Earnings call transcript: Alimentation Couche-Tard Q4 FY2025 sees earnings dip

Alimentation Couche-Tard Inc. reported its Q4 FY2025 earnings, revealing a net income of $439 million, or $0.46 per share. The fiscal year concluded with a total net earnings of $2.6 billion, marking a 5.5% decrease from the previous year. Despite the decline, the company saw a 6% rise in adjusted EBITDA for the quarter. The stock saw a decline of 2.84%, closing at $68.81, reflecting investor concerns over the earnings drop. According to InvestingPro data, the company maintains a "GOOD" financial health score, with particularly strong momentum metrics. The stock has delivered an impressive 40% return over the past year, although it’s currently trading above its Fair Value.

Key Takeaways

• Q4 net earnings fell by 5.5% compared to the previous year.
• Merchandise and service revenue grew by 2.4% in Q4.
• The company expanded its EV charging network by 40% year-over-year.
• Alimentation Couche-Tard opened 110 new stores during the fiscal year.
• The stock price decreased by 2.84% following the earnings announcement.

Company Performance

Alimentation Couche-Tard experienced a challenging fiscal year, with net earnings declining by 5.5% compared to the previous year. However, the company showed resilience in other areas, such as a 2.4% increase in merchandise and service revenue during Q4 and a significant improvement in road transportation fuel gross margins across regions. The company also maintained its market share in the U.S. fuel business and strengthened its position as a leading EV charging brand in Sweden.

Financial Highlights

• Revenue: Merchandise and service revenue increased by 2.4% in Q4.
• Net earnings: $439 million for Q4, $2.6 billion for the fiscal year (5.5% decrease YoY).
• Adjusted EBITDA: Increased by 6% in Q4.
• Road transportation fuel gross margin: Improved across regions.

Outlook & Guidance

Looking forward, Alimentation Couche-Tard aims to achieve €120 million in synergies by FY2027. The company is focused on cost control, investing in technology and digital platforms, and exploring potential mergers and acquisitions. Discussions with Seven and I Holdings are ongoing, indicating potential strategic partnerships or expansions. InvestingPro analysis reveals that 5 analysts have recently revised their earnings expectations downward for the upcoming period, though the company maintains its position as a prominent player in the Consumer Staples Distribution & Retail industry. Subscribers can access the comprehensive Pro Research Report for deeper insights into the company’s growth strategy and market position.

Executive Commentary

CEO Alex Miller emphasized the company’s dedication to execution and efficiency: "We are laser focused on execution and specifically SKU rationalization." He also highlighted the company’s commitment to cost control and future investments: "Controlling cost is at the cornerstone of our culture. We will continue to invest in our business heavily."

Risks and Challenges

• Economic conditions: Value-conscious consumers in the U.S. pose a challenge.
• Competition: Intense competition in the European market, though currently outperforming peers.
• Supply chain: Potential disruptions could affect merchandise availability.
• Market saturation: Expansion efforts might face hurdles in saturated markets.
• Regulatory changes: Could impact the company’s operations, especially in the fuel sector.

Q&A

During the earnings call, analysts inquired about the company’s food strategy and its impact on revenue growth. Executives expressed optimism, citing promising results and a focus on value and personalization. Questions also centered on technology investments aimed at driving efficiency, with management cautiously optimistic about navigating current market conditions.

Full transcript - Alimentation Couche Tard Inc (ATD) Q4 2025:

Joelle, Conference Operator: Good morning. My name is Joelle, and I will be your conference operator today. I will now introduce mister Matthew Brunet, vice president, investor relations and treasury at.

Matthew Brunet, Vice President, Investor Relations and Treasury, Couche-Tard: Good morning. I would like to welcome everyone to this web conference presenting Alimonta Sans Couche Tard financial results for the fourth quarter of fiscal year twenty twenty five. All lines will be kept on mute to prevent any background noise. After the presentation, we will answer questions from analysts asked live during the web conference. We would like to remind everyone that this webcast presentation will be available on our website for a ninety day period.

Also, please remember that some of the issues discussed during this webcast may be forward looking statements, which are provided by the corporation with its usual caveat. These caveats or risks and uncertainties are outlined in our financial reporting. Therefore, our future results could differ from the information discussed today. Our financial results will be presented by Mr. Alex Miller, President and Chief Executive Officer and Mr.

Felipe Dostova, Chief Financial Officer. Alex, you may begin your conference. Thank you, Matthew. Good morning, everyone, and thank you for joining us for our presentation of our fourth quarter results. As we conclude this milestone year, the forty fifth year since we opened our first store, we are proud of the resilience of our business and the award winning engagement of our team members.

During the fourth quarter, in the face of difficult economic and geopolitical conditions, we held the line in same store sales in The United States and had strong positive results in Canada and Europe. Our initiatives to provide compelling value to our customers with exclusive food and beverage offers are performing well across the network. Compared to the same period last year, in our fuel business, we had positive volumes in Canada. And in The United States, we maintained market share and margins aligned with recent quarters. As we move into the new fiscal year, we remain confident in the strength of our global scale, long term strategy and customer centric teams.

Later in this presentation, I will go into more detail on our convenience and mobility results and value building initiatives. However, before I do so, I first want to address our global efforts to grow the network through M and A as well as our notable progress in organic growth. Let me begin by briefly mentioning our ongoing commitment to acquire Seven and I Holdings. At the April, we announced that we had signed a nondisclosure agreement with Seven and I to progress transaction discussions, facilitate due diligence and collaborate on plans to engage with regulators. Over the last several weeks, we have begun those discussions and look forward to continuing to work with the special committee of Seven and I.

