As reported yesterday in CSP Daily News, the company showed revenues amounting to $3.7 billion in the first quarter of fiscal 2010. Although this was down 14.9% compared to the first quarter of fiscal 2009 due to lower retail motor fuel prices and the weakening Canadian [image-nocss] dollar, those factors were offset to some extent by a $471 million increase partially generated by acquisitions.
Alain Bouchard, president and CEO, said that during the quarter, the company added 49 company-operated stores to its network; 43 of which were acquired from ExxonMobil. The same transaction included the transfer of ExxonMobil's On the Run trademark right in the United States, as well as 444 U.S. franchise stores operating under the trademark. He added, "Our network now covers 43 U.S. states and 10 Canadian provinces, with over 5,900 stores."
While Pare did not give specifics relative to previous quarters, in terms of acquisitions, he added, "We're still in a good position, and looking at some opportunities."
Meanwhile, in a research note, Michael Van Aelst, vice president and director of merchandising and consumer products equity research for Montreal-based TD Newcrest, wrote, "Couche-Tard has $650 million in cash and credit available for acquisitions. While management stated it has
nothing new to mention on the acquisition front, we believe activity is likely to increase over the next 12 months in both Canada and the U.S. as Big Oil divests locations and smaller chains capitulate."
He said that TD Newcrest was upgrading its recommendation on Couche-Tard "to buy from hold to account for the improved internal operating strength as well as the potential for ramped up consolidation activity over the next couple of years as we enter a period of 'c-store Darwinism' (i.e., survival of the fittest)."
Other highlights from the webcast:
For the first quarter of fiscal 2010, operating, selling, administrative and general expenses rose by 1.9% compared with the first quarter of fiscal 2009. The expenses increased by 11.5% because of acquisitions while they decreased by 3.3% and 2.6%, respectively because of the weaker Canadian dollar and the decrease in electronic payment modes expenses. Excluding these items, expenses decreased by 3.7%. Par a called the 11.5% due to acquisitions "not bad at all," and said it was attributable more to the "number of stores and kind of stores than anything else." The increase in units was 8%-9%, and all of the sites included motor fuels. "These kinds of sites usually have higher expenses per store," according to Pare. Internal growth, as measured by the growth in same-store merchandise revenues, rose by 2.4% in the United States, mainly because of the increase in tobacco products retail prices. While Pare declined to go into too much detail on tobacco for competitive reasons, he said, "We can say that overall on the margin, it's neutral to positive." Pare said the company is continuing its efforts on credit-card interchange fees in both Canada and the United States, including alignment with other organizations such as NACS and completion of a petition in all of the company's U.S. stores. "The support of our customers was incredible," he added. "It needs to be understood loud and clear that the situation with the credit card is unacceptable and needs urgent attention." He also said, "In North America, we have the highest fees in the world, with no specific reason. That needs to change. It's difficult to say if it will be before the end of the year, but for sure we will continue to focus on that."
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