Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)

The Pantry, Inc. (NASDAQ:PTRY)

F3Q2013 Earnings Call

August 6, 2013; 08:30 a.m. ET

Executives

Dennis Hatchell - President & Chief Executive Officer

Clyde Preslar - Chief Financial Officer

Berry Epley - Controller

Andrew Hinton - Director of Treasury Operations

Analysts

Irene Nattel - RBC Capital Markets

Kevin Mcclure - Wells Fargo Securities

Ben Brownlow - Raymond James

Spencer - BofA Merrill Lynch

Ronald Bookbinder - The Benchmark

Anthony Lebiedzinski - Sidoti & Company

Operator

Good day ladies and gentlemen and welcome to The Pantry Inc., Q3 2013 earnings conference call. My name is Stephanie and I will be your operator for today.

At this time all participants are in a listen-only mode. We will conduct a question-and-answer session after managements prepared comments. As a reminder, this conference call is being recoded for replay purposes.

Now, Andrew Hinton, Director of Treasury Operations will introduce today’s participants. Please proceed.

Andrew Hinton

Good morning everyone. Thank you for joining us to discuss The Pantry’s third quarter financial results, which were released this morning. Please note that we’ve also posted slides for this morning’s call on the Investor Section of our website, at www.thepantry.com.

Today’s presenters are Dennis Hatchell, our President and CEO; and Clyde Preslar, our CFO. Berry Epley, our Controller is also participating in the call.

Before we begin, I would like to point out that certain comments made during this call may be characterized as forward-looking statements under the Private Securities Litigation Reform Act of 1995. There are a number of factors that could cause actual results to differ materially from those implied by any forward-looking statements.

These risks and uncertainties are detailed in The Pantry’s filings with the SEC and in our earnings release issued this morning. We refer you to the SEC’s website or our site at www.thepantry.com for these and other documents.

During today’s call, we will refer to certain non-GAAP financial measures that we believe are helpful in understanding our financial performance. A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP measure is included in the conference call slides posted on our website.

At this point, we’ll turn to Dennis for his comments.

Dennis Hatchell

Thanks Andrew. Good morning everyone. I’ll start with an overview of our third quarter performance, which is on slide four.

Diluted earnings per share was $0.26 versus $0.65 and adjusted EBITDA was $65 million compared to $75 million in the prior year quarter. We were pleased to see comparable store merchandise revenue climb back into positive territory, up 1.3% and up 3.3% excluding cigarettes.

Customer traffic at our stores improved from the challenging quarter two conditions, but more importantly, we continue to grow our merchandise sale per customer, which was up 2.5% on a comparable basis.

Fuel, gallon comps also showed significant improvement on a sequential core basis, but was still minus 4.4% from the prior year. Retail fuel margins declined $0.023 to $0.123 when compared to a very strong prior year quarter.

Wholesale fuel costs as measured by the Gulf stock price fell $0.32 from the beginning of the quarter to the end of the quarter, compared to an $0.85 drop during the third quarter of last quarter. The third quarter of this year began with a steep drop in the Gulf stock price to the first week of the quarter, followed by 10 weeks of variability before falling steeply again in the last two weeks of the quarter.

Last year the Gulf Stock price fell gradually throughout the entire quarter. The inconsistency of this year’s wholesale cost changes contributed to a less favorable retail fuel margin environment than it did last year. These cost dynamics and retail price variations constrained third quarter margin per gallon. As an additional perspective we maintained our overall competitive position from a retail price standpoint and our fuel pricing system helped us to rapidly assist market price changes across our market.

Slide five shows that we made solid progress during the quarter. When customers visit our stores they are responding to our marketing initiatives and product offerings and driving higher merchandise sales per customer. Our goal is to continue growing average sale per customer and leverage it as our traffic strengthens.

In terms of category performance, cigarette sales comps declined 3.3% during the third quarter on a continued category weakness. Excluding cigarettes, our comparable store sales were up 3.3%. Other packaged goods performed well, up 3% on a comparable basis.