We have also outlined what we believe is a clear path to U. S. Regulatory approval, which you can find on our dedicated website, growing7.com. As we mentioned last quarter, and it is worth repeating that while there has been extensive media coverage of our interest in Seven and I, internally, a very small team is involved in these efforts as the vast majority of the business is laser focused on our global operations. Also, as we discussed, we continue to consider other M and A opportunities as the strength of our globally diversified business allows us to pursue different tracks simultaneously as we have done so throughout our growth journey.

Moving to Europe, I recently returned from a terrific pride tour to our new mid European business units, visiting stores and team members, and I was able to see firsthand the progress we have made in the region as we begin our second year since completing the acquisition. From the visit, it was abundantly clear that team members have embraced our culture, values and customer focused approach to retail operations. We now have nearly 50 stores rebranded to Circle K and continue to see strong progress with store rebranding, both on the physical store layout as well as with product assortment and EV charging dispensers. Synergies from the transaction continue to be on track with expectations, which Felipe will cover in more detail in his presentation. While discussing M and A, let me briefly mention the ongoing progress we are making with GetGo, which we expect to close in the coming days.

As we have always done with all our acquisitions, we have identified local management to lead the business as they know best how to serve local customers. We also continue to be excited about our learnings from GetGo’s extremely popular food and loyalty programs and dedicated team members. In organic growth, we have made record progress with our 500 new store ambition. We have opened nearly 45 stores this quarter and over 110 stores in North America during this fiscal year. Our new stores include dozens of high speed diesel in rural locations and are designed to win our customers by making it easy to enjoy our offers, both inside the store and on the forecourt.

As we start the new quarter, we have more than 40 stores currently under construction and 1,000 sites in our overall real estate development pipeline. Now let me get back to our quarterly results, starting with convenience. Compared to the same quarter last year, same store merchandise revenues decreased by 0.4% in The United States, while they increased by 3.4% in Europe and other regions and by 3.5% here in Canada. The U. S.

Same store performance continued to be impacted by challenging economic and inflationary conditions as consumers carefully watch their spending. In Canada, same store revenues were boosted by strong growth of the alcohol category. Europe’s standout convenience performance was further supported by cigarette sales in The Netherlands as new legislation continues to be favorable to our industry. I’ll now go into more detail about our convenience offer and the ways in which we are focused on winning our customers by providing compelling value on products and services. Our meal deals in North America continue to deliver impressive sequential improvement.

At the end of Q4 in The U. S, we topped over 500,000 meal deals sold each week, up over 35% from Q3. While on a smaller scale, Canada also showed good signs of growth with food bundle sales up over 50% from the previous quarter. I am proud to share that now, as we start the new fiscal year, we are already up to nearly 800,000 meal deals sold each week in North America. Our win in food strategy continues to progress with nearly 6,200 fresh food fast stores opened globally by the end of the quarter.

The focus of the food team is on execution simplification, SKU rationalization and consistency, margin improvement and spoilage control. Back to the success of our meal deals, hot food units are increasing in percentage of those bundles as we strengthen the execution and popularity of our food offer. Turning to our loyalty membership programs. In The U. S, full enrollments in InnerCircle continued to grow quarter over quarter.

It is now nearly 10,500,000 members, and we are seeing an uptick in sign ups resulting from simplified enrollment features. We’ve also introduced new value campaigns and personalization efforts, which are driving incremental sales and traffic. We continue to be pleased with the linkage of Easy Pay and Inner Circle introduced last quarter, which is allowing customers a more frictionless experience at both our pumps and in our stores. The extra loyalty program in Europe ended the year with a record number of active members and strong growth in both fuel and merchandise penetration. Plans are underway to roll out the two point zero loyalty concept currently in Sweden to Poland and soon after to other European business units.

This new concept is designed to offer rewards across all products and services at our sites, whether a customer is looking to fill up with fuel, charge an electric vehicle or grab a snack. Work is also underway to bring some of the communication personalization capabilities to our new mid European business units during the new fiscal year. In our goal of owning Thirst, we are excited about our many recent exclusive product launches in The U. S, including Celsius watermelon ice and our first ghost brand. We also recently launched a second Gatorade exclusive, Summer Blaze, which is a bold refreshing flavor only available at Circle K in 28 ounce bottles.

These limited edition offers help drive excitement, customer engagement and traffic with store teams rallying support and display activity making the offers hard to miss in our stores. While packaged beverages continue to face headwinds in The U. S, energy drinks help bolster the overall performance of the category. Cold and frozen dispensed beverages in The U. S.

Continued impressive growth, benefiting from traffic driving promotional campaigns and popular flavor options. In the adult beverage category, Canada continued to have a strong performance in beer sales, following the recent change in legislation in Ontario, Canada’s largest market. The impressive same store sales growth in alcohol in Canada more than offset the decline in tobacco in the region, which continues to be impacted by illicit trade and removal of popular products in the other nicotine products category. In The U. S, overall nicotine performance was slightly negative with declines in cigarettes driven by lower demand.

However, we continue to outperform the market due to our efforts around price optimization, assortment expansion and personalization programs for our age verified customers. Other nicotine product sales were up in The U. S. Over the quarter as we deployed a series of initiatives across the segment. In Europe, we see signs of recovery in the nicotine category, driven by growth in other nicotine products, helping offset decline in combustibles.

Legislation changes in cigarettes in The Netherlands and favorable competition in Luxembourg have resulted in positive nicotine performance as consumers increasingly shift their spending toward our channel. Moving to our fuel business. Same store road transportation fuel volumes decreased by 1.9% in The United States by 0.6% in Europe and other regions, while an increase by 3.7% in Canada. As I mentioned earlier, we are maintaining market share in The United States and margins aligned with the trends of recent quarters as we continue to work on building value from our fuel supply chain and serving our customers through lower cost sourcing options. We also continued our efforts to provide compelling value to our customers with our very popular fuel days, including one in late May at over 7,000 locations in North America.

