Acquisitions

6 Months Ended

Oct. 31, 2021

Many of our acquisitions meet the criteria to be considered business combinations. The Company accounts for business combinations using the acquisition method of accounting. Under this method of accounting, acquired assets and assumed liabilities are included within the acquirer's accounts as of the date of acquisition, with any excess of purchase price over the fair value of the net assets acquired recognized as goodwill. Acquisition-related transaction costs are recognized as period costs as incurred. We accounted for the Buchanan Energy and Circle K acquisitions as business combinations.

Buchanan Energy

On May 13, 2021, the Company closed on the acquisition of 100% of the equity interest in Buchanan Energy (and certain of its related subsidiaries and affiliated entities), owner of Bucky’s Convenience Stores. The transaction included 92 retail locations (consisting of 24 stores in Nebraska, 56 in Illinois, five in Iowa, three in Missouri, and four in Texas), a dealer network of 81 stores where Casey’s will manage fuel wholesale supply agreements to these stores, as well as several parcels of real estate which may be used for new store construction. Three of the retail locations were divested shortly after closing as part of a consent order with the Federal Trade Commission. As a result of this acquisition, we increased our total store count to over 2,300 stores and have added a fuel wholesale business. The Company expects to achieve certain synergies over time, in part, through the reduction of duplicate processes, improvements in purchasing power, installing our kitchens, and expanding merchandise offerings.

The aggregate purchase price for the acquisition totaled $572,532, which is net of a provisional working capital adjustment of $4,710. Upon closing, $577,242 was paid in cash using available cash on hand and proceeds from the Term Loan Facility and a draw on the Revolving Facility, as discussed above in Note 4. The draw on the Revolving Facility has been repaid at October 31, 2021.

The table below summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. We utilized a third-party valuation specialist to assist in valuing the contractual customer relationships, leases, and property and equipment acquired. The accounting related to certain property and equipment, intangible assets, goodwill, contingent liabilities, deferred taxes, and the working capital adjustment is considered provisional and is subject to change.


Assets acquired:
Cash and cash equivalents	$	5,517
Receivables	3,023
Inventories	18,516
Prepaid expenses	400
Property and equipment	293,176
Contractual customer relationships	31,100
Deferred income taxes	1,343
Finance lease right-of-use assets	10,689
Operating lease right-of-use assets	11,816
Other assets	24
Goodwill	261,811
Total assets	637,415
Liabilities assumed:
Accounts payable	24,736
Accrued expenses	8,395
Finance lease liabilities	12,369
Operating lease liabilities	15,666
Other long-term liabilities	3,717
Total liabilities	64,883
Net assets acquired and total purchase price	$	572,532

Acquired operating lease right-of-use assets are included within other assets, net of amortization and acquired operating lease liabilities are included within accrued expenses and other long-term liabilities in the condensed consolidated balance sheets as of October 31, 2021.

The $31,100 of contractual customer relationships will be amortized over a useful life of 15 years and are included within other assets, net of amortization in the condensed consolidated balance sheets as of October 31, 2021. These assets were valued using the multi-period excess earnings method.

The goodwill acquired was assigned to the retail reporting unit in the amount of $253,814 and the fuel wholesale reporting unit in the amount of $7,997. The goodwill recognized is primarily attributable to the location of the seller’s stores in relation to our footprint and expected synergies due to expanded inside store offerings and improved purchasing power. Almost all of the goodwill acquired as the result of this transaction will be deductible for income tax purposes over 15 years. The value assigned to goodwill is considered provisional.

The Company incurred total acquisition-related transaction costs of approximately $8.6 million. This includes approximately $6.7 million incurred during the six months ended October 31, 2021, which are included in the condensed consolidated statements of income within operating expenses.

The Company recognized approximately $246,947 and $470,591 of revenue related to Buchanan Energy in the condensed consolidated statements of income for the three and six months ended October 31, 2021, respectively. The amount of net income related to Buchanan Energy was not material for the three and six months ended October 31, 2021.

Circle K

Throughout June 2021, the Company closed on the acquisition of 48 stores located in Oklahoma from Circle K pursuant to the terms and conditions of an asset purchase agreement. The aggregate purchase price for the acquisition totaled $41,416, which was paid in cash upon closing using available cash on hand.


Assets acquired:
Inventories	$	5,299
Property and equipment	6,150
Finance lease right-of-use assets	37,086
Operating lease right-of-use assets	24,164
Goodwill	31,662
Total assets	104,361
Liabilities assumed:
Accrued expenses	545
Finance lease liabilities	46,576
Operating lease liabilities	15,824
Total liabilities	62,945
Net assets acquired and total consideration paid	$	41,416

The goodwill recognized from this transaction is primarily attributable to the location of the seller's stores in relation to our footprint and expected synergies due, in part, to expanded inside store and fuel offerings. All of the goodwill acquired as a result of this transaction will be deductible for income tax purposes over 15 years.

The Company recognized approximately $47,647 and $71,391 of revenue related to the acquired Circle K locations in the condensed consolidated statements of income for the three and six months ended October 31, 2021, respectively. The amount of net income related to the acquired Circle K locations was not material for the three and six months ended October 31, 2021.

Pro Forma Information

The following unaudited pro forma information presents a summary of our condensed consolidated statements of income as if the Buchanan Energy and Circle K transactions referenced above occurred on May 1, 2020 (amounts in thousands, except per share data):


	Three Months Ended October 31,		Six Months Ended October 31,
	2021	2020	2021	2020
Total revenue	3,262,942	2,456,322	6,502,640	4,788,888
Net income	98,378	114,439	225,741	234,694
Net income per common share
Basic	2.65	3.09	6.08	6.34
Diluted	2.63	3.07	6.04	6.30

Pilot

On September 27, 2021, the Company entered into an asset purchase agreement (the “Purchase Agreement”) with Pilot Corporation to acquire all of the assets of 40 stores located in Tennessee and Kentucky for a purchase price of $220 million, subject to customary post-closing adjustments.

The closing of the acquisition is conditioned upon the satisfaction of customary closing conditions, including, among others: (a) expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which occurred on or around November 4, 2021; (b) the accuracy of the representations and warranties of each party to the Purchase Agreement as of the closing; (c) the performance in all material respects by the parties of their respective covenants under the Purchase Agreement, including receipt of certain

consents; and (d) in the case of Pilot Corporation, the absence of any material adverse effect since the date of the Purchase Agreement.

The Company intends to finance the pending transaction with a combination of cash on hand and incremental financing.