# Caseys General Stores Inc: Form 10-Q for the period ended Oct 31, 2023

- Company: [Caseys General Stores Inc](/companies/casy.md) (CIK 726958)
- Form: 10-Q
- Filed: 2023-12-11
- Accepted by EDGAR: Dec 11, 2023, 16:19 ET
- Period: 2023-10-31
- Accession: 0000726958-23-000097
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/726958/000072695823000097/casy-20231031.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/726958/000072695823000097/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-10-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-08-01 to 2023-10-31 | $4.06bn | us-gaap:Revenues |
| Revenue | 6 months, 2023-05-01 to 2023-10-31 | $7.93bn | us-gaap:Revenues |
| Interest expense | 3 months, 2023-08-01 to 2023-10-31 | $12.3m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2023-05-01 to 2023-10-31 | $24.8m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-08-01 to 2023-10-31 | $49.2m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2023-05-01 to 2023-10-31 | $101.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-08-01 to 2023-10-31 | $158.8m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-05-01 to 2023-10-31 | $328.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-08-01 to 2023-10-31 | $4.24 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-05-01 to 2023-10-31 | $8.76 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-08-01 to 2023-10-31 | $4.27 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-05-01 to 2023-10-31 | $8.80 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-08-01 to 2023-10-31 | 37,431,075 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-05-01 to 2023-10-31 | 37,452,253 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-05-01 to 2023-10-31 | $481.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2023-05-01 to 2023-10-31 | $176.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2023-05-01 to 2023-10-31 | $31.0m | us-gaap:PaymentsOfDividends |
| Share repurchases | 6 months, 2023-05-01 to 2023-10-31 | $59.5m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-10-31 | $409.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-10-31 | $1.01bn | us-gaap:AssetsCurrent |
| Total assets | at 2023-10-31 | $6.23bn | us-gaap:Assets |
| Current liabilities | at 2023-10-31 | $949.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-10-31 | $3.33bn | us-gaap:Liabilities |
| Long-term debt | at 2023-10-31 | $1.60bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2023-10-31 | $53.2m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2023-10-31 | $2.90bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 35,465 characters.

### Overview

As of October 31, 2023, Casey’s General Stores, Inc. and its direct and indirect wholly-owned subsidiaries operate convenience stores primarily under the names "Casey's" and "Casey’s General Store" (collectively, with the stores below referenced as "GoodStop", "Bucky's" or "Minit Mart", referred to as "Casey's" or the "Company") throughout 16 states, over half of which are located in Iowa, Missouri and Illinois. Subsequent to quarter-end, the Company closed on an acquisition in which it entered its 17th state, Texas. Approximately 49% of all Casey's were opened in areas with populations of fewer than 5,000 persons, while approximately 27% of all stores were opened in communities with populations exceeding 20,000 persons. As of October 31, 2023, there were a total of 2,592 stores in operation.

All convenience stores carry a broad selection of food items (including, but not limited to, freshly prepared foods such as regular and breakfast pizza, donuts, hot breakfast items, and hot and cold sandwiches), beverages, tobacco and nicotine products, health and beauty aids, automotive products, and other nonfood items. As of October 31, 2023, 225 store locations offered car washes. In addition, all but eight store locations offer fuel for sale on a self-service basis.

The Company had 48 stores operate under the "GoodStop (by Casey’s)" brand as of October 31, 2023. Similar to most of our store footprint, the "GoodStop" locations offer fuel for sale on a self-serve basis, and a broad selection of snacks, beverages, tobacco products, and other essentials. However, these locations typically do not have a kitchen and have limited prepared food offerings.

The Company is also temporarily operating certain locations acquired from Buchanan Energy under the name "Bucky's" and certain locations acquired from Minit Mart LLC under the name "Minit Mart". The Company is in the process of transitioning all "Bucky's" and "Minit Mart" locations to either the "Casey's" or "GoodStop" brand. These locations typically have similar offerings to the "Casey’s" or "GoodStop" branded stores.

