Alimentation Couche-tard Inc. · TSX:ATD
Alimentation Couche-tard — Investor Presentation (March 2023)
66 slides from Alimentation Couche-tard's investor presentation, Mar 16, 2023
Slide 1: Investor Presentation
ALIMENTATION COUCHE-TARD INVESTOR PRESENTATION March 2023 1
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: A History of Entrepreneurship & Growth
A HISTORY OF ENTREPRENEURSHIP & GROWTH 2012 2016 2022 Alain Bouchard 2001 Expansion into Europe Expansion in Ireland 2020 Started EV journey Our Founder Entry into U.S. Acquired Statoil Fuel & Canada Grow into Asia in NA & Retail, a leading Acquired Topaz, a leader in Ireland Acquired Circle K Launc
Slide 4: Values We Live By
VALUES WE LIVE BY We work together to make it easier for We treat the business as our own. We our customers and colleagues. We stay seek out problems, act quickly to solve humble and celebrate shared them, and deliver better results. We take successes. We have fun and care for responsibility, and wh
Slide 5: 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 6: Recent Highlight - ACT Acquires True Blue Car Wash LLC
RECENT HIGHLIGHT - ACT ACQUIRES ALL OF THE MEMBERSHIP INTERESTS OF TRUE BLUE CAR WASH LLC ➢ True Blue currently operates 65 car washes conveniently located in high-traffic areas in Arizona, Texas, Illinois, and Indiana with a strong pipeline of future NTI sites planned and under development ➢ Couche
Slide 7: Content
CONTENT 1 Company Highlights 2 U.S. Industry Overview 3 Competitive Advantages 4 Our Ambition 5 EV Transition 6 Sustainability Increasing Shareholder 7 Value Alimentation Couche-Tard | Investor Presentation 7
Slide 8: Company Highlights
COMPANY HIGHLIGHTS Ticker Symbol TSX: ATD ➢ Coast-to-coast presence in Canada and located in 47 of 50 U.S. states. ➢ Leading market share across many markets in Europe. ➢ EBITDA1 CAGR of ~20%2 since 2012 and profitable since IPO in 1986. ➢ Track record of generating shareholder value with average RO
Slide 9: Global Leader in Fuel & Convenience Retail
GLOBAL LEADER IN FUEL & CONVENIENCE RETAIL Store Count Our People Countries / Territories 14,008 ~122,000 24 incl. int’l licensees globally incl. int’l licensees Fuel Gallons Sold Customers Served1 Cups of Coffee Sold1 ~35 million ~9 million ~750,000 per day per day per day Hot Dogs Sold1 Polar Pop
Slide 10: Revenue and Gross Profit Mix
REVENUE AND GROSS PROFIT MIX Gross Profit(1,2) 2% 12% Revenue Geographic Mix Product Mix 1% 13% 26% 19% 21% 47% 51% 66% 72% 69% United States Europe & Other 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:
Slide 11: Investment Highlights
INVESTMENT HIGHLIGHTS Merch. SSS – US1 SS Volume – US1 Net Earnings Growth Y/Y3 +4.8% (2.3%) -1.2% Adj. EBITDA Growth Y/Y2,3 Merch. SSS – Europe and Other SS Volume – Europe and Other Regions2 Regions1 Diluted EPS Growth Y/Y3 -0.2% Q3 +3.5% (1.2%) +4.3% Leverage Ratio2 Merch. SSS – Canada1 SS Volume
Slide 12: Our Vision and Mission
OUR VISION AND MISSION To become the world’s preferred destination for convenience and Our Vision mobility. Our Mission To make our customers’ lives a little easier every day. Alimentation Couche-Tard | Investor Presentation 12
Slide 13: Content
CONTENT 1 Company Highlights 2 U.S. Industry Overview 3 Competitive Advantages 4 Our Ambition 5 EV Transition 6 Sustainability Increasing Shareholder 7 Value Alimentation Couche-Tard | Investor Presentation 13
Slide 14: Snapshot of U.S. Fuel & Convenience Industry
SNAPSHOT OF U.S. FUEL & CONVENIENCE INDUSTRY Store Type Population of U.S. Convenience Stores Single Stores Chain Stores 2021 Non-Fuel 2006 148,026 21% 145,119 total total stores stores 175000 Fuel 150000 79% 57,315 57,031 56,836 56,476 57,792 57,612 58,078 56,226 55,401 54,917 54,526 58,690 55,611
