ALIMENTATION COUCHE-TARD ANNOUNCES ITS SECOND QUARTER OF FISCAL 2011 RESULTS
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- Net earnings of $105.6 million, or $0.56 per share on a diluted basis,
an increase of $17.4 million or 19.7% compared the second quarter of
fiscal 2010. Net earnings are up 31.1% since the beginning of the
fiscal year.
- Net earnings include fees related to the public tender offer to acquire
Casey's shares, a non-recurring impact on net earnings of approximately
$7.0 million or $0.04 per share on a diluted basis. In the fourth
quarter of fiscal 2010, a gain on disposal of Casey's shares of
$11.4 million net of income taxes had been recorded.
- Same-store merchandise sales up 4.9% in the United States and 1.6% in
Canada.
- Consolidated merchandise and service gross margin in proportion of
sales up 0.5% at 33.7%.
- Same-store motor fuel volume up 0.5% in the United States and 5.3% in
Canada.
- Motor fuel gross margin in the United States at 17.12 cents per gallon,
up 1.34 cents per gallon or 0.96 cents per gallon, net of electronic
payment modes fees.
- Operating, selling, administrative and general expenses accounted for
28.3% of merchandise and service revenues in the second quarter of 2011
against 28.7% during the comparable quarter last year.
- Quarterly dividend per share increased by 25%.
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LAVAL, QC, Nov. 23, 2010 /CNW Telbec/ - For its second quarter, Alimentation Couche-Tard Inc. announces net earnings of $105.6 million, up $17.4 million or 19.7%. The increase mainly reflects the growing contribution of merchandise and service sales, the 1.34 cents per gallon increase in motor fuel gross margin in the United States, the contribution from a growing number of sites offering fuel, the growth in same-store motor fuel volume in Canada and the United States, the strengthening of the Canadian dollar, Couche-Tard's sound management of its expenses as well as a lower income tax rate. These items contributing positively to net earnings were partially offset by an increase in electronic payment modes resulting from higher average motor fuel retail prices as well as recognition to earnings of fees incurred in connection with Couche-Tard's public tender offer to acquire all of the outstanding shares of common stock of Casey's General Stores Inc. which was not renewed.
"The economic recovery is slow to pick up momentum, especially in the U.S., as demonstrated by the modest growth in same-store motor fuel volume we recorded in this market. However, our focus on merchandise sales and margins as well as on expense control still allows us to deliver good results.", declared Alain Bouchard, President and Chief Executive Officer. "As for acquisitions, despite the fact we decided not to renew our offer for Casey's, we are looking at other opportunities that may prove to be interesting. However, we will continue to favor a disciplined approach by ensuring to pay a fair price for stores that are offered to us" he concluded.
As for Raymond Paré, Vice-President and Chief Financial Officer, he indicated: "It is important to underscore that our performance is mainly organic despite the modest economic recovery. As demonstrated by our lower indebtedness ratios generated by cash flows from operations as well as our bettering working capital, we continue to improve our balance sheet. We also implemented a new share repurchase program in order to take advantage of the actual market valuation of our stock. We will use this program cautiously while taking into account other opportunities and cash flows generated".
Highlights of the Second Quarter of Fiscal 2011
Changes in the Store Network
The following table presents certain information regarding changes in Couche-Tard's stores network over the 12 and 24-week periods ended October 10, 2010:
12-week period ended 24-week period ended
October 10, 2010 October 10, 2010
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Company- Affi- Company- Affi-
operated liated operated liated
stores stores Total stores stores Total
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Number of
stores,
beginning
of period 4,401 1,468 5,869 4,408 1,470 5,878
Acquisitions 25 - 25 31 - 31
Openings/
construc-
tions/
additions 7 66 73 16 83 99
Closures/
disposals/
withdrawals (18) (45) (63) (40) (64) (104)
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Number of
stores, end
of period 4,415 1,489 5,904 4,415 1,489 5,904
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Business acquisitions
During the second quarter of fiscal 2011, Couche-Tard made the following acquisitions:
- On September 9, 2010, Couche-Tard acquired ten company-operated stores
from Compac Food Stores Inc. Nine of the stores are located in the
greater Mobile, Alabama area and one is located in Pensacola, Florida.
The Company owns all buildings while it leases the land for four stores
and owns the six others.