The Company has 76 dealer locations, where Casey’s manages fuel wholesale supply agreements to these stores. These locations are not operated by Casey's and are not included in our overall store count in the paragraph below. Approximately 1% of total revenue for the six-months ended October 31, 2023 relates to this dealer network.

The Company operates three distribution centers, through which certain grocery and general merchandise and prepared food and dispensed beverage items are supplied to our stores. One distribution center is adjacent to our corporate headquarters, which we refer to as the Store Support Center facility in Ankeny, Iowa. The other two distribution centers are located in Terre Haute, Indiana (opened in February 2016) and Joplin, Missouri (opened in April 2021).

The Company’s business is seasonal, and generally experiences higher sales and profitability during the first and second fiscal quarters (May-October), when guests tend to purchase greater quantities of fuel and certain convenience items such as beer, sports drinks, water, soft drinks and ice.

The Company reported diluted earnings per common share of $4.24 for the second quarter of fiscal 2024. For the same quarter a year-ago, diluted earnings per common share was $3.67.

The following table represents the roll forward of store growth through the second quarter of fiscal 2024:

|  | Store Count |
| --- | ---: |
| **Total stores at April 30, 2023** | 2,521 |
| New store construction | 13 |
| Acquisitions | 60 |
| Acquisitions not opened | (5) |
| Prior acquisitions opened | 5 |
| Closed | (2) |
| **Total stores at October 31, 2023** | 2,592 |

#### COVID-19 and Related Impacts

The onset of COVID-19 caused a significant decrease in store traffic across our entire footprint. While store traffic has markedly increased as the economy reopened over the past two or so years, the Company has not seen a full return to store traffic levels experienced prior to the pandemic. The Company believes this is due to the increased prevalence and acceptance across all industries of working from home, a trend which the Company expects to continue into the foreseeable future.

#### Fuel Volatility

Since early calendar 2020, the price of crude oil, and in turn the wholesale cost of fuel, has been volatile compared to historical averages. Initially, at the outset of the pandemic, oil and fuel prices fell dramatically; however, as the economy in general began to emerge from the COVID-19 pandemic, prices began to modestly increase over time. More recently, during the end of the Company’s 2022 fiscal year, oil and fuel prices saw a quick and dramatic increase, in part, as a result of the conflict in Ukraine, as well as other macroeconomic conditions. Generally, oil and fuel prices have decreased from levels seen throughout the past two years, but they remain elevated compared to historical levels. The Company expects these comparatively higher prices to remain further into the 2024 fiscal year.

In addition, during the past three calendar years, the Company, and the retail fuel industry as a whole, has experienced historically high average revenue less cost of goods sold per gallon (excluding depreciation and amortization). Although this has remained relatively consistent since that time, on a longer-term basis, this metric can fluctuate significantly, and sometimes unpredictably, in the short-term. While the Company believes that its average revenue less cost of goods sold per gallon (excluding depreciation and amortization) will remain elevated from historical levels for the foreseeable future, it is possible that increased oil and fuel prices, rising interest rates, macroeconomic conditions and/or continuing conflicts or disruptions involving oil producing countries may materially impact the performance of this metric.

#### Electric Vehicles and Renewable Fuels

Casey's continues its process of developing a robust electric vehicle ("EV") strategy and our management team remains committed to understanding if and how the increased demand for, and usage of, EVs impacts consumer behavior across our store footprint and beyond. As consumer demand for alternative fuel options continues to grow, Casey’s has continued to add EV charging stations across our 16-state footprint. As of October 31, 2023, the Company has installed 162 charging stations at 33 stores, across 11 states. Our installation strategy is currently designed to selectively increase our charging stations at locations within our region where we see higher levels of consumer EV buying trends and demand for EV charging. To date, consumer EV demand within our Midwest footprint has been comparatively lower than the levels along the coasts. As EV demand from our guests increases, we are prepared to strategically integrate charging station options at select stores.

The Company also remains committed to offering renewable fuel options at our stores and continues to expand its alternative fuel options in response to evolving guest needs and as part of its environmental stewardship efforts. Currently, almost all of our stores offer fuel with at least 10% of blended ethanol and 43% of our stores offer biodiesel. Every new store has the capability to sell higher blended ethanol, and we aim to continue growing sales of renewable fuels throughout our footprint.

