MONTREAL — Convenience store giant Alimentation Couche-Tard Inc. said its profits rose in the fourth quarter as consumers travelled more and it continued to expand its global network.
The Laval, Que.-based company reported a fourth-quarter profit of US$670.7 million, up from US$477.7 million a year earlier as it both sold more gasoline and increased the range of food options at its stores.
"We feel good about miles driven, despite all the economic uncertainty that we read about," said chief executive Brian Hannasch on an earnings call Wednesday.
The company has also seen sales rise as it buys up other operators. Just in the last six months Couche-Tard has signed deals to buy 45 retail sites from Big Red Stores, 112 fuel and convenience sites from Mapco Express Inc. and 65 car washes from True Blue Car Wash, with all three deals focused on the U.S., while it also made a roughly $4.5 billion deal to buy some 2,193 retail sites in Europe from TotalEnergies.
There are likely more deals ahead, said Hannasch, estimating the company will do around four or five material deals for the year.
"Our balance sheet is robust. We've got plenty of dry powder. And we've got an organization that's capable. So we're ready to do more and just need the right opportunities at the right values."
The company is keen on North America, but is also open to South America and Asia as opportunities arise, Hannasch said.
Opportunities have increased as private equity should largely be on the sidelines, he said, as high interest rates squeeze some buyers.
Within the existing network, same-store merchandise sales were up 3.3 per cent in the U.S. and 5.9 per cent in Canada, while same-store fuel sales were up 0.8 per cent in the U.S. and six per cent in Canada.
Merchandise sales have been held back in part by softness in tobacco sales. Hannasch blamed this on the illicit market, which he said is approaching 40 per cent of total volume in Canada.
"So if you say, hey, tobacco is 30 per cent of sales and that there's zero or negative growth, you can do some math and say that the rest of the business is actually very strong."
Couche-Tard, which keeps its books in U.S. dollars, said its profit for the quarter amounted to 68 cents per diluted share for the 13-week period ended April 30, up from 46 cents per share in the same quarter last year that included 12 weeks.
Overall revenue totalled US$16.26 billion, down from US$16.43 billion a year earlier.
Merchandise and service revenue was US$4.18 billion, up from US$3.76 billion.
On an adjusted basis, Couche-Tard said it earned 71 cents per diluted share in its latest quarter compared with an adjusted profit of 55 cents per diluted share a year earlier.
Analysts on average had expected an adjusted profit of 49 cents per share, based on estimates compiled by financial markets data firm Refinitiv.
This report by The Canadian Press was first published June 28, 2023.
Companies in this story: (TSX:ATD)
The Canadian Press
Note to readers: This is a corrected story. A previous version said Q4 revenue was up when in fact it was down.
