- Net earnings attributable to shareholders of the Corporation ("net earnings") were
$777.1 million or$0.70 per diluted share for the first quarter of fiscal 2021 compared with$538.8 million or$0.48 per diluted share for the first quarter of fiscal 2020. Adjusted net earnings were approximately$795.0 million 1 compared with$548.0 million 1 for the first quarter of fiscal 2020. Adjusted net earnings per share on a diluted basis were$0.71 1, representing an increase of 47.9% from$0.48 1 for the corresponding quarter of last year. - Due to the ongoing restrictive social measures in the various geographies in which the Corporation operates, the COVID-19 pandemic continued to have a meaningful impact on its financial results. On merchandise sales, it benefited from consolidated trips by consumers driving larger basket size. While on the fuel side, as revenues declined from lower demand and lower fuel prices, it was compensated by strong fuel margins.
- Total merchandise and service revenues of
$3.9 billion , an increase of 7.0%. Same-store merchandise revenues increased 7.7% in theU.S. , 3.4% inEurope , and 19.9% inCanada . - Merchandise and service gross margin increased 0.7% in the
U.S. to 34.7%, while it decreased 0.9% inEurope to 40.6% and 1.2% inCanada to 31.7%, both negatively impacted by product mix. - Same-store road transportation fuel volume decreased 21.2% in the
U.S. , 12.4% inEurope , and 25.6% inCanada . - Road transportation fuel gross margin increased by 16.13¢ per gallon in the
U.S. to 42.99¢ per gallon, by US 2.07¢ per liter inEurope to US 10.51¢ per liter, and by CA 2.89¢ per liter inCanada to CA 10.29¢ per liter. - Normalized operating, selling, general and administrative expenses declined by 0.3% as rigorous cost control compensated for the additional COVID-19 related expenses.
- The Corporation's cash position is stronger than ever, with access to approximately
$5.8 billion through its available cash and revolving unsecured operating credit facility. Its leverage ratio2 stood at 1.26 : 1, on a pro forma basis. - Return on capital employed2 stood at 16.4%, on a pro forma basis.
LAVAL, QC,
"We had an exceptional first quarter, both financially and operationally, as we have seen an increase in shopping occasions and solid execution by our teams to take advantage of the changing consumer behaviors, this led to very strong same-store merchandise sales of 7.7% in the
"This quarter, we pushed forward our Fresh Food, Fast program in the
____________________________ | |
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. |
2 | Please refer to the section "Summary Analysis of Consolidated Results for the First Quarter of Fiscal 2021" of this press release for additional information on these performance measures not defined by IFRS. |
Significant Items of the First Quarter of Fiscal 2021
- Due to the ongoing restrictive social measures across the various geographies in which we operate, the COVID-19 pandemic has had a meaningful impact on our financial results, mostly driven by declining traffic throughout our network. The impact of lower traffic on the merchandise sales was however more than offset by an increase in the average basket size as consumers consolidated their purchases. From a fuel perspective, volumes generally improved throughout the quarter following the gradual pickup in overall economic activity and fuel margins remained healthy. Lastly, from an operating expense perspective, we have continued to invest in the health and safety of our employees and customers and have successfully gained the trust of our communities which recognize us as a safe shopping destination. These additional costs were fully offset by initiatives implemented across our network to reduce our controllable expenses.
- During the first quarter of fiscal 2021, we fully repaid the outstanding balance of
$1.5 billion borrowed on our operating credit D with available cash. OnAugust 21, 2020 , subsequent to the end of the first quarter of fiscal 2021, we fully repaid, at maturity, our CA$300.0 million ($227.1 million ) Canadian-dollar-denominated senior unsecured notes issued onAugust 21, 2013 . - On
April 28, 2020 , we invested an additional amount of CA$2.5 million ($1.8 million ) in Fire & Flower Holdings Corp. ("Fire & Flower"), which consisted of secured convertible debentures as well as common share purchase warrants. OnJuly 23, 2020 , subsequent to the end of the first quarter of fiscal 2021, amendments to our investments in Fire & Flower were announced, which mainly aimed at modifying the maturity and expiry dates of the financial instruments, as well as their respective conversion and exercise price to a lower strike price or to a market-based price. A commitment to exercise a portion of the common share purchase warrants, for an amount of CA$19.0 million , no later thanDecember 31, 2020 , would take effect on the same date as the amendments become effective. As atSeptember 1, 2020 , these amendments are still subject to customary conditions precedent and regulatory approvals.
