What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-06-24 compared with 2023-06-23 · 88 added, 133 removed, 202 unchanged (52% of the section changed)

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As of April 30, 2024, 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, primarily in Iowa, Missouri, and Illinois.

On April 30, 2023, there were a total of 2,521 stores in operation.

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", "Minit Mart", or "Lone Star Food Store" referred to as "Casey's" or the "Company") throughout 17 states, over half of which are located in Iowa, Missouri, and Illinois.

Approximately 72% 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.

As of April 30, 2024, there were a total of 2,658 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 April 30, 2024, 233 store locations offered car washes.

In addition, all but seven store locations offer fuel for sale on a self-service basis.

During the prior fiscal year, the Company introduced certain stores branded or rebranded as "GoodStop (by Casey’s)".

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.

As of April 30, 2023, 43 stores operate under the "GoodStop" brand.

The Company is also temporarily operating certain locations acquired from Buchanan Energy during the prior fiscal year under the name "Bucky's" and certain locations acquired from Minit Mart LLC during the current fiscal year 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.

In addition, all but eight store locations offer fuel for sale on a self-service basis.

The Company has 73 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.

These locations are not operated by Casey's and are not included in our overall store count.

Approximately 1% of total revenue for the year-ended April 30, 2024 relates to this dealer network.

Approximately 50% of all Casey’s were opened in areas with populations of fewer than 5,000 people, while approximately 26% of all stores were opened in communities with populations of more than 20,000 persons.

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

One is adjacent to 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).

At April 30, 2023, the Company leased the combination of land and/or building at 121 locations.

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

The following table represents the roll forward of store growth throughout fiscal 2024:

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Stores at April 30, 2024 2,658

Acquisitions in the table above include, in part, 26 stores which were acquired from Minit Mart LLC in April 2023.

For additional discussion, refer to Note 2 in the consolidated financial statements.

For further general descriptive information on the Company’s business and operations, see Item 1, above, which is incorporated herein by reference.

Long-Term Strategic Plan

The Company announced a three-year strategic plan in January 2020 focused on four strategic objectives:

reinvent hospitality and the guest experience;

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 was based on building on our proud heritage and distinct advantages to become more contemporary through new capabilities, technology, data, and processes.

The Company announced a three-year strategic plan in June 2023 focused on three enterprise objectives:

grow store count, accelerate the food business, and enhance operational efficiency, which are enabled by a strong foundation and Team Member experience.

The Company's plan was 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.

The Company closed out its strategic plan at the end of the fiscal year.

Some of the key highlights from this past fiscal year include:

• Grew our store count through new store construction and a number of strategic acquisitions

• Diluted EPS of $11.91, up 30.8% over the prior year

• Private label penetration in the grocery and general merchandise category was over 9% on both units and gross profit for the year

The Company made significant progress towards its strategic plan goals during the 2024 fiscal year.

Some of the key highlights include:

• Grew store count by 154 stores through new store construction and a number of strategic acquisitions

• Entered into our 17 th state of Texas

• Diluted earnings per share of $13.43, up 12.8% over the prior year

• Recorded strong prepared food and dispensed beverage growth driven by innovation including thin crust pizza and a refreshed lunch sandwich menu

• Casey's Rewards members grew to 7.9 million at year-end

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 largely contributed to by the increased prevalence and acceptance across all industries of working from home, a trend which the Company expects to continue into the foreseeable future.

While the ongoing impacts of COVID-19, in particular those related to governmental actions in response thereto, and those mentioned immediately above, will continue to bring challenges to our operating environment, we believe that our resilient business model and the strength of our brand and balance sheet position us well to navigate the impacts.

Fuel Volatility

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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, which also directly impacts the retail price of fuel that we sell at our stores.

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 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).

Oil and fuel prices continued to be impacted throughout fiscal 2024 as a result of the ongoing conflict in Ukraine, unrest in the Middle East and economic uncertainty in Western nations.

The Company expects similar market volatility to remain throughout the 2025 fiscal year.

