Couche-Tard’s Q3 Report: Profits Up

“Despite the absence of recent major acquisitions, quarter after quarter, we continue to create value for our shareholders by improving our sales and margins and through initiatives that allow us to increase our efficiency,” says vice president.

Alimentation Couche-Tard Inc. announced net earnings of $71.0 million for its third quarter, up $16.2 million or 29.6% from last fiscal’s comparable period.

The increase mainly reflects the growth of merchandise and service sales and related margin, the contribution from a growing number of sites offering fuel, the growth in same-store motor fuel volume in Canada and the U.S., the strengthening of the Canadian dollar as well as Couche-Tard’s sound management of its expenses.

An increase in motor fuel gross margin was offset by an increase in electronic payment modes, resulting from higher average motor fuel retail prices. Net earnings were also negatively impacted by the higher income tax rate. The variance in the tax rate is however rather positive on an annual basis as the variance should be favorable throughout fiscal 2011 compared to fiscal 2010.

“During the third quarter, we continued on the momentum of the previous quarters. Our results continue to improve, primarily from the growing contribution of in-store sales and margin”, said Alain Bouchard, president and CEO of Couch-Tard. “As for acquisitions, we are looking at many interesting opportunities but as we have mentioned many times in the past, we don’t want to favor store count growth to the detriment of shareholders’ return. Yet, when the right opportunity at the right price presents itself, we will be ready,” he concluded.

Acquisitions/Construction
During the third quarter of fiscal 2011, Couche-Tard acquired nine company-operated stores through seven distinct transactions, and built 10 new stores during the 16-week period ended Jan. 30, 2011, and 26 since the beginning of fiscal 2011.

“Once again, despite the absence of recent major acquisitions, quarter after quarter, we continue to create value for our shareholders by improving our sales and margins and through initiatives that allow us to increase our efficiency,” said Raymond Paré, vice president and chief financial officer. “We are also optimizing our capital structure, including the repurchase of our own shares as well as the redemption of our debt bearing a higher interest rate. However, this optimization is done prudently, taking into consideration investment opportunities that could arise in the foreseeable future. As we have mentioned many times in the past, we have a balanced approach, which uses all of the tools that allow for the creation of value for our partners and shareholders. We remain a business focused on growth but mainly on value creation.”

Report Highlights:

• Net earnings of $71.0 million, or $0.38 per share on a diluted basis, an increase of $16.2 million or 29.6% compared to the third quarter of fiscal 2010. Net earnings are up 30.8% since the beginning of the fiscal year.

• Same-store merchandise sales up 3.9% in the U.S. and 0.4% in Canada.

• Consolidated merchandise and service gross margin in proportion of sales up 0.2% at 33.2%.

• Same-store motor fuel volume up 0.7% in the U.S. and 3.2% in Canada.

• Motor fuel gross margin in the U.S. at 13.38 cents per gallon, up 50 cents per gallonbut down 0.01 cents per gallon, net of electronic payment modes fees.

• Operating, selling, administrative and general expenses accounted for 30.8% of merchandise and service revenues in the third quarter of fiscal 2011 against 31.3% during the comparable quarter last year.

• Early redemption of the subordinated unsecured debt of $350.0 million bearing interest at 7.5%.

• Repurchase of 9,000 Class A multiple voting shares and 2,435,900 Class B subordinate voting shares.

  • rumor has it

    We understand Circle K Stores Inc. is under investigation by the EEOC at this time for violations including age discrimination, sex and race. It has been rumored that within the past year or so the terminations of so many tenured, higher paid employee’s and replaced with lower paid younger employee’s is why service margins/expense control have added just value to 3rd quarter reporting. Do we anticipate a press release stating EEOc has found cause in these charges and if so where will that place 1st quater reporting in 2012 and how will this affect Company image and how the consumer feels about spending their money with you?

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