CIBCHave a $64.00 target. GLTA
EQUITY RESEARCH
June 28, 2022 Flash Research
ALIMENTATION COUCHE-TARD INC.
Q4 First Look: U.S. Fuel Margins Surge, While Same-store
Volumes Lag
Couche-Tard reported mixed Q4 results with healthy earnings, driven by
standout U.S. fuel margins (contributing ~$0.09 vs. our model). Adjusted
EPS of $0.55 was modestly ahead of CIBCe/consensus at $0.51/$0.53.
The impact of inflation and higher fuel prices was apparent in the Q4 results,
most notably in U.S. same-store fuel volumes, which declined by 1.7%
(CIBCe +3%, consensus +1.6%). Merchandise same-store sales (SSS)
growth was near forecast in the U.S. (2.3% vs. CIBCe 2.5%, consensus
2.6%) though lagged notably in Canada (0.1% vs. CIBCe 2.5%, consensus
2.4%). Normalized operating expenses were also above expectations and
posted organic growth of 15.6% on a Y/Y basis and 6.8% growth based on a
two-year CAGR vs. F2020. But U.S. fuel margins saved the bottom line and
were well above the OPIS benchmark of 37cpg. In fact, the 9.1cpg
outperformance was the widest gap since Q1/F21, which was the first full
quarter of the pandemic.
Management will host a conference call on June 29 at 8:00 a.m. ET; dial-in
numbers are 1 888 390-0549 or 416-764-8682; access code: 37095248#.
We expect trends quarter-to-date (both merchandise SSS and SSV) and the
outlook for U.S. fuel margins and operating costs to be key topics on the call.
The table in Exhibit 1 summarizes Q4 results, our estimates, and consensus