Alimentation Couche-tard Inc. · TSX:ATD
Alimentation Couche-tard — Investor Presentation (September 2020)
42 slides from Alimentation Couche-tard's investor presentation, September 2020
Slide 1: Investor Presentation
INVESTOR PRESENTATION Alimentation Couche-Tard September 2020
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS 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”, “anticipate”, “believe”
Slide 3: Investment Highlights
INVESTMENT HIGHLIGHTS • Global rebrand initiative permits better leverage of broad scale. Size and Scale • More flexibility to compete compared to small-size operators. • Decentralized model drives accountability and entrepreneurship. Strong Culture • Cost discipline and lean operations are a major
Slide 4: Content
CONTENT 1 Company Highlights 2 U.S. Industry Overview 3 Competitive Advantages Increasing 4 Our Ambition 5 Shareholder Value 4
Slide 5: Company Highlights
COMPANY HIGHLIGHTS Ticker Symbol TSX: ATD.A | ATD.B • Coast-to-coast presence in Canada and located in 48 of 50 U.S. states. • Leading market share across many markets in Europe. • EBITDA CAGR of ~22%1 since 2011 and profitable since IPO in 1986. • Track record of generating shareholder value with a
Slide 6: Global Leader in Fuel & Convenience Retail
GLOBAL LEADER IN FUEL & CONVENIENCE RETAIL Store Count Our People Countries / Territories 14,323 ~131,000 26 incl. int’l licensees globally incl. int’l licensees Fuel Gallons Sold1 Customers Served1 Cups of Coffee Sold1 ~41 million ~9 million ~750,000 per day per day per day Hot Dogs Sold1 Polar Pop
Slide 7: Revenue and Gross Profit Mix
REVENUE AND GROSS PROFIT MIX Gross Profit 11% 2% Revenue Geographic Mix Product Mix 12 1% 27 17% % 18 % % 46% 52% 70 71 % % 72% United States Europe Canada Merchandise and Service Fuel Other ~65% of transactions are convenience only, while 25% are fuel only, and 10% are a mix of both. Note: All figu
Slide 8: Snapshot of Key Business Metrics
SNAPSHOT OF KEY BUSINESS METRICS Merch. SSS – US1 Merch. SSS - Europe Merch. SSS - Canada1 +7.7% +3.4% +19.9% SS Volume - US1 SS Volume - Europe SS Volume - Canada1 Q1 -21.2% -12.4% -25.6% Adj. EBITDA Growth Y/Y Adj. EPS Growth Y/Y Leverage Ratio +31% +48% 1.26 Merch. & Service Sales Fuel Gallons So
Slide 9: Our Vision and Mission
OUR VISION AND MISSION To become the world’s preferred destination Our Vision for fuel and convenience. To make our customers’ lives a little easier Our Mission every day. 9
Slide 10: Content
CONTENT 1 Company Highlights 2 U.S. Industry Overview 3 Competitive Advantages Increasing 4 Our Ambition 5 Shareholder Value 10
Slide 11: Snapshot of U.S. Fuel & Convenience Industry
SNAPSHOT OF U.S. FUEL & CONVENIENCE INDUSTRY Population of U.S. Convenience Stores Store Type Single Stores Chain Stores 2019 2006 152,720 Non-Fuel 20% 145,119 total total stores stores 175,000 Fuel 80% 150,000 57,315 57,031 56,836 56,476 57,792 57,612 56,226 55,401 54,917 54,526 125,000 55,611 55,1
Slide 12: Attractive Channel Within Broader Retail
12 2004 $132.1 2005 $151.1 (in billions) 2006 $163.6 2007 $168.5 2008 $173.9 2009 $182.4 2010 $190.4 2011 $195.0 2012 $199.3 2013 $204.0 CAGR 4.4% Industry Inside Sales 2014 $213.5 2015 $225.8 2016 $233.0 Source: NACS State of the Industry Report of 2019 Data. 2017 $237.0 2018 $242.2 2019 $251.9 200
Slide 13: ... and Recession Resilient
… AND RECESSION RESILIENT Industry Inside Sales (in billions) Dot-Com Bubble Great Recession $251.9 $242.2 $237.0 $233.0 +5% +8% $225.8 $213.5 $204.0 $199.3 $195.0 $190.4 $182.4 $173.9 $168.5 $163.6 $151.1 $132.1 $116.2 $112.0 $109.3 $104.1 $99.8 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 200
Slide 14: Expert in Sale of Age-Restricted Products
EXPERT IN SALE OF AGE-RESTRICTED PRODUCTS Product Category Share by Channel 100% 90% Convenience store channel is the leader in 97% sales of age-restricted products, with market 90% 80% share gains in 2019 of ~200 bps in OTP, 70% ~60 bps in Cigarettes and ~500 bps in Beer. 60% 61% 59% 50% 49% 40% 44
Slide 15: U.S. National Fuel Margin Trending Higher
U.S. NATIONAL FUEL MARGIN TRENDING HIGHER While labor costs per hour for top quartile performers 2014 - 2019 average: 22.2 cpg were 1.5x that of the bottom quartile, their inside gross profit dollars per labor hour were more than double, effectively easing pressure on breakeven. 24.8 24.0 2008 - 201