In addition, during the past four calendar years, the Company, and the retail fuel industry, 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.

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, 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 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.

Casey's continues its process of implementing an 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 17-state footprint.

The Company has installed 138 charging stations at 29 stores, across 10 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.

As of April 30, 2024, the Company has 170 charging stations at 37 stores, across 12 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.

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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.

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

Currently, almost all of our stores offer fuel with at least 10% of blended ethanol and 43% 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.

Fiscal 2024 Compared with Fiscal 2023

Total revenue for fiscal 2023 increased 16.5% ($2,141,881) to $15,094,475.

Total revenue was impacted favorably by operating 69 more stores than a year ago, elevated retail fuel prices, and strategic retail price adjustments.

Retail fuel sales for the fiscal year were $10,027,310, an increase of 20.6% primarily due to a 16.5% increase in the average price of fuel.

Fuel gallons sold increased 3.6% to 2.7 billion gallons, which increased fuel revenue by an additional $349,451.

Grocery and general merchandise revenue for the fiscal year was $3,445,777, an increase of 9.7% due to strong sales of packaged beverages, snacks, and candy.

Prepared food and dispensed beverage revenue increased 9.8% to $1,322,560 due to increased sales of pizza slices, whole pies, and donuts.

Total revenue less cost of goods sold (excluding depreciation and amortization) was 20.4% for fiscal 2023 compared with 21.3% for the prior year.

Fuel cents per gallon increased to 40.2 cents in fiscal 2023 from 36.0 cents in fiscal 2022.

The grocery and general merchandise revenue less related cost of goods sold (exclusive of depreciation and amortization) increased to 33.6% from 32.7% during fiscal 2023 compared to fiscal 2022.

Grocery and general merchandise revenue less related cost of goods sold (exclusive of depreciation and amortization) was positively impacted by mix shift to higher margin items like energy drinks, candy, and private label products, as well as retail price adjustments, offset by inflationary pressures.

The prepared food and dispensed beverage revenue less related cost of goods sold (exclusive of depreciation and amortization) decreased to 56.6% from 59.2% during fiscal 2023 compared to the prior year, primarily due to higher ingredient costs, notably cheese, and higher levels of stales, which were partially offset by retail price adjustments.

Operating expenses increased 8.1% ($158,469) in fiscal 2023.

A one-time payment of $15,297 was received from the resolution of a legal matter, which reduced operating expenses by approximately 1%.

Approximately 3% of the increase is due to operating 69 more stores than a year ago.

Approximately 2% of the increase was related to same-store operations.

One percent of the increase was related to same-store credit card fees driven by higher retail fuel prices, retail price adjustments and strong inside sales.

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

Same-store employee expense was flat as the increase in employee wage rate was offset by a 2% reduction in same-store labor hours.

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

Depreciation and amortization expense increased 3.2% ($9,590) to $313,131 in fiscal 2023 from $303,541 in fiscal 2022.

The increase was due primarily to acquisitions and capital expenditures made in fiscal 2023 and fiscal 2022, offset by a decrease in accelerated depreciation, which was recorded in the prior year on equipment replaced in remodels.

Interest, net decreased 9.1% ($5,157) to $51,815 in fiscal 2023 from $56,972 in fiscal 2022.

The decrease was primarily attributable to an increase in interest income due to the increase in cash and cash equivalents and interest rates.

The effective tax rate increased to 24.0% in fiscal 2023 from 22.9% in fiscal 2022.

The increase in the effective tax rate was driven by a decrease in excess tax benefits recognized on share-based awards and a decrease in favorable permanent differences.

Net income increased to $446,691 in fiscal 2023 from $339,790 in fiscal 2022.

Total revenue for fiscal 2024 decreased by $231,562 (1.5%) since the prior fiscal year.

Prepared food and dispensed beverage revenue increased by $139,040 (10.5%), due to an increase in same-store sales of 6.8% and an increase of approximately 3.7% due to operating 137 more stores than a year ago.

