Alimentation Couche-Tard maintains its momentum into the second quarter of fiscal year 2019
-- Net earnings attributable to shareholders of the Corporation ("net
earnings") of $473.1 million ($0.84 per share on a diluted basis) for
the second quarter of fiscal 2019 compared with $432.5 million ($0.76
per share on a diluted basis) for the second quarter of fiscal 2018.
Excluding certain items for both comparable periods, net earnings for
the quarter would have been approximately $473.0 million(1) or $0.84(1)
per share on a diluted basis, compared with $0.80(1) per share on a
diluted basis for the second quarter of fiscal 2018, an increase of
5.0%.
-- Total merchandise and service revenues of $3.5 billion, an increase of
11.1%. Same-store merchandise revenues increased by 4.4% in the U.S., by
4.6% in Europe and by 5.1% in Canada.
-- Merchandise and service gross margin increased by 1.1% in the U.S., to
34.3%, while it decreased by 0.9% in Europe and Canada, to 41.1% and
33.7%, respectively.
-- Total road transportation fuel volumes grew by 12.6%. Same-store road
transportation fuel volumes increased by 1.2% in the U.S. and by 0.1% in
Europe, while same-store volumes decreased by 2.2% in Canada.
-- Road transportation fuel gross margin decreased by US 2.82¢ per gallon
in the U.S. to US 21.88¢ per gallon, by US 0.79¢ per liter in Europe,
to US 8.75¢ per liter and by CA 0.22¢ per liter in Canada, to CA
8.42¢ per liter.
-- Current annual synergies run rate related to the CST Brands Inc. ("CST")
integration reached approximately $200.0 million.
-- Adjusted leverage ratio continued to improve and reached 2.79:1, on a
pro-forma basis.
-- Circle K rebranding project continues in North America and Ireland. More
than 4,050 stores in North America and more than 1,800 stores in Europe
now display the new Circle K global brand.
-- Return on equity and return on capital employed at 24.0% and 12.1%,
respectively, on a pro-forma basis.
__________________________________
(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.
LAVAL, QC, Nov. 27, 2018 /PRNewswire/ - For its second quarter ended October 14, 2018, Alimentation Couche-Tard Inc. (TSX: ATD.A) (TSX: ATD.B) announces net earnings attributable to shareholders of the Corporation of $473.1 million, representing $0.84 per share on a diluted basis. The results for the second quarter of fiscal 2019 were affected by a net tax benefit of $6.2 million stemming from the decrease of the statutory income tax rate in Sweden, pre-tax restructuring costs of $4.8 million, a pre-tax net foreign exchange gain of $3.7 million, as well as pre-tax acquisition costs of $0.7 million. The results for the comparable quarter of fiscal 2018 were affected by a pre-tax net foreign exchange loss of $17.3 million, pre-tax incremental expenses caused by hurricanes totaling $4.8 million, a $4.2 million pre-tax accelerated depreciation and amortization expense in connection with the Corporation's global brand initiative, as well as pre-tax acquisition costs of $3.4 million. Excluding these items, the adjusted diluted net earnings per share would have remained at $0.84 for the second quarter of fiscal 2019, compared with $0.80 for the second quarter of fiscal 2018, an increase of 5.0%, driven by organic growth, the contribution from acquisitions, as well as a lower income tax rate, partly offset by lower road transportation fuel margins and the net negative impact from the translation of our Canadian and European operations into US dollars. All financial information is in US dollars unless stated otherwise.
"We had strong performance this quarter across the entire network. In particular, I am pleased with year-over-year same-store merchandise revenues. In the U.S., where we had a 4.4% increase, we also improved our underlying margins," stated Brian Hannasch, President and CEO of Alimentation Couche-Tard. "We are also pleased with the improvement in year-over-year same-store sales results in Canada and in Europe driven by new promotions and the continued success of our food programs in many areas. Overall, we feel good about the momentum we are seeing in our stores as we continue our network-wide push of promotional and marketing programs."
Brian Hannasch continued: "While U.S. fuel margins were strong this quarter, they were markedly lower compared to the prior year quarter, which was impacted by volatility caused by the hurricanes in Texas and Florida last year. In Canada, we improved the trend in same-store transportation fuel volumes compared to the first quarter of fiscal 2019 as the new loyalty program was introduced at the Esso locations and continues to gain traction."
"Great work continues to be done at the CST and Holiday sites. The rebranding of several hundred former CST stores to Circle K contributed to the overall positive same-store merchandise results this quarter. Hundreds more CST sites are scheduled for rebranding by the end of the fiscal year, and we are seeing good customer acceptance at these locations. From the Holiday network, we are beginning to track the added value of the food pilots in other business units," concluded Brian Hannasch.
Claude Tessier, Chief Financial Officer stated: "This was once again an impressive quarter in terms of cash-flow generation and continuation of our deleveraging plan. After only 15 months, we are very close to hitting our 3-year synergy expectations related to the CST acquisition. We also efficiently managed inflationary pressure from both wages and other costs while keeping our operating expenses under control. This is due to our strict financial discipline as we continue our strategic growth trajectory and increasing value for our shareholders."
Significant Items of the Second Quarter of Fiscal 2019
-- As at October 14, 2018, our annual synergies run rate for the CST
acquisition reached approximately $200.0 million. These synergies should
result in reductions in operating, selling, administrative and general
expenses, as well as improvements in road transportation fuel and
merchandise distribution and supply costs. We expect that we will reach
our synergy target of $215.0 million(1).