Our proprietary food service comps were up 6.9%, driven by solid growth in dispense beverage and in our grill, deli and fresh food offerings.

Our QSR sales declined 2.4%, but performed well relative to the overall QSR markets. Slide six highlights our continued focus on managing costs and improving profitability. Store level productivity supported by employee training is an ongoing focus. We continue doing a good job managing our labor costs; reduce in energy usage and controlling other facility costs.

On the G&A side, we are working to ensure that we allocate resources to the highest impact areas and push relentlessly to become more cost-effective.

Moving on to slide seven, in our merchandising initiatives, as we previously announced Boris Zelmanovich joined The Pantry in early June as our Chief Merchandising Officer and is already actively engaged in driving our merchandising initiatives and providing strong leadership for the organization.

Our local merchandising initiatives are being refined store by store as our merchandising team uses our experience in conjunction with the category management tool we are implementing. We are supporting this for the point of purchase advertising and promotional activity. The RooCup has met expectations with almost 500,000 cups sold and over 7 million refills since the April kickoff.

Our third annual Salute Our Troops Campaign is now underway. Over the last two years we raised almost $6 million for the UFO, the Wounded Warrior Project and other local military charities throughout our footprint. We are also strong supporters of Victory Junction and recently raised more than $1 million for this charity that aids children with chronic medical conditions.

As part of our continued efforts to drive brand recognitions for Kangaroo Express, we opened a temporary store this year in the infield of the Charlotte Motor Speedway. In addition to providing a level of convenience not experienced by race fans, this store attracted media attention due to the novelty of location and provides outstanding venue for showcasing the Kangaroo Express brands. Slide eight will give you some perspective on this store unquiet store.

And another key areas shown on slide nine, we continued upgrading our store base. We completed 31 remodels during the third quarter, bringing the year-to-date total of 41. We currently have more than 50 projects under way, including remodels, QSR additions, new stores and a rebuild. We remain on track for 70 to 80 remodels during the fiscal year.

I’m encouraged by the results of our remodel program. We monitor each store and continue to refine our process, as we push for the maximum impact from these investments.

Adding QSR’s is also a key element to our strategy. Year-to-date we have completed six new QSR’s, bringing our total amount to 221. We currently have 13 under construction or in the planning stage and are on track towards 15 new QSR’s for this fiscal year.

To accelerate our overall growth and build value, we are actively evaluating new store and remodel opportunities and we are interested in acquiring both individual stores, as well as chains. On July 18 we acquired a 5,500 square foot store in Conway, South Carolina, the second store we’ve acquired this year. It’s a modern and large format store, strong food service offerings that will further strengthen our position in the Myrtle Beach market.

Optimizing our store portfolio is an ongoing element of our strategy and we have closed a 140 stores since 2011. Typically these are stores that are at the end of their lease and no longer meet our profitability targets or just simply not a good strategic fit.

In our new store area we have two stores under construction and expect them to open before the end of the year. They will be similar in design and product offerings to our recently opened store in Charlotte. Slide 10 shows the new Charlotte store, which has been open since February. It features a Subway with a drive through, indoor/outdoor seating, as well our NMs proprietary QSR brand.

Now Clyde will review the second quarter results.

Clyde Preslar

Thanks Dennis. As you just heard, we continue to make progress strengthening the company and positioning it for sustained profitable growth. Staying focused on executing our core plan is paying off. This showed up in our improved fundamentals in Q3 compared to our very challenging second quarter.

Turning now to slide 12, other revenues for the quarter were $2 billion. This was 6.8% below last year, due to the decline in fuel gallons sold, lower retail fuel prices and 38 fewer stores on average.

Net interest expense increased $3.3 million to $22 million due to higher rates. Our effective tax rate was 54.9% compared to 36.5% in the third quarter of fiscal 2012, due to actual and anticipated levels of pre-tax profit. We now anticipate a full year 2013 effective tax rate of 32.6% compared to 54.1% in 2012.

