Alimentation Couche-Tard Announces its Results for its Second Quarter of Fiscal Year 2021
-- Net earnings attributable to shareholders of the Corporation ("net
earnings") were $757.0 million or $0.68 per diluted share for the second
quarter of fiscal 2021 compared with $578.6 million or $0.51 per diluted
share for the second quarter of fiscal 2020. Adjusted net earnings were
approximately $735.0 million(1) compared with $569.0 million(1) for the
second quarter of fiscal 2020. Adjusted net earnings per share on a
diluted basis were $0.66(1), representing an increase of 32.0% from
$0.50(1) for the corresponding quarter of last year.
-- The COVID-19 pandemic continues to have a meaningful impact on the
Corporation's quarterly financial results. Traffic remained soft
throughout its network due to ongoing restrictive social measures and
continued work from home trends across the various geographies in which
it operates. From a merchandise perspective, sales benefited from
consolidation of trips, new shopping options and diversified product
offerings. From a fuel perspective, volumes improved compared to the
prior quarter, particularly in Europe which benefited from favorable
summer weather, but remained challenged by work from home trends and
evolving local restrictions, while fuel margins remained healthy.
-- Total merchandise and service revenues of $3.8 billion, an increase of
6.3%. Same-store merchandise revenues increased 4.4% in the U.S., 8.6%
in Europe, and 11.4% in Canada.
-- Merchandise and service gross margin increased 0.1% in the U.S. to
34.0%, while it decreased 1.1% to 40.2% in Europe, negatively impacted
by product mix, and remained steady in Canada at 32.6%.
-- Same-store road transportation fuel volume decreased 15.5% in the U.S.,
4.5% in Europe, and 11.8% in Canada.
-- Road transportation fuel gross margin increased by 9.19¢ per gallon in
the U.S. to 37.48¢ per gallon, by US 2.76¢ per liter in Europe to US
11.10¢ per liter, and by CA 2.16¢ per liter in Canada to CA 10.05¢
per liter.
-- Normalized operating, selling, administrative and general expenses
declined 0.8% as rigorous cost control more than compensated for the
additional COVID-19 related expenses.
-- Subsequent to the end of the quarter, the Corporation entered into an
agreement to acquire all the issued and outstanding shares of
Convenience Retail Asia (BVI) Limited for approximately $360.0 million.
-- The Corporation's cash position is stronger than ever, with access to
approximately $6.0 billion through its available cash and revolving
unsecured operating credit facility. Its leverage ratio(2) stood at 1.13
: 1, on a pro forma basis.
-- 25.0% increase of the quarterly dividend, from CA 7.00¢ to CA 8.75¢.
-- The Corporation announced the renewal of its share repurchase program
which will allow it to repurchase up to 4.0% of the public float of its
Class B subordinate voting shares.
-- Return on capital employed(2) stood at 17.3%, on a pro forma basis.
LAVAL, QC, Nov. 24, 2020 /PRNewswire/ - For its second quarter ended October 11, 2020, Alimentation Couche-Tard Inc. ("Couche-Tard" or the "Corporation") (TSX: ATD.A) (TSX: ATD.B) announces net earnings attributable to shareholders of the Corporation of $757.0 million, representing $0.68 per share on a diluted basis. The results for the second quarter of fiscal 2021 were affected by a pre-tax gain on disposal of $40.9 million related to the sale of a property located in Toronto, Canada, a pre-tax net foreign exchange loss of $8.9 million, as well as pre-tax acquisition costs of $1.2 million. The results for the comparable quarter of fiscal 2020 were affected by a pre-tax net foreign exchange gain of $11.8 million, pre-tax acquisition costs of $0.8 million, as well as a tax benefit from the second tranche of the December 2018 asset exchange agreement with CAPL, of which $0.7 million was attributable to shareholders of the Corporation. Excluding these items, the adjusted net earnings were approximately $735.0 million(1) or $0.66(1) per share on a diluted basis for the second quarter of fiscal 2021, compared with $569.0 million(1) or $0.50(1) per share on a diluted basis for the second quarter of fiscal 2020, an increase of 32.0% in the adjusted net earnings per share on a diluted basis, driven by strong growth in merchandise and service and in road transportation fuel gross profit, as well as by good cost control. All financial information presented is in US dollars unless stated otherwise.
"Across our global network, we had a strong second quarter, both in our stores and on our forecourts, even with the continuing impact of COVID-19. New customers and associated share gains since the start of the pandemic have continued as consumers take advantage of the convenience and proximity of our locations. This led to solid same-store sales growth of 4.4% in the U.S., 8.6% in Europe, and 11.4% in Canada. In Europe, we also had improvement in fuel volumes with strong B2B performance and favorable weather encouraging consumer travel. Overall, we continued to achieve healthy fuel margins during the quarter bolstered by conversions to the Circle K fuel brand and a continued focus in sourcing and logistics capabilities, which we expect will lead to improvements in the value chain and margins over time," said Brian Hannasch, President and Chief Executive Officer of Alimentation Couche-Tard.