- On September 30, 2010, Couche-Tard acquired 12 company-operated stores
located in central Indiana from Crystal Flash Petroleum, LLC. The
Company owns the land and building for one site, leases those same
assets for ten sites and it owns the building and lease the land for
one site.
- Couche-Tard also acquired three other stores through three distinct
transactions.
Casey's General Stores, Inc. ("Casey's")
On September 30, 2010, Couche-Tard's public tender offer to acquire all of the outstanding shares of common stock of Casey's for $38.50 per share, payable in cash expired. Given Casey's Board's repeated refusal to negotiate with the Company, Couche-Tard decided not to continue to pursue its offer. Couche-Tard has not purchased any Casey's shares pursuant to the public tender offer, and all tendered shares have been returned.
Share repurchase program
Subsequent to the end of the second quarter of fiscal 2011 - on October 25, 2010 - Couche-Tard implemented a new share repurchase program. This program allows Couche-Tard to repurchase up to 2,685,335 of the 53,706,712 Class A multiple voting shares and up to 11,621,801 of the 116,218,014 Class B subordinate voting shares issued and outstanding as at October 20, 2010 (representing 5.0% of the Class A multiple voting shares issued and outstanding and 10.0% of the Class B subordinate voting shares of the public float, as at that date, respectively, as defined by applicable rules). In accordance with Toronto Stock Exchange requirements, Couche-Tard can repurchase a daily maximum of 1,000 Class A multiple voting shares and of 83,622 Class B subordinate voting shares. When making such repurchases, the number of Class A multiple voting shares and of Class B subordinate voting shares in circulation is reduced and the proportionate interest of all remaining shareholders in the Company's share capital is increased on a pro rata basis. The share repurchase period will end no later than October 24, 2011. All shares repurchased under the share repurchase program are cancelled upon repurchase.
Redemption of Senior Subordinated Debt
On November 10, 2010, Couche-Tard announced its intention of redeeming its 7.5% Subordinated Unsecured Debt of $350.0 million. The redemption date is expected to be December 15, 2010 at a price of 101.25% of the principle amount plus accrued and unpaid interests.
Dividends
During its November 23, 2010 meeting, considering Couche-Tard's good results and strong balance sheet, the Company's Board of Directors (the "Board") decided it was appropriate to amend the quarterly dividend by increasing it by Cdn$0.01 per share, which thereby corresponds to Cdn$0.05 per share.
On the same date, the Board declared a quarterly dividend of Cdn$0.05 per share for the second quarter of fiscal 2011 to shareholders on record as at December 2, 2010 and approved its payment for December 10, 2010. This is an eligible dividend within the meaning of the Income Tax Act of Canada.
Exchange Rate Data
The Company's US dollar reporting provides more relevant information given the predominance of its operations in the United States and its debt largely dominated in US dollars.
The following table sets forth information about exchange rates based upon the Bank of Canada closing rates expressed as US dollars per Cdn$1.00:
12-week periods ended 24-week periods ended
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October 10, October 11, October 10, October 11,
2010 2009 2010 2009
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Average for period (1) 0.9654 0.9228 0.9642 0.8974
Period end 0.9888 0.9575 0.9888 0.9575
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(1) Calculated by taking the average of the closing exchange rates of
each day in the applicable period.
Considering the Company uses the US dollar as its reporting currency, in its consolidated financial statements and in the present document, unless indicated otherwise, results from its Canadian and corporate operations are translated into US dollars using the average rate for the period. Variances and explanations related to variations in the foreign exchange rate and the volatility of the Canadian dollar which are discussed in the present document are therefore related to the translation in US dollars of the Company's Canadian and corporate operations results and do not have a true economic impact on its performance since most of the Company's consolidated revenues and expenses are received or denominated in the functional currency of the markets in which it does business. Accordingly, the sensitivity of the Company's results to variations in foreign exchange rates is economically limited.
