Alimentation Couche-tard Inc. · TSX:ATD
Alimentation Couche-tard — Investor Presentation (April 2016)
52 slides from Alimentation Couche-tard's investor presentation, April 2016
Slide 1: Investors Presentation April 2016
ALIMENTATION COUCHE-TARD INC. Investors Presentation April 2016
Slide 2: Forward-Looking Information and Cautionary Language
FORWARD-LOOKING INFORMATION AND CAUTIONARY LANGUAGE This presentation and the accompanying oral presentation contain forward-looking statements within the meaning of applicable securities legislation. Forward-looking statements are typically identified by words such as “projected”, “estimate”, “may”
Slide 3: Company Representatives
COMPANY REPRESENTATIVES Brian Hannasch President and Chief Executive Officer Claude Tessier Chief Financial Officer Mathieu Descheneaux Vice President Finance 3
Slide 4: Agenda
AGENDA 1. Company Highlights 2. Financial Highlights 3. Strategy and Value Creation 1. Organic Growth 2. Acquisitions 3. Cost Control 4. Capital Structure & Financial Flexibility 4. Appendix 4
Slide 5: Company Highlights
ALIMENTATION COUCHE-TARD INC. COMPANY HIGHLIGHTS
Slide 6: Who Are We?
WHO ARE WE ? Couche-Tard is a Canadian based group and a world leader in the convenience store sector • In North America, we are the largest independent convenience store operator in terms of number of company- operated stores. • In Europe, Couche-Tard is a leader in convenience store and road trans
Slide 7: Company History
COMPANY HISTORY • 1980 Start of operations with the opening of a first convenience store located in Laval, Québec. • 80’s-90’s Consolidation of the Canadian market. • 2001 First breakthrough of Couche-Tard in the United States : acquisition of the assets of Johnson Oil Company, Inc., owner of 225 Bi
Slide 8: Key Data
KEY DATA • Listed on the Toronto Stock Exchange ATD.B • Market Cap1 CAD $33.3B • Revenue USD $34.5B Fiscal Year 20152 USD $26.7B Q3 2016 YTD2 • Gross Profit USD $5.27B Fiscal Year 20152 (+5.6%) USD $4.7B Q3 2016 YTD2 (+14.5%) • EBITDA USD $1.9B Fiscal Year 20152 USD $1.9B Q3 2016 YTD2 • Number of st
Slide 9: Investment Highlights
INVESTMENT HIGHLIGHTS Disciplined Broad Geographic Footprint Management Culture with Leading Market Positions Superior • Management team with strong track • Leading C-store operator in North America, Product Offerings record and founders have 23% equity Scandinavia and Baltics • Increasing focus on
Slide 10: Stock Price – Compared to TSX
STOCK PRICE – COMPARED TO TSX During the last 12 months periods, while the TSX Composite Index lost 9%, ACT’s stock appreciated by over 15%. 10 Source: Reuters. As of March 21, 2016.
Slide 11: Stock Price – Compared to Public Competitors and Retail Industry
STOCK PRICE – COMPARED TO PUBLIC COMPETITORS AND RETAIL INDUSTRY 11 Source: Reuters. As of March 21, 2016.