"We continue to be very pleased with developments in our food program, which is the biggest project ever undertaken by the organization. In the U.S., despite COVID-19 and associated supply chain disruptions, we met our target of introducing 1,500 Fresh Food, Fast locations by this fall. Our focus remains on the quality and ease of our fresh food offer, both for our customers and our team members. Stores with Fresh Food, Fast have been performing very well relative to test stores, and we are also customizing the offer to meet the tastes and pricing needs of our local communities. Based on these results, we plan to rollout the program in another 3,000 locations in North America by the end of fiscal year 2022. I am particularly proud that we are meeting our food service deployment goals through the challenges of this year," concluded Brian Hannasch.
Claude Tessier, Chief Financial Officer, said: "Our business continues to show a lot of flexibility and resilience despite the disruptions on shopping and commuting behaviors caused by the pandemic. Once again, we executed well during the second quarter on our cost optimization initiatives including solid labor efficiencies, savings in goods-not-for-resale and strong control on discretionary expenses. Our balance sheet, with $6.0 billion of cash, on hand and available under our credit facility, remains well-positioned to support our global growth ambition. We continue to favor a balanced approach towards capital allocation and have announced the renewal of our share repurchase program representing 4.0% of the public float of our Class B shares to complement our quarterly dividend, for which an increase of 25.0% was approved on November 24, 2020."
___________________________
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.
2 Please refer to the section
"Summary Analysis of
Consolidated Results for the
Second Quarter and First Half-
year of Fiscal 2021" of this
press release for additional
information on these performance
measures not defined by IFRS.
Significant Items of the Second Quarter of Fiscal 2021
-- The COVID-19 pandemic continues to have a meaningful impact on our
quarterly financial results. Traffic remained soft throughout our
network due to ongoing restrictive social measures and continued work
from home trends across the various geographies in which we operate. 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 trips and took advantage of new shopping options and
diversified product offerings. From a fuel perspective, volumes improved
compared to the prior quarter, particularly in Europe which benefited
from favorable summer weather, but remained challenged by work from home
trends and evolving local restrictions, while fuel margins remained
healthy. Lastly, from an operating expense perspective, the initiatives
implemented across our network to reduce our controllable expenses had a
favorable impact while we continued to promote and support the wellness
of our employees and customers.
-- The terms and conditions of our investments in Fire & Flower Holdings
Corp. were amended mainly to modify 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. The
amendments also gave rise to a commitment from Couche-Tard to exercise a
portion of the common share purchase warrants for an amount of CA $19.0
million, no later than December 31, 2020, of which CA $10.3 million
($7.8 million) was exercised during the second quarter.
-- We disposed of a property located in Toronto, Canada, for a cash
consideration of $54.7 million and recognized to earnings a gain on
disposal of $40.9 million.
-- We fully repaid, at maturity, our CA $300.0 million ($227.1 million)
Canadian-dollar-denominated senior unsecured notes issued on August 21,
2013.
-- On November 24, 2020, subsequent to the end of the quarter, the Toronto
Stock Exchange approved the renewal of our share repurchase program
which will allow us to repurchase up to 4.0% of the public float of our
Class B subordinate voting shares.
Changes in our Network during the Second Quarter of Fiscal 2021
-- We closed the sixth and final transaction of the December 2018 asset
exchange agreement with CrossAmerica Partners LP ("CAPL"). In this sixth
transaction, we transferred 24 Circle K U.S. stores for a total value of
approximately $20.0 million. In exchange, CAPL transferred the real
estate for 4 properties of an equivalent value.
-- We acquired 10 company-operated stores from Wadsworth Oil Company of
Clanton, Inc., all located in Alabama, within the United States. We
settled this transaction using our available cash and existing credit
facilities.
-- We acquired one company-operated store, reaching a total of two
single-site acquisitions since the beginning of fiscal year 2021.
-- We completed the construction of 13 stores and the relocation or
reconstruction of 1 store, reaching a total of 38 stores since the
beginning of fiscal year 2021. As of October 11, 2020, another 51 stores
were under construction and should open in the upcoming quarters.
-- On November 5, 2020, subsequent to the end of the quarter, we entered
into an agreement to acquire all the issued and outstanding shares of
Convenience Retail Asia (BVI) Limited ("Circle K HK") for a purchase
price of HK $2.8 billion, or approximately $360.0 million. Circle K HK,
a subsidiary of Convenience Retail Asia Limited, operates a network of
Circle K-licensed convenience stores, with 340 company-operated stores
in Hong Kong and 33 franchised stores in Macau. The transaction is still
subject to Convenience Retail Asia Limited shareholders' approval and we
expect it to close before the end of calendar year 2020.
-- On November 12, 2020, subsequent to the end of the quarter, we acquired
seven company-operated stores from Pride C-Stores Inc., all located in
Indiana, within the United States. We settled this transaction using our
available cash and existing credit facilities.
