Alimentation Couche-Tard Inc.
October 2014
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 27, 2014. 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 27, 2014 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 CoucheTard 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.
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Company Representative
Raymond Paré Vice-President and Chief Financial Officer Tel: (450) 662-6632 ext. 4607
[email protected]
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Table of Contents
1. Investment Highlights 2. Couche-Tard Today
3. Capital Structure & Debt Reduction Plan
Appendix
1. Historical Industry Sales
2. Dividend vs Free Cash Flow 3. Adjusted Enterprise Value on EBITDAR vs EPS
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1. Investment Highlights
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Investment Highlights Broad Geographic Footprint with Leading Market Positions • Leading C-store operator in North America, Scandinavia and Central and Eastern Europe
Disciplined Management Culture • Management team with strong track record and founders have 23% equity ownership
• SFR’s management team remains in
Superior Product Offerings
• Powerful local banners (Couche-Tard, Circle K, Mac’s, Ingo, and Statoil) continue to drive traffic and sales
• World class Canadian retailer with most geographically diversified footprint
• Increasing focus on private label and fresh food products
• Industry leading merchandise gross
place
margin
• Decentralized operating model
Powerful Financial Results
Attractive Sector Dynamics
• Strong and consistent financial performance
• Steady industry performance throughout
throughout all economic cycles
S&P: BBB- (Stable) Moody’s: Baa2 (Stable)
• Prolific history of positive same store sales comps and 22% ROE
• Significant FCF generation (2008-2014)
downturns with strong projected growth
• C-store sector well positioned to gain share from traditional food retail
• Industry-leading returns in recession
CAGR of over 60%)
proof industry
Attractive SFR Synergy Potential • Proven ability to extract significant synergies from acquisitions
• Transferring best practices across entire platform
Track Record of Highly Disciplined Growth and Debt Reduction
• Proven ability to integrate acquisitions (~1,500 stores from 46 acquisitions since Circle K in 2003, excluding SFR)
• Well positioned to lead further consolidation in fragmented industry
• Committed to remain investment grade post SFR acquisition
Couche-Tard is a disciplined c-store operator and integrator 5
2. Couche-Tard Today
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Key Highlights ●
Couche-Tard is a leading global convenience store operator
Largest operator in North America based on number of company-operated stores. Leader in convenience store and road transportation fuel in Scandinavian countries and in the Baltic countries
Network of 6,236 corporate-operated stores, 592 CODO(1), 538 DODO(2) and 1,127 affiliated stores
In addition to the stores above, under licensing agreements, 4,616 stores operated under the Circle K banner worldwide
●
Well-recognized banners including Couche-Tard, Circle K, Statoil, Ingo and Mac’s
●
Proven track record of disciplined growth and profitability
Revenue, EBITDA and EPS ’08-’14 CAGR of 16.3%, 22.5% and 29.4%, respectively LTM EBITDA of $1.7B ●
Disciplined management culture with proven integration track record
Decentralized operating model Successfully integrated ~1,500 stores from 46 acquisitions since Circle K transaction (excluding Statoil Fuel & Retail)
Founders own ~23% of the Company ●
Significant cash flow generator with historically strong credit metrics
Free cash flow ’08-’13 CAGR of 64.8% Largest operator of company-operated stores and disciplined consolidator in resilient industry (1) (2)
Company Owned Dealer Operated. Dealer Owned Dealer Operated.
