- Net earnings attributable to shareholders of the Corporation ("net earnings") of
$578.6 million ($0.51 per share on a diluted basis) for the second quarter of fiscal 2020 compared with$473.1 million ($0.42 per share on a diluted basis) for the second quarter of fiscal 2019. Excluding certain items for both comparable periods, net earnings for the quarter would have been approximately$571.0 million 1 or$0.51 1 per share on a diluted basis, compared with$0.41 1 per share on a diluted basis for the second quarter of fiscal 2019, an increase of 24.4%. - Total merchandise and service revenues of
$3.5 billion , an increase of 2.3%. Same-store merchandise revenues increased by 3.2% in theU.S. , by 3.3% inEurope and by 2.1% inCanada . - Merchandise and service gross margin decreased in the
U.S. and inCanada by 0.4% and 1.1% to 33.9% and 32.6% respectively, the decrease inCanada is entirely attributable to the conversion of the Esso stores, while it increased by 0.2% inEurope to 41.3%. - Same-store road transportation fuel volume increased by 0.6% in the
U.S. and by 0.2% inCanada , while it decreased by 0.6% inEurope , a sequential improvement versus last quarters. - Road transportation fuel gross margin increased by US 6.41¢ per gallon in the
U.S. to US 28.29¢ per gallon, while it decreased by US 0.41¢ per liter inEurope , to US 8.34¢ per liter, entirely attributable to the impact of the currency translations, and by CA 0.53¢ per liter inCanada , to CA 7.89¢ per liter. - Return on capital employed² at 13.9%, as at
October 13, 2019 , up 1.3%, driven by higher earnings before interests and taxes. - Adjusted leverage ratio² continued to improve and reached 1.86 : 1 as at
October 13, 2019 . Circle K rebranding project continues inNorth America with more than 6,000 stores now displaying the newCircle K global brand.- Share repurchases totaled
$126.5 million during the second quarter of fiscal 2020 and$172.7 million since the inception of the program. - Subsequent to the end of the second quarter of fiscal 2020, on
November 19, 2019 , the Corporation announced the closing of the sale of its interests in CAPL as well as an asset exchange agreement with CAPL under which a portion of itsU.S. wholesale road transportation fuel operations will be exchanged against CAPL's 17.5% limited partnership interest inCST Fuel Supply LP .
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 12-week period ended |
² Please refer to the section "Summary Analysis of Consolidated Results for the Second Quarter and First Half-year of Fiscal 2020" of this press release for additional information on these performance measures not defined by IFRS. These performance measures, for the 52-week period ended |
"We continue to experience steady results in our overall business with strong fuel performance and merchandise sales. We saw solid increases in same-store merchandise revenues across our core geographies, even as we cycled strong numbers last year," said
"In the convenience sector, we are starting to see good traction from the different projects we launched, such as food pilots, our digital upsell platform, and the redesign of our European stores. Customer awareness is growing as our Circle K brand continues to roll out, and we are confident in the positive impact this should have on traffic and loyalty. In the fuel sector, while we experienced some pressure in
Significant Items of the Second Quarter of Fiscal 2020
- The rollout of our Circle K brand in
North America is progressing steadily. As ofOctober 13, 2019 , more than 6,000 stores inNorth America , including 880 stores acquired from CST, now proudly display our new global brand. - On
August 7, 2019 , we invested an amount of CA$26.0 million ($19.5 million ) in Fire & Flower Holdings Corp. ("Fire & Flower"), a leading independent cannabis retailer based inAlberta, Canada . This investment is in the form of unsecured convertible debentures which would result in a 9.9% ownership interest in Fire & Flower upon conversion. We have also been issued Common Share purchase warrants, that, if exercised in accordance with the terms thereof, would subsequently increase our ownership interest in Fire & Flower up to 50.1%. As atOctober 13, 2019 , the unsecured convertible debentures were not converted, and no Common Share purchase warrants were exercised. - On
August 13, 2019 , we repaid, without penalty, the remaining$150.0 million balance of our$300.0 million US-dollar-denominated senior unsecured notes issued onDecember 14, 2017 and maturing onDecember 13, 2019 . OnNovember 1, 2019 , subsequent to the end of the second quarter of fiscal 2020, 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
September 4, 2019 , the Board of Directors approved a two-for-one split of all the Corporation's issued and outstanding Class A multiple-voting shares and Class B subordinate voting shares as atSeptember 20, 2019 . This share split was approved by regulatory authorities and occurred onSeptember 27, 2019 . All share and per-share information in this document has been adjusted retroactively to reflect this share split. - During the second quarter and the first half-year of fiscal 2020, we repurchased 4,132,620 and 5,660,968 Class B subordinate voting shares, respectively. These repurchases were settled for net amounts of
$126.5 million and$172.7 million , respectively.
