- Net earnings attributable to shareholders of the Corporation ("net earnings") of
$659 .9 million ($0 .59 per share on a diluted basis) for the third quarter of fiscal 2020 compared with$612.1 million ($0.54 per share on a diluted basis) for the third quarter of fiscal 2019. Excluding certain items for both comparable periods, net earnings for the quarter would have been approximately$583.0 million 1 or$0.52 1 per share on a diluted basis, compared with$602 .0 million1 or$0.53 1 per share on a diluted basis for the third quarter of fiscal 2019, a 1.9% decrease of the adjusted net earnings per share on a diluted basis. -
Total merchandise and service revenues of
$4.3 billion , an increase of 2.6%. Same-store merchandise revenues increased by 3.0% in theU.S. , by 2.1% inEurope and by 4.2% inCanada . -
Merchandise and service gross margin increased by 0.3% in the
U.S. to 34.0%, and by 0.5% inEurope to 42.3%, while it decreased by 0.2% inCanada to 32.9%. Excluding the impact from the conversion of the Esso stores from the agent model to the corporate model, the margin inCanada would have shown positive growth. -
Same-store road transportation fuel volume increased by 0.1% in the
U.S. , while it decreased by 0.8% inEurope and by 3.1% inCanada . -
Road transportation fuel gross margin decreased by 2.38¢ per gallon in the
U.S. to 27.04¢ per gallon, and by CA 0.05¢ per liter inCanada to CA 8.06¢ per liter, while it increased by US 0.20¢ per liter inEurope to US 8.50¢ per liter. -
On
November 19, 2019 , the Corporation sold its interests in CrossAmerica Partners LP ("CAPL"), which resulted in a pre-tax net gain on disposal of$61 .5 million. On the same date, the Corporation announced an asset exchange agreement with CAPL under which a portion of itsU.S. wholesale road transportation fuel operations will be exchanged, receiving in return CAPL's 17.5% limited partnership interest inCST Fuel Supply LP , bringing the Corporations interest in this entity to 100%. Circle K rebranding project continues inNorth America with more than 6,250 stores now displaying the newCircle K global brand, representing more than 85.0% of the North American project scope.- 12.0% increase of the quarterly dividend, from CA 6.25¢ to CA 7.00¢.
- The Corporation announced, subject to TSX approval, its intention to renew the share repurchase program which would allow it to repurchase up to 4.0% of its Class B subordinate voting shares.
-
Share repurchases totaled
$64 .2 million during the third quarter of fiscal 2020 and$236 .9 million for the first three quarters of fiscal 2020.. -
Successful issuance of US-dollar-denominated senior unsecured notes totaling
$1.5 billion at favorable terms.
LAVAL, QC,
______________________________________ | |
1 | Please refer to the section "Net earnings attributable to shareholders of the Corporation ("net earnings") and adjusted net earnings attributable to shareholders of the Corporation ("adjusted net earnings")" of this press release for additional information on this performance measure not defined by IFRS. This performance measure, for the 16-week period ended |
"We had an overall strong performance, especially in the convenience sector where we are seeing impressive results from our strategic initiatives and improvements in our offerings. We are excited about the expansion of our food at scale program and remain very pleased with initial acceptance by our customers. Over the coming months, we will apply these learnings and increase the pace of our rollout in new business units. Our cross-functional teams are preparing our stores and training employees for this critical advancement in our food journey," said
"We continue to experience positive trends in our
Significant Items of the Third Quarter of Fiscal 2020
- The rollout of our Circle K brand in
North America is progressing steadily. As ofFebruary 2, 2020 , more than 6,250 stores inNorth America , including 945 stores acquired from CST, now proudly display our new global brand. This represents more than 85.0% of our overall North American project. - On
December 13, 2019 , we fully repaid, at maturity, our$600.0 million US-dollar-denominated senior unsecured notes issued onDecember 14, 2017 . OnNovember 1, 2019 , we fully repaid, at maturity, our CA$450.0 million ($341.4 million ) Canadian-dollar-denominated senior unsecured notes issued onNovember 1, 2012 , and settled the associated cross-currency interest rate swaps. - On
January 22, 2020 , we issued US-dollar-denominated senior unsecured notes totaling$1.5 billion , consisting of a$750.0 million tranche with a coupon rate of 2.950% and maturing in 2030, as well as a$750.0 million tranche with a coupon rate of 3.800% and maturing in 2050. - During the third quarter and first three quarters of fiscal 2020, we repurchased 1,996,992 and 7,657,960 Class B subordinate voting shares, respectively. These repurchases were settled for net amounts of
$64 .2 million and$236 .9 million, respectively. Subsequent to the end of the quarter, 4,660,240 Class B subordinate voting shares were repurchased, for a net amount of$137 .9 million. - On
March 17, 2020 , we announced, subject to TSX approval, our intention to renew the share repurchase program which allows us to repurchase up to 4.0% of our Class B subordinate voting shares. - During the third quarter of fiscal 2020, as part of our cost's reduction initiatives and the search for synergies aimed at improving our efficiency, we made the decision to proceed with the restructuring of certain of our operations. As such, an additional restructuring expense of
$1.7 million was recorded to earnings of the third quarter of fiscal 2020.
