SpartanNash Company
Q1 2014 Earnings Call Transcript

Published: 1 Aug 2013

[Operator:]

Good morning, and welcome to the Spartan Stores Incorporated First Quarter 2014 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to your moderator, Ms. Katie Turner. Please go ahead.

[Katie M. Turner:]

Thank you. Good morning, and welcome to Spartan Stores first quarter fiscal year 2014 earnings conference call. By now, everyone should have access to the earnings release for the first quarter ended June 22, 2013. For a copy of the release, please visit Spartan Stores' website at www.spartanstores.com under For Investors. This call is being webcast, and a replay will be available on the company's website for approximately 10 days. Before we begin, we'd like remind everyone that comments made by management during today's call will contain forward-looking statements. These forward-looking statements discuss plans, expectations, estimates and projections that might involve significant risks and uncertainties. Actual results may differ materially from the results discussed in these forward-looking statements. Internal and external factors that may cause such differences include, among others, competitive pressures among food, retail and distribution companies, the uncertainties inherent in implementing strategic plans and general economic and market conditions. Additional information about risk factors and the uncertainties associated with Spartan Stores' forward-looking statements can be found in the company's first quarter earnings release, fiscal annual report on Form 10-K and in the company's other filings with the SEC. Because of these risks and uncertainties, investors should not place undue reliance on forward-looking statements. Spartan Stores disclaims any intention or obligation to update or revise any forward-looking statements. This presentation includes certain non-GAAP metrics and comparable period measures to provide investors with useful information about the company's financial performance. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures and the other required by Regulation G is included in the company's earnings release issued after market closed yesterday. And it's now my pleasure to introduce Mr. Dennis Eidson, President and CEO of Spartan Stores, for opening remarks.

[Dennis Eidson:]

Thank you, Katie. Good morning, and thank you for joining our first quarter fiscal year 2014 earnings conference call. With me this morning are members of our team, including our EVP and Chief Financial Officer, Dave Staples; our EVP of Retail Operations, Derek Jones; and our EVP of Wholesale Operations, Ted Adornato. I'll begin by providing you with a brief overview of our business and financial performance for the first quarter, and then Dave will share some more information and some specific details about the first quarter financial results, as well as our outlook for the second quarter and the full fiscal year 2014. And finally, I'll provide a few closing remarks, and we can open up the call and take some questions. We are pleased to report another solid quarter of execution and to deliver improved first quarter financial results despite some difficult comparisons to 2013. While we anticipated that the calendar shift of the Easter holiday would have a negative effect on the sales in the quarter, we also experienced very unfavorable weather conditions compared to the prior year when it was unseasonably warm and dry. Despite these headwinds, we continue to benefit from improvements across both our distribution and the retail segment due to the acquisition of a retail store in the third quarter of last year, new customer gains, the growing traction of our YES Rewards loyalty program and increased fuel sales. Through our team's continued efforts to provide a strong value proposition as well as our disciplined expense management, we achieved better-than-expected adjusted earnings from its continuing operations, and we generated increased cash flow from operations for the quarter. Now, I'm reviewing our distribution segment results. Sales increased 0.1% for the quarter, as new business gains were largely offset by the elimination of sales related to our acquisition of a customer store in the third quarter of fiscal '13, the calendar shift of the Easter holiday and unfavorable weather conditions as I mentioned earlier. We continue to focus on increasing sales penetration with our existing customer base and adding new customers in adjacent markets similar to our new distribution customer in Ohio, which we added in the fourth quarter of fiscal '13. We remain committed to enhancing our value-added service offerings to our customers and finding new ways to improve our efficiency. Our newest efficiency efforts involve investing in warehouse automation and high-low robotics to perform certain unloading and storage tasks at our distribution centers. We are in the testing phase, but expect this greater use of automation will help increase our productivity and operational efficiencies in the second half of the year, allowing us to continue to offer a highly competitive cost of goods to our customers. Net sales in our retail segment increased 2.4% due to the sales contribution of the grocery store we acquired, as well as the new Valu Land Store openings and increased fuel sales. We continue to refine our YES Rewards program, including pharmacy and fuel value-added rewards in order to strengthen customer loyalty and drive sales. The program continues to gain traction, and I'm pleased to report that the number of active households increased 1.3% from the same period last year. Our pharmacies posted a 3.2% increase in comps script count for the quarter and a comparable decrease in average script price due to continued shift from branded to significantly lower-priced generic prescriptions. On the product side, we continue to drive both retail and distribution sales through the expansion of our private brand program. This program remains a key element of our strategy to increase our value proposition. And during the quarter, we launched 172 new private brand items. We ended the quarter with 4,650 items in our lineup, and the private brand unit penetration at retail of 23.4%, which continues to place us above the national average. We continue to expect to introduce approximately 300 to 350 new private brand items over the course of this fiscal year. Moving onto our capital plan during the first quarter, we had no major remodels, but completed 2 minor remodels and store rebanners of Glen's locations to our Family Fare brand. During the second quarter, we anticipate completing 4 minor remodels and 1 major remodel. In addition, we opened a new Valu Land store in the Lansing market on July 21. And although this is our eighth Valu Land location, we consider this banner a test and continue to experiment with our store offers and marketing. We've been relatively pleased with the customer acceptance to date for those customers that choose to shop Valu Land. We are now primarily focused on increasing brand awareness and driving traffic into those stores. For the 2014 fiscal year, we planned to rebanner up to total of 13 Glen's locations to the Family Fare brand and complete up to 12 minor remodels and 3 major remodels, many of which will be associated with the rebannered locations. Before I turn the call back over to Dave, I just wanted to comment on our recently announced merger with Nash Finch. We're very excited about this transaction and really view it as a transformational step in terms of strengthening our business and enhancing our growth prospects. The proposed combination is highly attractive strategically, as it positions the company for future organic and acquisitive growth through increased scale and complementary capabilities. The merger creates a $7.5 billion revenue company with a broader customer base and geographic reach across 3 highly competitive and balanced business units

