U.S. markets closed

Alimentation Couche-Tard Announces Its Results for Its Fourth Quarter and Fiscal Year 2020

Fourth Quarter 2020

  • Net earnings attributable to shareholders of the Corporation ("net earnings") were $576.3 million or $0.52 per diluted share for the fourth quarter of fiscal 2020 compared with $293.1 million or $0.26 per diluted share for the fourth quarter of fiscal 2019. Adjusted net earnings were $521.0 million 1 compared with $289.0 million 1 for the fourth quarter of fiscal 2019. Adjusted net earnings per share on a diluted basis were $0.47 1 , representing an increase of 80.8% from $0.26 1 last year.
  • Due to the implementation of restrictive social measures in the various geographies in which the Corporation operates, the COVID-19 pandemic had a meaningful impact on financial results, mostly driven by declining traffic across the network. Fuel volumes declined rapidly following the initial response to the crisis but stabilized during April, while fuel margins overall benefited from the rapid and steep decline in crude prices as well as by changes in the competitive landscape. Merchandise sales benefited from a higher average basket which helped offset in part the lower number of visitors.
  • Total merchandise and service revenues of $3.2 billion , a decrease of 2.6%. Same-store merchandise revenues decreased 0.5% in the U.S., 6.5% in Europe , while they increased 4.7% in Canada .
  • Merchandise and service gross margin decreased 0.9% in the U.S. to 33.0%, 1.2% in Europe to 40.6%, and 1.2% in Canada to 31.8%, all impacted by product mix.
  • Same-store road transportation fuel volume decreased 18.3% in the U.S., 13.4% in Europe , and 23.5% in Canada .
  • Road transportation fuel gross margin increased by 28.37¢ per gallon in the U.S. to 46.88¢ per gallon, by US 0.39¢ per liter in Europe to US 8.67¢ per liter, and by CA 0.27¢ per liter in Canada to CA 8.40¢ per liter.
  • Took mitigating actions to adapt the business, including reducing non-critical capital expenditures, marketing and promotional expenses, and various professional fees. Adjusted store hours where appropriate and shared best practices across business units to optimize decision-making and minimize business risks.
  • To ensure customers and employees safety, the Corporation pulled forward enabling technologies that could become key to serving customers beyond the pandemic, including the expansion of home delivery, Click & Collect and curbside delivery, as well as in-app ordering and prepayment.
  • The Corporation is in a strong cash position, with access to approximately $4.7 billion through available cash and its revolving unsecured operating credit facility.

Fiscal Year 2020

  • Net earnings per diluted share of $2.09 1 compared with $1.62 1 for fiscal 2019, an increase of 29.0%, while adjusted net earnings per diluted share were $1.97 1 compared with $1.63 1 for fiscal 2019, an increase of 20.9%.
  • Circle K rebranding project continues in North America with more than 6,300 stores now displaying the new Circle K global brand, representing more than 86.0% of the overall North American project.
  • Increase in the annual dividend of 17.8%, from CA 22.5¢ to CA 26.5¢.
  • Return on capital employed² improved from 12.6% to 15.0%, on a pro forma basis.
  • Adjusted leverage ratio², improved from 2.18 : 1 to 1.60 : 1, on a pro forma basis, driven by strong earnings.

_____________________________

1

Please refer to the section "Net earnings attributable to shareholders of the Corporation ("net earnings") and adjusted net earnings attributable to shareholders of the Corporation ("adjusted net earnings")" of this press release for additional information on this performance measure not defined by IFRS. This performance measure, for the 12 and 52-week periods ended April 28, 2019, has been adjusted for the estimated pro forma impact of IFRS 16.



2

Please refer to the section "Summary Analysis of Consolidated Results for the Fourth Quarter and Fiscal 2020" of this press release for additional information on this performance measure not defined by IFRS. These performance measures, for the 52-week period ended April 28, 2019, have been adjusted for the estimated pro forma impact of IFRS 16.

