1
Alimentation Couche-Tard Inc.Annual Report © 2020 2
Alimentation Couche-Tard Inc.Annual Report © 2020 Table of Contents
p.2
Company
and Financial Highlights
p.22
Reaching more Customers
through Network Growth
p.4
Message from the Founder
and Executive Chairman
of the Board
p.24
Providing an Environment
That Fosters Growing Together
p.6
Letter from the President
and CEO
p.28
Elevating Sustainability as a Lens
in Our Business
p.10
Developing a Differentiated
Customer Experience
p.30
Facing an Invisible Threat
with a Long-Term Mindset
p.14
Adapting Our Offering
to Meet Customer Needs
p.32
Retooling for a Better,
Stronger Company
p.20
Driving Operational Excellence
and Scale in the Business
p.35
Financial Results
Company Highlights
OUR PEOPLE
Around the world, our people work
tirelessly to make our customers’
lives a little easier every day. This
year, they stepped up to meet the
most challenging circumstances our
company has ever faced.
EUROPE
~22,000
~131,000
NORTH
AMERICA
~109,000
OUR SITES
Our global footprint extends across five continents. We continue to progress through
acquisitions and organic growth, in line with our vision to become the world’s
preferred destination for convenience and fuel.
CANADA
2,131
EUROPE
2,710
UNITED
STATES
7,283
INTL
FOOTPRINT
2,347
2
Alimentation Couche-Tard Inc.Annual Report © 2020 Financial Highlights
2020
US
EUROPE CANADA
Growth of Same-Store Merchandise Revenues
2.1%
0.1%
2.8%
Decrease in Same-Store Road Transportation Fuel Volume
(3.9%)
(3.9%)
(6.0%)
ALL DOLLAR FIGURES ARE IN USD MILLIONS, EXCEPT PER SHARE AMOUNTS WHICH ARE IN USD.
*Footnotes can be found on page 34.
MERCHANDISE AND SERVICE
GROSS PROFIT
$5,006.0
$5,006.0
$5,006.0
$5,031.2
$5,031.2
$5,031.2
$5,006.0
$5,006.0
$5,006.0
$5,031.2
$5,031.2
$5,031.2
ROAD TRANSPORTATION FUEL
GROSS PROFIT
EBITDA
$3,949.0
$3,949.0
$3,949.0
$4,465.0
$4,465.0
$4,465.0
$4,524.8
$4,524.8
$4,524.8
$3,583.0
$3,583.0
$3,583.0
$5,006.0
$5,006.0
$5,006.0
2019
2019
2019
+$25.2
+$25.2
+$25.2
$5,031.2
$5,031.2
$5,031.2
+0.5%
+0.5%
+0.5%
+$25.2
+0.5%
+$25.2
+$25.2
+0.5%
+0.5%
+$25.2
+$25.2
+$25.2
2020
2020
2020
+0.5%
+0.5%
+0.5%
$3,949.0
$3,949.0
$3,949.0
$3,949.0
$3,949.0
$3,949.0
2019
2019
2019
$4,465.0
$4,465.0
$4,465.0
+$516.0
+$516.0
+$516.0
+13.1%
+13.1%
+13.1%
$4,465.0
$4,465.0
$4,465.0
+$516.0
+13.1%
+$516.0
+$516.0
+13.1%
+13.1%
+$516.0
+$516.0
+$516.0
2020
2020
2020
+13.1%
+13.1%
+13.1%
$3,583.0
$3,583.0
$3,583.0
$3,583.0
$3,583.0
$3,583.0
2019
2019
2019
$4,524.8
$4,524.8
$4,524.8
+$941.8
+$941.8
+$941.8
+26.3%
+26.3%
+26.3%
$4,524.8
$4,524.8
$4,524.8
+$941.8
+26.3%
+$941.8
+$941.8
+26.3%
+26.3%
+$941.8
+$941.8
+$941.8
2020
2020
2020
+26.3%
+26.3%
+26.3%
2019
2019
2019
2020
2020
2020
2019
2019
2019
2020
2020
2020
2019
2019
2019
2020
2020
2020
DILUTED NET EARNINGS
2019
2019
2019
PER SHARE
2020
2020
2020
$2.09
$2.09
$2.09
$1.62
$1.62
$1.62
$1.62
$1.62
$1.62
$1.62
$1.62
$1.62
2019
2019
2019
2019
2019
2019
$2.09
$2.09
$2.09
+$0.47
+$0.47
+$0.47
$2.09
$2.09
$2.09
+29.0%
+29.0%
+29.0%
+$0.47
+29.0%
+$0.47
+$0.47
+29.0%
+29.0%
+$0.47
+$0.47
+$0.47
2020
2020
2020
+29.0%
+29.0%
+29.0%
2020
2020
2020
2019
2019
2019
21.9%
21.9%
21.9%
24.8%
24.8%
24.8%
2020
2020
2020
RETURN ON EQUITY2,3
24.8%
24.8%
24.8%
21.9%
21.9%
21.9%
NET EARNINGS ATTRIBUTABLE
TO SHAREHOLDERS
OF THE CORPORATION
2020
2020
2020
2019
2019
2019
$2,353.6
$2,353.6
$2,353.6
$1,833.9
$1,833.9
$1,833.9
$1,833.9
$1,833.9
$1,833.9
$1,833.9
$1,833.9
$1,833.9
2019
2019
2019
$2,353.6
$2,353.6
$2,353.6
+$519.7
+$519.7
+$519.7
+28.3%
+28.3%
+28.3%
$2,353.6
$2,353.6
$2,353.6
+$519.7
+28.3%
+$519.7
+$519.7
+28.3%
+28.3%
+$519.7
+$519.7
+$519.7
2020
2020
2020
+28.3%
+28.3%
+28.3%
RETURN ON CAPITAL
EMPLOYED1,2
2019
2019
2019
2020
2020
2020
12.6%
12.6%
12.6%
15.0%
15.0%
15.0%
12.6%
12.6%
12.6%
15.0%
15.0%
15.0%
2019
2019
2019
12.6%
12.6%
12.6%
15.0%
15.0%
15.0%
2020
2020
2020
2019
2019
2019
2020
2020
2020
2019
2019
2019
2020
2020
2020
2019
2019
2019
2.18
2.18
2.18
2020
2020
2020
ADJUSTED LEVERAGE RATIO2,4
1.60
1.60
1.60
2.18
2.18
2.18
2019
2019
2019
$1,844.1
$1,844.1
$1,844.1
$2,340.1
$2,340.1
$2,340.1
2020
2020
2020
ADJUSTED FREE CASH FLOW5
$2,340.1
$2,340.1
$2,340.1
+$496.0
+$496.0
+$496.0
+26.9%
+26.9%
+26.9%
$2,340.1
$2,340.1
$2,340.1
1.60
1.60
1.60
$1,844.1
$1,844.1
$1,844.1
1.60
1.60
1.60
2020
2020
2020
$1,844.1
$1,844.1
$1,844.1
2019
2019
2019
+$496.0
+$496.0
+$496.0
+26.9%
+26.9%
+26.9%
2020
2020
2020
+$496.0
+$496.0
+$496.0
+26.9%
+26.9%
+26.9%
21.9%
21.9%
21.9%
24.8%
24.8%
24.8%
2019
2019
2019
2020
2020
2020
2.18
2.18
2.18
2019
2019
2019
2019
2019
2019
2020
2020
2020
2019
2019
2019
2020
2020
2020
2019
2019
2019
2020
2020
2020
2019
2019
2019
2020
2020
2020
2019
2019
2019
2020
2020
2020
2019
2019
2019
2020
2020
2020
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Alimentation Couche-Tard Inc.Annual Report © 2020 Message from the Founder
and Executive Chairman
of the Board
ALAIN
BOUCHARD
As we celebrate the 40th anniversary of Alimentation
Couche-Tard, who could have imagined the current
circumstances? Amid some of the most challenging
times we have ever faced, I am filled with pride and
appreciation.
When my partners and I opened our first convenience
store in Laval, Quebec, we never imagined the size and
scale that our company would achieve. And back then,
we certainly never envisaged a global pandemic and
the demand for a rapid response to protect our people,
our customers and our company.
Our culture of growth, agility, discipline, and innovation
has served us well.
We have always put our people first, and this has stood
us in good stead. They are the ones who have made
our accomplishments of the last 40 years possible.
When COVID-19 appeared, we made sure to be there
for them, as they navigated financial, emotional and
medical hardship. This empowered our people to be
there in turn, and to keep putting our customers first.
We were already well into preparations for a changing
world in which new generations of customers have
different tastes and needs. Innovation is part of our DNA,
and we have always challenged ourselves to evolve
with our younger shoppers and developing technology.
With the crisis, we actually accelerated the pace of
innovations to
improve the customer experience,
making it even easier and safer for everyone.
4
Alimentation Couche-Tard Inc.Annual Report © 2020 Our 40 years of hard work are paying off. We will
continue to be a company dedicated to growth and
serving our customers. We will emerge from this crisis
an even better, stronger company positioned for the
next 40 years, on our journey to become the world’s
preferred destination for convenience and fuel.
Thank you to all our people, shareholders, partners and
customers. We’re in this together, and you can continue
to count on us.
Our history of financial discipline allowed us to face
the situation with confidence and competence. We
were a strong company coming into this, ready to
adapt through the pandemic and challenges beyond,
both operationally and financially. Never has it been
more important to provide what our customers need,
when and where they want it, and to make it as easy as
possible.
As we care for all our stakeholders, we continue to
expand our efforts towards a cleaner, safer world
by reducing our energy footprint, empowering our
diverse talent at work, and being part of the solution
in our communities—all through a unified approach
communicated with greater transparency and dialogue.
It’s a win-win: good for our company, our people, the
communities we serve, and the environment. This
summer, we will publish our second company-wide
sustainability report—a global effort of which I am very
proud.
5
Alimentation Couche-Tard Inc.Annual Report © 2020 Letter from the President
and CEO
BRIAN
HANNASCH
“I have never been
prouder to be CEO
of this company!”
This year has clearly been one that we will always
remember. In my almost 20 years with Couche-Tard,
I could have never predicted these last twelve months,
in particular the last three, when an invisible threat
evolved to challenge our businesses, our communities,
and our families. We started this historic year as
a strong company—and through the compassion, care,
and dedication of our team members and customers—
ended it a better, stronger company.
Let me back up a little to January, as we came to
the end of our third quarter and were on track to have
our strongest fiscal year on record. We were hitting
milestones of our five-year strategy, driving organic
growth, expanding our network through new builds,
growing our food program, rebranding at a rapid pace
both at our stores and on our fuel courts, and improving
the customer experience through innovative solutions.
I am extremely proud of this progress and the committed
teamwork behind it.
It is because of this solid foundation that Couche-Tard
was in a robust position to face the financial volatility
and headwinds of the pandemic. We had good
liquidities, a healthy balance sheet and developed robust
contingency plans, which meant we could stay focused
on meeting the needs of our people and customers. For
a company whose mission revolves around “easy,” this
was not easy; but once again, it did make me proud.
6
Alimentation Couche-Tard Inc.Annual Report © 2020 It is clear that through this crisis, our company and the
convenience industry became increasingly essential
to our communities. In the past, during hurricanes and
other natural disasters, we have shown our importance
to our localities. However, during this pandemic, we
demonstrated on a global scale that we are always
here for our customers. Our stores remained open,
we maintained strict health and safety protocols, and
served millions of free beverages to healthcare workers
and first responders and free meals to families in need
through our partnership with Feeding America.
No doubt, the future is uncertain and there are many
challenges ahead, but I am confident that as we retool
for the new normal, we will build on the lessons learned
during COVID-19 and continue to progress with relevant
technology and offerings, always pushing to make our
customers’ lives a little easier every day. I am grateful
for the trust our employees, customers, partners and
shareholders showed us throughout this year and the
pandemic.
If we measure a company by how it responds to
challenge and controversy, then I must say that Couche-
Tard is succeeding in ways we never imagined. Our
store employees have become frontline heroes, we are
part of the solution in the communities where we work
and live, and, with our customary financial discipline, we
are positioned to continue our growth journey. I have
never been prouder to be CEO of this company!
7
Alimentation Couche-Tard Inc.Annual Report © 2020 A BETTER,
STRONGER
COMPANY
8
Alimentation Couche-Tard Inc.Annual Report © 2020 While we faced an unprecedented global
challenge in the fourth quarter, this fiscal
year has been one of steady and significant
progress towards our strategic vision: we
are developing a differentiated customer
experience both inside our stores and at
our fuel courts, adapting and innovating our
offering to meet changing customer needs,
driving operational excellence and scale,
growing the network, enhancing our people’s
talent base, and putting sustainability at the
forefront of our priorities. In this report, we
highlight each of these areas of growth in
fiscal 2020 as we became a better, stronger
company.
9
Alimentation Couche-Tard Inc.Annual Report © 2020 Developing a Differentiated
Customer Experience
At every level of the company, we have been relentlessly
focused on transforming and improving the customer
experience. The work we do on branding, pricing,
promotions, loyalty programs, and innovation forms
a seamless whole, designed to make life easier for our
people and our customers.
ESTABLISHING AND GROWING
A POWERFUL GLOBAL BRAND
During the past year, we continued to roll out our global
Circle K brand across the network. We completed the
conversion of our European stores early in the year
and consolidated our focus on North America where
we now have more than 6,300 stores with the new
global brand.
Our actions are bearing fruit, as brand awareness has
never been higher, with our brand trackers in both
Europe and North America outperforming the industry.
Throughout the global network, our customers can
easily identify our Circle K and Couche-Tard brands,
and we are seeing increased loyalty and feedback.
Importantly, our rebranding allows us to speak with a
clear voice and unified message, which was especially
meaningful as we navigated through the COVID-19
pandemic and provided support for our employees,
customers, and communities.
Actions to strengthen our brand have also extended
to our forecourts in North America, as we converted
nearly 600 fuel canopies and pumps during the past
two years, to reach a total of nearly 2,300 stores under
the Circle K fuel brand. We have also reinforced our
leadership position in mobility, building on our success
in Norway, where Circle K is now the most recognized
brand for electric charging, by rolling out our first Circle
K branded chargers in Sweden and Ireland. In response
to the changing customer habits brought on by electric
charging, we have worked hard to adapt our customer
experience and increase traffic inside our locations
by developing new larger format stores in Europe,
enhancing our food offering, and giving our customers
a reason to engage with our brand more frequently
throughout their daily routines.
10
Alimentation Couche-Tard Inc.Annual Report © 2020 “Operating under one global brand has
a number of advantages from increasing
brand awareness in consumers and
potential employees, to speaking with a
consistent voice across the network, and
leveraging our scale in procurement and
in national marketing campaigns.”
Margaret Barron
Vice President, Global Marketing & Brand
BUILDING LOYALTY THROUGH
PERSONALIZED OFFERS
This past year was key for us from the standpoint of
enhancing the shopping experience for our customers
and stretching the value of their dollar. We pressed on
the accelerator on several basket-building and tactical
loyalty initiatives.
We continued to deploy our LIFT platform across
the network, providing us with the ability to track
our customers’ purchase histories and to offer them
personalized discounts based on the composition of
their baskets. We have now deployed this capability
in close to 7,600 stores across our North American
network and are in the planning stage to deploy it to
Europe. Additionally, we have expanded our Smart
Value Program, a key promotional tool in Holiday’s
business model, to the entire North America network.
This program has shown great success in growing the
shopping basket while providing customers with solid
value for the products they love most.
We introduced our Easy Rewards loyalty program
in the U.S. last summer, which awards points for fuel,
food and beverage purchases that can be converted to
cash discounts, and also offers prizes and various other
benefits. Both the frequency of visits and fuel volumes
purchased have shown good growth with members of
the program. We also launched our Easy Pay loyalty
program in all U.S. markets, providing everyday fuel
discounts to our most loyal customers.
We also made initial strides in a dynamic, state-of-the art
pricing approach that offers our fuel and merchandise
at prices aligned with individualized markets. In today’s
reality, we believe that flexibility in the retail space will
be an integral component of success and, as such, we
have deployed enterprising pricing capabilities that set
apart our customer experience.
11
Alimentation Couche-Tard Inc.Annual Report © 2020 “With our customer journey and digital
innovation practice, we continue to
address touch points and frictions
throughout the journey in-store or at
the fuel pumps. This ensures that we
stay grounded in solving real customer
problems, not just chasing technology.
We continue to reinvent the customer
experience by expanding our capacity to
serve our customers anywhere, anytime.
Our collaboration with start-ups and
academia helps us to make this even
faster.”
Magnus Tägtström
Head of Global Digital Innovation
Alimentation Couche-Tard Inc.
Annual Report © 2020
12
ACCELERATING INNOVATION
IN THE CUSTOMER JOURNEY
Our capacity to invest in innovation is among our
characteristic strengths and, in the past year, we pushed
our teams to examine new ways of doing business and
serving our customers. We built on the success of our
gamification initiatives in Europe, and we expanded our
home delivery pilots to a broader number of sites. We
also developed new methods of accepting payments
and new convenience options for our customers.
To better respond to the changing needs of our
customers both before and during the pandemic,
we examined new ways to bring convenience to our
customers using our broad network. We expanded
our home delivery pilot in Texas and initiated ones
in Florida and other regions with new partners. We
developed other frictionless solutions including pick-
up in store and curbside delivery, leveraging our Circle
K app to offer ordering and prepayment capabilities,
as well as licence plate recognitions to accept fuel
payments in Norway
Following strong results with our gamification work
in Europe, we rolled out several mobile-centric games
and promotions to our customers in both the U.S. and
Canada. These were very well-received and helped
drive traffic to our stores, while also enhancing the way
in which our customers engage with our brands.
As the COVID-19 crisis evolved, we doubled-down on
these initiatives, using our nimble and decentralized
operating structure, to accelerate the expansion of our
delivery and low-touch platforms. These innovations
will clearly serve the business and our customers in
the future as we become a better, stronger company.
13
Alimentation Couche-Tard Inc.Annual Report © 2020 Adapting Our Offering
to Meet Customer Needs
Our scale and agility allow us to share best practices and
learn from each other quickly across our global network,
constantly
in convenience
and fuel.
improving our offering
TRANSFORMING
OUR FOODSERVICE OFFER
This past year marked a turning point for our food
offer globally, as we moved from a phase of foundation
building, to one of executing on the strategy. This
foodservice program, inspired by Holiday’s model and
launched this year in the U.S., creates a satisfying offer
that aims to increase traffic, drive loyalty, and delight
our customers.
We launched the program in limited pilot stores early
this year, testing a variety of formats to identify what
worked best before moving to scale the program
across our North American network. Our teams also
decided on menu options, pricing, ingredient sourcing,
and packaging, as well as establishing key partnerships
to ensure a smooth and consistent supply chain. We
determined equipment needs as we worked hard to
minimize capital costs. We believe this tremendous
effort will result in a highly profitable food initiative
that adds to the customer experience through simple
preparation and speed of service.
We are targeting a roll out of this new food offer to
1,500 stores in North America by fall 2020 and have
already deployed it to several hundred sites. Prior to
the spread of the COVID-19 pandemic, we had been
growing the program at a pace of a dozen stores per
week, with plans to accelerate this significantly through
the summer months. Importantly, we had been seeing
positive results and customer enthusiasm, especially for
our breakfast sandwich assortment, our best-in-class
Hot & Ready pizza offering, and our irresistible freshly
baked-in-store cookies.
While safety measures due to the pandemic impacted
the sampling and sales of prepared foods as well as
employee training, we have maintained our pace of
structural buildout, putting critical equipment and
material foundations in place. As the pandemic recedes,
we will reactivate the offer and remain on track with
our U.S. roll out plans. We will also begin to expand the
program to Canada.
14
Alimentation Couche-Tard Inc.Annual Report © 2020 “Our new foodservice offering in
North America is one of the largest
programs we have ever undertaken
and there’s no question that it will be
fundamentally transformative for our
business. Over the last year, we have
made tremendous strides in laying
the foundation, and we are excited
to bring this new assortment to our
customers and determined to get
things right.”
David Hall
Vice President, Global Foodservice
Alimentation Couche-Tard Inc.
Annual Report © 2020
1515
Alimentation Couche-Tard Inc.Annual Report © 2020 PROVIDING INCREDIBLE VALUE COFFEE
AND ADAPTING TO LOCAL TASTES
We deployed our Coffee on Demand program in 95%
of our U.S. network, with approximately 13,500 bean-
to-cup machines installed and serving fresh coffee
24 hours a day. In January, we launched our first-ever
national media campaign for coffee offering incredible
value, starting at $1 a cup through the duration of the
campaign. Customer reaction was very positive to on-
demand brewing, which delivers the freshest coffee
possible, while also reducing waste and maintenance
costs. Thanks to analytics embedded in these new
machines, we have the ability to measure the demand
for individual blends and cup sizes, and better identify
peak times by individual store.
We continue to evolve our coffee offer across the
different regions in which we operate, as coffee
preferences can vary meaningfully from one market
to the next. In Europe, we introduced Circle K certified
blends with new equipment that delivers a barista-
quality beverage in less than 90 seconds, allowing for
customization and easy selection by the customer. In
Quebec, to deliver the highest quality cup of coffee
and meet the needs of our guests, we commissioned
focus group research to determine the blend that most
resonated with our customers in the region. In February,
we started to roll out this blend to our Couche-Tard
stores.
“Froster has been a significant addition
to the product offering in our stores.
Since its launch in the summer of 2019,
we have seen positive sales results and
a lot of online viral content on social
media. We have introduced Froster to a
significant number of stores and continue
to see this strong performance. It’s one
of my favourite innovations to date!”
Judy Glover
Senior Market Director, Ireland
GENERATING TRAFFIC WITH NEW
AND EXCLUSIVE OFFERS
In the U.S., we activated a summer national campaign
focused on both Polar Pop and Froster. We also
expanded the Polar Pop program to our Holiday sites,
launching some exclusive and first-to-market flavours
to help drive engagement and sales. In Canada, we
expanded Polar Pop to an additional 130 stores and
introduced exclusive and new limited-time flavours.
16
Alimentation Couche-Tard Inc.Annual Report © 2020 “When you reach the level of penetration
we have in Norway with EVs, this can
be a major traffic driver and it is also
a competitive advantage—being out
there before our competition. We are
capturing EV drivers that could instead
go to other places.”
Håkon Stiksrud
Senior Director, E-mobility
GROWING AWARENESS
OF CIRCLE K FUEL
GROWING OUR EV CHARGING
AND MOBILITY SHARE
Our Norway market is ahead of the curve on Electric
Vehicles (“EV”) adoption, and we are a clear leader in
that evolution, as we look to provide easy charging for
our customers, whether at home or on the go. We have
currently installed more than 450 chargers at 81 sites
across the country. In the urban market of Oslo, we were
the first to convert an entire station to EV charging, and
are proud to be a global pioneer in this space.
We have also developed a home charging solution that
is Circle K-branded and have installed more than 1,100
chargers in partnership with residential complexes.
We have extended our offer to office buildings as
well. These initiatives have made Circle K the most
recognized charging destination in Norway and allow
us to keep our customers engaged in our ecosystem
while earning perks to spend in our stores.
Fuel remains one of the prime movers of our business,
and we continue to focus on it as a critical stand-
alone product category. As such, we have worked on
incorporating our Circle K brand more prominently in
our forecourts and dedicated much effort to developing
pricing strategies that will benefit our customers and
drive higher volumes.
During the last year, we tested modified branding
strategies at nearly 150 sites in the U.S., positioning our
Circle K brand and colors on the fuel canopy either on
its own or side by side with our fuel partner brands.
We have also converted more sites entirely to the
Circle K brand, both forecourts and stores, with the aim
of creating a stronger ecosystem and enhancing the
customer experience. Looking forward, we will continue
to work on strategies that grow the Circle K fuel brand.
We also focused overall on developing new promotional
and pricing approaches that will benefit our customers.
This work includes testing more dynamic pricing
strategies in 2,400 sites across our network. In many
parts of the network, we have also moved to improve
the customer experience at our forecourts by supplying
bio-degradable gloves and better lighting.
17
Alimentation Couche-Tard Inc.Annual Report © 2020 Alimentation Couche-Tard Inc.
Annual Report © 2020
18
We are also exploring the cannabis opportunity in
Canada, as it both fits in with our work on innovating
the customer experience and our historical experience
with age restricted products. We made a strategic
agreement with Canopy Growth Corporation to operate
Tweed-branded cannabis retail stores
in Ontario,
Canada. We also invested an initial CA$26 million in Fire
& Flower Holdings Corp., a cannabis retail chain with
stores in several Canadian provinces. Both ventures
are allowing us to learn more about the space and its
growth potential.
BUILDING ON OUR TRACK RECORD
AS A RESPONSIBLE RETAILER
As an experienced and responsible retailer of age-
restricted products, including tobacco, vaping, alcohol,
CBD, and lotteries, we spare no efforts to comply
with laws and regulations in each of our markets.
Furthermore, we ensure that we only sell products from
trusted manufacturers who follow the same approach.
Age-restricted products continue to represent an
important portion of our sales: in the U.S., we benefitted
from the growing demand for smokeless tobacco and
other alternative tobacco products, particularly modern
white nicotine. In Canada, we observed strong traction
for premier vaping products which had been introduced
in our stores late in the prior fiscal year.
This past year brought significant regulation and
change to the tobacco category in the U.S., including
raising the minimum age of sale of all tobacco products
to 21 and the removal of flavoured vaping pods from
retail locations. We have been monitoring the impact
on our business and stand ready to adapt to changes
in customer preference and to new government
regulations. We have taken the same responsible
approach with CBD products in jurisdictions where
it has been legalized, and we intend to be the North
American market leader in this segment.
19
Alimentation Couche-Tard Inc.Annual Report © 2020 Driving Operational
Excellence and Scale
in the Business
Store managers face some of the greatest challenges
in our business, which is why we listen carefully to their
feedback and have made significant strides in improving
operational excellence. Our goal is to make it easier
for store employees to better serve our customers by
reducing administrative and labor challenges.
WORKING TOWARDS OPERATIONAL
EXCELLENCE
Operational excellence has been an important focus
this year. In North America, we rolled out a best-in-class
labour model that adapts to individual store needs and
determines labour allocation based on key metrics. The
rollout is complete in the U.S. and will begin in Canada
in the coming months. A new labour scheduling tool
automates the creation of schedules and permits easy
shift-swapping. This not only benefits our people, it
also ensures increased capacity to meet our customers’
needs.
In Europe, administrative-oriented hours in the stores
have been cut down almost 15% since the beginning
of our five-year strategy. In North America, this past
year alone, nearly 5,000 stores underwent a refresh of
backrooms, offices, cash register, storages, and cooler
areas as part of the Easy Visit initiative.
“As we move to complete the majority
of stores across Canada and the US,
we want to recognize the monumental
team work behind this Easy Visit store
organization project. Our teams have
reported great feedback from these
efforts, mainly in helping give our people
a fresh start with less clutter and creating
a more positive workspace for teams.”
Eric Lindstrom
Head of North America Operational Excellence
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Alimentation Couche-Tard Inc.Annual Report © 2020 As we innovate with operational excellence, keeping
our people and stores safe is a top priority for us. In
the coming year, we will deploy a smart safe project to
reduce cash handling, along with improved service with
a one-stop support number. We are also introducing
an artificial intelligence tool to assist in reducing losses
and improving age-restricted sales verification.
Our single labour model across all our European business
units made it easier to adapt to COVID-19 traffic and
routines, including adding extra essential minutes of
cleaning and other routines per hour per store. During
the crisis, our operational excellence teams across the
globe worked around the clock to ensure our stores
remained safe and at the highest sanitization standards
as well as meeting labour needs during store closures
and openings due to the virus.
TAKING ADVANTAGE OF OUR LEAN
COST STRUCTURE
Our work in operational excellence is not only part of our
drive toward improving our customers’ and employees’
experience; it is also about cost efficiencies, including
operating expenses, margins and capital expenditures
as well as optimizing the scale of our supply chain. By
doing this work, it helps us maintain structural and cost
advantages that preserve our ability to take advantage
of opportunities to grow the network.
We identified significant cost optimization opportunities
in fiscal 2020, the majority of which are already in
execution, completed or realized. We began re-
negotiation of hundreds of agreements and initiated key
changes in the organization to support transformation.
We also completed many standardization projects—all
leading to greater efficiencies and simplification of back-
office processes, and we are finalizing our migration
toward a single integrated enterprise management
platform in the U.S.
While our decentralization allows us to maintain agility,
we are also seeing the benefit of standardization in
some areas and globalizing certain functions to take
advantage of our scale, and to make it easy for our
people. By balancing these strategies, we maintain our
advantage as the industry’s low-cost operator.
21
Alimentation Couche-Tard Inc.Annual Report © 2020 Reaching more Customers
through Network Growth
Our five-year strategy to double again requires that we
grow market share in the U.S. and expand to new growth
markets and industries. Maintaining financial discipline
allows us to take advantage of opportunities as they arise.
Coming into fiscal 2020, we accelerated the pace of new
store construction, after a significant effort to develop
our project pipeline. We had good momentum with the
new builds until the pandemic triggered a pause in many
of these projects. We also introduced a new design for
our North American sites that mirrors the Holiday store
format and improves the customer journey.
We continued to roll out our new store concept in Europe,
which is now at more than 300 sites with enhanced
food, fuel, charging, WIFI, washrooms, and parking.
These stores provide a welcoming ambience and
comfortable seating area, high-quality food displayed
in an attractive way and improved merchandising in the
rest of the store. We instituted learnings from our initial
pilots, which led to improved profitability and sales.
“We now have the newly refurbished
Circle K stores across all nine of our
European countries. The offer and modern
look and feel are driving new traffic and
increased sales. Both younger customers
and returning ones are clearly enjoying
the enhanced customer experience both
inside and outside the store.”
Per Selin
Director, Concept & Format Development, Europe
22
Alimentation Couche-Tard Inc.Annual Report © 2020 “As part of our new store concept in
Europe, we are very proud of our recently
opened station, one of our largest in
Sweden, which welcomes both private
individuals and truck drivers. Our entire
range of products and services is offered,
including our latest food concept, seating
concept and even our own electrical
speed chargers - everything to make
the stop along the way easy and smooth.”
Eva Kimborn Heivert
Vice President, Operations, Sweden
This year, we divested our holdings in CrossAmerica
Partners LP, a master-limited partnership and leading
wholesale fuel distributor, and concurrently transferred
to them a part of our U.S. dealer business in exchange
for their share of CST Fuel Supply LP, giving us full
ownership. These transactions were beneficial to
Couche-Tard, allowing us to focus on growing our
core fuel business. We also consolidated our position
in our Northern Tier division by adding a small Holiday
franchise network as well as single stores in various
parts of our network.
Our international licensees network grew during the last
year, with 166 stores added across our different regions.
In particular, we saw our partners in Mexico, Indonesia
and Vietnam significantly ramp up their presence in
their respective markets. This growth has allowed us an
opportunity to learn more about these countries and to
adopt best practices and technologies that benefit the
rest of our network.
We continue to watch carefully for advantageous M&A
opportunities in the U.S., a market we know well, and
where we can achieve significant synergies due to our
scale. We also remain interested in expanding to the Asia
Pacific markets where we see attractive demographic
trends and solid economic growth potential.
23
Alimentation Couche-Tard Inc.Annual Report © 2020 Providing an Environment
That Fosters Growing
Together
True to our One Team philosophy, we seek solutions
that improve communications, facilitate recruitment and
strengthen employee engagement, making it easier for
our people to serve our customers every day. We also
strive to build an ever-more inclusive workplace and
prepare future growth by training our next generation
of leaders.
DIGITIZING OUR HUMAN RESOURCES
CAPABILITIES
This year, we pushed forward with the implementation
of our digital Human Resources platform with the
goal of having it accessible to all our North American
employees by early fiscal 2021. We have also set the
stage to start the deployment in Europe. Through this
platform, our people can receive everything from pay
stubs to scheduling changes, and we are able to attract
and hire the best people through direct, streamlined
processes. It has also helped improve the efficiency of
our talent identification and reviews.
“I am excited to be able to use a new
technology to assist in further developing
our employees. With the help of our
European team, and focus groups,
we have created a real in-store
experience where the game graphics
truly represent our stores and customer
base. The training possibilities are
endless, and I cannot wait to see how
this format will grow in the future.”
Having the ability to communicate with all employees
directly via a mobile platform is transformative in
creating a much more dynamic and engaging work
environment and better training capabilities.
Troy Beatty
Human Resources Director,
Grand Canyon Division
24
Alimentation Couche-Tard Inc.Annual Report © 2020 It has also proved key in communicating vital messaging
quickly and effectively with our people as the pandemic
was unfolding. We are also gaining valuable analytics
and insights through utilizing these mobile systems.
Hiring the right people and providing appropriate
training is a key success factor in our business. With
gamified training, we make it user-friendly, fun and
more efficient for our people. We launched two training
modules in all our European divisions, focusing on sales
techniques and food, that achieved a 90% employee
completion rate and led to an increase in basket sizes.
Leveraging our learnings and success in Europe, we will
pilot the program in designated U.S. divisions in the first
few weeks of fiscal 2021.
IDENTIFYING AND SUPPORTING
OUR FUTURE LEADERS
We are also proactively planning for our future talent
needs by putting together development and succession
strategies to secure our growth. We continue to provide
in-depth knowledge and networking opportunities
to our leaders through a NACS partnership with top
universities in the U.S.
This year, we also launched two internally-developed
programs, tailored to our company culture, to accelerate
the growth of our high-potential employees. These
programs provide an experiential learning experience by
asking participants to work on real business challenges
with coaching from executive leaders.
25
Alimentation Couche-Tard Inc.Annual Report © 2020 “In honour of International Women’s
Day, the company launched its first
global Diversity & Inclusion campaign,
‘Together we make a difference.’ This
campaign supports our company’s
culture that, together, we will make
a difference in promoting a diverse
workforce, supporting the professional
development and well-being of each of
our employees, and driving operational
growth. What a great day for ACT!”
Elisa Goria
Co-Lead of ACT’s Women’s Council
Alimentation Couche-Tard Inc.
Annual Report © 2020
26
STRENGTHENING OUR COMMITMENT
TO DIVERSITY AND INCLUSION
This year, our President and CEO, Brian Hannasch,
signed the CEO Action Pledge, making us the first
convenience store retailer to join the largest CEO-
driven business commitment to advance diversity and
inclusion within the workplace. In addition, the company
launched an internal global campaign, «Together we
make a difference,» where all employees were able to
make their own personal pledge.
This effort was championed by Alimentation Couche-
Tard’s Women’s Council, which celebrated its first year
of formation. The Council continues to engage and hold
accountable the company leadership to increase the
visibility and roles of women and diverse candidates
within the company. The Council has also implemented
career-advancement training sessions throughout the
network. Another one of its milestones has been the
rollout of a major training initiative to increase both
awareness of unconscious bias and inclusivity.
27
Alimentation Couche-Tard Inc.Annual Report © 2020 Elevating Sustainability
as a Lens in Our Business
This year, we assessed the opportunities and threats
related to sustainability and made the strategic decision
to elevate sustainability as a lens in our business.
We assembled a core team and appointed executives
with responsibility for prioritized sustainability areas.
In July 2019, we released our very first global
sustainability report, where we started our journey
around defined areas that anchor the many sustainability
initiatives taking place across our locations and regions.
“I’m so happy to have been given the
opportunity to be part of the journey
as our company has started to evolve a
stronger focus on sustainability. I truly
believe that doing good for our people,
environment and society is also good for
the business.”
Helena Winberg
Senior Manager, HSE & Sustainability
28
Alimentation Couche-Tard Inc.Annual Report © 2020 SINCE RELEASING OUR FIRST REPORT IN 2019,
WE HAVE CONTINUED TO MAKE PROGRESS
ON OUR SUSTAINABILITY JOURNEY:
CUSTOMER
EXPERIENCE
We want to make it easier for our customers to access fresh, healthy and
sustainable food and beverage options, all while maintaining our commitment to
be a responsible retailer of age-restricted products. We aim to provide a faster,
cleaner and more environmentally-friendly car wash service. We are supporting
the transition to a cleaner future through our sustainable fuel options and electric
charging stations, and we continue to roll out renewable fuels across all markets.
ENVIRONMENTAL
MANAGEMENT
Our focus is to find innovative ways to use resources efficiently, reduce our
carbon footprint and minimize the waste generated by our products and services
through our operations and supply chain. We also worked hard on improving our
packaging: in Europe this year, we developed and introduced more sustainable
food packaging that reduces the use of plastic and increases the potential for
recycling. In the US, we rolled out coffee on demand, which reduces energy
consumption and waste while increasing quality.
PEOPLE
Our global community of people is at the heart of our business. It is their
commitment, motivation and talent that make us a successful convenience store
operator. We continuously work with programs to make our employees feel safe,
respected and included, as we strive to be a diverse and attractive employer,
building the capabilities of our talent so they can thrive. This year’s employee
survey confirms that we are headed in the right direction: we see an increase in
overall engagement, improvement in our respect for each other and employees
feeling safer at work.
COMMUNITY
ENGAGEMENT
We are committed to be a good neighbour, contributing to safe, healthy and
vibrant communities. In addition to supporting local community causes, through
strategic investments and partnerships we support programs to help youth and
prevent crime. During the pandemic, we became part of the solutions in our
localities giving away millions of free drinks to healthcare workers, meals to local
food banks, care packages to hospitals, and deliveries to the elderly and frail.
GOVERNANCE
We strive to conduct our business in compliance with the highest standards of
ethical conduct and integrity, engaging our partners and reporting transparently
as part of our commitment to be open about our business activities. We began
setting ambitious five-year targets for 2025 and integrating sustainability across
key aspects of our business. We intend to announce our priorities and targets in
our second global sustainability report in the summer of 2020.
Visit acttoevolve.com for more information.
Alimentation Couche-Tard Inc.
Annual Report © 2020
2929
Alimentation Couche-Tard Inc.Annual Report © 2020 Facing an Invisible Threat
with a Long-Term Mindset
When COVID-19 first emerged, Couche-Tard had powerful
tools to face it—an experienced team that had prepared for
crises in the past and successfully protected the company
during natural disasters, as well as an agile, decentralized
model allowing us to react quickly to local conditions.
As well, we took critical steps around food safety,
enforcing strict cleaning in stores and food preparation
areas, adding single-item packaging to bakery and
other self-serve food items, suspending the use of
refillable mugs and cups, and ceasing in-store product
sampling. At the distribution centres in North America,
temperature checks were taken to screen employees
for possible symptoms of the virus .
Right away, the crisis team mobilized the network,
bringing best practices from Europe where the virus first
hit the network to North America. By February, we had
put into place a ban on travel and large meetings and
established the technical ability for office employees to
work remotely and maintain essential business continuity.
KEY PRIORITY HEALTH AND SAFETY
More importantly, we moved rapidly to ensure the
health and safety of our frontline store employees and
customers. Many preventive measures were established,
including extensive sanitization procedures,
the
installation of plexiglass dividers at checkouts, the
addition of queue line separators and floor markings
to ensure proper social distancing, and the supply of
gloves at the fuel pumps and masks for team members
where permitted or required.
30
Alimentation Couche-Tard Inc.Annual Report © 2020 “From the moment we took our first
preventive measures in January, our
teams across our global network came
together to support each other. We have
faced this unprecedented crisis with
courage, determination and a unified
approach, and I am so impressed by all
that has been achieved in such a short
time to help protect and support our
employees and customers.”
Michael Sandberg
Head of Global HSE & Sustainability
SUPPORTING FRONTLINE EMPLOYEES
Additional measures were quickly implemented to
support employees and ensure their well-being,
especially for North American hourly workers, who do
not have the same government safety nets as in other
regions where the company operates. These included
an emergency appreciation pay premium of $2.50 per
hour as well as emergency sick care plans that included
both a bank of sick days, as well as a pay continuation
benefit for anyone who had either been diagnosed with
COVID-19 or placed under mandatory quarantine.
BEING PART OF THE SOLUTION
Most of all, the company was operating at all times
and committed to being part of the solution in the
communities where we work and live. We were among
the first retailers to offer globally free dispensed
beverages for all health care workers, giving away
over two million drinks in the first few weeks of the
pandemic. We pledged to donate 25 million meals to
Feeding America ®, and by the end of the fiscal year
had exceeded that target and hit 40 million meals given
to local food banks. Other meaningful initiatives took
place across the globe including Little Thank Yous
digital gift coupons in Canada and Europe and home
delivery to the elderly and frail in Ireland.
Throughout this unprecedented crisis, our team
in this together, showing
members have been
compassion, care, and dedication to each other, to our
customers and to the business.
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Alimentation Couche-Tard Inc.Annual Report © 2020
Retooling for a Better,
Stronger Company
As we enter a new fiscal year, and a future where the threat
posed by the virus is still looming and the global economy
is uncertain, the company is reflecting and learning from
the lasting implications of the pandemic and how we can
position our people and business to continue to thrive
and grow in the long term.