[David M. Staples:]

Thanks, Dennis, and good morning, everyone. Consolidated net sales for the first quarter increased 1.4% to $612.4 million, compared to $603.9 million in the year ago quarter due to increases in both the distribution and retail segments. The growth was partially offset by the calendar shift of the Easter holiday selling week into the fourth quarter fiscal 2013 and the other factors that Dennis mentioned. Distribution and fuel sales represented 42.2% and 8%, respectively, of consolidated net sales compared to 42.8% and 7.5%, respectively, in last year's first quarter. The consolidated gross profit margin for the first quarter was 20.5% compared to 20.2% last year, primarily due to the improvement in the retail segment as we cycled our price freeze campaign. First quarter adjusted operating expenses were $112.5 million or 18.4% of net sales, compared to $109.9 million or 18.2% of net sales last year. The increase in the rate was due to higher incentive compensation, health care costs and depreciation and amortization. These results exclude $1.8 million in professional fees related to the merger with Nash Finch and a $1 million asset impairment charge in fiscal 2014. And $108,000 in professional fees for tax planning in fiscal 2013. Adjusted EBITDA for the first quarter was $23.8 million or 3.9% of net sales, compared to $22.6 million or 3.8% of net sales last year. Adjusted earnings from continuing operations for the first quarter were $6.5 million or $0.30 per diluted share, compared to $5.4 million or $0.25 per diluted share last year. These results exclude professional fees related to the merger of $0.05 per diluted share and an asset impairment charge of $0.03 per diluted share in fiscal '14 and exclude a net $0.03 per diluted share benefit in fiscal 2013 related to tax planning. Turning to our operating segments, first quarter net sales for the distribution segment were $258.6 million compared to $258.3 million in the year ago quarter. First quarter operating earnings for the distribution segment were $7.5 million, if adjusted to exclude $1.8 million in professional fees related to the merger versus $7.9 million if adjusted to exclude $100,000 in professional fees related to tax planning last year. In our retail segment, first quarter net sales were $353.8 million compared to $345.6 million last year. The increase in sales was driven by incremental sales from our recent grocery store acquisition, new Valu Land store openings last year and increased fuel sales, partially offset by negative comparable store sales. Comparable store sales, excluding fuel, decreased 2.9% in large part to the Easter calendar shift, which was affect -- which affected retail comps by 90 basis points. Sales were also impacted by cycling of the launch of the price freeze campaign, unfavorable cold and wet weather conditions this year compared to unseasonably warm weather conditions last year, the cycling of the grand opening of a new relocated store in the company's Grand Rapids market and the continued shift in the pharmacy sales mix towards generic medications. Retail segment operating earnings for the quarter was $5.2 million, if adjusted to exclude a noncash pretax asset impairment charge of $1 million compared to $3.9 million last year. The improvement in adjusted operating earnings was due to the store acquisition and improved margins at our supermarkets and fuel centers, partially offset by higher incentive compensation, depreciation and amortization and health care cost. From a cash flow perspective, our operating cash flow was $7.4 million for the first quarter of fiscal 2014 compared to $19.2 million of cash used for the same period last year. The increase was primarily due to the timing of working capital requirements, lower income tax payments and cycling of $5 million in payments for customer supply agreements entered into last year. Total net long-term debt was down $6.8 million to $147.8 million as of June 22, 2013, versus $154.6 million at the end of the first quarter last year, primarily due to the timing of working capital requirements. Additionally, in conjunction with the previously announced merger, we intend to enter into a new $1 billion credit facility, which will be used to repay Nash Finch's and Spartan's outstanding borrowings and transaction-related expenses. Upon completion of the merger, the facility will be funded, and we expect to have approximately $190 million in availability beyond the capital needs of the business that can be used for strategic growth. Additionally, we anticipate that the combined company will generate meaningful cash flow to continue to invest in the business, pay an attractive dividend and deleverage the company. Both Spartan Stores and Nash Finch have strong, consistent track records of returning cash to shareholders. And the combined company intends do continue to do so, issuing a quarterly dividend which will initially be set at $0.48 per share on an annualized basis. I will now provide further detail on our outlook for the second quarter and full year of fiscal 2014. For the second quarter, we expect comparable store sales in the retail segment to be slightly negative to slightly positive as the weather returns to more seasonable conditions. We believe earnings per diluted share from continuing operations will exceed last year due to benefits from the retail store acquisition, new customer gains and the company's capital program, as well as the maturation of the YES Rewards Loyalty program. As we look to the full year for fiscal 2014, we expect comparable store sales, adjusted for the either Easter calendar shift, which will occur in both the first and fourth quarters, to range from slightly negative to slightly positive. We continue to expect fiscal 2014 net consolidated sales and adjusted earnings from continuing operations to exceed our fiscal 2013 results, excluding any expenses related to our recently announced merger. However, adjusted earnings from continuing operations are expected to flatten out in the second half of this year, when compared to the prior year due to anticipated higher LIFO expense, lower fuel profit per gallon and realized in the first half of the year and the cycling of the retail store acquisition late in the third quarter. We expect the capital expenditures for fiscal 2014 will be in the range of $39 million to $42 million with depreciation and amortization now in the range of $41 million to $43 million and total interest expense in the range of $9.5 million to $10.5 million. This concludes our financial discussion, and I will now turn the call back to Dennis for his closing remarks. Dennis?

