ALIMENTATION COUCHE-TARD INC.
Investors Presentation April 2016
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”, “anticipate”, “believe”, “expect”, “plan”, “intend” or similar words suggesting future outcomes or statements regarding an outlook. All statements other than statements of historical fact contained in these slides are forward-looking statements. Forward-looking statements involve numerous assumptions, risks and uncertainties. A variety of factors, many of which are beyond Alimentation Couche-Tard Inc.’s (“Couche-Tard”) control, may cause actual results to differ materially from the expectations expressed in its forward-looking statements. These factors include, but are not limited to, the effects of the integration of acquired businesses and the ability to achieve projected synergies, fluctuations in margins on motor fuel sales, competition in the convenience store and retail motor fuel industries, foreign exchange rate fluctuations, and such other risks as described in detail from time to time in documents filed by Couche-Tard with securities regulatory authorities in Canada, including those risks described in Couche-Tard’s management’s discussion and analysis (MD&A) for the year ended April 26, 2015. Couche-Tard’s MD&A and other publicly filed documents are available on SEDAR at www.sedar.com. Unless otherwise required by law, Couche-Tard does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by it or on its behalf. No financial information presented in this presentation as of a date more recent than April 26, 2015 has been audited.
While the information contained in this presentation is believed to be accurate, Couche-Tard expressly disclaims any and all liability for any losses, claims or damages of whatsoever kind based upon the information contained in, or omissions from, this presentation or any oral communication transmitted in connection therewith. In addition, none of the statements contained in this presentation are intended to be, nor shall be deemed to be, representations or warranties of Couche-Tard and its affiliates. Where the information is from third-party sources, the information is from sources believed to be reliable, but Couche-Tard has not independently verified any of such information contained herein. This presentation is not, and under no circumstances is to be construed as, a prospectus, an offering memorandum, an advertisement or a public offering of securities. Under no circumstances should the information contained herein be considered an offer to sell or a solicitation of an offer to buy any securities.
2
COMPANY REPRESENTATIVES
Brian Hannasch President and Chief Executive Officer Claude Tessier Chief Financial Officer
Mathieu Descheneaux Vice President Finance
3
AGENDA
1. Company Highlights 2. Financial Highlights 3. Strategy and Value Creation 1. Organic Growth 2. Acquisitions 3. Cost Control 4. Capital Structure & Financial Flexibility 4. Appendix
4
ALIMENTATION COUCHE-TARD INC.
COMPANY HIGHLIGHTS
WHO ARE WE ?
Couche-Tard is a Canadian based group and a world leader in the convenience store sector • In North America, we are the largest independent convenience store operator in terms of number of companyoperated stores. • In Europe, Couche-Tard is a leader in convenience store and road transportation fuel retail in Scandinavian and Baltic countries with a significant presence in Poland and Russia. • Couche-Tard’s mission is to provide a fast and friendly service offering food, hot and cold beverages, car wash services, road transportation fuel and other high quality products and services in a clean, welcoming and efficient environment. As of January 31, 2016, Couche-Tard’s network comprised:
6
North America
Europe
Rest of World
7,979 convenience stores throughout North America, including 6,560 stores offering road transportation fuel in all 10 Canadian provinces and 41 US states, and employing about 80,000 people.
Couche-Tard operates 2,218 stores, comprising a broad retail network across Scandinavia (Norway, Sweden and Denmark), Poland, the Baltics (Estonia, Latvia and Lithuania) and Russia. Including employees at its branded franchise stations, about 19,000 people work in its retail network, terminals and service offices across Europe.
In addition, about 1,500 stores are operated by independent operators under the Circle K banner in 13 other countries or regions worldwide which brings to almost 11,700 the number of sites in Couche-Tard’s network.
COMPANY HISTORY
7
•
1980
Start of operations with the opening of a first convenience store located in Laval, Québec.
•
80’s-90’s
Consolidation of the Canadian market.
•
2001
First breakthrough of Couche-Tard in the United States : acquisition of the assets of Johnson Oil Company, Inc., owner of 225 Bigfoot stores, all located in the U.S. Midwest.
