Alimentation Couche-Tard maintains its momentum into the second quarter of fiscal year 2019

• Net earnings attributable to shareholders of the Corporation ("net earnings") of $473.1 million ($0.84 per share on a diluted basis) for the second quarter of fiscal 2019 compared with $432.5 million ($0.76 per share on a diluted basis) for the second quarter of fiscal 2018. Excluding certain items for both comparable periods, net earnings for the quarter would have been approximately $473.0 million¹ or $0.84¹ per share on a diluted basis, compared with $0.80¹ per share on a diluted basis for the second quarter of fiscal 2018, an increase of 5.0%.
• Total merchandise and service revenues of $3.5 billion, an increase of 11.1%. Same-store merchandise revenues increased by 4.4% in the U.S., by 4.6% in Europe and by 5.1% in Canada.
• Merchandise and service gross margin increased by 1.1% in the U.S., to 34.3%, while it decreased by 0.9% in Europe and Canada, to 41.1% and 33.7%, respectively.
• Total road transportation fuel volumes grew by 12.6%. Same-store road transportation fuel volumes increased by 1.2% in the U.S. and by 0.1% in Europe, while same-store volumes decreased by 2.2% in Canada.
• Road transportation fuel gross margin decreased by US 2.82¢ per gallon in the U.S. to US 21.88¢ per gallon, by US 0.79¢ per liter in Europe, to US 8.75¢ per liter and by CA 0.22¢ per liter in Canada, to CA 8.42¢ per liter.
• Current annual synergies run rate related to the CST Brands Inc. ("CST") integration reached approximately $200.0 million.
• Adjusted leverage ratio continued to improve and reached 2.79:1, on a pro-forma basis.
• Circle K rebranding project continues in North America and Ireland. More than 4,050 stores in North America and more than 1,800 stores in Europe now display the new Circle K global brand.
• Return on equity and return on capital employed at 24.0% and 12.1%, respectively, on a pro-forma basis.

^{__________________________________}

¹ Please refer to the section "Net earnings attributable to shareholders of the Corporation ("net earnings") and adjusted net earnings attributable to shareholders of the Corporation ("adjusted net earnings")" of this press release for additional information on this performance measure not defined by IFRS.

LAVAL, QC, Nov. 27, 2018 /CNW Telbec/ - For its second quarter ended October 14, 2018, Alimentation Couche-Tard Inc. (TSX: ATD.A) (TSX: ATD.B) announces net earnings attributable to shareholders of the Corporation of $473.1 million, representing $0.84 per share on a diluted basis. The results for the second quarter of fiscal 2019 were affected by a net tax benefit of $6.2 million stemming from the decrease of the statutory income tax rate in Sweden, pre-tax restructuring costs of $4.8 million, a pre-tax net foreign exchange gain of $3.7 million, as well as pre-tax acquisition costs of $0.7 million. The results for the comparable quarter of fiscal 2018 were affected by a pre-tax net foreign exchange loss of $17.3 million, pre-tax incremental expenses caused by hurricanes totaling $4.8 million, a $4.2 million pre-tax accelerated depreciation and amortization expense in connection with the Corporation's global brand initiative, as well as pre-tax acquisition costs of $3.4 million. Excluding these items, the adjusted diluted net earnings per share would have remained at $0.84 for the second quarter of fiscal 2019, compared with $0.80 for the second quarter of fiscal 2018, an increase of 5.0%, driven by organic growth, the contribution from acquisitions, as well as a lower income tax rate, partly offset by lower road transportation fuel margins and the net negative impact from the translation of our Canadian and European operations into US dollars. All financial information is in US dollars unless stated otherwise.

"We had strong performance this quarter across the entire network. In particular, I am pleased with year-over-year same-store merchandise revenues. In the U.S., where we had a 4.4% increase, we also improved our underlying margins," stated Brian Hannasch, President and CEO of Alimentation Couche-Tard. "We are also pleased with the improvement in year-over-year same-store sales results in Canada and in Europe driven by new promotions and the continued success of our food programs in many areas. Overall, we feel good about the momentum we are seeing in our stores as we continue our network-wide push of promotional and marketing programs."

Brian Hannasch continued: "While U.S. fuel margins were strong this quarter, they were markedly lower compared to the prior year quarter, which was impacted by volatility caused by the hurricanes in Texas and Florida last year. In Canada, we improved the trend in same-store transportation fuel volumes compared to the first quarter of fiscal 2019 as the new loyalty program was introduced at the Esso locations and continues to gain traction."

"Great work continues to be done at the CST and Holiday sites. The rebranding of several hundred former CST stores to Circle K contributed to the overall positive same-store merchandise results this quarter. Hundreds more CST sites are scheduled for rebranding by the end of the fiscal year, and we are seeing good customer acceptance at these locations. From the Holiday network, we are beginning to track the added value of the food pilots in other business units," concluded Brian Hannasch. 

Claude Tessier, Chief Financial Officer stated: "This was once again an impressive quarter in terms of cash-flow generation and continuation of our deleveraging plan. After only 15 months, we are very close to hitting our 3-year synergy expectations related to the CST acquisition. We also efficiently managed inflationary pressure from both wages and other costs while keeping our operating expenses under control. This is due to our strict financial discipline as we continue our strategic growth trajectory and increasing value for our shareholders."