[Dennis Eidson:]

Thanks, Dave. In closing, we delivered a solid first quarter performance. We continue to benefit from our retail store acquisition, new customer gains and the growing traction of our YES Rewards Loyalty program and remain confident in our plans to invest in the consumer experience, ensure broad assortment of both brand name and private brand products and execute with excellence. We are continuing our remodeling efforts and introduction of new private brand products and believe that these initiatives, together with our effort to build on our core strengths and our improved productivity across our operations, will position us to deliver our sales and earnings outlook for fiscal '14. Further, we believe the continued improving business trends in the Michigan market, along with the additional growth opportunities from the Nash Finch merger, will lead to better earnings per share growth for Spartan stores in the years ahead. And with that, we'll now open up the call for your questions. Marie?

[Operator:]

[Operator Instructions] Our first question is Scott Mushkin, Wolfe Research.

[Scott Andrew Mushkin:]

So I had a couple of questions. And first, I wanted to do Valu Land. Are there any in the comp base yet, and if so, how are they doing? And then maybe just an overall update on what your thoughts are on that format.

[Dennis Eidson:]

Yes, we have actually in the last quarter, we had 4 stores in the comp phase. This was a strange quarter because the way Easter landed. So Easter week a year ago, we cycled week 1 of this first quarter and our comp store sales were predictably like negative 20% or something in that range. If you take that out, the remaining 11 weeks on the quarter, the Valu Land stores comped positive, and they comped positive 9 of the 11 weeks. In the quarter, they do tend to be somewhat foodstamp dependent, and in some of the market places. So you might guess which weeks were a little bit softer. But yes, comping positive for the most part, and we're pleased with that. We're in a similar situation early in Q2. The format continues to -- we get -- we're playing with it. Obviously, you heard me call it out as a test. We're very energized about some parts of it, and we know we still have some work to do in others. But the eighth store that just opened last week got off to a good start. It's our second store in the Greater Lansing marketplace. And I think we have enough boxes now with an assortment of demographics, different regions of the state to continue to be able to more effectively read this format and determine where we're going to go long term.