Summary of changes in our store network
The following table presents certain information regarding changes in our store network over the 12-week period ended October 11, 2020:
12-week period ended October 11, 2020
Type of site Company- CODO DODO
Franchised and Total
operated
other affiliated
Number of sites, beginning of period 9,647 435 662 1,244 11,988
Acquisitions 11 3 14
Openings / constructions / additions 13 1 9 16 39
Closures / disposals / withdrawals (40) (4) (5) (9) (58)
Store conversion 2 (26) 24
---
Number of sites, end of period 9,633 406 690 1,254 11,983
Circle K branded sites under licensing agreements 2,221
---
Total network 14,204
---
Number of automated fuel stations included in the period-end figures 986 9 995
---
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 ended 24-week periods ended
October 11, 2020
October 13, 2019
October 11, 2020
October 13, 2019
Average for period
Canadian dollar 0.7541 0.7547 0.7416 0.7531
Norwegian krone 0.1101 0.1115 0.1064 0.1134
Swedish krone 0.1136 0.1032 0.1097 0.1044
Danish krone 0.1582 0.1482 0.1538 0.1494
Zloty 0.2653 0.2551 0.2568 0.2589
Euro 1.1777 1.1063 1.1453 1.1150
Ruble 0.0134 0.0154 0.0137 0.0155
Summary Analysis of Consolidated Results for the Second Quarter and First Half-year of Fiscal 2021
The following table highlights certain information regarding our operations for the 12 and 24-week periods ended October 11, 2020, and October 13, 2019. CAPL refers to CrossAmerica Partners LP.
12-week periods ended 24-week periods ended
(in millions of US dollars, unless otherwise stated) October 11,
October 13,
Variation October 11,
October 13,
Variation
2020 2019 2020 2019
%
%
Statement of Operations Data:
Merchandise and service revenues(1):
United States 2,736.4 2,629.8 4.1 5,587.8 5,287.6 5.7
Europe 394.6 331.3 19.1 737.8 684.4 7.8
Canada 629.8 568.4 10.8 1,293.0 1,144.0 13.0
CAPL 9.8 (100.0) 29.6 (100.0)
Elimination of intercompany transactions with CAPL (0.3) (100.0) (0.8) (100.0)
Total merchandise and service revenues 3,760.8 3,539.0 6.3 7,618.6 7,144.8 6.6
Road transportation fuel revenues:
United States 4,438.3 6,519.0 (31.9) 8,344.3 13,320.5 (37.4)
Europe 1,496.2 1,876.5 (20.3) 2,678.6 3,796.3 (29.4)
Canada 875.7 1,130.8 (22.6) 1,552.7 2,332.2 (33.4)
CAPL 530.1 (100.0) 1,097.5 (100.0)
Elimination of intercompany transactions with CAPL (116.1) (100.0) (237.5) (100.0)
Total road transportation fuel revenues 6,810.2 9,940.3 (31.5) 12,575.6 20,309.0 (38.1)
Other revenues(2):
United States 9.5 8.1 17.3 17.0 15.0 13.3
Europe 69.5 161.8 (57.0) 144.7 316.9 (54.3)
Canada 5.4 5.3 1.9 9.3 10.1 (7.9)
CAPL 27.0 (100.0) 52.8 (100.0)
Elimination of intercompany transactions with CAPL (3.5) (100.0) (7.6) (100.0)
Total other revenues 84.4 198.7 (57.5) 171.0 387.2 (55.8)
Total revenues 10,655.4 13,678.0 (22.1) 20,365.2 27,841.0 (26.9)
Merchandise and service gross profit(1):
United States 931.5 891.8 4.5 1,919.8 1,796.7 6.9
Europe 158.6 136.9 15.9 297.8 283.4 5.1
Canada 205.1 185.1 10.8 415.6 374.6 10.9
CAPL 2.2 (100.0) 6.8 (100.0)
Elimination of intercompany transactions with CAPL (0.3) (100.0) (0.8) (100.0)
Total merchandise and service gross profit 1,295.2 1,215.7 6.5 2,633.2 2,460.7 7.0
Road transportation fuel gross profit:
United States 767.4 698.4 9.9 1,579.9 1,370.9 15.2
Europe 283.2 226.2 25.2 519.7 448.4 15.9
Canada 97.3 86.4 12.6 179.0 167.9 6.6
CAPL 23.9 (100.0) 47.0 (100.0)
Total road transportation fuel gross profit 1,147.9 1,034.9 10.9 2,278.6 2,034.2 12.0
Other revenues gross profit(2):
United States 9.5 8.1 17.3 17.0 15.0 13.3
Europe 27.4 31.9 (14.1) 58.3 63.2 (7.8)
Canada 5.4 5.2 3.8 9.3 10.0 (7.0)
CAPL 27.0 (100.0) 52.8 (100.0)
