Leases

12 Months Ended

Apr. 30, 2023

Leases [Abstract]

Leases

LEASES

The Company is a lessee in situations where we lease property and equipment, most commonly land, building or store equipment, from a lessor. The Company is a lessor in situations where the Company owns land or building and leases a portion or all of the property or equipment to a tenant. In both situations, leases are reported in accordance with ASC 842 - Leases. As a lessee, the Company recognizes a right-of-use asset representing its right to use the underlying asset for the lease term and a lease liability for the obligation to make lease payments. Both the right-of-use asset and lease liability are initially measured at the present value of the lease payments, with subsequent measurement dependent on the classification of the lease as either a finance or an operating lease. For leases with a term of twelve months or less, we have elected to not recognize lease assets and lease liabilities and will recognize lease expense on a straight-line basis over the lease term. The Company records operating lease liabilities in other accrued expenses and other long-term liabilities and records finance lease liabilities within current maturities of long-term debt and long-term debt and finance lease obligations on the consolidated balance sheets. All lessor related activity is considered immaterial to the consolidated financial statements.

New leases are recognized at the present value of the lease payments using the implicit rate in the lease agreement when it is readily determinable. In the case the implicit rate is not readily determinable, the Company uses our incremental borrowing rate of debt based on the term of the lease. The Company commonly has options to renew or extend the current lease arrangement on many of our leases. In these situations, if it is reasonably certain the lease would be extended, we have included those extensions within the remaining lease payments at the time of measurement.

When acquiring leases in a business combination, we retain the lease classification utilized by the seller if it was determined using acceptable methods under ASC 842. As part of the allocation of the purchase price in a business combination, lease terms are compared to market terms utilizing an income approach to determine if leases are favorable or unfavorable. Any favorable or unfavorable leasehold interests identified increase (favorable) or reduce (unfavorable) the right-of-use lease asset and are recognized over the life of the related right-of-use asset.

Lease right-of-use assets outstanding as of April 30, 2023 and 2022 consisted of the following:

	Classification	April 30, 2023		April 30, 2022
Finance lease right-of-use assets	Property and equipment	$	79,344	$	59,677
Operating lease right-of-use assets	Other assets	107,994		104,579

The summary of lease-related costs included on the consolidated statements of income is included below:

	Years ended April 30,
	2023		2022		2021
Operating lease cost	$	9,346	$	6,721	$	2,290
Finance lease cost:
Amortization of right-of-use assets	$	5,882	$	4,489	$	2,870
Interest on lease liabilities	2,966		2,337		612

Weighted average remaining lease terms, weighted average discount rates, and supplementary cash flow information or outstanding leases were as follows:

	April 30, 2023			April 30, 2022
Weighted-average remaining lease-term - finance lease	15.1			19.3
Weighted-average remaining lease-term - operating lease	19.8			20.3
Weighted-average discount rate - finance lease	4.40		%	3.97		%
Weighted-average discount rate - operating lease	4.33		%	3.98		%
Right-of-use assets obtained in exchange for new finance lease liabilities	$	25,166		$	52,525
Right-of-use assets obtained in exchange for new operating lease liabilities	14,642			87,723

Future minimum payments under the finance leases and operating leases consisted of the following at April 30, 2023:

Years ended April 30,	Finance leases		Operating leases
2024	$	12,398	$	8,140
2025	10,913		8,204
2026	10,589		8,118
2027	10,596		8,059
2028	9,644		8,027
Thereafter	76,757		123,773
Total minimum lease payments	$	130,897	$	164,321
Less amount representing interest	35,825		58,392
Present value of net minimum lease payments	$	95,072	$	105,929

Effective during the third quarter of fiscal year 2020, Casey’s Marketing Company, and the City of Joplin, Missouri (“Joplin”) entered into an agreement in which Joplin agreed to issue up to $51,400 of taxable industrial development revenue bonds for the purpose of acquiring, constructing, improving, purchasing, equipping and installing a warehouse and distribution facility, which has been completed and is currently being used by the Company. As the title of the development was transferred to Joplin and the Company is subsequently leasing the related asset from Joplin, we have accounted for the transaction under the sale-and-leaseback guidance included in ASC 842-40. We have a purchase option included in the lease agreement for below the fair value of the asset, which prevents the transfer of the assets to Joplin from being recognized as a sale. Accordingly, we have not recognized any gain or loss related to the transfer. Furthermore, we have not derecognized the transferred assets and continue to recognize them in property and equipment on the consolidated balance sheets. The Company has the right and intends to set-off any obligations to make payments under the lease, with proceeds due from the industrial revenue bonds. As of April 30, 2023, we have recognized the full amount of bonds available as property and equipment on the consolidated balance sheets related to this agreement.