-- The rollout of the Circle K brand in North America and Ireland is
progressing steadily. As of October 14, 2018, more than 4,050 stores in
North America, including more than 300 stores acquired from CST, and
more than 1,800 stores in Europe are now proudly displaying our new
global brand.
-- During the quarter, we recorded a net tax benefit of $6.2 million,
derived from the evaluation of our deferred income tax balances
following the decrease of the statutory income tax rate in Sweden, which
will decrease from 22.0% to 20.6% over the next 2 years.
-- During the quarter, as part of our costs 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 European
operations. As such, an additional restructuring expense of $4.8 million
was recorded during the second quarter of fiscal 2019.
-- In connection with divestiture of certain assets, we have paid a
compensatory amount of $6.3 million to CAPL. This compensatory payment
was recorded in our operating expenses and was eliminated upon
consolidation.
-- During the quarter, we finalized our estimates of the fair value of the
assets acquired, the liabilities assumed and the goodwill for the
Holiday Stationstores, LLC acquisition ("Holiday"). There were no other
changes to the adjusted net earnings previously reported.
________________________________
1 As our previously stated goal is considered a forward looking
statement, we are required, pursuant to securities laws, to
clarify that our synergies estimate is based on a number of
important factors and assumptions. Among other things, our
synergies objective is based on our comparative analysis of
organizational structures and current level of spending across our
network as well as on our ability to bridge the gap, where
relevant. Our synergies objective is also based on our assessment
of current contracts in North America and how we expect to be able
to renegotiate these contracts to take advantage of our increased
purchasing power. In addition, our synergies objective assumes
that we will be able to establish and maintain an effective
process for sharing best practices across our network. Finally,
our objective is also based on our ability to integrate CST's
system with ours. An important change in these facts and
assumptions could significantly impact our synergies estimate as
well as the timing of the implementation of our different
initiatives.
Changes in our Network
-- During the second quarter and first half-year of fiscal 2019, we
acquired two company-operated stores through distinct transactions.
-- During the second quarter of fiscal 2019, we completed the construction,
relocation or reconstruction of 11 stores, reaching a total of 21 stores
since the beginning of the fiscal year. As of October 14, 2018, 34
stores were under construction and should open in the upcoming quarters.
Summary of changes in our store network during the second quarter of fiscal 2019
The following table presents certain information regarding changes in our store network over the 12-week period ended October 14, 2018:
12-week period ended October 14, 2018
Company- Franchised and
Type of site operated CODO DODO other affiliated Total
Number of sites, beginning of
period 9,678 700 1,060 1,263 12,701
Acquisitions 2 2
Openings /constructions /additions 11 1 6 23 41
Closures /disposals /withdrawals (25) (1) (12) (45) (83)
Store conversion 6 (5) (1)
Number of sites, end of period 9,672 695 1,053 1,241 12,661
===
CAPL network 1,291
Circle K branded sites under
licensing agreements 2,042
---
Total network 15,994
---
Number of automated fuel
stations included in the
period-end figures 977 14 991
---
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 United States.
The following table sets forth information about exchange rates based upon closing rates expressed as US dollars per comparative currency unit:
12-week periods 24-week periods
ended ended
October 14, 2018 October 15, 2017 October 14, 2018 October 15, 2017
Average for period
Canadian dollar 0.7675 0.8021 0.7674 0.7766
Norwegian krone 0.1210 0.1268 0.1222 0.1227
Swedish krone 0.1112 0.1239 0.1125 0.1197
Danish krone 0.1555 0.1590 0.1565 0.1548
Zloty 0.2701 0.2769 0.2713 0.2716
Euro 1.1598 1.1828 1.1665 1.1516
Ruble 0.0151 0.0171 0.0155 0.0171
Summary Analysis of Consolidated Results for the Second Quarter and First Half-year of Fiscal 2019
The following table highlights certain information regarding our operations for the 12 and 24-week periods ended October 14, 2018 and October 15, 2017. CAPL refers to CrossAmerica Partners LP.
