"Despite the fact we decided not to renew our offer for Casey's, we are looking at other opportunities that may prove to be interesting," said president and CEO Alain Bouchard in a press release. "However, we will continue to favor a disciplined approach by [image-nocss] ensuring to pay a fair price for stores that are offered to us."
For its second quarter, Couche-Tard Inc. announced net earnings of $105.6 million, up $17.4 million or 19.7%. The increase mainly reflects the growing contribution of merchandise and service sales, the 1.34-cent-per-gallon increase in motor fuel gross margin in the United States, the contribution from a growing number of sites offering fuel, the growth in same-store motor fuel volume in Canada and the United States, the strengthening of the Canadian dollar, Couche-Tard's sound management of its expenses, as well as a lower income tax rate, the company stated.
These items contributing positively to net earnings were partially offset by an increase in electronic payment modes resulting from higher average motor-fuel retail prices, as well as recognition to earnings of fees incurred in connection with the company's public tender offer to acquire all of the outstanding shares of common stock of Casey's General Stores Inc. which was not renewed in late September.
"The economic recovery is slow to pick up momentum, especially in the U.S., as demonstrated by the modest growth in same-store motor-fuel volume we recorded in this market," Bouchard said. "However, our focus on merchandise sales and margins, as well as on expense control, still allows us to deliver good results."
"It is important to underscore that our performance is mainly organic despite the modest economic recovery," added vice president and CFO Raymond Par a. "As demonstrated by our lower indebtedness ratios generated by cash flows from operations as well as our bettering working capital, we continue to improve our balance sheet. We also implemented a new share repurchase program in order to take advantage of the actual market valuation of our stock. We will use this program cautiously while taking into account other opportunities and cash flows generated."
During the second quarter of fiscal 2011, Couche-Tard made the following acquisitions: On September 9, 2010, Couche-Tard acquired 10 company-operated stores from Compac Food Stores Inc. Nine of the stores are located in the greater Mobile, Ala., area and one is in Pensacola, Fla. On September 30, 2010, Couche-Tard acquired 12 company-operated stores located in central Indiana from Crystal Flash Petroleum LLC. Couche-Tard also acquired three other stores through three distinct transactions.
Operating Results
Couche-Tard's revenues amounted to $4.2 billion in the second quarter of fiscal 2011, up $414.9 million, an increase of 10.8%, mainly attributable to an increase in motor fuel sales due to higher average retail prices at the pump and the rise in motor fuel volume sold in the United States and Canada, to the growth of merchandise and service sales, as well as to the stronger Canadian dollar.
For the first half-year of fiscal 2011, Couche-Tard's revenues grew by $1.0 billion, an increase of 13.5% compared to the first half-year of fiscal 2010 for reasons similar to those mentioned for the quarter.
More specifically, the growth of merchandise and service revenues for the second quarter of fiscal 2011 was $79.0 million or 5.6%, of which approximately $22.0 million was generated by a stronger Canadian dollar. Internal growth, as measured by the growth in same-store merchandise revenues, was 4.9% in the United States while it stood at 1.6% in Canada. For the Canadian and U.S. markets, growth of same-store merchandise sales is attributable to Couche-Tard's merchandising strategies, to the economic condition in each of their market as well as to the investments the company made to enhance the offering of products and services in its stores.
In the first half-year of fiscal 2011, merchandise and service revenues rose by $207.0 million, a 7.4% increase compared to the same period last fiscal year for reasons similar to those of the second quarter, including an increase in same-store merchandise revenues of 4.7% in the United States and 4.1% in Canada.
Motor fuel revenues increased by $335.9 million or 13.9% in the second quarter of fiscal 2011, of which $82.0 million stems from additional volume due to a growing number of sites offering motor fuel and approximately $19.0 million were generated by the appreciation of the Canadian dollar against its U.S. counterpart. Same-store motor-fuel volume grew by 0.5% in the United States and 5.3% in Canada. The higher average retail price of motor fuel generated an increase in revenues of approximately $154.0 million.
In the second quarter of fiscal 2011, the motor-fuel gross margin for Couche-Tard's company-operated stores in the United States increased by 1.34 cents per gallon, from 15.78 cents per gallon last year to 17.12 cents per gallon this year. In Canada, the gross margin fell slightly to Cdn5.48 cents per liter compared with Cdn5.49cents per liter for the second quarter of fiscal 2010.
During the second quarter of fiscal 2011, Couche-Tard's investing activities were primarily for the acquisition of 25 stores for an amount of $19.4 million and for capital expenditures for an amount of $34.9 million. Since the beginning of the fiscal year, the company acquired 31 stores for a total amount of $26.3 million and disbursed a total of $61.2 million for capital expenditures.
Alimentation Couche-Tard Inc., Laval, Quebec, is the leader in the Canadian convenience-store industry. In North America, Couche-Tard is the largest independent convenience store operator (whether integrated with a petroleum company or not) in terms of number of company-operated stores. Couche-Tard currently operates a network of 5,904 convenience stores, 4,178 of which include motor-fuel dispensing. The stores are operated by 12 business units, including nine in the United States covering 42 states and the District of Columbia, and three in Canada covering all 10 provinces.
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