•
2003
Acquisition of The Circle K Corporation from ConocoPhillips Company that operates 1,663 Circle K corporate stores located in 16 States and has a franchising or licensing relationship with 627 additional stores in the U.S. and worldwide.
•
2004
Couche-Tard becomes an active player in the US market consolidation.
•
2012
Acquisition of Statoil Fuel & Retail, a leading Scandinavian road transport fuel retailer. Statoil Fuel & Retail operates a broad retail network across Scandinavia (Norway, Sweden, Denmark), Poland, the Baltics (Estonia, Latvia, Lithuania), and Russia with approximately 2,300 stores, the majority of which offer fuel and convenience products while the others are automated (fuel only) stations.
•
2015
Acquisition of The Pantry, Inc., a leading convenience store operator in the southeastern United States and one of the largest independently operated convenience store chains in the United States. The Pantry operates approximately 1,500 stores in 13 states under select banners, including Kangaroo Express®, its primary operating banner.
•
2015
Couche-Tard launches its global Circle K brand, the world’s preferred destination for convenience and fuel.
•
2016
Acquisition of Topaz, the leading convenience and fuel retailer in Ireland, made up of 444 stores. All the Topaz stores will be rebranded with the new global brand Circle K.
•
2016
Couche-Tard signs an agreement with Imperial Oil to acquire 279 Esso-branded Canadian fuel and convenience sites. These sites are located in the provinces of Ontario and Québec.
KEY DATA • • •
Listed on the Toronto Stock Exchange
ATD.B
Market Cap1
CAD $33.3B
Revenue
USD $34.5B Fiscal Year 20152 USD $26.7B Q3 2016 YTD2
•
Gross Profit
USD $5.27B Fiscal Year 20152 (+5.6%) USD $4.7B Q3 2016 YTD2 (+14.5%)
•
EBITDA
USD $1.9B Fiscal Year 20152 USD $1.9B Q3 2016 YTD2
•
Number of stores3
•
North America
7,979
Europe
2,218
International
1,501
Net Debt / Leverage4
FY 2015 Q3 2016
• 8 1. 2. 3. 4.
11,698
USD 2.5B / 1.18x USD 1.8B / 0.83x
Ratings
S&P
BBB (Positive)
Moody’s
Baa2 (Stable)
As of March 4, 2016. Fiscal Year ended 24/04/2015 and Q3 2016 YTD being 40 weeks to 31/01/2016. Includes Couche-Tard’s Company-Owned/Dealer-Operated and Dealer-Owned-Dealer-Operated sites. Long term interest-bearing debt, net of cash and cash equivalents and temporary investments divided by EBITDA adjusted for non-recurring items. Pro forma the acquisition of The Pantry.
INVESTMENT HIGHLIGHTS Disciplined Management Culture
• Management team with strong track
Broad Geographic Footprint with Leading Market Positions
• Leading C-store operator in North America,
Superior Product Offerings
record and founders have 23% equity ownership
Scandinavia and Baltics
• Increasing focus on private
• Multiple banners (Couche-Tard, Circle K,
• Management and Board need to hold
Mac’s, Ingo, and Kangaroo Express) that will be rebranded to the strong and wellestablished Circle K banner (except CoucheTard in Québec, Canada) to drive traffic and sales
label, fresh food products and famous for concepts
a multiple of their salary in Shares
• Decentralized operating model
• Industry leading merchandise gross margin
• World class Canadian retailer with most geographically diversified footprint
Attractive Sector Dynamics
Powerful Financial Results
• Strong and consistent financial
• Steady industry performance
performance throughout all economic cycles
• Prolific history of positive same-store comps and 25% ROE
• Significant FCF generation (2010-2015)
throughout downturns with strong projected growth
S&P: BBB (Positive) Moody’s: Baa2 (Stable)
CAGR of 29%
Attractive Synergy Potential • Proven ability to extract significant
• C-store sector well positioned to gain share from traditional food retail
• Industry-leading returns in recession
Track Record of Highly Disciplined Growth and Debt Reduction
• Proven ability to integrate acquisitions (More than 5,550 stores
synergies from acquisitions
from more than 50 acquisitions since Circle K in 2003, including SFR and The Pantry)
• Transferring best practices across entire
• Well positioned to lead further consolidation in fragmented
platform
industry
• Committed to remain investment grade post acquisition
9
Couche-Tard is a disciplined c-store operator and integrator
STOCK PRICE – COMPARED TO TSX
During the last 12 months periods, while the TSX Composite Index lost 9%, ACT’s stock appreciated by over 15%. 10 Source: Reuters. As of March 21, 2016.
