Caseys General Stores Inc: Form 10-Q for the period ended Oct 31, 2025

Overview

As of October 31, 2025, 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", "CEFCO", "Bucky's", or "Lone Star Food Store", referred to as "Casey's" or the "Company") throughout 19 states, approximately half of which are located in Iowa, Missouri and Illinois.

During the third quarter of the prior fiscal year, the Company closed on the acquisition of Fikes Wholesale and Group Petroleum Services (collectively "Fikes"), owner of CEFCO Convenience Stores, which added 198 total stores (the "Fikes acquisition") and a wholesale fuel network.

As of October 31, 2025, there were 2,921 stores in operation. Approximately 71% of all stores were opened in areas with populations of fewer than 20,000 persons. The Company competes on the basis of price, as well as on the basis of traditional features of convenience store operations such as location, extended hours, product offerings, and quality of service.

All convenience stores carry a broad selection of food items (which at most stores includes, but is 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, groceries, health and beauty aids, automotive products, and other non-food items. As of October 31, 2025, 247 store locations offered car washes. In addition, all but six store locations offer fuel.

The Company had 68 stores operating under the "GoodStop (by Casey’s)" brand, 10 stores operating under the "Lone Star Food Store" brand, and was also temporarily operating certain locations under the name "Bucky's" as of October 31, 2025. Additionally, the majority of the stores acquired from Fikes are currently operating under the "CEFCO" brand. Similar to most of our store footprint, the "GoodStop", "Lone Star Food Store", "Bucky's", and "CEFCO" locations offer fuel for sale on a self-serve basis, and a broad selection of snacks, beverages, tobacco products, and other essentials. However, some of these locations do not have a kitchen and have limited prepared food offerings.

The Company operates a wholesale network where Casey’s manages fuel wholesale supply agreements to certain dealer sites and other wholesale locations. During the prior year, the Company expanded its fuel wholesale network through the Fikes acquisition. The dealer and wholesale locations are not operated by Casey's and are not included in our overall store count in the table below. Approximately 3% of total revenue for the three and six-months ended October 31, 2025, relates to the fuel wholesale network.

The Company operates three distribution centers, through which certain grocery and general merchandise and prepared food and dispensed beverage items are supplied to most of our stores. One distribution center is adjacent to our corporate headquarters, which we refer to as the Store Support Center in Ankeny, Iowa. The other two distribution centers are located in Terre Haute, Indiana and Joplin, Missouri. Additionally, the Company owns and operates a fuel terminal in Waco, Texas, which was acquired from Fikes in the prior year. The Company also self-distributes the majority of fuel to our stores.

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 $5.53 for the second quarter of fiscal 2026. For the same quarter a year-ago, diluted earnings per common share was $4.85.

The following table represents the roll forward of store count through the second quarter of fiscal 2026:

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Fuel Profitability

The Company, and the retail fuel industry, has recently experienced historically high average revenue less cost of goods sold per gallon (exclusive of depreciation and amortization). Although this has remained relatively consistent, 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 (exclusive of depreciation and amortization) will remain elevated from historical levels for the foreseeable future, it is possible that increased oil and fuel prices, higher 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 implementing an electric vehicle ("EV") strategy and our management team remains committed to understanding 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 19-state footprint. As of October 31, 2025, the Company has 232 charging stations at 48 stores, across 13 states. Our EV growth 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 approximately 41% of our stores offer biodiesel. Every newly built store has the capability to sell renewable fuels, 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.

Same-store sales of prepared food and dispensed beverage increased 4.8% and grocery and general merchandise increased 2.7% during the quarter. The increase in prepared food and dispensed beverage same-store sales was attributable to strong sales of whole pizzas and hot sandwiches. The increase in grocery and general merchandise same-store sales was primarily due to sales of non-alcoholic beverages. Additionally, the second quarter results reflected a 0.8% increase in same-store fuel gallons sold.

Three Months Ended October 31, 2025 Compared to

Three Months Ended October 31, 2024

(Dollars and Amounts in Thousands)

Total revenue for the second quarter of fiscal 2026 increased by $559,313 (14.2%) over the comparable period in fiscal 2025, primarily driven by $511,805 of additional revenue from the Fikes acquisition. Prepared food and dispensed beverage revenue increased by $49,972 (12.0%), due to an increase in same-store sales of 4.8% driven by strong sales of whole pizzas and hot sandwiches, as well as an increase of approximately 7.2% related to store growth, due to operating 236 more stores than a year ago. Grocery and general merchandise revenue increased by $140,943 (13.4%), due to an increase in same-store sales of 2.7% driven by sales of non-alcoholic beverages, as well as an increase of approximately 10.7% related to store growth. Retail fuel revenue increased by $272,657 (11.3%) due to an increase in the number of gallons sold of 130,738 (16.8%). This was partially offset by a decrease in the average retail price per gallon of 4.8%.

