Casey's General Stores Inc.

03/08/2021 | Press release | Distributed by Public on 03/08/2021 16:08

Quarterly Report (SEC Filing - 10-Q)

casy-20210131
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-34700
CASEY'S GENERAL STORES, INC.
(Exact name of registrant as specified in its charter)

Iowa 42-0935283
(State or other jurisdiction of
incorporation or organization) 		(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 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 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 ☒ Accelerated filer ☐ Non-accelerated filer ☐
Smaller reporting company ☐ Emerging growth 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 ☐
Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐No ☒
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class Outstanding at February 21, 2021
Common stock, no par value per share 36,947,180 shares
Table of Contents
CASEY'S GENERAL STORES, INC.
INDEX
Page
PART I
FINANCIAL INFORMATION
Item 1.
Condensed Consolidated Financial Statements
Condensed consolidated balance sheets---January 31, 2021 and April 30, 2020 (unaudited)
4
Condensed consolidated statements of income---three and nine months ended January31, 2021 and 2020 (unaudited)
5
Condensed consolidated statement of shareholders' equity---nine months ended January31, 2021 and 2020 (unaudited)
6
Condensed consolidated Condensed consolidated statements of cash flows--- nine months ended January 31, 2021 and 2020 (unaudited) of cash flows--- nine months ended January 31, 2021 and 2020 (unaudited)
7
Notes to unaudited condensed consolidated financial statements
9
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
14
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
20
Item 4.
Controls and Procedures
20
PART II
OTHER INFORMATION
Item 1.
Legal Proceedings
21
Item 1A.
Risk Factors
21
Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
21
Item 6.
Exhibits
22
SIGNATURE
23

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PART I-FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
CASEY'S GENERAL STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(DOLLARS IN THOUSANDS)
January 31,
2021 		April 30,
2020
ASSETS
Current assets:
Cash and cash equivalents $ 388,946 $ 78,275
Receivables 66,617 48,500
Inventories 271,421 236,007
Prepaid expenses 17,794 9,801
Income taxes receivable - 14,667
Total current assets 744,778 387,250
Other assets, net of amortization 78,210 71,766
Goodwill 161,075 161,075
Property and equipment, net of accumulated depreciation of $2,151,436 at January 31, 2021 and $2,037,708 at April 30, 2020 3,412,924 3,323,801
Total assets $ 4,396,987 $ 3,943,892
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Lines of credit $ - $ 120,000
Current maturities of long-term debt and finance lease obligations 2,327 570,280
Accounts payable 332,103 184,800
Accrued expenses 245,519 188,348
Income taxes payable 1,877 -
Total current liabilities 581,826 1,063,428
Long-term debt and finance lease obligations, net of current maturities 1,362,076 714,502
Deferred income taxes 449,152 435,598
Deferred compensation 14,636 13,604
Insurance accruals, net of current portion 21,103 22,862
Other long-term liabilities 74,605 50,693
Total liabilities 2,503,398 2,300,687
Shareholders' equity:
Preferred stock, no par value - -
Common stock, no par value 48,855 33,286
Retained earnings 1,844,734 1,609,919
Total shareholders' equity 1,893,589 1,643,205
Total liabilities and shareholders' equity $ 4,396,987 $ 3,943,892
See notes to unaudited condensed consolidated financial statements.



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CASEY'S GENERAL STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Three Months Ended
January 31, 		Nine Months Ended
January 31,
2021 2020 2021 2020
Total revenue (a) $ 2,008,028 $ 2,248,198 $ 6,328,954 $ 7,362,413
Cost of goods sold (exclusive of depreciation and amortization, shown separately below) (a) 1,467,847 1,751,335 4,533,510 5,742,799
Operating expenses 414,448 377,330 1,210,884 1,130,554
Depreciation and amortization 65,185 63,285 195,299 185,981
Interest, net 11,469 13,209 35,510 39,613
Income before income taxes 49,079 43,039 353,751 263,466
Federal and state income taxes 10,452 9,080 82,549 61,711
Net income $ 38,627 $ 33,959 $ 271,202 $ 201,755
Net income per common share
Basic $ 1.04 $ 0.92 $ 7.33 $ 5.47
Diluted $ 1.04 $ 0.91 $ 7.28 $ 5.43
Basic weighted average shares outstanding 37,042,544 36,920,960 37,017,656 36,901,338
Plus effect of stock compensation 241,047 221,917 240,962 221,187
Diluted weighted average shares outstanding 37,283,591 37,142,877 37,258,618 37,122,525
Dividends declared per share $ 0.34 $ 0.32 $ 0.98 $ 0.96
(a) Includes excise taxes of: $ 249,678 $ 270,023 $ 784,950 $ 833,750
See notes to unaudited condensed consolidated financial statements.
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CASEY'S GENERAL STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Shares Outstanding Common
Stock 		Retained
Earnings 		Shareholders' Equity
Balance at April 30, 2020 36,806,325 $ 33,286 $ 1,609,919 $ 1,643,205
Net income - - 120,592 120,592
Dividends declared (32 cents per share) - - (11,874) (11,874)
Exercise of stock options 4,748 211 - 211
Share-based compensation 95,700 (896) - (896)
Balance at July 31, 2020 36,906,773 32,601 1,718,637 1,751,238
Net income - - 111,983 111,983
Dividends declared (32 cents per share) - - (11,883) (11,883)
Exercise of stock options 23,470 1,042 - 1,042
Share-based compensation 5,504 7,471 - 7,471
Balance at October 31, 2020 36,935,747 41,114 1,818,737 1,859,851
Net income - - 38,627 38,627
Dividends declared (34 cents per share) - - (12,630) (12,630)
Exercise of stock options 9,273 412 - 412
Share-based compensation 2,160 7,329 - 7,329
Balance at January 31, 2021 36,947,180 $ 48,855 $ 1,844,734 $ 1,893,589
Shares Outstanding Common
Stock 		Retained
Earnings 		Shareholders' Equity
Balance at April 30, 2019 36,664,521 $ 15,600 $ 1,393,169 $ 1,408,769
Net income - - 85,815 85,815
Dividends declared (32 cents per share) - - (11,772) (11,772)
Exercise of stock options 50,931 2,261 - 2,261
Share-based compensation 67,182 4,141 - 4,141
Balance at July 31, 2019 36,782,634 22,002 1,467,212 1,489,214
Net income - - 81,981 81,981
Dividends declared (32 cents per share) - - (11,773) (11,773)
Exercise of stock options 1,030 46 - 46
Share-based compensation 7,984 2,380 - 2,380
Balance at October 31, 2019 36,791,648 24,428 1,537,420 1,561,848
Net income - - 33,959 33,959
Dividends declared (32 cents per share) - - (11,774) (11,774)
Exercise of stock options 1,925 85 - 85
Share-based compensation - 4,472 - 4,472
Balance at January 31, 2020 36,793,573 $ 28,985 $ 1,559,605 $ 1,588,590
See notes to unaudited condensed consolidated financial statements.

