Casey's · 10-Q · Item 2 MD&A

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Dollars in Thousands).

Overview

As of July 31, 2026, 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 (by Casey's)" ("GoodStop"), or "CEFCO", referred to as "Casey's" or the "Company") throughout 19 states, approximately half of which are located in Iowa, Missouri and Illinois.

As of July 31, 2026, there were 2,959 stores in operation. Approximately 71% of all stores were opened in areas with populations of fewer than 20,000 persons. The Company competes on the basis of traditional features of convenience store operations such as location, extended hours, product offerings, price and quality of service.

All stores carry a broad selection of food items (which at most stores includes, but is not limited to, prepared foods such as regular and breakfast pizza, donuts, hot breakfast items, and hot and cold sandwiches), beverages, tobacco and nicotine products, groceries, health and beauty aids, automotive products, and other non-food items. As of July 31, 2026, 240 store locations offered car washes. In addition, all but five store locations offer fuel.

In addition to the "Casey's" and "Casey's General Stores" brands, the Company also operates a limited number of stores under the additional brands of "GoodStop" or "CEFCO". These locations offer fuel for sale, and a broad selection of snacks, beverages, tobacco and nicotine products, and other essentials. However, some of these locations do not have a full-service kitchen and, therefore, have limited prepared food offerings. When the Company acquires stores, the locations are typically re-branded as "Casey’s" as soon as the store is remodeled to include a full-service kitchen. If the store’s layout or location does not allow for a full-service kitchen, the store typically will be operated as "GoodStop" or the acquired brand.

The Company operates a wholesale network where Casey’s manages wholesale fuel supply agreements to certain dealer sites and other wholesale locations. The dealer and wholesale locations are not operated by Casey's and are not included in our overall store count. For the three-months ended July 31, 2026, approximately 3% of total revenue relates to the wholesale fuel network.

The Company operates three distribution centers, through which certain grocery and general merchandise and prepared food and dispensed beverage items are supplied to most of our stores. One distribution center is adjacent to our corporate headquarters, which we refer to as the Store Support Center, in Ankeny, Iowa. The other two distribution centers are located in Terre Haute, Indiana and Joplin, Missouri. Certain stores outside of our optimal distribution radius, in Florida for example, are supplied by third-party distribution partners. Additionally, the Company owns and operates a fuel terminal in Waco, Texas. The Company self-distributes the majority of fuel to our stores.

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

The Company reported diluted earnings per common share of $7.37 for the first quarter of fiscal 2027. For the same quarter a year-ago, diluted earnings per common share was $5.77.

The following table represents the roll forward of store count through the first quarter of fiscal 2027:

Store Count

New store construction

9

Acquisitions

Closed or divested

(6)

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Electric Vehicles and Renewable Fuels

Casey's continues to implement our electric vehicle ("EV") strategy and our management team remains committed to understanding 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, albeit slowly, Casey’s has continued to add EV charging stations across our 19-state footprint. T1As of July 31, 2026, the Company has 294 charging stations at 68 stores, across 14 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.

Same-Store Sales

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. When comparing data, the store must be open for each entire fiscal period being compared. Remodeled stores that remained open or were closed for just a very brief period of time (i.e., 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 (i.e., 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.

T2Same-store sales of prepared food and dispensed beverage increased 4.8% and grocery and general merchandise increased 2.7% during the quarter. The increase in prepared food and dispensed beverage same-store sales was driven primarily by positive traffic, led by whole pizzas. The increase in grocery and general merchandise same-store sales was primarily due to strong sales of non-alcoholic beverages. Additionally, the first quarter results reflected a 0.3% decrease in same-store fuel gallons sold.