Slide 16: Cost Headwinds Favour Larger Chains
COST HEADWINDS FAVOUR LARGER CHAINS Card Costs to Industry Average Associate Wage (in billions) (in dollars per hour) $11.30 $11.8 $11.4 $11.2 $11.2 $11.1 $11.1 $10.74 $10.1 $10.0 $9.5 $9.0 $10.19 $8.4 $9.99 $7.6 $7.4 $6.6 $9.44 $5.4 $9.02 $8.76 $8.56 $3.8 $8.51 $8.46 $8.37 $8.27 2004 2005 2006 2007
Slide 17: Content
CONTENT 1 Company Highlights 2 U.S. Industry Overview 3 Competitive Advantages Increasing 4 Our Ambition 5 Shareholder Value 17
Slide 18: Competitive Advantages
COMPETITIVE ADVANTAGES • Significant scale and buying power through broad footprint and global brand. • Strong leadership team and decentralized business model. • Long-standing cost discipline embedded in our company culture and DNA. • Proven ability to integrate acquisitions. • Well positioned with
Slide 19: Global Footprint with Lots of White Space
GLOBAL FOOTPRINT WITH LOTS OF WHITE SPACE Canada Europe1 2,127 2,714 stores stores United States Int’l 7,147 2,335 stores stores Core network International licensees Note: Store count as at July 19, 2020. 1 Europe store count includes 993 automats; presence in Russia (33 stores) is not shown on map.
Slide 20: Going Global with Circle K Brand
GOING GLOBAL WITH CIRCLE K BRAND Higher brand awareness and loyalty Unified corporate culture Greater purchasing power Rollout of national promotions Exclusive product launches Private label and product innovation ~86% of stores in the U.S. are operating under the Circle K banner, 89% in Canada, and
Slide 21: Highly Experienced Executive Team
HIGHLY EXPERIENCED EXECUTIVE TEAM Brian Hannasch Claude Tessier President & Chief Executive Chief Financial Officer Officer • 18 yrs with ACT • 4 years with ACT • 30 yrs in Oil & Gas / Retail • 27 yrs in Retail Deborah Hall Lefevre Kevin A. Lewis Ina Strand Technology Marketing Human Resources • 3 y
Slide 22: Long-Standing Cost Discipline
LONG-STANDING COST DISCIPLINE Lean corporate structure Adj. SG&A Expense Growth Y/Y 3.7% Decentralized business units 1.6% average 2.8% 2.1% Procurement efficiency 1.7% 1.9% 1.5% 2.0% 0.2% Continuous benchmarking 0.8% -0.3% -0.9% Cost efficient systems Q1'21 LTM 2011 2012 2013 2014 2015 2016 2017 20
Slide 23: Proven Ability to Integrate Acquisitions
PROVEN ABILITY TO INTEGRATE ACQUISITIONS Garvin Revenues Oil Compac Food Stores Winners Sterling Stores Pump N Shop 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Deals 2 3 4 8 1 4 5 2 7 7 4 3 4 3 3 Stores 1,706 45 75 421 46 107 70 47 326 2,506 166 1,660 515 442 2,055 Sin
Slide 24: Norway Laboratory Is a Significant Advantage
NORWAY LABORATORY IS A SIGNIFICANT ADVANTAGE E-mob platform and internal 450+ fast chargers now installed in Home and workplace charging capabilities established Norway on more than 80 sites launched in Norway +179 458 +150 279 129 • Full time dedicated team. FY18 FY19 FY20 Circle K Grønn Kontakt Te
Slide 25: Impressive EBITDA-to-FCF Conversion
IMPRESSIVE EBITDA-TO-FCF CONVERSION 38% 39% 32% 34% 39% 41% 39% 32% 31% Target Allocation 30% of Capex 4,525 New to Industry Aiming to deploy 35% to 40% of 2,043 EBITDA towards capital expenditures 1/3 3,583 in US$ millions of total capex 1,844 2,980 1,269 Commercial Programs 2,396 1,163 2,331 889 9
Slide 26: Efficient Structure Below EBITDA Line
EFFICIENT STRUCTURE BELOW EBITDA LINE EBITDA 100% D&A 30% Net financial expenses 6% Income taxes 12% Net earnings 52% Low cost of debt and global corporate structure permits high conversion of EBITDA to net earnings. Note: All figures based on results for fiscal year ended April 26, 2020; includes t
Slide 27: Solid Balance Sheet and Capacity to Invest
SOLID BALANCE SHEET AND CAPACITY TO INVEST Circle K No transformational acquisition Statoil Fuel & Retail, Topaz, IOL, CST, Cracker Barrel, Investment Grade The Pantry Holiday, Jet Pep Credit Rating Rapid deleveraging after Leverage after SFR 3,042 stores acquired transformational acquisition Strong
Slide 28: Content
CONTENT 1 Company Highlights 2 U.S. Industry Overview 3 Competitive Advantages Increasing 4 Our Ambition 5 Shareholder Value 28
Slide 29: Our Ambition: Double Again