#### Same-Store Sales

Same-store sales is a common metric used in the convenience store industry. We define same-store sales as the total sales increase (or decrease) for stores open during the full time of both periods being presented. When comparing data, the store must be open for each entire fiscal period being compared. Remodeled stores that remained open or were closed for just a very brief period of time (i.e., less than a week) during the period being compared remain in the same-store sales comparison. If a store is replaced, either at the same location (i.e., razed and rebuilt) or relocated to a new location, it is removed from the comparison until the new store has been open for each entire period being compared. Newly constructed and acquired stores do not enter the calculation until they are open for each entire period being compared.

The second quarter results reflected flat same-store fuel gallons sold. Same-store sales of grocery and general merchandise increased 1.7% and prepared food and dispensed beverage increased 6.1% during the quarter. The increase in grocery and general merchandise same-store sales was primarily due to strong sales of alcoholic beverages. The increase in prepared food and dispensed beverage same-store sales was attributable to improved sales of whole pizza pies, bakery, and dispensed beverages.

### Three Months Ended October 31, 2023 Compared to

### Three Months Ended October 31, 2022

#### (Dollars and Amounts in Thousands)

| Three Months Ended October 31, 2023 | Prepared Food & Dispensed Beverage | Grocery & General Merchandise | Fuel | Other | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| Revenue | **$382,481** | **$964,430** | **$2,646,478** | **$71,011** | **$4,064,400** |
| Revenue less cost of goods sold (excluding depreciation and amortization) | **$225,664** | **$327,600** | **$308,835** | **$23,462** | **$885,561** |
|  | **59.0%** | **34.0%** | **11.7%** | **33.0%** | **21.8%** |
| Fuel gallons sold |  |  | **730,439** |  |  |
| **Three Months Ended October 31, 2022** | **Prepared Food & Dispensed Beverage** | **Grocery & General Merchandise** | **Fuel** | **Other** | **Total** |
| Revenue | $351,260 | $917,176 | $2,635,920 | $74,219 | $3,978,575 |
| Revenue less cost of goods sold (excluding depreciation and amortization) | $199,224 | $305,250 | $284,407 | $22,061 | $810,942 |
|  | 56.7% | 33.3% | 10.8% | 29.7% | 20.4% |
| Fuel gallons sold |  |  | 702,043 |  |  |

Total revenue for the second quarter of fiscal 2024 increased by $85,825 (2.2%) over the comparable period in fiscal 2023. Total revenues were impacted favorably by operating 129 more stores than a year ago. Retail fuel sales increased by $10,558 (0.4%) as the number of gallons sold increased by 28,396 (4.0%), which was offset by a decrease in the average retail price per gallon of fuel of 3.5%. During this same period, retail sales of grocery and general merchandise increased by $47,254 (5.2%), due to strong sales of non-alcoholic and alcoholic beverages. Prepared food and dispensed beverage sales increased by $31,221 (8.9%), due to improved sales of whole pizza pies, bakery, and dispensed beverages.

The other revenue category primarily consists of activity related to car wash revenue and the wholesale fuel revenue from the dealer network, which are both presented gross of applicable costs, as well as lottery, which is presented net of applicable costs. Other revenues decreased $3,208 (4.3%) for the second quarter of fiscal 2024 compared to the prior year, driven primarily by a decrease in wholesale fuel prices.

Revenue less cost of goods sold (excluding depreciation and amortization) was 21.8% of revenue for the second quarter of fiscal 2024, compared to 20.4% for the comparable period in the prior year. Grocery and general merchandise revenue less related cost of goods sold (exclusive of depreciation and amortization) was 34.0% of revenue for the second quarter of fiscal 2024, compared to 33.3% for the comparable period in the prior year. The current year percentage was positively impacted by increased sales of private label products. Prepared food and dispensed beverage revenue less related cost of goods sold (exclusive of depreciation and amortization) increased to 59.0% of revenue, compared to 56.7% of revenue for the comparable period in the prior year, primarily due to softening ingredient costs.

