William J. Walljasper - Chief Financial Officer, Principal Accounting Officer and Senior Vice President Robert J. Myers - Chairman, Chief Executive Officer, President and Member of Executive Committee

Karen F. Short - BMO Capital Markets U.S. Irene Nattel - RBC Capital Markets, LLC, Research Division Kelly A. Bania - BofA Merrill Lynch, Research Division Benjamin Brownlow - Raymond James & Associates, Inc., Research Division Anthony C. Lebiedzinski - Sidoti & Company, LLC

Good day, ladies and gentlemen, and welcome to the Third Quarter 2013 Casey's General Stores Earnings Conference Call. My name is Shaquana, and I will be your coordinator for today. [Operator Instructions] I would now like to turn the presentation over to your host for today's call, Mr. Bill Walljasper, CFO. Please proceed, sir. William J. Walljasper: Thank you, and good morning. Thanks for joining us to discuss Casey's results for the quarter ended January 31. I'm Bill Walljasper, Chief Financial Officer. Bob Myers, President and Chief Executive Officer, is also here. Before I 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 in the 2012 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's disclaims any intention or obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise. We'll take a few minutes to summarize the quarter and then open for questions. As most of you have seen, diluted earnings per share in the third quarter were $0.40 compared to $0.43 a year ago. Year-to-date, diluted earnings per share were $2.26 compared to $2.44. Earnings shortfall in the quarter from a year ago is the result of a challenging cigarette environment and certain noncash charges related to planned store closures and replacement activity offset by a more favorable tax rate. We will go over each category in more detail, what is driving these results. During the third quarter, we experienced a solid fuel margin environment, resulting in an average margin of $0.138 per gallon compared to $0.136 per gallon in the same period a year ago. Year-to-date, the fuel margin is $0.146 per gallon, ahead of our annual goal. Same-store gallons sold in the quarter were up 0.6%, driven in part to the declining retail fuel price throughout the quarter. Total gallons sold increased 4.4% to $376 [Audio Gap] million. Same-store gallons sold through the 9 months were flat compared to the same period a year ago, and total gallons sold for the year, up 3.6% to 1.2 billion. For the 9-month mark, the average retail price was $3.38 per gallon compared to $3.41 last year. Average retail price of gasoline for the quarter was $3.15 a gallon compared to $3.16 1 year ago. Same-store gallons sold in February decreased 2% with the average retail price of fuel in the month of $3.55 per gallon. Adjusting for the extra day in last February's result, same-store gallons sold would have been up 1.3%. As indicated in the press release, sales in the grocery and general merchandise category continued to be adversely impacted by the cigarette environment, resulting in same-store sales for the third quarter to be up just slightly. However, we have seen steady improvement throughout the quarter after initiating recent price adjustments. Excluding cigarettes, same-store sales in the quarter would have been up approximately 5.3%. Total sales in the quarter were up nearly 6% to $329.7 million, with average margin of 31.7%. Both the beer and beverage areas had double-digit sales increases in the quarter, which will offset the margin pressure from the cigarette price adjustments mentioned earlier. As a result, gross profit dollars rose 5.6% to $104.7 million. Year-to-date, same-store sales are up 3.2% with an average margin of 32.9%. February same-store sales decreased 0.4% in the grocery and other merchandise category. Again, excluding the extra day in last February's results, same-store sales sold would have been up 4%. The prepared food and fountain category continued its strong performance. Total sales were up 15.4% to $137 million for the quarter. Same-store sales in the quarter were up 11.6%, with an average margin of 60.6%, down 60 basis points from the same time 1 year ago. Margin decrease was primarily due to an increase in the cost of cheese and other input cost. The average cost of cheese this quarter was $2.09 per pound compared to $1.93 a year ago. Currently, the average cost of cheese is approximately $1.85 per pound. Gross profit dollars were up 14.2% in the third quarter. Year-to-date, same-store sales are up 10.2%, with an average margin of 62.2%, well ahead of our annual goal. We continue to benefit from the additional rollout of our operational initiatives. Same-store sales for prepared foods in February were up 2.5%. Excluding the extra day in last February's results, same-store sales would have been up 6.1%. In the 9-month mark, operating expenses were up 11.1%. For the quarter, operating expenses increased 12.2% to $189.9 million. About 57% of this increase was due to a rise in wages, primarily related to operating 45 more stores this quarter compared to the same time period 1 year ago. Any increase in operational initiative is described in the press release. 11.4% or $2.4 million came from the combined increase of credit card fees and fuel expense. This was up due to a modest increase in credit card utilization. Credit card transactions were up 10.3%, accounting for approximately 60% of all the sales this quarter compared to 58% in the same time period 1 year ago. In addition to these items, we also experienced $2.2 million in noncash charges from the combination of the impairment of the planned store closure and a recent acquisition and store replacement activity. Of this amount, $1.7 million was included in the operating expenses and the remaining balance ran through depreciation. In total, this represent an approximate impact to earnings of $0.03 to $0.04 per share. On the income statement, total revenue in the quarter was up 5.3% to $1.7 billion due to an increase in the number of stores in operation this quarter compared to the same time period 1 year ago and the completion of more operational initiatives. Year-to-date, total revenue was up 4%, primarily due to sales increases in the categories mentioned previously, offset by a lower retail fuel price. Effective tax rate in the quarter was down from 1 year ago in the same period, primarily due to workers' opportunity tax credit extended by law enacted in the third quarter, with retroactive application back to beginning of the fiscal year. Our balance sheet continues to be strong. As of January 31, cash and cash equivalents were $26.5 million. Long-term debt net of current maturities decreased slightly to $660.8 million, while shareholder equity rose to $583.5 million, up $77.4 million from fiscal year end. We generated $194.5 million in cash flow from operations. At the 9-month mark, capital expenditures were $266.3 million compared to $222.3 million 1 year ago in the same period. This was up due to an increase in construction, acquisition and store remodeling activity. This quarter, we opened 10 new store constructions and 18 acquisitions. For the year, we opened 21 acquired stores and completed 18 new store constructions. We're on pace to complete a total of 30 new store constructions by the end of the fiscal year and replace 25 stores. Year-to-date, we have replaced 21 stores. We currently have 21 new stores under construction and 12 replacement stores under construction. In addition to these, we have an additional 50 new sites and 25 replacement sites under contract. This, combined with having 10 stores under an agreement to acquire, positions our company well for future growth. Our store count at the end of this quarter was 1,731 corporate stores. During the quarter, we added 50 more locations to the pizza delivery program and completed 27 major remodels. The combination of all the operational initiatives accounts for approximately 1/2 of all same-store sales increases. During the remainder of this fiscal year, we plan to add 50 more stores to the pizza delivery program. That completes our review for the quarter. We'll now take your questions.