Our net income for the third quarter was $5.9 million or $0.26 per diluted share, compared with net income of $14.8 million or $0.65 per diluted shares last year. Adjusted EBITDA for the quarter was $65.3 million compared with $74.7 million a year ago.

Slide 13 covers the P&L in more detail. Merchandised revenue was essentially unchanged at $477 million, as a 1.3% improvement in comp store sales was offset by the lower store count. Our overall merchandise gross margin rate improved 30 basis points to 33.8%, supported by the favorable mix impact of proprietary food service growth. This put merchandise gross profit $1.1 million above last year’s level.

In the fuel area, retail gallon sold declined 4.4% on a comp store basis. Our third quarter retail gross margin per gallon was $0.123 compared with $0.146 a year ago. The volume declined combined with margins that were $0.023 per gallon, lower than last years third quarter and pushed our fuel gross profit down $13.2 million.

Please note that our fuel margin is net of credit card fees and equipment maintenance costs, which total $0.068 per gallon this quarter compared to $0.072 per gallon a year ago. Excluding these costs, retail gross margin per galling would have been $0.191 and $0.218 in the third quarters of 2013 and 2012 respectively.

Total store operating and G&A expenses for the quarter were down $2.6 million. Within this, store-operating expenses declined $3.6 million as our productivity initiatives and reduced store count drove labor and facility-related costs. More significantly, adjustments to our self-insurance reserves, for worker’s compensation and general liability were $4.7 million favorable to the adjustment made in Q3 of last year. Annually at this time, we get updated comprehensive actuary analysis and this year’s results benefited from improved loss experience and claims management processes.

G&A expenses increased $1 million to $26.1 million, due to higher professional fees and losses on asset sales. This put income from operations at $35.1 million, down 19% from the prior year quarter. For perspective, if our fuel margin per gallon had been at last year’s level, income from operations would have been $9.9 million higher or up 4.4%.

Turning next to capital expenditures on slide 14, our net capital spending was $19.7 million with $1.4 million in proceeds from asset sales compared to $9.9 million last year when we had $3.7 million in asset sales.

From a store count perspective on slide 15, we closed seven stores during the third quarter, bringing the year-to-date total to 20. Netted against store additions, we ended Q3 with 1,562 company-operated locations, compared to 1,592 at this time last year. Our quick service restaurant count was up to 221 and we have 69 wholesale fuel locations.

Slide 16 covers our cash and liquidity position, showing we finished the third quarter with $44 million in cash. Our net debt declined to $906 million, which was down $25 million from last year. At quarter end we had $175 million in liquidity, including cash and revolver availability.

Slide 17 shows our current outlook for the fourth quarter and full year 2013. So far in Q4 we’ve been encouraged by our sales during periods of favorable weather, but have been encountering heavy rain across much of our territory. Quarter-to-date our merchandise sales are down 0.5% and our retail fuel gallons are down 6.9%, with a CPG of $0.115.

For full year 2013, we expect total merchandise sales to be between $1.79 and $1.8 billion. Merchandise gross margin in the 33.8% to 33.9% range, retail fuel volume between 1.69 billion and 1.71 billion gallons, retail fuel margin ranging between $0.114 to $0.12 per gallon and store operating and G&A expenses of $601 million to $605 million. We’ve also provided guidance for D&A, net interest expense and capital expenditures.

With that, we’ll conclude our prepared remarks and open the call for questions. Operator, we are now ready to take questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). Our first question comes from Irene Nattel from RBC Capital Markets. Your line is open.

Irene Nattel - RBC Capital Markets

Thanks and good morning guys. I was interested in your commentary around acquisitions. It seems to me that this is the first time in a while we’ve heard you talking about that. So wondering just how much balance sheet capacity you think you have. When you mention small chains, how small are we talking about and on a regional basis, where you’re looking?