STOCK PRICE – COMPARED TO PUBLIC COMPETITORS AND RETAIL INDUSTRY
11 Source: Reuters. As of March 21, 2016.
COUCHE-TARD – WORLD LEADER Couche-Tard is a leading global convenience store operator with pro-forma EBITDA of $2.2 billion • • •
Well diversified Merchandise and services represent 57% of gross profits Focus on growing high margin categories Merchandise and services
Motor Fuel
Other
Total
Revenue: $9,961M
$24,002M
$727M
$34,690M
Gross Profit By Products
Other 4%
US 7%
Europe 33%
Europe 11% Canada 17%
Motor fuel 39%
Merchandise and services 57%
LTM Q3 2016(1) US 61%
Canada 6%
US 72%
US
Canada
Gross Profit: $3,872M
$735M
Merchandise and services 63%
Gross Profit By Geography
Motor fuel 21%
Merchandise and services 79%
Europe 93%
Other 15%
Europe
Total
$1,357M
$5,964M
Merchandise and services 27%
Canada 12%
LTM Q3 2016(1) Motor fuel 37%
12 (1)
Pro Forma The Pantry acquisition.
Europe 23%
Motor fuel 58%
US 65%
FINANCIAL REVIEW STRONG & CONSISTENT GROWTH
13 CAG: Five-year compounded annual growth - Fiscal 2015 over fiscal 2010. (1) Fiscal 2015 store count excludes The Pantry stores. (2) Pro forma the acquisition of The Pantry. (3) 2015 Free cash flow includes the proceeds from the disposal of the aviation fuel business. (4) 2016 Q3 LTM free cash flow is pro forma the acquisition of The Pantry. It includes the proceeds from the disposal of the lubricants business.
COUCHE-TARD’S NETWORK
Canada
Europe
International presence
Total
COCO(1)
1,447
4,698
1,645
-
7,790
CODO(2)
-
154
375
-
529
DODO(3)
-
567
198
-
765
394
719
-
-
-
-
1,501
1,501
1,841
6,138
2,218
1,501
11,698
-
-
920
-
920
# With fuel
735
5,825
2,216
-
8,776
% With fuel
40%
95%
100%
-
75%
Franchise/Affiliated(4) Licensed(5) Total
Of which: Automats
14
U.S.
1,113
(1) Sites for which the real estate is controlled by Couche-Tard (through ownership or lease agreements) and for which the stores (and/or the service stations) are operated by Couche-Tard or one of its commission agents. (2) Sites for which the real estate is controlled by Couche-Tard (through ownership or lease agreements) and for which the stores (and/or the service stations) are operated by an independent operator in exchange for rent and to which Couche-Tard supplies road transportation fuel through supply contracts. Some of these sites are subject to a franchise agreement, licensing or other similar agreement under one of our main or secondary banners. (3) Sites controlled and operated by independent operators to which Couche-Tard supplies road transportation fuel through supply contracts. Some of these sites are subject to a franchise agreement, licensing or other similar agreement under one of our main or secondary banners. (4) Stores operated by an independent operator through a franchising, licensing or another similar agreement under one of our main or secondary banners. (5) Stores operated by independent operators under the Circle K banner in other countries or regions worldwide.
NORTH AMERICAN NETWORK
Leader in industry
•
the Canadian
convenience
store
In Canada, the convenience store sector is dominated by a few major players including Couche-Tard and integrated oil companies. Some of these are selling, or expected to sell their retail assets.