Fuel revenue less related cost of goods sold (exclusive of depreciation and amortization) was 11.7% of fuel revenue during the second quarter of fiscal 2024, compared to 10.8% for the comparable period in the prior year. Revenue per gallon less cost of goods sold (exclusive of depreciation and amortization) per gallon increased to 42.3 cents in the second quarter of fiscal 2024, compared to 40.5 cents for the comparable period in the prior year. The Company sold 6.9 million RINs \[renewable identification numbers\] for $8,429 during the quarter, compared to the sale of 6.4 million RINs in the second quarter of the prior year, which generated $11,080 (see footnote 3, above, for a further description of RINs and how they are generated).

Operating expenses increased $40,496 (7.5%) in the second quarter of fiscal 2024 from the comparable period in the prior year. Over 3% of the increase is due to operating 129 more stores than the comparable period in the prior year. Total same-store employee expense contributed to 1% of the increase, as the increase in labor rate was partially offset by a reduction in same-store labor hours. The Company also incurred higher variable incentive compensation, repair, maintenance, and insurance expense that made up 2% of the increase.

Depreciation and amortization expense increased by 9.6% to $85,598 in the second quarter of fiscal 2024 from $78,117. The increase was primarily due to operating 129 more stores than a year ago and capital expenditures during the previous twelve months.

Interest, net decreased by 8.9% to $12,306 in the second quarter of fiscal 2024 from $13,502. The decrease was primarily attributable to an increase in interest income due to an increase in market interest rates and average cash and cash equivalents on hand throughout the period, partially offset by increased interest expense on variable rate debt.

The effective tax rate was 23.6% in the second quarter of fiscal 2024 which is consistent with that of the same period of fiscal 2023. Both years include a similar one-time benefit from adjusting the Company’s deferred tax assets and liabilities for state law changes enacted during the quarter.

Net income increased by $21,227 (15.4%) to $158,782 from $137,555 in the comparable period in the prior year. The increase in net income was primarily attributable to higher profitability both inside the store and higher fuel margin, partially offset by increases in operating expenses and depreciation and amortization. See discussion in the paragraphs above for the primary drivers for each of these changes.

### Six Months Ended October 31, 2023 Compared to

### Six Months Ended October 31, 2022

#### (Dollars and Amounts in Thousands)

| Six Months Ended October 31, 2023 | Prepared Food & Dispensed Beverage | Grocery & General Merchandise | Fuel | Other | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| Revenue | **$755,294** | **$1,961,366** | **$5,073,811** | **$143,180** | **$7,933,651** |
| Revenue less cost of goods sold (excluding depreciation and amortization) | **$442,525** | **$667,173** | **$605,813** | **$47,804** | **$1,763,315** |
|  | **58.6%** | **34.0%** | **11.9%** | **33.4%** | **22.2%** |
| Fuel gallons sold |  |  | **1,444,429** |  |  |
| **Six Months Ended October 31, 2022** | **Prepared Food & Dispensed Beverage** | **Grocery & General Merchandise** | **Fuel** | **Other** | **Total** |
| Revenue | $694,813 | $1,840,240 | $5,732,262 | $165,904 | $8,433,219 |
| Revenue less cost of goods sold (excluding depreciation and amortization) | $390,177 | $618,557 | $592,595 | $45,863 | $1,647,192 |
|  | 56.2% | 33.6% | 10.3% | 27.6% | 19.5% |
| Fuel gallons sold |  |  | 1,391,510 |  |  |

Total revenue for the first six months of fiscal 2024 decreased by $499,568 (5.9%) over the comparable period in fiscal 2023. Total revenues were impacted favorably by operating 129 more stores than a year ago. Retail fuel sales decreased by $658,451 (11.5%) as the average retail price per gallon decreased 14.7%, partially offset by an increase in the number of gallons sold by 52,919 (3.8%). During this same period, retail sales of grocery and general merchandise increased by $121,126 (6.6%) due to strong sales of non-alcoholic and alcoholic beverages, snacks, and candy. Prepared food and dispensed beverage sales increased by $60,481 (8.7%) due to improved sales of hot sandwiches, whole pizza pies, bakery, and dispensed beverages.