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CASEY'S GENERAL STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(DOLLARS IN THOUSANDS)
Nine months ended January 31,
2021 2020
Cash flows from operating activities:
Net income $ 271,202 $ 201,755
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 195,299 185,981
Amortization of debt issuance costs 1,258 -
Share-based compensation 22,009 14,394
Loss on disposal of assets and impairment charges 3,808 2,115
Deferred income taxes 13,554 39,454
Changes in assets and liabilities:
Receivables (18,117) (8,527)
Inventories (35,238) 10,207
Prepaid expenses (7,993) (6,937)
Accounts payable 124,026 (53,534)
Accrued expenses 56,228 12,737
Income taxes 18,363 9,204
Other, net 18,680 (7,142)
Net cash provided by operating activities 663,079 399,707
Cash flows from investing activities:
Purchase of property and equipment (263,077) (363,907)
Payments for acquisition of businesses, net of cash acquired (5,780) (12,644)
Proceeds from sales of property and equipment 4,823 3,813
Net cash used in investing activities (264,034) (372,738)
Cash flows from financing activities:
Proceeds from long-term debt 650,000 -
Payments of long-term debt (570,999) (9,329)
Payments of debt issuance costs (5,525) -
Net (payments) borrowings of short-term debt (120,000) 1,000
Proceeds from exercise of stock options 1,665 2,392
Payments of cash dividends (35,410) (34,178)
Tax withholdings on employee share-based awards (8,105) (6,611)
Net cash used in financing activities (88,374) (46,726)
Net increase (decrease) in cash and cash equivalents 310,671 (19,757)
Cash and cash equivalents at beginning of the period 78,275 63,296
Cash and cash equivalents at end of the period $ 388,946 $ 43,539
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CASEY'S GENERAL STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
(DOLLARS IN THOUSANDS)
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Nine months ended January 31,
2021 2020
Cash paid during the period for:
Interest, net of amount capitalized $ 32,862 $ 33,636
Income taxes, net 48,137 10,800
Noncash investing and financing activities:
Purchased property and equipment in accounts payable 28,605 9,813
Right-of-use assets obtained in exchange for new finance lease liabilities - 1,520
Right-of-use assets obtained in exchange for new operating lease liabilities 1,109 1,037
Noncash additions from adoption of ASC 842 - 22,635
See notes to unaudited condensed consolidated financial statements.

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CASEY'S GENERAL STORES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Dollars in Thousands, Except Share and Per Share Amounts)

1. Presentation of Financial Statements
Casey's General Stores, Inc. and its subsidiaries (hereinafter referred to as the 'Company' or 'Casey's') operate 2,229 convenience stores in 16 Midwest states. The stores are located primarily in smaller communities, many with populations of less than 5,000.
The accompanying condensed consolidated financial statements include the accounts and transactions of Casey's General Stores, Inc. and its direct and indirect wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

2. Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations.
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.
In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position as of January 31, 2021 and April 30, 2020, the results of operations for the three and nine months ended January 31, 2021 and 2020, and shareholders' equity and cash flows for the nine months ended January 31, 2021 and 2020. Although management believes that the disclosures are adequate to make the information presented not misleading, it is suggested that these interim condensed consolidated financial statements be read in conjunction with the Company's most recent audited financial statements and notes thereto. See the Form 10-K for the year ended April 30, 2020 for our consideration of new accounting pronouncements.