Changes in our Network
- During the first quarter of fiscal 2021, we closed the fifth transaction of the
December 2018 asset exchange agreement with CrossAmerica Partners LP ("CAPL"). In this fifth transaction, we transferred 29 Circle KU.S. stores for a total value of approximately$32.0 million . In exchange, CAPL transferred the real estate for 13 properties of an equivalent value. The remaining assets of this agreement are expected to be exchanged in the second half of calendar 2020. - During the first quarter of fiscal 2021, we acquired one company-operated store.
- During the first quarter of fiscal 2021, we completed the construction of 16 stores and the relocation or reconstruction of 8 stores. As of
July 19, 2020 , another 23 stores were under construction and should open in the upcoming quarters. - On
August 24, 2020 , subsequent to the end of the first quarter of fiscal 2021, we acquired 10 company-operated stores fromWadsworth Oil Company of Clanton, Inc. , all located inAlabama , withinthe United States . We settled this transaction using our available cash and existing credit facilities.
Summary of changes in our store network during the first quarter of fiscal 2021
The following table presents certain information regarding changes in our store network over the 12-week period ended
12-week period ended | ||||||||||
Type of site | Company- | CODO | DODO | Franchised and | Total | |||||
Number of sites, beginning of period | 9,691 | 453 | 689 | 1,291 | 12,124 | |||||
Acquisitions | 1 | — | — | 1 | 2 | |||||
Openings / constructions / additions | 16 | — | 7 | 13 | 36 | |||||
Closures / disposals / withdrawals | (56) | (30) | (26) | (62) | (174) | |||||
Store conversion | (5) | 12 | (8) | 1 | — | |||||
Number of sites, end of period | 9,647 | 435 | 662 | 1,244 | 11,988 | |||||
2,335 | ||||||||||
Total network | 14,323 | |||||||||
Number of automated fuel stations included in the period-end | ||||||||||
figures | 983 | — | 10 | — | 993 |
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:
12-week periods ended | |||
Average for period | |||
Canadian dollar | 0.7289 | 0.7517 | |
Norwegian krone | 0.1027 | 0.1155 | |
Swedish krone | 0.1057 | 0.1055 | |
Danish krone | 0.1492 | 0.1505 | |
Zloty | 0.2481 | 0.2629 | |
Euro | 1.1124 | 1.1239 | |
Ruble | 0.0141 | 0.0156 | |
Summary Analysis of Consolidated Results for the First Quarter of Fiscal 2021
The following table highlights certain information regarding our operations for the 12-week periods ended
12-week periods ended | ||||||
(in millions of US dollars, unless otherwise stated) |
|
| Variation % | |||
Statement of Operations Data: | ||||||
Merchandise and service revenues(1): | ||||||
2,851.4 | 2,657.8 | 7.3 | ||||
343.2 | 353.1 | (2.8) | ||||
663.2 | 575.6 | 15.2 | ||||
CAPL | — | 19.8 | (100.0) | |||
Elimination of intercompany transactions with CAPL | — | (0.5) | (100.0) | |||
Total merchandise and service revenues | 3,857.8 | 3,605.8 | 7.0 | |||
Road transportation fuel revenues: | ||||||
3,906.0 | 6,801.5 | (42.6) | ||||
1,182.4 | 1,919.8 | (38.4) | ||||
677.0 | 1,201.4 | (43.6) | ||||
CAPL | — | 567.4 | (100.0) | |||
Elimination of intercompany transactions with CAPL | — | (121.4) | (100.0) | |||
Total road transportation fuel revenues | 5,765.4 | 10,368.7 | (44.4) | |||
Other revenues(2): | ||||||
7.5 | 6.9 | 8.7 | ||||
75.2 | 155.1 | (51.5) | ||||
3.9 | 4.8 | (18.8) | ||||
CAPL | — | 25.8 | (100.0) | |||
Elimination of intercompany transactions with CAPL | — | (4.1) | (100.0) | |||
Total other revenues | 86.6 | 188.5 | (54.1) | |||
Total revenues | 9,709.8 | 14,163.0 | (31.4) | |||