Largest independent convenience store operator in the US in terms of number of company operated stores
•
In the US, the convenience sector fragmented and in a consolidation phase
•
Couche-Tard acquired The Pantry in March 2015, one of the largest independently operated convenience stores in the US
is
Key brands: Canada
US
Couche-Tard
Circle K
Circle K Kangaroo Express Mac’s (will be rebranded to (will be rebranded Circle K) to Circle K)
15 As of January 31, 2016.
Total network of 7,979 stores in North America
EUROPEAN NETWORK
Leader in convenience store and road transportation fuel retail in the Scandinavian and Baltic countries
16 As of January 31, 2016.
•
The European convenience store sector is often dominated by a few major players, including integrated oil companies. Some of these are in the process of selling, or are expected to sell their retail assets
•
Key brands: Circle K
being rebranded from Statoil
Ingo
Unmanned Scandinavian stations
2,218 stores in 8 countries in Europe
INTERNATIONAL PRESENCE
•
Convenience stores operated by independent operators
•
Under the Circle K brand
Around 1,500 licensed Circle K stores in Asia, Costa Rica, Egypt, Honduras, Mexico, and U.A.E 17 As of January 31, 2016.
DIVIDEND TO SHAREHOLDERS Our growth and financial discipline is shared
18 (1)
CAG: Five-year compounded annual growth - fiscal 2015 over fiscal 2010.
(2)
On April 14, 2014, a three-for-one stock split occurred on the Corporation’s Multiple Voting Shares and Subordinate Voting Shares. All dividends prior to that date have been adjusted to reflect this split.
ALIMENTATION COUCHE-TARD INC.
FINANCIAL HIGHLIGHTS
REVENUE & GROSS PROFIT Gross Profit is the more accurate reflection of our business operations •
Revenue includes road transportation fuel revenues which is the dollar amount of sales
•
Revenue can therefore change with movements in the average selling price of road transportation fuel
•
In fiscal 2015, road transportation fuel revenue represented about : 57% of total revenue in Canada 73% of total revenue in the US, and 71% of total revenue in Europe
20 LTM financial results at January 31, 2016, (including The Pantry Pro Forma).
•
Yet, road transportation fuel gross margins represented only about 40% of Couche-Tard’s overall gross profit
•
Gross profit represents our income after cost of sales
FUEL GROSS MARGIN VS AVERAGE SELLING PRICE
U.S. Fuel Margins (CPG)
21
•
No clear correlation between fuel selling price and margins;
•
Our margins are not directly impacted by lower fuel selling prices;
•
Lower fuel prices leave customers more money in their pockets for their in-store shopping.
Canadian Fuel Margins (CPL)
EBITDA AND NET EARNINGS
• Consistent EBITDA and Net earnings growth year after year.
• This growth is due to the four pillars of our value creation strategy. • Year after year, Alimentation Couche-Tard generates great results that creates great value to its shareholders.
22 CAG: Five-year compounded annual growth - Fiscal 2015 over Fiscal 2010 (1)
Pro forma the acquisition of The Pantry.
Q3 2016 LTM NET EARNINGS ON SALES VS COMPETITORS
4,0% 3,2%
3,0%
1,2%
1,7%
1,4% 0,8%
0,5% Casey's
23 ACT Pro Forma for The Pantry.
Applegreen
CST
Murphy
Marathon
Delek
NACS 2014
CAPITAL INVESTMENT Capital Investment primarily consists of the investment in property and equipment net of disposals and the ongoing improvement of our network
NET CAPEX (in millions of US dollars) 799
• Construction of new stores • Relocation and construction of existing stores
• •
563 487
198
2010
2011
2012
Information technology
459 Q3 2016 LTM has increased significantly because of the integration of the Pantry stores. 1,500 stores were added to Couche-Tard’s storecount.
289 202
Replacement of equipment
2013
2014
2015
2016 Q3 - LTM
Capex spend has averaged about 35% of EBITDA since 2010
24
FREE CASH FLOW
25 CAG: Five-year compounded annual growth - Fiscal 2015 over Fiscal 2010. (1) 2015 Free cash flow includes the proceeds from the disposal of the aviation fuel business. (2) 2016 Q3 LTM free cash flow is pro forma the acquisition of The Pantry. It includes the proceeds from the disposal of the lubricants business.
•
Year after year, ACT generates cash flow from its operations, which allows rapid deleveraging and strong credit profile.
•
This enables ACT to be in a strong financial position to consider opportunities for acquisitions of businesses.
