# CASEYS GENERAL STORES INC (CASY) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from CASEYS GENERAL STORES INC's 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/726958/000072695824000046/casy-20240430.htm
Accession: 0000726958-24-000046
Filing date: 2024-06-24
Report date: 2024-04-30
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/CASY/
All MD&A years: /company/CASY/mda/
Previous year: /company/CASY/mda/fy2023/ (FY 2023)
Next year: /company/CASY/mda/fy2025/ (FY 2025)

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

As of April 30, 2024, Casey’s General Stores, Inc. and its direct and indirect wholly-owned subsidiaries operate convenience stores primarily under the names "Casey's" and "Casey’s General Store" (collectively, with the stores below referenced as "GoodStop", "Bucky's", "Minit Mart", or "Lone Star Food Store" referred to as "Casey's" or the "Company") throughout 17 states, over half of which are located in Iowa, Missouri, and Illinois.

Approximately 72% of all stores were opened in areas with populations of fewer than 20,000 persons. The Company competes on the basis of price, as well as on the basis of traditional features of convenience store operations such as location, extended hours, product offerings, and quality of service. As of April 30, 2024, there were a total of 2,658 stores in operation.

All convenience stores carry a broad selection of food items (including, but not limited to, freshly prepared foods such as regular and breakfast pizza, donuts, hot breakfast items, and hot and cold sandwiches), beverages, tobacco and nicotine products, health and beauty aids, automotive products, and other nonfood items. As of April 30, 2024, 233 store locations offered car washes. In addition, all but eight store locations offer fuel for sale on a self-service basis.

The Company has 73 dealer locations, where Casey’s manages fuel wholesale supply agreements to these stores. These locations are not operated by Casey's and are not included in our overall store count. Approximately 1% of total revenue for the year-ended April 30, 2024 relates to this dealer network.

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

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

[[GREPCENT_TABLE]]
[["","Store Count"],["Stores at April 30, 2023","2,521"],["New store construction","42"],["Acquisitions","112"],["Acquisitions not opened","(1)"],["Prior acquisitions opened","6"],["Closed","(22)"],["Stores at April 30, 2024","2,658"]]
[[/GREPCENT_TABLE]]

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

Long-Term Strategic Plan

The Company announced a three-year strategic plan in June 2023 focused on three enterprise objectives: grow store count, accelerate the food business, and enhance operational efficiency, which are enabled by a strong foundation and Team Member experience. The Company's plan was based on building on our proud heritage and distinct advantages, to become more

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contemporary through new capabilities, technology, data, and processes. We believe this will best position the Company to address rapidly evolving shifts in consumer habits and other macro retail trends.

The Company made significant progress towards its strategic plan goals during the 2024 fiscal year. Some of the key highlights include:

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

•Entered into our 17th state of Texas

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

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

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

Fuel Volatility

Since early calendar 2020, the price of crude oil, and in turn the wholesale cost of fuel, has been volatile compared to historical averages. Initially, at the outset of the pandemic, oil and fuel prices fell dramatically; however, as the economy in general began to emerge from the COVID-19 pandemic, prices began to modestly increase over time. Oil and fuel prices continued to be impacted throughout fiscal 2024 as a result of the ongoing conflict in Ukraine, unrest in the Middle East and economic uncertainty in Western nations. The Company expects similar market volatility to remain throughout the 2025 fiscal year.

In addition, during the past four calendar years, the Company, and the retail fuel industry, has experienced historically high average revenue less cost of goods sold per gallon (excluding depreciation and amortization). Although this has remained relatively consistent since that time, on a longer-term basis, this metric can fluctuate significantly, and sometimes unpredictably, in the short-term. While the Company believes that its average revenue less cost of goods sold per gallon (excluding depreciation and amortization) will remain elevated from historical levels for the foreseeable future, it is possible that increased oil and fuel prices, higher interest rates, macroeconomic conditions and/or continuing conflicts or disruptions involving oil producing countries may materially impact the performance of this metric.

Electric Vehicles and Renewable Fuels

Casey's continues its process of implementing an electric vehicle ("EV") strategy and our management team remains committed to understanding if and how the increased demand for, and usage of, EVs impacts consumer behavior across our store footprint and beyond. As consumer demand for alternative fuel options continues to grow, Casey’s has continued to add EV charging stations across our 17-state footprint. As of April 30, 2024, the Company has 170 charging stations at 37 stores, across 12 states. Our EV growth strategy is currently designed to selectively increase our charging stations at locations within our region where we see higher levels of consumer EV buying trends and demand for EV charging. To date, consumer EV demand within our Midwest footprint has been comparatively lower than the levels along the coasts. As EV demand from our guests increases, we are prepared to strategically integrate charging station options at select stores.

