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Item 7. Management’s Discussion and Analysis

2021-06-25 compared with 2020-06-26 · 146 added, 138 removed, 157 unchanged (64% of the section changed)

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Please read the following discussion of the Company’s financial condition and results of operations in conjunction with the selected historical consolidated financial data and consolidated financial statements and accompanying notes presented elsewhere in this Form 10-K.

The Company primarily operates convenience stores under the names "Casey's" and “Casey’s General Store” in 16 Midwestern states, primarily in Iowa, Missouri and Illinois.

The Company primarily operates convenience stores under the names "Casey's" and “Casey’s General Store” in 16 Midwestern states, primarily in Iowa, Illinois, and Missouri.

On April 30, 2021, there were a total of 2,243 stores in operation.

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Approximately 55% of all Casey’s Stores were opened in areas with populations of fewer than 5,000 people, while approximately 19% of all stores were opened in communities with populations exceeding 20,000 persons.

The Marketing Company operates two distribution centers, through which grocery and other merchandise, and prepared food and fountain items are supplied to our stores.

CMC operates three distribution centers, through which certain grocery and other merchandise, and prepared food and fountain items, are supplied to our stores.

One is adjacent to the Store Support Center facility in Ankeny, Iowa.

The other was opened in February 2016 in Terre Haute, Indiana.

The other two distribution centers were opened in February 2016 in Terre Haute, Indiana and April 2021 in Joplin, Missouri.

At April 30, 2021, the Company owned the land at 2,216 store locations and the buildings at 2,225 locations, and leased the land at 27 locations and the buildings at 18 locations.

The Company’s business is seasonal, and generally the Company 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, pop and ice.

The following table represents the roll forward of store growth through the fourth quarter of fiscal 2020 :

The following table represents the roll forward of store growth throughout fiscal 2021:

Stores at April 30, 2020 2,207

New store construction 40

Acquisitions 5

Acquisitions not opened (3)

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Stores at April 30, 2021 2,243

On May 13, 2021, Casey’s closed on the Buchanan Energy acquisition which included 92 retail sites.

The Company also

closed on the 48-store Circle K transaction in June.

In total, Casey’s expects to add 200 more stores next fiscal year.

Long-Term Strategic Plan

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reinvigorate hospitality and the guest experience;

be where the guest is;

best-in-class efficiencies;

be where the guest is by accelerating unit growth;

create capacity through best-in-class efficiencies;

and, invest in our people and culture.

The Company's plan is based on building on our proud heritage and distinct advantages to become more contemporary through new capabilities, technology, data, and processes.

The Company's plan is based on building on our proud heritage

and distinct advantages to become more contemporary through new capabilities, technology, data, and processes.

We believe this will best position the Company to address rapidly evolving shifts in consumer habits and other macro retail trends.

COVID-19 and Fourth Quarter Results

During the fourth quarter of fiscal year 2020, the COVID-19 pandemic began to take hold throughout our footprint, as the number of reported infections within the sixteen states in which we operate increased.

Starting in mid-March, governmental restrictions, including shelter in place and stay at home orders, a widespread shift to working from home, other efforts to restrict the spread of the outbreak, and our guests’ behavior in response to the pandemic resulted in a sharp, overall decline in store traffic.

This resulted in lower demand for our products and a decrease in same-store sales.

Because we were considered an “essential service” by public authorities, we continued to operate with minimal (and only temporary) store closings.

While our stores remained open, the manner in which we served our guests required changes at many of our locations, including restrictions on self-service food and beverages, reduced prepared food offerings, limiting guest traffic in our stores and social distancing measures.

In addition, due to the decrease in demand, and to enhance our cleaning procedures, many of our stores saw a reduction in store hours.

Throughout the pandemic, however, we have not experienced any significant disruptions in our supply chain to date, despite the increased restrictions and uncertainty.

Our top priority throughout this pandemic has been the health and well-being of our team members, our guests, and our communities.

As a result, we implemented the following changes across our store footprint:

Despite the challenges caused by the COVID-19 pandemic, the Company made significant progress towards its strategic plan goals during the 2021 fiscal year, examples of which include the following:

• Introduced 100+ private label products and curbside pickup at all stores

• Updated our branding, including the introduction of a new logo

• Expanded our digital offerings and added 1.5 million Casey's Rewards members

• Developed and refined capabilities across the enterprise to drive efficiencies by launching centralized procurement and asset protection departments, opening a third distribution center in Joplin, Missouri, optimizing our transportation network, and enhancing price and product optimization

• Continued to add stores through a mixture of new store builds and acquisitions

• Added thirteen talented and diverse individuals to the extended leadership team

Since the fourth quarter of the Company’s 2020 fiscal year, the COVID-19 pandemic has generally led to decreased store traffic and lower demand for certain of our products.