The increase in same-store sales was driven by improved sales of hot sandwiches, whole pies, bakery, and dispensed beverages.

Grocery and general merchandise revenue increased by $281,617 (8.2%), due to an increase in same-store sales of 3.5% and an increase of approximately 4.7% due to operating 137 more stores than a year ago.

The increase in same-store sales was driven by strong sales of non-alcoholic and alcoholic beverages, snacks, and candy.

Retail fuel revenue decreased by $625,239 (6.2%) as the average retail price per gallon decreased 11.5%, partially offset by an increase in the number of gallons sold by 156,303 (5.8%) Other revenue decreased $26,980 (9.0%) compared to the prior year, driven primarily by a decrease in total revenue related to the dealer network.

Total revenue less cost of goods sold (excluding depreciation and amortization) was 22.5% of revenue for fiscal 2024 compared with 20.4% for the prior year.

Prepared food and dispensed beverage revenue less related cost of goods sold (excluding depreciation and amortization) increased to 58.7% of revenue from 56.6% during fiscal 2024 compared to the prior year, an increase of 2.1%, primarily due to softening ingredient costs.

Grocery and general merchandise revenue less related cost of goods sold (excluding depreciation and amortization) increased to 34.1% of revenue from 33.6% during fiscal 2024

compared to the prior year, an increase of 0.5%.

The current year percentage was positively impacted by increased sales of private label products.

Fuel revenue less related cost of goods sold (excluding of depreciation and amortization) was 11.9% of revenue for fiscal 2024 compared with 10.7% for the prior year.

Fuel cents per gallon decreased to 39.5 cents in fiscal 2024 from 40.2 cents in fiscal 2023.

The Company sold 25.9 million RINs (renewable identification numbers) for $33,023 during fiscal 2024, compared to the sale of 18.6 million RINs fiscal 2023, which generated $31,656 (see Note 1, below, for a further description of RINs and how they are generated).

Operating expenses increased $168,571 (8.0%) to $2,288,513 in fiscal 2024.

In the prior fiscal year, a one-time benefit from the resolution of a legal matter of $15,297 reduced operating expenses by approximately 1%.

Approximately 4.5% of the increase is due to operating 137 more stores than the comparable period in the prior year.

Total same-store employee expense contributed to approximately 1% of the increase, as the increases in labor rates were partially offset by a reduction in same-store labor hours.

Depreciation and amortization expense increased $36,666 (11.7%) to $349,797 in fiscal 2024, primarily due to operating 137 more stores than a year ago.

Interest, net increased $1,626 (3.1%) to $53,441 in fiscal 2024, primarily due to an increase in finance lease obligations from the prior fiscal year.

The effective tax rate decreased to 23.5% in fiscal 2024 from 24.0% in fiscal 2023.

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 $55,281 (12.4%) to $501,972 in fiscal 2024 from $446,691 in fiscal 2023.

The increase was primarily attributable to higher profitability both inside the store and in fuel.

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Total revenue by category

Fuel $ 10,027,310 $ 8,312,038 $ 4,825,466

Grocery and general merchandise 3,445,777 3,141,527 2,724,374

Prepared food and dispensed beverage $ 1,461,600 $ 1,322,560 $ 1,204,100

Grocery and general merchandise 3,727,394 3,445,777 3,141,527

Fuel 9,402,071 10,027,310 8,312,038

Other (1) 271,848 298,828 294,929

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

Fuel $ 1,074,913 $ 928,868 $ 761,247

Grocery and general merchandise 1,156,451 1,027,477 872,573

Prepared food and dispensed beverage $ 858,295 $ 748,405 $ 712,352

Grocery and general merchandise 1,270,527 1,156,451 1,027,477

Fuel 1,116,671 1,074,913 928,868

Other (1) 102,418 92,637 94,017

$ 3,347,911 $ 3,072,406 $ 2,762,714

(1) The 'Other' category historically has primarily consisted of lottery, which is presented net of applicable costs, and car wash.

