Good day, ladies and gentlemen, and welcome to the Third Quarter 2012 Casey's General Stores Earnings Conference Call. My name is Keith, and I'll be your operator for today. [Operator Instructions] As a reminder, today's conference is being recorded for replay purposes. And I would now like to turn the conference over to your host for today, Mr. Bill Walljasper, Chief Financial Officer.

Thanks, Keith. Good morning, and thank you 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 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 2011 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. Let's take a few minutes to summarize the quarter and then open for questions. As most of you have seen, basic earnings per share in the third quarter were $0.44 compared to $0.34 a year ago. Year-to-date basic earnings per share were $2.46 compared to $1.64. The results last year include approximately $27.4 million in costs related to the company's recapitalization plan, as well as fees associated with the hostile takeover attempt by Alimentation Couche-Tard. Adjusting for these costs, basic earnings would have been $0.37 per share in the third quarter last year and $1.87 year-to-date. The solid earnings performance this quarter was anchored by strong inside sales due to operating more stores this quarter compared to last year, as well as other initiatives such as major remodels and expanded store hours. The average gas margin in the third quarter was $13.6 per gallon compared to $13.9 last year. Year-to-date, our margin is $15.9 per gallon, up from $15.1 during the same time period a year ago. Casey's trailing 4-year average gas margin is $14.2 per…

[Operator Instructions] And your first question is from the line of Chuck Cerankosky with Northcoast Research.

This is Jamie Dunford on for Chuck. Quick question for you, can you provide an update on the acquisition pipeline for after fiscal '12 and then the first half of fiscal '13?

Yes, for fiscal 2012, I mean, as I mentioned in the call, we're going to add about 65 stores in total, roughly about 35 of those will be through acquisitions and 30 will be for new store constructions. Now as we head forward, the pipeline that we're seeing with acquisitions, really, is as strong as it's ever been, the stores that we consider to be in the funnel whether we're negotiating those, reviewing those or modeling those, it is roughly the same as it was in prior years. As we all know, sometimes, acquisitions tend to be lumpy and certainly, we're going to remain to be disciplined in our approach with acquisitions. I will tell you as a sidebar to that, we do anticipate accelerating our new store constructions next year and the following year. That program has been very well-received by our customer base, and we think there's opportunities in that regard as well.

Your next question is from line of Anthony Lebiedzinski with Sidoti & Company.

Couple questions here. Just first, I just wanted to clarify the gas gallon comment for February. I think, Bill, you said that it improved relative to previous months. Does that mean you're less negative than the previous months? Or have you actually been able to post a positive comp gallon?

We anticipate a positive comp gallon in February.

Okay. Thank you for that. And as far as the margins, I think I missed that. Did you have a comment on the gas margin?

No, we didn't have a gas margin, but the gas margin has narrowed relative to what we have been experiencing the year-to-date. That year-to-date was north of 15%. So the margin has started to narrow just a little bit.

Okay. And as far as you know, this quarter over here. You highlighted the weather. I'm just wondering how important that was for -- in the overall scheme of things? How much of the earnings growth here would you have attributed to the favorable weather?

It's always hard to make an accurate determination of weather and the impact. Certainly, we'll look at the weather conditions in the third quarter last year. Remember this year was considerably different. We had quite a bit of inclement weather last year relative to this year. Now I can tell you that certain items due to the weather has accelerated tremendously, ranging anywhere from 20% to 35% increases in energy drinks and sports drinks. Also ice was another item that I called out in the narrative that increased significantly during that period. Those are all factors that in part, at least, are driven by weather. So certainly, I think weather does have a plight. It's really, it's a little bit harder to bifurcate that.

Okay. And I think you guys have also extended some of your operating hours at the stores without actually going to a full 24-hour basis. Can you just comment on that initiative?