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Three Months Ended July 31, 2026 Compared to

(Dollars and Amounts in Thousands)

Prepared Food & Dispensed Beverage

Grocery & General

Merchandise

Fuel

Other

Total

Revenue

$

$

$

$

$

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

$

$

$

$

$

%

%

%

%

%

Fuel gallons sold

Prepared Food & Dispensed Beverage

Grocery & General

Merchandise

Fuel

Other

Total

Revenue

$

$

$

$

$

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

$

$

$

$

$

%

%

%

%

%

Fuel gallons sold

Total revenue for the first quarter of fiscal 2027 increased by $1,111,230 (24.3%) over the comparable period in fiscal 2026. Prepared food and dispensed beverage revenue increased by $34,146 (7.4%), due to an increase in same-store sales of 4.8% driven by strong sales of whole pizzas, as well as an increase of approximately 2.6% related to store growth, due to operating 64 more stores than a year ago. Grocery and general merchandise revenue increased by $59,578 (4.9%), due to an increase in same-store sales of 2.7% driven by sales of non-alcoholic beverages, as well as an increase of approximately 2.2% related to store growth. Retail fuel revenue increased by $991,139 (36.3%) due to an increase in the average retail price per gallon of 33.0%, as well as an increase in the number of gallons sold of 22,432 (2.5%).

The other category primarily consists of activity related to wholesale fuel and car wash revenue, which are both presented gross of applicable costs, as well as lottery, which is presented net of applicable costs. Other revenue increased $26,367 (17.6%) for the first quarter of fiscal 2027 compared to the prior year, driven primarily by an increase in wholesale fuel revenue, largely driven by an increase in the average fuel price per gallon.

Total revenue less cost of goods sold (excluding depreciation and amortization) was 21.8% of revenue for the first quarter of fiscal 2027, compared to 24.4% for the comparable period in the prior year. Prepared food and dispensed beverage revenue less related cost of goods sold (excluding depreciation and amortization) increased to 59.3% of prepared food and dispensed beverage revenue for the first quarter of fiscal 2027, compared to 58.0% for the comparable period in the prior year. The increase was primarily due to refinements in the allocation for certain distribution costs between prepared food and dispensed beverage and grocery and general merchandise to better reflect the underlying expenses of each category.

Grocery and general merchandise revenue less related cost of goods sold (excluding depreciation and amortization) remained relatively flat, decreasing from 35.9% in the comparable period in the prior year to 35.6% in the current year, largely driven by the offsetting impacts of the aforementioned allocation.

T3Fuel revenue less related cost of goods sold (excluding depreciation and amortization) was 12.0% of fuel revenue during the first quarter of fiscal 2027, compared to 13.7% for the comparable period in the prior year. Revenue less cost of goods sold (excluding depreciation and amortization) per gallon increased to 47.8 cents in the first quarter of fiscal 2027, compared to 41.0 cents for the comparable period in the prior year. During the quarter, the Company, and the retail fuel industry, experienced historically higher than average fuel revenue less cost of goods sold per gallon (excluding depreciation and amortization). On a longer-term basis, this metric can fluctuate significantly, and sometimes unpredictably, in the short-term.

T4The Company recognized $25,736 from renewable identification number ("RIN") related activities from 10.9 million RINs during the quarter, compared to $6,742 from 6.1 million RINs in the first quarter of the prior year (see Note 3, above, for a further description of RINs). The overall impact to fuel revenue less related cost of goods sold (excluding depreciation and amortization) from RINs was minimal during the quarter, given the higher related activity was offset by higher costs.

Operating expenses increased $55,935 (8.0%) to $754,111 in the first quarter of fiscal 2027. Operating 64 more stores than prior year accounted for approximately 2% of the increase. Same-store credit card fees added approximately 1.5% of the

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increase. Same-store employee expense contributed to approximately 1% of the increase, primarily due to increases in labor rates, while same-store labor hours were nearly flat. Insurance was responsible for approximately 1% of the increase.

Depreciation and amortization expense increased $7,031 (6.5%) to $115,994 in the first quarter of fiscal 2027, primarily due to purchases of property and equipment since the comparable period.

Interest, net decreased $4,791 (17.8%) to $22,059 in the first quarter of fiscal 2027, primarily due to a decrease in the interest rate on our variable-rate debt.

The effective tax rate decreased to 21.1% in the first quarter of fiscal 2027 compared to 22.7% in the same period of fiscal 2026. The decrease in the effective tax rate was primarily due to an increase in excess tax benefits recognized on share-based awards.