 Significant Items of the Second Quarter of Fiscal 2019

• As at October 14, 2018, our annual synergies run rate for the CST acquisition reached approximately $200.0 million. These synergies should result in reductions in operating, selling, administrative and general expenses, as well as improvements in road transportation fuel and merchandise distribution and supply costs. We expect that we will reach our synergy target of $215.0 million¹.
• The rollout of the Circle K brand in North America and Ireland is progressing steadily. As of October 14, 2018, more than 4,050 stores in North America, including more than 300 stores acquired from CST, and more than 1,800 stores in Europe are now proudly displaying our new global brand.
• During the quarter, we recorded a net tax benefit of $6.2 million, derived from the evaluation of our deferred income tax balances following the decrease of the statutory income tax rate in Sweden, which will decrease from 22.0% to 20.6% over the next 2 years.
• During the quarter, as part of our costs reduction initiatives and the search for synergies aimed at improving our efficiency, we made the decision to proceed with the restructuring of certain of our European operations. As such, an additional restructuring expense of $4.8 million was recorded during the second quarter of fiscal 2019.
• In connection with divestiture of certain assets, we have paid a compensatory amount of $6.3 million to CAPL. This compensatory payment was recorded in our operating expenses and was eliminated upon consolidation.
• During the quarter, we finalized our estimates of the fair value of the assets acquired, the liabilities assumed and the goodwill for the Holiday Stationstores, LLC acquisition ("Holiday"). There were no other changes to the adjusted net earnings previously reported.

________________________________

1 As our previously stated goal is considered a forward looking statement, we are required, pursuant to securities laws, to clarify that our synergies estimate is based on a number of important factors and assumptions. Among other things, our synergies 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 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 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 estimate as well as the timing of the implementation of our different initiatives.  

Changes in our Network

• During the second quarter and first half-year of fiscal 2019, we acquired two company-operated stores through distinct transactions.
• During the second quarter of fiscal 2019, we completed the construction, relocation or reconstruction of 11 stores, reaching a total of 21 stores since the beginning of the fiscal year. As of October 14, 2018, 34 stores were under construction and should open in the upcoming quarters.

Summary of changes in our store network during the second quarter of fiscal 2019

The following table presents certain information regarding changes in our store network over the 12-week period ended October 14, 2018:

		12-week period ended October 14, 2018
Type of site		Company- operated	CODO	DODO	Franchised and other affiliated	Total
Number of sites, beginning of period		9,678	700	1,060	1,263	12,701
	Acquisitions	2	-	-	-	2
	Openings / constructions / additions	11	1	6	23	41
	Closures / disposals / withdrawals	(25)	(1)	(12)	(45)	(83)
	Store conversion	6	(5)	(1)	-	-
Number of sites, end of period		9,672	695	1,053	1,241	12,661
CAPL network						1,291
Circle K branded sites under licensing agreements						2,042
Total network						15,994
Number of automated fuel stations included in the period-end figures		977	-	14	-	991

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 periods ended		24-week periods ended
	October 14, 2018	October 15, 2017	October 14, 2018	October 15, 2017
Average for period
Canadian dollar	0.7675	0.8021	0.7674	0.7766
Norwegian krone	0.1210	0.1268	0.1222	0.1227
Swedish krone	0.1112	0.1239	0.1125	0.1197
Danish krone	0.1555	0.1590	0.1565	0.1548
Zloty	0.2701	0.2769	0.2713	0.2716
Euro	1.1598	1.1828	1.1665	1.1516
Ruble	0.0151	0.0171	0.0155	0.0171

Summary Analysis of Consolidated Results for the Second Quarter and First Half-year of Fiscal 2019

The following table highlights certain information regarding our operations for the 12 and 24-week periods ended October 14, 2018 and October 15, 2017. CAPL refers to CrossAmerica Partners LP.