Changes in our Network
- On
November 19, 2019 , we announced the closing of the sale of our interests in CAPL, representing 100% of the equity interests of the sole member of the General Partner, 100% of the incentive distribution rights and 21.7% of the outstanding common units of CAPL to investment entities controlled byJoe Topper , the founder of CAPL and a member of the board of directors of itsGeneral Partner for an amount of$190.0 million . We recognized a pre-tax net gain on disposal of$61 .5 million in relation to this transaction. The decision to divest our interests in CAPL was based on the outcome of a strategic review. This transaction also led to the release of a deferred tax asset valuation allowance of$29.0 million in relation with capital losses which were not expected to be used before their expiration date. - On
November 19, 2019 , we also announced an asset exchange agreement with CAPL under which we will transfer a portion of ourU.S. wholesale road transportation fuel operations, which consists of wholesale fuel supply contracts covering 387 sites and 45 fee and leasehold properties, receiving in return CAPL's 17.5% limited partnership interest inCST Fuel Supply LP ("November 2019 asset exchange agreement"), bringing our interest in this entity to 100%. Subject to regulatory approvals, theNovember 2019 asset exchange agreement is expected to be completed in the first half of calendar 2020. - On
February 25, 2020 , subsequent to the end of the third quarter of fiscal 2020, we closed the third transaction of the asset exchange agreement with CAPL ("December 2018 asset exchange agreement"). In this third transaction, we transferred 10 Circle KU.S. stores for a total value of approximately$11.0 million . In exchange, CAPL transferred the real estate for 5 properties for a total value of approximately$10.0 million . The remaining tranches of theDecember 2018 asset exchange agreement are expected to be completed in the first half of calendar 2020. - On
January 13, 2020 , we acquired 17 stores from a franchise operator. These convenience stores operate under the Holiday banner inSouth Dakota andMinnesota , withinthe United States . - During the third quarter of fiscal 2020, we acquired 1 company-operated store, reaching a total of 10 stores since the beginning of fiscal 2020.
- During the third quarter of fiscal 2020, we completed the construction of 13 stores and the relocation or reconstruction of 7 stores, reaching a total of 68 stores since the beginning of fiscal year 2020. As of February 2, 2020, another 40 stores were under construction and should open in the upcoming quarters.
Summary of changes in our store network during the third quarter of fiscal 2020
The following table presents certain information regarding changes in our store network over the 16-week period ended
16-week period ended | ||||||
Type of site | Company- | CODO | DODO | Franchised and | Total | |
Number of sites, beginning of period | 9,735 | 452 | 1,039 | 1,297 | 12,523 | |
Acquisitions | 18 | — | — | — | 18 | |
Openings / constructions / additions | 13 | 1 | 7 | 25 | 46 | |
Closures / disposals / withdrawals | (36) | (3) | (20) | (32) | (91) | |
Store conversion | 2 | (1) | (1) | — | — | |
Number of sites, end of period | 9,732 | 449 | 1,025 | 1,290 | 12,496 | |
2,384 | ||||||
Total network | 14,880 | |||||
Number of automated fuel stations included in the period-end figures | 980 | — | 10 | — | 990 |
New Accounting Standard Adopted by the Corporation
As of
16-week period ended | ||||||||||||||
(in millions of US dollars) | Pre –IFRS 16 | Excluding: rent | Including: | Other | Total estimated | Pro forma - | Total estimated | |||||||
Revenues | 16,515.0 | — | — | 11.0 | 11.0 | 16,526.0 | 6.0 | |||||||
Cost of sales | 13,681.1 | — | — | — | — | 13,681.1 | — | |||||||
Gross profit | 2,833.9 | — | — | 11.0 | 11.0 | 2,844.9 | 6.0 | |||||||
