2020 ANNUAL REPORT
2020 ANNUAL REPORT
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TABLE OF CONTENTS
To Our Shareholders.................................................................... page 4
The Right Strategy ......................................................................page 5
Managing The Crisis ...................................................................page 9
Here For Good ............................................................................ page 13
Extended Leadership Team .................................................... page 15
Board Of Directors ................................................................... page 17
Investor Information ................................................................ page 18
ND 31
SD 46
MN 183
IA 531
NE 145
WI 52
MI 1
IL 451
IN 125
OH 20
KS 166
MO 329
OK 45
AR 55
KY 16
TN 11
STORE COUNT BY STATE
ND 31
SD 46
MN 183
IA 531
NE 145
WI 52
MI 1
IL 451
IN 125
OH 20
KS 166
MO 329
OK 45
AR 55
KY 16
TN 11
FINANCIAL HIGHLIGHTS
Total Revenue
Cash Flow from Operations
Net Income
EPS (Basic)
EPS (Diluted)
Number of Stores
2019
2020
$9,352,910
$9,175,296
$530,614
$203,886
$504,314
$263,846
$5.55
$5.51
2,146
$7.14
$7.10
2,207
PAGE 2
Here To Serve, Here For Good.
DARREN REBELEZ
DARREN REBELEZ
President
President and
and
Chief Executive Officer
Chief Executive Officer
Here To Serve, Here For Good.
TO OUR SHAREHOLDERS:
At Casey’s General Stores, our purpose is to make lives better for our
guests and communities every day. We’re Here For Good: high-quality
food and excellent service to our guests … a great work experience
for our team members … a force for good in our communities … and a
superior return to you, our shareholders.
That purpose has been tested as never before over the past several
months. Nevertheless, thanks to the commitment, passion and just
plain hard work of our 38,000 team members, it has stood up to that
test. We’ve not only kept our commitments to our guests and our
communities, we’ve produced further proof that the strategic plan
we launched in January 2020 is the right plan at the right time.
I’d like to begin by putting Casey’s FY2020 results in perspective for
you. We finished the first three quarters of the year on track for solid
performance against our financial objectives. Through nine months,
diluted earnings per share were up over 12% driven by advancements
made in our fuel price optimization, fuel procurement, and digital
initiatives, as well as continued store growth. And with the January
launch of Casey’s Rewards, same-store sales accelerated into the first
half of the fourth quarter.
Then COVID-19 changed all our lives. As a result, our fourth quarter ended
up being a tale of two quarters. The second half of the fourth quarter saw
significant traffic declines from stay-at-home orders and self-service food
restrictions as our nation and our world slipped into the uncharted territory
of the coronavirus pandemic.
Ultimately, we ended FY2020 with excellent results, along with a very
strong balance sheet that will enable us to preserve all the financial
flexibility we need to pursue our strategic initiatives and run our business
in spite of the pandemic and economic swoon.
PAGE 4
THE RIGHT STRATEGY
Looking ahead, Casey’s is in a very favorable position – not just to weather
the COVID storm, but to emerge even stronger, with our strategic plan
intact and on track. We’re confident in our position as the external
environment evolves. And, most important, we’re continuing to welcome
our guests back to Casey’s.
As we navigate our way forward through recovery and accelerate
back to healthy growth, this plan is our compass. Like the points of
a compass, it has four key elements that we’ve continued to make
steady progress against:
1. Reinvent the Guest Experience:
Contemporize our food proposition, optimize and localize assortment,
and deliver compelling experiences.
>
>
>
>
We surpassed 2.3 million Casey’s Rewards members, and are seeing
nearly 20 percent of all transactions include Rewards participation
– just six months since launch. The Rewards platform has become
a powerful tool to enhance the shopping experience as well as
message to our guests.
We are piloting a tech-enabled curbside offering now, and we will
expand it in the coming months.
We have plans for private label expansion and updates by third
quarter to meet the value-seeking needs of many guests.
And, under the leadership of our new head of Food Service,
and an expanded team, we are excited about our fresh food
innovation pipeline.
EBITDA
8
1
0
2
9
1
0
2
0
2
0
2
$486,347
$563,445
$646,641
DILUTED EPS
8
1
0
2
9
1
0
2
0
2
0
2
$3.81*
$5.51
$7.10
*Excludes re-measurement of net deferred tax liabilities.
STORE COUNT
8
1
0
2
9
1
0
2
0
2
0
2
2,073
2,146
2,207
PAGE 6
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We’re confident in our position as
the external environment evolves.
2. Create Capacity Through Efficiencies:
Drive efficiencies to improve the shape of the business and fund
future growth.
>
>
We are in the process of centralizing procurement, and we have
engaged a third party, subject matter expert to help us drive
savings and ensure we build a best in class procurement
organization over time.
We recently updated our operations organization to include
cross-functional, action-oriented teams that will enable our field
and store leaders to focus more fully on serving their guests
and communities.
>
We also are adding a dedicated asset protection function.
>
Across the board, we’re confident that we have built the right
team with a great mix of perspectives and experiences to find
greater efficiencies in all areas of the business.
3. Accelerate Unit Growth:
Accelerate our new store builds and acquisitions, including market
and store format expansion.
>
Our dedicated M&A team is driving more activity and deal-making.
>
>
We are expanding within our addressable market and optimizing
our network plan.
We continue to make progress on our third distribution center,
located in Joplin, Missouri, to more efficiently serve our growing
number of southwest locations.
PAGE 8
4. Invest in Our Talent:
Create a culture that drives performance and exceeds expectations.
>
We have built out a full and diverse leadership team that includes new
roles that are key to being a retail leader – Chief Operating Officer,
Chief Information Officer and Chief Merchandising Officer.
>
We continue to enhance the diversity of the talent and experience
across our entire team.
I am confident that our strategic plan, our adaptive business model,
the agility of our team members and our financial strength will all work
together to speed our recovery and position us well going forward.
MANAGING THE CRISIS
As the pandemic crisis began to unfold, we moved quickly to safeguard
the health and safety of our team members through a variety of means,
from enhanced cleaning, to social distancing, to shifts in store hours. We
took steps to protect their financial wellbeing, too, offering bonus pay,
covering testing costs, and continuing pay during mandatory quarantines
or positive cases.
As an essential business, we also made a commitment to be here to safely
serve our guests and communities. The measures we took to protect our
guests made our stores safe places to continue meeting critical needs like
fuel, groceries and food in our communities. In addition, we took quick
action to bring new digital services to our guests to better serve them
throughout the pandemic. This included announcing Door Dash as a new
delivery partner, introducing contactless delivery and expanding the grocery
products that are available for online purchase. In some of the rural parts
of our footprint Casey’s was one of the few businesses, and at times the
only business, open to meet those needs.
CONTACTLESS
DELIVERY
2.3 MILLION
IN REWARDS
ENROLLMENT
EXPANDED ONLINE
GROCERY PURCHASE
PAGE 10
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I could not be prouder
of our team members...
We also took swift action to take care of our business. We entered this
situation with a strong balance sheet and long track record of earnings
growth. We immediately formed a COVID-19 response task force and
plan-ahead team, which enabled us to react quickly to the dynamic
pressures caused by the pandemic to meet the needs of our guests.
Meanwhile, we quickly shifted our focus on liquidity through proactively
managing working capital, reducing discretionary spend and slowing
new store development. We also evaluated operational efficiencies. We
identified new ways of working across the business – from remote work
options to virtual store tours to keep our field teams informed.
Our diverse business model, which offers fuel, groceries and prepared
foods, once again proved resilient. Despite the guest traffic declines,
fourth quarter diluted earnings per share finished up over 145% to
prior year primarily due to an unprecedented average fuel margin and
the proactive steps taken to manage operating expenses that more than
offset traffic declines from COVID-19. Fiscal 2020 diluted earnings per
share were $7.10, up nearly 29% from prior year.
We have learned so much in this time, not least of all that when we
work together, we can move our business faster than we might have
ever imagined.
PAGE 12
HERE FOR GOOD
I could not be prouder of our team members for the way they have risen to
the recent unprecedented challenges we have faced together. In addition to
keeping our day-to-day operations up and running, they have reached out to
help our neighbors in the communities we serve in countless ways. That has
included supporting our partnership with Feeding America that has driven
$150,000 of support directly to 52 food banks in our footprint. And they’ve
helped us implement the Slice of Thanks program that has donated more
than 15,000 slices of pizza to essential workers and community servants.
They have my admiration, my respect and, most of all, my deepest thanks.
I’m grateful, as well, to our Board of Directors for their steady guidance,
wise counsel and unflinching support. Their diversity of backgrounds
and experience and their proactive approach to governance have been
invaluable in these challenging times.
Finally, my thanks to you, our shareholders, for your confidence in our
strategy, our purpose and our ability to create value for you for years to
come. I can assure you that all of us at Casey’s are working hard every day
to repay that confidence. We are, indeed, here to serve and Here For Good.
Darren Rebelez
President and Chief Executive Officer
PARTNERED WITH
FEEDING AMERICA TO
DIRECTLY SUPPORT
52 FOOD BANKS
DONATED NEARLY
15,000 SLICES
OF PIZZA TO
ESSENTIAL WORKERS
25,000 MEALS
TO FEED CHILDREN
AND FAMILIES
PAGE 14
Extended Leadership Team
1
8
12
18
22
2
6
13
19
24
5
9
15
23
3
10
14
16
20
4
7
11
17
21
25
Extended Leadership Team
DARREN REBELEZ
1.
President and Chief Executive Officer
STEVE BRAMLAGE
2.
Chief Financial Officer
TOM BRENNAN
3.
Chief Merchandising Officer
CHAD FRAZELL
5.
Chief Human Resources Officer
CHRIS JONES
7.
Chief Marketing Officer
BILL WALLJASPER
9.
Executive Advisor, Former CFO
HAL BROWN
11.
Vice President - Support Services
ADRIAN BUTLER
4.
Chief Information Officer
JULIE JACKOWSKI
6.
Chief Legal Officer and Secretary
ENA WILLIAMS
8.
Chief Operating Officer
CHRIS BOLING
10.
Vice President - Store Operations
NATHANIEL DODDRIDGE
12.
Vice President - Fuels
MEGAN ELFERS
13.
Vice President - Marketing and Advertising
BRAD HAGA
14.
Vice President - Merchandising
SHERRI HART
15.
Vice President - Total Rewards
BRIAN JOHNSON
17.
Senior Vice President - Investor
Relations and Business Development
KIRK HAWORTH
16.
Vice President - Real Estate
SAM JAMES
18.
Vice President - Finance
JAMES PISTILLO
19.
Vice President -Accounting and Treasurer
JAIME ROBLES
20.
Vice President - Procurement
ART SEBASTIAN
21.
Vice President - Digital Experience
JAY SOUPENE
22.
Senior Vice President - Operational Excellence
NAN THOMAE
23.
Vice President - Human Resources
ED VASKE
24.
Vice President - Transportation and Distribution
MICHELLE WICKHAM
25.
Vice President - Food Service
PAGE 16
Board of Directors
H. LYNN HORAK
1.
Board President,
Past Regional Chairman with
Wells Fargo Regional Bank
DARREN REBELEZ
2.
President and Chief
Executive Officer of
Casey’s General Stores, Inc.
3.
DIANE BRIDGEWATER*
Executive Vice President,
Chief Financial and
Administrative Officer of LCS
4.
DONALD FRIESON
Executive Vice President
Supply Chain, Lowe’s Companies
5.
CARA HEIDEN*
Retired Co-President
of Wells Fargo Home Mortgage
6.
DAVID LENHARDT*
Former President and Chief
Executive Officer of PetSmart, Inc.
7.
LARREE RENDA
Retired Executive
Vice President of Safeway, Inc.
JUDY SCHMELING*
8.
Former Chief Operating Officer
of HSN, Inc. and former President
of Cornerstone Brands
9.
ALLISON WING
Chief Consumer Officer
of Bright Health
2
4
8
*Member of the
Audit Committee
1
5
7
3
6
9
INVESTOR INFORMATION
COMMON STOCK
Casey’s General Stores, Inc. common stock trades on the Nasdaq Global Select Market under the symbol CASY.
The approximately 36.8 million shares of common stock outstanding at April 30, 2020 had a market value of
approximately $5.6 billion. As of that same date, there were 1,583 shareholders of record.
COMMON STOCK MARKET PRICES
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Calendar 2018
Calendar 2019
Calendar 2020
HIGH
LOW
HIGH
LOW
HIGH
LOW
$ 128.51
$ 105.45
$ 138.45
$ 122.86
$ 181.99
$ 114.01
110.83
90.42
156.82
127.75
130.74
102.47
173.31
154.58
137.08
116.23
179.21
152.05
On June 29, 2020, the last reported sales price of the Company’s common stock was $148.39 per share.
On that same date, the market capitalization of the Company was approximately $5.5 billion.
DIVIDENDS
The Company began paying cash dividends during fiscal 1991.
The dividends declared in fiscal 2020 totaled $1.28 per share.
At its June 2020 meeting, the Board of Directors declared
a quarterly dividend to $0.32 per share. The dividend is
payable on August 17, 2020 to shareholders of record on
August 3, 2020.
DIVIDEND REINVESTMENT AND
STOCK PURCHASE PLAN
This plan, introduced in the fall of 1998, gives holders of
Casey’s General Stores, Inc. common stock a convenient and
economical way of purchasing additional shares at market
prices by reinvesting their dividends in full or in part. Stock-
holders may also take advantage of the cash payment option
to purchase additional shares. Those wishing to enroll should
contact the transfer agent and registrar:
Computershare Trust Company, N.A.
250 Royall Street
Canton, MA 02021
Telephone 781-575-2000
www.computershare.com
INVESTOR INQUIRIES
Current or prospective Casey’s General Stores, Inc. investors
can receive annual reports, proxy statements, Forms 10-K and
10-Q, and earnings announcements at no cost by calling (515)
965-6100 or sending written requests to the following address:
Investor Relations
Casey’s General Stores, Inc.
One SE Convenience Blvd.
Ankeny, Iowa 50021
Corporate information is also available at www.caseys.com
under the Investor Relations tab. Quarterly conference calls
are broadcast live over the Internet via the Investor Relations
page and made available in archived format. Broadcast times
for the quarterly calls will be announced on our website and in
corresponding press releases.
FORWARD-LOOKING STATEMENTS
This annual report contains statements that constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and
other factors that may cause actual results to differ materially
from future results expressed or implied by those statements.
Casey’s disclaims any intention or obligation to update or revise
forward-looking statements, whether as result of new information,
future events or otherwise.
PAGE 18
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Fiscal Year Ended April 30, 2020
OR
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from February 1, 2020 to April 30, 2020
Commission File Number 001-34700
CASEY’S GENERAL STORES, INC.
(Exact name of registrant as specified in its charter)
Iowa
(State or other jurisdiction of
incorporation or organization)
42-0935283
(I.R.S. Employer
Identification Number)
ONE SE CONVENIENCE BLVD., Ankeny, Iowa
(Address of principal executive offices)
50021
(Zip Code)
(515) 965-6100
(Registrant’s telephone number, including area code)
Securities Registered pursuant to Section 12(b) of the Act
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, no par value per share
CASY
The NASDAQ Global Select Market
Securities Registered pursuant to Section 12(g) of the Act
NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Exchange Act. Yes
No
Table of Contents Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit such files). Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer",
"smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act
Large accelerated filer
Non-accelerated filer
Emerging growth company
Accelerated filer
Smaller reporting company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes
No
The aggregate market value of the registrant’s common stock held by non-affiliates as of October 31, 2019, was
approximately $6.3 billion based on the closing sales price ($170.81 per share) as quoted on the NASDAQ Global Select
Market.
Indicate the number of shares outstanding of each of the issuer’s class of common stock, as of the latest practicable date.
Class
Common Stock, no par value per share
Outstanding at June 9, 2020
36,849,324 shares
DOCUMENTS INCORPORATED BY REFERENCE
Certain information called for by Items 10, 11, 12, 13 and 14 of Part III is hereby incorporated by reference from the
definitive Proxy Statement to be filed with the Securities and Exchange Commission in connection with the Annual Meeting of
Shareholders, which will be filed with the Securities and Exchange Commission not later than 120 days after April 30, 2020.
PAGE 2
Table of Contents FORM 10-K
TABLE OF CONTENTS
PART I
ITEM 1. Business
ITEM 1A. Risk Factors
ITEM 1B. Unresolved Staff Comments
ITEM 2. Properties
ITEM 3. Legal Proceedings
ITEM 4. Mine Safety Disclosures
PART II
ITEM 5.
Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases
of Equity Securities
ITEM 6. Selected Financial Data
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk
ITEM 8. Financial Statements and Supplementary Data
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
ITEM 9A. Controls and Procedures
ITEM 9B. Other Information
PART III ITEM 10. Directors, Executive Officers and Corporate Governance
ITEM 11. Executive Compensation
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
ITEM 13. Certain Relationships and Related Transactions and Director Independence
ITEM 14. Principal Accountant Fees and Services
PART IV ITEM 15. Exhibits and Financial Statement Schedules
ITEM 16. Form 10-K Summary
Signatures
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Table of Contents3 PART I
ITEM 1. BUSINESS
The Company
Casey’s General Stores, Inc. (“Casey’s”) and its wholly-owned subsidiaries (Casey’s, together with its subsidiaries, are
referred to herein as the “Company” or “we”) operate convenience stores under the names "Casey's" and “Casey’s General
Store” (hereinafter referred to as “Casey’s Store” or “Stores”) in 16 Midwestern states, primarily in Iowa, Missouri, and
Illinois. The Company also operates two stores under the name "Tobacco City", selling primarily tobacco and nicotine
products, one liquor store, and one grocery store. The Casey's Stores carry a broad selection of food (including freshly prepared
foods such as pizza, donuts, and sandwiches), beverages, tobacco and nicotine products, health and beauty aids, automotive
products, and other nonfood items. In addition, all but three offer fuel for sale on a self-service basis. Our fiscal year runs from
May 1 through April 30 of each year. On April 30, 2020, there were a total of 2,207 stores in operation. There were 60 stores
newly constructed in fiscal 2020. We closed 13 stores in fiscal 2020. We also acquired 18 additional stores in fiscal 2020; 11 of
those stores were opened in fiscal 2020, and seven will be opened during the 2021 fiscal year. Finally, we opened three
acquisitions purchased in the prior year. Two distribution centers are in operation (in Ankeny, Iowa adjacent to the Store
Support Center and in Terre Haute, Indiana) from which grocery and general merchandise items are supplied to our stores.