Merchandise and service gross profit(1): | ||||||
988.3 | 904.9 | 9.2 | ||||
139.2 | 146.5 | (5.0) | ||||
210.5 | 189.5 | 11.1 | ||||
CAPL | — | 4.6 | (100.0) | |||
Elimination of intercompany transactions with CAPL | — | (0.5) | (100.0) | |||
Total merchandise and service gross profit | 1,338.0 | 1,245.0 | 7.5 | |||
Road transportation fuel gross profit: | ||||||
812.5 | 672.5 | 20.8 | ||||
236.5 | 222.2 | 6.4 | ||||
81.7 | 81.5 | 0.2 | ||||
CAPL | — | 23.1 | (100.0) | |||
Total road transportation fuel gross profit | 1,130.7 | 999.3 | 13.1 | |||
Other revenues gross profit(2): | ||||||
7.5 | 6.9 | 8.7 | ||||
30.9 | 31.3 | (1.3) | ||||
3.9 | 4.8 | (18.8) | ||||
CAPL | — | 25.8 | (100.0) | |||
Elimination of intercompany transactions with CAPL | — | (4.1) | (100.0) | |||
Total other revenues gross profit | 42.3 | 64.7 | (34.6) | |||
Total gross profit | 2,511.0 | 2,309.0 | 8.7 | |||
Operating, selling, administrative and general expenses | ||||||
Excluding CAPL | 1,171.0 | 1,224.3 | (4.4) | |||
CAPL | — | 20.2 | (100.0) | |||
Elimination of intercompany transactions with CAPL | — | (4.4) | (100.0) | |||
Total Operating, selling, administrative and general expenses | 1,171.0 | 1,240.1 | (5.6) | |||
(Gain) loss on disposal of property and equipment and other assets | (8.8) | 10.1 | (187.1) | |||
Depreciation, amortization and impairment | ||||||
Excluding CAPL | 289.5 | 284.2 | 1.9 | |||
CAPL | — | 22.9 | (100.0) | |||
Total depreciation, amortization and impairment | 289.5 | 307.1 | (5.7) | |||
Operating income | ||||||
Excluding CAPL | 1,059.3 | 743.0 | 42.6 | |||
CAPL | — | 8.9 | (100.0) | |||
Elimination of intercompany transactions with CAPL | — | (0.2) | (100.0) | |||
Total operating income | 1,059.3 | 751.7 | 40.9 | |||
Net financial expenses | 88.0 | 87.0 | 1.1 | |||
Net earnings including non-controlling interests | 777.1 | 536.0 | 45.0 | |||
Net loss attributable to non-controlling interests | — | 2.8 | (100.0) | |||
Net earnings attributable to shareholders of the Corporation | 777.1 | 538.8 | 44.2 | |||
Per Share Data: | ||||||
Basic net earnings per share (dollars per share) | 0.70 | 0.48 | 45.8 | |||
Diluted net earnings per share (dollars per share) | 0.70 | 0.48 | 45.8 | |||
Adjusted diluted net earnings per share (dollars per share) | 0.71 | 0.48 | 47.9 |
12-week periods ended | ||||||
(in millions of US dollars, unless otherwise stated) |
|
| Variation % | |||
Other Operating Data – excluding CAPL: | ||||||
Merchandise and service gross margin(1): | ||||||
Consolidated | 34.7% | 34.6% | 0.1 | |||
34.7% | 34.0% | 0.7 | ||||
40.6% | 41.5% | (0.9) | ||||
31.7% | 32.9% | (1.2) | ||||
Growth of same-store merchandise revenues(3): | ||||||
7.7% | 2.5% | |||||
3.4% | 0.7% | |||||
19.9% | 0.3% | |||||
Road transportation fuel gross margin: | ||||||
42.99 | 26.86 | 60.1 | ||||
10.51 | 8.44 | 24.5 | ||||
10.29 | 7.40 | 39.1 | ||||
Total volume of road transportation fuel sold: | ||||||
1,950.9 | 2,590.6 | (24.7) | ||||
2,250.5 | 2,633.6 | (14.5) | ||||
1,092.3 | 1,472.6 | (25.8) | ||||
Growth of (decrease in) same-store road transportation fuel volume: | ||||||
(21.2)% | 0.6% | |||||
(12.4)% | (1.6)% | |||||
(25.6)% | 0.4% |
(in millions of US dollars, unless otherwise stated) | Variation $ | |||||
Balance Sheet Data: | ||||||
Total assets | 26,275.7 | 25,679.5 | 596.2 | |||
Interest-bearing debt (5) | 9,178.0 | 10,379.3 | (1,201.3) | |||
Equity | 11,101.6 | 10,066.6 | 1,035.0 | |||
Indebtedness Ratios(6): | ||||||
Net interest-bearing debt/total capitalization(5)(7) | 0.35 : 1 | 0.40 : 1 | ||||
Leverage ratio(8) | 1.26 : 1 | 1.54 : 1 | ||||
Returns(6): | ||||||