Operating, selling, administrative and general expenses | 1,698.6 | (122.0) | — | 9.0 | (113.0) | 1,585.6 | (112.0) | |||||||
Restructuring costs | 1.6 | — | — | — | — | 1.6 | — | |||||||
Gain on disposal of property and equipment and other assets | (6.5) | — | — | — | — | (6.5) | — | |||||||
Depreciation, amortization and impairment | 305.2 | (6.0) | 118.0 | — | 112.0 | 417.2 | 108.0 | |||||||
Total operating expenses | 1,998.9 | (128.0) | 118.0 | 9.0 | (1.0) | 1,997.9 | (4.0) | |||||||
Operating income | 835.0 | 128.0 | (118.0) | 2.0 | 12.0 | 847.0 | 10.0 | |||||||
Share of earnings of joint ventures and associated companies | 7.3 | — | — | — | — | 7.3 | — | |||||||
EBITDA | 1,147.5 | 122.0 | — | 2.0 | 124.0 | 1,271.5 | 119.0 | |||||||
Financial expenses | 95.2 | (5.0) | 27.0 | — | 22.0 | 117.2 | 20.0 | |||||||
Financial revenues | (3.6) | — | — | — | — | (3.6) | — | |||||||
Foreign exchange gain | (1.5) | — | — | — | — | (1.5) | — | |||||||
Net financial expenses | 90.1 | (5.0) | 27.0 | — | 22.0 | 112.1 | 20.0 | |||||||
Earnings before income taxes | 752.2 | 133.0 | (145.0) | 2.0 | (10.0) | 742.2 | (10.0) | |||||||
Income taxes | 140.4 | 33.0 | (36.0) | — | (3.0) | 137.4 | (3.0) | |||||||
Net earnings including non-controlling interests | 611.8 | 100.0 | (109.0) | 2.0 | (7.0) | 604.8 | (7.0) | |||||||
Net loss attributable to non-controlling interests | 0.3 | (1.0) | 5.0 | (4.0) | — | 0.3 | — | |||||||
Net earnings attributable to shareholders of the Corporation | 612.1 | 99.0 | (104.0) | (2.0) | (7.0) | 605.1 | (7.0) | |||||||
(1) Depreciation and interest expenses are based on our assessment of Fiscal 2020 impact. | ||||||||||||||
40-week period ended | ||||||||||||||
(in millions of US dollars) | Pre – IFRS 16 | Excluding: rent | Include: | Other | Total estimated | Pro forma - | Total estimated | |||||||
Revenues | 46,004.3 | — | — | 30.0 | 30.0 | 46,034.3 | 14.0 | |||||||
Cost of sales | 38,787.7 | — | — | — | — | 38,787.7 | — | |||||||
Gross profit | 7,216.6 | — | — | 30.0 | 30.0 | 7,246.6 | 14.0 | |||||||
Operating, selling, administrative and general expenses | 4,306.6 | (299.0) | — | 21.0 | (278.0) | 4,028.6 | (277.0) | |||||||
Restructuring costs | 7.9 | — | — | — | — | 7.9 | — | |||||||
Gain on disposal of property and equipment and other assets | (5.8) | — | — | — | — | (5.8) | — | |||||||
Depreciation, amortization and impairment | 829.2 | (14.0) | 298.0 | — | 284.0 | 1,113.2 | 272.0 | |||||||
Total operating expenses | 5,137.9 | (313.0) | 298.0 | 21.0 | 6.0 | 5,143.9 | (5.0) | |||||||
Operating income | 2,078.7 | 313.0 | (298.0) | 9.0 | 24.0 | 2,102.7 | 19.0 | |||||||
Share of earnings of joint ventures and associated companies | 19.8 | — | — | — | — | 19.8 | — | |||||||
EBITDA | 2,927.7 | 299.0 | — | 9.0 | 308.0 | 3,235.7 | 292.0 | |||||||
Financial expenses | 255.2 | (15.0) | 69.0 | — | 54.0 | 309.2 | 48.0 | |||||||
Financial revenues | (9.5) | — | — | — | — | (9.5) | — | |||||||
Foreign exchange gain | (4.2) | — | — | — | — | (4.2) | — | |||||||
Net financial expenses | 241.5 | (15.0) | 69.0 | — | 54.0 | 295.5 | 48.0 | |||||||
Earnings before income taxes | 1,857.0 | 328.0 | (367.0) | 9.0 | (30.0) | 1,827.0 | (29.0) | |||||||
Income taxes | 325.6 | 83.0 | (92.0) | 2.0 | (7.0) | 318.6 | (7.0) | |||||||
Net earnings including non-controlling interests | 1,531.4 | 245.0 | (275.0) | 7.0 | (23.0) | 1,508.4 | (22.0) | |||||||
Net loss attributable to non-controlling interests | 9.4 | (2.0) | 15.0 | (12.0) | 1.0 | 10.4 | — | |||||||
Net earnings attributable to shareholders of the Corporation | 1,540.8 | 243.0 | (260.0) | (5.0) | (22.0) | 1,518.8 | (22.0) | |||||||
(1) Depreciation and interest expenses are based on our assessment of Fiscal 2020 impact. |
In order to facilitate the understanding of our financial performance, we have adjusted some of our previously reported performance measures. All adjustments related to IFRS 16 are clearly identified and are based on the calculations presented in the tables above.