The other revenue category primarily consists of activity related to car wash revenue and the wholesale fuel revenue from the dealer network, which are both presented gross of applicable costs, as well as lottery, which is presented net of applicable costs. Other revenues decreased $22,724 (13.7%) for the first six months of fiscal 2024 compared to the prior year, driven primarily by a decrease in wholesale fuel prices.

Revenue less cost of goods sold (excluding depreciation and amortization) was 22.2% of revenue for the first six months of fiscal 2024, compared to 19.5% for the comparable period in the prior year. Grocery and general merchandise revenue less related cost of goods sold (exclusive of depreciation and amortization) increased to 34.0% of grocery and general merchandise revenue, compared to 33.6% in the prior year. The current year percentage was positively impacted by increased sales of private label products. Prepared food and dispensed beverage revenue less related cost of goods sold (exclusive of depreciation and amortization) increased to 58.6% of revenue, compared to 56.2% in the prior year, primarily due to softening ingredient costs, as well as changes in the digital box top program.

Fuel revenue less related cost of goods sold (exclusive of depreciation and amortization) was 11.9% of fuel revenue for the first six months of fiscal 2024, compared to 10.3% for the first six months of the prior year. Revenue per gallon less cost of goods sold (exclusive of depreciation and amortization) per gallon was 41.9 cents for the first six months of fiscal 2024 compared to 42.6 cents in the prior year. The Company sold 19.7 million RINs \[renewable identification numbers\] for $28,626 during the six months of fiscal 2024, compared to the sale of 17.0 million RINs in the prior year, which generated $28,756 (see footnote 3, above, for a further description of RINs and how they are generated).

Operating expenses increased by $58,080 (5.4%) in the first six months of fiscal 2024 from the comparable period in the prior year. Approximately 3% of the increase is due to operating 129 more stores than the comparable period in the prior year. Total same-store employee expense contributed to 0.5% of the increase, as the increase in labor rate was partially offset by a reduction in same-store labor hours. The Company also incurred higher same-store repairs and maintenance expense that made up 1.1% of the increase.

Depreciation and amortization expense increased 9.1% to $168,503 for the first six months of fiscal 2024 from $154,412 for the comparable period in the prior year. The increase was primarily due to operating 129 more stores than a year ago and capital expenditures during the previous twelve months.

Interest, net decreased by 9.2% to $24,801 for the first six months of fiscal 2024 from $27,318. The decrease was primarily attributable to an increase in interest income due to an increase in market interest rates and average cash and cash equivalents on hand throughout the period, partially offset by increased interest expense on variable rate debt.

The effective tax rate decreased to 23.6% in the first six months of the fiscal year compared to 24.2% in the same period of the prior fiscal year. The decrease in the effective tax rate was primarily due to one-time benefits from adjusting the Company’s deferred tax assets and liabilities for state law changes enacted during the year.

Net income increased by $37,532 (12.9%) to $328,019 from $290,487 in the prior year. The increase in net income was primarily attributable to higher profitability inside the store and higher fuel margin, partially offset by increases in operating expenses and depreciation and amortization. See discussion in the paragraphs above for the primary drivers for each of these changes.

### Use of Non-GAAP Measures

We define EBITDA as net income before net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by excluding the gain or loss on disposal of assets as well as impairment charges. Neither EBITDA nor Adjusted EBITDA are considered GAAP measures, and should not be considered as a substitute for net income, cash flows from operating activities or other income or cash flow statement data. These measures have limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. We strongly encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

We believe EBITDA and Adjusted EBITDA are useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of financial performance and debt service capabilities, and they are regularly used by management for internal purposes including our capital budgeting process, evaluating acquisition targets, assessing performance, and awarding incentive compensation.

Because non-GAAP financial measures are not standardized, EBITDA and Adjusted EBITDA, as defined by us, may not be comparable to similarly titled measures reported by other companies. It therefore may not be possible to compare our use of these non-GAAP financial measures with those used by other companies.