We once again drove excitement for our brands while providing impactful savings on fuel and exciting promotional offers inside the store, especially for Inner Circle members. This fuel event also supported our communities with donations to the Children of Fallen Patriots Foundation in The U. S. And Food Banks Canada. Our European B2B fuel business demonstrated resilience this quarter despite adverse market conditions and volume volatility.

Overall card volumes were slightly down. However, this was effectively offset by strong margin performance. Growing nonfuel income remains a strategic priority with B2B transit charging volumes growing steadily, up over 75% year over year. Integration and synergy delivery plans for the new business units in Benelux in Germany are advancing. B2B fuel share in The U.

S. Continued to grow quarter over quarter as we developed customer relationships with fleets of all sizes. As for our B2B truck segment, we saw significant growth across all business units, especially in Northern and Western states. This has been realized by continued execution of our commercial diesel growth strategy, implementation of new strategic partners and the optimization of existing partnerships. Our EV fast charging network in Europe now consists of nearly 3,480 charge points, up nearly 40% from the same quarter last year, with nearly 2,800 Circle K branded charge points.

Our station Circle K Jarnas, which is Sweden’s largest ultrafast charging station located on a highway south of Stockholm, has been named one of the three best EV hubs in the world. We also just opened our first EV charging only convenience location in Europe in a high traffic area of Gothenburg, Sweden. With these notable EV developments, we are now the most preferred brand for charging in Sweden, surpassing Tesla and all other competitors, which is a testament to our brand strength and the quality of our product offering in winning local customers. Before I turn the call over to Felipe, I want to mention some exciting recognition and game changing investments in innovative technology, which are benefiting our recruitment and onboarding as well as inventory management. First, we have recently been awarded the 2025 NAC Convenience Retail Technology Award Europe for our AI driven digital people platform.

This solution designed to streamline recruitment, onboarding and ongoing training has been recognized as industry’s leading innovation in workforce technology. We are also advancing on our deployment of RELX in North America, which we aim to start piloting in September. RELX is a unified end to end inventory planning system that applies AI and machine learning to retailer data to assist with determining where merchandise should be positioned across the entirety of each store. Our investment in RelX is part of a historic multiyear inventory management modernization journey that stands to deliver significant improvement to our ordering and space planning capabilities in North America, similar to recent successes achieved in our Europe business. With that, let me turn it over to Felipe to dive deeper into our financial performance this quarter.

Thank you, Alex, and good morning, everyone. We closed the fourth quarter and fiscal year with disciplined financial results, reflecting the strength of our operations, the dedication of our teams and continued investment in technology and customer value. Our focus on efficiency allowed us to advance strategic initiatives while preserving healthy margins. Building on Alex’s comments, we held the line on same store sales in The US despite the more value conscious consumer. This, along with strong strong same store sales in Europe and Canada, allied to the advantage of having a global a globally diversified network.

We stay focused on the levers within our control, executing the discipline and advancing initiatives that resonate with customers. While we don’t report multi trends, we ended the year on a positive note with modest same store sales improvement in The U. S. The integration of our Total Energy assets progressed according to plan, driven by strong performance across the board. Same store merchandise revenue grew at a solid mid single digit, nearly 30% higher than Q3 on a sequential basis.

Gross fuel margins have continued to improve year over year, while same store road transportation fuel volumes remained positive. These results reflect our team’s execution and ability to integrate complex acquisitions effectively. As of the end of Q4, we have delivered approximately 20,000,000 in operating expense synergies, exceeding our initial target of €18,000,000 On an annualized basis, this now represents over €40,000,000 in synergies. We remain on track to achieve €120,000,000 in synergies by fiscal twenty twenty seven and January by fiscal twenty twenty nine. These benefits are expected to come from reductions in operating, selling and administrative expenses as well as top line uplift from the deployment of our industry leading retail standards, operational practices and customer initiatives.

I will now go over some key figures for the quarter. For more details, please refer to our MD and A available on our website. For the fourth quarter of fiscal twenty twenty five, net earnings attributable to shareholders of the corporation stood at $439,000,000 or $0.46 per share on a diluted basis. Excluding certain items described in more detail in our MD and A, adjusted net earnings attributable to shareholders of the corporation were approximately $441,000,000 or $0.46 per share on an adjusted diluted basis, representing a decrease of 4.2% compared to the corresponding quarter of last year. For fiscal twenty twenty five, net earnings stood at $2,600,000,000 a decrease of $149,300,000 or 5.5% compared with fiscal twenty twenty four.

Diluted net earnings per share stood at $2.71 compared with $2.82 from the previous fiscal year. Adjusted net earnings stood at $2,600,000,000 a decrease of $139,000,000 or 5.1% compared with fiscal twenty twenty four. Adjusted diluted net earnings per share were $2.71 compared with $2.81 for fiscal twenty twenty four, a decrease of 3.6%. The decrease in net earnings was primarily driven by higher depreciation, finance and operating expenses linked to the acquisitions and strategic investments. Adjusted EBITDA for the fourth quarter of fiscal twenty twenty five increased by approximately $69,000,000 or 6% compared with the corresponding quarter of fiscal twenty twenty four, mainly due to improved Road Transportation fuel gross margin, partly offset by the impact of strategic investment on operating expenses.

During fiscal twenty twenty five, adjusted EBITDA increased by $345,200,000 or 6.1% compared with fiscal twenty twenty four, mainly attributable to the contribution from acquisition, which amounted to approximately $395,000,000 Softness in traffic and show demand in The United States as low income consumer was impacted by challenging economic conditions as well as what was just outlined for the fourth quarter. Now let’s review detail of our business segments on an FX adjusted basis. During the fourth quarter, merchandise and service revenue increased by approximately $99,000,000 or 2.4%, primarily attributable to organic growth, the net impact from organic changes to our network and the contribution from acquisitions, which amounted to approximately $22,000,000 During fiscal twenty twenty five, merchandise and service revenue increased by approximately $899,000,000 or 5.1%. Merchandise and service gross profit increased by approximately $24,000,000 or 1.7%. This is primarily attributable to organic growth in Europe and other regions and in Canada and into the contribution from acquisition, which amounted to approximately $7,000,000 Our merchandise and sales gross margin in The United States decreased by 0.2% to 33.9%, mainly driven by ongoing price investment and nonrecurring tobacco write off and inventory optimization.

