Alimentation Couche-tard Inc. · TSX:ATD
Alimentation Couche-tard — Investor Presentation (March 2019)
44 slides from Alimentation Couche-tard's investor presentation, March 2019
Slide 1: Investor Presentation
ALIMENTATION COUCHE-TARD INC. INVESTOR PRESENTATION March 2019
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 Highlights
ALIMENTATION COUCHE-TARD INC. COMPANY HIGHLIGHTS 3
Slide 4: Key Facts
KEY FACTS Listed on the Toronto Stock Exchange ATD.B Largest Canadian Market Cap1 Approx. CA$41.7B company based on Revenue US$51.4B Fiscal Year 2018 revenues US$46.0B Q3 2019 YTD2 (+22%) Gross Profit US$8.1B Fiscal Year 2018 US$7.2B Q3 2019 YTD2 (+18%) EBITDA US$3.0B Fiscal Year 2018 5-year CAGR +5
Slide 5: Our Company Timeline
OUR COMPANY TIMELINE Acquisition of The Pantry Inc., a Entry into US leading convenience store Acquisition of the assets of operator in the southeastern Johnson Oil Company, United States. Inc., owner of 225 Bigfoot stores, all located in the Global Circle K brand is U.S. Midwest launched Acquisitio
Slide 6: Our North American Network
OUR NETWORK – NORTH AMERICA QUEBEC WEST Corporate stores: 454 CODO: 2 DODO: - CENTRAL CANADA Affiliated stores: 225 Corporate stores: 690 Our North American CODO: - QUEBEC EAST AND ATLANTIC DODO: - Affiliated stores: 129 Corporate stores: 356 WESTERN CANADA CODO: - Corporate stores: 305 DODO: - Netw
Slide 7: Our European Network
OUR NETWORK – EUROPE NORWAY Corporate stores: 229 CODO: 215 RUSSIA DODO: 24 Corporate stores: 33 inc. automats: 183 CODO: - DODO: - inc. automats: - SWEDEN Our European Corporate stores: 640 CODO: 103 DODO: 16 ESTONIA Network – inc. automats: 466 Corporate stores: 77 CODO: - DODO: - 2,709 stores, DE
Slide 8: Our Network – Worldwide
OUR NETWORK – WORLDWIDE Asia Mongolia Approximately 2,146 stores 16 United Arab China Emirates 75 under licensing Saudi 34 Arabia 14 agreements worldwide Hong Kong Mexico 335 753 Egypt Vietnam 306 26 Macau Well positioned to participate in Honduras 30 Guam many high growth markets. 35 13 Costa Rica
Slide 9: Couche-Tard Is a World Leader
COUCHE-TARD IS A WORLD LEADER Couche-Tard is a leading global convenience store operator with EBITDA of $3.6 billion • Well diversified across geographies • Focus on growing high margin categories Merchandise and Service Motor Fuel Other Total REVENUES $14,331M (25%) $41,930M (73%) $1,419M (2%) $57,
Slide 10: Couche-Tard Provides Two Valuable Resources
COUCHE-TARD PROVIDES TWO VALUABLE RESOURCES Convenience stores have an unmatched speed of transaction: The average time it takes a customer to walk in, purchase an item and depart is between 3 to 4 minutes TIME & CONVENIENCE Convenience stores are everywhere. There are 155, 000 convenience stores in
Slide 11: Our Growth Model
ALIMENTATION COUCHE-TARD INC. OUR GROWTH MODEL 11
Slide 12: Our Four Pillars of Value Creation – The Equation
OUR FOUR PILLARS OF VALUE CREATION – THE EQUATION Capital Organic Acquisitions Cost Structure & Value Growth Discipline Financial Creation Discipline GROWTH DISCIPLINE 12
Slide 13: Our Global Brand – Circle K
OUR GLOBAL BRAND – CIRCLE K 13
Slide 14: Our Growth – Network Store Count
OUR GROWTH – NETWORK STORE COUNT 2014 8,500 2015 10,100 2016 10,600 2017 10,900 2018 12,700 Notes: (1) Network store count excludes CAPL and International sites under licenses. (2) All figures rounded to nearest hundred. 14
Slide 15: Our Growth – Great Employees
OUR GROWTH – GREAT EMPLOYEES 2014 2015 2016 2017 2018 80,000 100,000 105,000 120,000 130,000 15
Slide 16: Organic Growth
ORGANIC GROWTH Growth Customer Focus Key Digital Categories Network Innovation Development Organic Growth Branding Execution Private Continuous Label Improvement 16
Slide 17: Organic – Sustainable Top-Line Growth
ORGANIC – SUSTAINABLE TOP-LINE GROWTH Growth Merchandise & Service Sales Road Transportation Fuel Volume (millions of US dollars) (millions of gallons) +11% CAG 12,899 +16% CAG 14,525 10,072 10,724 11,793 8,276 10,502 7,596 7,953 7,626 8,135 6,945 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 20