The Company also remains committed to offering renewable fuel options at our stores and continues to expand its alternative fuel options in response to evolving guest needs and as part of its environmental stewardship efforts. Currently, almost all of our stores offer fuel with at least 10% of blended ethanol and 43% of our stores offer biodiesel. Every newly built store has the capability to sell renewable fuels, and we aim to continue growing sales of renewable fuels throughout our footprint.

Fiscal 2024 Compared with Fiscal 2023

Total revenue for fiscal 2024 decreased by $231,562 (1.5%) since the prior fiscal year. Prepared food and dispensed beverage revenue increased by $139,040 (10.5%), due to an increase in same-store sales of 6.8% and an increase of approximately 3.7% due to operating 137 more stores than a year ago. The increase in same-store sales was driven by improved sales of hot sandwiches, whole pies, bakery, and dispensed beverages. Grocery and general merchandise revenue increased by $281,617 (8.2%), due to an increase in same-store sales of 3.5% and an increase of approximately 4.7% due to operating 137 more stores than a year ago. The increase in same-store sales was driven by strong sales of non-alcoholic and alcoholic beverages, snacks, and candy. Retail fuel revenue decreased by $625,239 (6.2%) as the average retail price per gallon decreased 11.5%, partially offset by an increase in the number of gallons sold by 156,303 (5.8%) Other revenue decreased $26,980 (9.0%) compared to the prior year, driven primarily by a decrease in total revenue related to the dealer network.

Total revenue less cost of goods sold (excluding depreciation and amortization) was 22.5% of revenue for fiscal 2024 compared with 20.4% for the prior year. Prepared food and dispensed beverage revenue less related cost of goods sold (excluding depreciation and amortization) increased to 58.7% of revenue from 56.6% during fiscal 2024 compared to the prior year, an increase of 2.1%, primarily due to softening ingredient costs. Grocery and general merchandise revenue less related cost of goods sold (excluding depreciation and amortization) increased to 34.1% of revenue from 33.6% during fiscal 2024

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compared to the prior year, an increase of 0.5%. The current year percentage was positively impacted by increased sales of private label products.

Fuel revenue less related cost of goods sold (excluding of depreciation and amortization) was 11.9% of revenue for fiscal 2024 compared with 10.7% for the prior year. Fuel cents per gallon decreased to 39.5 cents in fiscal 2024 from 40.2 cents in fiscal 2023. The Company sold 25.9 million RINs (renewable identification numbers) for $33,023 during fiscal 2024, compared to the sale of 18.6 million RINs fiscal 2023, which generated $31,656 (see Note 1, below, for a further description of RINs and how they are generated).

Operating expenses increased $168,571 (8.0%) to $2,288,513 in fiscal 2024. In the prior fiscal year, a one-time benefit from the resolution of a legal matter of $15,297 reduced operating expenses by approximately 1%. Approximately 4.5% of the increase is due to operating 137 more stores than the comparable period in the prior year. Total same-store employee expense contributed to approximately 1% of the increase, as the increases in labor rates were partially offset by a reduction in same-store labor hours.

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

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

The effective tax rate decreased to 23.5% in fiscal 2024 from 24.0% in fiscal 2023. The decrease in the effective tax rate was primarily due to one-time benefits from adjusting the Company’s deferred tax assets and liabilities for state law changes enacted during the year.

Net income increased by $55,281 (12.4%) to $501,972 in fiscal 2024 from $446,691 in fiscal 2023. The increase was primarily attributable to higher profitability both inside the store and in fuel. This increase was partially offset by higher operating expenses, depreciation and amortization, and income tax expense. See discussion in the paragraphs above for the primary drivers for each of these increases.

