Alimentation Couche-tard Inc. · TSX:ATD
Alimentation Couche-tard — Investor Presentation (May 2019)
43 slides from Alimentation Couche-tard's investor presentation, May 2019
Slide 1: Investor Presentation
INVESTOR PRESENTATION Alimentation Couche-Tard May 2019
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 • Largest company in Canada by revenues, 15th largest by market capitalization. • 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% since 2011 and prof
Slide 6: Global Leader in Fuel & Convenience Retail
GLOBAL LEADER IN FUEL & CONVENIENCE RETAIL Store Count People Countries 16,072 ~130,000 25 incl. CAPL sites globally incl. int’l licensees Fuel Gallons Sold Customers Served Cups of Coffee Sold ~43 million ~9 million ~750,000 per day (excl. CAPL) per day per day Hot Dogs Sold Polar Pop Sold Vehicles
Slide 7: Revenue and Gross Profit Mix
REVENUE AND GROSS PROFIT MIX Gross Profit 2% 13% Revenue Geographic Mix Product Mix 12% 2% 25% 20% 20% 43% 55% 68% 73% 67% 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 figures b
Slide 8: Momentum Across Number of Key Metrics
MOMENTUM ACROSS NUMBER OF KEY METRICS Merch. SSS – US1 Merch. SSS - Europe Merch. SSS - Canada1 +4.5% +2.9% +4.9% SS Volume - US1 SS Volume - Europe SS Volume - Canada1 Q3 +0.8% -1.4% -0.6% EBITDA Growth Y/Y Adj. EPS Growth Y/Y Adj. Leverage Ratio +58% +104% 2.38 Merch. & Service Sales Fuel Gallons
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 2017 2006 154,958 Non-Fuel 21% 145,119 total total stores stores 175,000 Fuel 79% 150,000 57,315 57,031 56,836 56,476 56,226 55,401 54,917 54,526 125,000 55,611 55,162 54,492 55,3
Slide 12: Attractive Channel Within Broader Retail
12 2003 $116.2 2004 $132.1 (in billions) 2005 $151.1 2006 $163.6 2007 $168.5 2008 $173.9 2009 $182.4 2010 $190.4 2011 $195.0 CAGR 5.2% 2012 $199.3 Industry Inside Sales 2013 $204.0 2014 $213.5 Source: NACS State of the Industry Report of 2017 Data. 2015 $225.8 2016 $233.0 2017 $237.0 2003 $4.0 2004
Slide 13: ... and Recession Resilient
… AND RECESSION RESILIENT Industry Inside Sales (in billions) Dot-Com Bubble Great Recession $237.0 $233.0 $225.8 +5% +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 2009 2010 2011 20
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 clear 95% 89% 80% leader in sales of age-restricted products 70% 60% 66% 60% 50% 50% 40% 43% 30% 36% 36% 35% 19% 20% 25% 9% 6% 5% 10% 5% 4% 4% 4% 4% 3% 1% 1% 0% 0% 0% Convenience Foo
Slide 15: U.S. National Fuel Margin Trending Higher
U.S. NATIONAL FUEL MARGIN TRENDING HIGHER Industry breakeven increased ~28% y/y in 2017. 2013 - 2017 average: 20.7 cpg More importantly, the bottom 50% operators would be losing money below a margin of ~17 cpg. 22.4 2008 - 2012 average: 16.9 cpg 21.8 cents per gallon 20.4 19.9 19.0 18.5 18.4 18.1 16
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) $11.4 $10.19 $11.2 $11.2 $11.1 $9.99 $10.1 $10.0 $9.5 $9.0 $8.4 $9.44 $7.6 $7.4 $9.02 $6.6 $8.76 $5.4 $8.56 $8.51 $8.46 $8.37 $8.27 $3.8 $3.2 $7.95 2003 2004 2005 2006 2007 2008 2009
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 Europe2 2,169 2,709 stores stores United States1 Int’l 9,048 2,146 stores stores Core network International licensees Note: Store count as at Q3 2019 ended February 3, 2019. 1 U.S. store count includes 1,284 CAPL sites. 2 Europe store count includes 9
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 ~78% of stores1 in the U.S. are operating under the Circle K banner, 81% in Canada, an
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 • 3 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 • 2 y
Slide 22: Long-Standing Cost Discipline
LONG-STANDING COST DISCIPLINE Lean corporate structure Decentralized business units Procurement efficiency Continuous benchmarking Cost efficient systems Automation and robotics Cost containment is part of Couche-Tard’s DNA. 22
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 260+ fast chargers now installed in Home and workplace charging capabilities established Norway, in total 400 chargers in EUR launched in Norway • Full time dedicated team. • 133 new fast chargers installed in Norway (40 brande
