CST store network integration underway.
For its second quarter of fiscal 2018, ended Oct. 15, 2017, Alimentation Couche-Tard Inc. reported record net earnings attributable to shareholders of the Corporation of $435.3 million, representing $0.76 per share on a diluted basis.
Results for the second quarter of fiscal 2017 were $321.5 million ($0.57 per share on a diluted basis).
Highlights:
- The Corporation’s network was impacted by Hurricanes Harvey and Irma in the United States, and lost approximately 3,000 store days in merchandise and service sales and 5,700 store days in road transportation fuel sales.
- Total merchandise and services revenues were $3.1 billion, an increase of 23.4%.
- Same‑store merchandise revenues, excluding the CST Brands Inc. (“CST”) stores network, increased by 0.7% in the U.S., by 1.6% in Europe and decreased by 1.6% in Canada.
- Merchandise and service gross margin slightly decreased by 0.1% in the U.S., to 33.2% due to the integration of the CST stores. Excluding the CST stores, gross margin in the U.S. increased by 0.2%, to 33.5%. Merchandise and service gross margin increased by 0.6% in Europe, to 42.0% and by 1.0% in Canada, to 34.6%.
- Total road transportation fuel volumes grew by 21.5%. Same‑store road transportation fuel volumes, excluding the CST stores network, decreased by 0.7% in the U.S., negatively impacted by Hurricanes Harvey and Irma. Same-store volumes decreased by 0.2% in Europe and by 2.3% in Canada, also excluding the CST stores network.
“In terms of our overall performance this quarter, the positive contribution from our newly acquired CST network is particularly notable and added to the strong increase of nearly 38.0% in our adjusted net earnings per share,” announced Brian Hannasch, president and CEO of Alimentation Couche-Tard. “This is even more remarkable in light of the challenges faced by some our network due to Hurricanes Harvey and Irma, and the continued softness in the industry in general. I am deeply proud of how our teams came together during and after these catastrophic storms in order to get our stores back online to serve our communities.”
“The integration of the CST network is going extremely well. Our operation teams are successfully optimizing site layouts, implementing key programs and pushing strategic promotions to increase traffic to those stores,” added Brian Hannasch. “Our strategies allowed us to reverse the negative traffic trend in less than three months. On the synergies side, in less than four months, our annual run rate in cost reductions reached $84 million, which puts us ahead of our initial plan and makes us optimistic that we will reach our initial target of $150 million to $200 million in cost reductions over the three years following the close of the transaction.”
“On the acquisition front, we anticipate the close of the Holiday Stationstores transaction in the third quarter of fiscal 2018. As we become more familiar with the Holiday network, we are learning about the talented management team, dedicated employees and exceptional assets of that network. Over the weeks ahead, we will continue evaluating the business and planning the integration process, which will begin immediately upon closing. However, it is already clear that many best practice opportunities will result from the acquisition,” continued Hannasch.
“As we continue our acquisition growth strategy, we are also positioning ourselves as an innovative leader preparing for the future of the convenience business. Earlier this month, we announced a partnership with European auto makers to create the first network of high-power chargers across Europe to enable long-distance mobility of electric vehicles, which is a true tribute to our newly implemented brand Circle K. Our goal is to evaluate and learn about the potential of this technology in the years ahead, all the while expanding our traditional fuel offerings and increasing traffic inside our stores,” concluded Hannasch.
Claude Tessier, Chief Financial Officer stated, “One of our highest priorities is to reduce our debt and further strengthen our balance sheet. The strong cash flow generated during the quarter through the added contribution of CST and strong fuel margins, allowed us to accelerate our deleveraging plan as evidenced by our adjusted leverage ratio of 2.88:1.” He continued, “The recent repurchase of 4.4 million of our shares at favorable conditions was also a nice opportunity for us to create value for our shareholders. As usual, we will continue to focus on cost control and on our commitment to financial discipline to increase value for our shareholders,” concluded Claude Tessier.