There is no doubt that the company, with its strong
financial performance and healthy balance sheet,
fared much better than most. Not only did we stay
operational throughout the crisis—even as inside store
traffic and fuel volumes were significantly affected by
global lockdowns—we used our customary financial
discipline and decentralized model to our advantage.
Early in the crisis, Couche-Tard cut back on capital
expenditures, put people first in our financial planning,
and stayed committed to our strategic priorities such as
developing our food program and new stores growth.
POSITIVE LEARNINGS FROM
THE PANDEMIC
Even during these troubled times, there was a silver
lining from the pandemic: the convenience industry
became essential parts of its communities, store team
members showed incredible bravery as a frontline
workforce, and customer feedback, in surveys and social
media, was the most positive in the company’s history.
We intend to maintain the extensive sanitization and
health measures in our stores and offices into the future
and expect our customers to choose the ease and safety
of our locations more often over big box retail sites.
We will also continue to focus on supplying products,
which became popular during the pandemic, from
emergency goods, alcohol and tobacco to prepared
food items and more.
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Alimentation Couche-Tard Inc.Annual Report © 2020 A MORE FRICTIONLESS FUTURE
During the COVID-19 pandemic, we did not stand still
on the innovation front, rather we have shown that we
accelerated and adapted to those changing customer
behaviours. Because of our agile and decentralized
business model, we were able to expand many delivery
platforms and pull forward enabling technologies that
will serve customers beyond the pandemic. These
initiatives include the expansion of home delivery
capabilities, curbside delivery in both Europe and North
America with pre-ordering and payment through the
Circle K app, and frictionless payment technology in
Norway to accept fuel payments using license plate
recognition.
“Click & Collect and curbside delivery
were fast-tracked projects, where we as
an organization have shown how we can
accomplish incredible things. A fantastic
team has delivered more than anyone
could expect in this COVID-19 situation.
To design, scope, develop and put a
solution in the market in just two weeks
and hereafter scale it to seven additional
markets within a month must be quite a
record.”
Charlotte Haue
Click & Collect Project Manager
and European Head of Digital
A BETTER, STRONGER COMPANY
As underscored in this report, we have stayed on course
with our five-year strategy and remained committed to
growing both organically and through acquisitions in
our journey to become the world’s preferred destination
for convenience and fuel.
In conclusion, this year was clearly one for the history
books, where we used our foundational strength
built over 40 years to achieve record financial and
operational performance, face a deadly virus with a
long-term mindset, become a better steward of the
environment, and emerge a better, stronger company.
33
Alimentation Couche-Tard Inc.Annual Report © 2020 Financial Highlights
Footnotes
ALL DOLLAR FIGURES ARE IN USD MILLIONS,
EXCEPT PER SHARE AMOUNTS WHICH ARE IN USD.
1. This measure is presented for information purposes only and represents a measure of performance used especially in financial
circles. It represents the following calculation: earnings before income taxes and interest divided by average capital employed
for the corresponding period. Capital employed represents total assets less short-term liabilities not bearing interest. It does
not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by
other public corporations. This performance measure, for the 52-week period ended April 28, 2019, has been adjusted for the
estimated pro forma impact of IFRS 16 and the previously disclosed measure was 14.1%. We believe this measure is useful to
investors and analysts.
2. Until November 2019, these measures are presented as if our investment in CAPL was reported using the equity method as we
believe it allows a more relevant presentation of the underlying performance of the Corporation.
3. This measure is presented for information purposes only and represents a measure of performance used especially in financial
circles. It represents the following calculation: net earnings divided by average equity for the corresponding period. It does
not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by
other public corporations. This performance measure, for the 52-week period ended April 28, 2019, has been adjusted for the
estimated pro forma impact of IFRS 16 and the previously disclosed measure was 22.3%. We believe this measure is useful to
investors and analysts.
4. This measure is presented for information purposes only and represents a measure of financial condition used especially in
financial circles. It represents the following calculation: interest-bearing debt plus the product of eight times rent expense, net
of cash and cash equivalents and temporary investments divided by EBITDAR (Earnings before Interest, Tax, Depreciation,
Amortization, Impairment and Rent expense) adjusted for specific items. It does not have a standardized meaning prescribed
by IFRS and therefore may not be comparable to similar measures presented by other public corporations. For the purpose
of this calculation, until November 2019, CAPL’s interest bearing debt was excluded as it was a non-recourse debt to the
Corporation, as referenced in footnote 2. This performance measure, for the 52-week period ended April 28, 2019, has been
adjusted for the estimated pro forma impact of IFRS 16 and the previously disclosed measure was 2.29 : 1. We believe this
measure is useful to investors and analysts.
5. The Adjusted Free Cash flow is presented for information purposes only and excludes CrossAmerica Partners LP (“CAPL”).
It represents the following calculation: adjusted EBITDA (Earnings Before Interest, Income tax, Depreciation, Amortization
and Impairment) minus Net CAPEX, interest paid net of interest received, Income taxes paid, Dividends paid; plus Proceeds
from disposal of assets, CAPL’s distribution received and Incentive Distribution Rights received from CAPL. It does not have
a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other
public corporations.
34
Alimentation Couche-Tard Inc.Annual Report © 2020 FINANCIAL
RESULTS
35
Alimentation Couche-Tard Inc.Annual Report © 2020 Management Discussion and Analysis
The purpose of this Management Discussion and Analysis (“MD&A”) is, as required by regulators, to explain management’s
point of view on the financial condition and results of the operations of Alimentation Couche-Tard Inc. (“Couche-Tard”) as well
as its performance during the fiscal year ended April 26, 2020. More specifically, it aims to let the reader better understand our
development strategy, performance in relation to objectives, future expectations, and how we address risk and manage our
financial resources. This MD&A also provides information to improve the reader’s understanding of Couche-Tard’s
consolidated financial statements and related notes. It should therefore be read in conjunction with those documents. By “we”,
“our”, “us” and “the Corporation”, we refer collectively to Couche-Tard and its subsidiaries.
Except where otherwise indicated, all financial information reflected herein is expressed in United States dollars (“US dollars”)
and determined on the basis of International Financial Reporting Standards (“IFRS”) as issued by the International Accounting
Standards Board (“IASB”). We also use measures in this MD&A that do not comply with IFRS. Where such measures are
presented, they are defined, and the reader is informed. This MD&A should be read in conjunction with the audited annual
consolidated financial statements and notes thereto included in our 2020 Annual Report, which, along with additional
information relating to Couche-Tard, including the most recent Annual Information Form, is available on SEDAR at
https://www.sedar.com/ and on our website at https://corpo.couche-tard.com/.
Forward-Looking Statements
This MD&A includes certain statements that are “forward-looking statements” within the meaning of the securities laws of
Canada. Any statement in this MD&A that is not a statement of historical fact may be deemed to be a forward-looking
statement. When used in this MD&A, the words “believe”, “could”, “should”, “intend”, “expect”, “estimate”, “assume” and other
similar expressions are generally intended to identify forward-looking statements. It is important to know that the forward-
looking statements in this MD&A describe our expectations as at June 29, 2020, which are not guarantees of the future
performance of Couche-Tard or its industry, and involve known and unknown risks and uncertainties that may cause Couche-
Tard’s or the industry’s outlook, actual results or performance to be materially different from any future results or performance
expressed or implied by such statements. Our actual results could be materially different from our expectations if known or
unknown risks affect our business, or if our estimates or assumptions turn out to be inaccurate. A change affecting an
assumption can also have an impact on other interrelated assumptions, which could increase or diminish the effect of the
change. As a result, we cannot guarantee that any forward-looking statement will materialize and, accordingly, the reader is
cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements do not take into
account the effect that transactions or special items announced or occurring after the statements are made may have on our
business. For example, they do not include the effect of sales of assets, monetization, mergers, acquisitions, other business
combinations or transactions, asset write-downs or other charges announced or occurring after forward-looking statements are
made. Additionally, we are uncertain of the duration and impacts of the current COVID-19 pandemic on our business. We are
actively monitoring the effect of the COVID-19 pandemic on all aspects of our business and geographies, including how it will
impact our people, our customers, our suppliers, our business partners and distribution channels.
Unless otherwise required by applicable securities laws, we disclaim any intention or obligation to update or revise the forward-
looking statements, whether as a result of new information, future events or otherwise.
The foregoing risks and uncertainties include the risks set forth under “Business Risks” in our 2020 Annual Report as well as
other risks detailed from time to time in reports filed by Couche-Tard with securities regulators in Canada.
Our Business
We are the leader in the Canadian convenience store industry. In the United States, we are the largest independent
convenience store operator in terms of the number of company-operated stores. In Europe, we are a leader in convenience
store and road transportation fuel retail in the Scandinavian countries (Norway, Sweden and Denmark), in the Baltic countries
(Estonia, Latvia and Lithuania), as well as in Ireland, and have an important presence in Poland.
As of April 26, 2020, our network comprised 9,414 convenience stores throughout North America, including 8,221 stores with
road transportation fuel dispensing. Our North American network consists of 18 business units, including 14 in the
United States covering 48 states and 4 in Canada covering all 10 provinces. Approximately 109,000 people are employed
throughout our network and at our service offices in North America.
In Europe, we operate a broad retail network across Scandinavia, Ireland, Poland, the Baltics and Russia through 10 business
units. As of April 26, 2020, our network comprised 2,710 stores, the majority of which offer road transportation fuel and
convenience products while the others are unmanned automated fuel stations which only offer road transportation fuel. We
also offer other products, including aviation fuel and energy for stationary engines. Including employees at branded franchise
stores, approximately 22,000 people work in our retail network, terminals and service offices across Europe.
36
Alimentation Couche-Tard Inc.Annual Report © 2020 In addition, under licensing agreements, close to 2,350 stores are operated under the Circle K banner in 15 other countries
and territories (Cambodia, Egypt, Guam, Guatemala, Honduras, Hong Kong, Indonesia, Jamaica, Macau, Mexico, Mongolia,
New Zealand, Saudi Arabia, the United Arab Emirates and Vietnam), which brings the worldwide total network to close to
14,500 stores.
Our mission is to make our customers’ lives a little easier every day. To this end, we strive to meet the demands and needs of
people on the go. We offer fast and friendly service, providing food, hot and cold beverages, car wash services, and other
high-quality products and services including road transportation fuel, designed to meet or exceed our customers’ demands in a
clean, welcoming and efficient environment. Our business model is our key to success. We are a customer-centric, financially
disciplined organization that routinely compares best practices, and uses our global experience to enhance our operational
expertise and continually invests in our people and our stores.
Value Creation
In the United States, the convenience store sector is fragmented and in a consolidation phase. We are participating in this
process through our acquisitions, the market shares we gain when competitors close sites, and by improving our offering. In
Europe and Canada, the convenience store sector is often dominated by a few major players, including integrated oil
companies. Some of these integrated oil companies are in the process of selling, or are expected to sell, their retail assets. We
intend to study investment opportunities that might come to us through this process.
No matter the context, to create value for our Corporation and its shareholders, acquisitions have to be concluded at
reasonable conditions. Therefore, we do not necessarily favor store count growth to the detriment of profitability. In addition to
acquisitions, the contribution from organic growth has played an important role in the recent growth of our net earnings.
Highlights have included the ongoing improvements we have made to our offer, including fresh products, to our supply terms
and to our efficiency. All these elements, in addition to our strong balance sheet, have contributed to the growth in our net
earnings and to value creation for our shareholders and other stakeholders. We intend to continue in this direction.
Exchange Rate Data
We use the US dollar as our reporting currency, which provides more relevant information given the predominance of our
operations in the United States.
The following tables set forth information about exchange rates based upon closing rates expressed as US dollars per
comparative currency unit:
Average for period(1)
Canadian dollar
Norwegian krone
Swedish krone
Danish krone
Zloty
Euro
Ruble
12-week periods ended
52-week periods ended
April 26, 2020
April 28, 2019
April 26, 2020
April 28, 2019
April 29, 2018
0.7275
0.1005
0.1016
0.1467
0.2485
1.0953
0.0141
0.7510
0.1165
0.1077
0.1514
0.2627
1.1298
0.0153
0.7494
0.1096
0.1038
0.1485
0.2568
1.1087
0.0153
0.7595
0.1195
0.1108
0.1542
0.2675
1.1499
0.0153
0.7826
0.1241
0.1205
0.1587
0.2800
1.1810
0.0172
(1) Calculated by taking the average of the closing exchange rates of each day in the applicable period.
Period end
Canadian dollar
Norwegian krone
Swedish krone
Danish krone
Zloty
Euro
Ruble
As at April 26, 2020
As at April 28, 2019
0.7118
0.0941
0.0993
0.1448
0.2385
1.0800
0.0134
0.7412
0.1152
0.1053
0.1491
0.2596
1.1133
0.0154
As we use the US dollar as our reporting currency in our consolidated financial statements and in this document, unless
indicated otherwise, results from our Canadian, European and corporate operations are translated into US dollars using the
average rate for the period. Unless otherwise indicated, variances and explanations regarding changes in the foreign
exchange rate and the volatility of the Canadian dollar and European currencies which we discuss in the present document are
therefore related to the translation into US dollars of our Canadian, European and corporate operations’ results.
37
Alimentation Couche-Tard Inc.Annual Report © 2020 Fiscal 2020 Overview
Financial Results
Net earnings attributable to shareholders of the Corporation (“net earnings”) amounted to $2.4 billion for fiscal 2020, compared
with $1.8 billion for fiscal 2019. Diluted net earnings per share stood at $2.09, compared with $1.62 for the previous year.
The results for fiscal 2020 were affected by a pre-tax net gain of $61.5 million on the disposal of our interests in CrossAmerica
Partners LP ("CAPL"), a pre-tax net gain of $41.0 million on the disposal of a portion of our U.S. wholesale fuel business as
part of an asset exchange with CAPL, a positive impact on income tax of $33.6 million from an adjustment to deferred tax
assets, a pre-tax net foreign exchange gain of $33.5 million, pre-tax acquisition costs of $6.7 million, pre-tax restructuring costs
of $4.5 million and an income tax expense of $2.7 million following the asset exchange transactions with CAPL.
The results for fiscal 2019 were affected by a pre-tax impairment on CAPL's goodwill of $55.0 million, pre-tax restructuring
costs of $10.5 million, a compensatory payment to CAPL for divestiture of assets of $6.3 million, which had a negative impact
of $5.0 million on pre-tax net earnings attributable to shareholders of the Corporation, a net tax benefit stemming from the
decrease of the statutory income tax rate in Sweden of $6.2 million, a pre-tax net foreign exchange gain of $5.3 million, a pre-
tax gain from the disposal of the marine fuel business of $3.2 million, as well as pre-tax acquisition costs of $2.2 million.
Excluding these items, the adjusted net earnings would have been approximately $2.2 billion1 (1.971 per share on a diluted
basis) for fiscal 2020, compared with $1.8 billion1 (1.631 per share on a diluted basis) for fiscal 2019, an increase of
$374.0 million or 20.3%, driven by higher road transportation fuel margins in the U.S. and Europe and strong organic growth in
our convenience operations, partly offset by the negative impact of COVID-19 on the traffic in our network.
Changes in our Network
Disposal of our interests in CAPL
On November 19, 2019, we announced the closing of the sale of our interests in CAPL, representing 100% of the equity
interests of the sole member of the General Partner, 100% of the incentive distribution rights and 21.7% of the outstanding
common units of CAPL to investment entities controlled by Joe Topper, the founder of CAPL and a member of the Board of
Directors of its General Partner for an amount of $190.0 million. We recognized a net gain on disposal of $61.5 million in
relation to this transaction. The decision to divest our interests in CAPL was based on the outcome of a strategic review. This
transaction also led to the release of a deferred tax asset valuation allowance of $29.0 million in relation with capital losses
which were not expected to be used before their expiration date.
Asset Exchange Agreements with CAPL
November 2019 asset exchange agreement
On March 26, 2020, we announced the closing of an asset exchange agreement with CAPL (the "November 2019 asset
exchange agreement") under which we transferred a portion of our U.S. wholesale road transportation fuel operations, which
consisted of wholesale fuel supply agreements covering 333 sites, 33 fee and leasehold properties also covered by wholesale
fuel supply agreements for a total of 366 supply agreements, as well as cash consideration of approximately $14.0 million,
receiving in return CAPL’s 17.5% limited partnership interest in CST Fuel Supply LP. We recognized a net gain on disposal of
$41.0 million in relation to this transaction. Following this asset exchange agreement, we own a 100% interest in CST Fuel
Supply LP. Therefore, an amount of $105.2 million, net of taxes, was recognized to retained earnings corresponding to the
difference between the non-controlling interest in CST Fuel Supply LP recognized in our consolidated financial statements and
the fair value of the consideration to acquire the remaining 17.5% interest in CST fuel Supply LP. This transaction also led to
the release of a deferred tax asset valuation allowance of $4.6 million in relation with capital losses which were not expected to
be used before their expiration date.
1 Please refer to the section “Net earnings attributable to shareholders of the Corporation (“net earnings”) and adjusted net earnings attributable to shareholders
of the Corporation (“adjusted net earnings”)” of this MD&A for additional information on this performance measure not defined by IFRS. These performance
measures, for the 52-week period ended April 28, 2019, have been adjusted for the estimated impact of IFRS 16, the previously reported adjusted net earnings
were approximately $1.9 billion and adjusted diluted net earnings per share was $1.66.
38
Alimentation Couche-Tard Inc.Annual Report © 2020 December 2018 asset exchange agreement
On December 17, 2018, we entered into an asset exchange agreement with CAPL under which we aimed at exchanging
192 Circle K U.S. stores against the real estate property held by CAPL for 56 U.S. company-operated stores leased and
operated by Couche-Tard pursuant to a master lease that CAPL had previously purchased jointly with or from CST Brands Inc.
(“CST”), and 17 company-operated stores owned and operated by CAPL in the U.S. Upper Midwest (“December 2018 asset
exchange agreement”). The aggregate value of this agreement will totalize approximately $185.0 million.
During fiscal 2020, we closed the first four transactions of the December 2018 asset exchange agreement with CAPL. In these
transactions, 139 Circle K U.S. stores for a total value of approximately $132.0 million have been exchanged against 17
company-operated stores owned and operated by CAPL and the real estate for 39 properties held by CAPL for an equivalent
value.
The first two transactions of the December 2018 asset exchange agreement, which occurred while CAPL was fully
consolidated in our consolidated financial statements, resulted in a reclassification of $7.7 million between equity attributable to
the shareholders of the Corporation and equity attributable to the non-controlling interests. Following these exchange
transactions, we performed a re-evaluation of our deferred tax assets and liabilities which generated a net income tax expense
of $4.4 million, of which $2.7 million are attributable to shareholders of the Corporation. The third and fourth transactions of the
same agreement, which occurred after the disposal of our interests in CAPL, resulted in a gain on disposal of $1.9 million in
relation to these transactions.
On May 5, 2020, subsequent to the end of fiscal 2020, we closed the fifth transaction of the December 2018 asset exchange
agreement with CAPL. In this fifth transaction, we transferred 29 Circle K U.S. stores for a total value of approximately
$32.0 million. In exchange, CAPL transferred the real estate for 13 properties for an equivalent value. The remaining assets of
this agreement are expected to be exchanged in the second half of calendar 2020.
Multi-site acquisition 1
On January 13, 2020, we acquired 17 stores from a franchise operator. These convenience stores operate under the Holiday
banner in South Dakota and Minnesota, within the United States.
Single-site acquisitions
During fiscal 2020, we acquired 13 company-operated stores through distinct transactions.
Store construction
During fiscal 2020, we completed the construction of 56 stores and the relocation or reconstruction of 29 stores. As of
April 26, 2020, another 30 stores were under construction and should open in the upcoming quarters.
1 A multi-site acquisition is defined as an acquisition of seven store or more.
39
Alimentation Couche-Tard Inc.Annual Report © 2020 Summary of changes in our store network during the fourth quarter and fiscal 2020
The following tables present certain information regarding changes in our store network over the 12-week and 52-week
periods ended April 26, 2020(1):
Type of site
Number of sites, beginning of period
Acquisitions
Openings / constructions / additions
Closures / disposals / withdrawals
Store conversion
Number of sites, end of period
Circle K branded sites under licensing agreements
Total network
Number of automated fuel stations included in the period-end
figures(6)
Type of site
Number of sites, beginning of period
Acquisitions
Openings / constructions / additions
Closures / disposals / withdrawals
Store conversion
Number of sites, end of period
Circle K branded sites under licensing agreements
Total network
12-week period ended April 26, 2020
Company-
operated(2)
CODO(3)
9,732
3
10
(33)
(21)
9,691
449
—
1
(26)
29
453
DODO(4)
Franchised and
other affiliated(5)
1,025
1,290
—
18
(345)
(9)
689
—
27
(27)
1
1,291
Total
12,496
3
56
(431)
—
12,124
2,347
14,471
982
—
10
—
992
52-week period ended April 26, 2020
Company-
operated(2)
CODO(3)
9,794
30
72
(128)
(77)
9,691
514
—
3
(151)
87
453
DODO(4)
Franchised and
other affiliated(5)
1,052
1,215
—
37
(389)
(11)
689
—
163
(88)
1
1,291
Total
12,575
30
275
(756)
—
12,124
2,347
14,471
(1)
(2)
(3)
(4)
(5)
(6)
These figures include 50% of the stores operated through RDK, a joint venture.
Sites for which the real estate is controlled by Couche-Tard (through ownership or lease agreements) and for which the stores (and/or the service stations)
are operated by Couche-Tard or one of its commission agents.
Sites for which the real estate is controlled by Couche-Tard (through ownership or lease agreements) and for which the stores (and/or the service stations)
are operated by an independent operator in exchange for rent and to which Couche-Tard sometimes provides road transportation fuel through supply
contracts. Some of these sites are subject to a franchise agreement, licensing or other similar agreement under one of our main or secondary banners.
Sites controlled and operated by independent operators to which Couche-Tard supplies road transportation fuel through supply contracts. Some of these
sites are subject to a franchise agreement, licensing or other similar agreement under one of our main or secondary banners.
Stores operated by an independent operator through a franchising, licensing or another similar agreement under one of our main or secondary banners.
These sites sell road transportation fuel only.
COVID-19 Pandemic
Due to the implementation of restrictive social measures in the various geographies where we operate, the COVID-19
pandemic had a meaningful impact on our financial results, mostly driven by declining traffic in our entire network. These
measures led to fewer visits to our stores starting mid-March in Europe and slightly later in North America. The impact of lower
traffic was partially offset by the purchasing of larger baskets by consumers. From a merchandise category standpoint, product
demand shifted during the pandemic negatively impacting margins due to a different product mix. From a fuel perspective,
volumes declined rapidly during the first weeks following the stay-at-home orders across the different regions, while margins
remained healthy. Additionally, various measures were enacted to support the health and safety of our employees and
customers driving incremental operating expenses. These additional costs were partly offset by initiatives implemented across
our network to reduce our controllable expenses.
Global Circle K Brand
On September 22, 2015, we announced the creation of a new global convenience brand, Circle K. The new brand is replacing
our existing Circle K, Statoil, Mac’s, Kangaroo Express, Corner Store, On the Run, and Topaz brands on stores and service
stations across Canada (except Quebec), the United States and Europe. The rollout of our Circle K brand in Europe was
completed during the first quarter of fiscal 2020, while in North America, it is progressing steadily.
As of April 26, 2020, more than 6,300 stores in North America, including 995 stores acquired from CST, now proudly display
our new global brand. This represents more than 86.0% of our overall North American project.
40
Alimentation Couche-Tard Inc.Annual Report © 2020
Class A multiple-voting shares and Class B subordinate voting shares split
On September 4, 2019, the Board of Directors approved a two-for-one split of all the Corporation’s issued and outstanding
Class A multiple-voting shares and Class B subordinate voting shares as at September 20, 2019. This share split was
approved by regulatory authorities and occurred on September 27, 2019. All share and per-share information in this document
has been adjusted retroactively to reflect this share split.
Share Repurchase Program
During fiscal 2020, under our share repurchase program launched on April 8, 2019, we repurchased 16,354,384 Class B
subordinate voting shares for a net amount of $470.8 million. The last share repurchase was traded on March 26, 2020. The
share repurchase program expired on April 9, 2020 and was not renewed.
Repayment of Senior Unsecured Notes
On December 13, 2019, we fully repaid, at maturity, our $600.0 million US-dollar-denominated senior unsecured notes issued
on December 14, 2017, and on the same date the associated fixed-to-floating interest rate swaps matured.
On November 1, 2019, we fully repaid, at maturity, our CA $450.0 million ($341.4 million) Canadian-dollar-denominated senior
unsecured notes issued on November 1, 2012. On the same date, we settled, at maturity, the following cross-currency interest
rate swaps:
Receive – Notional
(in millions)
Receive – Rate
Pay – Notional
(in millions)
Pay – Rate
CA $450.0 (US $341.4)
3.319%
US $451.4
From 2.733% to 2.740%
On May 28, 2019, we repaid, without penalty, $150.0 million of our $300.0 million US-dollar-denominated senior unsecured
notes issued on December 14, 2017, and maturing on December 13, 2019. On August 13, 2019, we repaid, without penalty,
the remaining $150.0 million of our $300.0 million US-dollar-denominated senior unsecured notes.
Issuance of Senior Unsecured Notes
On January 22, 2020, we issued US-dollar-denominated senior unsecured notes totaling $1.5 billion, consisting of the
following:
Nominal amount
(in millions)
$750.0
$750.0
Maturity
Coupon rate
January 25, 2030
January 25, 2050
2.950%
3.800%
Effective rate as at
April 26, 2020
3.033%
3.880%
Interest payment dates
July 25, and January 25
July 25, and January 25
A part of the net proceeds from these issuances, which were $1,484.1 million, was used to repay our term revolving unsecured
operating credit D.
Interest Rate Locks
During fiscal 2020, we entered into interest rate locks at the following conditions:
Notional amount
(in millions)
$500.0
Interest lock term
Rate
10 years
From 1.566% to 1.626%
Maturity date
March 9, 2020
The instruments allowed us to hedge the variability of our interest payments on the anticipated issuance of US-dollar-
denominated senior unsecured notes due to changes in the US Treasury rates. These instruments were designated as a cash
flow hedge of our interest rate risk and as a result, during fiscal 2020, a gain of $7.5 million was recognized in Accumulated
other comprehensive loss to reflect the fluctuation in the interest rate locks' fair value. On January 22, 2020, prior to their
maturity, we settled all of our interest rate locks. The total cumulative gain of $7.5 million is amortized over the term of the
related US-dollar-denominated senior unsecured notes issued on January 22, 2020, and maturing on January 25, 2030, as an
adjustment to the related interest expense.
41
Alimentation Couche-Tard Inc.Annual Report © 2020 Restructuring
During fiscal 2020, as part of our cost reduction initiatives and the search for synergies aimed at improving our efficiency, we
made the decision to proceed with the restructuring of certain of our operations. As such, restructuring costs of $4.5 million
were recorded to earnings during fiscal 2020.
Investment in Fire & Flower
On August 7, 2019, we invested an amount of CA $26.0 million ($19.5 million) in Fire & Flower Holdings Corp.
(“Fire & Flower”), a leading independent cannabis retailer listed on the Toronto Stock Exchange and based in Alberta, Canada.
This investment is in the form of unsecured convertible debentures which would result, as at April 26, 2020 and on a fully-
diluted basis, in a 11.3% ownership interest in Fire & Flower upon conversion. We have also been issued common share
purchase warrants, that, if exercised in accordance with the terms thereof, would subsequently increase our ownership interest
in Fire & Flower up to 51.6% as at April 26, 2020 on a fully-diluted basis. As at April 26, 2020, the unsecured convertible
debentures were not converted, and no common share purchase warrants were exercised.
Dividends
During its June 29, 2020 meeting, the Board of Directors declared a quarterly dividend of CA 7.0¢ per share, for the fourth
quarter of fiscal 2020 to shareholders on record as at July 9, 2020, and approved its payment for July 23, 2020. This is an
eligible dividend within the meaning of the Income Tax Act (Canada).
For fiscal 2020, the Board of Directors declared total dividends of CA 26.5¢ per share, an increase of 17.8% compared with
fiscal 2019.
Outstanding Shares and Stock Options
As at June 26, 2020, Couche-Tard had 253,803,700 Class A multiple-voting shares and 858,952,631 Class B subordinate
voting shares issued and outstanding. In addition, as at the same date, Couche-Tard had 3,254,697 outstanding stock options
for the purchase of Class B subordinate voting shares.
42
Alimentation Couche-Tard Inc.Annual Report © 2020 New Accounting Standard Adopted by the Corporation
As of April 29, 2019, we adopted IFRS 16, Leases, which requires lessees to recognize on the balance sheet a lease liability
reflecting future lease payments and a right-of-use asset for virtually all lease contracts, except with respect to lease contracts
that meet limited exception criteria. As permitted under the specific transition provisions in the standard, we have elected not to
restate our comparative figures for the fiscal year 2019. The table below presents the estimated pro forma impact of the
change in accounting policy on our previously reported results:
Operating, selling, administrative and
general expenses
5,646.1
(390.0)
52-week period ended April 28, 2019
Pre – IFRS 16
As reported
Excluding: rent
under IAS 17
Including:
depreciation
and interests(1)
Total estimated
pro forma IFRS
16 adjustments
Other
Pro forma -
IFRS 16
Total estimated
pro forma IFRS
16 impacts –
attributable to
shareholders of
the Corporation
59,117.6
49,922.7
9,194.9
—
—
—
10.5
(21.3)
1,070.7
6,706.0
2,488.9
23.4
3,583.0
338.7
(13.3)
(5.3)
320.1
2,192.2
370.9
—
—
(18.0)
(408.0)
408.0
—
390.0
(20.0)
—
—
(20.0)
428.0
108.0
—
—
—
—
—
—
388.0
388.0
(388.0)
—
—
90.0
—
—
90.0
(478.0)
(120.0)
40.0
—
40.0
40.0
—
40.0
59,157.6
49,922.7
9,234.9
20.0
—
20.0
28.0
(362.0)
5,284.1
(361.0)
—
—
—
28.0
12.0
—
12.0
—
—
—
—
12.0
3.0
—
—
370.0
8.0
32.0
10.5
(21.3)
1,440.7
6,714.0
2,520.9
—
23.4
402.0
3,985.0
70.0
—
—
70.0
(38.0)
(9.0)
408.7
(13.3)
(5.3)
390.1
2,154.2
361.9
—
—
356.0
(5.0)
25.0
—
381.0
62.0
—
—
62.0
(37.0)
(9.0)
(28.0)
—
(in millions of US dollars)
Revenues
Cost of sales
Gross profit
Restructuring costs
Gain on disposal of property and
equipment and other assets
Depreciation, amortization and
impairment
Total operating expenses
Operating income
Share of earnings of joint ventures
and associated companies
EBITDA
Financial expenses
Financial revenues
Foreign exchange gain
Net financial expenses
Earnings before income taxes
Income taxes
Net earnings including non-controlling
interests
Net loss attributable to non-controlling
interests
Net earnings attributable to
shareholders of the Corporation
1,821.3
320.0
(358.0)
9.0
(29.0)
1,792.3
12.6
(3.0)
20.0
(16.0)
1.0
13.6
1,833.9
317.0
(338.0)
(7.0)
(28.0)
1,805.9
(28.0)
(1) Depreciation and interest expenses are based on our assessment of Fiscal 2020 impact.
In order to facilitate the understanding of our financial performance, we have adjusted some of our previously reported
performance measures. All adjustments related to IFRS 16 are clearly identified and are based on the calculations presented
in the tables above.
43
Alimentation Couche-Tard Inc.Annual Report © 2020
Statements of Earnings Categories
Merchandise and service revenues. In-store merchandise revenues are comprised primarily of the sale of tobacco and
alternative tobacco products, beer, wine, beverage, grocery items, candy and snacks and fresh food offerings, including quick
service restaurants. These revenues are recognized at the time of the transaction since control of goods and services is
considered transferred when customer makes payment and takes possession of the sold item. Merchandise sales also include
the wholesale of merchandise and goods to certain independent operators and franchisees made from our distribution centers
and commissaries, which are generally recognized on the passing of possession of the goods and when the transfer of the
associated risk is made. Service revenues include car wash revenues, commissions on the sale of lottery tickets and the
issuance of money orders, fees from automatic teller machines, sales of calling cards and gift cards, fees for cashing checks,
sales of postage stamps and sales of bus tickets.
Service revenues also include franchise and license fees as well as commissions from agents, and royalties from franchisees
and licensees. We also generate license fees revenues derived from the underlying sale of cannabis product through a
licensed store in Ontario, Canada.
Road transportation fuel revenues. We include in our revenues the total dollar amount of road transportation fuel sales,
including any embedded taxes when they are included in the purchase price, if we take ownership of the road transportation
fuel inventory. In the United States and in Europe, in some instances, we purchase road transportation fuel and sell it to certain
independent store operators at cost plus a mark-up. We record the full value of these revenues (cost plus mark-up) as road
transportation fuel revenues. Where we act as a selling agent for a petroleum distributor, only the commission we earn is
recorded as revenue.
Other revenues. Other revenues include sales of aviation fuel and energy for stationary engines and marine fuel (until
November 30, 2018). Other revenues also include rental income from operating leases for certain land and buildings we own.
Gross profit. Gross profit consists mainly of revenues less the cost of goods sold. Cost of goods sold is mainly comprised of
the specific cost of merchandise and road transportation fuel sold, including applicable freight less vendor rebates. For in-store
merchandise, the cost of inventory is generally determined using the retail method (retail price less a normal margin), and for
road transportation fuel, it is generally determined using the average cost method. The road transportation fuel gross margin
for stores generating commissions corresponds to the sales commission.
Operating, selling, administrative and general expenses. The main items comprising Operating, selling, administrative and
general expenses are labor, occupancy costs, electronic payment modes fees, repairs, maintenance and overhead.
Key performance indicators used by management, which can be found under “Summary Analysis of Consolidated Results of
Fiscal 2020 - Other Operating Data”, are merchandise and service gross margin, growth of same-store merchandise revenues,
road transportation fuel gross margin and growth of same-store road transportation fuel volume, return on equity and return on
capital employed.
44
Alimentation Couche-Tard Inc.Annual Report © 2020 Summary Analysis of Consolidated Results for the Fourth Quarter of Fiscal 2020
The following table highlights certain information regarding our operations for the 12-week periods ended April 26, 2020, and
April 28, 2019. CAPL refers to CrossAmerica Partners LP.
(in millions of US dollars, unless otherwise stated)
Revenues
Operating income
Net earnings attributable to shareholders of the Corporation
Selected Operating Data – excluding CAPL:
Merchandise and service gross margin(1):
Consolidated
United States
Europe
Canada
Growth of (decrease in) same-store merchandise revenues(2):
United States(3)
Europe
Canada(3)
Road transportation fuel gross margin:
United States (cents per gallon)(3)
Europe (cents per liter)
Canada (CA cents per liter)(3)
Growth of (decrease in) same-store road transportation fuel volume:
United States(3)
Europe(3)
Canada(3)
12-week period ended
12-week period ended
April 26, 2020
9,687.2
769.6
576.3
April 28, 2019
13,113.3
410.2
293.1
Variation %
(26.1)
87.6
96.6
33.5%
33.0%
40.6%
31.8%
(0.5%)
(6.5%)
4.7%
46.88
8.67
8.40
(18.3%)
(13.4%)
(23.5%)
34.6%
33.9%
41.8%
33.0%
3.4%
4.7%
4.2%
18.51
8.28
8.13
0.3%
(1.8%)
(0.4%)
(1.1)
(0.9)
(1.2)
(1.2)
153.3
4.7
3.3
(1)
(2)
(3)
Includes revenues derived from franchise fees, royalties, suppliers' rebates on some purchases made by franchisees and licensees, as well as from
wholesale merchandise.
Does not include services and other revenues (as described in footnote 1 above). Growth in Canada and in Europe is calculated based on local currencies.
For company-operated stores only.
Revenues
Our revenues were $9.7 billion for the fourth quarter of fiscal 2020, down by $3.4 billion, a decrease of 26.1% compared with
the corresponding quarter of fiscal 2019, mainly attributable to the negative impact of COVID-19 on fuel demand, to a lower
average road transportation fuel selling price and to the disposal of our interests in CAPL, which had an impact of
approximately $387.0 million, as well as by the net negative impact from the translation of revenues of our Canadian and
European operations into US dollars, which had an impact of approximately $197.0 million.
Merchandise and service revenues
Total merchandise and service revenues for the fourth quarter of fiscal 2020 were $3.2 billion, a decrease of $85.2 million
compared with the corresponding quarter of fiscal 2019. Excluding CAPL’s revenues, as well as the net negative impact from
the translation of our Canadian and European operations into US dollars, merchandise and service revenues decreased by
approximately $33.0 million or 1.0%. This decrease is primarily attributable to decreased traffic in our network partly offset by
growth in basket size. Same-store merchandise revenues decreased by 0.5% in the United States, and by 6.5% in Europe,
while they increased by 4.7% in Canada due to changes in the competitive landscape.
Road transportation fuel revenues
Total road transportation fuel revenues for the fourth quarter of fiscal 2020 were $6.3 billion, a decrease of $3.3 billion
compared with the corresponding quarter of fiscal 2019. Excluding CAPL’s revenues, as well as the net negative impact from
the translation of revenues of our Canadian and European operations into US dollars, road transportation fuel revenues
decreased by approximately $2.7 billion or 29.7%. This decrease is mostly attributable to the negative impact of COVID-19 on
fuel demand, as well as to a lower average road transportation fuel selling price, which had a negative impact of approximately
$1.0 billion. Same-store road transportation fuel volume decreased in the United States by 18.3%, in Europe by 13.4%, and in
Canada by 23.5%.
45
Alimentation Couche-Tard Inc.Annual Report © 2020 The following table shows the average selling price of road transportation fuel of our company-operated stores in our various
markets for the last eight quarters, starting with the first quarter of the fiscal year ended April 28, 2019:
Quarter
52-week period ended April 26, 2020
United States (US dollars per gallon) – excluding CAPL
Europe (US cents per liter)
Canada (CA cents per liter)
52-week period ended April 28, 2019
United States (US dollars per gallon) – excluding CAPL
Europe (US cents per liter)
Canada (CA cents per liter)
Other revenues
1st
2nd
3rd
2.66
77.35
111.16
2.76
75.07
117.95
2.55
70.86
105.14
2.72
80.56
115.22
2.51
73.92
103.47
2.42
75.28
97.59
4th
2.21
60.95
88.78
2.51
74.59
103.45
Weighted
average
2.50
71.20
103.21
2.60
76.32
107.82
Total other revenues for the fourth quarter of fiscal 2020 were $129.1 million, a decrease of $88.8 million compared with the
corresponding period of fiscal 2019. Excluding CAPL’s revenues, as well as the net negative impact from the translation of our
Canadian and European operations into US dollars, other revenues decreased by $69.6 million in the fourth quarter of
fiscal 2020, primarily driven by lower demand and lower prices in our aviation fuel activities.
Gross profit
Our gross profit was $2.3 billion for the fourth quarter of fiscal 2020, up by $312.2 million, or 15.8% compared with the
corresponding quarter of fiscal 2019, mainly attributable to higher road transportation fuel gross margin in the U.S. and in
Europe, partly offset by the negative impact of COVID-19 on fuel demand, by the disposal of our interests in CAPL, which had
an impact of approximately $38.0 million, and to the net negative impact from the translation of our Canadian and European
operations into US dollars, which had an impact of approximately $29.0 million.
Merchandise and service gross profit
In the fourth quarter of fiscal 2020, our merchandise and service gross profit was $1.1 billion, a decrease of $60.5 million
compared with the corresponding quarter of fiscal 2019. Excluding CAPL’s gross profit, as well as the net negative impact from
the translation of our Canadian and European operations into US dollars, merchandise and service gross profit decreased by
approximately $45.0 million or 3.9%, mainly attributable to lower traffic in our network due to COVID-19. Our gross margin
decreased by 0.9% in the United States to 33.0%, by 1.2% in Europe to 40.6%, and by 1.2% to 31.8% in Canada. These
performances reflect changes in our product mix towards lower margin categories.
Road transportation fuel gross profit
In the fourth quarter of fiscal 2020, our road transportation fuel gross profit was $1.2 billion, an increase of $392.3 million
compared with the corresponding quarter of fiscal 2019. Excluding CAPL’s gross profit, as well as the net negative impact from
the translation of our Canadian and European operations into US dollars, our fourth quarter road transportation fuel gross profit
increased by approximately $431.0 million or 56.8%. Our road transportation fuel gross margin was strong at 46.88¢ per gallon
in the United States, an increase of 28.37¢ per gallon, driven by the sharp decline in crude oil prices during the quarter as well
as by changes in the competitive landscape. In Europe, road transportation fuel margin was US 8.67¢ per liter, an increase of
US 0.39¢ per liter, while in Canada, it was CA 8.40¢ per liter, an increase of CA 0.27¢ per liter.