3. Revenue and Cost of Goods Sold
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 condensed consolidated financial statements.
A portion of revenue from sales that include a redeemable digital 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 digital box top coupon or points. The amounts related to digital box top coupons and points are deferred until their redemption or expiration. Revenue related to the digital box top coupons and points issued is expected to be recognized less than one year from the original sale to the guest. As of January 31, 2021 and April 30, 2020, the Company recognized a contract liability of $26,036 and $11,180, respectively, related to the outstanding digital box top coupons and Casey's Rewards points, which is included in accrued expenses on the condensed 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.
Renewable Identification Numbers (RINs) are treated as a reduction in cost of goods sold in the period the Company commits to a price and agrees to sell the RIN. Warehousing costs are recorded within operating expenses on the condensed consolidated statements of income. Reimbursements of an operating expense (e.g., advertising) are recorded as reductions of the related expense.
The Company often receives vendor allowances on the basis of quantitative contract terms that vary by product and vendor or 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.
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4. Long-Term Debt and Finance Lease Obligations, Lines of Credit, and Fair Value Disclosure
The fair value of the Company's long-term debt (including current maturities) is estimated based on the current rates offered to the Company for debt of the same or similar issuances. The fair value of the Company's long-term debt was approximately $1,417,000 and $1,341,000 at January 31, 2021 and April 30, 2020, respectively.
Senior Notes
On June 30, 2020, the Company entered into a note purchase agreement with respect to the issuance of $650,000 aggregate principal amount of senior notes, consisting of: (i) $325,000 aggregate principal amount of 2.85% Senior Notes, Series G (the 'Series G Notes'); and (ii) $325,000 aggregate principal amount of 2.96% Senior Notes, Series H (the 'Series H Notes') (collectively, the 'Notes'). The Notes were issued on August 7, 2020. The Series G Notes bear interest at the rate of 2.85% per annum, payable semi-annually on February 7 and August 7 of each year, and mature on August 7, 2030. The Series H Notes bear interest at the rate of 2.96% per annum, payable semi-annually on February 7 and August 7 of each year, and mature on August 6, 2032. The Company used a portion of the proceeds of the Notes to pay off the $569,0005.22% senior notes that matured on August 9, 2020.
Bridge Loan
On November 8, 2020, the Company entered into a commitment letter ('Commitment Letter') with Goldman Sachs Bank USA ('Goldman'), pursuant to which Goldman committed to lend the Company up to $100 million under a new senior unsecured 364-day bridge loan facility (the 'Bridge Loan'). As a result of, and concurrent with the effectiveness of the second amendment of the Credit Agreement discussed below, the commitments under the Commitment Letter were reduced, and are now expired, in accordance with the terms thereof.
Credit Agreement
On December 23, 2020 (the 'Amendment Effective Date'), the Company entered into a second amendment ('the Amendment') to its existing credit agreement dated January 11, 2019, as amended June 30, 2020 ('the Existing Credit Agreement', together with the Amendment, the 'Credit Agreement') to: (a) increase the revolving commitments thereunder to an aggregate principal amount of $450 million (the 'Revolving Facility Increase', and together with the existing revolving commitments the 'Revolving Facility'); and (b) provide for a senior unsecured delayed-draw term loan facility in an aggregate principal amount of up to $300 million (the 'Term Loan Facility').
Revolving Facility Increase: The Amendment increased the total borrowing capacity under the Revolving Facility by an aggregate principal amount of $150 million, from $300 million to $450 million. The maturity date of the Revolving Facility remains unchanged, at January 11, 2024. Amounts borrowed under the Revolving Facility bear interest at variable rates based upon, at the Company's option, either: (a) the LIBO Rate adjusted for statutory reserve requirements (but no less than 0.75%) (the 'Adjusted LIBO Rate'), plus a margin ranging from 1.05% to 1.85%; or (b) an alternate base rate, which is the higher of (i) the prime rate announced by the Administrative Agent, (ii) the federal funds rate plus 1/2 of 1.00%, and (iii) the one-month LIBO Rate plus 1.00% (as applicable, the 'ABR Rate'), plus a margin ranging from 0.05% to 0.85%. The Revolving Facility also carries a facility fee of 0.20% to 0.40% per annum. The applicable margins and facility fee are dependent upon the Company's Consolidated Leverage Ratio, as calculated quarterly in accordance with the Credit Agreement (the 'Consolidated Leverage Ratio'). The Company had $0 outstanding on the Revolving Facility at January 31, 2021 and $120,000 outstanding at April 30, 2020.
Term Loan Facility: The Amendment also provides for a new senior unsecured delayed-draw term loan facility in an aggregate principal amount of up to $300 million, which may be drawn in a single borrowing for up to three months from the Amendment Effective Date. The Term Loan Facility has a maturity date of January 6, 2026 (the 'Term Loan Maturity Date') and its proceeds may be used to finance the pending Buchanan Energy Acquisition (see fn. 9, below) and for working capital needs, capital expenditures, share repurchases and general corporate purposes.
Amounts borrowed under the Term Loan Facility will bear interest at variable rates based upon, at the Company's option, either: (i) the Adjusted LIBO Rate, plus a margin ranging from 1.55% to 2.60%; or (ii) the ABR Rate, plus a margin ranging from 0.20% to 1.60%. The Term Loan Facility also carries a facility fee of 0.20% to 0.40% per annum. The applicable margins and facility fee are dependent upon the Consolidated Leverage Ratio.
The outstanding principal balance of the loan drawn on the Term Loan Facility is required to be repaid in equal quarterly installments in an amount equal to 1.25% of the original principal amount, on the last day of each March, June, September and December following the Effective Date, commencing on March 31, 2021, with the balance due on the Term Loan Maturity Date. As of January 31, 2021, the Company has not yet drawn on the Term Loan Facility.


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5. Compensation Related Costs and Share Based Payments
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. At January 31, 2021, there were 2,212,588 shares available for grant under the 2018 Plan.
We account for share-based compensation by estimating the 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 a share of our common stock on the date of grant. 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 condensed 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 performance based awards. All awards have been granted at no cost to the grantee and/or non-employee member of the Board.
At January 31, 2021, options for 5,698 shares (which expire in June 2021) were outstanding under the 2009 Plan (no stock option awards have been granted under the 2018 Plan). Information concerning the issuance of stock options under the 2009 Plan is presented in the following table:
Number of
option shares 		Weighted
average option
exercise price
Outstanding at April 30, 2020 43,189 $ 44.39
Exercised 37,491 44.39
Outstanding at January 31, 2021 5,698 $ 44.39
At January 31, 2021, all 5,698 outstanding options were vested, and had an aggregate intrinsic value of $815 and a weighted average remaining contractual life of 0.42 years. The aggregate intrinsic value for the total of all options exercised during the nine months ended January 31, 2021, was $4,833.
Information concerning the unvested restricted stock units under the 2009 Plan and the 2018 Plan is presented in the following table:
Unvested at April 30, 2020 473,799
Granted 207,928
Vested (154,842)
Forfeited (10,306)
Performance Award Adjustments 56,071
Unvested at January 31, 2021 572,650