Governmental and privately imposed restrictions, including those on travel, social, work and other gatherings, in-person schooling and other closures, and our guests’ behavior in response to such restrictions, have contributed to such declines, which have not fully recovered to pre-pandemic levels.

Overall, we saw a decrease in same-store fuel gallons of approximately 8.1% and same-store inside customer traffic of approximately 8.7%, compared to the prior year.

Additionally, as a result of these factors, the manner in which we served our guests required changes at many of our locations for a portion of the 2021 fiscal year, including restrictions on self-service food and beverages, reduced prepared food offerings, limiting guest traffic in our stores and social distancing measures.

Prepared food and fountain category saw a same-store sales decrease of 2.1%, compared to the prior year, due, in part, to many of these restrictions.

Despite these declines, throughout the 2021 fiscal year, due to the combination of COVID-19 fuel demand dynamics, other macroeconomic factors in the oil industry, and the efforts of our fuel team, we experienced record high fuel average revenue less cost of goods sold per gallon (excluding depreciation and amortization and credit card fees), leading to historically strong financial performance for the 2021 fiscal year, including record net income, record fuel gross profit and record diluted earnings per share.

Average revenue less cost of goods sold (excluding depreciation and amortization and credit card fees) per gallon increased by 30.2%, to 34.9 cents in fiscal 2021 from 26.8 cents in fiscal 2020.

While fuel gross profit margins continue to remain strong, and remain higher than historic averages, they are lower than the highs achieved during the pandemic, which we expect will gradually decline during the next fiscal year.

COVID-19 also resulted in increased operating expenses throughout the 2021 fiscal year, as we took significant proactive steps to protect the health and safety of our Team Members, guests and communities.

Our top priority throughout has been their health and well-being.

Examples of certain COVID-19 measures that we implemented at certain times during the 2021 fiscal year include the following:

• $50 bonus to Team Members upon their full COVID-19 vaccination

• provided additional compensation and operational bonuses for key field and support Team Members;

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• established 6-foot markings in our stores to encourage social distancing;

implemented contact-less delivery.

• provided free meals for all store and distribution center Team Members;

After a strong start to the fourth quarter, the Company’s results of operations for fiscal 2020 in the last half of the quarter were significantly impacted in all categories by the COVID-19 pandemic as follows:

Same-Store Sales

4th quarter total

Grocery & Other Merchandise

Prepared Food & Fountain

Despite these impacts, however, during the fourth quarter, the Company reported $1.67 in diluted earnings per share compared to $0.68 per share for the same quarter a year ago.

The increase was driven largely by an unprecedented fuel margin of 40.8 cents per gallon in the fourth quarter of fiscal 2020, compared to 18.6 cents per gallon in the fourth quarter of fiscal 2019, which was primarily due to declining wholesale fuel costs related to macro-economic factors in the oil industry.

The fuel margin peaked at the beginning of April, and moderated throughout the remainder of the quarter.

Same-store fuel gallons sold during the fourth quarter of fiscal 2020 were down 14.7% , compared to a decrease of 2.8% in the prior year.

Also in the fourth quarter of fiscal 2020, same-store sales of grocery and other merchandise decreased 2.0% with an average margin of 30.4% .

In the prior year, same-store sales were up 5.7% with a 31.5% average margin.

The average margin was adversely affected by stronger sales of lower margin products in the category.

Prepared food and fountain same-store sales in the fourth quarter of fiscal 2020 were down 13.5% with an average margin of 60.0% .

In the prior year, same-store sales were up 2.0% with a 62.2% average margin.

The average margin was adversely impacted by higher commodity costs and increased promotional activity.

For the fourth quarter of fiscal 2020, operating expenses were up 6.2% to 367.5 million.

Fourth quarter results were positively impacted by wage expense reductions related to a reduction in hours at the stores, along with lower credit card fees, offset by higher hourly wage rates and increased costs of cleaning and other pandemic-related supplies.

Fourth quarter depreciation expense was consistent with prior year.

Fourth quarter effective tax rate was higher than prior year, due primarily to larger prior year tax credits combined with lower pretax income.