The other category primarily consists of activity related to wholesale fuel and car wash revenue, which are both presented gross of applicable costs, as well as lottery, which is presented net of applicable costs. Other revenue increased $95,741 (148.2%) for the second quarter of fiscal 2026 compared to the prior year, driven primarily by an increase in wholesale fuel revenue, as a result of the Fikes acquisition. The increased activity related to the wholesale fuel network carries a lower revenue less cost of good sold as a percentage of total revenue. Additionally, other revenue and other revenue less cost of goods sold (exclusive of depreciation and amortization) was favorably impacted by a one-time adjustment of $8,000 due to a change in estimate related to breakage assumptions on the outstanding gift card liability balance.

Total revenue less cost of goods sold (exclusive of depreciation and amortization) was 24.9% of revenue for the second quarter of fiscal 2026, compared to 24.3% for the comparable period in the prior year. Prepared food and dispensed beverage revenue less related cost of goods sold (exclusive of depreciation and amortization) decreased to 58.6% of prepared food and dispensed beverage revenue for the second quarter of fiscal 2026, compared to 58.7% for the comparable period in the prior year driven primarily by the acquisition of Fikes, as the CEFCO stores contribute a lower percentage than a typical Casey's store. Grocery and general merchandise revenue less related cost of goods sold (exclusive of depreciation and amortization) increased to 36.0% of grocery and general merchandise revenue for the second quarter of fiscal 2026, compared to 35.6% of grocery and general merchandise revenue for the comparable period in the prior year driven primarily by product mix.

Fuel revenue less related cost of goods sold (exclusive of depreciation and amortization) was 14.0% of fuel revenue during the second quarter of fiscal 2026, compared to 12.9% for the comparable period in the prior year. Revenue less cost of goods sold (exclusive of depreciation and amortization) per gallon increased to 41.6 cents in the second quarter of fiscal 2026, compared to 40.2 cents for the comparable period in the prior year. The Company sold 7.0 million RINs (renewable identification numbers) for $7,222 during the quarter, compared to the sale of 6.3 million RINs in the second quarter of the prior year, which generated $4,923 (see Note 3, above, for a further description of RINs and how they are generated).

Operating expenses increased $101,908 (16.7%) to $711,587 in the second quarter of fiscal 2026. Approximately 10.5% of the increase is due to operating 236 more stores than the comparable period in the prior year. Same-store employee expense contributed to approximately 2% of the increase, due to increases in labor rates, as same-store labor hours were flat.

Approximately 1% of the change is related to an increase in accrued costs for variable incentive compensation due to strong financial performance.

Depreciation and amortization expense increased $14,824 (15.3%) to $111,416 in the second quarter of fiscal 2026, primarily due to operating 236 more stores than a year ago.

Interest, net increased $12,137 (96.7%) to $24,690 in the second quarter of fiscal 2026, primarily due to issuing incremental debt of $1,100,000 in the prior year to partially fund the acquisition of Fikes.

The effective tax rate increased to 24.7% in the second quarter of fiscal 2026 compared to 24.5% in the same period of fiscal 2025. The increase in the effective tax rate was primarily due to a decrease in favorable permanent differences.

Net income increased $25,418 (14.0%) to $206,336 compared to $180,918 in the comparable period. The increase in net income was primarily attributable to higher profitability both inside the store and in fuel, partially offset by increases in operating expenses, depreciation and amortization, and interest expense. See discussion in the paragraphs above for the primary drivers for each of these changes.

Six Months Ended October 31, 2025 Compared to

Six Months Ended October 31, 2024

(Dollars and Amounts in Thousands)

Total revenue for the first six months of fiscal 2026 increased by $1,028,682 (12.8%) over the comparable period in fiscal 2025 primarily driven by $1,034,139 of additional revenue from the Fikes acquisition. Prepared food and dispensed beverage revenue increased by $103,277 (12.5%) due to an increase in same-store sales of 5.0% driven by improved sales of hot sandwiches, bakery, and whole pizzas, as well as an increase of approximately 7.5% related to store growth. Grocery and general merchandise revenue increased by $297,348 (14.0%) due to an increase of approximately 10.8% related to store growth, as well as an increase in same-store sales of 3.2% driven by strong sales of non-alcoholic beverages. Retail fuel revenue increased by $450,674 (9.1%) due to an increase in the number of gallons sold of 269,982 (17.4%), partially offset by the average retail price per gallon decreasing 7.1%.

