Couche-Tard Adjusted Revenues Rise

Published in CSP Daily News

Same-store merchandise revenues up 2.8% in the United States, 5% in Canada

LAVAL, Quebec -- For its first quarter, Alimentation Couche-Tard Inc. has announced that first-quarter earnings fell to $102.9 million from $139.5 million a year earlier. Excluding one-time items associated with the Statoil Fuel & Retail deal, including a $113.5 million loss on foreign exchange contracts, earnings rose to $173 million, up $33.3 million or 23.8%. Revenue rose 16.3% to $6.02 billion.

The increase in adjusted net earnings is mainly attributable to the contribution from acquisitions, to the growing contribution of merchandise and service sales, to higher road transportation fuel margins, to Couche-Tard's management of its expenses, as well as to a lower income tax rate.

These items, which contributed to the growth in net earnings, were partially offset by the increase in financial expenses attributable to the additional debt that Couche-Tard incurred to finance the acquisition of Statoil Fuel & Retail, as well as to a weaker Canadian dollar.

It should be noted that Couche-Tard's results for first-quarter fiscal 2013 include those of Statoil Fuel & Retail for the period beginning June 20, 2012, and ending June 30, 2012.

"As it has been the case for the last few quarters, the first quarter of fiscal 2013 provided strong results with a satisfying contribution from organic growth as well as from recent acquisitions," said Alain Bouchard, president and CEO. "However, in light of the changing conditions in supply terms and of the persistent competitive landscape, the tobacco products category remains a challenge [see Related Content below for additional CSP Daily News coverage]. On an ongoing basis, we evaluate our options and our strategies, with the goal of maximizing the marginal contribution of this product category. But on the bright side, the constant improvement in the contribution of our fresh food offering allows us to offset the lower contribution of tobacco products."

He added, "In Europe, our management team is fully in place and ready for action. As for our assessment of the potential synergies, it is still in the preliminary stages, but we should have a clearer idea of our opportunities in the next few months."

Raymond Pare, vice president and CFO, said, "Excluding positive and negative nonrecurring items, net earnings for the first quarter increased by $33 million or 23.8%, corresponding to an increase of 20 cents per share or 26.7%.

"It should be clear that this increase excludes, for all practical purposes, the contribution of Statoil Fuel & Retail since our results include only 11 days of activity of the latter. Rather, the increase in earnings per share reflects the diversity of elements that constantly contributed to the value creation during the last few years, including organic growth, targeted acquisitions, cost control, our share repurchase program as well as our tight management of the balance sheet. With respect to the balance sheet, it remains strong despite the additional debt attributable to the acquisition of Statoil Fuel & Retail. As at July 22, 2012, on a pro forma basis and taking into consideration subsequent share issuance, our adjusted net interest-bearing debt to EBITDAR ratio of 3.39 and our net interest-bearing debt to total capitalization ratio 0.56 remain comfortable, even before the positive impact from forthcoming synergies."

Pare added, "During the remainder of fiscal year 2013 and the upcoming fiscal years, we will favor a rapid reduction of our indebtedness level to allow us the flexibility to seize opportunities that lie ahead. Likewise, we remain determined to maintain the quality of our credit profile by keeping focused on organic growth as well as growth through acquisitions. Given our past experience as well as the quality and the geographical diversification of cash flows generated by our operations, and considering that we expect that Statoil Fuel & Retail should significantly and positively contribute to our results starting this year, we are confident that we will be able to meet our objectives."

Same-store merchandise revenues were up 2.8% in the United States and 5% in Canada. In the United States, excluding tobacco products, the increase was 6.6%.

Consolidated merchandise and service gross margin were up $41.5 million or 7.9%, posting at 33.7%.

In the United States, same-store fuel volume was up 1.1% and total volume was up 18.9%.

In Canada, same-store fuel volume was up 2.2% and total volume was up 8%.

Fuel gross margin in the United States stood at 23.20 cents per gallon compared to 19.95 cents per gallon for the corresponding period of the previous fiscal year. In Canada, road transportation fuel margin stood at 5.61 cents Canadian per liter compared to 5.53 cents per liter the previous year.

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As of July 22, 2012, Laval, Quebec-based Couche-Tard's network included 6,109 convenience stores throughout North America, including 4,534 stores with fuel dispensing. At the same date, Couche-Tard had agreements for the supply of motor fuel to 357 sites operated by independent operators. Its North-American network consists of 13 business units, including nine in the United States covering 40 states and the District of Columbia and four in Canada covering all 10 provinces. Through its acquisition of Statoil Fuel & Retail, Couche-Tard also operates a broad retail network across Scandinavia (Norway, Sweden, Denmark), Poland, the Baltics (Estonia, Latvia, Lithuania), and Russia with 2,307 stores as at June 30, 2012, the majority of which offer fuel and convenience products while the others are unmanned automated service-stations (road transportation fuel only).