As we continue to navigate through this near-term challenge, we made numerous adjustments in our business to maintain flexibility to ensure our continued long-term success, including deferring some discretionary capital spending, temporarily adjusting store hours to meet guest demand to optimize profitability, expanding third-party delivery opportunities, expanding delivery items beyond prepared foods, expanding online assortment available for sale and modifying prepared food production to reduce food waste.

In parallel, we continue to move forward in executing on key elements of our long-term strategic plan.

While COVID-19 has resulted in, and will continue to bring, significant challenges and uncertainty, we believe that the strength of our brand and balance sheet position us well to emerge from the COVID-19 pandemic.

However, given the uncertainties, we are unable to forecast or estimate the potential impact to our future operating results.

• implemented contact-less delivery.

In total, the Company spent approximately $38.4 million during the 2021 fiscal year for all COVID-19 health, safety and related measures.

As schools, businesses and the economy in general have slowly reopened, and vaccinations rates in our operating territory improve and new infections decline, we have continued to see improvements in store traffic numbers.

However, the unpredictable nature of the pandemic could again lead to closures, decreased traffic and demand, and increased COVID-19-

related operating expenses, for the foreseeable future.

While COVID-19 has resulted in, and will continue to bring, significant challenges and uncertainty to our operating environment, we believe that our resilient business model and the strength of our brand and balance sheet position us well to emerge from the pandemic.

For more information related to the additional risks to the Company related to the COVID-19 pandemic, and certain conditions that may affect future performance, please refer to the “Risk Factors” section above in Item 1A.

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Fiscal 2021 Compared with Fiscal 2020

The Company’s results of operations for fiscal 2020 in the last two months of the year were significantly impacted in all categories by the COVID-19 pandemic.

Total revenue for fiscal 2021 decreased 5.1% ($468,107) to $8,707,189.

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Total revenue less cost of goods sold (excluding depreciation and amortization) was 27.1% for fiscal 2021 compared with 23.4% for the prior year.

Fuel cents per gallon increased to 26.8 cents in fiscal 2020 from 20.3 cents in fiscal 2019 due to an unprecedented fourth quarter average fuel margin driven by macro-economic factors, as well as the Company's transition to a more balanced approach to fuel pricing and focus on optimizing gross profit dollars.

The grocery and other merchandise revenue less related cost of goods sold (exclusive of depreciation and amortization) was relatively consistent at 32.0% in fiscal 2020 compared to 32.1% in fiscal 2019 .

The prepared food and fountain revenue less related cost of goods sold (exclusive of

depreciation and amortization) decreased to 60.9% from 62.2% during fiscal 2020 , due mainly to higher commodity costs and increased promotional activity.

Operating expenses increased 7.7% ( $106,764 ) in fiscal 2020 primarily due to operating 61 more stores than one year ago, and incremental expenses associated with the COVID-19 pandemic.

Fuel cents per gallon increased to 34.9 cents in fiscal 2021 from 26.8 cents in fiscal 2020, primarily as a result of COVID-19, combined with the efforts of our centralized fuel team coupled with procurement improvements.

The grocery and other merchandise revenue less related cost of goods sold (exclusive of depreciation and amortization) was consistent at 32.0% in fiscal 2021 and fiscal 2020.

The prepared food and fountain revenue less related cost of goods sold (exclusive of depreciation and amortization) decreased to 60.1% from 60.9% during fiscal 2021 compared to the prior year, due mainly to lower volume and higher waste in the morning day part.

Operating expenses increased 9.3% ($139,148) in fiscal 2021 primarily due to operating 36 more stores than one year ago, as well as incurring $38.4 million in COVID-related expenses and $30.7 million in incremental incentive compensation expense due to the strong performance of the company.

The majority of all operating expenses are wages and wage-related costs.

Depreciation and amortization expense increased 5.6% ($14,021) to $265,195 in fiscal 2021 from $251,174 in fiscal 2020.

The increase was due primarily to capital expenditures made in fiscal 2020 and fiscal 2019 , primarily relating to new stores, offset by an adjustment to the useful lives of underground storage tanks.

The increase was due primarily to capital expenditures made in fiscal 2021 and fiscal 2020.

The effective tax rate increased to 23.2% in fiscal 2021 from 22.9% in fiscal 2020.

The increase in the effective tax rate was due to a one-time benefit in the prior year from adjusting the Company’s deferred tax assets and liabilities for enacted state law changes, offset by a one-time benefit related to net operating loss carrybacks in the current year enacted by the Coronavirus Aid, Relief and Economic Security (CARES) Act.