As a result of the Buchanan Energy acquisition in the prior fiscal year, we acquired a dealer network where Casey’s manages fuel wholesale supply agreements to these stores.

The activity related to this dealer network is included in the 'Other' category and is presented gross of applicable costs.

(1) The 'Other' category primarily consists of activity related to wholesale fuel revenue from the dealer network and car wash revenue, which are both presented gross of applicable costs, as well as lottery, which is presented net of applicable costs.

INDIVIDUAL STORE COMPARISONS (1)

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2024 2023 2022

Fuel gallons (0.8) % 4.4 % (8.1) %

Grocery and general merchandise (2) 6.3 % 6.3 % 6.6 %

Prepared food and dispensed beverage 6.8 % 7.1 % 7.4 %

Grocery and general merchandise 3.5 % 6.3 % 6.3 %

Fuel gallons 0.1 % (0.8) % 4.4 %

(1) Same-store sales is a common metric used in the convenience store industry.

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If a store is replaced, either at the same location (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 as well.

(2) The increase in grocery and general merchandise same-store sales was primarily due to strong sales of packaged beverages, snacks and candy.

The increase in prepared food and dispensed beverage same-store sales was attributable to improved sales in pizza slices, whole pies, and donuts.

Both categories were also impacted favorably by strategic retail price adjustments.

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

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 years ended April 30, 2024, 2023, and 2022, respectively:

April 30, 2023 April 30, 2022

Years ended April 30,

2024 2023 2022

Net income $ 501,972 $ 446,691 $ 339,790

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For the year ended April 30, 2024, EBITDA and Adjusted EBITDA increased 11.2% and 11.1%, respectively.

The increase was primarily attributable to higher profitability both inside the store and in fuel, which was partially offset by higher operating expenses due to operating 69 more stores than one year ago, an increase in store operations cost, as well as increased credit card fees resulting from increased revenue.

The increase was primarily attributable to higher profitability both inside the store and in fuel, which was partially offset by higher operating expenses.

See discussion in the preceding sections for the primary drivers for each of these individual changes.

Please refer to the Form 10-K related to the fiscal year ended April 30, 2023, filed on June 23, 2023, for comparison of Fiscal 2023 to Fiscal 2022.

Critical Accounting Policies and Estimates

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The acquisitions are recorded in the financial statements by allocating the purchase price to the assets acquired, including intangible assets, and liabilities assumed, based on their estimated fair values at the acquisition date as determined by third party appraisals or internal estimates.

The more significant assets acquired include buildings, equipment, and land.

The significant assets acquired include buildings, equipment, and land.

The Company primarily values buildings and equipment using the cost method and land using comparable land sales.

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Subsequent adjustments recorded to provisional balances within the measurement period are recorded in the period in which the adjustment is identified.

Acquisition-related transaction costs are recognized as period costs as incurred.

Acquisition-related transaction costs are recognized in operating expenses as incurred.

Inventories, which consist of merchandise and fuel, are stated at the lower of cost or market.

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As of April 30, 2024, the Company’s ratio of current assets to current liabilities was 0.87 to 1.

The ratio at April 30, 2022 and at April 30, 2021 was 0.80 to 1 and 1.18 to 1, respectively.

The increase in the ratio from the prior year is partially attributable to an increase in cash and cash equivalents due to strong free cash flows, and a decrease in payments for acquisitions.

We believe our current $850,000 unsecured revolving credit facility, our $25,000 unsecured bank line of credit (subsequent to year-end this increased to $50,000, see discussion in Note 3), 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 $881,951 for the year ended April 30, 2023, compared to $788,741 for the year ended April 30, 2022.

The increase in operating cash flows was partially attributable to an increase in net income adjusted for non-cash reconciling items (depreciation and amortization, amortization of debt issuance costs, stock-based compensation, and loss (gain) on disposal of assets and impairment charges) of approximately $132,873.

Refer to “Fiscal 2023 Compared with Fiscal 2022” on page 21 for further details on the primary driver for these changes.