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

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COMPANY TOTAL REVENUE AND REVENUE LESS COST OF GOODS SOLD (EXCLUDING DEPRECIATION AND AMORTIZATION) BY CATEGORY

[[GREPCENT_TABLE]]
[["","Years ended April 30,"],["","2024","","2023","","2022"],["Total revenue by category"],["Prepared food and dispensed beverage","$","1,461,600","","","$","1,322,560","","","$","1,204,100"],["Grocery and general merchandise","3,727,394","","","3,445,777","","","3,141,527"],["Fuel","9,402,071","","","10,027,310","","","8,312,038"],["Other (1)","271,848","","","298,828","","","294,929"],["","$","14,862,913","","","$","15,094,475","","","$","12,952,594"],["Revenue less cost of goods sold (excluding depreciation and amortization) by category"],["Prepared food and dispensed beverage","$","858,295","","","$","748,405","","","$","712,352"],["Grocery and general merchandise","1,270,527","","","1,156,451","","","1,027,477"],["Fuel","1,116,671","","","1,074,913","","","928,868"],["Other (1)","102,418","","","92,637","","","94,017"],["","$","3,347,911","","","$","3,072,406","","","$","2,762,714"]]
[[/GREPCENT_TABLE]]

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

INDIVIDUAL STORE COMPARISONS (1)

[[GREPCENT_TABLE]]
[["","Years ended April 30,"],["","2024","","2023","","2022"],["Average retail sales","$","5,710","","","$","6,064","","","$","5,206"],["Average retail inside sales (2)","2,037","","","1,956","","","1,840"],["Average revenue less cost of goods sold (excluding depreciation and amortization) on inside sales (2)","801","","","752","","","723"],["Average retail sales of fuel","3,673","","","4,110","","","3,366"],["Average revenue less cost of goods sold (excluding depreciation and amortization) on fuel","445","","","450","","","363"],["Average operating income (3)","473","","","445","","","367"],["Average number of gallons sold","1,102","","","1,092","","","1,047"]]
[[/GREPCENT_TABLE]]

(1)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.

(2)Inside sales is comprised of sales related to the grocery and general merchandise and prepared food and dispensed beverage categories.

(3)Average operating income represents retail sales less cost of goods sold, operating expenses and depreciation and amortization attributable to a particular store; it excludes interest, federal and state income taxes, and Company operating expenses not attributable to a particular store.

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SAME STORE SALES BY CATEGORY (1)

[[GREPCENT_TABLE]]
[["","Years ended April 30,"],["","2024","","2023","","2022"],["Prepared food and dispensed beverage","6.8","%","","7.1","%","","7.4","%"],["Grocery and general merchandise","3.5","%","","6.3","%","","6.3","%"],["Fuel gallons","0.1","%","","(0.8)","%","","4.4","%"]]
[[/GREPCENT_TABLE]]

(1)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. 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.

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

[[GREPCENT_TABLE]]
[["","Years ended April 30,"],["","2024","","2023","","2022"],["Net income","$","501,972","","","$","446,691","","","$","339,790"],["Interest, net","53,441","","","51,815","","","56,972"],["Depreciation and amortization","349,797","","","313,131","","","303,541"],["Federal and state income taxes","154,188","","","140,827","","","100,938"],["EBITDA","$","1,059,398","","","$","952,464","","","$","801,241"],["Loss (gain) on disposal of assets and impairment charges","6,414","","","6,871","","","(1,201)"],["Adjusted EBITDA","$","1,065,812","","","$","959,335","","","$","800,040"]]
[[/GREPCENT_TABLE]]

For the year ended April 30, 2024, EBITDA and Adjusted EBITDA increased 11.2% and 11.1%, respectively. The increase was primarily attributable to higher profitability both inside the store and in fuel, which was partially offset by higher operating expenses. See discussion in the preceding sections for the primary drivers for each of these individual changes.

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

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Critical Accounting Policies and Estimates

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.

Business Combinations

The Company uses the acquisition method of accounting for transactions meeting the definition of a business combination. The acquisitions are recorded in the financial statements by allocating the purchase price to the assets acquired, including intangible assets, and liabilities assumed, based on their estimated fair values at the acquisition date as determined by third party appraisals or internal estimates. The significant assets acquired include buildings, equipment, and land. The Company primarily values buildings and equipment using the cost method and land using comparable land sales. The purchase price is determined based upon the fair value of consideration transferred to the seller. Fair values are typically determined using Level 3 inputs (see Note 3 to the consolidated financial statements). Given these estimates often are based upon unobservable inputs, the estimates require significant judgment when determining the overall value and actual results could differ from the estimates originally established. 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. During a one-year period from the acquisition date, amounts are allowed to be provisional for areas that are expected to be adjusted to their final amounts during the measurement period. These provisional adjustments are for when the buyer obtains additional information about the facts and circumstances that existed as of the acquisition date. Subsequent adjustments recorded to provisional balances within the measurement period are recorded in the period in which the adjustment is identified. Acquisition-related transaction costs are recognized in operating expenses as incurred.