The road transportation fuel gross margin of our company-operated stores in the United States and the impact of expenses
related to electronic payment modes for the last eight quarters, starting with the first quarter of the fiscal year ended
April 28, 2019, were as follows:
(US cents per gallon)
Quarter
52-week period ended April 26, 2020
Before deduction of expenses related to electronic payment modes
Expenses related to electronic payment modes
After deduction of expenses related to electronic payment modes
52-week period ended April 28, 2019
Before deduction of expenses related to electronic payment modes
Expenses related to electronic payment modes
After deduction of expenses related to electronic payment modes
1st
2nd
3rd
4th
Weighted
average
26.86
4.70
22.16
22.70
4.67
18.03
28.29
4.63
23.66
21.88
4.55
17.33
27.04
4.54
22.50
29.42
4.31
25.11
46.88
4.97
41.91
18.51
4.40
14.11
31.19
4.70
26.49
23.60
4.50
19.10
(1) Please note that this information has been restated to reflect the cost of electronic payment expenses per corporate-store road transportation fuel gallons
instead of per total road transportation fuel gallons.
46
Alimentation Couche-Tard Inc.Annual Report © 2020
Generally, during normal economic cycles, road transportation fuel margins in the United States can be volatile from one
quarter to another but have historically trended higher over longer periods. The historical trends for Europe and Canada are
similar, while the margin volatility and expenses related to electronic payment modes are not as significant.
Other revenues gross profit
In the fourth quarter of fiscal 2020, other revenues gross profit was $33.2 million, a decrease of $19.6 million compared with
the corresponding period of fiscal 2019. Excluding CAPL’s gross profit, as well as the net negative impact from the translation
of our Canadian and European operations into US dollars, other revenues gross profit decreased by approximately $6.0 million
in the fourth quarter of fiscal 2020. The decrease is mainly attributable to lower demand of aviation fuel products.
Operating, selling, administrative and general expenses (“expenses”)
For the fourth quarter of fiscal 2020, expenses decreased by 8.0% compared with the corresponding period of fiscal 2019. If
we exclude the decrease in rent from the transition to IFRS 16 and certain items that are not considered indicative of future
trends, expenses increased by 2.3%.
Total variance, as reported
Adjusted for:
Decrease in rent expense from transition to IFRS 16
Decrease from the net impact of foreign exchange translation
Decrease in CAPL’s expenses
Decrease from higher electronic payment fees, excluding acquisitions
Increase from incremental expenses related to acquisitions
Acquisition costs recognized to earnings of fiscal 2020
Remaining variance
12-week period ended
April 26, 2020
(8.0%)
6.3%
1.7%
1.6%
1.1%
(0.2%)
(0.2%)
2.3%
Growth in expenses, amongst other items, was driven by COVID-19 related expenses, normal inflation, higher labor costs from
minimum wage increases in certain regions and incremental investments in our stores to support our strategic initiatives.
COVID-19 related expenses include, but are not limited to, an emergency appreciation pay premium of $2.50 per hour in
North America for hourly store employees and distribution center employees, the installation of plexiglass dividers and other
social distancing tools in our stores, additional cleaning and sanitizing supplies as well as masks and gloves for our
employees. We continue to rigorously focus on controlling costs throughout our organization, while ensuring we maintain the
quality of service we offer to our customers.
Earnings before interest, taxes, depreciation, amortization and impairment (EBITDA)
and adjusted EBITDA
During the fourth quarter of fiscal 2020, EBITDA increased from $655.3 million to $1.1 billion, an increase of 65.5% compared
with the same quarter last year. Excluding the specific items shown in the table below the adjusted EBITDA for the fourth
quarter of fiscal 2020 increased by $314.0 million or 42.9% compared with the corresponding period of the previous fiscal year,
mainly from higher road transportation fuel gross margins in the U.S. and in Europe, partly offset by the negative impact of
COVID-19 on our traffic, the disposal of our interests in CAPL, as well as from the net negative impact from the translation of
our Canadian and European operations into US dollars. The variation in exchange rates had a net negative impact of
approximately $6.0 million.
47
Alimentation Couche-Tard Inc.Annual Report © 2020 It should be noted that EBITDA and adjusted EBITDA are not performance measures defined by IFRS, but we, as well as
investors and analysts, consider that those performance measures facilitate the evaluation of our ongoing operations and our
ability to generate cash flows to fund our cash requirements, including our capital expenditures program and payment of
dividends. Note that our definition of these measures may differ from the one used by other public corporations.
(in millions of US dollars)
Net earnings including non-controlling interests, as reported
Add:
Income taxes
Net financial expenses
Depreciation, amortization and impairment
EBITDA
Adjusted for:
Net gain on disposal of a portion of the Corporation's U.S. wholesale fuel business
Acquisition costs
EBITDA attributable to non-controlling interests
Restructuring costs attributable to shareholders of the Corporation
Adjusted EBITDA, as previously reported
Estimated pro forma impact from transition to IFRS 16 attributable to shareholders of the Corporation
Adjusted EBITDA
12-week periods ended
April 26, 2020
April 28, 2019
578.3
145.4
53.2
307.4
1,084.3
(41.0)
2.9
(2.0)
0.9
1,045.1
—
1,045.1
289.9
45.3
78.6
241.5
655.3
—
0.4
(16.2)
2.6
642.1
89.0
731.1
Depreciation, amortization and impairment (“depreciation”)
For the fourth quarter of fiscal 2020, our depreciation expense increased by $65.9 million compared with the fourth quarter of
fiscal 2019. Excluding CAPL’s results, as well as the net negative impact from the translation of our Canadian and European
operations into US dollars, the depreciation expense increased by approximately $88.0 million, mainly driven by the additional
depreciation expense arising from right-of-use assets due to the adoption of IFRS 16, which had an impact of approximately
$84.0 million.
Net financial expenses
Net financial expenses for the fourth quarter of fiscal 2020 were $53.2 million, a decrease of $25.4 million compared with the
fourth quarter of fiscal 2019. Excluding the items shown in the table below, net financial expenses decreased by $10.0 million,
mainly attributable to the lower average cost of our long-term debt compared to the fourth quarter of fiscal 2019.
(in millions of US dollars)
Net financial expenses, as reported
Adjusted for:
Net foreign exchange gain
CAPL’s financial expenses
Estimated pro forma impact from transition to IFRS 16
Net financial expenses excluding items above
Income taxes
12-week periods ended
April 26, 2020
April 28, 2019
53.2
22.8
—
—
76.0
78.6
1.1
(7.7)
14.0
86.0
The income tax rate for the fourth quarter of fiscal 2020 was 20.1% compared with 13.5% for the corresponding period of
fiscal 2019. The income tax rate for the fourth quarter of fiscal 2020 includes a net tax benefit of $4.6 million derived from the
release of deferred tax asset valuation allowance following the disposal of a portion of our U.S. wholesale fuel business.
Excluding this adjustment, the income tax rate would have been 20.7% for the fourth quarter of fiscal 2020, an increase
compared to the fourth quarter of fiscal 2019, stemming from the impact of a different mix in our earnings across the various
jurisdictions in which we operate.
Income tax rate, as reported
Adjusted for:
Release of deferred tax asset valuation allowance
Net income tax rate excluding item above
12-week periods ended
April 26, 2020
April 28, 2019
20.1%
13.5%
0.6%
20.7%
—
13.5%
48
Alimentation Couche-Tard Inc.Annual Report © 2020
Net earnings attributable to shareholders of the Corporation (“net earnings”) and
adjusted net
the Corporation
to
(“adjusted net earnings”)
shareholders of
attributable
earnings
Net earnings for the fourth quarter of fiscal 2020 were $576.3 million, compared with $293.1 million for the fourth quarter of the
previous fiscal year, an increase of $283.2 million or 96.6%. Diluted net earnings per share stood at $0.52, compared with
$0.26 for the previous year. The translation of revenues and expenses from our Canadian and European operations into
US dollars had a net negative impact of approximately $2.0 million on net earnings of the fourth quarter of fiscal 2020.
Excluding the items shown in the table below from net earnings of the fourth quarter of fiscal 2020 and fiscal 2019, adjusted
net earnings for the fourth quarter of fiscal 2020 would have been approximately $521.0 million, compared with $289.0 million
for the fourth quarter of fiscal 2019, an increase of $232.0 million or 80.3%. Adjusted diluted net earnings per share would
have been $0.47 for the fourth quarter of fiscal 2020 compared with $0.26 for the corresponding period of fiscal 2019, an
increase of 80.8%.
The table below reconciles reported net earnings to adjusted net earnings:
(in millions of US dollars)
Net earnings attributable to shareholders of the Corporation, as reported
Adjusted for:
Net gain on disposal of a portion of the Corporation's U.S. wholesale fuel business
Net foreign exchange gain
Release of deferred tax asset valuation allowance
Acquisition costs
Restructuring costs attributable to shareholders of the Corporation
Tax impact of the items above and rounding
Adjusted net earnings attributable to shareholders of the Corporation, as previously reported
Estimated pro forma impact from transition to IFRS 16
Adjusted net earnings attributable to shareholders of the Corporation
12-week periods ended
April 26, 2020
April 28, 2019
576.3
293.1
(41.0)
(22.8)
(4.6)
2.9
0.9
9.3
521.0
—
521.0
—
(1.1)
—
0.4
2.6
—
295.0
(6.0)
289.0
It should be noted that adjusted net earnings is not a performance measure defined by IFRS, but we, as well as investors and
analysts, consider this measure useful for evaluating the underlying performance of our operations on a comparable basis.
Note that our definition of this measure may differ from the one used by other public corporations.
49
Alimentation Couche-Tard Inc.Annual Report © 2020
Summary Analysis of Consolidated Results of Fiscal 2020
The following table highlights certain information regarding our operations for the 52-week periods ended April 26, 2020,
April 28, 2019, and April 29, 2018. CAPL refers to CrossAmerica Partners LP.
(in millions of US dollars, unless otherwise stated)
Statement of Operations Data:
Merchandise and service revenues(1):
United States
Europe
Canada
CAPL
Elimination of intercompany transactions with CAPL
Total merchandise and service revenues
Road transportation fuel revenues:
United States
Europe
Canada
CAPL
Elimination of intercompany transactions with CAPL
Total road transportation fuel revenues
Other revenues(2):
United States
Europe
Canada
CAPL
Elimination of intercompany transactions with CAPL
Total other revenues
Total revenues
Merchandise and service gross profit(1):
United States
Europe
Canada
CAPL
Elimination of intercompany transactions with CAPL
Total merchandise and service gross profit
Road transportation fuel gross profit:
United States
Europe
Canada
CAPL
Total road transportation fuel gross profit
Other revenues gross profit(2):
United States
Europe
Canada
CAPL
Elimination of intercompany transactions with CAPL
Total other revenues gross profit
Total gross profit
Operating, selling, administrative and general expenses
Excluding CAPL
CAPL
Elimination of intercompany transactions with CAPL
Total operating, selling, administrative and general expenses
Restructuring costs
Gain on disposal of property and equipment and other assets
Depreciation, amortization and impairment
Excluding CAPL
CAPL
Total depreciation, amortization and impairment
Operating income
Excluding CAPL
CAPL
Elimination of intercompany transactions with CAPL
Total operating income
Net financial expenses
Net earnings including non-controlling interests
Net (earnings) loss attributable to non-controlling interests
Net earnings attributable to shareholders of the Corporation
Per Share Data:
Basic net earnings per share (dollars per share)
Diluted net earnings per share (dollars per share)
Adjusted diluted net earnings per share (dollars per share)(15)
Cash dividend per share declared for fiscal year ended (CA cents per share)
52-week period
52-week period
52-week period
2020
2019
2018
10,918.4
1,416.3
2,302.7
29.6
(0.8)
14,666.2
25,724.8
7,481.1
4,415.7
1,365.7
(288.0)
38,699.3
36.9
652.0
21.3
65.6
(8.9)
766.9
54,132.4
3,686.7
587.6
750.9
6.8
(0.8)
5,031.2
3,131.3
932.0
344.2
57.5
4,465.0
36.9
123.6
21.2
65.7
(8.9)
238.5
9,734.7
5,276.4
46.8
(9.2)
5,314.0
4.5
(83.1)
1,282.9
53.9
1,336.8
3,137.7
25.3
(0.5)
3,162.5
284.5
2,357.6
(4.0)
2,353.6
2.10
2.09
1.97
26.50
10,781.8
1,457.8
2,172.7
95.8
(2.7)
14,505.4
28,195.6
8,380.7
4,957.9
2,211.8
(444.7)
43,301.3
21.8
1,220.7
24.5
61.2
(17.3)
1,310.9
59,117.6
3,646.3
609.0
729.7
23.3
(2.3)
5,006.0
2,471.5
981.1
392.8
103.6
3,949.0
21.8
149.7
24.5
61.2
(17.3)
239.9
9,194.9
5,584.8
80.5
(19.2)
5,646.1
10.5
(21.3)
927.2
143.5
1,070.7
2,534.0
(44.7)
(0.4)
2,488.9
320.1
1,821.3
12.6
1,833.9
1.62
1.62
1.63
22.50
9,432.0
1,413.9
2,053.5
76.6
—
12,976.0
23,327.3
7,684.1
4,819.9
1,547.6
(262.4)
37,116.5
25.1
1,217.7
27.6
47.6
(16.1)
1,301.9
51,394.4
3,140.1
602.3
707.7
18.6
—
4,468.7
1,868.1
1,024.2
424.9
69.6
3,386.8
23.2
173.7
27.6
47.6
(16.1)
256.0
8,111.5
5,069.5
67.8
(12.5)
5,124.8
56.9
(17.7)
849.5
61.1
910.6
2,040.9
(0.4)
(3.6)
2,036.9
335.3
1,677.5
(6.9)
1,670.6
1.48
1.47
1.30
18.50
50
Alimentation Couche-Tard Inc.Annual Report © 2020
(in millions of US dollars, unless otherwise stated)
Other Operating Data – excluding CAPL:
Merchandise and service gross margin(1):
Consolidated
United States
Europe
Canada
Growth of same-store merchandise revenues(3):
United States(4)
Europe
Canada(4)
Road transportation fuel gross margin:
United States (cents per gallon)(4)
Europe (cents per liter)
Canada (CA cents per liter)(4)
Total volume of road transportation fuel sold:
United States (millions of gallons)
Europe (millions of liters)
Canada (millions of liters)
Growth of (decrease in) same-store road transportation fuel volume:
United States(4)
Europe(4)
Canada(4)
(in millions of US dollars, unless otherwise stated)
Balance Sheet Data(5):
Total assets (including $1.1 billion and $1.3 billion for CAPL as at April 28, 2019 and as
at April 29, 2018, respectively)
Interest-bearing debt (including $696.0 million and $536.8 million for CAPL as at
April 28, 2019 and as at April 29, 2018, respectively)(6)
Equity attributable to shareholders of the Corporation
Indebtedness Ratios(7):
Net interest-bearing debt/total capitalization(6)(8)
Leverage ratio(9)(13)
Adjusted leverage ratio(10)(13)
Returns(7):
Return on equity(11)(13)
Return on capital employed(12)(13)
52-week period
52-week period
52-week period
2020
2019
2018
34.3%
33.8%
41.5%
32.6%
2.1%
0.1%
2.8%
31.19
8.48
7.91
10,476.1
10,990.3
5,815.6
(3.9%)
(3.9%)
(6.0%)
34.6%
33.8%
41.8%
33.6%
4.1%
4.8%
5.2%
23.60
8.61
8.38
10,979.5
11,391.2
6,198.9
0.7%
(0.9%)
(1.6%)
34.5%
33.3%
42.6%
34.5%
0.8%
2.7%
0.4%
19.39
8.72
8.84
9,794.1
11,747.6
6,161.4
(0.4%)
—
(1.4%)
April 26, 2020
April 28, 2019
April 29, 2018(14)
25,679.5
10,379.3
10,066.6
0.40 : 1
1.54 : 1
1.60 : 1
24.8%
15.0%
25,033.0
23,156.7
9,575.3
8,913.7
0.48 : 1
2.09 : 1
2.18 : 1
21.9%
12.6%
8,906.7
7,560.4
0.50 : 1
2.46 : 1
3.13 : 1
24.8%
12.0%
Includes revenues derived from franchise fees, royalties, suppliers' rebates on some purchases made by franchisees and licensees, as well as from wholesale of merchandise.
Includes revenues from the rental of assets and from the sale of aviation fuel, energy for stationary engines and marine fuel (until November 30, 2018).
(1)
(2)
(3) Does not include services and other revenues (as described in footnotes 1 and 2 above). Growth in Canada and in Europe is calculated based on local currencies.
(4) For company-operated stores only.
(5) The balance sheet data as at April 28, 2019, has been adjusted for the estimated pro forma impact of IFRS 16. The previous total assets reported was $22,607.7 million, the interest-
bearing debt was $6,951.4 million and the equity attributable to shareholders of the Corporation was $8,923.2 million for the 52-week period ended April, 28, 2019. The balance sheet
data as at April 29, 2018 has not been adjusted for any estimated pro forma impact of IFRS 16.
(6) This measure is presented including the following balance sheet accounts: Current portion of long-term debt, Long-term debt, Current portion of lease liabilities, and Lease liabilities.
(7) Until November 2019, these measures are presented as if our investment in CAPL was reported using the equity method as we believe it allows a more relevant presentation of the
underlying performance of the Corporation.
(8) This measure is presented for information purposes only and represents a measure of financial condition used especially in financial circles. It represents the following calculation:
interest-bearing debt, net of cash and cash equivalents and temporary investments divided by the addition of shareholders’ equity and interest-bearing debt, net of cash and cash
equivalents and temporary investments. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other
public corporations. For the purpose of this calculation, until November 2019, CAPL’s long-term debt was excluded as it was a non-recourse debt to the Corporation, as referenced in
footnote 7. This performance measure, for the 52-week period ended April 28, 2019, has been adjusted for the estimated pro forma impact of IFRS 16 and the previously disclosed
measure was 0.39 : 1. We believe this ratio is useful to investors and analysts.
(9) This measure is presented for information purposes only and represents a measure of financial condition used especially in financial circles. It represents the following calculation:
interest-bearing debt, net of cash and cash equivalents and temporary investments divided by EBITDA (Earnings before Interest, Tax, Depreciation, Amortization and Impairment)
adjusted for specific items. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public
corporations. For the purpose of this calculation, until November 2019, CAPL’s long-term debt was excluded as it was a non-recourse debt to the Corporation, as referenced in
footnote 7. This performance measure, for the 52-week period ended April 28, 2019, has been adjusted for the estimated pro forma impact of IFRS 16 and the previously disclosed
measure was 1.61 : 1. We believe this measure is useful to investors and analysts.
(10) This measure is presented for information purposes only and represents a measure of financial condition used especially in financial circles. It represents the following calculation:
interest-bearing debt plus the product of eight times rent expense, net of cash and cash equivalents and temporary investments divided by EBITDAR (Earnings before Interest, Tax,
Depreciation, Amortization, Impairment and Rent expense) adjusted for specific items. It does not have a standardized meaning prescribed by IFRS and therefore may not be
comparable to similar measures presented by other public corporations. For the purpose of this calculation, until November 2019, CAPL’s long-term debt was excluded as it was a
non-recourse debt to the Corporation, as referenced in footnote 7. This performance measure, for the 52-week period ended April 28, 2019, has been adjusted for the estimated pro
forma impact of IFRS 16 and the previously disclosed measure was 2.29 : 1. We believe this measure is useful to investors and analysts.
(11) This measure is presented for information purposes only and represents a measure of performance used especially in financial circles. It represents the following calculation: net
earnings divided by average equity for the corresponding period. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar
measures presented by other public corporations. This performance measure, for the 52-week period ended April 28, 2019, has been adjusted for the estimated pro forma impact of
IFRS 16 and the previously disclosed measure was 22.3%. We believe this measure is useful to investors and analysts.
(12) This measure is presented for information purposes only and represents a measure of performance used especially in financial circles. It represents the following calculation: earnings
before income taxes and interests divided by average capital employed for the corresponding period. Capital employed represents total assets less short-term liabilities not bearing
interests. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations. This
performance measure, for the 52-week period ended April 28, 2019, has been adjusted for the estimated pro forma impact of IFRS 16 and the previously disclosed measure was
14.1%. We believe this measure is useful to investors and analysts.
(13) As at April 29, 2018, these measures are presented for the 52-week period ended April 29, 2018, on a pro forma basis for the acquisitions of CST and Holiday. CST’s and Holiday’s
historical earnings and balance sheet figures have been adjusted to make their presentation in line with our policies.
(14) The information as at April 29, 2018, has been adjusted based on the fair value of the assets acquired, the liabilities assumed and the goodwill for the Holiday acquisition. The
information, for the 52-week period ended April 29, 2018, has not been adjusted for the estimated pro forma impact of IFRS 16.
(15) This performance measure, for the 52-week period ended April 28, 2019, has been adjusted for the estimated pro forma impact of IFRS 16 and the previously reported adjusted
diluted net earnings per share was $1.66. The performance measure, for the 52-week period ended April 29, 2018 has not been adjusted for any estimated pro forma impact of
IFRS 16.
51
Alimentation Couche-Tard Inc.Annual Report © 2020 Revenues
For fiscal 2020, our revenues decreased by $5.0 billion or 8.4% compared with fiscal 2019, mainly attributable to the negative
impact of COVID-19 on fuel demand, to a lower road transportation fuel average selling price, to the disposal of our interests in
CAPL and of our marine fuel business, as well as to the net negative impact from the translation of revenues of our Canadian
and European operations into US dollars, which had a net negative impact of approximately $670.0 million, partly offset by
organic growth.
Merchandise and service revenues
For fiscal 2020, the growth in merchandise and service revenues was $160.8 million. Excluding CAPL’s revenues, as well as
the net negative impact from the translation of our Canadian and European operations into US dollars, merchandise and
service revenues increased by approximately $322.0 million or 2.2%. This increase is primarily attributable to organic growth,
partly offset by the impact of COVID-19 in the fourth quarter. Same-store merchandise revenues increased by 2.1% in the
United States, by 0.1% in Europe and by 2.8% in Canada, driven by the success of our rebranding activities, improvements
made to our offering, as well as by our various initiatives to drive traffic in our stores, partly offset by the negative impact of
COVID-19 on traffic toward the end of the fiscal year.
Road transportation fuel revenues
For fiscal 2020, the road transportation fuel revenues decreased by $4.6 billion compared with fiscal 2019. Excluding CAPL’s
revenues, as well as the net negative impact from the translation of our Canadian and European operations into US dollars,
road transportation fuel revenues decreased by approximately $3.4 billion or 8.2%. This decrease is mostly attributable to the
negative impact of COVID-19 on fuel demand, as well as to a lower average road transportation fuel selling price, which had a
negative impact of approximately $1.5 billion. Same-store road transportation fuel volume decreased by 3.9% in the
United States and in Europe. In Canada, same-store road transportation fuel volume decreased by 6.0%, mainly attributable to
the competitive landscape as well as to the significant drop in demand toward the end of the fiscal year due to COVID-19.
The following table shows the average selling price of road transportation fuel of our company-operated stores in our various
markets for the last eight quarters, starting with the first quarter of the fiscal year ended April 28, 2019:
Quarter
52-week period ended April 26, 2020
United States (US dollars per gallon) – excluding CAPL
Europe (US cents per liter)
Canada (CA cents per liter)
52-week period ended April 28, 2019
United States (US dollars per gallon) – excluding CAPL
Europe (US cents per liter)
Canada (CA cents per liter)
Other revenues
1st
2nd
3rd
2.66
77.35
111.16
2.76
75.07
117.95
2.55
70.86
105.14
2.72
80.56
115.22
2.51
73.92
103.47
2.42
75.28
97.59
4th
2.21
60.95
88.78
2.51
74.59
103.45
Weighted
average
2.50
71.20
103.21
2.60
76.32
107.82
Total other revenues for fiscal 2020 were $766.9 million, a decrease of $544.0 million compared with fiscal 2019. Excluding
CAPL’s revenues, as well as the net negative impact from the translation of our Canadian and European operations into
US dollars, other revenues decreased by $496.7 million for fiscal 2020, primarily driven by the disposal of our marine fuel
business during the third quarter of fiscal 2019, which had an impact of approximately $267.0 million, as well as lower demand
and lower prices in our aviation fuel activities.
Gross profit
For fiscal 2020, our gross profit was $9.7 billion, an increase of $539.8 million or 5.9% compared with fiscal 2019, mainly
attributable to higher fuel margins in the U.S. and in Europe and to organic growth in our convenience activities, partly offset by
the net negative impact from the translation of our Canadian and European operations into US dollars, which had an impact of
approximately $91.0 million.
52
Alimentation Couche-Tard Inc.Annual Report © 2020 Merchandise and service gross profit
During fiscal 2020, our merchandise and service gross profit was $5.0 billion, an increase of $25.2 million compared with
fiscal 2019. Excluding CAPL’s gross profit, as well as the net negative impact from the translation of our Canadian and
European operations into US dollars, merchandise and service gross profit increased by approximately $73.0 million or 1.5%.
This increase is mostly attributable to organic growth, partly offset by lower traffic in our network due to COVID-19 toward the
end of the fiscal year. The gross margin was steady at 33.8% in the United States, while it decreased by 0.3% in Europe, to
41.5%, due to a different product mix, and by 1.0% in Canada, to 32.6%, mainly as a result of the conversion of our Esso
stores from the agent model to the corporate model, as well as from the impact of a different product mix.
Road transportation fuel gross profit
During fiscal 2020, our road transportation fuel gross profit was $4.5 billion, an increase of $516.0 million compared with
fiscal 2019. Excluding CAPL’s gross profit, as well as the net negative impact from the translation of our Canadian and
European operations into US dollars, road transportation fuel gross profit increased by approximately $612.0 million or 15.9%,
as a result of higher fuel margins in the U.S. and in Europe, partly offset by the decrease in demand caused by COVID-19
towards the end of fiscal year. The road transportation fuel gross margin was 31.19¢ per gallon in the United States, an
increase of 7.59¢ per gallon driven by the volatility in crude oil prices during the year, to their sharp decline toward the end of
the fiscal year, as well as by changes to the competitive landscape. In Europe, road transportation fuel margin was US 8.48¢
per liter, a decrease of 0.13¢ per liter mainly as a result of the net negative impact from the translation of our European
operations into US dollars, and CA 7.91¢ per liter in Canada, a decrease of CA 0.47¢ per liter, driven by competitive pressure
in some of our markets.
The road transportation fuel gross margin of our company-operated stores in the United States and the impact of expenses
related to electronic payment modes for the last eight quarters, starting with the first quarter of the fiscal year ended
April 28, 2019, were as follows:
(US cents per gallon)
Quarter
52-week period ended April 26, 2020
Before deduction of expenses related to electronic payment modes
Expenses related to electronic payment modes(1)
After deduction of expenses related to electronic payment modes
52-week period ended April 28, 2019
Before deduction of expenses related to electronic payment modes
Expenses related to electronic payment modes(1)
After deduction of expenses related to electronic payment modes
1st
26.86
4.70
22.16
22.70
4.67
18.03
2nd
28.29
4.63
23.66
21.88
4.55
17.33
3rd
27.04
4.54
22.50
29.42
4.31
25.11
4th
46.88
4.97
41.91
18.51
4.40
14.11
Weighted
average
31.19
4.70
26.49
23.60
4.50
19.10
(1) Please note that this information has been restated to reflect the cost of electronic payment expenses per corporate-store road transportation fuel gallons
instead of per total road transportation fuel gallons.
Generally, during normal economic cycles, road transportation fuel margins in the United States can be volatile from one
quarter to another but have historically trended higher over longer periods. The historical trends for Europe and Canada are
similar, while the margin volatility and expenses related to electronic payment modes are not as significant.
Other revenues gross profit
During fiscal 2020, other revenues gross profit was $238.5 million, a decrease of $1.4 million, compared with fiscal 2019.
Excluding CAPL’s gross profit, as well as the net negative impact from the translation of our Canadian and European
operations into US dollars, other revenues gross profit decreased by approximately $5.0 million in fiscal 2020. This decrease is
mainly attributable to lower demand for other fuel products as well as by the disposal of our marine fuel business in
December 2018, which had an impact of approximately $9.0 million in fiscal 2019.
53
Alimentation Couche-Tard Inc.Annual Report © 2020 Operating, selling, administrative and general expenses (“expenses”)
For fiscal 2020, expenses decreased by 5.9% compared with fiscal 2019. If we exclude the decrease in rent from the transition
to IFRS 16 and certain items that are not considered indicative of future trends, expenses increased by 2.8%.
52-week period ended April 26, 2020
Total variance, as reported
Adjusted for:
Decrease in rent expense from transition to IFRS 16
Decrease from the net impact of foreign exchange translation
Decrease in CAPL’s expenses
Decrease from settlements and reserves adjustments for specific elements recognized to earnings of fiscal
2019(1)
Compensatory payment to CAPL for divestiture of assets recognized in fiscal 2019
Increase from incremental expenses related to acquisitions
Acquisition costs recognized to earnings of fiscal 2020
Disposal of our marine fuel business
Remaining variance
(5.9%)
6.4%
1.2%
0.6%
0.4%
0.2%
(0.1%)
(0.1%)
0.1%
2.8%
(1) During fiscal 2019, we settled various claims and adjusted our reserves in connection with specific events, which had a pre-tax negative impact of
$24.2 million on our earnings.
Growth in expenses, amongst other items, was driven by COVID-19 related expenses, normal inflation, higher labor costs from
minimum wage increases in certain regions and incremental investments in our stores to support our strategic initiatives.
COVID-19 related expenses include, but are not limited to, an emergency appreciation pay premium of $2.50 per hour in North
America for hourly store employees and distribution center employees, the installation of plexiglass dividers and other social
distancing tools in our stores, additional cleaning and sanitizing supplies as well as masks and gloves for our employees. We
continue to rigorously focus on controlling costs throughout our organization, while ensuring we maintain the quality of service
we offer to our customers. Excluding the conversion of our Esso stores from the agent model to the corporate model, the
remaining variance for fiscal 2020 would have been 2.5%.
Earnings before interest, taxes, depreciation, amortization and impairment (EBITDA)
and adjusted EBITDA
During fiscal 2020, EBITDA increased from $3.6 billion to $4.5 billion, a growth of 26.3% compared with the previous fiscal
year. Excluding the specific items shown in the table below from EBITDA of fiscal 2020 and of fiscal 2019, the adjusted
EBITDA for fiscal 2020 increased by $465.9 million or 11.9% compared with the previous fiscal year, mainly attributable to
higher road transportation fuel margins in the U.S. and in Europe and to organic growth on the convenience side, partly offset
by the negative impact of COVID-19 on our traffic. The variation in exchange rates had a net negative impact of approximately
$23.0 million.
It should be noted that EBITDA and adjusted EBITDA are not performance measures defined by IFRS, but we, as well as
investors and analysts, consider that those performance measures facilitate the evaluation of our ongoing operations and our
ability to generate cash flows to fund our cash requirements, including our capital expenditures program and payment of
dividends. Note that our definition of these measures may differ from the one used by other public corporations.
(in millions of US dollars)
Net earnings including non-controlling interests, as reported
Add:
Income taxes
Net financial expenses
Depreciation, amortization and impairment
EBITDA
Adjusted for:
EBITDA attributable to non-controlling interests
Net gain on the disposal of the Corporation's interests in CAPL
Net gain on the disposal of a portion of the Corporation's U.S. wholesale fuel business
Acquisition costs
Restructuring costs attributable to shareholders of the Corporation
Compensatory payment to CAPL for divestiture of assets, net of non-controlling interests
Gain on the disposal of the marine fuel business
Adjusted EBITDA, as previously reported
Estimated pro forma impact from transition to IFRS 16 attributable to shareholders of the Corporation
Adjusted EBITDA
52-week periods ended
April 26, 2020
April 28, 2019
2,357.6
545.9
284.5
1,336.8
4,524.8
(66.6)
(61.5)
(41.0)
6.7
4.5
—
—
4,366.9
—
4,366.9
1,821.3
370.9
320.1
1,070.7
3,583.0
(77.5)
—
—
2.2
10.5
5.0
(3.2)
3,520.0
381.0
3,901.0
54
Alimentation Couche-Tard Inc.Annual Report © 2020
Depreciation, amortization and impairment (“depreciation”)
For fiscal 2020, our depreciation expense increased by $266.1 million compared with fiscal 2019. Excluding CAPL’s results
and the $55.0 million impairment charge on CAPL’s goodwill recorded in the first quarter of fiscal 2019, as well as the net
negative impact from the translation of our Canadian and European operations into US dollars, the depreciation expense
increased by approximately $368.0 million for fiscal 2020, mainly driven by the additional depreciation expense arising from
right-of-use assets due to the adoption of IFRS 16, which had an impact of approximately $356.0 million.
Net financial expenses
Net financial expenses for fiscal 2020 were $284.5 million, a decrease of $35.6 million compared with fiscal 2019. Excluding
the items shown in the table below, net financial expenses for fiscal 2020 decreased by $65.7 million mainly attributable to our
lower average long-term debt following the repayments made, as well as to the lower average cost of our long-term debt
compared to fiscal 2019.
(in millions of US dollars)
Net financial expenses, as reported
Adjusted for:
Net foreign exchange gain
CAPL’s financial expenses
Estimated pro forma impact from transition to IFRS 16
Net financial expenses excluding items above
Income taxes
52-week periods ended
April 26, 2020
April 28, 2019
284.5
320.1
33.5
(25.6)
—
292.4
5.3
(29.3)
62.0
358.1
For fiscal 2020, the income tax rate was 18.8% compared with 16.9% for fiscal 2019. The income tax rate for fiscal 2020
includes a net tax benefit of $33.6 million derived from the release of deferred tax asset valuation allowance following the
disposal of our interests in CAPL as well as a portion of our U.S. wholesale fuel business. Excluding this adjustment, as well as
the impact of the first two transactions of the December 2018 asset exchange, the income tax rate would have been 19.9% for
fiscal 2020, an increase compared to fiscal 2019, stemming from the impact of a different mix in our earnings across the
various jurisdictions in which we operate.
Income tax rate, as reported
Adjusted for:
Release of deferred tax asset valuation allowance
Income tax expense following the asset exchange transactions with CAPL
Tax benefit stemming from the decrease of the statutory income tax rate in Sweden
Net income tax rate excluding items above
52-week periods ended
April 26, 2020
April 28, 2019
18.8%
16.9%
1.2%
(0.1%)
—
19.9%
—
—
0.3%
17.2%
55
Alimentation Couche-Tard Inc.Annual Report © 2020
Net earnings attributable to shareholders of the Corporation (“net earnings”) and
adjusted net earnings attributable to shareholders of the Corporation (“adjusted net
earnings”)
For fiscal 2020, net earnings were $2.4 billion, compared with $1.8 billion for fiscal 2019, an increase of $519.7 million or
28.3%. Diluted net earnings per share stood at $2.09, compared with $1.62 for the previous year. The translation of revenues
and expenses from our Canadian and European operations into US dollars had a net negative impact of approximately
$11.0 million on net earnings of fiscal 2020.
Excluding the items shown in the table below from net earnings of fiscal 2020 and fiscal 2019, adjusted net earnings for
fiscal 2020 would have been approximately $2.2 billion, compared with $1.8 billion for fiscal 2019, an increase of
$374.0 million or 20.3%. Adjusted diluted net earnings per share would have been $1.97 for fiscal 2020, compared with $1.63
for fiscal 2019, an increase of 20.9%.
The table below reconciles reported net earnings to adjusted net earnings:
(in millions of US dollars)
Net earnings attributable to shareholders of the Corporation, as reported
Adjusted for:
Net gain on the disposal of the Corporation's interests in CAPL
Net gain on disposal of a portion of the Corporation's U.S. wholesale fuel business
Release of deferred tax asset valuation allowance
Net foreign exchange gain
Acquisition costs
Restructuring costs attributable to shareholders of the Corporation
Income tax expense following the asset exchange transactions with CAPL
Impairment charge on CAPL’s goodwill
Tax benefit stemming from the decrease of the statutory income tax rate in Sweden
Compensatory payment to CAPL for divestiture of assets, net of non-controlling interests
Gain on the disposal of the marine fuel business
Tax impact of the items above and rounding
Adjusted net earnings attributable to shareholders of the Corporation, as previously reported
Estimated pro forma impact from transition to IFRS 16
Adjusted net earnings attributable to shareholders of the Corporation
52-week periods ended
April 26, 2020
April 28, 2019
2,353.6
1,833.9
(61.5)
(41.0)
(33.6)
(33.5)
6.7
4.5
2.7
—
—
—
—
22.1
2,220.0
—
2,220.0
—
—
—
(5.3)
2.2
10.5
—
55.0
(6.2)
5.0
(3.2)
(17.9)
1,874.0
(28.0)
1,846.0
It should be noted that adjusted net earnings is not a performance measure defined by IFRS, but we, as well as investors and
analysts, consider this measure useful for evaluating the underlying performance of our operations on a comparable basis.
Note that our definition of this measure may differ from the one used by other public corporations.
CAPL’s results
For fiscal 2020, CAPL’s results were impacted by the fact that fiscal 2020 included 8 months of activities compared to
12 months in fiscal 2019. On November 19, 2019, we disposed of our interests in CAPL.
56
Alimentation Couche-Tard Inc.Annual Report © 2020
Financial Position as at April 26, 2020
As shown by our indebtedness ratios included in the “Summary Analysis of Consolidated Results for Fiscal 2020” section and
our net cash provided by operating activities, our financial position is solid.
Our total consolidated assets amounted to $25.7 billion as at April 26, 2020, an increase of $3.1 billion over the balance as at
April 28, 2019, primarily due to a higher cash position following borrowings on our term revolving unsecured operating credit
and refinancing of US senior unsecured notes, as well as to the adoption of IFRS 16, partly offset by the disposal of our
interests in CAPL and the net negative impact of the variation in exchange rates at the balance sheet date. It should be noted
that, as permitted under the specific transition provisions in the standard, we did not adjust our balance sheet as at
April 28, 2019, to reflect the impact of IFRS 16 on our assets and liabilities.
During the 52-week periods ended April 26, 2020 and April 28, 2019, we recorded a return on capital employed1 of 15.0% and
of 12.6%, respectively.
Significant balance sheet variations are explained as follows:
Accounts receivable
Accounts receivable decreased by $607.9 million, from $1.9 billion as at April 28, 2019, to $1.3 billion as at April 26, 2020. The
decrease stems mainly from a lower selling price for road transportation fuel and decline in fuel traffic toward the end of the
fiscal year, as well as the negative net impact of approximately $58.0 million from the variation in exchange rates at the
balance sheet date.
Property and equipment
Property and equipment decreased by $993.4 million, from $11.1 billion as at April 28, 2019, to $10.1 billion as at
April 26, 2020, mainly as a result of the depreciation, amortization and impairment expense, the disposal of our interests in
CAPL, the adoption of IFRS 16, as finance leases are now part of the right-of-use assets, as well as the net negative impact of
approximately $226.0 million from the exchange rates variation at the balance sheet date. These were partly offset by the
investments we made to our network.
Right-of-use assets
Right-of-use assets stood at $2.5 billion as at April 26, 2020, following the adoption of IFRS 16, partly offset by depreciation,
amortization and impairment expense of fiscal 2020 as well as by the disposal of our interests in CAPL.
Intangible assets
Intangible assets decreased by $393.6 million, from $944.4 million as at April 28, 2019, to $550.8 million as at April 26, 2020,
mainly due to the disposal of our interests in CAPL, the adoption of IFRS 16, and the depreciation, amortization and
impairment expense, as well as the negative net impact of approximately $31.0 million from the variation in exchange rates at
the balance sheet date.
Accounts payable and accrued liabilities
Accounts payable and accrued liabilities decreased by $1.1 billion, from $3.9 billion as at April 28, 2019, to $2.8 billion as at
April 26, 2020. The decrease stems mainly from lower cost for road transportation fuel purchases and the decrease in fuel
purchases in response to the decline in traffic toward the end of fiscal 2020, as well as by the net impact of the weakening of
the Canadian and European currencies against the US dollar, which was approximately $101.0 million.
1 Please refer to the section “Summary Analysis of Consolidated Results of Fiscal 2020” of this MD&A for additional information on this performance measure not
defined by IFRS. This performance measure, for the 52-week period ended April 28, 2019, has been adjusted for the estimated impact of IFRS 16, the
previously reported return on capital employed was 14.1%.
57
Alimentation Couche-Tard Inc.Annual Report © 2020 Long-term debt and current portion of long-term debt
Long-term debt and current portion of long-term debt increased by $779.1 million, from $7.0 billion as at April 28, 2019, to
$7.7 billion as at April 26, 2020, mainly as a result of borrowings on our our term revolving unsecured operating credit and the
issuance of new US dollar senior unsecured notes, partly offset by the repayment of Canadian and US dollar senior unsecured
notes, the disposal of our interests in CAPL, the adoption of IFRS 16, as our finance leases are now part of the lease liabilities,
as well as the net impact of the weakening of the Canadian dollar, the Euro and the Norwegian krone against the US dollar,
which was approximately $88.0 million.