The above awards reflect (a) long-term incentive compensation program grants for 2018 through 2020, which include a mix of time-based restricted stock units and performance-based restricted stock units (subject to three-year cumulative net income before net interest expense, income taxes, depreciation and amortization ('EBITDA'), three-year relative total shareholder return ('TSR') or three-year average return on invested capital ('ROIC')), (b) certain 'make-whole' and sign-on grants, which include a mix of time-based restricted stock units and performance-based restricted stock units subject to TSR, EBITDA, or ROIC, (c) a special strategic grant which includes performance-based restricted stock units subject to the performance of the Company's e-commerce and loyalty platforms, (d) special performance grants which
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include time-based restricted stock units, and (e) non-employee director equity awards, which include time-based restricted stock units.
Total compensation costs recorded for employees and non-employee directors for the nine months ended January 31, 2021 and 2020, respectively, were $22,009 and $14,394, related entirely to restricted stock unit awards. As of January 31, 2021, there were no unrecognized compensation costs related to the 2009 Plan and 2018 Plan for stock options and $34,449 of unrecognized compensation costs related to restricted stock units which are expected to be recognized through fiscal 2024.

6. Acquisitions
On November 8, 2020, the Company entered into an Equity Purchase Agreement (the 'Purchase Agreement') with (a) Buck's, Inc., a Nebraska corporation, Chicago SPE (N), Inc., a Delaware corporation, Buchanan Energy (N), LLC, a Delaware limited liability company, Buchanan Energy (S), LLC, a Delaware limited liability company, Buck's Inc. of Collinsville, a Nebraska corporation, and C.T. Jewell Company, Inc., a Nebraska corporation, and Buck's Intermediate Holdings, LLC, a Nebraska limited liability company (each of the foregoing entities is a 'Seller Company', and all of the foregoing companies collectively are the 'Seller Companies'); (b) Buck's Holdco, Inc., a Nebraska corporation (the 'Seller'); and (c) Steven Buchanan and certain other shareholders and members. Pursuant to the terms of the Purchase Agreement, following restructuring of the Seller Companies and Seller for tax purposes, the Company will acquire all of the Seller's equity of Buck's Intermediate, which at closing will own 100% of the limited liability company interests of the remaining Seller Companies, for an aggregate purchase price in cash of $580 million (subject to customary post-closing adjustments).
The closing of the acquisition is conditioned upon the satisfaction of customary closing conditions, including, among others: (w) expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ('HSR Act'), as amended; (x) the accuracy of the representations and warranties of each party to the Purchase Agreement as of the closing; (y) the performance in all material respects by the parties of their respective covenants under the Purchase Agreement, including receipt of certain consents; and (z) in the case of the Seller Companies, the absence of any material adverse effect since the date of the Purchase Agreement.
The Company and Buchanan Energy have received a Request for Additional Information from the Federal Trade Commission ('FTC'). The effect of the request is to extend the anticipated closing date, which was initially expected to occur in late calendar year 2020. Casey's continues to cooperate with the FTC and does not expect its review to have a material impact on the acquisition.
The Company intends to finance the proposed transaction with a combination of cash on hand, the Revolving Facility, and the Term Loan Facility.

7. Commitments and Contingencies
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 or other general business disputes; employment, personnel, or accessibility matters; personal injury and property damage claims; claims by federal, state, and local regulatory authorities relating to the sale of products pursuant to licenses and permits issued by those authorities; and, other claims or proceedings. Claims for damages in those actions 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 adverse effect on our consolidated financial position and results of operations.
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.
We have entered into forward contracts for cheese in order to fix the price per pound for a portion of our expected supply. As of January 31, 2021, the forward contracts run through February 2021. The monthly commitment under these contracts is approximately $2,700. These contracts are not accounted for as derivatives as they meet the normal purchases exclusion under derivative accounting.

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8. Unrecognized Tax Benefits
The total amount of gross unrecognized tax benefits was $8,907 at April 30, 2020. At January 31, 2021, gross unrecognized tax benefits were $10,825. If this unrecognized tax benefit were ultimately recognized, $8,552 is the amount that would impact our effective tax rate. The total amount of accrued interest and penalties for such unrecognized tax benefits was $530 at January 31, 2021, and $354 at April 30, 2020. Net interest and penalties included in income tax expense for the nine months ended January 31, 2021 was a net expense of $176 and a net expense of $183 for the same period in 2020.
A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the ultimate outcome or the timing of resolution for uncertain tax positions. It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months. These changes could result from the expiration of the statute of limitations, examinations or other unforeseen circumstances. The Company has no ongoing federal or state income tax examinations. At this time, 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 statute of limitations.
The federal statute of limitations remains open for the tax years 2015 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.