	12-week periods ended			24-week periods ended
(in millions of US dollars, unless otherwise stated)	October 14, 2018	October 15, 2017	Variation %	October 14, 2018	October 15, 2017	Variation %
Statement of Operations Data:
Merchandise and service revenues^(1):
United States	2,569.4	2,240.5	14.7	5,178.5	4,221.6	22.7
Europe	340.5	320.1	6.4	709.2	640.7	10.7
Canada	524.2	526.3	(0.4)	1,068.6	1,003.4	6.5
CAPL	27.4	28.5	(3.9)	53.7	29.5	82.0
Elimination of intercompany transactions with CAPL	(0.8)	-	100.0	(1.5)	-	100.0
Total merchandise and service revenues	3,460.7	3,115.4	11.1	7,008.5	5,895.2	18.9
Road transportation fuel revenues:
United States	7,068.8	5,376.2	31.5	14,228.3	9,618.2	47.9
Europe	2,071.5	1,771.7	16.9	4,024.0	3,369.4	19.4
Canada	1,255.5	1,147.7	9.4	2,547.3	2,115.1	20.4
CAPL	630.4	501.1	25.8	1,264.1	516.7	144.6
Elimination of intercompany transactions with CAPL	(130.9)	(43.7)	199.5	(271.2)	(46.4)	484.5
Total road transportation fuel revenues	10,895.3	8,753.0	24.5	21,792.5	15,573.0	39.9
Other revenues^(2):
United States	5.1	4.9	4.1	10.5	8.0	31.3
Europe	324.7	249.0	30.4	643.7	486.5	32.3
Canada	6.2	6.6	(6.1)	12.4	13.0	(4.6)
CAPL	15.2	15.7	(3.2)	30.4	16.4	85.4
Elimination of intercompany transactions with CAPL	(4.4)	(4.0)	10.0	(8.7)	(4.3)	102.3
Total other revenues	346.8	272.2	27.4	688.3	519.6	32.5
Total revenues	14,702.8	12,140.6	21.1	29,489.3	21,987.8	34.1
Merchandise and service gross profit^(1):
United States	880.1	742.8	18.5	1,754.9	1,402.2	25.2
Europe	139.8	134.5	3.9	296.1	269.4	9.9
Canada	176.8	181.9	(2.8)	364.7	348.9	4.5
CAPL	6.6	7.0	(5.7)	13.0	7.3	78.1
Elimination of intercompany transactions with CAPL	(0.7)	-	100.0	(1.3)	-	100.0
Total merchandise and service gross profit	1,202.6	1,066.2	12.8	2,427.4	2,027.8	19.7
Road transportation fuel gross profit:
United States	547.0	537.9	1.7	1,107.0	940.4	17.7
Europe	235.9	254.0	(7.1)	482.4	493.1	(2.2)
Canada	93.8	100.6	(6.8)	193.8	183.2	5.8
CAPL	26.6	23.2	14.7	53.2	23.9	122.6
Total road transportation fuel gross profit	903.3	915.7	(1.4)	1,836.4	1,640.6	11.9
Other revenues gross profit^(2):
United States	5.2	4.9	6.1	10.5	8.0	31.3
Europe	37.5	38.8	(3.4)	74.3	81.0	(8.3)
Canada	6.2	6.4	(3.1)	12.4	13.0	(4.6)
CAPL	15.2	15.7	(3.2)	30.4	16.4	85.4
Elimination of intercompany transactions with CAPL	(4.4)	(4.0)	10.0	(8.7)	(4.3)	102.3
Total other revenues gross profit	59.7	61.8	(3.4)	118.9	114.1	4.2
Total gross profit	2,165.6	2,043.7	6.0	4,382.7	3,782.5	15.9
Operating, selling, administrative and general expenses
Excluding CAPL	1,284.6	1,180.4	8.8	2,579.3	2,211.9	16.6
CAPL	15.8	21.0	(24.8)	38.4	21.8	76.1
Elimination of intercompany transactions with CAPL	(4.9)	(3.2)	53.1	(9.7)	(4.2)	131.0
Total Operating, selling, administrative and general expenses	1,295.5	1,198.2	8.1	2,608.0	2,229.5	17.0
Restructuring costs (including $5.2 million for CAPL for the 24-week ended October 15, 2017)	4.8	-	100.0	6.3	43.2	(85.4)
Loss (gain) on disposal of property and equipment and other assets	0.5	(0.8)	(162.5)	0.7	(17.6)	104.0
Depreciation, amortization and impairment of property and equipment, goodwill, intangible assets, and other assets
Excluding CAPL	204.3	191.7	6.6	417.5	361.5	15.5
CAPL	18.2	17.6	3.4	106.5	18.1	488.4
Total depreciation, amortization and impairment of property and  equipment, goodwill, intangible assets, and other assets	222.5	209.3	6.3	524.0	379.6	38.0
Operating income
Excluding CAPL	628.2	630.5	(0.4)	1,244.5	1,146.9	8.5
CAPL	14.3	7.3	95.9	(0.5)	1.0	154.4
Elimination of intercompany transactions with CAPL	(0.2)	(0.8)	(75.0)	(0.3)	(0.1)	200.0
Total operating income	642.3	637.0	0.8	1,243.7	1,147.8	8.4
Net earnings including non-controlling interests	477.0	433.5	10.0	919.6	793.0	16.0
Net (earnings) loss attributable to non-controlling interests	(3.9)	(1.0)	290.0	9.1	4.2	116.7
Net earnings attributable to shareholders of the Corporation	473.1	432.5	9.4	928.7	797.2	16.5
Per Share Data:
Basic net earnings per share (dollars per share)	0.84	0.76	10.5	1.65	1.40	17.9
Diluted net earnings per share (dollars per share)	0.84	0.76	10.5	1.64	1.40	17.1
Adjusted diluted net earnings per share (dollars per share)	0.84	0.80	5.0	1.72	1.47	17.0
	12-week periods ended			24-week periods ended
(in millions of US dollars, unless otherwise stated)	October 14, 2018	October 15, 2017	Variation %	October 14, 2018	October 15, 2017	Variation %
Other Operating Data – excluding CAPL:
Merchandise and service gross margin^(1):
Consolidated	34.8%	34.2%	0.6	34.7%	34.4%	0.3
United States	34.3%	33.2%	1.1	33.9%	33.2%	0.7
Europe	41.1%	42.0%	(0.9)	41.8%	42.0%	(0.2)
Canada	33.7%	34.6%	(0.9)	34.1%	34.8%	(0.7)
Growth of (decrease in) same-store merchandise revenues^(3):
United States^(4)(13)	4.4%	0.7%		4.3%	1.0%
Europe	4.6%	1.6%		6.0%	1.5%
Canada^(4)(13)	5.1%	(1.6%)		5.9%	(0.9%)
Road transportation fuel gross margin:
United States (cents per gallon)^(4)	21.88	24.70	(11.4)	22.29	22.87	(2.5)
Europe (cents per liter)	8.75	9.54	(8.3)	8.98	9.38	(4.3)
Canada (CA cents per liter)^(4)	8.42	8.64	(2.5)	8.67	8.44	2.7
Total volume of road transportation fuel sold:
United States (millions of gallons)	2,627.8	2,178.2	20.6	5,202.4	4,112.6	26.5
Europe (millions of liters)	2,696.9	2,661.3	1.3	5,373.3	5,325.5	0.9
Canada (millions of liters)	1,457.8	1,448.9	0.6	2,927.0	2,783.3	5.2
Growth of (decrease in) same-store road transportation fuel volume:
United States^(4)(13)	1.2%	(0.7%)		0.9%	(0.2%)
Europe	0.1%	(0.2%)		0.0%	(0.3%)
Canada^(4)(13)	(2.2%)	(2.3%)		(2.7%)	(1.3%)