Slide 15: Attractive Channel Within Broader Retail
2005 $151.1 2006 $163.6 Source: NACS State of the Industry Report of 2021 Data. 2007 $168.5 (in billions) 2008 $173.9 2009 $182.4 2010 $190.4 Alimentation Couche-Tard | Investor Presentation 2011 $195.0 2012 $199.3 2013 $204.0 2014 $213.5 $225.8 CAGR 3.9% 2015 Industry Inside Sales 2016 $233.0 2017
Slide 16: ... and Recession Resilient
… AND RECESSION RESILIENT Industry Inside Sales (in billions) Dot-Com Bubble Great Recession $277.9 +5% +8% $255.6 $251.9 $242.2 $237.0 $233.0 $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
Slide 17: ACT Performance During Past Recessions
ACT PERFORMANCE DURING PAST RECESSIONS Growth of Same-Store Merchandise Revenues (%)1 U.S. RTF Gross Margin (CPG)3 25.0% 50.00 US SSS 3 EUR SSS CAN SSS 3 20.0% 44.00 15.0% 38.00 10.0% 32.00 5.0% 26.00 - 20.00 (5.0%) 14.00 (10.0%) 8.00 Q2-FY04 Q3-FY04 Q4-FY04 Q1-FY05 Q2-FY05 Q3-FY05 Q4-FY05 Q1-FY06 Q
Slide 18: Expert in Sale of Age-Restricted Products
EXPERT IN SALE OF AGE-RESTRICTED PRODUCTS Product Category Share by Channel 100% 90% 95% Convenience store channel continues to be 88% 80% a leader in sales of age-restricted products. 70% 60% 41% 50% 53% 36% 47% 30% 40% 37% 30% 32% 30% 13% 27% 11% 20% 22% 6% 4% 15% 3% 3% 2% 10% 2% 2% 2% 1% 0% Conve
Slide 19: U.S. National RTF Margin Trending Higher
U.S. NATIONAL RTF MARGIN1 TRENDING HIGHER 2014 - 2021 average: 24.9 cpg 35.2 30.9 2008 - 2013 average: 17.2 cpg cents per gallon 24.8 24.0 22.4 21.8 20.4 19.9 19.0 18.1 18.5 18.4 16.3 13.1 CAGR 4.2% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Rising breakeven point for sing
Slide 20: US C-Store RTF Breakeven Gross Margin
US C-STORE RTF BREAKVEN GROSS MARGIN (CPG)1,2 60.0 56.0 52.0 48.0 44.0 40.0 36.0 32.0 28.0 24.0 20.0 +10.8 16.0 +8.8 12.0 8.0 FY2018 FY2019 FY2020 FY2021 FY2022 ACT B/E US c-store bottom quartile B/E US c-store bottom quartile actual Fuel breakeven margins have increased and the spread between ACT a
Slide 21: Cost Headwinds Favour Larger Chains
COST HEADWINDS FAVOUR LARGER CHAINS Card Costs to Industry Average Associate Wage $13.5 $12.80 (in billions) (in dollars per hour) $11.8 $11.4 $11.2 $11.2 $11.1 $11.1 $10.7 $10.1 $10.0 $11.49 $9.5 $11.30 $9.0 $8.4 $10.74 $7.6 $7.4 $6.6 $10.19 $9.99 $5.4 $9.44 $9.02 $3.8 $8.76 $8.56 $8.51 $8.46 $8.37
Slide 22: Content
CONTENT 1 Company Highlights 2 U.S. Industry Overview 3 Competitive Advantages 4 Our Ambition 5 EV Transition 6 Sustainability Increasing Shareholder 7 Value Alimentation Couche-Tard | Investor Presentation 22
Slide 23: 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 company culture and DNA. ➢ Proven ability to integrate acquisitions. ➢ Solid balance sheet and
Slide 24: Our Sites: A Global Family of Merchants
A GLOBAL FAMILY OF MERCHANTS 24 COUNTRIES SITES TOTAL ~14,330 OUR UNITED-STATES 6,983 CANADA 2,272 EUROPE AND OTHER REGIONS1 3,086 INTERNATIONAL2 1,991 Core network International licensees Note: Store count as of January 29, 2023. Includes 978 automats 1 Europe and Other Regions store count includes
Slide 25: 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 ~91% of stores in the U.S. are operating under the Circle K banner, 97% in Canada, and
Slide 26: Highly Experienced Retail & Fuel Executive Team
HIGHLY EXPERIENCED RETAIL & FUEL EXECUTIVE TEAM Brian Hannasch Claude Tessier Alex Miller Hans-Olav Høidahl President and Chief Financial Officer Chief Operating Officer EVP, Operations, Europe Chief Executive Officer Ed Dzadovsky Kevin Lewis Ina Strand Aaron Brooks Louise Warner Chief Technology Of