Changes in our Network
- During the second quarter of fiscal 2020, we completed the construction of 20 stores and the relocation or reconstruction of 7 stores, reaching a total of 48 stores since the beginning of fiscal 2020. As of
October 13, 2019 , another 49 stores were under construction and should open in the upcoming quarters. - During the second quarter of fiscal 2020, we acquired one company-operated store, reaching a total of nine stores since the beginning of fiscal 2020.
- In
September 2019 , we closed the second transaction of the asset exchange agreement with CAPL. In this second transaction, we transferred 56 Circle KU.S. stores for a total value of approximately$50.0 million . In exchange, CAPL transferred the real estate for 19 properties for a total value of approximately$51.0 million . Following the exchange transaction, we performed a re-evaluation of our deferred tax assets and liabilities which generated a net income tax benefit of$0.1 million , of which$0.7 million is attributable to shareholders of the Corporation. For the first half-year of fiscal 2020, the total net income tax expense was$4.4 million , of which$2.8 million are attributable to shareholders of the Corporation. The remaining tranche is expected to be completed by the end of the first quarter of calendar year 2020. - On
October 29, 2019 , subsequent to the end of the second quarter of fiscal 2020, we reached an agreement to acquire 17 stores from a franchise operator. These convenience stores operate under the Holiday banner inSouth Dakota andMinnesota , withinthe United States . The transaction is anticipated to close in the third quarter of fiscal year 2020 and is subject to the standard regulatory approvals and closing conditions. We expect to finance this transaction using our available cash and existing credit facilities. - On
November 19, 2019 , subsequent to the end of the second quarter of fiscal 2020, we announced the closing of the sale of our interest in CAPL, following the outcome of a strategic review. - On
November 19, 2019 , subsequent to the end of the second quarter of fiscal 2020, 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, against CAPL's 17.5% limited partnership interest inCST Fuel Supply LP ("November 2019 asset exchange agreement"). Subject to regulatory approvals, theNovember 2019 asset exchange agreement is expected to be completed by the end of the first quarter of calendar 2020.
Summary of changes in our store network during the second quarter of fiscal 2020
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 | 9,793 | 456 | 1,033 | 1,216 | 12,498 | ||||||
Acquisitions | 1 | - | - | - | 1 | ||||||
Openings / constructions / additions | 20 | 1 | 8 | 87 | 116 | ||||||
Closures / disposals / withdrawals | (24) | (58) | (4) | (6) | (92) | ||||||
Store conversion | (55) | 53 | 2 | - | - | ||||||
Number of sites, end of period | 9,735 | 452 | 1,039 | 1,297 | 12,523 | ||||||
CAPL network | 1,312 | ||||||||||
2,278 | |||||||||||
Total network | 16,113 | ||||||||||
Number of automated fuel stations included in the period-end figures | 982 | - | 12 | - | 994 |
New Accounting Standard Adopted by the Corporation
As of
12-week period ended | ||||||||
(in millions of US dollars) |
Pre – IFRS |