Additionally, the Company is currently constructing a third distribution center in Joplin, Missouri. Casey’s, with the Store
Support Center located at One SE Convenience Blvd., Ankeny, Iowa 50021-8045 (telephone 515-965-6100), was incorporated
in Iowa in 1967.
Approximately 56% of all our stores were opened in areas with populations of fewer than 5,000 persons, while
approximately 19% of our stores were opened in communities with populations exceeding 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.
The Company’s internet address is www.caseys.com. Each year we make available through our website all of our SEC
filings, including current reports on Form 8-K, quarterly reports on Form 10-Q, our annual report on Form 10-K, and
amendments to those reports, free of charge as soon as reasonably practicable after they have been electronically filed with the
Securities and Exchange Commission. Additionally, you can go to our website to read our Financial Code of Ethics, Corporate
Governance Guidelines, Code of Conduct, and committee charters. In the event of a waiver to the Code of Conduct, any
required disclosure will be posted to our website.
General
We seek to meet the needs of residents of smaller towns through quality products at competitive prices with courteous
service in clean stores at convenient locations. Smaller communities often are not served by national-chain convenience stores.
We have succeeded at operating Casey’s Stores in smaller towns by offering, at competitive prices, a broader selection of
products than does a typical convenience store. We have also succeeded in meeting the needs of residents in larger communities
with these offerings. We currently own most of our real estate, including substantially all of our stores, both distribution
centers, a construction and support services facility, and the Store Support Center facility.
The Company derives its revenue primarily from the retail sale of fuel and the products offered in our stores. Our sales
historically have been strongest during the first and second fiscal quarters (May through October) relative to the third and
fourth fiscal quarters (November through April). In warmer weather, guests tend to purchase greater quantities of fuel and
certain convenience items such as beer, isotonics, water, soft drinks, and ice.
Corporate Subsidiaries
Casey's Marketing Company (the "Marketing Company") and Casey's Services Company (the "Services Company") were
organized as Iowa corporations in March 1995. Casey’s Retail Company (the "Retail Company") was organized as an Iowa
corporation in April 2004. CGS Stores, LLC was organized in April 2019 as an Iowa limited liability company. Heartland
Property Company, LLC was organized in September 2019 as a Delaware limited liability company. The Marketing Company,
Services Company, and Retail Company are wholly-owned subsidiaries of Casey’s. CGS Stores, LLC and Heartland Property
Company, LLC are wholly-owned subsidiaries of the Marketing Company.
Casey’s Retail Company owns and operates stores in Illinois, Kansas, Minnesota, Nebraska, North Dakota, South Dakota
and Michigan; it also holds the rights to the Company's trademarks, service marks, trade names, and other intellectual property.
The Marketing Company owns and operates stores in Arkansas, Indiana, Iowa, Kentucky, Missouri, Ohio, Oklahoma, and
PAGE 4
Table of Contents4 Wisconsin, and until May 2019, stores in Tennessee. The Marketing Company also has responsibility for all of our wholesale
operations, including both distribution centers. As of May 2019, CGS Stores, LLC owns and operates stores in Tennessee. The
Services Company provides a variety of construction and transportation services for all stores.
Store Operations
Products Offered
Each Casey’s Store typically carries over 3,000 food and nonfood items. Many of the products offered are those generally
found in a supermarket. The selection is generally limited to one or two well-known brands of each item stocked. Most of our
staple food products are nationally advertised brands, and we also have an assortment of Casey's proprietary branded products.
Stores sell regional brands of dairy and bakery products, and 1,887 (85.5%) of the stores offer beer. Our nonfood items include
tobacco and nicotine products, health and beauty aids, school supplies, housewares, pet supplies, and automotive products.
All but three Casey’s Stores offer retail motor fuel products for sale on a self-service basis. Gasoline and diesel fuel are
sold under the Casey’s name.
It is our practice to continually make additions to the Company’s product line, especially products with higher gross
profit margins. As a result, we have added various prepared food items to our product line over the years, facilitated by the
installation of kitchens, which now are in the majority of stores. The kitchens sell sandwiches, fountain drinks, and other items
that have gross profit margins higher than those of general staple goods. As of April 30, 2020, the Company was selling donuts
in 2,199 (99.6%) of our stores in addition to cookies, brownies, and other bakery items. The Company installs donut-making
equipment in all newly constructed stores.
We began marketing made-from-scratch pizza in 1984, and it was available in 2,198 stores (99.6%) as of April 30, 2020.
Although pizza is our most popular prepared food offering, we continue to expand our prepared food product line, which
currently includes ham and cheese sandwiches, pork, chicken, and sausage sandwiches, chicken tenders, pizza bites, popcorn
chicken, breakfast croissants and biscuits, breakfast pizza, hash browns, quarter-pound hamburgers and cheeseburgers, potato
cheese bites and other seasonal items. 1,553 (70.4%) stores currently offer made-to-order sub sandwiches.
The growth in our proprietary prepared food program reflects management’s strategy to promote high-margin products
that are compatible with convenience store operations. In the last three fiscal years, retail sales of nonfuel items have generated
about 39% of our total revenue, but they have resulted in approximately 75% of our revenue less cost of goods sold (excluding
depreciation and amortization). Revenue less cost of goods sold (excluding depreciation and amortization) as a percentage of
revenue on prepared food items averaged approximately 61% during the three fiscal years ended April 30, 2020—substantially
higher than the impact of retail sales of fuel, which averaged approximately 9%.
Store Design
Casey’s Stores are primarily freestanding and, with a few exceptions to accommodate local conditions, conform to
standard construction specifications. The current larger store design measures 46 feet by 130 feet with approximately 3,000
square feet devoted to sales area, 600 square feet to kitchen space, 400 square feet to storage, and 2 large public restrooms.
There is also a smaller store design that is generally designated for smaller communities that measures 39 feet by 86 feet, with
approximately 1,550 square feet devoted to sales area with the remaining areas similar in size. Store lots have sufficient
frontage and depth to permit adequate drive-in parking facilities on one or more sides of each store. Each new store typically
includes 5 to 10 islands of fuel dispensers and storage tanks with capacity for 60,000 to 70,000 gallons of fuel. The
merchandising display follows a standard layout designed to encourage a flow of guest traffic through all sections of every
store. All stores are air-conditioned and have modern refrigeration equipment. Nearly all the store locations feature our bright
red and yellow sign which displays Casey’s name and service mark.
All Casey’s Stores remain open at least sixteen hours per day, seven days a week. Hours of operation may be adjusted on
a store-by-store basis to accommodate guest traffic patterns. As of April 30, 2020, we operated 38 stores on a 24-hour basis,
and another 307 that have expanded hours. Store hours as of year-end reflect temporarily adjusted hours in response to the
COVID-19 pandemic. Prior to the COVID-19 pandemic, we operated 633 stores on a 24-hour basis and another 1,407 stores
with expanded hours. All stores maintain a bright, clean interior and provide prompt checkout service.
Store Locations
The Company traditionally has located its stores in smaller towns not served by national-chain convenience stores.
Management believes that a Casey’s Store provides a service generally not otherwise available in small towns and that a
5 convenience store in an area with limited population can be profitable if it stresses sales volume and competitive prices. Our
store-site selection criteria emphasize the population of the immediate area and daily highway traffic volume. We can operate
effectively at a highway location in a community with a population of as few as 400.
Fuel Operations
Fuel sales are an important part of our revenue and earnings. Approximately 60% of Casey’s total revenue for the year
ended April 30, 2020 was derived from the retail sale of fuel. The following table summarizes (dollars and gallons in
thousands) fuel sales for the last three fiscal years ended April 30:
Number of gallons sold
Total retail fuel sales
Percentage of total revenue
Percentage of revenue less cost of goods sold (excluding depreciation and
amortization and credit card fees)
Average retail price per gallon
Average revenue less cost of goods sold per gallon (excluding depreciation
and amortization and credit card fees)
Average number of gallons sold per store*
$
Year ended April 30,
2020
2,293,609
$ 5,517,412
2019
2,296,030
$ 5,848,770
2018
2,198,600
$ 5,145,988
60.1%
62.5%
11.1%
2.41
$
8.0%
2.55
$
26.81 ¢
1,055
20.30 ¢
1,097
61.3%
7.9%
2.34
18.50 ¢
1,087
*
Includes only those stores in operation at least one full year on April 30 of the fiscal year indicated.
Retail prices of fuel during the year decreased 5.5% from prior year. The total number of gallons we sold during this
period decreased by 0.1%. Over the course of the last year, the Company, as part of its evolving strategy around fuel price
optimization, has been more proactive and balanced to grow profitability, which has partially contributed to higher fuel margins
and lower same-store fuel gallons sold during that time. Additionally, shelter in place restrictions due to the COVID-19
pandemic diminished overall demand during the last two months of the fiscal year.
Percentage of revenue less cost of goods sold (excluding depreciation and amortization and credit card fees) represents
the fuel gross profit divided by the gross fuel sales dollars. As retail fuel prices fluctuate in a period of consistent gross margin
per gallon, the percentage will also fluctuate in an inverse relationship to fuel price. For additional information concerning the
Company’s fuel operations, see Item 7 herein.
Distribution and Wholesale Arrangements
The Marketing Company supplies all stores with groceries, food, health and beauty aids, and general merchandise from
the distribution centers. The stores place orders for merchandise electronically to the Store Support Center in Ankeny, and the
orders are filled with shipments in Company-operated delivery trucks from one of the distribution centers, based on route
optimization for the fleet network. All of our existing and most of our proposed stores are within the two distribution centers'
optimum efficiency range—a radius of approximately 500 miles around each distribution center.
In fiscal 2020, a majority of the food and nonfood items supplied to stores from the distribution centers were purchased
directly from manufacturers. With few exceptions, long-term supply contracts are not entered into with the suppliers of
products sold by Casey’s Stores. We believe the practice enables us to respond to changing market conditions with minimal
impact on margins.
Personnel
On April 30, 2020, we had 17,282 full-time team members and 19,871 part-time team members. We have not experienced
any work stoppages. There are no collective bargaining agreements between the Company and any of its team members.
Competition
Our business is highly competitive. Food, including prepared foods, and nonfood items similar or identical to those sold
by the Company are generally available from various competitors in the communities served by Casey’s Stores. We believe our
stores located in smaller towns compete principally with other local grocery and convenience stores, similar retail outlets, and,
to a lesser extent, prepared food outlets, restaurants, and expanded fuel stations offering a more limited selection of grocery and
PAGE 6
6 food items for sale. Stores located in more heavily populated communities may compete with local and national grocery and
drug store chains, quick serve restaurants, expanded fuel stations, supermarkets, discount food stores, and traditional
convenience stores. Examples of convenience store chains competing in the larger towns served by Casey’s Stores include Quik
Trip, Kwik Trip, Kum & Go, and other regional chains. Some of the Company’s competitors have greater financial and other
resources than we do. These competitive factors are discussed further in Item 7 of this Form 10-K.
Trademarks and Service Marks
The names "Casey’s" and “Casey’s General Store” and the marks consisting of the Casey’s design logos (with the words
“Casey’s General Store”) and the weathervane are registered trademarks and service marks under federal law. We believe these
marks are of material importance in promoting and advertising the Company’s business. The Company has a number of other
registered and unregistered trademarks and service marks that are significant to the Company from an operational and branding
perspective (e.g. "Casey’s Pizza", "Casey's Famous for Pizza", "Casey's Here for Good", etc.).
Government Regulation (dollars in thousands)
The United States Environmental Protection Agency and several states, including Iowa, have established requirements for
owners and operators of underground fuel storage tanks (USTs) with regard to (i) maintenance of leak detection, corrosion
protection, and overfill/spill protection systems; (ii) upgrade of existing tanks; (iii) actions required in the event of a detected
leak; (iv) prevention of leakage through tank closings; and (v) required fuel inventory record keeping. Since 1984, our new
stores have been equipped with noncorroding fiberglass USTs, including some with double-wall construction, overfill
protection, and electronic tank monitoring. We currently have 5,025 USTs, 4,152 of which are fiberglass and 873 are steel, and
we believe that all capital expenditures for electronic monitoring, cathodic protection, and overfill/spill protection to comply
with the existing UST regulations have been completed. Additional regulations or amendments to the existing UST regulations
could result in future expenditures.
Several states in which we do business have trust fund programs with provisions for sharing or reimbursing corrective
action or remediation costs incurred by UST owners, including the Company. For the years ended April 30, 2020 and 2019, we
spent approximately $718 and $774, respectively, for assessments and remediation. Substantially all of these expenditures were
submitted for reimbursement from state-sponsored trust fund programs. As of April 30, 2020, approximately $23,695 has been
received from such programs since inception. The payments are typically subject to statutory provisions requiring repayment of
the reimbursed funds for noncompliance with upgrade provisions or other applicable laws. None of the reimbursements
received are currently expected to be repaid by the Company to the trust fund programs. At April 30, 2020, we had an accrued
liability of $328 for estimated expenses related to anticipated corrective actions or remediation efforts, including relevant legal
and consulting costs. We believe we have no material joint and several environmental liability with other parties.
ITEM 1A. RISK FACTORS
You should carefully consider the risks described in this report before making a decision to invest in our securities. If any
of such risks actually occur, our business, financial condition, and/or results of operations could be materially adversely
affected. In that case, the trading price of our securities could decline and you might lose all or part of your investment.
Risks Related to Our Industry
Pandemics or disease outbreaks, such as the novel coronavirus (“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 such as COVID-19 have, and may continue to have, adverse impacts on the Company’s
business. These include, but are not limited to, decreased store traffic and changed guest behavior, decreased demand for our
fuel, prepared food and other convenience offerings, decreased or slowed unit/store growth, issues with our supply chain,
including difficulties obtaining certain items sold at our stores or that our guests may demand, issues with respect to our team
members’ health, working hours and/or ability to perform their duties, and increased costs to the Company in response to these
changing conditions and to protect the health and safety of our team members and guests.
In addition, the general economic and other impacts related to responsive actions taken by governments and others to
mitigate the spread of COVID-19, including but not limited to “stay-at-home,” “shelter-in-place” and other travel restrictions,
7 social distancing requirements, limitations on certain businesses’ hours and operations, limits on public gatherings and other
events, and restrictions on how certain products can be sold and offered to our guests, have, and may continue to, result in
similar declines in store traffic and overall demand, increased operating costs, and decreased or slower unit/store growth.
Further, although the Company’s business has been deemed an “essential service” by many public authorities, allowing our
operations to continue (in some cases in a modified manner), there are no guarantees the designation will continue, or be
applied during a future pandemic or COVID-19 outbreak, which would require us to reduce our operations and potentially close
stores for an undetermined period of time.
We cannot predict the extent and duration of the COVID-19 pandemic or the severity and duration of its impact to the
general economy, our guests or our operating results; however, its effects could be material and last for an extended period of
time.
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.
In the normal course of our business, we obtain and have access to large amounts of personal data, including but not
limited to credit and debit card information, personally identifiable information and other data from and about our guests, team
members, and suppliers. While we invest significant resources and have engaged professional advisers in the protection of such
data and information, our IT systems, and incident response programs, and maintain what we believe are adequate security
controls, a compromise or a breach in our systems, or other data security or privacy incident that results in the loss,
unauthorized release, disclosure or acquisition of such data or information, or other sensitive data or information, could
nonetheless occur and have a material adverse effect on our reputation, operating results and financial condition.
A data security or privacy incident of any kind could expose us to risk in terms of the loss, unauthorized release,
disclosure or acquisition of sensitive guest, team member or supplier data, and could result in litigation or other regulatory
action being brought against us and damages, monetary and other claims made by or on behalf of the payment card brands,
guests, team members, shareholders, financial institutions and governmental agencies. Such claims could give rise to substantial
monetary damages and losses which are not covered, or in some instances fully covered, by our insurance policies and which
could adversely affect our reputation, results of operations, financial condition and liquidity. Moreover, a data security or
privacy incident could require that we expend significant additional resources on mitigation efforts and to further upgrade the
security and other measures that we employ to guard against, and respond to, such incidents.
The convenience store industry is highly competitive.
The convenience store and retail fuel industries in which we operate are highly competitive and characterized by ease of
entry and constant change in the number and type of retailers offering the products and services found in our stores. We
compete with many other convenience store chains, gasoline stations, supermarkets, drugstores, discount stores, club stores, fast
food outlets, and mass merchants, and a variety of other retail companies, including retail gasoline companies that have more
extensive retail outlets, greater brand name recognition and established fuel supply arrangements. Several non-traditional
retailers such as supermarkets, club stores, and mass merchants have affected the convenience store industry by entering the
retail fuel business. These non-traditional fuel retailers have obtained a significant share of the motor fuels market, and their
market share is expected to grow. Certain of these non-traditional retailers may use more extensive promotional pricing or
discounts, both at the fuel pump and in the store, to encourage in-store merchandise sales and gasoline sales. In some of our
markets, our competitors have been in existence longer and have greater financial, marketing, and other resources than we do.
As a result, our competitors may have a greater ability to bear the economic risks inherent in our industry, and may be able to
respond better to changes in the economy and new opportunities within the industry. This intense competition could adversely
affect our revenues and profitability, and have a material adverse impact on our business and results of operations.
The volatility of wholesale petroleum costs could adversely affect our operating results.
Our net income is significantly affected by changes in the margins we receive on our retail fuel sales. Over the past three
fiscal years, on average our fuel revenues accounted for approximately 61% of total revenue and our fuel revenue less cost of
goods sold excluding depreciation and amortization accounted for approximately 25% of the total revenue less cost of goods
sold excluding depreciation and amortization. Crude oil and domestic wholesale petroleum markets are, and in the recent past
have been, marked by significant volatility. The overall economic impact of the COVID-19 pandemic, general political
conditions, threatened or actual acts of war or terrorism, instability or other changes in oil producing regions, particularly in the
Middle East and South America, and trade, economic or other disagreements between oil producing nations, can, and recently
PAGE 8
8 have, significantly affected crude oil supplies and wholesale petroleum costs. In addition, the supply of fuel and wholesale
purchase costs could be adversely affected in the event of a shortage, which could result from, among other things, lack of
capacity at United States oil refineries or, in our case, the level of fuel contracts that we have that guarantee an uninterrupted,
unlimited supply of fuel. Increases in the retail price of petroleum products have resulted and could in the future adversely
affect consumer demand for fuel. This volatility makes it difficult to predict the impact that future wholesale cost fluctuations
will have on our operating results and financial condition in future periods. Any significant change in one or more of these
factors could materially affect the number of fuel gallons sold, fuel revenue less cost of goods sold excluding depreciation and
amortization and overall guest traffic, which in turn could have a material adverse effect on our business, financial condition
and results of operations.
