Mr. Brian Hannasch reports

ALIMENTATION COUCHE-TARD ANNOUNCES ITS RESULTS FOR ITS FIRST QUARTER OF FISCAL YEAR 2024

For its first quarter ended July 23, 2023, Alimentation Couche-Tard Inc. had net earnings of $834.1-million, representing 85 cents per share on a diluted basis, compared with $872.4-million for the corresponding quarter of fiscal 2023, representing 85 cents per share on a diluted basis. The results for the first quarter of fiscal 2024 were affected by pretax acquisition costs of $3.5-million, as well as by a pretax net foreign exchange loss of $300,000. The results for the comparable quarter of fiscal 2023 were affected by pretax acquisition costs of $1.2-million, as well as by a pretax net foreign exchange loss of $1.0-million. Excluding these items, the adjusted net earnings were approximately $838.0-million, or 86 cents per share on a diluted basis for the first quarter of fiscal 2024, compared with $875.0-million, or 85 cents per share on a diluted basis for the corresponding quarter of fiscal 2023, an increase of 1.2 per cent in the adjusted diluted net earnings per share. This increase is primarily driven by organic growth in the convenience activities as well as by the favourable impact of the share repurchase program, partly offset by lower road transportation fuel gross profit in Europe and other regions, and by higher depreciation and expenses. All financial information presented is in United States dollars unless stated otherwise.

• Net earnings were $834.1-million, or 85 cents per diluted share for the first quarter of fiscal 2024 compared with $872.4-million, or 85 cents per diluted share for the first quarter of fiscal 2023. Adjusted net earnings were approximately $838.0-million compared with $875.0-million for the first quarter of fiscal 2023. Adjusted diluted net earnings per share were 86 cents, representing an increase of 1.2 per cent from 85 cents for the corresponding quarter of last year.
• Total merchandise and service revenues of $4.3-billion, an increase of 5.0 per cent. Same-store merchandise revenues increased by 2.1 per cent in the United States, by 2.7 per cent in Europe and other regions, and by 6.4 per cent in Canada.
• Merchandise and service gross margin increased by 0.4 per cent in the United States to 34.3 per cent, by 1.0 per cent in Europe and other regions to 39.9 per cent, and by 0.8 per cent in Canada to 33.9 per cent, all impacted favourably by a change in product mix.
• Same-store road transportation fuel volumes increased by 0.7 per cent in the United States, by 7.2 per cent in Canada, and decreased by 1.5 per cent in Europe and other regions.
• Road transportation fuel gross margin of 50.05 cents per gallon in the United States, an increase of 1.05 cents per gallon, and of 13.25 Canadian cents per litre in Canada, a decrease of 79 Canadian cents per liter. Fuel margins remained healthy throughout the North American network, due to favourable market conditions and the continued work on the optimization of the supply chain. In Europe and other regions, the road transportation fuel margin was 8.21 cents per litre, a decrease of 4.05 cents per litre, mostly driven by the volatility of the global fuel market, more impactful to the corporation's European gross margin due to a more integrated supply chain model in this region.
• Growth of expenses for the first quarter of fiscal 2024 was 2.9 per cent while normalized growth of expenses was 3.7 per cent, remaining below the average inflation observed throughout the corporation's network.
• During the quarter, the corporation reached an agreement to acquire 2,193 sites from TotalEnergies SE located in Germany, Belgium, Netherlands and Luxembourg.
• During the first quarter of fiscal 2024, the corporation repurchased 4.7 million shares for an amount of $230.0-million. Subsequent to the end of the first quarter of fiscal 2024 and under the share repurchase program, the corporation repurchased 10.8 million shares through a private agreement, for an amount of $529.7-million.