Leases liabilities and current portion of lease liabilities
Long-term lease liabilities and current portion of lease liabilities stood at $2.6 billion as at April 26, 2020, following the adoption
of IFRS 16, partly offset by the principal portion of the lease payments made during fiscal 2020 as well as by the disposal of
our interests in CAPL.
Equity
Equity attributable to shareholders of the Corporation amounted to $10.1 billion as at April 26, 2020, up $1.1 billion compared
with April 28, 2019, mainly reflecting net earnings for fiscal 2020, partly offset by the impact of share repurchases, the other
comprehensive loss, the dividends declared during fiscal 2020, as well as by the repurchase of non-controlling interests in
CST Fuel Supply LP. For the 52-week periods ended April 26, 2020, and April 28, 2019, we recorded a return on equity1 of
24.8% and 21.9%, respectively.
Non-controlling interests were nil as at April 26, 2020, a decrease of $257.9 million compared to April 28, 2019, mostly
reflecting the disposal of our interests in CAPL.
Liquidity and Capital Resources
Our principal sources of liquidity are our net cash provided by operating activities and borrowings available under our revolving
unsecured credit facility. Our principal uses of cash are to repay our debt, finance our acquisitions and capital expenditures,
pay dividends and repurchase shares, as well as to provide for working capital. We expect that cash generated from
operations and borrowings available under our revolving unsecured credit facility will be adequate to meet our liquidity needs
in the foreseeable future.
Our credit facility is detailed as follows:
Term revolving unsecured operating credit, maturing in December 2024 (“operating credit D”)
Credit agreement consisting of a revolving unsecured facility of a maximum amount of $2,525.0 million. As at April 26, 2020,
$1.5 billion of the term revolving unsecured operating credit D has been used. As at the same date, the weighted average
effective interest rate was 2.110% and standby letters of credit in the amount of $11.9 million were outstanding.
During fiscal 2020, this operating credit's maturity was extended to December 2024.
During the month of May 2020, subsequent to the end of fiscal 2020, we fully repaid the $1.5 billion borrowed on our operating
credit D.
Available liquidities
As at April 26, 2020, a total of approximately $1.0 billion was available under our operating credit D and we were in compliance
with the restrictive covenants and ratios imposed by the credit agreement at that date. Thus, as at the same date, we had
access to approximately $4.7 billion through our available cash and our operating credit D.
1 Please refer to the section “Summary Analysis of Consolidated Results of Fiscal 2020” of this MD&A for additional information on this performance measure not
defined by IFRS.
58
Alimentation Couche-Tard Inc.Annual Report © 2020 Selected Consolidated Cash Flow Information
(in millions of US dollars)
Operating activities
Net cash provided by operating activities
Investing activities
52-week periods ended
April 26, 2020
April 28, 2019
Variation
3,720.7
3,083.6
637.1
Purchase of property and equipment, intangible assets and other assets
(1,408.2)
(1,145.1)
Proceeds from the disposal of the Corporation's interests in CAPL, net of transaction
costs and cash and cash equivalent disposed
Proceeds from disposal of property and equipment and other assets
Business acquisitions
Change in restricted cash
Investment in Fire & Flower
Proceeds from disposal of marine fuel business
Net cash used in investing activities
Financing Activities
Issuance of US-dollar-denominated senior unsecured notes, net of financing costs
Net increase (decrease) in term revolving unsecured operating credit D
Repayment of senior unsecured notes
Share repurchases
Principal elements of lease payments and net decrease in other debts
Cash dividends paid
Settlement of derivative financial instruments
Distributions paid to non-controlling interests
Repurchase of non-controlling interests in CST Fuel Supply LP
Net increase in CAPL senior secured revolving credit facility
Decrease in acquisition facility
Exercise of stock options
Net cash provided by (used in) financing activities
Credit ratings
S&P Global Ratings – Corporate credit rating
Moody’s - Senior unsecured notes credit rating
Operating activities
185.2
89.7
(89.5)
28.5
(19.5)
—
(1,213.8)
1,484.1
1,460.0
(1,241.4)
(470.8)
(380.0)
(215.7)
(100.6)
(47.5)
(13.4)
6.0
—
—
480.7
BBB
Baa2
—
215.6
(13.1)
(16.9)
—
24.3
(935.2)
—
(1,357.4)
—
—
(52.2)
(181.3)
3.0
(56.5)
—
3.9
(413.5)
0.2
(2,053.8)
BBB
Baa2
(263.1)
185.2
(125.9)
(76.4)
45.4
(19.5)
(24.3)
(278.6)
1,484.1
2,817.4
(1,241.4)
(470.8)
(327.8)
(34.4)
(103.6)
9.0
(13.4)
2.1
413.5
(0.2)
2,534.5
During fiscal 2020, net cash from our operations reached $3.7 billion, up $637.1 million compared with fiscal 2019, mainly due
to higher net earnings as well as to the impact of the payment on principal elements of leases, now classified as financing
activities.
Investing activities
During fiscal 2020, net investments in property and equipment, intangible assets and other assets amounted to $1.3 billion,
and business acquisitions amounted to $89.5 million. Those cash outflows were partly offset by the net proceeds from the
disposal of our interests in CAPL, which amounted to $185.2 million.
The investments were primarily for the replacement of equipment in some of our stores in order to enhance our offering of
products and services, for our rebranding project, for the addition of new stores, for the ongoing improvement of our network,
as well as for information technology.
Financing activities
During fiscal 2020, we issued US-dollar-denominated senior unsecured notes in the amount of $1.5 billion, borrowed a net
amount of $1.5 billion on our operating credit D, repaid $1.2 billion on our senior unsecured notes, repurchased Class B
subordinate voting shares for a net amount of $470.8 million and repaid $380.0 million on the principal element of our lease
liabilities and other debts. We also paid dividends in the amount of $215.7 million.
59
Alimentation Couche-Tard Inc.Annual Report © 2020
Contractual Obligations and Commercial Commitments
Set out below is a summary of our material contractual obligations as at April 26, 2020(1):
(in millions of US dollars)
Contractual obligations
Long-term debt
Lease liabilities
Total
2021
2022
2023
2024
2025
Thereafter
Total
1,915.5
454.3
2,369.8
195.0
416.1
611.1
1,359.3
352.3
1,711.6
159.5
319.5
479.0
650.2
270.0
920.2
5,831.3
1,382.1
7,213.4
10,110.8
3,194.3
13,305.1
(1)
The summary does not include the payments required under defined benefit pension plans.
Fuel Purchase Obligations
United States (in millions of gallons)
Europe (in millions of liters)
Canada (in millions of liters)
2021
2022
2023
2024
2025
Thereafter
Total
1,904.5
6,416.2
3,956.7
1,467.4
1,209.0
1,206.9
1,204.0
3,762.0
10,753.8
121.2
121.2
80.8
—
—
6,739.4
3,904.2
3,641.7
3,009.7
3,009.7
28,163.1
45,685.1
Long-term debt. As at April 26, 2020, our long-term debt totaled $7.7 billion, detailed as follows:
i. US-dollar-denominated senior unsecured notes totaling $4.0 billion, Canadian-dollar-denominated senior unsecured notes
totaling $1.4 billion (CA $2.0 billion), Euro-denominated senior unsecured notes totaling $806.8 million (€750.0 million) and
NOK-denominated senior unsecured notes totaling $63.3 million (NOK 675.0 million), divided as follows:
a. Notional amount of CA $250.0 million, maturing on November 1, 2022, bearing interest at 3.899%.
b. Notional amount of CA $300.0 million, maturing on August 21, 2020, bearing interest at 4.214%.
c. Notional amount of CA $700.0 million, maturing on June 2, 2025, bearing interest at 3.600%.
d. Notional amount of NOK 675.0 million, maturing on February 18, 2026, bearing interest at 3.850%.
e. Notional amount of €750.0 million, maturing on May 6, 2026, bearing interest at 1.875%.
f. Notional amount of $1.0 billion, maturing on July 26, 2022, bearing interest at 2.700%.
g. Notional amount of CA $700.0 million, maturing on July 26, 2024, bearing interest at 3.056%.
h. Notional amount of $1.0 billion, maturing on July 26, 2027, bearing interest at 3.550%.
i. Notional amount of $500.0 million, maturing on July 26, 2047, bearing interest at 4.500%.
j. Notional amount of $750.0 million, maturing on January 25, 2030, bearing interest at 2.950%.
k. Notional amount of $750.0 million, maturing on January 25, 2050, bearing interest at 3.800%.
ii. Borrowings of $1.5 billion under our term revolving unsecured operating credit facility denominated in US dollar, maturing in
December 2024. The weighted average effective interest rate was 2.110% as at April 26, 2020.
iii. Other long-term debts of $4.9 million, including various notes payable.
Leases liabilities. We lease an important portion of our assets mainly for the rental of stores, land, equipment and office
buildings. Generally, our real estate leases in North America are for primary terms of 5 to 20 years, which include the initial
base term and renewal option(s) when applicable. In Europe, the lease terms range from less than 12 months contracts to
contracts with maturities up to more than 50 years and also include options to renew at market prices when applicable. When
contracts are determined to contain a lease, lease liabilities and related right-of-use assets are included in our consolidated
balance sheets. Under certain leases, we are subject to additional rent based on revenues as well as future escalations in the
minimum lease amount.
Fuel purchase obligations. We have entered into various fuel purchase agreements, which require us to purchase minimum
volume of road transportation fuel annually. Failure to satisfy the minimum purchase requirements could result in termination of
the contract, penalties for shortfall volumes, change in the pricing of the products, payment to the applicable providers of a
predetermined percentage of the commitments and repayments of a portion of rebates received. We have generally exceeded
such minimum requirements in the past and do not expect that any potential failure to meet those in the foreseeable future
could lead to the materialization of any of the outcomes described above. As at April 26, 2020, our fuel purchase obligation
consisted of multiple contracts under which we have 10.8 billion of gallons and 52.4 billion of liters to be purchased over the
next years.
Contingencies. Various claims and legal proceedings have been initiated against us in the normal course of our operations and
through acquisitions. Although the outcome of such matters is not predictable with assurance, we have no reason to believe
that the outcome of any such current matter could reasonably be expected to have a materially adverse impact on our financial
position, results of operations or our ability to carry on any of our business activities.
60
Alimentation Couche-Tard Inc.Annual Report © 2020
We are covered by insurance policies that have significant deductibles. At this time, we believe that we are adequately covered
through the combination of insurance policies and self-insurance. Future losses which exceed insurance policy limits or, under
adverse interpretations, could be excluded from coverage would have to be paid out of general corporate funds. In association
with our workers' compensation policies, we issue letters of credit as collateral for certain policies.
Guarantees. We assigned a number of lease agreements for premises to third parties. Under some of these agreements, we
retain ultimate responsibility to the landlord for payment of amounts under the lease agreements, should the sub lessees fail to
pay. As at April 26, 2020, the total future lease payments under such agreements are approximately $14.1 million and the fair
value of the guarantee is not significant. Historically, we have not made any significant payments in connection with these
indemnification provisions and we do not expect to make any in the foreseeable future. We have also issued guarantees to
third parties, and on behalf of third parties, for maximum undiscounted future payments totaling $12.9 million. These
guarantees primarily relate to financial guarantee commitments under car rental agreements and on behalf of retailers in
Sweden. Guarantees on behalf of retailers in Sweden comprise items such as guarantees towards retailers’ store inventory, in
addition to guarantees towards leased store equipment. The carrying amount and fair value of the guarantee commitments
recognized in the balance sheet at April 26, 2020 were not significant.
We also issue surety bonds for a variety of business purposes for our own operations, including surety bonds for taxes, lottery
sales, wholesale distribution and alcoholic beverage sales. In most cases, a municipality or state governmental agency
requires the surety bonds as a condition of operating a store in that area.
Other commitments. We have entered into various property purchase agreements, as well as product purchase agreements
which require us to purchase minimum amounts or quantities of merchandise annually. Failure to satisfy the minimum
purchase requirements could result in termination of the contract, penalties for shortfall volumes, change in the pricing of the
products, payment to the applicable providers of a predetermined percentage of the commitments and repayments of a portion
of rebates received. We have generally exceeded such minimum requirements in the past and do not expect that any potential
failure to meet those in the foreseeable future could lead to the materialization of any of the outcomes described above.
Off-Balance Sheet Arrangements
In the normal course of business, we had outstanding letters of credit for an amount of $83.5 million. Other than those letters
of credit, we have no other off-balance sheet activities. Our future commitments are included under “Long term debt” in the
table above.
61
Alimentation Couche-Tard Inc.Annual Report © 2020 Selected Quarterly Financial Information
Our 52-week reporting cycle is divided into quarters of 12 weeks each except for the third quarter, which comprises 16 weeks.
When a fiscal year, such as fiscal 2023, contains 53 weeks, the fourth quarter comprises 13 weeks. The following is a
summary of selected consolidated financial information derived from our interim consolidated financial statements for each of
the eight most recently completed quarters.
We have adopted IFRS 16 retrospectively from April 29, 2019, but have not restated comparatives for fiscal year 2019, as
permitted under the specific transition provisions in the standard. Therefore, the cumulative effect of initially applying the new
standard was recognized in the opening balance sheet on April 29, 2019 and comparatives for the 2019 fiscal year continue to
be reported under IAS 17.
(in millions of US dollars, except per share data)
52-week period ended April 26, 2020
52-week period ended April 28, 2019
Quarter
Weeks
Revenues
Operating income before depreciation, amortization and
impairment
Depreciation, amortization and impairment
Operating income
Share of earnings of joint ventures and associated companies
Net financial expenses
Net earnings including non-controlling interests
Net (earnings) loss attributable to non-controlling interests
Net earnings attributable to shareholders of the
Corporation
Net earnings per share
Basic
Diluted
4th
12 weeks
3rd
16 weeks
2nd
12 weeks
1st
12 weeks
4th
12 weeks
3rd
16 weeks
2nd
12 weeks
1st
12 weeks
9,687.2 16,604.2 13,678.0 14,163.0 13,113.3 16,515.0 14,702.8 14,786.5
1,077.0 1,274.6 1,088.9 1,058.8
651.7 1,140.2
864.8
902.9
307.4
769.6
7.3
53.2
578.3
(2.0)
406.1
316.2
307.1
241.5
305.2
222.5
868.5
772.7
751.7
410.2
835.0
642.3
5.1
6.5
6.6
3.6
7.3
5.4
84.2
60.1
87.0
78.6
90.1
73.7
301.5
601.4
7.1
77.7
663.9
579.4
536.0
289.9
611.8
477.0
442.6
(4.0)
(0.8)
2.8
3.2
0.3
(3.9)
13.0
576.3
659.9
578.6
538.8
293.1
612.1
473.1
455.6
$0.52
$0.52
$0.59
$0.51
$0.48
$0.26
$0.54
$0.42
$0.59
$0.51
$0.48
$0.26
$0.54
$0.42
$0.40
$0.40
The volatility of road transportation fuel gross margins, mostly in the United States, seasonality and changes in the exchange
rates have an impact on the variability of our quarterly net earnings.
62
Alimentation Couche-Tard Inc.Annual Report © 2020
Analysis of Consolidated Results for the Fiscal Year Ended April 28, 2019
Revenues
For fiscal 2019, our revenues increased by $7.7 billion or 15.0% compared with fiscal 2018, mainly attributable to the
contribution from acquisitions, to a higher average road transportation fuel selling price and to organic growth, partly offset by
the net negative impact from the translation of revenues of our Canadian and European operations into US dollars.
Merchandise and service revenues
For fiscal 2019, the growth in merchandise and service revenues was $1.5 billion. Excluding CAPL’s revenues, as well as the
net negative impact from the translation of our Canadian and European operations into US dollars, merchandise and service
revenues increased by $1.6 billion or 12.7%. This increase is primarily attributable to the contribution from acquisitions, which
amounted to approximately $1.0 billion, as well as to organic growth. Same-store merchandise revenues increased by 4.1% in
the United States, by 4.8% in Europe and by 5.2% in Canada, driven by the success of our rebranding activities,
improvements made to our offering, as well as by our various initiatives to drive traffic in our stores.
Road transportation fuel revenues
The growth in road transportation fuel revenues was $6.2 billion for fiscal 2019. Excluding CAPL’s revenues, as well as the net
negative impact from the translation of our Canadian and European operations into US dollars, road transportation fuel
revenues increased by $6.2 billion or 17.4%. This increase is attributable to the impact of a higher average road transportation
fuel selling price, which had a positive impact of approximately $3.5 billion, as well as to the contribution from acquisitions,
which amounted to approximately $3.1 billion, partly offset by lower revenues in our wholesale business. Same-store road
transportation fuel volume increased by 0.7% in the United States, while it decreased by 0.9% in Europe and by 1.6% in
Canada, strongly impacted at the beginning of the year by the transition to a new loyalty program in our Esso stores.
The following table shows the average selling price of road transportation fuel of our company-operated stores in our various
markets for the last eight quarters, starting with the first quarter of the fiscal year ended April 29, 2018:
Quarter
52-week period ended April 28, 2019
United States (US dollars per gallon) – excluding CAPL
Europe (US cents per liter)
Canada (CA cents per liter)
52-week period ended April 29, 2018
United States (US dollars per gallon) – excluding CAPL
Europe (US cents per liter)
Canada (CA cents per liter)
Other revenues
1st
2nd
3rd
4th
2.76
75.07
117.95
2.21
61.39
99.81
2.72
80.56
115.22
2.47
68.23
101.46
2.42
75.28
97.59
2.30
71.19
108.11
2.51
74.59
103.45
2.51
78.32
110.39
Weighted
average
2.60
76.32
107.82
2.37
70.52
102.85
Total other revenues for fiscal 2019 were $1.3 billion, an increase of $9.0 million compared with fiscal 2018. Excluding CAPL’s
revenues, other revenues decreased by $3.4 million in fiscal 2019. The decrease is primarily driven by the disposal of our
marine fuel business, partly offset by an increase in other fuel products average selling price.
Gross profit
Our gross profit was $9.2 billion for fiscal 2019, up by $1.1 billion, or 13.4% compared with fiscal 2018, mainly attributable to
the contribution from acquisitions, to higher fuel margins in the U.S. and to organic growth, partly offset by the net negative
impact from the translation of our Canadian and European operations into US dollars.
Merchandise and service gross profit
During fiscal 2019, our merchandise and service gross profit was $5.0 billion, an increase of $537.3 million compared with
fiscal 2018. Excluding CAPL’s gross profit, as well as the net negative impact from the translation of our Canadian and
European operations into US dollars, merchandise and service gross profit increased by approximately $583.0 million or
13.1%. This increase is mostly attributable to the contribution from acquisitions, which amounted to approximately
$340.0 million, and to our organic growth. The gross margin was 33.8% in the United States, an increase of 0.5% and 41.8%
in Europe, a decrease of 0.8%, due to a different product mix, while it was 33.6% in Canada, a decrease of 0.9%, mainly as a
result of the conversion of our Esso stores from the agent model to the corporate model, as well as from the increase in taxes
on cigarettes and other tobacco products.
63
Alimentation Couche-Tard Inc.Annual Report © 2020 Road transportation fuel gross profit
During fiscal 2019, our road transportation fuel gross profit was $3.9 billion, an increase of $562.2 million compared with
fiscal 2018. Excluding CAPL’s gross profit, as well as the net negative impact from the translation of our Canadian and
European operations into US dollars, road transportation fuel gross profit increased by approximately $586.0 million or 17.7%,
as a result of acquisitions and higher fuel margins. The road transportation fuel gross margin was 23.60¢ per gallon in the
United States, an increase of 4.21¢ per gallon, US 8.61¢ per liter in Europe, a decrease of 0.11¢ per liter mainly as a result of
the net negative impact from the translation of our European operations into US dollars, and CA 8.38¢ per liter in Canada, a
decrease of CA 0.46¢ per liter, driven by competitive pressure in some of our markets.
The road transportation fuel gross margin of our company-operated stores in the United States and the impact of expenses
related to electronic payment modes for the last eight quarters, starting with the first quarter of the fiscal year ended
April 29, 2018, were as follows:
(US cents per gallon)
52-week period ended April 28, 2019
Before deduction of expenses related to electronic payment modes
Expenses related to electronic payment modes (1)
After deduction of expenses related to electronic payment modes
52-week period ended April 29, 2018
Before deduction of expenses related to electronic payment modes
Expenses related to electronic payment modes (1)
After deduction of expenses related to electronic payment modes
1st
22.70
4.67
18.03
20.75
3.79
16.96
2nd
21.88
4.55
17.33
24.7
4.31
20.39
3rd
29.42
4.31
25.11
15.66
4.06
11.60
4th
18.51
4.40
14.11
17.29
3.86
13.43
Weighted
average
23.60
4.50
19.10
19.39
4.02
15.38
(1) Please note that this information has been restated to reflect the cost of electronic payment expenses per corporate-store road transportation fuel gallons
instead of per total road transportation fuel gallons.
As demonstrated by the table above, road transportation fuel margins in the United States can be volatile from one quarter to
another but tend to be relatively stable over longer periods. Margin volatility and expenses related to electronic payment
modes are not as significant in Europe and Canada.
Other revenues gross profit
In fiscal 2019, other revenues gross profit was $239.9 million, a decrease of $16.1 million compared with fiscal 2018.
Excluding CAPL’s gross profit, other revenues gross profit decreased by $28.5 million in fiscal 2019. The decrease is primarily
driven by lower demand and increased costs for other fuel products, as well as the disposal of our marine fuel business, which
had an impact of approximately $3.0 million on fiscal 2019.
Operating, selling, administrative and general expenses (“expenses”)
For fiscal 2019, expenses increased by 10.2% compared with fiscal 2018, but increased by only 3.7% if we exclude certain
items that are not considered indicative of future trends:
52-week period ended April 28, 2019
Total variance, as reported
Adjusted for:
Increase from incremental expenses related to acquisitions
Decrease from the net impact of foreign exchange translation
Increase from higher electronic payment fees, excluding acquisitions
Increase from settlements and reserves adjustments for specific elements recognized to earnings of fiscal
Acquisition costs recognized to earnings of fiscal 2018
Increase in CAPL’s expenses
Incremental costs from our global brand initiatives recognized to earnings of fiscal 2018
Additional costs incurred following Hurricanes Harvey and Irma recognized to earnings of fiscal 2018
Negative goodwill recognized to earnings of fiscal 2018
Compensatory payment to CAPL for divestiture of assets recognized to earnings of fiscal 2019
Remaining variance
10.2%
(6.4%)
1.4%
(0.9%)
(0.6%)
0.2%
(0.2%)
0.1%
0.1%
(0.1%)
(0.1%)
3.7%
(1) During fiscal 2019, we settled various claims and adjusted our reserves in connection with specific events of the year, which had a pre-tax negative impact
of $24.2 million on our earnings.
Excluding the conversion of our Esso stores from the agent model to the corporate model, as well as the impact from changes
in some assumptions driven by external factors included in the calculation of our provisions, the remaining variance for
fiscal 2019 would have been 3.4%. Growth in expenses, amongst other items, was driven by normal inflation, higher minimum
wages in certain regions and higher expenses to support our growth and strategy. We continue to rigorously focus on
controlling costs throughout our organization, while ensuring we maintain the quality of service we offer to our customers.
64
Alimentation Couche-Tard Inc.Annual Report © 2020 Earnings before interest, taxes, depreciation, amortization and impairment (EBITDA)
and adjusted EBITDA
During fiscal 2019, EBITDA increased from $3.0 billion to $3.6 billion, a growth of 20.3%. Excluding the specific items shown in
the table below from EBITDA of fiscal 2019 and fiscal 2018, the adjusted EBITDA for fiscal 2019 increased by $540.0 million or
18.1%, mainly through the contribution of higher fuel margins in the U.S., acquisitions and organic growth, partly offset by a
higher level of expenses, and the net negative impact from the translation of our Canadian and European operations into
US dollars. Acquisitions contributed approximately $269.0 million to the adjusted EBITDA of fiscal 2019, while the variation in
exchange rates had a net negative impact of approximately $45.0 million.
It should be noted that EBITDA and adjusted EBITDA are not performance measures defined by IFRS, but we, as well as
investors and analysts, consider that those performance measures facilitate the evaluation of our ongoing operations and our
ability to generate cash flows to fund our cash requirements, including our capital expenditures program and payment of
dividends. Note that our definition of these measures may differ from the one used by other public corporations.
(in millions of US dollars)
Net earnings including non-controlling interests, as reported
Add:
Income taxes
Net financial expenses
Depreciation, amortization and impairment
EBITDA
Adjusted for:
EBITDA attributable to non-controlling interests
Restructuring costs attributable to shareholders of the Corporation
Compensatory payment to CAPL for divestiture of asset, net of non-controlling interests
Gain on the disposal of the marine fuel business
Acquisition costs
Gain on disposal of a terminal
Gain on investment in CST
Incremental costs related to hurricanes
Incremental costs from our global brand initiatives
Negative goodwill
Adjusted EBITDA
52-week periods ended
April 28, 2019
1,821.3
April 29, 2018
1,677.5
370.9
320.1
1,070.7
3,583.0
(77.5)
10.5
5.0
(3.2)
2.2
—
—
—
—
—
56.1
335.3
910.6
2,979.5
(49.5)
51.7
—
—
11.8
(11.5)
(8.8)
6.6
3.0
(2.8)
3,520.0
2,980.0
Depreciation, amortization and impairment (“depreciation”)
For fiscal 2019, our depreciation expense increased by $160.1 million, including the $55.0 million impairment charge on
CAPL’s goodwill recorded in the first quarter of fiscal 2019. Excluding CAPL’s results, the depreciation expense increased by
$77.7 million for fiscal 2019, mainly driven by the contribution from our acquisitions, the replacement of equipment, the addition
of new stores and the ongoing improvement of our network.
Net financial expenses
Net financial expenses for fiscal 2019 were $320.1 million, a decrease of $15.2 million compared with fiscal 2018. Excluding
the items shown in the table below, net financial expenses increased by $28.6 million, mainly attributable to our higher average
long-term debt in connection with our recent acquisitions, partly offset by the repayments made.
(in millions of US dollars)
Net financial expenses, as reported
Adjusted for:
Net foreign exchange gain (loss)
CAPL’s financial expenses
Net financial expenses excluding items above
52-week periods ended
April 28, 2019
April 29, 2018
320.1
5.3
(29.3)
296.1
335.3
(48.4)
(19.4)
267.5
65
Alimentation Couche-Tard Inc.Annual Report © 2020
Income taxes
For fiscal 2019, the income tax rate was 16.9% compared with 20.6% for fiscal 2018, when excluding the net tax benefit of
$288.3 million stemming from the “U.S. Tax Cuts and Jobs Act”, as well as an adjustment for a tax benefit stemming from an
internal reorganization of fiscal 2018. The income tax rate for fiscal 2019 includes a net tax benefit of $6.2 million derived from
the evaluation of our deferred income tax balances following the decrease of the statutory income tax rate in Sweden.
Excluding this adjustment, the income tax rate would have been 17.2% for fiscal 2019, a decrease compared to fiscal 2018,
stemming from a lower statutory income tax rate in the U.S., as well as from the impact of a different mix in our earnings
across the various jurisdictions.
Net earnings attributable to shareholders of the Corporation (“net earnings”) and
adjusted net earnings attributable to shareholders of the Corporation (“adjusted net
earnings”)
For fiscal 2019, net earnings were $1.8 billion, compared with $1.7 billion for fiscal 2018, an increase of $163.3 million or 9.8%.
Diluted net earnings per share stood at $1.62, compared with $1.47 the previous year. The translation of revenues and
expenses from our Canadian and European operations into US dollars had a net negative impact of approximately
$30.0 million on net earnings of fiscal 2019.
Excluding the items shown in the table below from net earnings of fiscal 2019 and fiscal 2018, adjusted net earnings for
fiscal 2019 would have been approximately $1.9 billion, compared with $1.5 billion for fiscal 2018, an increase of
$402.0 million or 27.3%. Adjusted diluted net earnings per share would have been $1.66 for fiscal 2019, compared with $1.30
for fiscal 2018, an increase of 27.7%. The table below reconciles reported net earnings to adjusted net earnings:
(in millions of US dollars)
Net earnings attributable to shareholders of the Corporation, as reported
Adjusted for:
Impairment charge on CAPL’s goodwill
Restructuring costs attributable to shareholders of the Corporation
Tax benefit stemming from the decrease of the statutory income tax rate in Sweden
Net foreign exchange (gain) loss
Compensatory payment to CAPL for divestiture of assets, net of non-controlling interests
Gain on the disposal of the marine fuel business
Acquisition costs
Tax benefit stemming from the “U.S. Tax Cuts and Jobs Act” attributable to shareholders of the
Corporation
Accelerated depreciation and amortization expense
Tax benefit stemming from an internal reorganization
Gain on disposal of a terminal
Gain on investment in CST
Incremental costs related to hurricanes
Incremental costs from our global brand initiatives
Negative goodwill
Tax impact of the items above and rounding
Adjusted net earnings attributable to shareholders of the Corporation
52-week periods ended
April 28, 2019
1,833.9
April 29, 2018
1,670.6
55.0
10.5
(6.2)
(5.3)
5.0
(3.2)
2.2
—
—
—
—
—
—
—
—
(17.9)
1,874.0
—
51.7
—
48.4
—
—
11.8
(270.1)
19.0
(13.4)
(11.5)
(8.8)
6.6
3.0
(2.8)
(32.5)
1,472.0
It should be noted that adjusted net earnings is not a performance measure defined by IFRS, but we, as well as investors and
analysts, consider this measure useful for evaluating the underlying performance of our operations on a comparable basis.
Note that our definition of this measure may differ from the one used by other public corporations.
CAPL’s results
For fiscal 2019, CAPL’s results were impacted by higher road transportation fuel prices as well as by the fact that fiscal 2018
included 9 months of activities compared to 12 months in fiscal 2019, since CAPL was acquired toward the end of the first
quarter of fiscal 2018.
66
Alimentation Couche-Tard Inc.Annual Report © 2020
Internal Controls over Financial Reporting
We maintain a system of internal controls over financial reporting designed to safeguard assets and ensure that financial
information is reliable. We also maintain a system of disclosure controls and procedures designed to ensure, in all material
respects, the reliability, completeness and timeliness of the information we disclose in this MD&A and other public disclosure
documents. Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in
reports filed with securities regulatory agencies is recorded and/or disclosed on a timely basis, as required by law, and is
accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure. As at April 26, 2020, our management, following its
assessment, certifies the design and operating effectiveness of the Corporation’s disclosure controls and procedures.
As a results of the adoption of IFRS 16, we adjusted our internal controls and implemented processes to enable the adoption
of the new standard.
We undertake ongoing evaluations of the effectiveness of our internal controls over financial reporting and implement control
enhancements, when appropriate. As at April 26, 2020, our management and our external auditors reported that these internal
controls were effective.
Critical Accounting Policies and Estimates
Estimates. This MD&A is based on our consolidated financial statements, which have been prepared in accordance with IFRS.
These standards require us to make certain estimates and assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. On an ongoing basis, we review our estimates. These estimates are based on
our best knowledge of current events and actions that we may undertake in the future. Actual results could differ from those
estimates. The most significant accounting judgments and estimates that we have made in the preparation of the consolidated
financial statements are discussed along with the relevant accounting policies when applicable and relate primarily to the
following topics: vendor rebates, useful lives of tangible and intangible assets, income taxes, employee future benefits,
provisions, impairment of tangible and intangible assets, lease terms and business combinations.
As at April 26, 2020, we performed an assessment of the impact of the uncertainties around the outbreak of the novel strain of
the coronavirus, specifically identified as COVID-19 pandemic, on the carrying amount of our assets and liabilities. This
assessment, which required the use of significant judgments and estimates, had no material impact on our consolidated
financial statements for the fiscal year ended April 26, 2020. We assessed that the uncertainties around the impact of
COVID-19 could generate, in future reporting periods, a significant risk of material adjustment to the carrying amounts of the
following assets and liabilities: property and equipment, intangible assets with finite useful lives, goodwill and intangible assets
with indefinite useful lives, deferred income tax assets, right-of-use assets, net pension benefit plans and contractual
obligations. As an emerging risk, the duration and full financial effect of the COVID-19 pandemic are unknown, and accordingly
estimates of the extent to which the COVID-19 may materially and adversely affect us are subject to significant uncertainties.
Inventory. Our inventory is comprised mainly of products purchased for resale including tobacco products and alternative
tobacco products, fresh goods, beer, wine, beverage, grocery items, candy and snacks, other and road transportation fuel.
Inventories are valued at the lesser of cost and net realizable value. The cost of merchandise is generally valued based on the
retail price less a normal margin and the cost of road transportation fuel inventory is generally determined according to the
average cost method. Inherent in the determination of margins are certain management judgments and estimates, which could
affect ending inventory valuations and results of operations.
Impairment of long-lived assets. Property and equipment are tested for impairment, should events or circumstances indicate
that their book value may not be recoverable, as measured by comparing their net book value to their recoverable amount,
which corresponds to the higher of fair value less costs to sell and value in use. Should the carrying amount of long-lived
assets exceed their recoverable amount, an impairment loss in the amount of the excess would be recognized. Our evaluation
of the existence of impairment indicators is based on market conditions and our operational performance. The variability of
these factors depends on a number of conditions, including uncertainty about future events. These factors could cause us to
conclude that impairment indicators exist and require that impairment tests be performed, which could result in determining
that the value of certain long-lived assets is impaired, resulting in a write-down of such long-lived assets.
Goodwill and other intangible assets. Goodwill and other intangible assets with indefinite-life are evaluated for impairment
annually, or more often if events or changes in circumstances indicate that the value of certain goodwill or intangibles may be
impaired. For the purpose of this impairment test, management uses estimates and assumptions to establish the fair value of
our cash-generating units and intangible assets. If these assumptions and estimates prove to be incorrect, the carrying value
of our goodwill or other intangible assets may be overstated. Our annual impairment test is performed in the first quarter of
each fiscal year.
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Alimentation Couche-Tard Inc.Annual Report © 2020 Asset retirement obligations. Asset retirement obligations primarily relate to estimated future costs to remove road
transportation fuel storage tanks and are based on our prior experience in removing these tanks, estimated tank useful life,
remaining lease terms for those tanks installed on leased properties, external estimates and governmental regulatory
requirements. A discounted liability is recorded for the present value of an asset retirement obligation, with a corresponding
increase to the carrying value of the related long-lived asset at the time a storage tank is installed. To determine the initial
recorded liability, the future estimated cash flows are discounted using a pre-tax rate that reflects current market assessments
of the time value of money, and the risks specific to the liability.
Following the initial recognition of the asset retirement obligation, the carrying amount of the liability is increased to reflect the
passage of time and then adjusted for variations in the current market-based discount rate or the scheduled underlying cash
flows required to settle the liability.
Environmental costs. We provide for estimated future site remediation costs to meet government standards for known site
contaminations, when such costs can be reasonably estimated. Estimates of the anticipated future costs for remediation
activities at such sites are based on our prior experience with remediation sites and consideration of other factors such as the
condition of the site’s contamination, location of sites and experience of the contractors performing the environmental
assessments and remediation work. In order to determine the initial recorded liability, the present value of estimated future
cash flows was calculated using a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the liability.
In most of the U.S. states in which we operate, with the exception of Alaska, California, Florida, Iowa, Maryland, New York,
Oregon, Texas, Washington, West Virginia and Wisconsin, there is a state fund to cover the cost of certain environmental
remediation activities after the applicable trust fund deductible is met, which varies by state. These state funds provide
insurance for motor fuel facilities operations to cover some of the costs of cleaning up certain environmental contamination
caused by the use of road transportation fuel equipment. Road transportation fuel storage tank registration fees and/or a motor
fuel tax in each of the states finance the trust funds. We pay annual registration fees and remits sales taxes to applicable
states. Insurance coverage and deductibles differ from state to state.
Income taxes. The income tax expense recorded to earnings is the sum of the Deferred income taxes and Current income
taxes that are not recognized in Other comprehensive income (loss) or directly in Equity.
We use the balance sheet liability method to account for income taxes. Under this method, deferred tax assets and liabilities
are determined based on differences between the carrying amounts and tax bases of assets and liabilities, using enacted or
substantively enacted tax rates and laws, as appropriate, at the date of the consolidated financial statements for the years in
which the temporary differences are expected to reverse. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred tax liabilities are recognized for all taxable temporary differences associated with investments in subsidiaries and
interests in joint ventures, except where we are able to control the reversal of the temporary difference and it is probable that
the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary
differences associated with such investments and interests are only recognized to the extent that it is probable that there will
be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse
in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities, and when they relate to income taxes levied by the same taxation authority, and we intend to settle our
current tax assets and liabilities on a net basis.
We are subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the worldwide
provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain.
We recognize liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the
final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the
current and deferred income tax assets and liabilities in the period in which such determination is made.
Obligations related to general liability and workers' compensation. In the United States and Ireland, we are self-insured for
certain losses related to general liability and workers’ compensation. The expected ultimate cost for claims incurred as of the
consolidated balance sheet date is discounted and is recognized as a liability. This cost is estimated based on analysis of our
historical data and actuarial estimates. In order to determine the initial recorded liability, the present value of estimated future
cash flows is calculated using a pre-tax rate that reflects current market assessments of the time value of money and the risks
specific to the liability.
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Alimentation Couche-Tard Inc.Annual Report © 2020 Accounting standard adopted during the current year
Leases
On April 29, 2019, we adopted IFRS 16 Leases which replaces IAS 17, Leases. This new standard requires lessees to
recognize and record on the balance sheet a lease liability reflecting future lease payments and a right-of-use asset for
virtually all lease contracts except with respect to lease contracts that meet limited exception criteria
We have adopted IFRS 16 retrospectively from April 29, 2019, but have not restated comparative figures for fiscal year 2019,
as permitted under the specific transition provisions in the standard. Therefore, the cumulative effect of initially applying the
new standard was recognized in the opening balance sheet on April 29, 2019 and comparative figures for fiscal year 2019
continue to be reported under IAS 17 and related interpretations, including IFRIC 4 Determining Whether an Arrangement
Contains a Lease.
IFRS 16 introduces significant changes to the lessee accounting by removing the distinction between operating and finance
lease and requiring the recognition of a right-of-use asset and a lease liability at commencement for all leases, except for
short-term leases and leases of low value assets. In contrast to lessee accounting, the requirement for lessor accounting have
remained largely unchanged.
Refer to Note 3, 14 and 18 of our consolidated financial statements of the year ended April 26, 2020 for further details on these
changes.
Business Risk
We are constantly looking to control and improve our operations. In this perspective, identification and management of risks
are key components of such activities. We have identified and assessed key risk factors that could negatively impact our
objectives and their ensuing performance.
We manage risks on an ongoing basis and implement a series of measures designed to mitigate key risks described in the
present section as well as their financial impact.
Pandemic, epidemic or outbreak of an infectious disease. The widespread outbreak of an illness including the COVID-19
pandemic or any other communicable disease, or any other public health crisis, could adversely affect our business, results of
operations and financial condition. Changes in operations in response to such outbreak, whether self-imposed or due to
governmental or other authority, could materially impact financial results and may include temporary closures of facilities,
temporary or long-term labor shortages or disruptions, temporary or long-term impacts on supply chains and distribution
channels, temporary or long-term restrictions on cross-border commerce and travel, greater currency volatility, and increased
risks to IT systems, networks and digital services.
Uncertain economic conditions resulting from a pandemic, epidemic or outbreak may, in the short or long term, adversely
impact operations and the financial performance of the Corporation and each of its operating segments. These could include
the loss of consumer confidence and spend, greater currency volatility, consequences on the financial condition of our
customers, suppliers and other counterparties.
Changes in customer behaviour. In the road transportation fuel and convenience business sector, customer traffic is generally
driven by consumer preferences and spending trends, growth of road traffic and trends in travel and tourism. A decline in the
number of potential customers using our fuel stations and convenience stores due to changes in consumer preferences,
changes in discretionary consumer spending or modes of transportation could adversely impact our business, financial
condition and results of operations. Additionally, developments regarding climate change and the effects of greenhouse gas
emissions on climate change and the environment may decrease the demand for our major product, petroleum-based fuel.
Attitudes toward our product and its relationship to the environment and the green movement may significantly affect our sales
and ability to market our product. New technologies developed to steer the public toward non-fuel dependent means of
transportation may create an environment with negative attitude toward fuel, thus affecting the public’s attitude toward our
major product and potentially having a material effect on our business, financial condition and results of operations. Further,
new technologies developed to improve fuel efficiency or governmental mandates to improve fuel efficiency may result in
decreased demand for petroleum-based fuel, which could have a material effect on our business, financial condition and
results of operations.