On a positive note, we have seen the food spoilage decreasing by more than 500 basis points during the quarter compared to the previous year, which demonstrates the success of the store execution the store execution of our food program. Our merchandise and service gross margin decreased by 0.6% to 38.6% in Europe and other regions and by 0.8% to 34.1% in Canada, both impacted by changes in product mix with the implementation of new legislation in our various locations. For fiscal twenty twenty five, merchandise and service gross profit increased by approximately three thirty million dollars or 5.2%. Our gross margin in The United States decreased by 0.1% to 33.9% by 0.3% in Europe and other regions to 38.9% and by 0.3% in Canada to 33.7%. Moving on to the fuel side of our business.

Our road transportation fuel gross margin was 43.27¢ per gallon in The United States, an increase of 4.48¢ per gallon. In Europe and other regions, it was 5.57 US cents per meter, an increase of 1.27 US cents per meter. And in Canada, it was 14.05¢ Canadian per meter, an increase of 0.37¢ Canadian per meter. Fuel margin remained healthy throughout our network due to the continued work on the optimization of our supply chain, our fuel trading teams, and strong execution in our stores. During fiscal twenty twenty five, our water transportation fuel gross profit increased by approximately $620,000,000 or 10.7%.

Our work transportation fuel gross margin was 45.39¢ per gallon in The United States, 9.50¢ per liter in Europe and other regions, and 13.51¢ Canadian per liter in Canada. Now turning to SG and A. In the fourth quarter of fiscal twenty twenty five, normalized expense expenses increased by 4.6% year over year, attributable to a mix of core operating expenses, strategic incremental investment, and by large changes in specific results. First, roughly 2% of the increase came from our core operating expenses. I want to emphasize that across all three regions, expense growth remained well controlled, supported in part by our fit to serve initiatives and continue to track below the weighted average inflation across the network.

This speaks to the discipline of our teams and our ongoing commitment on operational excellence. Second, about 1.5 of the increase was tied to strategic incremental investment in the business, particularly in technology and operational tools that support our long term growth. And finally, the remaining increase, which was roughly $20,000,000 in adjustment or about $02 on EPS, is related to legal general liabilities and environmental reserves tied to specific events in the quarter. For the full full fiscal year, normalized operating expenses rose by 3.3%. Let me now turn to the work we’re doing to modernize our operation and support future growth.

Over the past year, we have continued to advance our digital road map, focused on enhancing the in store experience and deepening engagement across our customer journey. Our loyalty platform investment already helping us better connect with our customers while creating new personalized avenue for growth. We’re also bolstering the underlying tech infrastructure needed to support this evolution. As Alex noted earlier, our rollout of Rolex in North America marks the next step in modernizing inventory management, improving forecasting and product availability. We are also scaling data capabilities and advancing the next phase of our new car platform in Europe, which will streamline onboarding, pricing and billing for our B2B customers.

Additionally, we are embedding smart tools to run automation and efficiency across the network. In roughly 7,000 North American stores, new upgraded handheld devices are streamlining tasks like ordering and inventory management. We have also introduced a level of scheduler that tailor starting plans to each store’s expected traffic and sales pattern. In about 1,000 stores, we deployed an AI platform that converts raw data into clear actionable missions for store managers and even faster, more agile execution. And with the rollout of new floor new floor cleaning equipment, we further reducing labor hours and time spent on working task, allowing teams to focus on the in store experience.

To support and fund some of these investment, we are delivering meaningful progress under our c two sub program. Workforce productivity continues to improve. When combining regular and overtime hours, total hours worked declined nearly 2% year over year. Overtime alone drove by a remarkable 14%, 13% in The US, and we have reduced administrative tasks and associated store hours by nearly 50% over the past four years. Over time for US associate now remains below 2.5, a clear reflection of our tools like end of device, optimized labor scheduling, and how clean our helping teams operate more efficiently and dedicate more time on selling the customer.

We continue to drive cost improvement by centralizing procurement for good months for goods, not for resale, better leveraging our global scale. In parallel, through our global capability network, we have established a global customer care team supported by outsourced call center operation to enhance service consistency and efficiency. This structure also enables a stronger feedback loop, bringing valuable customer insights back into operations and offers. In summary, the combination of thoughtful technology investment and our fit to serve initiative is strengthening execution, streamlining growth and positioning us for long term value creation. At the same time, disciplined cost management remains a priority, and we expect normalized expense growth to stay below inflation as we move into fiscal twenty twenty six.

Turning over to depreciation and amortization for the fourth quarter of fiscal twenty twenty five. Our depreciation expense increased by $49,000,000 or 9.9% year over year, mainly driven by the acquisition of Total Energy assets, equipment upgrade and store remodel program across our network and the strategic investments in new stores opening technology and EV chargers. For fiscal twenty twenty five, our depreciation expense increased by approximately $352,000,000 or 20%, mainly driven by the impact from acquisition investment in Global Tech profits, which amounted to approximately $2.00 $5,000,000 From a tax perspective, the income tax rate for the fourth quarter of fiscal twenty twenty five was 18.8% compared with 10.2% for the corresponding quarter of fiscal twenty twenty four. In the corresponding quarter of fiscal twenty twenty four, the income tax rate included a net tax benefit derived from an internal reorganization, which had a favorable impact of 6.5% on the tax rate corresponding to an approximate EPS benefit of $03 The remaining increase is mainly stemming from the impact of a different mix in our earnings across the various jurisdictions in which we operate. As of 04/27/2025, we recorded a return on equity at 18.3%, and our return on capital employed stood at 12.2%.