Selected Consolidated Financial Information
The following table highlights certain information regarding Couche-Tard's operations for the 12 and 24-week periods ended October 10, 2010 and October 11, 2009:
(In millions -----------------------------------------------------------
of US dollars,
unless
otherwise
stated) 12-week periods ended 24-week periods ended
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October October October October
10, 11, Varia- 10, 11, Varia-
2010 2009 tion % 2010 2009 tion %
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Statement of
Operations
Data:
Merchandise
and service
revenues (1):
United
States 994.8 946.5 5.1 1,996.8 1,900.2 5.1
Canada 500.5 469.8 6.5 1,017.3 906.9 12.2
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Total
merchandise
and service
revenues 1,495.3 1,416.3 5.6 3,014.1 2,807.1 7.4
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Motor fuel
revenues:
United
States 2,266.9 1,995.8 13.6 4,559.2 3,907.3 16.7
Canada 478.5 413.7 15.7 940.3 786.5 19.6
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Total motor
fuel
revenues 2,745.4 2,409.5 13.9 5,499.5 4,693.8 17.2
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Total
revenues 4,240.7 3,825.8 10.8 8,513.6 7,500.9 13.5
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Merchandise
and service
gross
profit (1):
United
States 328.0 308.4 6.4 657.1 621.1 5.8
Canada 175.5 162.4 8.1 357.0 311.7 14.5
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Total
merchandise
and service
gross
profit 503.5 470.8 6.9 1,014.1 932.8 8.7
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Motor fuel
gross profit:
United
States 143.2 123.7 15.8 301.1 243.1 23.9
Canada 33.0 29.4 12.2 63.3 57.4 10.3
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Total motor
fuel gross
profit 176.2 153.1 15.1 364.4 300.5 21.3
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Total gross
profit 679.7 623.9 8.9 1,378.5 1,233.3 11.8
Operating,
selling,
adminis-
trative and
general
expenses 480.0 447.5 7.3 949.1 878.5 8.0
Depreciation
and
amortization
of property
and equipment
and other
assets 49.8 46.9 6.2 97.8 91.9 6.4
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Operating
income 149.9 129.5 15.8 331.6 262.9 26.1
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Net earnings 105.6 88.2 19.7 235.1 179.3 31.1
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Other Operating
Data:
Merchandise
and
service gross
margin (1):
Consolidated 33.7% 33.2% 0.5 33.7% 33.2% 0.5
United
States 33.0% 32.6% 0.4 32.9% 32.7% 0.2
Canada 35.1% 34.6% 0.5 35.1% 34.4% 0.7
Growth of
same-store
merchandise
revenues
(2)(3):
United States 4.9% 2.9% 4.7% 2.7%
Canada 1.6% 5.2% 4.1% 3.8%
Motor fuel
gross margin
(3):
United
States
(cents per
gallon): 17.12 15.78 8.5 18.11 15.61 16.0
Canada (Cdn
cents per
litre) 5.48 5.49 (0.2) 5.37 5.62 (4.4)
Volume of
motor fuel
sold (4):
United
States
(millions
of gallons) 856.8 812.6 5.4 1,706.8 1,613.1 5.8
Canada
(millions
of litres) 625.6 580.7 7.7 1,226.4 1,136.2 7.9
Growth of
same-store
motor fuel
volume (3):
United
States 0.5% 3.9% 0.8% 2.8%
Canada 5.3% 3.3% 5.4% 2.4%
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Per Share Data:
Basic net
earnings
per share
(dollars
per share) 0.57 0.48 18.8 1.27 0.97 30.9
Diluted net
earnings
per share
(dollars
per share) 0.56 0.47 19.1 1.25 0.95 31.6
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October 10, April 25, Varia-
2010 2010 tion $
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Balance Sheet Data:
Total assets 3,896.6 3,696.7 203.5
Interest-bearing debt 640.4 741.2 (100.8)
Shareholders' equity 1,839.7 1,614.3 230.8
Indebtedness Ratios:
Net interest-bearing debt/total
capitalization (5) 0.11: 1 0.24: 1
Net interest-bearing debt/EBITDA (6) 0.30: 1(7) 0.80: 1
Adjusted net interest bearing
debt/EBITDAR (8) 2.17: 1(7) 2.81: 1
Returns:
Return on equity (7)(9) 21.5%
Return on capital employed (7)(10) 18.2%
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(1) Includes other revenues derived from franchise fees, royalties and
rebates on some purchases by franchisees and licensees.
(2) Does not include services and other revenues (as described in
footnote 1 above). Growth in Canada is calculated based on Canadian
dollars.
(3) For company-operated stores only.
(4) Includes volume of franchisees and dealers.
(5) This ratio is presented for information purposes only and represents
a measure of financial condition used especially in financial
circles. It represents the following calculation: long-term
interest-bearing debt, net of cash and cash equivalents and
temporary investments, divided by the addition of shareholders'
equity and long-term debt, net of cash and cash equivalents and
temporary investments. It does not have a standardized meaning
prescribed by Canadian GAAP and therefore may not be comparable to
similar measures presented by other public companies.