Elimination of intercompany transactions with CAPL (3.5) (100.0) (7.6) (100.0)
Total other revenues gross profit 42.3 68.7 (38.4) 84.6 133.4 (36.6)
Total gross profit 2,485.4 2,319.3 7.2 4,996.4 4,628.3 8.0
Operating, selling, administrative and general expenses
Excluding CAPL(11) 1,194.4 1,214.8 (1.7) 2,365.4 2,439.1 (3.0)
CAPL 18.3 (100.0) 38.5 (100.0)
Elimination of intercompany transactions with CAPL (3.7) (100.0) (8.1) (100.0)
Total Operating, selling, administrative and general expenses 1,194.4 1,229.4 (2.8) 2,365.4 2,469.5 (4.2)
(Gain) loss on disposal of property and equipment and other assets (35.1) 1.0 (3,610.0) (43.9) 11.1 (495.5)
Depreciation, amortization and impairment
Excluding CAPL 305.8 292.9 4.4 595.3 577.1 3.2
CAPL 23.3 (100.0) 46.2 (100.0)
Total depreciation, amortization and impairment 305.8 316.2 (3.3) 595.3 623.3 (4.5)
Operating income
Excluding CAPL 1,020.3 763.0 33.7 2,079.6 1,506.0 38.1
CAPL 9.8 (100.0) 18.7 (100.0)
Elimination of intercompany transactions with CAPL (0.1) (100.0) (0.3) (100.0)
Total operating income 1,020.3 772.7 32.0 2,079.6 1,524.4 36.4
Net financial expenses 77.2 60.1 28.5 165.2 147.1 12.3
Net earnings including non-controlling interests 757.0 579.4 30.7 1,534.1 1,115.4 37.5
Net (earnings) loss attributable to non-controlling interests (0.8) (100.0) 2.0 (100.0)
Net earnings attributable to shareholders of the Corporation 757.0 578.6 30.8 1,534.1 1,117.4 37.3
Per Share Data:
Basic net earnings per share (dollars per share) 0.68 0.51 33.3 1.38 0.99 39.4
Diluted net earnings per share (dollars per share) 0.68 0.51 33.3 1.38 0.99 39.4
Adjusted diluted net earnings per share (dollars per share)(11) 0.66 0.50 32.0 1.37 0.99 38.4
12-week periods ended 24-week periods ended
(in millions of US dollars, unless otherwise stated) October 11,
October 13,
Variation October 11,
October 13,
Variation
2020 2019 2020 2019
%
%
Other Operating Data - excluding CAPL:
Merchandise and service gross margin(1):
Consolidated 34.4% 34.4% 34.6% 34.5% 0.1
United States 34.0% 33.9% 0.1 34.4% 34.0% 0.4
Europe 40.2% 41.3% (1.1) 40.4% 41.4% (1.0)
Canada 32.6% 32.6% 32.1% 32.7% (0.6)
Growth of same-store merchandise revenues(3):
United States(4) 4.4% 3.2% 6.1% 2.9%
Europe 8.6% 3.3% 6.0% 2.0%
Canada(4) 11.4% 2.1% 15.7% 1.2%
Road transportation fuel gross margin:
United States (cents per gallon)(4) 37.48 28.29 32.5 40.14 27.57 45.6
Europe (cents per liter) 11.10 8.34 33.1 10.82 8.39 29.0
Canada (CA cents per liter)(4) 10.05 7.89 27.4 10.16 7.64 33.0
Total volume of road transportation fuel sold:
United States (millions of gallons) 2,098.2 2,601.8 (19.4) 4,049.1 5,192.4 (22.0)
Europe (millions of liters) 2,550.7 2,713.2 (6.0) 4,801.2 5,346.8 (10.2)
Canada (millions of liters) 1,288.4 1,458.4 (11.7) 2,380.8 2,931.0 (18.8)
(Decrease in) growth of same-store road transportation fuel
volume:
United States(4) (15.5)% 0.6% (18.4)% 0.6%
Europe(4) (4.5)% (0.6)% (8.3)% (1.1)%
Canada(4) (11.8)% 0.2% (18.7)% 0.3%
(in millions of US
dollars, unless
otherwise stated)
As at
As at
Variation
October 11, 2020 April 26, 2020 $
Balance Sheet Data:
Total assets 26,767.1 25,679.5 1,087.6
Interest-bearing debt
(5) 9,043.4 10,379.3 (1,335.9)
Equity 11,919.9 10,066.6 1,853.3
Indebtedness
Ratios(6):
Net interest-bearing
debt/total
capitalization(5)(7) 0.32
: 1
0.40
: 1
Leverage ratio(8)(11) 1.13
: 1
1.54
: 1
Returns(6):
Return on equity(9) 25.7% 24.8%
Return on capital
employed(10) 17.3% 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 Canada and in Europe is
calculated based on local
currencies.
(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 November 2019, 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.
(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.
