LAVAL, Quebec -- Alimentation Couche-Tard Inc. has reported revenues of $3 billion (U.S.) for the fourth quarter ended April 29, 2007, an increase of $333.7 million or 12.6% over 2006. Net earnings for the quarter were $33.4 million, an increase of 4.1%.
The company ended the fiscal year with total revenues of $12.1 billion, an increase of $1.9 billion or 19% over 2006. Net earnings for the year totaled $196.4 million, (97 cents per share, or 94 cents on a diluted basis) compared with $196.2 million in 2006. Comparing standardized periods of 52 weeks, [image-nocss] revenues increased 21.6% and net earnings 1.5%.
We are very satisfied with our progress achieved on many fronts this year, said Alain Bouchard, chairman, president and CEO. Particularly on the development side with the addition of 506 company-operated stores, far exceeding our expectations in a much more competitive acquisitions environment . Also, we completed 413 more of our successful IMPACT store conversions. Altogether, we invested close to $1 billion to foster future earnings growth.
Bouchard pointed to the impact of two external issues during the year: First, the motor fuel business was particularly volatile and competitive and that hurt our sales in the U.S., he said. And we posted an unusual income tax expense of $9.9 million following the adoption of Bill 15. If we exclude that, and consider a standardized motor fuel net margin, earnings would have increased over $35.2 million or 18.2%. This proves that the merchandise and service growth, our most profitable sector, is very healthy.
During the fourth quarter, Couche-Tard implemented its IMPACT program in 146 company-op stores, bringing its total stores converted under this program to 413 for fiscal 2007. As a result, 51.2% of the company-op stores have now been converted to the IMPACT program.
Revenues amounted to $3 billion for the 12-week period ended April 29, 2007, up $333.7 million or 12.6%. On a 12-week comparative basis, the company's revenues posted an increase of $553.8 million or 22.9%. For fiscal 2007, revenues amounted to $12.1 billion, up $1.9 billion for an increase of 19.0%. On a 52-week comparative basis, the increase is $2.2 billion or 21.6%. Couche-Tard earned 79.7% of its annual revenues in the U.S., compared with 77.4% the previous year.
Merchandise and service revenues grew $48 million or 4.6% in the fourth quarter of fiscal 2007. On a 12-week comparative basis, the increase is $131.7 million or 13.8%, of which $90.9 million was generated by the stores acquired since the beginning of fiscal 2007. Growth of same-store merchandise revenues in the United States (on a 12-week standardized basis) was 3.4% while it was 3.3% in Canada. In the U.S., this growth rate is very satisfactory particularly given that it is in comparison to a particularly hectic period the previous year following the hurricanes. In Canada, the internal growth rate was also very satisfactory given the very competitive markets in central and eastern Canada and the growing smuggling of tobacco products.
Growth, in both the U.S. and Canada, is partially due to the results from investments in the IMPACT program conversions, the retailer said, as well as from the launch of new products that were well received by customers and from the implementation of pricing strategies on certain product categories.
For fiscal 2007, the growth in merchandise and service revenues stood at $378.3 million or 8.9%. On a 52-week comparative basis, the increase was $462 million or 11.1%, of which $219.1 million was generated by the stores acquired during the year and $67.4 million was generated by the 4.4% appreciation of the Canadian dollar against its U.S. counterpart. Also, the increase in same-store merchandise revenues in the U.S. stood at 3.3% and 2.6% in Canada.
Motor fuel revenues increased $285.7 million or 17.9% for the fourth quarter of fiscal 2007. On a 12-week comparable basis, the increase amounted to $422.1 million or 28.8%. This increase is mainly related to the stores acquired since May 1, 2006, which generated $381.5 million and by the increase in the average retail price at the pump for the company-op stores which explained, based on last year's volume, another $105.9 million. These factors were offset by the decrease of same-store motor fuel volume.
In the U.S., growth of same-store motor fuel volume (on a 12-week standardized basis) fell 2.5% but rose 5.2% in Canada. In the U.S., in light of the significant and quick increases in the cost of motor fuel in the last weeks of the fiscal year, the Southeast and Florida/Gulf Coast region markets took the initiative to restore retail prices in their respective markets. This strategy was not always followed by the competition, which had a negative impact on volume; however, the strategy had a positive impact on net earnings.
For the full year, motor fuel revenues climbed $1.6 billion or 26.2%. On a 52-week standardized basis, motor fuel revenues increased by $1.7 billion, of which $816.2 million was generated by the stores acquired during fiscal 2007. The increase in pump prices for the company-op stores contributed $352.6 million to the total increase while the appreciation of the Canadian dollar generated $42.1 million. Finally, the growth in same-store motor fuel volume was 2.9% in the U.S. and 4.8% in Canada for reasons similar to those described above and due to the fact that the pricing optimization program in the southwest of the U.S. is in its second year.
