Couche-Tard Staying Active on Acquisitions

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Couche-Tard Staying Active on Acquisitions

By Linda Lisanti, Convenience Store News - 11/24/2009
LAVAL, Quebec -- On the heels of its announcement of a retail joint venture with Shell Oil Products US , Alimentation Couche-Tard Inc. President and CEO Alain Bouchard said yesterday during a Webcast with investors and analysts that the company is actively working on acquisition opportunities.

"There are acquisition files on our desks now. ... We have deposited bids for groups of stores, and we are awaiting feedback from the sellers," Bouchard said.

His comments were made before the convenience chain, with stores in both the United States and Canada, presented its second-quarter fiscal 2010 financial results.

Couche-Tard's net earnings were down $9.4 million, or 9.6 percent, to $88.2 million for the quarter -- mainly a result of a 9.10-cents-per-gallon decrease in motor fuel gross margin in the U.S., an estimated impact of more than $65 million before income taxes. During the comparable period last fiscal year, U.S. motor fuel gross margins were unusually high, whereas this year's margins are closer to expectations, the chain stated.

As for the first half of fiscal 2010, net earnings were $179.3 million, compared to $144.8 million last fiscal year, an increase of $34.5 million, or 23.8 percent.

Except for the motor fuel gross margin in the U.S., Bouchard said the retailer's other key performance indicators continued to improve in the second quarter, and operating expenses decreased for the third quarter in a row -- a reflection of the retailer's widespread efforts to improve its efficiency and manage the expenses it can control.

"I'm pleased with what our team has been able to do," Bouchard said during yesterday's Webcast. "We had a pretty good quarter ... but when I raise my head and look around, I see a still-fragile economy. That's why we are constantly looking for ways to improve our performance by benchmarking ourselves internally and externally; finding ways to get better supply terms; and improving our offer and services for our customers. ... So far, we have grabbed opportunities [presented to us] with great success," he continued.

Other highlights of Couche-Tard's second quarter results were:

-- Same-store merchandise sales were up 2.9 percent in the U.S.; 5.2 percent in Canada.
-- Same-store motor fuel volume grew 3.9 percent in the U.S.; 3.3 percent in Canada.
-- U.S. motor fuel gross margin was 15.78 cents per gallon, a loss of 9.10 cents per gallon.
-- Operating, selling, administrative and general expenses were down 4.7 percent excluding the impact of exchange rate, acquisitions and electronic payment mode-related expenses.
-- During the second quarter, Couche-Tard acquired five new stores.

Looking ahead, Couche-Tard said it expects to pursue investments with caution in order to deploy its IMPACT program. Given the economic climate and its access to capital, Couche-Tard believes it is well positioned to realize acquisitions and create value. However, the retailer said it will continue to exercise patience in order to benefit from a fair price in view of current market conditions. The chain also intends to keep an ongoing focus on its supply terms and operating expenses.

Finally, in line with its business model, Couche-Tard intends to continue to focus its resources on the sale of fresh products and on innovation, including the introduction of new products and services, in order to satisfy the needs of its large clientele.

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