PR Newswire
LAVAL, QC, Sept. 6, 2023
- Net earnings were $834.1 million, or $0.85 per diluted share for the first quarter of fiscal 2024 compared with $872.4 million, or $0.85 per diluted share for the first quarter of fiscal 2023. Adjusted net earnings1 were approximately $838.0 million compared with $875.0 million for the first quarter of fiscal 2023. Adjusted diluted net earnings per share1 were $0.86, representing an increase of 1.2% from $0.85 for the corresponding quarter of last year.
- Total merchandise and service revenues of $4.3 billion, an increase of 5.0%. Same-store merchandise revenues2 increased by 2.1% in the United States, by 2.7% in Europe and other regions1, and by 6.4% in Canada.
- Merchandise and service gross margin1 increased by 0.4% in the United States to 34.3%, by 1.0% in Europe and other regions to 39.9%, and by 0.8% in Canada to 33.9%, all impacted favorably by a change in product mix.
- Same-store road transportation fuel volumes increased by 0.7% in the United States, by 7.2% in Canada, and decreased by 1.5% in Europe and other regions.
- Road transportation fuel gross margin1 of 50.05¢ per gallon in the United States, an increase of 1.05¢ per gallon, and of CA 13.25¢ per liter in Canada, a decrease of CA 0.79¢ per liter. Fuel margins remained healthy throughout the North American network, due to favorable market conditions and the continued work on the optimization of the supply chain. In Europe and other regions, the road transportation fuel margin1 was US 8.21¢ per liter, a decrease of US 4.05¢ per liter, mostly driven by the volatility of the global fuel market, more impactful to the Corporation's European gross margin1 due to a more integrated supply chain model in this region.
- Growth of expenses for the first quarter of fiscal 2024 was 2.9% while normalized growth of expenses1 was 3.7%, remaining below the average inflation observed throughout the Corporation's network.
- During the quarter, the Corporation reached an agreement to acquire 2,193 sites from TotalEnergies SE located in Germany, Belgium, Netherlands and Luxembourg.
- During the first quarter of fiscal 2024, the Corporation repurchased 4.7 million shares for an amount of $230.0 million. Subsequent to the end of the first quarter of fiscal 2024 and under the share repurchase program, the Corporation repurchased 10.8 million shares through a private agreement, for an amount of $529.7 million.
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1 | Please refer to the "Non-IFRS Measures" section for additional information on performance measures not defined by IFRS |
2 | This measure represents the growth of (decrease in) cumulated merchandise revenues between the current period and comparative period for those stores that were open for at least 23 days out of every 28-day period included in the reported periods. Merchandise revenues are defined as Merchandise and service revenues excluding service revenues. |
LAVAL, QC, Sept. 6, 2023 /PRNewswire/ - For its first quarter ended July 23, 2023, Alimentation Couche-Tard Inc. ("Couche-Tard" or the "Corporation") (TSX: ATD) announces net earnings of $834.1 million, representing $0.85 per share on a diluted basis, compared with $872.4 million for the corresponding quarter of fiscal 2023, representing $0.85 per share on a diluted basis. The results for the first quarter of fiscal 2024 were affected by pre-tax acquisition costs of $3.5 million, as well as by a pre-tax net foreign exchange loss of $0.3 million. The results for the comparable quarter of fiscal 2023 were affected by pre-tax acquisition costs of $1.2 million, as well as by a pre-tax net foreign exchange loss of $1.0 million. Excluding these items, the adjusted net earnings1 were approximately $838.0 million, or $0.86 per share on a diluted basis for the first quarter of fiscal 2024, compared with $875.0 million, or $0.85 per share on a diluted basis for the corresponding quarter of fiscal 2023, an increase of 1.2% in the adjusted diluted net earnings per share1. This increase is primarily driven by organic growth in the convenience activities as well as by the favorable impact of the share repurchase program, partly offset by lower road transportation fuel gross profit1 in Europe and other regions, and by higher depreciation and expenses. All financial information presented is in US dollars unless stated otherwise.
"We are pleased to announce a good first quarter of our new fiscal year, with our Canadian operations leading the way with strong performances in both convenience and fuel. Same store sales continued to grow in all Canadian business units with our packaged beverages category performing exceptionally well. Fuel volumes also grew significantly in this region. Across North America, we are seeing benefit from our promotional initiatives including reoccurring fuel days, which are contributing to volume growth. At the end of August, we had our first ever global Couche-Tard/Circle K Day with limited-time food and fuel discounts across our network from Hong Kong, to Europe, and coast to coast in North America. With inflationary conditions continuing across the globe, our focus has remained on providing value and ease to our customers both inside our stores and on our forecourts," said Brian Hannasch, President and Chief Executive Officer of Alimentation Couche-Tard.
"We are especially excited to have launched our Innercircle loyalty program during the quarter. Early in the summer, we went live with the program in nearly 430 stores across the Florida business unit. Innercircle is a free membership program with fuel rewards, food rewards and much more, while also providing new personalized experiences to our loyal customers. We could not be more pleased with the rollout so far in terms of customer adoption, positive feedback, and growing popularity of the app. We have just introduced Innercircle in one of our largest business units, Grand Canyon, and plan to expand to more business units, starting in the southeast of the U.S., as the year progresses. I want to thank the many cross-functional team members for bringing forward this unique program to make it easier and more rewarding for our customers," concluded Brian Hannasch.
Filipe Da Silva, Chief Financial Officer, added: "I am delighted to report that our focus on cost reduction has yielded favorable outcomes during this quarter. Our disciplined approach to expense management and streamlining processes has positively impacted our results which include a normalized growth of expenses3 of 3.7%, lower than the average inflation observed throughout our network. This strong sequential improvement underscores our dedication to financial discipline and reflects our commitment to delivering sustainable value to our various stakeholders. I am thankful for our team's continued pursuit of operational excellence which enabled us to deliver strong results across our key metrics. At our 2023 Analyst and Investor Conference, we look forward to communicating our new multi-year strategic plan which will include a renewed focus on cost reduction initiatives. Finally, in terms of capital allocation, the recent private buyback transaction, which took place shortly after quarter-end, highlights a great use of our excess cash and will further enhance our key return metrics."
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Significant Items of the First Quarter of Fiscal 2024
- On April 26, 2023, the Toronto Stock Exchange approved the renewal of our share repurchase program, which took effect on May 1, 2023. The renewed program allows us to repurchase up to 49.1 million shares, representing 5.0% of the shares outstanding as at April 20, 2023, and the share repurchase period will end no later than April 30, 2024. During the first quarter of fiscal 2024, we repurchased 4.7 million shares for an amount of $230.0 million. Subsequent to the end of the first quarter of fiscal 2024 and under the share repurchase program, we repurchased 10.8 million shares through a private agreement, for an amount of $529.7 million.
- On June 6, 2023, following the reception by Fire & Flower of an order for creditor protection under the Companies' Creditors Arrangement Act, we executed a facility agreement with Fire & Flower pursuant to which we agreed to advance a CA $9.8 million ($7.2 million) debtor-in-possession loan. On June 21, 2023, the Ontario Superior Court of Justice approved a Sales and Investment Solicitation Process ("SISP") pursuant to which one of our wholly-owned subsidiaries was acting as stalking horse bidder. Subsequent to the end of the first quarter of fiscal 2024 and following an auction held on August 15, 2023, our wholly-owned subsidiary was selected as the back-up bidder and our back-up bid will remain valid until the closing of the transaction contemplated by the successful bid, in accordance with the SISP.
On June 30, 2023, the unsecured convertible debentures matured without being converted and the Series C Warrants expired without being exercised.
Changes in our Network during the First Quarter of Fiscal 2024
- On July 7, 2023, we reached an agreement to acquire 2,193 sites from TotalEnergies SE for a total cash consideration of approximately €3.1 billion ($3.4 billion). The retail assets included in the transaction cover 1,195 sites located in Germany, 566 sites in Belgium, 387 sites in Netherlands, and 45 sites in Luxembourg, of which 1,495 sites are company-owned and 698 sites are dealer-owned. For the same sites included in the transaction, 12% are company-operated and 88% are dealer-operated. The transaction comprises 100% of TotalEnergies SE's retail assets in Germany and Netherlands, as well as a 60% interest in the Belgium and Luxembourg entities. We expect the transaction to close before the end of calendar year 2023 and it remains subject to customary closing conditions and regulatory approvals. The transaction would be financed using available cash, existing credit facilities, including the United States commercial paper program, and new term loans.
- We acquired four company-operated stores through various transactions since the beginning of fiscal 2024. We settled these transactions using our available cash.
- We completed the construction of 16 stores and the relocation or reconstruction of 3 stores, reaching a total of 19 stores since the beginning of fiscal 2024. As of July 23, 2023, another 45 stores were under construction and should open in the upcoming quarters.
Summary of changes in our store network
The following table presents certain information regarding changes in our store network over the 12-week period ended July 23, 2023:
12-week period ended July 23, 2023 | |||||||||
Type of site | Company- | CODO | DODO | Franchised and other affiliated | Total | ||||
Number of sites, beginning of period | 9,983 | 344 | 820 | 1,285 | 12,432 | ||||
Acquisitions | 4 | — | — | — | 4 | ||||
Openings / constructions / additions | 16 | — | 10 | 10 | 36 | ||||
Closures / disposals / withdrawals | (65) | (3) | (33) | (34) | (135) | ||||
Store conversions | 4 | (1) | (5) | 2 | — | ||||
Number of sites, end of period | 9,942 | 340 | 792 | 1,263 | 12,337 | ||||
Circle K branded sites under licensing agreements | 2,084 | ||||||||
Total network | 14,421 | ||||||||
Number of automated fuel stations included in the period-end figures | 984 | — | 2 | — | 986 | ||||
Exchange Rate Data
We use the US dollar as our reporting currency, which provides more relevant information given the predominance of our operations in the United States.
The following table sets forth information about exchange rates based upon closing rates expressed as US dollars per comparative currency unit:
12-week periods ended | ||
July 23, 2023 | July 17, 2022 | |
Average for the period(1) | ||
Canadian dollar | 0.7484 | 0.7778 |
Norwegian krone | 0.0936 | 0.1031 |
Swedish krone | 0.0943 | 0.0995 |
Danish krone | 0.1464 | 0.1412 |
Zloty | 0.2431 | 0.2248 |
Euro | 1.0903 | 1.0503 |
Hong Kong dollar | 0.1277 | 0.1274 |
(1) Calculated by taking the average of the closing exchange rates of each day in the applicable period. |
For the analysis of consolidated results, the impact of the translation of our foreign currency operations into US dollars is defined as the impact from the translation of our Canadian, European, Asian, and corporate operations into US dollars. Variances of our foreign currency operations into US dollars are determined as being the difference between the corresponding period results in local currencies translated at the current period average exchange rate and the corresponding period results in local currencies translated at the corresponding period average exchange rate.
Summary Analysis of Consolidated Results for the First Quarter of Fiscal 2024
The following table highlights certain information regarding our operations for the 12-week periods ended July 23, 2023, and July 17, 2022, and the results analysis in this section should be read in conjunction with this table. The results from our operations in Europe and Asia are presented together as Europe and other regions.
12-week periods ended | |||
(in millions of US dollars, unless otherwise stated) | July 23, 2023 | July 17, 2022 | Variation % |
Statement of Operations Data: | |||
Merchandise and service revenues(1): | |||
United States | 3,005.3 | 2,904.9 | 3.5 |
Europe and other regions | 622.0 | 537.1 | 15.8 |
Canada | 648.5 | 630.5 | 2.9 |
Total merchandise and service revenues | 4,275.8 | 4,072.5 | 5.0 |
Road transportation fuel revenues: | |||
United States | 7,522.2 | 9,681.4 | (22.3) |
Europe and other regions | 2,263.7 | 2,975.9 | (23.9) |
Canada | 1,449.3 | 1,661.8 | (12.8) |
Total road transportation fuel revenues | 11,235.2 | 14,319.1 | (21.5) |
Other revenues(2): | |||
United States | 8.2 | 9.7 | (15.5) |
Europe and other regions | 95.1 | 250.5 | (62.0) |
Canada | 8.9 | 5.9 | 50.8 |
Total other revenues | 112.2 | 266.1 | (57.8) |
Total revenues | 15,623.2 | 18,657.7 | (16.3) |
Merchandise and service gross profit(1)(3): | |||
United States | 1,030.0 | 985.3 | 4.5 |
Europe and other regions | 248.2 | 208.7 | 18.9 |
Canada | 219.7 | 208.9 | 5.2 |
Total merchandise and service gross profit | 1,497.9 | 1,402.9 | 6.8 |
Road transportation fuel gross profit(3): | |||
United States | 1,074.6 | 1,031.4 | 4.2 |
Europe and other regions | 197.6 | 280.7 | (29.6) |
Canada | 137.1 | 132.4 | 3.5 |
Total road transportation fuel gross profit | 1,409.3 | 1,444.5 | (2.4) |
Other revenues gross profit(2)(3): | |||
United States | 8.2 | 9.7 | (15.5) |
Europe and other regions | 16.3 | 19.8 | (17.7) |
Canada | 6.7 | 5.9 | 13.6 |
Total other revenues gross profit | 31.2 | 35.4 | (11.9) |
Total gross profit(3) | 2,938.4 | 2,882.8 | 1.9 |
Operating, selling, general and administrative expenses | 1,439.1 | 1,398.1 | 2.9 |
Gain on disposal of property and equipment and other assets | (3.5) | (13.0) | (73.1) |
Depreciation, amortization and impairment | 360.5 | 319.2 | 12.9 |
Operating income | 1,142.3 | 1,178.5 | (3.1) |
Net financial expenses | 70.7 | 67.1 | 5.4 |
Net earnings | 834.1 | 872.4 | (4.4) |
Per Share Data: | |||
Basic net earnings per share (dollars per share) | 0.85 | 0.85 | — |
Diluted net earnings per share (dollars per share) | 0.85 | 0.85 | — |
Adjusted diluted net earnings per share (dollars per share)(3) | 0.86 | 0.85 | 1.2 |
12-week periods ended | |||
(in millions of US dollars, unless otherwise stated) | July 23, 2023 | July 17, 2022 | Variation % |
Other Operating Data: | |||
Merchandise and service gross margin(1)(3): | |||
Consolidated | 35.0 % | 34.4 % | 0.6 |
United States | 34.3 % | 33.9 % | 0.4 |
Europe and other regions | 39.9 % | 38.9 % | 1.0 |
Canada | 33.9 % | 33.1 % | 0.8 |
Growth of (decrease in) same-store merchandise revenues(4): | |||
United States(5)(6) | 2.1 % | 3.5 % | |
Europe and other regions(3) | 2.7 % | 2.8 % | |
Canada(5)(6) | 6.4 % | (1.3 %) | |
Road transportation fuel gross margin(3): | |||
United States (cents per gallon) | 50.05 | 49.00 | 2.1 |
Europe and other regions (cents per liter) | 8.21 | 12.26 | (33.0) |
Canada (CA cents per liter) | 13.25 | 14.04 | (5.6) |
Total volume of road transportation fuel sold: | |||
United States (millions of gallons) | 2,146.9 | 2,105.0 | 2.0 |
Europe and other regions (millions of liters) | 2,406.8 | 2,288.8 | 5.2 |
Canada (millions of liters) | 1,382.2 | 1,212.1 | 14.0 |
Growth of (decrease in) same-store road transportation fuel volumes(5): | |||
United States | 0.7 % | (4.0 %) | |
Europe and other regions | (1.5 %) | (3.7 %) | |
Canada | 7.2 % | 0.4 % | |
(in millions of US dollars, unless otherwise stated) | As at July 23, 2023 | As at April 30, 2023 | Variation $ |
Balance Sheet Data: | |||
Total assets | 30,325.9 | 29,049.2 | 1,276.7 |
Interest-bearing debt(3) | 10,011.9 | 9,465.9 | 546.0 |
Equity | 13,281.8 | 12,564.5 | 717.3 |
Indebtedness Ratios(3): | |||
Net interest-bearing debt/total capitalization | 0.38 : 1 | 0.41 : 1 | |
Leverage ratio | 1.39 : 1 | 1.49 : 1 | |
Returns(3): | |||
Return on equity | 23.8 % | 24.7 % | |
Return on capital employed | 17.0 % | 17.5 % |
(1) | Includes revenues derived from franchise fees, royalties, suppliers' rebates on some purchases made by franchisees and licensees, as well as from wholesale of merchandise. Franchise fees from international licensed stores are presented in the United States. |
(2) | Includes revenues from the rental of assets and from the sale of aviation fuel and energy for stationary engines. |
(3) | Please refer to the "Non-IFRS measures" section for additional information on our capital management measure as well as performance measures not defined by IFRS. |
(4) | This measure represents the growth of (decrease in) cumulated merchandise revenues between the current period and comparative period for those stores that were open for at least 23 days out of every 28-day period included in the reported periods. Merchandise revenues are defined as Merchandise and service revenues excluding service revenues. |
(5) | For company-operated stores only. |
(6) | Calculated based on respective functional currencies. |
Revenues
Our revenues were $15.6 billion for the first quarter of fiscal 2024, down by $3.0 billion, a decrease of 16.3% compared with the corresponding quarter of fiscal 2023. This decrease is mainly attributable to a lower average road transportation fuel selling price as well as the net negative impact of approximately $118.0 million from the translation of our foreign currency operations into US dollars, while being partly offset by the contribution from acquisitions, higher road transportation fuel demand as well as organic growth of our convenience activities.
Merchandise and service revenues
Total merchandise and service revenues for the first quarter of fiscal 2024 were $4.3 billion, an increase of $203.3 million compared with the corresponding quarter of fiscal 2023. The translation of our foreign currency operations into US dollars had a net negative impact of approximately $25.0 million. The remaining increase of approximately $228.0 million, or 5.6%, is primarily attributable to organic growth, and to the contribution from acquisitions which amounted to approximately $52.0 million. Same-store merchandise revenues increased by 2.1% in the United States, by 2.7%1 in Europe and other regions, and by 6.4% in Canada, driven by our diversified offer in the beverage category as well as the continued growth of our Fresh Food, Fast program and private brands.
Road transportation fuel revenues
Total road transportation fuel revenues for the first quarter of fiscal 2024 were $11.2 billion, a decrease of $3.1 billion compared with the corresponding quarter of fiscal 2023. The translation of our foreign currency operations into US dollars had a net negative impact of approximately $96.0 million. The remaining decrease of approximately $3.0 billion, or 20.9%, is attributable to a lower average road transportation fuel selling price, which had an impact of approximately $3.5 billion, partly offset by the impact of strategic initiatives leading to higher road transportation fuel volumes as well as by the contribution from acquisitions, which amounted to approximately $141.0 million. Same-store road transportation fuel volumes increased by 0.7% in the United States and by 7.2% in Canada, favorably impacted by lower crude oil prices and promotional activities. Same-store road transportation fuel volumes decreased by 1.5% in Europe and other regions, unfavorably impacted by challenging macroeconomic conditions, including high inflation.
The following table shows the average selling price of road transportation fuel of our company-operated stores in our various markets for the last eight quarters. The average selling price of road transportation fuel consists of the road transportation fuel revenues divided by the volume of road transportation fuel sold:
Quarter | 2nd | 3rd | 4th | 1st | Weighted | |
53‑week period ended July 23, 2023 | ||||||