DIVIDENDS Dividend vs free cash flow
FCF 28.6% CAG(1)
Shareholders have shared in the growth of free cash flow
• Dividend 28.2% CAG(1)
However cash dividend payouts remain a moderate percentage of the group’s free cash flow enabling continued organic and acquisition led growth
Dividend to shareholders
26 (1) (2) (3) (4)
CAG: Five-year compounded annual growth - fiscal 2015 over fiscal 2010. 2015 Free cash flow includes the proceeds from the disposal of the aviation fuel business. 2016 Q3 LTM free cash flow is pro forma the acquisition of The Pantry. It includes the proceeds from the disposal of the lubricants business. On April 14, 2014, a three-for-one stock split occurred on the Corporation’s Multiple Voting Shares and Subordinate Voting Shares. All dividends prior to that date have been adjusted to reflect this split.
CAPITAL STRUCTURE ADJUSTED NET DEBT/ ADJUSTED EBITDAR
Couche-Tard’s debt fluctuates primarily with acquisitions, followed by strong cash flow paying down debt
•
Adjusted debt / adjusted EBITDAR ratio includes lease obligations
• Couche-Tard’s term revolving unsecured credit facilities include financial covenants for : Leverage – the ratio of net debt to EBITDA for the four most recent quarters
Interest Coverage – the ratio of EBITDA to total interest paid for the four most recent quarters
TOTAL CAPITALIZATION
•
27 (1)
Pro Forma The Pantry
Couche-Tard is in compliance with these covenants
LIQUIDITY & CREDIT RATINGS Strong Liquidity and improving Credit Ratings Strong Liquidity : Couche-Tard maintains strong liquidity across cash balances, discretionary cash flow and availability under its revolving credit facility
•
Cash balances at January 31, 2016 were $972M, where $570M have been used on February 1st, 2016 for Topaz acquisition.
• •
Couche-Tard’s revolving credit facility of $2,525M has a maturity date of December 2019. The available undrawn balance at January 31, 2016 was $1,339M.
Improving Credit Ratings : Baa2 st / BBB pos Couche-Tard was first assigned a credit rating by Standard and Poor's in 2003
• •
In September 2014, Couche-Tard’s credit rating was raised to BBB In July 2015, the outlook was changed to positive (from stable)
Moody’s assigned Couche-Tard a Baa3 credit rating in 2012
• In August 2014, the credit rating was raised to Baa2, stable outlook
28
FY16 HIGHLIGHTS
16-week periods ended
January 31, 2016
40-week periods ended
February 1, 2015
January 31, 2016
February 1, 2015
Growth in same-store merchandise revenues United States
5.0%
4.5%
5.1%
3.4%
Europe
4.3%
1.7%
3.0%
1.6%
Canada
3.5%
3.6%
3.1%
3.3%
Merchandise and service gross margin
29
United States
33.3%
32.8%
33.2%
32.7%
Europe
43.9%
40.5%
42.3%
41.0%
Canada
32.4%
32.2%
32.8%
33.0%
FY16 HIGHLIGHTS 16-week periods ended January 31, 2016
40-week periods ended
February 1, 2015
January 31, 2016
February 1, 2015
Same-store motor fuel volume growth United States
6.2%
2.8%
7.5%
2.3%
Europe
2.9%
2.1%
3.1%
2.0%
Canada
(0.5%)
(0.5%)
1.4%
(0.5%)
United States (millions of gallons)
2,177.6
1,491.3
5,557.8
3,720.3
Europe (millions of litres)
2,544.1
2,455.1
6,551.8
6,400.0
Canada (millions of litres)
918.8
904.1
2,399.8
2,326.4
United States (US cents per gallon)
19.90
24.93
21.18
24.15
Europe (US cents per litre)
8.69
9.81
9.26
10.90
Canada (CA cents per litre)
6.29
6.12
6.50
6.39
Total motor fuel volume
Motor fuel gross margin
30
FY16 HIGHLIGHTS
EBITDA (millions USD) 16-week periods ended
40-week periods ended
January 31, 2016
February 1, 2015
Variation %
January 31, 2016
February 1, 2015
Variation %
Reported
627.5
544.5
15.2
1,869.5
1,556.3
20.1
Adjusted (1)
619.9
559.8
10.7
1,823.1
1,571.1
16.0
Diluted Net Earnings per Share 16-week periods ended January 31, 2016
February 1, 2015
Variation %
January 31, 2016
February 1, 2015
Variation %
Reported
0.48
0.44
9.1
1.73
1.41
22.7
Adjusted (1)
0.53
0.51
3.9
1.70
1.54
10.4
31 (1)
40-week periods ended
Adjusted for non-recurring items. Refer to the Corporation’s MD&As for more details.
