"Our patience really paid off," said CEO Alain Bouchard yesterday as he summarized the Canadian company's 2011 fiscal year, during which the chain added a net 89 stores, and the June deal with ExxonMobil that could add as many as 322 stores to Couche-Tard's rolls. "We put our hands on quality stores at a fair price, which will give us room to advance [image-nocss] further in these stores while maintaining returns that meet our objectives and provide added value to our shareholders."
(Click here to read previous CSP Daily News coverage of the ExxonMobil deal.)
And there's more to come soon. "We should announce shortly other deals for a total of 47 stores," he added during a conference call with stock analysts.
Regarding foodservice, Bouchard said several tests are under way in Couche-Tard's chain of Circle K stores, and the company will begin implementing a five-year plan later this year.
Since being named vice president of foodservice for Couche-Tard in January, Joe Chiovera has, according to Bouchard, toured each of the company's divisions, helped create some "quick wins" and identified future partners for various foodservice offers.
"Now he will prepare a five-year plan, aligned with what is already successful in our network," Bouchard said. "We will then start to execute the plan in the second part of this fiscal year.
For its fourth quarter, Alimentation Couche-Tard Inc. announced net earnings of $64 million, down $4.8 million or 7% from the comparable period of last fiscal year; however, net earnings for the fourth quarter of fiscal 2010 had benefited from nonrecurring items, including a gain of $11.4 million, net of tax, from the disposal of Casey's shares and the reversal of provisions totaling $3.6 million, net of taxes.
Excluding these items, net earnings of the fourth quarter of fiscal 2011 are up $10.2 million or 19%, mainly attributable to the growth of merchandise and service sales and related margin in the United States, the growth in same-store motor fuel volume in Canada and the United States, the strengthening of the Canadian dollar, Couche-Tard's management of its expenses, the decrease in financial expenses, as well as a lower income tax rate. These factors that contributed to the growth in net earnings were partially offset by the slight decrease in U.S. motor fuel gross margin combined with the steep increase in electronic payment modes expense generated by the higher average motor fuel retail price.
"I am very satisfied with the results for the fourth quarter and fiscal 2011; however, we remain cautious as in recent years," Bouchard said in a press release. "The level of unemployment and household indebtedness, as well as rising motor fuel prices, are negative factors globally and affect the resources available to consumers in general. Their confidence in the short term seems to be affected, but the medium and long-term perspectives remain positive.
"It is also noteworthy that adverse weather conditions in several of our markets have also been a negative factor, as for many other retailers"
Bouchard also reported a quarterly dividend increase that "reflects the quality of our financial performance and our ongoing willingness to share our success with our shareholders while preserving our ability and the financial flexibility to continue to create value."
In fact, CFO Raymond Pare declared on the conference call, "Our financial health is better than ever."
In a press release he added, "We continue to create value as we have been able to do for several years, despite obstacles and challenges we encountered. To do so, we have been successfully combining our targeted investments to our organic growth, the latter coming, amongst other things, from increased sales, including fresh products, from the improvement in our supply and from the on-going improvement of our efficiency, not forgetting also the optimization of our capital structure allowing us to reduce financial expenses."
Acquisitions & Construction of New Stores
During the fourth quarter of fiscal 2011, Couche-Tard acquired seven company-operated stores through six transactions. In fiscal 2011, Couche-Tard acquired a total of 47 company-operated stores.
In addition, the company built nine new stores during the 12-week period ended April 24, 2011, and 35 during fiscal 2011.
In May 2011, Couche-Tard acquired 11 company-operated stores located in Ontario, Manitoba, Saskatchewan, Alberta and British-Columbia, Canada, from Shell Canada Products. It also acquired five company-operated stores operating under the Gas City banner, one in Arizona and four in the Chicago area.
In June 2011, Couche-Tard signed an agreement with ExxonMobil for 322 stores and a motor fuel supply agreement for another 65 stores. All stores are operated in Southern California, United States. Also in June 2011, Couche-Tard signed an agreement to acquire 26 company-operated stores operating in the mid-Atlantic states of the United States.
Operating Results
Revenues amounted to $4.8 billion in the fourth quarter of fiscal 2011, up $837.6 million, an increase of 20.9%, mainly attributable to an increase in motor fuel sales arising from the higher average retail prices at the pump and from the rise in motor fuel volume sold in the United States and Canada, to the stronger Canadian dollar as well as to the growth of same-store merchandise sales in the United States.
For fiscal 2011, revenues grew by $2.5 billion, an increase of 15.4% compared to fiscal 2010 for reasons similar to those mentioned for the quarter.
For fiscal 2011, merchandise and service revenues rose by $340.3 million, a 5.8% increase compared to the previous fiscal year, including an increase in same-store merchandise revenues of 4.2% in the United States and 1.8% in Canada.
Motor fuel revenues increased by $785.3 million or 29.7% in the fourth quarter of fiscal 2011, of which $65.0 million stems from additional volume due to a growing number of sites offering motor fuel, including acquisitions, and approximately $22.0 million were generated by the appreciation of the Canadian dollar against its U.S. counterpart. Same-store motor fuel volume grew by 0.3% in the United States and 1.8% in Canada.
As of April 24, 2011, Laval, Quebec-based Alimentation Couche-Tard Inc. had a network of 5,795 convenience stores, 4,128 of which include motor-fuel dispensing. The network consists of 13 business units, including nine in the United States covering 42 states and the District of Columbia, and four in Canada covering all 10 provinces.
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