LAVAL, Quebec – Mainly due to the effect of acquisitions and organic growth, for its first quarter of fiscal year 2016 ended July 19, 2015, Alimentation Couche-Tard Inc. has reported net earnings of $303.8 million, compared to net earnings of $269.2 million for the same period for the previous year.
Lower fuel gross margins in part offset these factors.
"The integration of The Pantry stores is well underway, with a lot of activity on all fronts. We are already seeing solid results, and I am excited to see how this network will perform with the implementation of key programs and harmonization of the brands" said Brian Hannasch, president and CEO.
"Building on the momentum of the last few quarters, we recorded strong organic growth in all our markets, both in terms of merchandise and service and in road transportation fuel. We believe our results compare very favorably to the results of our competition in the majority of our markets. We achieved these results through the continued improvements we made to our network and our product offer, our excellent retail execution and growing recognition by consumers of our private-label products. Those products include our European fuel brands miles and milesPlus which continue to contribute to growing fuel volumes and gaining market share while maintaining healthy margins,” said Hannasch.
“Despite a lower U.S. fuel margin than that of the comparable quarter of the previous fiscal year, we delivered a solid increase in net earnings through strong organic growth and well-integrated acquisitions,” Raymond Paré, vice president and CFO, said. “We were able to maintain tight cost control while establishing two new business units in the United States and deploying considerable efforts towards the integration of The Pantry stores. Our indebtedness ratios remain solid compared with the industry, even after the acquisition of The Pantry.”
He continued, “We have a very strong balance sheet supported by great real-estate assets and solid sustainable cash flow. … We are still excited by the opportunities for organic growth, including our growing foodservice offering, the implementation of synergies and great top line momentum, as well as any potential acquisitions."
“Since the acquisition, we have already taken actions that should allow us to record annual cost reductions we estimate at approximately $50 million before income taxes. During the 12-week period ended July 19, 2015, we recorded cost reductions estimated at approximately $9 million, before income taxes. We believe this amount does not represent the full annual impact of all of our initiatives. … Furthermore, we have taken actions that should allow us to reduce our cost of goods sold by approximately $17 million. … These reductions mainly result from the negotiation of better supply conditions and economies of scale. We estimate the realized savings for the 12-week period ended July 19, 2015, at approximately $3.0 million before income taxes.”
Same-store merchandise revenues up 5.1% in the United States, 1.3% in Europe and 2.3% in Canada. The merchandise and service gross margin increased by 0.4% in the United States and by 0.2% in Europe but decreased slightly in Canada by 0.1%.
Same-store road transportation fuel volumes grew by 9.4% in the United States, 2.7% in Europe and 1.4% in Canada. Road transportation fuel gross margin at US 18.34 cents per gallon in the United States, at 9.60 cents (U.S.) per liter in Europe and at 6.36 cents (Canadian) per liter in Canada.
On June 2, 2015, the company acquired Tiger Tote Food Stores Inc. and its affiliates, 21 company-operated convenience stores in Texas, Mississippi and Louisiana, from Cinco J, Inc. It owns the land and buildings for 18 sites and lease the land and own the buildings for the remaining three sites. As part of this agreement, it also acquired 141 dealer fuel supply agreements, five development properties as well as customer relations for 124 dealer sites.
In addition, during the first quarter of fiscal 2016, it acquired five additional company-operated stores through separate transactions.
Also, the company completed the construction, relocation or reconstruction of 17 stores during the first quarter of fiscal 2016. It added or improved a total of 22 convenience stores through the construction of new stores, the relocation or reconstruction of existing stores and the acquisition of single stores. Furthermore, as of July 19, 2015, it had 31 c-stores under construction.
As of July 19, 2015, Laval, Quebec-based Couche-Tard’s network included 7,987 convenience stores throughout North America, including 6,556 stores offering fuel. Its North American network consists of 15 business units, including 11 in the United States covering 41 states (under the Circle K and Kangaroo Express flags) and four in Canada covering all 10 provinces (under the Mac’s and Couche-Tard flags).
In Europe, Couche-Tard operates a broad retail network across Scandinavia (Norway, Sweden and Denmark), Poland, the Baltics (Estonia, Latvia and Lithuania) and Russia. In addition, about 4,700 stores are operated by independent operators under the Circle K banner in 12 other countries or regions worldwide (China, Guam, Honduras, Hong Kong, Indonesia, Japan, Macau, Malaysia, Mexico, the Philippines, the United Arab Emirates and Vietnam), which brings to more than 14,900 the number of sites in Couche-Tard’s network.
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