The increase in the effective tax rate was due to a reduction in favorable permanent differences, offset by a decrease in state tax expense.

Net income increased to $312,900 in fiscal 2021 from $263,846 in fiscal 2020.

The increase was due to increased fuel margin contribution and operating 61 more stores than one year ago.

The increase was primarily due to increased fuel contribution and operating 36 more stores than one year ago.

Please refer to the Form 10-K related to the fiscal year ended April 30, 2020, filed on June 26, 2020, for comparison of Fiscal 2020 to Fiscal 2019.

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Years ended April 30,

2021 2020 2019

Total revenue by category

Fuel $ 4,825,466 $ 5,517,412 $ 5,848,770

Grocery and other merchandise 2,724,374 2,498,966 2,369,521

Prepared food and fountain 1,087,147 1,097,207 1,074,294

Other 70,202 61,711 60,325

$ 8,707,189 $ 9,175,296 $ 9,352,910

Revenue less cost of goods sold (excluding depreciation and amortization) by category

Fuel $ 761,247 $ 614,847 $ 466,107

Grocery and other merchandise 872,573 800,140 759,817

Prepared food and fountain 653,689 668,092 668,598

Other 68,926 61,605 60,202

$ 2,356,435 $ 2,144,684 $ 1,954,724

INDIVIDUAL STORE COMPARISONS (1)

Years ended April 30,

2021 2020 2019

Average retail sales $ 3,894 $ 4,203 $ 4,449

Average retail inside sales (3) 1,720 1,659 1,649

Average revenue less cost of goods sold (excluding depreciation and amortization) on inside items

Average revenue less cost of goods sold (excluding depreciation and amortization) on inside sales (3) 655 647 651

Average retail sales of fuel 2,174 2,544 2,800

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Years ended April 30,

2021 2020 2019

Fuel gallons (2) (8.1) % (5.1) % (1.7) %

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We define same-store sales as the total sales increase (or decrease) for stores open during the full time of the periods being presented.

When comparing quarterly data the store must be open for each entire quarter.

When comparing annual data, the store must be open for each entire fiscal year being compared.

The store must be open for each entire fiscal year being compared.

Remodeled stores that remained open or were closed for just a very brief period of time (less than a week) during the period being compared remain in the same store sales comparison.

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Newly constructed and acquired stores do not enter the calculation until they are open for each entire period being compared as well.

The decline in fuel gallons in fiscal 2020 as compared to fiscal 2019 was primarily due to shelter in place restrictions diminishing overall demand during the last two months of the fiscal year, as well as transitioning to a more balanced pricing approach that focuses on both gallon movement and margins.

The decline in same store sales growth for grocery and other merchandise and prepared food and fountain for 2020 as compared to 2019 was primarily due to slowing guest traffic related to the COVID-19 pandemic over the last two months of the fiscal year.

(2) The decline in fuel gallons in fiscal 2021 as compared to fiscal 2020 was primarily due to softer demand in due to the COVID-19 pandemic.

(3) The decline in same-store sales for prepared food and fountain for 2021 as compared to 2020 was primarily due to the COVID-19 pandemic and the related restrictions.

Use of Non-GAAP Measures

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The following table contains a reconciliation of net income to EBITDA and Adjusted EBITDA for the three months and years ended April 30, 2021 and 2020, respectively:

Three months ended

April 30, 2020

April 30, 2019

April 30, 2020

April 30, 2019

Three months ended Years ended

April 30, 2021 April 30, 2020 April 30, 2021 April 30, 2020

Net income 41,698 $ 62,091 $ 312,900 $ 263,846

Interest, net 11,168 13,806 46,679 53,419

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Federal and state income taxes 11,921 16,491 94,470 78,202

EBITDA $ 134,684 $ 157,581 $ 719,244 $ 646,641

Loss on disposal of assets and impairment charges 5,872 1,380 9,680 3,495

Adjusted EBITDA $ 140,556 $ 158,961 $ 728,924 $ 650,136

For the three months ended April 30, 2020 , EBITDA and Adjusted EBITDA were up 48.4% and 49.4% respectively, when compared to the same period a year ago.

The increase was due primarily to gross profit dollar margin expansion from unprecedented average fuel margins driven by macro-economic factors.

For the year ended April 30, 2020 , EBITDA and Adjusted EBITDA were up 14.8% and 15.1% respectively.