Slide 27: Long-Standing Cost Discipline
LONG-STANDING COST DISCIPLINE Lean corporate structure Normalized Growth of Expenses1 9.4% Decentralized business units Procurement efficiency 3.7% 2.1% 2.5% Continuous benchmarking 1.5% 2.0% 0.2% 0.8% 2.0% average Cost efficient systems -0.9% -1.2% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Slide 28: Cost Optimization & Efficiencies
COST OPTIMIZATION & EFFICIENCIES Optimizing costs across broad range of categories Alimentation Couche-Tard | Investor Presentation 28
Slide 29: Proven Ability to Integrate Acquisitions
PROVEN ABILITY TO INTEGRATE ACQUISITIONS Revenues 2005- 2004 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012- Deals 2 34 7 4 3 4 3 3 0 1 3 4 Stores 1,706 1,137 2,506 166 1,660 515 442 2,055 0 30 367 91 Since 2004, Couche-Tard has successfully completed a total of 68 deals, adding ~10,700 stor
Slide 30: Uniquely Positioned to Win
UNIQUELY POSITIONED TO WIN Highly Convenient ➢ Strong core capabilities and customer value ➢ Adapt to evolving consumer demands Localized ➢ Complete localized pricing across network and work on data-driven assortment and promotion Innovating for future ➢ EV charging solutions ➢ Frictionless technolo
Slide 31: Impressive EBITDA to Free Cash Flow Conversion
Target Allocation IMPRESSIVE EBITDA TO FREE CASH FLOW1 CONVERSION of Capex Network Development 35% 38% 39% 32% 34% 39% 41% 39% 32% 32% 32% of total Capex 23% Commercial 5,244 Programs 5,061 Aiming to deploy 35% to 40% of EBITDA1 towards 2,203 Purchase of property and equipment, intangible 30% 4,446
Slide 32: Efficient Structure Below EBITDA Line
EFFICIENT STRUCTURE BELOW EBITDA LINE 1 EBITDA 100% 2 D&A 29% Net financial expenses 5% Income taxes 14% Net earnings 51% Low cost of debt and global corporate structure permits high conversion of EBITDA to net earnings. 1 Please refer to the “Non-IFRS Measures” section of this presentation for addi
Slide 33: Solid Balance Sheet and Capacity to Invest
SOLID BALANCE SHEET AND CAPACITY TO INVEST Investment Grade Credit Rating BBB / Baa2 S&P / Moody’s LEVERAGE RATIO 3 Leverage Ratio2,3 Q3/23 1.46 below 2.25 target Incremental Balance Sheet Capacity4 ~ $10 billion incremental debt Repurchased almost 27 million shares for ~$1.2 billion during the thir
Slide 34: Content
CONTENT 1 Company Highlights 2 U.S. Industry Overview 3 Competitive Advantages 4 Our Ambition 5 EV Transition 6 Sustainability Increasing Shareholder 7 Value Alimentation Couche-Tard | Investor Presentation 34
Slide 35: Our Ambition
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 Please refer to the “Non-IFRS Measures” section of this presentation for additional information on performance measures
Slide 36: Principles for Profitable Growth
PRINCIPLES FOR PROFITABLE GROWTH Aim to deliver an EBIT-based return on capital ROCE1 employed of more than 15%. Aim to keep our adjusted net debt-to-EBITDA Leverage Ratio1 ratio below 2.25, allowing for flexibility following significant acquisitions. Capital Aim to maintain a level of Capex spendin
Slide 37: More Balanced Growth Going Forward
MORE BALANCED GROWTH GOING FORWARD Historical Projected Organic Acquisitions 30% 40% Acquisitions Organic 70% 60% Greater focus on the offering and customer journey is expected to drive higher share of organic growth. Alimentation Couche-Tard | Investor Presentation 37
Slide 38: 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 39: Update on Core Initiatives
UPDATE ON CORE INITIATIVES CUSTOMER JOURNEY OFFERING NETWORK • Solid progress expanding Circle K fuel • Fast Food, Fresh ~4,000 stores at the end • Record year on New-to-Industry(NTI) brand in North America in FY22 with of FY22 (Q3-23 total of 4,539) with plans with a total of 135 in FY22 additional