9. Segment Reporting
As of January 31, 2021, we operated 2,229 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. Our stores sell similar products and services, and use similar processes to sell those products and services directly to the general public. We make specific disclosures concerning the three broad merchandise categories of fuel, grocery and other merchandise, and prepared food and fountain because it allows us to more effectively discuss trends and operational programs 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 categories.
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Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations (Dollars in Thousands).
Overview
Casey's and its direct and indirect wholly-owned subsidiaries operate convenience stores under the names 'Casey's' and 'Casey's General Store' (hereinafter referred to as the 'Company', 'Casey's Store' or 'Stores') in 16 Midwestern states, primarily Iowa, Missouri and Illinois. The Company also operates two stores selling primarily tobacco products, one grocery store, and one liquor store. As of January 31, 2021, there were a total of 2,229 stores in operation. All convenience stores offer fuel for sale on a self-serve basis and most stores carry a broad selection of food (including freshly prepared foods such as pizza, donuts and sandwiches), beverages, tobacco products, health and beauty aids, automotive products and other non-food items. The Company derives its revenue primarily from the retail sale of fuel and the products offered in its stores.
Approximately 55% of our stores were opened in areas with populations of fewer than 5,000 persons, while approximately 19% of all stores were opened in communities with populations exceeding 20,000 persons. Two distribution centers are currently in operation, which supply grocery and general merchandise items to stores. One is adjacent to the Store Support Center facility in Ankeny, Iowa, and the other is located in Terre Haute, Indiana. In addition, a third distribution center is currently under construction in Joplin, Missouri. As of January 31, 2021, the Company owned the land at 2,203 locations and the buildings at 2,211 locations, and leased the land at 26 locations and the buildings at 18 locations.
The Company reported diluted earnings per common share of $1.04 for the third quarter of fiscal 2021. For the same quarter a year-ago, diluted earnings per common share was $0.91.
The following table represents the roll forward of store growth through the third quarter of fiscal 2021:
Store Count
Total stores at April 30, 2020 2,207
New store construction 27
Acquisitions 3
Acquisitions not opened (2)
Prior acquisitions opened 2
Closed (8)
Total stores at January 31, 2021 2,229
As discussed previously, on November 8, 2020, the Company announced an agreement to acquire Buchanan Energy, owner of Bucky's Convenience Stores, in an all-cash transaction for $580 million. The closing of the acquisition is conditioned upon, among other things, the expiration or termination of the applicable waiting period under the HSR Act. The Company and Buchanan Energy have received a Request for Additional Information from the FTC in connection with the transaction, and continue to cooperate with the FTC with respect thereto. The Company does not expect the FTC review to have a material impact on the acquisition. In addition thereto, the Company also expects to complete the construction of approximately 40 new stores this fiscal year.

Since the fourth quarter of the Company's 2020 fiscal year, the COVID-19 pandemic has generally led to decreased store traffic and lower demand for certain of our products. Governmental and privately imposed restrictions, including those on travel, social, work and other gatherings, in-person schooling and other closures, and our guests' behavior in response to such restrictions, have contributed to such declines. In addition, the pandemic has resulted in increased operating expenses, as we have taken proactive steps to protect the health and safety of our team members and guests. Although the number of reported new infections within our sixteen state footprint have generally decreased recently, the unpredictable nature of the pandemic, along with the reported emergence of new 'strains' and the limited availability of vaccines, could contribute to continued decreased traffic and demand, and increased COVID-19-related operating expenses, for the foreseeable future. While COVID-19 has resulted in, and will continue to bring, significant challenges and uncertainty to our operating environment, we believe that the strength of our brand and balance sheet position us well to emerge from the pandemic. However, given the uncertainties, we are currently unable to forecast or estimate the potential impact to our future operating results.
Same-store sales is a common metric used in the convenience store industry. We define same-store sales as the total sales increase (or decrease) for stores open during the full time of both periods being presented. We exclude from the calculation any acquired stores and any stores that have been replaced with a new store, until such stores have been open during the full time of both periods being presented. Stores that have undergone a major remodel, had adjustments in hours of operation, added pizza delivery, or had other revisions to their operating format remain in the calculation.
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The third quarter results reflected a 12.1% decrease in same-store fuel gallons sold, with an average fuel revenue less related cost of goods sold (exclusive of depreciation and amortization) of 32.9 cents per gallon, compared to 21.7 cents per gallon in the same quarter a year ago. Current quarter same-store gallons sold were impacted by softer demand in the Midwest due to the COVID-19 pandemic. Fuel margin for the quarter was impacted favorably due in part to our centralized fuel team and its ability to navigate the broad spectrum of the fuel marketplace. The Company sold 9.1 million renewable fuel credits for $6.9 million during the quarter, compared to the sale of 8.9 million renewable fuel credits in the third quarter of the prior year, which generated $1.7 million.
Same-store sales of grocery and other merchandise increased 5.4% and prepared food and fountain decreased 5.0% during the third quarter. The increase in grocery and other merchandise same-storesales was primarily due to stronger sales of alcohol and packaged beverages. The decrease in prepared food and fountain same-store sales was primarily attributable to pressure in the dispensed beverage and bakery categories as lower guest counts in the morning day part disproportionately impact these categories.
Three Months Ended January 31, 2021 Compared to
Three Months Ended January 31, 2020
(Dollars and Amounts in Thousands)
Three Months Ended January 31, 2021 Fuel Grocery &
Other
Merchandise 		Prepared
Food &
Fountain 		Other Total
Revenue $ 1,100,875 $ 624,465 $ 264,018 $ 18,670 $ 2,008,028
Revenue less cost of goods sold (excluding depreciation and amortization) $ 170,399 $ 191,502 $ 159,988 $ 18,292 $ 540,181
15.5 % 30.7 % 60.6 % 98.0 % 26.9 %
Fuel gallons 518,408
Three Months Ended January 31, 2020 Fuel Grocery &
Other
Merchandise 		Prepared
Food &
Fountain 		Other Total
Revenue $ 1,376,018 $ 582,407 $ 273,630 $ 16,143 $ 2,248,198
Revenue less cost of goods sold (excluding depreciation and amortization) $ 124,257 $ 191,692 $ 164,795 $ 16,119 $ 496,863
9.0 % 32.9 % 60.2 % 99.9 % 22.1 %
Fuel gallons 572,746

Total revenue for the third quarter of fiscal 2021 decreased by $240,170 (10.7%) over the comparable period in fiscal 2020. Retail fuel sales decreased by $275,143 (20.0%) as the average retail price per gallon decreased 11.6% (amounting to a $159,753 decrease), and the number of gallons sold decreased by 54,338 (9.5%). During this same period, retail sales of grocery and other merchandise increased by $42,058 (7.2%), due to operating 36 more stores than a year ago and strong sales of alcohol and packaged beverage. Preparedfood and fountain sales decreased by $9,612 (3.5%), due primarily to pressure in the dispensed beverage and bakery categories.

