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ALIMENTATION COUCHE-TARD ANNOUNCES ITS RESULTS FOR ITS SECOND QUARTER OF FISCAL YEAR 2023

  • Net earnings were $810.4 million, or $0.79 per diluted share for the second quarter of fiscal 2023 compared with $694.8 million, or $0.65 per diluted share for the second quarter of fiscal 2022. Adjusted net earnings1 were approximately $838.0 million compared with $693.0 million for the second quarter of fiscal 2022. Adjusted diluted net earnings per share1 were $0.82, representing an increase of 26.2% from $0.65 for the corresponding quarter of last year.

  • Total merchandise and service revenues of $4.1 billion, an increase of 2.3%. Same-store merchandise revenues2 increased by 5.6% in the United States, by 2.9% in Europe and other regions1, and decreased by 1.5% in Canada.

  • Merchandise and service gross margin1 increased by 0.2% in the United States to 34.0%, by 0.9% in Canada to 33.2% and decreased by 0.1% in Europe and other regions to 38.3%.

  • Same-store road transportation fuel volumes decreased by 1.9% in the United States, by 6.3% in Europe and other regions, and by 6.5% in Canada.

  • Road transportation fuel gross margin1 of 49.16¢ per gallon in the United States, an increase of 12.77¢ per gallon, US 9.76¢ per liter in Europe and other regions, a decrease of US 0.81¢ per liter driven by the impact of currency translation, and CA 12.55¢ per liter in Canada, an increase of CA 1.52¢ per liter. Fuel margins remained healthy throughout the network due to favorable market conditions and the continued work on the optimization of the supply chain.

  • The Corporation completed the acquisition of 218 sites within the Wilsons network, consisting of 79 company-owned and operated convenience retail and fuel locations, 2 company-owned and dealer-operated locations, 137 dealer-owned and operated locations, and a fuel terminal in Atlantic Canada. According to the Corporation's agreement with the competition bureau, a portion of this network will be divested.

  • During the second quarter and first half-year of fiscal 2023, the Corporation repurchased shares for amounts of $205.2 million and $683.2 million, respectively. Subsequent to the end of the quarter, shares were repurchased for an amount of $396.2 million.

  • Sustained healthy financial situation as demonstrated by a leverage ratio1 of 1.20 : 1, and a return on capital employed1 of 16.4%, both driven by strong earnings.

  • 27.3% increase of the quarterly dividend, from CA 11.0¢ per share, bringing it to CA 14.0¢ per share.

LAVAL, QC, Nov. 22, 2022 /CNW/ - For its second quarter ended October 9, 2022, Alimentation Couche-Tard Inc. ("Couche-Tard" or the "Corporation") (TSX: ATD) announces net earnings of $810.4 million, representing $0.79 per share on a diluted basis, compared with $694.8 million for the corresponding quarter of fiscal 2022, representing $0.65 per share on a diluted basis. The results for the second quarter of fiscal 2023 were affected by a pre-tax impairment loss of $23.9 million on our investment in Fire & Flower Holdings Corp., by pre-tax acquisition costs of $5.3 million, as well as by a pre-tax net foreign exchange gain of $1.5 million. The results for the comparable quarter of fiscal 2022 were affected by a pre-tax net foreign exchange gain of $4.9 million, as well as by pre-tax acquisition costs of $1.8 million. Excluding these items, the adjusted net earnings1 were approximately $838.0 million, or $0.82 per share on a diluted basis for the second quarter of fiscal 2023, compared with $693.0 million, or $0.65 per share on a diluted basis for corresponding quarter of fiscal 2022, an increase of 26.2% in the adjusted diluted net earnings per share1, driven by higher road transportation fuel gross profit1, by organic growth in the convenience activities, as well as by the favorable impact of the share repurchase program, partly offset by higher expenses and by the net negative impact from the translation of our foreign currency operations into US dollars. All financial information presented is in US dollars unless stated otherwise.

ACT banner of logos (CNW Group/Alimentation Couche-Tard Inc.)
ACT banner of logos (CNW Group/Alimentation Couche-Tard Inc.)

________________________

1 Please refer to the "Non-IFRS Measures" section for additional information on performance measures not defined by IFRS.

2 This measure represents the growth of (decrease in) cumulated merchandise revenues between the current period and comparative period for those stores that were open for at least 23 days out of every 28-day period included in the reported periods. Merchandise revenues are defined as Merchandise and service revenues excluding service revenues. 