[Scott Andrew Mushkin:]

So that's good color, and I would love to follow up, if I could, as your -- kind your sense of it and I guess maybe remind us kind of the positioning, exact value, and we know it's discount, but kind of how you're pricing with the private label mix, maybe the brand, Dennis. And then as you look at this, what's your initial sense, vis–à–vis maybe Nash Finch, is there opportunity to -- potentially, as you look at things, maybe have this be a part of a growth platform as you move out? Or is it way too early to say that?

[Dennis Eidson:]

Scott, I think it may be early, but I can tell you, on some levels, I'm pretty encouraged. The geography that we have these boxes in is extremely varied to more urban setting, in Lansing. Some of metro Detroit is more suburban. Some of the earlier boxes are really more rural in nature. And those are in the comps phase, actually, the earlier boxes, and I just described some of the performance on the comp. If you look at Nash Finch's business, they -- in the retail sector, they have a pretty wide variety of demographic, but they have a fair amount of demographic at rural in their portfolio, so we're intrigued by that. Having said -- I repeat, it's a little bit early. The go-to market there, Scott, just to remind you, is we looked at the alternatives in the space, and I guess the most obvious duo are Aldi and Save-A-Lot, and they're both great competitors. They do a wonderful job. But when we did our research, we did conclude there was an opportunity to have more variety in the stores. So you'll find in our box that we'll have the leading national brand in virtually every center store category, as well as in entry level price point, either covered off by Valu Time or Spartan brand. And then in the perimeter, we noted in our research that there was a desire for a more robust meat and produce offering. So we're actually cutting meat in the store, and we have a real meat department and a real produce department, and so we're getting strong scores for that. Our overall satisfaction scores in the store are the highest of any brand that we're operating in. We're getting very strong scores for price and value. We do instant consumer feedback kind of thing on your receipt. And it's a 1-to-5 grading scale, and we only count the 5s, right? So it asks, "Would you give the store a 5 for price?" We're getting somewhere between 60% and 65% of the customers giving us a 5 on the price metric, and we're feeling pretty good about that. The private brand penetration in center store is running in excess of 40% in these stores on a unit basis. So it's a fairly robust shopper for a private brand product that we're attracting. And as you know, we treat it, private brand, as a strategic plank to the company's position for a long time, and I think that's resonating. So I don't know if that helps you a little bit.

[Scott Andrew Mushkin:]

It helps tremendously, so I appreciate it. And then if I could maybe turn to Dave, and I'll yield and get back in the queue. You recycled promotions, I think you mentioned, from last year. How should we think about gross profit margins going forward? Is it still something that's probably going to head higher as you continue that cycling phase? Or is there something that's going to cause that not to happen? And then I'll yield.

[David M. Staples:]

Well, I mean, I think as, really, you look through the history of how we rolled out the price freeze and it -- it was rolled out in -- the initial roll out, and then every 90 days, there's incremental rollouts. I think we've really cycled through the bulk of the margin improvement that you're going to see. And so I would say margins would be flattish, more on trends like you've seen in the past, prior to the cycling.

[Operator:]

Our next question will be Chuck Cerankosky from Northcoast Research.

[Charles Edward Cerankosky:]

Another quick question about Valu Land. Any thoughts about putting general merchandise into the stores ala what Aldi's done?

[Dennis Eidson:]

We obviously observe very closely what the competitive set is doing. And we have experimented with some gm. We do some in and out, not nearly as aggressively as they have. And we do have a small amount of gm in the base offer. So we're watching, and we're learning. I think you'll probably see us be more opportunistic in that area as we move forward with the brand.

[Charles Edward Cerankosky:]

And Dave -- sorry, excuse me, Dennis, I'm intrigued that you still referred to it as a test with 8 of them. Is there an alternative format if you do change course with these locations? Or are they just short enough leases to support the no-go decision if that's what ultimately happens?

[Dennis Eidson:]

Yes, it's more the latter. We have not entered into expensive leases nor long-term leases in any of the properties that we're currently operating. As when we started, we knew it was going to be a test. I'd say we're more encouraged at this point than discouraged. But we want to make sure that we make a prudent decision with regard to rolling out the model, and we don't want anybody getting ahead of the results and getting too far afield. So we're -- I think I said somewhere in my remarks we tend to be sometimes pretty conservative in how we run our business, and I think that's reflected itself in our balance sheet over the course of the last several years. But we're not going to make a big mistake, and so we're very planful as it relates to the rollout of Valu Land.