Exchange Rate Data
We use the US dollar as our reporting currency, which provides more relevant information given the predominance of our operations in
The following table sets forth information about exchange rates based upon closing rates expressed as US dollars per comparative currency unit:
16-week periods ended | 40-week periods ended | |||
Average for period | ||||
Canadian dollar | 0.7601 | 0.7542 | 0.7558 | 0.7622 |
Norwegian krone | 0.1103 | 0.1177 | 0.1122 | 0.1204 |
Swedish krone | 0.1046 | 0.1107 | 0.1045 | 0.1118 |
Danish krone | 0.1484 | 0.1528 | 0.1490 | 0.1550 |
Zloty | 0.2597 | 0.2653 | 0.2592 | 0.2689 |
Euro | 1.1090 | 1.1400 | 1.1126 | 1.1560 |
Ruble | 0.0158 | 0.0150 | 0.0156 | 0.0153 |
Summary Analysis of Consolidated Results for the Third Quarter and First Three Quarters of Fiscal 2020
The following table highlights certain information regarding our operations for the 16 and 40-week periods ended
16-week periods ended | 40-week periods ended | ||||||
(in millions of US dollars, unless otherwise stated) |
|
| Variation |
|
| Variation | |
Statement of Operations Data: | |||||||
Merchandise and service revenues(1): | |||||||
3,197.0 | 3,133.4 | 2.0 | 8,484.6 | 8,311.9 | 2.1 | ||
419.0 | 405.3 | 3.4 | 1,103.4 | 1,114.5 | (1.0) | ||
672.0 | 618.3 | 8.7 | 1,816.0 | 1,686.9 | 7.7 | ||
CAPL | — | 22.0 | (100.0) | 29.6 | 75.7 | (60.9) | |
Elimination of intercompany transactions with CAPL | — | (0.7) | (100.0) | (0.8) | (2.2) | (63.6) | |
Total merchandise and service revenues | 4,288.0 | 4,178.3 | 2.6 | 11,432.8 | 11,186.8 | 2.2 | |
Road transportation fuel revenues: | |||||||
8,100.2 | 7,740.2 | 4.7 | 21,420.7 | 21,968.5 | (2.5) | ||
2,324.4 | 2,396.6 | (3.0) | 6,120.7 | 6,420.6 | (4.7) | ||
1,423.3 | 1,377.3 | 3.3 | 3,755.5 | 3,924.6 | (4.3) | ||
CAPL | 268.2 | 511.4 | (47.6) | 1,365.7 | 1,775.5 | (23.1) | |
Elimination of intercompany transactions with CAPL | (50.5) | (93.5) | (46.0) | (288.0) | (364.7) | (21.0) | |
Total road transportation fuel revenues | 12,065.6 | 11,932.0 | 1.1 | 32,374.6 | 33,724.5 | (4.0) | |
Other revenues(2): | |||||||
13.1 | 6.4 | 104.7 | 28.1 | 16.9 | 66.3 | ||
219.4 | 380.0 | (42.3) | 536.3 | 1,023.7 | (47.6) | ||
6.6 | 7.3 | (9.6) | 16.7 | 19.7 | (15.2) | ||
CAPL | 12.8 | 15.3 | (16.3) | 65.6 | 45.7 | 43.5 | |
Elimination of intercompany transactions with CAPL | (1.3) | (4.3) | (69.8) | (8.9) | (13.0) | (31.5) | |
Total other revenues | 250.6 | 404.7 | (38.1) | 637.8 | 1,093.0 | (41.6) | |
Total revenues | 16,604.2 | 16,515.0 | 0.5 | 44,445.2 | 46,004.3 | (3.4) | |
Merchandise and service gross profit(1): | |||||||
1,087.7 | 1,055.0 | 3.1 | 2,884.4 | 2,809.9 | 2.7 | ||
177.2 | 169.5 | 4.5 | 460.6 | 465.6 | (1.1) | ||
221.4 | 204.6 | 8.2 | 596.0 | 569.3 | 4.7 | ||
CAPL | — | 5.4 | (100.0) | 6.8 | 18.4 | (63.0) | |
Elimination of intercompany transactions with CAPL | — | (0.6) | (100.0) | (0.8) | (1.9) | (57.9) | |
Total merchandise and service gross profit | 1,486.3 | 1,433.9 | 3.7 | 3,947.0 | 3,861.3 | 2.2 | |
Road transportation fuel gross profit: | |||||||
856.9 | 914.5 | (6.3) | 2,227.8 | 2,021.5 | 10.2 | ||
277.4 | 272.7 | 1.7 | 725.8 | 755.1 | (3.9) | ||
112.9 | 116.5 | (3.1) | 280.8 | 310.3 | (9.5) | ||
CAPL | 10.5 | 28.1 | (62.6) | 57.5 | 81.3 | (29.3) | |
Total road transportation fuel gross profit | 1,257.7 | 1,331.8 | (5.6) | 3,291.9 | 3,168.2 | 3.9 | |
Other revenues gross profit(2): | |||||||
13.1 | 6.4 | 104.7 | 28.1 | 16.9 | 66.3 | ||
40.6 | 43.5 | (6.7) | 103.8 | 117.8 | (11.9) | ||
6.6 | 7.3 | (9.6) | 16.6 | 19.7 | (15.7) | ||
CAPL | 12.9 | 15.3 | (15.7) | 65.7 | 45.7 | 43.8 | |
Elimination of intercompany transactions with CAPL | (1.3) | (4.3) | (69.8) | (8.9) | (13.0) | (31.5) | |
Total other revenues gross profit | 71.9 | 68.2 | 5.4 | 205.3 | 187.1 | 9.7 | |
Total gross profit | 2,815.9 | 2,833.9 | (0.6) | 7,444.2 | 7,216.6 | 3.2 | |
Operating, selling, administrative and general expenses | |||||||
Excluding CAPL | 1,607.3 | 1,682.9 | (4.5) | 4,044.5 | 4,262.2 | (5.1) | |
CAPL | 8.3 | 20.5 | (59.5) | 46.8 | 58.9 | (20.5) | |
Elimination of intercompany transactions with CAPL | (1.1) | (4.8) | (77.1) | (9.2) | (14.5) | (36.6) | |