 

LAVAL, QC, June 29, 2020 /PRNewswire/ - For its fourth quarter ended April 26, 2020 , Alimentation Couche-Tard Inc. ("Couche-Tard" or the "Corporation") (TSX: ATD.A) (TSX: ATD.B) announces net earnings attributable to shareholders of the Corporation of $576.3 million , representing $0 .52 per share on a diluted basis. The results for the fourth quarter of fiscal 2020 were affected by a pre-tax net gain of  $41 .0 million on the disposal of a portion of its U.S. wholesale fuel business as  part of an asset exchange with CAPL, a pre-tax net foreign exchange gain of $22 .8 million, a positive impact on income tax of $4.6 million from an adjustment to deferred tax assets, pre-tax acquisition costs of $2.9 million , as well as pre-tax restructuring costs of $0 .9 million. The results for the comparable quarter of fiscal 2019 were affected by pre-tax restructuring costs of $2 .6 million, a pre-tax net foreign exchange gain of $1 .1 million, as well as pre-tax acquisition costs of $0 .4 million. Excluding these items, the adjusted net earnings would have been approximately $521 .0 million 1 or $0.47 per share on a diluted basis for the fourth quarter of fiscal 2020, compared with $289 .0 million 1 or $0.26 1 per share on a diluted basis for the fourth quarter of fiscal 2019, an increase of 80.8% in the adjusted net earnings per share on a diluted basis, driven by higher road transportation fuel margins in the U.S. and in Europe , partly offset by the impact of the COVID-19 outbreak on traffic in its network. All financial information presented is in US dollars unless stated otherwise.

Couche Tard, Circle K, ingo - logo (CNW Group/Alimentation Couche-Tard Inc.)

"This year, Couche-Tard became a better, and stronger company. We had an exceptional year overall, both financially and operationally. We stayed on track with our strategic goals including growing organically across the network by making significant strides in the rebranding of our sites and fuel brand, beginning the rollout of our new food program in the U.S., pushing dynamic pricing initiatives,  and improving our customer experience across the globe. Our agile, decentralized model and advancements in operational excellence allowed us to face the unprecedented challenges of the COVID-19 crisis and fare far better than many other businesses." said Brian Hannasch , President and CEO of Alimentation Couche-Tard.

"We also had a strong fourth quarter with positive traffic trends to begin with before we endured significant decline in traffic and fuel volumes with the pandemic stay-at-home orders implemented across our global footprint. Our customers changed their shopping behaviors moving to larger baskets with more impulse and emergency items, and we innovated quickly to meet their desire for less touchpoints while visiting our locations. Most of all, we placed the health and safety of our employees and customers at the forefront of all our decision making and were committed to being part of the solution in the communities where we work and live. I want to thank all our employees, customers, partners, and shareholders for their trust in the business during these troubling times. I am deeply proud of the courage, care, and commitment our employees showed towards each other and our customers," concluded Brian Hannasch .

Claude Tessier , Chief Financial Officer, said, "I am very pleased with our fourth quarter performance, capping off another strong year despite the turbulence caused by the COVID-19 pandemic. I especially want to underline the exceptional efforts of our teams throughout the year, from executing on our organic growth initiatives to standardizing key processes in order to simplify our business and leverage our scale. In the past year, we increased our quarterly dividend and returned more than $470 .0 million to shareholders through share repurchases, strengthened our balance sheet further by building our cash position and continued to allocate capital strategically in support of our five-year plan. Since the start of the pandemic, we halted our share repurchases, we worked hard to maximize cash flows and doubled down on our usual cost discipline. As a result, we ended the year in an enviable position, with great financial flexibility and solid leverage and return ratios. More importantly, we are taking all the necessary steps to adapt to the new environment and become an even better, stronger company."

Significant Items of the Fourth Quarter of Fiscal 2020

  • Due to the implementation of restrictive social measures in the various geographies in which we operate, the COVID-19 pandemic had a meaningful impact on our financial results, mostly driven by declining traffic in our entire network. These measures led to fewer visits to our stores starting mid-March in Europe and slightly later in North America . The impact of lower traffic was partially offset by the purchasing of larger baskets by consumers. From a merchandise category standpoint, product demand shifted during the pandemic negatively impacting margins due to a different product mix. From a fuel perspective, volumes declined rapidly during the first weeks following the stay-at-home orders across the different regions, while margins remained healthy. Additionally, various measures were enacted to support the health and safety of our employees and customers driving incremental operating expenses. These additional costs were partly offset by initiatives implemented across our network to reduce our controllable expenses.
  • During the fourth quarter and entire fiscal 2020, we repurchased 8,696,424 and 16,354,384 Class B subordinate voting shares, respectively. These repurchases were settled for net amounts of $233.9 million and $470.8 million , respectively. The last share repurchase was traded on March 26, 2020 . The share repurchase program expired on April 9, 2020 , and was not renewed.
  • During the fourth quarter of fiscal 2020, as part of our cost reduction initiatives and the search for synergies aimed at improving our efficiency, we made the decision to proceed with the restructuring of certain of our operations. As such, an additional restructuring expense of $0.9 million was recorded to earnings of the fourth quarter of fiscal 2020.