Excluding: Rent under |
Including: |
Other | Total |
Pro forma | Total estimated pro | |
Revenues | 14,702.8 | - | - | 10.0 | 10.0 | 14,712.8 | 5.0 | |
Cost of sales | 12,537.2 | - | - | - | - | 12,537.2 | - | |
Gross profit | 2,165.6 | - | - | 10.0 | 10.0 | 2,175.6 | 5.0 | |
Operating, selling, administrative and general expenses | 1,295.5 | (89.0) | - | 6.0 | (83.0) | 1,212.5 | (83.0) | |
Restructuring costs | 4.8 | - | - | - | - | 4.8 | - | |
Loss on disposal of property and equipment and other assets | 0.5 | - | - | - | - | 0.5 | - | |
Depreciation, amortization and impairment | 222.5 | (4.0) | 90.0 | - | 86.0 | 308.5 | 83.0 | |
Total operating expenses | 1,523.3 | (93.0) | 90.0 | 6.0 | 3.0 | 1,526.3 | - | |
Operating income | 642.3 | 93.0 | (90.0) | 4.0 | 7.0 | 649.3 | 5.0 | |
Share of earnings of joint ventures and associated companies | 5.4 | - | - | - | - | 5.4 | - | |
EBITDA | 870.2 | 89.0 | - | 4.0 | 93.0 | 963.2 | 88.0 | |
Financial expenses | 80.6 | (5.0) | 21.0 | - | 16.0 | 96.6 | 14.0 | |
Financial revenues | (3.2) | - | - | - | - | (3.2) | - | |
Foreign exchange gain | (3.7) | - | - | - | - | (3.7) | - | |
Net financial expenses | 73.7 | (5.0) | 21.0 | - | 16.0 | 89.7 | 14.0 | |
Earnings before income taxes | 574.0 | 98.0 | (111.0) | 4.0 | (9.0) | 565.0 | (9.0) | |
Income taxes | 97.0 | 25.0 | (28.0) | 1.0 | (2.0) | 95.0 | (2.0) | |
Net earnings including non-controlling interests | 477.0 | 73.0 | (83.0) | 3.0 | (7.0) | 470.0 | (7.0) | |
Net loss attributable to non-controlling interests | (3.9) | (1.0) | 5.0 | (4.0) | - | (3.9) | - | |
Net earnings attributable to shareholders of the Corporation | 473.1 | 72.0 | (78.0) | (1.0) | (7.0) | 466.1 | (7.0) | |
24-week period ended | ||||||||
(in millions of US dollars) |
Pre – IFRS |
Excluding: Rent under |
Including: |
Other | Total |
Pro forma | Total estimated pro | |
Revenues | 29,489.3 | - | - | 19.0 | 19.0 | 29,508.3 | 8.0 | |
Cost of sales | 25,106.6 | - | - | - | - | 25,106.6 | - | |
Gross profit | 4,382.7 | - | - | 19.0 | 19.0 | 4,401.7 | 8.0 | |
Operating, selling, administrative and general expenses | 2,608.0 | (177.0) | - | 12.0 | (165.0) | 2,443.0 | (165.0) | |
Restructuring costs | 6.3 | - | - | - | - | 6.3 | - | |
Gain on disposal of property and equipment and other assets | 0.7 | - | - | - | - | 0.7 | - | |
Depreciation, amortization and impairment | 524.0 | (8.0) | 180.0 | - | 172.0 | 696.0 | 164.0 | |
Total operating expenses | 3,139.0 | (185.0) | 180.0 | 12.0 | 7.0 | 3,146.0 | (1.0) | |
Operating income | 1,243.7 | 185.0 | (180.0) | 7.0 | 12.0 | 1,255.7 | 9.0 | |
Share of earnings of joint ventures and associated companies | 12.5 | - | - | - | - | 12.5 | - | |
EBITDA | 1,780.2 | 177.0 | - | 7.0 | 184.0 | 1,964.2 | 173.0 | |
Financial expenses | 160.0 | (10.0) | 42.0 | - | 32.0 | 192.0 | 28.0 | |
Financial revenues | (5.9) | - | - | - | - | (5.9) | - | |
Foreign exchange gain | (2.7) | - | - | - | - | (2.7) | - | |
Net financial expenses | 151.4 | (10.0) | 42.0 | - | 32.0 | 183.4 | 28.0 | |
Earnings before income taxes | 1,104.8 | 195.0 | (222.0) | 7.0 | (20.0) | 1,084.8 | (19.0) | |
Income taxes | 185.2 | 50.0 | (56.0) | 2.0 | (4.0) | 181.2 | (4.0) | |
Net earnings including non-controlling interests | 919.6 | 145.0 | (166.0) | 5.0 | (16.0) | 903.6 | (15.0) | |