FY16 HIGHLIGHTS
Balance Sheet, Liquidities and Returns – As of January 31, 2016 Total assets (millions USD) Cash (millions USD)
972
Borrowing available under credit facilities (millions USD)
1,300
Interest bearing debt (millions USD)
2,770
Shareholder’s equity (millions USD)
4,734
Net interest-bearing debt/Total capitalization
0.28 : 1
Net interest bearing debt/Adjusted EBITDA(1)
0.83 : 1
Adjusted net interest bearing debt/Adjusted EBITDAR(1)
1.90 : 1
Return on equity
25.4%
Return on capital employed
17.6%
32 (1)
11,200
Adjusted for non-recurring items. Refer to the Corporation’s MD&As for more details.
ALIMENTATION COUCHE-TARD INC.
STRATEGY & VALUE CREATION
EXPERIENCED MANAGEMENT TEAM Alain Bouchard PLACE IMAGE HERE
Founder and Executive Chairman of the Board On September 24, 2014, Mr. Bouchard stepped down as President and Chief Executive Officer and took on a new role as Founder and Executive Chairman of the Board of Directors.
Jean Bernier PLACE IMAGE HERE
Group President Fuel Americas and Operations North-East Appointed Group President Fuel Americas and Operations North-East on July 30, 2012. He has over 25 years of experience in the convenience store, fuel and grocery store sectors of the retail industry.
Senior Vice President, Global Fuels Appointed Senior VicePresident Global Fuels on February 16, 2016. Previously, he had been VicePresident North American Fuels since October 2012. He joined Couche-Tard in January 2012 as Director of Operations Midwest.
Senior Vice-President, Operations Appointed Senior VicePresident, Operations in January 2011. He was formerly Vice-President, Operations, U.S. Arizona Region since December 2003.
PLACE IMAGE HERE
Group President, European Operations Appointed Group President, European Operations in June, 2012. He was formerly Chief Executive Officer for Statoil Fuel & Retail from October 1st, 2010. He joined Statoil in 1996.
Chief Financial Officer
President and Chief Executive Officer President and Chief Executive Officer since 2014. Previously Chief Operating Officer since 2010 and Senior Vice-President, U.S. Operations from 2008 to 2010.
PLACE IMAGE HERE
Claude Tessier, CPA, CA, is Couche-Tard’s Chief Financial Officer since February 2016. Beforehand, Mr. Tessier was President of the IGA Operations Business Unit part of Sobeys since 2012.
Dennis Tewell PLACE IMAGE HERE
Jacob Schram
Alex Miller PLACE IMAGE HERE
PLACE IMAGE HERE
Geoffrey C. Haxel PLACE IMAGE HERE
Claude Tessier
Brian P. Hannasch
Senior Vice-President, Operations Appointed Senior VicePresident, Operations in June 2013. Prior to his current appointment, He held the position of Vice-President, Worldwide Franchise as he joined Couche-Tard in January 2011.
Darrell Davis PLACE IMAGE HERE
Jørn Madsen PLACE IMAGE HERE
Executive Vice-President, Central & Eastern Europe Appointed Executive VicePresident, Central & Eastern Europe on October 1, 2010. He was formerly Vice President for country operations in Statoil Energy & Retail since 2007. He joined Statoil in 1990.
Senior Vice-President, Operations Appointed Senior VicePresident, Operations in May 2012. Previously, he had been Vice-President Operations, Florida since March 2011.
Hans-Olav Høidahl PLACE IMAGE HERE
Executive Vice-President, Scandinavia Appointed Executive VicePresident, Scandinavia on October 1, 2010. He was formerly Vice President for Energy Europe in the Statoil Group since 2006.