The other revenue category primarily consists of lottery, which is presented net of applicable costs, and car wash. These revenues increased $2,527 (15.7%) for the third quarter of fiscal 2021, driven by higher lottery sales.
Revenue less cost of goods sold (excluding depreciation and amortization) was 26.9% of revenue for the third quarter of fiscal 2021, compared to 22.1% for the comparable period in the prior year. Fuel revenue less related cost of goods sold (exclusive of depreciation and amortization) was 15.5% of fuel revenue during the third quarter of fiscal 2021, compared to 9.0% in the third quarter of the prior year. Revenue per gallon less cost of goods sold per gallon (exclusive of depreciation and amortization) was 32.9 cents in the third quarter of fiscal 2021, compared to 21.7 cents in the prior year, due in part to our centralized fuel team and its ability to navigate the broad spectrum of the fuel marketplace.
Grocery and other merchandise revenue less related cost of goods sold (exclusive of depreciation and amortization) decreasedfrom 32.9% of revenue in the prior year to 30.7% in the currentyear. Grocery and other merchandise revenue less related cost of goods sold continues to be adversely impacted by mix shift to larger pack sizes across categories. The average margin was also adversely affected by stronger sales of lower margin products in the category. In addition, the Company discounted select merchandise in conjunction with a major store reset that took place throughout the chain in the third quarter.
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The reset expanded selling space throughout the store to drive key categories, optimized category flow and adjacencies, and enabled the rapid expansion of our private brand program. Prepared food and fountain revenue less related cost of goods sold (exclusive of depreciation and amortization) increased to 60.6% of revenue, compared to 60.2% in the prior year, primarily due to lower commodity costs.
Operating expenses increased $37,118 (9.8%) in the third quarter of fiscal 2021 from the comparable period in the prior year, due to operating 36 more stores compared to the same period a year ago, as well as incurring $11 million in COVID-related expenses, $10 million in incremental incentive compensation costs due to the strong performance of the Company, $3 million in labor costs associated with the major store reset noted above, offset by a reduction in credit card fees. Same store operating expenses excluding credit card fees were up 5.6% for the quarter.
Depreciation and amortization expense increased by 3.0% to $65,185 in the third quarter of fiscal 2021 from $63,285 for the comparable period in the prior year. The increase was primarily due to operating 36 more stores than a year ago and capital expenditures during the previous twelve months.
Interest expense decreasedby $1,740 (13.2%), attributable to the refinancing of the 5.22% senior notes to lower interest rate debt.

The effective tax rate increased to 21.3% in the third quarter of fiscal 2021 compared to 21.1% in the same period of fiscal 2020. The increase in the effective tax rate was primarily due to a decrease in favorable permanent differences. During the third quarter of fiscal year 2021, the Consolidated Appropriations Act, 2021, was enacted and extended the Work Opportunity Tax Credit (WOTC) program through December 31, 2025. The Company benefited from similar legislation in the third quarter of fiscal year 2020 when the Further Consolidated Appropriations Act, 2020 was enacted and provided for an extension of WOTC through December 31, 2020.
Net income increased by $4,668 (13.7%) to $38,627 from $33,959 in the comparable period in the prior year. The increase in net income was primarily attributable to higher fuel contribution and operating 36 more stores than a year ago.

