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LAVAL, Quebec — Despite making several, large recent acquisitions, Alimentation Couche-Tard Inc. has the financial wherewithal to make additional purchases, President and CEO Brian Hannasch stated Tuesday during the company’s fiscal fourth-quarter earnings call.
“We continue to grow, and do not intend to slow down any time soon,” Hannasch said. “We don’t just look at strategic opportunities, but we also look at potential acquisitions to see if there is anything we can learn from them.”
Whether CST Brands Inc. — whom Couche-Tard has reportedly been interested in purchasing — fits this criteria is unknown. Hannasch did not discuss this possibility during Tuesday's call, nor was he asked about it by financial analysts.
The chief executive did say the global parent of Circle K would be “disciplined in its [acquisition] approach” and in its 2017 fiscal year that began April 25, Couche-Tard will be focusing on integrating and learning from its Topaz acquisition in Ireland and Shell downstream purchase in Denmark, as well as completing its acquisition of Esso-branded Imperial Oil locations in Ontario and Québec.
CIRCLE K INTEGRATION CONTINUES
Hannasch also revealed the integration of U.S. convenience stores to its global Circle K brand continues, primarily at former Kangaroo Express stores in the Southeast. To date, 400 U.S. stores have been rebranded to the new Circle K banner, with good feedback from customers thus far.
“We have begun to see the landscape change in the United States as hundreds of signs bearing our global Circle K brand light our stores, welcoming customers in the Southeast,” remarked Hannasch.
“These integrations are not just a signage change,” he continued. “We have also instituted best practices, including our Polar Pop [fountain beverages] and Simply Great Coffee offerings.”
These improved product offerings are paying off in terms of financial performance. For Couche-Tard’s 2016 fiscal fourth quarter ended April 24, U.S. same-store merchandise revenues rose 3.2 percent year over year to $1.7 billion, while merchandise and service gross margin rose 30 basis points to 33.7 percent. U.S. merchandise and gross profit increased nearly $100 million year over year to $573.7 million.
At the forecourt, U.S. same-store road transportation fuel revenues increased by 3.6 percent year over year to $3.1 billion, with a fuel gross margin of 16.78 cents per gallon, a year-over-year increase of 1.32 cents per gallon.
Companywide, Couche-Tard achieved net earnings of $206.2 million for its fiscal fourth quarter, compared to $126 million in fiscal 2015’s fourth quarter. Acquisitions and newly opened stores buoyed earnings in the fourth quarter, according to Hannasch.
For its full 2016 fiscal year, Couche-Tard generated a net profit of $1.2 billion, a 28.4-percent increase vs. fiscal 2015.
“Our performance in the fourth quarter was a fitting finale to another outstanding year; the eighth year in a row with record-setting earnings,” concluded Hannasch.
In its fiscal fourth quarter, Laval-based Couche-Tard acquired 161 c-stores, opened 33 new stores and completed two store conversions, while closing 57 sites during the same period. As of April 24, Couche-Tard had 10,547 convenience stores worldwide, including 7,929 company-operated locations.