General economic conditions that are largely out of the Company’s control may adversely affect the Company’s
financial condition and results of operations.
Current economic conditions, including those resulting from the COVID-19 pandemic, higher interest rates, higher fuel
and other energy costs, inflation, increases or fluctuations in commodity prices such as cheese and coffee, higher levels of
unemployment, higher consumer debt levels and lower consumer discretionary spending, higher tax rates and other changes in
tax laws or other economic factors may affect input costs and consumer spending or buying habits, and could adversely affect
the costs of the products we sell in our stores and the consumer demand for such products. Unfavorable economic conditions,
especially those affecting the agricultural industry, higher fuel prices, and unemployment levels can affect consumer
confidence, spending patterns, and miles driven, and can cause guests to “trade down” to lower priced products in certain
categories when these conditions exist. These factors can lead to sales declines, and in turn have an adverse impact on our
business, 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.
Congress has given the Food and Drug Administration (“FDA”) broad authority to regulate tobacco and nicotine products,
and the FDA has enacted numerous regulations restricting the sale of such products. These governmental actions, as well as
national, state and local campaigns and regulations to discourage tobacco and nicotine use and limit the sale of such products,
including but not limited to certain actions taken to increase the minimum age in order to purchase such products, have resulted
or may in the future result in, reduced industry volume and consumption levels, and could materially affect the retail price of
cigarettes, unit volume and revenues, gross profit, and overall guest traffic, which in turn could have a material adverse effect
on our business, financial condition and results of operations.
Also, increasing regulations for e-cigarettes and vapor products could offset some of the revenue growth we have
experienced from selling these types of products.
Consumer or other litigation could adversely affect our financial condition and results of operations.
Our retail operations are characterized by a high volume of guest traffic and by transactions involving a wide array of
product selections, including prepared food. These operations carry a higher exposure to consumer litigation risk when
compared to the operations of companies operating in many other industries. Consequently, we may become a party to personal
injury, bad fuel, product liability, accessibility, data security and privacy and other legal actions in the ordinary course of our
business. While these actions are generally routine in nature, incidental to the operation of our business and immaterial in
scope, if our assessment of any action or actions should prove inaccurate, our financial condition and results of operations could
be adversely affected.
Additionally, we are occasionally exposed to industry-wide or class-action claims arising from the products we carry,
industry-specific business practices or other operational matters. Our defense costs and any resulting damage awards or
settlement amounts may not be covered, or in some instances fully covered, by our insurance policies. Thus, an unfavorable
outcome or settlement of one or more of these lawsuits could have a material adverse effect on our financial position, liquidity
and results of operations.
Increased credit card expenses could increase operating expenses.
A significant percentage of our sales are made with the use of credit cards. Because the interchange fees we pay when
credit cards are used to make purchases are based on transaction amounts, higher fuel prices at the pump and higher gallon
movement result in higher credit card expenses. These additional fees increase operating expenses. Higher operating expenses
9 that result from higher credit card fees may decrease our overall profit and have a material adverse effect on our business,
financial condition and results of operations. Total credit card fees paid in fiscal 2020, 2019, and 2018, were approximately
$145 million, $140 million, and $123 million, respectively.
Developments related to fuel efficiency, fuel conservation practices, climate change, and changing consumer preferences
may decrease the demand for motor fuel.
Technological advances and consumer behavior in reducing fuel use and governmental mandates to improve fuel
efficiency could lessen the demand for our largest revenue product, petroleum-based motor fuel, which may have a material
adverse effect on our business, financial condition, and results of operation. Changes in our climate, including the effects of
greenhouse gas emissions in the environment, may lessen demand or lead to additional government regulation. In addition, a
shift toward electric, hydrogen, natural gas or other alternative fuel-powered vehicles, including driverless motor vehicles,
could fundamentally change the shopping and driving habits of our guests or lead to new forms of fueling destinations or new
competitive pressure. Any of these outcomes could potentially result in fewer guest visits to our stores, decreases in sales
revenue across all categories or lower profit margins, which could have a material adverse effect on our business, financial
condition and results of operations.
Wholesale cost and tax increases relating to tobacco and nicotine products could affect our operating results.
Sales of tobacco and nicotine products have averaged approximately 11% of our total revenue over the past three fiscal
years, and our tobacco and nicotine revenue less cost of goods sold excluding depreciation and amortization accounted for
approximately 10% of the total revenue less cost of goods sold excluding depreciation and amortization for the same period.
Any significant increases in wholesale cigarette and related product costs or tax increases on tobacco or nicotine products may
have a materially adverse effect on unit demand for cigarettes (or related products). Currently, major cigarette and tobacco and
nicotine manufacturers offer significant rebates to retailers, although there can be no assurance that such rebate programs will
continue. We include these rebates as a component of cost of goods sold, which affects our gross margin from sales of cigarettes
and related products. In the event these rebates are no longer offered or decreased, our wholesale cigarette and related product
costs will increase accordingly. In general, we attempt to pass price increases on to our guests. Due to competitive pressures in
our markets, however, we may not always be able to do so. These factors could adversely affect our retail price of cigarettes and
related products, cigarette or related product unit volume and revenues, merchandise revenue less cost of goods sold excluding
depreciation and amortization, and overall guest traffic, and in turn have a material adverse effect on our business, financial
condition and results of operations.
Risks Related to Our Business
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.
Instances or reports of food-safety issues, such as food-borne illnesses, food tampering, food contamination or
mislabeling, either during growing, manufacturing, packaging, transportation, storage, preparation or service, have in the past
significantly damaged the reputations and impacted the sales of companies in the food processing, grocery, quick service and
“fast casual” restaurant sectors, and could affect us as well. Any instances of, or reports linking us to, food-borne illnesses or
food tampering, contamination, mislabeling or other food-safety issues could damage the value of our brand and severely hurt
sales of our prepared food products and possibly lead to product liability and personal injury claims, litigation (including class
actions), government agency investigations and damages. In addition, guest preferences and store traffic could be adversely
impacted by food-safety issues, health concerns or negative publicity about the consumption of our products, which could cause
a decline in demand for those products and adversely impact our sales.
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.
Our continued success depends on our ability to remain relevant with respect to consumer needs and wants, attitudes
toward our industry, and our guests’ preferences for ways of doing business with us, particularly with respect to digital
engagement, contactless delivery, curb-side pick-up and other non-traditional ordering and delivery platforms. We must
continually work to develop, produce and market new products, maintain and enhance the recognition of our brands, offer a
favorable mix of products, and refine our approach as to how and where we market, sell and deliver our products. This risk is
compounded by the increasing use of social and digital media by consumers and the speed by which information and opinions
PAGE 10
10 are shared. If we are unable to anticipate and respond to sudden challenges that we may face in the marketplace, trends in the
market for our products and changing consumer demands and sentiment, it could have a material adverse effect on our business,
financial condition and results of operations.
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.
We depend on our information technology (IT) systems, and a number of third-party vendor platforms, to manage and
operate numerous aspects of our business, provide analytical information to management and serve as a platform for our
business continuity plan. Our IT systems, and the technology platforms provided by our vendors, are an essential component of
our business and growth strategies, and a serious disruption to these could significantly limit our ability to manage and operate
our business efficiently. These systems are vulnerable to, among other things, damage and interruption from power loss or
natural disasters, computer system and network failures, loss of telecommunications services, physical and electronic loss of, or
loss of access to, data and information, security breaches or other security incidents, and computer viruses or attacks. Any
disruption could cause our business and competitive position to suffer and cause our operating results to be reduced.
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 rely on our distribution and transportation network, and the networks of our direct store delivery partners, to provide
products to our stores in a timely and cost-effective manner. Products are either moved from supplier locations to our
distribution centers, or delivered directly to our stores. Deliveries to our stores occur from the distribution centers or directly
from our suppliers. Any disruption, unanticipated or unusual expense or operational failure related to this process could affect
our store operations negatively.
We also depend on regular deliveries of products to and from our facilities and stores that meet our specifications. In
addition, we may have a single supplier or limited number of suppliers for certain products. While we believe there are
adequate reserve quantities and alternative suppliers, shortages or interruptions in the receipt or supply of products caused by
unanticipated demand, problems in production or distribution, financial or other difficulties of suppliers, inclement weather or
other economic conditions could adversely affect the availability, quality and cost of products, and our operating results.
We may experience difficulties implementing and realizing the results of our strategic plan.
In January 2020, Casey’s unveiled an updated, long-term/strategic plan, centered around four strategic objectives:
reinvigorate hospitality and the guest experience; be where the guest is; best-in-class efficiencies; and, invest in our people and
culture. While we have invested, and will continue to invest, significant resources in our team and in planning, development,
project management, and implementation of the plan, it is possible that we may experience significant delays, increased costs
and other difficulties that are not presently contemplated. Further, the intended results of the plan may not be realized as
anticipated. Any such issues could adversely affect our operations and negatively impact our business, results of operations and
financial condition.
Unfavorable weather conditions can adversely affect our business.
All of our stores are located in the central region of the United States, which is susceptible to tornadoes, thunderstorms,
extended periods of rain or unseasonably cold temperatures, flooding, ice storms, and heavy snow. Inclement weather
conditions could damage our facilities or could have a significant impact on consumer behavior, travel, and convenience store
traffic patterns as well as our ability to operate our locations. In addition, we typically generate higher revenues and gross
margins during warmer weather months, which fall within our first and second fiscal quarters. When weather conditions are not
favorable during a particular period, our operating results and cash flow from operations could be adversely affected.
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 are dependent on the continued knowledge and efforts of our management team and other key team members. If, for
any reason, our executives do not continue to be active in management, or we lose such persons, or other key team members, or
we fail to identify and/or recruit for current or future positions of need, our business, financial condition or results of operations
11 could be adversely affected. We also rely on our ability to recruit qualified drivers, store and field management and other store
personnel. Failure to continue to attract these individuals at reasonable compensation levels could have a material adverse effect
on our business and results of operations.
We may experience increased costs, disruptions or other difficulties with the implementation, operation and
functionality of our enterprise resource planning system.
We are engaged in a phased implementation of an enterprise resource planning (ERP) system, which will replace or
enhance certain internal financial and operating systems that are critical to our business operations. The implementation,
operation, and functionality of the ERP system has and will continue to require a significant investment of human,
technological, and financial resources. While we have invested, and continue to invest, significant resources in planning, project
management, consulting, and training, it is possible that significant implementation, operational, and functionality issues may
arise during the course of implementing and utilizing the ERP system, and it is further possible that we may experience
significant delays, increased costs, and other difficulties that are not presently contemplated. Any significant disruptions,
delays, deficiencies, or errors in the design, implementation, and utilization of the ERP system could adversely affect our
operations, prevent us from accurately and timely reporting our financial results, and negatively impact our business, results of
operations and financial condition. Additionally, if we do not effectively implement and utilize the ERP system as planned or
the system does not operate as intended, the effectiveness of our internal control over financial reporting could be adversely
affected or our ability to assess it adequately could be delayed.
Control deficiencies could prevent us from accurately and timely reporting our financial results.
Our internal control over financial reporting constitutes a process, including controls, designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S.
generally accepted accounting principles. We have in the past and may in the future identify deficiencies in our internal control
over financial reporting, including significant deficiencies and material weaknesses. Failure to identify and remediate
deficiencies in our internal control over financial reporting in a timely manner could prevent us from accurately and timely
reporting our financial results, which could cause us to fail to meet our reporting obligations, lead to a loss of investor
confidence and have a negative impact on the trading price of our common stock.
Our operations present hazards and risks which may not be fully covered by insurance, if insured.
The scope and nature of our operations present a variety of operational hazards and risks that must be managed through
continual oversight and control. As protection against hazards and risks, we maintain insurance against many, but not all,
potential losses or liabilities arising from such risks. Uninsured losses and liabilities from operating risks could reduce the funds
available to us for capital and investment spending and could have a material adverse impact on the results of operations.
We may not be able to identify, acquire, and integrate new properties and stores, which could adversely affect our
ability to grow our business.
An important part of our growth strategy has been to purchase properties on which to build our stores, and in certain
instances, acquire other convenience stores that complement our existing stores or broaden our geographic presence. We expect
to continue pursuing acquisition opportunities, which involve risks that could cause our actual growth or operating results to
differ materially from our expectations or the expectations of securities analysts. These risks include, but are not limited to, the
inability to identify and acquire suitable sites at advantageous prices; competition in targeted market areas; difficulties during
the acquisition process in discovering some of the liabilities of the businesses that we acquire; difficulties associated with our
existing financial controls, information systems, management resources and human resources needed to support our future
growth; difficulties with hiring, training and retaining skilled personnel; difficulties in adapting distribution and other
operational and management systems to an expanded network of stores; difficulties in adopting, adapting to or changing the
business practices, models or processes of stores or chains we acquire; difficulties in obtaining governmental and other third-
party consents, permits and licenses needed to operate additional stores; difficulties in obtaining the cost savings and financial
improvements we anticipate from future acquired stores; the potential diversion of our management’s attention from focusing
on our core business due to an increased focus on acquisitions; and, challenges associated with the consummation and
integration of any future acquisition.
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.
PAGE 12
12 We are required to comply with certain financial and non-financial covenants under our existing senior notes and credit
facility agreements. A breach of any covenant could result in a default under such agreements, which could, if not timely cured,
permit lenders to declare all amounts outstanding to be immediately due and payable, and to terminate such instruments, which
in turn could have a material adverse effect on our business, financial condition and results of operation.
Compliance with and changes in tax laws could adversely affect our performance.
We are subject to extensive tax liabilities imposed by multiple jurisdictions, including but not limited to income taxes,
indirect taxes (excise, sales/use, and gross receipts taxes), payroll taxes, property taxes, and tobacco taxes. Tax laws and
regulations are dynamic and subject to change as new laws are passed and new interpretations of existing laws are issued and
applied. The activity could result in increased expenditures for tax liabilities in the future. Many of these liabilities are subject
to periodic audits by the respective taxing authorities. Subsequent changes to our tax liabilities as a result of these audits may
subject us to interest and penalties.
We are subject to extensive governmental regulations.
Our business is subject to extensive governmental laws and regulations that include, but are not limited to, those relating to
environmental protection and remediation; the preparation, sale and labeling of food; minimum wage, overtime and other
employment laws and regulations; compliance with the Patient Protection and Affordable Care Act and the Americans with
Disabilities Act; legal restrictions on the sale of alcohol, tobacco and nicotine products, money orders, lottery/lotto and other
age-restricted products; compliance with the Payment Card Industry Data Security Standards and similar requirements;
compliance with the Federal Motor Carriers Safety Administration regulations; and, securities laws and Nasdaq listing
standards. In addition, during the COVID-19 pandemic, the Company was, and continues to be, subject to responsive actions
taken by governments and others to mitigate the spread of COVID-19, which resulted in decreased store traffic and certain
changes to how we operate our stores and offer certain products for sale to our guests. The effects created by these, including
the costs of compliance with these laws and regulations, is substantial, and a violation of or change in such laws and/or
regulations could have a material adverse effect on our business, financial condition, and results of operations.
State laws regulate the sale of alcohol, tobacco and nicotine products, lottery/lotto products and other age-restricted
products. A violation or change of these laws could adversely affect our business, financial condition, and results of operations
because state and local regulatory agencies have the power to approve, revoke, suspend, or deny applications for and renewals
of permits and licenses relating to the sale of certain of these products or to seek other remedies.
Any appreciable increase in wages, overtime pay, or the statutory minimum salary requirements, minimum wage rate,
mandatory scheduling or scheduling notification laws, or the adoption of additional mandated healthcare or paid-time-off
benefits would result in an increase in our labor costs. Such cost increases, or the penalties for failing to comply, could
adversely affect our business, financial condition, and results of operations. State or federal lawmakers or regulators may also
enact new laws or regulations applicable to us that may have a material adverse and potentially disparate impact on our
business.
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.
We store motor fuel in storage tanks at our retail locations. Additionally, a significant portion of motor fuel is transported
in our own trucks, instead of by third-party carriers. Our operations are subject to significant hazards and risks inherent in
transporting and storing motor fuel. These hazards and risks include, but are not limited to, fires, explosions, traffic accidents,
spills, discharges and other releases, any of which could result in distribution difficulties and disruptions, environmental
pollution, governmentally-imposed fines or clean-up obligations, personal injury or wrongful death claims and other damage to
our properties and the properties of others. As a result, any such event could have a material adverse effect on our business,
financial condition and results of operations.
Other Risks
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.
Securities markets worldwide experience significant price and volume fluctuations. This market volatility could
significantly affect the market price of our common stock without regard to our operating performance. In addition, the price of
13 our common stock could be subject to wide fluctuations in response to these, and other factors: a deviation in our results from
the expectations of public market analysts and investors; statements by research analysts about our common stock, company, or
industry; changes in market valuations of companies in our industry and market evaluations of our industry generally; additions
or departures of key personnel; actions taken by our competitors; sales or repurchases of common stock by the Company or
other affiliates; and, other general economic, political, or market conditions, many of which are beyond our control.
The market price of our common stock will also be affected by our quarterly operating results and same store sales results,
which may be expected to fluctuate. Some of the factors that may affect our quarterly results and same store sales include
general, regional, and national economic conditions; competition; unexpected costs; changes in retail pricing, consumer trends,
and the number of stores we open and/or close during any given period; and the costs of compliance with corporate governance
and other legal requirements. Other factors are discussed throughout Management’s Discussion and Analysis of Financial
Condition and Results of Operations. You may not be able to resell your shares of our common stock at or above the price you
pay.
Any issuance of shares of our common stock in the future could have a dilutive effect on your investment.
We could issue additional shares for investment, acquisition, or other business purposes. Even if there is not an immediate
need for capital, we may choose to issue securities to sell in public or private equity markets, if and when conditions are
favorable. Raising funds by issuing securities would dilute the ownership interests of our existing shareholders. Additionally,
certain types of equity securities we may issue in the future could have rights, preferences, or privileges senior to the rights of
existing holders of our common stock.
Iowa law and provisions in our charter documents may have the effect of preventing or hindering a change in control
and adversely affecting the market price of our common stock.
Our articles of incorporation give the Company’s board of directors the authority to issue up to one million shares of
preferred stock and to determine the rights and preferences of the preferred stock without obtaining shareholder approval. The
existence of this preferred stock could make it more difficult or discourage an attempt to obtain control of the Company by
means of a tender offer, merger, proxy contest, or otherwise. Furthermore, this preferred stock could be issued with other rights,
including economic rights, senior to our common stock, thereby having a potentially adverse effect on the market price of our
common stock.
