've really had some strength in our alcoholic and non-alcoholic beverages, energy drinks in particular. A lot of good movement in candy and snacks, pizza slices, donuts have all had positive units, and then it's been offset by some other categories that have seen a little bit of softness. You know that tends to be par for the course in any sort of times where different categories are performing differently. Again, a little bit of softness, but nothing that's overly concerning at this point. Please stand by for our next question. Our next question comes from Irene Nattel with RBC. Your line is now open. Thanks. Good morning, everyone. Just sticking with the whole question around mix in grocery. You said you saw tobacco fall off. Was that a temporary element that just sort of impacted Q3, or is that something that you're seeing continuing, and is that something we should be anticipating as we look ahead to F 2024? Yeah, Irene. Yeah, the tobacco mix shift is something that's, it's really been ongoing for a while. It wasn't anything really dramatic in the quarter. I think it's important to recognize that, you know, the tobacco manufacturers, this is part of their strategy actually, is to reduce the velocity of combustible cigarettes and shift people over to other smokeless options like vaping or smokeless tobacco. This is sort of a natural occurrence, but at the same time, our merchandising team has really done a nice job of accelerating the growth in the non-tobacco categories, specifically in alcohol and in non-alcoholic beverages. As we accelerate the growth in those, that mix starts to shift a bit on its own. That's been happening over the last couple of years. You know, I don't anticipate that really changing, that dynamic changing because we'll continue to lean into those other non-tobacco categories. The tobacco category itself is in somewhat of secular decline, so we'd expect that mix shift to happen. Yeah, that's great. All of that should continue to support stronger margins. If I can just switch topics for a second to M&A and notably valuations. What are you seeing at this point in time in terms of seller expectations, both sort of at sort of the smaller operator level and for some of the larger networks? Yeah. you know, we're taking a look at a lot of different deals and, you know, I'd say there's a variety of expectations. I think some, in some cases, there are some sellers that are sitting on historically high fuel margins that would love to be able to sell at that rate. We don't necessarily believe that those margins at the most recent year are reflective of what the long-term trend is going to be. We're having those ongoing discussions. Yeah, I think if I step back a minute and look at the environment overall, it's an interesting dynamic because we have sellers that obviously are trying to maximize value, but we also have really high interest rates, so there's fewer participants in the processes, I think, than maybe otherwise would have been because of that. We're in the midst of a lot of different discussions, so I've yet to see how this is all going to play out. That's what we're seeing at this point. Please stand by for our next question. Our next question comes from Chuck Cerankosky with Northcoast Research. Your line is now open. Good morning, everyone. Great quarter. When you're looking at the grocery category and the merchandise inflation trends over the rest of the year, I know you've negotiated with the vendors. How do you feel about further inflation taking place over the course of the year? How does that work into your shelf pricing and assortment mix? Yeah, Chuck, this is Darren. Yeah, you're correct. We typically negotiate those agreements in advance of the beginning of the calendar year. Most of that is fairly locked. What we saw this year is a little bit of moderation in the cost increases versus where we were in the prior year. Where there were cost increases is a little more targeted to certain subcategories from the supplier as opposed to across the board increases. While we're still experiencing inflation, and in that category, about 8% inflation, it has moderated a bit from what we were experiencing the year before. You know, we make those price adjustments as needed. Again, we're trying to maintain the balance between having a relative value for our guests and at the same time protecting the margin. I think the team has done a nice job balancing that. You saw the results in the most recent quarter where we've been able to have strong sales results, but at the same time, blend up the margin from a mix perspective to get the margin at a really strong rate. We think we're striking that right balance right now, and we'll continue to do that. Darren, 8% is the average cost increase for calendar 2023? No, that would be for fiscal year. Fiscal year. Okay. Yeah. All right, thank you. Well, let me ask, how did that compare to fiscal 2022? I don't know, Steve, do you.. It was, we had higher inflation in fiscal 2023, than we did in fiscal 2022, right? Just if you think of the lags and the time, the timing that we negotiate