Alimentation Couche-Tard announces its results for its fourth quarter and fiscal year 2019

Quarter

• Net earnings attributable to shareholders of the Corporation ("net earnings") of $293.1 million ($0.52 per share on a diluted basis) for the fourth quarter of fiscal 2019 compared with $391.0 million ($0.69 per share on a diluted basis) for the fourth quarter of fiscal 2018. Excluding certain items for both comparable periods, net earnings for the quarter would have been approximately $295.0 million¹ or $0.52¹ per share on a diluted basis, compared with $0.59¹ per share on a diluted basis for the fourth quarter of fiscal 2018, a decrease of 11.9%.
• Total merchandise and service revenues of $3.3 billion, an increase of 2.4%. Same-store merchandise revenues increased by 3.4% in the U.S., by 4.7% in Europe and by 4.2% in Canada.
• Merchandise and service gross margin increased by 0.3% in the U.S. to 33.9%, while it decreased by 2.2% in Europe to 41.8%, and by 1.4% in Canada to 33.0%.
• Same-store road transportation fuel volume increased by 0.3% in the U.S., while they decreased by 1.8% in Europe and by 0.4% in Canada.
• Road transportation fuel gross margin increased by 1.22¢ per gallon in the U.S. to 18.51¢ per gallon, while it decreased by US 0.44¢ per liter in Europe to US 8.28¢ per liter, and by CA 1.31¢ per liter in Canada to CA 8.13¢ per liter.
• The Corporation surpassed its annual synergies run rate target of $215.0 million for CST Brands Inc. ("CST"), one year earlier than planned.
• Adjusted leverage ratio² continued to improve and reached 2.29 : 1.
• The Corporation successfully finalized its rebranding project in Europe, by completing the rebranding of its network in Ireland. More than 2,000 stores in Europe and more than 5,600 stores in North America now display the new Circle K global brand.

Fiscal Year 2019

• Record diluted net earnings per share of $3.25 compared with $2.95 for fiscal 2018, an increase of 10.2%, while adjusted diluted net earnings per share were $3.32¹ compared with $2.60¹ for fiscal 2018, an increase of 27.7%.
• Unprecedent free cash flows generation allowed for net debt repayment totalling $1.8 billion during the year.
• Strong improvement on return on capital employed², moving from 12.0% to 14.1%, on a pro-forma basis.
• Increase in the annual dividend of 21.6%, from CA 37.0¢ to CA 45.0¢.

 

 

LAVAL, QC, July 9, 2019 /PRNewswire/ - For its fourth quarter ended April 28, 2019, Alimentation Couche-Tard Inc. ("Couche‑Tard" or the "Corporation") (TSX: ATD.A) (TSX: ATD.B) announces net earnings attributable to shareholders of the Corporation of $293.1 million, representing $0.52 per share on a diluted basis. The results for the fourth quarter of fiscal 2019 were affected by pre-tax restructuring costs of $2.6 million, a pre-tax net foreign exchange gain of $1.1 million, as well as pre‑tax acquisition costs of $0.4 million. The results for the comparable quarter of fiscal 2018 were affected by a net tax benefit of $69.7 million, of which $4.1 million relates to non-controlling interests, following the approval of the "U.S. Tax Cuts and Jobs Act", pre-tax restructuring costs of $6.9 million, a $4.5 million pre-tax accelerated depreciation and amortization expense in connection with the Corporation's global brand initiative, a pre-tax net foreign exchange loss of $1.0 million, as well as pre-tax acquisition costs of $0.9 million. Excluding these items, the adjusted diluted net earnings per share would have remained at $0.52 for the fourth quarter of fiscal 2019, compared with $0.59 for the fourth quarter of fiscal 2018, a decrease of 11.9%, driven by an increase in expenses, as well as by the net negative impact from the translation of our Canadian and European operations into US dollars, partly offset by organic growth. All financial information is in US dollars unless stated otherwise.

"We had a fantastic year in fiscal 2019, and I am immensely proud of the entire team for the work done in our stores and support offices. We had a record bottom-line, generated impressive cash flows, surpassed our CST synergies target and integrated Holiday into our network," stated Brian Hannasch, President and CEO of Alimentation Couche-Tard. "This year, we once again proved our commitment to organic growth by initiating a pipeline of activities focused on bringing more customers to our locations and becoming more strategically aligned as a company than ever before. More and more customers are getting to know the Circle K brand across the globe and how we make our customers' lives a little easier every day."