OUR AMBITION DOUBLE AGAIN by making our customers’ lives a little easier every day! Double adjusted EBITDA1, driven by our value creation equation and a focus on organic growth. 1 Earnings before interest, tax, depreciation, amortization, and impairment, adjusted for specific items. 29
Slide 30: Principles for Profitable Growth
PRINCIPLES FOR PROFITABLE GROWTH Aim to deliver an EBIT-based return on capital ROCE employed of more than 15%. Aim to keep our adjusted net debt-to-EBITDA Leverage Ratio ratio below 2.25, allowing for flexibility following significant acquisitions. Capital Aim to maintain a level of capex spending
Slide 31: More Balanced Growth Going Forward
MORE BALANCED GROWTH GOING FORWARD Historical Projected Organic 30% M&A Organic 50% 50% Acquisitions 70% Greater focus on the offering and customer journey is expected to drive higher share of organic growth. 31
Slide 32: Key Focus Areas
KEY FOCUS AREAS Customer Journey Offering Network • Be recognized by our customers • Succeed with food • Continue to grow market share in for a differentiated experience, in • Capture new opportunities the U.S. the way we deliver and • Further develop our retail • Expand to new growth markets. conti
Slide 33: Core Initiatives
CORE INITIATIVES Customer Journey Offering Network • Making Circle K the convenience • Food at scale • U.S. expansion brand of choice • Merchandise pricing, promotion, • Profitable ramp-up of new stores • Customer journey innovation and assortment • Profitable remodels • Customer loyalty • Age-restr
Slide 34: Content
CONTENT 1 Company Highlights 2 U.S. Industry Overview 3 Competitive Advantages Increasing 4 Our Ambition 5 Shareholder Value 34
Slide 35: Increasing Shareholder Value
INCREASING SHAREHOLDER VALUE • Long track record of delivering solid results. • Increasing free cash flow generation. • Rewarding shareholders through a steadily increasing dividend. • Strong focus on reinvesting profitably in our operations and improving the ROCE. 35
Slide 36: Delivering Strong Results
36 in millions of gallons in US$ millions 2011 4,195 2011 6,184 2012 4,613 2012 6,599 2013 6,945 2013 7,602 2014 7,626 2014 7,953 2015 8,135 2015 8,276 2016 10,502 2016 10,072 IFRS 16 lease accounting standard. CAGR 15.1% CAGR 10.1% 2017 11,793 2017 10,724 Fuel Volume Sold 2018 14,525 2018 12,976 20
Slide 37: ... and Rewarding Shareholders Accordingly
… AND REWARDING SHAREHOLDERS ACCORDINGLY Dividend per Share CAGR 26.6% in CAD cents per share 27.25 26.50 22.50 18.50 17.38 13.38 5.00 4.58 3.17 9.50 6.80 LTM 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Increased quarterly dividend by 12% in Q3 2020 to an annualized payment of 28¢ per share. 3
Slide 38: Strong Organic Growth Driving Returns
STRONG ORGANIC GROWTH DRIVING RETURNS Return on Capital Employed IAS 17 IFRS 16 avg. 15.4% 19.2% 19.0% We have repeatedly 18.1% proven our ability to 16.4% 16.2% 15.8% 15.0% increase our ROCE 14.1% 13.3% 13.2% following the integration 12.0% 11.0% of large acquisitions LTM 2011 2012 2013 2014 2015 2
Slide 39: Relative Stock Performance
RELATIVE STOCK PERFORMANCE Performance comparative sur 10 ans Alimentation Couche-Tard S&P/TSX Composite S&P 500 95% 83.7% 75% 55% 55.1% 35% 23.3% 15% -5% -25% Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Source: FactSet, based on the closing prices at the end of June
Slide 40: Financial Highlights
FINANCIAL HIGHLIGHTS in US$ millions, unless otherwise noted 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 CAGR Total revenues 18,543 22,980 35,549 37,962 34,530 34,145 37,905 51,394 59,118 54,132 13% Gross profit 2,752 2,975 4,607 4,988 5,268 6,082 6,482 8,112 9,195 9,735 15% EBITDA 734 841 1,3
Slide 41: Investment Highlights
INVESTMENT HIGHLIGHTS • Global rebrand initiative permits better leverage of broad scale. Size and Scale • More flexibility to compete compared to small-size operators. • Decentralized model drives accountability and entrepreneurship. Strong Culture • Cost discipline and lean operations are a major
Slide 42: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS Karinne Bouchard Head of Investor Relations and Treasurer Karinne.Bouchard@couche-tard.com 450-662-6632 x. 4736 Jean Marc Ayas Manager, Investor Relations JeanMarc.Ayas@couche-tard.com 450-662-6632 x. 4619 42
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