Inventory

Inventories, which consist of merchandise and fuel, are stated at the lower of cost or market. For fuel inventories, 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. Inventory valued using the LIFO method of inventory requires judgement when making the determination of appropriate indices to be used for determining price level changes.

Long-lived Assets

The Company monitors closed and underperforming stores for an indication that the carrying amount of assets may not be recoverable. If the sum of the expected future undiscounted cash flows is less than the carrying amount of the assets, an impairment loss is recognized to the extent carrying value of the assets exceeds their estimated fair value. Fair value is based on management’s estimate of the price that would be received to sell an asset in an orderly transaction between market participants. The estimate is derived from offers, actual sale or disposition of assets subsequent to year-end, and other indications of fair value, which are considered Level 3 inputs (see Note 3 to the consolidated financial statements). In determining whether an asset is impaired, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets, which for the Company is generally on a store-by-store basis. The Company incurred impairment charges of $4,057 in fiscal 2024, $3,500 in fiscal 2023, and $1,056 in fiscal 2022. Impairment charges are a component of operating expenses.

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 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 $57,369 and $61,168 for the years ended April 30, 2024 and 2023, respectively.

Recent Accounting Pronouncements

Refer to Note 1 of the consolidated financial statements for a description of new accounting pronouncements applicable to the Company.

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Liquidity and Capital Resources

Due to the nature of our business, cash provided by operations is our primary source of liquidity. The Company finances 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, 2024, the Company’s ratio of current assets to current liabilities was 0.87 to 1. The ratio at April 30, 2023 and 2022 was 0.99 to 1 and 0.80 to 1, respectively. The decrease in the ratio from the prior year is primarily attributable to a decrease in cash and cash equivalents as a result of increased acquisition related activity, as well as share repurchases during fiscal 2024.

We believe our current $850,000 committed unsecured revolving credit facility, our $50,000 unsecured bank line of credit, current cash and cash equivalents, and the future cash flow from operations will be sufficient to satisfy the working capital needs of our business.

Net cash provided by operating activities was $892,953 for the year ended April 30, 2024, compared to $881,951 for the year ended April 30, 2023, an increase of $11,002. Our primary source of operating cash flows is from sales to guests at our stores. The primary uses of operating cash flows are payments to our team members and suppliers, as well as payments for taxes and interest. Cash flow from operations was favorably impacted by improved revenue less cost of goods sold (excluding depreciation and amortization) of $275,505, offset by an increase in operating expenses of approximately $168,571 and an increase in cash paid for taxes of approximately $14,602. The increase in cash paid for taxes was primarily attributable to applying a higher outstanding income tax receivable to reduce our estimated tax payments for fiscal 2023, compared to fiscal 2024. Refer to “Fiscal 2024 Compared with Fiscal 2023” starting on page 20 for further details on the primary drivers for the changes in revenue, cost of goods sold, and operating expenses. Cash flows from operations can also be impacted by variability in the timing of payments and receipts for certain assets and liabilities, such as wage related accruals, accounts payable, and receivables from credit card companies or our vendors. The increase in operating cash flows, compared to the prior year, was partially offset by a reduction of operating cash flows of $51,644 due to the increased purchases of inventory, primarily attributable to store growth, and a reduction of operating cash flows of $18,727 primarily due to the timing of vendor rebate payments.

Cash used in investing activities increased $280,322. During fiscal 2024, the Company expended $852,036 for purchases of property and equipment and payments for acquisitions compared to $562,137 for fiscal 2023 related to these activities. The increase in cash used in investing activities was largely attributable to an increase in acquisition related activity compared to the prior year (see Note 2 for further discussion). Purchases of property and equipment and payments for acquisitions of businesses typically represent the single largest use of excess Company funds. Management believes that by acquiring, building, and reinvesting in stores, the Company will be better able to drive long-term shareholder value.