"We are pleased to report strong results this quarter, especially in the face of the continued challenges of high inflation, energy and fuel prices across the global economy. We had good performance in convenience with favorable same store sales, particularly in our U.S. market, which had strong growth in food, and positive promotional activity. We also continued to generate robust fuel margins across all of our platforms. As always, we remain committed to delivering consistent value both inside our stores and on our forecourts to help make our customers' lives a little easier every day," said Brian Hannasch, President and Chief Executive Officer of Alimentation Couche-Tard.

"We are proud of the recent significant milestones that we have achieved especially in innovation and mobility. Over 1,000 units have been deployed so far in the roll out of our easy-to-use, smart checkout technology. We passed one million pay-by-plate fuel transactions on Circle K forecourts in Europe and launched the first-ever public EV-chargers for trucks in Scandinavia. We have also piloted our new loyalty program in the U.S. and new tiered concept in Europe. We are pleased with the early results of those pilots and are preparing for an expansion in the upcoming quarters," concluded Brian Hannasch.

Claude Tessier, Chief Financial Officer, added: "We delivered once again a solid quarter with impressive bottom-line growth notwithstanding the challenging inflationary environment. Adjusted diluted net earnings per share increased by 26.2% compared to the second quarter of fiscal 2022 driven by strong gross profit1 growth as well as by our cost optimization initiatives, which have helped to mitigate the impacts from higher inflation. These strong results have contributed to noticeable increases in our key return metrics as return on equity[3] and return on capital employed1 reached 22.7% and 16.4%, respectively, up 30 basis points and 50 basis points compared to the first quarter of fiscal 2023. Even with another active quarter in share repurchases, our financial position remains very strong, highlighted by our leverage ratio1 of 1.20, providing us with opportunities for the future and resulting in the announcement today of a dividend increase of 27.3% to CA 14.0¢ per share."

Significant Items of the Second Quarter of Fiscal 2023

  • On September 1, 2022, we adopted a special resolution to convert Class A multiple-voting shares into Common shares carrying one vote per share. Following the conversion, the Common shares of Couche-Tard are listed on the Toronto Stock Exchange in substitution of all Class A multiple-voting shares under the symbol "ATD".

  • During the second quarter and first half-year of fiscal 2023, we repurchased 4,796,500 and 15,736,900 shares, for amounts of $205.2 million and $683.2 million, respectively. Subsequent to the end of the quarter, 8,875,400 shares were repurchased for an amount of $396.2 million.

  • On October 9, 2022, as a result of a decrease in the market capitalization of Fire & Flower Holdings Corp. ("Fire & Flower"), an impairment loss of $23.9 million was recorded to Depreciation, amortization and impairment to bring our investment of 35.2% in the associated company to its fair value.

  • Subsequent to the end of the quarter, we issued a $8.0 million secured loan to Fire & Flower bearing interest at an annual rate of 11.0% and maturing on December 31, 2023.

Changes in our Network during the Second Quarter of Fiscal 2023

  • On August 30, 2022, we closed the acquisition of all the issued and outstanding shares of Cape D'Or Holdings Limited, Barrington Terminals Limited, and other related holding entities which operate an independent convenience store and fuel network in Atlantic Canada under the Esso, Go! Store and Wilsons Gas Stops brands (collectively "Wilsons"). The Wilsons network comprises 79 company-owned and operated convenience retail and fuel locations, 2 company-owned and dealer-operated locations, 137 dealer-owned and operated locations, and a fuel terminal in Halifax, Canada. The transaction was settled for a consideration, subject to post-closing adjustments, of CA $277.9 million ($213.0 million), using available cash.

  • In connection with obtaining the Competition Bureau (Canada) approval for the transaction, we entered into a consent agreement with the Commissioner of Competition to divest 34 company-owned and operated convenience retail and fuel locations, 1 company-owned and dealer-operated location, and 12 dealer-owned and operated locations in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island, Canada.

  • We acquired one company-operated store, reaching a total of two company-operated stores since the beginning of fiscal 2023.

  • We completed the construction of 19 stores and the relocation or reconstruction of 4 stores, reaching a total of 53 stores since the beginning of fiscal 2023. As of October 9, 2022, another 73 stores were under construction and should open in the upcoming quarters.

__________________________

1 Please refer to the "Non-IFRS Measures" section for additional information on performance measures not defined by IFRS.


