JCP Issues Letter To Shareholders Of Casey's General Stores

Believes Casey's Offers More Value in a Sale than as a Standalone Company

Encourages Casey's to Explore Strategic Alternatives Immediately

HOUSTON, Jan. 3, 2018 /PRNewswire/ -- JCP Investment Management, LLC, BLR Partners LP and Joshua E. Schechter, together significant shareholders of Casey's General Stores, Inc. ("Casey's" or the "Company") CASY who collectively own approximately $45 million of the Company's common stock, today issued an open letter to Casey's shareholders. The full text of the letter appears below.

January 3, 2018

To: Casey's Shareholders

Re: Casey's – More Value in a Sale

Dear Fellow Shareholders,

JCP Investment Management, LLC, BLR Partners LP and Joshua E. Schechter (together, "we") collectively own approximately $45 million of Casey's General Stores, Inc. ("Casey's" or the "Company") common stock. We believe Casey's shares are significantly undervalued as they do not reflect the true earnings power and full real estate value of the Company's irreplaceable fleet of 2,000+ stores. We have previously engaged with management regarding our concerns with the Company's returns on invested capital and capital allocation.

Casey's no longer delivers best in class returns as measured by either operating metrics or share price performance. Casey's has missed earnings targets for seven straight quarters due in part to decelerating same store sales and bloated operational expenses. Casey's has significantly underperformed the industry leader, Alimentation Couche-Tard Inc. ("ATD"), since Casey's decision to reject ATD's offer and remain independent in 2010. Casey's has also underperformed Murphy USA Inc. ("Murphy") since Murphy became an independent company in August 2013.

Shareholder Returns

	1yr	2yr	5yr	Since 2010
CASY	-5%	-6%	125%	183%
ATD/B	8%	7%	316%	657%

vs. ATD/B	-13%	-13%	-191%	-474%

Note: Per Bloomberg as of 12/29/2017, assumes dividends reinvested.
	1yr	2yr	Since MUSA Spin
CASY	-5%	-6%	69%
MUSA (1)	31%	29%	116%

vs. MUSA	-36%	-35%	-47%

(1) MUSA began trading 8/19/2013.
Note: Per Bloomberg as of 12/29/2017, assumes dividends reinvested.

We are concerned that Casey's store level returns on invested capital have declined as the Company has gone from operating in 9 states to 15 states. Prior to 2010 (before the offer from ATD), the Company had only operated in nine states since 1995. We believe such rapid expansion coupled with seeming declining returns on invested capital is symptomatic of a company that has been unable to manage growth effectively.

Rapid consolidation has been ongoing in the convenience store industry over the past five years. We have played a constructive role in this consolidation while serving as directors during the successful sale of The Pantry, Inc. ("Pantry") to ATD in 2014 and as part of a settlement agreement with CST Brands, Inc. ("CST") which resulted in a sale to ATD in 2016. We note some of the larger transactions in the industry below.

Target	Buyer	Date	Price ($ millions)	EV/EBITDA	Real Estate
Holiday	Couche-Tard	Jul-17	-	-	-
PDQ	Kwik Trip	Jul-17	-	-	-
Sunoco	7-Eleven	Apr-17	$3,300	13.0x	~64%
CST	Couche-Tard	Aug-16	4,430	10.4x	~72%
MAPCO (Delek)	Copec S.A.	Aug-16	535	12.7x	~63%
CST - CA/WY	7-Eleven	Jul-16	408	-	-
Flash Foods	CST	Feb-16	425	-	-
Pantry	Couche-Tard	Dec-14	1,713	7.8x	~31%
Hess	Marathon	May-14	2,870	16.4x	-
Warren Equities	Global Partners	Oct-14	387	-	-
Susser Holdings	ETP/Sunoco	Apr-14	1,800	10.7x	~52%

Note: Based on SEC filings and wall street research.

Based on the above transaction multiples, we believe Casey's shares could be worth from $150 to greater than $170 per share to a potential acquirer. We believe this is realistic given the significant synergies and real estate value that Casey's offers. We note that ATD is projecting $125 million in synergies for its acquisition of Pantry and between $150-200 million in synergies for its acquisition of CST, both of which were smaller than Casey's and owned less real estate.

Potential Strategic Value

		EV / EBITDA
		11x	13x
FY 2020 (4/20) Consensus EBITDA	$623	$6,853	$8,099
Total Debt		1,315	1,315
Cash		285	285
Equity Value		5,823	7,069

Per Share		$155.08	$188.27
Shares		37.55	37.55

Source: Per Bloomberg, SEC Filings.
Note: Per share price estimate based upon industry transaction multiples; all other figures in millions.

The gap between Casey's current share price and its strategic value is significant. We do not believe that waiting for an increase in share price in the face of significant declining EBITDA is the prudent path to take considering that we believe that Casey's could potentially realize $150 to greater than $170 in a sale today. We believe that Casey's Board should immediately engage a financial advisor to explore all strategic alternatives, including a potential sale, merger or similar transaction in order to maximize shareholder value. We encourage you, our fellow shareholders, to let the Board know that you feel the same way.

We are happy to discuss our thoughts in further detail with any interested shareholders.

Sincerely,
James C. Pappas
Managing Member
JCP Investment Management, LLC

About JCP Investment Management:

JCP Investment Management, LLC is an investment firm headquartered in Houston, TX that engages in value-based investing across the capital structure. JCP follows an opportunistic approach to investing across different equity, credit and distressed securities largely in North America.

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