[Operator Instructions] Your first question comes from the line of Karen Short, representing BMO Capital Markets. Karen F. Short - BMO Capital Markets U.S.: Just a couple of questions on all the initiatives. Can you just give us an update on exactly how many stores are now on pizza delivery? And then you indicated, I guess, 50 more would happen before year end, so -- and then number of remodels and number of 24-hours, and then if there's any update on what you think the total number that could be with all these initiatives? William J. Walljasper: Yes, absolutely. Well, right now, pizza delivery for the year -- I mean, we're going to add with the ones I just mentioned, we'll be adding in the fiscal year about 225 stores that'll be delivering pizza. With respect to that initiative going forward, we have not outlined the plans or announced the plans for the next fiscal year. But certainly, what we see is that the stores that have a little bit larger population seem to be ones that really are doing well for us in that area. Now having said that, we don't have a specific number. We think at least double the number that we currently have is a reasonable number for pizza delivery program and its applicability. But we're pretty early in that particular initiative, so time will tell as far how we can push that out. For 24-hour initiative, we have currently -- by the end of this fiscal year, we'll have roughly about 500 of our stores of the 1,731 I mentioned that will be 24 hours. Now some of these were 24-hour stores that we took on when we did some acquisitions. Going into next year -- by the end of the fiscal year, we don't have any additional plans for 24 hours. We're currently evaluating the next group for next fiscal year to see how far we can take that initiative down. Now with respect to the remodel, major remodels, at the end of the fiscal year, we'll have roughly about 200 stores that we have remodeled. We did 75 this particular fiscal year. This is an initiative that we continue to evaluate. We want to make sure that we continue to have the right returns. Currently, the return on invested capital on an after-tax basis is right now in the high single digits. You look at it on the combined basis of all the ones that we have completed. So we continue to evaluate that to make sure we're as efficient as possible. When we originally started this program, Karen, we specifically identified what we call E&G [ph] style stores, of which we have about 600 or so in our chain. So we'll continue to evaluate the remaining pieces of those to see how applicable they are. Karen F. Short - BMO Capital Markets U.S.: Got it. That's very helpful. And then you made a comment about the tax rate. Is there anything to look for in terms of guidance on tax rate going forward? William J. Walljasper: Well, for the next quarter, the tax rates -- I mean, as we started the year, I believe, it indicates -- it was about 37%, 37.5% of the effective tax rate. We're coming a little bit less than that due to the retroactive of that workers opportunity tax credit. Karen F. Short - BMO Capital Markets U.S.: But that was a one time thing and you decide to catch up, it doesn't lower your tax rate going forward. William J. Walljasper: That's correct. So that we had a one time benefit in the third quarter. So typically in the third and fourth quarter, though, we do have some tax contingencies that do fall off, and we typically do see a little bit lower tax rate in those particular quarters. We anticipate a tax rate in the fourth quarter somewhere close to 34%. Karen F. Short - BMO Capital Markets U.S.: Got it, okay. And then last question I had is, there's been obviously -- I think you commented on REITs and real estate last quarter. And I think what I heard was that you look at all ways to improve shareholder value, but it seemed to me that a REIT structure is something that you would entertain. So I wanted to just talk a little bit more about that. And is that an accurate statement? And then the next question I had is given what one of your competitors has done with the MLP, I'm just curious, is there any reason why you couldn't do something like that, too? Or -- and what is your opinion of that? William J. Walljasper: Well, we'll take those 2 separately. First of all, your first question on the REIT, and your memory's correct, I did get a question on the conference call in the second quarter about REIT. Maybe the context of the answer might have been a little bit -- people might have misunderstood that. I mean, the board continually looks at the value in a number of different strategic alternatives to add value. That comment wasn't intended to mean necessarily we're actively pursuing that particular initiative, it's just that we do look at those periodically. So having said that, the second part of your question with one of our competitors, we have been getting more and more questions in regards to MLPs subsequent to Susser's rollout of the MLP last fall. I think your question was, is there any reason why we would not have an applicability. Again, that's one of those particular areas, it's another strategic alternative that from time to time the board does evaluate. Now keep in mind, there are differences between Susser's operation and our operation, one of which is the fact that they are a wholesaler of fuel, which is one of the -- one of their key drivers of growth in their business, which is the component that we currently do not have. So that would be one dynamic if we were to go down and look further in the MLP structure that we'd had to evaluate. Karen F. Short - BMO Capital Markets U.S.: But isn't it just you cant' be going -- to have the MLP, you can't be selling it to the end user? Isn't that -- I mean, if you were basically spending something into an MLP, you would just be selling the volumes to the wholesale -- to your stores as opposed to the end use? William J. Walljasper: That's correct. Currently, that's what we do. I mean, we distribute about 70% to 75% of the fuel in our own trucks to our own stores. We don't currently have any third-party distribution. However, that type of income would be, as I understand, is a qualifiable income under an MLP.

