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LAVAL, Quebec -- Alimentation Couche-Tard Inc., operator of 5,416 Circle K, Mac’s and Couche-Tard convenience stores based here, closed its second quarter of fiscal 2009 with $4.6 billion in revenue, an increase of 30.2 percent or $1.1 billion compared to the second quarter of 2008, the company reported yesterday.
Net earnings for the 12-week period ending Oct. 12, 2008, reached $97.6 million, up 80.1 percent or $43.4 million, compared to $54.2 million last year. As for the first half of this fiscal year, net earnings were $144.8 million compared to $123.3 million last year.
Contributing to its record second-quarter net earnings were sharp increases in U.S. motor fuel gross margins, which fully offset the 10.6 percent decrease in same-store motor fuel volumes, the company noted. As part of this decrease, 1.7 percent is attributable to the impact of fuel supply issues and temporary store closures in the wake of hurricanes, with the remaining being attributable to the general economical conditions in the nation.
On the demand side, for August only as per the U.S. Federal Highway Administration (FHA), and considering the weighting of Couche-Tard's stores in each state, the decrease in distance traveled on U.S. highways in such states was 6.8 percent.
Also in the U.S., the company's results were supported by the contribution of merchandise and service revenues, despite a slight decrease of 1 percent in same-store revenues due in part to the impact of hurricanes and a gross margin of 32.3 percent.
In Canada, same-store merchandise revenues and motor fuel volume increased by 1.4 percent and 2.2 percent, respectively. In addition, merchandise and service and motor fuel gross margins posted at 34.4 percent and 4.66 Canadian cents per liter, respectively.
"It's been quite a while since we last had the satisfaction to capitalize on motor fuel gross margins that turned to our advantage," Couche-Tard president and CEO Alain Bouchard said. "Despite lower motor fuel volumes resulting from supply issues and temporary stores closures due to hurricanes, compounded by the overall drop in demand, our U.S. divisions recorded a good performance by deriving significant motor fuel gross margins."
"However, we remain prepared to deal with the significant challenge created by the difficult economic conditions. Although these same conditions could also allow us to realize acquisitions at potentially advantageous terms given our solid financial position," he concluded.
Other highlights from the second quarter of 2009 included:
-- During the quarter, Couche-Tard implemented its IMPACT program in 32 company-operated stores (76 since the beginning of the fiscal year). As a result, 58.8 percent of its company-operated stores have now been converted to the IMPACT program.
-- Its commercial partnership with Irving Oil, put in place during the first quarter of 2009 and relating to 252 c-stores, Couche-Tard integrated seven Irving stores in Canada during the second quarter of fiscal 2009, bringing the integrated number of stores to 203 (79 in Canada and 124 in the U.S.). The company expects the remaining stores included in the initial agreement to be integrated with its network before the end of fiscal year 2009. In addition, pursuant to the agreement, another 13 stores in the United States were added to the initial 252 stores. These 13 stores were also integrated during the second quarter, according to Couche-Tard.
-- Effective Nov. 7, 2008, the company acquired seven company-operated stores from Gate Petroleum Co. in the Greensboro and Raleigh areas of North Carolina.
Looking ahead, Couche-Tard stated in the course of fiscal 2009, the company will pursue its investments with caution in order to, amongst other things, deploy its IMPACT program. The retailer also intends to realize acquisitions by seizing upon opportunities arising from the economic climate and attractive conditions to secure cash.
In view of current accessibility conditions to capital market and debt, Couche-Tard said it is in good position to create value, and is aware results depend on several external factors, including the exchange rate effect and the motor fuel net margin. However, the company said its profitability should increase during the current fiscal year.
Finally, in line with its business model, Couche-Tard said it will 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 growing clientele.