(6) This ratio is presented for information purposes only and represents
a measure of financial condition used especially in financial
circles. It represents the following calculation: long-term
interest-bearing debt, net of cash and cash equivalents and
temporary investments, divided by EBITDA (Earnings Before Interest,
Tax, Depreciation and Amortization). It does not have a standardized
meaning prescribed by Canadian GAAP and therefore may not be
comparable to similar measures presented by other public companies.
(7) This ratio was standardized over a period of one year. It includes
the results of the first and second quarters of the fiscal year
which will end April 24, 2011 as well as the third and fourth
quarters of the fiscal year ended April 25, 2010.
(8) This ratio is presented for information purposes only and represents
a measure of financial condition used especially in financial
circles. It represents the following calculation: long-term
interest-bearing debt plus the product of eight times rent expense,
net of cash and cash equivalents and temporary investments, divided
by EBITDAR (Earnings Before Interest, Tax, Depreciation,
Amortization and Rent expense). It does not have a standardized
meaning prescribed by Canadian GAAP and therefore may not be
comparable to similar measures presented by other public companies.
(9) This ratio is presented for information purposes only and represents
a measure of performance used especially in financial circles. It
represents the following calculation: cumulated net earnings of the
last four quarter divided by average equity for the same period. It
does not have a standardized meaning prescribed by Canadian GAAP and
therefore may not be comparable to similar measures presented by
other public companies.
(10) This ratio is presented for information purposes only and represents
a measure of performance used especially in financial circles. It
represents the following calculation: cumulated earning before
income taxes and interests of the last four quarter divided by
average capital employed for the same period. Capital employed
represents total assets less short-term liabilities. It does not
have a standardized meaning prescribed by Canadian GAAP and
therefore may not be comparable to similar measures presented by
other public companies.
Operating Results
Couche-Tard's revenues amounted to $4.2 billion in the second quarter of fiscal 2011, up $414.9 million, an increase of 10.8%, mainly attributable to an increase in motor fuel sales due to higher average retail prices at the pump and the rise in motor fuel volume sold in the United States and Canada, to the growth of merchandise and service sales, as well as to the stronger Canadian dollar.
As for the first half-year of fiscal 2011, Couche-Tard's revenues grew by $1.0 billion, an increase of 13.5% compared to the first half-year of fiscal 2010 for reasons similar to those mentioned for the quarter.
More specifically, the growth of merchandise and service revenues for the second quarter of fiscal 2011 was $79.0 million or 5.6%, of which approximately $22.0 million was generated by a stronger Canadian dollar. Internal growth, as measured by the growth in same-store merchandise revenues, was 4.9% in the United States while it stood at 1.6% in Canada. For the Canadian and U.S. markets, growth of same-store merchandise sales is attributable to Couche-Tard's merchandising strategies, to the economic condition in each of their market as well as to the investments the Company made to enhance the offering of products and services in its stores.
In the first half-year of fiscal 2011, merchandise and service revenues rose by $207.0 million, a 7.4% increase compared to the same period last fiscal year for reasons similar to those of the second quarter, including an increase in same-store merchandise revenues of 4.7% in the United States and 4.1% in Canada.
Motor fuel revenues increased by $335.9 million or 13.9% in the second quarter of fiscal 2011, of which $82.0 million stems from additional volume due to a growing number of sites offering motor fuel and approximately $19.0 million were generated by the appreciation of the Canadian dollar against its U.S. counterpart. Same-store motor fuel volume grew by 0.5% in the United States and 5.3% in Canada. The higher average retail price of motor fuel generated an increase in revenues of approximately $154.0 million as shown in the following table, starting with the third quarter of the fiscal year ended April 25, 2010:
Weighted
Quarter 3rd 4th 1st 2nd average
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52-week period ended
October 10, 2010
United States (US
dollars per gallon) 2.59 2.71 2.72 2.67 2.67
Canada (Cdn cents
per litre) 90.00 92.36 91.46 90.47 90.98
52-week period ended
October 11, 2009
United States (US
dollars per gallon) 2.00 1.95 2.41 2.48 2.20
Canada (Cdn cents
per litre) 78.05 78.67 88.80 89.24 83.58
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For the first half-year of fiscal 2011, motor fuel revenues increased by $805.7 million or 17.2% of which $168.0 million stems from additional volume due to a growing number of sites offering motor fuel and approximately $59.0 million were generated by the appreciation of the Canadian dollar against its U.S. counterpart. Same-store motor fuel volume grew by 0.8% in the United States and 5.4% in Canada. The higher average retail price of motor fuel generated an increase in revenues of approximately $402.0 million.
