For its first quarter of fiscal 2014, Alimentation Couche-Tard Inc. has announced net earnings of $255.0 million, up $152.1 million (147.8%), which equals $1.35 per share on a diluted basis.
The results mark an increase of 78 cents per share (136.8%) over diluted net earnings per share of the first quarter of fiscal 2013.
Some items affected the results of the first quarter, including the negative goodwill of $41.6 million in relation with the acquisition of a store network in the U.S. as well as a foreign exchange gain of $13.2 million. On the other hand, the results from the first quarter of fiscal 2013 included a non-recurring loss of $113.5 million on foreign exchange forward contracts as well as a foreign exchange gain of $6.2 million.
Excluding these items as well as the negative goodwill and acquisition costs from both comparable quarter results, the diluted net earnings per share would have been $1.16 for the first quarter of fiscal 2014 compared to $1 for the first quarter of fiscal 2013 an increase of 16.0%. This increase is mainly attributable to the contribution from acquisitions as well as to Couche-Tard’s sound management of its expenses.
These items, which contributed to the growth in net earnings, were partially offset by lower merchandise and service and road transportation fuel margins, the increase in financial expenses attributable to the additional debt that Couche-Tard incurred to finance the acquisition of Statoil Fuel & Retail as well as by expenses Couche-Tard incurred to promote future growth and improve efficiency in Europe.
Although they were lower than in the previous quarters, the corporation expects these expenses to continue to decrease over the course of the next quarters following the completion of these projects. All financial information is in U.S. dollars unless stated otherwise.
“We are satisfied with the results of the first quarter. The numerous improvement efforts deployed in Europe enabled us to turn around the negative trend in in-store sales as well as fuel volume,” declared Alain Bouchard, president and CEO. ”Whether through benchmarking, exchange of best practices or implementation of new and sustainable in-store merchandising strategies, our teams demonstrated creativity and open-mindedness helping us to achieve and surpass our goals, which is especially satisfying considering the unfavorable economic climate in Europe. Our major initiatives, namely ‘Coin Offer’ promoting in-store fresh food offering and miles our new fuel brand are showing promising results and definitely contributed to the growth of the quarter. In North America, we have been very active in terms of pricing strategies to support in-store traffic growth, which has allowed us to record an increase in same-store merchandise sales but which also had the adverse impact of reducing our margin percentage of the first quarter. The work done by our teams in order to grow sales is very good, especially in light of the weak growth recorded by several players in the retail industry during the last few months” Bouchard concluded.
“Overall, our efforts to increase sales combined with control over our expenses resulted in a 30.6% increase in adjusted EBITDA which allowed us to reduce our debt and improve our leverage ratio,” said Raymond Paré, vice-president and chief financial officer. “As at July 21, 2013, our adjusted net interest-bearing debt to adjusted EBITDAR ratio stood at 2.97: 1, a significant improvement compared to the ratio of 3.58: 1 recorded shortly after the acquisition of Statoil Fuel & Retail and also compared to the 3.05:1 ratio as of April 28, 2013. Since the acquisition of Statoil Fuel & Retail, we were able to reduce our net debt and our leverage while pursuing acquisitions in the U.S. Moreover, subsequent to the quarter, in order to further improve our financial flexibility and to secure advantageous interest rates, we issued Canadian dollar denominated senior unsecured notes totaling CA$300.0 million maturing in seven years. Our objective remains to continue to improve our financial flexibility to take advantage of potential opportunities.”
Other highlights include:
• Results for the first quarter of fiscal 2014 include those of Statoil Fuel & Retail for the period from May 1, 2013 to July 21, 2013 (82 days) while results for the first quarter of fiscal 2013 included Statoil Fuel & Retail’s for a period of 10 days only.
• Same-store merchandise revenues up 2.7% in the U.S., 0.7% in Canada and 1.9% in Europe.
• Merchandise and service gross margin stood at 32.2% in the U.S., at 34.0% in Canada and at 40.6% in Europe.
• Same-store road transportation fuel volume up 1.2% in the U.S., up 1.8% in Europe and down 0.4% in Canada. Canada represents a smaller part of Couche-Tard’s road transportation fuel volume.