Dennis Hatchell

Good morning, Irene. This is Dennis. I’ll let Clyde talk to the balance sheet capacity, but we’ve been studying our markets pretty closely looking for strategic fit sort of stores that would round out the markets that we’re in, and we’ve also coupled that with the fact that it appears that more stores are all of a sudden available for acquisitions. We didn’t want to pass up the opportunity to take a look at some of these good assets. So we added that into our comments to let you know that’s what we’re taking a look at.

In terms of the size of the chain, I don’t think we put any size on it. We are just kind of open to whoever might be in our marketplace that would fit our strategy. We’re not just after acquisitions. We have some very strategic moves to make in some of these markets.

Clyde Preslar

And Irene, in terms of capacity, as Dennis mentioned we’ll be very focused and very selective. Our feeling based on the factors that he mentioned is, we’ll have the opportunity to make acquisitions and reduce the effective purchase multiple with improvements to the business and generally speaking, keeping it fairly neutral from a leverage perspective in terms of net debt to EBITDA. So we think, again as we find these opportunities and convince ourselves that they are good fits that we can finance them and remain comfortable.

Irene Nattel - RBC Capital Markets

Thank you, I appreciate it. And when you talk about find opportunities and good fit, can you describe to us, is it a specific size of box you are looking for, size of locations so you can expand the box. Could you provide a little more color?

Dennis Hatchell

Well obviously we’re looking for as good as assets as we can find, but it’s more the geographic fit in the market to help us either dense up the market or protect the market. So we’d obviously want to make sure that they are assets, so if we need to improve them, there’s enough room and lease life and that sort of thing on them. So if that’s not available, we’re not going to be interested.

Irene Nattel - RBC Capital Markets

That’s great. And finally I apologize, just to a point of clarification. When you ran through the quarter-to-date statistics, couldn’t quite get them all down; if you could repeat those. And then on the Q4, the implicit Q4 guidance on the tax rate, it looks like you’re looking for a tax recovery in Q4 if we’re going to get to 32.6 for the year. Is that correct?

Clyde Preslar

That is correct. We’re looking for a tax benefit this year, for the full year, just like we had last year. So again, the rate difference is just impacted by our level of pre-tax profit for the most part. But yes, we would be looking for a benefit in Q4, in line with that full year projected rate. And then the statistics I’m sorry, which statistic?

Irene Nattel - RBC Capital Markets

Okay. When you very quickly ran through the...

Clyde Preslar

Okay. Got it, got it. On the merchandise comp standpoint, and again we are comfortable with the guidance we’ve given for the quarter. But we have – in fact it’s raining here right now. The rain has not really been very helpful. But the merchandise comps we’re down 0.5% for quarter-to-date and then on the fuel gallons we’re down 6.9% and CPG is 11.5%, and again factoring all that in, we are comfortable with our quarterly guidance and the full year.

Irene Nattel - RBC Capital Markets

That’s great. Thank you very much.

Dennis Hatchell

Sure.

Operator

Our next question comes from Bryan Hunt with Wells Fargo Securities. Your line is open.

Kevin Mcclure - Wells Fargo Securities

This is Kevin McClure standing in for Brian. Dennis, a couple of questions about the Q4 weather. If I recall it was fairly wet around the southeast. So did you see an impact predominantly over the July 4 holiday or did that continue throughout the remainder of the month in your territory.

Dennis Hatchell

You are talking about Q3 right? Q4, okay.

Kevin Mcclure - Wells Fargo Securities

Q4, yes.

Dennis Hatchell

Well, the 4th of July holiday was a strange holiday. We had impact from weather. We had a lot of rain and a lot of problems with the weather, but it was also an interesting holiday. We’ve looked back when it falls late in the week like that, how the business shifts from one week to the next. So it was very difficult to figure out how we did on the 4th of July. We think we did all right, but we’re not 100% sure.