Although the Company began a phased declassification of its board of directors over a three-year period starting with the
Company’s 2019 annual shareholders’ meeting, its board of directors remains partially staggered. Our staggered board, along
with other provisions of our articles of incorporation and bylaws and Iowa corporate law, could make it more difficult for a
third party to acquire us or remove our directors by means of a proxy contest, even if doing so would be beneficial to our
shareholders. For example, the Iowa Business Corporation Act (the “Act”) prohibits publicly held Iowa corporations to which it
applies from engaging in a business combination with an interested shareholder for a period of three years after the date of the
transaction in which the person became an interested shareholder unless the business combination is approved in a prescribed
manner. Further, the Act permits a board of directors, in the context of a takeover proposal, to consider not only the effect of a
proposed transaction on shareholders, but also on a corporation’s team members, suppliers, guests, creditors, and on the
communities in which the corporation operates. These provisions could discourage others from bidding for our shares and
could, as a result, reduce the likelihood of an increase in our stock price that would otherwise occur if a bidder sought to buy
our stock.
We may, in the future, adopt other measures (such as a shareholder rights plan or “poison pill”) that could have the effect
of delaying, deferring, or preventing an unsolicited takeover, even if such a change in control were at a premium price or
favored by a majority of unaffiliated shareholders. These measures may be adopted without any further vote or action by our
shareholders.
PAGE 14
14 ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2.
PROPERTIES
We own the Store Support Center (built in 1990) and both distribution centers. Located on an approximately 57-acre site
in Ankeny, Iowa, the Store Support Center, our first distribution center, and our vehicle service and maintenance center occupy
a total of approximately 375,000 square feet. We also own a building near the Store Support Center where our construction
and support services departments operate. In February 2016, we opened our second distribution center, located in Terre Haute,
Indiana. This second distribution center has approximately 300,000 square feet of warehouse space. We are currently in the
process of constructing a third distribution center located in Joplin, Missouri. The new distribution center is expected to provide
approximately 230,000 square feet of available space.
On April 30, 2020, we also owned the land at 2,181 store locations and the buildings at 2,189 locations and leased the
land at 26 locations and the buildings at 18 locations. Most of the leases provide for the payment of a fixed rent plus property
taxes, insurance, and maintenance costs. Generally, the leases are for terms of ten to twenty years with options to renew for
additional periods or options to purchase the leased premises at the end of the lease period. Additionally, the Company
regularly has land held for development, land under construction for new stores, and land held for sale as a result of store
closures.
ITEM 3.
LEGAL PROCEEDINGS
The information required to be set forth under this heading is incorporated by reference from Note 10, Contingencies, to
the Consolidated Financial Statements included in Part II, Item 8.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
Table of Contents15 PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND
ISSUER PURCHASES OF EQUITY SECURITIES
Common Stock
Casey’s common stock trades on the Nasdaq Global Select Market under the symbol CASY. The 36,806,325 shares of
common stock outstanding at April 30, 2020 had a market value of approximately $5.6 billion. On that date, there were 1,583
shareholders of record.
Common Stock Market Prices
High
128.51 $
110.83 $
130.74 $
137.08 $
Low
105.45
90.42
102.47
116.23
$
$
$
$
Calendar
2019
Q1
Q2
Q3
Q4
High
138.45 $
156.82 $
173.31 $
179.21 $
$
$
$
$
Low
122.86
127.75
154.58
152.05
Calendar
2020
Q1
High
181.99 $
Low
114.01
$
Calendar
2018
Q1
Q2
Q3
Q4
Dividends
We began paying cash dividends during fiscal 1991. The dividends declared in fiscal 2020 totaled $1.28 per share. The
dividends declared in fiscal 2019 totaled $1.16 per share. On June 3, 2020, the Board of Directors declared a quarterly dividend
of $0.32 per share payable August 17, 2020, to shareholders of record on August 3, 2020. The Board typically reviews the
dividend every year at its June meeting.
The cash dividends declared during the calendar years 2018 through 2020 were as follows:
$
Calendar 2018
Q1
Q2
Q3
Q4
Cash
dividend
declared
0.260
0.290
0.290
0.290
1.130
$
Calendar 2019
Q1
Q2
Q3
Q4
Cash
dividend
declared
0.290
0.320
0.320
0.320
1.250
Calendar 2020
Q1
Q2
$
Cash
dividend
declared
0.320
0.320
Issuer Purchases of Equity Securities
The following table sets forth information with respect to the Company's repurchases of common stock during the quarter
ended April 30, 2020:
Period
Fourth Quarter:
February 1-29, 2020
March 1-31, 2020
April 1-30, 2020
Total
Total Number of
Shares Purchased
Average Price Paid
Per Share
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
Maximum Dollar Value of
Shares That May Yet Be
Purchased Under the Plans or
Programs (1)
— $
—
—
— $
—
—
—
—
— $
—
— $
— $
300,000,000
300,000,000
300,000,000
300,000,000
PAGE 16
Table of Contents16 (1)
On March 6, 2017, the Company announced a share repurchase program, wherein the Company was authorized to
repurchase up to an aggregate of $300 million of the Company's outstanding common stock. The share repurchase
authorization was valid for a period of two years. The repurchase was completed in May 2018. In March 2018, the
Company announced a second share repurchase program with an aggregate $300 million repurchase authorization,
also valid for two years. On March 6, 2020, the authorization was extended through the end of the Company’s 2022
fiscal year. The timing and number of repurchase transactions under the program depends on a variety of factors
including, but not limited to, market conditions, corporate considerations, business opportunities, debt agreements, and
regulatory requirements. The program can be suspended or discontinued at any time. No stock was repurchased in the
fourth quarter or fiscal year related to that authorization.
Table of Contents17 ITEM 6. SELECTED FINANCIAL DATA
(In thousands, except per share amounts)
Statement of Income Data
Total revenue
$ 9,175,296 $ 9,352,910 $ 8,391,124 $ 7,506,587 $ 7,122,086
2020
2019
2018
2017
2016
Years ended April 30,
Cost of goods sold (exclusive of
depreciation and amortization, shown
separately below)
Operating expenses
Depreciation and amortization
Interest, net
Income before income taxes
Federal and state income taxes
Net income
Basic earnings per common share
Diluted earnings per common share
Weighted average number of common
shares outstanding—basic
Weighted average number of common
shares outstanding—diluted
Dividends declared per common share
Balance Sheet Data
7,030,612
1,498,043
251,174
53,419
342,048
7,398,186
1,391,279
244,387
55,656
263,402
78,202
263,846 $
7.14 $
7.10 $
59,516
203,886 $
5.55 $
5.51 $
6,621,731
1,283,046
220,970
50,940
214,437
(103,466)
317,903 $
8.41 $
8.34 $
5,825,426
1,172,328
197,629
41,536
269,668
92,183
177,485 $
4.54 $
4.48 $
5,508,465
1,053,805
170,937
40,173
348,706
122,724
225,982
5.79
5.73
36,956
36,710
37,778
39,125
39,016
37,186
36,975
38,132
39,579
1.28 $
1.16 $
1.04 $
0.96 $
39,422
0.88
$
$
$
$
Current assets
Total assets
Current liabilities
Long-term debt, net of current maturities
Shareholders’ equity
As of April 30,
2020
387,250 $
2019
410,580 $
2018
396,840 $
2017
350,685 $
$ 3,943,892
1,063,428
714,502
1,643,205
3,731,376
590,932
1,283,275
1,408,769
3,469,927
507,850
1,291,725
1,271,141
3,020,102
446,546
907,356
1,190,620
2016
325,885
2,726,148
387,571
822,869
1,083,463
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(Dollars and gallons in thousands, except per share amounts)
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.
Overview
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. On April 30, 2020, there were a total of 2,207 stores in operation.
All but three Casey's Stores offer fuel for sale on a self-serve basis and all carry a broad selection of food (including freshly
prepared foods such as pizza, donuts and sandwiches), beverages, tobacco and nicotine products, health and beauty aids,
automotive products and other non-food items. We derive our revenue from the retail sale of fuel and the products offered in
our stores.
PAGE 18
18 Approximately 56% 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. One is adjacent to the Store Support Center facility in Ankeny, Iowa. The other was opened in
February 2016 in Terre Haute, Indiana. At April 30, 2020, the Company owned the land at 2,181 store locations and the
buildings at 2,189 locations, and leased the land at 26 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:
Stores at April 30, 2019
New store construction
Acquisitions
Acquisitions not opened
Prior acquisitions opened
Closed
Stores at April 30, 2020
Long-Term Strategic Plan
Store Count
2,146
60
18
(7)
3
(13)
2,207
The Company announced an updated, long-term strategic plan in January 2020 focused on four strategic objectives:
reinvigorate hospitality and the guest experience; be where the guest is; 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. 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:
•
•
•
•
•
•
•
•
•
•
provided additional compensation and operational bonuses for key field and support team members;
provided additional paid leave for impacted team members;
provided personal protective equipment for team members;
installed Plexiglas shields at our cash registers;
enhanced cleaning and hygiene practices;
implemented health checks in all our distribution centers;
designated exclusive shopping times for higher risk guests;
established 6-foot markings in our stores to encourage social distancing; and
implemented contact-less delivery.
provided free meals for all store and distribution center team members;
19
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
Fuel Gallons
Grocery & Other Merchandise
Prepared Food & Fountain
1st Half
2nd Half
4th quarter total
2.9%
4.9%
5.5%
(32.2)%
(9.3)%
(30.2)%
(14.7)%
(2.0)%
(13.5)%
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.
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. and “Forward-
looking Statements” at the end of Item 7.
Fiscal 2020 Compared with Fiscal 2019
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 2020 decreased 1.9% ($177,614) to $9,175,296. Retail fuel
sales for the fiscal year were $5,517,412, a decrease of 5.7% primarily due to a 5.5% decrease in the price of fuel, which
decreased fuel revenue by $321,444. Fuel gallons sold decreased 0.1% to 2.3 billion gallons, which decreased fuel revenue by
an additional $5,835. The decrease in fuel revenue was offset by a $152,358 increase to $3,596,173 (4.4%) in grocery and other
merchandise and prepared food and fountain, primarily due to operating 61 more stores than one year ago.
Total revenue less cost of goods sold (excluding depreciation and amortization) was 23.4% for fiscal 2020 compared with
20.9% 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
PAGE 20
20 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. The majority of all operating expenses are wages and
wage-related costs.
Depreciation and amortization expense increased 2.8% ($6,787) to $251,174 in fiscal 2020 from $244,387 in fiscal 2019.
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 effective tax rate increased to 22.9% in fiscal 2020 from 22.6% in fiscal 2019. 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.
Net income increased to $263,846 in fiscal 2020 from $203,886 in fiscal 2019. The increase was due to increased fuel
margin contribution and operating 61 more stores than one year ago.
Please refer to the Form 10-K related to the fiscal year ended April 30, 2019, filed on June 28, 2019, for comparison of
Fiscal 2019 to Fiscal 2018.
COMPANY TOTAL REVENUE AND REVENUE LESS COST OF GOODS SOLD (EXCLUDING DEPRECIATION
AND AMORTIZATION) BY CATEGORY
Total revenue by category
Fuel
Grocery and other merchandise
Prepared food and fountain
Other
Revenue less cost of goods sold (excluding depreciation and amortization)
by category
Fuel
Grocery and other merchandise
Prepared food and fountain
Other
INDIVIDUAL STORE COMPARISONS (1)
Average retail sales
Average retail inside sales (3)
Average revenue less cost of goods sold (excluding depreciation and
amortization) on inside items
Average retail sales of fuel
Average revenue less cost of goods sold (excluding depreciation and
amortization) on fuel
Average operating income (2)
Average number of gallons sold
21
$
$
$
$
$
Years ended April 30,
2020
2019
2018
5,517,412 $
2,498,966
1,097,207
61,711
9,175,296 $
5,848,770 $
2,369,521
1,074,294
60,325
9,352,910 $
5,145,988
2,184,147
1,005,621
55,368
8,391,124
614,847 $
800,140
668,092
61,605
2,144,684 $
466,107 $
759,817
668,598
60,202
1,954,724 $
406,811
693,576
613,736
55,270
1,769,393
Years ended April 30,
2020
2019
2018
4,203 $
1,659
4,449 $
1,649
674
2,544
280
317
1,055
679
2,800
223
281
1,097
4,150
1,602
643
2,548
202
246
1,087
(1)
(2)
(3)
Individual store comparisons include only those stores that had been in operation for at least one full year and
remained open on April 30 of the fiscal year indicated.
Average operating income represents retail sales less cost of goods sold and operating expenses attributable to a
particular store; it excludes federal and state income taxes, and Company operating expenses not attributable to a
particular store.
Inside sales is comprised of sales related to the grocery and other merchandise and prepared food and fountain
categories
SAME STORE SALES BY CATEGORY (1)
Fuel gallons (2)
Grocery and other merchandise (3)
Prepared food and fountain (3)
Years ended April 30,
2020
2019
2018
(5.1)%
1.9 %
(1.5)%
(1.7)%
3.6 %
1.9 %
2.3%
1.9%
1.7%
(1)
(2)
(3)
Same-store sales is a common metric used in the convenience store industry. We define same-store sales as the total
sales increase (or decrease) for stores open during the full time of 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. 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. 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.
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.
Use of Non-GAAP Measures
We define EBITDA as net income before net interest expense, income taxes, depreciation and amortization. Adjusted
EBITDA further adjusts EBITDA by excluding the gain or loss on disposal of assets as well as impairment charges. Neither
EBITDA nor Adjusted EBITDA are presented in accordance with GAAP.
We believe EBITDA and Adjusted EBITDA are useful to investors in evaluating our operating performance because
securities analysts and other interested parties use such calculations as a measure of financial performance and debt service
capabilities, and they are regularly used by management for internal purposes including our capital budgeting process,
evaluating acquisition targets, and assessing store performance.
EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be considered as a substitute for
net income, cash flows from operating activities or other income or cash flow statement data. These measures have limitations
as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results as reported under
GAAP. We strongly encourage investors to review our financial statements and publicly filed reports in their entirety and not to
rely on any single financial measure.
Because non-GAAP financial measures are not standardized, EBITDA and Adjusted EBITDA, as defined by us, may not
be comparable to similarly titled measures reported by other companies. It therefore may not be possible to compare our use of
these non-GAAP financial measures with those used by other companies.
The following table contains a reconciliation of net income to EBITDA and Adjusted EBITDA for the three months and
years ended April 30, 2020 and 2019, respectively:
PAGE 22
22 Three months ended
Years ended
April 30, 2020
April 30, 2019
April 30, 2020
Net income
Interest, net
Depreciation and amortization
Federal and state income taxes
EBITDA
Loss on disposal of assets and impairment charges
Adjusted EBITDA
62,091 $
13,806
65,193
16,491
157,581 $
1,380
158,961 $
25,212 $
13,749
62,867
4,377
106,205 $
225
106,430 $
$
$
263,846 $
53,419
251,174
78,202
646,641 $
3,495
650,136 $
April 30, 2019
203,886
55,656
244,387
59,516
563,445
1,384
564,829
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.
Critical Accounting Policies
Critical accounting policies are those accounting policies that management believes are important to the portrayal of our
financial condition and results of operations and require management’s most difficult, subjective judgments, often because of
the need to estimate the effects of inherently uncertain factors.
Inventory
Inventories, which consist of merchandise and fuel, are stated at the lower of cost or market. For fuel, cost is determined
through the use of the first-in, first-out (FIFO) method. For merchandise inventories, cost is determined through the use of the
last-in, first-out (LIFO) method.
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. 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. 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 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. Actuarial projections
of the losses are employed due to the potential of variability in the liability estimates. Some factors affecting the uncertainty of
claims include the development time frame, settlement patterns, litigation and adjudication direction, and medical treatment
and cost trends. The liability is not discounted. The balances of our self-insurance reserves were $44,959 and $44,334 for the
years ended April 30, 2020 and 2019, respectively.
Recent Accounting Pronouncements
Refer to Note 1 of the consolidated financial statements for a description of new accounting pronouncements applicable
to the Company.
Liquidity and Capital Resources
23
Due to the nature of our business, cash provided by operations is our primary source of liquidity. We finance our
inventory purchases primarily from normal trade credit aided by relatively rapid inventory turnover. This turnover allows us to
conduct operations without large amounts of cash and working capital. As of April 30, 2020, the Company’s ratio of current
assets to current liabilities was 0.36 to 1. The ratio at April 30, 2019 and at April 30, 2018 was 0.69 to 1 and 0.78 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.
Capital expenditures represent the single largest use of Company funds. We believe that by reinvesting in stores, we will
be better able to respond to competitive challenges and increase operating efficiencies. During fiscal 2020, we expended
$471,683 for property and equipment, primarily for construction, acquisition, and remodeling of stores compared with
$462,899 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.
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.
PAGE 24
24 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.
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.
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. We do not expect such capital needs to
adversely affect liquidity.
The table below presents our significant contractual obligations, including interest, at April 30, 2020:
Contractual obligations
Payments due by period
Senior notes
Finance lease obligations
Operating lease obligations
Unrecognized tax benefits
Deferred compensation
Total
Total
$ 1,451,662 $
23,840
34,064
8,907
15,079
$ 1,518,488 $
Less than
1 year
1-3 years
3-5 years
More than
5 years
602,899 $
3,118
1,829
—
—
607,846 $
70,963 $
6,226
3,531
—
—
80,720 $
111,103 $
3,732
3,369
—
—
118,204 $
666,697
10,764
25,335
—
—
702,796
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, 2020, the Company had a total of $8,907 in gross unrecognized tax benefits. Of this amount, $7,059
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 $354 as of April 30, 2020. Interest and penalties related to
income taxes are classified as income tax expense in our consolidated financial statements. The federal statute of limitations
remains open for the tax years 2012 and forward. Tax years 2012 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 IRS is currently
examining tax year 2016 and 2017. The Company has no other 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 $1,800
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 long-term liabilities on our consolidated balance sheet at April 30, 2020, was a $13,604 obligation for
deferred compensation. Additionally, $1,037 was recognized in current liabilities as of April 30, 2020 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 $7,875 will be due during the next 5 years.
25
At April 30, 2020, 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 renew the letters of credit on an annual basis.
Forward-Looking Statements
This Form 10-K, including but not limited to the Management’s Discussion and Analysis of Financial Condition and
Results of Operations, contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933,
as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act
of 1995. The words “may,” “will,” “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”:
Industry. 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: 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; 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; 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.