_____________________________

1

Please refer to the section "Net earnings attributable to shareholders of the Corporation ("net earnings") and adjusted net earnings attributable to shareholders of the Corporation ("adjusted net earnings")" of this press release for additional information on this performance measure not defined by IFRS. This performance measure, for the 12 and 52-week periods ended April 28, 2019, has been adjusted for the estimated pro forma impact of IFRS 16.

Changes in our Network

  • On March 26, 2020 , we announced the closing of an asset exchange agreement with CAPL (the " November 2019 asset exchange agreement") under which we transferred a portion of our U.S. wholesale road transportation fuel operations, which consisted of wholesale fuel supply agreements covering 333 sites, 33 fee and leasehold properties, also covered by wholesale fuel supply agreements, for a total of 366 supply agreements, as well as a cash consideration of approximately $14.0 million , receiving in return CAPL's 17.5% limited partnership interest in CST Fuel Supply LP. We recognized a net gain on disposal of $41.0 million in relation to this transaction. This transaction also led to the release of a deferred tax asset valuation allowance of $4.6 million in relation with capital losses which were not expected to be used before their expiration date.
  • On February 25, 2020 , and on April 7, 2020 , we closed the third and fourth transactions of the asset exchange agreement with CAPL (" December 2018 asset exchange agreement"). In these transactions, we transferred 23 Circle K U.S. stores for a total value of approximately $24.0 million . In exchange, CAPL transferred the real estate for 12 properties for a total value of approximately $23.0 million .
  • On May 5, 2020 , subsequent to the end of the fourth quarter of fiscal 2020, we closed the fifth transaction of the December 2018 asset exchange agreement with CAPL. In this fifth transaction, we transferred 29 Circle K U.S. stores for a total value of approximately $32.0 million . In exchange, CAPL transferred the real estate for 13 properties for an equivalent value. The remaining assets of this agreement are expected to be exchanged in the second half of calendar 2020.
  • During the fourth quarter of fiscal 2020, we acquired 3 company-operated stores, reaching a total of 13 stores since the beginning of fiscal 2020.
  • During the fourth quarter of fiscal 2020, we completed the construction of 11 stores and the relocation or reconstruction of 6 stores, reaching a total of 85 stores since the beginning of fiscal year 2020. As of April 26, 2020 , another 30 stores were under construction and should open in the upcoming quarters.

Summary of changes in our store network during the fourth quarter and fiscal 2020

The following table presents certain information regarding changes in our store network over the 12-week period ended April 26, 2020:


12-week period ended April 26, 2020

Type of site

Company-
operated

CODO

DODO

Franchised and
other affiliated

Total

Number of sites, beginning of period

9,732

449

1,025

1,290

12,496

Acquisitions

3

3

Openings / constructions / additions

10

1

18

27

56

Closures / disposals / withdrawals

(33)

(26)

(345)

(27)

(431)

Store conversion

(21)

29

(9)

1

Number of sites, end of period

9,691

453

689

1,291

12,124

Circle K branded sites under licensing agreements





2,347

Total network





14,471

Number of automated fuel stations included in the period-end
   figures

982

10

992

The following table presents certain information regarding changes in our store network over the 52-week period ended April 26, 2020:


52-week period ended April 26, 2020

Type of site

Company-
operated

CODO

DODO

Franchised and
other affiliated

Total

Number of sites, beginning of period

9,794

514

1,052

1,215

12,575

Acquisitions

30

30

Openings / constructions / additions

72

3

37

163

275

Closures / disposals / withdrawals

(128)

(151)

(389)

(88)

(756)

Store conversion

(77)

87

(11)

1

Number of sites, end of period

9,691

453

689

1,291

12,124

Circle K branded sites under licensing agreements





2,347

Total network





14,471


New Accounting Standard Adopted by the Corporation

As of April 29, 2019 , we adopted IFRS 16, Leases , which requires lessees to recognize on the balance sheet a lease liability reflecting future lease payments and a right-of-use asset for virtually all lease contracts, except with respect to lease contracts that meet limited exception criteria. As permitted under the specific transition provisions in the standard, we have elected not to restate our comparative figures for the fiscal year 2019. The tables below present the estimated pro forma impact of the change in accounting policy on our previously reported results:


12-week period ended April 28, 2019

(in millions of US dollars)

Pre IFRS 16
As reported

Excluding: rent
under IAS 17

Including:
depreciation and
interests (1)

Other

Total estimated
pro forma IFRS
16 adjustments

Pro forma -
IFRS 16

Total estimated
pro forma IFRS
16 impacts
attributable to
shareholders of
the Corporation