Slide 12: Couche-Tard – World Leader
COUCHE-TARD – WORLD LEADER Couche-Tard is a leading global convenience store operator with pro-forma EBITDA of $2.2 billion • Well diversified • Merchandise and services represent 57% of gross profits • Focus on growing high margin categories Merchandise and services Motor Fuel Other Total Revenue:
Slide 13: Financial Review
FINANCIAL REVIEW STRONG & CONSISTENT GROWTH 13 CAG: Five-year compounded annual growth - Fiscal 2015 over fiscal 2010. (1) Fiscal 2015 store count excludes The Pantry stores. (2) Pro forma the acquisition of The Pantry. (3) 2015 Free cash flow includes the proceeds from the disposal of the aviation
Slide 14: Couche-Tard's Network
COUCHE-TARD’S NETWORK Canada U.S. Europe International Total presence COCO(1) 1,447 4,698 1,645 - 7,790 CODO(2) - 154 375 - 529 DODO(3) - 567 198 - 765 Franchise/Affiliated(4) 394 719 - 1,113 Licensed(5) - - - 1,501 1,501 Total 1,841 6,138 2,218 1,501 11,698 Of which: Automats - - 920 - 920 # With f
Slide 15: North American Network
NORTH AMERICAN NETWORK Leader in the Canadian convenience store industry • In Canada, the convenience store sector is dominated by a few major players including Couche-Tard and integrated oil companies. Some of these are selling, or expected to sell their retail assets. Largest independent convenien
Slide 16: European Network
EUROPEAN NETWORK Leader in convenience store and road transportation fuel retail in the Scandinavian and Baltic countries • The European convenience store sector is often dominated by a few major players, including integrated oil companies. Some of these are in the process of selling, or are expecte
Slide 17: International Presence
INTERNATIONAL PRESENCE • Convenience stores operated by independent operators • Under the Circle K brand Around 1,500 licensed Circle K stores in Asia, Costa Rica, Egypt, Honduras, Mexico, and U.A.E 17 As of January 31, 2016.
Slide 18: Dividend to Shareholders
DIVIDEND TO SHAREHOLDERS Our growth and financial discipline is shared 18 (1) CAG: Five-year compounded annual growth - fiscal 2015 over fiscal 2010. (2) On April 14, 2014, a three-for-one stock split occurred on the Corporation’s Multiple Voting Shares and Subordinate Voting Shares. All dividends p
Slide 19: Financial Highlights
ALIMENTATION COUCHE-TARD INC. FINANCIAL HIGHLIGHTS
Slide 20: Revenue & Gross Profit
REVENUE & GROSS PROFIT Gross Profit is the more accurate reflection of our business operations • Revenue includes road transportation fuel revenues which is the dollar amount of sales • Revenue can therefore change with movements in the average selling price of road transportation fuel • In fiscal 2
Slide 21: Fuel Gross Margin vs Average Selling Price
FUEL GROSS MARGIN VS AVERAGE SELLING PRICE • No clear correlation between fuel selling price and margins; • Our margins are not directly impacted by lower fuel selling prices; • Lower fuel prices leave customers more money in their pockets for their in-store shopping. U.S. Fuel Margins (CPG) Canadia
Slide 22: EBITDA and Net Earnings
EBITDA AND NET EARNINGS • Consistent EBITDA and Net earnings growth year after year. • This growth is due to the four pillars of our value creation strategy. • Year after year, Alimentation Couche-Tard generates great results that creates great value to its shareholders. 22 CAG: Five-year compounded
Slide 23: Q3 2016 LTM Net Earnings on Sales vs Competitors
Q3 2016 LTM NET EARNINGS ON SALES VS COMPETITORS 4,0% 3,2% 3,0% 1,7% 1,2% 1,4% 0,8% 0,5% Casey's Applegreen CST Murphy Marathon Delek NACS 2014 23 ACT Pro Forma for The Pantry.
