Company continues to benefit from geographic diversification and excellence in integrating acquisitions, says CEO.
After a busy quarter that included many acquisitions, Alimentation Couche-Tard reported net earnings of $277.6 million ($0.49 per share on a diluted basis) for the fourth quarter of fiscal 2017 compared with $203.9 million ($0.36 per share on a diluted basis) for the fourth quarter of fiscal 2016.
Results of the fourth quarter and of fiscal 2017 include an extra week. All same-store information is presented on a comparable basis of 12 and 52 weeks, respectively.
Excluding certain items for both comparable periods, net earnings for the quarter would have been approximately $298.0 million ($0.52 per share on a diluted basis) compared with $219.0 million ($0.38 per share on a diluted basis) for the fourth quarter of fiscal 2016, an increase of 36.1%.
Same‑store merchandise revenues increased by 1.6% in the U.S., by 2.7% in Europe and decreased by 0.9% in Canada.
Merchandise and service gross margin decreased by 0.4% in the U.S. to 33.3%. Gross margin increased by 0.9% in Europe and by 1.8% in Canada, reaching 44.0% and 34.7%, respectively.
Same‑store road transportation fuel volumes grew 1.7% in the U.S. and 0.7% in Europe. Same-store volumes decreased by 0.2% in Canada.
Road transportation fuel gross margin decreased by US 1.31 cents per gallon in the U.S. to US 15.47 cents per gallon.
The company completed the acquisition of CST Brands Inc. (CST) on June 28, 2017, for a total enterprise value of $4.4 billion, including assumed net debt. It divested, on the same date, a significant portion of CST’s Canadian assets for an amount of CA $986.0 million. An agreement was also reached to dispose of 70 sites in the U.S. to Empire Petroleum Partners LLC, which is expected to close in the second quarter of fiscal 2018. After those transactions, a total of 1,263 sites in the U.S. and in Canada will join the Couche-Tard family of merchants.
Subsequent to the end of the quarter, the Corporation acquired 53 company-operated sites, which are operating under the Cracker Barrel brand in Louisiana and including 11 quick-service restaurants.
On July 10, 2017, subsequent to the end of the quarter, the Corporation entered into an agreement to acquire all issued and outstanding shares of Holiday Stationstores, Inc. and certain affiliated companies, which operate a network of 374 corporate stores and 148 franchisees in the U.S. Midwest region and in Alaska.
The Corporation’s global rebranding project is now successfully completed in Scandinavia and was launched in Poland and the Baltic countries. More than 1,300 stores in North America and more than 1,200 stores in Europe now display Couche-Tard’s new Circle K global brand.
“During the last quarter, we continued to experience strong results in Europe while observing softer conditions in the broader North American retail industry as well as a weak fuel margin environment in the United States, which both contributed to a slowdown in our organic growth in these regions. Despite the challenges we faced in our North America, we delivered 36.8% growth in adjusted diluted earnings per share, which is a true testament to our many strengths. We continue to benefit from our geographic diversification, our excellence in integrating acquisitions and realizing associated synergies and our strong cost control culture –a pursuit of our ongoing quest for financial efficiency,” stated Brian Hannasch, president and CEO of Alimentation Couche-Tard.
Fiscal Year 2017
Diluted net earnings per share were $2.12 in 2017 compared with $2.09 for fiscal 2016, an increase of 1.4%, while adjusted diluted net earnings per share were $2.211 compared with $2.081 for fiscal 2016, an increase of 6.2%.
Since April 24, 2016, the company has added more than 2,000 stores through new openings and acquisitions, including the recently acquired CST Brands and Cracker Barrel sites.
“At Circle K and Couche-Tard, we thrive on selling people time, a main focus of our global brand strategy. In the deployment of our global positioning, fiscal 2017 was a successful year in increasing our presence by converting more than 2,400 stores throughout our network. This year marked the first time we introduced our global Circle K brand to our customers in Scandinavia. Here, the challenge was to successfully transition from the well-established Statoil brand without affecting customer traffic in stores. We are pleased to report outstanding results and that our integration teams surpassed the desired results with increased customer traffic at the rebranded sites, all the while managing the initial risks identified for the company, a performance that exceeded our expectations,” added Hannasch.
“And of course, having announced the closing of the CST Brands acquisition a few weeks ago, the next months will also be dedicated to the integration and the identification and evaluation of potential costs synergies as well as working on welcoming CST and CAPL to the Couche-Tard/Circle K family,” concluded Brian Hannasch.
Claude Tessier, Chief Financial Officer added, “Overall, our proven ability to manage and control expenses, to grow organically and to successfully integrate acquisitions has allowed us to post record net earnings and operating cash flow which we cleverly used to further deleverage our balance sheet.” He added, “With the CST transaction having closed, we remain committed to our usual financial discipline so that we can continue to thrive on our capacity to seek out the right acquisitions at the right price for the benefit of our stakeholders.”