During the fiscal year, our leverage ratio decreased to 1.96. We also had strong balance sheet liquidity with $2,300,000,000 in cash and an additional $3,400,000,000 available through our revolving unsecured operating credit facility. Turning to the dividend. The Board of Directors declared yesterday a quarterly dividend of 19.5¢ Canadian per share for the fourth quarter of fiscal twenty twenty five to shareholders on record as of July seventh of twenty twenty five and approved its payment effective 07/21/2025. Let me conclude by briefly highlighting a few key points.

Fiscal twenty twenty five is now in the real junior role. Like many of our peers, we faced our share of challenges and uncertainties, but I’m very proud of how the team responded in a disciplined way and delivered solid performance. We held the line supported by the strength of our global digital network and the resilience of our operating model. We also developed synergies while integrating a large acquisition, all while employing local teams for the discipline of our organization and the strength of our culture. As we enter fiscal twenty twenty six, our focus is clear, control our cost, strongly seeking our CapEx deployment to continue delivering best in class returns while investing in areas that support our long term strategy.

I thank you all for your attention, and I will turn the call over again to our president and CEO, Alex Mio. Thank you, Felipe. I’m truly honored that my first year as President and CEO has coincided with the forty fifth anniversary of Couche Tard. Few companies, large or small, make it as long and successfully as we have been able to do so. I have no doubt that this is because of our special culture of putting our people and customers first, an approach started by Elaine when he opened our first store in Laval, Canada, and one that continues to guide us today across our global network.

This year has also been among the more challenging in retail as our consumers are hurting and carefully watching their spending. That is why I’ve asked the entire company to make winning the customer by focusing on compelling value, ease and readiness our number one priority as we begin the next forty five years of our company’s journey. With our globally diversified business, long term growth strategy and customer centric team members, I remain confident that we will continue to play to win far into the future. On that note, let’s turn it over to the operator to answer analyst questions.

Joelle, Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys.

Please limit yourself to one question. Your first question comes from Irene Nattel with RBC Capital Markets. Your line is now open.

Matthew Brunet, Vice President, Investor Relations and Treasury, Couche-Tard: Thanks, and good morning, everyone. Could you talk a little bit more about the demand profile you’re seeing across geographies, notably in The US. You know, you you talked a little bit about tobacco and meal deals, but more broadly speaking, category trends. And, you know, if if we’re talking about innings, where are you on key initiatives like Fit to Serve and Owning First? Irene, thanks for the question.

Let me start with Europe. I think I think demand is okay. I would say stable. I think the big the big piece for us is just our outperformance of market. You see that in fuel.

We are significantly outperforming market, taking market share. The same can be said in convenience. We are actually growing nicotine in Europe and have done so period on period for a while now. So we are extraordinarily bullish on our European performance and going forward. Not so much that the underlying demand, it’s tough over there as well, but just the performance of our business is really humming.

In Canada, strong fuel. We are seeing period over fuel period over period, excuse me, fuel growth. I think we still have opportunities to execute and take additional share inside of that. And then the significant tailwind that we have from alcohol in Ontario is more than offsetting the nicotine losses. Again, the consumer demand profile, I you know, it’s not overly rosy.

It’s fairly stable, but challenged, I would say. In The US, I would say more of the same, Irene. I wouldn’t say we’re seeing it getting worse, but I can’t say that we’re seeing it getting better. We see our consumers lower end, lower middle end consumers continuing to be very selective with their dollars, consolidating trips, and we just need to continue to take market share. Your question around where are we at?

Food, we are early innings, but I am extraordinarily pleased about the direction. We have fourteen straight weeks. We have grown units, food units in The United States. Our digital programs are growing. We are executing on personalization.

Our trip frequency is up 9%. Our spend per member is up 2%. Our member growth is up 40% over two years. We’re just we’re I’m seeing the focus and the execution on the core initiatives paying off. Cold dispense is a big for us in North America around Thirst, and we’ve got some big initiatives coming over the summer.

You heard me mention Summer Blaze with Gatorade. We blew that out last summer, so we’re excited about that. We’ve got a global activation with Monster around Formula One and the new F1 movie in McLaren. Really excited about that. So we are focused on our core strategy, digital first, food, and we are going to leverage those down to take market share, Irene.

Joelle, Conference Operator: Thank you very much. I’ll get back into the queue. Your next question comes from Chris Lee with Desjardins. Your line is now open.

Matthew Brunet, Vice President, Investor Relations and Treasury, Couche-Tard: Good morning. Just maybe a quick follow-up question, maybe also in The U. S. Can you share with us how did merchandise comps trend through the quarter? Did it improve?

And how is it trending Q1 to date? Yes. We were soft at the end of Q3 and soft at the start of Q4, and that improved over the final periods of the quarter. And we have seen the start of this quarter kinda trend with more towards the end of last quarter. Yeah.

And and for your just to just to complement, Chris, what what we see is basically, you know, food, you know, improving. As mentioned earlier in the call by Alex, you know, our food program, the new program is is really working a lot and driving traffic to to our top. So we we feel very, very encouraged by that. And for sure, I don’t think, you know, the the overall performance of the of the business this quarter. Great.

Thanks for the colors.

Joelle, Conference Operator: Your next question comes from Michael Van Nuys with TD Cowen. Your line is now open.