"We are pleased to announce a good first quarter of our new fiscal year, with our Canadian operations leading the way with strong performances in both convenience and fuel. Same store sales continued to grow in all Canadian business units with our packaged beverages category performing exceptionally well. Fuel volumes also grew significantly in this region. Across North America, we are seeing benefit from our promotional initiatives including reoccurring fuel days, which are contributing to volume growth. At the end of August, we had our first ever global Couche-Tard/Circle K Day with limited-time food and fuel discounts across our network from Hong Kong, to Europe and coast to coast in North America. With inflationary conditions continuing across the globe, our focus has remained on providing value and ease to our customers both inside our stores and on our forecourts," said Brian Hannasch, president and chief executive officer of Alimentation Couche-Tard.

"We are especially excited to have launched our Innercircle loyalty program during the quarter. Early in the summer, we went live with the program in nearly 430 stores across the Florida business unit. Innercircle is a free membership program with fuel rewards, food rewards and much more, while also providing new personalized experiences to our loyal customers. We could not be more pleased with the rollout so far in terms of customer adoption, positive feedback, and growing popularity of the app. We have just introduced Innercircle in one of our largest business units, Grand Canyon, and plan to expand to more business units, starting in the southeast of the U.S., as the year progresses. I want to thank the many cross-functional team members for bringing forward this unique program to make it easier and more rewarding for our customers," concluded Mr. Hannasch.

Filipe Da Silva, chief financial officer, added: "I am delighted to report that our focus on cost reduction has yielded favourable outcomes during this quarter. Our disciplined approach to expense management and streamlining processes has positively impacted our results which include a normalized growth of expenses of 3.7 per cent, lower than the average inflation observed throughout our network. This strong sequential improvement underscores our dedication to financial discipline and reflects our commitment to delivering sustainable value to our various stakeholders. I am thankful for our team's continued pursuit of operational excellence which enabled us to deliver strong results across our key metrics. At our 2023 analyst and investor conference, we look forward to communicating our new multiyear strategic plan which will include a renewed focus on cost reduction initiatives. Finally, in terms of capital allocation, the recent private buyback transaction, which took place shortly after quarter-end, highlights a great use of our excess cash and will further enhance our key return metrics."

Significant items of the first quarter of fiscal 2024

• On April 26, 2023, the Toronto Stock Exchange approved the renewal of our share repurchase program, which took effect on May 1, 2023. The renewed program allows us to repurchase up to 49.1 million shares, representing 5.0 per cent of the shares outstanding as at April 20, 2023, and the share repurchase period will end no later than April 30, 2024. During the first quarter of fiscal 2024, the company repurchased 4.7 million shares for an amount of $230.0-million. Subsequent to the end of the first quarter of fiscal 2024 and under the share repurchase program, the company repurchased 10.8 million shares through a private agreement, for an amount of $529.7-million.
• On June 6, 2023, following the reception by Fire & Flower of an order for creditor protection under the Companies' Creditors Arrangement Act, the company executed a facility agreement with Fire & Flower pursuant to which the company agreed to advance a $9.8-million (Canadian) ($7.2-million) debtor-in-possession loan. On June 21, 2023, the Ontario Superior Court of Justice approved a sales and investment solicitation process (SISP) pursuant to which one of the company's wholly owned subsidiaries was acting as stalking horse bidder. Subsequent to the end of the first quarter of fiscal 2024 and following an auction held on Aug. 15, 2023, Couche-Tard's wholly owned subsidiary was selected as the backup bidder and the company's backup bid will remain valid until the closing of the transaction contemplated by the successful bid, in accordance with the SISP.
• On June 30, 2023, the unsecured convertible debentures matured without being converted and the Series C warrants expired without being exercised.

Changes in the company's network during the first quarter of fiscal 2024

• On July 7, 2023, the company reached an agreement to acquire 2,193 sites from TotalEnergies SE for a total cash consideration of approximately 3.1 billion euros ($3.4-billion). The retail assets included in the transaction cover 1,195 sites located in Germany, 566 sites in Belgium, 387 sites in Netherlands and 45 sites in Luxembourg, of which 1,495 sites are company owned and 698 sites are dealer owned. For the same sites included in the transaction, 12 per cent are company operated and 88 per cent are dealer operated. The transaction comprises 100 per cent of TotalEnergies SE's retail assets in Germany and Netherlands, as well as a 60-per-cent interest in the Belgium and Luxembourg entities. The company expects the transaction to close before the end of calendar year 2023 and it remains subject to customary closing conditions and regulatory approvals. The transaction would be financed using available cash, existing credit facilities, including the United States commercial paper program and new term loans.
• The company acquired four company-operated stores through various transactions since the beginning of fiscal 2024. The company settled these transactions using its available cash.
• The company completed the construction of 16 stores and the relocation or reconstruction of three stores, reaching a total of 19 stores since the beginning of fiscal 2024. As of July 23, 2023, another 45 stores were under construction and should open in the upcoming quarters.