In terms of the rest of our southeast market, I don’t know what to tell you, it’s just raining, it’s just raining all the time and we have downpours that flood and closed roads and just really change people’s behaviors. But we are hopeful that’s going to end at some point, even though it’s still raining this morning. Bound to happen sooner or later and we’ll get those customers back in the stores.

Kevin Mcclure - Wells Fargo Securities

Got it, okay. And then following on that, are you seeing a change in the average size of the transaction, meaning are consumers to save money filling up their vehicles less or are they just not filling vehicles up as much as they had in the past.

Dennis Hatchell

I think when they fill up, our average gallons per transaction has stayed the same really, there’s been no change to that. So we really believe it’s just a matter of probably going a little longer in between to avoid the rain and the downpours that are happening.

Kevin Mcclure - Wells Fargo Securities

Got it. Okay, and it relates to your store development or store closures, how many leases expire in 2014 on units that you could perhaps close; I’ll start there.

Dennis Hatchell

I don’t have the exact count, but in and around 20 would be very close, where the leases are expiring. I hope that’s the right now, but that’s now far off.

Kevin Mcclure - Wells Fargo Securities

Okay, and for fiscal 2014, is it premature to ask your preliminary thoughts on CapEx spend and remodels?

Clyde Preslar

Well, in terms of totals, I would put us up in that kind of $95 million total capital spending. A big part of that will be continuing remodels and opening some new stores. We’ll have more clarity around that when we report our full year results.

Kevin Mcclure - Wells Fargo Securities

Got it. One final one for us and I’ll pass it along. It looks like wholesale prices increased in the beginning of July and they start to come down a little bit since then. Where do you see, I guess wholesale fuel costs settling out? What’s the trend look like on your end?

Dennis Hatchell

Well, if I knew that answer we’d really be doing well, but right now we’re looking at historical projections that show that should generally increase now over the balance of quarter four. We are hopeful it will go the other way, but all our historical trends and our models say that it typically rises throughout our fourth quarter.

Kevin Mcclure - Wells Fargo Securities

Got it. Thank you for your time.

Dennis Hatchell

Thank you.

Operator

Our next question comes from William Rutcher (ph) with BofA Merrill Lynch. Your line is open.

Spencer - BofA Merrill Lynch

This is actually Spencer in for Bill. I appreciate you guys taking my questions. I was curious on the QSR trends, if you are seeing any difference between the newer stores that you built and the older ones and then any kind of just color you have on why you think the QSR's are under performing.

Dennis Hatchell

I don’t think we – hi, good morning by the way. We are not seeing a difference between new and mature QSR’s, and what we do is compare our numbers against the system numbers from Subway and the other folks that we use, and we are tracking a bit better than them, based on the numbers they are reporting. So there appears to be kind of an industry state right now, where consumers aren’t hitting the QSR’s like they used to and wait for that to turn.

Spencer - BofA Merrill Lynch

Okay, that’s helpful. And then I was curious on that the comparable gallon trends and sequential improvement during the quarter. How much would you attribute that to the new fuel pricing system and then anything else that you would attribute the improvement to?

Dennis Hatchell

I think a good bit of it, just simply the quarter, the overall environment was better than the previous quarter. I take some amount of that improvement, I wouldn’t say it’s a huge amount, but some amount of that improvement was due to the system. It’s provided us the ability to watch what’s going on in the marketplace and adjust more quickly and have far more accurate information, so I think we are really pleased with the system and what it delivered.

But quarter two, we didn’t – we thought quarter two was an anomaly and I think to try to take too much credit for that in quarter to be using the system wouldn’t be right either, because things just improved.

Spencer - BofA Merrill Lynch

Okay. Thanks guys. That’s it from me.

Dennis Hatchell

Thank you.

Operator

Our next question comes from Ben Brownlow with Raymond James. Your line is open.

Ben Brownlow - Raymond James

Hey, good morning. Could you guys discuss just the initial returns in sales metrics that you’re seeing from the new store build in Charlotte?