[Charles Edward Cerankosky:]

What -- how would you track inflation for the quarter? And what's your outlook for all of fiscal 2014?

[Dennis Eidson:]

The inflation -- a little bit of inflation has always been good for the food industry, and that impacts us in so many different ways. With a more traditional inflation rate, it's a little bit easier to generate comp sales, and we just haven't seen that. Our quarter, we were, at retail, just a little bit over 1% inflation. Distribution was a little more than 1.5% inflation, but you put that up against what the USDA showed for the last couple of years. I mean, 2 years ago, it was 4.8%. Last year, it was 2.5% inflation. And the USDA, actually, just last week came out with new inflation numbers on food at home, taking their outlook for the full year from 2.5% to 3.5% down to 1.5% to 2%. So we're not expecting a significant amount of inflation going forward. We are seeing some inflation and spotty in some categories. Poultry continues to be pretty aggressive with regard to inflation. We're seeing that in eggs as well. Beef tends to be a little more inflationary, and yet, we're seeing things going the other way, too. Pork is actually deflationary, so mixed bag. I just don't think we're going to get a lot of inflation in the back half of the year.

[Charles Edward Cerankosky:]

Could -- Dennis, could you repeat what USDA's new food at home inflation outlook is?

[Dennis Eidson:]

Yes, they've taken food at home -- their previous outlook was 2.5% to 3.5%. And I think on July 25, they revised their outlook to 1.5% to 2.5% inflation for food at home.

[Charles Edward Cerankosky:]

Okay. Dave, on the $26 million of acquisition integration costs, what part of that would be cash?

[David M. Staples:]

I think the large portion of that will be cash. I'd say the majority of it will be cash. I mean, it ranges from all the types of things you'd expect

[Charles Edward Cerankosky:]

Okay. And last question, with the weather changing a bit, how has it been impacting second quarter thus far?

[Dennis Eidson:]

We are -- we're pretty encouraged. I think you heard Dave remark that the second quarter, we expected comp store sales at retail to be slightly negative to slightly positive. And obviously, we had Easter and other factors in that first quarter, including weather. But going from a negative 2.9% to potentially going positive would signal to you that things seem to be much better early in the second quarter. We are, in fact, comping positive in the business. Glen's has performed significantly better in the second quarter than the first quarter. And last year, the weather was unseasonably warm, but it also came early in that Glen's shopper that goes up north here in Michigan in the summertime was there early and often. We just missed that entirely late in the first quarter, and so we're seeing a little bit more normal performance here in the second quarter. So we're encouraged early in Q2.

[Operator:]

Our next question will be from Ajay Jain, Cantor Fitzgerald.

[Ajay Jain:]

Just on the Easter and weather impact this quarter, I was just wondering what the relative impact on IDs was from weather. Maybe you've mentioned -- and I think, Dave, you mentioned that Easter was around 90 basis points? So I just wanted to see if you can talk about Easter and also what accounted for the ID decline.

[David M. Staples:]

Yes. Easter, obviously, was -- we mentioned the 90 points specifically. The weather and the cycling of the launch of the "Yes Is More," when you look at trends, that could be another 100-plus points. And then the cycling of our store opening is in the 40-ish type points was where we were at on that. So it really kind of runs you through the numbers pretty quick.

[Ajay Jain:]

Okay. So sequentially, you're looking for basically flat comps. Is that a correct assessment? You're looking for a potentially positive but potentially negative, so you're looking for a sequential -- a material sequential improvement. Is that...

[David M. Staples:]

Yes. Yes, a material sequential approval -- improvement. Yes.

[Ajay Jain:]

All right. And I also just wanted to ask about your perception of total industry growth in Michigan. Maybe last quarter was kind of an anomaly for the whole industry in your region because of Easter and bad weather. But how fast do you think the industry is growing in your markets based on like total ACV? And do you think you're maintaining your share of total industry growth in retail?

[Dennis Eidson:]

I'll take a whack at that. Our share is holding relatively flat, actually, Ajay. And we track it a number of different ways. Retail is flat. When you combine retail and wholesale, again, it's flat, maybe just a smidge in positive. If you look at all commodity volume in the state of Michigan for the quarter, it was actually negative about 1.2% in the quarter. Now if you go back 52 weeks, it has been just slightly positive, like 0.3% positive, and this is being tracked by units just so we get the terminology straight. So it's flattish. The quarter was not positive, interestingly enough. And I think -- remember, we're -- there's probably still a little bit of the payroll tax thing going on. And I hate to even talk about the weather, but it was stinky. Hopefully, that helps you.