Matthew Brunet, Vice President, Investor Relations and Treasury, Couche-Tard: Thank you. I wanted to talk on the fresh food execution. It sounds like you’re finally getting some really good traction on these meal deals. But I was hoping you could explain a little bit about why you think you were not getting traction on the fresh food to the extent that you wanted to in recent years and now what you’re doing differently that’s really driving the momentum in the last fourteen weeks or so. Yeah.

I think thanks for the question. You know, our our focus is we have been laser focused on execution and specifically SKU rationalization. I think I’ve mentioned on previous calls that that, you know, we we we frankly had too many skews, and that was making it difficult for us to execute. So we’ve significantly reduced the number of skews. We have focused on our operational execution, simplifying that execution, making it easier for our stores.

And we have launched our closed loop program that we have been piloting that really gets into detail across our processes to ensure that we are executing food on a day to day basis, and we are getting better and we have momentum. I still think we’re early innings on meal bundles. We set an initial target of a million. The team is telling me they are are pretty hopeful that we can accomplish that in the next quarter. So I guess I’ll be able to hopefully tell you that when I talk to you next time.

But, you know, again, we we our consumers are recognizing the value of our meal bundles, and our partners are keen to to partner with us across our drink options, which is differentiated against QSRs. So we continue to have really good conversations across our drink providers, across categories, and we will continue to build out those options. Is your advertising and loyalty program also helping to drive Yeah. I think if you go into one of our stores, it’s pretty tough to not not see our meal bundles. So I think we are focused on digital.

The progress we’ve made around personalization, being able to give customer offers that are relevant for them on their purchases, being able to know that our fuel customers are on the lot and get them an immediate deal to come into the store, which we’re now converting at 20%. The team just continues to advance our capability. And I fully expect for our digital penetration to continue to grow up go up to drive trips and to drive additional business and to turn our traffic to positive. Okay. And just so I I understood clearly, you said you ended ended the fourth quarter in The US with modest center sales growth.

Yep. Correct. Alright. Perfect. That is accurate.

Thank you.

Joelle, Conference Operator: Your next question comes from Tammy Chen with BMO Capital Markets. Your line is now open.

Matthew Brunet, Vice President, Investor Relations and Treasury, Couche-Tard: Hi. Good morning. Thanks for the question. I just wanted to stick quickly with food here. So the improved spoilage you mentioned is is quite significant year over year.

I’m just wondering if this also improved sequentially, and is that more from the the SKU reductions or or much more from uptake of the new bundles by customers? And as you think about the level of spoilage now, do you have a target you’re trying to get to? Are you still a bit far away from the target? If you can give us a sense of that, that would be helpful. Thank you.

Yeah. I I can take this question. I I can answer answer the question. So on the on on the storage, I think it’s it’s coming really from, you know, the the SKU reduction. The business that, you know, help to facilitate and make simple, you know, the the the the work and execution at.

And, you know, we have kind of also implemented a program of, you know, zero zero for e work products. So just focusing, you know, and making sure that, you know, the the the merchandise that we need is available in stores when the the the customer need it. So the things are helping. And and, you know, providing tools also. So we are, you know, as we mentioned a few quarters ago, so just helping the store to have a better idea about, you know, how much they need to produce, you know, sales forecasting.

So all all that is combined help us actually to see across our our network in in in US, as you mentioned, a significant improvement in. There’s still a lot to do there. We are not at the end of the journey, and and we expect actually, potash to continue to improve. Okay? So difficult at this stage to tell you where we will land, but but you should you should see some some additional, you know, improvement on the on the full margin over the next coming quarters.

Joelle, Conference Operator: Your next question comes from Mark Petrie with CIBC. Your line is now open.

Matthew Brunet, Vice President, Investor Relations and Treasury, Couche-Tard: Yeah. Thanks, and good morning. Not to not to beat this too too much more, but I do wanna continue just asking about food and, I guess, specifically, the sort of production and distribution shifts that you’re making. Could you just talk about the timing there and how material you think the benefits will be? How those will how those will show up?

What what what do you mean here in terms of supply chain and the the way that we are That’s right. Bring the store. Thank you. Yeah. Yeah.

Sure. Today, we have one commissary in The United States that supplies a fairly significant majority of our frozen items to six business units. I think and the rest is provided by third party vendors. For this next fiscal year, that model will continue from a supply chain. I think we are active.

We are adding three warehouses for our our regular goods, not our food goods that we will add later this calendar year. And I believe we will add a couple commissaries in The United States over the coming years and take more control of our supply chain, but that’s not near term activity. Yeah. Supply chain supply chain is part of yeah. Our strategic road map, Michael, and and, definitely, we are now wrapping up our capabilities on on on the dry side, on the on on what is not nonfood.

But but, definitely, we are in the road map as well to look at what we could potentially do on the on the fresh side, but more to come on that in the next coming quarter. Okay. Excellent. Thank you.

Joelle, Conference Operator: Your next question comes from John Zampara with Scotiabank. Your line is now open.

Matthew Brunet, Vice President, Investor Relations and Treasury, Couche-Tard: Thanks very much. Good morning. I wanted to come back to The U. S. Same store merch comp.

Can you just confirm that the traffic was also negative in the quarter, just to clarify that? And then the question is, you have specific drivers that are supporting same store sales growth in Canada and Europe. And I wonder how material those are. If you normalize for the impact of those, how are Canada and Europe comparing to The U. S?

Is there still a meaningful delta there? And if so, what you attribute that to? Traffic was negative in the quarter, mid one, one and a half roughly. The, The Ontario beer is a massive driver for us, and it’s offsetting we lost Donik, the white nicotine. That’s a real tailwind.

We will cycle on both of those things in a quarter or two as we both lost Ozonic and the initiation of alcohol and beer. But the amount of traffic that beer and we are still learning, our execution by our teams is so good. We are still learning about the basket, what’s the mix. So, yeah, I having beer in our stores, the number of new customers is a real win in Canada, and we will continue to amplify that. In Europe, it’s we’re just we’re just executing.