Your next question comes from the line of Irene Nattel, representing RBC Capital Markets. Irene Nattel - RBC Capital Markets, LLC, Research Division: I was wondering if you could just spend a little bit of time talking about the cigarette category and how you feel about the way things are evolving with the changes that you've made. William J. Walljasper: That's a great question, Irene. And certainly, the cigarette environment, it's just been a challenge probably for the last 8 months or so. Not to rehash things, but just to kind of get point of reference, we did have Illinois state tax that went into effect late June. Even prior to that, even and subsequent to that, we had seen a little bit more competitive pricing on packs in a number of areas in our business, primarily however, Illinois and Missouri. So as a result of that, knowing that cigarettes is probably the #2 destination item of most convenient stores, we felt that we needed to maintain a competitive edge. So we did lower retails in those areas and other areas that we saw that type of behavior. So kind to put that in perspective, in about 50% of our store base, we now have what we call the MLP structure with Altria. So we are in line with our competition. Now what we have seen recently is we have seen a gradual improvement in carton movement and sales movement throughout the quarter. And putting in perspective the most recent same-store sales release, which was just yesterday, was for February same stores. If you exclude the extra day that was in last February, we would've experienced about a 3.5% same-store sales increase in cigarettes and a unit increase of about the same. But we are seeing now positive unit movement as a result of those initiatives. And keep in mind, we've been doing -- we've been taking those price adjustments throughout the year, but a big chunk of those, Irene, happened in late October, November. So you didn't really see the effect until the third quarter, and we're really are starting to see some nice improvements. We're encouraged by that. Irene Nattel - RBC Capital Markets, LLC, Research Division: That's great. And I know that, again, this question came up on the call last quarter, but with the continuing rollout of tobacco from new dollar stores, are you still seeing no impact on that category? William J. Walljasper: Not anything identifiable currently. I mean certainly with the dollar stores getting into the cigarette that is another competitor that we continue to put on our radar screen and we evaluate competitive changes. So to the extent that they would be competitive in the pricing structure in our market area, they are certainly in our radar screen and being evaluated. Irene Nattel - RBC Capital Markets, LLC, Research Division: That's great. And then just going back to the whole question of the returns that you're getting on some of the strategic initiatives. You mentioned that the ROIC after tax is in the high-single digits for the completion. When -- would that be in line with, better, worse than what you had anticipated going into those? William J. Walljasper: It's not up to our expectation as of yet. We are seeing improvement. This is a relatively new program for us. And that return that I referenced in my remarks is related to the trailing 12 months. So we are seeing improvement. It's not to the level that we would like to see that. We are wanting to see that into the double digits. And so that's why we are currently evaluating that program to make sure that we are making the right decisions there. Irene Nattel - RBC Capital Markets, LLC, Research Division: And when you look at where the shortfall is coming from, Bill, is it more that the revenue is not coming through as strong as you would like or really is it more just an issue of the cost associated -- where do you think -- or is it too early to tell? William J. Walljasper: No. What we see is when we look at the different quartiles of the remodel program, Irene, it's clear that the top 2 quartiles set themselves apart on the top line revenue growth relative to the bottom quartiles. So when you look at operating expense increase, they're relatively the same amongst all the quartiles, but certainly, it's a revenue issue. So we're taking another step back and looking at the remodel program, looking again at the criteria that sets the top quartile apart from the bottom quartiles. And then -- we still think it's a viable initiative, and we just want to be as efficient as possible when rolling that out. Irene Nattel - RBC Capital Markets, LLC, Research Division: Yes, so again, not to serve where JRS [ph] go, but what I'm hearing you say is you've really -- the difference between the top quartile and -- or the best performing and the less performing remodeled stores really is a question of the revenue gains that you're getting. And you're doing kind of a deep dive into what characteristic might differentiate the better from the less well-performing stores before you continue to move -- roll it forward. Is that correct? William J. Walljasper: Couldn't have said it better, Irene. Robert J. Myers: Yes, that's excellent. William J. Walljasper: Now, that's exactly right. We're pretty confident and want to make sure that we continue to be diligent.

