Fourth-quarter net earnings were positively affected by earnings stemming from acquisitions, higher motor [image-nocss] fuel gross margins, an increase in same-store merchandise revenues, growth in same-store motor fuel volume in Canada, "sound management" by Couche-Tard of its operating expenses as well as a decrease in financial expenses, the company said.
These positive items were partially offset by a decrease in same-store motor fuel volume in the United States, a weakening Canadian dollar, a slight decrease in merchandise and service consolidated gross margin as well as a higher income tax expense compared to the income tax recovery recorded in fourth-quarter fiscal 2008.
"Given the economic conditions, we are satisfied with the quarterly and annual results while remaining level-headed and prudent about the coming year", indicates Alain Bouchard, president and CEO. "Our performance most certainly reflects the interesting margins on motor fuel sales over a portion of the last fiscal year; however, we keep ourselves in check and understand that such a windfall may not present itself during the coming year."
He added, "On the other hand, with the sacrifices made by all over the past months and the informed decisions we made with our people, we are poised to tackle the challenges that will arise over the coming years and maintain the company's results despite normal motor fuel margins."
Raymond Pare, vice president and CFO, said, "Although the economic situation is quite difficult in the United States, we are observing encouraging signs. Indeed, although it is still negative, the United States same-store motor fuel trend is improving. The U.S. merchandise and service gross margin, is also increasing. In addition, excluding the impact related to the foreign exchange variations, to the electronic payment modes expense and to acquisitions, operating, selling, administrative and general expenses decreased by 3.3% during the last quarter."
He added, "We have nonetheless generated an average return on investment of 18.3% during the challenging last three fiscal years, 19.4% for fiscal 2009. We are therefore in good position and will be working hard to maintain and even improve our situation as well as that of our partners."
During the quarter, Couche-Tard also implemented its IMPACT (Innovation-Marketing-People-Alimentation-Couche-Tard) local product mix program in 81 company-operated stores, 211 for fiscal 2009. As a result, 61% of its company-operated stores have now been converted to the IMPACT program.
Revenues amounted to $3 billion in fourth-quarter fiscal 2009, compared to $3.7 billion for the same quarter last fiscal year, a decrease of 19.2% or $711.8 million. Of this amount, $903 million is due to a lower retail price at the pump compared to fourth-quarter fiscal 2008 and $145.8 million is due to the depreciation of the Canadian dollar against its U.S. counterpart. These decreases were partially offset by additional revenues of $384 million generated by acquisitions. Couche-Tard recorded 79.7% of its revenues in the United States, compared with 81.5% in the fourth quarter last fiscal year.
Revenues amounted to $15.8 billion in fiscal 2009, up $411.1 million, an increase of 2.7%, of which $1.6 billion was attributable to acquisitions, further complemented by the growth of same-store merchandise revenues in the United States and Canada, as well as the growth in same-store motor fuel volume in Canada. These positive items were partially offset by a drop in same-store motor fuel volumes in the United States, a $411 million decrease in revenues related to the drop in motor fuel retail price as compared to last year, and a $310.6 million decrease related to the weakening Canadian dollar.
More specifically, the growth of merchandise and service revenues for fourth-quarter fiscal 2009 was $52 million, an increase of 4.5% compared to the same quarter last fiscal year, of which $100.2 million was generated by acquisitions, partially offset by a $80.3 million decrease related to the depreciation of the Canadian dollar against its U.S. counterpart. Growth in same-store merchandise revenues was 3.3% in the United States, of which 2.7% is due to the positive effect of the federal tax increase on tobacco products during fourth quarter fiscal 2009 while the remaining increase comes from the ability of Couche-Tard's business units to put forward a product mix allowing them to maintain revenues as well as gross margin; however, these growth factors were partially offset by the impact of poor economic conditions in certain of Couche-Tard's U.S. markets. As for the Canadian market, the 2.8% increase in same-store merchandise revenues is in great part attributable to Couche-Tard's merchandising strategy.
