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LAVAL, Quebec -- Alimentation Couche-Tard executives yesterday reported record-high net earnings for fiscal year 2009, and at the same time, said they are confident the convenience store chain will buy more stores this year comparable to its acquisition numbers in previous years.
"The market a couple of weeks ago was very active. Today, we have a higher [fuel] margin and so, entrepreneurs are more willing to wait. But we have a good active file," Couche-Tard President and CEO Alain Bouchard said during the company’s Webcast, which reported on its fiscal 2009 and fourth quarter 2009 results. "I am confident that we will buy more stores this year, comparable to last year and the year before."
Couche-Tard’s vice president and Chief Financial Officer, Raymond Paré, added: "Because of our size and solid financial standing, we can absorb lower [fuel] margins for consecutive quarters when smaller operators can't. This is where our opportunities lie—in acquisitions when these operators sell, or [increased] market share when they close."
Among the highlights of Couche-Tard’s fourth quarter and fiscal 2009 financial results were:
-- Fiscal year 2009 net earnings climbed to $253.9 million, compared to $189.3 million last year, an increase of 34.1 percent and a record high for Couche-Tard.
-- Fourth-quarter net earnings reached $38.0 million, compared to $15.5 million last year.
-- Same-store merchandise sales up 3.3 percent in the U.S.; up 2.8 percent in Canada.
-- A slight decrease of 0.1 percent in the consolidated merchandise and service gross margin; but an increase of 0.4 percent in the gross margin in the United States.
--A 2.2-percent same-store fuel volume increase in Canada; but a 4.1-percent decrease in the United States; the trend is improving in the U.S. though, the retailer noted.
-- 11.38 cents per gallon U.S. motor fuel gross margin; Cdn 5.62 cents per liter in Canada.
-- Excluding the impact related to the exchange rate, acquisitions and electronic payment fees, operating, selling, administrative and general expenses were down 3.3 percent.
-- During the fourth quarter, Couche-Tard implemented its IMPACT program in 81 company-operated stores (211 for fiscal 2009). As a result, 61.0 percent of its company-operated stores have now been converted to the IMPACT program.
-- In connection with its commercial partnership with Irving Oil—put in place during the first quarter of 2009—the company integrated 15 Irving stores in Canada during the fourth quarter, bringing the total number of integrated stores to 249 (125 in Canada including seven affiliated stores and 124 in the U.S., all company-operated).
-- During the fourth quarter, Couche-Tard acquired 13 company-operated stores located in the Province of Quebec from Exploitation Quali-T Inc., a subsidiary of Groupe Therrien; and seven company-operated stores from Gate Petroleum Co. operating under the Gate banner in the Greensboro and Raleigh regions of North Carolina.
Fourth-quarter net earnings were positively affected by earnings stemming from acquisitions, higher motor fuel gross margins, an increase in same-store merchandise revenues, growth in same-store motor fuel volume in Canada, sound management of its operating expenses, as well as a decrease in financial expenses.
These positive items were partially offset by a decrease in same-store motor fuel volume in the U.S., a weakening Canadian dollar, a slight decrease in merchandise and service consolidated gross margin, as well as a higher income tax expense compared to the income tax recovery recorded in the fourth quarter of fiscal 2008, the company stated.
"Given the economic conditions, we are satisfied with the quarterly and annual results while remaining level-headed and prudent about the coming year. Our performance most certainly reflects the interesting margins on motor fuel sales over a portion of the last fiscal year. However, we keep ourselves in check and understand that such a windfall may not present itself during the coming year," Bouchard stated in a release.
"On the other hand, with the sacrifices made by all over the past months and the informed decisions we made with our people, we are poised to tackle the challenges that will arise over the coming years and maintain the company’s results despite normal motor fuel margins. With this being said, I want to say thank you to our employees for their great work and constant support," he concluded.
During the webcast, Bouchard described the company’s cost-saving initiatives as "considerable" and said "a hundred different tasks" have been taken to cut costs, from cutting 1,000 phone lines to reducing utilities through energy-saving equipment.
The two areas where spending was purposely maintained at the same levels was customer service and training at store level, as well as the company’s marketing program, he noted.
"I am truly amazed and humbled at the messages being sent back to me from the field saying that what we are doing is understood," Bouchard said during yesterday’s webcast. "There’s no doubt in my mind that the future for Couche-Tard is a bright one."
As for its outlook for fiscal year 2010, the company expects to pursue investments with caution in order to, among other things, deploy its IMPACT program. Couche-Tard believes it will able to realize acquisitions by seizing opportunities arising from the challenging economic climate and from the attractive access to its credit facilities.
However, the company said it will continue to exercise patience in order to benefit from a fair price in view of current market conditions. Couche-Tard also intends to keep an ongoing focus on its supply terms and operating expenses, as well as 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.
Couche-Tard currently boasts a network of 5,443 convenience stores, 3,646 of which include motor fuel dispensing, located in 11 large geographic markets, including eight in the United States covering 34 states, and three in Canada covering 10 provinces.
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