Other: The market price for our common stock has been and may in the future be volatile, which could cause the value
of your investment to decline; any issuance of shares of our common stock in the future could have a dilutive effect on your
investment; and, Iowa law and provisions in our charter documents may have the effect of preventing or hindering a change in
control and adversely affecting the market price of our common stock.
PAGE 26
26 Although we have attempted to list the important factors that presently affect the Company’s business and operating
results, we further caution you that other factors we have not identified may in the future prove to be important in affecting our
business and results of operations. We ask you not to place undue reliance on any forward-looking statements because they
speak only of our views as of the statement dates. We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events, or otherwise.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company’s exposure to market risk for changes in interest rates relates primarily to our investment portfolio and
long-term debt obligations. We place our investments with high-quality credit issuers and, by policy, limit the amount of credit
exposure to any one issuer. Our first priority is to reduce the risk of principal loss. Consequently, we seek to preserve our
invested funds by attempting to limit default risk, market risk, and reinvestment risk. We attempt to mitigate default risk by
investing in only high-quality credit securities that we believe to be low risk and by positioning our portfolio to respond
appropriately to a significant reduction in a credit rating of any investment issuer or guarantor. The portfolio includes only
marketable securities with active secondary or resale markets to ensure portfolio liquidity. We believe an immediate 100-basis-
point move in interest rates affecting our floating and fixed rate financial instruments as of April 30, 2020, would have no
material effect on pretax earnings.
We do, from time to time, participate in a forward buy of certain commodities. These are not accounted for as derivatives
under the normal purchase and normal sale exclusions under the applicable accounting guidance.
27
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Shareholders and Board of Directors
Casey’s General Stores, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Casey’s General Stores, Inc. and subsidiaries (the Company)
as of April 30, 2020 and 2019, the related consolidated statements of income, shareholders’ equity, and cash flows for each of
the years in the three-year period ended April 30, 2020, and the related notes (collectively, the consolidated financial
statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
the Company as of April 30, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the
three-year period ended April 30, 2020, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of April 30, 2020, based on criteria established in Internal
Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission,
and our report dated June 26, 2020 expressed an unqualified opinion on the effectiveness of the Company’s internal control
over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Assessment of the self-insurance claim liability for workers’ compensation
As discussed in Notes 1 and 10 to the consolidated financial statements, at April 30, 2020, the Company was primarily
self-insured for workers’ compensation claims. The self-insurance claim liability for workers’ compensation is determined
actuarially based on claims filed and an estimate of claims incurred but not yet reported. Actuarial projections of the losses
are employed due to the potential variability in the liability estimates. Factors affecting the uncertainty of the claim liability
include the (1) loss development factors, which includes the development time frame, and settlement patterns, and (2)
expected loss rates, which includes litigation and adjudication direction, and medical treatment and cost trends.
We identified the assessment of the self-insurance claim liability for workers’ compensation as a critical audit matter. The
evaluation of the key assumptions used to estimate the liability, specifically the loss development factors and expected loss
28
PAGE 28
rates involved significant measurement uncertainty requiring complex auditor judgment. Specialized skill and knowledge
is necessary to evaluate the methods and key assumptions used to determine the liability.
The primary procedures we performed to address this critical audit matter included the following. We tested certain
internal controls over the Company’s process to determine the self-insurance claim liability for workers’ compensation
including controls over the selection of the methods used to determine the liability, and the loss development factors and
expected loss rates. We involved actuarial professionals with specialized skill and knowledge, who assisted in:
assessing the methods used by the Company’s external actuary by comparing them to generally accepted actuarial
evaluating the loss development factors and expected loss rates used by the Company’s external actuary by comparing
–
methods
–
them to industry and regulatory trends.
We have served as the Company’s auditor since 1987.
/s/ KPMG LLP
Des Moines, Iowa
June 26, 2020
29
Report of Independent Registered Public Accounting Firm
The Shareholders and Board of Directors
Casey’s General Stores, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Casey’s General Stores, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of
April 30, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of April 30, 2020, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of April 30, 2020 and 2019, the related consolidated statements
of income, shareholders’ equity, and cash flows for each of the years in the three-year period ended April 30, 2020, and the
related notes (collectively, the consolidated financial statements), and our report dated June 26, 2020 expressed an unqualified
opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Des Moines, Iowa
June 26, 2020
/s/ KPMG LLP
30
PAGE 30
CASEY’S GENERAL STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
Assets
Current assets
Cash and cash equivalents
Receivables
Inventories
Prepaid expenses
Income taxes receivable
Total current assets
Property and equipment, at cost
Land
Buildings and leasehold improvements
Machinery and equipment
Finance lease right-of-use assets
Construction in process
Less accumulated depreciation and amortization
Net property and equipment
Other assets, net of amortization
Goodwill
Total assets
Liabilities and Shareholders’ Equity
Current liabilities
Lines of credit
Current maturities of long-term debt
Accounts payable
Accrued expenses
Wages and related taxes
Property taxes
Insurance accruals
Other
Total current liabilities
Long-term debt and finance lease obligations, net of current maturities
Deferred income taxes
Deferred compensation
Insurance accruals, net of current portion
Other long-term liabilities
Total liabilities
Commitments and contingencies
Shareholders’ equity
Preferred stock, no par value, none issued
Common stock, no par value, 36,806,325 and 36,664,521 shares issued and outstanding
at April 30, 2020 and 2019, respectively
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
See accompanying Notes to Consolidated Financial Statements.
31
April 30,
2020
2019
$
78,275 $
48,500
236,007
9,801
14,667
387,250
872,151
1,969,585
2,369,361
24,780
125,632
5,361,509
2,037,708
3,323,801
71,766
161,075
63,296
37,856
273,040
7,493
28,895
410,580
792,601
1,770,695
2,236,123
25,323
124,613
4,949,355
1,826,936
3,122,419
41,154
157,223
$
3,943,892 $
3,731,376
$
120,000 $
570,280
184,800
75,000
17,205
335,240
34,039
36,348
22,097
95,864
1,063,428
714,502
435,598
13,604
22,862
50,693
39,950
32,931
21,671
68,935
590,932
1,283,275
385,788
15,881
22,663
24,068
2,300,687
2,322,607
—
—
33,286
1,609,919
1,643,205
3,943,892 $
$
15,600
1,393,169
1,408,769
3,731,376
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Total revenue
Cost of goods sold (exclusive of depreciation and amortization, shown
separately below) (a)
Operating expenses
Depreciation and amortization
Interest, net
Income before income taxes
Federal and state income taxes
Net income
Net income per common share
Basic
Diluted
Dividends declared per share
Years ended April 30,
2020
2019
2018
$
9,175,296 $
9,352,910 $
8,391,124
7,030,612
1,498,043
251,174
53,419
342,048
78,202
263,846 $
7,398,186
1,391,279
244,387
55,656
263,402
59,516
203,886 $
6,621,731
1,283,046
220,970
50,940
214,437
(103,466)
317,903
7.14 $
7.10 $
5.55 $
5.51 $
8.41
8.34
1.28 $
1.16 $
1.04
$
$
$
$
(a) Includes excise taxes of approximately:
$
1,063,000 $
988,000 $
919,000
See accompanying Notes to Consolidated Financial Statements.
PAGE 32
32 CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands, except per share and share amounts)
Shares
Outstanding
Common
stock
Retained
earnings
Shareholders'
Equity
38,765,821 $
40,074 $1,150,546 $ 1,190,620
—
—
40,377
(1,997,800)
65,924
36,874,322 $
—
—
—
71,546
(352,592)
71,245
—
—
1,377
(57,186)
15,735
317,903
(39,060)
—
(158,248)
—
317,903
(39,060)
1,377
(215,434)
15,735
—
—
— $1,271,141 $ 1,271,141
(4,140)
203,886
(42,471)
2,290
(35,247)
13,310
(4,140)
203,886
(42,471)
—
(35,247)
—
—
—
2,290
13,310
36,664,521 $
15,600 $1,393,169 $ 1,408,769
—
—
—
—
66,638
2,958
263,846
(47,096)
—
263,846
(47,096)
2,958
75,166
36,806,325 $
14,728
14,728
—
33,286 $1,609,919 $ 1,643,205
Balance at April 30, 2017
Net income
Dividends declared ($1.04 per share)
Exercise of stock options
Repurchase of common stock
Stock-based compensation
Balance at April 30, 2018
Implementation of ASU 2014-09
Net income
Dividends declared ($1.16 per share)
Exercise of stock options
Repurchase of common stock
Stock-based compensation
Balance at April 30, 2019
Net income
Dividends declared ($1.28 per share)
Exercise of stock options
Stock-based compensation
Balance at April 30, 2020
See accompanying Notes to Consolidated Financial Statements.
33
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Stock-based compensation
Loss on disposal of assets and impairment charges
Deferred income taxes
Changes in assets and liabilities:
Receivables
Inventories
Prepaid expenses
Accounts payable
Accrued expenses
Income taxes
Other, net
Net cash provided by operating activities
Cash flows from investing activities
Purchase of property and equipment
Payments for acquisitions of businesses, net of cash acquired
Proceeds from sales of property and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from long-term debt
Repayments of long-term debt
Net borrowings of short-term debt
Proceeds from exercise of stock options
Payments of cash dividends
Repurchase of common stock
Tax withholdings on employee share-based awards
Net cash (used in) provided by financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid during the year for interest, net of amount capitalized
Cash paid (received) for income taxes, net
Noncash investing and financing activities
Noncash additions from adoption of ASC 842
Purchased property and equipment in accounts payable
Shares repurchased in accounts payable
See accompanying Notes to Consolidated Financial Statements.
Years ended April 30,
2020
2019
2018
$
263,846 $
203,886 $
317,903
251,174
18,129
3,495
49,810
(10,644)
37,713
(2,308)
(140,151)
26,400
15,783
(8,933)
504,314
(438,977)
(32,706)
5,041
(466,642)
—
(17,476)
45,000
2,958
(45,951)
—
(7,224)
(22,693)
14,979
63,296
78,275 $
244,387
16,410
1,384
45,337
7,189
(29,648)
(1,727)
12,451
30,927
22,545
(22,527)
530,614
(394,699)
(68,200)
5,069
(457,830)
—
(16,000)
35,400
2,290
(41,430)
(37,479)
(5,948)
(63,167)
9,617
53,679
220,970
18,800
2,281
(98,178)
(1,801)
(38,406)
3,413
14,751
15,967
(30,053)
(5,850)
419,797
(577,421)
(37,160)
5,246
(609,335)
400,000
(15,688)
38,700
1,377
(38,780)
(214,683)
(4,426)
166,500
(23,038)
76,717
63,296 $
53,679
54,277 $
9,364
56,306 $
(11,433)
22,635
5,328
—
—
15,616
—
48,757
24,274
—
12,014
2,232
$
$
PAGE 34
34 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
1. SIGNIFICANT ACCOUNTING POLICIES
Operations: Casey’s General Stores, Inc. and its subsidiaries (the Company/Casey’s) operate 2,207 convenience stores in
16 Midwest states. The stores are located primarily in smaller communities, many with populations of less than 5,000. Retail
revenue in 2020 by category are as follows: 60% fuel, 28% grocery and other merchandise, and 12% prepared food and
fountain. The Company’s products are readily available, and the Company is generally not dependent on a single supplier or
only a few suppliers.
Principles of consolidation: The consolidated financial statements include the financial statements of Casey’s General
Stores, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in
consolidation. Certain amounts in prior year have been reclassified to conform to current year presentation.
Use of estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
Cash equivalents: We consider all highly liquid investments with a maturity at purchase of three months or less to be cash
equivalents. Included in cash equivalents are money market funds and credit card, debit card and electronic benefits transfer
transactions that process within three days.
Inventories: Inventories, which consist of merchandise and fuel, are stated at the lower of cost or market. For fuel, cost is
determined through the use of the first-in, first-out (FIFO) method. For merchandise inventories, cost is determined through the
use of the last-in, first-out (LIFO) method.
The excess of replacement cost over the stated LIFO value was $87,546 and $80,814 at April 30, 2020 and 2019,
respectively. There were no material LIFO liquidations during the periods presented. Below is a summary of the inventory
values at April 30, 2020 and 2019:
Fuel
Merchandise
Total inventory
Years ended April 30,
2020
2019
$
$
33,695 $
202,312
236,007 $
83,204
189,836
273,040
The Company often receives vendor allowances on the basis of quantitative contract terms that vary by product and
vendor or directly on the basis of purchases made. Vendor allowances include rebates and other funds received from vendors to
promote their products. Vendor rebates, including billbacks, are treated as a reduction in cost of goods sold and are recognized
primarily based on the purchase of product or shipment of product from the warehouse to the store, or sale of product to our
guests. These are recognized in the period earned based on the applicable rebate agreement. Reimbursements of an operating
expense (e.g., advertising) are recorded as reductions of the related expense.
Renewable Identification Numbers (RINs) are recorded as a reduction in cost of goods sold in the period when the
Company commits to a price and agrees to sell all of the RINs earned during a specified period. The Company includes in cost
of goods sold the costs incurred to acquire fuel and merchandise, including excise taxes, less vendor allowances and rebates
and RINs. The Company does not record an asset on the balance sheet related to RINs that have not been validated and
contracted. Warehousing costs are recorded within operating expenses on the consolidated statements of income.
Capitalized software implementation costs: The Company capitalizes expenditures related to the implementation of
software as incurred. These costs are expensed on a straight-line basis within operating expenses over the contractual life of the
contract with the related software provider. The useful lives utilized for capitalized software implementation costs range from
3-13 years. As of April 30, 2020 and April 30, 2019, the Company had recognized $38,593 and $27,873 of capitalized software
implementation costs, respectively. The outstanding balance is recognized in other assets on the consolidated balance sheets.
35
Goodwill: Goodwill and intangible assets with indefinite lives are tested for impairment at least annually. The Company
assesses impairment annually at year-end using a market based approach to establish fair value. All of the goodwill assigned to
the individual stores is aggregated into a single reporting unit due to the similar economic characteristics of the stores. As of
April 30, 2020 and 2019, there was $161,075 and $157,223 of goodwill, respectively. Management’s analysis of recoverability
completed as of the fiscal year-end indicated no evidence of impairment for the years ended April 30, 2020, 2019, and 2018.
Depreciation and amortization: Depreciation of property and equipment are computed using the straight-line method over
the following estimated useful lives:
Buildings
Machinery and equipment
Finance lease right-of-use assets
Leasehold improvements
25-40 years
5-40 years
Lesser of term of lease or life of asset
Lesser of term of lease or life of asset
The Company monitors stores and will accelerate depreciation if the expected life of the asset is reduced due to the
expected remaining operation of the store or the Company’s plans. Construction in process is reported at cost and not subject
to depreciation until the related asset is placed in service.
Store closings and asset impairment: The Company writes down property and equipment of stores it is closing to
estimated net realizable value at the time management commits to a plan to close such stores and begins active marketing of the
stores. The Company bases the estimated net realizable value of property and equipment on its experience in utilizing and/or
disposing of similar assets, as well as estimates provided by its own and/or third-party real estate experts.
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). 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 incurred impairment charges of
$1,177 in fiscal 2020, $1,167 in fiscal 2019, and $507 in fiscal 2018. Impairment charges are a component of operating
expenses.
Excise taxes: Excise taxes approximating $1,063,000, $988,000, and $919,000 on retail fuel sales are included in total
revenue and cost of goods sold for fiscal 2020, 2019, and 2018, respectively.
Income taxes: The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. The Company calculates its current and deferred tax provision based on estimates and
assumptions that could differ from actual results reflected in income tax returns filed in subsequent years. Adjustments based
on filed returns are recorded when identified.
Revenue recognition: The Company recognizes retail sales of fuel, grocery and other merchandise, prepared food and
fountain and other revenue at the time of the sale to the guest. Sales taxes collected from guests and remitted to the government
are recorded on a net basis in the consolidated financial statements.
A portion of revenue from sales that include a redeemable box top coupon or points under our Casey’s Rewards program
is deferred. The deferred portion of the sale represents the value of the estimated future redemption of the box top coupon or
points. The amounts related to redeemable box top coupons and points are deferred until their redemption or expiration.
Revenue related to the box top coupons and points issued is expected to be recognized less than one year from the original sale
to the guest. As of April 30, 2020 and April 30, 2019, the Company recognized a contract liability of $11,180 and $6,931,
PAGE 36
36 respectively, related to the outstanding box top coupons and Casey's Rewards points, which is included in other accrued
expenses on the consolidated balance sheets.
Gift card related revenue is recognized as the gift cards are used by the guest. Gift card breakage revenue is
recognized based on the estimated gift card breakage rate over the pro rata usage of the card.
Net income per common share: Basic earnings per share have been computed by dividing net income by the weighted
average shares outstanding during each of the years. Unvested shares under equity awards are treated as common shares within
the basic earnings per share calculation when a team member has met certain requirements in the award agreement. For
example, if retirement provisions are satisfied which allow a team member to avoid forfeiture of the award upon a normal
retirement from the Company, it is included in the basic earnings per share calculation. The calculation of diluted earnings per
share treats stock options and unvested restricted stock units with time-based restrictions as potential common shares to the
extent they are dilutive. The diluted earnings per share calculation does not take into effect any shares that have not met
performance or market conditions as of the reporting period.
Asset retirement obligations: The Company recognizes the estimated future cost to remove underground storage tanks
over the estimated useful life of the storage tank. The Company records a discounted liability for the fair value of an asset
retirement obligation with a corresponding increase to the carrying value of a long-lived asset at the time an underground
storage tank is installed. The Company amortizes the amount added to property and equipment on a straight-line basis and
recognizes accretion expense in connection with the discounted liability over the remaining life of the tank. The estimates of
the anticipated future costs for removal of an underground storage tank are based on our prior experience with removal.
Because these estimates are subjective and are currently based on historical costs with adjustments for estimated future changes
in the associated costs, we expect the dollar amount of these obligations to change as more information is obtained.
There were no material changes in our asset retirement obligation estimates during fiscal 2020. The net amount recorded
as an increase to the related underground storage tank asset related to asset retirement obligations was $13,416 and $11,793 at
April 30, 2020 and 2019, respectively, and is recorded in property and equipment, net of depreciation. The discounted liability
was $22,658 and $18,058 at April 30, 2020 and 2019, respectively, and is recorded in other long-term liabilities.
Self-insurance: 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.
Actuarial projections of the losses are employed due to the potential of variability in the liability estimates. Some factors
affecting the uncertainty of the claim liability include the loss development factors, which includes the development time frame
and settlement patterns, and expected loss rates, which includes litigation and adjudication direction, and medical treatment and
cost trends. The liability is not discounted. The balance of our self-insurance reserves was $44,959 and $44,334 for the years
ended April 30, 2020 and 2019, respectively.