(in millions of US dollars, unless otherwise stated)	October 14, 2018	April 29, 2018^(14)	Variation $
Balance Sheet Data:
Total assets (excluding $1.2 billion and $1.3 billion for CAPL as of October 14, 2018 and as of April 29, 2018, respectively)	21,594.1	21,862.7	(268.6)
Interest-bearing debt (excluding $540.3 million and $536.8 million for CAPL as of October 14, 2018 and as of April 29, 2018, respectively)	7,359.8	8,369.9	(1,010.1)
Shareholders' equity	8,279.8	7,560.4	719.4
Indebtedness Ratios^(5):
Net interest-bearing debt/total capitalization^(6)	0.45 : 1	0.50 : 1
Leverage ratio^(7)(11)	2.09 : 1	2.46 : 1
Adjusted leverage ratio^(8)(11)	2.79 : 1	3.13 : 1
Returns^(5):
Return on equity^(9)(11)	24.0%	24.8%
Return on capital employed^(10)(12)	12.1%	12.0%

(1)	Includes revenues derived from franchise fees, royalties, suppliers rebates on some purchases made by franchisees and licensees as well as from wholesale of merchandise.
(2)	Includes revenues from the rental of assets and from the sale of stationary energy, marine fuel and aviation fuel.
(3)	Does not include services and other revenues (as described in footnotes 1 and 2 above). Growth in Canada and in Europe is calculated based on local currencies.
(4)	For company-operated stores only.
(5)	These measures are presented as if our investment in CAPL was reported using the equity method as we believe it allows a more relevant presentation of the underlying performance of the Corporation.
(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 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 IFRS and therefore may not be comparable to similar measures presented by other public corporations. For the purpose of this calculation, CAPL's long-term debt is excluded as it is a non-recourse debt to the Corporation, as referenced in note 5. We believe this ratio is useful to investors and analysts.
(7)	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, Amortization and Impairment) adjusted for specific items. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations. For the purpose of this calculation, CAPL's long-term debt is excluded as it is a non-recourse debt to the Corporation, as referenced in note 5. We believe this ratio is useful to investors and analysts.
(8)	This measure 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, Impairment and Rent expense) adjusted for specific items. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations. For the purpose of this calculation, CAPL's long-term debt is excluded as it is a non-recourse debt to the Corporation, as referenced in note 5. We believe this measure is useful to investors and analysts.
(9)	This measure is presented for information purposes only and represents a measure of performance used especially in financial circles. It represents the following calculation: net earnings divided by average equity for the corresponding period. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations. We believe this measure is useful to investors and analysts.
(10)	This measure is presented for information purposes only and represents a measure of performance used especially in financial circles. It represents the following calculation: earnings before income taxes and interests divided by average capital employed for the corresponding period. Capital employed represents total assets less short-term liabilities not bearing interests. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations. We believe this measure is useful to investors and analysts.
(11)	As of October 14, 2018, these ratios are presented for the 52-week period ended October 14, 2018 on a pro forma basis for the acquisition of Holiday. As of April 29, 2018, these ratios are presented for the 52-week period ended April 29, 2018 on a pro forma basis for the acquisition of CST and Holiday. CST's and Holiday's historical earnings and balance sheet figures have been adjusted to make their presentation in line with our policies.
(12)	As of October 14, 2018 and as of April 29, 2018, this ratio is presented for the 52-week period ended October 14, 2018 and for the 52-week period ended April 29, 2018, respectively, on a pro forma basis for the acquisition of CST and Holiday. CST's and Holiday's historical earnings and balance sheet figures have been adjusted to make their presentation in line with our policies.
(13)	Does not include CST stores for the 12 and 24-week period ended October 15, 2017.
(14)	The information as of April 29, 2018, has been adjusted based on our estimates of the fair value of the assets acquired, the liabilities assumed and the goodwill for the Holiday acquisition.

Revenues

Our revenues were $14.7 billion for the second quarter of fiscal 2019, up by $2.6 billion, an increase of 21.1% compared with the corresponding quarter of fiscal 2018, mainly attributable to a higher average road transportation fuel selling price, to the contribution from acquisitions and to organic growth, partly offset by the net negative impact from the translation of revenues of our Canadian and European operations into US dollars.

For the first half-year of fiscal 2019, our revenues increased by $7.5 billion or 34.1% compared with the first half-year of fiscal 2018 mainly attributable to similar factors as those of the second quarter.

More specifically, total merchandise and service revenues for the second quarter of fiscal 2019 were $3.5 billion, an increase of $345.3 million compared with the corresponding quarter of fiscal 2018. Excluding CAPL's revenues, as well as the net negative impact from the translation of our Canadian and European operations into US dollars, merchandise and service revenues increased by approximately $390.0 million or 12.6%. This increase is primarily attributable to the contribution from acquisitions, which amounted to approximately $251.0 million, and to organic growth, driven by successful traffic-aimed promotional activities. Same-store merchandise revenues increased by 4.4% in the United States, continuing on the improved trend from the last quarters. Same-store merchandise revenues increased by 4.9% in our CST U.S. stores network, driven by the success of our rebranding activities and improvements made to our offering. In Europe, same-store merchandise revenues increased by 4.6%, thanks to the success of our rebranding activities and the rollout and improvements of our food programs. In Canada, same-store merchandise revenues increased by 5.1%, mainly driven by strong performance of our CST Canada sites which posted same-store merchandise revenues of 13.0% and by higher taxes on cigarettes and other tobacco products.