Revenues

13,113.3

10.0

10.0

13,123.3

6.0

Cost of sales

11,135.0

11,135.0

Gross profit

1,978.3

10.0

10.0

1,988.3

6.0









Operating, selling, administrative and
   general expenses

1,339.5

(91.0)

7.0

(84.0)

1,255.5

(84.0)

Restructuring costs

2.6

2.6

Gain on disposal of property and
   equipment and other assets

(15.5)

(15.5)

Depreciation, amortization and
   impairment

241.5

(4.0)

90.0

86.0

327.5

84.0

Total operating expenses

1,568.1

(95.0)

90.0

7.0

2.0

1,570.1

Operating income

410.2

95.0

(90.0)

3.0

8.0

418.2

6.0









Share of earnings of joint ventures
   and associated companies

3.6

3.6

EBITDA

655.3

91.0

3.0

94.0

749.3

89.0









Financial expenses

83.5

(5.0)

21.0

16.0

99.5

14.0

Financial revenues

(3.8)

(3.8)

Foreign exchange gain

(1.1)

(1.1)

Net financial expenses

78.6

(5.0)

21.0

16.0

94.6

14.0

Earnings before income taxes

335.2

100.0

(111.0)

3.0

(8.0)

327.2

(8.0)

Income taxes

45.3

25.0

(28.0)

1.0

(2.0)

43.3

(2.0)

Net earnings including non-controlling
   interests

289.9

75.0

(83.0)

2.0

(6.0)

283.9

(6.0)

Net loss attributable to non-controlling
   interests

3.2

(1.0)

5.0

(4.0)

3.2

Net earnings attributable to
   shareholders of the Corporation

293.1

74.0

(78.0)

(2.0)

(6.0)

287.1

(6.0)

(1)

Depreciation and interest expenses are based on our assessment of Fiscal 2020 impact.

 


52-week period ended April 28, 2019

(in millions of US dollars)

Pre IFRS 16
As reported

Excluding: rent
under IAS 17

Including:
depreciation
and interests (1)

Other

Total estimated
pro forma IFRS
16 adjustments

Pro forma -
IFRS 16

Total estimated
pro forma IFRS
16 impacts
attributable to
shareholders of
the Corporation

Revenues

59,117.6

40.0

40.0

59,157.6

20.0

Cost of sales

49,922.7

49,922.7

Gross profit

9,194.9

40.0

40.0

9,234.9

20.0









Operating, selling, administrative and
   general expenses

5,646.1

(390.0)

28.0

(362.0)

5,284.1

(361.0)

Restructuring costs

10.5

10.5

Gain on disposal of property and
   equipment and other assets

(21.3)

(21.3)

Depreciation, amortization and
   impairment

1,070.7

(18.0)

388.0

370.0

1,440.7

356.0

Total operating expenses

6,706.0

(408.0)

388.0

28.0

8.0

6,714.0

(5.0)

Operating income

2,488.9

408.0

(388.0)

12.0

32.0

2,520.9

25.0








Share of earnings of joint ventures
   and associated companies

23.4

23.4

EBITDA

3,583.0

390.0

12.0

402.0

3,985.0

381.0









Financial expenses

338.7

(20.0)

90.0

70.0

408.7

62.0

Financial revenues

(13.3)

(13.3)

Foreign exchange gain

(5.3)

(5.3)

Net financial expenses

320.1

(20.0)

90.0

70.0

390.1

62.0

Earnings before income taxes

2,192.2

428.0

(478.0)

12.0

(38.0)

2,154.2

(37.0)

Income taxes

370.9

108.0

(120.0)

3.0

(9.0)

361.9

(9.0)

Net earnings including non-controlling
   interests

1,821.3

320.0

(358.0)

9.0

(29.0)

1,792.3

(28.0)

Net loss attributable to non-controlling
   interests

12.6

(3.0)

20.0

(16.0)

1.0

13.6

Net earnings attributable to
   shareholders of the Corporation

1,833.9

317.0

(338.0)

(7.0)

(28.0)

1,805.9

(28.0)

(1)

Depreciation and interest expenses are based on our assessment of Fiscal 2020 impact.

In order to facilitate the understanding of our financial performance, we have adjusted some of our previously reported performance measures. All adjustments related to IFRS 16 are clearly identified and are based on the calculations presented in the tables above.

Exchange Rate Data

We use the US dollar as our reporting currency, which provides more relevant information given the predominance of our operations in the United States .