(11) Prior figures such as Adjusted
EBITDA, Adjusted net earnings, as
well as Adjusted diluted net
earnings per share have been
updated to remove the
restructuring costs. This
adjustment had no impact on the
leverage ratio as of April 26,
2020. For additional information
on these performance measures not
defined by IFRS, please refer to
the sections "Earnings before
interest, taxes, depreciation,
amortization and impairment
(EBITDA) and adjusted EBITDA", as
well as "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. In addition,
Operating, selling, administrative
and general expenses excluding
CAPL for the 12 and 24-week
periods ended October 13, 2019 now
include the restructuring costs
that were previously presented on
a distinct line.
Revenues
Our revenues were $10.7 billion for the second quarter of fiscal 2021, down by $3.0 billion, a decrease of 22.1% compared with the corresponding quarter of fiscal 2020. This performance is mainly attributable to a lower average road transportation fuel selling price, to the negative impact of COVID-19 on fuel demand, and to the disposal of our interests in CAPL which had an impact of approximately $447.0 million, partly offset by strong organic growth on merchandise and service sales, as well as by the net positive impact from the translation of revenues of our Canadian and European operations into US dollars, which had an impact of approximately $154.0 million.
For the first half-year of fiscal 2021, our revenues decreased by $7.5 billion or 26.9% compared with the corresponding period of fiscal 2020, mainly attributable to similar factors as those of the second quarter.
Merchandise and service revenues
Total merchandise and service revenues for the second quarter of fiscal 2021 were $3.8 billion, an increase of $221.8 million compared with the corresponding quarter of fiscal 2020. Excluding CAPL's revenues, as well as the net positive impact from the translation of our Canadian and European operations into US dollars, merchandise and service revenues increased by approximately $208.0 million or 5.9%. This increase is primarily attributable to growth in basket size, which more than offset continued softness in traffic. The tobacco, package beverage, alcohol and grocery products categories continued to perform well all across our regions while in Europe, our fresh food category outperformed last year results. Same-store merchandise revenues increased by 4.4% in the United States, by 8.6% in Europe, and by 11.4% in Canada.
For the first half-year of fiscal 2021, the growth in merchandise and service revenues was $473.8 million compared with the first half-year of fiscal 2020. 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 $512.0 million or 7.2%. Same-store merchandise revenues increased by 6.1% in the United States, by 6.0% in Europe and by 15.7% in Canada.
Road transportation fuel revenues
Total road transportation fuel revenues for the second quarter of fiscal 2021 were $6.8 billion, a decrease of $3.1 billion compared with the corresponding quarter of fiscal 2020. Excluding CAPL's revenues, as well as the net positive impact from the translation of revenues of our Canadian and European operations into US dollars, road transportation fuel revenues decreased by approximately $2.8 billion, or 29.8%. This decrease is mostly attributable to a lower average road transportation fuel selling price, which had a negative impact of approximately $1.3 billion, as well as to the decrease on fuel demand in relation with the work from home trends due to the COVID-19 pandemic. Same-store road transportation fuel volume decreased by 15.5% in the United States, by 4.5% in Europe, and by 11.8% in Canada.
For the first half-year of fiscal 2021, the road transportation fuel revenues decreased by $7.7 billion compared with the first half-year of fiscal 2020. 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 decreased by approximately $6.9 billion or 35.3%. The negative impact of the lower average road transportation fuel selling price was approximately $3.1 billion. Same-store road transportation fuel volume decreased by 18.4% in the United States, by 8.3% in Europe, and by 18.7% in Canada.
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 third quarter of the fiscal year ended April 28, 2019:
Quarter
3rd
4th
1st
2nd
Weighted
average
---
52-week period ended
October 11, 2020
United States (US dollars per
gallon) - excluding CAPL 2.51 2.21 2.04 2.14 2.26
Europe (US cents per liter) 73.92 60.95 56.89 63.19 64.91
Canada (CA cents per liter) 103.47 88.78 86.89 92.00 94.34
---
52-week period ended
October 13, 2019
United States (US dollars per
gallon) - excluding CAPL 2.42 2.51 2.66 2.55 2.53
Europe (US cents per liter) 75.28 74.59 77.35 70.86 74.55
Canada (CA cents per liter) 97.59 103.45 111.16 105.14 103.86
Other revenues
Total other revenues for the second quarter and first half-year of fiscal 2021 were $84.4 million and $171.0 million, respectively, a decrease of $114.3 million and $216.2 million compared with the corresponding periods of fiscal 2020. Excluding CAPL's revenues, as well as the net positive impact from the translation of our Canadian and European operations into US dollars, other revenues decreased by $101.3 million and by $175.9 million in the second quarter and first half-year of fiscal 2021, respectively, primarily driven by lower demand and lower average selling prices in our other fuel products, which had a minimal impact on gross profit.
Gross profit
Our gross profit was $2.5 billion for the second quarter of fiscal 2021, up by $166.1 million, or 7.2%, compared with the corresponding quarter of fiscal 2020, mainly attributable to higher road transportation fuel gross margins, to strong organic growth in our convenience activities, as well as to the net positive impact from the translation of our Canadian and European operations into US dollars, which had an impact of approximately $25.0 million, partly offset by the negative impact of COVID-19 on fuel demand, and by the disposal of our interests in CAPL which had an impact of approximately $49.0 million.