Slide 40: Content
CONTENT 1 Company Highlights 2 U.S. Industry Overview 3 Competitive Advantages 4 Our Ambition 5 EV Transition 6 Sustainability Increasing Shareholder 7 Value Alimentation Couche-Tard | Investor Presentation 40
Slide 41: EV Transition
EV Transition ➢ Developments in Scandinavia; participation in several value pools ➢ Key learnings ➢ North America remains the world’s largest market for internal combustion engines, and despite regulatory attention, energy transition for transportation is only at a formative stage ➢ The co-existence
Slide 42: Developments in Scandinavia
DEVELOPMENTS IN SCANDINAVIA Number of chargers(1) Number of home and workplace chargers(1) 9,916 1,380 7,349 977 4,648 738 600 1,099 FY2020 FY2021 FY2022 Q3-23 FY2020 FY2021 FY2022 Q3-23 Number of sites with chargers(1) Circle K application users 300 272,547 262,419 191 142 159 108,116 35,218 FY2020
Slide 43: Key Learnings
KEY LEARNINGS ➢ Longer dwell times in relation to chargers have led to an increase in traffic in our stores and ultimately a positive lift in sales ➢ Positive incremental impact of installing additional chargers on our sites ➢ Increased engagement with customers as evidenced by the increase in Circl
Slide 44: Scaling in Europe and Penetrate North America
SCALING IN EUROPE AND PENETRATE NORTH AMERICA Steady network expansion in Scandinavia EU Invest to achieve > 25% market share Explore B2B possibilities Build a team and operating platform N.A Execute transit charging pilots Collaborate with other fuel retailers Announced rollout of 200 sites across
Slide 45: Our Location in Bamble, Norway
OUR LOCATION IN BAMBLE, NORWAY Recognized as “most important store of 2020” by ShopTalk LIVE Alimentation Couche-Tard | Investor Presentation 45
Slide 46: Content
CONTENT 1 Company Highlights 2 U.S. Industry Overview 3 Competitive Advantages 4 Our Ambition 5 EV Transition 6 Sustainability Increasing Shareholder 7 Value Alimentation Couche-Tard | Investor Presentation 46
Slide 47: Sustainability
SUSTAINABILITY ➢ ESG journey ➢ Our sustainability framework ➢ Our external commitments ➢ Celebrating our progress in sustainable practices Alimentation Couche-Tard | Investor Presentation 47
Slide 48: ESG Journey
ESG JOURNEY Alimentation Couche-Tard | Investor Presentation 48
Slide 49: Our Sustainability Framework
OUR SUSTAINABILITY FRAMEWORK Following our 2019 decision to elevate sustainability to a business lens, we have continued to develop our Environmental, Social and Governance (ESG) Sustainability Framework. This is how we approach sustainability and categorize all aspects of our sustainability work an
Slide 50: Our External Commitments
OUR EXTERNAL COMMITMENTS For more information on ACT’s company officers, please visit Report & Indexes - Couche-Tard Corpo Alimentation Couche-Tard | Investor Presentation 50
Slide 51: Celebrating Our Progress in Sustainable Practices
CELEBRATING OUR PROGRESS IN SUSTAINABLE PRACTICES Awarded by the world’s Celebrating our second year Scoring among the highest with an AA rating as most trusted providers of receiving this award, which a leader within our industry in managing the business sustainability recognizes companies that hav
Slide 52: Content
CONTENT 1 Company Highlights 2 U.S. Industry Overview 3 Competitive Advantages 4 Our Ambition 5 EV Transition 6 Sustainability Increasing Shareholder 7 Value Alimentation Couche-Tard | Investor Presentation 52
Slide 53: 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. Alimentation Couche-Tard | Investo
Slide 54: Delivering Strong Results...
