CASEY'S GENERAL STORES, INC. Overview
Casey's 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 "Pilot", "GoodStop" or "Bucky's", as the "Company" or "Stores") throughout 17 states, over half of which are located inIowa ,Missouri andIllinois . All convenience stores carry a broad selection of food (including freshly prepared foods such as pizza, donuts, and sandwiches), beverages, tobacco and nicotine products, health and beauty aids, automotive products, and other nonfood items. In addition, all but three offer fuel for sale on a self-service basis. The Company derives its revenue primarily from the retail sale of fuel and the products offered in its stores. As ofJanuary 31, 2022 , there were a total of 2,431 stores in operation. During the fiscal year, the Company introduced certain stores branded or rebranded as "GoodStop (by Casey's)". Similar to most of our store footprint, the "GoodStop" locations offer fuel for sale on a self-serve basis, and a broad selection of snacks, drinks, tobacco products, and other essentials. However, such locations typically do not have a kitchen and have limited prepared food offerings. As ofJanuary 31, 2022 , 28 stores operate under the "GoodStop" brand. Additionally, the Company is temporarily operating certain locations acquired from Buchanan Energy under the name, "Bucky's." Further, the Company is also temporarily operating certain locations acquired from Pilot Corporation under the "Pilot" name, as part of a transition services agreement. The Company plans to eventually transition all "Bucky's" and "Pilot" locations to either the "Casey's" or "GoodStop" brand. The Company also operates two stores selling primarily tobacco products, one grocery store, and one liquor store. Approximately 51% of our stores were opened in areas with populations of fewer than 5,000 persons, while approximately 24% of all stores were opened in communities with populations exceeding 20,000 persons. Three distribution centers are currently in operation (inAnkeny, Iowa adjacent to our corporate headquarters [which we refer to as our Store Support Center], inTerre Haute, Indiana , and inJoplin, Missouri ) from which certain grocery and general merchandise and prepared food and dispensed beverage items are supplied to our stores. As ofJanuary 31, 2022 , the Company leased a combination of land and/or building at 108 locations. The Company reported diluted earnings per common share of$1.71 for the third quarter of fiscal 2022. For the same quarter a year-ago, diluted earnings per common share was$1.04 .
The following table represents the roll forward of store growth through the third quarter of fiscal 2022:
Store Count
Total stores at April 30, 2021 2,243
New store construction 11
Acquisitions 191
Acquisitions not opened (5)
Prior acquisitions opened 4
Closed (13)
Total stores at
Acquisitions in the table above include, in part, 89 stores which were acquired from Buchanan Energy onMay 13, 2021 . The table excludes three sites that were included in the transaction, but were divested by the Company shortly after closing as part of a consent order with theFederal Trade Commission . Additionally, it includes 48 stores from theCircle K transaction that closed in June and 40 stores from the Pilot transaction that closed in December. For additional discussion, refer to Note 6 in the condensed consolidated financial statements. Throughout the first nine months of fiscal 2022, the Company has generally seen an increase in guest traffic and sales of certain products compared to the same period a year ago as schools, businesses and the economy in general have gone through various stages of reopening from COVID-19. During its second and third fiscal quarters, the Company saw an increase in the number of COVID-19 cases reported amongst its team members and in certain areas of its operating territory, presumably due to the Omicron and Delta variants. That led to a slight increase in temporary store closures for COVID-19 cleaning protocols and the return of a patchwork of various locally imposed governmental restrictions. However, that trend did not appear to have a negative impact on guest traffic. Further, starting towards the end of the third quarter, and to-date, the Company has seen a sharp decline in the number of positive COVID-19 cases amongst its Team Members, faced fewer staffing challenges directly due to positive COVID-19 cases and did not have any COVID-19 related store closures. As part of its continued efforts, the 16