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Alimentation Couche-Tard Inc.Annual Report © 2020 Road transportation fuel. Our results are sensitive to the changes in road transportation fuel prices and gross margin. Factors
beyond our control such as market-driven changes in supply terms, road transportation fuel price fluctuations due to, among
other things, general political and economic conditions, as well as the market’s limited ability to absorb road transportation fuel
prices fluctuations, are factors that could influence road transportation fuel selling price and related gross margin. During
fiscal 2020, road transportation fuel revenues accounted for approximately 71.0% of our total revenues, yet the road
transportation fuel gross margin represented about only 46.0% of our overall gross profits.
Tobacco products. Tobacco products represent our largest product category of merchandise and service revenues. For
fiscal 2020, tobacco products represented approximately 40.0% and 21.0% of total merchandise and service revenues and
gross profits, respectively. Significant increases in wholesale cigarette pricing, significant increases or structural changes in
tobacco related taxes, current and future legislation and national and local campaigns to discourage smoking, or prevent use
of tobacco products, competition of illicit trade and introduction of smoking alternatives may have an adverse impact on the
demand for tobacco products, and may therefore adversely affect our revenues and profits in light of the competitive
landscape and consumer sensitivity to the price of such products.
Legislative and regulatory requirements. Our operations are subject to extensive regulations, including regulations relating to
the sale and labeling of alcohol, tobacco and nicotine products, products containing cannabis (through a licensed store), and
products containing cannabidiol (CBD), various food preparation, packaging, safety and product quality requirements, lottery
and related products and other age-restricted products laws and regulations, minimum wage laws, overtime and other
employment laws and regulations, data privacy laws, compliance with the Payment Card Industry Data Security Standards,
securities laws, and tax laws and regulations. In addition, convenience store operations are subject to numerous
environmental laws and regulations that are discussed under “Environmental laws and regulations”.
We currently incur substantial operating and capital costs for compliance with existing health, safety, environmental and other
laws and regulations applicable to our operations. Such, laws and regulations are subject to change and it is expected that,
given the nature of our business, we will continue to be subject to increasingly stringent health, safety, environmental laws and
regulations, and other laws and regulations that may increase the cost of operating our business above currently expected
levels and require substantial future capital and other expenditures. As a result, there can be no assurance that the effect of
any future laws and regulations or any changes to existing laws and regulations, or their current interpretation, on our
business, financial condition and results of operations would not be material.
If we fail to comply with any laws and regulations or permit limitations or conditions, or fail to obtain any necessary permits or
registrations, or to extend current permits or registrations upon expiry of their terms, or to comply with any restrictive terms
contained in our current permits or registrations, we may be subject to, among other things, civil and criminal penalties and, in
certain circumstances, the temporary or permanent curtailment or shutdown of a portion of our operations.
In addition, the sale of products containing cannabidiol (CBD) in the United States is based on our position that, with the
passing of the U.S. Agricultural Improvement Act of 2018 (also known as the 2018 Farm Bill), hemp and hemp products were
permanently removed from the U.S. Controlled Substances Act and out of the jurisdiction of the U.S. Drug Enforcement
Administration (DEA). There is a risk that our interpretation of the U.S. legislation is inaccurate or that it will be successfully
challenged by U.S. federal or state authorities. A successful challenge to such position by a U.S. state or federal authority
could have an adverse impact on our operations and results, including as a result of civil and criminal penalties, damages,
fines, the curtailment of a portion of our operations or asset seizures and the denial of regulatory applications, as well as on
our reputation.
Sensitive information – data protection. In the normal course of our business as a fuel and merchandise retailer, we are in
receipt of personal data from our customers as well as other sensitive information regarding our employees, business partners
and vendors. While we have invested significant amounts in the protection of our information technology and maintain what we
believe are appropriate security controls over individually identifiable customer, employee and vendor data provided to us, a
breakdown or a breach in our systems that results in the unauthorized release of individually identifiable customer or other
sensitive data could nonetheless occur and have a material effect on our reputation, operating results and financial condition.
Such a breakdown or breach could also materially increase the costs we incur to protect against such risks. A material failure
on our part to comply with regulations relating to our obligations to protect such sensitive data or to the privacy rights of our
customers, employees and others could subject us to fines or other regulatory sanctions and potentially to lawsuits.
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Alimentation Couche-Tard Inc.Annual Report © 2020 Environmental laws and regulations. Our operations, particularly those relating to the storage, transportation and sale of fuel
products, are subject to numerous environmental laws and regulations in the countries in which we operate. These include
laws and regulations governing the quality of fuel products, ground pollution and emissions and discharges into air and water,
the implementation of targets regarding the use of certain bio-fuel or renewable energy products, the handling and disposal of
hazardous wastes, the use of vapor reduction systems to capture fuel vapor, and the remediation of contaminated sites.
Environmental requirements, and the enforcement and interpretation of these requirements, change frequently and have
generally become more stringent over time. Under various national, provincial, state and local laws and regulations, we may,
as the owner or operator, be liable for the costs of removal or remediation of contamination at our current or former sites,
whether or not we knew of, or caused, the presence of such contamination. We may also be subject to litigation costs, fines
and other sanctions as a result of our failure to comply with these requirements.
Our business may also be affected by laws and regulations addressing global climate change and the role played in it by fossil
fuel combustion and the resulting carbon emissions. Some jurisdictions in which we operate have enacted measures to limit
carbon emissions, and such measures increase the costs of petroleum-based fuels above what they otherwise would be and
may adversely affect the demand for road transportation fuel. Similarly, adoption of other environmental protection measures
affecting the petroleum supply chain, such as more stringent requirements applicable to the exploration, drilling, and
transportation of crude oil and to the refining and transportation of petroleum products, may also increase the costs of
petroleum-based fuels with similar effects on demand for road transportation fuel. The impact of such developments,
individually or in combination, could adversely affect our sales of road transportation fuel and associated gross profit.
Tax incentives and other subsidies in different legislations in which we operate have also made renewable fuels as well as
alternative powered and energy-efficient vehicles more competitive than they otherwise would have been, which may
adversely impact our business, financial condition and results of operations.
Information technology systems. We depend on information technology systems (“IT systems”) to manage numerous aspects
of our business transactions and to provide complete and reliable information to management. Our IT systems are an essential
component of our business and growth strategies, and obsolescence of or a serious disruption to our IT systems could
significantly limit our ability to manage and operate our business efficiently. These systems are vulnerable to, among other
things, damage and interruption from power outage or natural disasters, computer system and network failures, loss of
telecommunications services, physical and electronic loss of data, security breaches, cyberattacks, computer viruses and laws
and regulations necessitating mandatory upgrades and timelines with which we may not be able to comply. Any serious
disruption could adversely affect our operations, our competitive position and/or reputation, and could lead to claims that could
have an adverse effect on profitability.
Acquisitions. Acquisitions have been and should continue to be a significant part of our growth strategy. Our ability to identify
and complete strategic acquisitions in the future may be limited by different factors, including the number of attractive
acquisition targets with motivated sellers, internal demands on our resources and, to the extent necessary, our ability to obtain
regulatory approval and financing on satisfactory terms for larger acquisitions, if at all.
Achieving anticipated benefits and synergies of an acquisition will depend in part on whether the operations, systems,
management and cultures of our corporation and the acquired business can be integrated in an efficient and effective manner
and whether the presumed bases or sources of synergies produce the benefits anticipated. We may not be able to achieve
anticipated synergies and cost savings for an acquisition for many reasons, including contractual constraints, an inability to
take advantage of expected synergistic savings and increased operating efficiencies, loss of key employees, or changes in tax
laws and regulations. The process of integrating an acquired business may lead to greater than expected operating costs,
significant one-time write-offs or restructuring charges, customer loss and business disruption (including, without limitation,
difficulties in maintaining relationships with employees, customers, or suppliers). Failure to successfully integrate an acquired
business may have an adverse effect on our business, financial condition and results of operations.
Although we perform a due diligence investigation of the businesses or assets that we acquire, there may be liabilities or
expenses of the acquired business or assets that we do not uncover during our due diligence investigation and for which we,
as a successor owner, may be responsible. The discovery of any material liabilities relating to an acquisition could have a
material adverse effect on our business, financial condition and results of operations.
Competition. The industries and geographic areas in which we operate are highly competitive and marked by a constant
change in terms of the number and type of retailers offering the products and services found in our stores. We compete with
other convenience store chains, independent convenience stores, gas station operators, large and small food retailers, quick
service restaurants, local pharmacies and pharmacy chains and dollar stores. There can be no assurance that we will be able
to compete successfully against our competitors. Our business may also be adversely affected if we do not sustain our ability
to meet customer requirements relative to price, quality, customer service and service offerings.
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Alimentation Couche-Tard Inc.Annual Report © 2020 Recruitment and retention of employees. We are dependent on our ability to attract and retain a strong management team and
key employees. If, for any reason, we are not able to attract and retain sufficient and appropriately skilled people, our
business, our financial results and our ability to achieve our strategic objectives may be compromised.
Electronic payment modes. We are exposed to significant fluctuations in expenses related to electronic payment modes
resulting from large changes in road transportation fuel retail prices, because the majority of this expense is based on a
percentage of the retail prices of road transportation fuel. For fiscal 2020, a variation of 10.0% in our expenses associated with
electronic payment modes would have had an impact of approximately $0.04 on earnings per share on a diluted basis.
Tax laws and liabilities. We are subject to extensive tax obligations imposed by multiple jurisdictions, including direct and
indirect taxes, payroll taxes, franchise taxes, foreign withholding taxes and property taxes. New or changes to existing tax laws
and regulations could result in increased tax expenses or liabilities in the future and could materially and adversely impact our
financial condition, results of operations and cash flows. Additionally, many tax obligations are subject to periodic audits by tax
authorities which could result in penalties and interest payments.
Dependence on third party suppliers. Our fuel business is dependent upon the supply of refined oil products from a relatively
limited number of suppliers and upon a distribution network serviced principally by third party tanker trucks. In the case of
disruption to our suppliers' supply chain, this can have a significant effect on our ability to receive refined oil products for
resale, or results in us paying higher cost to obtain such products.
Litigation. In the ordinary course of business, we are a defendant in a number of legal proceedings, suits, and claims common
to companies engaged in our business and an adverse outcome in such proceedings could adversely affect our business,
financial condition and results of operations. Effectively, convenience store businesses and other foodservices operators can
be adversely affected by litigation and complaints from customers or government agencies resulting from food quality, illness,
or other health or environmental concerns or operating issues stemming from one or more locations. Lack of fresh food
handling experience among our workforce increases the risk of food borne illness resulting in litigation and reputational
damage. Adverse publicity about these allegations may negatively potentially affect us, regardless of whether the allegations
are true, by discouraging customers from purchasing fuel, merchandise or food at one or more of our convenience stores. We
could also incur significant liabilities if a lawsuit or claim results in a decision against us. Even if we are successful in defending
such litigation, our litigation costs could be significant, and the litigation may divert time and money away from our operations
and adversely affect our performance or our ability to continue operating our stores.
Brand image and reputation. Trademarks and other proprietary rights are important to the Corporation’s competitive position
and we benefit from a well-recognized brand. If the Corporation is unsuccessful in protecting its intellectual property rights, or if
another party prevails in litigation claiming any rights thereto, the value of the brand could be diminished, causing customer
confusion and materially adversely impacting our business and financial results. Failure to maintain product safety and quality
could materially adversely affect our brand image and reputation and lead to potential product liability claims (including class-
action), government agency investigations and damages.
Seasonality and natural disasters. Weather conditions can have an impact on our revenues as historical purchase patterns
indicate that our customers increase their transactions and also purchase higher margin items when weather conditions are
favourable. We have operations in the Southeast and West Coast regions of the United States and, although these regions are
generally known for their mild weather, they are susceptible to severe storms, hurricanes, earthquakes and other natural
disasters.
Hazards and risks associated with fuel products. Our operations expose us to certain risks, particularly at our terminals and
other storage facilities, where large quantities of fuel are stored, and at our fuel stations. These risks include equipment failure,
work accidents, fires, explosions, vapour emissions, spills and leaks at storage facilities and/or in the course of transportation
to or from our or a third party’s terminal, fuel stations or other sites. In addition, we are also exposed to the risk of accidents
involving the tanker trucks used in our fuel product distribution system. These types of hazards and accidents may cause
personal injuries or the loss of life, business interruptions and/or property, equipment and environmental contamination and
damage. Further, we may be subject to litigation, compensation claims, governmental fines or penalties or other liabilities or
losses in relation to such incidents and accidents and may incur significant costs as a result. Such incidents and accidents
may also affect our reputation or our brands, leading to a decline in the sales of our products and services, and may adversely
impact our business, financial condition and results of operations.
Indebtedness. We currently have $6.2 billion of bonds with an average effective interest rate of 3.316% with the latest maturity
date being January 25, 2050. This level of indebtedness could have important consequences, such as allocating a portion of
cash flows from operations to the payment of interests on the indebtedness and other financial obligations, and thus making it
unavailable for other purposes and potentially affecting the corporation’s ability to obtain additional financing. The credit
arrangements contain restrictive covenants that may limit our ability to incur, assume or permit to exist additional
indebtedness, guarantees or liens. They also require the corporation to comply with certain coverage ratio tests which may
prevent the corporation from pursuing certain business opportunities or taking certain actions.
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Alimentation Couche-Tard Inc.Annual Report © 2020 Exchange rate. The functional currency of our parent Company is the Canadian dollar. As such, our investments in our U.S.
and European operations are exposed to net changes in currency exchange rates. Should changes in currency exchange
rates occur, the amount of our net investment in our U.S. and European operations could increase or decrease. From time to
time, we use cross-currency interest rate swap agreements to hedge a portion of this risk.
We are also exposed to foreign currency risk with respect to a portion of our long-term debt denominated in US dollars,
Norwegian-krone and Euro-denominated senior unsecured notes and cross-currency interest rate swaps. As at April 26, 2020,
all else being equal, a hypothetical variation of 5.0% of the US dollar would have had a net impact of $19.0 million on Other
comprehensive income (loss) which would be offset by equivalent amounts from the hedged net investments. For the cash and
cash equivalent denominated in foreign currencies, as at April 26, 2020 and with all other variables held constant, a
hypothetical variation of 5.0% of the various foreign currencies would have had a net impact of $152.1 million on Net earnings
attributable to shareholders of the Corporation, which would be partially offset by a net impact of $112.5 million from the long-
term debts denominated in US dollars not designated as net investment hedges of foreign operations.
We use the US dollar as our reporting currency. As such, changes in currency exchange rates could materially increase or
decrease our foreign currency-denominated net assets on consolidation which would increase or decrease, as applicable,
shareholders’ equity. In addition, changes in currency exchange rates will affect the translation of the revenue and expenses of
our Canadian and European operations and will result in lower or higher net earnings than would have occurred had the
exchange rate not changed.
In addition to currency translation risks, we incur a currency transaction risk whenever one of our subsidiaries enters into a
contract with customer or supplier labelled in a different currency than its functional currency. Given the volatility of exchange
rates, we may not be able to manage our currency transaction and/or translation risks effectively, and volatility in currency
exchange rates could have an adverse effect on our business, financial condition and results of operations.
Credit risk. We are exposed to credit risk arising from our indexed deposit contract including an embedded total return swap
and cross-currency interest rate swaps when these swaps result in a receivable from financial institutions. We do not currently
use derivative instruments to mitigate this risk.
Interest rates. We are exposed to interest rate fluctuations associated with changes in the short-term interest rate. Borrowings
under our credit facilities bear interest at variable rates, and other debt we incur could likewise bear interest at variable rates.
As at April 26, 2020, we carried a variable rate debt of approximately $1.5 billion. Based on the amount of our variable rate
debt as at April 26, 2020, a one percentage point increase in interest rates would not have a significant impact on our earnings
per share on a diluted basis. If market interest rates increase, variable-rate debt will create higher debt service requirements,
which could adversely affect our cash flows. We do not currently use derivative instruments to mitigate this risk. We could also
be exposed to a risk of change in cash flows due to changes in interest rates on future debt issuance. To mitigate this risk, we
can enter into derivative instruments in order to hedge the interest rates on forecasted debt issuance.
Liquidity. Liquidity risk is the risk that we will encounter difficulties in meeting our obligations associated with financial liabilities
and lease liabilities. We are exposed to this risk mainly through our long-term debt, accounts payable and accrued expenses,
lease agreements and derivative financial instruments when their fair value is unfavorable for us. Our liquidities are provided
mainly by cash flows from operating activities and borrowings available under our revolving credit facilities.
Accounts receivable. We are exposed to risk related to the creditworthiness and performance of our customers, suppliers and
contract counterparties. As of April 26, 2020, we had outstanding accounts receivable totaling $1.3 billion. This amount
primarily consists of vendor rebates due from our suppliers, credit card receivables, receivables arising from the sale of fuel
and other products to independent franchised or licensed fuel station operators as well as amounts receivable from other
industrial and commercial clients. Contracts with longer payment cycles or difficulties in enforcing contracts or collecting
accounts receivable could lead to material fluctuations in our cash flows and could adversely impact our business, financial
condition and results of operations.
Insurance. We carry comprehensive liability, fire and extended coverage insurance on most of our facilities, with policy
specifications and insured limits customarily carried in our industry for similar properties. There can be no assurance that we
will be able to continue to obtain such insurance on favourable terms or at all. Some types of losses, such as losses resulting
from wars, acts of terrorism, pandemics, or natural disasters, generally are not insured because they are either uninsurable or
not economically practical.
Economic conditions. Our revenues may be negatively influenced by changes in global, national, regional and/or local
economic variables and consumer confidence. Changes in economic conditions could adversely affect consumer spending
patterns, travel and tourism in certain of our market areas.
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Alimentation Couche-Tard Inc.Annual Report © 2020 Global operations. We have significant operations in multiple jurisdictions throughout the world. Some of the risks inherent in
the scope of our international operations include: the difficulty of enforcing agreements and collecting receivables through
certain foreign legal systems, more expansive legal rights of foreign labor unions and employees, foreign currency exchange
rate fluctuations, the potential for changes in local economic conditions, potential tax inefficiencies in repatriating funds from
foreign subsidiaries and foreign exchange controls and restrictive governmental actions, such as restrictions on transfer or
repatriation of funds and trade protection matters, including prohibitions or restrictions on acquisitions or joint ventures. Any of
these factors could materially and adversely affect our business, financial condition and results of operations.
Corporate structure. We are a holding company and essentially all of our assets consist of the capital stock of our material
subsidiaries. We conduct substantially all of our business through our subsidiaries, which generate substantially all of our
revenues. Consequently, our cash flows and ability to complete current or desirable future enhancement opportunities are
dependent on the earnings of our subsidiaries and the distribution of those earnings to us. The ability of these entities to pay
dividends and other distributions will depend on their operating results and will be subject to applicable laws and regulations
which require that solvency and capital standards be maintained by such companies and contractual restrictions contained in
the instruments governing their debt. In the event of a bankruptcy, liquidation or reorganization of any of our material
subsidiaries, holders of indebtedness and trade creditors may be entitled to payment of their claims from the assets of those
subsidiaries before us.
Acts of war or terrorism. Acts of war and terrorism could impact general economic conditions and the supply and price of crude
oil. Such events could adversely impact our business, financial condition and results of operations.
Outlook
For fiscal 2021, we are adapting from the impact of the pandemic to better server our customers and make their lives a little
easier every day. At the same time, we are progressing with our strategic vision by developing a differentiated customer
experience both inside our stores and at our fuel courts, adapting and innovating our offering to meet changing customer
needs, driving operational excellence and scale, growing the network, enhancing our people’s talent base, and putting
sustainability at the forefront of our priorities. These actions bring us closer to reaching our five-year ambition of doubling the
business.
It is because of our solid foundation that we are in a robust position to face the headwinds of the pandemic. We will continue,
as always, to look for and seize opportunities to grow the business, always focusing on creating value for our employees,
partners and shareholders.
June 29, 2020
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Alimentation Couche-Tard Inc.Annual Report © 2020 Management’s Report
The consolidated financial statements of Alimentation Couche-Tard Inc. and the financial information contained in this Annual
Report are the responsibility of management. This responsibility is applied through a judicious choice of accounting procedures
and principles, the application of which requires the informed judgment of management. The consolidated financial statements
have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International
Accounting Standards Board (“IASB”), and were approved by the Board of Directors. In addition, the financial information
included in the Annual Report is consistent with the consolidated financial statements.
Alimentation Couche-Tard Inc. maintains accounting and administrative control systems which, in the opinion of management,
ensure the reasonable accuracy, relevance and reliability of financial information and the well-ordered, efficient management of
the Corporation’s affairs.
The Board of Directors is responsible for approving the consolidated financial statements included in this Annual Report,
primarily through its Audit Committee. This committee, which holds periodic meetings with members of management as well as
with the independent auditors, reviewed the consolidated financial statements of Alimentation Couche-Tard Inc. and
recommended their approval to the Board of Directors.
The consolidated financial statements for the fiscal years ended April 26, 2020, and April 28, 2019, were audited by
PricewaterhouseCoopers LLP, a partnership of Chartered Professional Accountants, and their report indicates the extent of
their audit and their opinion on the consolidated financial statements.
June 29, 2020
/s/ Brian Hannasch
Brian Hannasch
President and
Chief Executive Officer
/s/ Claude Tessier
Claude Tessier
Chief Financial Officer
75
Alimentation Couche-Tard Inc.Annual Report © 2020
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting for Alimentation
Couche-Tard Inc., as such term is defined in Canadian securities regulations. With our participation, management carried out
an evaluation of the effectiveness of our internal control over financial reporting for the fiscal year ended April 26, 2020. The
framework on which such evaluation was based is contained in the report entitled Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). This evaluation includes
the review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating
effectiveness of controls and a conclusion on this evaluation. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, and that the degree of compliance
with the policies or procedures may deteriorate. Based on this evaluation, management concluded that Alimentation Couche-
Tard Inc.’s internal control over financial reporting was effective as at April 26, 2020.
PricewaterhouseCoopers LLP, a partnership of Chartered Professional Accountants, audited the effectiveness of Alimentation
Couche-Tard Inc.’s internal control over financial reporting as at April 26, 2020 and expressed an unqualified opinion thereon,
which is included herein.
June 29, 2020
/s/ Brian Hannasch
Brian Hannasch
President and
Chief Executive Officer
/s/ Claude Tessier
Claude Tessier
Chief Financial Officer
76
Alimentation Couche-Tard Inc.Annual Report © 2020
Independent auditor’s report
To the Shareholders of
Alimentation Couche-Tard Inc.
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position
of Alimentation Couche-Tard Inc. and its subsidiaries (together, the Corporation) as at April 26, 2020 and April 28, 2019, and its
financial performance and its cash flows for the years then ended in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board (IFRS).
What we have audited
The Corporation’s consolidated financial statements comprise:
•
•
•
•
•
•
The consolidated balance sheets as at April 26, 2020 and April 28, 2019;
The consolidated statements of earnings for the years then ended;
The consolidated statements of comprehensive income for the years then ended;
The consolidated statements of changes in equity for the years then ended;
The consolidated statements of cash flows for the years then ended; and
The notes to the consolidated financial statements, which include a summary of significant accounting policies.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of
our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Corporation in accordance with the ethical requirements that are relevant to our audit of the
consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these
requirements.
Other matter – audit of internal control over financial reporting.
We also have audited, in accordance with the standards for audits of internal control over financial reporting set out in the CPA
Canada Handbook – Assurance, the Corporation's internal control over financial reporting as at April 26, 2020, in accordance
with criteria established in Internal Control – Integrated Framework (2013), issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”) and issued our report dated June 29, 2020.
Other information
Management is responsible for the other information. The other information comprises the Management's Discussion and
Analysis and the information, other than the consolidated financial statements and our auditor's report thereon, included in the
annual report.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance
with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
77
Alimentation Couche-Tard Inc.Annual Report © 2020 In preparing the consolidated financial statements, management is responsible for assessing the Corporation’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Corporation or to cease operations, or has no realistic
alternative but to do so.
Those charged with governance are responsible for overseeing the Corporation’s financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:
•
•
•
•
•
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher
intentional omissions,
fraud may
misrepresentations, or the override of internal control.
for one resulting
involve collusion,
from error, as
forgery,
than
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal
control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Corporation’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we
are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Corporation to cease to
continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Corporation to express an opinion on the consolidated financial statements. We are responsible for the
direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
The engagement partner on the audit resulting in this independent auditor’s report is Sonia Boisvert.
Montréal, Quebec
June 29, 2020
1 FCPA auditor, FCA, public accountancy permit No. A116853
78
Alimentation Couche-Tard Inc.Annual Report © 2020 Independent auditor’s report
To the Shareholders of
Alimentation Couche-Tard Inc.
We have audited the effectiveness of Alimentation Couche-Tard Inc. and its subsidiaries’ internal control over financial
reporting as at April 26, 2020.
Management’s responsibility
Management is responsible for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal
Control over Financial Reporting.
Auditor’s responsibility
Our responsibility is to express an opinion, based on our audit, on whether the entity’s internal control over financial reporting
was effectively maintained in accordance with criteria established in Internal Control – Integrated Framework (2013), issued by
the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
We conducted our audit in accordance with the standard for audit of internal control over financial reporting set out in the CPA
Canada Handbook – Assurance. This standard requires that we plan and perform the audit to obtain reasonable assurance
about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures, as we considered necessary in the circumstances.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
An entity’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
International Financial Reporting Standards. An entity’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the entity; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with International Financial Reporting Standards, and
that receipts and expenditures of the entity are being made only in accordance with authorizations of management and
directors of the entity; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the entity’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, Alimentation Couche-Tard Inc. and its subsidiaries maintained, in all material respects, effective internal control
over financial reporting as at April 26, 2020, in accordance with the criteria established in Internal Control – Integrated
Framework (2013), issued by COSO.
We also have audited, in accordance with Canadian generally accepted auditing standards, the consolidated financial
statements of Alimentation Couche-Tard Inc. and its subsidiaries as at April 26, 2020 and April 28, 2019 and for the years then
ended and issued our report dated June 29, 2020.
Montréal, Quebec
June 29, 2020
1 FCPA auditor, FCA, public accountancy permit No. A116853
79
Alimentation Couche-Tard Inc.Annual Report © 2020 Consolidated Statements of Earnings
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except per share amounts)
Revenues
Cost of sales (Note 9)
Gross profit
Operating, selling, administrative and general expenses
Restructuring costs
Gain on disposal of property and equipment and other assets (Notes 5 and 6)
Depreciation, amortization and impairment (Notes 17, 18 and 19)
Total operating expenses (Note 9)
Operating income
Share of earnings of joint ventures and associated companies (Note 8)
Financial expenses
Financial revenues
Foreign exchange gain
Net financial expenses (Note 11)
Earnings before income taxes
Income taxes (Note 12)
Net earnings including non-controlling interests
Net (earnings) loss attributable to non-controlling interests (Note 6)
Net earnings attributable to shareholders of the Corporation
Net earnings per share (Note 13)
Basic
Diluted
The accompanying notes are an integral part of the consolidated financial statements.
2020
$
54,132.4
44,397.7
9,734.7
5,314.0
4.5
(83.1)
1,336.8
6,572.2
3,162.5
25.5
342.2
(24.2)
(33.5)
284.5
2,903.5
545.9
2,357.6
(4.0)
2,353.6
2019
$
59,117.6
49,922.7
9,194.9
5,646.1
10.5
(21.3)
1,070.7
6,706.0
2,488.9
23.4
338.7
(13.3)
(5.3)
320.1
2,192.2
370.9
1,821.3
12.6
1,833.9
2.10
2.09
1.62
1.62
80
Alimentation Couche-Tard Inc.Annual Report © 2020
Consolidated Statements of Comprehensive Income
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2))
Net earnings including non-controlling interests
Other comprehensive loss
Items that may be reclassified subsequently to earnings
Translation adjustments
Change in cumulative translation adjustments(1)
Cumulative translation adjustments reclassified to earnings (Note 5)
Change in fair value and net interest on cross-currency interest rate swaps designated as a hedge of the
Corporation’s net investment in certain of its foreign operations(2) (Note 24)
Cash flow hedges
Change in fair value of financial instruments(2) (Note 31)
Loss realized on financial instruments transferred to earnings(2) (Note 31)
Items that will never be reclassified to earnings
Net actuarial loss(3) (Note 30)
Loss on investments in equity instruments measured at fair value through Other
comprehensive income(4) (Note 20)
Other comprehensive loss
Comprehensive income including non-controlling interests
Comprehensive (income) loss attributable to non-controlling interests
Comprehensive income attributable to shareholders of the Corporation
2020
$
2019
$
2,357.6
1,821.3
(268.8)
—
(102.8)
3.6
1.0
(23.3)
(14.0)
(404.3)
1,953.3
(4.0)
1,949.3
(207.9)
(0.8)
(84.5)
3.3
1.9
(2.3)
—
(290.3)
1,531.0
12.6
1,543.6
(1) For the fiscal years ended April 26, 2020 and April 28, 2019, these amounts include losses of $134.1 (net of income taxes of $20.5) and losses of $143.1 (net
of income taxes of $21.9), respectively. These losses arise from the translation of long-term debts denominated in foreign currencies.
(2) For the fiscal years ended April 26, 2020 and April 28, 2019, these amounts are net of income tax recoveries of $0.6 and $1.6, respectively.
(3) For the fiscal years ended April 26, 2020 and April 28, 2019, these amounts are net of income tax recoveries of $6.4 and $1.5, respectively.
(4) For the fiscal year ended April 26, 2020, these amounts do not include any income taxes.
The accompanying notes are an integral part of the consolidated financial statements.
81
Alimentation Couche-Tard Inc.Annual Report © 2020
Consolidated Statements of Changes in Equity
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2))
Attributable to the shareholders of the Corporation
Capital
stock
Contributed
surplus
Retained
earnings
Accumulated other
comprehensive
loss (Note 29)
$
$
$
$
Non-
controlling
interests
$
Total
$
2020
Equity
$
Balance, beginning of year
Adoption of IFRS 16 (Note 3)
706.8
19.5
9,053.5
(856.6)
8,923.2
257.9
9,181.1
(9.5)
(9.5)
—
(9.5)
Adjusted balance, beginning of year
706.8
19.5
9,044.0
(856.6)
8,913.7
257.9
9,171.6
Comprehensive income:
Net earnings
Other comprehensive loss
Comprehensive income
Repurchases and cancellations of shares
(Note 27)
(13.1)
Dividends declared
Distributions to non-controlling interests
(Note 6)
December 2018 asset exchange agreement
(Note 6)
Disposal of the Corporation's interests in CAPL
(Note 6)
Repurchase of non-controlling interests in
CST Fuel Supply LP (Note 6)
Stock option-based compensation expense
(Note 28)
Exercise of stock options
Balance, end of year
2,353.6
(457.7)
(215.7)
2,353.6
(404.3)
(404.3)
1,949.3
(470.8)
(215.7)
4.0
—
4.0
2,357.6
(404.3)
1,953.3
(470.8)
(215.7)
(47.5)
(47.5)
(7.7)
(7.7)
7.7
—
(222.1)
(222.1)
(105.2)
(105.2)
—
(105.2)
1.1
694.8
3.0
(1.1)
3.0
—
3.0
—
21.4
10,611.3
(1,260.9)
10,066.6
—
10,066.6
Attributable to the shareholders of the Corporation
Capital stock
Contributed
surplus
Retained
earnings
Accumulated other
comprehensive loss
(Note 29)
$
$
$
$
Non-
controlling
interests
$
Total
$
2019
Equity
$
Balance, beginning of year
Adoption of IFRS 15
704.0
17.7
7,405.0
(566.3)
7,560.4
327.0
7,887.4
(4.1)
(4.1)
—
(4.1)
Adjusted balance, beginning of year
704.0
17.7
7,400.9
(566.3)
7,556.3
327.0
7,883.3
Comprehensive income:
Net earnings (loss)
Other comprehensive loss
Comprehensive income (loss)
Dividends declared
Distributions to non-controlling interests
(Note 6)
Stock option-based compensation expense
(Note 28)
Exercise of stock options
Balance, end of year
1,833.9
1,833.9
(12.6)
1,821.3
(181.3)
(290.3)
(290.3)
—
(290.3)
1,543.6
(12.6)
1,531.0
(181.3)
(181.3)
4.4
(2.6)
(56.5)
(56.5)
4.4
0.2
4.4
0.2
19.5
9,053.5
(856.6)
8,923.2
257.9
9,181.1
2.8
706.8
The accompanying notes are an integral part of the consolidated financial statements.
82
Alimentation Couche-Tard Inc.Annual Report © 2020
Consolidated Statements of Cash Flows
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2))
Operating activities
Net earnings including non-controlling interests
Adjustments to reconcile net earnings including non-controlling interests to
net cash provided by operating activities
Depreciation, amortization, impairment and amortization of financing costs
Gain on disposal of property and equipment and other assets (Note 6)
Deferred income taxes (Note 12)
Share of earnings of joint ventures and associated companies, net of dividends received
Other
Changes in non-cash working capital (Note 14)
Net cash provided by operating activities
Investing activities
Purchase of property and equipment, intangible assets and other assets
Proceeds from the disposal of the Corporation's interests in CAPL,
net of transaction costs and cash and cash equivalents disposed (Note 6)
Proceeds from disposal of property and equipment and other assets
Business acquisitions (Note 4)
Change in restricted cash
Investment in Fire & Flower (Note 7)
Proceeds from disposal of marine fuel business (Note 5)
Net cash used in investing activities
Financing activities
Issuance of US-dollar-denominated senior unsecured notes, net of financing costs (Notes 14 and 22)
Net increase (decrease) in term revolving unsecured operating credit D (Notes 14 and 22)
Repayment of senior unsecured notes (Notes 14 and 22)
Share repurchases (Note 27)
Principal elements of lease payments and net decrease in other debts (Notes 3, 14 and 18)
Cash dividends paid
Settlements of derivative financial instruments (Notes 14, 23 and 24)
Distributions paid to non-controlling interests (Note 6)
Repurchase of non-controlling interests in CST Fuel Supply LP (Note 6)
Net increase in CAPL senior secured revolving credit facility (Notes 14 and 22)
Decrease in acquisition facility
Increase in unsecured non-revolving credit facility
Decrease in unsecured non-revolving credit facility
Exercise of stock options
Net cash provided by (used in) financing activities
Effect of exchange rate fluctuations on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental information:
Interest paid
Interest and dividends received
Income taxes paid
2020
$
2019(1)
$
2,357.6
1,821.3
1,343.8
(83.1)
105.1
(5.3)
2.0
0.6
1,077.6
(21.3)
91.7
2.4
32.4
79.5
3,720.7
3,083.6
(1,408.2)
(1,145.1)
185.2
89.7
(89.5)
28.5
(19.5)
—
(1,213.8)
1,484.1
1,460.0
(1,241.4)
(470.8)
(380.0)
(215.7)
(100.6)
(47.5)
(13.4)
6.0
—
—
—
—
480.7
(52.5)
2,935.1
706.4
3,641.5
329.3
48.6
193.6
—
215.6
(13.1)
(16.9)
—
24.3
(935.2)
—
(1,357.4)
—
—
(52.2)
(181.3)
3.0
(56.5)
—
3.9
(413.5)
213.5
(213.5)
0.2
(2,053.8)
(54.4)
40.2
666.2
706.4
291.1
57.5
336.7
(1)
The classification of cash flows related to deferred credits for 2019 was adjusted within the cash flows provided by operating activities to reflect their current
presentation for 2020.
The accompanying notes are an integral part of the consolidated financial statements.
83
Alimentation Couche-Tard Inc.Annual Report © 2020
Consolidated Balance Sheets
As at April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2))
Assets
Current assets
Cash and cash equivalents
Restricted cash
Accounts receivable (Note 15)
Inventories (Note 16)
Prepaid expenses
Assets held for sale (Note 6)
Other short-term financial assets (Notes 7 and 31)
Income taxes receivable
Property and equipment (Note 17)
Right-of-use assets (Notes 3 and 18)
Intangible assets (Note 19)
Goodwill (Note 19)
Other assets (Note 20)
Investment in joint ventures and associated companies (Note 8)
Deferred income taxes (Note 12)
Liabilities
Current liabilities
Accounts payable and accrued liabilities (Note 21)
Short-term provisions (Note 25)
Other short-term financial liabilities (Notes 24 and 31)
Income taxes payable
Liabilities associated with assets held for sale (Note 6)
Current portion of long-term debt (Note 22)
Current portion of lease liabilities (Notes 3, 14 and 18)
Long-term debt (Note 22)
Lease liabilities (Notes 3, 14 and 18)
Long-term provisions (Note 25)
Pension benefit liability (Note 30)
Other long-term financial liabilities (Notes 14, 24 and 31)
Deferred credits and other liabilities (Note 26)
Deferred income taxes (Note 12)
Equity
Capital stock (Note 27)
Contributed surplus
Retained earnings
Accumulated other comprehensive loss (Note 29)
Equity attributable to shareholders of the Corporation
Non-controlling interests (Note 6)
The accompanying notes are an integral part of the consolidated financial statements.
On behalf of the Board of Directors,
/s/ Brian Hannasch
Brian Hannasch
Director
/s/ Alain Bouchard
Alain Bouchard
Director
2020
$
3,641.5
8.0
1,256.0
1,237.4
96.0
64.0
38.6
89.4
6,430.9
10,136.5
2,513.9
550.8
5,505.8
350.1
139.7
51.8
25,679.5
2019
$
706.4
36.5
1,863.9
1,467.7
83.7
—
—
163.1
4,321.3
11,129.9
—
944.4
5,683.1
306.6
136.0
86.4
22,607.7
2,808.3
3,917.1
108.1
—
222.0
8.1
214.7
383.1
3,744.3
7,515.8
2,265.7
551.3
91.5
237.4
161.9
1,045.0
160.0
123.6
70.6
—
1,310.7
—
5,582.0
5,640.7
—
590.1
92.6
135.1
349.0
1,037.1
15,612.9
13,426.6
694.8
21.4
10,611.3
(1,260.9)
10,066.6
—
10,066.6
25,679.5
706.8
19.5
9,053.5
(856.6)
8,923.2
257.9
9,181.1
22,607.7
84
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
1.
GOVERNING STATUTES AND NATURE OF OPERATIONS
Alimentation Couche-Tard Inc. (the “Corporation”) is governed by the Business Corporations Act (Quebec). The Corporation’s
head office is located at 4204 Boulevard Industriel in Laval, Quebec, Canada.
As at April 26, 2020, the Corporation operates and licenses 12,124 convenience stores across North America, Ireland,
Scandinavia (Norway, Sweden and Denmark), Poland, the Baltics (Estonia, Latvia and Lithuania) and Russia, of which 9,691
are company-operated, and generates income primarily from the sale of tobacco products and alternative tobacco products,
grocery items, candy and snacks, beverages, beer, wine and fresh food offerings, including quick service restaurants, car
wash services, other services and road transportation fuel. Until November 19, 2019, through CrossAmerica Partners LP
(“CAPL”), the Corporation supplied road transportation fuel under various brands to approximately 1,300 locations in the
United States.
Furthermore, under licensing agreements, approximately 2,350 stores are operated under the Circle K banner in 15 other
countries and territories (Cambodia, Egypt, Guam, Guatemala, Honduras, Hong Kong, Indonesia, Jamaica, Macau, Mexico,
Mongolia, New Zealand, Saudi Arabia, the United Arab Emirates and Vietnam), which brings the worldwide total network to
close to 14,500 stores.
2.
BASIS OF PREPARATION
Year-end date
The Corporation’s year-end is the last Sunday of April of each year. The fiscal years ended April 26, 2020, and April 28, 2019,
are referred to as “2020” and “2019”.
Basis of presentation
The Corporation prepares its consolidated financial statements in accordance with International Financial Reporting Standards
(“IFRS”), as issued by the International Accounting Standards Board (“IASB”).
Reporting currency
The parent corporation’s functional currency is the Canadian dollar. However, the Corporation uses the US dollar as its
reporting currency to provide more relevant information considering its predominant operations in the United States.
Approval of the financial statements
On June 29, 2020, the Corporation’s consolidated financial statements were approved by the Board of Directors, which also
approved their publication.
3.
ACCOUNTING POLICIES
Change in accounting policies
Leases
On April 29, 2019, the Corporation adopted IFRS 16 Leases, which replaces IAS 17 Leases. This new standard requires
lessees to recognize and record on the balance sheet a lease liability reflecting future lease payments and a right-of-use asset
for virtually all lease contracts except with respect to lease contracts that meet limited exception criteria.
The Corporation has adopted IFRS 16 retrospectively from April 29, 2019, but has not restated comparative figures for
fiscal year 2019, as permitted under the specific transition provisions in the standard. Therefore, the cumulative effect of
initially applying the new standard was recognized in the opening balance sheet on April 29, 2019 and comparative figures for
fiscal year 2019 continue to be reported under IAS 17 and related interpretations, including IFRIC 4 Determining Whether an
Arrangement Contains a Lease.