For the first half-year of fiscal 2019, the growth in merchandise and service revenues was $1.1 billion. Excluding CAPL's revenues as well as the net negative impact from the translation of our Canadian and European operations into US dollars, merchandise and service revenues increased by $1.1 billion or 19.0%. Acquisitions contributed by approximately $835.0 million to this increase. Same-store merchandise revenues grew by 4.3% in the United States, by 6.0% in Europe, and by 5.9% in Canada.

Total road transportation fuel revenues for the second quarter of fiscal 2019 were $10.9 billion, an increase of $2.1 billion compared with the corresponding quarter of fiscal 2018. Excluding CAPL's revenues, as well as the net negative impact from the translation of revenues of our Canadian and European operations into US dollars, road transportation fuel revenues increased by approximately $2.3 billion or 27.3%. This increase was attributable to the impact of a higher average road transportation fuel selling price, which had a positive impact of approximately $1.4 billion and to the contribution from acquisitions, which amounted to approximately $764.0 million. Same‑store road transportation fuel volumes in the United States increased by 1.2%, including the nice performance of our CST U.S. network, which posted same-store road transportation fuel volumes growth of 2.1%. In Europe, same‑store road transportation fuel volumes increased by 0.1% while in Canada, same‑store road transportation fuel volumes decreased by 2.2%, still impacted by the transition to a new loyalty program in our Esso stores as well as by unfavorable weather conditions in the western part of the country.

For the first half-year of fiscal 2019, the growth in road transportation fuel revenues was $6.2 billion. Excluding CAPL's revenues, as well as the net negative impact from the translation of our Canadian and European operations into US dollars, road transportation fuel revenues increased by $5.8 billion or 38.3%. This increase is attributable to the impact of a higher average road transportation fuel selling price, which had a positive impact of approximately $3.1 billion, as well as to the contribution from acquisitions, which amounted to approximately $2.6 billion. Same-store road transportation fuel volumes increased by 0.9% in the United States, remained stable in Europe and decreased by 2.7% in Canada.

The following table shows the average selling price of road transportation fuel in our various markets, starting with the third quarter of the fiscal year ended April 30, 2017:

Quarter		3^rd	4^th	1^st	2^nd	Weighted average
52‑week period ended October 14, 2018
	United States (US dollars per gallon) – excluding CAPL	2.30	2.51	2.76	2.72	2.56
	Europe (US cents per liter)	71.19	78.32	75.07	80.56	76.03
	Canada (CA cents per liter)	108.11	110.39	117.95	115.22	112.63
53‑week period ended October 15, 2017
	United States (US dollars per gallon) – excluding CAPL	2.18	2.25	2.21	2.47	2.28
	Europe (US cents per liter)	61.87	62.46	61.39	68.23	63.58
	Canada (CA cents per liter)	94.67	97.20	99.81	101.46	98.18

Total other revenues for the second quarter and first half-year of fiscal 2019 were $346.8 million and $688.3 million, respectively, an increase of $74.6 million and $168.7 million compared with the corresponding periods of fiscal 2018. Excluding CAPL's revenues, other revenues increased by $75.5 million and by $159.1 million in the second quarter and first half-year of fiscal 2019, respectively, primarily driven by an increase in other fuel demand and other fuel products average selling price.

Gross profit

Our gross profit was $2.2 billion for the second quarter of fiscal 2019, up by $121.9 million, an increase of 6.0% compared with the corresponding quarter of fiscal 2018, mainly attributable to the contribution from acquisitions and to organic growth, partly offset by lower fuel margins and by the net negative impact from the translation of our Canadian and European operations into US dollars.

In the second quarter of fiscal 2019, our merchandise and service gross profit was $1.2 billion, an increase of $136.4 million compared with the corresponding quarter of fiscal 2018. Excluding CAPL's gross profit, as well as the net negative impact from the translation of our Canadian and European operations into US dollars, merchandise and service gross profit increased by approximately $152.0 million or 14.4%. This increase is attributable to the contribution from acquisitions, which amounted to approximately $85.0 million and to our organic growth. Our gross margin increased by 1.1% in the United States to 34.3%, due to a different product mix and synergies, and decreased by 0.9% in Europe to 41.1%, due to a different geographical mix. In Canada, our gross margin decreased by 0.9% to 33.7%, mainly as a result of changes in our product mix as well as increased taxes on tobacco products.

During the first half-year of fiscal 2019, the consolidated merchandise and service gross profit was $2.4 billion, an increase of $399.6 million compared with the corresponding period of fiscal 2018. Excluding CAPL's gross profit, as well as the net negative impact from the translation of our Canadian and European operations into US dollars, consolidated merchandise and service gross profit increased by $401.0 million or 19.8%. The gross margin was 33.9% in the United States, an increase of 0.7%, it was 41.8% in Europe, a decrease of 0.2%, while in Canada the gross margin was 34.1%, a decrease of 0.7%.

