Couche-Tard Continues Search For North American Acquisitions
LAVAL, Quebec -- Alimentation Couche-Tard Inc.'s 2013 fiscal first quarter was certainly a memorable one regarding acquisitions.
During its most recent quarter ended June 30, the large convenience store chain closed its acquisition of Statoil Fuel & Retail ASA for $2.58 billion and bought 56 stores in the United States.
"We once again changed the face of the company on a continent where we had no presence until now," Alain Bouchard, Couche-Tard's CEO, said during the company's earnings call this afternoon, referring to Statoil's massive convenience store presence in Europe. "The acquisition should immediately contribute to earnings."
The Laval, Quebec-based company will continue to be aggressive regarding acquisitions. Bouchard said Couche-Tard is still looking into more North American acquisitions. "We are looking at 25- to 50-store [acquisitions] in North America," he said. "We have looked at bigger acquisitions, but they [haven't] met our criteria."
Bouchard added that Couche-Tard will look to "divest non-core assets" of its business to reduce the debt that acquisitions have and will cause. Reducing debt would also help maintain Couche-Tard's credit rating, or the rate at which the c-store chain can borrow money. Standard and Poor's currently rates Couche-Tard's debt as BBB-.
As for Couche-Tard's overall earnings, the company earned $173 million for its 2013 fiscal first quarter, compared to a net profit of $142.7 million during the same timeframe last year.
Revenues at Couche-Tard's Circle K U.S. stores were up across the board. Merchandise and service gross profit increased to $362.9 million, vs. $336.6 million in 2012's fiscal first quarter. Road transportation and fuel gross profit improved to $220.2 million vs. $160.4 million last year.
U.S. in-store merchandise sales rose 2.8 percent. "Foodservice sales were more than enough to compensate for tobacco," said Bouchard. "We have not abandoned tobacco. We are attempting to maintain margins [in that category]."
Raymond Paré, Couche-Tard's vice president and chief financial officer, added that Crowne, the company's private label tobacco business, is a "good solution" to counteract the difficult tobacco margin environment in the United States.
Looking ahead, Paré was very bullish about Couche-Tard's foodservice offerings. "Our foodservice progress has been great," he said. "Foodservice is still in the early stages and will improve."