Nine Months Ended January 31, 2021 Compared to
Nine Months Ended January 31, 2020
(Dollars and Amounts in Thousands)
Nine Months Ended January 31, 2021 Fuel Grocery &
Other Merchandise 		Prepared
Food &
Fountain 		Other Total
Revenue $ 3,380,348 2,074,552 823,605 50,449 6,328,954
Revenue less cost of goods sold (excluding depreciation and amortization) 584,584 666,093 495,297 49,470 1,795,444
17.3 % 32.1 % 60.1 % 98.1 % 28.4 %
Fuel gallons 1,645,497
Nine Months Ended January 31, 2020 Fuel Grocery &
Other Merchandise 		Prepared
Food &
Fountain 		Other Total
Revenue $ 4,518,061 $ 1,930,886 $ 867,353 $ 46,113 $ 7,362,413
Revenue less cost of goods sold (excluding depreciation and amortization) $ 416,045 $ 627,278 $ 530,259 $ 46,032 $ 1,619,614
9.2 % 32.5 % 61.1 % 99.8 % 22.0 %
Fuel gallons 1,805,901
Total revenue for the first nine months of fiscal 2021 decreased by $1,033,459 (14.0%) over the comparable period in fiscal 2020. Retail fuel sales decreased by $1,137,713 (25.2%) as the average retail price per gallon decreased 17.9% (amounting to a $808,195 decrease), and the number of gallons sold decreased 160,404 (8.9%). During this same period, retail sales of grocery and other merchandise increased by $143,666 (7.4%) due to operating 36 more stores than a year ago and
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strong sales of alcohol, packaged beverage and tobacco. Prepared food and fountain sales decreased by $43,748 (5.0%), due primarily to pressure in the dispensed beverage and bakery categories.
The other revenue category primarily consists of lottery, which is presented net of applicable costs, and car wash. These revenues increased $4,336 (9.4%) through the third quarter of fiscal 2021.
Revenue less cost of goods sold (excluding depreciation and amortization) was 28.4% of revenue for the first nine months of fiscal 2021, compared to 22.0% for the comparable period in the prior year. Fuel revenue less related cost of goods sold (exclusive of depreciation and amortization) was 17.3% of fuel revenue for the first nine months of fiscal 2021 compared to 9.2% for the first nine months of the prior year. Revenue per gallon less cost of goods sold per gallon (exclusive of depreciation and amortization) was 35.5 cents for the first nine months of fiscal 2021 compared to 23.0 cents in the prior year, due in part to our centralized fuel team and its ability to navigate the broad spectrum of the fuel marketplace.
Grocery and other merchandise revenue less related cost of goods sold (exclusive of depreciation and amortization) decreased to 32.1% of grocery and other merchandise revenue, compared to 32.5% in the prior year. The average margin was adversely affected by stronger sales of lower margin products in the category. Prepared food and fountain revenue less related cost of goods sold (exclusive of depreciation and amortization) decreased to 60.1% of revenue, compared to 61.1% in the prior year, due to increased promotional activity.
Operating expenses increased by $80,330 (7.1%) in the first nine months of fiscal 2021 from the comparable period in the prior year, primarily due to operating 36 more stores than a year ago, as wellas incurring $32 million in COVID-related expenses and $22 million in incremental incentive compensation costs due to the strong performance of the Company. Same store operating expenses excluding credit card fees were up 1.8% for the first nine months of fiscal 2021.
Depreciation and amortization expense increased 5.0% to $195,299 for the first nine months of fiscal 2021 from $185,981 for the comparable period in the prior year. The increase was due partially to capital expenditures during the previous twelve months. Additionally, the expense for the first nine months of fiscal 2020 was impacted by an approximately $5.0 million adjustment related to the useful lives of underground storage tanks.
Interest expense decreased by $4,103 (10.4%),primarily attributable to the refinancing of the 5.22% senior notes to lower interest rate debt.
The effective tax rate decreased to 23.3% in the first nine months of fiscal year 2021 compared to 23.4% in the same period of fiscal year 2020. The decrease in the effective tax rate was due to a reduction in state tax expense.
Net income increased by $69,447 (34.4%) to $271,202 from $201,755 in the prior year. The increase in net income was primarily due to growth in fuel gross profit dollars and operating 36 more stores than a year ago.
Use of Non-GAAP Measures
We define EBITDA as net income before net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by excluding the gain or loss on disposal of assets as well as impairment charges. Neither EBITDA nor Adjusted EBITDA are considered GAAP measures, and should not be considered as a substitute for net income, cash flows from operating activities or other income or cash flow statement data. These measures have limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. We strongly encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.
We believe EBITDA and Adjusted EBITDA are useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of financial performance and debt service capabilities, and they are regularly used by management for internal purposes including our capital budgeting process, evaluating acquisition targets, assessing performance, and awarding incentive compensation.
Because non-GAAP financial measures are not standardized, EBITDA and Adjusted EBITDA, as defined by us, may not be comparable to similarly titled measures reported by other companies. It therefore may not be possible to compare our use of these non-GAAP financial measures with those used by other companies.
The following table contains a reconciliation of net income to EBITDA and Adjusted EBITDA for the three and nine months ended January 31, 2021 and 2020:
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Three months ended Nine months ended
January 31, 2021 January 31, 2020 January 31, 2021 January 31, 2020
Net income $ 38,627 $ 33,959 $ 271,202 $ 201,755
Interest, net 11,469 13,209 35,510 39,613
Federal and state income taxes 10,452 9,080 82,549 61,711
Depreciation and amortization 65,185 63,285 195,299 185,981
EBITDA $ 125,733 $ 119,533 $ 584,560 $ 489,060
Loss on disposal of assets and impairment charges 1,649 858 3,808 2,115
Adjusted EBITDA $ 127,382 $ 120,391 $ 588,368 $ 491,175
For the three months ended January 31, 2021, EBITDA and Adjusted EBITDA increased 5.2% and 5.8%, respectively, when compared to the same period a year ago. For the nine months ended January 31, 2021, EBITDA and Adjusted EBITDA increased 19.5% and 19.8%, respectively, when compared to the same period a year ago. The increases in both periods are primarily due to a higher fuel contribution and operating 36 more stores than a year ago.

Critical Accounting Policies
Critical accounting policies are those accounting policies that management believes are important to the portrayal of the Company's financial condition and results of operations. The Company's critical accounting policies are described in the Form 10-K for the year ended April 30, 2020, and such discussion is incorporated herein by reference. There have been no changes to these policies in the nine months ended January 31, 2021.
Liquidity and Capital Resources
Due to the nature of the Company's business, cash provided by operations is the Company's primary source of liquidity. The Company finances its inventory purchases primarily from normal trade credit aided by the relatively rapid turnover of inventory. This turnover allows the Company to conduct its operations without large amounts of cash and working capital. As of January 31, 2021, the Company's ratio of current assets to current liabilities was 1.28 to 1. The ratio at January 31, 2020 and April 30, 2020 was 0.35 to 1 and 0.36 to 1, respectively.The increase in the ratio is primarily attributable to an increase in cash and cash equivalents associated with an increase in cash provided by operations and a decrease in cash used in investing. Additionally, current liabilities decreased due to the refinancing of the 5.22% senior notes. Refer to Note 4 for additional discussion on the Series G and Series H notes.
Management believes that the Company's unsecured revolving line of creditof $25,000 (the 'Bank Line'), its Revolving Facility of $450,000, combined with the current cash and cash equivalents and the future cash flow from operations will be sufficient to satisfy the working capital needs of our business.
Net cash provided by operations increased $263,372 (65.9%) in the nine months ended January 31, 2021 from the comparable period in the prior year, due to an increase in net income and increases in accounts payable and accrued expenses. Cash used in investing in the nine months ended January 31, 2021 decreased $108,704 (29.2%) over prior year, due to governmental delays in zoning and licensing and a reduction in discretionary spending related to the COVID-19 pandemic. Cash used in financing increased $41,648 (89.1%), primarily due to payments on the Revolving Facility during the period, offset by incremental proceeds on the Series G and Series H notes.
Capital expenditures typically represent the single largest use of Company funds. Management believes that by acquiring, building, and reinvesting in stores, the Company will be better able to respond to competitive challenges and increase operating efficiencies. During the first nine months of fiscal 2021, the Company expended $268,857, primarily for property and equipment, resulting from the construction, remodeling, and acquisition of stores, compared to $376,551 for the comparable period in the prior year. The decrease in capital expenditures from the prior year is due to governmental delays in zoning and licensing, as well as a reduction in discretionary spending related to the COVID-19 pandemic. 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.