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North American Footprint Network CENTRAL CANADA Corporate stores: 506 CODO: DODO: Affiliated stores: 188 WESTERN CANADA Corporate stores: 300 CODO: DODO: Affiliated stores: -
v v
QUEBEC EAST AND ATLANTIC Corporate stores: 301 CODO: DODO: Affiliated stores: 12 QUEBEC WEST Corporate stores: 351 CODO: DODO: Affiliated stores: 209
WEST COAST REGION Corporate stores: 246 CODO: 133 DODO: 183 Affiliated stores: 263
GREAT LAKES REGION Corporate stores: 524 CODO: DODO: Affiliated stores: 134 MIDWEST REGION Corporate stores: 497 CODO: 39 DODO: 104 Affiliated stores: 56
SOUTHEAST REGION Corporate stores: 294 CODO: DODO: 3 Affiliated stores: 114
ARIZONA REGION Corporate stores: 617 CODO: DODO: Affiliated stores: 2
SOUTHWEST REGION Corporate stores: 269 CODO: 2 DODO: 3 Affiliated stores: 62
GULF REGION Corporate stores: 287 CODO: DODO: 7 Affiliated stores: 45
FLORIDA REGION Corporate stores: 413 CODO: 15 DODO: 22 Affiliated stores: 42
Total network of 5,732 stores in North America and supplies fuel to an additional 511 sites As of July 20, 2014.
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European Footprint NORWAY Corporate stores: 199 CODO: 246 DODO: 49 inc. automats: 178
SWEDEN Corporate stores: 619 CODO: 135 DODO: 26 inc. automats: 478
RUSSIA Corporate stores: 33 CODO: DODO: inc. automats: -
ESTONIA Corporate stores: 52 CODO: DODO: inc. automats: 6
DENMARK Corporate stores: 310 CODO: 22 DODO: 50 inc. automats: 170
LATVIA Corporate stores: 65 CODO: DODO: 12 inc. automats: 6
POLAND Corporate stores: 277 CODO: DODO: 78 inc. automats: 86
LITHUANIA Corporate stores: 76 CODO: DODO: 1 inc. automats: 13
2,250 stores in 8 countries in Europe As of July 20, 2014.
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International Presence Central / South America
China 92
Asia
Mexico Japan
269
3,273
United Arab Emirates 32
Guam 13
Hong Kong
Macau
340
25
Honduras 11
India
Vietnam
Philippines
79
2
Malaysia 9
Indonesia 471
4,616 licensed Circle K stores in Asia, Mexico, Honduras and U.A.E As of July 20, 2014.
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Couche-Tard as a World Leader
Europe
($ billions)
North America
LTM
Revenue
$25.7
$12.5
$38.2
Contribution
67%
33%
100%
Gross Profit
$3.3
$1.8
$5.1
Gross Margin
12.9%
14.2%
13.3%
EBITDA (3)
$1.7
EBITDA Margin
4.4%
Stores (#)
6,243 (2)
2,250
(1)
8,493
Couche-Tard is a leading global convenience store operator with EBITDA of $1.7 billion (1) (2) (3)
LTM financial results as at July 20, 2014. Includes Couche-Tard’s Company-Owned/Dealer-Operated and Dealer-Owned/Dealer-Operated sites. Adjusted for non-recurring restructuring provision, curtailment gain and negative goodwill.
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Gross Profit Breakdown
By Geography
By Product Other 7.9%
Canada 16.7%
Motor fuel 38.7%
US 48.5% Europe 34.8%
Merchandise, services and other
53.4%
Fuel Gross Margins United States (cents per gallon) Europe (cents per litre) Canada (CA cents per litre)
23.08 11.67 6.44
Gross Margins (As a % sales) United States Europe Canada Consolidated
32.8% 41.9% 33.3% 34.1%
Entry into resilient Scandinavian market with high margin motor fuel business LTM financial results as at July 20, 2014.
