Couche-Tard has completed its acquisition of The Pantry through an all-cash transaction valued at US $36.75 per share, with a total enterprise value of approximately $1.7 billion including debt assumed. The Pantry operates over 1,500 stores in 13 states.
“The third quarter of fiscal 2015 was marked by the great announcement of our agreement to acquire The Pantry,” said Brian Hannasch, President and CEO. “This transaction has just closed yesterday and I’d like to take this opportunity to offer a warm welcome to the newest members of the Couche-Tard family. With this acquisition, we can only look to upcoming quarters with enthusiasm and we are very confident that our new network has impressive potential for contributing to the future growth of the corporation. We are already working on the integration of these new stores to our existing network and should be able to realize cost reductions of up to $85.0 million over the next 24 months in addition to growing in-store and fuel volumes in this geographic area through the combination of business awareness, sharing of each company’s best practices and better supply conditions. We also announced this morning an agreement with Shell to acquire its operations in Denmark which would be great additions to our existing network in that country.”
The agreement with A/S Dansk Shell is to acquire its Danish retail business, comprising 315 stations, a commercial fuel business and an aviation fuel business.
Strong Third Quarter
“As for the performance of the third quarter of fiscal 2015, while the headlines may have been fuel margins, our continuous efforts to improve our product offering, in-store execution and customer service have enabled us to once again generate outstanding results with a strong contribution from organic merchandise sales and fuel volume growth. I am particularly pleased with our performance on fuel volume in the U.S. and with our “miles” brand in Europe where we continue to gain traction and perform well against the market. In addition to delivering strong growth, our teams have done an outstanding job continuing to control costs across our network. Our ability to influence our results effectively and sustainably at all levels allows us to be very optimistic in regards to the future,” said Hannasch.
Raymond Paré, vice president and chief financial officer added, “We are proud to show significant growth in our results from organic growth and strong fuel margins. The additional upcoming synergies in Europe and the expected ones from The Pantry as well as this morning’s announcement concerning our agreement with Shell in Denmark should allow us to continue creating significant value over the next years. Due to the rapid decrease of our indebtedness and to our solid performance, our leverage ratios keep declining significantly while our return on capital employed continues to be solid, reaching 17.8%. Recently announced acquisitions will not materially affect our balance sheet or financial leverage. We will continue to reduce our debt and manage our financial flexibility in order to have the ability to materialize any potential future opportunities. At the same time, we are committed to keep a strong balance sheet in order to improve our credit profile.”
Third Quarter Highlights
- Net earnings of $248.1 million ($0.44 per share on a diluted basis) for the third quarter of fiscal 2015. Excluding non-recurring items for both comparable periods, net earnings for the quarter would have been $289.0 million ($0.51 per share on a diluted basis) compared to $175.0 million ($0.31 per share on a diluted basis) for the third quarter of fiscal 2014, an increase of 65.1%.
- Same-store merchandise revenues up 4.5% in the U.S., 1.7% in Europe and 3.6% in Canada.
- Merchandise and service gross margin stood at 32.8% in the U.S., at 41.0% in Europe and at 32.2% in Canada, for a consolidated margin of 33.7%.
- Same-store road transportation fuel volume up 2.8% in the U.S., 2.1% in Europe and down slightly by 0.5% in Canada. Total volume is up 4.3%.