Revenues Rise for Couche-Tard's Third Quarter of Fiscal 2013
Merchandise, fuel volumes, acquisitions help earnings
LAVAL, Quebec -- For its third fiscal quarter, Alimentation Couche-Tard Inc. has announced net earnings of $142.5 million, up $55.7 million or 64.2%, over last year's third fiscal quarter net earnings of $86.8 million.
The increase in net earnings is mainly attributable to the contribution from acquisitions, to higher road transportation fuel margins, to the growing contribution of merchandise and service sales and other factors. 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.
Revenues reached $11.6 billion in the third quarter of fiscal 2013, up almost $5 billion, an increase of 75.2%, mainly attributable to acquisitions, to the increase in road transportation fuel sales generated by the higher average retail prices at the pump, to the growth of same-store merchandise sales and road transportation fuel volume.
For the first three quarters of fiscal 2013, revenues grew by $9.97 billion, an increase of 58.8% compared to the first three quarters of fiscal 2012 mainly because of the contribution from acquisitions and the increase in same-store merchandise sales and road transportation fuel volume.
The growth of merchandise and service revenues for the third quarter of fiscal 2013 was $457.8 million or 24.5%, of which approximately $410.5 million was generated by acquisitions. As for internal growth, same-store merchandise revenues increased by 0.8% in the United States and by 1.7% in Canada. The increase in same-store merchandise revenues is attributable to Couche-Tard's merchandising strategies, to the economic conditions in each of its markets as well as to the investments it made to enhance service and the offering of products in its stores.
In the United States, for the cigarettes category, the changes made to the supply terms of the industry and to Couche-Tard's pricing strategies as well as the competitive environment had an unfavorable impact on Couche-Tard's sales for that product category because of their deflationary impact. Thus, Couche-Tard estimates that excluding tobacco products sales, its same-store merchandise revenues in the United States increased by 2.6%.
In the first three quarters of fiscal 2013, merchandise and service revenues rose by $909.5 million, a 18.2% increase compared to the same period last fiscal year, mainly because of the contribution from acquisitions and the increase in same-store merchandise revenues of 1.3% in the United States and 2.3% in Canada.
Road transportation fuel revenues increased by $3.45 billion or 72.9% in the third quarter of fiscal 2013, of which approximately $3.3 billion stems from acquisitions. Same-store road transportation fuel volume in the United States increased by 0.8% while, in Canada, it decreased by 0.9%. Although not very strong, volume growth in the United States is still satisfactory when compared with data from the U.S. Federal Highway Administration's Traffic Volume Trends reports which indicate that, in Oct. and Nov. 2012, travel on U.S. roads and streets increased by only 0.3% and 0.8% compared to Oct. and Nov. 2011, respectively while it decreased by 2.9% in Dec. 2012 compared to Dec. 2011.
The higher average retail price of road transportation fuel generated an increase in revenues of approximately $48 million, starting with the fourth quarter of fiscal year ended April 24, 2011.
For the first three quarters of fiscal 2013, motor fuel revenues increased by $7.1 billion or 59.4%, of which approximately $6.93 billion came from acquisitions. Same-store motor fuel volume increased by 0.5% in the United States and by 0.4% in Canada.
Other revenues showed an increase of $1.1 billion for the third quarter of fiscal 2013, entirely attributable to acquisitions. Other revenues include revenues from rental of assets, from sale of aviation and marine fuel, liquefied petroleum gas (LPG), heating oil, kerosene, lubricants and chemicals.
For the first three quarters of fiscal 2013, other revenues showed an increase of $2 billion for reasons similar to those of the third quarter.
The consolidated merchandise and service gross margin grew by $189.5 million or 30.9% in the third quarter of fiscal 2013. In the United States, the gross margin increased by 0.1% to 33.2% while in Canada, it increased by 0.9% to 33.3%. This performance reflects changes in the product-mix, the modifications Couche-Tard brought to its supply terms as well as its merchandising strategy in line with market competitiveness and economic conditions within each market.
During the first three quarters of fiscal 2013, the consolidated merchandise and service gross margin grew by $365.1 million or 22.1%. The gross margin was 33.2% in the United States, an increase of 0.2% while the margin was 33.7 % in Canada, up 0.3%.
In the third quarter of fiscal 2013, the road transportation fuel gross margin for Couche-Tard's company-operated stores in the United States increased by 2.96 cents per gallon, from 14.84 cents per gallon last year to 17.8 cents per gallon this year. In Canada, the gross margin increased to 5.88 cents (Canadian) per liter compared with 5.19 cents per liter for the third quarter of fiscal 2012.
For the 40-week period ended Feb. 3, 2013, the motor fuel gross margin for the corporation's company-operated stores in the United States increased by 1.62 cents per gallon, from 16.99 cents per gallon last fiscal year to 18.61 cents per gallon this fiscal year. In Canada, the margin also increased, reaching 5.79 cents (Canadian) per liter compared with 5.41cents per liter for the comparable period of fiscal 2012.
For the third quarter and first three quarters of fiscal 2013, operating, selling, administrative and general expenses rose by 71.4% and 51.1% respectively, compared with the third quarter and first three quarters of fiscal 2012.
An increase in electronic payment fees stemmed mainly from the increase in the average retail price of road transportation fuel.
"Our recent acquisitions continue to contribute significantly to our results," said Alain Bouchard, president and CEO. "We continue to improve our network by adding quality stores, while divesting some stores that do not meet our profitability criteria. Despite the difficult and uncertain conditions in some markets, we grew the organic contribution, both in terms of merchandise, service and motor fuel."
Raymond Pare, vice president and CFO, said, "Since the acquisition of Statoil Fuel & Retail, we have achieved the goals we had set for ourselves from day one, and we remain confident regarding synergies to come. Results from the last quarters are encouraging taking into consideration the economic uncertainty in many of our markets and when we compared ourselves to other retailers. .... Our balance sheet is solid and gives us the financial flexibility we need, at low cost. As at Feb. 3, 2013, we had access to more than $1.3 billion through our operating credits and our available cash. ... We are therefore in a good position to continue to reduce our leverage and to maintain our favorable risk profile in order to take advantage of acquisition opportunities."
As of Feb. 3, 2013, Couche-Tard's network consisted of 6,173 convenience stores throughout North America, including 4,603 stores with road transportation fuel dispensing. Its North-American network consists of 13 business units, including nine in the United States covering 39 states and the District of Columbia (Circle K) and four in Canada covering all 10 provinces (Mac's, Couche Tard).
Through its acquisition of Statoil Fuel & Retail, Couche-Tard operates a broad retail network across Scandinavia (Norway, Sweden, Denmark), Poland, the Baltics (Estonia, Latvia, Lithuania), and Russia with 2,294 stores as of Jan. 31, 2013, the majority of which offer road transportation fuel and convenience products while the others are unmanned automated service-stations (road transportation fuel only). Couche-Tard also offers other products, including stationary energy, marine fuel, aviation fuel, lubricants and chemicals. It operates 12 key fuel terminals and 38 fuel depots in eight countries. In addition, under licensing agreements, about 4,150 stores are operated under the Circle K banner in nine other countries (China, Guam, Hong Kong, Indonesia, Japan, Macau, Mexico, Vietnam and United Arab Emirates).