Dennis Hatchell

Yes. So all parts of the store are pretty high. Can we get specific numbers out on?

Clyde Preslar

We are a little hesitant to do that for competitive reasons, but we are pleased with both, with the QSR and the inside of the store. It sits, as you know, kind of right as an out lot to a Wal-Mart Super Center and we are pleased with the inside and the feel has been terrific. So all in all, the overall delivery of the store has been a very nice mix.

Ben Brownlow - Raymond James

I guess the same for the remodels. Any sales or return metrics you can give for the initial remodels that were done about a year ago?

Dennis Hatchell

Let the see. On average I would say that we're looking for a 5% to 10% lift depending on how these stores are rather situated, and I would say of the 31 that we completed in quarter three, we are pretty pleased with that performance. We have stores that obviously way outperform what we are looking for and we have a few that are still missing, but we're on every one of them and making adjustments to pull them along. All in all, we’re meeting the targets.

Ben Brownlow - Raymond James

And are the initial remodels from about a year ago, are they outperforming the chain?

Dennis Hatchell

I would safely say that all but one is outperforming and one of them is right at the chain numbers.

Ben Brownlow - Raymond James

Great, and just on the acquisition, last question, when you're looking at acquisitions, are you specifically wanting the square footage for a proprietary food service or QSR or is that not necessary?

Dennis Hatchell

We think the stores will need to be at least 2,500 square feet or larger or have the ability for us to expand them, because that would give us the ability to put in QSR’s as discussed.

Ben Brownlow - Raymond James

Great. Thank you guys.

Operator

Our next question comes from Ronald Bookbinder with The Benchmark. Your line is open.

Ronald Bookbinder - The Benchmark

Hi. Good morning and thank you for taking my questions. Rent had become very meaningful from some of the other convenient store chains. Is there a possibility that you could benefit from rent somehow down the road; are looking at that?

Clyde Preslar

Today we’re buying blended (inaudible), so there’s not much an opportunity there for us. We’re just not in markets and terms where that's an option for us.

Ronald Bookbinder - The Benchmark

You couldn't splash blended pump somehow or something...

Clyde Preslar

Not today.

Ronald Bookbinder - The Benchmark

Okay. And it seems that your gallon comp continues to be below miles driven. Is somebody taking your market share or are you just in tougher markets. What do you think is going on there?

Dennis Hatchell

This is Den. So we’re continuing to study different reports to determine whether we are gaining or losing share and that's really I think what the question is. Personally I think that we are tracking just a hair below the market performance. That is, we've lost a little bit of share. The majority of that can be accounted for through the different competitive activity that’s going on and we’re competing well with those. So when you have more competitors open and you got more tanks, you have to fight for the gallon.

But otherwise I think we've leveled off, and going forward, unless we have another strange quarter like our quarter two, we should be very close to how the gallons are performing in the marketplace and the miles driven.

Ronald Bookbinder - The Benchmark

And you think the fuel pricing system is going to be a key to accomplishing that?

Dennis Hatchell

Yes. It gives us a complete knowledge in the marketplace of what's going on. We’re able to adjust our prices on a more frequent basis than when today if we need to, especially in those places that have electronic signs and we're able to react to any kind of competitive change in a far faster way and know the impact of those changes at the same time.

Ronald Bookbinder - The Benchmark

And on the localized merchandising, the college beach, Latino merchandising, have you finished rolling that out or are you continuing to expand that to more markets and how pleased are you with the results?

Dennis Hatchell

We are pleased with the results and we’re finished rolling out like major categories. Like lots of Hispanic into the stores and that sort of thing. Now we’re refining it on a local basis. We have a category management, a tool in place that's allowing our teams to now take a look at not only how are those items performing, but also the other items in the store and we’re starting to make adjustments. So we are really localizing the stores now, every time we set a store or change up a category.