12-week periods ended 24-week periods ended
(in millions of US
dollars, unless
otherwise stated) October 14,
October 15,
Variation October 14,
October 15,
Variation
2018 2017
% 2018 2017
%
Statement of Operations
Data:
Merchandise and service
revenues(1):
United States 2,569.4 2,240.5 14.7 5,178.5 4,221.6 22.7
Europe 340.5 320.1 6.4 709.2 640.7 10.7
Canada 524.2 526.3 (0.4) 1,068.6 1,003.4 6.5
CAPL 27.4 28.5 (3.9) 53.7 29.5 82.0
Elimination of
intercompany
transactions with CAPL (0.8) 100.0 (1.5) 100.0
Total merchandise and
service revenues 3,460.7 3,115.4 11.1 7,008.5 5,895.2 18.9
Road transportation fuel
revenues:
United States 7,068.8 5,376.2 31.5 14,228.3 9,618.2 47.9
Europe 2,071.5 1,771.7 16.9 4,024.0 3,369.4 19.4
Canada 1,255.5 1,147.7 9.4 2,547.3 2,115.1 20.4
CAPL 630.4 501.1 25.8 1,264.1 516.7 144.6
Elimination of
intercompany
transactions with CAPL (130.9) (43.7) 199.5 (271.2) (46.4) 484.5
Total road
transportation fuel
revenues 10,895.3 8,753.0 24.5 21,792.5 15,573.0 39.9
Other revenues(2):
United States 5.1 4.9 4.1 10.5 8.0 31.3
Europe 324.7 249.0 30.4 643.7 486.5 32.3
Canada 6.2 6.6 (6.1) 12.4 13.0 (4.6)
CAPL 15.2 15.7 (3.2) 30.4 16.4 85.4
Elimination of
intercompany
transactions with CAPL (4.4) (4.0) 10.0 (8.7) (4.3) 102.3
Total other revenues 346.8 272.2 27.4 688.3 519.6 32.5
Total revenues 14,702.8 12,140.6 21.1 29,489.3 21,987.8 34.1
Merchandise and service
gross profit(1):
United States 880.1 742.8 18.5 1,754.9 1,402.2 25.2
Europe 139.8 134.5 3.9 296.1 269.4 9.9
Canada 176.8 181.9 (2.8) 364.7 348.9 4.5
CAPL 6.6 7.0 (5.7) 13.0 7.3 78.1
Elimination of
intercompany
transactions with CAPL (0.7) 100.0 (1.3) 100.0
Total merchandise and
service gross profit 1,202.6 1,066.2 12.8 2,427.4 2,027.8 19.7
Road transportation fuel
gross profit:
United States 547.0 537.9 1.7 1,107.0 940.4 17.7
Europe 235.9 254.0 (7.1) 482.4 493.1 (2.2)
Canada 93.8 100.6 (6.8) 193.8 183.2 5.8
CAPL 26.6 23.2 14.7 53.2 23.9 122.6
Total road
transportation fuel
gross profit 903.3 915.7 (1.4) 1,836.4 1,640.6 11.9
Other revenues gross
profit(2):
United States 5.2 4.9 6.1 10.5 8.0 31.3
Europe 37.5 38.8 (3.4) 74.3 81.0 (8.3)
Canada 6.2 6.4 (3.1) 12.4 13.0 (4.6)
CAPL 15.2 15.7 (3.2) 30.4 16.4 85.4
Elimination of
intercompany
transactions with CAPL (4.4) (4.0) 10.0 (8.7) (4.3) 102.3
Total other revenues
gross profit 59.7 61.8 (3.4) 118.9 114.1 4.2
Total gross profit 2,165.6 2,043.7 6.0 4,382.7 3,782.5 15.9
Operating, selling,
administrative and
general expenses
Excluding CAPL 1,284.6 1,180.4 8.8 2,579.3 2,211.9 16.6
CAPL 15.8 21.0 (24.8) 38.4 21.8 76.1
Elimination of
intercompany
transactions with CAPL (4.9) (3.2) 53.1 (9.7) (4.2) 131.0
Total Operating,
selling, administrative
and general expenses 1,295.5 1,198.2 8.1 2,608.0 2,229.5 17.0
Restructuring costs
(including $5.2 million
for CAPL for the
24-week ended October
15, 2017) 4.8 100.0 6.3 43.2 (85.4)
Loss (gain) on disposal
of property and
equipment and other
assets 0.5 (0.8) (162.5) 0.7 (17.6) 104.0
Depreciation,
amortization and
impairment of property
and equipment,
goodwill, intangible
assets, and other
assets
Excluding CAPL 204.3 191.7 6.6 417.5 361.5 15.5
CAPL 18.2 17.6 3.4 106.5 18.1 488.4
Total depreciation,
amortization and
impairment of property
and equipment,
goodwill, intangible
assets, and other
assets 222.5 209.3 6.3 524.0 379.6 38.0
Operating income
Excluding CAPL 628.2 630.5 (0.4) 1,244.5 1,146.9 8.5
CAPL 14.3 7.3 95.9 (0.5) 1.0 154.4
Elimination of
intercompany
transactions with CAPL (0.2) (0.8) (75.0) (0.3) (0.1) 200.0
Total operating income 642.3 637.0 0.8 1,243.7 1,147.8 8.4
Net earnings including
non-controlling
interests 477.0 433.5 10.0 919.6 793.0 16.0
Net (earnings) loss
attributable to non-
controlling interests (3.9) (1.0) 290.0 9.1 4.2 116.7
Net earnings
attributable to
shareholders of the
Corporation 473.1 432.5 9.4 928.7 797.2 16.5
Per Share Data:
Basic net earnings per
share (dollars per
share) 0.84 0.76 10.5 1.65 1.40 17.9
Diluted net earnings per
share (dollars per
share) 0.84 0.76 10.5 1.64 1.40 17.1
Adjusted diluted net
earnings per share
(dollars per share) 0.84 0.80 5.0 1.72 1.47 17.0
12-week periods ended 24-week periods ended
(in millions of US
dollars, unless
otherwise stated) October 14,
October 15,
Variation October 14,
October 15,
Variation
2018 2017
% 2018 2017
%
Other Operating Data -
excluding CAPL:
Merchandise and service
gross margin(1):
Consolidated 34.8% 34.2% 0.6 34.7% 34.4% 0.3
United States 34.3% 33.2% 1.1 33.9% 33.2% 0.7
Europe 41.1% 42.0% (0.9) 41.8% 42.0% (0.2)
Canada 33.7% 34.6% (0.9) 34.1% 34.8% (0.7)
Growth of (decrease in)
same-store merchandise
revenues(3):
United States(4)(13) 4.4% 0.7% 4.3% 1.0%
Europe 4.6% 1.6% 6.0% 1.5%
Canada(4)(13) 5.1% (1.6%) 5.9% (0.9%)
Road transportation fuel
gross margin:
United States (cents per
gallon)(4) 21.88 24.70 (11.4) 22.29 22.87 (2.5)
Europe (cents per liter) 8.75 9.54 (8.3) 8.98 9.38 (4.3)
Canada (CA cents per
liter)(4) 8.42 8.64 (2.5) 8.67 8.44 2.7
Total volume of road
transportation fuel
sold:
United States (millions
of gallons) 2,627.8 2,178.2 20.6 5,202.4 4,112.6 26.5
Europe (millions of
liters) 2,696.9 2,661.3 1.3 5,373.3 5,325.5 0.9
Canada (millions of
liters) 1,457.8 1,448.9 0.6 2,927.0 2,783.3 5.2
Growth of (decrease in)
same-store road
transportation fuel
volume:
United States(4)(13) 1.2% (0.7%) 0.9% (0.2%)
Europe 0.1% (0.2%) 0.0% (0.3%)