85
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
IFRS 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes to the
lessee accounting by removing the distinction between operating and finance lease and requiring the recognition of a right-of-
use asset and a lease liability at commencement for all leases, except for short-term leases and leases of low value assets. In
contrast to lessee accounting, the requirement for lessor accounting have remained largely unchanged.
Impact of the new definition of a lease
The Corporation has made use of the practical expedient available upon transition to IFRS 16 not to reassess whether a
contract is or contains a lease. Accordingly, the Corporation continues to apply the definition of a lease in accordance with
IAS 17 and IFRIC 4 to those leases entered into or modified before April 29, 2019.
The change in the definition of a lease mainly relates to the concept of control. IFRS 16 determines whether a contract
contains a lease on the basis of whether the customer has the right to control the use of an identified asset for a period of time
in exchange for consideration.
The Corporation assesses whether a contract is or contains a lease in accordance with the definition of a lease and related
guidance set out in IFRS 16 to all lease contracts entered into or modified on or after April 29, 2019.
Impact on accounting policies when the Corporation is the lessee
Leases previously classified as operating leases and lease contracts entered into or modified on or after April 29, 2019
IFRS 16 changes how the Corporation accounts for leases previously classified as operating leases under IAS 17, which were
not recognized in the Corporation’s consolidated balance sheet.
Applying IFRS 16, for all leases (except those meeting limited exception criteria described in the related accounting policy
below), the Corporation:
•
•
•
Recognizes right-of-use assets and lease liabilities in the consolidated balance sheets;
Recognizes depreciation of right-of-use assets and interest on lease liabilities in the consolidated statements of
earnings; and
Separates the total amount paid in cash into a principal portion (presented within financing activities) and an interest
portion (presented within operating activities) in the consolidated statements of cash flows.
Under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS 36 Impairment of Assets. This replaces
the previous requirement to recognize a provision for onerous lease contracts.
Lease incentives are recognized as part of the measurement of the right-of-use asset and lease liability whereas under IAS 17
they resulted in the recognition of a lease incentive liability, amortized as a reduction of rental expenses on a straight-line
basis.
Leases previously classified as finance leases
The main difference between IFRS 16 and IAS 17 with respect to assets formerly held under a finance lease is the
measurement of residual value guarantees provided by a lessee to a lessor. IFRS 16 requires that the Corporation recognizes
as part of its lease liability only the amount expected to be payable under a residual value guarantee, rather than the maximum
amount guaranteed as required by IAS 17. This difference did not have a material effect on the Corporation’s consolidated
financial statements.
86
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Impact on accounting policies when the Corporation is the lessor
The Corporation enters into lease agreements as a lessor with respect to properties. IFRS 16 does not change substantially
how a lessor accounts for leases. Under IFRS 16, a lessor continues to classify leases as either finance leases or operating
leases and accounts for those two types accordingly.
Under IFRS 16, when the Corporation is an intermediate lessor, it accounts for the head lease and the sublease as separate
contracts. The intermediate lessor is required to classify the sublease as a finance or operating lease by reference to the right-
of-use asset arising from the head lease and not by reference to the underlying asset as it was the case under IAS 17.
Impact of the adoption of the new standard on the Corporation’s consolidated financial statements
Upon adoption of IFRS 16, the Corporation recognized lease liabilities in relation to leases which had previously been
classified as operating leases under the principles of IAS 17. These liabilities were measured at the net present value of the
remaining lease payments that are not paid at adoption date, discounted using the Corporation’s incremental borrowing rate as
at April 29, 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on April 29, 2019,
was 3.31%.
Operating lease commitments disclosed as at April 28, 2019
Discounted using the Corporation’s incremental borrowing rate as at April 29, 2019
Add: finance lease liabilities recognized as at April 28, 2019
(Less): short-term leases recognized on a straight-line basis as expenses
(Less): low-value assets leases recognized on a straight-line basis as expenses
Add/(less): adjustments relating to changes in the index or rate affecting variable payments
Other
Lease liabilities recognized as at April 29, 2019
Of which are:
Current lease liabilities
Non-current lease liabilities
As at April 29, 2019
$
3,260.7
2,769.3
328.3
(132.5)
(2.0)
(7.9)
(3.0)
2,952.2
382.9
2,569.3
The associated right-of-use assets were measured at the amount equal to the lease liabilities, adjusted by the amount of any
prepaid or accrued lease payments relating to that lease recognized in the consolidated balance sheet as at April 28, 2019.
As at April 29, 2019, the recognized right-of-use assets relate to the following underlying asset classes:
Properties
Motor vehicles
Equipment
As at April 29, 2019
$
2,789.8
37.6
7.6
2,835.0
87
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
The adoption of IFRS 16 affected the following items in the opening balance sheet on April 29, 2019:
Assets
Current assets
Prepaid expenses
Property and equipment(a)
Right-of-use assets
Intangible assets
Other assets
Total assets
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Current portion of long-term debt
Current portion of lease liabilities
Long-term debt
Lease liabilities
Long-term provisions
Deferred credits and other liabilities
Deferred income taxes
Total liabilities
Equity
Retained earnings
Total equity
Balance,
beginning of year
Adoption of IFRS 16
Adjusted balance,
beginning of year
$
$
$
83.7
11,129.9
—
944.4
306.6
22,607.7
3,917.1
1,310.7
—
5,640.7
—
590.1
349.0
1,037.1
13,426.6
9,053.5
9,181.1
(26.4)
(306.5)
2,835.0
(104.5)
27.7
2,425.3
(24.6)
(40.5)
382.9
(287.8)
2,569.3
(3.0)
(158.3)
(3.2)
2,434.8
(9.5)
(9.5)
57.3
10,823.4
2,835.0
839.9
334.3
25,033.0
3,892.5
1,270.2
382.9
5,352.9
2,569.3
587.1
190.7
1,033.9
15,861.4
9,044.0
9,171.6
(a) Adoption of IFRS 16 had an impact of $143.2 on Land, $105.2 on Buildings and building components and $58.1 on Equipment.
In applying IFRS 16 for the first time, the Corporation has used the following practical expedients permitted by the standard for
certain of its leases:
•
•
•
•
•
The use of a single discount rate to a portfolio of leases with reasonably similar characteristics;
The use of the provision for onerous leases as an alternative to performing an impairment review;
The accounting for operating leases with a remaining lease term of less than 12 months as at April 29, 2019, as short-
term leases;
The right to exclude initial direct costs from the measurement of the right-of-use asset at the date of initial application;
and
The use of hindsight in determining the lease term where the contract contains options to extend or terminate the
lease.
The Corporation has also selected to use the practical expedient permitting not to separate non-lease components, and to
instead account for any lease and associated non-lease components as a single lease component. Non-lease components
include, but are not limited to, utility charges and common area maintenance charges when those charges are fixed over the
term of the lease.
Use of estimates and judgments
The preparation of consolidated financial statements in accordance with IFRS requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. On an
ongoing basis, management reviews its estimates. These estimates are based on management’s best knowledge of current
events and actions that the Corporation may undertake in the future. Actual results could differ from those estimates. The most
significant accounting judgments and estimates that the Corporation has made in the preparation of the consolidated financial
statements are discussed along with the relevant accounting policies when applicable and relate primarily to the following
topics: vendor rebates, useful lives of tangible and intangible assets, income taxes, employee future benefits, provisions,
impairment of tangible and intangible assets, lease terms and business combinations.
88
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
The Corporation is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the
worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is
uncertain. The Corporation recognizes uncertain tax positions based on estimates of whether additional taxes will be due.
Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences impact
the current and deferred income tax assets and liabilities in the period in which such determination is made.
As at April 26, 2020, the Corporation performed an assessment of the impact of the uncertainties around the outbreak of the
novel strain of the coronavirus, specifically identified as COVID-19 pandemic, on the carrying amount of its assets and
liabilities. This assessment, which required the use of significant judgments and estimates, had no material impact on the
Corporation's consolidated financial statements for the fiscal year ended April 26, 2020. The Corporation assessed that the
uncertainties around the impact of COVID-19 could generate, in future reporting periods, a risk of material adjustment to the
carrying amounts of the following assets and liabilities: property and equipment, intangible assets with finite useful lives,
goodwill and intangible assets with indefinite useful lives, deferred income tax assets, right-of-use assets, net pension benefit
plans and contractual obligations. As an emerging risk, the duration and full financial effect of the COVID-19 pandemic are
unknown, and accordingly estimates of the extent to which the COVID-19 may materially and adversely affect the Corporation
are subject to significant uncertainties.
Principles of consolidation
The consolidated financial statements include the accounts of the Corporation and its subsidiaries, which are generally wholly
owned. They also include the Corporation’s share of earnings of joint ventures and associated companies accounted for using
the equity method. All intercompany balances and transactions have been eliminated on consolidation. See Note 6 for more
details about the consolidation of CAPL until November 19, 2019.
Subsidiaries are entities over which the Corporation has control, where control is defined as the power to govern financial and
operating policies. The Corporation generally has a direct or indirect shareholding of 100% of the voting rights in its
subsidiaries. These criteria are reassessed regularly and subsidiaries are fully consolidated from the date control is transferred
to the Corporation and deconsolidated from the date control ceases.
The Corporation holds contracts with franchisees and independent operators. They manage their store and are responsible for
merchandising and financing their inventory. Their financial statements are not included in the Corporation’s consolidated
financial statements.
Foreign currency translation
Functional currency
The functional currency is the currency of the primary economic environment in which an entity operates. The functional
currency of the parent corporation and its Canadian operations is the Canadian dollar. The functional currency of foreign
subsidiaries is generally their local currency, mainly the US dollar for operations in the United States and various other
European currencies for operations in Europe.
Foreign currency transactions
Transactions denominated in foreign currencies are translated into the relevant functional currency as follows: monetary assets
and liabilities are translated using the exchange rate in effect at the consolidated balance sheet date, whereas revenues and
expenses are translated using the average exchange rate of the period. Non-monetary assets and liabilities are translated
using historical rates or using the rate on the date they were valued at fair value. Gains and losses arising from such
translations, if any, are reflected in the earnings except for assets and liabilities designated as part of hedging relationships.
Consolidation and foreign operations
The consolidated financial statements are consolidated in Canadian dollars using the following procedure: assets and liabilities
are translated into Canadian dollars using the exchange rate in effect at the consolidated balance sheet date. Revenues and
expenses are translated using the average exchange rate of the period. Individual transactions with a significant impact on the
consolidated statements of earnings, comprehensive income or cash flows are translated using the transaction date exchange
rate.
89
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Gains and losses arising from such translation are included in Accumulated other comprehensive income (loss) in Equity. The
translation difference derived from each foreign subsidiary, associated company or joint venture is transferred to the
consolidated statements of earnings as part of the gain or loss arising from the divestment or liquidation of such a foreign
entity when there is a loss of control, or a change in ownership of the associated company or joint venture, respectively.
Reporting currency
The Corporation has adopted the US dollar as its reporting currency. The Canadian-dollar consolidated financial statements
are translated into the reporting currency using the procedure described above. Capital stock, Contributed surplus and
Retained earnings are translated using historical rates. Gains and losses arising from such translations are included in
Accumulated other comprehensive income (loss) in Equity.
Net earnings per share
Basic net earnings per share are calculated by dividing the net earnings available to Class A and Class B shareholders by the
respective weighted average number of shares outstanding during the year. Diluted net earnings per share are calculated
using the weighted average number of shares outstanding plus the weighted average number of shares that would be issued
upon the conversion of all potential dilutive stock options into common shares.
Revenue recognition
For its three major product categories, merchandise and services, road transportation fuel and other, the Corporation
recognizes revenue when control of goods or services is transferred to a customer.
For retail operations, merchandise sales primarily comprise the sale of tobacco products and alternative tobacco products,
beer, wine, beverages, grocery items, candy and snacks and fresh food offerings, including quick service restaurants. Service
revenues include car wash revenues, commissions on the sale of lottery tickets and the issuance of money orders, fees from
automatic teller machines, sales of calling cards and gift cards, fees for cashing checks, sales of postage stamps and sales of
bus tickets. Road transportation fuel sales comprise the sale of different types of road transportation fuel via fuel dispensers
located at the Corporation’s convenience stores or automate stations. These revenues are recognized at the time of the
transaction since control of goods and services is considered transferred when customer makes payment and takes
possession of the sold item.
Service revenues also include franchise and license fees, which are recognized in revenues over the period of the agreement,
initial franchise fees for which a portion is recognized when the franchise store opens and the remaining portion is deferred
and recognized over the estimated term of the related agreement, as well as commissions from agents, and royalties from
franchisees and licensees, which are recognized periodically based on sales reported by agents, and franchise and license
operators.
For its wholesale operations, the Corporation generally recognizes sales of merchandise and goods to certain independent
operators and franchisees made from the Corporation’s distribution centers and sales of road transportation fuel upon delivery
to its customers.
Other revenues include aviation fuel, sales of energy for stationary engines and marine fuel (until November 30, 2018), which
are generally recognized upon delivery to the customer. Other revenues also include rental income from operating leases,
which is recognized on a straight-line basis over the term of the lease.
In markets where refined oil products are purchased excluding excise duties, revenues from sales to customers are reported
net of excise duties. In markets where refined oil products are purchased including excise duties, revenues and costs of goods
sold are reported including these duties.
Through license fees with one of Canopy Growth's Tweed Inc. branded licensed store in Ontario, Canada, the Corporation
generates revenues derived from the underlying sale of cannabis products as the licensed store is selling cannabis as part of
its retail operations.
90
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Cost of sales and vendor rebates
Cost of sales mainly comprises the cost of finished goods and input materials, as well as transportation costs when they are
incurred to bring products to the point of sale.
The Corporation records vendor rebates as a reduction in the price of the vendors’ products and reflects them as a reduction of
related inventory and cost of sales in its consolidated balance sheets and consolidated statements of earnings when it is
probable that they will be received. The Corporation estimates the probability based on the consideration of a variety of
factors, including quantities of items sold or purchased, market shares and other conditions specified in the contracts. The
accuracy of the Corporation’s estimates can be affected by many factors, some of which are beyond its control, including
changes in economic conditions and consumer buying trends. Historically, the Corporation has not experienced significant
differences in its estimates compared with actual results. Amounts received but not yet earned are presented in Deferred
credits.
Operating, selling, administrative and general expenses
The main items comprising Operating, selling, administrative and general expenses are labor, occupancy costs, electronic
payment modes fees, repairs, maintenance and overhead.
Cash and cash equivalents
Cash includes cash and demand deposits. Cash equivalents include highly liquid investments that can be readily converted
into cash for a fixed amount and which mature less than three months from the date of acquisition.
Restricted cash
Restricted cash comprises, when applicable, escrow deposits held by independent escrow agent to fund pending acquisitions
and future capital expenditures but restricted by certain release conditions.
Inventories
Inventories are valued at the lesser of cost and net realizable value. The cost of merchandise is generally valued based on the
retail price less a normal margin. The cost of road transportation fuel inventory is generally determined according to the
average cost method.
Income taxes
The income tax expense recorded to earnings is the sum of the Deferred income taxes and Current income taxes that are not
recognized in Other comprehensive income (loss) or directly in Equity.
The Corporation uses the balance sheet liability method to account for income taxes. Under this method, deferred tax assets
and liabilities are determined based on differences between the carrying amount and the tax base of assets and liabilities,
using enacted or substantively enacted tax rates and laws, as appropriate, at the date of the consolidated financial statements
for the years in which the temporary differences are expected to reverse. Deferred tax assets are reviewed at each reporting
date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred tax liabilities are recognized for all taxable temporary differences associated with investments in subsidiaries and
interests in joint ventures, except where the Corporation is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible
temporary differences associated with such investments and interests are only recognized to the extent that it is probable that
there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to
reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities, when they relate to income taxes levied by the same taxation authority, and the Corporation intends to
settle its current tax assets and liabilities on a net basis.
91
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Property and equipment, depreciation, amortization and impairment
Property and equipment are stated at cost less accumulated depreciation and are depreciated over their estimated useful lives
using the straight-line method based on the following periods:
Buildings and building components
Equipment
Leasehold improvements
Buildings and equipment under finance leases (for the fiscal
year ended April 28, 2019)
3 to 40 years
3 to 40 years
Lesser of the lease term and useful life
Lesser of the lease term and useful life
Building components include air conditioning and heating systems, plumbing and electrical fixtures. Equipment includes
signage, fuel equipment and in-store equipment.
Property and equipment are tested for impairment should events or circumstances indicate that their book value may not be
recoverable, as measured by comparing their net book value to their recoverable amount, which corresponds to the higher of
fair value less costs to sell and value in use of the asset or the cash-generating unit (“CGU”). Should the carrying amount of
property and equipment exceed their recoverable amount, an impairment loss in the amount of the excess would be
recognized.
The Corporation performs an annual evaluation of residual values, estimated useful lives and depreciation methods used for
property and equipment and any change resulting from this evaluation is applied prospectively by the Corporation.
Goodwill
Goodwill is the excess of the cost of an acquired business over the fair value of underlying net assets acquired from the
business at the time of acquisition. Goodwill is not amortized. Rather, it is tested for impairment annually during the
Corporation’s first quarter or more frequently should events or changes in circumstances indicate that it might be impaired or if
necessary due to the timing of acquisitions. Should the carrying amount of a CGU’s goodwill exceed its recoverable amount,
an impairment loss would be recognized.
Intangible assets
Intangible assets, which are initially recorded at cost, mainly comprise trademarks, franchise agreements, motor fuel supply
agreements, software, favorable leases (until April 28, 2019) and licenses. Licenses and trademarks that have indefinite lives,
since they are expected to provide economic benefits to the Corporation indefinitely, are not amortized and are tested for
impairment annually during the first quarter or more frequently should events or changes in circumstances indicate that they
might be impaired or if necessary due to the timing of acquisitions. Motor fuel supply agreements, franchise agreements and
trademarks with finite lives are amortized using the straight-line method over the term of the agreements they relate to.
Favorable leases represent lease terms that are favorable compared to those currently available in the marketplace, and they
were amortized using the straight-line method over the term of the lease. Software and other intangible assets are amortized
using the straight-line method over a period of 3 to 15 years. Amortization of intangible assets with finite lives is included in
Depreciation, amortization and impairment in the consolidated statements of earnings.
Leases
For the fiscal year ended April 26, 2020 under IFRS 16 Leases
Determining whether a contract is, or contains, a lease
At inception of a contract, the Corporation analyzes whether it is, or contains, a lease by assessing if the contract conveys the
right to control the use of an identified asset for a period of time in exchange for consideration. This is achieved if the
Corporation has both of the following:
•
•
The right to obtain substantially all of the economic benefits from use of the identified asset; and
The right to direct the use of the identified asset.
92
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
If the Corporation has the right to control the use of an identified asset for only a portion of the term of the contract, the
contract contains a lease for that portion of the term.
The Corporation assess whether a contract contains a lease for each of its potential separate lease component.
The Corporation has assessed that some arrangements with franchisees contain lease components and accordingly accounts
for a portion of those agreements as leases.
The Corporation distinguishes between lease contracts and capacity contracts. Lease contracts provide the right to obtain
substantially all of the economic benefits from use and the right to direct the use of an identified asset. Capacity contracts
confer the right to and the obligation to pay for availability of certain capacity volumes related primarily to transportation. Such
capacity contracts that do not involve specified identified assets or that do not involve substantially all the capacity of an
identified asset are not considered to qualify as leases for accounting purposes. Capacity payments are recognized in the
consolidated statements of earnings in Operating, selling, administrative and general expenses.
Lease arrangements in which the Corporation is a lessee
For all leases (except those meeting limited exception criteria, see below), the Corporation recognizes right-of-use assets and
lease liabilities in the consolidated balance sheet.
The lease liability is initially measured at the net present value of future lease payments, discounted using the implicit interest
rate of the lease, if that rate can be readily determined, or the Corporation’s incremental borrowing rate. Future lease
payments included in the measurement of the lease liability comprise of:
•
•
•
•
•
Fixed payments (including in-substance fixed payments), less any lease incentives receivable;
Variable lease payment that are based on an index or a rate;
Amounts expected to be payable by the Corporation under residual value guarantees;
The exercise price of a purchase option if the Corporation is reasonably certain to exercise that option; and
Payments of penalties for terminating the lease, if the lease term reflects the Corporation exercising that option.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability and by
reducing the carrying amount to reflect the lease payments made. The interest expense is charged to Financial expenses on
the consolidated statements of earnings over the lease period so as to produce a constant periodic interest rate on the
remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
•
•
•
•
The amount of the initial measurement of lease liability;
Any lease payments made at or before the commencement date less any lease incentives received;
Any initial direct costs; and
Any restoration costs of the underlying asset.
Right-of-use assets are subsequently measured at cost less accumulated depreciation, amortization and impairment and are
depreciated over the shorter period of the lease term and useful life of the underlying asset. Right-of-use assets are tested for
impairment in accordance with IAS 36 Impairment of Assets.
Lease incentives are recognized as part of the measurement of the right-of-use asset and lease liability. Variable lease
payments that are not based on an index or a rate are not included in the measurement of both the lease liabilities and the
right-of-use assets. The related payments are recognized as an expense in the period in which the conditions that trigger those
payments occur and are recorded as Operating, selling, administrative and general expenses in the consolidated statements
of earnings.
For short-term leases (lease term of 12 months or less) and leases of low-value assets (such as personal computers and office
furniture), the Corporation recognizes a lease expense on a straight-line basis over the lease term. This expense is presented
within Operating, selling, administrative and general expenses in the consolidated statements of earnings.
93
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
The Corporation remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset)
whenever:
•
•
The lease term, assessment of a purchase option or termination penalties have changed, in which case the lease
liability is remeasured by discounting the revised lease payments using a revised discount rate; and
Change in the future lease payments resulting from changes in an index or rate or change in amounts expected to be
payable under residual value guarantees, in which cases the lease liability is remeasured by discounting the revised
lease payments using the same discount rate used when initially setting up the liability.
In determining the lease term, the Corporation considers all facts and circumstances that create an economic incentive to
exercise an extension option, or not exercise a termination option. Extension options (or periods subject to termination options)
are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The assessment is
reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within
the Corporation’s control.
Lease arrangements in which the Corporation is a lessor
Leases for which their terms transfer substantially all the risks and rewards of the ownership of the underlying asset to the
lessee are classified as finance leases. Whenever it is determined that a lease where the Corporation is the lessor is a finance
lease, the present value of the amounts due from the lessee are recognized as the Corporation’s net investment in the lease
which is recorded under Other assets on the consolidated balance sheet. The net investment in the lease is subsequently
measured by increasing the carrying amount to reflect interest revenue reflecting a constant periodic rate of return and by
reducing the carrying amount of the net investment to reflect the lease payments received.
When the Corporation is an intermediate lessor, it accounts for the head lease and the sublease as separate contracts. The
intermediate lessor is required to classify the sublease as a finance or operating lease by reference to the right-of-use asset
arising from the head lease.
Leases for which their terms do not transfer substantially all the risks and rewards of the ownership of the underlying asset to
the lessee are classified as operating leases. Payments received in relation with operating leases are recognized as Revenues
on a straight-line basis over the term of the relevant lease in the consolidated statements of earnings.
For the fiscal year ended April 28, 2019 under IAS 17 Leases
Determining whether an arrangement contains a lease
At inception of an arrangement, the Corporation analyzes whether an arrangement is or contains a lease by assessing if:
•
•
Fulfillment of the arrangement is dependent on the use of a specified asset or assets; and
The arrangement conveys a right to use the asset or assets.
The Corporation has assessed that some arrangements with franchisees contain embedded lease agreements and
accordingly accounts for a portion of those agreements as lease agreements.
The Corporation distinguishes between lease contracts and capacity contracts. Lease contracts provide the right to use a
specific asset for a period of time. Capacity contracts confer the right to and the obligation to pay for availability of certain
capacity volumes related primarily to transportation. Such capacity contracts that do not involve specified single assets or that
do not involve substantially all the capacity of an undivided interest in a specific asset are not considered to qualify as leases
for accounting purposes. Capacity payments are recognized in the consolidated statements of earnings in Operating, selling,
administrative and general expenses.
Lease arrangements in which the Corporation is a lessee
The Corporation accounts for finance leases in instances where it has acquired substantially all the benefits and risks
incidental to ownership of the leased property. In some cases, the characterization of a lease transaction is not evident, and
management uses judgment in determining whether the lease is a finance lease arrangement that transfers substantially all
the risks and benefits incidental to ownership to the Corporation. Judgment is required on various aspects that include, but are
not limited to, the fair value of the leased asset, the economic life of the leased asset, whether or not to include renewal
94
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
options in the lease term and determining an appropriate discount rate to calculate the present value of the minimum lease
payments. The Corporation’s activities involve a considerable number of lease agreements, most of which are determined to
be operational in nature. The cost of assets under finance leases represents the present value of minimum lease payments or
the fair value of the leased property, whichever is lower, and is amortized on a straight-line basis over the term of the lease or
useful life of the asset, whichever is shorter. Assets under finance leases are presented under Property and equipment in the
consolidated balance sheets.
Leases that do not transfer substantially all the benefits and risks incidental to ownership of the property are accounted for as
operating leases. When a lease contains a predetermined fixed escalation of the minimum rent, the Corporation recognizes
the related rent expense on a straight-line basis over the term of the lease and, consequently, records the difference between
the recognized rental expense and the amounts payable under the lease as deferred rent expense.
The Corporation also receives tenant allowances, which are amortized on a straight-line basis over the term of the lease or the
useful life of the asset, whichever is shorter.
Gains and losses resulting from sale and leaseback transactions are recorded in the consolidated statements of earnings at
the transaction date except if:
•
•
The sale price is below fair value and the loss is compensated for by future lease payments below market price, in
which case the loss shall be deferred and amortized in proportion to the lease payments over the period during which
the asset is expected to be used; or
The sale price is above fair value, in which case the excess shall be deferred and amortized over the period during
which the asset is expected to be used.
Lease arrangements in which the Corporation is a lessor
Leases in which the Corporation transfers substantially all the risks and rewards of ownership of an asset to a third party are
classified as finance leases. The Corporation recognizes lease payments receivable in the consolidated balance sheets and
presents them as accounts receivable. Lease payments received under finance leases are apportioned between financial
revenues and reduction of the receivable.
Leases that do not transfer substantially all the benefits and risks incidental to ownership of the property to a third party are
accounted for as operating leases. When a lease contains a predetermined fixed escalation of the minimum rent, the
Corporation recognizes the related rent revenue on a straight-line basis over the term of the lease and, consequently, records
the difference between the recognized rental revenue and the rent received under the lease as rent receivable.
Financing costs
Financing costs related to term loans and debt securities are included in the initial carrying amount of the corresponding debt
and are amortized using the effective interest rate method that is based on the estimated cash flow over the expected life of
the liability. Financing costs related to revolving loans are included in other assets and are amortized using the straight-line
method over the expected life of the underlying agreement.
Stock-based compensation and other stock-based payments
Stock-based compensation costs are measured at the grant date of the award based on the fair value method.
The fair value of stock options is recognized over the vesting period of each respective vesting portion as compensation
expense with a corresponding increase in contributed surplus taking into account the number of awards that are expected to
ultimately vest. When stock options are exercised, the corresponding contributed surplus is transferred to capital stock.
The Phantom Stock Units (“PSU”) compensation cost and the related liability are recorded on a straight-line basis over the
corresponding vesting period based on the fair market value of Class B shares and the best estimate of the number of PSUs
that will ultimately be paid. The recorded liability is adjusted periodically to reflect any variation in the fair market value of the
Class B shares and revisions to the estimated forfeitures.
95
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Employee future benefits
The Corporation accrues its obligations under employee pension plans and the related costs, net of plan assets. The
Corporation has adopted the following accounting policies with respect to the defined benefit plans:
•
•
•
•
•
The accrued benefit obligations and the cost of pension benefits earned by active employees are actuarially
determined using the projected unit credit method pro-rated on service, and the pension expense is recorded in
earnings as the services are rendered by active employees. The calculations reflect management’s best estimate of
salary escalation and retirement ages of employees;
Plan assets are valued at fair value;
Actuarial gains and losses arise from increases or decreases in the present value of the defined benefit obligation
because of changes in actuarial assumptions and experience adjustments. Actuarial gains and losses are recognized
immediately in Other comprehensive income (loss) with no impact on net earnings;
Past service costs are recorded to earnings at the earlier of the following dates:
◦ When the plan amendment or curtailment occurs;
◦ When the Corporation recognizes related restructuring costs or termination benefits; and
Net interest on the defined benefit liability (asset) represents the net defined benefit liability (asset), multiplied by the
discount rate and is recorded in financial expenses.
The pension cost recorded in net earnings for the defined contribution plans is equivalent to the contribution, which the
Corporation is required to pay in exchange for services provided by the employees.
The present value of pension obligations depends on a number of factors that are determined on an actuarial basis using a
number of assumptions. Any changes in these assumptions will impact the carrying amount of pension obligations. The
Corporation determines the appropriate discount rate at the end of each fiscal year, which is the rate used to determine the
present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the
appropriate discount rate, the Corporation considers the interest rates of high-quality corporate bonds that are denominated in
the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension
obligation.
Provisions
Provisions are recognized when the Corporation has a present obligation (legal or constructive) as a result of a past event, it is
probable that the Corporation will be required to settle the obligation and a reliable estimate of the amount of the obligation can
be made. The amount recognized as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is
measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those
cash flows.
The present value of provisions depends on a number of factors that are assessed on a regular basis using a number of
assumptions, including the discount rate, the expected cash flows to settle the obligation and the number of years until the
realization of the provision. Any changes in these assumptions or in governmental regulations will impact the carrying amount
of provisions. Where the actual cash flows are different from the amounts that were initially recorded, such differences will
impact earnings in the period in which the payment is made. Historically, the Corporation has not experienced significant
differences in its estimates compared with actual results.
Environmental costs
The Corporation provides for estimated future site remediation costs to meet government standards for known site
contaminations, when such costs can be reasonably estimated. Estimates of the anticipated future costs for remediation
activities at such sites are based on the Corporation’s prior experience with remediation sites and consideration of other
factors such as the condition of the site’s contamination, location of sites and experience of the contractors performing the
environmental assessments and remediation work. In order to determine the initial recorded liability, the present value of
estimated future cash flows was calculated using a pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the liability.
96
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Asset retirement obligations
Asset retirement obligations primarily relate to estimated future costs to remove road transportation fuel storage tanks and are
based on the Corporation’s prior experience in removing these tanks, estimated tank useful life, remaining lease terms for
those tanks installed on leased properties, external estimates and governmental regulatory requirements. A discounted liability
is recorded for the present value of an asset retirement obligation, with a corresponding increase to the carrying value of the
related long-lived asset at the time a storage tank is installed. To determine the initial recorded liability, the future estimated
cash flows are discounted using a pre-tax rate that reflects current market assessments of the time value of money, and the
risks specific to the liability.
Following the initial recognition of the asset retirement obligation, the carrying amount of the liability is increased to reflect the
passage of time and then adjusted for variations in the current market-based discount rate or the scheduled underlying cash
flows required to settle the liability.
Obligations related to general liability and workers’ compensation
In the United States and Ireland, the Corporation is self-insured for certain losses related to general liability and workers’
compensation. The expected ultimate cost for claims incurred as of the consolidated balance sheet date is discounted and is
recognized as a liability. This cost is estimated based on an analysis of the Corporation’s historical data and actuarial
estimates. In order to determine the initial recorded liability, the present value of estimated future cash flows is calculated using
a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Restructuring
Restructuring provisions are recognized only when a detailed formal plan for the restructuring exists and either the plan has
commenced or the plan’s main features have been announced to those affected by it. In order to determine the initial recorded
liability, the present values of estimated future cash flows are calculated using a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability.
A detailed formal plan usually includes:
Identifying the concerned business or part of the business;
The principal locations affected;
•
•
• Details regarding the employees affected;
•
•
The restructuring’s timing; and
The expenditures that will have to be undertaken.
Financial instruments recognition and measurement
The Corporation has made the following classifications for its financial assets and financial liabilities:
Financial assets and financial
Classification
Subsequent measurement (1) Classification of gains and
liabilities
Cash and cash equivalents
Restricted cash
Accounts receivable
Investments
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
losses
Net earnings
Net earnings
Net earnings
Fair value through earnings or loss (unless
fair value through OCI is elected) (2)
Fair value
Net earnings (Other
comprehensive income (loss)
not subject to reclassification to
net earnings if election made)
Derivative financial instruments
Fair value through earnings or loss
Fair value
Net earnings
Derivative financial instruments
designated as net investment hedges
and cash flow hedges
Fair value through earnings or loss subject
Fair value
to hedge accounting requirements
Derivative financial instruments
designated as fair value hedges
Fair value through earnings or loss subject
Fair value
to hedge accounting requirements
Other comprehensive income
(loss) subject to reclassification
to net earnings
Net earnings, with offsetting basis
adjustment recorded to hedged
item
Bank indebtedness and long-term debt
Amortized cost
Accounts payable and accrued liabilities Amortized cost
Amortized cost
Amortized cost
Net earnings
Net earnings
(1) Initial measurement of Accounts receivable is at transaction price while initial measurement of all other financial assets and financial liabilities is at fair value.
(2) The Corporation has elected to classify its investments in equity instruments as fair value through OCI.
97
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Hedging and derivative financial instruments
The Corporation applies general hedge accounting requirements of IAS 39 Financial instruments: recognition and
measurement.
Embedded total return swap
The Corporation is party to an indexed deposit contract to manage current and forecasted risks related to changes in the fair
value of the PSUs and deferred share units (“DSUs”) granted by the Corporation. The indexed deposit contract is recorded at
fair value on the consolidated balance sheets under Other accounts receivable and Other assets and classified as fair value
through earnings or loss.
The Corporation has documented and designated the indexed deposit contract as the hedging item in a cash flow hedge of the
anticipated cash settlement transaction related to the granted PSUs and DSUs. The Corporation has determined that the
indexed deposit contract is an effective hedge at the time of the establishment of the hedge and for the duration of the indexed
deposit contract. The changes in the fair value of the indexed deposit contract are initially recorded in other comprehensive
income (loss) and subsequently reclassified to consolidated net earnings in the same period that the change in the fair value of
the PSUs and DSUs affected consolidated net earnings. Should the hedged transaction no longer be expected to occur, any
gains, losses, revenues or expenses associated with the hedging item that had previously been recognized in Other
comprehensive income (loss) as a result of applying hedge accounting will be recognized in the reporting period’s net earnings
under Operating, selling, administrative and general expenses.
Fuel swaps
The Corporation uses fuel swaps to manage the price risk associated with the commodity prices of road transportation fuel.
The changes in fair value of these swaps are recognized in the consolidated statements of earnings under Cost of sales.
Also, from time to time, the Corporation uses fuel swaps to manage the price risk associated with an anticipated cash
settlement transaction related to a sale of a large volume of fuel. The Corporation documents and designates the fuel swaps
as a cash flow hedge of the anticipated cash settlement transaction related to the sale of fuel. Accordingly, changes in the fair
value of the hedging item, the fuel swaps, are recognized in Other comprehensive income (loss). Realized gains in
Accumulated other comprehensive income (loss) are then reclassified to Revenues in the same period as when the hedged
transaction occurs.
Designated long-term debts denominated in foreign currencies
The Corporation designates a portion of its US-dollar-denominated and its Norwegian-krone-denominated long-term debts as
a foreign exchange hedge of its net investment in its United States and Norwegian operations, respectively. The Corporation
also designates a portion of its Euro-denominated long-term debts as a foreign exchange hedge of its net investment in its
Eurozone and Danish operations. Accordingly, the gains and losses arising from the translation of the designated debts that
are designated to be an effective hedge, are recognized in Other comprehensive income (loss), counterbalancing gains and
losses arising from the translation of the Corporation’s net investment in its United States, Norwegian, and Eurozone and
Danish operations.
Cross-currency interest rate swaps
The Corporation designates cross-currency interest rate swaps as a foreign exchange hedge of its net investment in its foreign
operations. Accordingly, the portion of the gains or losses arising from the translation of the cross-currency interest rate swaps
that are determined to be an effective hedge, are recognized in Other comprehensive income (loss), counterbalancing gains
and losses arising from the translation of the Corporation’s net investment in its foreign operations.
Short-term cross-currency interest rate swaps
Occasionally, the Corporation uses short-term cross-currency interest rate swaps to manage the currency fluctuation risk
associated with forecasted cash disbursements in a foreign currency. Gains or losses arising from the translation of these
short-term cross-currency interest rate swaps are recognized in the consolidated statements of earnings as foreign exchange
gain or loss.
98
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Fixed-to-floating interest rate swaps
The Corporation used fixed-to-floating interest rate swaps to manage the interest rate fair value risk associated with fixed
interest rate debt. The Corporation designated these fixed-to-floating interest rate swaps as a fair value hedge of fixed interest
rate debt issued (the “hedged item”). Accordingly, the hedged item is remeasured to reflect changes in fair value arising from
changes in the hedged risk and such remeasurements are recognized in the consolidated statements of earnings as financial
expenses. This is counterbalanced by gains and losses arising from the remeasurement of the swap’s fair value, which are
recognized in the consolidated statements of earnings as financial expenses as well.
Interest rate locks
From time to time, the Corporation uses interest rate locks to manage the interest rate risk associated with forecasted debt
issuance. The Corporation designates these interest rate locks as a cash flow hedge of the anticipated interest from the debt
issuance. Accordingly, changes in the fair value of the hedging item, the interest rate locks, are recognized in Other
comprehensive income (loss). Realized gains and losses in Accumulated other comprehensive income (loss) are reclassified
to Interest expense over the same periods as the Interest expense on the debt will be recognized in earnings.
Guarantees
A guarantee is defined as a contract or an indemnification agreement contingently requiring an entity to make payments to a
third party based on future events. These payments are contingent on either changes in an underlying element or other
variables that are related to an asset, a liability, or an equity security of the indemnified party or the failure of another entity to
perform under an obligating agreement. It could also be an indirect guarantee of the indebtedness of another party.
Guarantees are initially recognized at fair value and subsequently revaluated when the loss becomes probable.
Business combinations
Business combinations are accounted for using the purchase method. The cost of a business combination is measured as the
aggregate of the fair values, at the date of acquisition, of assets given, liabilities incurred or assumed, and equity instruments
issued by the Corporation in exchange for control of the acquiree. The acquiree’s identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3 Business Combinations, are recognized at their fair value at the
acquisition date. Direct acquisition costs are recorded to earnings when incurred.
Goodwill arising from business combinations is recognized as an asset and initially measured at cost, being the excess of the
cost of the business combination over the net fair value of the identifiable assets, liabilities and contingent liabilities
recognized. If, after reassessment, the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities
exceeds the cost of the business combination, the excess (“Negative goodwill”) is recognized immediately to earnings.
Determination of the fair value of the assets acquired and liabilities assumed requires judgment and the use of assumptions
that, if changed, may affect the consolidated statements of earnings and consolidated balance sheets.
For purchase price allocation and impairment testing purposes, goodwill and other intangible assets with indefinite useful lives
are allocated to CGUs based on the lowest level at which management reviews the results, a level which is not higher than the
operating segment. The allocation is made to those CGUs, which are expected to benefit from the business combination, and
in which the goodwill and intangible assets with indefinite useful lives arose.
Earnings from the businesses acquired are included in the consolidated statements of earnings from their respective dates of
acquisition.
99
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Recently issued accounting standards not yet implemented
Definition of a business
In October 2018, the IASB issued amendments to the guidance in IFRS 3 Business combinations, which revise the definition
of a business. These amendments introduce an optional concentration test that, if met, leads to the conclusion that the group
of assets acquired is not a business and that no further assessment is needed. To be considered a business, an acquisition
would have to include an input and a substantive process that together significantly contribute to the ability to creating outputs.
It is also no longer necessary to assess whether market participants are capable of replacing missing elements or integrating
the acquired activities and assets. These amendments will be applied by the Corporation to business combinations for which
the acquisition date is on or after the beginning of the fiscal year ending April 25, 2021 and to assets acquisitions that occur on
or after the beginning of that period.
4.
BUSINESS ACQUISITIONS
The Corporation has made the following business acquisitions:
2020
•
On January 13, 2020, the Corporation acquired 17 stores from a franchise operator. These convenience stores
operate under the Holiday banner in South Dakota and Minnesota, within the United States. The Corporation owns
the land and the building for 16 locations and leases the land and building for the remaining location.
•
During the fiscal year ended April 26, 2020, the Corporation also acquired 13 company-operated stores through
distinct transactions. The Corporation owns the land and building for 7 sites and leases the land and the building for
the remaining 6 sites.
These transactions were settled for a total consideration of $89.7 using available cash and existing credit facilities. For the
fiscal year ended April 26, 2020, acquisition costs of $6.7 in connection with these acquisitions and other unrealized and
ongoing acquisitions are included in Operating, selling, administrative and general expenses.