Slide 25: 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 Investment Grade The Pantry Barrel, Holiday, Jet Pep Credit Rating Rapid deleveraging after Leverage at SFR acquisition 2,656 stores acquired transformational acquisiti
Slide 26: Impressive EBITDA-to-FCF Conversion
IMPRESSIVE EBITDA-TO-FCF CONVERSION Aiming to deploy ~40% of EBITDA New to Industry towards capital expenditures 41% 39% 39% 39% 1/3 3,639 38% of total capex 34% 32% 1,944 30% in US$ millions 2,980 1,269 Commercial Programs 2,396 2,331 889 984 1/3 1,876 884 673 1,640 706 of total capex 866 608 1,376
Slide 27: Efficient Structure Below EBITDA Line
EFFICIENT STRUCTURE BELOW EBITDA LINE EBITDAR 112% Rent 12% EBITDA 100% D&A 29% Net financial expenses 9% Income taxes 9% Net earnings 53% Low cost of debt and global corporate structure permits higher conversion of EBITDA to net earnings. Note: All figures based on LTM results as at Q3 F2019 ended
Slide 28: Meaningful Control Over Operating Assets
MEANINGFUL CONTROL OVER OPERATING ASSETS Total Network 2,300 2,300 4,353 5,723 Control over our real Substantial intrinsic estate provides us with value embedded in our the flexibility needed to real estate portfolio 6,087 operate efficiently 4,717 Land Buildings Owned Leased Third-Party Control ~82
Slide 29: Content
CONTENT 1 Company Highlights 2 U.S. Industry Overview 3 Competitive Advantages Increasing 4 Our Ambition 5 Shareholder Value 29
Slide 30: Our Ambition: Double Again
OUR AMBITION DOUBLE AGAIN by making our customers’ lives a little easier every day! Double the business again, driven by our value creation equation and a focus on organic growth. 30
Slide 31: 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-EBITDAR Adj. ratio below 2.50, allowing for flexibility following Leverage Ratio significant acquisitions. Capital Aim to maintain a level of capex spe
Slide 32: More Balanced Growth Going Forward
MORE BALANCED GROWTH GOING FORWARD Historically Projected Organic 30% M&A Organic 50% 50% M&A 70% Greater focus on the offering and customer journey is expected to drive higher share of organic growth. 32
Slide 33: 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 34: 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 35: Content
CONTENT 1 Company Highlights 2 U.S. Industry Overview 3 Competitive Advantages Increasing 4 Our Ambition 5 Shareholder Value 35
Slide 36: 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. 36
Slide 37: Delivering Strong Results
37 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 CAGR 19.4% CAGR 11.2% 2016 10,502 2016 10,072 Fuel Volume Sold 2017 11,793 2017 10,724 2018 14,525 2018 12,976 Merchandise and Service Revenues LTM
Slide 38: ... and Rewarding Shareholders Accordingly
… AND REWARDING SHAREHOLDERS ACCORDINGLY Dividend per Share CAGR 28.7% 0.37 0.35 in C$ per share 0.27 0.19 0.06 0.14 0.10 0.09 2011 2012 2013 2014 2015 2016 2017 2018 Increased quarterly dividend by 25% in Q3 2019 to an annualized payment of 50¢ per share. 38
Slide 39: Strong Organic Growth Driving Returns
STRONG ORGANIC GROWTH DRIVING RETURNS Return on Capital Employed avg. 15.6% 19.2% 19.0% 18.1% We have repeatedly 16.2% 15.8% proven our ability to 13.9% increase our ROCE 13.3% following the integration 12.0% 11.0% of large acquisitions LTM 2011 2012 2013 2014 2015 2016 2017 2018 Moving towards goal
Slide 40: Relative Stock Performance
RELATIVE STOCK PERFORMANCE 5-Year Stock Performance vs. Key Indices ATD.B-T TSEC-T SPX 180% 160% 157.0% 140% 120% 100% 80% 60% 55.6% 40% 20% 12.2% 0% -20% Nov-14 Nov-15 Nov-16 Nov-17 Nov-18 May-14 May-15 May-16 May-17 May-18 May-19 Source: Nasdaq IR Insight, based on the closing prices at the end of
Slide 41: Financial Highlights
FINANCIAL HIGHLIGHTS in US$ millions, unless otherwise noted 2011 2012 2013 2014 2015 2016 2017 2018 LTM CAGR Total revenues 18,543 22,980 35,549 37,962 34,530 34,145 37,905 51,394 59,619 16% Gross profit 2,752 2,975 4,607 4,988 5,268 6,082 6,482 8,112 9,228 17% EBITDA 734 841 1,376 1,640 1,876 2,33
Slide 42: 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 43: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS Karinne Bouchard Senior Director, 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 43
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