Alimentation Couche-Tard recorded significant growth in Fiscal 2016, and company officials have high hopes for the coming year.
For the fourth quarter ended April 24, 2016, Alimentation Couche‑Tard Inc. has recorded significant financial growth.
The company reported net earnings of $206.2 million, representing 36 cents per share on a diluted basis. The results for the fourth quarter of fiscal 2016 were affected by a $7.7 million pre-tax accelerated depreciation and amortization expense in connection with the Corporation’s global brand initiative, by a net pre-tax foreign exchange loss of $5.8 million and by a $3.2 million pre-tax charge on early termination of certain fuel supply contracts.
The results for the fourth quarter of fiscal 2015 included pre‑tax restructuring and integration costs of $22.2 million mainly in connection with the acquisition of The Pantry, a net pre-tax foreign exchange gain of $3.5 million and a $0.6 million pre-tax loss on disposal of the aviation fuel business. Excluding these items as well as the acquisition costs from both comparable quarters’ results, the diluted net earnings per share would have been 39 cents for the fourth quarter of fiscal 2016 compared with 24 cents for the fourth quarter of fiscal 2015, an increase of 62.5%. This increase is attributable to continued organic growth, to higher fuel margins in the U.S. as well as to the contribution from acquisitions.
“Our performance in the fourth quarter was a fitting finale to another outstanding fiscal year – the eighth year in a row with record setting earnings,” said Brian Hannasch, president & CEO. “This quarter we celebrated the expansion of our European network to Ireland and further strengthened our presence in Denmark. We have begun to see the landscape change in the U.S. as hundreds of signs bearing our global Circle K brand lit up our stores, welcoming our customers in the southeast and engaging our employees around the world. Meanwhile, amidst all the excitement our employees remained relentlessly focused on our customers, growing basket size and delivering nice same-store growth.”
“We continue to grow – and we do not intend to slow down any time soon,” Hannasch continued. “We don’t just look for strategic opportunities, but we also look at potential acquisitions to see if there is anything we can learn from them. Fiscal year 2017 will be a year of integrating and learning from Topaz in Ireland and Shell in Denmark. We also very much look forward to completing our acquisition of the Esso-branded Imperial Oil locations in Ontario and Québec, which should be finalized during the first half-year of fiscal 2017. As a united global brand, we will be stronger than all our individual brands combined. We will benefit even more from our scale, international presence and expertise, while focusing on our customers. This is the foundation we will build upon.”
“Couche-Tard’s fourth quarter results drove adjusted earnings per share growth of 62.5 % and operating cash flow of $188.3 million. We returned $29.2 million to our investors during the quarter in dividends and we are on track to reach our target of $85 million in synergies from The Pantry integration,” said Claude Tessier, chief financial officer.
“Even amidst a high degree of acquisition activity, our financial position remains strong, with very comfortable leverage ratios,” Tessier continued. “The issuance in May of €750 million of senior unsecured notes on the European bond market provides additional support for those operations and further enhances our financial flexibility. We will continue to ensure we are well positioned to take advantage of any opportunities that might present themselves in the future.”
The financial results for the fourth quarter of Fiscal Year 2016 for Alimentation Couche-Tard have revealed that the company experienced significant growth during the quarter.
Net earnings of $206.2 million (36 cents per share on a diluted basis) for the fourth quarter of fiscal 2016 compared with $126 million (22 cents per share on a diluted basis) for the fourth quarter of fiscal 2015. Excluding certain items for both comparable periods, net earnings for the quarter would have been approximately $221 million (39 cents per share on a diluted basis) compared with $138 million (24 cents per share on a diluted basis) for the fourth quarter of fiscal 2015, an increase of 60.1%.
Additional points of interest for the quarter include:
- Same‑store merchandise revenues up 3.2% in the U.S., 2.2% in Europe and 2.2% in Canada.
- Merchandise and service gross margin stood at 33.7% in the U.S., up 30bps, at 43.1% in Europe, up 100 basis points and at 32.9% in Canada, up 40 basis points.
- Same‑store road transportation fuel volumes grew by 3.6% in the U.S. and by 1.1% in Europe while it decreased by 0.8% in Canada.
- Road transportation fuel gross margin of U.S. 16.78 cents per gallon in the U.S., of U.S. 7.74 cents per liter in Europe and of CA 6.09 cents per liter in Canada. Margin in Europe is affected by the negative impact of foreign currency translation.
- Acquisition of Topaz on February 1, 2016, the leading convenience and fuel retailer in Ireland with a network comprising 444 service stations, of which 158 are company-operated and 286 are operated by dealers.
- Quarterly dividend increase nearly 15.0% to CA 7.75¢ supported by strong balance sheet and cash flows.
- Subsequent to the end of the quarter, issuance of Euro denominated senior unsecured notes totaling €750.0 million with a coupon rate of 1.875% and maturing on May 6, 2026, reinforcing the balance sheet.
- Subsequent to the end of the quarter, an agreement was reached to purchase from Sevenoil Est OÜ and its affiliates 23 company-operated sites located in Estonia, increasing the presence of the company to 77 sites.
- Successful kick off of the new Circle K brand in the Southeastern region of the U.S. and in Sweden.
Fiscal Year 2016
In addition to growth in the fourth quarter, the most recent financial results have shown that the company grew significantly throughout Fiscal Year 2016. Overall, the company’s net earnings amounted to $1,193.7 million for fiscal 2016, up 28.4% over fiscal 2015.
For fiscal 2016, diluted net earnings per share were $2.10 compared with $1.63 for fiscal 2015, an increase of 28.8% while adjusted diluted net earnings per share were $2.09 compared with $1.79 for fiscal 2015, an increase of 16.8%.
Other key influences on the company’s Fiscal Year results include:
- Addition of 867 stores to our network through acquisitions and new openings.
- Return on equity and return on capital employed were 27.0% and 18.5%, respectively, on a pro forma basis.