The preliminary estimates of the fair value of assets acquired and liabilities assumed for these acquisitions based on the
estimated fair value on the date of acquisition and available information as at the date of the publication of these consolidated
financial statements are as follows:
Tangible assets acquired
Cash and cash equivalents
Inventories
Prepaid expenses
Property and equipment
Right-of-use assets
Total tangible assets
Liabilities assumed
Accounts payable and accrued liabilities
Provisions
Lease liabilities
Total liabilities
Net tangible assets acquired
Goodwill
Total cash consideration paid
Cash and cash equivalents acquired
Net cash flow for the acquisition
$
0.2
4.1
0.1
50.8
10.9
66.1
0.3
0.8
10.9
12.0
54.1
35.6
89.7
0.2
89.5
The Corporation expects that almost all of the goodwill related to these transactions will be deductible for tax purposes.
100
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
These acquisitions were concluded in order to expand the Corporation’s market share. These acquisitions generated goodwill
mainly due to the strategic location of stores acquired. Since the date of acquisition, revenues and net earnings from these
stores amounted to $61.3 and $3.6, respectively. Considering the size and the nature of these acquisitions, the available
financial information does not allow for the accurate disclosure of pro forma revenues and net earnings had the Corporation
concluded these acquisitions at the beginning of its fiscal year.
2019
During the fiscal year ended April 28, 2019, the Corporation acquired six company-operated stores and two commission
operated retail sites through distinct transactions. The Corporation owns the land and building for three sites and leases the
land and the building for the remaining three sites. Theses transactions were settled for a total consideration of $13.1 using
available cash and existing credit facilities and generated goodwill for an amount of $2.2. Acquisition costs of $2.2 in
connection with these acquisitions and other unrealized acquisitions are included in Operating, selling, administrative and
general expenses for the fiscal year ended April 28, 2019.
5.
DISPOSAL OF BUSINESS
2020
See Note 6 for the disposal of the Corporation's interests in CAPL and the related asset exchange agreements.
2019
Disposal of retail sites
On February 5, 2019, the Corporation sold 19 retail sites in Oregon and West Washington for a cash consideration of
approximately $30.0. This transaction resulted in a gain of $17.3 for the fiscal year ended April 28, 2019.
On July 3, 2018, the Corporation sold to Irving Oil Ltd. 13 retail sites in the Canadian Atlantic provinces for a cash
consideration of approximately $30.0. This transaction resulted in a gain of $4.5 for the fiscal year ended April 28, 2019. These
stores, which will continue to be operated by the Corporation, were previously acquired through the CST acquisition.
Statoil Fuel & Retail Marine AS
to which St1 Norge AS acquired 100% of all
On December 1, 2018, the Corporation completed the disposal of its marine fuel business through a share purchase
agreement pursuant
issued and outstanding shares of
Statoil Fuel & Retail Marine AS. Total proceeds from the disposal were $24.3. The Corporation recognized a gain on disposal
of $3.2 in relation to this transaction. The disposal also resulted in a $0.8 cumulated gain on translation adjustments being
reclassified to earnings. These gains are included in Gain on disposal of property and equipment and other assets in the
consolidated statements of earnings for the fiscal year ended April 28, 2019.
6.
CROSSAMERICA PARTNERS LP
On November 19, 2019, the Corporation announced the closing of the sale of its interests in CAPL, representing 100% of the
equity interests of the sole member of the General Partner, 100% of the incentive distribution rights (“IDRs”) and 21.7% of the
outstanding common units of CAPL to investment entities controlled by Joe Topper, the founder of CAPL and a member of the
board of directors of its General Partner. The decision to divest the Corporation’s interests in CAPL was based on the outcome
of a strategic review.
Proceeds, net of transaction costs from the disposal, were $186.9. The Corporation recognized a net gain on disposal of $61.5
in relation to this transaction. This gain is included in Gain on disposal of property and equipment and other assets in the
consolidated statements of earnings for the fiscal year ended April 26, 2020.
CAPL’s accounting periods did not coincide with the Corporation’s accounting periods. The consolidated statements of
earnings, comprehensive income, changes in equity and cash flows for the fiscal year ended April 26, 2020 include those of
CAPL for the period beginning April 1, 2019 and ending November 19, 2019.
101
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
All transactions between the Corporation and CAPL were eliminated from the Corporation’s consolidated financial statements
until November 19, 2019. These transactions consisted of motor fuel purchased and sold between the Corporation and CAPL,
rent charged by CAPL to the Corporation, earnings from CAPL’s equity ownership interest in CST Fuel Supply LP, a subsidiary
of the Corporation, the Corporation’s portion of CAPL’s common unit distributions and the Corporation’s revenues from CAPL’s
IDRs. Additionally, the Corporation provided management and corporate support services to CAPL and charged CAPL a
management fee under the terms of the Amended and Restated Omnibus Agreement, as well as an allocation of certain
incentive compensation. Approximately 78.3% of CAPL’s operating results were attributable to non-controlling interests for the
fiscal year ended April 26, 2020 (78.3% for the fiscal year ended April 28, 2019). Therefore, the Corporation’s shareholders did
not have rights to a substantial portion of the operating results of CAPL. The earnings attributable to CAPL’s other units
holders were presented as non-controlling interests.
CAPL is a publicly traded Delaware limited partnership and its common units are listed for trading on the New York Stock
Exchange under the symbol “CAPL”. As a result, CAPL is required to file reports with the United States Securities and
Exchange Commission (“SEC”), where additional information about its results of operations prepared in accordance with US
Generally Accepted Accounting Principles can be found and should be read in conjunction with the table below which
highlights the results of CAPL’s operations and certain of its financial metrics which are in accordance with IFRS:
Statements of Earnings for the periods from
April 1, 2019 to
November 19, 2019
Revenues
Gross profit
Total operating expenses (excluding depreciation, amortization and impairment)
Depreciation, amortization and impairment
Net financial expenses
Loss before income taxes
Income tax expense (recovery)
Net loss
Statements of Cash Flows for the periods from
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities, including $11.8 and $15.7 of distributions
paid to the Corporation, respectively
Balance Sheets as at
Cash and cash equivalents
Current assets (other than cash and cash equivalents)
Goodwill
Long-term assets (other than goodwill)
Current liabilities
Long-term liabilities
April 1, 2018 to
March 31, 2019(1)
$
2,368.8
188.1
89.3
143.5
29.3
(74.0)
(2.8)
(71.2)
$
1,460.9
130.0
50.8
53.9
25.6
(0.3)
0.7
(1.0)
April 1, 2019 to
November 19, 2019
$
80.1
(7.9)
(76.8)
April 1, 2018 to
March 31, 2019(1)
$
86.8
(14.9)
(67.3)
November 19, 2019(2)
$
March 31, 2019(1)
$
1.7
36.6
87.3
1,088.3
82.3
784.8
6.3
49.5
73.2
1,016.4
64.7
676.0
(1)
(2)
Adjusted for significant transactions, if any.
As of October 22, 2019, criteria for the classification of these assets and liabilities as held for sale had been met.
102
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Asset exchange agreements
November 2019 asset exchange agreement
On March 26, 2020, the Corporation announced the closing of an asset exchange agreement with CAPL (the "November 2019
asset exchange agreement") under which the Corporation transferred a portion of its U.S. wholesale road transportation fuel
operations, which consisted of wholesale fuel supply agreements covering 333 sites, 33 fee and leasehold properties also
covered by wholesale fuel supply agreements for a total of 366 supply agreements, as well as a cash consideration of
approximately $14.0, receiving in return CAPL’s 17.5% limited partnership interest in CST Fuel Supply LP. The Corporation
recognized a net gain on disposal of $41.0 in relation to this transaction which is included in Gain on disposal of property and
equipment and other assets in the consolidated statements of earnings for the fiscal year ended April 26, 2020. Following this
asset exchange agreement, the Corporation owns a 100% interest in CST Fuel Supply LP. Therefore, an amount of $105.2,
net of taxes, was recognized to retained earnings corresponding to the difference between the non-controlling interest in
CST Fuel Supply LP recognized in the Corporation's consolidated financial statements and the fair value of the consideration
to acquire the remaining 17.5% interest in CST fuel Supply LP.
December 2018 asset exchange agreement
On December 17, 2018, the Corporation entered into an asset exchange agreement with CAPL which aimed at exchanging
192 of the Circle K U.S. stores against the real estate property held by CAPL for 56 U.S. company-operated stores leased and
operated by the Corporation pursuant to a master lease that CAPL had previously purchased jointly with or from CST Brands
Inc., and 17 company-operated stores owned and operated by CAPL in the U.S. Upper Midwest (the “December 2018 asset
exchange agreement”). The aggregate value of this agreement will totalize approximately $185.0.
During the fiscal year ended April 26, 2020, the Corporation closed the first four transactions of the December 2018 asset
exchange agreement between CAPL and
transactions,
139 Circle K U.S. stores for a total value of approximately $132.0 have been exchanged against 17 company-operated stores
owned and operated by CAPL and the real estate for 39 properties held by CAPL for an equivalent value.
the Corporation’s wholly owned operations.
these
In
The first two transactions of the December 2018 asset exchange agreement, which occurred while CAPL was fully
consolidated in the Corporation's consolidated financial statements, resulted in a reclassification of $7.7 between equity
attributable to the shareholders of the Corporation and equity attributable to the non-controlling interests. Following these
exchange transactions, the Corporation performed a re-evaluation of its deferred tax assets and liabilities which generated a
net income tax expense of $4.4, of which $2.7 are attributable to shareholders of the Corporation. The third and fourth
transactions of the same agreement, which occurred after the disposal of the Corporation's interests in CAPL, resulted in a
gain of $1.9 which is included in Gain on disposal of property and equipment and other assets in the consolidated statements
of earnings for the fiscal year ended April 26, 2020.
As at November 19, 2019, criteria for the classification as assets held for sale had been met for the assets to be exchanged in
the remaining tranches of the December 2018 asset exchange agreement and in the November 2019 asset exchange
agreement. The following assets and liabilities related to the remaining tranches of the December 2018 asset exchange
agreement were therefore classified as held for sale as at April 26, 2020:
Assets
Property and equipment
Right-of-use assets
Intangible assets
Goodwill
Liabilities
Lease liabilities
Provisions
As at April 26, 2020
$
37.6
5.4
1.4
19.6
64.0
5.9
2.2
8.1
103
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
On May 5, 2020, subsequent to the fiscal year ended April 26, 2020, the Corporation closed the fifth transaction of the
December 2018 asset exchange agreement with CAPL. In this fifth transaction, the Corporation transferred 29 Circle K U.S.
stores for a total value of approximately $32.0. In exchange, CAPL transferred the real estate for 13 properties for an
equivalent value. The remaining assets of this agreement are expected to be exchanged in the second half of calendar 2020.
7.
INVESTMENT IN FIRE & FLOWER HOLDINGS CORP. (“Fire & Flower”)
On August 7, 2019, the Corporation invested an amount of CA $26.0 ($19.5) in Fire & Flower, a leading independent cannabis
retailer listed on the Toronto Stock Exchange and based in Alberta, Canada. This investment is composed of the following:
•
•
Unsecured convertible debentures which bear interest at an annual rate of 8% and mature on December 31, 2020.
Interests are payable semi-annually on June 30 and December 31. At the option of the Corporation, the unsecured
convertible debentures can be converted into common shares of Fire & Flower, at a conversion price of CA $1.07, at
any time between the issuance and the maturity date. As at April 26, 2020 and on a fully diluted basis, the full
conversion of the unsecured convertible debentures would result in a 11.3% ownership interest in Fire & Flower. The
unsecured convertible debentures are measured at fair value through earnings. As at April 26, 2020, the unsecured
convertible debentures were not converted.
Common share purchase warrants which consist of the Series A Warrants, the Series B Warrants and the Series C
Warrants, with each series having their own terms and conditions, as follows:
◦
◦
◦
The Series A Warrants, if exercised in accordance with the terms thereof, would subsequently increase the
Corporation’s interest in Fire & Flower to 21.5% on a fully diluted basis as at April 26, 2020. The Series A
Warrants expire 90 days following the maturity date of the unsecured convertible debentures. The Series A
Warrants must be exercised before the Series B Warrants can be exercised.
The Series B Warrants, if exercised in accordance with the terms thereof, would subsequently increase the
Corporation’s interest in Fire & Flower to 35.1% on a fully diluted basis as at April 26, 2020. They expire 12
months from the date that all Series A Warrants have been exercised, unless the Series A Warrants expire, in
which case the Series B Warrants will also expire. The Series B Warrants must be exercised before the Series C
Warrants can be exercised.
The Series C Warrants, if exercised in accordance with the terms thereof, would subsequently increase the
Corporation’s interest in Fire & Flower to 51.6% on a fully diluted basis as at April 26, 2020. They expire 12
months from the date all Series B Warrants have been exercised, unless the Series B Warrants expire, in which
case the Series C Warrants will also expire.
The common share purchase warrants are measured at fair value through earnings. As at April 26, 2020, no common
share purchase warrants were exercised.
The estimated fair value at initial recognition for the unsecured convertible debentures and the common share purchase
warrants differed from the transaction price. As further described below, such fair values were evidenced by entity-specific
inputs and not solely by a quoted price in an active market for an identical asset or liability or by a valuation technique that
uses only data from observable markets. Such estimated fair values are thus Level 3 measurements (Note 31). Therefore, the
initial measurement of these financial assets was adjusted to defer the difference between the fair value at initial recognition
and the transaction price. Since these differences stem mainly from the time component input of each valuation model, such
initial differences will be recognized gradually over the expected life of each asset using the straight-line method.
The table below shows the amounts presented in Other short-term financial assets on the consolidated balance sheet:
Estimated fair
value of the
convertible
debentures
Estimated fair
value of the
common share
purchase warrants
Estimated total fair
value of the
financial assets
Deferred
differences
Net carrying
amount
Initial measurement
Revenues (expenses) recognized to
Net financial expenses
Effect of exchange rate variations
Balance as at April 26, 2020
$
27.6
(8.0)
(1.1)
18.5
$
39.9
(29.3)
(0.5)
10.1
$
67.5
(37.3)
(1.6)
28.6
$
(48.0)
33.4
0.8
(13.8)
$
19.5
(3.9)
(0.8)
14.8
104
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
The estimated fair value of the unsecured convertible debentures is determined using a one-factor model, where the stock
price is assumed to follow a Black-Scholes, lognormal stock process and the estimated fair value of the common share
purchase warrants is determined using the Black-Scholes option pricing model. The following key unobservable inputs were
used in establishing the fair value of these financial assets and there were no changes in the valuation techniques used since
initial measurement:
Expected volatility(a)
Credit spread over Government of Canada rate (applicable solely
to the unsecured convertible debentures)(b)
As at April 26, 2020
As at August 7, 2019
85.0 %
35.0 %
60.0 %
25.0 %
(a)
Expected volatility
Sensitivity to volatility stems mainly from the limited availability of Fire & Flower historical data given that it is listed on the
Toronto Stock Exchange since February 2019, as well as the emerging market in which it operates.
As at August 7, 2019, and as at April 26, 2020, with all other variables held constant, a 5% increase or decrease in the
expected volatility would not have had a significant impact on the fair value of the unsecured convertible debentures.
As at August 7, 2019, and as at April 26, 2020, with all other variables held constant, a 5% increase in the expected volatility
would have increased by $6.3 and $2.1 the fair value of the common share purchase warrants, respectively. As at the same
dates, a 5% decrease in the expected volatility would have decreased by $6.0 and $1.9 the fair value of the common share
purchase warrants, respectively.
(b)
Credit spread
Sensitivity to credit spread stems mainly from the nature of the financial instrument issued as well as the emerging market in
which Fire & Flower operates.
As at August 7, 2019, and as at April 26, 2020, with all other variables held constant, a 5% increase or decrease in the credit
spread would not have had a significant impact on the fair value of the unsecured convertible debentures.
Valuation process
The Corporation performs the valuations of its financial instruments required for financial reporting purposes, including Level 3
fair values. Changes in Level 2 and Level 3 fair values are analyzed at the end of each reporting period by the Corporation and
reports explaining the reasons for the fair value movements are presented to the Corporation’s management.
8.
INVESTMENT IN JOINT VENTURES AND ASSOCIATED COMPANIES
Investment in joint ventures
Investment in associated companies
2020
$
139.6
0.1
139.7
2019
$
134.5
1.5
136.0
The Corporation’s investment in joint ventures and associated companies, none of which are individually significant to the
Corporation, are recorded according to the equity method. The following amounts represent the Corporation’s share of the joint
ventures’ and associated companies’ net earnings and comprehensive income:
Joint ventures’ net earnings and comprehensive income
Associated companies’ net earnings and comprehensive income
2020
$
25.4
0.1
25.5
2019
$
23.2
0.2
23.4
105
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
9.
SUPPLEMENTARY INFORMATION RELATING TO EXPENSES
Cost of sales
Selling expenses
Administrative expenses
Other operating expenses
Total operating expenses
Employee benefit charges
Salaries
Fringe benefits and other employer contributions
Employee future benefits (Note 30)
Termination benefits
Stock-based compensation and other stock-based payments (Note 28)
10.
COMPENSATION OF KEY MANAGEMENT PERSONNEL
Salaries and other current benefits
Stock-based compensation and other stock-based payments
Employee future benefits (Note 30)
2020
$
2019
$
44,397.7
49,922.7
5,788.1
702.7
81.4
6,572.2
2020
$
5,852.6
758.4
95.0
6,706.0
2019
$
2,394.0
2,373.4
293.1
128.1
6.8
14.3
280.1
126.0
10.0
15.4
2,836.3
2,804.9
2020
$
11.2
8.8
2.5
22.5
2019
$
14.5
9.5
2.9
26.9
For 2020, key management personnel comprise members of the Board of Directors and executive committee. For 2019, they
comprise members of the Board of Directors and senior management.
11.
NET FINANCIAL EXPENSES
Financial expenses
Interest expense
Interest on long-term debt
Interest on lease liabilities (Interest on finance lease obligations for the
fiscal year ended April 28, 2019)
Accretion of provisions (Note 25)
Interest on bank overdrafts and bank loans
Net interest on defined benefit plans (Note 30)
Other finance costs
Financial revenues
Interest on bank deposits
Other financial revenues
Foreign exchange gain
Net financial expenses
2020
$
214.7
90.3
18.3
1.5
1.9
15.5
342.2
(15.4)
(8.8)
(24.2)
(33.5)
284.5
2019
$
259.0
28.5
20.4
3.2
1.8
25.8
338.7
(5.0)
(8.3)
(13.3)
(5.3)
320.1
106
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
12.
INCOME TAXES
Current income tax expense
Deferred income tax expense
2020
$
440.8
105.1
545.9
2019
$
279.2
91.7
370.9
The principal items which resulted in differences between the Corporation’s effective income tax rates and the combined
statutory rates in Canada are detailed as follows:
Combined statutory income tax rate in Canada(a)
Impact of other jurisdictions’ tax rates
Impact of tax rate changes
Other permanent differences
Effective income tax rate
2020
%
26.57
(7.19)
(0.01)
(0.57)
18.80
2019
%
26.67
(4.59)
(0.23)
(4.93)
16.92
(a) The Corporation’s combined statutory income tax rate in Canada includes the appropriate provincial income tax rates.
The components of deferred income tax assets and liabilities are as follows:
Deferred income tax assets
Property and equipment
Expenses deductible during the
following years
Intangible assets
Goodwill
Deferred charges
Tax losses and tax credits
carried forward
Asset retirement obligations
Deferred credits
Revenues taxable during the
following years
Right-of-use assets
Lease liabilities
Investments
Unrealized exchange loss
Balance as at
April 28, 2019
Adoption of
IFRS 16
(Note 3)
$
(8.0)
(2.4)
20.3
(0.1)
25.5
14.6
7.6
(6.8)
3.0
—
—
—
32.7
86.4
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Adjusted
balance,
beginning
of year
Recognized
to earnings
$
$
(8.0)
(2.4)
20.3
(0.1)
25.5
14.6
7.6
(6.8)
3.0
—
—
—
32.7
86.4
1.8
(1.5)
(20.0)
—
3.9
(1.7)
4.7
1.6
(0.8)
(47.2)
47.9
—
5.8
(5.5)
2020
Recognized
directly to other
comprehensive
income (loss) or
equity
Recognized
through business
acquisitions and
disposals as well
as assets held for
sale
Balance as at
April 26, 2020
$
2.0
0.2
2.1
—
(1.1)
(0.3)
(1.7)
0.9
0.2
4.3
(4.4)
1.6
(32.9)
(29.1)
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
(4.2)
(3.7)
2.4
(0.1)
28.3
12.6
10.6
(4.3)
2.4
(42.9)
43.5
1.6
5.6
51.8
107
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Balance as at
April 28, 2019
Adoption of
IFRS 16
(Note 3)
Adjusted
balance,
beginning
of year
Recognized
to earnings
Recognized
directly to other
comprehensive
income (loss) or
equity
2020
Recognized
through business
acquisitions and
disposals as well
as assets held for
sale
Balance as at
April 26, 2020
$
$
$
$
$
$
$
Deferred income tax liabilities
Property and equipment
951.4
(28.7)
922.7
Expenses deductible during the
following years
Intangible assets
Goodwill
Deferred Charges
Tax losses and tax credits
carried forward
Asset retirement obligations
Deferred credits
Revenues taxable during the
following years
Right-of-use assets
Lease liabilities
Investments
Other
Unrealized exchange loss
(73.0)
44.0
235.7
(74.2)
49.9
(83.6)
(51.2)
26.8
—
—
23.8
(0.5)
(12.0)
12.8
—
—
(0.1)
—
—
53.2
—
552.2
(592.6)
—
—
—
(60.2)
44.0
235.7
(74.3)
49.9
(83.6)
2.0
26.8
552.2
(592.6)
23.8
(0.5)
(12.0)
1,037.1
(3.2)
1,033.9
69.4
43.0
18.0
5.0
(1.3)
12.1
8.6
(3.0)
1.0
8.5
(14.8)
(19.5)
0.5
(27.9)
99.6
(7.3)
(0.5)
0.3
(2.1)
(4.1)
21.6
1.2
(1.9)
(0.8)
(25.1)
27.0
(0.1)
—
(36.4)
(28.2)
Balance as at
April 29, 2018
Recognized to
earnings
Recognized directly to
other comprehensive
income (loss) or equity
Recognized through
business
acquisitions and
disposals
(60.0)
924.8
—
—
(18.5)
17.6
0.6
—
—
—
—
—
—
—
—
(17.7)
62.3
220.1
(62.1)
84.2
(73.8)
(2.9)
27.0
535.6
(580.4)
4.2
—
(76.3)
(60.3)
1,045.0
2019
Balance as at
April 28, 2019
Deferred income tax assets
Property and equipment
Expenses deductible during the following
years
Intangible assets
Goodwill
Deferred charges
Tax losses and tax credits carried forward
Asset retirement obligations
Deferred credits
Revenues taxable during the following
years
Unrealized exchange loss
$
1.2
(2.0)
25.0
—
18.9
3.4
1.2
(4.6)
—
14.4
57.5
$
(7.9)
(0.1)
(5.0)
(0.1)
7.8
16.5
6.8
(1.1)
3.2
2.6
22.7
$
(1.8)
(0.3)
0.3
—
(1.2)
(5.3)
(0.4)
(1.1)
(0.2)
15.7
5.7
$
0.5
—
—
—
—
—
—
—
—
—
0.5
$
(8.0)
(2.4)
20.3
(0.1)
25.5
14.6
7.6
(6.8)
3.0
32.7
86.4
108
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Deferred income tax liabilities
Property and equipment
Expenses deductible during the following
years
Intangible assets
Goodwill
Deferred charges
Tax losses and tax credits carried forward
Asset retirement obligations
Deferred credits
Revenues taxable during the following
years
Unrealized exchange (loss) gain
Investments
Other
Balance as at
April 29, 2018
Recognized to
earnings
Recognized directly to
other comprehensive
income (loss) or equity
Recognized through
business
acquisitions and
disposals
841.8
(14.2)
53.8
174.4
(56.3)
(51.0)
(58.2)
(46.8)
—
37.2
38.0
8.0
926.7
126.3
(52.1)
(7.4)
62.9
(16.8)
77.8
(28.4)
(4.8)
28.8
(49.2)
(14.2)
(8.5)
114.4
(16.7)
(6.7)
(2.4)
(1.6)
(1.1)
23.1
3.0
0.4
(2.0)
—
—
—
(4.0)
—
—
—
—
—
—
—
—
—
—
—
—
—
2019
Balance as at
April 28, 2019
951.4
(73.0)
44.0
235.7
(74.2)
49.9
(83.6)
(51.2)
26.8
(12.0)
23.8
(0.5)
1,037.1
The losses carried forward and deductible temporary differences for which deferred tax assets have not been recognized
amounted to $1,421.3 as at April 26, 2020 ($1,272.5 as at April 28, 2019), of which $821.5 will reverse through Other
comprehensive income (loss) ($554.2 as at April 28, 2019).
Of these amounts, approximately $968.7 as at April 26, 2020 had no expiration date ($705.6 as at April 28, 2019). Net capital
losses can be carried forward indefinitely and can only be used against future taxable gains. Other losses carried forward and
deductible temporary differences will expire as follows:
Less than one year
One to two years
Two to three years
Three to four years
Four to five years
Five to ten years
Ten to twenty years
$
8.5
6.4
26.5
75.5
1.2
—
334.5
452.6
During the fiscal year ended April 26, 2020, $34.7 of previously unrecognized deferred tax have been used.
Deferred income tax liabilities that would be payable upon repatriation of the retained earnings of certain foreign subsidiaries
have not been recognized because such amounts are not expected to materialize in the foreseeable future. Temporary
differences related to these investments amounted to $4,016.0 ($2,685.1 in 2019).
109
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
13.
NET EARNINGS PER SHARE
The following table presents the information for the computation of basic and diluted net earnings per share:
Net earnings available to Class A and B shareholders
Weighted average number of shares (in millions)
Dilutive effect of stock options (in millions)
Weighted average number of diluted shares (in millions)
Basic net earnings per share available to Class A and B shareholders
Diluted net earnings per share available to Class A and B shareholders
2020
$
2019
$
2,353.6
1,833.9
1,123.3
1.2
1,124.5
2.10
2.09
1,128.6
1.5
1,130.1
1.62
1.62
In calculating diluted net earnings per share for 2020, 246,668 stock options are excluded due to their antidilutive effect
(323,536 stock options excluded in 2019).
For 2020, the Board of Directors declared total dividends of CA 26.5¢ per share (CA 22.5¢ per share for 2019).
14.
SUPPLEMENTARY INFORMATION RELATING TO THE STATEMENTS OF CASH FLOWS
Changes in non-cash working capital
Accounts receivable
Inventories
Prepaid expenses
Accounts payable and accrued liabilities
Current income taxes
2020
$
545.3
204.2
(47.6)
(936.3)
235.0
0.6
2019
$
40.2
(126.3)
14.8
205.9
(55.1)
79.5
110
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Changes in liabilities arising from financing activities
2020
2019
Net other financial
liabilities
Lease liabilities
Long-term debt
Net other financial
liabilities
Long-term debt,
including obligations
under finance leases
258.7
—
258.7
—
—
(100.6)
—
—
—
79.3
—
—
—
—
$
—
2,952.2
2,952.2
—
(378.2)
—
(187.9)
194.3
130.2
—
10.9
—
—
(72.7)
237.4
2,648.8
$
6,951.4
(328.3)
6,623.1
1,706.9
—
—
(522.7)
—
—
—
—
7.0
3.9
(87.7)
7,730.5
171.7
—
171.7
—
—
3.0
—
—
—
84.0
—
—
—
—
258.7
$
8,906.7
—
8,906.7
(1,819.2)
—
—
—
—
29.6
—
—
8.3
2.9
(176.9)
6,951.4
Balance, beginning of year
Adoption of IFRS 16 (Note 3)
Adjusted balance, beginning of year
Cash flows
Net cash inflow (outflow) in long-term
debt
Principal elements of lease payments
Settlements of derivative financial
instruments
Non-cash movements
Reclassified to liabilities associated with
assets held for sale (Note 6)
Change in estimates
Additions of lease liabilities (New
obligations under finance leases,
net of disposals for 2019)
Change in fair value
Business acquisitions (Note 4)
Amortization of financing costs
Change in fair value of associated
swaps
Effect of exchange rate fluctuations
Balance, end of year
15.
ACCOUNTS RECEIVABLE
Credit and debit cards receivable(a)
Trade accounts receivable and vendor rebates receivable(a)
Provision for credit losses
Credit and debit cards receivable and trade accounts receivable and vendor
rebates receivable – net
Other accounts receivable
2020
$
521.5
518.1
(38.1)
2019
$
801.8
846.9
(30.8)
1,001.5
1,617.9
254.5
1,256.0
246.0
1,863.9
(a)
These amounts are presented net of an amount of $148.7 from Accounts payable and accrued expenses due to netting arrangements
($338.1 as at April 28, 2019).
111
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
The following table details the aging of credit and debit cards receivable and trade accounts receivable and vendor rebates
receivable on a gross basis as well as the aging of provision for expected credit losses based on expected loss rate:
Not past due
Past due 1-30 days
Past due 31-60 days
Past due 61-90 days
Past due 91 days and over
Not past due
Past due 1-30 days
Past due 31-60 days
Past due 61-90 days
Past due 91 days and over
Movements in the provision for expected credit losses are as follows:
Balance, beginning of year
Provision for expected credit losses, net of unused beginning balance
Receivables written off during the year
Reclassified to assets held for sale (Note 6)
Effect of exchange rate variations
Balance, end of year
16.
INVENTORIES
Merchandise
Road transportation fuel(a)
Other products
Gross carrying
amount
Expected loss rate
Loss allowance
2020
$
881.1
78.7
21.2
9.3
49.3
1,039.6
%
0.4
1.5
7.1
5.4
63.9
$
3.4
1.2
1.5
0.5
31.5
38.1
2019
Gross carrying
amount
Expected loss rate
Loss allowance
$
1,460.1
94.6
17.9
15.1
61.0
1,648.7
%
0.1
0.5
1.7
8.6
44.4
2020
$
30.8
18.7
(8.7)
(0.4)
(2.3)
38.1
$
1.6
0.5
0.3
1.3
27.1
30.8
2019
$
31.7
11.3
(10.0)
—
(2.2)
30.8
2020
$
831.6
396.4
9.4
2019
$
782.7
665.2
19.8
1,237.4
1,467.7
(a) For the fiscal year ended April 26, 2020, a write-down to net realizable value expense of $12.9 was recorded for this category in Cost of sales on the
consolidated statements of earnings (nil for the fiscal year ended April 28, 2019).
The cost of sales amounts presented in the consolidated statements of earnings are almost entirely composed of inventory
recognized as an expense.
112
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
17.
PROPERTY AND EQUIPMENT
Year ended April 26, 2020
Net book amount, beginning
Adoption of IFRS 16 (Note 3)
Adjusted net book amount, beginning
Additions
Business acquisitions (Note 4)
Disposals
Depreciation, amortization and impairment expense
Transfers
Reclassified to assets held for sale (Note 6)
Effect of exchange rate variations
Net book amount, end(a)
Buildings and
building
components(b)
Equipment(c)
Leasehold
improvements
$
$
$
Land
$
Total
$
3,830.6
(143.2)
3,687.4
55.4
13.6
(33.2)
(0.7)
12.0
(319.3)
(70.4)
3,233.9
(105.2)
3,128.7
272.9
17.4
(17.5)
(255.0)
4.2
(292.6)
(67.3)
3,670.7
(58.1)
3,612.6
786.4
19.6
(52.3)
(531.9)
(20.7)
(140.6)
(84.7)
394.7
11,129.9
—
(306.5)
394.7
10,823.4
98.0
0.2
(5.5)
(70.3)
4.5
(5.6)
(3.5)
1,212.7
50.8
(108.5)
(857.9)
—
(758.1)
(225.9)
3,344.8
2,790.8
3,588.4
412.5
10,136.5
As at April 26, 2020
Cost
Accumulated depreciation, amortization and impairment
Net book amount (a)
Portion related to property and equipment not operated by the
Corporation as they are subject to operating leases
3,378.4
4,150.0
6,316.7
(33.6)
(1,359.2)
(2,728.3)
3,344.8
2,790.8
3,588.4
927.3
(514.8)
412.5
14,772.4
(4,635.9)
10,136.5
28.1
42.1
3.5
—
73.7
Year ended April 28, 2019
Net book amount, beginning
Additions
Business acquisitions (Note 4)
Disposals
Depreciation and amortization expense
Transfers
Effect of exchange rate variations
Net book amount, end(a)
3,917.2
3,306.6
3,768.7
71.7
2.1
(52.1)
(12.7)
2.0
(97.6)
341.0
4.8
(47.6)
(273.7)
(8.4)
(88.8)
672.2
3.2
(87.7)
(553.3)
(39.1)
(93.3)
293.3
133.3
—
(4.0)
(69.6)
45.5
(3.8)
11,285.8
1,218.2
10.1
(191.4)
(909.3)
—
(283.5)
3,830.6
3,233.9
3,670.7
394.7
11,129.9
As at April 28, 2019
Cost
Accumulated depreciation, amortization and impairment
Net book amount (a)
Portion related to finance leases
3,868.8
4,520.7
6,186.0
(38.2)
(1,286.8)
(2,515.3)
3,830.6
3,233.9
3,670.7
869.9
(475.2)
394.7
15,445.4
(4,315.5)
11,129.9
143.2
105.2
58.1
—
306.5
(a) The net book amount as at April 26, 2020 includes $753.9 related to construction in progress ($677.4 as at April 28, 2019).
(b) For the fiscal year ended April 26, 2020, an impairment loss of $4.7 was recorded for this category in Depreciation, amortization and impairment on the
consolidated statements of earnings (nil for the fiscal year ended April 28, 2019).
(c) For the fiscal year ended April 26, 2020, no impairment loss was recorded for this category ($13.0 in Depreciation, amortization and impairment on the
consolidated statements of earnings for the fiscal year ended April 28, 2019).
113
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
18.
LEASES
Information about leases for which the Corporation is a lessee is presented below:
Right-of-use assets
The reconciliation of the Corporation’s right-of-use assets by underlying asset classes is as follows:
Properties
Motor vehicles
Equipment
Year ended April 26, 2020
Net book amount, beginning
Adoption of IFRS 16 (Note 3)
Adjusted net book amount, beginning
Additions
Business acquisitions (Note 4)
Depreciation and amortization expense
Change in estimates
Reclassified to assets held for sale (Note 6)
Deemed disposals related to subleases
Effect of exchange rate variations
Net book amount, end
As at April 26, 2020
Cost
Accumulated depreciation, amortization and impairment
Net book amount
$
$
—
2,789.8
2,789.8
116.1
10.9
(399.4)
221.6
(172.7)
(1.7)
(71.2)
2,493.4
2,831.1
(337.7)
2,493.4
—
37.6
37.6
12.2
—
(9.0)
(21.6)
—
—
(1.2)
18.0
26.6
(8.6)
18.0
Amounts recognized in the consolidated statements of earnings
Expenses relating to short-term leases
Expenses relating to leases of low-value assets
Expenses relating to variable lease payments not included in the measurement of
lease liabilities
$
—
7.6
7.6
0.6
—
(0.8)
(4.5)
—
—
(0.4)
2.5
3.8
(1.3)
2.5
2020
$
28.6
4.8
23.5
Total
$
—
2,835.0
2,835.0
128.9
10.9
(409.2)
195.5
(172.7)
(1.7)
(72.8)
2,513.9
2,861.5
(347.6)
2,513.9
For the fiscal year ended April 28, 2019, the consolidated statements of earnings include rent expense of $416.8, net of sub-
leasing income of $28.7.
Information on cash flows
Total cash outflow for leases
2020
$
526.3
As at April 26, 2020, the Corporation leases mainly land, buildings, building components, equipment and motor vehicles. Lease
terms are negotiated on an individual basis and contain a wide range of terms and conditions. The lease terms, for the majority
of leases in North America, vary between 5 and 20 years, which include the initial base term and renewal option(s) when
applicable. In Europe, the lease terms range from less than 12 months contracts to contracts with maturities up to more than
50 years and also include options to renew at market prices when applicable. The lease agreements do not impose any
covenants, but leased assets may not be used as security for borrowing purposes. As at April 26, 2020, the Corporation was in
compliance with the restrictions imposed by its lease agreements. As at April 26, 2020, the residual value guarantees expected
to be payable included in calculating the lease liabilities as well as those not expected to be payable and which have hence
been excluded from the lease liabilities were not significant.
114
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Some of the property leases contain variable payment terms that are linked to sales generated from a store. For individual
stores, up to 100% of lease payments are on the basis of variable payment terms and there is a wide range of sales
percentages applied. Variable payment terms are used for a variety of reasons, including minimizing the fixed costs base for
newly established stores. Variable lease payments that depends on sales are recognized in earnings in the period in which the
conditions that triggers those payments occur. For the fiscal year ended April 26, 2020, a 10% increase in variable terms
across all stores in the group with such variable payment terms would not have had a significant impact on the total lease
payments.
Extension and termination options are included in a number of leases across the Corporation. These terms are used to
maximize operational flexibility in terms of managing contracts. The majority of extension and termination options held are
exercisable only by the Corporation and not by the respective lessor. As at April 26, 2020, potential future annual undiscounted
cash outflows of $192.1 have not been included in the lease liabilities for which the contractual maturities are in less than five
years because it is not reasonably certain that renewal options on those leases will be exercised.
As at April 26, 2020, future undiscounted cash outflows of $15.9 have not been included in the lease liabilities because they
are related to leases not yet commenced but to which the Corporation is committed.
Information about leases for which the Corporation is a lessor is presented below:
As at April 26, 2020, the Corporation leases mainly properties. Lease terms are negotiated on an individual basis and contain a
wide range of terms and conditions.
Amounts recognized in the consolidated statements of earnings
Income relating to operating leases, excluding those variable lease payments that do
not depend on an index or a rate
Income relating to variable lease payments that do not depend on an index or a rate
Rental income from subleasing right-of-use assets
2020
$
38.2
37.7
44.7
As at April 26, 2020, the total amount of undiscounted future minimum payments expected to be received under net investment
in subleases is $21.6. These minimum payments are expected to be received as follows:
Less than one year
One to five years
More than five years
Unearned finance income included in
payments above
Net investment in subleases
$
6.9
11.2
3.5
21.6
(1.9)
19.7
As at April 26, 2020, the total amount of undiscounted future minimum operating leases payments expected to be received
under lease and sublease agreements is $92.8. These minimum payments are expected to be received as follows:
Less than one year
One to five years
More than five years
$
23.4
46.9
22.5
92.8
115
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
19.
GOODWILL AND INTANGIBLE ASSETS
Goodwill
Net book amount, beginning of year
Reclassified to assets held for sale (Note 6)
Business acquisitions (Note 4)
CAPL’s goodwill impairment
Disposal of business (Note 5)
Effect of exchange rate variations
Net book amount, end of year
2020
$
5,683.1
(140.9)
35.6
—
—
(72.0)
5,505.8
2019
$
5,845.8
—
2.2
(55.0)
(25.5)
(84.4)
5,683.1
Intangible assets
Year ended April 26, 2020
Net book amount, beginning
Adoption of IFRS 16 (Note 3)
Adjusted net book amount, beginning
Additions
Disposals
Depreciation and
amortization expense
Transfers
Reclassified to assets held for sale
(Note 6)
Effect of exchange rate
variations
Net book amount, end
As at April 26, 2020
Cost
Accumulated depreciation and
amortization
Net book amount
Year ended April 28, 2019
Net book amount, beginning
Additions
Business acquisitions (Note 4)
Disposals
Rent, depreciation and
amortization expense
Transfers
Effect of exchange rate
variations
Net book amount, end
As at April 28, 2019
Cost
Accumulated depreciation and
amortization
Net book amount
Trademarks
Franchise
agreements
Software(a)
Fuel supply
agreements
Favorable
leases
$
$
$
$
$
255.6
—
255.6
—
—
(7.5)
—
—
(7.3)
240.8
61.0
—
61.0
0.3
—
(10.2)
0.2
170.4
—
170.4
56.0
(0.9)
(34.4)
2.6
267.9
—
267.9
—
—
(14.7)
—
—
—
(238.9)
(2.9)
48.4
(19.6)
174.1
—
14.3
277.3
136.3
348.5
55.6
(36.5)
240.8
(87.9)
48.4
(174.4)
174.1
(41.3)
14.3
104.5
(104.5)
—
—
—
—
—
—
—
—
—
—
—
275.3
—
—
(0.8)
(10.9)
—
(8.0)
255.6
75.2
0.2
—
—
(12.3)
—
(2.1)
61.0
177.7
297.9
129.7
41.6
—
(0.5)
(37.4)
(0.9)
(10.1)
170.4
—
—
(1.2)
(28.9)
0.1
—
267.9
—
—
(1.5)
(19.4)
(0.1)
(4.2)
104.5
Other
$
85.0
—
85.0
0.2
(0.1)
(6.3)
(2.8)
Total
$
944.4
(104.5)
839.9
56.5
(1.0)
(73.1)
—
(1.5)
(240.4)
(1.3)
73.2
(31.1)
550.8
180.0
997.7
(106.8)
73.2
(446.9)
550.8
92.2
4.9
0.3
(0.8)
(8.2)
0.9
(4.3)
85.0
1,048.0
46.7
0.3
(4.8)
(117.1)
—
(28.7)
944.4
295.3
149.7
335.6
360.7
152.0
199.2
1,492.5
(39.7)
255.6
(88.7)
61.0
(165.2)
170.4
(92.8)
267.9
(47.5)
104.5
(114.2)
85.0
(548.1)
944.4
(a)
The net book amount as at April 26, 2020 includes $19.8 related to software in progress ($14.5 as at April 28, 2019).