Canada(4)(13) (2.2%) (2.3%) (2.7%) (1.3%)
(in millions of US
dollars, unless
otherwise stated)
October 14, 2018
April 29, 2018(14)
Variation $
Balance Sheet Data:
Total assets (excluding
$1.2 billion and $1.3
billion for CAPL as of
October 14, 2018 and
as of April 29, 2018,
respectively) 21,594.1 21,862.7 (268.6)
Interest-bearing debt
(excluding $540.3
million and $536.8
million for CAPL as of
October 14, 2018 and
as of April
29, 2018,
respectively) 7,359.8 8,369.9 (1,010.1)
Shareholders' equity 8,279.8 7,560.4 719.4
Indebtedness Ratios(5):
Net interest-bearing
debt/total
capitalization(6)
0.45 : 1
0.50 : 1
Leverage ratio(7)(11)
2.09 : 1
2.46 : 1
Adjusted leverage
ratio(8)(11)
2.79 : 1
3.13 : 1
Returns(5):
Return on equity(9)(11) 24.0% 24.8%
Return on capital
employed(10)(12) 12.1% 12.0%
---
(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
stationary energy, marine fuel and
aviation fuel.
(3) Does not include services and other
revenues (as described in
footnotes 1 and 2 above). Growth
in Canada and in Europe is
calculated based on local
currencies.
(4) For company-operated stores only.
(5) 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.
(6) This ratio is presented for
information purposes only and
represents a measure of financial
condition used especially in
financial circles. It represents
the following calculation:
long?term interest-bearing debt,
net of cash and cash equivalents
and temporary investments divided
by the addition of shareholders'
equity and long-term 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 note
5. We believe this ratio is useful
to investors and analysts.
(7) This ratio is presented for
information purposes only and
represents a measure of financial
condition used especially in
financial circles. It represents
the following calculation:
long?term 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
note 5. We believe this ratio 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:
long?term 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 long-term debt is excluded
as it is a non-recourse debt to
the Corporation, as referenced in
note 5. 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 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 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.
(11) As of October 14, 2018, these
ratios are presented for the
52-week period ended October 14,
2018 on a pro forma basis for the
acquisition of Holiday. As of
April 29, 2018, these ratios are
presented for the 52-week period
ended April 29, 2018 on a pro
forma basis for the acquisition of
CST and Holiday. CST's and
Holiday's historical earnings and
balance sheet figures have been
adjusted to make their
presentation in line with our
policies.
(12) As of October 14, 2018 and as of
April 29, 2018, this ratio is
presented for the 52-week period
ended October 14, 2018 and for the
52-week period ended April 29,
2018, respectively, on a pro forma
basis for the acquisition of CST
and Holiday. CST's and Holiday's
historical earnings and balance
sheet figures have been adjusted
to make their presentation in line
with our policies.
(13) Does not include CST stores for the
12 and 24-week period ended
October 15, 2017.
(14) The information as of April 29,
2018, has been adjusted based on
our estimates of the fair value of
the assets acquired, the
liabilities assumed and the
goodwill for the Holiday
acquisition.
Revenues
Our revenues were $14.7 billion for the second quarter of fiscal 2019, up by $2.6 billion, an increase of 21.1% compared with the corresponding quarter of fiscal 2018, mainly attributable to a higher average road transportation fuel selling price, to the contribution from acquisitions and to organic growth, partly offset by the net negative impact from the translation of revenues of our Canadian and European operations into US dollars.
For the first half-year of fiscal 2019, our revenues increased by $7.5 billion or 34.1% compared with the first half-year of fiscal 2018 mainly attributable to similar factors as those of the second quarter.
More specifically, total merchandise and service revenues for the second quarter of fiscal 2019 were $3.5 billion, an increase of $345.3 million compared with the corresponding quarter of fiscal 2018. Excluding CAPL's revenues, as well as the net negative impact from the translation of our Canadian and European operations into US dollars, merchandise and service revenues increased by approximately $390.0 million or 12.6%. This increase is primarily attributable to the contribution from acquisitions, which amounted to approximately $251.0 million, and to organic growth, driven by successful traffic-aimed promotional activities. Same-store merchandise revenues increased by 4.4% in the United States, continuing on the improved trend from the last quarters. Same-store merchandise revenues increased by 4.9% in our CST U.S. stores network, driven by the success of our rebranding activities and improvements made to our offering. In Europe, same-store merchandise revenues increased by 4.6%, thanks to the success of our rebranding activities and the rollout and improvements of our food programs. In Canada, same-store merchandise revenues increased by 5.1%, mainly driven by strong performance of our CST Canada sites which posted same-store merchandise revenues of 13.0% and by higher taxes on cigarettes and other tobacco products.