Summary of changes in our store network

The following table presents certain information regarding changes in our store network over the 12‑week period ended October 9, 2022:


12‑week period ended October 9, 2022

Type of site

Company-
operated


CODO


DODO


Franchised and

 other affiliated


Total

Number of sites, beginning of period

9,796


369


698


1,294


12,157

Acquisitions

80


2


137



219

Openings / constructions / additions

19



5


13


37

Closures / disposals / withdrawals

(20)


(1)


(6)


(19)


(46)

Store conversions

4


(4)




Number of sites, end of period

9,879


366


834


1,288


12,367

Circle K branded sites under licensing agreements









1,935

Total network









14,302

Number of automated fuel stations included in the period-end

   figures

978



1



979


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

24‑week periods ended


October 9, 2022

October 10, 2021

October 9, 2022

October 10, 2021

Average for the period(1)





Canadian dollar

0.7626

0.7923

0.7702

0.8045

Norwegian krone

0.0999

0.1142

0.1015

0.1165

Swedish krone

0.0945

0.1154

0.0970

0.1171

Danish krone

0.1348

0.1581

0.1380

0.1600

Zloty

0.2114

0.2572

0.2181

0.2617

Euro

1.0031

1.1758

1.0267

1.1901

Ruble

Not Applicable

0.0137

Not Applicable

0.0136

Hong Kong dollar

0.1274

0.1285

0.1274

0.1287


(1)     Calculated by taking the average of the closing exchange rates of each day in the applicable period.


For the analysis of consolidated results, the impact of the translation of our foreign currency operations into US dollars is defined as the impact from the translation of our Canadian, European, and Asian operations into US dollars. Variances of our foreign currency operations into US dollars are determined as being the difference between the corresponding period results in local currencies translated at the current period average exchange rate and the corresponding period results in local currencies translated at the corresponding period average exchange rate.

Summary Analysis of Consolidated Results for the Second Quarter and First Half-year of Fiscal 2023

The following table highlights certain information regarding our operations for the 12 and 24‑week periods ended October 9, 2022 and October 10, 2021, and the results analysis in this section should be read in conjunction with this table. Europe and other regions include the results from our operations in Asia.


12‑week periods ended

24‑week periods ended

(in millions of US dollars, unless otherwise stated)

October 9,

2022

October 10,

2021

Variation

%

October 9,

2022

October 10,

2021

Variation

%

Statement of Operations Data:







Merchandise and service revenues(1):







United States

2,903.0

2,754.0

5.4

5,807.9

5,583.4

4.0

Europe and other regions

550.9

580.4

(5.1)

1,088.0

1,141.8

(4.7)

Canada

617.9

644.5

(4.1)

1,248.4

1,321.7

(5.5)

Total merchandise and service revenues

4,071.8

3,978.9

2.3

8,144.3

8,046.9

1.2

Road transportation fuel revenues:







United States

8,236.0

6,654.8

23.8

17,917.4

13,118.5

36.6

Europe and other regions

2,837.5

2,154.9

31.7

5,813.4

3,948.5

47.2

Canada

1,453.1

1,267.7

14.6

3,114.9

2,405.6

29.5

Total road transportation fuel revenues

12,526.6

10,077.4

24.3

26,845.7

19,472.6

37.9

Other revenues(2):







United States

8.5

11.4

(25.4)

18.2

22.2

(18.0)

Europe and other regions

265.6

147.6

79.9

516.1

247.6

108.4

Canada

7.0

4.4

59.1

12.9

9.3

38.7

Total other revenues

281.1

163.4

72.0

547.2

279.1

96.1

Total revenues

16,879.5

14,219.7

18.7

35,537.2

27,798.6

27.8

Merchandise and service gross profit(1)(3):







United States

987.5

932.1

5.9

1,972.8

1,899.8

3.8

Europe and other regions

211.1

222.8

(5.3)

419.8

438.2

(4.2)

Canada

205.0

208.3

(1.6)

413.9

427.3

(3.1)

Total merchandise and service gross profit

1,403.6

1,363.2

3.0

2,806.5

2,765.3

1.5

Road transportation fuel gross profit(3):







United States

1,058.0

791.7

33.6

2,089.4

1,596.5

30.9

Europe and other regions

241.8

278.0

(13.0)

522.5

524.7

(0.4)

Canada

124.9

115.7

8.0

257.3

223.7

15.0

Total road transportation fuel gross profit

1,424.7

1,185.4

20.2

2,869.2

2,344.9

22.4

Other revenues gross profit(2)(3):