We do have some headwinds or some, excuse me, some tailwinds, as we mentioned, in cigarettes. Specifically, Mid Europe was up low 6% last quarter, and that a good chunk of that is the change in cigarettes in The Netherlands that moves cigarettes from grocery stores into our channel. So so that is a specific activity that’s helping us. But again, across our European business, nicotine is positive. So the combination of cigarettes and other nicotine products is positive to our same store results.

I think lastly, mentioned Hong Kong has been a real drag on us because of the increased cigarette taxes. We have finally cycled on that. We have started to see positive same store sales coming out of Hong Kong. Our our we’ve got a make your own cup of coffee, cold coffee, iced coffee that is proving to be tremendously popular that we are continuing to roll out. So really excited for our Hong Kong business as we look to the future.

Yeah. Just just a bit more color on on on Europe. For example, you you have today, it’s positive traffic overall. And and something that, you know, that Europe has done incorrectly better than than US is food. Food, you know, penetration is stronger, and that’s definitely helping.

So that’s, you know, indicating that, you know, existing and and and and it’s not full offer in US is is the right path as you know. But also I think what we see also in the Scandinavian countries is the product that we are making on the EV and being a very relevant and leading actor there, that’s helping us with driving traffic and, of course, on the for corp but in store as well. So there is always combination, you know, for corp plus corp that’s helping driving traffic in in in Europe and making this business very, very resilient actually to to the environment that remains quite challenging in Europe, to be honest.

Joelle, Conference Operator: Your next question comes from Vishal Shreedhar with National Bank. Line is now open.

Matthew Brunet, Vice President, Investor Relations and Treasury, Couche-Tard: Thanks for taking my questions. Wanted to get your perspective on capital allocation as it as it relates to the acquisition backdrop. In the preliminary comments, you indicated that you you’re you’ll continue to look for deals, notwithstanding your interest in seven and I. So I wanted to get your perspective on how you perceive the acquisition backdrop and and prices and opportunity and how we should think about that in the fiscal year ahead? And does your comment also relate to buying back your own stock?

Is that something that is on the table as well? Yeah. Sure. I think, first of all, let me reference Gecko. It’s not a small transaction.

I I think we we are very close to Gecko, and we expect to close that in the coming days. And we are really excited to bring Gecko over as a new business unit into The United States and really understand their very strong food and loyalty programs. So we’re excited about that. Our focus on M and A, it hasn’t changed. We have a defined playbook that our founders and Brian have given us.

We deploy it across our business units. I would say activity has not been as pronounced in the recent weeks as it had been over the previous month, but we remain active on some things, and we will continue to look at those things as we have always done. Capital allocation for us, I think with with Seven and I, we are engaged. We signed the NDA. We are engaged in diligence.

We are engaged in management meetings. We are engaged on the divestiture. And I think the benefit of that is it’s setting a time line to bring clarity to both us and to Paul and their special committee if a transaction is going to be reached. And I believe that time line will be shorter rather than longer. Our deployment of capital across our base, we have a very disciplined way around how much we deploy traditionally.

We’ve lowered that a little bit this year, really just for capital discipline practices. And but we continue to invest in our business heavily. And you hear 40 plus openings this year, 1,000 stores in our NTI pipeline. Our new stores do phenomenally with great returns, and our real estate group continues to ramp up the activity, and we will continue to do that. Just on the the on your question regarding the share buyback program.

So as you know, we we have stopped actually to this program due to support. And, you know, if support would would go and we conclude that that’s what we seven and I sorry, seven and eleven transaction will will will go at the end. We’ll need cash. So that’s why we have stopped, you know, the the share buyback program. But we will reinitiate it if, know, if seven and eleven pro seven and eleven does not continue.

So that’s that’s the the way that we believe that, you know, we’ll is is very optimum to to use the the share buyback But today, given the line, again, we we are stopping it.

Joelle, Conference Operator: Your next question comes from Mark Carden with UBS. Your line is now open.

Matthew Brunet, Vice President, Investor Relations and Treasury, Couche-Tard: Good morning. Thanks so much for taking the question. On the food front, how’s the rollout of meal deals going in Canada? It sounds like alcohol was a major driver, but did food contribute to the strength in your merch comp as well in the quarter? And and how do you think about the long term opportunity there relative to The US?

We are committed to food across our geographies, and we are committed to meal deals and bundles across our geographies. And we are growing them in Canada at actually a faster percentage clip, not on an absolute clip than we are in The United States. And we are growing them in Europe as well, where our food penetration is much deeper. So we are absolutely committed to meal deals in Canada. Our we grew food this quarter once again, and our intent is to grow at even greater basis than we did this quarter and to ramp that up.

We’ve talked a lot about our food margin. We had a great quarter. If you look quarter Q4 versus Q4 last year, significant improvement in food margin. And we talked about our processes, the simplification. We as Felipe said, we believe there’s more runway to that.

We believe food along with digital is right at the center that’s gonna flip our traffic to positive. Thanks so much. Good luck. Thanks.

Joelle, Conference Operator: Your next question comes from Luke Hannan with Canaccord. Your line is now open.

Matthew Brunet, Vice President, Investor Relations and Treasury, Couche-Tard: Thanks, and good morning, everyone. I wanted to follow-up on a couple of one timers in the quarter. Firstly, the it was mentioned the tobacco spoilage in The U. S. Can you just shed share more details on what exactly that entails?

And was that broad based across all your BUs? You’re just focused on a couple and also across product lines? And then secondly, the $20,000,000 in the provisions within OpEx, just more details on what exactly that was and potentially whether there could be a release on that reserve in the relative near term? Yeah. It was really a skew rationalization in nicotine of products that we elected to exit, and it was in three of our BUs, but it was significant.