In the second quarter of fiscal 2019, our road transportation fuel gross profit was $903.3 million, a decrease of $12.4 million compared with the corresponding quarter of fiscal 2018. Excluding CAPL's gross profit, as well as the net negative impact from the translation of our Canadian and European operations into US dollars, our second quarter of fiscal 2019 road transportation fuel gross profit increased by approximately $2.1 million or 0.2%. Our road transportation fuel gross margin was 21.88¢ per gallon in the United States, a decrease of 2.82¢ per gallon, compared to the unusual high fuel margin of same quarter last year as a result of volatility caused by the hurricanes in Texas and Florida last year. In Europe, the road transportation fuel gross margin was US 8.75¢ per liter, a decrease of US 0.79¢ per liter, mainly as a result of the net negative impact from the translation of our European operations into US dollars, while in Canada, the road transportation fuel gross margin was CA 8.42¢ per liter, a decrease of CA 0.22¢ per liter.

During the first half-year of fiscal 2019, the consolidated road transportation fuel gross profit was $1.8 billion, an increase of $195.8 million compared with the corresponding period of fiscal 2018. Excluding CAPL's gross profit, as well as the net negative impact from the translation of our Canadian and European operations into US dollars, consolidated road transportation fuel gross profit increased by $173.3 million or 10.7%. The road transportation fuel gross margin was 22.29¢ per gallon in the United States, US 8.98¢ per liter in Europe and CA 8.67¢ per liter in Canada.

The road transportation fuel gross margin of our company-operated stores in the United States and the impact of expenses related to electronic payment modes for the last eight quarters, starting with the third quarter of the fiscal year ended April 30, 2017, were as follows:

(US cents per gallon)
Quarter	3^rd	4^th	1^st	2^nd	Weighted average
52‑week period ended October 14, 2018
Before deduction of expenses related to electronic payment modes	15.66	17.29	22.70	21.88	19.20
Expenses related to electronic payment modes	3.73	3.62	4.21	4.10	3.91
After deduction of expenses related to electronic payment modes	11.92	13.67	18.49	17.78	15.29
53-week period ended October 15, 2017
Before deduction of expenses related to electronic payment modes	18.33	15.47	20.75	24.70	20.06
Expenses related to electronic payment modes	3.99	4.12	3.79	4.21	4.04
After deduction of expenses related to electronic payment modes	14.34	11.35	16.96	20.49	16.02

As demonstrated by the table above, road transportation fuel margins in the United States can be volatile from one quarter to another but tend to be relatively stable over longer periods. Margin volatility and expenses related to electronic payment modes are not as significant in Europe and Canada.

In the second quarter and first half-year of fiscal 2019, other revenues gross profit was $59.7 million and $118.9 million, respectively, a decrease of $2.1 million and an increase of $4.8 million compared with the corresponding periods of fiscal 2018, respectively. Excluding CAPL's gross profit, other revenues gross profit decreased by $1.2 million and $4.8 million in the second quarter and first half-year of fiscal 2019, respectively.

Operating, selling, administrative and general expenses ("expenses")

For the second quarter and first half-year of fiscal 2019, expenses increased by 8.1% and 17.0%, respectively, compared with the corresponding periods of fiscal 2018, but increased by only 2.5% and 3.1%, respectively, if we exclude certain items as demonstrated by the following table:

		12-week period ended	24-week period ended
		October 14, 2018	October 14, 2018
Total variance, as reported		8.1%	17.0%
Adjusted for:
	Increase from incremental expenses related to acquisitions	(6.6%)	(12.1%)
	Decrease from the net impact of foreign exchange translation	1.4%	0.2%
	Increase from higher electronic payment fees, excluding acquisitions	(0.9%)	(1.5%)
	Acquisition costs recognized to earnings of fiscal 2018	0.7%	0.5%
	Compensatory payment to CAPL for divestiture of assets	(0.5%)	(0.3%)
	Acquisition costs recognized to earnings of fiscal 2019	(0.1%)	-
	Decrease (increase) in CAPL's expenses	0.4%	(0.7%)
Remaining variance		2.5%	3.1%

Growth in expenses was primarily driven by higher minimum wages in certain regions, higher expenses needed to support our organic growth, by the conversion of CODO stores into company-operated stores and by proportionally higher operational expenses in our recently built stores, as these stores generally have a larger footprint and higher sales than the average of our existing network. We continue to rigorously focus on controlling costs throughout our organization, while ensuring we maintain the quality of service we offer to our customers.

Earnings before interest, taxes, depreciation, amortization and impairment (EBITDA) and adjusted EBITDA

During the second quarter of fiscal 2019, EBITDA increased from $854.6 million to $870.2 million, a growth of 1.8% compared with the same quarter last year. Excluding the specific items shown in the table below from EBITDA of the second quarter of fiscal 2019 and of the corresponding period of fiscal 2018, the adjusted EBITDA for the second quarter of fiscal 2019 increased by $13.3 million or 1.6% compared with the corresponding period of the previous fiscal year, mainly through the contribution from acquisitions and organic growth, partly offset by lower fuel margins and by the net negative impact from the translation of the results of our Canadian and European operations into US dollars. Acquisitions contributed approximately $64.0 million to the adjusted EBITDA of the second quarter of fiscal 2019, while the variation in exchange rates had a net negative impact of approximately $18.0 million.

During the first half-year of fiscal 2019, EBITDA increased from $1,544.3 million to $1,780.2 million, a growth of 15.3% compared with the same period last year. Excluding the specific items shown in the table below from EBITDA of the first half-year of fiscal 2019 and of the first half-year of fiscal 2018, the adjusted EBITDA for the first half-year of fiscal 2019 increased by $195.5 million or 12.6% compared with the corresponding period of the previous fiscal year, mainly through the contribution from acquisitions and organic growth. Acquisitions contributed approximately $207.0 million to the adjusted EBITDA of the first half-year of fiscal 2019, while the variation in exchange rates had a net negative impact of approximately $8.0 million.

