Couche-Tard Earnings Decline Due to Pantry Acquisition Costs
But strongest U.S. growth since beginning of financial crisis in 2008, says Hannasch
LAVAL, Quebec -- For its fourth quarter ended April 26, 2015, convenience-store company Alimentation Couche‑Tard Inc. has announced net earnings of $129.5 million, a 10.8% decline over last year’s $145.1 million. Non‑recurring restructuring and integration costs of $22.2 million in connection with the acquisition of The Pantry Inc. c-store chain and a $600,000 additional loss on disposal of its aviation fuel business, among other factors, affected the results.
Excluding non‑recurring items for both comparable periods, net earnings for the quarter would have been approximately $142 million compared with $123 million for the fourth quarter of fiscal 2014, an increase of 15.4%.
This increase is attributable to continued organic growth and higher fuel margins as well as to the contribution from acquisitions.
Couche-Tard closed on the acquisition of The Pantry on March 16, 2015, through an all‑cash transaction with a total enterprise value of approximately $1.7 billion including debt assumed. Results for the fourth quarter and fiscal year 2015 include The Pantry's results for a period of 41 days, including non‑recurring integration costs of approximately $22 million.
“Our performance in the fourth quarter was a great way to end an exceptional fiscal year. It allowed us to begin fiscal year 2016 with the momentum needed to achieve the ambitious goals we have set for ourselves" said Brian Hannasch, president and CEO. "In all our markets, we recorded strong organic growth while maintaining our solid profit margins, confirming the sustainability of our strategies. … In the U.S., we have experienced our strongest growth since the beginning of the financial crisis in 2008.”
Raymond Paré, vice president and CFO, said, "We are very proud of our fourth-quarter results, but even prouder of our ability to demonstrate strong, sustained growth, quarter after quarter, year after year. Even after the acquisition of The Pantry, our financial position remains strong.”
Net earnings amounted to $933.5 million for fiscal 2015, compared with $812.2 million for the previous fiscal year. Excluding the same items and acquisition costs from both periods, fiscal 2015 net earnings would have been approximately $1.022 billion compared with $766 million for fiscal 2014, an increase of 33.4%.
For the quarter, Couche-Tard reported that same‑store merchandise revenues were up 5.2% in the United States, 3% in Europe and 3.8% in Canada. Same‑store merchandise revenues in the United States include The Pantry's results from the acquisition date.
Merchandise and service gross margin stood at 33.4% in the United States, at 42.1% in Europe and at 32.5% in Canada, for a consolidated margin of 34.1%.
Same‑store road transportation fuel volumes grew by 6.4% in the United States, 3.7% in Europe and 1.5% in Canada. Same‑store road transportation fuel volume in the United States includes The Pantry's results from the acquisition date.
Road transportation fuel gross margin was 15.46 cents per gallon in the United States, at 8.55 cents per liter (U.S.) in Europe and at 6.18 cents per liter (Canadian) in Canada.
Laval, Quebec-based Couche-Tard operates a network of more than 6,300 convenience stores throughout North America (more than 7,800 including The Pantry). Its North American network consists of 13 business units, including nine in the United States (under the Circle K brand) in 40 states and four business units in Canada (under the Mac's and Couche-Tard brands) covering all 10 provinces.
In Europe, Couche-Tard operates a broad retail network across Scandinavia (Norway, Sweden and Denmark), Poland, the Baltics (Estonia, Latvia and Lithuania) and Russia, with approximately 2,250 stores--the Statoil Fuel & Retail network it acquired in 2012.
Also, under licensing agreements, about 4,600 stores are operated under the Circle K banner in 12 other countries (China, Guam, Honduras, Hong Kong, Indonesia, Japan, Macau, Malaysia, Mexico, Philippines, Vietnam and United Arab Emirates), which brings to more than 13,100 the number of sites in Couche-Tard's network.