[Ajay Jain:]

That's very helpful. And just finally, if you are able to get to slightly positive IDs this quarter, do you see this as an inflection point where you can sort of sustain positive comps now that you're cycling the price investments from last year? And I should add that my question is just for the legacy Spartan stores, not the Nash Finch retail stores.

[David M. Staples:]

Yes, and I think you see that in our guidance, Ajay. So we've talked about being slightly negative to slightly positive for Q2, and then we talk about the full year moving to slightly negative to slightly positive. So I think implicit in that is that we would be in that same kind of run rate for the whole second half of the year.

[Operator:]

Our next question is from Ben Brownlow, Raymond James.

[Benjamin Brownlow:]

Could you guys talk a little bit about what you're seeing in the competitive landscape in terms of promotional levels?

[Dennis Eidson:]

I would say it's competitive. It's heated but not irrational. Meijer is one of the primary competitors that we have across the state. And I think over the course of time, they've attempted to get their everyday pricing a little closer to Walmart, and I think the market is reacting accordingly. I -- Kroger does what Kroger does on the east side of the state, and we have tremendous respect for them and their go-to-market strategy. They're taking Walmart head on in the marketplace, and they've got some pretty effective marketing that they've deployed against Walmart. We price right even with Kroger day in and day out. We run a high-low promotional program, and we think that resonates with our customers. Competitive but rational, I would say.

[Benjamin Brownlow:]

And with the Whole Foods store in Detroit -- and they were commenting on the value strategy on perishables. Are you seeing any impact in that market?

[Dennis Eidson:]

We are not, and the store is performing fairly well. It's new. The -- we don't have a corporate store anywhere near metro Detroit or downtown Detroit to be able to feel the numbers directly ourselves. In talking to independent customers that we have in the geography, they have not been significantly impacted. I think it has been a lunch crowd that's been pretty aggressive there, midday shopping, but we haven't felt the impact yet. Maybe we will, but so far, we haven't felt it.

[Benjamin Brownlow:]

Okay. And just thinking about the merger and the retail banners, can you talk a little bit around the competitive advantages you see between Family Fare and Glen's versus the numerous concepts at Nash Finch?

[Dennis Eidson:]

It may be a little early to get too deep into that. I would say that -- they've recently bought the Bag'n Save stores and No Frills in Omaha, which is a pretty large percentage of that retail portfolio. They haven't owned it for a year, and they're still integrating that. I think we have more history as going to market as a chain of stores that you would see probably more continuity in our offers than what you might see in the Nash Finch brands. I'm very impressed with the fresh fare concept -- Family Fresh concept that they have. I was in a couple of those stores. They seem to be performing very well, focused on the perimeter with our real value statement on the inside of the store. Maybe just a little bit early, I think there are things we do from just a continuity perspective that may be helpful. And I'm absolutely positive there are things they do that will be helpful in our retail portfolio.

[Benjamin Brownlow:]

Great. And just a housekeeping question. Do you have fuel center contribution, revenue contribution, in front of you for the quarter?

[David M. Staples:]

Fuel for the quarter?

[Benjamin Brownlow:]

Yes, the -- from the fuel center.

[David M. Staples:]

Yes, it was 49.3%.

[Operator:]

[Operator Instructions] Having no more questions, this concludes our question-and-answer session. I would like to turn the conference back over to management for any closing -- actually, we just have a question came in from Chuck Cerankosky, Northcoast Research.

[Charles Edward Cerankosky:]

Guys, I forgot to ask this before. What was the penny profit per gallon of gasoline in the quarter? And how did that compare to the year ago?

[Dennis Eidson:]

The penny profit per gallon was about $0.02 better than a year ago for the quarter.

[Charles Edward Cerankosky:]

What would that put it at absolutely?

[David M. Staples:]

Well, I think it's around $0.26.

[Dennis Eidson:]

It's $0.216.

[David M. Staples:]

$0.216?

[Dennis Eidson:]

Yes. Well, with no further questions, I want to thank everybody. That concludes our first quarter 2014 conference call. Thank you all for joining us today, and we're going to obviously look forward to sharing our progress with you next quarter. Thank you.

[Operator:]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.