Leases

LEASES

The Company is a lessee in situations where we lease property and equipment, most commonly land, building or store equipment, from a lessor. The Company is a lessor in situations where the Company owns land or building and leases a portion or all of the property or equipment to a tenant. In both situations, leases are reported in accordance with ASC 842 - Leases. As a lessee, the Company recognizes a right-of-use asset representing its right to use the underlying asset for the lease term and a lease liability for the obligation to make lease payments. Both the right-of-use asset and lease liability are initially measured at the present value of the lease payments, with subsequent measurement dependent on the classification of the lease as either a finance or an operating lease. For leases with a term of twelve months or less, we have elected to not recognize lease assets and lease liabilities and will recognize lease expense on a straight-line basis over the lease term. The Company records operating lease liabilities in other accrued expenses and other long-term liabilities and records finance lease liabilities within current maturities of long-term debt and long-term debt and finance lease obligations on the consolidated balance sheets. All lessor related activity is considered immaterial to the consolidated financial statements.

New leases are recognized at the present value of the lease payments using the implicit rate in the lease agreement when it is readily determinable. In the case the implicit rate is not readily determinable, the Company uses our incremental borrowing rate of debt based on the term of the lease. The Company commonly has options to renew or extend the current lease arrangement on many of our leases. In these situations, if it is reasonably certain the lease would be extended, we have included those extensions within the remaining lease payments at the time of measurement.

When acquiring leases in a business combination, we retain the lease classification utilized by the seller if it was determined using acceptable methods under ASC 842. As part of the allocation of the purchase price in a business combination, lease terms are compared to market terms utilizing an income approach to determine if leases are favorable or unfavorable. Any favorable or unfavorable leasehold interests identified increase (favorable) or reduce (unfavorable) the right-of-use lease asset and are recognized over the life of the related right-of-use asset.

Lease right-of-use assets outstanding as of April 30, 2023 and 2022 consisted of the following:

	Classification	April 30, 2023		April 30, 2022
Finance lease right-of-use assets	Property and equipment	$	79,344	$	59,677
Operating lease right-of-use assets	Other assets	107,994		104,579

The summary of lease-related costs included on the consolidated statements of income is included below:

	Years ended April 30,
	2023		2022		2021
Operating lease cost	$	9,346	$	6,721	$	2,290
Finance lease cost:
Amortization of right-of-use assets	$	5,882	$	4,489	$	2,870
Interest on lease liabilities	2,966		2,337		612

Weighted average remaining lease terms, weighted average discount rates, and supplementary cash flow information or outstanding leases were as follows:

	April 30, 2023			April 30, 2022
Weighted-average remaining lease-term - finance lease	15.1			19.3
Weighted-average remaining lease-term - operating lease	19.8			20.3
Weighted-average discount rate - finance lease	4.40		%	3.97		%
Weighted-average discount rate - operating lease	4.33		%	3.98		%
Right-of-use assets obtained in exchange for new finance lease liabilities	$	25,166		$	52,525
Right-of-use assets obtained in exchange for new operating lease liabilities	14,642			87,723

Future minimum payments under the finance leases and operating leases consisted of the following at April 30, 2023:

Years ended April 30,	Finance leases		Operating leases
2024	$	12,398	$	8,140
2025	10,913		8,204
2026	10,589		8,118
2027	10,596		8,059
2028	9,644		8,027
Thereafter	76,757		123,773
Total minimum lease payments	$	130,897	$	164,321
Less amount representing interest	35,825		58,392
Present value of net minimum lease payments	$	95,072	$	105,929

Effective during the third quarter of fiscal year 2020, Casey’s Marketing Company, and the City of Joplin, Missouri (“Joplin”) entered into an agreement in which Joplin agreed to issue up to $51,400 of taxable industrial development revenue bonds for the purpose of acquiring, constructing, improving, purchasing, equipping and installing a warehouse and distribution facility, which has been completed and is currently being used by the Company. As the title of the development was transferred to Joplin and the Company is subsequently leasing the related asset from Joplin, we have accounted for the transaction under the sale-and-leaseback guidance included in ASC 842-40. We have a purchase option included in the lease agreement for below the fair value of the asset, which prevents the transfer of the assets to Joplin from being recognized as a sale. Accordingly, we have not recognized any gain or loss related to the transfer. Furthermore, we have not derecognized the transferred assets and continue to recognize them in property and equipment on the consolidated balance sheets. The Company has the right and intends to set-off any obligations to make payments under the lease, with proceeds due from the industrial revenue bonds. As of April 30, 2023, we have recognized the full amount of bonds available as property and equipment on the consolidated balance sheets related to this agreement.