The other category primarily consists of activity related to wholesale fuel and car wash revenue, which are both presented gross of applicable costs, as well as lottery, which is presented net of applicable costs. Other revenue increased $177,383 (133.8%) for the first six months of fiscal 2026 compared to the prior year, driven primarily by an increase in wholesale fuel revenue, as a result of the Fikes acquisition. The increased activity related to the wholesale fuel network carries a lower revenue less cost of good sold as a percentage of total revenue. Additionally, other revenue and other revenue less cost of goods sold (exclusive of depreciation and amortization) was favorably impacted by a one-time adjustment of $8,000 due to a change in estimate related to breakage assumptions on the outstanding gift card liability balance.

Revenue less cost of goods sold (exclusive of depreciation and amortization) was 24.6% of revenue for the first six months of fiscal 2026, compared to 23.8% for the comparable period in the prior year. Prepared food and dispensed beverage revenue less related cost of goods sold (exclusive of depreciation and amortization) decreased to 58.3% of prepared food and dispensed beverage revenue, compared to 58.5% for the comparable period in the prior year driven primarily by the acquisition of Fikes, as the CEFCO stores contribute a lower percentage than a typical Casey's store. Grocery and general merchandise revenue less related cost of goods sold (exclusive of depreciation and amortization) increased to 36.0% of grocery and general merchandise revenue, compared to 35.5% in the prior year driven primarily by product mix.

Fuel revenue less related cost of goods sold (exclusive of depreciation and amortization) was 13.9% of fuel revenue for the first six months of fiscal 2026, compared to 12.6% for the first six months of the prior year. Revenue less cost of goods sold (exclusive of depreciation and amortization) per gallon was 41.3 cents for the first six months of fiscal 2026 compared to 40.5 cents in the prior year. The Company sold 13.1 million RINs (renewable identification numbers) for $13,964 during the six months of fiscal 2026, compared to the sale of 14.9 million RINs in the prior year, which generated $9,758 (see Note 3, above, for a further description of RINs and how they are generated).

Operating expenses increased by $190,610 (15.6%) in the first six months of fiscal 2026 from the comparable period in the prior year. Operating 236 more stores than the prior year accounted for approximately 10% of the increase. Same-store employee expense contributed to approximately 2% of the increase, due to an increases in labor rates, offset by same-store labor hours down nearly 1%. Approximately 1% of the change is related to an increase in accrued costs for variable incentive compensation due to strong financial performance.

Depreciation and amortization expense increased $29,378 (15.4%) to $220,379 for the first six months of fiscal 2026, primarily due to operating 236 more stores than a year ago.

Interest, net increased by $24,920 (93.6%) to $51,540 for the first six months of fiscal 2026 primarily due to issuing incremental debt of $1,100,000 in the prior year to partially fund the acquisition of Fikes.

The effective tax rate decreased to 23.7% in the first six months of the fiscal year compared to 24.3% in the same period of the prior fiscal year. The decrease in the effective tax rate was primarily due to an increase in excess tax benefits recognized on share-based awards.

Net income increased by $60,575 (16.8%) to $421,691 from $361,116 in the prior year. The increase in net income was primarily attributable to higher profitability both inside the store and in fuel, partially offset by increases in operating expenses, depreciation and amortization and interest expense. 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, and depreciation and amortization. EBITDA is not considered to be a GAAP measure, and should not be considered as a substitute for net income, cash flows from operating activities or other income or cash flow statement data. This measure has limitations as an analytical tool, and should not be considered in isolation or as a substitute 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 is useful to investors in evaluating our operating performance because securities analysts and other interested parties use this calculation as a measure of financial performance and debt service capabilities, and it is 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, 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 this non-GAAP financial measure with those used by other companies.

The following table contains a reconciliation of net income to EBITDA for the three and six months ended October 31, 2025 and 2024:

For the three and six months ended October 31, 2025, EBITDA increased by 17.5% and 18.7%, respectively, when compared to the same period a year ago. The increase was primarily attributable to higher profitability both inside the store and in fuel, 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, 2025, and such discussion is incorporated herein by reference. There have been no changes to these policies in the six months ended October 31, 2025.