For the first half-year of fiscal 2019, the growth in merchandise and service revenues was $1.1 billion. Excluding CAPL's revenues as well as the net negative impact from the translation of our Canadian and European operations into US dollars, merchandise and service revenues increased by $1.1 billion or 19.0%. Acquisitions contributed by approximately $835.0 million to this increase. Same-store merchandise revenues grew by 4.3% in the United States, by 6.0% in Europe, and by 5.9% in Canada.
Total road transportation fuel revenues for the second quarter of fiscal 2019 were $10.9 billion, an increase of $2.1 billion compared with the corresponding quarter of fiscal 2018. Excluding CAPL's revenues, as well as the net negative impact from the translation of revenues of our Canadian and European operations into US dollars, road transportation fuel revenues increased by approximately $2.3 billion or 27.3%. This increase was attributable to the impact of a higher average road transportation fuel selling price, which had a positive impact of approximately $1.4 billion and to the contribution from acquisitions, which amounted to approximately $764.0 million. Same?store road transportation fuel volumes in the United States increased by 1.2%, including the nice performance of our CST U.S. network, which posted same-store road transportation fuel volumes growth of 2.1%. In Europe, same?store road transportation fuel volumes increased by 0.1% while in Canada, same?store road transportation fuel volumes decreased by 2.2%, still impacted by the transition to a new loyalty program in our Esso stores as well as by unfavorable weather conditions in the western part of the country.
For the first half-year of fiscal 2019, the growth in road transportation fuel revenues was $6.2 billion. Excluding CAPL's revenues, as well as the net negative impact from the translation of our Canadian and European operations into US dollars, road transportation fuel revenues increased by $5.8 billion or 38.3%. This increase is attributable to the impact of a higher average road transportation fuel selling price, which had a positive impact of approximately $3.1 billion, as well as to the contribution from acquisitions, which amounted to approximately $2.6 billion. Same-store road transportation fuel volumes increased by 0.9% in the United States, remained stable in Europe and decreased by 2.7% in Canada.
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 April 30, 2017:
Weighted
average
Quarter
3rd
4th
1st
2nd
---
52?week period ended
October 14, 2018
---
United States (US dollars per
gallon) - excluding CAPL 2.30 2.51 2.76 2.72 2.56
Europe (US cents per liter) 71.19 78.32 75.07 80.56 76.03
Canada (CA cents per liter) 108.11 110.39 117.95 115.22 112.63
---
53?week period ended
October 15, 2017
---
United States (US dollars per
gallon) - excluding CAPL 2.18 2.25 2.21 2.47 2.28
Europe (US cents per liter) 61.87 62.46 61.39 68.23 63.58
Canada (CA cents per liter) 94.67 97.20 99.81 101.46 98.18
Total other revenues for the second quarter and first half-year of fiscal 2019 were $346.8 million and $688.3 million, respectively, an increase of $74.6 million and $168.7 million compared with the corresponding periods of fiscal 2018. Excluding CAPL's revenues, other revenues increased by $75.5 million and by $159.1 million in the second quarter and first half-year of fiscal 2019, respectively, primarily driven by an increase in other fuel demand and other fuel products average selling price.
Gross profit
Our gross profit was $2.2 billion for the second quarter of fiscal 2019, up by $121.9 million, an increase of 6.0% compared with the corresponding quarter of fiscal 2018, mainly attributable to the contribution from acquisitions and to organic growth, partly offset by lower fuel margins and by the net negative impact from the translation of our Canadian and European operations into US dollars.
In the second quarter of fiscal 2019, our merchandise and service gross profit was $1.2 billion, an increase of $136.4 million compared with the corresponding quarter of fiscal 2018. Excluding CAPL's gross profit, as well as the net negative impact from the translation of our Canadian and European operations into US dollars, merchandise and service gross profit increased by approximately $152.0 million or 14.4%. This increase is attributable to the contribution from acquisitions, which amounted to approximately $85.0 million and to our organic growth. Our gross margin increased by 1.1% in the United States to 34.3%, due to a different product mix and synergies, and decreased by 0.9% in Europe to 41.1%, due to a different geographical mix. In Canada, our gross margin decreased by 0.9% to 33.7%, mainly as a result of changes in our product mix as well as increased taxes on tobacco products.
During the first half-year of fiscal 2019, the consolidated merchandise and service gross profit was $2.4 billion, an increase of $399.6 million compared with the corresponding period of fiscal 2018. Excluding CAPL's gross profit, as well as the net negative impact from the translation of our Canadian and European operations into US dollars, consolidated merchandise and service gross profit increased by $401.0 million or 19.8%. The gross margin was 33.9% in the United States, an increase of 0.7%, it was 41.8% in Europe, a decrease of 0.2%, while in Canada the gross margin was 34.1%, a decrease of 0.7%.
