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Alimentation Couche-Tard announces its results for its first quarter of fiscal year 2018
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PR Newswire
LAVAL, QC, Sept. 6, 2017, Sept. 6
- Closing of the CST Brands Inc. ("CST") acquisition on June 28, 2017, for a total enterprise value of $4.4 billion, including assumed net debt. Disposal, on the same date, of a significant portion of CST's Canadian assets. From this date, CST's results, balance sheet and cash flows are included in our consolidated financial statements. Results, balance sheet and cash flows are also consolidated for CrossAmerica Partners LP ("CAPL"), including the impact of the non-controlling interest.
- Net earnings attributable to shareholders of the Corporation ("net earnings") of $364.7 million ($0.64 per share on a diluted basis) for the first quarter of fiscal 2018 compared with $322.8 million ($0.56 per share on a diluted basis) for the first quarter of fiscal 2017. Excluding certain items for both comparable periods, net earnings for the quarter would have been approximately $380.1 million1 ($0.67 per share on a diluted basis) compared with $327.0 million1 ($0.57 per share on a diluted basis) for the first quarter of fiscal 2017, an increase of 16.5%.
- Total merchandise revenues were $2.8 billion, an increase of 9.8%. Same‑store merchandise revenues increased by 1.4% in the U.S. and in Europe and decreased by 0.2% in Canada.
- Merchandise and service gross margin increased by 0.1% in the U.S., to 33.3%, by 0.4% in Europe, to 42.1% and by 1.8% in Canada, to 35.0%.
- Total road transportation fuel volumes grew by 15.8%. Same‑store road transportation fuel volumes growth of 0.4% in the U.S. Same-store volumes decreased by 0.3% in Europe and by 0.2% in Canada.
- Road transportation fuel gross margin decreased by US 0.11¢ per gallon in the U.S. to US 20.75¢ per gallon, negatively impacted by lower margins for the CST network. Excluding CST stores, gross margin in the US would have been US 21.20¢ per gallon. Gross margin increased by US 0.27¢ per litre in Europe, to US 8.97¢ per litre and increased by CA 1.44¢ per litre in Canada, to CA 8.22¢ per litre.
- Current annual costs reduction run rate related to the CST integration reached approximately $47.0 million.
- Acquisition of 53 company-operated sites operating under the Cracker Barrel brand in Louisiana, 7 of which were closed by the Corporation on the same date.
- Definitive agreement to acquire all the issued and outstanding shares of Holiday Stationstores, Inc. and certain affiliated companies.
- The Corporation's global rebranding project is still successfully progressing in Poland, in the Baltic countries, in the US and has recently been launched in Canada. Close to 1,800 stores in North America and close to 1,300 stores in Europe now display Couche-Tard's new Circle K global brand.
- Return on equity and return on capital employed at 21.1% and 11.8%, respectively, on a pro-forma basis.
| ______________________________________ |
| 1 Please refer to section "Net earnings and adjusted net earnings attributable to shareholders of the Corporation" of this press release for additional information on this performance measure not defined by IFRS. |
LAVAL, QC, Sept. 6, 2017, /PRNewswire/ - For its first quarter ended July 23, 2017, Alimentation Couche-Tard Inc. (TSX: ATD.A ATD.B) announces net earnings attributable to shareholders of the Corporation ("net earnings") of $364.7 million, representing $0.64 per share on a diluted basis. The results for the first quarter of fiscal 2018 were affected by pre-tax restructuring and integration costs of $43.2 million (of which $5.2 million is attributable to non-controlling interest), a pre-tax net foreign exchange loss of $20.3 million, a $13.4 million tax recovery following an internal reorganization, an $11.5 million pre-tax gain on the disposal of a terminal, an $8.8 million pre-tax gain on the investment the Corporation held in CST, as well as a $3.7 million pre-tax accelerated depreciation and amortization expense in connection with the Corporation's global brand initiative. The results for the comparable quarter of fiscal 2017 included a $6.9 million pre-tax accelerated depreciation and amortization expense in connection with the Corporation's global brand initiative as well as a pre-tax net foreign exchange gain of $3.2 million. Excluding these items, as well as acquisition costs, the adjusted diluted net earnings per share would have been $0.67 for the first quarter of fiscal 2018, an increase of 17.5%, driven by the contribution from acquisitions, by Couche-Tard's continued organic growth as well as by the impact of a lower income tax rate. All financial information is in US dollars unless stated otherwise.