The increase was due primarily to gross profit dollar margin expansion in fuel and operating 61 more stores than the same period a year ago, offset by decreased fuel gallons sold.

For the three months ended April 30, 2021, EBITDA and Adjusted EBITDA decreased 14.5% and 11.6% respectively, when compared to the same period a year ago.

The decrease was due primarily to unusually high fuel margin achieved last year via supply and demand shocks from COVID-19 and macroeconomic conditions in the oil industry.

For the year ended April 30, 2021, EBITDA and Adjusted EBITDA increased 11.2% and 12.1%, respectively.

The increase was due primarily to higher fuel contribution and operating 36 more stores than the same period a year ago.

Critical Accounting Policies

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Long-lived Assets

The Company periodically monitors closed and underperforming stores for an indication that the carrying amount of assets may not be recoverable.

If the sum of the expected future undiscounted cash flows is less than the carrying amount of the assets, an impairment loss is recognized to the extent the carrying value of the assets exceeds their estimated fair value.

The Company bases the estimated net realizable value of property and equipment on its experience in utilizing and/or disposing of similar assets and on estimates provided by its own and/or third-party real estate experts.

Fair value is based on management’s estimate of the future cash flows to be generated and the amount that could be realized from the sale of assets in a current transaction between willing parties, which are considered Level 3 inputs (See Note 3 to the consolidated financial statements).

The estimate is derived from offers, actual sale or disposition of assets subsequent to year-end, and other indications of fair value.

The Company monitors closed and underperforming stores for an indication that the carrying amount of assets may not be recoverable.

If the sum of the expected future undiscounted cash flows is less than the carrying amount of the assets, an impairment loss is recognized to the extent carrying value of the assets exceeds their estimated fair value.

Fair value is based on management’s estimate of the price that would be received to sell an asset in an orderly transaction between market participants.

The estimate is derived from offers, actual sale or disposition of assets subsequent to year-end, and other indications of fair value, which are considered Level 3 inputs (see Note 3 to the consolidated financial statements).

In determining whether an asset is impaired, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets, which for the Company is generally on a store-by-store basis.

The Company recorded impairment charges of $1,177 in fiscal 2020 , $1,167 in fiscal 2019 , and $507 in fiscal 2018 , a portion of which was related to replacement store and acquisition activities.

The Company incurred impairment charges of $3,846 in fiscal 2021, $1,177 in fiscal 2020, and $1,167 in fiscal 2019.

Impairment charges are a component of operating expenses.

Self-insurance

We are primarily self-insured for team member healthcare, workers’ compensation, general liability, and automobile claims.

The Company is primarily self-insured for Team Member healthcare, workers’ compensation, general liability, and automobile claims.

The self-insurance claim liability for workers’ compensation, general liability, and automobile claims is determined actuarially at each year-end based on claims filed and an estimate of claims incurred but not yet reported.

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The ratio at April 30, 2020 and at April 30, 2019 was 0.36 to 1 and 0.69 to 1, respectively.

The decrease in the ratio is primarily attributable to the reclassification of $569,000 5.22% Senior notes to current liabilities as they are due on August 9, 2020.

The Company is in the process of refinancing the 5.22% Senior notes.

We believe our current $300,000 unsecured revolver, our $25,000 unsecured bank line of credit, 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 $26,300 ( 5.0% ) for the year ended April 30, 2020 , primarily due to a decrease in accounts payable, partially offset by an increase in net income and a decrease in inventories.

Cash used in investing activities in the year ended April 30, 2020 increased $8,812 ( 1.9% ) primarily due to an increase in new store construction, offset by a decrease in acquisition activity.

Cash flows used in financing activities decreased $40,474 , primarily due to reductions in share buyback activity.

The increase in the ratio is partially attributable to an increase in cash and cash equivalents associated with an increase in cash provided by operations and a decrease in cash used in investing.

Additionally, current liabilities decreased due to the refinancing of the 5.22% senior notes.

Refer to Note 3 of the consolidated financial statements for additional discussion.

We believe our current $450,000 unsecured revolving credit facility, our $25,000 unsecured bank line of credit, 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 increased $299,774 (59.4%) for the year ended April 30, 2021, primarily due to an increase in accounts payable and accrued expenses, and an increase in net income, partially offset by an increase in inventories.

Cash used in investing activities in the year ended April 30, 2021 decreased $22,302 (4.8%) primarily due to a decrease in acquisition activity.

However, the Company did close on two large acquisitions during the first quarter of fiscal 2022.