The consolidated merchandise and service gross margin was 33.7% in the second quarter fiscal 2011, up 0.5% compared with the same quarter of fiscal 2010. In the United States, the gross margin was 33.0% while it was 35.1% in Canada, a 0.4% and 0.5% increase, respectively. These increases reflect a more favorable product-mix, the improvements the Company brought to its supply terms as well as its merchandising strategy in tune with market competitiveness and economic conditions within each market.
During the first half-year of fiscal 2011, the consolidated merchandise and service gross margin was 33.7%. More specifically, it was 32.9% in the United States, an increase of 0.2%, and 35.1% in Canada, an increase of 0.7%.
In the second quarter of fiscal 2011, the motor fuel gross margin for Couche-Tard's company-operated stores in the United States increased by 1.34 cents per gallon, from 15.78 cents per gallon last year to 17.12 cents per gallon this year. In Canada, the gross margin fell slightly to Cdn5.48 cents per litre compared with Cdn5.49cents per litre for the second quarter of fiscal 2010. The motor fuel gross margin of Couche-Tard's company-operated stores in the United States as well as the impact of expenses related to electronic payment modes for the last eight quarters, starting with the third quarter of fiscal year ended April 25, 2010, were as follows:
(US cents per gallon)
Weighted
Quarter 3rd 4th 1st 2nd average
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52-week period ended
October 10, 2010
Before deduction of
expenses related to
electronic payment
modes 12.88 14.21 19.12 17.12 15.69
Expenses related to
electronic payment
modes 3.85 4.14 4.17 4.17 4.07
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After deduction of
expenses related to
electronic payment
modes 9.03 10.07 14.95 12.95 11.62
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52-week period ended
October 11, 2009
Before deduction of
expenses related to
electronic payment
modes 18.21 11.38 15.43 15.78 15.41
Expenses related to
electronic payment
modes 3.15 3.10 3.56 3.79 3.38
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After deduction of
expenses related to
electronic payment
modes 15.06 8.28 11.87 11.99 12.03
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As for the 24-week period ended October 10, 2010, the motor fuel gross margin for the company-operated stores in the United States increased by 2.50 cents per gallon, from 15.61 cents per gallon last fiscal year to 18.11 cents per gallon this fiscal year. In Canada, the margin fell, reaching Cdn5.37 cents per litre compared with Cdn5.62 cents per litre for the comparable period of fiscal 2010.
For the second quarter of fiscal 2011, operating, selling, administrative and general expenses rose by 7.3% compared with the second quarter of fiscal 2010. These expenses increased by 1.4% because of the stronger Canadian dollar, by 1.3% because of the increase in electronic payment modes expenses and by 0.3% because of acquisitions. In addition, following the non-renewal of Couche-Tard's public tender offer for the acquisition of Casey's, the Company recorded to earnings related fees that had previously been deferred, which made expenses increase by 2.1%. Excluding these items, expenses increased by 2.2% which reflects the increase in hours worked in stores in order to support the increase in merchandise and service sales, minimum wage increases in certain regions as well as the normal increase in expenses caused by inflation. Moreover, excluding fees related to Casey's as well as expenses related to electronic payment modes for both comparable periods, expenses in proportion to merchandise and services sales represented 28.3% of sales during the second quarter of fiscal 2011, compared to 28.7% during the second quarter of fiscal 2010.
As for the first half-year of fiscal 2011, operating, selling, administrative and general expenses rose by 8.0% compared with the corresponding period of fiscal 2010. These expenses increased by 2.2% because of the stronger Canadian dollar, by 1.6% because of the increase in electronic payment modes expenses, by 1.1% because of the recognition to earnings of the fees related to Casey's and by 0.6% because of acquisitions. Excluding these items, expenses increased by 2.5% for reasons similar as those mentioned for the second quarter. Moreover, excluding fees related to Casey's as well expenses related to electronic payment modes for both comparable periods, expenses in proportion to merchandise and services sales represented 28.1% of sales during the half-year of fiscal 2011, compared to 28.5% during the first half-year of fiscal 2010.
This performance reflects Couche-Tard's constant efforts to find ways to improve its efficiency while making certain that it maintains the quality of the service it offer to its clients.