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As of January 31, 2021, the Company had long-term debt consisting of:
Finance lease liabilities 14,747
3.67% Senior notes (Series A) due in 7 installments beginning June 17, 2022, and ending June 15, 2028 150,000
3.75% Senior notes (Series B) due in 7 installments beginning December 17, 2022 and ending December 18, 2028 50,000
3.65% Senior notes (Series C) due in 7 installments beginning May 2, 2025 and ending May 2, 2031 50,000
3.72% Senior notes (Series D) due in 7 installments beginning October 28, 2025 and ending October 28, 2031 50,000
3.51% Senior notes (Series E) due June 13, 2025 150,000
3.77% Senior notes (Series F) due August 22, 2028 250,000
2.85% Senior notes (Series G) due August 7, 2030 325,000
2.96% Senior notes (Series H) due August 6, 2032 325,000
Less debt issuance costs (344)
1,364,403
Less current maturities (2,327)
1,362,076
To date, the Company has funded capital expenditures primarily from the proceeds of the sale of Common Stock, issuance of debt, existing cash, and funds generated from operations. Future capital needs required to finance operations, improvements and the anticipated growth in the number of stores are expected to be met from cash generated by operations, the Revolving Facility, the Bank Line, and additional long-term debt or other securities as circumstances may dictate, and are not expected to adversely affect liquidity.
Cautionary Statements

This Form 10-Q, including the foregoing Management's Discussion and Analysis of Financial Condition and Results of Operations, contains 'forward-looking statements' within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. The words 'may,' 'will,' '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, results of operations, business strategy, strategic plans, short-term and long-term business operations and objectives, and financial needs.The Company cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements, including, without limitation, the following risk factors described more completely in the Company's Form 10-K for the fiscal year ended April 30, 2020:

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; 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; 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
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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.

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 3. 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 attempt to reduce the risk of principal loss. Consequently, we seek to preserve our invested funds by limiting default risk, market risk, and reinvestment risk. We attempt to mitigate default risk by investing in only high-quality credit securities that we believe to be low risk and by positioning our portfolio to respond appropriately to a significant reduction in a credit rating of any investment issuer or guarantor. The portfolio includes only marketable securities with active secondary or resale markets to ensure portfolio liquidity. We believe an immediate 100-basis-point move in interest rates affecting our floating and fixed rate financial instruments as of January 31, 2021 would have no material effect on pretax earnings.
We do from time to time, participate in a forward buy of certain commodities. These contracts are not accounted for as derivatives as they meet the normal purchases exclusion under derivative accounting.
Item 4. Controls and Procedures.

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

Changes in Internal Controls Over Financial Reporting

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There have been no changes in the Company's internal control over financial reporting during the quarter ended January 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II-OTHER INFORMATION
Item 1. Legal Proceedings
The information required by this Item is set forth in Note 6 to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q and is incorporated herein by this reference.
Item 1A. Risk Factors
There have been no material changes in our 'risk factors' from those previously disclosed in our 2021 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table sets forth information with respect to the Company's repurchases of common stock during the quarter ended January 31, 2021:
Period 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
Third Quarter
November 1 - November 30, 2020 - $ - - $ 300,000,000
December 1 - December 31, 2020 - - - 300,000,000
January 1 - January 31, 2021 - - - 300,000,000
Total - $ - - $ 300,000,000
On March 7, 2018, the Company announced a share repurchase program, whereby the Company is authorized to repurchase up to an aggregate of $300 million of the Company's outstanding common stock. 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 quarter related to the authorization.


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Item 6. Exhibits.
Exhibit
No. 		Description
2.1
3.1
3.2a
10.34
10.35
10.36*
Restricted Stock Units Agreement (Special Performance Award to Brian Johnson)
31.1*
Certification of Darren M. Rebelez under Section 302 of the Sarbanes Oxley Act of 2002
31.2*
Certification of Stephen P. Bramlage Jr. under Section 302 of the Sarbanes Oxley Act of 2002
32.1*
Certification of Darren M. Rebelez under Section 906 of Sarbanes-Oxley Act of 2002
32.2*
Certification 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
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
101. DEF XBRL Taxonomy Extension Definition Linkbase Document
* Filed herewith

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SIGNATURE
Pursuant to the requirements 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.
CASEY'S GENERAL STORES, INC.
Date: March 8, 2021 By: /s/ Stephen P. Bramlage Jr.
Stephen P. Bramlage Jr.
Its: Chief Financial Officer
(Authorized Officer and Principal
Financial and Accounting Officer)
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