The following table contains a reconciliation of net income to EBITDA and Adjusted EBITDA for the three and six months ended October 31, 2023 and 2022:

|  | Three months ended October 31, 2023 | October 31, 2022 | Six months ended October 31, 2023 | October 31, 2022 |
| --- | ---: | ---: | ---: | ---: |
| Net income | **$158,782** | $137,555 | **$328,019** | $290,487 |
| Interest, net | **12,306** | 13,502 | **24,801** | 27,318 |
| Federal and state income taxes | **49,172** | 42,561 | **101,434** | 92,497 |
| Depreciation and amortization | **85,598** | 78,117 | **168,503** | 154,412 |
| EBITDA | **$305,858** | $271,735 | **$622,757** | $564,714 |
| Loss (gain) on disposal of assets and impairment charges | **1,216** | 4,561 | **(232)** | 4,791 |
| Adjusted EBITDA | **$307,074** | $276,296 | **$622,525** | $569,505 |

For the three months ended October 31, 2023, EBITDA and Adjusted EBITDA increased 12.6% and 11.1%, respectively, when compared to the same period a year ago. For the six months ended October 31, 2023, EBITDA and Adjusted EBITDA increased 10.3% and 9.3%, respectively, when compared to the same period a year ago. The increase in EBITDA and

Adjusted EBITDA was primarily attributable to higher profitability inside the store and higher fuel margin, which was partially offset by higher operating expenses. See discussion in the preceding sections for the primary drivers for each of these individual changes.

### Critical Accounting Policies

Critical accounting policies are those accounting policies that management believes are important to the portrayal of the Company’s financial condition and results of operations. The Company's critical accounting policies are described in the Form 10-K for the year ended April 30, 2023, and such discussion is incorporated herein by reference. There have been no changes to these policies in the six months ended October 31, 2023.

### Liquidity and Capital Resources

Due to the nature of the Company’s business, cash provided by operations is the Company’s primary source of liquidity. The Company finances its inventory purchases primarily from normal trade credit aided by the relatively rapid turnover of inventory. This turnover allows the Company to conduct its operations without large amounts of cash and working capital. As of October 31, 2023, the Company’s ratio of current assets to current liabilities was 1.06 to 1. The ratio at October 31, 2022 and April 30, 2023 was 1.08 to 1 and 0.99 to 1, respectively. The decrease in the ratio from October 31, 2022 is due primarily to the timing of debt payments, with an increase in current maturities at October 31, 2023. The increase in the ratio from April 30, 2023 is primarily attributable to an increase in cash and cash equivalents due to strong free cash flows.

Management believes that the net availability under the Bank Line of approximately $49,568 and the Revolving Facility of $850,000, combined with the current cash and cash equivalents and the future cash flow from operations will be sufficient to satisfy the working capital needs of our business.

Net cash provided by operating activities decreased $4,319 for the six months ended October 31, 2023 from the comparable period in the prior year. Cash flows from operating activities was impacted by an increase in net income adjusted for non-cash reconciling items (depreciation and amortization, amortization of debt issuance costs, change in excess replacement cost over LIFO inventory valuation, share-based compensation, and (gain) loss on disposal of assets and impairment charges) of approximately $31,093. Refer to "Six Months Ended October 31, 2023 Compared to Six Months Ended October 31, 2022" on page 17 for further details on the primary driver for these changes. This increase was offset by the changes in components of assets and liabilities. Cash provided by operations can be impacted by variability in the timing of payments and receipts for certain assets and liabilities, as well as changes in commodity costs year-over-year. The largest impacts from the changes in assets and liabilities are as follows:

- Impacts from changes in inventories decreased operating cash flows by $30,810, attributable to an increase in inventory quantities on hand at the end of the second quarter of fiscal 2024, compared to the prior year.
- Impacts due to changes in accrued expenses decreased operating cash flows by $27,149 in comparison to prior year, primarily due to timing of vendor payments, changes in the digital box top program, and impacts from wage related accruals.
- Impacts from changes in income tax related balances reduced operating cash flows by $24,715 primarily attributable to applying a higher outstanding income tax receivable to reduce our estimated tax payments for the first six months of fiscal 2023, compared to fiscal 2024.
- The above decreases in operating cash flows was partially offset by impacts from changes in receivables of $27,566 primarily due to the timing of vendor rebate payments during the comparable periods.