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Disciplined Growth and Significant Free Cash Flow
Sales
Same-store sales
Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015
EBITDA
Merchandise same-store sales US 3.4% 2.8% Can 5.4% 5.0% Eur
0.4% 0.4%
0.8% 1.7%
0.1% 0.9%
2.7% 0.7% 1.9%
4.5% 3.2% 1.9%
3.8% 2.2% 0.9%
4.4% 1.6% 2.5%
2.8% 3.3% 1.2%
Motor fuel same store volume US 0.2% 1.1% Can 0.1% 2.2% Eur
-0.5% 0.2%
0.8% -0.9%
1.1% -1.4%
1.2% -0.4% 1.8%
1.7% 1.5% 2.2%
1.3% 2.1% 2.7%
2.8% 1.7% 3.2%
1.8% 0.3% 1.7%
Free Cash Flow
History of strong operational performance and FCF generation 13
History of Highly Disciplined M&A Approach Couche-Tard’s Consistent Acquisition Strategy
Dickerson Petroleum Florida Oil Holdings, LLC
Groovin Noovin
Revenue ($)
RDK Joint Venture
Garvin oil
Compac Food Stores
Accel Marketing LLC
All Star Winners
Moore Oil
Sterling Stores
Spectrum Store Pump N Shop
2004 Total Debt/ 3.1 EBITDA (x) (1) Stores 1,706 Acquired
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Q1 2015
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)
45
75
421
46
107
70
47
326
2,506
166
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Superb track record of integrating acquisitions (1) Represents Total Debt/EBITDA at fiscal year end. (2) Pro forma the acquisition of SFR . (3) Adjusted for non-recurring restructuration provision, curtailment gain and negative goodwill.
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Industry Leading Returns Return on capital employed(1)(2)
(3)
Before Current Susser Acquisition
Casey's
Pantry
CST
NACS 2013
Grocery Home Drugstores Mass Dollar Stores Improv. Merchants Stores Industry Average
Return on capital employed since 2003
Strong returns even in challenging economic conditions (1) (2) (3)
Based on most recent published last 12 months results as of August 15, 2014. Pantry financials adjusted for non-recurring asset write-off Couche-Tard’s most recent published results are as of July 20, 2014 (Q1 2015) As of April 29, 2012
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Operational Trademark •
In-store sales
•
Innovation Differentiation Private and exclusive brands Food Store upgrades Technology Industry consolidation
Gross margin improvement Procurement Price strategies Product loss reductions
•
Increase efficiency Benchmarking Best practices
•
Growth of the store network Acquisitions Store development
• •
People Forecourt execution Best-in-class retail operator 16
Operational Trademark
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3. Capital Structure & Debt Reduction Plan
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Adj. Net Debt / Adj. EBITDAR
Strong Credit Metrics Support Investment Grade Rating
Track record of deleveraging after acquisition
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Appendix Historical Industry Sales Dividend vs Free Cash Flow Enterprise Value ratio vs EPS
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Resilient and Growing Industry • Industry’s inside sales grow each year, even during recessions
U.S. Convenience Stores Industry Sales
700
164
169
174
182
190
195
199
2006
2007
2008
2009
2010
2011
2012
221
181
492 204
151 2005
501
132 2004
487
116 2003
385
409
109 2002
86 1998
329
406
112 2001
93 81 1997
344
171
104 2000
89 77 1996
100
100
200
134
300
263
165
100 1999
400
450
500
Inside Sales
Motor Fuel Sales
2013
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
0
1980
Billions of U.S. Dollars
600
Recession
Consistent growth throughout economic cycles over the last 30 years Source: Industry data is from the «NACS Sate of the Industry Annual Report – 2013 Data»
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Dividend vs Free Cash Flow
Dividend / Free CF (%)
50.0
10.0
9.0
8.7
12.3
9.1
7.5
Consistent growth more than doubling within 5 years 22
Adjusted Enterprise Value on EBITDAR vs CAG EPS
Couche-Tard earns shareholders more than competition vs its value. Based on most recent published last 12 months results as of August 15, 2014. ACT’s most recent published results are as of July 20, 2014 (Q1 2015). «Enterprise Value» and «Stock Price» calculated as of August 31, 2014. Pantry financials adjusted for non-recurring asset write-off. CAG EPS on 5 years for all except for Marathon and Dollar Stores on 3 years.
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