Net loss attributable to non-controlling interests | 9.1 | (1.0) | 10.0 | (8.0) | 1.0 | 10.1 | - | |
Net earnings attributable to shareholders of the Corporation | 928.7 | 144.0 | (156.0) | (3.0) | (15.0) | 913.7 | (15.0) |
(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:
12-week periods ended | 24-week periods ended | ||||
Average for period | |||||
Canadian dollar | 0.7547 | 0.7675 | 0.7531 | 0.7674 | |
Norwegian krone | 0.1115 | 0.1210 | 0.1134 | 0.1222 | |
Swedish krone | 0.1032 | 0.1112 | 0.1044 | 0.1125 | |
Danish krone | 0.1482 | 0.1555 | 0.1494 | 0.1565 | |
Zloty | 0.2551 | 0.2701 | 0.2589 | 0.2713 | |
Euro | 1.1063 | 1.1598 | 1.1150 | 1.1665 | |
Ruble | 0.0154 | 0.0151 | 0.0155 | 0.0155 | |
Summary Analysis of Consolidated Results for the Second Quarter and First Half‑year of Fiscal 2020
The following table highlights certain information regarding our operations for the 12 and 24-week periods ended
12-week periods ended | 24-week periods ended | ||||||
(in millions of US dollars, unless otherwise stated) | 2019 | 2018 | Variation % | 2019 | 2018 | Variation % | |
Statement of Operations Data: | |||||||
Merchandise and service revenues(1): | |||||||
2,629.8 | 2,569.4 | 2.4 | 5,287.6 | 5,178.5 | 2.1 | ||
331.3 | 340.5 | (2.7) | 684.4 | 709.2 | (3.5) | ||
568.4 | 524.2 | 8.4 | 1,144.0 | 1,068.6 | 7.1 | ||
CAPL | 9.8 | 27.4 | (64.2) | 29.6 | 53.7 | (44.9) | |
Elimination of intercompany transactions with CAPL | (0.3) | (0.8) | (62.5) | (0.8) | (1.5) | (46.7) | |
Total merchandise and service revenues | 3,539.0 | 3,460.7 | 2.3 | 7,144.8 | 7,008.5 | 1.9 | |
Road transportation fuel revenues: | |||||||
6,519.0 | 7,068.8 | (7.8) | 13,320.5 | 14,228.3 | (6.4) | ||
1,876.5 | 2,071.5 | (9.4) | 3,796.3 | 4,024.0 | (5.7) | ||
1,130.8 | 1,255.5 | (9.9) | 2,332.2 | 2,547.3 | (8.4) | ||
CAPL | 530.1 | 630.4 | (15.9) | 1,097.5 | 1,264.1 | (13.2) | |
Elimination of intercompany transactions with CAPL | (116.1) | (130.9) | (11.3) | (237.5) | (271.2) | (12.4) | |
Total road transportation fuel revenues | 9,940.3 | 10,895.3 | (8.8) | 20,309.0 | 21,792.5 | (6.8) | |
Other revenues(2): | |||||||
8.1 | 5.1 | 58.8 | 15.0 | 10.5 | 42.9 | ||
161.8 | 324.7 | (50.2) | 316.9 | 643.7 | (50.8) | ||
5.3 | 6.2 | (14.5) | 10.1 | 12.4 | (18.5) | ||
CAPL | 27.0 | 15.2 | 77.6 | 52.8 | 30.4 | 73.7 | |
Elimination of intercompany transactions with CAPL | (3.5) | (4.4) | (20.5) | (7.6) | (8.7) | (12.6) | |
Total other revenues | 198.7 | 346.8 | (42.7) | 387.2 | 688.3 | (43.7) | |
Total revenues | 13,678.0 | 14,702.8 | (7.0) | 27,841.0 | 29,489.3 | (5.6) | |
Merchandise and service gross profit(1): | |||||||
891.8 | 880.1 | 1.3 | 1,796.7 | 1,754.9 | 2.4 | ||
136.9 | 139.8 | (2.1) | 283.4 | 296.1 | (4.3) | ||
185.1 | 176.8 | 4.7 | 374.6 | 364.7 | 2.7 | ||
CAPL | 2.2 | 6.6 | (66.7) | 6.8 | 13.0 | (47.7) | |
Elimination of intercompany transactions with CAPL | (0.3) | (0.7) | (57.1) | (0.8) | (1.3) | (38.5) | |
Total merchandise and service gross profit | 1,215.7 | 1,202.6 | 1.1 | 2,460.7 | 2,427.4 | 1.4 | |
Road transportation fuel gross profit: | |||||||
698.4 | 547.0 | 27.7 | 1,370.9 | 1,107.0 | 23.8 | ||
226.2 | 235.9 | (4.1) | 448.4 | 482.4 | (7.0) | ||
86.4 | 93.8 | (7.9) | 167.9 | 193.8 | (13.4) | ||