For the first half-year of fiscal 2021, our gross profit increased by $368.1 million, or 8.0%, compared with the first half-year of fiscal 2020, mainly attributable to similar factors as those of the second quarter.
Merchandise and service gross profit
In the second quarter of fiscal 2021, our merchandise and service gross profit was $1.3 billion, an increase of $79.5 million compared with the corresponding quarter of fiscal 2020. Excluding CAPL's gross profit, as well as the net positive impact from the translation of our Canadian and European operations into US dollars, merchandise and service gross profit increased by approximately $72.0 million, or 5.9%, mainly attributable to strong organic growth, despite lower traffic in our network due to COVID-19. Our gross margin increased by 0.1% in the United States to 34.0%, while it decreased by 1.1% in Europe to 40.2% due to our product mix towards lower margin categories. It remained steady at 32.6% in Canada.
During the first half-year of fiscal 2021, our merchandise and service gross profit was $2.6 billion, an increase of $172.5 million compared with the first half-year of fiscal 2020. 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 $181.0 million, or 7.4%. The gross margin increased by 0.4% to 34.4% in the United States, while it decreased by 1.0% in Europe to 40.4%, and by 0.6% in Canada to 32.1%.
Road transportation fuel gross profit
In the second quarter of fiscal 2021, our road transportation fuel gross profit was $1.1 billion, an increase of $113.0 million compared with the corresponding quarter of fiscal 2020. Excluding CAPL's gross profit, as well as the net positive impact from the translation of our Canadian and European operations into US dollars, our road transportation fuel gross profit increased by approximately $124.0 million, or 12.2%. In the United States, our road transportation fuel gross margin was 37.48¢ per gallon, an increase of 9.19¢ per gallon, in Europe, it was US 11.10¢ per liter, an increase of US 2.76¢ per liter, and in Canada, it was CA 10.05¢ per liter, an increase of CA 2.16¢ per liter. Growth in road transportation fuel gross margins were driven by decline in fuel product costs, changes in the competitive landscape and improved supply conditions.
During the first half-year of fiscal 2021, our road transportation fuel gross profit was $2.3 billion, an increase of $244.4 million compared with the first half-year of fiscal 2020. Excluding CAPL's gross profit, as well as the net positive impact from the translation of our Canadian and European operations into US dollars, road transportation fuel gross profit increased by approximately $291.0 million, or 14.7%. The road transportation fuel gross margin was 40.14¢ per gallon in the United States, US 10.82¢ per liter in Europe, and CA 10.16¢ 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 28, 2019, were as follows:
(US cents per
gallon)
Quarter
3rd
4th
1st
2nd
Weighted
average
---
52-week period ended
October 11, 2020
Before deduction of
expenses related to
electronic payment
modes 27.04 46.88 42.99 37.48 37.10
Expenses related to
electronic payment
modes 4.54 4.97 4.88 4.79 4.76
After deduction of
expenses related to
electronic payment
modes 22.50 41.91 38.11 32.69 32.34
---
52-week period ended
October 13, 2019
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 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
---
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 Europe and Canada are similar, while the margin volatility and expenses related to electronic payment modes are not as significant.
Other revenues gross profit
In the second quarter and first half-year of fiscal 2021, other revenues gross profit was $42.3 million and $84.6 million, respectively, a decrease of $26.4 million and of $48.8 million, compared with the corresponding periods of fiscal 2020. Excluding CAPL's gross profit, as well as the net positive impact from the translation of our Canadian and European operations into US dollars, other revenues gross profit decreased by approximately $5.0 million and $4.0 million in the second quarter and first half-year of fiscal 2021, respectively, mainly driven by a decrease in rental income.
Operating, selling, administrative and general expenses ("expenses")
For the second quarter and first half-year of fiscal 2021, expenses decreased by 2.8% and 4.2%, respectively, compared with the corresponding periods of fiscal 2020. If we exclude certain items that are not considered indicative of future trends, expenses decreased by 0.8% and 0.6%, respectively.
12-week period ended
24-week period ended
October 11, 2020 October 11, 2020
Total variance, as
reported (2.8%) (4.2%)
---
Adjusted for:
Decrease from lower
electronic payment
fees, excluding
acquisitions 1.6% 2.0%
Decrease from the
disposal of our
interests in CAPL 1.5% 1.6%
Increase from the net
impact of foreign
exchange translation (1.2%)
Impact from the
December 2018 asset
exchange agreement
with CAPL, net of
electronic payment
fees 0.4% 0.5%
Increase from
incremental expenses
related to
acquisitions (0.3%) (0.3%)
Acquisition costs
recognized to earnings
of fiscal 2021 (0.1%) (0.2%)
Acquisition costs
recognized to earnings
of fiscal 2020 0.1%
Remaining variance (0.8%) (0.6%)
===
We were able to achieve this decrease while maintaining the investments in our stores to support our strategic initiatives, even though we continue to see higher labor costs from minimum wage increases in certain regions, normal inflation and COVID-19 related expenses. This decrease was a result of cost and labor efficiencies, as well as rigorous work and activities initiated to streamline and minimize our controllable expenses. COVID-19 related expenses of the second quarter of fiscal 2021 include, but are not limited to, severance costs, additional cleaning and sanitizing supplies, as well as masks and gloves for our employees. For the first half-year of fiscal 2021, it also includes an emergency appreciation pay premium of $2.50 per hour in North America for hourly store employees and distribution center employees, and Thank you bonuses in North America following the end of the appreciation pay premium.