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Company continues to offer its Team Members a vaccination bonus and certain COVID-19 mitigation measures remain in place. The continued unpredictable nature of COVID-19, including case trends, severity of new variants, the efficacy of vaccines and the willingness of individuals to be vaccinated, further governmental restrictions or protections, and its effect on the Company's workforce and the economy as a whole, could again lead or contribute to additional disruptions, labor shortages and increased operating expenses for the foreseeable future. While COVID-19 will continue to bring challenges and uncertainty to our operating environment, we believe that our resilient business model and the strength of our brand and balance sheet position us well to navigate, and eventually emerge from, the COVID-19 pandemic. 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. The third quarter results reflected a 5.7% increase in same-store fuel gallons sold, with an average fuel revenue less related cost of goods sold (exclusive of depreciation and amortization) of38.3 cents per gallon, compared to32.9 cents per gallon in the same quarter a year ago, despite a challenging rising wholesale fuel cost environment. Same-store gallons sold were positively impacted by higher guest traffic. The Company sold 7.5 million renewable fuel credits for$10.2 million during the quarter, compared to the sale of 9.1 million renewable fuel credits in the third quarter of the prior year, which generated$6.9 million . Same-store sales of grocery and general merchandise increased 7.7% and prepared food and dispensed beverage increased 7.4% during the third quarter. Note that we have changed the names of the "grocery and other merchandise" category to "grocery and general merchandise" and the "prepared food and fountain" category to "prepared food and dispensed beverage" to better reflect the composition of the category. There have been no changes to the makeup of the categories, and they remain directly comparable to prior periods. The increase in grocery and general merchandise same-store sales was primarily due to stronger sales of packaged beverages and grocery items, such as salty snacks and candy. The increase in prepared food and dispensed beverage same-store sales was partially attributable to continued momentum in pizza slices. Additionally, the morning daypart performance continues to improve due, in part, to the recent breakfast menu relaunch, as well as an increase in guest traffic. Three Months Ended January 31, 2022 Compared to Three Months Ended January 31, 2021 (Dollars and Amounts in Thousands) Prepared Grocery & Food & General Dispensed Three Months Ended January 31, 2022 Fuel Merchandise Beverage Other Total Revenue$ 1,951,422 $ 732,514 $ 292,884 $ 71,897 $ 3,048,717 Revenue less cost of goods sold (excluding depreciation and amortization)$ 237,873 $ 234,064 $ 169,773 $ 22,785 $ 664,495 12.2 % 32.0 % 58.0 % 31.7 % 21.8 % Fuel gallons 621,770 Prepared Grocery & Food & General Dispensed Three Months Ended January 31, 2021 Fuel Merchandise Beverage 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 Total revenue for the third quarter of fiscal 2022 increased by$1,040,689 (51.8%) over the comparable period in fiscal 2021. Retail fuel sales increased by$850,547 (77.3%) as the average retail price per gallon increased 47.8%, and the number of gallons sold increased by 103,362 (19.9%). During this same period, retail sales of grocery and general merchandise increased 17 -------------------------------------------------------------------------------- Table of Contents by$108,049 (17.3%), due to operating 202 more stores than a year ago and strong sales of packaged beverages, salty snacks, and candy. Prepared food and dispensed beverage sales increased by$28,866 (10.9%), due to operating 202 more stores than a year ago, increased sales of pizza slices, and the breakfast menu relaunch. Total prepared food and dispensed beverage sales increased less than grocery and general merchandise and fuel, due to timing of kitchen installations in recently acquired stores. The other revenue category historically has primarily consisted of lottery, which is presented net of applicable costs, and car wash. As a result of the Buchanan Energy acquisition, we acquired a dealer network of 81 stores where Casey's manages fuel wholesale supply agreements to these stores. The activity related to this dealer network is included in the other category and is presented gross of applicable costs. Other revenues increased$53,227 (285.1%) for the third quarter of fiscal 2022 compared to the prior year, driven primarily by activity related to the dealer network. Revenue less cost of goods sold (excluding depreciation and amortization) was 21.8% of revenue for the third quarter of fiscal 2022, compared to 26.9% for the comparable period in the prior year. Fuel revenue less related cost of goods sold (exclusive of