Total Operating, selling, administrative and general expenses | 1,614.5 | 1,698.6 | (5.0) | 4,082.1 | 4,306.6 | (5.2) | |
Restructuring costs | 1.7 | 1.6 | 6.2 | 3.6 | 7.9 | (54.4) | |
Gain on disposal of property and equipment and other assets | (74.9) | (6.5) | 1,052.3 | (63.8) | (5.8) | 1,000.0 | |
Depreciation, amortization and impairment | |||||||
Excluding CAPL | 398.4 | 286.1 | 39.3 | 975.5 | 703.6 | 38.6 | |
CAPL | 7.7 | 19.1 | (59.7) | 53.9 | 125.6 | (57.1) | |
Total depreciation, amortization and impairment | 406.1 | 305.2 | 33.1 | 1,029.4 | 829.2 | 24.1 | |
Operating income | |||||||
Excluding CAPL | 862.1 | 825.9 | 4.4 | 2,368.1 | 2,118.2 | 11.8 | |
CAPL | 6.6 | 9.2 | (28.3) | 25.3 | (39.1) | (164.7) | |
Elimination of intercompany transactions with CAPL | (0.2) | (0.1) | 100.0 | (0.5) | (0.4) | 25.0 | |
Total operating income | 868.5 | 835.0 | 4.0 | 2,392.9 | 2,078.7 | 15.1 | |
Net financial expenses | 84.2 | 90.1 | (6.5) | 231.3 | 241.5 | (4.2) | |
Net earnings including non-controlling interests | 663.9 | 611.8 | 8.5 | 1,779.3 | 1,531.4 | 16.2 | |
Net (earnings) loss attributable to non-controlling interests | (4.0) | 0.3 | (1,433.3) | (2.0) | 9.4 | (121.3) | |
Net earnings attributable to shareholders of the Corporation | 659.9 | 612.1 | 7.8 | 1,777.3 | 1,540.8 | 15.3 | |
Per Share Data: | |||||||
Basic net earnings per share (dollars per share) | 0.59 | 0.54 | 9.3 | 1.58 | 1.37 | 15.3 | |
Diluted net earnings per share (dollars per share) | 0.59 | 0.54 | 9.3 | 1.58 | 1.36 | 16.2 | |
Adjusted diluted net earnings per share (dollars per share)(13) | 0.52 | 0.53 | (1.9) | 1.51 | 1.38 | 9.4 | |
Other Operating Data – excluding CAPL: | |||||||
Merchandise and service gross margin(1): | |||||||
Consolidated | 34.7% | 34.4% | 0.3 | 34.6% | 34.6% | — | |
34.0% | 33.7% | 0.3 | 34.0% | 33.8% | 0.2 | ||
42.3% | 41.8% | 0.5 | 41.7% | 41.8% | (0.1) | ||
32.9% | 33.1% | (0.2) | 32.8% | 33.7% | (0.9) | ||
Growth of same-store merchandise revenues(3): | |||||||
3.0% | 4.5% | (1.5) | 2.9% | 4.4% | (1.5) | ||
2.1% | 2.9% | (0.8) | 2.1% | 4.8% | (2.7) | ||
4.2% | 4.9% | (0.7) | 2.3% | 5.5% | (3.2) | ||
Road transportation fuel gross margin: | |||||||
27.04 | 29.42 | (8.1) | 27.37 | 25.12 | 9.0 | ||
8.50 | 8.30 | 2.4 | 8.43 | 8.72 | (3.3) | ||
8.06 | 8.11 | (0.6) | 7.81 | 8.45 | (7.6) | ||
Total volume of road transportation fuel sold: | |||||||
3,290.2 | 3,263.9 | 0.8 | 8,482.6 | 8,466.3 | 0.2 | ||
3,264.6 | 3,287.3 | (0.7) | 8,611.4 | 8,660.6 | (0.6) | ||
1,848.9 | 1,912.0 | (3.3) | 4,779.9 | 4,839.0 | (1.2) | ||
Growth of (decrease in) same-store road transportation fuel volume: | |||||||
0.1% | 0.8% | (0.7) | 0.4% | 0.9% | (0.5) | ||
(0.8%) | (1.4%) | 0.6 | (1.0%) | (0.6%) | (0.4) | ||
(3.1%) | (0.6%) | (2.5) | (1.0%) | (1.9%) | 0.9 | ||
(in millions of US dollars, unless otherwise stated) | Variation $ | ||||||
Balance Sheet Data(5): | |||||||
Total assets (including | 24,838.9 | 25,033.0 | (194.1) | ||||
Interest-bearing debt (including | 9,010.8 | 9,575.3 | (564.5) | ||||
Equity attributable to shareholders of the Corporation | 9,994.3 | 8,913.7 | 1,080.6 | ||||
Indebtedness Ratios(7): | |||||||
Net interest-bearing debt/total capitalization(6)(8) | 0.42 : 1 | 0.48 : 1 | |||||
Leverage ratio(9) | 1.77 : 1 | 2.09 : 1 | |||||
Adjusted leverage ratio(10) | 1.84 : 1 | 2.18 : 1 | |||||
Returns(7): | |||||||
Return on equity(11) | 22.0% | 21.9% | |||||
Return on capital employed(12) | 13.7% | 12.6% |
(1) | Includes revenues derived from franchise fees, royalties, suppliers' rebates on some purchases made by franchisees and licensees, as well as from wholesale of merchandise. |
(2) | Includes revenues from the rental of assets and from the sale of aviation fuel, energy for stationary engines and marine fuel (until |
(3) | Does not include services and other revenues (as described in footnotes 1 and 2 above). Growth in |
(4) | For company-operated stores only. |
(5) | The balance sheet data as at |
(6) | This measure is presented including the following balance sheet accounts: Current portion of long-term debt, Long-term debt, Current portion of lease liabilities, and Lease liabilities. |