FOUR PILLARS OF VALUE CREATION Organic Growth
Acquisitions
Cost Control
Capital Structure & Financial Flexibility
• Focus on customers’ needs and respond to market trends
• Smart, disciplined acquisition strategy – Spotting the right opportunities and striking the right deals at the right price
• Disciplined culture
• Cost of debt at competitive conditions
• Swift and efficient integration
• Economies of scale – Relationship with local, national and global suppliers
• Emphasize on key categories – Food, coffee, cold beverages, fuel and car wash • Innovation and technology
• Execution • Continuous improvement • Private label • Branding • Construction, relocation or reconstruction of stores
35
• Realization of available synergies
• Continuous benchmarking
• Exchange of best practices throughout the organization
• Maturity spread • Access to liquidities – Cash and credit facilities • Dividend growth • Disposal of non-core assets
ALIMENTATION COUCHE-TARD INC.
ORGANIC GROWTH Value Creation
ORGANIC GROWTH - SAME-STORE SALES In all markets it operates in, Alimentation Couche-Tard generates same-store growth through dynamic merchandising strategies, a competitive offer, excellent retail execution and exchange of best practices.
Same-store fuel volume
Merchandise same-store sales 6,0%
9,0%
5,0% 4,0%
7,0%
3,0%
5,0%
2,0%
3,0%
1,0% 1,0%
0,0% -1,0%
-1,0% 2011
2012
2013
US
Europe
2014
37 2015 and 2016 US same-store results include The Pantry stores since the acquisition.
2015 Canada
Q3 2016 YTD
2011
2012
2013
US
Europe
2014
2015
Canada
Q3 2016 YTD
GLOBAL CIRCLE K BRAND • On September 22, 2015, Couche-Tard announced the creation of a new, global convenience brand, “Circle K TM” • The existing Circle K is already Couche-Tard’s largest and most international brand. It can be seen today serving the needs of customers in 16 countries around the world • The new Circle K brand will replace the existing brands • Circle K® • Statoil® • Mac’s® • Kangaroo Express® • Couche-Tard has chosen to retain the company’s founding Couche-Tard retail brand in the province of Québec, Canada • The rollout will take place progressively across Canada, USA, Scandinavia, and Central and Eastern Europe • The new Circle K brand will also appear on licensed stores worldwide • The Company’s goal in the coming years is to have a single convenience retail brand across our worldwide network • Very pragmatic approach: Couche-Tard will be rebranding stores as part of its normal cycle of store refreshes • Prioritization of recent acquisitions, such as The Pantry, as well as those for which Couche-Tard is under contractual obligations to rebrand, such our Statoil sites in Europe Before
38
After
Before
After
ALIMENTATION COUCHE-TARD INC.
ACQUISITIONS Value Creation
ACQUISITIONS - HISTORY OF HIGHLY DISCIPLINED M&A APPROACH Superb track record of integrating acquisitions
Garvin oil
Revenue ($)
Compac Food Stores
Winners Sterling Stores Pump N Shop
2004 Debt/ Adjusted EBITDA (1)
Stores Acquired
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
3.1
1.5
1.2
1.8
1.7
1.3
1.1
0.7
0.8
2.4 (2) (3)
1.6 (3)
1.5 (3) (4)
1,706
45
75
421
46
107
70
47
326
2,506
166
1,660
Agreement signed for additional stores acquisition in 2016
2016 Q3 YTD 1.3 (3) (4) 68
315 444
40 (1) (2) (3) (4)
279 Represents Total Debt/ Adjusted EBITDA at fiscal year end and LTM for Q3 2016. Pro forma the acquisition of SFR. Adjusted for non-recurring items. Refer to the Corporation’s MD&As for more details.. Pro Forma the acquisition of The Pantry.