"On behalf of the entire Couche-Tard community, our hearts and prayers go out to all those who continue to suffer from the devastation of Hurricane Harvey. Our Texas team is working tirelessly to help our impacted employees and to get our stores and fuel supply back to full capacity" announced Brian Hannasch, President and CEO of Alimentation Couche Tard.
"While the overall retail industry continues to face challenging conditions, we were able to continue our growth trajectory in significant key areas, including growth by acquisitions. Our merchandises and service revenues were up 9.8%, total fuel volumes were up 15.8%, and adjusted diluted earnings per share increased by 17.5%. As we continue to work on implementing initiatives to increase customer traffic into our stores without materially impacting margins, our successful acquisition strategy continued to make compelling contributions to our bottom line and desire to be the world's preferred destination for convenience and fuel," stated Brian Hannasch.
"I am very excited that, for the first time, CST, our largest acquisition to date, is officially part of our company's financial reporting. By adding 1,263 sites from CST, and CrossAmerica Partners's wholesale fuel network to ours, we have critically strengthened our position in both the retail and wholesale fuel markets" added Brian Hannasch. "The integration of CST is going extremely well, and I am grateful to all the hardworking and talented employees bringing our teams together and welcoming them to the Couche-Tard and Circle K family."
"As we continue to expand through acquisitions, we are also pushing enthusiastically to bring our Circle K brand to life. The rollout in Poland and the Baltic countries is going very well with great customer acceptance, and the brand is now being introduced in Canada. In North America and Europe we now have more than 3,000 stores displaying the Circle K brand. Frankly, the support and energy around the globe for the Circle K brand has exceeded our expectations," concluded Brian Hannasch.
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Claude Tessier, Chief Financial Officer stated, "Our knowledge from past acquisitions such as The Pantry and Statoil Fuel and Retail is making a tremendous difference in capturing potential cost synergies and integrating resources with CST as demonstrated by our current annual costs reduction run rate of $47.0 million." He added, "We will use this deep experience and our usual financial discipline as we move to close on the Holiday Stationstores in fiscal 2018. One of our highest priorities is to reduce our debt and further strengthen our balance sheet. In this regard, we are very satisfied with the positive term out on our new senior notes. We are also working to put together a divestment plan for non-core and surplus assets, including more than 200 stores that do not meet our profitability standards."
Significant Items of the First Quarter of Fiscal 2018
- The rollout of our new Circle K global convenience brand in the United States, in Poland and in the Baltic countries is progressing steadily and has recently been launched in Canada. Close to 1,800 stores in North America and close to 1,300 stores in Europe are now proudly displaying our new global brand. In connection with this rebranding, a depreciation and amortization expense of $3.7 million was recorded to earnings for the first quarter of fiscal 2018.
- During the first quarter, we disposed of our 50% share in a fuel terminal in Ireland for a total cash consideration of $18.1 million and recognized to earnings a gain of $11.5 million on the disposal.
Acquisition of CST Brands, Inc.
- On June 28, 2017, we completed the acquisition of all the issued and outstanding shares of CST Brands, Inc. ("CST") through an all-cash transaction valued at US$48.53 per share, with a total enterprise value of approximately $4.4 billion including net debt assumed. CST is based in San Antonio, Texas and, before the closing of the acquisition, it employed more than 14,000 people at over 2,000 locations throughout the Southwestern U.S., with an important presence in Texas, the Southeastern U.S., the State of New York and Eastern Canada.
- On the same day, we sold to Parkland Fuel Corporation a significant portion of CST's Canadian assets for approximately CA $986.0 million ($753.0 million). The disposed assets were mainly comprised of CST's independent dealers and commission agents' network, its heating-oil business, 159 company-operated sites, as well as its Montreal head office. As a result, we retained 157 of CST's company-operated sites in Canada.
- As per the requirements of the US Federal Trade Commission, we entered in an agreement to sell 70 company-operated sites to Empire Petroleum Partners, LLC ("Empire"). This transaction is subject to the customary regulatory approvals and closing conditions and is expected to close during the second quarter of fiscal 2018.