CAPL | 23.9 | 26.6 | (10.2) | 47.0 | 53.2 | (11.7) | |
Total road transportation fuel gross profit | 1,034.9 | 903.3 | 14.6 | 2,034.2 | 1,836.4 | 10.8 | |
Other revenues gross profit(2): | |||||||
8.1 | 5.2 | 55.8 | 15.0 | 10.5 | 42.9 | ||
31.9 | 37.5 | (14.9) | 63.2 | 74.3 | (14.9) | ||
5.2 | 6.2 | (16.1) | 10.0 | 12.4 | (19.4) | ||
CAPL | 27.0 | 15.2 | 77.6 | 52.8 | 30.4 | 73.7 | |
Elimination of intercompany transactions with CAPL | (3.5) | (4.4) | (20.5) | (7.6) | (8.7) | (12.6) | |
Total other revenues gross profit | 68.7 | 59.7 | 15.1 | 133.4 | 118.9 | 12.2 | |
Total gross profit | 2,319.3 | 2,165.6 | 7.1 | 4,628.3 | 4,382.7 | 5.6 | |
Operating, selling, administrative and general expenses | |||||||
Excluding CAPL | 1,212.9 | 1,284.6 | (5.6) | 2,437.2 | 2,579.3 | (5.5) | |
CAPL | 18.3 | 15.8 | 15.8 | 38.5 | 38.4 | 0.3 | |
Elimination of intercompany transactions with CAPL | (3.7) | (4.9) | (24.5) | (8.1) | (9.7) | (16.5) | |
Total Operating, selling, administrative and general expenses | 1,227.5 | 1,295.5 | (5.2) | 2,467.6 | 2,608.0 | (5.4) | |
Restructuring costs | 1.9 | 4.8 | (60.4) | 1.9 | 6.3 | (69.8) | |
Loss on disposal of property and equipment and other assets | 1.0 | 0.5 | 100.0 | 11.1 | 0.7 | 1,485.7 | |
Depreciation, amortization and impairment | |||||||
Excluding CAPL | 292.9 | 204.3 | 43.4 | 577.1 | 417.5 | 38.2 | |
CAPL | 23.3 | 18.2 | 28.0 | 46.2 | 106.5 | (56.6) | |
Total depreciation, amortization and impairment | 316.2 | 222.5 | 42.1 | 623.3 | 524.0 | 19.0 | |
Operating income | |||||||
Excluding CAPL | 763.0 | 628.2 | 21.5 | 1,506.0 | 1,244.5 | 21.0 | |
CAPL | 9.8 | 14.3 | (31.5) | 18.7 | (0.5) | (3,840.0) | |
Elimination of intercompany transactions with CAPL | (0.1) | (0.2) | (50.0) | (0.3) | (0.3) | - | |
Total operating income | 772.7 | 642.3 | 20.3 | 1,524.4 | 1,243.7 | 22.6 | |
Net financial expenses | 60.1 | 73.7 | (18.5) | 147.1 | 151.4 | (2.8) | |
Net earnings including non-controlling interests | 579.4 | 477.0 | 21.5 | 1,115.4 | 919.6 | 21.3 | |
Net (earnings) loss attributable to non-controlling interests | (0.8) | (3.9) | (79.5) | 2.0 | 9.1 | (78.0) | |
Net earnings attributable to shareholders of the Corporation | 578.6 | 473.1 | 22.3 | 1,117.4 | 928.7 | 20.3 | |
Per Share Data: | |||||||
Basic net earnings per share (dollars per share) | 0.51 | 0.42 | 21.4 | 0.99 | 0.82 | 20.7 | |
Diluted net earnings per share (dollars per share) | 0.51 | 0.42 | 21.4 | 0.99 | 0.82 | 20.7 | |
Adjusted diluted net earnings per share (dollars per share)(13) | 0.51 | 0.41 | 24.4 | 0.99 | 0.85 | 16.5 | |
12-week periods ended | 24-week periods ended | ||||||
(in millions of US dollars, unless otherwise stated) | 2019 | 2018 | Variation % | 2019 | 2018 | Variation % | |
Other Operating Data – excluding CAPL: | |||||||
Merchandise and service gross margin(1): | |||||||
Consolidated | 34.4% | 34.8% | (0.4) | 34.5% | 34.7% | (0.2) | |
33.9% | 34.3% | (0.4) | 34.0% | 33.9% | 0.1 | ||
41.3% | 41.1% | 0.2 | 41.4% | 41.8% | (0.4) | ||
32.6% | 33.7% | (1.1) | 32.7% | 34.1% | (1.4) | ||
Growth of same-store merchandise revenues(3): | |||||||
3.2% | 4.4% | (1.2) | 2.9% | 4.3% | (1.4) | ||
3.3% | 4.6% | (1.3) | 2.0% | 6.0% | (4.0) | ||
2.1% | 5.1% | (3.0) | 1.2% | 5.9% | (4.7) | ||
Road transportation fuel gross margin: | |||||||