In the second quarter of fiscal 2019, our road transportation fuel gross profit was $903.3 million, a decrease of $12.4 million compared with the corresponding quarter of fiscal 2018. Excluding CAPL's gross profit, as well as the net negative impact from the translation of our Canadian and European operations into US dollars, our second quarter of fiscal 2019 road transportation fuel gross profit increased by approximately $2.1 million or 0.2%. Our road transportation fuel gross margin was 21.88¢ per gallon in the United States, a decrease of 2.82¢ per gallon, compared to the unusual high fuel margin of same quarter last year as a result of volatility caused by the hurricanes in Texas and Florida last year. In Europe, the road transportation fuel gross margin was US 8.75¢ per liter, a decrease of US 0.79¢ per liter, mainly as a result of the net negative impact from the translation of our European operations into US dollars, while in Canada, the road transportation fuel gross margin was CA 8.42¢ per liter, a decrease of CA 0.22¢ per liter.
During the first half-year of fiscal 2019, the consolidated road transportation fuel gross profit was $1.8 billion, an increase of $195.8 million compared with the corresponding period of fiscal 2018. Excluding CAPL's gross profit, as well as the net negative impact from the translation of our Canadian and European operations into US dollars, consolidated road transportation fuel gross profit increased by $173.3 million or 10.7%. The road transportation fuel gross margin was 22.29¢ per gallon in the United States, US 8.98¢ per liter in Europe and CA 8.67¢ per liter in Canada.
The road transportation fuel gross margin of our company-operated stores in the United States and the impact of expenses related to electronic payment modes for the last eight quarters, starting with the third quarter of the fiscal year ended April 30, 2017, were as follows:
(US cents per
gallon)
Weighted
average
Quarter
3rd
4th
1st
2nd
---
52?week period
ended October
14, 2018
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 3.73 3.62 4.21 4.10 3.91
After deduction
of expenses
related to
electronic
payment modes 11.92 13.67 18.49 17.78 15.29
---
53-week period
ended October
15, 2017
Before deduction
of expenses
related to
electronic
payment modes 18.33 15.47 20.75 24.70 20.06
Expenses related
to electronic
payment modes 3.99 4.12 3.79 4.21 4.04
After deduction
of expenses
related to
electronic
payment modes 14.34 11.35 16.96 20.49 16.02
---
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 Europe and Canada.
In the second quarter and first half-year of fiscal 2019, other revenues gross profit was $59.7 million and $118.9 million, respectively, a decrease of $2.1 million and an increase of $4.8 million compared with the corresponding periods of fiscal 2018, respectively. Excluding CAPL's gross profit, other revenues gross profit decreased by $1.2 million and $4.8 million in the second quarter and first half-year of fiscal 2019, respectively.
Operating, selling, administrative and general expenses ("expenses")
For the second quarter and first half-year of fiscal 2019, expenses increased by 8.1% and 17.0%, respectively, compared with the corresponding periods of fiscal 2018, but increased by only 2.5% and 3.1%, respectively, if we exclude certain items as demonstrated by the following table:
12-week period ended
24-week period ended
October 14, 2018
October 14, 2018
Total variance, as reported 8.1% 17.0%
---
Adjusted for:
Increase from incremental expenses
related to acquisitions (6.6%) (12.1%)
Decrease from the net impact of
foreign exchange translation 1.4% 0.2%
Increase from higher electronic
payment fees, excluding
acquisitions (0.9%) (1.5%)
Acquisition costs recognized to
earnings of fiscal 2018 0.7% 0.5%
Compensatory payment to CAPL for
divestiture of assets (0.5%) (0.3%)
Acquisition costs recognized to
earnings of fiscal 2019 (0.1%)
Decrease (increase) in CAPL's
expenses 0.4% (0.7%)
---
Remaining variance 2.5% 3.1%
===
Growth in expenses was primarily driven by higher minimum wages in certain regions, higher expenses needed to support our organic growth, by the conversion of CODO stores into company-operated stores and by proportionally higher operational expenses in our recently built stores, as these stores generally have a larger footprint and higher sales than the average of our existing network. We continue to rigorously focus on controlling 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 2019, EBITDA increased from $854.6 million to $870.2 million, a growth of 1.8% compared with the same quarter last year. Excluding the specific items shown in the table below from EBITDA of the second quarter of fiscal 2019 and of the corresponding period of fiscal 2018, the adjusted EBITDA for the second quarter of fiscal 2019 increased by $13.3 million or 1.6% compared with the corresponding period of the previous fiscal year, mainly through the contribution from acquisitions and organic growth, partly offset by lower fuel margins and by the net negative impact from the translation of the results of our Canadian and European operations into US dollars. Acquisitions contributed approximately $64.0 million to the adjusted EBITDA of the second quarter of fiscal 2019, while the variation in exchange rates had a net negative impact of approximately $18.0 million.
During the first half-year of fiscal 2019, EBITDA increased from $1,544.3 million to $1,780.2 million, a growth of 15.3% compared with the same period last year. Excluding the specific items shown in the table below from EBITDA of the first half-year of fiscal 2019 and of the first half-year of fiscal 2018, the adjusted EBITDA for the first half-year of fiscal 2019 increased by $195.5 million or 12.6% compared with the corresponding period of the previous fiscal year, mainly through the contribution from acquisitions and organic growth. Acquisitions contributed approximately $207.0 million to the adjusted EBITDA of the first half-year of fiscal 2019, while the variation in exchange rates had a net negative impact of approximately $8.0 million.