It should be noted that EBITDA and adjusted EBITDA are not performance measures defined by IFRS, but we, as well as investors and analysts, consider that those performance measures facilitate the evaluation of our ongoing operations and our ability to generate cash flows to fund our cash requirements, including our capital expenditures program and payment of dividends. Note that our definition of these measures may differ from the one used by other public corporations:

	12-week periods ended		24-week periods ended
(in millions of US dollars)	October 14, 2018	October 15, 2017	October 14, 2018	October 15, 2017
Net earnings including non-controlling interests, as reported	477.0	433.5	919.6	793.0
Add:
Income taxes	97.0	122.2	185.2	222.9
Net financial expenses	73.7	89.6	151.4	148.8
Depreciation, amortization and impairment of property and equipment, goodwill, intangible assets, and other assets	222.5	209.3	524.0	379.6
EBITDA	870.2	854.6	1,780.2	1,544.3
Adjusted for:
EBITDA attributable to non-controlling interests	(25.7)	(21.1)	(40.2)	(16.5)
Compensatory payment to CAPL for divestiture of assets, net of non-controlling interests	5.0	-	5.0	-
Restructuring costs attributable to shareholders of the Corporation (including $5.2 million for our interest in CAPL for the 24-week period ended October 15, 2017)	4.8	-	6.3	38.0
Acquisition costs	0.7	3.4	1.2	6.7
Incremental costs related to hurricanes	-	4.8	-	4.8
Gain on disposal of a terminal	-	-	-	(11.5)
Gain on investment in CST	-	-	-	(8.8)
Adjusted EBITDA	855.0	841.7	1,752.5	1,557.0

Depreciation, amortization and impairment of property and equipment, goodwill, intangible assets, and other assets ("depreciation")

For the second quarter and first half-year of fiscal 2019, our depreciation expense increased by $13.2 million and $144.4 million, respectively. Excluding CAPL's results, as well as the $55.0 million impairment charge on CAPL's goodwill recorded in the first quarter of fiscal 2019, the depreciation expense increased by $12.6 million and by $56.0 million for the second quarter and first half-year of fiscal 2019, respectively, mainly driven by the impact from investments made through acquisitions, the replacement of equipment, the addition of new stores and the ongoing improvement of our network.

Net financial expenses

Net financial expenses for the second quarter of fiscal 2019 were $73.7 million, a decrease of $15.9 million compared with the second quarter of fiscal 2018. Excluding the net foreign exchange gain of $3.7 million and the net foreign exchange loss of $17.3 million as well as CAPL's financial expenses of $7.1 million and $6.0 million recorded in the second quarters of fiscal 2019 and fiscal 2018, respectively, net financial expenses increased by $3.9 million. This increase is mainly attributable to our higher average long-term debt in connection with our recent acquisitions, partly offset by the repayments made. The net foreign exchange gain of $3.7 million for the second quarter of fiscal 2019 is mainly due to the impact of foreign exchange variations on certain cash balances and working capital items.

Net financial expenses for the first half-year of fiscal 2019 were $151.4 million, an increase of $2.6 million compared with the first half-year of fiscal 2018. Excluding the net foreign exchange gain of $2.7 million and the net foreign exchange loss of $37.6 million as well as CAPL's financial expenses of $14.1 million and $7.1 million recorded in the first half-years of fiscal 2019 and fiscal 2018, respectively, net financial expenses increased by $35.0 million for similar factors as those of the second quarter. The net foreign exchange gain of $2.7 million for the first half-year of fiscal 2019 is mainly due to the impact of foreign exchange variations on certain cash balances and working capital items. 

Income taxes

The income tax rate for the second quarter of fiscal 2019 was 16.9% compared with an income tax rate of 22.0% for the second quarter of fiscal 2018. The income tax rate for the second quarter of fiscal year 2019 includes a net tax benefit of $6.2 million derived from the evaluation of our deferred income tax balances following the decrease of the statutory income tax rate in Sweden. Excluding this adjustment, the income tax rate would have been 18.0%, a decrease compared to the second quarter of fiscal 2018, stemming from a lower statutory income tax rate in the U.S. For the first half-year of fiscal 2019, the income tax rate was 16.8%.

Net earnings attributable to shareholders of the Corporation ("net earnings") and adjusted net earnings attributable to shareholders of the Corporation ("adjusted net earnings")

Net earnings for the second quarter of fiscal 2019 were $473.1 million, compared with $432.5 million for the second quarter of the previous fiscal year, an increase of $40.6 million or 9.4%. Diluted net earnings per share stood at $0.84, compared with $0.76 the previous year. The translation of revenues and expenses from our Canadian and European operations into US dollars had a net negative impact of approximately $14.0 million on net earnings of the second quarter of fiscal 2019.

Excluding the items shown in the table below from net earnings of the second quarter of fiscal 2019 and of fiscal 2018, adjusted net earnings for the second quarter of fiscal 2019 would have been approximately $473.0 million, compared with $455.0 million for the second quarter of fiscal 2018, an increase of $18.0 million or 4.0%. Adjusted diluted net earnings per share would have remained at $0.84 for the second quarter of fiscal 2019 compared with $0.80 for the corresponding period of fiscal 2018, an increase of 5.0%.