Net income increased $58,365 (27.1%) to $273,720 compared to $215,355 in the comparable period. The increase in net income was primarily attributable to higher profitability both inside the store and in fuel, partially offset by increases in operating expenses, and depreciation and amortization. See discussion in the paragraphs above for the primary drivers for each of these changes.

Use of Non-GAAP Measures

We define EBITDA as net income before net interest expense, income taxes, and depreciation and amortization. EBITDA is not considered to be a GAAP measure, and should not be considered as a substitute for net income, cash flows from operating activities or other income or cash flow statement data. This measure has limitations as an analytical tool, and should not be considered in isolation or as a substitute 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 is useful to investors in evaluating our operating performance because securities analysts and other interested parties use this calculation as a measure of financial performance and debt service capabilities, and it is 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, 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 this non-GAAP financial measure with those used by other companies.

The following table contains a reconciliation of net income to EBITDA for the three months ended July 31, 2026 and 2025:

Three months ended

Net income

$

$

Interest, net

Federal and state income taxes

Depreciation and amortization

EBITDA

$

$

For the three months ended July 31, 2026, EBITDA increased by 17.1% when compared to the same period a year ago. The increase was primarily attributable to higher profitability both inside the store and in fuel, partially offset by higher operating expenses. See discussion in the preceding sections for the primary drivers for each of these individual changes.

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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, 2026, and such discussion is incorporated herein by reference. There have been no changes to these policies in the three months ended July 31, 2026.

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 July 31, 2026, the Company’s ratio of current assets to current liabilities was 1.02 to 1. The ratio at July 31, 2025 and April 30, 2026 was 1.03 to 1 and 1.01 to 1, respectively.

Management believes that the net availability under the Bank Line of approximately $50,000 and the Revolving Facility of $807,375, 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 operating activities was $384,072 for the three months ended July 31, 2026, compared to $372,417 for the comparable period in the prior year, an increase of $11,655. 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 $126,748, and a decrease in cash paid for interest of $4,398. This was offset by an increase in operating expenses of $55,935.

Refer to "Three Months Ended July 31, 2026 Compared to Three Months Ended July 31, 2025" starting on page 16 for further details on the primary drivers for the changes in revenue, cost of goods sold (excluding depreciation and amortization), operating expenses, and interest. 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. Operating cash flows were also unfavorably impacted by a decrease of $53,166 related to accounts payable and accrued expenses, due to the timing of payments.

Net cash used in investing activities was $234,721 for the three months ended July 31, 2026, compared to $102,042 in the comparable period in the prior year, an increase of $132,679. During the first three months of fiscal 2027, the Company expended $238,299 for purchases of property and equipment and payments for acquisitions compared to $119,541 for the comparable period in the prior year. 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.

Net cash used in financing activities was $148,283 for the three months ended July 31, 2026, compared to $138,964 in the comparable period in the prior year, an increase of $9,319. T5The increase was primarily due to an increase in the repurchase and retirement of common stock under our share repurchase program of approximately $13,605, and an increase in payments for tax withholdings on employee shared-based awards of $32,667, due to an increase in the fair value of restricted stock units vested during the quarter. This was offset by an increase in proceeds from long-term debt of $42,625 due to borrowings under the Revolving Facility during the quarter.

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As of July 31, 2026, the Company had long-term debt consisting of:

Finance lease liabilities

$

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

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

3.65% Senior notes (Series C) due in 7 installments beginning May 2, 2025 and ending May 2, 2031

3.72% Senior notes (Series D) due in 7 installments beginning October 28, 2025 and ending October 28, 2031

Variable rate term loan facility, requiring quarterly installments beginning June 30, 2027 and ending April 21, 2028

Variable rate incremental term loan facility, requiring quarterly installments ending October 30, 2029

Variable rate revolving facility due April 21, 2028

Less debt issuance costs

Less current maturities

$

The Company has funded purchases of property and equipment and payments for acquisitions of businesses primarily from the 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.

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Cautionary Statements

This Form 10-Q, 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 conflicts in oil producing regions and other geopolitical disruptions 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 in the Company’s Form 10-K for the fiscal year ended April 30, 2026:

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 and technology providers, to support 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.

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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