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)
October 14, 2018
October 15, 2017
October 14, 2018
October 15, 2017
---
Net earnings including non-
controlling interests, as
reported 477.0 433.5 919.6 793.0
---
Add:
Income taxes 97.0 122.2 185.2 222.9
Net financial expenses 73.7 89.6 151.4 148.8
Depreciation, amortization
and impairment of property
and equipment, goodwill,
intangible assets, and
other assets 222.5 209.3 524.0 379.6
---
EBITDA 870.2 854.6 1,780.2 1,544.3
---
Adjusted for:
EBITDA attributable to non-
controlling interests (25.7) (21.1) (40.2) (16.5)
Compensatory payment to CAPL
for divestiture of assets,
net of non-controlling
interests 5.0 5.0
Restructuring costs
attributable to
shareholders of the
Corporation (including $5.2
million for our interest in
CAPL for the 24-week period
ended October 15, 2017) 4.8 6.3 38.0
Acquisition costs 0.7 3.4 1.2 6.7
Incremental costs related to
hurricanes 4.8 4.8
Gain on disposal of a
terminal (11.5)
Gain on investment in CST (8.8)
---
Adjusted EBITDA 855.0 841.7 1,752.5 1,557.0
===
Depreciation, amortization and impairment of property and equipment, goodwill, intangible assets, and other assets ("depreciation")
For the second quarter and first half-year of fiscal 2019, our depreciation expense increased by $13.2 million and $144.4 million, respectively. Excluding CAPL's results, as well as the $55.0 million impairment charge on CAPL's goodwill recorded in the first quarter of fiscal 2019, the depreciation expense increased by $12.6 million and by $56.0 million for the second quarter and first half-year of fiscal 2019, respectively, mainly driven by the impact from investments made through acquisitions, the replacement of equipment, the addition of new stores and the ongoing improvement of our network.
Net financial expenses
Net financial expenses for the second quarter of fiscal 2019 were $73.7 million, a decrease of $15.9 million compared with the second quarter of fiscal 2018. Excluding the net foreign exchange gain of $3.7 million and the net foreign exchange loss of $17.3 million as well as CAPL's financial expenses of $7.1 million and $6.0 million recorded in the second quarters of fiscal 2019 and fiscal 2018, respectively, net financial expenses increased by $3.9 million. This increase is mainly attributable to our higher average long-term debt in connection with our recent acquisitions, partly offset by the repayments made. The net foreign exchange gain of $3.7 million for the second quarter of fiscal 2019 is mainly due to the impact of foreign exchange variations on certain cash balances and working capital items.
Net financial expenses for the first half-year of fiscal 2019 were $151.4 million, an increase of $2.6 million compared with the first half-year of fiscal 2018. Excluding the net foreign exchange gain of $2.7 million and the net foreign exchange loss of $37.6 million as well as CAPL's financial expenses of $14.1 million and $7.1 million recorded in the first half-years of fiscal 2019 and fiscal 2018, respectively, net financial expenses increased by $35.0 million for similar factors as those of the second quarter. The net foreign exchange gain of $2.7 million for the first half-year of fiscal 2019 is mainly due to the impact of foreign exchange variations on certain cash balances and working capital items.
Income taxes
The income tax rate for the second quarter of fiscal 2019 was 16.9% compared with an income tax rate of 22.0% for the second quarter of fiscal 2018. The income tax rate for the second quarter of fiscal year 2019 includes a net tax benefit of $6.2 million derived from the evaluation of our deferred income tax balances following the decrease of the statutory income tax rate in Sweden. Excluding this adjustment, the income tax rate would have been 18.0%, a decrease compared to the second quarter of fiscal 2018, stemming from a lower statutory income tax rate in the U.S. For the first half-year of fiscal 2019, the income tax rate was 16.8%.
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 2019 were $473.1 million, compared with $432.5 million for the second quarter of the previous fiscal year, an increase of $40.6 million or 9.4%. Diluted net earnings per share stood at $0.84, compared with $0.76 the previous year. The translation of revenues and expenses from our Canadian and European operations into US dollars had a net negative impact of approximately $14.0 million on net earnings of the second quarter of fiscal 2019.
Excluding the items shown in the table below from net earnings of the second quarter of fiscal 2019 and of fiscal 2018, adjusted net earnings for the second quarter of fiscal 2019 would have been approximately $473.0 million, compared with $455.0 million for the second quarter of fiscal 2018, an increase of $18.0 million or 4.0%. Adjusted diluted net earnings per share would have remained at $0.84 for the second quarter of fiscal 2019 compared with $0.80 for the corresponding period of fiscal 2018, an increase of 5.0%.
For the first half-year of fiscal 2019, net earnings were $928.7 million, compared with $797.2 million for the comparable period of fiscal 2018, an increase of $131.5 million or 16.5%. Diluted net earnings per share stood at $1.64, compared with $1.40 the previous year. The translation of revenues and expenses from our Canadian and European operations into US dollars had a net negative impact of approximately $7.0 million on net earnings of the first half-year of fiscal 2019.
Excluding the items shown in the table below from net earnings of the first half-year of fiscal 2019 and fiscal 2018, net earnings for the first half-year of fiscal 2019 would have been approximately $970.0 million, compared with $836.0 million for the comparable period of the previous year, an increase of $134.0 million or 16.0%. Adjusted diluted net earnings per share would have been $1.72 for the first half-year of fiscal 2019, compared with $1.47 for the corresponding period of fiscal 2018, an increase of 17.0%.