Return on equity(9) | 25.3% | 24.8% | ||||
Return on capital employed(10) | 16.4% | 15.0% |
(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 and energy for stationary engines. |
(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) | 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. |
(6) | Until |
(7) | 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. We believe this measure is useful to investors and analysts. |
(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 EBITDA for the last 52 weeks (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. We believe this measure is useful to investors and analysts. |
(9) | 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 for the last 52 weeks 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. We believe this measure is useful to investors and analysts. |
(10) | 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 for the last 52 weeks 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. We believe this measure is useful to investors and analysts. |
Revenues
Our revenues were
Merchandise and service revenues
Total merchandise and service revenues for the first quarter of fiscal 2021 were
Road transportation fuel revenues
Total road transportation fuel revenues for the first quarter of fiscal 2021 were
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 second quarter of the fiscal year ended
Quarter | 2nd | 3rd | 4th | 1st | Weighted | ||
52-week period ended | |||||||
United States (US dollars per gallon) – excluding CAPL | 2.55 | 2.51 | 2.21 | 2.04 | 2.36 | ||
70.86 | 73.92 | 60.95 | 56.89 | 66.83 | |||
105.14 | 103.47 | 88.78 | 86.89 | 97.79 | |||
52-week period ended | |||||||
United States (US dollars per gallon) – excluding CAPL | 2.72 | 2.42 | 2.51 | 2.66 | 2.57 | ||
80.56 | 75.28 | 74.59 | 77.35 | 76.86 | |||
115.22 | 97.59 | 103.45 | 111.16 | 106.23 |
Other revenues
Total other revenues for the first quarter of fiscal 2021 were
Gross profit
Our gross profit was
Merchandise and service gross profit
In the first quarter of fiscal 2021, our merchandise and service gross profit was
Road transportation fuel gross profit
In the first quarter of fiscal 2021, our road transportation fuel gross profit was
The road transportation fuel gross margin of our company-operated stores in
(US cents per gallon) | ||||||
Quarter | 2nd | 3rd | 4th | 1st | Weighted | |
52-week period ended | ||||||
Before deduction of expenses related to electronic payment modes | 28.29 | 27.04 | 46.88 | 42.99 | 34.72 | |
Expenses related to electronic payment modes | 4.63 | 4.54 | 4.97 | 4.88 | 4.72 | |
After deduction of expenses related to electronic payment modes | 23.66 | 22.50 | 41.91 | 38.11 | 30.00 | |
52-week period ended | ||||||
Before deduction of expenses related to electronic payment modes | 21.88 | 29.42 | 18.51 | 26.86 | 24.53 | |
Expenses related to electronic payment modes | 4.55 | 4.31 | 4.40 | 4.70 | 4.48 | |
After deduction of expenses related to electronic payment modes | 17.33 | 25.11 | 14.11 | 22.16 | 20.05 |
Generally, during normal economic cycles, road transportation fuel margins in the United States can be volatile from one quarter to another but have historically trended higher over longer periods. The historical trends for
Other revenues gross profit
In the first quarter of fiscal 2021, other revenues gross profit was
Operating, selling, administrative and general expenses ("expenses")
For the first quarter of fiscal 2021, expenses decreased by 5.6%, compared with the corresponding quarter of fiscal 2020. If we exclude certain items that are not considered indicative of future trends, expenses decreased by 0.3%.