(7) | Until |
(8) | This measure is presented for information purposes only and represents a measure of financial condition used especially in financial circles. It represents the following calculation: interest-bearing debt, net of cash and cash equivalents and temporary investments divided by the addition of shareholders' equity and interest-bearing debt, net of cash and cash equivalents and temporary investments. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations. For the purpose of this calculation, until |
(9) | This measure is presented for information purposes only and represents a measure of financial condition used especially in financial circles. It represents the following calculation: interest-bearing debt, net of cash and cash equivalents and temporary investments divided by EBITDA (Earnings before Interest, Tax, Depreciation, Amortization and Impairment) adjusted for specific items. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations. For the purpose of this calculation, until |
(10) | This measure is presented for information purposes only and represents a measure of financial condition used especially in financial circles. It represents the following calculation: interest-bearing debt plus the product of eight times rent expense, net of cash and cash equivalents and temporary investments divided by EBITDAR (Earnings before Interest, Tax, Depreciation, Amortization, Impairment and Rent expense) adjusted for specific items. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations. For the purpose of this calculation, until |
(11) | This measure is presented for information purposes only and represents a measure of performance used especially in financial circles. It represents the following calculation: net earnings divided by average equity for the corresponding period. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations. This performance measure, for the 52-week period ended |
(12) | This measure is presented for information purposes only and represents a measure of performance used especially in financial circles. It represents the following calculation: earnings before income taxes and interests divided by average capital employed for the corresponding period. Capital employed represents total assets less short-term liabilities not bearing interests. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations. This performance measure, for the 52-week period ended |
(13) | These performance measures, for the 16 and 40-week periods ended |
Revenues
Our revenues were
For the first three quarters of fiscal 2020, our revenues decreased by
Merchandise and service revenues
Total merchandise and service revenues for the third quarter of fiscal 2020 were
For the first three quarters of fiscal 2020, the growth in merchandise and service revenues was
Road transportation fuel revenues
Total road transportation fuel revenues for the third quarter of fiscal 2020 were
For the first three quarters of fiscal 2020, the road transportation fuel revenues decreased by
The following table shows the average selling price of road transportation fuel of our company-operated stores in our various markets for the last eight quarters, starting with the fourth quarter of the fiscal year ended
Quarter | 4th | 1st | 2nd | 3rd | Weighted | |
52-week period ended | ||||||
United States (US dollars per gallon) – excluding CAPL | 2.51 | 2.66 | 2.55 | 2.51 | 2.55 | |
74.59 | 77.35 | 70.86 | 73.92 | 74.15 | ||
103.45 | 111.16 | 105.14 | 103.47 | 105.70 | ||
52-week period ended | ||||||
United States (US dollars per gallon) – excluding CAPL | 2.51 | 2.76 | 2.72 | 2.42 | 2.59 | |
78.32 | 75.07 | 80.56 | 75.28 | 77.21 | ||
110.39 | 117.95 | 115.22 | 97.59 | 109.34 |
Other revenues
Total other revenues for the third quarter and first three quarters of fiscal 2020 were
Gross profit
Our gross profit was
For the first three quarters of fiscal 2020, our gross profit increased by
Merchandise and service gross profit
In the third quarter of fiscal 2020, our merchandise and service gross profit was
During the first three quarters of fiscal 2020, our merchandise and service gross profit was