"During the quarter, we saw a good performance in same-store sales in all our geographies and good same-store gallons results in the U.S. despite fuel shortages in some regions. We continue to see traffic to site strengthening and I am particularly pleased with developments in our packaged and dispensed beverage categories with the continued success in the rollout of our new Coffee on Demand program in the U.S., the expansion of Polar Pop® and Froster® beverages in Canada, and increased interest in seasonal blends and limited-time-offers in Europe. The rollout of innovative products in tobacco and food helped improve merchandise revenues this quarter, and we also took part in new collaborations with our partners which are beginning to drive more traffic to our stores and excitement with our offerings," concluded Brian Hannasch.

Claude Tessier, Chief Financial Officer, stated: "I am pleased that once again our solid results in fiscal 2019 have led to significant cash flows and moved us forward in our deleveraging plan as evidence in our adjusted leverage ratio of 2.29 : 1. This quarter, we also secured approval and adopted a share repurchase program. While this quarter had higher than usual operating expenses, these were partly driven by the impact of changes to certain provision assumptions caused by external factors, as well as the Esso dealers' model change, similar to what was discussed in previous quarters. It should be noted that operating expenses for the year were on plan. As always, we remain committed to our customary financial discipline and increasing value for our shareholders."

Significant Items of the Fourth Quarter of Fiscal 2019

• Our annual synergies run rate related to the CST acquisition surpassed our target of $215.0 million over the three years following the transaction, one year earlier than planned. These synergies resulted in reductions in operating, selling, administrative and general expenses, as well as improvements in road transportation fuel and merchandise distribution and supply costs. As always, we will continue our efforts towards improving our efficiency and we are confident that additional synergies will be realized.
• The rollout of the Circle K brand in North America is progressing steadily. As of April 28, 2019, more than 5,600 stores in North America, including approximately 720 stores acquired from CST, and more than 2,000 stores in Europe were proudly displaying our new global brand. Subsequent to the end of the quarter, we successfully finalized our rebranding project in Europe, by completing the rebranding of our network in Ireland.
• During the quarter, as part of our cost reduction initiatives and the search for synergies aimed at improving our efficiency, we made the decision to proceed with the restructuring of certain of our operations. As such, additional restructuring costs of $2.6 million were recorded to earnings of the fourth quarter of fiscal 2019.
• During the quarter, we repaid the totality of our unsecured non-revolving credit facility, as well as the majority of our revolving unsecured credit facility. In addition, subsequent to the end of the quarter, on May 28, 2019, we repaid $150.0 million of our US-dollar-denominated senior unsecured notes.
• On April 8, 2019, we received the approval from the Toronto Stock Exchange to implement a new share repurchase program to repurchase up to 4.0% of our Class B subordinate voting shares. Subsequent to the end of the quarter, we repurchased 245,274 shares, for a net amount of $14.4 million. All shares repurchased were cancelled.

Changes in our Network

• On February 5, 2019, we sold 19 retail sites in Oregon and West Washington for a cash consideration of approximately $30.0 million. This transaction resulted in a gain of $17.3 million.
• During the fourth quarter of fiscal 2019, we acquired one company-operated store through a distinct transaction, for a total of eight acquired company-operated stores since the beginning of fiscal 2019.
• During the fourth quarter of fiscal 2019, we completed the construction of 19 stores and the relocation or reconstruction of 13 stores, reaching a total of 51 and 41 stores, respectively, since the beginning of the fiscal year. As of April 28, 2019, 28 stores were under construction and should open in the upcoming quarters.
• On May 22, 2019, subsequent to the end of the quarter, we closed the first transaction of the Asset Exchange Agreement with CrossAmerica Partners LP ("CAPL"). In this first transaction, 60 Circle K U.S. stores have been exchanged against 17 company-operated stores owned and operated by CAPL and the real estate for 8 properties held by CAPL, for a total value of approximately $58.0 million. No gain or loss arose from this transaction. The remaining transactions are expected to be completed by the end of the first quarter of calendar year 2020.
• On February 21, 2019, we announced a multi-year agreement with Canopy Growth Corporation allowing us to licence the "Tweed" trademark to cannabis retail store operations in the Province of Ontario, Canada. Through this new strategic partnership, we aim to lean on Canopy Growth's cannabis expertise and leverage our experience with other age-restricted products to focus on the safe, responsible and lawful sale of cannabis. On May 17, 2019, a first licensed store was opened under this agreement.

Summary of changes in our store network during the fourth quarter and fiscal 2019

The following table presents certain information regarding changes in our store network over the 12-week period ended April 28, 2019:

 

 

The following table presents certain information regarding changes in our store network over the 52-week period ended April 28, 2019:

 

 

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:

 

 

Summary Analysis of Consolidated Results for the Fourth Quarter and Fiscal 2019

The following table highlights certain information regarding our operations for the 12 and 52-week periods ended April 28, 2019, and April 29, 2018. CAPL refers to CrossAmerica Partners LP.