Cash used in investing activities increased $137,056. During the first six months of fiscal 2024, the Company expended $315,314 for purchases of property and equipment and payments for acquisitions compared to $180,019 for the comparable period in the prior year related to these activities. The increase in cash used in investing activities was largely attributable to an increase in acquisition related activity compared to the prior year. Purchases of property and equipment and payments for acquisitions of businesses typically represent the single largest use of excess Company funds. Management believes that by acquiring, building, and reinvesting in stores, the Company will be better able to drive long-term shareholder value.

Cash used in financing increased $83,523, primarily due to the repurchase and retirement of common stock under our share repurchase program for a total of $59,491, as well as an increase in debt payments compared to the comparable period in fiscal 2023.

As of October 31, 2023, the Company had long-term debt consisting of:

|  |  |
| --- | ---: |
| Finance lease liabilities | $101,741 |
| 3.67% Senior notes (Series A) due in 7 installments beginning June 17, 2022, and ending June 15, 2028 | 111,000 |
| 3.75% Senior notes (Series B) due in 7 installments beginning December 17, 2022 and ending December 18, 2028 | 45,000 |
| 3.65% Senior notes (Series C) due in 7 installments beginning May 2, 2025 and ending May 2, 2031 | 50,000 |
| 3.72% Senior notes (Series D) due in 7 installments beginning October 28, 2025 and ending October 28, 2031 | 50,000 |
| 3.51% Senior notes (Series E) due June 13, 2025 | 150,000 |
| 3.77% Senior notes (Series F) due August 22, 2028 | 250,000 |
| 2.85% Senior notes (Series G) due August 7, 2030 | 325,000 |
| 2.96% Senior notes (Series H) due August 6, 2032 | 325,000 |
| Variable rate term loan facility, requiring quarterly installments ending April 21, 2028 | 243,750 |
| Less debt issuance costs | (1,539) |
|  | 1,649,952 |
| Less current maturities | (53,166) |
|  | $1,596,786 |

The Company has funded purchases of property and equipment and payments for acquisitions of businesses primarily from the issuance of debt, existing cash, and funds generated from operations. Future capital needs required to finance operations, improvements and the anticipated growth in the number of stores are expected to be met from cash generated by operations, the Revolving Facility, the Bank Line, and additional long-term debt or other securities as circumstances may dictate, and are not expected to adversely affect liquidity.

### Cautionary Statements

This Form 10-Q, including the foregoing Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. The words “may,” “will,” "should," “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “continue,” and similar expressions are used to identify forward-looking statements. Forward-looking statements represent the Company’s current expectations or beliefs concerning future events and trends that we believe may affect our financial condition, liquidity and related sources and needs, supply chain, results of operations and performance at our stores, business strategy, strategic plans, growth opportunities, integration of acquisitions, acquisition synergies, short-term and long-term business operations and objectives including our long-term strategic plan, wholesale fuel, inventory and ingredient costs and the potential effects of the conflict in Ukraine and COVID-19 on our business. The Company cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements, including, without limitation, the following risk factors described more completely in the Company’s Form 10-K for the fiscal year ended April 30, 2023:

Business Operations; Our business and our reputation could be adversely affected by a cyber or data security incident or the failure to protect sensitive guest, Team Member or supplier data, or the failure to comply with applicable regulations relating to data security and privacy; food-safety issues and foodborne illnesses, whether actual or reported, or the failure to comply with applicable regulations relating to the transportation, storage, preparation or service of food, could adversely affect our business and reputation; we may be adversely impacted by increases in the cost of food ingredients and other related costs; a significant disruption to our distribution network, to the capacity of the distribution centers, or timely receipt of inventory could adversely impact our sales or increase our transaction costs, which could have a material adverse effect on our business; we could be adversely affected if we experience difficulties in, or are unable to recruit, hire or retain, members of our leadership team and other distribution, field and store Team Members; any failure to anticipate and respond to changes in consumer preferences, or to introduce and promote innovative technology for guest interaction, could adversely affect our financial results; we rely on our information technology systems, and a number of third-party software providers, to manage numerous aspects of our business, and a disruption of these systems could adversely affect our business; increased credit card expenses could lead to higher operating expenses and other costs for the Company; our operations present hazards and risks which may not be fully covered by insurance, if insured; the dangers inherent in the storage and transport of fuel could cause disruptions and could expose to us potentially significant losses, costs or liabilities; consumer or other litigation could adversely affect our financial condition and results of operations; pandemics or disease outbreaks, such as COVID-19, responsive actions taken by governments and others to mitigate their spread, and guest behavior in response to these events, have, and may in the future, adversely affect our business operations, supply chain and financial results; and, covenants in our Senior Notes and credit facility agreements require us to comply with certain covenants and meet financial maintenance tests and the failure to comply with these requirements could have a material impact to us.

Governmental Actions, Regulations, and Oversight: Compliance with and changes in tax laws could adversely affect our performance; we are subject to extensive governmental regulations; governmental action and campaigns to discourage tobacco and nicotine use and other tobacco products may have a material adverse effect on our revenues and gross profit; and, wholesale cost and tax increases relating to tobacco and nicotine products could affect our operating results.

Industry: General economic and political conditions that are largely out of the Company’s control may adversely affect the Company’s financial condition and results of operations; developments related to fuel efficiency, fuel conservation practices, climate change, and changing consumer preferences may decrease the demand for motor fuel; unfavorable weather conditions can adversely affect our business; the volatility of wholesale petroleum costs could adversely affect our operating results; and, the convenience store industry is highly competitive.

Growth Strategies: We may not be able to identify, acquire, and integrate new properties and stores, which could adversely affect our ability to grow our business.

Common Stock: The market price for our common stock has been and may in the future be volatile, which could cause the value of your investment to decline; any issuance of shares of our common stock in the future could have a dilutive effect on your investment; and, Iowa law and provisions in our charter documents may have the effect of preventing or hindering a change in control and adversely affecting the market price of our common stock.

We further caution you that other factors we have not identified may in the future prove to be important in affecting our business and results of operations. We ask you not to place undue reliance on any forward-looking statements because they speak only of our views as of the statement dates. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

## Market risk

As filed, 1,290 characters.

The Company’s exposure to market risk for changes in interest rates relates primarily to our investment portfolio and floating rate long-term debt obligations. We place our investments with high-quality credit issuers and, by policy, limit the amount of credit exposure to any one issuer. Our first priority is to attempt to reduce the risk of principal loss. Consequently, we seek to preserve our invested funds by limiting default risk, market risk, and reinvestment risk. We attempt to mitigate default risk by investing in only high-quality credit securities that we believe to be low risk and by positioning our portfolio to respond appropriately to a significant reduction in a credit rating of any investment issuer or guarantor. The portfolio includes only marketable securities with active secondary or resale markets to ensure portfolio liquidity. Based upon the outstanding balance of the Company's term loan facility as of October 31, 2023, an immediate 100-basis-point move in interest rates would have an approximate annualized impact of $2.4 million on interest expense.

We do from time to time, participate in a forward buy of certain commodities. These contracts are not accounted for as derivatives as they meet the normal purchases exclusion under derivative accounting.

## Controls and procedures

As filed, 1,308 characters.

### Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 240.13a-15(e)). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s current disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

### Changes in Internal Controls Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the quarter ended October 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 129 characters.

There have been no material changes in our “risk factors” from those previously disclosed in our 2023 Annual Report on Form 10-K.

Filed Dec 11, 2023.
Source: SEC EDGAR, the filing index for accession 0000726958-23-000097. Last ingested by Listed: Nov 4, 2026, 19:53 ET. No prices; not investment advice.