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, 2025, the Company’s ratio of current assets to current liabilities was 1.05 to 1. The ratio at October 31, 2024 and April 30, 2025 was 0.88 to 1 and 0.92 to 1, respectively. The increase in the ratio is primarily attributable to an increase in cash and cash equivalents. For further information, refer to discussions on the changes in the sections of the statement of cash flow below.

Management believes that the net availability under the Bank Line of approximately $49,726 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 was $719,486 for the six months ended October 31, 2025, compared to $552,057 for the comparable period in the prior year, an increase of $167,429. Our primary source of operating cash flows is from sales to guests at our stores. The primary uses of operating cash flows are payments to our team members and suppliers, as well as payments for taxes and interest. Cash flow from operations was favorably impacted by improved revenue less cost of goods sold (exclusive of depreciation and amortization) of $320,317, as well as a decrease in cash paid for taxes of $17,553 compared to the prior year, primarily due to increased accelerated tax depreciation following the reinstatement of 100% bonus depreciation under the One Big Beautiful Bill Act. This was offset by an increase in operating expenses of $190,610 and an increase in cash paid for interest of $31,847. Refer to "Six Months Ended October 31, 2025 Compared to Six Months Ended October 31, 2024" starting on page 16 for further details on the primary drivers for the changes in revenue, cost of goods sold, operating expenses, and interest. Cash flows from operations can also be impacted by variability in the timing of payments and receipts for certain assets and liabilities, such as wage related accruals, accounts payable, and receivables from credit card companies or our vendors. Operating cash flows were also favorably impacted by an increase of $24,144 due to the timing of inventory purchases, as well as an increase of $30,288 related to accounts payable and accrued expenses, due to the timing of payments.

Net cash used in investing activities increased by $98,395. During the first six months of fiscal 2026, the Company expended $368,554 for purchases of property and equipment and payments for acquisitions compared to $257,567 for the comparable period in 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.

Net cash used in financing activities was $209,890 for the six months ended October 31, 2025, compared to net cash provided by financing activities of $999,149 in the comparable period. The change from the prior year was primarily due to the proceeds from long-term debt of $1,100,000 received to partially fund the Fikes acquisition in the prior year. Additionally, the repurchase and retirement of common stock under our share repurchase program resulted in an increase in the net cash used of approximately $61,768 during the period.

As of October 31, 2025, the Company had long-term debt consisting of:

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 but not limited to the 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 conflicts in oil producing regions and other geopolitical disruptions 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, 2025:

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, 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.

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. We utilize an interest rate swap to manage exposure to fluctuations in variable interest rates. While the interest rate swap is not designated as a hedging instrument for accounting purposes, the Company does not enter into interest rate swap agreements for trading or speculative purposes. The impact of the interest rate swap was immaterial to the financial statements as of October 31, 2025 and for the period then ended. Based upon the outstanding balance of the Company's term loan facilities as of October 31, 2025, an immediate 100-basis-point move in interest rates would have an approximate annualized impact of $9.6 million on interest expense.

The Company also has exposure to market risks related to the volatility of fuel prices associated with non-store inventoried fuel (pipeline and terminal). The Company utilizes futures contracts to economically hedge the physical products while the bulk fuel is in storage at various terminals and pipelines, until such time the underlying gallons can be delivered to the store or wholesale customer. The Company does not speculate in trading financial instruments. All hedges must be matched against recorded physical transactions, inventoried fuel in a pipeline or at a terminal. Derivative contracts outstanding were immaterial to the financial statements as of October 31, 2025 and for the period then ended.

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.

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

We acquired Fikes Wholesale, owner of CEFCO Convenience Stores, and Group Petroleum Services (collectively “Fikes”) on November 1, 2024. We will exclude Fikes' internal controls over financial reporting from the scope of management’s annual assessment of the effectiveness of the Company's controls and procedures for the period May 1, 2025 through October 31, 2025. This exclusion is in accordance with the general guidance issued by the Staff of the SEC that an assessment of a recent business combination may be omitted from management's report on internal control over financial reporting in the first year of consolidation.

There have been no other changes in the Company’s internal control over financial reporting during the quarter ended October 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

There have been no material changes in our “risk factors” from those previously disclosed in our 2025 Annual Report on Form 10-K.