Merchandise and service gross margin during the 12-week period ended April 29, 2007, was 33.9%, slightly under the 34.2% for the corresponding quarter of fiscal 2006. In the U.S., the gross margin was 33.2%, down from 34% last year but in Canada, it rose to 35.6% for the fourth quarter of fiscal 2007 compared with 34.5% in fiscal 2006.
The decrease in the United States margin was due to the following: There were more promotional activities introduced due to intense competition in several product categories, including beer, milk and fresh products; the tax hike of $8.20-per-carton on tobacco products in Arizona effective as of Dec. 8, 2006, was not fully passed on to consumers; and some stores acquired during the year had aggressive price strategies that cannot be modified on a short-term basis.
All these factors were offset, however, by improvements in purchasing terms, changes in the product mix with a focus on higher-margin items that target customers' demand more specifically, as well as the implementation of the IMPACT program in an increasing number of stores, including the newly acquired stores. In Canada, the increase can be attributed primarily to improvements in purchasing terms and the change in product mix.
For fiscal 2007, the merchandise and service gross margin reached 34.1%, up from 33.4% for fiscal year 2006. Gross margin in the U.S. was 33.6%, up from 33.2% last year. In Canada, it stood at 35.1% compared with 33.9%, which represents a significant increase of 1.2%.
Motor fuel gross margin for the company-op stores in the U.S. increased to 13.12 cents per gallon for the fourth quarter of fiscal 2007 compared with 10.96 cents per gallon in the corresponding quarter of the previous year. In Canada, it fell to 4.67 cents (Canadian) per liter compared with 5.11 cents per liter last year. The volatility in margins from one quarter to another tends to stabilize on an annual basis.
For fiscal year 2007, the U.S. motor fuel gross margin fell slightly to 14.90 cents per gallon compared with 15.14 cents per gallon for the previous fiscal year. Canada followed the same trend with the gross margin decreasing to 4.31 cents per liter compared with 5 cents per liter.
Net earnings for the fourth quarter increased $1.3 million or 4.1% to $33.4 million, resulting in earnings per share of 17 cents or 16 cents on a diluted basis. On a 12-week standardized basis, the increase is $4 million or 13.6%.
As merchandise and service revenues generate approximately 80% of the company's gross margin, Couche-Tard's management considers that an appropriate performance measure for the stores consists in neutralizing the variance of the motor fuel gross margin from one period to another; therefore, on a comparable motor fuel net margin, net earnings would have increased 1% on a standardized 12-week basis. This modest increase can be attributed primarily to acquisitions of fiscal 2007. Of the 421 company-op stores acquired during the 2007 fiscal year, 62.7% or 264 were acquired during the second half of the year, including Shell's stores, which represents an additional integration challenge with respect to human resources. These acquisitions have not yet generated their full potential in terms of operating income before depreciation. On the other hand, the depreciation expense and the financial fees related to these acquisitions have been fully recorded to earnings.
Couche-Tard closed fiscal 2007 with net earnings of $196.4 million, which equals 97 cents per share or 94 cents per share on a diluted basis compared with $196.2 million in 2006. On a 52-week comparable basis, net earnings rose $2.9 million or 1.5%. Considering a comparable motor fuel net margin and excluding the unusual income tax expense posted following the adoption of Bill 15, net earnings would have increased by $35.2 million or 18.2% compared with net earnings in fiscal 2006, standardized over 52 weeks.
Investing activities Couche-Tard's investments carried out during this quarter were the acquisitions of the Groovin Noovin and All-Star stores, which were added to the Spectrum, Stop-n-Save, Holland Oil, Sparky's and Shell stores acquired during the first three quarters of fiscal 2007. Capital expenditures are primarily related to the ongoing implementation of the company's IMPACT program throughout its network, new constructions, as well as the replacement of equipment in some of its stores to enhance the offering of products and services.
During fiscal 2008, we will pursue our investments in order to deploy our IMPACT program in approximately 400 stores in addition to the construction of approximately 60 new stores. These investments, in addition to the other capital expenditures, will amount to approximately $300 million, which we plan to finance with our net cash provided by operating activities, said Bouchard. In terms of acquisitions, our objective is to purchase approximately 250 stores and we believe we have the structure and the teams to do so. In line with our business model, we will continue to focus our resources on the sale of fresh products and on innovation, including the introduction of new products and services, in order to satisfy the needs of our growing clientele. On a comparable motor fuel net margin basis, we are confident that we will increase our results significantly in the coming year.
Couche-Tard, Laval, Quebec, currently operates a network of 5,513 c-stores, 3,413 of which include motor fuel dispensing, located in nine large geographic markets, including six in the U.S. covering 29 states and three in Canada covering six provinces.
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