depreciation and amortization) was 12.2% of fuel revenue during the third quarter of fiscal 2022, compared to 15.5% in the third quarter of the prior year, largely attributable to higher average retail price of fuel per gallon. Revenue per gallon less cost of goods sold (exclusive of depreciation and amortization) per gallon was38.3 cents in the third quarter of fiscal 2022, compared to32.9 cents for the comparable period in the prior year. Grocery and general merchandise revenue less related cost of goods sold (exclusive of depreciation and amortization) increased to 32.0% of revenue, from 30.7% of revenue for the comparable period in the prior year. The current year percentage was positively impacted by the private label program, procurement initiatives, and price increases, offset by inflationary pressures. Prepared food and dispensed beverage revenue less related cost of goods sold (exclusive of depreciation and amortization) decreased to 58.0% of revenue, compared to 60.6% of revenue for the comparable period in the prior year, primarily due to cost increases for ingredients and pizza toppings, offset by menu price increases. Operating expenses increased$76,549 (18.5%) in the third quarter of fiscal 2022 from the comparable period in the prior year. Approximately 9% of the increase is due to operating 202 more stores than prior year. Additionally, approximately 4% of the increase is due to same-store employee expenses, offset by a 2% reduction in store hours. Finally, approximately 2% of the change is due to an increase in same-store credit card fees from higher retail fuel prices and higher sales volume and 2% is due to incentive compensation. Depreciation and amortization expense increased by 15.9% to$75,529 in the third quarter of fiscal 2022 from$65,185 . The increase was primarily due to operating 202 more stores than a year ago and capital expenditures during the previous twelve months.
Interest expense increased by
The effective tax rate increased to 23.4% in the third quarter of fiscal 2022 compared to 21.3% in the same period of fiscal 2021. The increase in the effective tax rate was primarily due to a decrease in favorable permanent differences.
Net income increased by$25,397 (65.7%) to$64,024 from$38,627 in the comparable period in the prior year. The increase in net income was primarily attributable to increased fuel and merchandise contribution from improved guest traffic, offset by higher operating expenses and depreciation driven primarily from operating 202 more stores than a year ago, higher wage rates, and an increase in credit card fees. 18
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Nine Months Ended January 31, 2022 Compared to
Nine Months Ended January 31, 2021
(Dollars and Amounts in Thousands)
Prepared
Grocery & Food &
General Dispensed
Nine Months Ended January 31, 2022 Fuel Merchandise Beverage Other Total
Revenue $ 5,967,408 2,397,483 910,828 217,933 9,493,652
Revenue less cost of goods sold
(excluding depreciation and
amortization) 704,231 785,412 545,377 70,952 2,105,972
11.8 % 32.8 % 59.9 % 32.6 % 22.2 %
Fuel gallons 1,958,061
Prepared
Grocery & Food &
General Dispensed
Nine Months Ended January 31, 2021 Fuel Merchandise Beverage 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
Total revenue for the first nine months of fiscal 2022 increased by $3,164,698
(50.0%) over the comparable period in fiscal 2021. Retail fuel sales increased
by $2,587,060 (76.5%) as the average retail price per gallon increased 48.4%,
and the number of gallons sold increased 312,564 (19.0%). During this same
period, retail sales of grocery and general merchandise increased by $322,931
(15.6%) due to operating 202 more stores than a year ago and strong sales of
packaged beverages, salty snacks, meat snacks, and candy. Prepared food and
dispensed beverage sales increased by $87,223 (10.6%), due to operating 202 more
stores than a year ago, increased sales of pizza slices, and the breakfast menu
relaunch. Total prepared food and dispensed beverage sales increased less than
grocery and general merchandise and fuel, due to timing of kitchen installations
in recently acquired stores.
The other revenue category historically has primarily consisted of lottery,
which is presented net of applicable costs, and car wash. As a result of the
Buchanan Energy acquisition, we acquired a dealer network of 81 stores where
Casey's manages fuel wholesale supply agreements to these stores. The activity
related to this dealer network is included in the other category and is
presented gross of applicable costs. These revenues increased $167,484
(332.0%) through the third quarter of fiscal 2022 compared to the prior year,
driven primarily by activity related to the dealer network.