Slide 24: Capital Investment
CAPITAL INVESTMENT Capital Investment primarily consists of the investment in property and equipment net of disposals and the ongoing improvement NET CAPEX (in millions of US dollars) of our network • Construction of new stores 799 • Relocation and construction of existing stores • Replacement of eq
Slide 25: Free Cash Flow
FREE CASH FLOW • Year after year, ACT generates cash flow from its operations, which allows rapid deleveraging and strong credit profile. • This enables ACT to be in a strong financial position to consider opportunities for acquisitions of businesses. 25 CAG: Five-year compounded annual growth - Fis
Slide 26: Dividends
DIVIDENDS Dividend vs free cash flow FCF 28.6% CAG(1) Shareholders have shared in the growth of free cash flow • However cash dividend payouts remain a moderate percentage of the group’s free Dividend 28.2% CAG(1) cash flow enabling continued organic and acquisition led growth Dividend to shareholde
Slide 27: Capital Structure
CAPITAL STRUCTURE ADJUSTED NET DEBT/ ADJUSTED EBITDAR Couche-Tard’s debt fluctuates primarily with acquisitions, followed by strong cash flow paying down debt • Adjusted debt / adjusted EBITDAR ratio includes lease obligations • Couche-Tard’s term revolving unsecured credit facilities include financ
Slide 28: Liquidity & Credit Ratings
LIQUIDITY & CREDIT RATINGS Strong Liquidity and improving Credit Ratings Strong Liquidity : Couche-Tard maintains strong liquidity across cash balances, discretionary cash flow and availability under its revolving credit facility • Cash balances at January 31, 2016 were $972M, where $570M have been
Slide 29: FY16 Highlights
FY16 HIGHLIGHTS 16-week periods ended 40-week periods ended January 31, 2016 February 1, 2015 January 31, 2016 February 1, 2015 Growth in same-store merchandise revenues United States 5.0% 4.5% 5.1% 3.4% Europe 4.3% 1.7% 3.0% 1.6% Canada 3.5% 3.6% 3.1% 3.3% Merchandise and service gross margin Unite
Slide 30: FY16 Highlights
FY16 HIGHLIGHTS 16-week periods ended 40-week periods ended January 31, 2016 February 1, 2015 January 31, 2016 February 1, 2015 Same-store motor fuel volume growth United States 6.2% 2.8% 7.5% 2.3% Europe 2.9% 2.1% 3.1% 2.0% Canada (0.5%) (0.5%) 1.4% (0.5%) Total motor fuel volume United States (mil
Slide 31: FY16 Highlights
FY16 HIGHLIGHTS EBITDA (millions USD) 16-week periods ended 40-week periods ended January 31, February 1, Variation January 31, February 1, Variation 2016 2015 % 2016 2015 % Reported 627.5 544.5 15.2 1,869.5 1,556.3 20.1 Adjusted (1) 619.9 559.8 10.7 1,823.1 1,571.1 16.0 Diluted Net Earnings per Sha
Slide 32: FY16 Highlights
FY16 HIGHLIGHTS Balance Sheet, Liquidities and Returns – As of January 31, 2016 Total assets (millions USD) 11,200 Cash (millions USD) 972 Borrowing available under credit facilities 1,300 (millions USD) Interest bearing debt (millions USD) 2,770 Shareholder’s equity (millions USD) 4,734 Net interes
Slide 33: Strategy & Value Creation
ALIMENTATION COUCHE-TARD INC. STRATEGY & VALUE CREATION
Slide 34: Experienced Management Team
EXPERIENCED MANAGEMENT TEAM Alain Bouchard Brian P. Hannasch Claude Tessier Founder and Executive President and Chief Chief Financial Officer PLACE IMAGE Chairman of the Board PLACE IMAGE Executive Officer PLACE IMAGE Claude Tessier, CPA, CA, is HERE HERE HERE Couche-Tard’s Chief Financial On Septem
Slide 35: Four Pillars of Value Creation
FOUR PILLARS OF VALUE CREATION Organic Growth Acquisitions Cost Control Capital Structure & Financial Flexibility • Focus on customers’ needs • Smart, disciplined • Disciplined culture • Cost of debt at competitive and respond to market acquisition strategy – conditions trends Spotting the right • C
Slide 36: Organic Growth
ALIMENTATION COUCHE-TARD INC. ORGANIC GROWTH Value Creation
Slide 37: Organic Growth - Same-Store Sales
ORGANIC GROWTH - SAME-STORE SALES In all markets it operates in, Alimentation Couche-Tard generates same-store growth through dynamic merchandising strategies, a competitive offer, excellent retail execution and exchange of best practices. Merchandise same-store sales Same-store fuel volume 6,0% 9,0
Slide 38: Global Circle K Brand
GLOBAL CIRCLE K BRAND • On September 22, 2015, Couche-Tard announced the creation of a new, global convenience brand, “Circle K TM” • The existing Circle K is already Couche-Tard’s largest and most international brand. It can be seen today serving the needs of customers in 16 countries around the wo
Slide 39: Acquisitions
ALIMENTATION COUCHE-TARD INC. ACQUISITIONS Value Creation
Slide 40: Acquisitions - History of Highly Disciplined M&A Approach
ACQUISITIONS - HISTORY OF HIGHLY DISCIPLINED M&A APPROACH Superb track record of integrating acquisitions Garvin oil Compac Food Stores Revenue ($) Winners Sterling Stores Pump N Shop 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q3 YTD Debt/ Adjusted EBITDA (1) 3.1 1.5 1.2 1.8 1.