- Once the transaction with Empire is completed, the CST acquisition will have allowed us to add 1,263 sites to our North American network, for a value of approximately $3.7 billion.
- Pursuant to the acquisition of CST, we have also acquired the general partner of CrossAmerica Partners LP ("CAPL"), own 100% of its Incentive Distribution Rights and hold a 20.5% equity investment in it. CAPL supplies road transportation fuel under various brands to more than 1,200 locations in the United States. The combination of CAPL with our existing wholesale network of more than 700 stores makes us a leading wholesaler of road transportation fuel in the US.
- On June 28, 2017, we repaid all of CST's outstanding borrowings under its revolving credit facilities and, on July 28, 2017, subsequent to the end of the quarter, we repaid all of CST's outstanding senior notes for an amount of $583.7 million from amounts drawn from our acquisition facility.
- In order to finance the CST acquisition, as well as the repayments of CST's outstanding debt, we entered into a new credit agreement consisting of an unsecured non-revolving acquisition credit facility of an aggregate maximum amount of $4.3 billion, which is available exclusively to finance the acquisition of CST and the repayment of any of CST's and its subsidiaries' outstanding debt. As of July 23, 2017, a total amount of $3.0 billion has been drawn from this credit facility and the effective interest rate was 2.75%.
- At the acquisition date, we owned an investment in CST which, through the closing of the acquisition, we disposed of. As a consequence, we recognized an $8.8 million pre-tax gain to our earnings of the first quarter of fiscal 2018.
- Our first quarter of fiscal 2018 earnings include pre-tax restructuring and integration costs amounting to $43.2 million (including $6.5 million for CAPL, of which $5.2 million is attributable to non-controlling interest). Those costs mostly consist of severance to employees of CST.
- Our initial assessment of the expected annual costs reductions1 opportunities associated with this transaction ranges from $150.0 to $200.0 million over the next 3 years. We are actively working on our integration plan and refining this initial assessment to take into account CST's latest results and the announced divestments. Once our plans are finalized, we will communicate our final costs reduction target for the retained business. As of July 23, 2017, our current annual costs reduction run rate reached approximately $47.0 million.
- From June 28, 2017, CST's results, balance sheet and cash flows are included in our consolidated financial statements. Results, balance sheet and cash flows for CAPL are also fully consolidated in our financial statements from this date. The earnings attributable to CAPL's other units holders are presented as earnings attributable to non-controlling interest.
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| 1 As our previously stated goal is considered a forward looking statement, we are required, pursuant to securities laws, to clarify that our costs reductions estimate is based on a number of important factors and assumptions. Among other things, our synergies and cost savings objective is based on our comparative analysis of organizational structures and current level of spending across our network as well as on our ability to bridge the gap, where relevant. Our synergies and cost reduction objective is also based on our assessment of current contracts in North America and how we expect to be able to renegotiate these contracts to take advantage of our increased purchasing power. In addition, our synergies and costs reduction objective assumes that we will be able to establish and maintain an effective process for sharing best practices across our network. Finally, our objective is also based on our ability to integrate CST's system with ours. An important change in these facts and assumptions could significantly impact our synergies and costs reductions estimate as well as the timing of the implementation of our different initiatives. |
Changes in our Network
- On May 30, 2017, we acquired 53 company-operated sites located in Louisiana, United States from American General Investments, LLC and North American Financial Group, LLC. These convenience stores operate under the Cracker Barrel brand and include 11 quick service restaurants. On the same date, we closed seven of those stores.
- On July 7, 2017, we acquired from Empire Petroleum Partners, LLC, 53 fuel supply contracts with independent operators in the Atlanta, GA metro area.
- During the first quarter of fiscal 2018, we completed the construction, relocation or reconstruction of 23 stores. As of July 23, 2017, 49 stores were under construction and should open in the upcoming quarters.