Your next question comes from the line of Kelly Bania, representing Bank of America Merrill Lynch. Kelly A. Bania - BofA Merrill Lynch, Research Division: Just wanted to go back to the cigarette category for 1 minute. Just kind of step back and hear you kind of talk about how you're approaching that category. I mean, what is ideally your pricing position in cigarettes? I mean, do you want to just be matching competitors and make that kind of a neutral? It seems to be just getting more and more competitive and constantly catching up to price increases. And I realize this last round maybe was triggered by Illinois and the tax change there. But how do you -- where do you want to be positioned in that category? William J. Walljasper: Well, typically speaking, Kelly, we like to be matching our competition on key products within the cigarette category. And so you've got to evaluate what those key products are market by market to make sure that you are priced competitively. Because as I mentioned earlier, I mean, cigarettes arguably is the #2 destination item of most -- any convenience store, gasoline being the first. And so if we understand that, that is the reason that they're coming to our stores, we certainly don't want to give them any reason not to come to our stores. And especially, in follow-up to Irene's earlier question, as more players get into the competitive landscape of selling cigarettes, it becomes probably even more apparent that we need to be competitive in that area. So for the most part, we are going to match those competitive key areas. Kelly A. Bania - BofA Merrill Lynch, Research Division: I mean, how long ideally -- I mean, how long would you lag and try to catch up? It seems like there's a pattern of catching up with -- market got a little bit more competitive, we're going to make some investments. So I guess, I'm just trying to get a sense of where you think you stand now with... William J. Walljasper: Good question actually. So when I look at -- going back at the, well, basically, last calendar year and I look at the increases that we have taken or price adjustments, I should say, that we have taken, it really has tapered off after November. And we have just a handful of stores that we had taken price adjustments in the month of January and February. And so it appears that, that kind has plateaued, Kelly. And so I think they -- in part that's why you're seeing a resurgence of unit movement in the cartons. And obviously, most people will realize that we will start cycling against these weaker competitions and competitive landscapes that we started last year. So again, a little bit of a tailwind at this point.