This increase was partially offset by the changes in deferred income taxes and 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 impacts from changes in deferred income taxes decreased by $59,595, attributable to lower accelerated tax depreciation on acquisitions and capital expenditures made in the current fiscal year.

Additionally, impacts from accounts payable decreased $175,376 due to higher fuel costs in the prior fiscal year and an effort to better utilize available payment terms introduced in the prior fiscal year.

These decreases were partially offset by impacts from changes in income tax balances which increased $56,368, primarily attributable to the timing of tax payments across the last two fiscal years, and impacts from inventories which increased $100,820, attributable to higher fuel costs in the prior year.

As shown in the supplemental disclosures to the cash flow, cash paid for taxes increased $40,833, primarily attributable to an increase in taxable income (refer to “Fiscal 2023 Compared with Fiscal 2022” on page 21 for further details on the primary driver for these changes) during the year as impacts from changes in deferred tax liabilities and income tax receivable were offsetting.

Purchases of property and equipment and payments for acquisitions of businesses typically represent the single largest use of Company funds.

Management believes that by acquiring, building, and reinvesting in stores, the Company will be better able to respond to competitive challenges and increase operating efficiencies.

During fiscal 2023, we expended $562,137 for property and equipment, primarily for construction, acquisition, and remodeling of stores compared with $1,228,113 in the prior year.

The decrease was primarily due to significant acquisition activity occurring in the prior year (see Note 2 for further discussion).

Cash provided by financing decreased $308,513, primarily due to $450,000 in draws on the Company's term loan facility to finance acquisitions in the prior year, offset by prior year prepayments of $167,500 on the Company's term loan facility due to strong free cash flow.

The ratio at April 30, 2023 and 2022 was 0.99 to 1 and 0.80 to 1, respectively.

The decrease in the ratio from the prior year is primarily attributable to a decrease in cash and cash equivalents as a result of increased acquisition related activity, as well as share repurchases during fiscal 2024.

We believe our current $850,000 committed unsecured revolving credit facility, our $50,000 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 was $892,953 for the year ended April 30, 2024, compared to $881,951 for the year ended April 30, 2023, an increase of $11,002.

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 (excluding depreciation and amortization) of $275,505, offset by an increase in operating expenses of approximately $168,571 and an increase in cash paid for taxes of approximately $14,602.

The increase in cash paid for taxes was primarily attributable to applying a higher outstanding income tax receivable to reduce our estimated tax payments for fiscal 2023, compared to fiscal 2024.

Refer to “Fiscal 2024 Compared with Fiscal 2023” starting on page 20 for further details on the primary drivers for the changes in revenue, cost of goods sold, and operating expenses.

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.

The increase in operating cash flows, compared to the prior year, was partially offset by a reduction of operating cash flows of $51,644 due to the increased purchases of inventory, primarily attributable to store growth, and a reduction of operating cash flows of $18,727 primarily due to the timing of vendor rebate payments.

Cash used in investing activities increased $280,322.

During fiscal 2024, the Company expended $852,036 for purchases of property and equipment and payments for acquisitions compared to $562,137 for fiscal 2023 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 (see Note 2 for further discussion).

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 $123,058, primarily due to the repurchase and retirement of common stock under our share repurchase program for a total of $104,898 in fiscal 2024.

As of April 30, 2024, we had long-term debt and finance lease obligations consisting of:

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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.

During the fourth quarter, the Company refinanced its existing credit agreement (dated January 11, 2019, as amended, by and among the Company, the lenders party thereto and Royal Bank of Canada, as administrative agent) which resulted in its termination and repayment, in full, and entry into a new credit agreement (dated April 21, 2023, by among the lenders thereto and Wells Fargo Bank, National Association, as administrative agent) to provide for (a) a $250 million unsecured term loan , and (b) an $850 million unsecured revolving credit facility (collectively, the “Credit Facilities”).

See Note 3 for additional information related to the Credit Facilities (see “Prior Credit Agreement” and “New Credit Agreement” sections).