During the second quarter of fiscal 2011, Earnings before interests, taxes, depreciation and amortization (EBITDA) increased by 13.2% compared to the corresponding period of the previous fiscal year, reaching $199.7 million while it reached $429.4 million during the first half-year of fiscal 2011, an increase of 21.0%. Acquisitions contributed $0.4 million to EBITDA during the second quarter and $2.8 million during the first half-year.
It should be noted that EBITDA is not a performance measure defined by Canadian GAAP, but Couche-Tard's management, as well as investors and analysts, use this measure to evaluate the Company's financial and operating performance. Note that Couche-Tard's definition of this measure may differ from the one used by other public companies:
(in millions
of US dollars) 12-week periods ended 24-week periods ended
October 10, October 11, October 10, October 11,
2010 2009 2010 2009
-------------------------------------------------------------------------
Net earnings, as reported 105.6 88.2 235.1 179.3
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Add:
Income taxes 36.9 34.3 82.2 69.7
Financial expenses 7.4 7.0 14.3 13.9
Depreciation and
amortization of
property and
equipment and other
assets 49.8 46.9 97.8 91.9
-------------------------------------------------------------------------
EBITDA 199.7 176.4 429.4 354.8
-------------------------------------------------------------------------
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For the second quarter and first half-year of fiscal 2011, the depreciation expense increased due to the investments made through acquisitions, replacement of equipment, the addition of new stores and the ongoing improvement of Couche-Tard's network.
For both the second quarter and the first half-year of fiscal 2011, financial expenses increased by $0.4 million compared with the second quarter and first half-year of fiscal 2010.
The income tax rate for both the second quarter and first half-year of fiscal 2011 is 25.9% compared to a rate of 28.0% for the corresponding quarter and half-year of the previous fiscal year.
Couche-Tard closed the second quarter of fiscal 2011 with net earnings of $105.6 million, which equals $0.57 per share (or $0.56 per share on a diluted basis), compared to $88.2 million the previous fiscal year ($0.47 per share on a diluted basis), an increase of $17.4 million or 19.7%. The stronger Canadian dollar had a favorable impact of approximately $2.0 million on net earnings.
As for the first half-year of fiscal 2011 net earnings were $235.1 million, which equals $1.27 per share (or $1.25 per share on a diluted basis), compared to $179.3 million the previous fiscal year ($0.95 per share on a diluted basis), an increase of $55.8 million or 31.1%. The stronger Canadian dollar had a favorable impact of approximately $6.0 million on net earnings.
For their part, for both the quarter and first half-year, fees related to Couche-Tard's public tender offer for the acquisition of Casey's had a negative impact of approximately $7.0 million on net earnings or $0.04 per share on a diluted basis.
Liquidity and Capital Resources
Couche-Tard's sources of liquidity remain unchanged compared with fiscal year ended April 25, 2010. For further information, please refer to the Company's 2010 Annual Report.
With respect to Couche-Tard's capital expenditures and acquisitions carried out in the first half-year of fiscal 2011, they were financed using its available cash. Couche-Tard expects that its cash available from operations together with borrowings available under its revolving unsecured credit facilities, as well as potential sale and leaseback transactions, will meet its liquidity needs in the foreseeable future.
Couche-Tard's credit facilities have not changed with respect to the terms of use since April 25, 2010. As at October 10, 2010, $250.0 million of the Company's term revolving unsecured operating credits had been used ($250.0 million for the US dollars portion, nil for the Canadian dollars portion). As at the same date, the weighted average effective interest rate was 0.81%. In addition, standby letters of credit in the amount of Cdn$0.8 million and $25.8 million were outstanding as at October 10, 2010. Couche-Tard also has a $351.5 million subordinated unsecured debt (nominal value amounting to $350.0 million, net of attributable financing costs of $7.1 million, adjusted for amounts received for the early termination of interest rate swap agreements which are amortized on the remaining term of the debt using the effective rate method), bearing interest at an effective rate of 7.35% and maturing in 2013.