Road transportation fuel gross profit
In the third quarter of fiscal 2020, our road transportation fuel gross profit was
During the first three quarters of fiscal 2020, our road transportation fuel gross profit was
The road transportation fuel gross margin of our company-operated stores in
(US cents per gallon) | |||||
Quarter | 4th | 1st | 2nd | 3rd | Weighted |
52-week period ended | |||||
Before deduction of expenses related to electronic payment modes | 18.51 | 26.86 | 28.29 | 27.04 | 25.30 |
Expenses related to electronic payment modes(1) | 4.40 | 4.70 | 4.63 | 4.54 | 4.60 |
After deduction of expenses related to electronic payment modes | 14.11 | 22.16 | 23.66 | 22.50 | 20.70 |
52-week period ended | |||||
Before deduction of expenses related to electronic payment modes | 17.29 | 22.70 | 21.88 | 29.42 | 23.30 |
Expenses related to electronic payment modes(1) | 3.86 | 4.67 | 4.55 | 4.31 | 4.30 |
After deduction of expenses related to electronic payment modes | 13.43 | 18.03 | 17.33 | 25.11 | 19.00 |
(1) | Please note that this information has been restated to reflect the cost of electronic payment expenses per corporate-store road transportation fuel gallons instead of per total road transportation fuel gallons. |
As demonstrated by the table above, road transportation fuel margins in the United States can be volatile from one quarter to another but tend to be relatively stable over longer periods. Margin volatility and expenses related to electronic payment modes are not as significant in
Other revenues gross profit
In the third quarter and first three quarters of fiscal 2020, other revenues gross profit was
Operating, selling, administrative and general expenses ("expenses")
For the third quarter and first three quarters of fiscal 2020, expenses decreased by 5.0% and 5.2%, respectively, compared with the corresponding periods of fiscal 2019. If we exclude decrease in rent from the transition to IFRS 16 and certain items that are not considered indicative of future trends, expenses increased by 3.7% and 3.0%, respectively.
16-week period ended | 40-week period ended | |
Total variance, as reported | (5.0%) | (5.2%) |
Adjusted for: | ||
Decrease in rent expense from transition to IFRS 16 | 6.6% | 6.4% |
Decrease from settlements and reserves adjustments for specific elements recognized to earnings of fiscal 2019(1) | 1.5% | 0.6% |
Decrease in CAPL's expenses | 0.7% | 0.3% |
Decrease from the net impact of foreign exchange translation | 0.6% | 1.0% |
Increase from higher electronic payment fees, excluding acquisitions | (0.6%) | (0.3%) |
Acquisition costs recognized to earnings of fiscal 2020 | (0.2%) | (0.1%) |
Disposal of our marine fuel business | 0.1% | 0.1% |
Compensatory payment to CAPL for divestiture of assets recognized in fiscal 2019 | — | 0.2% |
Remaining variance | 3.7% | 3.0% |
(1) | During the third quarter of fiscal 2019, we settled various claims and adjusted our reserves in connection with specific events of the quarter, which had a pre-tax negative impact of |
Excluding the conversion of our Esso stores from the agent model to the corporate model, the remaining variance for the third quarter and first three quarters of fiscal 2020 would have been 3.4% and 2.5%, respectively. Growth in expenses, amongst other items, was driven by normal inflation, higher labor costs from minimum wage increases in certain regions as well as from the challenging labor market in
Earnings before interest, taxes, depreciation, amortization and impairment (EBITDA) and adjusted EBITDA
During the third quarter of fiscal 2020, EBITDA increased from
During the first three quarters of fiscal 2020, EBITDA increased from
It should be noted that EBITDA and adjusted EBITDA are not performance measures defined by IFRS, but we, as well as investors and analysts, consider that those performance measures facilitate the evaluation of our ongoing operations and our ability to generate cash flows to fund our cash requirements, including our capital expenditures program and payment of dividends. Note that our definition of these measures may differ from the one used by other public corporations.
