For its third quarter ended Jan. 31, 2021, Alimentation Couche-Tard Inc. announced net earnings attributable to shareholders of the corporation of $607.5 million, representing $0.55 per share on a diluted basis.
All financial information presented is in US dollars unless stated otherwise.
The results for the third quarter of fiscal 2021 were affected by a pre-tax net foreign exchange loss of $16.5 million, as well as by pre-tax acquisition costs of $5.2 million.
The results for the comparable quarter of fiscal 2020 were affected by a pre-tax net gain of $61.5 million on the disposal of its interests in CAPL, a positive impact on income tax of $29.0 million from an adjustment to deferred tax assets, a pre-tax net foreign exchange gain of $5.4 million and pre-tax acquisition costs of $2.9 million.
Excluding these items, the adjusted net earnings were approximately $622.0 million or $0.561 per share on a diluted basis for the third quarter of fiscal 2021, compared with $581.0 million or $0.521 per share on a diluted basis for the third quarter of fiscal 2020, an increase of 7.7% in the adjusted net earnings per share on a diluted basis, driven by higher road transportation fuel margins, disciplined cost control and lower income tax rate, partly offset by the negative impact of COVID-19 on fuel demand.
“One year after the start of the COVID-19 pandemic, I am pleased to report that across our global network we had solid third quarter results,” said Brian Hannasch, president and CEO of Alimentation Couche-Tard.
Same-store sales growth was 2.9% in the U.S., 4.7% in Canada and 2.8% in Europe and other regions as the company’s customers continued to visit its convenient locations for their everyday needs. In its fuel business, the company achieved healthy margins, despite a persistent increase in product costs during the quarter.
Varied Fuel Volume Results
“Fuel volume results were highly variable with areas of renewed lockdowns showing very soft demand, while other areas strengthened,” Hannasch added. “We also pushed forward our work in global fuel procurement, pricing analytics, and the Circle K fuel rebranding efforts, where results continue to be encouraging.
Hannasch explained that in Couche-Tard is making notable strides in its strategic ambitions, evolving its model to become a more innovative and differentiated retailer.
“In our ‘Fresh Food, Fast’ priority, we are starting our second wave of implementation and will be expanding the program to an additional 3,000 stores in the coming months,” said Hannasch. “Our focus on ease, safety and the quality of the offer are clearly resonating with our customers, and I am pleased that we are meeting our food development goals despite the challenges of the pandemic.”
He said the company is also advancing its innovation journey with the opening of its first frictionless store, as well as the expansion of its license-plate recognition initiative and electric vehicle (EV) home charging solutions.
The company’s data-analytic work on store-by-store pricing is now in nearly 60% of its network, and Couche-Tard is expanding its work to localize assortments and promotions.
“We continue to believe there is a very large prize to optimize locally,” said Hannasch.
Strong Cash Flows
Company CFO Claude Tessier said the company maintained solid momentum during the quarter in the face of a challenging environment. The company continued to generate strong cash flows as it stayed true to its usual cost discipline and focus on operating efficiency.
“I would like to highlight the work our teams have accomplished throughout the last year, ensuring that we emerge from the pandemic in a strong financial position and ready to accelerate capital deployment towards our strategic initiatives,” explained Tessier. “Furthermore, we continued to return cash to our shareholders by way of dividend payments, as well as with our share repurchase program, through which we have opportunistically bought back close to $900 million in our stock since the renewal last November.”
In the U.S., Canada-based Couche-Tard is the largest independent convenience store operator in terms of the number of company-operated stores. In Europe, Couche-Tard is a leader in convenience store and road transportation fuel retail in the Scandinavian countries (Norway, Sweden and Denmark), in the Baltic countries (Estonia, Latvia and Lithuania), as well as in Ireland, and has an important presence in Poland.
In addition, under licensing agreements, more than 2,220 stores are operated under the Circle K banner in 15 other countries and territories (Cambodia, Egypt, Guam, Guatemala, Honduras, Hong Kong, Indonesia, Jamaica, Macau, Mexico, Mongolia, New Zealand, Saudi Arabia, the United Arab Emirates and Vietnam), which brings the worldwide total network to more than 14,220 stores.