Alimentation Couche-Tard releases Q1 2022 financial results

Alimentation Couche-Tard Inc. beat expectations, delivering net earnings of US$764.4 million, representing $0.71 per share on a diluted basis, compared with US$777.1 million or 70 cents per share a year earlier.

Net profit slipped in the first quarter of its fiscal year 2022, despite a 40% increase in revenues.

The results for the first quarter were affected by a pre-tax net foreign exchange gain of $8.6 million, as well as pre-tax acquisition costs of $0.8 million. The results for the comparable quarter of fiscal 2021 were affected by a pre-tax net foreign exchange loss of $18.4 million, as well as pre-tax acquisition costs of $3.9 million. Excluding these items, the adjusted net earnings were approximately $758.0 million for the first quarter of fiscal 2022, compared with $795.0 million for the first quarter of fiscal 2021, a decrease of $37.0 million, or 4.7%, driven by lower road transportation fuel margins in the United States and higher operating expenses, partly offset by higher fuel demand and the net positive impact from the translation of its Canadian and European operations into U.S. dollars. 

Total merchandise and service revenues were $4.1 billion, an increase of 5.4%. Same-store merchandise revenues decreased 9.6% in Canada and 0.2% in the United States, but increased 5.9% in Europe and other regions. On a two-year basis, same-store merchandise revenues increased at a compound annual growth rate of 4.2% in Canada, 3.7% in the United States and 4.9% in Europe.

Couche-Tard was expected to earn 65 cents per share in adjusted profits on US$13.27 billion of revenues, according to financial data firm Refinitiv.

"While remaining impacted by COVID-19 traffic patterns, fuel volumes improved and we continued to achieve healthy margins as well as expanded our global fuel business in terms of procurement capabilities, pricing analytics, and the Circle K fuel rebranding efforts, where results continued to be encouraging," CEO Brian Hannasch said in a statement.

In a release the company explained: "As we compare against a quarter fully impacted by the COVID-19 pandemic, results varied by region as the pandemic and social restrictive measures were at different levels year-over-year. Merchandise categories most impacted by COVID-19, such as food, continue to show a positive trend and, on a two-year basis, convenience activities performed well in our global network. Fuel margins continue to be higher than pre-pandemic levels, while fuel volumes continue to be challenged by work from home trends and changes in local restrictions."
 

Other highlights:

• Merchandise and service gross margin decreased 0.1% in the United States to 34.2%, and 2.2% in Europe and other regions to 38.4%, which was impacted by the integration of Circle K Hong Kong. Gross margin in Canada increased 1.2% to 32.3%, due to favourable changes in product mix.
   
• Same-store road transportation fuel volume increased 10.4% in Canada, 11.8% in the United States and 6.3% in Europe and other regions, due to higher fuel demand compared to the corresponding quarter. On a two-year basis, same-store road transportation fuel volume decreased at a compound annual growth rate of 9.4% in Canada, 6.1% in the United States and 3.3% in Europe, still impacted by work from home trends.
• Road transportation fuel gross margin of 36.75¢ per gallon in the United States, a decrease of 4.55¢ per gallon, and US 10.32¢ per liter in Europe and other regions, a decrease of U.S. 0.19¢ per litre due to the unusually high fuel margins of the comparable quarter. In Canada, it increased by CA 0.67¢ per litre to CA 10.92¢ per litre. Fuel margins remained healthy, driven by favourable market conditions, procurement initiatives and fuel rebranding.

• Successful issuance of $1.0 billion of U.S.-dollar-denominated senior unsecured notes, including an inaugural tranche of Green Bonds totalling $350.0 million.
   
• The Corporation implemented a share repurchase program which allows it to repurchase up to 4.0% of the public float of its Class B subordinate voting shares. Under this program, shares for an amount of $299.2 million were repurchased.

The company stated: "Looking at gross profit on a two-year basis provides additional insight given the volatility in the various key measures of our business. Excluding the impact of CAPL and Circle K Hong Kong, merchandise and service, as well as road transportation fuel gross profit, are higher by 10.9% and 19.4%, respectively, compared with the pre-pandemic first quarter of fiscal 2020."