12-week period ended | ||
Total variance, as reported | (5.6%) | |
Adjusted for: | ||
Decrease from lower electronic payment fees, excluding acquisitions | 2.4% | |
Decrease from the disposal of our interests in CAPL | 1.6% | |
Decrease from the net impact of foreign exchange translation | 1.2% | |
Impact from the | 0.6% | |
Acquisition costs recognized to earnings of fiscal 2021 | (0.3%) | |
Increase from incremental expenses related to acquisitions | (0.2%) | |
Remaining variance | (0.3%) |
Decrease in expenses was driven by, amongst other items, cost and labor efficiencies, as well as by various measures enacted to streamline and minimize our controllable expenses. These items were partly offset by COVID-19 related expenses, normal inflation, higher labor costs from minimum wage increases in certain regions and incremental investments in our stores to support our strategic initiatives. COVID-19 related expenses include, but are not limited to, an emergency appreciation pay premium of
Earnings before interest, taxes, depreciation, amortization and impairment (EBITDA) and adjusted EBITDA
During the first quarter of fiscal 2021, 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.
12-week periods ended | ||||
(in millions of US dollars) | ||||
Net earnings including non-controlling interests, as reported | 777.1 | 536.0 | ||
Add: | ||||
Income taxes | 202.7 | 135.3 | ||
Net financial expenses | 88.0 | 87.0 | ||
Depreciation, amortization and impairment | 289.5 | 307.1 | ||
EBITDA | 1,357.3 | 1,065.4 | ||
Adjusted for: | ||||
Acquisition costs | 3.9 | 0.2 | ||
EBITDA attributable to non-controlling interests | — | (24.8) | ||
Adjusted EBITDA | 1,361.2 | 1,040.8 |
Depreciation, amortization and impairment ("depreciation")
For the first quarter of fiscal 2021, our depreciation expense decreased by
Net financial expenses
Net financial expenses for the first quarter of fiscal 2021 were
12-week periods ended | ||||
(in millions of US dollars) | ||||
Net financial expenses, as reported | 88.0 | 87.0 | ||
Adjusted for: | ||||
Net foreign exchange loss | (18.4) | (6.5) | ||
CAPL's financial expenses | — | (11.3) | ||
Net financial expenses excluding items above | 69.6 | 69.2 |
Income taxes
The income tax rate for the first quarter of fiscal 2021 was 20.7% compared with 20.2% for the corresponding quarter of fiscal 2020. The income tax rate for the first quarter of fiscal 2020 includes an income tax expense of
12-week periods ended | ||||
Income tax rate, as reported | 20.7% | 20.2% | ||
Adjusted for: | ||||
Income tax expense following the first tranche of the December 2018 asset exchange agreement with CAPL | — | (0.7)% | ||
Income tax rate excluding the item above | 20.7% | 19.5% |
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 first quarter of fiscal 2021 were
Excluding the items shown in the table below from net earnings of the first quarter of fiscal 2021 and fiscal 2020, adjusted net earnings for the first quarter of fiscal 2021 were approximately
The table below reconciles reported net earnings to adjusted net earnings:
12-week periods ended | ||||
(in millions of US dollars) | ||||
Net earnings attributable to shareholders of the Corporation, as reported | 777.1 | 538.8 | ||
Adjusted for: | ||||
Net foreign exchange loss | 18.4 | 6.5 | ||
Acquisition costs | 3.9 | 0.2 | ||
Income tax expense following the first tranche of the | — | 3.5 | ||
Tax impact of the items above and rounding | (4.4) | (1.0) | ||
Adjusted net earnings attributable to shareholders of the Corporation | 795.0 | 548.0 |
It should be noted that adjusted net earnings and adjusted diluted net earnings are not performance measures defined by IFRS, but we, as well as investors and analysts, consider these measures useful for evaluating the underlying performance of our operations on a comparable basis. Note that our definition of these measures may differ from the one used by other public corporations.
Dividends
During its
Profile
As of
In
In addition, under licensing agreements, close to 2,350 stores are operated under the Circle K banner in 15 other countries and territories (
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