Earnings before interest, taxes, depreciation, amortization and impairment (EBITDA) and adjusted EBITDA
During the second quarter of fiscal 2021, EBITDA increased from $1.1 billion to $1.3 billion, an increase of 21.7% compared with the same quarter last year. Excluding the specific items shown in the table below, the adjusted EBITDA for the second quarter of fiscal 2021 increased by $223.5 million, or 20.9%, compared with the corresponding period of the previous fiscal year, mainly from higher road transportation fuel gross margins, organic growth on merchandise and service sales, as well as from the net positive impact from the translation of our Canadian and European operations into US dollars, partly offset by the negative impact of COVID-19 on our traffic. The variation in exchange rates had a net positive impact of approximately $11.0 million.
During the first half-year of fiscal 2021, EBITDA increased from $2.2 billion to $2.7 billion, an increase of 24.5% 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 2021 and of the first half-year of fiscal 2020, the adjusted EBITDA for the first half-year of fiscal 2021 increased by $543.9 million or 25.8% compared with the corresponding period of the previous fiscal year, mainly attributable to similar factors as those of the second quarter. The variation in exchange rates had a net negative impact of approximately $1.0 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 11, 2020
October 13, 2019
October 11, 2020
October 13, 2019
---
Net earnings including
non-controlling
interests, as reported 757.0 579.4 1,534.1 1,115.4
---
Add:
Income taxes 193.6 139.7 396.3 275.0
Net financial expenses 77.2 60.1 165.2 147.1
Depreciation, amortization
and impairment 305.8 316.2 595.3 623.3
---
EBITDA 1,333.6 1,095.4 2,690.9 2,160.8
---
Adjusted for:
Gain on disposal of a
property (40.9) (40.9)
Acquisition costs 1.2 0.8 5.1 1.0
EBITDA attributable to
non-controlling
interests (25.8) (50.6)
Adjusted EBITDA 1,293.9 1,070.4 2,655.1 2,111.2
===
Depreciation, amortization and impairment ("depreciation")
For the second quarter of fiscal 2021, our depreciation expense decreased by $10.4 million compared with the second quarter of fiscal 2020. Excluding CAPL's results, as well as the net negative impact from the translation of our Canadian and European operations into US dollars, the depreciation expense increased by approximately $10.0 million. This increase is mainly driven by the replacement of equipment and the ongoing improvement of our network.
For the first half-year of fiscal 2021, our depreciation expense decreased by $28.0 million compared with the corresponding period of fiscal 2020. Excluding CAPL's results, as well as the net positive impact from the translation of our Canadian and European operations into US dollars, the depreciation expense increased by approximately $19.0 million for the first half-year of fiscal 2021, mainly attributable to similar factors as those of the second quarter.
Net financial expenses
Net financial expenses for the second quarter of fiscal 2021 were $77.2 million, an increase of $17.1 million compared with the second quarter of fiscal 2020. Excluding the items shown in the table below, net financial expenses for the second quarter of fiscal 2021 increased by $5.9 million compared to the second quarter of fiscal 2020, driven by a higher average cost of debt.
Net financial expenses for the first half-year of fiscal 2021 were $165.2 million, an increase of $18.1 million compared with the first half-year of fiscal 2020. Excluding the items shown in the table below, net financial expenses for the first half-year of fiscal 2021 increased by $6.3 million compared to corresponding period of fiscal 2020, driven by the same factor as the one of the second quarter.
12-week periods ended 24-week periods ended
(in millions of US dollars)
October 11, 2020
October 13, 2019
October 11, 2020
October 13, 2019
---
Net financial expenses, as reported 77.2 60.1 165.2 147.1
---
Adjusted for:
Net foreign exchange (loss) gain (8.9) 11.8 (27.3) 5.3
CAPL's financial expenses (9.5) (20.8)
---
Net financial expenses excluding items above 68.3 62.4 137.9 131.6
===
Income taxes
The income tax rate for the second quarter of fiscal 2021 was 20.4% compared with 19.4% for the corresponding period of fiscal 2020. Excluding the item shown in the table below, the income tax rate for the second quarter of fiscal 2020 would have been 19.5%.