28.29 | 21.88 | 29.3 | 27.57 | 22.29 | 23.7 | ||
8.34 | 8.75 | (4.7) | 8.39 | 8.98 | (6.6) | ||
7.89 | 8.42 | (6.3) | 7.64 | 8.67 | (11.9) | ||
Total volume of road transportation fuel sold: | |||||||
2,601.8 | 2,627.8 | (1.0) | 5,192.4 | 5,202.4 | (0.2) | ||
2,713.2 | 2,696.9 | 0.6 | 5,346.8 | 5,373.3 | (0.5) | ||
1,458.4 | 1,457.8 | - | 2,931.0 | 2,927.0 | 0.1 | ||
Growth of (decrease in) same-store road transportation fuel volume(4): | |||||||
0.6% | 1.2% | (0.6) | 0.6% | 0.9% | (0.3) | ||
(0.6%) | 0.1% | (0.7) | (1.1%) | 0.0% | (1.1) | ||
0.2% | (2.2%) | 2.4 | 0.3% | (2.7%) | 3.0 |
(in millions of US dollars, unless otherwise stated) | Variation $ | |||
Balance Sheet Data(5): | ||||
Total assets (including | 25,248.1 | 25,033.0 | 215.1 | |
Interest-bearing debt (including |
9,175.7 |
9,575.3 |
(399.6) | |
Equity attributable to shareholders of the Corporation | 9,675.2 | 8,913.7 | 761.5 | |
Indebtedness Ratios(7): | ||||
Net interest-bearing debt/total capitalization(6)(8) | 0.43 : 1 | 0.48 : 1 | ||
Leverage ratio(9) | 1.80 : 1 | 2.09 : 1 | ||
Adjusted leverage ratio(10) | 1.86 : 1 | 2.18 : 1 | ||
Returns(7): | ||||
Return on equity(11) | 22.4% | 21.9% | ||
Return on capital employed(12) | 13.9% | 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) | These measures are presented as if our investment in CAPL was reported using the equity method as we believe it allows a more relevant presentation of the underlying performance of the Corporation. |
(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, CAPL's long-term debt is excluded as it is a non-recourse debt to the Corporation, as referenced in footnote 7. This performance measure, for the 52-week period ended |
(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, CAPL's long-term debt is excluded as it is a non-recourse debt to the Corporation, as referenced in footnote 7. This performance measure, for the 52-week period ended |
(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, CAPL's interest bearing debt is excluded as it is a non-recourse debt to the Corporation, as referenced in footnote 7. This performance measure, for the 52-week period ended |
(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 12 and 24-week period ended |
Revenues
Our revenues were
For the first half-year of fiscal 2020, our revenues decreased by
Merchandise and service revenues
Total merchandise and service revenues for the second quarter of fiscal 2020 were
For the first half-year of fiscal 2020, the growth in merchandise and service revenues was
Road transportation fuel revenues
Total road transportation fuel revenues for the second quarter of fiscal 2020 were
For the first half-year of fiscal 2020, the road transportation fuel revenues decreased by
The following table shows the average selling price of road transportation fuel in our various markets, starting with the third quarter of the fiscal year ended
Quarter | 3rd | 4th | 1st | 2nd | Weighted | |
52‑week period ended | ||||||
United States (US dollars per gallon) – excluding CAPL | 2.42 | 2.51 | 2.66 | 2.55 | 2.53 | |
75.28 | 74.59 | 77.35 | 70.86 | 74.55 | ||
97.59 | 103.45 | 111.16 | 105.14 | 103.86 | ||
52-week period ended | ||||||
2.30 | 2.51 | 2.76 | 2.72 | 2.56 | ||