on a calendar basis, we certainly have incurred more consistent and higher levels of inflation this fiscal year than we did in the prior fiscal year. Please stand by for our next question. Our next question comes from Ben Bienvenu with Stephens. Your line is now open. Hello, this is Jack Hardin, subbing in for Ben Bienvenu. Congratulations on the strong quarter. I just wanted to ask about pizza for starters. What are you seeing in your pizza business in terms of demand, and how insulated or exposed do you think your business is from increased promotional activity in the category? Yeah, Jack, this is Darren. You know, our pizza business has performed pretty well. We've, we had a strong volume in the third quarter in slices, both in sales and in units. On the whole pies, we're still keeping positive sales. The units have softened a bit, but not, again, not at a concerning level, just a little bit softness. I'd actually would characterize that a little bit more as a timing issue in terms of innovation that's launched. We're starting to see that velocity recover here, more recently with the launch of our PEPPERONI PEPPERONI PEPPERONI pizza. That being said, from a promotional standpoint, we are seeing increased activity from our major pizza competitors, mostly around the medium-sized pizza which they can get at a lower price point. We're keeping an eye on that. We haven't seen a material impact to our business at this point, so we're not necessarily ready to jump into that fray, but we continue to monitor and we'll react accordingly if we need to. Okay, great. Thank you. Very helpful. Then on the fuel side of things, your fuel balance has softened a bit, and was just wondering if you could talk about the key factors driving that change? Fuel's been a dance for a while now with volume. I think we've been able to maintain our strategy, which is to maximize gross profit dollars, and that's a balance of driving gallons and driving margin. What we've seen in most quarters is that we've been hovering right around that flat level, sometimes a little bit below, sometimes a little bit above flat fuel gallons. What we're seeing in the industry in our specific geography is gallons are down anywhere from 4%-6%. When we take a look at our business and we're down 0.5% in a down 6% environment, we feel pretty good about the position we're holding relative to everybody else, and that we're actually taking share as a result of that. Please stand by for our next question. Our next question comes from Krisztina Katai with Deutsche Bank. Your line is now open. Hi, good morning. Congratulations on very nice results. I wanted to circle back to the strength that we saw at the grocery segment, you know, coming in at 34% looks the strongest, at least since 2010. As private label penetration increases there, are you seeing that vendors are more open to taking less pricing, maybe as their units could be coming under pressure? Does that essentially help with your joint vendor planning process as it relates to getting great margin in that segment going forward? Yeah, Krisztina, it does change the conversation a bit with some of our supplier partners when we have the private label products. In some cases, it's a matter of sharpening the pencil on cost of goods. In other cases, we've been able to prove some different pricing strategies that we've implemented on the private label side that causes them to rethink some of their pricing strategies with us on their brands and their products. We've been able to have those discussions and in some cases, you know, create different plans from a joint business planning perspective to take advantage of those learnings and to maximize the overall category. Ultimately, that's the goal, is to grow all boats, not one at the expense of the other. I think our merchandising team and our supplier partners have worked together really well to make that happen. Right. Thank you for that. I have a follow-up question. Just around capital allocation, you do have a lot of cash on the balance sheet. It is well above what we've seen from you guys, at least, you know, from a historical perspective. How do you think about the strong cash flow generation of your business in the context of organic unit growth, pursuing M&A opportunities, and potentially buying back shares opportunistically? Good morning, Krisztina. This is Steve. I'll address that. We do have a lot of cash on the balance sheet relative to what we've had historically. We are certainly aware of that for sure. We think about it a lot in terms of the best way to allocate that capital. I think in the very near- term, you know, the reality is because our capital spending this year and the closing of the small deal M&A that we talked about, both of those items are heavily back-end loaded, right? We're gonna have a very busy April, realistically, in terms of opening and buying stores. It seemed the most prudent for us, you know, to hold that cash over the course of the year because we knew we were gonna have uses for it. As the cash flow generation potential of the company continues to grow in an