United States

8.5

11.4

(25.4)

18.2

22.2

(18.0)

Europe and other regions

18.4

23.8

(22.7)

38.2

46.5

(17.8)

Canada

5.0

4.4

13.6

10.9

9.3

17.2

Total other revenues gross profit

31.9

39.6

(19.4)

67.3

78.0

(13.7)

Total gross profit(3)

2,860.2

2,588.2

10.5

5,743.0

5,188.2

10.7

Operating, selling, general and administrative expenses

1,433.0

1,321.3

8.5

2,831.1

2,599.4

8.9

(Gain) loss on disposal of property and equipment and other assets

(20.4)

3.2

(737.5)

(33.4)

(34.1)

(2.1)

Depreciation, amortization and impairment

353.9

325.7

8.7

673.1

640.0

5.2

Operating income

1,093.7

938.0

16.6

2,272.2

1,982.9

14.6

Net financial expenses

58.1

67.3

(13.7)

125.2

141.6

(11.6)

Net earnings

810.4

694.8

16.6

1,682.8

1,459.2

15.3

Per Share Data:







Basic net earnings per share (dollars per share)

0.79

0.65

21.5

1.64

1.36

20.6

Diluted net earnings per share (dollars per share)

0.79

0.65

21.5

1.64

1.36

20.6

Adjusted diluted net earnings per share (dollars per share)(3)

0.82

0.65

26.2

1.67

1.35

23.7

 


12‑week periods ended

24‑week periods ended

(in millions of US dollars, unless otherwise stated)

October 9,

2022

October 10,

2021

Variation

%

October 9,

2022

October 10,

2021

Variation

 %

Other Operating Data:







Merchandise and service gross margin(1)(3):







Consolidated

34.5 %

34.3 %

0.2

34.5 %

34.4 %

0.1

United States

34.0 %

33.8 %

0.2

34.0 %

34.0 %

Europe and other regions

38.3 %

38.4 %

(0.1)

38.6 %

38.4 %

0.2

Canada

33.2 %

32.3 %

0.9

33.2 %

32.3 %

0.9

Growth of (decrease in) same-store merchandise revenues(4):







United States(5)(6)

5.6 %

1.4 %


4.5 %

0.6 %


Europe and other regions(3)

2.9 %

3.9 %


2.9 %

4.9 %


Canada(5)(6)

(1.5 %)

(2.1 %)


(1.4 %)

(6.1 %)


Road transportation fuel gross margin(3):







United States (cents per gallon)

49.16

36.39

35.1

49.08

36.57

34.2

Europe and other regions (cents per liter)

9.76

10.57

(7.7)

10.96

10.45

4.9

Canada (CA cents per liter)

12.55

11.03

13.8

13.27

11.02

20.4

Total volume of road transportation fuel sold:







United States (millions of gallons)

2,152.2

2,175.7

(1.1)

4,257.2

4,365.3

(2.5)

Europe and other regions (millions of liters)

2,476.2

2,629.9

(5.8)

4,765.0

5,021.6

(5.1)

Canada (millions of liters)

1,305.3

1,324.5

(1.4)

2,517.5

2,536.4

(0.7)

Growth of (decrease in) same-store road transportation fuel volume(5):







United States

(1.9 %)

3.3 %


(3.0 %)

7.4 %


Europe and other regions

(6.3 %)

(0.3 %)


(5.0 %)

2.8 %


Canada

(6.5 %)

2.8 %


(3.2 %)

6.3 %


 

(in millions of US dollars, unless otherwise stated)                                

As at
October 9, 2022

As at
April 24, 2022

Variation

 $

Balance Sheet Data:




Total assets

29,108.6

29,591.6

(483.0)

Interest-bearing debt(3)

9,136.7

9,439.9

(303.2)

Equity

12,793.9

12,437.6

356.3

Indebtedness Ratios(3):




Net interest-bearing debt/total capitalization

              0.34 : 1

              0.37 : 1


Leverage ratio

              1.20 : 1

              1.39 : 1


Returns(3):




Return on equity

22.7 %

21.8 %


Return on capital employed

16.4 %

15.4 %




(1)

Includes revenues derived from franchise fees, royalties, suppliers' rebates on some purchases made by franchisees and licensees, as well as from wholesale of merchandise. Franchise fees from international licensed stores are presented in the United States.