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

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

[[GREPCENT_TABLE]]
[["Finance lease liabilities (Note 7)","$","101,818"],["3.67% Senior Notes (Series A) due in 7 installments beginning June 17, 2022, and ending June 15, 2028","111,000"],["3.75% Senior Notes (Series B) due in 7 installments beginning December 17, 2022 and ending December 18, 2028","37,000"],["3.65% Senior Notes (Series C) due in 7 installments beginning May 2, 2025 and ending May 2, 2031","50,000"],["3.72% Senior Notes (Series D) due in 7 installments beginning October 28, 2025 and ending October 28, 2031","50,000"],["3.51% Senior Notes (Series E) due June 13, 2025","150,000"],["3.77% Senior Notes (Series F) due August 22, 2028","250,000"],["2.85% Senior Notes (Series G) due August 7, 2030","325,000"],["2.96% Senior Notes (Series H) due August 6, 2032","325,000"],["Variable rate term loan facility, requiring quarterly installments ending April 21, 2028","237,500"],["Debt issuance costs","(1,379)"],["","$","1,635,939"],["Less current maturities","53,181"],["","$","1,582,758"]]
[[/GREPCENT_TABLE]]

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, as amended, between the Company and the purchasers of the Senior Notes Series A and Series B.

Interest on the 3.65% Senior Notes Series C is payable on the 2nd day of each May and November, while the interest on the 3.72% Senior Notes Series D is payable on the 28th day of each April and October. Principal on the Senior Notes Series C and Series D is payable in various installments beginning May 2, 2025 (Series C) and October 28, 2025 (Series D) through October 2031. We may prepay the 3.65% and 3.72% Senior Notes in whole or in part at any time in an amount of not less than $2,000 at a redemption price calculated in accordance with the Note Agreement dated May 2, 2016, as amended, between the Company and the purchasers of the Senior Notes Series C and Series D.

Interest on the 3.51% Senior Notes Series E is payable on the 13th day of each June and December, while the interest on the 3.77% Senior Notes Series F is payable on the 22nd day of each February and August. Principal on the Senior Notes Series E and Series F is payable in full on June 13, 2025 (Series E) and August 22, 2028 (Series F), respectively. We may prepay the 3.51% and 3.77% Senior Notes in whole or in part at any time in an amount of not less than $2,000 at a redemption price calculated in accordance with the Note Agreement dated June 13, 2017, as amended, between the Company and the purchasers of the Senior Notes Series E and Series F.

Interest on the 2.85% Senior Notes Series G and 2.96% Senior Notes Series H is payable on the 7th day of each February and August. Principal on the Senior Notes Series G and Series H is payable in full on August 7, 2030 (Series G) and August 6, 2032 (Series H), respectively. We may prepay the 2.85% and 2.96% Senior Notes in whole or in part at any time in an amount of not less than $2,000 at a redemption price calculated in accordance with the Note Purchase Agreement dated June 30, 2020, between the Company and the purchasers of the Senior Notes Series G and Series H.

Amounts borrowed under the term loan facility bear interest at variable rates based upon, at the Company’s option, either: (a) either Term SOFR or Daily Simple SOFR, in each case plus 0.10% (with a floor of 0.00%) for the interest period in effect, plus an applicable margin ranging from 1.10% to 1.70% or (b) an alternate base rate, which generally equals the highest of (i) the prime commercial lending rate announced by the Administrative Agent as its “prime rate”, (ii) the federal funds rate plus 1/2 of 1.00%, and (iii) Adjusted Daily Simple SOFR plus 1.00%, each plus an applicable margin ranging from 0.10% to 0.70% and each with a floor of 1.00%. The applicable margins are dependent upon the Company's quarterly Consolidated Leverage Ratio, as defined in the credit agreement dated April 21, 2023. We have the right at any time to prepay all or a portion of the outstanding balance without premium or penalty, other than customary “breakage” costs with respect to Term SOFR-based borrowings, with prior notice given.

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To date, we have funded capital expenditures primarily through funds generated from operations, the proceeds of the sale of common stock, issuance of debt or other bank financing, and existing cash. Future capital required to finance operations, improvements, and the anticipated growth in the number of stores is expected to come from cash generated by operations, our $850,000 committed unsecured revolving credit facility, our additional $50,000 unsecured bank line of credit, and additional long-term debt or other securities as circumstances may dictate. We do not expect such capital needs to adversely affect liquidity.