For the first half-year of fiscal 2019, net earnings were $928.7 million, compared with $797.2 million for the comparable period of fiscal 2018, an increase of $131.5 million or 16.5%. Diluted net earnings per share stood at $1.64, compared with $1.40 the previous year. The translation of revenues and expenses from our Canadian and European operations into US dollars had a net negative impact of approximately $7.0 million on net earnings of the first half-year of fiscal 2019.

Excluding the items shown in the table below from net earnings of the first half-year of fiscal 2019 and fiscal 2018, net earnings for the first half-year of fiscal 2019 would have been approximately $970.0 million, compared with $836.0 million for the comparable period of the previous year, an increase of $134.0 million or 16.0%. Adjusted diluted net earnings per share would have been $1.72 for the first half-year of fiscal 2019, compared with $1.47 for the corresponding period of fiscal 2018, an increase of 17.0%.

The table below reconciles reported net earnings to adjusted net earnings:

	12-week periods ended		24-week periods ended
(in millions of US dollars)	October 14, 2018	October 15, 2017	October 14, 2018	October 15, 2017
Net earnings attributable to shareholders of the Corporation, as reported	473.1	432.5	928.7	797.2
Adjusted for:
Tax benefit stemming from the decrease of the statutory income tax rate in Sweden	(6.2)	-	(6.2)	-
Compensatory payment to CAPL for divestiture of assets, net of non-controlling interests	5.0	-	5.0	-
Restructuring costs – attributable to shareholders of the Corporation	4.8	-	6.3	38.0
Net foreign exchange loss (gain)	(3.7)	17.3	(2.7)	37.6
Acquisition costs	0.7	3.4	1.2	6.7
Impairment charge on CAPL's goodwill	-	-	55.0	-
Incremental costs related to hurricanes	-	4.8	-	4.8
Tax benefit stemming from an internal reorganization	-	-	-	(13.4)
Gain on disposal of a terminal	-	-	-	(11.5)
Gain on investment in CST	-	-	-	(8.8)
Accelerated depreciation and amortization expense	-	4.2	-	7.9
Tax impact of the items above and rounding	(0.7)	(7.2)	(17.3)	(22.5)
Adjusted net earnings attributable to shareholders of the Corporation	473.0	455.0	970.0	836.0

It should be noted that adjusted net earnings is not a performance measure defined by IFRS, but we, as well as investors and analysts, consider this measure useful for evaluating the underlying performance of our operations on a comparable basis. Note that our definition of this measure may differ from the one used by other public corporations.

Dividends

During its November 27, 2018 meeting, the Corporation's Board of Directors declared a quarterly dividend of CA 10.0¢ per share for the second quarter of fiscal 2019 to shareholders on record as at December 6, 2018, and approved its payment for December 20, 2018. This is an eligible dividend within the meaning of the Income Tax Act (Canada).

Profile

Couche-Tard is the leader in the Canadian convenience store industry. In the United States, it 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 also has an important presence in Poland.

As of October 14, 2018, Couche-Tard's network comprised 9,943 convenience stores throughout North America, including 8,660 stores with road transportation fuel dispensing. Its North American network consists of 19 business units, including 15 in the United States covering 48 states and 4 in Canada covering all 10 provinces. Approximately 105,000 people are employed throughout its network and at its service offices in North America. In addition, through CrossAmerica Partners LP, Couche-Tard supplies road transportation fuel under various brands to approximately 1,300 locations in the United States.

In Europe, Couche-Tard operates a broad retail network across Scandinavia, Ireland, Poland, the Baltics and Russia through ten business units. As of October 14, 2018, Couche-Tard's network comprised 2,718 stores, the majority of which offer road transportation fuel and convenience products while the others are unmanned automated fuel stations which only offer road transportation fuel. Couche-Tard also offers other products, including stationary energy, marine fuel and aviation fuel. Including employees at branded franchise stores, approximately 25,000 people work in its retail network, terminals and service offices across Europe.

In addition, under licensing agreements, more than 2,000 stores are operated under the Circle K banner in 14 other countries and territories (Cambodia, China, Costa Rica, Egypt, Guam, Honduras, Hong Kong, Indonesia, Macau, Mexico, Mongolia, Saudi Arabia, the United Arab Emirates and Vietnam), which brings the worldwide total network to approximately 16,000 stores.

For more information on Alimentation Couche-Tard Inc. or to consult its quarterly Consolidated Financial Statements and Management Discussion and Analysis, please visit: https://corpo.couche‑tard.com.

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 "believe", "can", "shall", "intend", "expect", "estimate", "assume" 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 in 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 28, 2018, at 8:00 A.M. (EST)

Couche-Tard invites analysts known to the Corporation to send their two questions to its management before 7:00 P.M. (EST) on November 27, 2018.

Financial analysts, investors, media and any individuals interested in listening to the webcast on Couche-Tard's results which will take place online on November 28, 2018, at 8:00 A.M. (EST) can do so by either accessing the Corporation's website at https://corpo.couche‑tard.com by clicking in the "Investor Relations/Corporate presentations" section or by dialing 1-866-865-3087 or the international number 1-647-427-7450, followed by the access code 4495169#.

Rebroadcast: For individuals who will not be able to listen to the live webcast, a recording of the webcast will be available on the Corporation's website for a period of 90 days.

SOURCE Alimentation Couche-Tard Inc.

Investor relations: Mathieu Descheneaux, Vice-President Finance, Tel: [phone], ext. 4619, [email protected]; Media relations: Marie-Noëlle Cano, Senior Director - Global Communications, Tel: [phone], ext. 6611, [email protected]

Related Links

http://corpo.couche-tard.com/