71.19 | 78.32 | 75.07 | 80.56 | 76.03 | ||
108.11 | 110.39 | 117.95 | 115.22 | 112.63 |
Other revenues
Total other revenues for the second quarter and first half-year of fiscal 2020 were
Gross profit
Our gross profit was
For the first half-year of fiscal 2020, our gross profit increased by
Merchandise and service gross profit
In the second quarter of fiscal 2020, our merchandise and service gross profit was
During the first half-year of fiscal 2020, the consolidated merchandise and service gross profit was
Road transportation fuel gross profit
In the second quarter of fiscal 2020, our road transportation fuel gross profit was
During the first half-year of fiscal 2020, the consolidated road transportation fuel gross profit was
The road transportation fuel gross margin of our company-operated stores in
(US cents per gallon) | ||||||
Quarter | 3rd | 4th | 1st | 2nd | Weighted | |
52‑week period ended | ||||||
Before deduction of expenses related to electronic payment modes | 29.42 | 18.51 | 26.86 | 28.29 | 26.00 | |
Expenses related to electronic payment modes(1) | 4.31 | 4.40 | 4.70 | 4.63 | 4.50 | |
After deduction of expenses related to electronic payment modes | 25.11 | 14.11 | 22.16 | 23.66 | 21.50 | |
52‑week period ended | ||||||
Before deduction of expenses related to electronic payment modes | 15.66 | 17.29 | 22.70 | 21.88 | 19.20 | |
Expenses related to electronic payment modes(1) | 4.06 | 3.86 | 4.67 | 4.55 | 4.30 | |
After deduction of expenses related to electronic payment modes | 11.60 | 13.43 | 18.03 | 17.33 | 14.90 |
(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 second quarter and first half-year of fiscal 2020, other revenues gross profit was
Operating, selling, administrative and general expenses ("expenses")
For the second quarter and first half-year of fiscal 2020, expenses decreased by 5.2% and 5.4%, 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 2.7% and 2.5% respectively:
12-week period ended | 24-week period ended | ||
Total variance, as reported | (5.2%) | (5.4%) | |
Adjusted for: | |||
Decrease in rent expense from transition to IFRS 16 | 6.4% | 6.4% | |
Decrease from the net impact of foreign exchange translation | 1.2% | 1.3% | |
Compensatory payment to CAPL for divestiture of assets recognized in fiscal 2019 | 0.5% | 0.2% | |
Disposal of our marine fuel business | 0.2% | 0.1% | |
Increase in CAPL's expenses | (0.2%) | - | |
Increase from higher electronic payment fees, excluding acquisitions | (0.2%) | (0.1%) | |
Remaining variance | 2.7% | 2.5% |
Excluding the conversion of our Esso stores from the agent model to the corporate model, the remaining variance for the second quarter of fiscal 2020 would have been only 2.2%. Growth in expenses was primarily driven by normal inflation, the higher expenses needed to support our organic growth, and higher minimum wages in certain regions. We continue to favor a rigorous control of costs throughout our organization, while ensuring we maintain the quality of service we offer to our customers.
Earnings before interest, taxes, depreciation, amortization and impairment (EBITDA) and adjusted EBITDA
During the second quarter of fiscal 2020, EBITDA increased from
During the first half-year 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.