Refer to Note 11 of the consolidated financial statements for additional discussion.

Cash flows used in financing activities increased $78,785, primarily due to payments on the revolving credit facility during the period, offset by incremental proceeds on the Series G and Series H notes.

Capital expenditures represent the single largest use of Company funds.

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During fiscal 2021, we expended $450,608 for property and equipment, primarily for construction, acquisition, and remodeling of stores compared with $471,683 in the prior year.

In fiscal 2021 , we anticipate funding our capital expenditures primarily from existing cash, funds generated by operations, and long-term debt proceeds for our construction and acquisition of stores.

Due to the continued uncertainty of COVID-19, guidance around capital expenditures will not be provided at this time.

This will be reevaluated as conditions warrant.

In January 2019, the Company entered into a credit agreement that provides for a $300 million unsecured revolving credit facility which includes a $30 million sublimit for letters of credit and a $30 million sublimit for swingline loans (the "Credit Facility").

The Credit Facility contains an expansion option permitting the Company to request an increase of the Credit Facility from time to time up to an aggregate additional $150 million from the lenders or other financial institutions acceptable to the Company and the Administrative Agent, upon the satisfaction of certain conditions, including the consent of the lenders whose commitments would increase.

The maturity date is January 11, 2024.

Amounts borrowed under the Credit Facility bear interest at variable rates based upon, at the Company's option, either (a) LIBOR plus an applicable margin or (b) an alternate base rate.

The Credit Facility also carries a facility fee between 0.2% and 0.4% per annum based on the Company's consolidated leverage ratio as defined in the credit agreement.

The Company had $120,000 and $ 75,000 outstanding under the Credit Facility at April 30, 2020 and 2019 respectively.

Concurrently with this credit agreement, the Company also reduced its existing unsecured revolving line of credit from $150,000 to $25,000 (the "Bank Line").

The Bank Line bears interest at a variable rate subject to change from time to time based on changes in an independent index referred to in the Bank Line as the Federal Funds Offered Rate (the “Index”).

The interest rate to be applied to the unpaid principal balance of the Bank Line was at a rate of 1.0% over the Index.

There was $0 outstanding on the Bank Line at April 30, 2020 and 2019 .

The line of credit is due upon demand.

As of April 30, 2020 , we had long-term debt and finance lease obligations of $ 714,502 (which is net of current maturities of $ 570,280 ) primarily consisting of:

$150,000 in principal amount of 3.67% Senior Notes, Series A;

$50,000 in principal amount of 3.75% Senior Notes, Series B;

$50,000 in principal amount of 3.65% Senior Notes, Series C;

$50,000 in principal amount of 3.72% Senior Notes, Series D;

$150,000 in principal amount of 3.51% Senior Notes, Series E;

$250,000 in principal amount of 3.77% Senior Notes, Series F;

and $14,502 of finance lease obligations.

Current maturities of long-term debt is primarily comprised of $ 569,000 in principal amount of 5.22% Senior notes.

Interest on the 5.22% Senior notes is payable on the 9th day of each February and August.

Principal on the 5.22% Senior notes is payable in full on August 9, 2020.

We may prepay the 5.22% notes in whole or in part at any time in an amount of not less than $2,000 at a redemption price calculated in accordance with the Note Agreement dated August 9, 2010 between the Company and the purchasers of the 5.22% Senior notes.

In fiscal 2022, we anticipate spending approximately $500 million in capital expenditures, including store remodels for acquisitions, primarily from existing cash, funds generated by operations, and proceeds from long-term debt.

As of April 30, 2021, we had long-term debt and finance lease obligations consisting of:

Finance lease liabilities (Note 7) 14,085

3.67% Senior notes (Series A) due in 7 installments beginning June 17, 2022, and ending June 15, 2028 150,000

3.75% Senior notes (Series B) due in 7 installments beginning December 17, 2022 and ending December 18, 2028 50,000

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

Debt issuance costs (336)

Less current maturities 2,354

On December 23, 2020, the Company amended its existing credit agreement dated January 11, 2019, as amended June 30, 2020 to:

(a) increase the revolving commitments thereunder to an aggregate principal amount of $450 million;

and (b) provide for a senior unsecured delayed-draw term loan facility in an aggregate principal amount of up to $300 million.

The Amendment increased the total borrowing capacity of the revolving commitments by an aggregate principal amount of $150 million, from $300 million to $450 million.

The maturity date remains unchanged, at January 11, 2024.