Your next question comes from the line of Ben Brownlow, representing Raymond James. Benjamin Brownlow - Raymond James & Associates, Inc., Research Division: On cigarette category, not to harp on it, but the -- are you seeing any difference in the growth rates between the fair trade and non-fair trade states? William J. Walljasper: It's an excellent question and on the 2 states that I mentioned earlier, Illinois and Missouri are non-fair trade states. and so typically, we see a little bit more competitive movement in those states because of that. And so that's where we saw most of the competitive landscape or competitive pack pricing. Now we did see pockets elsewhere in other parts of our market area. But when you look at a state-by-state basis, those 2 were certainly leading the charge. Benjamin Brownlow - Raymond James & Associates, Inc., Research Division: And what states are leading the rebound in cigarette carton sales now? William J. Walljasper: It'd be both those states. Benjamin Brownlow - Raymond James & Associates, Inc., Research Division: Okay. And if you could just give a little more color sort of outside of cheese prices, which, I guess, are still up about $0.10 or so year-over-year, how would you characterize the pricing and cost environment into the fourth quarter? And are you seeing any change in competitive pricing on pizza? William J. Walljasper: Yes. Well, I mentioned the cheese cost earlier, so you have a handle on that. But some of the other cost or the input cost that I referred to, we did see an input cost late in the third quarter that will be impacting the fourth quarter. And these range from a number of things. Probably the biggest one would be pizza flour, but you also have some chicken, some packaging, some supplies that also came in to that. When you roll all of that up, those cost increases were about $1.5 million that came through towards the latter part of the third quarter. So that's something that will be coming into the third quarter in addition to however the cheese moves in the quarter. Now having said that, Ben, we are evaluating the opportunities. We do -- as you may know, we do competitive pricing surveys on a regular basis. And we believe that there is going to be some opportunities for price adjustments coming forward here in the not-too-distant future. Benjamin Brownlow - Raymond James & Associates, Inc., Research Division: Great. And then, I believe your coffee forward buy expires in March, if I'm correct. Are you looking in to lock that in now? And how is that spot compared to the prior hedge? William J. Walljasper: Yes, you're correct. The lock that we have on or the forward buy that we have on coffee does expire at the end of March. Coffee continues to moderate. So it is an area that we are actively pursuing to extend that and hopeful that we can move in that direction. We don't have anything announced in that front at this point, but we're always evaluating opportunities to do forward buys of key products, coffee being one of them, obviously, cheese being another.

Your next question comes from the line of Anthony Lebiedzinski, representing Sidoti & Company. Anthony C. Lebiedzinski - Sidoti & Company, LLC: Couple of questions. Just a follow-up to the one of the first questions in regards to the REIT speculation, but -- now under your current debt structure, wouldn't that be such a transaction somewhat cost prohibitive? Just wanted to touch on that. William J. Walljasper: As you obviously have picked up on, Anthony, our debt has make whole provisions. They're senior notes, so that would definitely, from the research that we have done, albeit not very much, keep that in mind, it appears that, that may trigger the make whole provisions of our current debt, which would be significant. It would be well over $100 million in make whole provision, which certainly would be an obstacle when you look at a REIT structure. Anthony C. Lebiedzinski - Sidoti & Company, LLC: Okay. Also as far as the prepared food category, obviously, pizza delivery has been terrific for you guys. Now are you planning any, perhaps, any new additions to the menu? William J. Walljasper: Well, as we get a little bit more traction behind us, we don't have that many stores under that. So that's certainly distinct possibility. For the most part, we have delivered pizza, maybe some 2-liter sodas, but as we get more comfortable in that particular initiative, it certainly now have the realm of possibility to expand the delivery options. Anthony C. Lebiedzinski - Sidoti & Company, LLC: Okay. Also, I just noticed on your balance sheet, you did have note payable of $59 million. Can we assume that you'll be able to pay that off by the end of your fiscal year? William J. Walljasper: That's certainly -- we're certainly working toward -- that's the line of credit that we currently have. It's not uncommon this time of year as our business slows down a little bit, inventory turns slow down a little bit for us to go into the line to take care of a lot of different needs.

I would now like to turn the call back over to Mr. Bill Walljasper. Please proceed. William J. Walljasper: Thank you very much for joining us, everyone. And we look forward to the next conference call. Have a good day.

Thank you for your participation on today's conference. This concludes the presentation. You may now disconnect, and have a great day.