The table below presents our significant contractual obligations, including interest, at April 30, 2024: 

[[GREPCENT_TABLE]]
[["Contractual obligations","Payments due by period"],["","Total","","Less than 1 year","","1-3 years","","3-5 years","","More than 5 years"],["Long-term debt (1)","$","1,757,829","","","$","86,778","","","$","337,269","","","$","592,118","","","$","741,664"],["Finance lease obligations","144,383","","","12,942","","","25,934","","","17,800","","","87,707"],["Operating lease obligations","180,543","","","9,297","","","18,341","","","18,176","","","134,729"],["Deferred compensation","11,652","","","\u2014","","","\u2014","","","\u2014","","","\u2014"],["Total","$","2,094,407","","","$","109,017","","","$","381,544","","","$","628,094","","","$","964,100"]]
[[/GREPCENT_TABLE]]

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

Included in other long-term liabilities on our consolidated balance sheet at April 30, 2024, was a $10,895 obligation for 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 $6,669 are scheduled over the next 5 years, which includes $757 recognized in current liabilities as of April 30, 2024.

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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,” "should," “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “continue,” and similar expressions are used to identify forward-looking statements. Forward-looking statements represent the Company’s current expectations or beliefs concerning future events and trends that we believe may affect our financial condition, liquidity and related sources and needs, supply chain, results of operations and performance at our stores, business strategy, strategic plans, growth opportunities, integration of acquisitions, acquisition synergies, short-term and long-term business operations and objectives including our long-term strategic plan, wholesale fuel, inventory and ingredient costs and the potential effects of the conflict in Ukraine on our business.  The Company cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements, including, without limitation, the following risk factors described more completely above in Item 1A entitled “Risk Factors”:

Business Operations; Our business and our reputation could be adversely affected by a cyber or data security incident or the failure to protect sensitive guest, Team Member or supplier data, or the failure to comply with applicable regulations relating to data security and privacy; food-safety issues and foodborne illnesses, whether actual or reported, or the failure to comply with applicable regulations relating to the transportation, storage, preparation or service of food, could adversely affect our business and reputation; we may be adversely impacted by increases in the cost of food ingredients and other related costs; a significant disruption to our distribution network, to the capacity of the distribution centers, or timely receipt of inventory could adversely impact our sales or increase our transaction costs, which could have a material adverse effect on our business; we could be adversely affected if we experience difficulties in, or are unable to recruit, hire or retain, members of our leadership team and other distribution, field and store Team Members; any failure to anticipate and respond to changes in consumer preferences, or to introduce and promote innovative technology for guest interaction, could adversely affect our financial results; we rely on our information technology systems, and a number of third-party software providers, to manage numerous aspects of our business, and a disruption of these systems could adversely affect our business; increased credit card expenses could lead to higher operating expenses and other costs for the Company; our operations present hazards and risks which may not be fully covered by insurance, if insured; the dangers inherent in the storage and transport of fuel could cause disruptions and could expose to us potentially significant losses, costs or liabilities; consumer or other litigation could adversely affect our financial condition and results of operations; pandemics or disease outbreaks, responsive actions taken by governments and others to mitigate their spread, and guest behavior in response to these events, have, and may in the future, adversely affect our business operations, supply chain and financial results; and, covenants in our Senior Notes and credit facility agreements require us to comply with certain covenants and meet financial maintenance tests and the failure to comply with these requirements could have a material impact to us.

Governmental Actions, Regulations, and Oversight: Compliance with and changes in tax laws could adversely affect our performance; we are subject to extensive governmental regulations; governmental action and campaigns to discourage tobacco and nicotine use and other tobacco products may have a material adverse effect on our revenues and gross profit; and, wholesale cost and tax increases relating to tobacco and nicotine products could affect our operating results.

Industry: General economic and political conditions that are largely out of the Company’s control may adversely affect the Company’s financial condition and results of operations; developments related to fuel efficiency, fuel conservation practices, climate change, and changing consumer preferences may decrease the demand for motor fuel; unfavorable weather conditions can adversely affect our business; the volatility of wholesale petroleum costs could adversely affect our operating results; and, the convenience store industry is highly competitive.

Growth Strategies: We may not be able to identify, acquire, and integrate new properties and stores, which could adversely affect our ability to grow our business.

Common Stock: The market price for our common stock has been and may in the future be volatile, which could cause the value of your investment to decline; any issuance of shares of our common stock in the future could have a dilutive effect on your investment; and, Iowa law and provisions in our charter documents may have the effect of preventing or hindering a change in control and adversely affecting the market price of our common stock.

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.

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