Summary of changes in the company's store network

The attached table presents certain information regarding changes in the company's store network over the 12-week period ended July 23, 2023.

Exchange rate data

The company uses the United States dollar as its reporting currency, which provides more relevant information given the predominance of the company's operations in the United States.

The attached table sets forth information about exchange rates based upon closing rates expressed as United States dollars per comparative currency unit.

For the analysis of consolidated results, the impact of the translation of the company's foreign currency operations into U.S> dollars is defined as the impact from the translation of its Canadian, European, Asian and corporate operations into U.S. dollars. Variances of the company's foreign currency operations into U.S. dollars are determined as being the difference between the corresponding period results in local currencies translated at the current period average exchange rate and the corresponding period results in local currencies translated at the corresponding period average exchange rate.

Summary analysis of consolidated results for the first quarter of fiscal 2024

The attached table highlights certain information regarding the company's operations for the 12-week periods ended July 23, 2023, and July 17, 2022, and the results analysis in this section should be read in conjunction with this table. The results from the company's operations in Europe and Asia are presented together as Europe and other regions.

Revenues

The company's revenues were $15.6-billion for the first quarter of fiscal 2024, down by $3.0-billion, a decrease of 16.3 per cent compared with the corresponding quarter of fiscal 2023. This decrease is mainly attributable to a lower average road transportation fuel selling price as well as the net negative impact of approximately $118.0-million from the translation of the company's foreign currency operations into United States dollars, while being partly offset by the contribution from acquisitions, higher road transportation fuel demand as well as organic growth of the company's convenience activities.

Merchandise and service revenues

Total merchandise and service revenues for the first quarter of fiscal 2024 were $4.3-billion, an increase of $203.3-million compared with the corresponding quarter of fiscal 2023. The translation of the company's foreign currency operations into United States dollars had a net negative impact of approximately $25.0-million. The remaining increase of approximately $228.0-million, or 5.6 per cent, is primarily attributable to organic growth, and to the contribution from acquisitions which amounted to approximately $52.0-million. Same-store merchandise revenues increased by 2.1 per cent in the United States, by 2.7 per cent in Europe and other regions, and by 6.4 per cent in Canada, driven by the company's diversified offer in the beverage category as well as the continued growth of its Fresh Food, Fast program and private brands.

Road transportation fuel revenues

Total road transportation fuel revenues for the first quarter of fiscal 2024 were $11.2-billion, a decrease of $3.1-billion compared with the corresponding quarter of fiscal 2023. The translation of the company's foreign currency operations into United States dollars had a net negative impact of approximately $96.0-million. The remaining decrease of approximately $3.0-billion, or 20.9 per cent, is attributable to a lower average road transportation fuel selling price, which had an impact of approximately $3.5-billion, partly offset by the impact of strategic initiatives leading to higher road transportation fuel volumes as well as by the contribution from acquisitions, which amounted to approximately $141.0-million. Same-store road transportation fuel volumes increased by 0.7 per cent in the United States and by 7.2 per cent in Canada, favourably impacted by lower crude oil prices and promotional activities. Same-store road transportation fuel volumes decreased by 1.5 per cent in Europe and other regions, unfavourably impacted by challenging macroeconomic conditions, including high inflation.

The attached table shows the average selling price of road transportation fuel of the company's company-operated stores in its various markets for the last eight quarters. The average selling price of road transportation fuel consists of the road transportation fuel revenues divided by the volume of road transportation fuel sold.