The income tax rate for the first half-year of fiscal 2021 was 20.5% compared with 19.8% for the first half-year of fiscal 2020. Excluding the item shown in the table below, the income tax rate would have been 19.6% for the first half-year of fiscal 2020. 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
October 11, 2020
October 13, 2019
October 11, 2020
October 13, 2019
Income tax rate, as reported 20.4% 19.4% 20.5% 19.8%
---
Adjusted for:
Income tax benefit (expense)
following the December 2018
asset exchange agreement with
CAPL 0.1% (0.2)%
Net income tax rate excluding
items above 20.4% 19.5% 20.5% 19.6%
===
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 2021 were $757.0 million, compared with $578.6 million for the second quarter of the previous fiscal year, an increase of $178.4 million or 30.8%. Diluted net earnings per share stood at $0.68, compared with $0.51 for the previous fiscal year. The translation of revenues and expenses from our Canadian and European operations into US dollars had a net positive impact of approximately $8.0 million on net earnings of the second quarter of fiscal 2021.
Excluding the items shown in the table below from net earnings of the second quarter of fiscal 2021 and fiscal 2020, adjusted net earnings for the second quarter of fiscal 2021 were approximately $735.0 million, compared with $569.0 million for the second quarter of fiscal 2020, an increase of $166.0 million, or 29.2%. Adjusted diluted net earnings per share were $0.66 for the second quarter of fiscal 2021, compared with $0.50 for the corresponding period of fiscal 2020, an increase of 32.0%.
For the first half-year of fiscal 2021, net earnings were $1.5 billion, compared with $1.1 billion for the first half-year of fiscal 2020, an increase of $416.7 million or 37.3%. Diluted net earnings per share stood at $1.38, compared with $0.99 for the previous fiscal year. The translation of revenues and expenses from our Canadian and European operations into US dollars had no significant impact on net earnings of the first half-year of fiscal 2021.
Excluding the items shown in the table below from net earnings of the first half-year of fiscal 2021 and fiscal 2020, adjusted net earnings for the first half-year of fiscal 2021 were approximately $1.5 billion, compared with $1.1 billion for the comparable period of the previous year, an increase of $413.0 million or 37.0%. Adjusted diluted net earnings per share were $1.37 for the first half-year of fiscal 2021, compared with $0.99 for the first half-year of fiscal 2020, an increase of 38.4%.
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 11, 2020
October 13, 2019
October 11, 2020
October 13, 2019
---
Net earnings attributable to shareholders of the Corporation, as reported 757.0 578.6 1,534.1 1,117.4
---
Adjusted for:
Gain on disposal of a property (40.9) (40.9)
Net foreign exchange loss (gain) 8.9 (11.8) 27.3 (5.3)
Acquisition costs 1.2 0.8 5.1 1.0
Income tax (benefit) expense following the December 2018 asset exchange agreement with CAPL (0.7) 2.7
Tax impact of the items above and rounding 8.8 2.1 4.4 1.2
---
Adjusted net earnings attributable to shareholders of the Corporation 735.0 569.0 1,530.0 1,117.0
===
It should be noted that adjusted net earnings and adjusted diluted net earnings per share 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 November 24, 2020 meeting, the Board of Directors approved an increase in the quarterly dividend of CA 1.75¢ per share, bringing it to CA 8.75¢ per share, an increase of 25.0%.
During the same meeting, the Board of Directors declared a quarterly dividend of CA 8.75¢ per share for the second quarter of fiscal 2021 to shareholders on record as at December 3, 2020, and approved its payment for December 17, 2020. 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 has an important presence in Poland.
As of October 11, 2020, Couche-Tard's network comprised 9,261 convenience stores throughout North America, including 8,085 stores with road transportation fuel dispensing. Its North American network consists of 18 business units, including 14 in the United States covering 47 states and 4 in Canada covering all 10 provinces. Approximately 109,000 people are employed throughout its network and at its service offices in North America.
In Europe, Couche-Tard operates a broad retail network across Scandinavia, Ireland, Poland, the Baltics and Russia through 10 business units. As of October 11, 2020, Couche-Tard's network comprised 2,722 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 aviation fuel and energy for stationary engines. Including employees at branded franchise stores, approximately 22,000 people work in its retail network, terminals and service offices across Europe.
In addition, under licensing agreements, more than 2,220 stores are operated under the Circle K banner in 15 other countries and territories (Cambodia, Egypt, Guam, Guatemala, Honduras, Hong Kong, Indonesia, Jamaica, Macau, Mexico, Mongolia, New Zealand, Saudi Arabia, the United Arab Emirates and Vietnam), which brings the worldwide total network to more than 14,200 stores.
For more information on Alimentation Couche-Tard Inc. or to consult its Unaudited Interim Condensed 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, uncertainty related to the duration and severity of the current COVID-19 pandemic, 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 25, 2020, 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 24, 2020, at investor.relations@couche-tard.com.
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 25, 2020, at 8:00 A.M. (EST) can do so by either accessing the Corporation's website at https://corpo.couche-tard.com and by clicking in the "Investor Relations/Corporate presentations" section or by dialing 1-888-390-0549 or 1-416-764-8682, followed by the access code 70839272#.
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.
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