DELIVERING STRONG RESULTS… (1,2) (1,2) Note: Starting in fiscal 2020, revenue and gross profit figures include impact from transition to IFRS 16 lease accounting standard 1 Please refer to the “Non-IFRS Measures” section of this presentation for additional information on performance measures not def
Slide 55: ... and Rewarding Shareholders Accordingly
… AND REWARDING SHAREHOLDERS ACCORDINGLY Announced quarterly dividend of CA 14¢ in Q3 2023 representing an annualized payment of CA 56¢ per share. Alimentation Couche-Tard | Investor Presentation 55
Slide 56: Strong Organic Growth Driving Returns
STRONG ORGANIC GROWTH DRIVING RETURNS 1 Return on Capital Employed IAS 17 IFRS 16 avg. 14.8% 19.2% We have repeatedly proven our ability to 16.2% 15.9% 15.8% 15.4% 15.0% increase our ROCE 14.1% 13.3% following the integration 12.0% 11.0% of large acquisitions 2013 2014 2015 2016 2017 2018 2019 2020
Slide 57: Relative Stock Performance
RELATIVE STOCK PERFORMANCE 10-Year Stock Performance vs. Key Indices Alimentation Couche-Tard S&P/TSX Composite S&P 500 800% 700% 626.7% 600% 500% 400% 300% 200% 161.5% 100% 58.3% 0% Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 Aug-19 Aug-20 Aug-21 Aug-22 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Feb-18 Feb-1
Slide 58: Financial Highlights
FINANCIAL HIGHLIGHTS in US$ millions, unless otherwise noted 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 CAGR Total revenues 22,980 35,549 37,962 34,530 34,145 37,905 51,394 59,118 54,132 45,760 62,810 11% 1 Gross profit 2,975 4,607 4,988 5,268 6,082 6,482 8,112 9,195 9,644 10,115 11,005
Slide 59: Non-IFRS Measures
NON-IFRS MEASURES Alimentation Couche-Tard | Investor Presentation 59
Slide 60: Non-IFRS Measures
NON-IFRS MEASURES Alimentation Couche-Tard | Investor Presentation 60
Slide 61: Non-IFRS Measures
NON-IFRS MEASURES Alimentation Couche-Tard | Investor Presentation 61
Slide 62: Non-IFRS Measures
NON-IFRS MEASURES Alimentation Couche-Tard | Investor Presentation 62
Slide 63: Non-IFRS Measures
NON-IFRS MEASURES Alimentation Couche-Tard | Investor Presentation 63
Slide 64: Non-IFRS Measures
NON-IFRS MEASURES Alimentation Couche-Tard | Investor Presentation 64
Slide 65: Investor Relations Contact
INVESTOR RELATIONS CONTACT Jean-Philippe D. Lachance Vice President, Investor Relations and Treasury Investor.Relations@couche-tard.com Alimentation Couche-Tard | Investor Presentation 65
Slide 66: Thank You
THANK YOUE FUTURE Alimentation Couche-Tard | Investor Presentation 66
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