We've been doing that for some time, kind of tinkering with the hours. Our core hours, as you know, Anthony, are 6 to 11. So we've been tinkering with that for quite some time, expanding those to maybe 5:30 to 11:30, maybe it's 5 to midnight. I don't have a number in front of me as to how many stores we have on extended hours, but it's significantly more than the 220 stores that we converted over the last 12 months. But certainly, this is a program for us that expanded hours seems to be a very strong initiative. As I alluded to, we're in the process of identifying more stores to convert to 24 hours. We'll look to do that next fiscal year, and continue to roll that program out. It's probably not applicable to all of our stores, but certainly, we're going to find out where it is applicable to, and it's a pretty easy transition into that, and an easy transition back if it doesn't work.

Okay. And lastly, on the D&A expenses, looks like there was a big jump sequentially, certainly, on the year-over-year basis. So kind of the run rate that we should assume going forward, what would you say we should be looking at?

Well, the depreciation, is certainly going to be dependent upon the number of stores that we bring in, the construction activities that we bring into the mix going forward. So it's a little hard to give you any idea of what the run rate might be, not knowing exactly when that will come in next year. But we have been tracking in the low teens increases and the depreciation, so it really depends on the number of units that we bring into the mix and the construction activity.

[Operator Instructions] And your next question is from the line of Ben Brownlow with Morgan Keegan.

On the 24-hour format conversions, you touched on the criteria for the larger cities. Can you just give a little more detail with that? And then what are you seeing performance-wise with that conversion in the smaller cities?

While most of that, you hit right on point, Ben. Most of the conversions that we've done regarding the 24 hours have been in higher populated areas and stores that are centered around maybe a higher traffic pattern. Obviously, in my comment earlier about a not going to be a viable initiative in all of our stores. That's exactly why in a small community, it probably doesn't warrant to have a store would open for 24 hours. That doesn't mean necessarily going back to Anthony's question that we can't expand those hours to meet the demand in that region. But certainly, that's the key criteria that we're looking at is, the population, the traffic counts surrounding those stores. I can tell you that when you look at the EBITDA growth in the third quarter, and you look at the remodels that we did in the prior fiscal year in combination with the 70 or 80 stores that we converted to 24 hours back last February, those 2 initiatives are accounting for about 26%, 27% of the EBITDA growth in the third quarter. Certainly, it's a viable initiative that we're very encouraged by.

That's impressive. And as are most of those 24-hour formats in cities of larger than 10,000 people?

I don't have the breakdown in front of me. I wouldn't say necessarily that would be an accurate statement but certainly, larger than our store base.

Okay. And I missed your earlier comments on the delivery initiative. How many stores are on that? And how many went into effect in January? And if you could just give some color on sort of what you're seeing on the competitive response to that and any advertising initiatives you have planned?

Sure. The 24 hour stores, we had 26 stores -- excuse me, the pizza delivery stores, we had 26 pizza delivery stores that were in operation during the third quarter. Effective February 1, we put another 50 stores into that program. We're in the process of identifying more stores to bring into that program for next fiscal year. So when I circle back in the performance of those 26 stores, most of those were brought on November, November 1. Those 26 stores accounted for, of the 12.6% increase in same-store sales for Prepared Foods, about 1% was due to the pizza delivery. But just in a very short period of time, we're seeing a tremendous traction in that initiative, which is giving us some optimism to roll out that program. We'll still be disciplined with that and push that up to see where it's going to work because obviously, it's not going to work everywhere. So we are encouraged by that and we'll certainly keep you informed as we continue that program rollout.

And are you seeing any sort of competitive response via pricing or advertising? And then do you have any advertising programs planned for the additional rollouts?

I can't see that we've seen any increase in competition relative to that program, necessarily. Certainly, there's advertising and really, it's going to be centered around where we're rolling those stores out. It's going to be a combination of point-of-sale type advertising, radio. It's really going to be dependent upon where those stores are in, in the Metropolitan areas or not.

And we have no other questions at this time. So that will conclude our question-and-answer portion. And I would like to turn the call back over to Mr. Walljasper for closing remarks.

Yes, I'd like to thank everybody for joining us this morning. Just as a reminder, we will release February same-store sales on the 15th. So I appreciate it. Have a good day.

Ladies and gentlemen, that concludes today's conference. Thank you, for joining us. And you may now disconnect. Have a great day.