environment where we don't have any leverage concerns of significance, and we really don't need to pay off debt, you know, we will go back to where we start, which is the best use of capital dollar number one for us, we believe is investing in something that's EBITDA and ROIC accretive in terms of growth. We'll continue to lean into those new units and we are very respectful and thoughtful around making sure our dividend growth continues apace with what it has been historically and then the earnings profile of the company. You know, there is a point in time where there is excess cash beyond the near-term growth, you know, needs of the company and the leverage and the dividend uses, and clearly, share repurchase comes into the fore at that point in time. We haven't been there in the last couple of quarters, obviously. We have an authorization that we're very aware of, and so I think we will continue to remain quite aware of that. In the short- term, we know we're gonna be spending some of that cash to finish the things we've already committed to doing. Please stand by for our next question. Our last question comes from John Lawrence with Benchmark. Your line is now open. Thank you for squeezing me in. Darren, would you talk a little bit about private label? What your best customers, the loyalty members, what are you seeing in that basket now as that journey in private label continues? Is it the drinks? Is it, what are you seeing private label more often in that basket? Is there any type of a shift as we have gone through the year? Yeah, John. You know, in terms of the basket itself, I think private label runs the same sort of cycle from a seasonality standpoint that the rest of the store does. You know, in a third quarter, what you see is less beverages, because the weather's cold outside. It shifts more to the snacks and candy and that sort of thing. Then as we get more into the summer, you'll start to see the acceleration of the beverages in the beverage category. That being said, you know, some of the mix in the basket has accelerated in the candy category due to some recent introductions of candy products. I'll tell you that this is a great example of why private label is so important. We saw in the candy category that a lot of the national brands were really passing on some aggressive cost increases to all retailers, and it was starting to put some pressure on unit velocity. It was something like we had not seen before. That really gave us confidence to go into the candy bar category, which historically has been a really difficult category to penetrate because of the brand strength of the national manufacturers. We have introduced a line of candy bars that have actually become some of the top-selling items in the category because of the value pricing, because of the quality of the product. We continue to look at that and continue to look at expanding that. That's something that's the mix has kind of shifted in a way we originally hadn't anticipated because of the aggressive cost increases from the national manufacturers. That gives our guests a great quality product at a value price and allows us to continue to grow the category. Great. Thanks. Congrats and good luck. Thanks, John. Please stand by for our next call. Our next question comes from John Royall with JPMorgan. Your line is now open. Hey, guys. Good morning. Thanks for taking my question. I realize we're at the end, so I'll just try to squeeze one in. Just to follow up on the M&A side, I know you've gotten a lot of questions on it today, but you talked about the environment being constructive today, and it seems like you have plenty of liquidity to execute on a larger scale deal. Is there any thought that there might be another Buchanan out there, or do you consider having done a deal of that scale, kind of more of a one-off that wouldn't be repeated? No, John, we certainly look at larger deals of that scale or even bigger. You know, our issue isn't around the size of the deal. I think our balance sheet speaks for itself. We have plenty of balance sheet strength, and frankly, from a capability standpoint, now that we've integrated, you know, three larger acquisitions, we have a team that has a rhythm and has a process and understands how to do this. We have more confidence in our ability to integrate successfully a larger acquisition. From our perspective, it's really more about finding the right deal that's strategic for us, that's in the right geography, that's at the right valuation. We continue to work on those opportunities. We're looking at all types of deals, large and small. Thank you. I show no further questions at this time. I would now like to turn the conference back to Darren for closing remarks. All right. Thanks for taking the time today to join us on the call. As we finish our final fiscal quarter and three-year strategic plan, I just wanna thank our team members again for all their hard work and commitment to Casey's and the communities we serve every day. Thank you. This concludes today's conference call. Thank Thank you for participating. You may now disconnect.