Revenue less cost of goods sold (excluding depreciation and amortization) was
22.2% of revenue for the first nine months of fiscal 2022, compared to 28.4% for
the comparable period in the prior year. Fuel revenue less related cost of goods
sold (exclusive of depreciation and amortization) was 11.8% of fuel revenue for
the first nine months of fiscal 2022 compared to 17.3% for the first nine months
of the prior year, largely attributable to higher average retail price of fuel
per gallon. Revenue per gallon less cost of goods sold (exclusive of
depreciation and amortization) per gallon was 36.0 cents for the first nine
months of fiscal 2022 compared to 35.5 cents in the prior year.
Grocery and general merchandise revenue less related cost of goods sold
(exclusive of depreciation and amortization) increased to 32.8% of grocery and
general merchandise revenue, compared to 32.1% in the prior year. Grocery and
general merchandise revenue less related cost of goods sold (exclusive of
depreciation and amortization) was positively impacted by mix shift, including
gaining market share on the private label program, procurement initiatives, and
price increases, offset by inflationary pressures. Prepared food and dispensed
beverage revenue less related cost of goods sold (exclusive of depreciation and
amortization) decreased to 59.9% of revenue, compared to 60.1% in the prior
year, primarily due to inflationary pressures, offset by a resurgence in pizza
slices, procurement initiatives, and menu price increases.
Operating expenses increased by $259,685 (21.4%) in the first nine months of
fiscal 2022 from the comparable period in the prior year. Approximately 9% of
the increase is due to operating 202 more stores than the prior year.
Additionally,
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approximately 5% of the increase is due to same-store employee expenses, with 4% of that from higher wage rates and 1% from labor hours normalizing after significant cuts in the prior year. Finally, approximately 2% of the change is due to an increase in same-store credit card fees from higher retail fuel prices and higher sales volume. Depreciation and amortization expense increased 15.6% to$225,675 for the first nine months of fiscal 2022 from$195,299 for the comparable period in the prior year. The increase was primarily due to operating 202 more stores than a year ago and capital expenditures during the previous twelve months. Interest expense increased by$6,171 (17.4%), primarily attributable to the$450,000 draws on the Term Loan Facilities to fund the acquisition ofBuchanan Energy and in-part, the 40 stores from Pilot Corporation. Additionally, the amount of interest capitalized during the year has decreased by approximately$2,018 , as our current year store growth has primarily been through acquisition, as opposed to new store builds. The effective tax rate increased to 23.9% in the first nine months of fiscal year 2022 compared to 23.3% in the same period of fiscal year 2021. The increase in the effective tax rate was driven by a one-time expense to update the state deferred tax rate following the Buchanan Energy transaction. Net income increased by$8,812 (3.2%) to$280,014 from$271,202 in the prior year. The increase in net income was primarily attributable to increased fuel and merchandise contribution from improved guest traffic, offset by higher operating expenses and depreciation driven primarily from operating 202 more stores than a year ago, an increase in store hours, higher wage rates, and an increase in credit card fees.
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 endedJanuary 31, 2022 and 2021: Three months ended Nine months ended January 31, January 31, January 31, January 31, 2022 2021 2022 2021 Net income$ 64,024 $ 38,627 $ 280,014 $ 271,202 Interest, net 14,431 11,469 41,681 35,510 Federal and state income taxes 19,514 10,452 88,033 82,549 Depreciation and amortization 75,529 65,185 225,675 195,299 EBITDA$ 173,498 $ 125,733 $ 635,403 $ 584,560 Loss (gain) on disposal of assets and impairment charges 838 1,649 (869) 3,808 Adjusted EBITDA$ 174,336 $ 127,382 $ 634,534 $ 588,368 20
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For the three months endedJanuary 31, 2022 , EBITDA and Adjusted EBITDA increased 38.0% and 36.9%, respectively, when compared to the same period a year ago. For the nine months endedJanuary 31, 2022 , EBITDA increased 8.7% and Adjusted EBITDA increased 7.8%, compared to the same period a year ago. The increases in EBITDA and Adjusted EBITDA are primarily attributable to increased fuel and merchandise contribution from improved guest traffic, offset by higher operating expenses driven primarily from operating 202 more stores than a year ago, higher wage rates, and an increase in credit card fees.