The term loan facility may be drawn in a single borrowing for up to five months from the amendment date, and has a maturity date of January 6, 2026.

Proceeds of the term loan were used to finance the Buchanan Energy acquisition (see additional discussion at Note 11 of the condensed consolidated financial statements).

Refer to Note 3 of the consolidated financial statements for additional discussion on changes to the Company's debt agreements during the fiscal 2021.

Interest on the 3.67% Senior notes Series A and 3.75% Senior notes Series B is payable on the 17th day of each June and December.

Principal on the Senior notes Series A and Series B is payable in various installments beginning June 17, 2022 (Series A) and December 17, 2022 (Series B) through December 2028.

We may prepay the 3.67% and 3.75% Senior notes in whole or in part at any time in an amount of not less than $2,000 at a redemption price calculated in accordance with the Note Agreement dated June 17, 2013, between the Company and the purchasers of the Senior notes Series A and Series B.

We may prepay the 3.67% and 3.75% Senior notes in whole or in part at any time in an amount of not less than $2,000 at a redemption price calculated in accordance with the Note Agreement dated June 17, 2013, as amended, between the Company and the purchasers of the Senior notes Series A and Series B.

Interest on the 3.65% Senior notes Series C is payable on the 2nd day of each May and November, while the interest on the 3.72% Senior notes Series D is payable on the 28th day of each April and October.

Principal on the Senior notes Series C and Series D is payable in various installments beginning May 2, 2025 (Series C) and October 28, 2025 (Series D) through October 2031.

We may prepay the 3.65% and 3.72% Senior notes in whole or in part at any time in an amount of not less than $2,000 at a redemption price calculated in accordance with the Note Agreement dated May 2, 2016, between the Company and the purchasers of the Senior notes Series C and Series D.

We may prepay the 3.65% and 3.72% Senior notes in whole or in part at any time in an amount of not less than $2,000 at a redemption price calculated in accordance with the Note Agreement dated May 2, 2016, as amended, between the Company and the purchasers of the Senior notes Series C and Series D.

Interest on the 3.51% Senior notes Series E is payable on the 13th day of each June and December, while the interest on the 3.77% Senior notes Series F is payable on the 22nd day of each February and August.

Principal on the Senior notes Series E and Series F is payable in full on June 13, 2025 (Series E) and August 22, 2028 (Series F), respectively.

We may prepay the 3.51% and 3.77% Senior notes in whole or in part at any time in an amount of not less than $2,000 at a redemption price calculated in accordance with the Note Agreement dated June 13, 2017, between the Company and the purchasers of the Senior notes Series E and Series F.

We may prepay the 3.51% and 3.77% Senior notes in whole or in part at any time in an amount of not less than $2,000 at a redemption price calculated in accordance with the Note Agreement dated June 13, 2017, as amended, between the Company and the purchasers of the Senior notes Series E and Series F.

Interest on the 2.85% Senior notes Series G and 2.96% Senior notes Series H is payable on the 7th day of each February and August.

Principal on the Senior notes Series G and Series H is payable in full on August 7, 2030 (Series G) and August 6, 2032 (Series H), respectively.

We may prepay the 2.85% and 2.96% Senior notes in whole or in part at any time in an amount of not less than $2,000 at a redemption price calculated in accordance with the Note Purchase Agreement dated June 30, 2020, between the Company and the purchasers of the Senior notes Series G and Series H.

To date, we have funded capital expenditures primarily through funds generated from operations, the proceeds of the sale of common stock, issuance of debt, and existing cash.

Future capital required to finance operations, improvements, and the anticipated growth in the number of stores is expected to come from cash generated by operations, the revolver, the bank line of credit, and additional long-term debt or other securities as circumstances may dictate.

Future capital required to finance operations, improvements, and the anticipated growth in the number of stores is expected to come from cash generated by operations, the revolver, the bank line,

and additional long-term debt or other securities as circumstances may dictate.

We do not expect such capital needs to adversely affect liquidity.

The table below presents our significant contractual obligations, including interest, at April 30, 2021:

Contractual obligations

Payments due by period

Contractual obligations Payments due by period

Total Less than

1 year 1-3 years 3-5 years More than

Senior notes $ 1,704,789 $ 44,638 $ 139,821 $ 304,559 $ 1,215,771

Finance lease obligations 20,723 3,110 5,681 2,039 9,893

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Deferred compensation 16,465 — — — —

Total $ 1,785,355 $ 49,542 $ 148,853 $ 309,940 $ 1,251,239

Unrecognized tax benefits relate to uncertain tax positions and since we are not able to reasonably estimate the timing of the payments or the amount by which the liability will increase or decrease over time, the related timing of the payment of the balances have not been reflected in the above “Payments due by period” table.