Slide 18: Proven Track Record of Successful Acquisitions
PROVEN TRACK RECORD OF SUCCESSFUL ACQUISITIONS Growth Garvin oil Compac Revenue ($) Food Stores Winners Sterling Stores Pump N Shop 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Leverage ratio(1) 2.2 0.8 0.4 1.5 1.3 1.0 0.8 0.3 0.4 2.0 (2) 1.3 1.2 (3) 1.0 (3) 1.1 (3) 2.5
Slide 19: Acquisitions Roadmap
ACQUISITIONS ROADMAP Growth Strike the Identify the Secure Swift and Realization of Reverse right deal at Deleverage right the right acquired efficient available synergies and opportunities price talent integration synergies learnings 19
Slide 20: Disciplined Buyer
DISCIPLINED BUYER Discipline Transaction mutiples: North America Transaction mutiples: Europe Apr-2014 May-2014 Dec-2014 July-2015 Aug-2016 Sep-2016 Apr-2017 Jan-2018 Sep-2018 Dec-2018 Date Apr-2012 Apr-2014 Jun-2015 Oct-2015 Oct-2015 Jan-2016 Feb-2016 Feb-2016 Energy Marathon Couche- Sunoco Couche-
Slide 21: Significant Synergies
SIGNIFICANT SYNERGIES Discipline To Date: $207M CST Brands Target: $215M Holiday Target: Stationstores $50M-$60M 21
Slide 22: Cost Control – Part of Our DNA
COST CONTROL – PART OF OUR DNA Discipline Disciplined Year over year expense growth Optimization Culture of Shared Continuous Services Benchmarking Strategy 2.1% 2.0% 1.5% 0.8% 0.2% Cost Sharing of AI, Robotics Best Practices Control 2014 2015 2016 2017 (1) 2018 5-YEAR AVERAGE: +1.3% Scalable Organi
Slide 23: Return on Capital Employed (ROCE)
RETURN ON CAPITAL EMPLOYED (ROCE) Discipline (in millions of US dollars) 19.0% 19.2% 16.2% 15.8% 13.3% 13.9% 11.0% 12.0% (1) 2012 2013 2014 2015 2016 2017 2018 Q3-2019 (1) These measures are presented as if our investment in CAPL was reported using the equity method as we believe it allows a more re
Slide 24: Strong and Scalable Free Cash Flow Conversion
STRONG AND SCALABLE FREE CASH FLOW CONVERSION Value Creation 1,226 890 1,065 215 979 102 2,935 85 276 865 2,412 2,396 360 351 162 614 1,971 63 145 1,640 104 79 279 1,376 77 172 172 87 56 65 1,056 807 899 457 459 563 2013 2014 2015 2016 2017 2018 EBITDA Net capex Dividends Income tax paid Interest Pa
Slide 25: Result of the Value Creation Equation: EPS and Dividend Growth
RESULT OF THE VALUE CREATION EQUATION : ADJUSTED DILUTED NET Value EARNINGS PER SHARE AND DIVIDEND GROWTH Creation ADJUSTED DILUTED EARNINGS PER SHARE ++19% 19% CAG CAG (in US dollars) 2.60 2.08 2.21 1.79 1.11 1.35 2013 2014 2015 2016 2017 2018 DIVIDENDS PAID + 24% CAG (in millions of US dollars) 14
Slide 26: Q3 Highlights
ALIMENTATION COUCHE-TARD INC. Q3 HIGHLIGHTS 26
Slide 27: Q3 2019 Highlights (vs. Q3 2018)
Q3 2019 HIGHLIGHTS (VS. Q3 2018) (in millions of US dollars, unless otherwise stated) +8.8% +22.3% +56.4% 4,178.3 2,833.9 1,125.4 Merchandise and Gross Profit Adjusted EBITDA(1) Service Revenues +104% +25% $1.08 12.5¢ Adjusted Diluted EPS(1) Quarterly Dividend per share (1) We believe these measures
Slide 28: Q3 2019 Highlights
Q3 2019 HIGHLIGHTS SAME-STORE MERCHANDISE & SERVICE REVENUES 4.5% 2.9% 4.9% US Europe Canada SAME-STORE FUEL VOLUME 0.8% -1.4% -0.6% US Europe Canada Note: All figures exclude contribution from CAPL. 28
Slide 29: Result of the Value Creation Equation: Stock Value Growth
RESULT OF THE VALUE CREATION EQUATION : STOCK VALUE GROWTH Value Creation 5-YEAR STOCK PERFORMANCE VS. INDEX 150% 125% 138.5% 100% 75% 50% 25% 12.6% 0% -25% Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Variance ACT stock price (%) Variance TSX index (%) Source: IR Insight by
Slide 30: Stellar 5-Year Stock Performance vs. Peers
STELLAR 5-YEAR STOCK PERFORMANCE VS. PEERS Value Creation 175% 150% 138.5% 125% 150% 138.5% 100% 125% 75% 100% 50% 75% 25% 50% 0% 25% -25% 0% -50% -25% -75% Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Cou
Slide 31: P/E Valuation Relative to Peers
