Alimentation Couche-Tard Inc T.ATD

Alternate Symbol(s): ANCTF

Consumer Defensive Grocery Stores

Alimentation Couche-Tard Inc. is engaged in convenience and mobility, operating in about 29 countries and territories, with more than 16,700 stores, of which almost 13,100 offer road transportation fuel. With its Couche-Tard and Circle K banners, the Company is an independent convenience store operator in the United States, and it is engaged in the convenience store industry and road transportation fuel retail in Canada, Scandinavia, the Baltics, as well as in Ireland. It also has a presence in Poland, Hong Kong Special Administrative Region of the People's Republic of China, Belgium, Germany, Luxembourg, and the Netherlands. Its North American network consists of about 17 business units, including 14 in the United States covering 47 states and three in Canada covering all 10 provinces. In Europe, it operates a broad retail network across Scandinavia, Ireland, Poland, and the Baltics through seven business units. Its operating brands include Circle K, Couche-Tard, and Ingo.

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Alimentation Couche-Tard Inc

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Post by retiredcfon Jun 29, 2022 8:28am

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Post# 34789843

TD

Have a $62.00 target. GLTA

Alimentation Couche-Tard Inc.

(ATD-T) C$53.38

Q4/F22 First Look: N.A. Fuel Margins Lead to Consensus Beat Event

Yesterday after market close, ATD reported Q4/F22 adjusted EPS of $0.55 vs. $0.52 LY, falling short of our $0.60 estimate, but exceeding consensus of $0.53. EPS growth of +5.8% was mostly driven by the 3.7% fewer shares outstanding as earnings comps get tougher.

Impact: MIXED

EPS would have also beat our estimate, were it not for a 30% drop in Europe fuel margins amidst the war in Ukraine. That said, North American fuel margins did the heavy lifting, as sales momentum in both merchandise and fuel seems to be waning (Exhibit 2). The modest consensus EPS beat could allow ATD shares to outperform modestly today, particularly following yesterday's 3.5% dip.
Fuel demand was weaker than expected, as higher pump prices slow the recovery's momentum. This was easily offset by much stronger margins in N.A., leaving U.S./Canada fuel GP +31%/28% y/y, but Europe fuel profit (-28%) suffered from significant diesel price volatility and supply-chain challenges.
Versus pre-pandemic, U.S. in-store sales continue to expand (although below inflation), but momentum appears to have stalled in Canada/Europe. A recent survey pointed to slowing c-store industry traffic and fewer items in the basket as gasoline prices take a larger bite out of customers' wallets. GM% came in a bit below expectations (having yet to fully recover to pre-pandemic levels in N.A.), leaving adjusted in-store GP +2%/3%/4% y/y in U.S./Canada/Europe.
Normalized opex (SS, ex-credit card fees, CEWS, and temporary employment retention measures) grew 11.3%, 1% above our forecast. Inflationary pressure (European utilities and rising minimum wages) persist, discretionary spend (e.g., marketing) continues to normalize, and investments to support growth initiatives continue to ramp up.
Adjusted EBITDA was $1,134mm (vs. $1,083mm LY), 4% below TD ($1,179mm), but 1% above consensus ($1,126mm).
M&A activity in general has collapsed and EG Group may not still be considering a sale as the use of proceeds is unclear (its owners were reportedly interested in acquiring Boots, but Walgreens said yesterday it had stopped looking for buyers, given the less accommodating financing markets). This may have contributed to ATD's share-price weakness yesterday.
Conference call: 8:00 a.m. ET: 888–390-0549/416-764-8682; passcode: 37095248. Webcast: https://bit.ly/3o5nkfp