Alimentation Couche-Tard (Cl. A) ((TSE:ATD)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Alimentation Couche-Tard’s recent earnings call painted a mixed picture of the company’s performance. While there was notable growth in Europe and Canada, and significant strides in meal deals and EV charging networks, challenges in the U.S. market were evident. The company faced declines in same-store sales, net earnings, and softness in traffic and fuel demand, compounded by strategic investments and legal reserves impacting financial results.
Strong Performance in Europe and Canada
Alimentation Couche-Tard reported impressive growth in Europe and Canada, with same-store sales increasing by 3.4% and 3.5%, respectively. Europe’s performance was bolstered by robust cigarette sales in the Netherlands, while Canada’s growth was significantly driven by the alcohol category.
Record Progress in Organic Growth
The company achieved record progress in organic growth, opening nearly 45 stores in the quarter and over 110 stores in North America during the fiscal year. With over 1,000 sites in the real estate development pipeline, the company is poised for continued expansion.
Significant Growth in Meal Deals
Meal deals have seen substantial growth, particularly in the U.S., where sales reached over 500,000 each week by the end of Q4, marking a 35% increase from Q3. In Canada, food bundle sales surged by over 50% from the previous quarter, highlighting the success of this initiative.
Expansion in EV Charging Network
The company’s EV charging network has expanded significantly, with nearly 3,480 charge points in Europe, a 40% increase from the same quarter last year. Circle K has become the most preferred brand for charging in Sweden, underscoring the company’s leadership in this area.
Recognition for Innovative Technology
Alimentation Couche-Tard was awarded the 2025 NACS Convenience Retail Technology Award Europe for its AI-driven digital people platform. The company is also advancing the deployment of RELEX in North America for inventory management, showcasing its commitment to technological innovation.
Challenges in the U.S. Market
Despite successes elsewhere, the U.S. market presented challenges, with same-store merchandise revenues decreasing by 0.4%, impacted by economic and inflationary conditions. Additionally, net earnings declined by 5.5% to $2.6 billion, and there was softness in traffic and fuel demand as low-income consumers felt the pinch of economic challenges.
Impact of Higher Depreciation and Expenses
Higher depreciation, finance, and operating expenses linked to acquisitions and strategic investments negatively impacted net earnings. The company also faced approximately $20 million in legal, general liabilities, and environmental reserves tied to specific events in the quarter.
Forward-Looking Guidance
Looking ahead, Alimentation Couche-Tard provided guidance for the fourth quarter of fiscal year 2025, highlighting a 0.4% decrease in same-store merchandise revenue in the U.S., but increases of 3.4% in Europe and 3.5% in Canada. The company also reported a 6% increase in adjusted EBITDA for the quarter. With nearly 3,480 EV charge points in Europe and a focus on cost control, the company aims to keep expense growth below inflation while exploring M&A opportunities, including a potential acquisition of Seven & i Holdings.
In summary, Alimentation Couche-Tard’s earnings call reflected a balanced sentiment, with strong growth in Europe and Canada and significant advancements in meal deals and EV charging networks. However, challenges in the U.S. market and strategic investments impacted financial results. The company’s forward-looking guidance suggests a focus on growth and cost control, with continued exploration of strategic opportunities.