Summary of changes in our store network during the first quarter of fiscal 2018
The following table presents certain information regarding changes in our store network over the 12-week period ended July 23, 2017. These figures exclude CAPL's store network.
| | 12-week period ended July 23, 2017 | ||||||||||
| Type of site | Company- | | CODO | | DODO | | Franchised and | | Total | | |
| Number of sites, beginning of period | 8,011 | | 756 | | 1,010 | | 1,092 | | 10,869 | | |
| | Acquisitions(1) | 1,309 | | 6 | | 47 | | - | | 1,362 | |
| | Openings / constructions / additions | 23 | | 1 | | 15 | | 34 | | 73 | |
| | Closures / disposals / withdrawals | (32) | | (1) | | (24) | | (22) | | (79) | |
| | Store conversion | 18 | | (20) | | 2 | | - | | - | |
| Number of sites, end of period | 9,329 | | 742 | | 1,050 | | 1,104 | | 12,225 | | |
| Number of automated fuel stations included in the period-end figures | 964 | | - | | 17 | | - | | 981 | | |
| | |
| (1) | Exclude CST stores sold to Parkland Fuel Corporation, stores to be divested to Empire and classified as assets held for sale as well as the Cracker Barrel stores closed at the acquisition date. |
Outstanding transactions
- On July 10, 2017, we entered into an agreement with Holiday Companies to acquire all issued and outstanding shares of Holiday Stationstores, Inc. and certain affiliated companies ("Holiday"). Holiday is an important convenience store and fuel player in the U.S. Midwest region, with 522 sites, of which 374 are operated by Holiday and 148 are operated by franchisees. Holiday also has a strong car wash business with 221 locations, a food commissary operation and a fuel terminal in Newport, Minnesota. Its stores are located in Minnesota, Wisconsin, Washington, Idaho, Montana, Wyoming, North Dakota, South Dakota, Michigan and Alaska. On July 31, 2017, this transaction was approved by Holiday's parent company's shareholders. The transaction is subject to the customary regulatory approvals and closing conditions and is expected to close during the third quarter of fiscal 2018. We expect to finance this transaction using our available cash and existing credit facilities.
- On August 7, 2017, we reached an agreement to acquire certain assets from Jet Pep, Inc., including a fuel terminal, associated trucking equipment and 18 retail sites located in Alabama. In addition, through a distinct transaction, CrossAmerica Partners LP has also agreed to purchase other assets of Jet Pep, Inc. consisting of 101 commission operated retail sites, including 92 owned sites, 5 leased sites and 4 independent commission accounts. These transactions are subject to the customary regulatory approvals and closing conditions and are expected to close during the third quarter of fiscal 2018. These transactions are expected to be financed using available cash and existing credit facilities.
Subsequent Events
- On July 26, 2017, we issued Canadian-dollar-denominated senior unsecured notes totaling CA $700.0 million (approximately $558.0 million) as well as US-dollar-denominated senior unsecured notes totaling $2.5 billion, divided as follow.
| | Notional amount | Maturity | Coupon rate |
| Tranche 1 | $1,000.0 million | July 26, 2022 | 2.700% |
| Tranche 2 | CA$700.0 million | July 26, 2024 | 3.056% |
| Tranche 3 | $1,000.0 million | July 26, 2027 | 3.550% |
| Tranche 4 | $500.0 million | July 26, 2047 | 4.500% |
The net proceeds from those issuances, which were approximately $3.0 billion, were mainly used to repay a portion of our acquisition facility and of our term revolving unsecured operating credit facility.
- As a result of the review of our fuel supply strategy, starting August 1, 2017, we now supply our Scandinavian stores network through multiple suppliers, primarily through 12 to 18 months contracts. We believe we will benefit from these changes through improved supply conditions and increased flexibility.
- Subsequent to the end of the quarter, our store network was impacted by hurricane Harvey in Texas. 123 of our stores were affected at various levels and had to close for a certain period of time. As of September 5, 2017, 24 stores were still closed. We are working assiduously to support our employees and reopen our stores. We will continue our diligent work towards reopening our stores and will work with our insurance companies in order to minimize the financial impact of the storm as much as possible.
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 period ended | 12-week period ended | |
| | July 23, 2017 | July 17, 2017 | |
| Average for period | | | |
| | Canadian Dollar | 0.7524 Werbung Mehr Nachrichten zur Alimentation Couche-Tard B Aktie kostenlos abonnieren
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