TOPAZ SNAPSHOT
• Leading convenience and fuel retailer in Ireland, made up of 444 stations including its recently acquired Esso station network • 158 are operated by Topaz and 286 by dealers. Company owns underlying real estate for about 100 sites • Also commercial fuels operation, with over 30 depots and two owned terminals • Extensive and attractive convenience and fuel network, with good locations, quality forecourts and stores, an excellent food offering and very professional teams • Allows Couche-Tard to expand our geographic footprint into what, today, is one of Europe’s best performing economies
• Great strategic fit for Couche-Tard and it would strengthen its position in Western Europe • Superior growth anticipated in in-store sales and fuel volume through the improvement of operations; sharing of business awareness and each company’s best practices; and better supply conditions • Expected cost reduction synergies from integration into existing European platform
41
ESSO CANADA SNAPSHOT
• In March 2016, Couche-Tard announced an agreement to acquire 279 Esso-branded fuel and convenience sites in Canada • 229 sites are located in the province of Ontario, the majority of which in the Greater Toronto Area • 50 sites are located in the province of Québec, in the Greater Montréal Area, including the south shore of Montréal • The agreement also includes 13 land banks and two dealer sites, as well as a long-term supply agreement for Esso branded fuel • Allows Couche-Tard to expand it’s geographic footprint into the Greater Toronto Area and the Montréal area • Great strategic fit for Couche-Tard and it would strengthen its position in Canada
42
ALIMENTATION COUCHE-TARD INC.
COST CONTROL Value Creation
DISCPLINED AND RIGOROUS COST CONTROL Cost leadership is well anchored throughout the organization • Cost synergies from major acquisitions :
SFR Objective Realized
$150-$200M $199M
The Pantry Objective Identified Realized
$85M $63M $43M
44 (1)
Excluding credit card fees. Adjusted for currency translation, impact from acquisitions, acquisition costs as well as, from time to time, for certain non-recurring costs. Refer to the Corporation’s annual MD&As for more details.
ALIMENTATION COUCHE-TARD INC.
CAPITAL STRUCTURE & FINANCIAL FLEXIBILITY Value Creation
CAPITAL STRUCTURE - DEBT
• • • • • 46
Well spread debt maturity profile Debt maturity according to Couche-Tard’s fiscal year-end Couche-Tard utilizes the capital markets for the majority of term debt It has significant flexibility across a variety of financial markets and currencies In addition, in February 2016, Couche-Tard issued a NOK 675M (approximatively $78.0M) 3.85% 2026 bond
Capital structure as of January 31, 2016.
AVERAGE INTEREST RATE ON DEBT
Competitive and attractive cost of debt Based on latest Q4 information except for ACT which is as per January 31, 2016.
47
CAPITAL STRUCTURE – ADJUSTED NET DEBT/EBITDAR Strong Capital Discipline
•
Our growth strategy is supported by our commitment to a strong capital structure
•
Acquisitions are undertaken with the objective of rapid deleveraging
•
Our credit ratings were raised to Baa2 / BBB in Q3 2014 and S&P revised to positive outlook in July 2015
48 (1)
Pro Forma The Pantry.
INDUSTRY-LEADING RETURNS Return on equity(1)(2)
Industry Average
Return on equity - 7 years progressions
19,7%
20,6%
20,3%
2009
2010
2011
22,0%
21,5%
22,6%
2012
2013
2014
24,9%
25,4%
14,7%
2008 (1) (2)
49
Based on most recent published last 12 months results as of January 31, 2016. 2015 and 2016-Q3 of ACT are Pro Forma The Pantry.
2015 Q3 2016
ADJUSTED ENTERPRISE VALUE ON EBITDAR VS CAG EPS
Ratio (x)(1) 2.1
2.3
-0.8
1.2
0.8
-0.1
Couche-Tard earns shareholders more than competition vs its value. CAG: Five-year compounded annual growth. Based on most recent published last 12 months results as of October 11, 2015. ACT’s most recent published results are as of October 11, 2015 (Q2 2016). «Enterprise Value» and «Stock Price» calculated as of date of November 13, 2015.. No CAG EPS for Applegreen, Delek, Marathon, CST and Murphy since less than 5 years of financial data is available.
50
(1)
Represents CAG EPS/Adjusted Enterprise Value on EBITDAR
0.1
ALIMENTATION COUCHE-TARD INC.
APPENDIX
RESILIENT AND GROWING INDUSTRY
Industry’s inside sales grew each year, even during recessions 52
Consistent growth throughout economic cycles over the last 30 years
Source: Industry data is from the «NACS Sate of the Industry Annual Report – 2014 Data»