Environmental remediation liabilities: The Company accrues for environmental remediation liabilities when it is probable
a liability has been incurred and the amount of loss can be reasonably estimated.
Derivative instruments: There were no options or futures contracts as of or during the years ended April 30, 2020, 2019,
or 2018. However, we do from time to time, participate in a forward buy of certain commodities. These are not accounted for as
derivatives under the normal purchase and sale exclusions within the applicable accounting guidance.
Stock-based compensation: Stock-based compensation is recorded based upon the fair value of the award on the grant
date. The cost of the award is recognized ratably in the consolidated statements of income over the vesting period of the award,
adjusted for certain retirement provisions. Additionally, certain awards include performance and market conditions. The
majority of performance-based awards are based on the achievement of a three year average return on invested capital (ROIC).
For these awards, stock-based compensation expense is estimated based on the probable outcome of shares to be awarded
adjusted as necessary at each reporting period. The market-based awards are achieved based on our relative performance to a
pre-determined peer group. The fair value of these awards is determined using a Monte Carlo simulation as of the date of the
grant. For market-based awards, the stock-based compensation expense will not be adjusted should the target awards vary from
actual awards.
Segment reporting: As of April 30, 2020, we operated 2,207 stores in 16 states. Our convenience stores offer a broad
selection of merchandise, fuel and other products and services designed to appeal to the convenience needs of our guests. We
manage the business on the basis of one operating segment and therefore, have only one reportable segment. Our stores sell
37
similar products and services, use similar processes to sell those products and services, and sell their products and services to
similar classes of guests. We make specific disclosures concerning the three broad merchandise categories of fuel, grocery and
other merchandise, and prepared food and fountain because it makes it easier for us to discuss trends and operational initiatives
within our business and industry. Although we can separate revenues and cost of goods sold within these categories (and further
sub-categories), the operating expenses associated with operating a store that sells these products are not separable by these
three categories.
Recent accounting pronouncements:
In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with
Customers (Topic 606). We adopted the standard on May 1, 2018 using the modified retrospective approach. The Company
adopted two changes that affect the timing of recognition of revenues related to gift card breakage income and the redemption
of coupon box tops attached to our pizza boxes. The impact related to gift cards was $879, net of $321 of deferred taxes and
was an increase to shareholders' equity with a reduction in deferred income. The impact related to box tops was $5,019, net of
$1,816 of deferred taxes and was a reduction in shareholders' equity, with an increase in deferred income.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update seeks to increase the transparency and
comparability among entities by requiring public entities to recognize lease assets and lease liabilities on the balance sheet and
disclose key information about leasing arrangements. To satisfy the standard’s objective, a lessee will recognize a right-of-use
asset representing its right to use the underlying asset for the lease term and a lease liability for the obligation to make lease
payments. Both the right-of-use asset and lease liability will initially be measured at the present value of the lease payments,
with subsequent measurement dependent on the classification of the lease as either a finance or an operating lease. For leases
with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset
not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such
leases generally on a straight-line basis over the lease term.
In July 2018, the FASB issued ASU 2018-10, Leases (Topic 842) - Codification Improvements which contains several
FASB Codification improvements for ASC Topic 842, including several implementation issues and ASU 2018-11, "Leases (Topic
842) - Targeted Improvements" which provides entities with an additional transition method for implementing ASC Topic 842.
Entities have the option to apply the new standard at the adoption date, recognizing a cumulative-effect adjustment to the opening
balance of retained earnings along with the modified retrospective approach previously identified, both of which include a number
of practical expedients that companies may elect to apply. Under the cumulative-effect adjustment comparative periods would not
be restated. Under the modified retrospective approach leases are recognized and measured under the noted guidance at the
beginning of the earliest period presented. The new standard is effective for public companies for annual periods beginning after
December 15, 2018, and interim periods within those years, with early adoption permitted. We adopted this guidance as of May
1, 2019 using the modified retrospective approach and elected the cumulative-effect adjustment practical expedient. As a result
of the transition method selected, the Company did not restate previously reported comparable periods. Please refer to note 7 for
additional information regarding the Company’s adoption of ASC 842.
In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other than Inventory. We adopted
this standard in the quarter ended July 31, 2018, which resulted in no material impact to the Company.
In January 2017, the FASB issued ASU 2017-01, Business Combinations, Clarifying the Definition of a Business. The
standard clarifies the definition of a business and adds guidance to assist entities in the determination of whether an acquisition
(or disposal) represents assets or a business. The guidance requires the Company to utilize various criteria to evaluate whether
or not an acquisition is a business. First, if substantially all of the fair value of the assets acquired is concentrated in a single
asset or a group of similar identifiable assets, the acquired assets do not represent a business. If that is not the case, the update
provides further guidance to evaluate if the acquisition represents a business focused on the nature and substance of the inputs
and process acquired. The standard is generally expected to reduce the number of business combinations, which may impact the
allocation of purchase consideration in future acquisitions. Where it is determined that an acquisition is not a business
combination, there would be no resulting goodwill recorded. The Company prospectively adopted this guidance for all future
acquisitions in the first quarter of fiscal 2019.
In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud
Computing Arrangement That Is a Service Contract. This standard provides guidance on accounting for costs of
implementation activities performed in a cloud computing arrangement that is a service contract. The amendments in the update
align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with
the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting
PAGE 38
38 arrangements that include an internal-use software license. The Company early adopted this guidance retrospectively, in the
first quarter of fiscal 2019. The adoption did not have a material impact on our consolidated financial statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income
Taxes. The standard includes changes that eliminate certain exceptions related to the approach for intraperiod tax allocation and
the methodology for calculating income taxes in an interim period. It also simplifies aspects of the accounting for franchise
taxes, certain transactions that result in a step-up in the tax basis of goodwill, and enacted changes in tax laws or rates. The
Company is required to adopt this guidance in the first quarter of its fiscal 2022, with early adoption permitted. The Company
is currently evaluating the impact the standard has on the consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of
Reference Rate Reform on Financial Reporting. The standard included optional guidance for a limited period of time to help
ease the burden in accounting for the effects of reference rate reform. The new standard is effective for all entities through
December 31, 2022. The Company does not expect the adoption of this standard to have a material impact on our consolidated
financial statements.
2. ACQUISITIONS
During the year ended April 30, 2020, the Company acquired 18 stores through a variety of multi-store and single store
transactions with several unrelated third parties. Of the 18 stores acquired, 11 were re-opened as a Casey's store during the 2020
fiscal year, and seven will be opened during the 2021 fiscal year. The majority of the acquisitions meet the criteria to be
considered business combinations. The purchase price of the stores were valued using a discounted cash flow model on a
location by location basis. The acquisitions were 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 excess of the cost of the acquisition over the net amounts
assigned to the fair value of the assets acquired and the liabilities assumed is recorded as goodwill if the acquisition is
considered to be a business combination. All of the goodwill associated with these transactions will be deductible for income
tax purposes over 15 years.
Allocation of the purchase price for the transactions in aggregate for the year ended April 30, 2020 is as follows (in
thousands):
Assets acquired:
Inventories
Property and equipment
Total assets
Liabilities assumed:
Accrued expenses
Total liabilities
Net tangible assets acquired
Goodwill
Total consideration paid
$
$
680
28,384
29,064
210
210
28,854
3,852
32,706
The following unaudited pro forma information presents a summary of our consolidated results of operations as if the
transactions referenced above occurred at the beginning of the first fiscal year of the periods presented (amounts in thousands,
except per share data):
Total revenue
Net income
Net income per common share
Basic
Diluted
39
Years Ended April 30,
2020
9,217,749 $
265,233 $
2019
9,421,773
205,987
7.18 $
7.13 $
5.61
5.57
$
$
$
$
3. FAIR VALUE OF FINANCIAL INSTRUMENTS AND LONG-TERM DEBT
A summary of the fair value of the Company’s financial instruments follows.
Cash and cash equivalents, receivables, and accounts payable: The carrying amount approximates fair value due to the
short maturity of these instruments or the recent purchase of the instruments at current rates of interest.
Long-term debt: The fair value of the Company’s long-term debt (including current maturities) and finance lease
obligations is estimated based on the current rates offered to the Company for debt of the same or similar issues. The fair value
of the Company’s long-term debt and capital lease obligations was approximately $1,341,000 and $1,272,000, respectively, at
April 30, 2020 and 2019.
The carrying amount of the Company’s long-term debt and finance lease obligations by issuance is as follows:
Finance lease liabilities (Note 7)
5.72% Senior notes due in 14 installments beginning September 30, 2012 and ending
March 30, 2020
5.22% Senior notes due August 9, 2020 (1)
3.67% Senior notes (Series A) due in 7 installments beginning June 17, 2022, and ending
June 15, 2028
3.75% Senior notes (Series B) due in 7 installments beginning December 17, 2022 and
ending December 18, 2028
3.65% Senior notes (Series C) due in 7 installments beginning May 2, 2025 and ending May
2, 2031
3.72% Senior notes (Series D) due in 7 installments beginning October 28, 2025 and ending
October 28, 2031
3.51% Senior notes (Series E) due June 13, 2025
3.77% Senior notes (Series F) due August 22, 2028
Less current maturities (2)
As of April 30,
2020
2019
$
16,746 $
16,480
—
569,000
15,000
569,000
150,000
150,000
50,000
50,000
50,000
50,000
50,000
150,000
250,000
1,285,746
571,244
714,502 $
50,000
150,000
250,000
1,300,480
17,205
1,283,275
$
(1)
agreement for the refinancing in the near future shortly after the report date.
The Company is in the process of refinancing these Senior notes, and expects to execute the applicable note purchase
(2)
on the consolidated balance sheets for the years ended April 30, 2020 and 2019, respectively.
Long-term debt is presented gross in the table above, but net of unamortized debt issuance costs of $964 and $1,171
In January 2019, the Company entered into the Credit Facility that provides for a $300 million unsecured revolving line
of credit, a $30 million sublimit for letters of credit and a $30 million sublimit for swingline loans. 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 line of credit at April 30, 2020 and 2019,
respectively.
Concurrently with this credit agreement, the Company also reduced the Bank Line from $150,000 to $25,000. 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 at April 30, 2020 and 2019. The line
of credit is due upon demand.
PAGE 40
40 Interest expense is net of interest income of $860, $595, and $1,583 for the years ended April 30, 2020, 2019, and 2018,
respectively. Interest expense is also net of interest capitalized of $5,258, $3,057, and $2,260 during the years ended April 30,
2020, 2019, and 2018, respectively.
The agreements relating to the above long-term debt contain certain operating and financial covenants. At April 30, 2020,
the Company was in compliance with all such operating and financial covenants.
Listed below are the aggregate maturities of long-term debt, including finance lease obligations, for the 5 years
commencing May 1, 2020 and thereafter:
Years ended April 30,
2021
2022
2023
2024
2025
Thereafter
Finance Leases
$
2,244 $
2,354
2,484
2,060
734
6,870
16,746 $
Senior Notes
Total
569,000 $
—
20,000
32,000
32,000
616,000
1,269,000 $
571,244
2,354
22,484
34,060
32,734
622,870
1,285,746
$
4. PREFERRED AND COMMON STOCK
Preferred stock: The Company has 1,000,000 authorized shares of preferred stock, of which 250,000 shares have been
designated as Series A Serial Preferred Stock. No shares have been issued.
Common stock: The Company currently has 120,000,000 authorized shares of common stock.
Stock incentive plans: The 2018 Stock Incentive Plan (the “2018 Plan”), was approved by the Board in June 2018 and
approved by the Company's shareholders on September 5, 2018 ("the "2018 Plan Effective Date"). The 2018 Plan replaced the
2009 Stock Incentive Plan (the "2009 Plan") under which no new awards are allowed to be granted as of the 2018 Plan
Effective Date.
Awards under the 2018 Plan may take the form of stock options, stock appreciation rights, restricted stock, restricted
stock units and other equity-based and equity-related awards. Each share issued pursuant to a stock option and each share with
respect to which a stock-settled stock appreciation right is exercised (regardless of the number of shares actually delivered) is
counted as one share against the maximum limit under the 2018 Plan, and each share issued pursuant to an award of restricted
stock or restricted stock units is counted as two shares against the maximum limit. Restricted stock is transferred immediately
upon grant (and may be subject to a holding period), whereas restricted stock units have a vesting period that must expire, and
in some cases performance or market conditions that must be satisfied before the stock is transferred. There were 2,618,194
shares available for grant at April 30, 2020 under the 2018 Plan.
We account for stock-based compensation by estimating the grant date fair value of stock options using the Black Scholes
model, and the fair value of time-based and performance-based restricted stock unit awards using the closing price of our
common stock. For market based awards, we use a "Monte Carlo" approach to estimate the value of the awards, which
simulates the prices of the Company’s and each member of the performance peer groups' common stock price at the end of the
relevant performance period, taking into account volatility and the specifics surrounding each total shareholder return metric
under the relevant plan. We recognize these amounts as an operating expense in our consolidated statements of income ratably
over the requisite service period using the straight-line method, as adjusted for certain retirement provisions, and updated
estimates of shares to be issued under performance-based awards. All awards have been granted at no cost to the grantee and/or
non-employee member of the Board.
41
Table of Contents
The following table summarizes the equity-related grants made during the three-year period ended April 30, 2020:
Date of Grant
Type of Grant
Shares Granted
Recipients
Vesting Date
Fair Value at
Grant Date
June 1, 2017
July 14, 2017
September 28,
2017
March 29, 2018
May 24, 2018
June 8, 2018
September 5, 2018
June 4, 2019
June 4, 2019
June 24, 2019
Restricted Stock
Units
Restricted Stock
Units (1)
Restricted Stock
Restricted Stock
Units
Restricted Stock
Units
Restricted Stock
Units (1)
Restricted Stock
Units
Restricted Stock
Units
Restricted Stock
Units (1)
Restricted Stock
Units (2)
63,699 Key Employees
June 1, 2020
61,126 Officers
June 15, 2020
8,344
Non-Employee
Board Members
2,150
Non-Employee
Board Members
Immediate
September 21,
2018
88,846 Key Employees
May 24, 2021
75,402 Officers
7,984
Non-Employee
Board Members
June 8, 2021
2019 Annual
Shareholders'
Meeting Date
75,959 Key Employees
June 4, 2022
59,579 Officers
June 4, 2022
32,786 CEO
Various (2)
September 4, 2019
Restricted Stock
Units
5,504
Non-Employee
Board Members
2020 Annual
Shareholders'
Meeting Date
December 23, 2019
Restricted Stock
Units (3)
5,000 CEO
Various (3)
$7,388
$6,912
$920
$236
$8,593
$7,571
$920
$9,886
$9,097
$5,700
$919
$788
Various (4)
Restricted Stock
Units (4)
Various (5)
Restricted Stock
Units (5)
8,444 Officers
Various (4)
$1,368
1,763 Officers
Various (5)
$354
(1) This grant of restricted stock units includes time-based, performance-based and market-based awards. The performance-
based awards included in the figure above represent a “target” amount; the final amount earned is based on the satisfaction of
certain performance measures over a three-year performance period and will range from 0% to 200% of the “target". The
market-based awards incorporate market conditions in determining fair value as of the grant date, and will also range from 0%
to 200% of the "target". Total market-based expense of approximately $2.3 million for the 2017 grant, $2.6 million for the 2018
grant, and $3.1 million for the 2019 grant will be recognized on a straight-line basis over the vesting period, subject to
acceleration for retirement provisions.
(2) This grant of restricted stock units is comprised of time-based awards that vest ratably on each June 23, 2020 through 2022,
along with a market-based award vesting June 23, 2022. The market-based award incorporates market conditions in
determining fair value on the grant date and will range from 0% to 200% of the target. Total market-based expense of
approximately $1.8 million will be recognized on a straight-line basis over the vesting period.
(3) This grant of restricted stock units is comprised of performance-based awards which are calculated based upon targets
achieved over performance periods from January 1, 2020 to December 31, 2020. If the performance targets are met, the units
vest ratably on each January 15, 2021 through 2023.
(4) These grants of restricted stock units were issued to various officers throughout the fiscal year. The grants were comprised
of time-based awards and vest in accordance with the agreements, ranging from January 2021 to January 2023.
(5) These grants of restricted stock units were issued to various officers throughout the fiscal year. The grants includes time-
based, performance-based and market-based awards. The performance-based awards included in the figure above represent a
42
PAGE 42
“target” amount; the final amount earned is based on the satisfaction of certain performance measures over a three-year
performance period and will range from 0% to 200% of the “target". The market-based awards incorporate market conditions
in determining fair value as of the grant date, and will also range from 0% to 200% of the "target". Total market-based expense
of approximately $177 will be recognized on a straight-line basis over the vesting period.
At April 30, 2020, stock options for 43,189 shares (which expire on June 23, 2021) were outstanding. All stock option
shares issued are previously unissued authorized shares. Information concerning the issuance of stock options under the 2009
Plan is presented in the following table (no stock option awards have been granted under the 2018 Plan):
Outstanding at April 30, 2017
Exercised
Outstanding at April 30, 2018
Exercised
Forfeited
Outstanding at April 30, 2019
Exercised
Outstanding at April 30, 2020
Number
of option shares
Weighted
average option
exercise price
222,050 $
(40,377)
181,673 $
(71,546)
(300)
109,827 $
(66,638)
43,189 $
38.51
34.11
39.48
32.02
25.26
44.39
44.39
44.39
At April 30, 2020, all outstanding options had an aggregate intrinsic value of $4,622 and a remaining contractual life of
1.17 years. The weighted average exercise price for all remaining outstanding options is $44.39. All options are vested as of
April 30, 2020. The aggregate intrinsic value for the total of all options exercised during the year ended April 30, 2020 was
$7,412.
Information concerning the issuance of restricted stock units under the 2018 Plan and the 2009 Plan is presented in the
following table:
Unvested at April 30, 2017
Granted
Vested
Forfeited
Unvested at April 30, 2018
Granted
Vested
Forfeited
Performance Award Adjustments
Unvested at April 30, 2019
Granted
Vested
Forfeited
Performance Award Adjustments
Unvested at April 30, 2020
303,400
126,980
(88,700)
(2,699)
338,981
172,232
(104,166)
(10,530)
(7,717)
388,800
189,035
(108,484)
(25,146)
29,594
473,799
Total compensation costs recorded for employees and non-employee board members for the stock options, restricted
stock, and restricted stock unit awards for the years ended April 30, 2020, 2019 and 2018 were $18,129, $16,410, and $18,800,
respectively. As of April 30, 2020, there was $17,022 of total unrecognized compensation costs related to the 2018 Plan and
2009 Plan for costs related to restricted stock units which are expected to be recognized ratably through fiscal 2022.
During the fourth quarter of the fiscal year ended April 30, 2017, the Company began a share repurchase program,
wherein the Company was authorized to repurchase up to an aggregate of $300 million of the Company's outstanding common
stock. The share repurchase authorization was valid for a period of two years. From its inception on March 9, 2017, through
May 2018, the company completed the $300 million authorization by repurchasing 2,794,192 shares of its common stock.