(2)

Includes revenues from the rental of assets and from the sale of aviation fuel and energy for stationary engines.

(3)

Please refer to the "Non-IFRS measures" section for additional information on our capital management measure as well as performance measures not defined by IFRS.

(4)

This measure represents the growth of (decrease in) cumulated merchandise revenues between the current period and comparative period for those stores that were open for at least 23 days out of every 28-day period included in the reported periods. Merchandise revenues are defined as Merchandise and service revenues excluding service revenues.

(5)

For company-operated stores only.

(6)

Calculated based on respective functional currencies.


Revenues

Our revenues were $16.9 billion for the second quarter of fiscal 2023, up by $2.7 billion, an increase of 18.7% compared with the corresponding quarter of fiscal 2022, mainly attributable to a higher average road transportation fuel and other fuel products selling price, the contribution from acquisitions, and organic growth of our convenience activities while being partly offset by lower fuel demand and the net negative impact of approximately $523.0 million from the translation of our foreign currency operations into US dollars.

For the first half-year of fiscal 2023, our revenues increased by $7.7 billion, or 27.8%, compared with the corresponding period of fiscal 2022, mainly attributable to similar factors as those of the second quarter.

Merchandise and service revenues

Total merchandise and service revenues for the second quarter of fiscal 2023 were $4.1 billion, an increase of $92.9 million compared with the corresponding quarter of fiscal 2022. The translation of our foreign currency operations into US dollars had a net negative impact of approximately $95.0 million. The remaining increase of approximately $188.0 million, or 4.7%, is primarily attributable to organic growth, and to the contribution from acquisitions which amounted to approximately $40.0 million, while being partly offset by the disposal of stores following the strategic review of our network. Same-store merchandise revenues increased by 5.6% in the United States driven by the success of our Fresh Food, Fast program, by 2.9% in Europe and other regions1, and decreased by 1.5% in Canada. Same-store merchandise revenues in Canada were strongly impacted by increased competition of the illicit market in the cigarettes category compared with the corresponding quarter of fiscal 2022.

For the first half-year of fiscal 2023, the growth in merchandise and service revenues was $97.4 million compared with the corresponding period of fiscal 2022. The translation of our foreign currency operations into US dollars had a net negative impact of approximately $172.0 million. Same-store merchandise revenues increased by 4.5% in the United States, by 2.9% in Europe and other regions1, and decreased by 1.4% in Canada.

Road transportation fuel revenues

Total road transportation fuel revenues for the second quarter of fiscal 2023 were $12.5 billion, an increase of $2.4 billion compared with the corresponding quarter of fiscal 2022. The translation of our foreign currency operations into US dollars had a net negative impact of approximately $407.0 million. The remaining increase of approximately $2.9 billion, or 28.3%, is attributable to a higher average road transportation fuel selling price, which had a positive impact of approximately $3.1 billion. Same-store road transportation fuel volumes decreased by 1.9% in the United States, by 6.3% in Europe and other regions, and by 6.5% in Canada. During the quarter, road transportation fuel demand remained unfavorably impacted by the high retail prices driven by the increase in crude oil costs compared with the corresponding quarter of fiscal 2022, the continued work from home trends, and the impact from our fuel rebranding activities.

For the first half-year of fiscal 2023, the road transportation fuel revenues increased by $7.4 billion compared with the corresponding period of fiscal 2022. The translation of our foreign currency operations into US dollars had a net negative impact of approximately $653.0 million. Same-store road transportation fuel volumes decreased by 3.0% in the United States, by 5.0% in Europe and other regions, and by 3.2% in Canada.

The following table shows the average selling price of road transportation fuel of our company-operated stores in our various markets for the last eight quarters. The average selling price of road transportation fuel consists of the road transportation fuel revenues divided by the volume of road transportation fuel sold:

Quarter

3ʳᵈ

4ᵗʰ

1ˢᵗ

2ⁿᵈ

Weighted
average

52‑week period ended October 9, 2022







United States (US dollars per gallon)

3.28

3.94

4.61

3.84

3.87


Europe and other regions (US cents per liter)

96.66

120.84

129.11

117.39

115.58


Canada (CA cents per liter)

129.39

150.30

179.15

149.55

150.46

52‑week period ended October 10, 2021







United States (US dollars per gallon)

2.16

2.72

2.97

3.08

2.70


Europe and other regions (US cents per liter)

65.84

79.29

79.09

86.29

...