Selected Consolidated Cash Flow Information
(In millions
of US dollars) 12-week periods ended 24-week periods ended
-----------------------------------------------------------
October October Varia- October October Varia-
10, 11, tion 10, 11, tion
2010 2009 $ 2010 2009 $
-----------------------------------------------------------
Operating
activities
Cash flows(1) 156.4 135.6 20.8 330.0 277.2 52.8
Other 72.0 26.5 45.5 62.2 (36.9) 99.1
-----------------------------------------------------------
Net cash
provided by
operating
activities 228.4 162.1 66.3 392.2 240.3 151.9
-----------------------------------------------------------
Investing
activities
Purchase of
property and
equipment
and other
assets, net
of proceeds
from the
disposal of
property and
equipment
and other
assets (34.9) (47.4) 12.5 (61.2) (72.6) 11.4
Proceeds from
sale and
leaseback
transactions 3.2 6.5 (3.3) 5.1 9.6 (4.5)
Business
acquisitions (19.4) (6.2) (13.2) (26.3) (67.6) 41.3
-----------------------------------------------------------
Net cash used
in investing
activities (51.1) (47.1) (4.0) (82.4) (130.6) 48.2
-----------------------------------------------------------
Financing
activities
Decrease in
long-term
borrowings (0.9) (57.7) 56.8 (99.4) (30.0) (69.4)
Share
repurchase - (28.1) 28.1 - (56.4) 56.4
Dividends (14.3) (11.9) (2.4) (14.3) (11.9) (2.4)
Issuance of
shares 1.1 2.0 (0.9) 5.2 2.0 3.2
-----------------------------------------------------------
Net cash used
in financing
activities (14.1) (95.7) 81.6 (108.5) (96.3) (12.2)
-----------------------------------------------------------
-----------------------------------------------------------
Company credit
rating
Standard
and Poor's BB+ BB+ BB+ BB+
1. These cash flows are presented for information purposes only and
represent a performance measure used especially in financial circles.
They represent net earnings plus depreciation and amortization, loss
on disposal of assets (less gains on disposal of assets) and future
income taxes. They do not have a standardized meaning prescribed by
Canadian GAAP and therefore may not be comparable to similar measures
presented by other public companies.
Operating activities
During the second quarter of fiscal 2011, net cash from operation of Couche-Tard's stores reached $228.4 million, up $66.3 million from the second quarter of fiscal 2010 mainly due to higher net earnings and more favorable changes in working capital. During the first half-year of 2011, net cash from operation of Couche-Tard's stores reached $392.2 million, up $151.9 million from the comparable period of fiscal 2010 for the same reasons as for the quarter.
Investing activities
During the second quarter of fiscal 2011, Couche-Tard's investing activities were primarily for the acquisition of 25 stores for an amount of $19.4 million and for capital expenditures for an amount of $34.9 million. Since the beginning of the fiscal year, the Company acquired 31 stores for a total amount of $26.3 million and disbursed a total of $61.2 million for capital expenditures. Couche-Tard's capital expenditures were primarily for the replacement of equipment in some of their stores to enhance its offering of products and services, the addition of new stores as well as the ongoing improvement of Couche-Tard's network.
Financing activities
During the second quarter of fiscal 2011, the decrease in long term debt amounted to $0.9 million while the Company paid $14.3 million in dividends.
Financial Position as at October 10, 2010
As shown by the indebtedness ratios included in the "Selected Consolidated Financial Information" section and net cash provided by operating activities, Couche-Tard's financial position is excellent.
Couche-Tard's total consolidated assets amounted to $3.9 billion as at October 10, 2010, compared to $3.7 billion as at April 25, 2010, an increase of $199.9 million mainly attributable to the increase in the cash balance. For the 52-week period ended October 10, 2010, the Company recorded an 18.2% return on capital employed.
Shareholders' equity amounted to $1.8 billion as at October 10, 2010, up $225.4 million compared to April 25, 2010, mainly reflecting net earnings of the first half-year of fiscal 2011, partially offset by dividends declared. For the 52-week period ended October 10, 2010, the Company recorded a 21.5% return on equity.