Ronald Bookbinder - The Benchmark

You talked about I think on the last conference call, Subway's TacoDel Mar concept. Have you rolled out any of those and how are you doing?

Dennis Hatchell

Yes, we've opened three, I believe this quarter, since I last talked to you; I think that's right, and we've been disappointed in the performance of one and pleased with the other two. We think we’ve identified what the issue is around the one in terms of signing and some local marketing that we need to do, but it's a nice option and it gives us a chance to where the Subway name and brand has been saturated in the marketplace, it gives us another chance to go open an additional QSR.

Ronald Bookbinder - The Benchmark

Okay, great. Thank you very much and good luck going forward.

Dennis Hatchell

Thanks.

Operator

Our final question comes from Anthony Lebiedzinski with Sidoti & Company. Your line is open.

Anthony Lebiedzinski - Sidoti & Company

Good morning and thanks for taking the question. Just wanted to clarify, as far as the remodel activity, are you still targeting roughly a 10% annual rate in terms of the number of remodels?

Dennis Hatchell

Yes. We're on track right now -- good morning, by the way. We are on track right now. We’re running at the rate of three stores a week on average. We’d step that up if an opportunity presents itself, but it took us a while to get it rolling, but now it's scheduled well out there in kind of one market at a time or one area at a time and its coming together very nicely.

Anthony Lebiedzinski - Sidoti & Company

Okay, and also just wanted to get a little bit more insight into the merchandise sales per customer. They were up 2.5%. Can you just give us a little bit of detail as to what drove that?

Dennis Hatchell

In particular what drove it was our training and our associates in the stores, who we spent a good bit of time showing them how they could make a difference in suggested selling and additive selling. I think that's the single biggest thing we did, but then we started paying attention to the size of items we are offering, the retails that we’re offering and we’re continuing to improve that. I think Boris and his team will make that simply better.

But there’s a lot of things you can do in these stores, which our team has really accepted the challenge on staying in stock, keeping products fresher than normal and suggestive selling can really drive the sale per customer. So we’re really pleased with what they've accomplished.

Anthony Lebiedzinski - Sidoti & Company

Okay, and also looking at the store that you opened at the Charlotte Motor Speedway. I wondering, if perhaps there are any other opportunities for stores, kind of similar perhaps maybe venues?

Dennis Hatchell

Well, I hope so. It was a lot of fun that energized our folks. As you can imagine, we had two weekends of some pretty intense selling inside that infield and there's been a lot of discussion of whether that would fit around long weekends, around football or other large sporting events and we're not going to go crazy on this, but in particular, of developing the Charlotte market and keeping our name out there, we thought this was an awfully good fit.

Anthony Lebiedzinski - Sidoti & Company

Okay, and lastly as far as the tax rates for next year, any sort of early indication of where that could be?

Clyde Preslar

Yes again, we'll have more specific guidance as we report the full year, but as our income level climbs, we kind of approach that 39% rate with 35% on the federal and 4% on the state side. So if I had to pick a number right now, I’d be in that conservatory 39%, 40% range and again, that will be heavily influenced by our pre-tax income.

Anthony Lebiedzinski - Sidoti & Company

Okay, thanks.

Dennis Hatchell

Thank you.

Operator

That does conclude the Q&A session. I will now turn the call back over to Dennis Hatchell for closing remarks.

Dennis Hatchell

Thanks everyone. Thanks for your questions. We really appreciate your interest in The Pantry.

Now that we have our co-operating leadership team in place and working with all the associates throughout The Pantry, we should make excellent progress growing our business and creating shareholder value.

As always, I want to thank all the associates at The Pantry for everything they do, driving sales per customer and providing a terrific experience for our customers and again, I’d like to thank you. We look forward to updating you again at our next call.

Operator

Thank you ladies and gentlemen. That does conclude today's conference. You may all disconnect and have a wonderful day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: The Pantry's CEO Discusses F3Q2013 Results - Earnings Call Transcript
This Transcript
All Transcripts