Table of Contents43 In March 2018, the Company announced a second share repurchase program with an aggregate $300 million share
repurchase program. The share repurchase authorization was valid for a period of two years. On March 6, 2020, the
authorization was extended through the end of the Company’s 2022 fiscal year. The timing and number of repurchase
transactions under the program depends on a variety of factors including, but not limited to, market conditions, corporate
considerations, business opportunities, debt agreements, and regulatory requirements. The program can be suspended or
discontinued at any time. No repurchases were made on that program in fiscal 2020.
5. NET INCOME PER COMMON SHARE
Computations for basic and diluted earnings per common share are presented below:
Basic
Net income
Weighted average shares outstanding-basic
Basic earnings per common share
Diluted
Net income
Weighted-average shares outstanding-basic
Plus effect of stock options and restricted stock units
Weighted-average shares outstanding-diluted
Diluted earnings per common share
Years ended April 30,
2020
2019
2018
$
$
$
$
263,846 $
203,886 $
36,956,115
36,709,940
7.14 $
5.55 $
317,903
37,778,304
8.41
263,846 $
203,886 $
36,956,115
229,713
37,185,828
36,709,940
265,447
36,975,387
7.10 $
5.51 $
317,903
37,778,304
353,795
38,132,099
8.34
There were no options considered antidilutive; therefore, all options were included in the computation of dilutive
earnings per share for fiscal 2020, 2019, and fiscal 2018, respectively.
6. INCOME TAXES
Income tax expense (benefit) attributable to earnings consisted of the following components:
Current tax expense (benefit):
Federal
State
Deferred tax expense (benefit)
Total income tax expense (benefit)
Years ended April 30,
2020
2019
2018
$
$
22,182 $
6,210
28,392
49,810
78,202 $
10,326
3,853
14,179
45,337
59,516
(7,057)
1,769
(5,288)
(98,178)
(103,466)
PAGE 44
Table of Contents44 The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax
liabilities were as follows:
Deferred tax assets:
Accrued liabilities and reserves
Property and equipment depreciation
Workers compensation
Deferred compensation
Equity compensation
State net operating losses & tax credits
Other
Total gross deferred tax assets
Less valuation allowance
Total net deferred tax assets
Deferred tax liabilities:
Property and equipment depreciation
Goodwill
Other
Total gross deferred tax liabilities
Net deferred tax liability
As of April 30,
2020
2019
15,953 $
27,512
8,303
3,781
7,083
424
1,335
64,391
47
64,344
11,705
24,661
8,277
3,827
6,727
775
1,033
57,005
47
56,958
(474,829)
(24,348)
(765)
(499,942)
(435,598)
(420,710)
(21,560)
(476)
(442,746)
(385,788)
$
$
At April 30, 2020, the Company had net operating loss carryforwards for state income tax purposes of approximately
$97,144, which are available to offset future state taxable income. The state net operating loss carryforwards begin to expire in
2021.
The valuation allowance for state net operating loss deferred tax assets as of April 30, 2020 and 2019 was $47. In
assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of
the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected taxable income, and tax planning strategies in making this assessment.
Total reported tax expense applicable to the Company’s continuing operations varies from the tax that would have
resulted from applying the statutory U.S. federal income tax rates to income before income taxes.
Income taxes at the statutory rates
Impact of Tax Reform Act
Federal tax credits
State income taxes, net of federal tax benefit
Impact of phased-in state law changes, net of federal benefit
ASU 2016-09 benefit (share based compensation)
Other
Years ended April 30,
2020
2019
2018
21.0 %
— %
(1.9)%
4.0 %
(0.2)%
(0.5)%
0.5 %
22.9 %
21.0 %
0.4 %
(2.3)%
4.3 %
(1.8)%
(0.6)%
1.6 %
22.6 %
30.4 %
(80.5)%
(2.2)%
3.7 %
0.8 %
(0.8)%
0.3 %
(48.3)%
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being
sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.
Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company had
a total of $8,907 and $7,287 in gross unrecognized tax benefits at April 30, 2020 and 2019, respectively, which is recorded in
other long-term liabilities in the consolidated balance sheets. Of this amount, $7,059 represents the amount of unrecognized tax
benefits that, if recognized, would impact our effective tax rate. Unrecognized tax benefits increased $1,620 during the twelve
months ended April 30, 2020, due primarily to the increase associated with income tax filing positions for the current year
exceeding the decrease related to the expiration of certain statute of limitations.
Table of Contents45 A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Beginning balance
Additions based on tax positions related to current year
Reductions due to lapse of applicable statute of limitations
Ending balance
2020
2019
$
$
7,287 $
2,780
(1,160)
8,907 $
6,421
2,169
(1,303)
7,287
The total net amount of accrued interest and penalties for such unrecognized tax benefits was $354 and $242 at April 30,
2020 and 2019, respectively, and is included in other long-term liabilities. Net interest and penalties included in income tax
expense for the twelve month periods ended April 30, 2020 and 2019 was an increase in tax expense of $112 and $51,
respectively.
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 IRS is currently
examining tax years 2016 and 2017. The Company has no other ongoing federal or state income tax examinations.
At this time, the Company’s best estimate of the reasonably possible change in the amount of the gross unrecognized tax
benefits is a decrease of $1,800 during the next twelve months mainly due to the expiration of certain statutes of limitation. The
federal statute of limitations remains open for the tax years 2012 and forward. Tax years 2012 and forward are subject to audit
by state tax authorities depending on open statute of limitations waivers and the tax code of each state.
7. LEASES
The Company is a lessee in situations where we lease property and equipment, most commonly land or building, from a
lessor. The Company is a lessor in situations where the Company owns land or building and leases a portion or all of the
property or equipment to a tenant. In both situations, leases are reported in accordance with ASC 842 - Leases. As a lessee, the
Company recognizes a right-of-use asset representing its right to use the underlying asset for the lease term and a lease liability
for the obligation to make lease payments. Both the right-of-use asset and lease liability are initially measured at the present
value of the lease payments, with subsequent measurement dependent on the classification of the lease as either a finance or an
operating lease. For leases with a term of twelve months or less, we have elected to not recognize lease assets and lease
liabilities and will recognize lease expense on a straight-line basis over the lease term. The Company records the operating
lease liability in accrued expenses and other long-term liabilities and records the finance lease liability within current maturities
of long-term debt and long term debt and finance lease obligations on the consolidated balance sheets. We have elected to adopt
the package of practical expedients, as well as the land easement practical expedient. All lessor related activity is considered
immaterial to the consolidated financial statements.
The leases initially recorded under ASC 842 were recognized, at the time of adoption, at an amount equal to the present
value of the lease payments using the incremental borrowing rate of debt based upon the remaining term of the lease. New
leases are recognized at the present value of the lease payments using the implicit rate in the lease agreement when it is readily
determinable. In the case the implicit rate is not readily determinable, the Company uses the incremental borrowing rate of debt
based on the term of the lease.
Several leases have variable payment components of the lease such as commission based payments or payments for
property taxes and insurance. For these leases, the Company has not included those variable payments in the calculation of the
lease liability as the payments are not in-substance fixed and do not depend on an index or rate. These variable payments will
be expensed as incurred. The Company also has options to renew or extend the current lease arrangement on many of our
leases. In these situations, if it was reasonably certain the lease would be extended, we have included those extensions within
the remaining lease payments at the time of measurement.
Lease right-of-use assets outstanding as of April 30, 2020 consisted of the following (in thousands):
Operating lease right-of-use assets
Other assets
Finance lease right-of-use assets
Property and equipment
Classification
April 30, 2020
$
$
21,143
14,583
PAGE 46
Table of Contents46 Weighted average remaining lease terms, weighted average discount rates, and supplementary cash flow information for
outstanding leases were as follows:
Weighted-average remaining lease-term - finance lease
Weighted-average remaining lease-term - operating lease
Weighted-average discount rate - finance lease
Weighted-average discount rate - operating lease
Right-of-use assets obtained in exchange for new finance lease liabilities (in thousands)
Right-of-use assets obtained in exchange for new operating lease liabilities (in thousands)
$
$
April 30, 2020
10.9
20.4
5.34%
4.25%
1,520
2,840
Future minimum payments under the finance leases and operating leases with initial or remaining terms of one year or
more consisted of the following at April 30, 2020 and April 30, 2019:
Years ended April 30, 2020
Finance leases
Operating leases
2021
2022
2023
2024
2025
Thereafter
Total minimum lease payments
Less amount representing interest
Present value of net minimum lease payments
Years ended April 30, 2019
2020
2021
2022
2023
2024
Thereafter
Total minimum lease payments
Less amount representing interest
Present value of net minimum lease payments
$
$
$
$
3,118 $
3,110
3,116
2,565
1,167
10,764
23,840
7,094
16,746 $
1,829
1,814
1,717
1,683
1,686
25,335
34,064
12,468
21,596
Capital leases
Operating leases
3,103 $
3,109
3,096
3,098
2,548
9,215
24,169 $
7,689
16,480
1,703
1,547
1,354
1,228
1,066
10,438
17,336
Effective during the third quarter of fiscal year 2020, Casey’s Marketing Company, and the City of Joplin, Missouri
(“Joplin”) entered into an agreement in which Joplin agreed to issue up to $51.4 million of taxable industrial development
revenue bonds for the purpose of acquiring, constructing, improving, purchasing, equipping and installing a warehouse and
distribution facility, which is to be developed and used by the Company. As title transfers to Joplin throughout development and
the Company subsequently leases the related asset from Joplin, we have accounted for the transaction under the sale-and-
leaseback guidance included in ASC 842-40. We have a purchase option included in the lease agreement for below the fair
value of the asset, which prevents the transfer of the assets to Joplin from being recognized as a sale. Accordingly, we have not
recognized any gain or loss related to the transfer. Furthermore, we have not derecognized the transferred assets and continue to
recognize them in property and equipment on the consolidated balance sheets. The Company has the right and intends to set-off
any obligations to make payments under the lease, with proceeds due from the industrial revenue bonds. As of April 30, 2020,
we have $5,505 recognized as construction in process in property and equipment on the consolidated balance sheets related to
this agreement.
Table of Contents47 8. BENEFIT PLANS
401(k) Plan: The Company provides team members with a defined contribution 401(k) Plan. The 401(k) Plan is available
to all team members who meet minimum age and service requirements. The Company contributions consist of matching
amounts in Company stock and are allocated based on team member contributions. Contributions to the 401(k) Plan were
$10,571, $9,918, and $9,614 for the years ended April 30, 2020, 2019, and 2018, respectively.
On April 30, 2020 and 2019, 1,113,882 and 1,261,258 shares of common stock, respectively, were held by the trustee of
the 401(k) Plan in trust for distribution to eligible participants upon death, disability, retirement, or termination of employment.
Shares held by the 401(k) Plan are treated as outstanding in the computation of net income per common share.
Supplemental executive retirement plan: The Company has a nonqualified supplemental executive retirement plan
(SERP) for two of its former executive officers, one of whom retired April 30, 2003 and the other on April 30, 2008. The SERP
provides for the Company to pay annual retirement benefits, up to 50% of base compensation until death of the officer. If death
occurs within twenty years of retirement, the benefits become payable to the officer’s spouse (at a reduced level) until the
spouse’s death or twenty years from the date of the officer’s retirement, whichever comes first. The Company recorded the
deferred compensation over the term of employment. The amounts accrued at April 30, 2020 and 2019, respectively, were
$3,434 and $3,800. The discount rates were based off of the Company's incremental borrowing rate, and ranged from 2.04% to
2.44% for the year ended April 30, 2020. The discount rates used for the year ended April 30, 2019 ranged from 3.78% to
4.01%. The amount expensed in fiscal 2020 was $269 and the Company expects to pay $635 per year for each of the next three
years, and $354 in the fourth and fifth year. Expense incurred in fiscal 2019 and fiscal 2018 was $221 and $112, respectively.
Other post-employment benefits: The Company also has severance and/or deferred compensation agreements with former
team members. The amounts accrued at April 30, 2020 and 2019 were $3,793 and $2,870, respectively. The Company expects
to pay $1,511 in fiscal 2021 and $401 for each of the four years thereafter under the agreements. The expense (benefit received)
incurred in fiscal 2020, 2019, and 2018 related to these agreements was $2,727, $(97), and $131, respectively.
9. COMMITMENTS
During the 2019 fiscal year, the Company was a party to an employment agreement with Terry W. Handley with respect
to his service as President and Chief Executive Officer. Mr. Handley retired from the Company on June 23, 2019. In
connection with the appointment of Darren M. Rebelez as President and Chief Executive Officer, effective June 24, 2019, the
Company is a party to an employment agreement with Mr. Rebelez that provides he will receive aggregate base compensation
of not less than $950 per year, exclusive of incentive payments. The Company also has entered into change of control
agreements with its president and CEO and 21 other officers, providing for certain payments in the event of termination in
connection with a change of control of the Company.
We have entered into various purchase agreements related to our fuel supply, which include varying volume
commitments. Prices included in the purchase agreements are indexed to market prices. While volume commitments are
included in the contracts, we do not have a history of incurring material penalties related to these provisions. These
contracts are not accounted for as derivatives as they meet the normal purchases exclusion under derivative accounting.
10. CONTINGENCIES
Environmental compliance: The United States Environmental Protection Agency and several states have adopted laws
and regulations relating to underground storage tanks used for petroleum products. Several states in which the Company does
business have trust fund programs with provisions for sharing or reimbursing corrective action or remediation costs.
Management currently believes that substantially all capital expenditures for electronic monitoring, cathodic protection,
and overfill/spill protection to comply with existing regulations have been completed. The Company has an accrued liability at
April 30, 2020 and 2019 of approximately $328 and $381, respectively, for estimated expenses related to anticipated corrective
actions or remediation efforts, including relevant legal and consulting costs. Management believes the Company has no
material joint and several environmental liability with other parties. Additional regulations or amendments to the existing
regulations could result in future revisions to such estimated expenditures.
Legal matters: From time to time we may be involved in legal or administrative proceedings or investigations arising
from the conduct of our business operations, including, but not limited to, contractual disputes; employment, personnel, or
accessibility matters; personal injury and property damage claims; and claims by federal, state, and local regulatory authorities
relating to the sale of products pursuant to licenses and permits issued by those authorities. Claims for damages in those actions
PAGE 48
Table of Contents48 may be substantial. While the outcome of such litigation, proceedings, investigations, or claims is never certain, it is our
opinion, after taking into consideration legal counsel’s assessment and the availability of insurance proceeds and other
collateral sources to cover potential losses, that the ultimate disposition of such matters currently pending or threatened,
individually or cumulatively, will not have a material impact on our consolidated financial position and results of operations.
Other: At April 30, 2020, the Company was primarily self-insured for workers’ compensation claims in all but two states
of its marketing territory. In North Dakota and Ohio, the Company is required to participate in an exclusive, state managed
fund for all workers compensation claims. The Company was also 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. Additionally, the Company is self-insured for its
portion of team member medical expenses. At April 30, 2020 and 2019, the Company had $44,959 and $44,334, respectively,
outstanding for estimated claims relating to self-insurance, the majority of which has been actuarially determined.
Table of Contents49 11. QUARTERLY FINANCIAL DATA (Dollars in thousands, except per share amounts) (Unaudited)
Total revenue
Fuel
Grocery and other merchandise
Prepared food and fountain
Other
Revenue less cost of goods sold
excluding depreciation and amortization
and credit card fees
Fuel
Grocery and other merchandise
Prepared food and fountain
Other
Net income
Income per common share
Basic
Diluted
Total revenue
Fuel
Grocery and other merchandise
Prepared food and fountain
Other
Revenue less cost of goods sold
excluding depreciation and amortization
and credit card fees
Fuel
Grocery and other merchandise
Prepared food and fountain
Other
Net income
Income per common share
Basic
Diluted
$
$
$
$
$
$
$
$
$
$
Q1
Q2
Q3
Q4
Year Total
Year ended April 30, 2020
1,627,568
687,918
295,877
15,266
2,626,629
1,514,474
660,562
297,846
14,704
2,487,586
1,376,018
582,407
273,630
16,143
2,248,198
999,352
568,080
229,853
15,598
1,812,883
150,989
215,453
184,012
15,232
565,686
85,815
2.33
2.31
140,798
220,134
181,452
14,681
557,065
81,981
2.22
2.21
124,257
191,692
164,795
16,119
496,863
33,959
0.92
0.91
198,803
172,862
137,833
15,572
525,070
62,091
1.68
1.67
5,517,412
2,498,966
1,097,207
61,711
9,175,296
614,847
800,140
668,092
61,605
2,144,684
263,846
7.14
7.10
Q1
Q2
Q3
Q4
Year Total
Year ended April 30, 2019
1,647,417
644,800
281,003
15,212
2,588,432
1,621,868
618,250
283,062
14,825
2,538,005
1,233,620
543,773
256,144
14,539
2,048,076
1,345,866
562,699
254,086
15,746
2,178,397
123,476
208,925
174,184
15,183
521,768
70,224
1.92
1.90
118,656
200,193
176,675
14,797
510,321
66,615
1.82
1.80
122,559
173,512
159,682
14,512
470,265
41,835
1.14
1.13
101,417
177,188
158,057
15,708
452,370
25,212
0.69
0.68
5,848,770
2,369,521
1,074,294
60,325
9,352,910
466,107
759,817
668,598
60,202
1,954,724
203,886
5.55
5.51
PAGE 50
Table of Contents50 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
(a)
Evaluation of disclosure controls and procedures.
As of the end of the period covered by this report, an evaluation was performed under the supervision and with the
participation of the Company’s Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company’s
disclosure controls and procedures (as defined in Exchange Act Rule 240.13a-15(e)). Based on that evaluation, the Chief
Executive Officer and Chief Financial Officer have concluded that the Company’s current disclosure controls and procedures
were effective as of April 30, 2020.