The second part of the question was? Regarding the OpEx? Oh, the the one off? Go ahead. Okay.

On on that. Yeah. So on these two, I think those those reserve, it’s actually to anticipate a real expense coming. So the half of the €20,000,000 is coming from a settlement regarding U. S.

Litigation that happened during the quarter. So we have to reserve that and the payment will happen in Q1, so or this year. And the second component roughly also €10,000,000 is linked to environmental reserve and linked to additional remediation that we have to do in the site in Canada. So, again, here, reserve on q four and expense to to come in the next coming quarters. No no no reverse or potential reverse that will help ease the the PNM in the next coming quarters to coming from this two either.

It’s it it would be an expense. Okay. Thank you very much.

Joelle, Conference Operator: Your next question comes from Corey Tullow with Jefferies. Your line is now open.

Analyst Speakers, Various, Various (RBC, Desjardins, TD Cowen, BMO, CIBC, Scotiabank, National Bank, UBS, Canaccord, Jefferies, Stifel): Great. Thanks, and good morning. Alex, you used the phrase compelling value a number of times in your script, and it’s clear that what you’re doing is working as a part of your strategy. So as you think about whether it’s in the stores or at the pump, how do you think about leaning into value more to drive market share gains given this strategy seems to be working so well?

Matthew Brunet, Vice President, Investor Relations and Treasury, Couche-Tard: Yeah. I think value price perception is at the core of of our focus. And and it’s more it’s not a new trend. It’s just been heightened, right, I think, in this environment. So it’s not something that’s new to us, but I think it’s more important than ever.

You know, how are we thinking about it? Again, I’ll come back to our digital tools. Our digital tools and personalization personalization allow us to understand customers and what drives their behavior and and what value triggers they act upon. We are getting smarter and better in those places, and we will continue to deploy our extra two point o and our inner circle here in North America and to deliver value to customers. Our fuel days where we offer that we do a few times a year, the response to that and the loyalty sign up and the return visits from those customers that we can now see is very compelling.

And and private label. We have opportunity in private label to continue to expand our growth. We have new products coming. We are actively looking at how we continue to position those products to get value recognition from our consumers for that. And then within our food and meal bundles that we’ve talked a lot about on this call, it is clearly resonating with consumers.

For us to grow from about 100,000 meal deals to 800,000 really in a couple of quarters certainly suggests that this resonates with our consumers. So we are laser focused, but I also want to be clear, You know, it wasn’t a great in The US, it wasn’t a a great merch margin quarter. Some of that’s that nicotine piece, but I still believe we can offer value, grow traffic and sales while improving margins year over year in The U. S.

Analyst Speakers, Various, Various (RBC, Desjardins, TD Cowen, BMO, CIBC, Scotiabank, National Bank, UBS, Canaccord, Jefferies, Stifel): That’s very helpful. Just as a follow-up, I think you talked about the trajectory for expense growth. Was curious to get your thoughts in terms of how you’re thinking about leveraging technology, and the ability to perhaps keep expense growth a little bit more controlled than the rate of inflation perhaps, if that is a possibility, given the emphasis on investments in AI

Matthew Brunet, Vice President, Investor Relations and Treasury, Couche-Tard: and technology? Thanks so much. Yeah. Yeah. That’s our goal.

Let’s be very clear. We we want, you know, expense to to to grow. That’s that’s what we ambition for for, you know, this year and and the next coming one. So there’s definitely, you know, a strategy investment that we’re doing that are necessary for the long term. So I I explained, you know, many of these tools that we need that will make a huge difference for for the customer and for, you know, teams in store.

But at the same time, we have, you know, the fee to self program, the 800,000,000, you know, program that we have announced, what, two years ago. Just this year, we we delivered more than $250,000,000 savings. We are very confident that this year, we’ll, you know, we’ll continue to to to execute on on this plan. We have identified a lot of initiatives. We have, you know, just being just taken the the journey on the centralization of the non COGS, you know, items, and we see already the benefits of that.

And we are very confident that, yes, we’ll we’ll be able to offset the necessary investment that we actually don’t take. Yeah. I’ll build on that a little bit in that. You know, we talk about our culture a lot. Controlling cost is at the is a cornerstone of our culture.

And in this environment, it is an absolute. So we will continue to control cost. We have stated many times that our goal is to deliver cost at or under inflation, and we will continue to execute against that. We will do that while we are making investments into technology, data platforms, customer data platforms, back end technology that enables the things that I’ve been talking about around this call. Those are investments in our future.

Those are investments in future customers that we believe we need to make, we will offset those investments through efficiencies in fit to serve and through the operating improvements that you heard us mention. But thanks for the question.

Joelle, Conference Operator: Our last question comes from Martin Landry with Stifel. Your line is now open.

Matthew Brunet, Vice President, Investor Relations and Treasury, Couche-Tard: Hi. Good morning. I was wondering if we can return turn return back to seven Eleven quickly. So what is the likelihood of a transaction happening at this point? Is it a high likelihood or is it low likelihood?

And and how engaged is seven Eleven in in the discussion? Is there a real willingness on their end to transact? I’m not gonna say more than what I previously said, which was we are engaged with them on due deal, on management meetings, on the FTC process. I believe that the the good you know, there’s a lot good about that, but this gives us a definitive time line for both us and Paul and the special committee at Seven and I to reach a conclusion on this transaction, and I anticipate that time line being shorter rather than longer. Okay.

Thank you.

Joelle, Conference Operator: There are no further questions at this time. I will now turn the call over to Messer for closing remarks.

Matthew Brunet, Vice President, Investor Relations and Treasury, Couche-Tard: Thank you, Alex and Felipe. That covers all the questions for today’s call. Thank you all for joining us. We wish you a great day and look forward to discussing our first quarter twenty twenty six results in September.

Joelle, Conference Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your

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