Other revenues

Total other revenues for the first quarter of fiscal 2024 were $112.2-million, a decrease of $153.9-million compared with the corresponding quarter of fiscal 2023. The translation of the company's foreign currency operations into U.S. dollars had a net positive impact of approximately $2.0-million. The remaining decrease of approximately $156.0-million, or 58.6 per cent, is primarily driven by lower aviation fuel volume sold and lower prices on the company's other fuel products, which had a minimal impact on gross profit1.

Gross profit

The company's gross profit was $2.9-billion for the first quarter of fiscal 2024, up by $55.6-million, or 1.9 per cent, compared with the corresponding quarter of fiscal 2023, mainly attributable to organic growth in the company's convenience activities as well as the contribution from acquisitions, while being partly offset by lower road transportation fuel gross margins in Europe and other regions, and the net negative impact of the translation of the company's foreign currency operations into U.S. dollars of approximately $16.0-million.

Merchandise and service gross profit

In the first quarter of fiscal 2024, the company's merchandise and service gross profit was $1.5-billion, an increase of $95.0-million compared with the corresponding quarter of fiscal 2023. The translation of the company's foreign currency operations into U.S. dollars had a net negative impact of approximately $10.0-million. The remaining increase of approximately $105.0-million, or 7.5 per cent, is primarily due to organic growth as well as by the contribution from acquisitions which amounted to approximately $28.0-million. The company's gross margin increased by 0.4 per cent in the United States to 34.3 per cent, by 1.0 per cent in Europe and other regions to 39.9 per cent, and by 0.8 per cent in Canada to 33.9 per cent, all impacted favourably by a change in product mix.

Road transportation fuel gross profit

In the first quarter of fiscal 2024, the company's road transportation fuel gross profit was $1.4-billion, a decrease of $35.2-million compared with the corresponding quarter of fiscal 2023. The translation of the company's foreign currency operations into U.S. dollars had a net negative impact of approximately $6.0-million. The remaining decrease in our gross profit was approximately $29.0-million, or 2.0 per cent. In the United States, the company's road transportation fuel gross margin was 50.05 cents per gallon, an increase of 1.05 cents per gallon, and in Canada, it was 13.25 Canadian cents per litre, a decrease of 79 Canadian cents per litre. Fuel margins remained healthy throughout company's North American network, due to favourable market conditions and the continued work on the optimization of the company's supply chain. In Europe and other regions, the company's road transportation fuel gross margin was 8.21 U.S. cents per litre, a decrease of 4.05 U.S. cents per litre, mostly driven by the volatility of the global fuel market, more impactful to the company's European gross margin due to a more integrated supply chain model in this region.

The road transportation fuel gross margin of Couche-Tard's company-operated stores in the United States and the impact of expenses related to electronic payment modes for the last eight quarters, were as shown in the attached table.

The road transportation fuel gross margin of the company's network in Europe and other regions and in Canada for the last eight quarters, were as shown in the attached table.

Generally, road transportation fuel margins can be volatile from one quarter to another, but tend to be more stable over longer periods. In Europe and other regions, fuel margin volatility is impacted by a longer supply chain due to a more integrated model. In Europe and other regions and in Canada, expenses related to electronic payment modes are not as volatile as in the United States.

Other revenues gross profit

In the first quarter of fiscal 2024, other revenues gross profit was $31.2-million, a decrease of $4.2-million compared with the corresponding period of fiscal 2023. The translation of the company's foreign currency operations into U.S> dollars had no significant impact on gross profit for the first quarter of fiscal 2024.

Operating, selling, general and administrative expenses

For the first quarter of fiscal 2024, expenses increased by 2.9 per cent compared with the corresponding period of fiscal 2023, while normalized growth of expenses was 3.7 per cent, as shown in the attached table.