P/E VALUATION RELATIVE TO PEERS Forward P/E vs. Peers 32x Couche-Tard Peer Average 28x 24x 20x 20.7x 16x 15.7x 12x Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Forward EV/EBITDA vs. Peers 16x Couche-Tard Peer Average 14x 12x 11.2x 10x 9.0x 8x 6x Mar-14 Sep-14 Mar-15 Sep-15 M
Slide 32: Market Expects Couche-Tard to Drive Strong EBITDA Conversion
MARKET EXPECTS COUCHE-TARD TO DRIVE STRONG EBITDA CONVERSION NTM EBITDAR to Net Income Bridge EBITDAR 112% 103% 124% Operating Lease EBITDA 100% 100% 100% D&A EBIT Interest Taxes Net Income 52% ~34% ~45% Notes: Parkland valuation pro-forma acquisition of SOL; Empire valuation pro-forma acquisition o
Slide 33: Couche-Tard Trading Multiple Benchmark
COUCHE-TARD TRADING MULTIPLE BENCHMARK NTM EV/EBITDA NTM P/E C-Stores Grocers C-Stores Grocers 11.2x 23.8x 10.9x 10.2x 19.3x 8.7x 17.9x 7.9x 8.0x 17.4x 16.7x 7.4x 15.7x 15.0x ATD.B CASY PKI MUSA MRU EMP.A L ATD.B CASY PKI MUSA MRU EMP.A L Notes: Parkland valuation pro-forma acquisition of SOL and Em
Slide 34: Ambition & Strategy
ALIMENTATION COUCHE-TARD INC. AMBITION & STRATEGY 34
Slide 35: Key Baseline Topics and Trends Across Business
KEY BASELINE TOPICS AND TRENDS ACROSS BUSINESS CURRENT BUSINESS KEY TRENDS ORGANIC GROWTH - GLOBAL MOBILITY E-COMMERCE TRAFFIC ASSESSMENT TRENDS • Multiple factors causing pressure • EV growth pending price parity • Growing but still small for e- on same-store sales (~2025) grocery • Pressure on sal
Slide 36: Our Vision
OUR VISION TO BECOME THE WORLD’S PREFERRED DESTINATION FOR CONVENIENCE AND FUEL 36
Slide 37: Our Mission and Ambition
OUR MISSION AND AMBITION DOUBLE AGAIN MAKE OUR CUSTOMERS' LIVES A LITTLE EASIER EVERY DAY AND DOUBLE THE BUSINESS… AGAIN ! • Deliver on our mission of making our customers' lives a little easier every day and be recognized for it in the industry. • Remain a growth stock and double the business again
Slide 38: Key Focus Areas
KEY FOCUS AREAS CUSTOMER JOURNEY OFFERING NETWORK Be recognized by our customers Succeed with food, capture for a differentiated experience, new opportunities and further Continue to grow market share in the way we deliver and develop our retail capabilities in the US and expand to continuously impr
Slide 39: Core Initiatives to Support Our Ambition
CORE INITIATIVES TO SUPPORT OUR AMBITION CUSTOMER JOURNEY OFFERING NETWORK • Food at scale • Making Circle K the convenience • US expansion brand of choice • Merchandise pricing, promotion and • Profitable ramp-up of new stores assortment • Customer journey innovation • Profitable remodels • Age res
Slide 40: Our Key Tools
OUR KEY TOOLS Global Customer Circle K Decentralized Model Disciplined Culture Customer Data Segmentation Scaled Relationship Artificial Intelligence – Famous For Private Label Benchmarking with Suppliers Super Cluster National and Global Norway Global Lean Operations/ Reverse Synergies Payments Pro
Slide 41: Financial Principles to Live By
WE WILL REMAIN LOYAL TO OUR FINANCIAL DISCIPLINE AND FOLLOW DEFINED PRINCIPLES FOR PROFITABLE GROWTH Aim to deliver >15% EBIT-based return on capital ROCE employed Financial Principles LEVERAGE Aim to keep Adjusted Net Debt-to-EBITDAR below 2.5x Allow to exceed in short periods after significant t
Slide 42: Our Delivery Model: Super Global, Super Local
OUR DELIVERY MODEL SUPER GLOBAL SUPER LOCAL 42
Slide 43: Key Competitive Advantages
KEY COMPETITIVE ADVANTAGES Organic Growth Synergies Reverse Synergies Low Tax Rate Disciplined Sound & Access to Capital Deleveraging Disciplined M&A Strategy Strategy 43
Slide 44: A Disciplined Convenience Store Operator and Integrator
A DISCIPLINED CONVENIENCE STORE OPERATOR AND INTEGRATOR • World class retailer and leading C-store operator with geographically diverse footprint Broad Geographic Footprint with Leading • Strong banners, with our new global convenience brand “Circle KTM” and our fuel banner “Ingo” at Market Position
Alimentation Couche-Tard — Investor Presentation (March 2019) on 6ix