12-week periods ended | 24-week periods ended | ||||
(in millions of US dollars) | |||||
Net earnings including non-controlling interests, as reported | 579.4 | 477.0 | 1,115.4 | 919.6 | |
Add: | |||||
Income taxes | 139.7 | 97.0 | 275.0 | 185.2 | |
Net financial expenses | 60.1 | 73.7 | 147.1 | 151.4 | |
Depreciation, amortization and impairment | 316.2 | 222.5 | 623.3 | 524.0 | |
EBITDA | 1,095.4 | 870.2 | 2,160.8 | 1,780.2 | |
Adjusted for: | |||||
EBITDA attributable to non-controlling interests | (25.8) | (25.7) | (50.6) | (40.2) | |
Restructuring costs attributable to shareholders of the Corporation | 1.9 | 4.8 | 1.9 | 6.3 | |
Acquisition costs | 0.8 | 0.7 | 1.0 | 1.2 | |
Compensatory payment to CAPL for divestiture of assets, net of non-controlling interests | - | 5.0 | - | 5.0 | |
Adjusted EBITDA, as previously reported | 1,072.3 | 855.0 | 2,113.1 | 1,752.5 | |
Estimated pro forma impact from transition to IFRS 16 attributable to shareholders of the Corporation | - | 88.0 | - | 173.0 | |
Adjusted EBITDA | 1,072.3 | 943.0 | 2,113.1 | 1,925.5 |
Depreciation, amortization and impairment ("depreciation")
For the second quarter and first half-year of fiscal 2020, our depreciation expense increased by
Net financial expenses
Net financial expenses for the second quarter of fiscal 2020 were
Net financial expenses for the first half-year of fiscal 2020 were
12-week periods ended | 24-week periods ended | ||||
(in millions of US dollars) | |||||
Net financial expenses, as reported | 60.1 | 73.7 | 147.1 | 151.4 | |
Adjusted for: | |||||
Net foreign exchange gain | 11.8 | 3.7 | 5.3 | 2.7 | |
CAPL's financial expenses | (9.5) | (7.1) | (20.8) | (14.1) | |
Estimated pro forma impact from transition to IFRS 16 | - | 14.0 | - | 28.0 | |
Net financial expenses excluding items above | 62.4 | 84.3 | 131.6 | 168.0 |
Income taxes
The income tax rate for the second quarter of fiscal 2020 was 19.4% compared with an income tax rate of 16.9% for the second quarter of fiscal 2019. Excluding the items shown in the table below, the income tax rates would have been 19.5% and 18.0%, respectively.
The income tax rate for the first half-year of fiscal 2020 was 19.8% compared with an income tax rate of 16.8% for the first half-year of fiscal 2019. Excluding the items shown in the table below, the income tax rates would have been 19.6% and 17.3%, respectively. The increase for both the second quarter and first half-year is mainly stemming from the impact of a different mix in our earnings across the various jurisdictions in which we operate.
12-week periods ended | 24-week periods ended | ||||
Income tax, as reported | 19.4% | 16.9% | 19.8% | 16.8% | |
Adjusted for: | |||||
Income tax benefit (expense) following the Asset Exchange transactions with CAPL | 0.1% | - | (0.2%) | - | |
Tax benefit stemming from the decrease of the statutory income tax rate in | - | 1.1% | - | 0.5% | |
Net income tax excluding items above | 19.5% | 18.0% | 19.6% | 17.3% |
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 second quarter of fiscal 2020 were
Excluding the items shown in the table below from net earnings of the second quarter of fiscal 2020 and of fiscal 2019, adjusted net earnings for the second quarter of fiscal 2020 would have been approximately
For the first half-year of fiscal 2020, net earnings were
Excluding the items shown in the table below from net earnings of the first half-year of fiscal 2020 and fiscal 2019, net earnings for the first half-year of fiscal 2020 would have been approximately
The table below reconciles reported net earnings to adjusted net earnings:
12-week periods ended | 24-week periods ended | ||||
(in millions of US dollars) | |||||
Net earnings attributable to shareholders of the Corporation, as reported | 578.6 | 473.1 | 1,117.4 | 928.7 | |
Adjusted for: | |||||
Net foreign exchange gain | (11.8) | (3.7) | (5.3) | (2.7) | |
Restructuring costs – attributable to shareholders of the Corporation | 1.9 | 4.8 | 1.9 | 6.3 | |
Acquisition costs | 0.8 | 0.7 | 1.0 | 1.2 | |
Income tax (benefit) expense following the Asset Exchange transactions | (0.7) | - | 2.7 | - | |
Tax benefit stemming from the decrease of the statutory income tax rate in | - | (6.2) | - | (6.2) | |
Compensatory payment to CAPL for divestiture of assets, net of non-controlling interests | - | 5.0 | - | 5.0 | |
Impairment charge on CAPL's goodwill | - | - | - | 55.0 | |
Tax impact of the items above and rounding | 2.2 | (0.7) | 0.3 | (17.3) | |
Adjusted net earnings attributable to shareholders of the Corporation, as previously reported | 571.0 | 473.0 | 1,118.0 | 970.0 | |
Estimated pro forma impact from transition to IFRS 16 | - | (7.0) | - | (15.0) | |
Adjusted net earnings attributable to shareholders of the Corporation | 571.0 | 466.0 | 1,118.0 | 955.0 |
It should be noted that adjusted net earnings are 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
Profile
As of
In
In addition, under licensing agreements, approximately 2,280 stores are operated under the Circle K banner in 16 other countries and territories (
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