16-week periods ended | 40-week periods ended | |||
(in millions of US dollars) |
|
|
|
|
Net earnings including non-controlling interests, as reported | 663.9 | 611.8 | 1,779.3 | 1,531.4 |
Add: | ||||
Income taxes | 125.5 | 140.4 | 400.5 | 325.6 |
Net financial expenses | 84.2 | 90.1 | 231.3 | 241.5 |
Depreciation, amortization and impairment | 406.1 | 305.2 | 1,029.4 | 829.2 |
EBITDA | 1,279.7 | 1,147.5 | 3,440.5 | 2,927.7 |
Adjusted for: | ||||
Net gain on the disposal of the Corporation's interests in CAPL | (61.5) | — | (61.5) | — |
EBITDA attributable to non-controlling interests | (14.0) | (21.1) | (64.6) | (61.3) |
Acquisition costs | 2.9 | 0.6 | 3.9 | 1.8 |
Restructuring costs attributable to shareholders of the Corporation | 1.7 | 1.6 | 3.6 | 7.9 |
Gain on the disposal of the marine fuel business | — | (3.2) | — | (3.2) |
Compensatory payment to CAPL for divestiture of assets, net of non-controlling interests | — | — | — | 5.0 |
Adjusted EBITDA, as previously reported | 1,208.8 | 1,125.4 | 3,321.9 | 2,877.9 |
Estimated pro forma impact from transition to IFRS 16 attributable to shareholders of the Corporation | — | 119.0 | — | 292.0 |
Adjusted EBITDA | 1,208.8 | 1,244.4 | 3,321.9 | 3,169.9 |
Depreciation, amortization and impairment ("depreciation")
For the third quarter and first three quarters of fiscal 2020, our depreciation expense increased by
Net financial expenses
Net financial expenses for the third quarter of fiscal 2020 were
Net financial expenses for the first three quarters of fiscal 2020 were
16-week periods ended | 40-week periods ended | |||
(in millions of US dollars) | ||||
Net financial expenses, as reported | 84.2 | 90.1 | 231.3 | 241.5 |
Adjusted for: | ||||
Net foreign exchange gain | 5.4 | 1.5 | 10.7 | 4.2 |
CAPL's financial expenses | (4.8) | (7.5) | (25.6) | (21.6) |
Estimated pro forma impact from transition to IFRS 16 | — | 20.0 | — | 48.0 |
Net financial expenses excluding items above | 84.8 | 104.1 | 216.4 | 272.1 |
Income taxes
The income tax rate for the third quarter of fiscal 2020 was 15.9% compared with 18.7% for the corresponding period of fiscal 2019. The income tax rate for the third quarter of fiscal 2020 includes a net tax benefit of
For the first three quarters of fiscal 2020 the income tax rate was 18.4% compared with 17.5% for the first three quarters of fiscal 2019. Excluding the adjustments below, the income tax rate would have been 19.6% for the first three quarters of fiscal 2020, an increase compared to the first three quarters of fiscal 2019, for similar reasons as the quarter.
16-week periods ended | 40-week periods ended | |||
Income tax, as reported | 15.9% | 18.7% | 18.4% | 17.5% |
Adjusted for: | ||||
Release of deferred tax asset valuation allowance | 3.7% | — | 1.3% | — |
Income tax expense following the Asset Exchange transactions with CAPL | — | — | (0.1%) | — |
Tax benefit stemming from the decrease of the statutory income tax rate in | — | — | — | 0.5% |
Net income tax excluding items above | 19.6% | 18.7% | 19.6% | 18.0% |
Net earnings attributable to shareholders of the Corporation ("net earnings") and adjusted net earnings attributable to shareholders of the Corporation ("adjusted net earnings")
Net earnings for the third quarter of fiscal 2020 were
Excluding the items shown in the table below from net earnings of the third quarter of fiscal 2020 and fiscal 2019, adjusted net earnings for the third quarter of fiscal 2020 would have been approximately
For the first three quarters of fiscal 2020, net earnings were
Excluding the items shown in the table below from net earnings of the first three quarters of fiscal 2020 and fiscal 2019, net earnings for the first three quarters of fiscal 2020 would have been approximately
The table below reconciles reported net earnings to adjusted net earnings:
16-week periods ended | 40-week periods ended | |||
(in millions of US dollars) | ||||
Net earnings attributable to shareholders of the Corporation, as reported | 659.9 | 612.1 | 1,777.3 | 1,540.8 |
Adjusted for: | ||||
Net gain on the disposal of the Corporation's interests in CAPL | (61.5) | — | (61.5) | — |
Release of deferred tax asset valuation allowance | (29.0) | (29.0) | ||
Net foreign exchange gain | (5.4) | (1.5) | (10.7) | (4.2) |
Acquisition costs | 2.9 | 0.6 | 3.9 | 1.8 |
Restructuring costs attributable to shareholders of the Corporation | 1.7 | 1.6 | 3.6 | 7.9 |
Income tax expense following the Asset Exchange transactions with CAPL | — | — | 2.7 | — |
Gain on the disposal of the marine fuel business | — | (3.2) | — | (3.2) |
Impairment charge on CAPL's goodwill | — | — | — | 55.0 |
Tax benefit stemming from the decrease of the statutory income tax rate in | — | — | — | (6.2) |
Compensatory payment to CAPL for divestiture of assets, net of non-controlling interests | — | — | — | 5.0 |
Tax impact of the items above and rounding | 14.4 | (0.6) | 14.7 | (16.9) |
Adjusted net earnings attributable to shareholders of the Corporation, as previously reported | 583.0 | 609.0 | 1,701.0 | 1,580.0 |
Estimated pro forma impact from transition to IFRS 16 | — | (7.0) | — | (22.0) |
Adjusted net earnings attributable to shareholders of the Corporation | 583.0 | 602.0 | 1,701.0 | 1,558.0 |
It should be noted that adjusted net earnings is not a performance measure defined by IFRS, but we, as well as investors and analysts, consider this measure useful for evaluating the underlying performance of our operations on a comparable basis. Note that our definition of this measure may differ from the one used by other public corporations.
Dividends
During its
During the same meeting, the Board of Directors declared a quarterly dividend of CA 7.00¢ per share for the third quarter of fiscal 2020 to shareholders on record as at
Profile
As of
In
In addition, under licensing agreements, more than 2,380 stores are operated under the Circle K banner in 15 other countries and territories (
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