Bullboard - Stock Discussion Forum Alimentation Couche-Tard Inc T.ATD

Alternate Symbol(s): ANCTF

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... see more

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TSX:ATD - Post Discussion

Alimentation Couche-Tard Inc > TD

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Post by retiredcf on Jun 28, 2023 8:33am

TD

Potential for them to raise their current target of $74.00. GLTA

Alimentation Couche-Tard Inc.

(ATD-T) C$65.35

Q4/F23 First Look: Fuel and Merchandise Margins Lead to EPS Beat

Event

Post-close, ATD reported Q4/F23 adjusted EPS of $0.71 vs. $0.55 LY, +19% y/ y (same-week) and 29%/45% ahead of TD/consensus. Beat came mostly from U.S. and Europe fuel margins. Adjusted EBITDA increased 8% y/y (same-week) and 19%/26% ahead of TD/consensus.

Impact: POSITIVE

We expect ATD shares to trade higher today on the 45% consensus EPS beat and strong merchandise GM%, tempered somewhat by the fact that much of the beat came from fuel margins (which typically have a smaller impact on share-price), U.S. SSSG was a touch light, and the shares have greatly outperformed the Staples sector YTD.
SSSG was surprisingly strong in Canada, up 5.9% and 290/390bps ahead of TD/consensus on what we believe is a diminishing impact from illicit tobacco channels, allowing inflation and the strength in beverage, Fresh Food, Fast, and private brands to shine. U.S. SSSG of +3.3% fell short of TD/consensus (+5.0%/4.3%) as tobacco fell on ongoing competition from illicit channels and other-tobacco-products demand fell on new restrictions. Europe SSSG was +3.0% vs. TD/consensus of +4.0%/3.2%. Regardless, the improved mix drove vastly improved merchandise margins (+100bps/+160bps/+260bps y/y in US/Canada/Europe) and led to a 6% increase (same-week) in consolidated merchandise GP (1% better-than-expected). We will be looking for colour around the sustainability of the GM% expansion.
SSVG was roughly in-line in the U.S. and Europe, but jumped 6.0% in Canada (400bps better-than-expected) as lower prices boosted demand. Fuel margins were strong in all geographies, beating consensus in all geographies and adding $0.14 to EPS vs. our estimate. U.S. margins are not normalizing as quickly as many had anticipated, despite modest volume growth for the first time in over a year. Our U.S. fuel margin assumption could be a little conservative if this trend continues.
Guidance was not provided — we expect some colour at the October Investor Day — but management said it is “excited by the recent progress and positive environment for growth through acquisitions after many years of inflated multiples and assets”.
Normalized opex rose slightly less than weighted-average inflation of 5.8%, coming in 2% below expectations.
Conference call: 8:00 a.m. ET: 888-390-0549/416-764-8682; passcode: 48181733. Webcast: https://corpo.couche-tard.com/en/investors/ events-presentations/