The table below reconciles reported net earnings to adjusted net earnings:
12-week periods ended 24-week periods ended
(in millions of US
dollars)
October 14, 2018
October 15, 2017
October 14, 2018
October 15, 2017
---
Net earnings attributable
to shareholders of the
Corporation, as reported 473.1 432.5 928.7 797.2
---
Adjusted for:
Tax benefit stemming from
the decrease of the
statutory income tax
rate in Sweden (6.2) (6.2)
Compensatory payment to
CAPL for divestiture of
assets, net of non-
controlling interests 5.0 5.0
Restructuring costs -
attributable to
shareholders of the
Corporation 4.8 6.3 38.0
Net foreign exchange loss
(gain) (3.7) 17.3 (2.7) 37.6
Acquisition costs 0.7 3.4 1.2 6.7
Impairment charge on
CAPL's goodwill 55.0
Incremental costs related
to hurricanes 4.8 4.8
Tax benefit stemming from
an internal
reorganization (13.4)
Gain on disposal of a
terminal (11.5)
Gain on investment in CST (8.8)
Accelerated depreciation
and amortization expense 4.2 7.9
Tax impact of the items
above and rounding (0.7) (7.2) (17.3) (22.5)
---
Adjusted net earnings
attributable to
shareholders of the
Corporation 473.0 455.0 970.0 836.0
===
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 November 27, 2018 meeting, the Corporation's Board of Directors declared a quarterly dividend of CA 10.0¢ per share for the second quarter of fiscal 2019 to shareholders on record as at December 6, 2018, and approved its payment for December 20, 2018. This is an eligible dividend within the meaning of the Income Tax Act (Canada).
Profile
Couche-Tard is the leader in the Canadian convenience store industry. In the United States, it is the largest independent convenience store operator in terms of the number of company-operated stores. In Europe, Couche-Tard is a leader in convenience store and road transportation fuel retail in the Scandinavian countries (Norway, Sweden and Denmark), in the Baltic countries (Estonia, Latvia and Lithuania), as well as in Ireland and also has an important presence in Poland.
As of October 14, 2018, Couche-Tard's network comprised 9,943 convenience stores throughout North America, including 8,660 stores with road transportation fuel dispensing. Its North American network consists of 19 business units, including 15 in the United States covering 48 states and 4 in Canada covering all 10 provinces. Approximately 105,000 people are employed throughout its network and at its service offices in North America. In addition, through CrossAmerica Partners LP, Couche-Tard supplies road transportation fuel under various brands to approximately 1,300 locations in the United States.
In Europe, Couche-Tard operates a broad retail network across Scandinavia, Ireland, Poland, the Baltics and Russia through ten business units. As of October 14, 2018, Couche-Tard's network comprised 2,718 stores, the majority of which offer road transportation fuel and convenience products while the others are unmanned automated fuel stations which only offer road transportation fuel. Couche-Tard also offers other products, including stationary energy, marine fuel and aviation fuel. Including employees at branded franchise stores, approximately 25,000 people work in its retail network, terminals and service offices across Europe.
In addition, under licensing agreements, more than 2,000 stores are operated under the Circle K banner in 14 other countries and territories (Cambodia, China, Costa Rica, Egypt, Guam, Honduras, Hong Kong, Indonesia, Macau, Mexico, Mongolia, Saudi Arabia, the United Arab Emirates and Vietnam), which brings the worldwide total network to approximately 16,000 stores.
For more information on Alimentation Couche-Tard Inc. or to consult its quarterly Consolidated Financial Statements and Management Discussion and Analysis, please visit: https://corpo.couche?tard.com.
The statements set forth in this press release, which describes Couche-Tard's objectives, projections, estimates, expectations or forecasts, may constitute forward?looking statements within the meaning of securities legislation. Positive or negative verbs such as "believe", "can", "shall", "intend", "expect", "estimate", "assume" and other related expressions are used to identify such statements. Couche-Tard would like to point out that, by their very nature, forward-looking statements involve risks and uncertainties such that its results, or the measures it adopts, could differ materially from those indicated in or underlying these statements, or could have an impact on the degree of realization of a particular projection. Major factors that may lead to a material difference between Couche?Tard's actual results and the projections or expectations set forth in the forward-looking statements include the effects of the integration of acquired businesses and the ability to achieve projected synergies, fluctuations in margins on motor fuel sales, competition in the convenience store and retail motor fuel industries, exchange rate variations, and such other risks as described in detail from time to time in the reports filed by Couche-Tard with securities authorities in Canada and the United States. Unless otherwise required by applicable securities laws, Couche-Tard disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking information in this release is based on information available as of the date of the release.
Webcast on November 28, 2018, at 8:00 A.M. (EST)
Couche-Tard invites analysts known to the Corporation to send their two questions to its management before 7:00 P.M. (EST) on November 27, 2018.
Financial analysts, investors, media and any individuals interested in listening to the webcast on Couche-Tard's results which will take place online on November 28, 2018, at 8:00 A.M. (EST) can do so by either accessing the Corporation's website at https://corpo.couche?tard.com by clicking in the "Investor Relations/Corporate presentations" section or by dialing 1-866-865-3087 or the international number 1-647-427-7450, followed by the access code 4495169#.
Rebroadcast: For individuals who will not be able to listen to the live webcast, a recording of the webcast will be available on the Corporation's website for a period of 90 days.
View original content:http://www.prnewswire.com/news-releases/alimentation-couche-tard-maintains-its-momentum-into-the-second-quarter-of-fiscal-year-2019-300756387.html
SOURCE Alimentation Couche-Tard Inc.