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The total amount of accrued interest and penalties for such unrecognized tax benefits was $370 as of April 30, 2021.

Interest and penalties related to income taxes are classified as income tax expense in our consolidated financial statements.

Interest and penalties related to income taxes are classified as federal and state income taxes in our consolidated financial statements.

The federal statute of limitations remains open for the tax years 2015 and forward.

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These changes could result from the expiration of the statute of limitations, examinations or other unforeseen circumstances.

The IRS is currently examining tax year 2016 and 2017.

The Company has no other ongoing federal or state income tax examinations.

The Company has no ongoing federal or state income tax examinations.

At this time, management believes it is reasonably possible the aggregate amount of unrecognized tax benefits will decrease by $2,000 within the next 12 months.

This expected decrease is due to the expiration of statute of limitations related to certain federal and state income tax filing positions.

This expected decrease is due to the expiration of statute of limitations related to certain income tax filing positions.

Included in long-term liabilities on our consolidated balance sheet at April 30, 2021, was a $15,094 obligation for deferred compensation.

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At April 30, 2021, we were partially self-insured for workers’ compensation claims in all 16 states of our marketing territory;

we also were partially self-insured for general liability and auto liability under an agreement that provides for annual stop-loss limits equal to or exceeding $ 500 for general liability and auto liability and $ 350 for workers' compensation.

To facilitate this agreement, letters of credit approximating $21,526 were issued and outstanding at April 30, 2020 and 2019 , on the insurance company’s behalf.

we also were partially self-insured for general liability and auto liability under an agreement that provides for annual stop-loss limits equal to or exceeding $1,000 for auto liability and $500 for workers' compensation and general liability.

To facilitate this agreement, letters of credit approximating $24,000 and $21,526 were issued and outstanding at April 30, 2021 and 2020, respectively, on the insurance company’s behalf.

We renew the letters of credit on an annual basis.

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The words “may,” “will,” “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 needs, supply chain, results of operations and performance at our stores, business strategy, strategic plans, growth opportunities, short-term and long-term business operations and objectives, and the potential effects of 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 above in Item 1A entitled “Risk Factors”:

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 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, and the potential effects of 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 above in Item 1A entitled “Risk Factors”:

Business 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;

our business and our reputation could be adversely affected by a data security incident or the failure to protect sensitive guest, team member or vendor data, or the failure to comply with applicable regulations relating to data security and privacy;

the convenience store industry is highly competitive;

the volatility of wholesale petroleum costs could adversely affect our operating results;

general economic conditions that are largely out of the Company’s control may adversely affect the Company’s financial condition and results of operations;

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;

consumer or other litigation could adversely affect our financial condition and results of operations;

increased credit card expenses could increase operating expenses;

developments related to fuel efficiency, fuel conservation practices, climate change, and changing consumer preferences may decrease the demand for motor fuel;

and, wholesale cost and tax increases relating to tobacco and nicotine products could affect our operating results.

Our Business :

our business and our reputation could be adversely affected by a 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 food-borne 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;

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 vendor platforms, to manage numerous aspects of our business, and a disruption of these systems could adversely affect our business;

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 may experience difficulties implementing and realizing the results of our strategic plan;

unfavorable weather conditions can adversely affect our business;

because we depend on our management’s and other team members’ experience and knowledge of our industry, we could be adversely affected were we to lose, or experience difficulty in recruiting and retaining, any such members of our team;

we may experience increased costs, disruptions or other difficulties with the implementation, operation and functionality of our enterprise resource planning system;

control deficiencies could prevent us from accurately and timely reporting our financial results;

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;

we may not be able to identify, acquire, and integrate new properties and stores, which could adversely affect our ability to grow our business;

covenants in our senior notes and credit facility agreements require us to comply with certain covenants and meet financial maintenance tests - failure to comply with these requirements could have a material impact to us;

the dangers inherent in the storage and transport of motor 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;

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;

and, the dangers inherent in the storage and transport of motor fuel could cause disruptions and could expose to us potentially significant losses, costs or liabilities.

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.

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 experience difficulties implementing and realizing the results of our long-term strategic plan;

we may experience increased costs, disruptions or other difficulties with the integration of the Buchanan Energy acquisition;

and, w e 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;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis