Alimentation Couche-Tard Inc. announced financial results for its second quarter of fiscal 2014, including net earnings of $229.8 million, up 26.8%.
Excluding the non-recurring items, net earnings would have been approximately $249.0 million compared with $171.0 million for the second quarter of fiscal 2013, an increase of 45.6%.
Some items affected the results of the second quarter, mainly a foreign exchange loss of $25 million. On the other hand, the results from the second quarter of fiscal 2013 included a non-recurring gain of $10.6 million on foreign exchange forward contracts as well as a foreign exchange gain of $3.8 million.
Same-store merchandise revenues were up 4.5% in the U.S., 1.9% in Europe and 3.2% in Canada. Merchandise and service gross margin stood at 32.8% in the U.S., at 39.9% in Europe and at 33.2% in Canada. Same-store road transportation fuel volume up 1.7% in the U.S., up 2.2% in Europe and up 1.5% in Canada. Road transportation fuel gross margin stood at USD 21.56 cents per gallon in the U.S. at USD 11.43 cents per litre in Europe and at CA 6.67 cents per litre in Canada.
“The results for the second quarter were very strong and confirmed the trend from the first quarter, especially in Europe where our fuel brand “miles” and our fresh food initiatives continued to deliver strong results” declared Alain Bouchard, president and CEO. “Both in-store revenues and road transportation fuel volumes had a positive impact and were further supported by strong fuel margins and a nice contribution from our recent acquisitions. In North America, the pricing strategies we put in place in the first quarter to support in-store traffic growth proved their effectiveness in both the U.S. and Canada where same-store merchandise revenues increased significantly without affecting the margin as much as it did in the first quarter,” Bouchard concluded.
“Overall, our efforts to increase sales combined with strong road transportation fuel margins resulted in a 25.5% increase in adjusted EBITDA which allowed us to, once again, reduce our debt, improve our leverage ratio and further strengthen our balance sheet,” said Raymond Paré, vice-president and chief financial officer. “Our adjusted net interest-bearing debt to adjusted EBITDAR ratio stood at 2.63 : 1, a significant improvement compared to the ratio of 3.58 : 1 recorded shortly after the acquisition of Statoil Fuel & Retail and also compared to the 2.97 : 1 ratio as of July 21, 2013. Our objective remains to continue improving our financial flexibility to take advantage of opportunities.”
In September 2013, Couche-Tard acquired nine stores operating in Illinois from Baron-Huot Oil Company. Eight of these stores are company-operated and one is operated by an independent operator. The corporation owns the land and building for eight sites while it leases these assets for the other site.
In addition, during the second quarter of fiscal 2014, Couche-Tard acquired one additional company-operated store, one additional store operated by an independent dealer as well as three road transportation fuel supply agreements. Available cash was used for these acquisitions.
On Oct. 24, 2013, subsequent to the end of the second quarter of fiscal 2014, Couche-Tard signed an agreement to acquire, from Publix Super Markets Inc., 13 company-operated stores, 11 of which are located in Florida and the other two in Georgia. Pursuant to this transaction, Couche-Tard would own the land and buildings for nine sites and would lease these assets for the other four sites.
On Nov. 15, 2013, subsequent to the end of the second quarter of fiscal 2014, Couche-Tard signed an agreement to acquire 23 company-operated stores operating in New Mexico, from Albuquerque Convenience and Retail LLC. Pursuant to this transaction, the corporation would own the land and buildings for 22 sites and would lease these assets for the other site.
Couche-Tard expects to close both transactions in December 2013. These transactions are subject to standard regulatory approvals and closing conditions.
Couche-Tard completed the construction of six new stores during the 12-week period ended Oct. 13, 2013.