Selected Quarterly Financial Information (Unaudited)
(In millions of
US dollars
except for
per share 24-week period
data, ended
unaudited) October 10, 2010 52-week period ended April 25, 2010
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Quarter 2nd 1st 4th 3rd 2nd 1st
Weeks 12 weeks 12 weeks 12 weeks 16 weeks 12 weeks 12 weeks
------------------------------------------------------------
Revenues 4,240.7 4,272.9 4,003.5 4,935.2 3,825.8 3,675.1
------------------------------------------------------------
Income before
depreciation
and
amortization
of property
and equipment
and other
assets,
financial
expenses and
income taxes 199.7 229.7 150.5 141.3 176.4 178.4
Depreciation
and
amortization
of property
and equipment
and other
assets 49.8 48.0 49.4 63.2 46.9 45.0
------------------------------------------------------------
Operating
income 149.9 181.7 101.1 78.1 129.5 133.4
------------------------------------------------------------
Financial
expenses 7.4 6.9 7.4 8.6 7.0 6.9
------------------------------------------------------------
Net earnings 105.6 129.5 68.8 54.8 88.2 91.1
------------------------------------------------------------
------------------------------------------------------------
Net earnings
per share
Basic $0.57 $0.70 $0.37 $0.30 $0.48 $0.49
Diluted $0.56 $0.69 $0.37 $0.29 $0.47 $0.48
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Extract from the
52-week period
ended
April 26, 2009
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Quarter 2nd 1st
Weeks 12 weeks 12 weeks
------------------------------------------------------------
Revenues 2,994.0 3,911.7
------------------------------------------------------------
Income before
depreciation
and
amortization
of property
and equipment
and other
assets,
financial
expenses and
income taxes 105.0 168.1
Depreciation
and
amortization
of property
and equipment
and other
assets 42.6 56.4
------------------------------------------------------------
Operating
income 62.4 111.7
------------------------------------------------------------
Financial
expenses 6.8 10.3
------------------------------------------------------------
Net earnings 38.0 71.1
------------------------------------------------------------
------------------------------------------------------------
Net earnings
per share
Basic $0.20 $0.37
Diluted $0.20 $0.36
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Outlook
In the course of the fiscal 2011, Couche-Tard expects to pursue its investments with caution in order to, amongst other things, improve its network. Given the economic climate and its attractive access to capital, Couche-Tard believes to be well positioned to realize acquisitions and create value. However, Couche-Tard will continue to exercise patience in order to benefit from a fair price in view of current market conditions. The Company also intends to keep an ongoing focus on its supply terms and operating expenses.
Finally, in line with its business model, Couche-Tard intends to continue to focus its resources on the sale of fresh products and on innovation, including the introduction of new products and services, in order to satisfy the needs of its large clientele.
Profile
Alimentation Couche-Tard Inc. is the leader in the Canadian convenience store industry. In North America, Couche-Tard is the largest independent convenience store operator (whether integrated with a petroleum company or not) in terms of number of company-operated stores. Couche-Tard currently operates a network of 5,904 convenience stores, 4,178 of which include motor fuel dispensing. The stores are operated by 12 business units, including nine in the United States covering 42 states and the District of Columbia, and three in Canada covering all ten provinces. More than 53,000 people are employed throughout Couche-Tard's retail convenience network and service centers.
The statements set forth in this press release, which describes Couche-Tard's objectives, projections, estimates, expectations or forecasts, may constitute forward-looking statements within the meaning of securities legislation. Positive or negative verbs such as "plan", "evaluate", "estimate", "believe" and other related expressions are used to identify such statements. Couche-Tard would like to point out that, by their very nature, forward-looking statements involve risks and uncertainties such that its results, or the measures it adopts, could differ materially from those indicated or underlying these statements, or could have an impact on the degree of realization of a particular projection. Major factors that may lead to a material difference between Couche-Tard's actual results and the projections or expectations set forth in the forward-looking statements include the effects of the integration of acquired businesses and the ability to achieve projected synergies, fluctuations in margins on motor fuel sales, competition in the convenience store and retail motor fuel industries, exchange rate variations, and such other risks as described in detail from time to time in the reports filed by Couche-Tard with securities authorities in Canada and the United States. Unless otherwise required by applicable securities laws, Couche-Tard disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking information in this release is based on information available as of the date of the release.
Webcast on November 23, 2010 at 3:30 P.M. (EST)
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Couche-Tard invites analysts known to the Company to send their two questions in advance to its management, before 1:30 P.M. (EST) on November 23, 2010.
Financial analysts and investors who wish to listen to the webcast on Couche-Tard's results which will take place online on November 23, 2010 at 3:30 P.M. (EST) can do so by accessing the Company's website at www.couche-tard.com/corporate and by clicking on the corporate presentations link of the investor relations section. For those who will not be able to listen to the live presentation, the recording of the webcast will be available on the Company's website for a period of 90 days.
For further information: Raymond Paré, Vice-President and Chief Financial Officer, Tel: (450) 662-6632 ext. 4607, [email protected]
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