As for fiscal 2009, merchandise and services revenues grew by $215.7 million or 4.1% due to the $335.3 million generated by acquisitions, partially offset by the $170.5 million decrease related to the depreciation of the Canadian dollar against its U.S. counterpart. Internal growth, as measured by the growth in same-store merchandise revenues, was 0.6% in the United States and 2.2% in Canada.
Motor fuel revenues decreased by $763.8 million or 30.1% in fourth-quarter fiscal 2009. The lower average retail price at the pump in the company-operated stores in the United Stated and Canada created a drop in revenues of $903 million, as shown in the following table, beginning with the first quarter of the year ended April 27, 2008:
Acquisitions contributed an additional 138.5 million gallons in the fourth quarter, or $283.8 million in revenues, partially offset by the depreciation of the Canadian dollar against its U.S. counterpart, resulting in a decrease in revenues of $60.5 million. The same-store motor fuel volume fell 4.1% in the United States and rose 2.2% in Canada. In the United States, the decrease is mainly due to the poor economic conditions affecting some of Couche-Tard's business units; however, the trend is improving compared to the previous quarters.
During fiscal 2009, motor fuel revenues increased $195.4 million or 1.9%, of which $1.2 billion or 463.1 million of gallons stems from acquisitions. This increase was partially offset by a $411 million drop in motor fuel revenues due to a lower average retail price at the pump in Couche-Tard's U.S. and Canadian company-operated stores. As for the same-store motor fuel volume, it fell 6.4% in the United States and rose 3.7% in Canada. In the United States, the decrease is not only due to poor economic conditions affecting some of Couche-Tard's business units but also to the overall decline in consumer demand resulting from the sharp increase in retail prices at the pump during the first half of fiscal 2009. The depreciation of the Canadian dollar against its U.S. counterpart accounts for a decrease in revenues of $140.1 million.
During the fourth quarter of fiscal 2009, the merchandise and service gross margin stood at 33.6%, compared with 33.7% in fourth-quarter fiscal 2008. In the United States, gross margin rose to 33.6% in fourth-quarter iscal 2009, an increase compared with 33.2% in fiscal 2008, due to the implementation of the IMPACT conversion program in a growing number of stores, a more favorable product-mix as well as the company's merchandising strategies. In Canada, the margin fell to 33.8%, from 34.7% last fiscal year. The performance in Canada is mainly the result of a merchandising strategy in tune with market competitiveness and economic conditions within each market as well as a less favorable product mix. Finally, some recent acquisitions in Canada and the United States posted a lower gross margin than the existing network thereby lowering the overall gross margin. This situation should improve as Couche-Tard's integration and improved supply terms strategies are implemented.
The merchandise and service gross margin was 33.3% in fiscal 2009, down 0.3% compared with 33.6% in fiscal 2008. In the United States, the gross margin was 32.8%, a slight decrease from 33.0% in fiscal 2008. In Canada, the gross margin fell 0.6% to 34.3%.
During the fourth quarter, the motor fuel gross margin for Couche-Tard's company-operated stores in the United States increased by 1.36 cents per gallon, from 10.02 cents per gallon in fourth-quarter fiscal 2008 to 11.38 cents per gallon this quarter. For the same period, in Canada, the gross margin rose, reaching 5.62 cents (Canadian) per liter compared with 5.25 cents (Canadian) per liter in fourth-quarter 2008.
As for fiscal 2009, the motor fuel gross margin of company-operated stores in the United States increased by 3.97 cents per gallon, from 13.58 cents per gallon last year to 17.55 cents per gallon this year. In Canada, the margin decreased slightly to 4.97cents per liter compared to 5.08 cents per liter in fiscal 2008.
Laval, Quebec-based Couche-Tard has a network of 5,443 c-stores, 3,646 of which include motor fuel dispensing, located in 11 large geographic markets, including eight in the United States covering 34 states and three in Canada covering 10 provinces.
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