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 endedApril 30, 2021 , and such discussion is incorporated herein by reference. There have been no changes to these policies in the nine months endedJanuary 31, 2022 .
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 ofJanuary 31, 2022 , the Company's ratio of current assets to current liabilities was 0.84 to 1. The ratio atJanuary 31, 2021 andApril 30, 2021 was 1.28 to 1 and 1.18 to 1, respectively. The decrease in the ratio from the prior year is partially attributable to a decrease in cash and cash equivalents associated with payments for the acquisitions of Buchanan Energy, 48 stores fromCircle K and 40 stores from Pilot, offset by an increase in inventory due to operating 202 more stores than a year ago and higher fuel pricing. Additionally, current liabilities have increased partially related to accounts payable, due to increasing store count, as well as an effort to better utilize available payment terms. Additionally, current maturities of long-term debt and finance lease obligations increased by$89,341 fromApril 30, 2021 due to$20,000 in upcoming installments due on the Series A and Series B notes, as well as$22,500 of contractual obligations and$45,000 of principal payments expected to be made early on the Term Loan Facilities. Management believes that the Bank Line of$25,000 and the 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 decreased$126,538 (19.1%) in the nine months endedJanuary 31, 2022 from the comparable period in the prior year, due to changes in accounts payable. Cash used in investing in the nine months endedJanuary 31, 2022 increased$801,041 over prior year, due primarily to cash paid for the acquisition of Buchanan Energy for$571,725 , 48Circle K stores for$41,416 , and 40 Pilot stores for$226,529 , net of cash acquired. For additional discussion, refer to Note 6 in the condensed consolidated financial statements. Cash provided by financing increased$467,284 , primarily due to the$450,000 draws on the Term Loan Facilities, also discussed in Note 4 and Note 6. Purchases of property and equipment and payments for acquisitions of businesses typically represent the 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 2022, the Company expended$1,091,579 , compared to$268,857 for the comparable period in the prior year related to these activities. The increase from the prior year is due to theBuchanan Energy,Circle K , and Pilot acquisitions.
As of
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Finance lease liabilities
72,176
3.67% Senior notes (Series A) due in 7 installments beginning
150,000
3.75% Senior notes (Series B) due in 7 installments beginning
50,000
3.65% Senior notes (Series C) due in 7 installments beginning
50,000
3.72% Senior notes (Series D) due in 7 installments beginning
50,000
3.51% Senior notes (Series E) dueJune 13, 2025
150,000
3.77% Senior notes (Series F) dueAugust 22, 2028
250,000
2.85% Senior notes (Series G) dueAugust 7, 2030
325,000
2.96% Senior notes (Series H) dueAugust 6, 2032
325,000
Variable rate Term Loan Facilities, requiring quarterly installments endingJanuary 6, 2026 438,750 Less debt issuance costs (3,182) 1,857,744 Less current maturities (91,695) 1,766,049 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.
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 financial condition, liquidity 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, and the potential effects of COVID-19 on our business. The Company cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements, including, without limitation, the following risk factors described more completely in the Company's Form 10-K for the fiscal year endedApril 30, 2021 : Business Operations: Pandemics or disease outbreaks, such as COVID-19, responsive actions taken by governments and others to mitigate their spread, and guest behavior in response to these events, have, and may in the future, adversely affect our business operations, supply chain and financial results; 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; 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; 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 motor fuel could cause disruptions and could expose to us potentially significant losses, costs or 22 -------------------------------------------------------------------------------- Table of Contents liabilities; consumer or other litigation could adversely affect our financial condition and results of operations; 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 experience difficulties implementing and realizing the results of our long-term strategic plan; we may experience increased costs, disruptions or other difficulties with the integration of the Buchanan Energy acquisition; and, 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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