The following table sets forth information about exchange rates based upon closing rates expressed as US dollars per comparative currency unit:


12-week periods ended

52-week periods ended


April 26, 2020

April 28, 2019

April 26, 2020

April 28, 2019

Average for period





Canadian dollar

0.7275

0.7510

0.7494

0.7595

Norwegian krone

0.1005

0.1165

0.1096

0.1195

Swedish krone

0.1016

0.1077

0.1038

0.1108

Danish krone

0.1467

0.1514

0.1485

0.1542

Zloty

0.2485

0.2627

0.2568

0.2675

Euro

1.0953

1.1298

1.1087

1.1499

Ruble

0.0141

0.0153

0.0153

0.0153







Summary Analysis of Consolidated Results for the Fourth Quarter and Fiscal 2020

The following table highlights certain information regarding our operations for the 12 and 52-week periods ended April 26, 2020, and April 28, 2019. CAPL refers to CrossAmerica Partners LP.

...

12-week periods ended

52-week periods ended

(in millions of US dollars, unless otherwise stated)

April 26,
2020

April 28,
2019

Variation

%

April 26,
2020

April 28,
2019

Variation
%

Statement of Operations Data:







Merchandise and service revenues (1) :







United States

2,433.8

2,469.9

(1.5)

10,918.4

10,781.8

1.3

Europe

312.9

343.3

(8.9)

1,416.3

1,457.8

(2.8)

Canada

486.7

485.8

0.2

2,302.7

2,172.7

6.0

CAPL

20.1

(100.0)

29.6

95.8

(69.1)

Elimination of intercompany transactions with CAPL

(0.5)

(100.0)

(0.8)

(2.7)

(70.4)

Total merchandise and service revenues

3,233.4

3,318.6

(2.6)

14,666.2

14,505.4

1.1

Road transportation fuel revenues:






United States

4,304.1

6,227.1

(30.9)

25,724.8

28,195.6

(8.8)

Europe

1,360.4

1,960.1

(30.6)

7,481.1

8,380.7

(10.7)

Canada

660.2

1,033.3

(36.1)

4,415.7

4,957.9

(10.9)

CAPL

436.3

(100.0)

1,365.7

2,211.8

(38.3)

Elimination of intercompany transactions with CAPL

(80.0)

(100.0)

(288.0)

(444.7)

(35.2)

Total road transportation fuel revenues

6,324.7

9,576.8

(34.0)

38,699.3

43,301.3

(10.6)

Other revenues (2) :







United States

8.8

4.9

79.6

36.9

21.8

69.3

Europe

115.7

197.0

(41.3)

652.0

1,220.7

(46.6)

Canada

4.6

4.8

(4.2)

21.3

24.5

(13.1)

CAPL

15.5

(100.0)

65.6

61.2

7.2

Elimination of intercompany transactions with CAPL

(4.3)

(100.0)

(8.9)

(17.3)

(48.6)

Total other revenues

129.1

217.9

(40.8)

766.9

1,310.9

(41.5)

Total revenues

9,687.2

13,113.3

(26.1)

54,132.4

59,117.6

(8.4)

Merchandise and service gross profit (1) :







United States

802.3

836.4

(4.1)

3,686.7

3,646.3

1.1

Europe

127.0

143.4

(11.4)

587.6

609.0

(3.5)

Canada

154.9

160.4

(3.4)

750.9

729.7

2.9

CAPL

4.9

(100.0)

6.8

23.3

(70.8)

Elimination of intercompany transactions with CAPL

(0.4)

(100.0)

(0.8)

(2.3)

(65.2)

Total merchandise and service gross profit

1,084.2

1,144.7

(5.3)

5,031.2

5,006.0

0.5

Road transportation fuel gross profit:







United States

903.5

450.0

100.8

3,131.3

2,471.5

26.7

Europe

206.2

226.0

(8.8)

932.0

981.1

(5.0)

Canada

63.4

82.5

(23.2)

344.2

392.8

(12.4)

CAPL

22.3

(100.0)

57.5

103.6

(44.5)

Total road transportation fuel gross profit

1,173.1

780.8

50.2

4,465.0

3,949.0

13.1

Other revenues gross profit (2) :







United States

8.8

4.9

79.6

36.9

21.8

69.3

Europe

19.8

31.9

(37.9)

123.6

149.7

(17.4)

Canada

4.6

4.8

(4.2)

21.2

24.5

(13.5)

CAPL

15.5

(100.0)

65.7

61.2

7.4

Elimination of intercompany transactions with CAPL

(4.3)

(100.0)

(8.9)

(17.3)

(48.6)

Total other revenues gross profit

33.2

52.8

(37.1)

238.5

239.9

(0.6)

Total gross profit

2,290.5

1,978.3

15.8

9,734.7

9,194.9

5.9

Operating, selling, administrative and general expenses







Excluding CAPL