For purposes of Rule 13a-15(e), the term disclosure controls and procedures means controls and other procedures of
an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits
under the Act (l5 U.S.C. 78a et seq.) is recorded, processed, summarized and reported within the time periods specified in the
Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is
accumulated and communicated to the issuer's management, including its principal executive and principal financial officer, or
persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
(b)
Management's Report on Internal Control over Financial Reporting.
Management of the Company is responsible for establishing and maintaining adequate internal control over financial
reporting. The Company's internal control system was designed to provide reasonable assurance to the Company's
management and Board of Directors regarding the preparation and fair presentation of published financial statements. All
internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to
be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
The Company's management assessed the effectiveness of the Company's internal control over financial reporting as
of April 30, 2020. In making this assessment, management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013). On the basis of the
prescribed criteria, management concluded that the Company's internal control over financial reporting was effective as of
April 30, 2020.
KPMG LLP, as the Company's independent registered public accounting firm, has issued a report on its assessment of
the effectiveness of the Company's internal control over financial reporting. This report appears on page 33.
(c)
Changes in Internal Control over Financial Reporting.
There were no changes in the Company's internal control over financial reporting that occurred during the period
covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control
over financial reporting.
(d)
Other.
The Company does not expect that our disclosure controls and procedures or our internal control over financial reporting
will prevent all fraud and material errors. An internal control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations on all internal control systems, our internal control system can provide only
reasonable assurance of achieving its objectives and no evaluation of controls can provide absolute assurance that all control
issues and occurrences of fraud, if any, within the Company have been detected. These inherent limitations include the realities
that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes.
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by
management override of the control. The design of any system of internal control is also based in part upon certain assumptions
about the likelihood of future events, and can provide only reasonable, not absolute, assurance that any design will succeed in
Table of Contents51 achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes
in circumstances, or the degree of compliance with the policies and procedures may deteriorate.
ITEM 9B. OTHER INFORMATION
Not applicable.
PAGE 52
Table of Contents52 PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Those portions of the Company’s definitive Proxy Statement appearing under the captions “Election of Directors,”
“Governance of the Company,” "Information about our Executive Officers", “Executive Compensation”, "Nominating and
Corporate Governance Committee", and "Audit Committee", as filed with the Commission pursuant to Regulation 14A within
120 days after April 30, 2020, and used in connection with the Company’s 2020 Annual Meeting of Shareholders are hereby
incorporated by reference.
The Company has adopted a Financial Code of Ethics applicable to its Chief Executive Officer and other senior financial
officers. In addition, the Company has adopted a general code of business conduct (known as the Code of Business Conduct
and Ethics) for its directors, officers, and all team members. The Financial Code of Ethics, the Code of Business Conduct and
Ethics, and other Company governance materials are available under the Investor Relations-Governance link of the Company
website located at www.caseys.com. In the event of an amendment or waiver to the Financial Code of Ethics or the Code of
Business Conduct and Ethics, any required disclosure will be posted to our website. To date, there have been no waivers of the
Financial Code of Ethics or the Code of Business Conduct and Ethics. Shareholders may obtain copies of any of these
corporate governance documents free of charge by downloading from the Web site or by writing to the Corporate Secretary at
the address on the cover of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
That portion of the Company’s definitive Proxy Statement appearing under the caption "Compensation Discussion and
Analysis", "Compensation Committee Report", "Compensation Committee", “Executive Compensation,” "Potential Payments
Upon Termination or Change of Control", "Director Compensation", and "Certain Relationships and Related Party
Transactions", as filed with the Commission pursuant to Regulation 14A within 120 days after April 30, 2020, and used in
connection with the Company’s 2020 Annual Meeting of Shareholders is hereby incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Those portions of the Company’s definitive Proxy Statement appearing under the captions “Beneficial Ownership of
Shares of Common Stock by Directors and Executive Officers”, "Principal Shareholders" and "Equity Compensation Plan
Information", as filed with the Commission pursuant to Regulation 14A within 120 days after April 30, 2020, and used in
connection with the Company’s 2020 Annual Meeting of Shareholders are hereby incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
That portion of the Company’s definitive Proxy Statement appearing under the captions “Certain Relationships and
Related Transactions”, “Governance of the Company” and "The Board of Directors and its Committees", as filed with the
Commission pursuant to Regulation 14A within 120 days after April 30, 2020, and used in connection with the Company’s
2020 Annual Meeting of Shareholders is hereby incorporated by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
That portion of the Company’s definitive Proxy Statement appearing under the caption “Ratification of Appointment of
Independent Registered Public Accounting Firm” as filed with the Commission within 120 days after April 30, 2020, and used
in connection with the Company’s 2020 Annual Meeting of Shareholders is hereby incorporated by reference.
Table of Contents53 PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
Documents filed as a part of this report on Form 10-K:
(1)
The following financial statements are included herewith:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets, April 30, 2020 and 2019
Consolidated Statements of Income, Three Years Ended April 30, 2020
Consolidated Statements of Shareholders’ Equity, Three Years Ended April 30, 2020
Consolidated Statements of Cash Flows, Three Years Ended April 30, 2020
Notes to Consolidated Financial Statements
(2) No schedules are included because the required information is inapplicable or is presented in the consolidated
financial statements or related notes thereto.
(3)
The following exhibits are filed as a part of this report:
Exhibit
Number
3.1
Second Restatement of the Restated and Amended Articles of Incorporation, as amended September 5, 2018, June
28, 2019 and September 4, 2019 (incorporated by reference to Exhibit 3.1 to Form 10-Q as filed September 9,
2019)
Description of Exhibits
3.2(a)
Fourth Amended and Restated By-Laws, as amended September 5, 2018, June 28, 2019 and September 5, 2019
(incorporated by reference to Exhibit 3.2(a) to Form 10-Q as filed September 9, 2019)
4.1
4.2
4.3
4.4
4.5
4.6
10.1
10.2
10.3*
10.4*
10.5*
10.6*
Note Purchase Agreement dated as of September 29, 2006 among the Company and the purchasers the 5.72%
Senior Notes, Series A and Series B (incorporated by reference to Exhibit 4.8 to Form 8-K as filed September 29,
2006)
Note Purchase Agreement dated as of August 9, 2010 among the Company and the purchasers of the 5.22% Senior
Notes (incorporated by reference to Exhibit 4.1 to Form 8-K as filed August 10, 2010)
Note Purchase Agreement dated as of June 17, 2013 among the Company and the purchasers of the 3.67% Series
A Notes and 3.75% Series B Notes (incorporated by reference to Exhibit 4.10 to Form 8-K as filed June 18, 2013)
Note Purchase Agreement dated as of May 2, 2016 among the Company and the purchasers of the 3.65% Series C
Notes and 3.72% Series D Notes (incorporated by reference to Exhibit 4.11 to Form 8-K as filed May 3, 2016)
Note Purchase Agreement dated as of June 13, 2017 among the Company and the purchasers of the 3.51% Series
E Notes and 3.77% Series F Notes (incorporated by reference to Exhibit 4.12 to Form 8-K as filed June 15, 2017)
Description of Securities Registered Under Section 12 of the Exchange Act
Promissory Note delivered to UMB Bank, n.a. and related Negative Pledge Agreement dated January 11, 2019
(incorporated by reference to exhibit 10.28(d) to Form 8-K as filed January 17, 2019)
Credit Agreement dated January 11, 2019, among Casey's General Stores, Inc. as borrower, and Royal Bank of
Canada, as administrative agent, and the lenders and issuing banks from time to time party thereto (incorporated
by reference to Exhibit 10.28 (e) to Form 8-K as filed January 17, 2019)
Form of Change of Control Employment Agreement (incorporated by reference to Exhibit 10.29(a) to Form 8-K
as filed June 2, 2010)
Form of Change of Control Agreement (incorporated by reference to Exhibit 10.1 to Form 8-K as filed December
19, 2019)
Non-Qualified Supplemental Executive Retirement Plan and Amendment thereto (incorporated by reference to
Exhibit 10.30 to Form 10-K as filed June 29, 2018)
Non-Qualified Supplemental Executive Retirement Plan Trust Agreement with UMB Bank, n.a. (incorporated by
reference to Exhibit 10.31 to Form 8-K as filed November 10, 1997)
PAGE 54
Table of Contents54 10.7*
10.8*
10.9*
10.10*
10.11*
10.12*
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
10.23*
10.24*
21
23.1
31.1
31.2
32.1
32.2
Executive Nonqualified Excess Plan Document and related Adoption Agreement dated September 25, 2015
Casey’s General Stores, Inc. 2009 Stock Incentive Plan (incorporated by reference to Exhibit 10.41 to Form 8-K as
filed September 23, 2009)
Form of Stock Option Grant under 2009 Stock Incentive Plan (incorporated by reference to Exhibit 10.41(a) to
Form 8-K filed June 27, 2011)
Form of Restricted Stock Units Agreement (Non-Officer Employees) under 2009 Stock Incentive Plan
(incorporated by reference to Exhibit 99.2 to Form 8-K as filed July 19, 2017)
Form of Restricted Stock Units Agreement (LTI Awards to Officers) and Award Summary under 2009 Stock
Incentive Plan (incorporated by reference to Exhibit 99.1 to Form 8-K as filed July 19, 2017)
Employment Agreement with Robert J. Myers and Amendment and Second Amendment thereto (incorporated by
reference to Exhibit 10.39 to Form 10-K as filed June 29, 2018)
Employment Agreement and related Restricted Stock Units Award Agreement between the Company and Terry W.
Handley dated April 12, 2016 (incorporated by reference to Exhibit 10.42 to Form 10-K as filed June 29, 2018)
Separation and General Release Agreement, dated May 31, 2019, between the Company and Terry W. Handley
(incorporated by reference to Exhibit 10.2 to Form 8-K filed June 6, 2019)
Employment Agreement, dated May 31, 2019, between the Company and Darren M. Rebelez (with the Change of
Control Agreement between the Company and Darren M. Rebelez attached as an exhibit thereto) (incorporated by
reference to Exhibit 10.1 to Form 8-K as filed June 6, 2019)
Separation Agreement and General Release of Claims, dated September 11, 2019, between the Company and
Cindi W. Summers (incorporated by reference to Exhibit 10.49 to Form 10-Q as filed December 9, 2019)
Casey's General Stores, Inc. 2018 Stock Incentive Plan (incorporated by reference to Exhibit 10.43 to Form 8-K as
filed September 10, 2018)
Form of Restricted Stock Units Agreement for Non-Employee Directors under 2018 Stock Incentive Plan
(incorporated by reference to Exhibit 99.1 to Form 8-K as filed September 10, 2018)
Form of Restricted Stock Units Agreement (LTI Awards to Officers) and Award Summary under 2018 Stock
Incentive Plan (incorporated by reference to Exhibit 10.45 to Form 10-Q as filed September 9, 2019)
Restricted Stock Units Agreement (Make-Whole Award to Darren M. Rebelez) and Award Summary under 2018
Stock Incentive Plan (incorporated by reference to Exhibit 10.46 to Form 10-Q as filed September 9, 2019)
Performance-Based Restricted Stock Units Agreement (Special Strategic Grant to Darren M. Rebelez) and Award
Summary under 2018 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to Form 8-K as filed
December 26, 2019)
Restricted Stock Units Agreement (Make-Whole Award to Thomas P. Brennan) under 2018 Stock Incentive Plan
(incorporated by reference to Exhibit 10.53 to Form 10-Q as filed March 9, 2020)
Restricted Stock Units Agreement (Make-Whole Award to Chad Frazell) under 2018 Stock Incentive Plan
(incorporated by reference to Exhibit 10.54 to Form 10-Q as filed March 9, 2020)
Casey's General Stores, Inc. Officer Severance Plan (incorporated by reference to Exhibit 10.1 to Form 8-K as
filed September 9, 2019)
Subsidiaries of Casey’s General Stores, Inc.
Consent of Independent Registered Public Accounting Firm
Certificate of Darren M. Rebelez under Section 302 of Sarbanes-Oxley Act of 2002
Certificate of Stephen P. Bramlage Jr. under Section 302 of Sarbanes-Oxley Act of 2002
Certificate of Darren M. Rebelez under Section 906 of Sarbanes-Oxley Act of 2002
Certificate of Stephen P. Bramlage Jr. under Section 906 of Sarbanes-Oxley Act of 2002
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
Table of Contents55 101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
*
Indicates management contract or compensatory plan or arrangement.
ITEM 16. FORM 10-K SUMMARY
Not Applicable
PAGE 56
Table of Contents56 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
CASEY’S GENERAL STORES, INC.
(Registrant)
Date: June 26, 2020
Date: June 26, 2020
By /s/ Darren M. Rebelez
Darren M. Rebelez, President and
Chief Executive Officer
(Principal Executive Officer and Director)
By /s/ Stephen P. Bramlage Jr.
Stephen P. Bramlage Jr.
Chief Financial Officer
(Authorized Officer and Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: June 26, 2020
Date: June 26, 2020
Date: June 26, 2020
Date: June 26, 2020
Date: June 26, 2020
Date: June 26, 2020
By /s/ H. Lynn Horak
H. Lynn Horak
Chair and Director
By /s/ Darren M. Rebelez
Darren M. Rebelez, President and
Chief Executive Officer, Director
By /s/ Stephen P. Bramlage Jr.
Stephen P. Bramlage Jr.
Chief Financial Officer
By /s/ Cara K. Heiden
Cara K. Heiden
Director
By /s/ Diane C. Bridgewater
Diane C. Bridgewater
Director
By /s/ Donald E. Frieson
Donald E. Frieson
Director
Table of Contents57 Date: June 26, 2020
Date: June 26, 2020
Date: June 26, 2020
Date: June 26, 2020
By /s/ David K. Lenhardt
David K. Lenhardt
Director
By /s/ Allison M. Wing
Allison M. Wing
Director
By /s/ Larree M. Renda
Larree M. Renda
Director
By /s/ Judy A. Schmeling
Judy A. Schmeling
Director
PAGE 58
Table of Contents58 SUBSIDIARIES OF CASEY’S GENERAL STORES, INC.
1.
2.
3.
4.
5.
Casey’s Marketing Company, an Iowa corporation
Casey’s Services Company, an Iowa corporation
Casey’s Retail Company, an Iowa corporation
CGS Stores, LLC, an Iowa limited liability company
Heartland Property Company, LLC, a Delaware limited liability company
All subsidiaries are wholly owned by Casey’s General Stores, Inc, except for CGS Stores, LLC
and Heartland Property Company, LLC, which are wholly owned by Casey's Marketing
Company. All Stores operated by the subsidiaries do business under the names “Casey’s” and/or
“Casey’s General Store,” except for two stores selling primarily tobacco products, one liquor
stores, and one grocery store.
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Casey's General Stores, Inc.:
We consent to the incorporation by reference in the registration statements (No. 33-19179, 333-35393, 33-42907,
333 174560, 333-174561) on Form S-8 and Form S-3D of Casey’s General Stores, Inc. of our reports dated June 26,
2020, with respect to the consolidated balance sheets of Casey’s General Stores, Inc. and subsidiaries as of April 30,
2020 and 2019, the related consolidated statements of income, shareholders' equity, and cash flows for each of the
years in the three-year period ended April 30, 2020, and the related notes, and the effectiveness of internal control over
financial reporting as of April 30, 2020, which reports appear in the April 30, 2020 Annual Report on Form 10-K of
Casey’s General Stores, Inc.
/s/ KPMG LLP
Des Moines, Iowa
June 26, 2020
PAGE 60
Exhibit 31.1
CERTIFICATION OF DARREN M. REBELEZ
UNDER SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Darren M. Rebelez, certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Casey’s General Stores, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
(b)
(c)
(d)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting practices;
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or
persons performing the equivalent functions):
(a)
(b)
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Dated June 26, 2020
/s/ Darren M. Rebelez
Darren M. Rebelez, President and
Chief Executive Officer
Exhibit 31.2
CERTIFICATION OF STEPHEN P. BRAMLAGE JR.
UNDER SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Stephen P. Bramlage Jr., certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Casey’s General Stores, Inc.;
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
(b)
(c)
(d)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting practices;
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or
persons performing the equivalent functions):
(a)
(b)
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Dated June 26, 2020
/s/ Stephen P. Bramlage Jr.
Stephen P. Bramlage Jr.
Senior Vice President and
Chief Financial Officer
PAGE 62
Exhibit 32.1
CERTIFICATE PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Casey’s General Stores, Inc. (the Company) on Form 10-K for the fiscal year ended
April 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Darren M. Rebelez,
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-
Oxley Act of 2002, that
(1)
(2)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of
1934.
The information contained in the Report fairly presents, in all material respects, the financial condition and
result of operations of the Company.
/s/ Darren M. Rebelez
Darren M. Rebelez, President and
Chief Executive Officer
Dated June 26, 2020
Exhibit 32.2
CERTIFICATE PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Casey’s General Stores, Inc. (the Company) on Form 10-K for the fiscal year ended
April 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Stephen P. Bramlage
Jr., Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002, that
(1)
(2)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of
1934.
The information contained in the Report fairly presents, in all material respects, the financial condition and
result of operations of the Company.
/s/ Stephen P. Bramlage Jr.
Stephen P. Bramlage Jr.
Senior Vice President and Chief Financial Officer
Dated June 26, 2020
PAGE 64
This page has been intentionally left blank.
COMPARATIVE STOCK PERFORMANCE
The following Performance Graph compares the cumulative total shareholder return on the Company’s Common Stock for
the last five fiscal years with the cumulative return of (i) the Russell 2000 Index, and (ii) a peer group index(1) based on the
common stock of Travel Centers of America LLC, Alimentation Couche-Tard Inc., Core-Mark Holding Company, Inc., Dollar
General Corporation, Dollar Tree, Inc., Domino’s Pizza, Inc., Papa John’s International Inc. and The Kroger Co. The cumulative
total shareholder return computations set forth in the Performance Graph assumes the investment of $100 in the Company’s
Common Stock and each index on April 30, 2015, and reinvestment of all dividends. The total shareholder returns shown are
not intended to be indicative of future returns.
250.00
200.00
150.00
100.00
50.00
0
2015
2016
2017
2018
2019
2020
Casey’s General Stores, Inc. Russell 2000 Index Peer Group
Casey’s General Stores, Inc.
Russell 2000 Index
Peer Group
2015
100.00
100.00
100.00
2016
137.39
94.06
109.55
2017
138.60
118.16
107.97
2018
120.62
131.79
114.83
2019
166.81
137.87
140.33
2020
192.36
115.27
155.29
PAGE 66
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Casey’s General Stores, Inc. One SE Convenience Boulevard
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Ankeny, IA 50021
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caseys.com