Slide 41: Topaz Snapshot
TOPAZ SNAPSHOT • Leading convenience and fuel retailer in Ireland, made up of 444 stations including its recently acquired Esso station network • 158 are operated by Topaz and 286 by dealers. Company owns underlying real estate for about 100 sites • Also commercial fuels operation, with over 30 depo
Slide 42: Esso Canada Snapshot
ESSO CANADA SNAPSHOT • In March 2016, Couche-Tard announced an agreement to acquire 279 Esso-branded fuel and convenience sites in Canada • 229 sites are located in the province of Ontario, the majority of which in the Greater Toronto Area • 50 sites are located in the province of Québec, in the Gre
Slide 43: Cost Control
ALIMENTATION COUCHE-TARD INC. COST CONTROL Value Creation
Slide 44: Disciplined and Rigorous Cost Control
DISCPLINED AND RIGOROUS COST CONTROL Cost leadership is well anchored throughout the organization • Cost synergies from major acquisitions : SFR The Pantry Objective $150-$200M Objective $85M Realized $199M Identified $63M Realized $43M 44 (1) Excluding credit card fees. Adjusted for currency transl
Slide 45: Capital Structure & Financial Flexibility
ALIMENTATION COUCHE-TARD INC. CAPITAL STRUCTURE & FINANCIAL FLEXIBILITY Value Creation
Slide 46: Capital Structure - Debt
CAPITAL STRUCTURE - DEBT • Well spread debt maturity profile • Debt maturity according to Couche-Tard’s fiscal year-end • Couche-Tard utilizes the capital markets for the majority of term debt • It has significant flexibility across a variety of financial markets and currencies • In addition, in Feb
Slide 47: Average Interest Rate on Debt
AVERAGE INTEREST RATE ON DEBT Competitive and attractive cost of debt Based on latest Q4 information except for ACT which is as per January 31, 2016. 47
Slide 48: Capital Structure – Adjusted Net Debt/EBITDAR
CAPITAL STRUCTURE – ADJUSTED NET DEBT/EBITDAR Strong Capital Discipline • Our growth strategy is supported by our commitment to a strong capital structure • Acquisitions are undertaken with the objective of rapid deleveraging • Our credit ratings were raised to Baa2 / BBB in Q3 2014 and S&P revised
Slide 49: Industry-Leading Returns
INDUSTRY-LEADING RETURNS Return on equity(1)(2) Industry Average Return on equity - 7 years progressions 24,9% 25,4% 22,0% 21,5% 22,6% 19,7% 20,6% 20,3% 14,7% 2008 2009 2010 2011 2012 2013 2014 2015 Q3 2016 (1) Based on most recent published last 12 months results as of January 31, 2016. (2) 2015 an
Slide 50: Adjusted Enterprise Value on EBITDAR vs CAG EPS
ADJUSTED ENTERPRISE VALUE ON EBITDAR VS CAG EPS Ratio (x)(1) 2.1 2.3 -0.8 1.2 0.8 -0.1 0.1 Couche-Tard earns shareholders more than competition vs its value. CAG: Five-year compounded annual growth. Based on most recent published last 12 months results as of October 11, 2015. ACT’s most recent publi
Slide 51: Appendix
ALIMENTATION COUCHE-TARD INC. APPENDIX
Slide 52: Resilient and Growing Industry
RESILIENT AND GROWING INDUSTRY Industry’s inside sales grew each year, even during recessions Consistent growth throughout economic cycles over the last 30 years 52 Source: Industry data is from the «NACS Sate of the Industry Annual Report – 2014 Data»
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