Couche-Tard (ATDBCN; Baa1, BBB+) FY24 (ending April) Results

Couche-Tard, the 50/50 fuel/general merchandise gas station retailer has reported in-line results. We see the curve as fair here; Tesco31s gives +10bps over it on similar scale, less diversification (UK) and lower margins (Tesco 4% vs. Couche-Tard's high 5%s - though latter swings on fuel). More supply on M&A remains a risk for ATDBCN (we flagged in Q3) and it is something we are watching for in earnings call later today. For now our cheap view in staple retailers stays on the Tesco 31s.

All figures in USD.

• FY24: Revenue at $69.3b (-3.6%) made up of Fuel at $51b (-4.5%) and merchandise & services at $17.5b (+1.5%). Adj. EBITDA at $5.6b (-2.9%yoy) at unch margin of 8%. Weakness on headline its tagged to weaker fuel prices/margin and softness in traffic (group fuel volumes were down -0.8% in US, -1.5% in Europe & +1.6% in Canada).
• Fuel came in at a gross margin of 11.4% with fuel margins (in cents/litre) at US 10c (-0.5c), Europe 8.7c (-2.2c) and Canada 13.3c (+0.6c). Merchandise gross margin was 34.8% (+40bps), Europe continuing to be strongest at 39.2% (+40bps).
• Net it left 50% of gross profits from Merchandise, 48% from fuel (remainder from other). US is 63%, Euro 25%, Canada 12% of group sales with skew in merchandise to US (70% of that segment).
• Gross/net leverage was at 2.4x/2.2x vs. 1.6x/1.5x last year - the increase on gross issuance (did CAD/USD/Euro deals) to fund $3.8b purchase of TotalEnergies (A1/A+) gas stations in Europe. Gross debt up from $9.5b to $14.5b, $3.7b of that is in lease liabilities and net of the $1.3b in cash left net debt at $13.1b (up from $8.6b).
• Did $1.4b in buybacks last year and has renewed the share purchase programme (allows up to 10% (~$5.5b) of float to be bought). Increased FY24 annual dividend by +25% to CA66.5/share (~$645m).

Q3 earnings take (including references to M&A) here