Amounts borrowed under the Credit Facilities bear interest at variable rates based upon, at the Company’s option, either:

commercial lending rate announced by the Administrative Agent as its “prime rate”, (ii) the federal funds rate plus 1/2 of 1.00%, and (iii) Adjusted Daily Simple SOFR plus 1.00%, each plus an applicable margin ranging from 0.10% to 0.70% and each with a floor of 1.00%.

The applicable margins are dependent upon the Company's quarterly Consolidated Leverage Ratio, as defined in the credit agreement.

Amounts borrowed under the term loan facility bear interest at variable rates based upon, at the Company’s option, either:

(a) either Term SOFR or Daily Simple SOFR, in each case plus 0.10% (with a floor of 0.00%) for the interest period in effect, plus an applicable margin ranging from 1.10% to 1.70% or (b) an alternate base rate, which generally equals the highest of (i) the prime commercial lending rate announced by the Administrative Agent as its “prime rate”, (ii) the federal funds rate plus 1/2 of 1.00%, and (iii) Adjusted Daily Simple SOFR plus 1.00%, each plus an applicable margin ranging from 0.10% to 0.70% and each with a floor of 1.00%.

The applicable margins are dependent upon the Company's quarterly Consolidated Leverage Ratio, as defined in the credit agreement dated April 21, 2023.

We have the right at any time to prepay all or a portion of the outstanding balance without premium or penalty, other than customary “breakage” costs with respect to Term SOFR-based borrowings, with prior notice given.

To date, we have funded capital expenditures primarily through funds generated from operations, the proceeds of the sale of common stock, issuance of debt or other bank financing, 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, its $850,000 committed unsecured revolving credit facility, its additional $25,000 unsecured 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, our $850,000 committed unsecured revolving credit facility, our additional $50,000 unsecured bank line of credit, and additional long-term debt or other securities as circumstances may dictate.

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

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Operating lease obligations 180,543 9,297 18,341 18,176 134,729

Unrecognized tax benefits 10,957 — — — —

Deferred compensation 11,652 — — — —

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(1) The long-term debt portion of the table above excludes interest payments related to the Company's term loan facility, due to the variable nature of the required interest payments.

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.

At April 30, 2023, the Company had a total of $10,957 in gross unrecognized tax benefits.

Of this amount, $8,656 represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate.

The total amount of accrued interest and penalties for such unrecognized tax benefits was $386 as of April 30, 2023.

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

The federal statute of limitations remains open for the tax years 2019 and forward.

Tax years 2013 and forward are subject to audit by state tax authorities depending on open statute of limitations waivers and the tax code of each state.

A number of years may elapse before an uncertain tax position is audited and ultimately settled.

It is difficult to predict the ultimate outcome or the timing of resolution for uncertain tax positions.

It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months.

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

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 $2,500 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.

Included in other long-term liabilities on our consolidated balance sheet at April 30, 2024, was a $10,895 obligation for deferred compensation.

Additionally, $756 was recognized in current liabilities as of April 30, 2023 related to deferred compensation.

As the specific payment dates for a portion of the deferred compensation outstanding are unknown due to the unknown retirement dates of many of the participants, the related timing of the payment of the balances have not been reflected in the above “Payments due by period” table.

However, known payments of $8,777 will be due during the next 5 years.

At April 30, 2023, we were partially self-insured for workers’ compensation claims in all but two states of our operating territory.

In North Dakota and Ohio, we are required to participate in an exclusive, state managed fund for all workers compensation claims.

We were also partially self-insured for general liability and auto liability under an agreement that provides for annual stop-loss limits equal to or exceeding $2,000 for auto liability and $1,000 for workers' compensation and general liability.

However, known payments of $6,669 are scheduled over the next 5 years, which includes $757 recognized in current liabilities as of April 30, 2024.

Forward-Looking Statements

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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 above in Item 1A entitled “Risk Factors”:

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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;

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.

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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