Earnings before interest, taxes, depreciation, amortization and impairment (EBITDA) and adjusted EBITDA

During the first quarter of fiscal 2024, EBITDA stood at $1.5-billion, an increase of 0.6 per cent compared with the corresponding quarter of fiscal 2023. Adjusted EBITDA for the first quarter of fiscal 2024 increased by $10.7-million, or 0.7 per cent, compared with the corresponding quarter of fiscal 2023, mainly due to organic growth in the company's convenience operations as well as the contribution from acquisitions, partly offset by lower road transportation fuel gross margins in the company's European operations as well as higher expenses. The translation of foreign currency operations into U.S. dollars had a net negative impact of approximately $6.0-million.

Depreciation, amortization and impairment

For the first quarter of fiscal 2024, the company's depreciation expense increased by $41.3-million compared with the first quarter of fiscal 2023. The translation of the company's foreign currency operations into U.S. dollars had a net favourable impact of approximately $3.0-million. The remaining increase of approximately $44.0-million, or 13.8 per cent, is mainly driven by the replacement of equipment, the impact from investments made through acquisitions, which amounted to approximately $10.0-million, and the continuing improvement of Couche-Tard's network.

Net financial expenses

Net financial expenses for the first quarter of fiscal 2024 were $70.7-million, an increase of $3.6-million compared with the corresponding period of fiscal 2023. A portion of the increase is explained by certain items that are not considered indicative of future trends, as shown in the attached table.

Income taxes

The income tax rate for the first quarter of fiscal 2024 was 22.8 per cent compared with 21.9 per cent for the corresponding quarter of fiscal 2023. The increase is mainly stemming from the impact of a different mix in the company's earnings across the various jurisdictions in which we operate.

Net earnings and adjusted net earnings

Net earnings for the first quarter of fiscal 2024 were $834.1-million, compared with $872.4-million for the first quarter of the previous fiscal year, a decrease of $38.3-million, or 4.4 per cent. Diluted net earnings per share stood at 85 cents, stable with the corresponding quarter of the previous fiscal year. The translation of revenues and expenses from the company's foreign currency operations into U.S. dollars had a net negative impact of approximately $3.0-million on net earnings of the first quarter of fiscal 2024.

Adjusted net earnings for the first quarter of fiscal 2024 were approximately $838.0-million, compared with $875.0-million for the first quarter of fiscal 2023, a decrease of $37.0-million, or 4.2 per cent. Adjusted diluted net earnings per share were 86 cents for the first quarter of fiscal 2024, compared with 85 cents for the corresponding quarter of fiscal 2023, an increase of 1.2 per cent.

Dividends

During its Sept. 6, 2023, meeting, the board of directors declared a quarterly dividend of 14.0 Canadian cents per share for the first quarter of fiscal 2024 to shareholders on record as at Sept. 15, 2023, and approved its payment effective Sept. 29, 2023. This is an eligible dividend within the meaning of the Income Tax Act (Canada).

About Alimentation Couche-Tard Inc.

Couche-Tard is a global leader in convenience and mobility, operating in 25 countries and territories, with more than 14,400 stores, of which approximately 11,000 offer road transportation fuel. With its well-known Couche-Tard and Circle K banners, it is one of the largest independent convenience store operators in the United States and it is a leader in the convenience store industry and road transportation fuel retail in Canada, Scandinavia, the Baltics, as well as in Ireland. It also has an important presence in Poland and Hong Kong Special Administrative Region of People's Republic of China. Approximately 128,000 people are employed throughout its network.

Webcast on Sept. 7, 2023, at 8 a.m. ET

Couche-Tard invites analysts known to the corporation to ask their questions to its management on Sept. 7, 2023, during the question and answer period of the webcast.

Financial analysts, investors, media and any individuals interested in listening to the webcast on Couche-Tard's results, which will take place on-line on Sept. 7, 2023, at 8 a.m. ET can do so by either accessing the corporation's website. An automated system will automatically return the call to grant you access to the conference call.

Another option could be to access the conference call through an operator by dialling 1-888-390-0549 or the international number 1-416-764-8682, followed by the access code 48371945 followed by the pound key.

Rebroadcast: For individuals who will not be able to listen to the live webcast, a recording of the webcast will be available on the corporation's website for a period of 90 days.

We seek Safe Harbor.