116
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Goodwill and intangible assets with indefinite useful lives are allocated to CGUs based on the geographical location of the
acquired stores. Allocation as at April 26, 2020, and April 28, 2019, is as follows:
CGU
Canada
United States
CAPL(a)
Scandinavia
Central and Eastern Europe
Ireland
Intangible assets with
indefinite useful lives
$
—
185.5
—
53.8
24.3
—
2020
Goodwill
$
743.1
4,278.4
—
408.2
11.3
64.8
Intangible assets with
indefinite useful lives
$
—
185.4
—
59.5
26.0
—
270.9
(a)
As at April 28, 2019, this amount is presented net of a $55.0 accumulated impairment loss.
263.6
5,505.8
2019
Goodwill
$
773.8
4,313.1
73.2
444.6
11.7
66.7
5,683.1
The intangible assets with indefinite useful lives for the United States CGU are the Circle K trademark and licenses, which are
expected to provide economic benefits to the Corporation indefinitely. The intangible asset with indefinite useful life for the
Scandinavia and Central and Eastern Europe (“CEE”) CGUs is the droplet logo, which are expected to provide economic
benefits to the Corporation indefinitely. The Scandinavia CGU includes the activities of Norway, Sweden and Denmark, while
the CEE CGU includes the activities of Estonia, Latvia, Lithuania, Poland and Russia.
For the annual impairment test, the recoverable amount of the CGUs is determined on the basis of their fair value less costs to
sell. The Corporation uses an approach based on Earnings before interest, taxes, depreciation and amortization (“EBITDA”,
which is a non-IFRS measure) multiples of comparable corporations (Level 3) ranging from 8.7x to 12.1x to determine these
values. For CAPL, the Corporation used an approach based on its market capitalization (Level 1) and the discounted cash
flows of its IDRs (Level 3).
During the first quarter of 2019, the Corporation performed its annual goodwill impairment test. As a result of the decrease in
the market capitalization of the CAPL CGU, which was fully included in the United States geographic area, and the decrease in
the fair value of the IDRs, an impairment loss on Goodwill of $55.0 was recorded to Depreciation, amortization and impairment
in the consolidated statements of earnings for the fiscal year ended April 28, 2019.
At the time the goodwill impairment test was performed, the recoverable amount of the Corporation’s share of the CAPL CGU
was $157.3 and the impairment loss recorded reduced the carrying amount of the goodwill for the CAPL CGU to $73.2. The
recoverable amount of the CAPL CGU was determined on the basis of its fair value less costs of disposal, which includes the
Corporation’s shares in CAPL’s market capitalization (Level 1) and the discounted cash flows of its IDRs (Level 3).
The fair value less costs of disposal of the Corporation’s shares in CAPL’s market capitalization was determined using the
following observable inputs:
CAPL’s common unit closing value as at July 23, 2018, date of the annual goodwill impairment test
Number of CAPL’s outstanding common units as at July 22, 2018
% of CAPL’s common units owned by the Corporation as at July 22, 2018
$17.41
34,433,574
21.7 %
With all other variables held constant, every $1.00 decrease in CAPL’s common unit value would have increased the
impairment loss recorded by $7.5.
The fair value less costs of disposal of the IDRs was determined using discounted cash flows based on CAPL’s strategic plan
which was established by its management based on past experience.
117
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
The following key assumptions were used in establishing the recoverable amount of the IDRs and there were no changes in
the valuation technique used:
Annual Distributable cash flows/Total distributions ratio
Debt/Equity financing ratio on business acquisitions
Discount rate
Projection period of the cash flows
Annual growth rate of CAPL’s EBITDA
1.1x to 1.2x
57/43
12.5 %
4 years
In addition to the above key assumptions, in establishing the discounted cash flows of the IDRs, the Corporation considered an
annual growth rate of CAPL’s EBITDA which was determined by taking into consideration organic growth, growth generated by
business acquisitions as well as synergies.
20.
OTHER ASSETS
Investments in equity instruments
Environmental costs receivable (Note 25)
Deferred compensation assets
Indexed deposit contract (Note 31)
Deferred incentive payments
Deposits
Net investment in subleases (Note 18)
Pension benefit assets (Note 30)
Other
21.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued expenses(a)
Sales and excise taxes
Salaries and related benefits
Other
2020
$
78.5
68.4
51.9
34.4
27.1
25.4
19.7
12.5
32.2
2019
$
0.7
75.5
49.1
39.7
38.2
14.9
—
36.6
51.9
350.1
306.6
2020
$
2019
$
1,507.6
2,550.1
733.0
284.1
283.6
767.0
275.8
324.2
2,808.3
3,917.1
(a)
This amount is presented net of an amount of $129.8 from Credit and debit cards receivable and $18.9 from Trade accounts receivable and vendor rebates
receivable due to netting arrangements ($261.6 and $76.5, respectively as at April 28, 2019).
118
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
22.
LONG-TERM DEBT
US-dollar-denominated senior unsecured notes, maturing from July 2022 to January 2050(a)
US-dollar-denominated term revolving unsecured operating credit D, maturing in December 2024(b)
Canadian-dollar-denominated senior unsecured notes, maturing from August 2020 to June 2025(a)
Euro-denominated senior unsecured notes, maturing in May 2026(a)
NOK-denominated senior unsecured notes, maturing in February 2026(a)
CAPL US-dollar-denominated senior secured revolving credit facility, which was without recourse to the
Corporation (Note 6)
Other debts (Obligations related to buildings and equipment under finance leases, payable on various
dates, and other debts as at April 28, 2019)
Current portion of long-term debt
Long-term portion of long-term debt
(a) Senior unsecured notes
2020
$
3,970.7
1,500.0
1,384.8
806.8
63.3
—
4.9
7,730.5
214.7
7,515.8
2019
$
3,379.9
40.0
1,774.5
831.2
77.4
514.8
333.6
6,951.4
1,310.7
5,640.7
As at April 26, 2020, the Corporation had US-dollar-denominated senior unsecured notes totaling $4,000.0, Canadian-dollar-
denominated senior unsecured notes totaling CA $1,950.0, Euro-denominated senior unsecured notes totaling €750.0 and
Norwegian-krone-denominated senior unsecured notes totaling NOK 675.0, divided as follows:
Nominal
amount
Maturity
Coupon rate
Effective rate as at
April 26, 2020
November 1, 2012 issuance
CA $250.0
November 1, 2022
August 21, 2013 issuance
CA $300.0
August 21, 2020
June 2, 2015 issuance
CA $700.0
June 2, 2025
February 18, 2016 issuance
NOK 675.0
February 18, 2026
May 6, 2016 issuance
€750.0
May 6, 2026
July 26, 2017 issuance
$1,000.0
July 26, 2022
July 26, 2017 issuance
CA $700.0
July 26, 2024
July 26, 2017 issuance
$1,000.0
July 26, 2027
July 26, 2017 issuance
January 22, 2020 issuance
January 22, 2020 issuance
$500.0
$750.0
$750.0
July 26, 2047
January 25, 2030
January 25, 2050
3.899%
4.214%
3.600%
3.850%
1.875%
2.700%
3.056%
3.550%
4.500%
2.950%
3.800%
3.963%
4.317%
3.649%
3.927%
1.944%
2.819%
3.133%
3.642%
4.576%
3.033%
3.880%
Interest payment dates
May 1st and November 1st
August 21st and February 21st
June 2nd and December 2nd
April 20th and October 20th
May 6th
July 26th and January 26th
July 26th and January 26th
July 26th and January 26th
July 26th and January 26th
July 25th and January 25th
July 25th and January 25th
On January 22, 2020, the Corporation issued US-dollar-denominated senior unsecured notes totaling $1,500.0. A part of the
net proceeds from these issuances, which were $1,484.1, was used to repay the Corporation’s term revolving unsecured
operating credit D. A portion of these US-dollar-denominated senior unsecured notes was subject to interest rate locks in
anticipation of their issuance (Note 23).
On December 13, 2019, the Corporation fully repaid, at maturity, its $600.0 US-dollar-denominated senior unsecured notes
issued on December 14, 2017. These fixed interest rate US-dollar-denominated senior unsecured notes were subject to fixed-
to-floating interest rate swaps (Note 24).
On November 1, 2019, the Corporation fully repaid, at maturity, its CA $450.0 ($341.4) Canadian-dollar-denominated senior
unsecured notes issued on November 1, 2012.
On May 28, 2019, the Corporation repaid, without penalty, $150.0 on its $300.0 US-dollar-denominated senior unsecured
notes issued on December 14, 2017, and maturing on December 13, 2019. On August 13, 2019, the Corporation repaid,
without penalty, the remaining $150.0 of these $300.0 US-dollar-denominated senior unsecured notes.
The Canadian-dollar-denominated notes issued on November 1, 2012; June 2, 2015; and July 26, 2017; are associated with
cross-currency interest rate swaps (Note 24).
119
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
(b) Term revolving unsecured operating credit D
As at April 26, 2020, the Corporation had a credit agreement consisting of a revolving unsecured facility of a maximum amount
of $2,525.0. The credit facility was available in the following forms:
•
•
A term revolving unsecured operating credit, available i) in Canadian dollars, ii) in US dollars, iii) in Euros, and iv) in
the form of standby letters of credit not exceeding $150.0 or the equivalent in Canadian dollars, with applicable fees.
Depending on the form and the currency of the loan, the amounts borrowed bear interest at variable rates based on
the Canadian prime rate, the bankers’ acceptance rate, the US base rate, LIBOR or EURIBOR plus a variable margin;
and
An unsecured line of credit in the maximum amount of $115.0, available in Canadian or US dollars, bearing interest at
variable rates based, depending on the form and currency of the loan, on the Canadian prime rate, the US prime rate
or the US base rate plus a variable margin.
Standby fees, which vary based on the Corporation’s credit rating, were applied to the unused portion of the credit facility.
Letters of credit fees and the variable margin used to determine the interest rate applicable to borrowed amounts were
determined according to the Corporation’s credit rating as well. Under this credit agreement, the Corporation must maintain
certain financial ratios and respect certain restrictive provisions.
During the fiscal year ended April 26, 2020, this operating credit’s maturity was extended to December 2024.
As at April 26, 2020, the Corporation had $1,500.0 borrowed on the term revolving unsecured operating credit with a weighted
average effective interest rate of 2.110% (unused as at April 28, 2019) and the Corporation did not use the unsecured line of
credit ($40.0 as at April 28, 2019, bearing interests at 5.625%). The Corporation was in compliance with the restrictive
provisions and ratios imposed by the credit agreement.
During the month of May 2020, subsequent to the end of the fiscal year ended April 26, 2020, the Corporation fully repaid the
$1,500.0 borrowed on the term revolving unsecured operating credit.
Bank overdraft facilities
The Corporation had access to bank overdraft facilities totaling approximately $64.1 as at April 26, 2020 ($65.2 as at
April 28, 2019). As at April 26, 2020, and April 28, 2019, they were unused.
Letters of credit
As at April 26, 2020, the Corporation had outstanding letters of credit related to its own operations of $83.5 ($81.0 as at
April 28, 2019), of which $11.9 ($12.6 as at April 28, 2019) reduced funds available under the Corporation’s term revolving
unsecured operating credit D.
23.
INTEREST RATE LOCKS
During the fiscal year ended April 26, 2020, the Corporation entered into interest rate locks at the following conditions:
Notional amount
Interest lock term
Rate
Maturity date
$500.0
10 years
From 1.566% to 1.626%
March 9, 2020
The instruments allowed the Corporation to hedge the variability of its interest payments on the anticipated issuance of
US-dollar-denominated senior unsecured notes due to changes in the US Treasury rates. These instruments were designated
as a cash flow hedge of the Corporation’s interest rate risk and as a result, for the fiscal year ended April 26, 2020, a gain of
$7.5 was recognized in Accumulated other comprehensive loss to reflect the fluctuation in the interest rate locks’ fair value.
On January 22, 2020, prior to their maturity, the Corporation settled all its interest rate locks. The total cumulative gain of $7.5
recognized to Accumulated other comprehensive loss is amortized over the term of the related US-dollar-denominated senior
unsecured notes issued on January 22, 2020, and maturing on January 25, 2030, as an adjustment to the related interest
expense.
120
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
24.
INTEREST RATE AND CROSS-CURRENCY SWAPS
The Corporation has entered into cross-currency interest rate swap agreements, allowing it to synthetically convert a portion of
its Canadian-dollar-denominated senior unsecured notes into US dollars.
Receive – Notional
Receive – Rate
Pay – Notional
Pay – Rate
Maturity
Fair value as at (Note 31)
CA $1,650.0
From 3.056% to
3.899%
US $1,377.9
From 3.226% to
3.870%
From November 1, 2022
to June 2, 2025
Current portion of financial liabilities
Other long-term financial liabilities
April 26, 2020
April 28, 2019
$
237.4
—
237.4
$
250.1
115.0
135.1
These agreements are designated as foreign exchange hedges of the Corporation’s net investment in its operations in the
United States.
On November 1, 2019, the Corporation settled, at maturity, the following cross-currency interest rate swaps:
Receive – Notional
Receive – Rate
Pay – Notional
Pay – Rate
CA $450.0 ($341.4)
3.319%
US $451.4
From 2.733% to 2.740%
In addition to the agreements presented in the table above, the Corporation enters from time to time into short-term cross-
currency interest rate swap agreements. As at April 26, 2020, and April 28, 2019, the Corporation was not taking part in any of
these agreements.
Furthermore, the following fixed-to-floating interest rate swap agreements, which synthetically converted to floating interest
rates
issued on
December 14, 2017, matured on December 13, 2019:
rate US-dollar-denominated senior unsecured notes
the Corporation's $600.0
interest
fixed
Notional amount
Receive – Rate
Pay – Rate
$600.0
2.350%
Three-month LIBOR plus rates varying from
0.350% to 0.355%
These agreements were designated as fair value hedges of the Corporation’s US-dollar-denominated senior unsecured notes
issued on December 14, 2017. No ineffectiveness was recognized during the fiscal year ended April 26, 2020, in relation with
this fair value hedge designation.
121
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
25.
PROVISIONS
The reconciliation of the Corporation’s main provisions is as follows:
2020
Balance, beginning of year
Adoption of IFRS 16 (Note 3)
Adjusted balance, beginning of year
Business acquisitions (Note 4)
Liabilities incurred
Liabilities settled
Accretion expense
Reversal of provisions
Change in estimates
Reclassified to liabilities associated
with assets held for sale (Note 6)
Effect of exchange rate variations
Balance, end of year
Current portion
Long-term portion
2019
Balance, beginning of year
Business acquisitions (Note 4)
Liabilities incurred
Liabilities settled
Accretion expense
Reversal of provisions
Change in estimates
Effect of exchange rate variations
Balance, end of year
Current portion
Long-term portion
Asset
retirement
obligations(a)
Provision for
environmental
costs(b)
Restructuring
provision(c)
Provision for
workers’
compensation(d)
Provision
for general
liability(d)
Other
Total
$
$
$
$
$
$
$
452.2
—
452.2
0.8
6.3
(6.0)
15.6
(6.2)
(33.7)
(39.8)
(15.4)
373.8
31.7
342.1
465.9
0.2
2.7
(5.4)
18.2
(4.9)
(5.8)
(18.7)
452.2
72.1
380.1
166.7
—
166.7
—
19.6
(19.9)
2.1
(7.9)
3.6
(3.5)
(3.5)
157.2
45.5
111.7
180.1
—
14.4
(19.8)
1.6
(6.8)
1.4
(4.2)
166.7
47.4
119.3
14.9
—
14.9
—
4.5
(14.1)
—
(0.9)
0.1
—
(0.3)
4.2
4.0
0.2
20.4
—
10.5
(14.2)
—
(1.0)
—
(0.8)
14.9
14.3
0.6
40.7
—
40.7
—
28.6
(26.0)
0.6
—
0.7
—
(0.1)
44.5
13.1
31.4
44.1
—
23.5
(25.6)
0.5
(0.1)
(1.4)
(0.3)
40.7
12.5
28.2
42.3
33.3
750.1
—
(3.0)
(3.0)
42.3
30.3
747.1
—
32.0
(23.0)
—
(0.2)
(0.3)
(0.5)
—
50.3
9.4
40.9
—
1.4
0.8
92.4
(1.3)
(90.3)
—
(0.6)
—
—
(0.4)
29.4
4.4
25.0
18.3
(15.8)
(29.6)
(43.8)
(19.7)
659.4
108.1
551.3
36.0
43.6
790.1
—
27.5
—
4.2
0.2
82.8
(24.5)
(11.0)
(100.5)
0.1
(0.1)
3.3
—
42.3
8.7
33.6
—
20.4
(2.8)
(15.7)
—
(0.7)
33.3
5.0
28.3
(2.5)
(24.7)
750.1
160.0
590.1
(a)
The total undiscounted amount of estimated cash flows to settle the asset retirement obligations is approximately $698.8 and is expected to be incurred over
the next 40 years. Should changes occur in estimated future removal costs, tank useful lives, lease terms or governmental regulatory requirements, revisions
to the liability could be made.
Environmental costs should be disbursed over the next 20 years.
(b)
(c) Restructuring costs should be settled over the next two years.
(d) Workers’ compensation and general liability indemnities should be disbursed over the next five years.
Environmental costs
The Corporation is subject to Canadian, United States and European legislation governing the storage, handling and sale of
road transportation fuel and other petroleum-based products. The Corporation considers that it is compliant with all important
aspects of current environmental legislation.
The Corporation has an ongoing training program for its employees on environmental issues and performs preventative site
testing and site restoration in cooperation with regulatory authorities. The Corporation also examines its motor fuel equipment
annually.
122
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
In most of the U.S. states in which the Corporation operates, with the exception of Alaska, California, Florida, Iowa, Maryland,
New York, Oregon, Texas, Washington, West Virginia and Wisconsin, the Corporation participates in a state fund to cover the
cost of certain environmental remediation activities after the applicable trust fund deductible is met, which varies by state.
These state funds provide insurance for motor fuel facilities operations to cover some of the costs of cleaning up certain
environmental contamination caused by the use of road transportation fuel equipment. Road transportation fuel storage tank
registration fees and/or a motor fuel tax in each of the states finance the trust funds. The Corporation pays annual registration
fees and remits sales taxes to applicable states. Insurance coverage differs from state to state.
In order to provide for the above-mentioned environmental costs, the Corporation has recorded a $157.2 provision for
environmental costs as at April 26, 2020 ($166.7 as at April 28, 2019). Furthermore, the Corporation has recorded an amount
of $79.4 for environmental costs receivable from trust funds as at April 26, 2020 ($87.3 as at April 28, 2019), of which
$11.0 ($11.8 as at April 28, 2019) is included in Accounts receivable and $68.4 in Other assets ($75.5 as at April 28, 2019).
26.
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred compensation liabilities
Deferred credits
Deposits
Deferred branding credits
Other liabilities
Unfavorable leases (Note 3)
Deferred rent expense (Note 3)
27.
CAPITAL STOCK
Authorized
Unlimited number of shares without par value
2020
$
75.8
25.0
24.8
21.8
14.5
—
—
161.9
2019
$
75.2
29.5
39.4
22.9
23.7
102.7
55.6
349.0
•
•
•
First and second preferred shares issuable in series, non-voting, ranking prior to other classes of shares with respect
to dividends and payment of capital upon dissolution. The Board of Directors is authorized to determine the
designation, rights, privileges, conditions and restrictions relating to each series of shares prior to their issuance.
Class A multiple voting and participating shares, ten votes per share except for certain situations which provide for
only one vote per share, convertible into Class B subordinate voting shares on a share-for-share basis at the holder’s
option. Under the articles of amendment, no new Class A multiple voting shares may be issued.
Class B subordinate voting and participating shares, convertible automatically into Class A multiple voting shares on a
share-for-share basis on the earlier of the following:
◦ When all 4 of the Corporation’s co-founders will have reached the age of 65 years old; or
◦ When all 4 of the Corporation’s co-founders will hold, directly or indirectly, less than 50% of the voting rights
attached to all of the Corporation’s outstanding Class A multiple voting shares and Class B subordinate
voting shares.
The order of priority for the payment of dividends is as follows:
•
•
•
First preferred shares;
Second preferred shares; and
Class B subordinate voting shares and Class A multiple voting shares, ranking pari passu.
123
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Issued and fully paid
The changes in the number of outstanding shares are as follows:
Class A multiple voting shares (in thousands)(a)
Balance, beginning of year
Conversion into Class B shares
Balance, end of the year
Class B subordinate voting shares (in thousands)(a)
Balance, beginning of year
Issued on conversion of Class A shares
Repurchased and cancelled shares(b)
Issuance of shares on stock options exercised
Balance, end of year
2020
253,818
(14)
253,804
875,004
14
(16,354)
224
858,888
1,112,692
2019
264,048
(10,230)
253,818
864,388
10,230
—
386
875,004
1,128,822
(a) Class A multiple-voting shares and Class B subordinate voting shares split
On September 4, 2019, the Board of Directors approved a two-for-one split of all the Corporation’s issued and outstanding
Class A multiple-voting shares and Class B subordinate voting shares as at September 20, 2019. This share split was
approved by regulatory authorities and occurred on September 27, 2019. All share and per-share information in these
consolidated financial statements has been adjusted retroactively to reflect this share split.
(b) Share repurchase program
On April 8, 2019, the Toronto Stock Exchange approved the implementation of a new share repurchase program, which took
effect on April 10, 2019. This program allowed the Corporation to repurchase up to 33,955,152 Class B subordinate voting
shares, representing 4.00% of the 848,878,808 Class B subordinate voting shares of the public float issued and outstanding as
at April 5, 2019 (3.88% of the 874,850,206 Class B subordinate voting shares issued and outstanding as at April 5, 2019). In
accordance with the Toronto Stock Exchange requirements, the Corporation was entitled to purchase, on any trading day, up
to a total of 490,748 Class B subordinate voting shares representing 25.00% of the net average daily trading volume of the
Class B subordinate voting shares for the six-month period preceding April 1, 2019. When making such repurchases, the
number of Class B subordinate voting shares in circulation was reduced and the proportionate interest of all remaining
shareholders in the Corporation’s share capital was increased on a pro rata basis. The last share repurchase was traded on
March 26, 2020. The share repurchase program expired on April 9, 2020, and was not renewed.
An automatic securities purchase plan was also in place and allowed a designated broker to repurchase the Corporation's
shares on its behalf within parameters that were established by the Corporation. The automatic securities purchase plan was
pre-cleared by the Toronto Stock Exchange at the inception of the share repurchase program and expired on April 9, 2020.
During the fiscal year ended April 26, 2020, and under this program, the Corporation repurchased 16,354,384 Class B
subordinate voting shares (nil for the fiscal year ended April 28, 2019). These repurchases were settled for net amounts of
$470.8 (nil for the fiscal year ended April 28, 2019). All shares repurchased under the share repurchase program were
cancelled upon repurchase.
124
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
28.
STOCK-BASED COMPENSATION AND OTHER STOCK-BASED PAYMENTS
Stock option plan
The Corporation has a stock option plan (the “Plan”) under which it has authorized the grant of up to 101,352,000 stock
options for the purchase of its Class B subordinate voting shares.
Stock options have up to a 10-year term, vest 20.0% on the date of the grant and cumulatively thereafter on each anniversary
date of the grant and are exercisable at the designated market price on the date of the grant. The grant price of each stock
option shall not be set below the weighted average closing price for a board lot of the Class B shares on the Toronto Stock
Exchange for the five days preceding the grant. Each stock option is exercisable into one Class B share of the Corporation at
the price specified in the terms of the stock option. To enable option holders to proceed with a cashless exercise of their
options, the Plan allows them to elect to receive a number of subordinate shares equivalent to the difference between the total
number of subordinate shares underlying the options exercised and the number of subordinate shares required to settle the
exercise of the options.
The table below presents the status of the Corporation’s Plan as at April 26, 2020, and April 28, 2019, and the changes therein
during the years then ended:
Number of stock
options
Weighted average
exercise price
Number of stock
options
Weighted average
exercise price
2020
2019
Outstanding, beginning of year
Granted
Exercised
Forfeited
Outstanding, end of year
3,305,592
246,668
(232,782)
—
3,319,478
CA $
19.60
42.17
3.02
—
22.44
3,452,964
327,186
(449,964)
(24,594)
3,305,592
Exercisable, end of year
2,746,798
19.91
2,666,838
CA $
16.68
30.93
5.02
27.15
19.60
17.04
For options exercised in 2020, the weighted average share price at the date of exercise was CA $44.86 (CA $35.94 in 2019).
The following table presents information on the stock options outstanding and exercisable as at April 26, 2020:
Range of
exercise prices
CA $
2 – 16
16 – 30
30 – 45
Options outstanding
Number of
stock options
outstanding as at
April 26, 2020
Weighted average
remaining
contractual life
(years)
Weighted
average
exercise price
Options exercisable
Number of
stock options
exercisable as at
April 26, 2020
471,866
1,970,396
877,216
3,319,478
1.13
4.90
8.16
CA $
5.35
21.39
34.01
471,866
1,911,594
363,338
2,746,798
Weighted
average
exercise price
CA $
5.35
21.14
32.35
The fair value of stock options granted is estimated at the grant date using the Black-Scholes option pricing model on the basis
of the following weighted average assumptions for the stock options granted during the year:
Expected dividends (per share)
Expected volatility
Risk-free interest rate
Expected life
2020
CA $0.25
23 %
1.56 %
8 years
2019
CA $0.20
24 %
2.12 %
8 years
The fair value of stock options granted was CA $10.48 in 2020 (weighted average fair value of CA $8.84 in 2019).
For 2020, the compensation cost charged to the consolidated statements of earnings amounts to $2.1 ($2.4 in 2019).
125
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Deferred share unit plan
The Corporation has a DSU plan for the benefit of its external directors which allows them, at their option, to receive all or a
portion of their annual compensation and directors’ fee in the form of DSUs. A DSU is a notional unit, equivalent in value to the
Corporation’s Class B share. Upon leaving the Board of Directors, participants are entitled to receive the payment of their
cumulated DSUs either in a) the form of cash based on the price of the Corporation’s Class B shares as traded on the open
market on the date of payment, or b) Class B shares bought by the Corporation on the open market on behalf of the
participant.
The DSU expense and the related liability are recorded at the grant date. The liability is adjusted periodically to reflect any
variation in the market value of the Class B shares. As at April 26, 2020, the Corporation had a total of 383,109 DSUs
outstanding (353,964 as at April 28, 2019) and an obligation related to this plan of $11.0 ($10.4 as at April 28, 2019) was
recorded in Deferred credits and other liabilities. The exposure to the Corporation’s share price risk is managed with an
embedded total return swap (Note 31). For 2020, the net compensation cost amounted to $0.9 ($0.9 of net compensation cost
in 2019).
Phantom stock units
The Corporation has a PSU plan allowing the Board of Directors, through its Human Resources and Corporate Governance
Committee, to grant PSUs to the officers and selected key employees of the Corporation (the “participants”). A PSU is a
notional unit whose value is based on the weighted average reported closing price for a board lot of the Corporation’s Class B
subordinated voting share (the “Class B share”) on the Toronto Stock Exchange for the five trading days immediately
preceding the grant date. The PSU provides the participants with the opportunity to earn a cash award. Each PSU initially
granted vests no later than one day prior to the third anniversary of the grant date subject, namely, to the achievement of
performance objectives of the Corporation, based on external and internal benchmarks, over a three-year performance period.
PSUs are antidilutive since they are payable solely in cash.
The table below presents the status of the Corporation’s PSU plan as at April 26, 2020, and April 28, 2019, and the changes
therein during the years then ended in number of units:
Outstanding, beginning of year
Granted
Paid
Forfeited
Outstanding, end of year
2020
2019
1,500,784
1,451,304
554,172
(344,698)
(162,611)
1,547,647
593,992
(325,068)
(219,444)
1,500,784
As at April 26, 2020, an obligation related to this notional unit allocation plan of $12.3 was recorded in Accounts payable and
accrued liabilities ($9.2 as at April 28, 2019) and $11.3 was recorded in Deferred credits and other liabilities ($12.4 as at
April 28, 2019). The price risk of this obligation is also managed with the embedded total return swap (Note 31). For 2020, the
compensation cost amounted to $11.3 ($12.1 for 2019).
126
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
29.
ACCUMULATED OTHER COMPREHENSIVE LOSS
Items that may be reclassified to earnings
Will never be reclassified to earnings
Attributable to shareholders of the Corporation
Cumulative
translation
adjustments
Net investment
hedge
Cash flow
hedge
Cumulative net
actuarial loss
$
$
$
$
Year ended April 26, 2020
Balance, beginning of year
(496.1)
(348.2)
Other comprehensive (loss)
income
Balance, end of year
Year ended April 28, 2019
Balance, beginning of year
Other comprehensive (loss)
income
Balance, end of year
(268.8)
(764.9)
(102.8)
(451.0)
(8.3)
4.6
(3.7)
(287.4)
(263.7)
(13.5)
(208.7)
(496.1)
(84.5)
(348.2)
5.2
(8.3)
Investments in equity
instruments measured at
fair value through Other
comprehensive income
Accumulated other
comprehensive loss
$
—
(14.0)
(14.0)
—
—
—
$
(856.6)
(404.3)
(1,260.9)
(566.3)
(290.3)
(856.6)
(4.0)
(23.3)
(27.3)
(1.7)
(2.3)
(4.0)
30.
EMPLOYEE FUTURE BENEFITS
The Corporation has a number of funded and unfunded defined benefit and defined contribution plans that provide retirement
benefits to certain employees.
Defined benefit plans
The Corporation measures its accrued defined benefit obligation and the fair value of plan assets for accounting purposes on
the last Sunday of April of each year.
The Corporation has defined benefit plans in Canada, the United States, Norway, Sweden and Ireland. Those plans provide
benefits based on average earnings at retirement, or based on the years with the highest salaries and the number of years of
service. The most recent actuarial valuation of the pension plans for funding purposes was as at December 31, 2019, and the
next required valuation will be as at December 31, 2020.
Some plans include benefit adjustments in line with the consumer price index, whereas most of them do not provide such
adjustments. The majority of the benefit payments are from trustee-administered funds. However, there is also a number of
unfunded plans where the Corporation meets the benefit payment obligation as it falls due. Plan assets held in trusts are
governed by local regulations and practice in each country, as is the nature of the relationship between the Corporation and
the trustees and their composition. Responsibility for governance of the plans, investment decisions and contribution
schedules lies jointly with the plan committees and the Corporation.
Reconciliation of the funded status of the benefit plans to the amount recorded in the consolidated financial statements:
Present value of defined benefit obligation for funded pension plans
Fair value of plans’ assets
Net funded status of funded plans – net surplus
Present value of defined benefit obligation for unfunded pension plans
Net accrued pension benefit liability
2020
$
(141.1)
155.4
14.3
(93.3)
(79.0)
2019
$
(125.9)
165.9
40.0
(96.0)
(56.0)
The pension benefit asset of $12.5 ($36.6 as at April 28, 2019) is included in Other assets and the Pension benefit liability of
$91.5 ($92.6 as at April 28, 2019) is presented separately in the consolidated balance sheets.
127
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
The defined benefit obligation and plan assets are composed by country as follows:
Canada
United States
Norway
Sweden
Ireland
2020
Present value of defined benefit obligation
Fair value of plans’ assets
Net funded status of plan – (deficit) surplus
2019
Present value of defined benefit obligation
Fair value of plans’ assets
Net funded status of plan – (deficit) surplus
$
(56.4)
21.2
(35.2)
(57.6)
21.4
(36.2)
As at the measurement date, the plans’ assets consisted of:
Total
$
$
$
$
$
(20.2)
(29.4)
—
1.6
(120.2)
132.6
(8.2)
(234.4)
—
155.4
(20.2)
(27.8)
12.4
(8.2)
(79.0)
(14.5)
(34.9)
—
1.8
(106.3)
142.7
(8.6)
(221.9)
—
165.9
(14.5)
(33.1)
36.4
(8.6)
(56.0)
Cash and cash equivalents
Equity securities
Debt instruments
Government
Corporate
Real estate
Other assets
Total
Quoted Unquoted
Total
$
0.2
77.1
68.5
5.4
—
4.0
$
—
—
—
—
0.2
—
$
0.2
77.1
68.5
5.4
0.2
4.0
2020
Plan’s assets
allocation
%
0.1
49.6
44.1
3.5
0.1
2.6
Quoted Unquoted
Total
$
0.3
88.7
66.5
4.0
—
5.5
$
—
—
—
—
0.9
—
$
0.3
88.7
66.5
4.0
0.9
5.5
2019
Plan’s assets
allocation
%
0.2
53.5
40.1
2.4
0.5
3.3
155.2
0.2 155.4
100.0
165.0
0.9 165.9
100.0
The Corporation’s pension benefit expense for the fiscal year is determined as follows:
Current service cost, net of employee contributions
Administrative expenses
Pension expense for the year
Net interest expense
Curtailment gain
Amount recognized in earnings for the year
2020
$
3.1
0.1
3.2
1.9
(1.1)
4.0
The amount recognized in Other comprehensive income (loss) for the fiscal year is determined as follows:
Losses from change in financial assumptions
Experience gains
Return on assets (excluding amounts included in interest income)
Amount recognized in Other comprehensive loss
2020
$
29.7
(1.3)
1.3
29.7
2019
$
3.7
0.1
3.8
1.8
(2.7)
2.9
2019
$
16.7
(4.9)
(8.0)
3.8
The Corporation expects to make a contribution of $6.3 to the defined benefit plans during the next fiscal year.
128
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
The significant weighted average actuarial assumptions, which management considers the most likely to determine the
accrued benefit obligations and the pension expense, are the following:
Discount rate
Rate of compensation increase
Rate of benefit increase
Rate of social security base amount
increase (G-amount)
2020
2019
Canada United States Norway Sweden
Ireland Canada United States Norway Sweden
Ireland
%
2.95
3.00
2.00
—
%
3.00
3.00
2.00
%
1.75
2.25
0.50
%
1.50
2.75
1.75
%%
1.00
—
0.75
—
2.00
2.75
—
3.30
3.00
2.00
—
%
4.00
3.00
2.00
%
2.50
2.75
0.80
%
2.25
2.75
1.75
%
1.20
—
1.30
—
2.50
2.75
—
The Corporation uses mortality tables provided by regulatory authorities and actuarial associations in each country. The social
security base amount (G-amount) is the expected increase of pensions paid from the state. In some European countries, the
Corporation is responsible for the difference between what the pensioners receive from the state and the entitled pension
based on their salary at the time of retirement.
The weighted average duration of the defined benefit obligation of the Corporation is 20 years.
The sensitivity of the defined benefit obligation to changes in the weighted principal actuarial assumptions is as follows:
Discount rate
Rate of compensation increase
Rate of benefit increase
Increase of life expectancy
Change in assumption
Increase in assumption Decrease in assumption
0.50 %
0.50 %
0.50 %
1 year
Decrease by 9.5%
Increase by 10.6%
Increase by 2.4%
Decrease by 2.1%
Increase by 7.4%
Decrease by 7.5%
Increase by 4.4%
-
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In
practice, this is unlikely to occur, because changes in some of the assumptions may be correlated. When calculating the above
sensitivity analysis, the same method has been applied as when calculating the pension liability recognized in the consolidated
balance sheets.
Through its defined benefit pension plans, the Corporation is exposed to the following risks:
Asset returns: The value of the defined benefit pension plan obligations is calculated using a discount rate set with reference to
corporate bond yields. If plan assets underperform this yield, this will create a deficit. All of the capitalized plans hold a
significant proportion of equities, which are expected to outperform corporate bonds in the long term. Furthermore, the
Corporation actively monitors the performance of the assets to ensure the expected return. To mitigate the risks of assets
underperforming, investment policies require a diversified portfolio that spreads risk across different types of instruments.
Changes in bond yields: A decrease in corporate bond yields will increase defined benefit pension plan obligations. However,
this same decrease will increase existing bond values held by the various plans.
Change in demographic assumptions: A change in demographic assumptions (rate of salary increase or pension increase,
change in mortality tables) will increase or decrease the obligation.
For funded plans, the individual plans have investment policy objectives to bring investment average duration in line with the
average expected life of the obligation and scheduled benefit payments. The Corporation and the trustees actively monitor the
duration and the expected yield of the investments to ensure they match the expected cash outflows arising from the pension
benefit payments. Also, as presented above, to mitigate the risks, the investments are well diversified. The Corporation does
not use derivatives to offset its risk and has not changed the processes from the previous fiscal year.
In Europe, it is the Corporation’s responsibility to make contributions, where required, to the defined benefit plans. The
Corporation contributes to these plans except when they are overcapitalized. For funded plans that are running a deficit, the
Corporation makes payments based on the actuaries’ recommendations and existing regulations. The Corporation is
committed to making special payments in the coming years to eliminate the deficit. These contributions have no significant
impact on the Corporation’s cash flows. The Corporation does not have a funded plan in the United States.
129
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Defined contribution plans
The Corporation’s total pension expense under its defined contribution plans and mandatory governmental plans for the fiscal
year 2020 is $126.1 ($125.0 for 2019).
Deferred compensation plan – United States operations
The Corporation sponsors a deferred compensation plan that allows certain employees in its United States operations to defer
up to 25.0% of their base salary and 100.0% of their cash bonuses for any given year. Interest accrued on the deferral and
amounts due to the participants are generally payable on retirement, except in certain limited circumstances. Obligations under
this plan amount to $53.5 as at April 26, 2020 ($52.4 as at April 28, 2019) and are included in Deferred credits and other
liabilities. The assets of the plan are held in a trust and are subject to the claims of the Corporation’s general creditors under
federal and state laws in the event of insolvency, the trust therefore qualifies as a Rabbi trust for income tax purposes. The
plan’s assets mainly consist of mutual funds and are classified as investments measured at fair value through earnings or loss.
Assets under this plan amount to $51.9 as at April 26, 2020 ($49.1 as at April 28, 2019) and are included in Other assets
(Note 20).
31.
FINANCIAL INSTRUMENTS AND CAPITAL RISK MANAGEMENT
Financial risk management objectives and policies
The Corporation’s activities expose it to a variety of financial risks: foreign currency risk, interest rate risk, credit risk, liquidity
risk and price risk. The Corporation uses cross-currency interest rate swaps to hedge its foreign currency risk related to its net
investments in its operations in the United States, Norway, Denmark, the Baltics and Ireland. The Corporation also uses from
time to time interest rate locks to hedge the interest rates on forecasted debt issuance, and fixed-to-floating interest rate swaps
to hedge the interest rates associated with fixed interest rate debt.
The Corporation’s risk management is predominantly controlled by its treasury department and its road transportation fuel and
other fossil fuel supply group under policies approved by the Board of Directors. These groups controlling risk management
identify, evaluate and hedge financial risks in close co-operation with the Corporation’s operating units. The Board of Directors
provides written principles for overall risk management, as well as policies covering specific areas, such as foreign currency
risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, investment of
excess liquidity and capital risk management.
Foreign currency risk
A large portion of the Corporation’s consolidated revenues and expenses are received or denominated in the functional
currency of the business units operating in the markets in which it does business. Accordingly, the Corporation’s sensitivity to
variations in foreign exchange rates is economically limited.
The Corporation is exposed to foreign currency risk with respect to its cash and cash equivalents denominated in foreign
currencies, long-term debt denominated in US dollars, its Norwegian-krone and Euro-denominated senior unsecured notes
and the cross-currency interest rate swaps, a portion of which are designated as net investment hedges of its operations in the
United States, Norway, Denmark, the Baltics and Ireland. As the Corporation uses the US dollar as its reporting currency, part
of these impacts is compensated by the translation of the Canadian-dollar consolidated financial statements into US dollars.
For the long-term debt denominated in US dollars, Norwegian-krone and Euro-denominated senior unsecured notes and
cross-currency interest rate swaps which are designated as net investment hedges of foreign operations, as at April 26, 2020
and with all other variables held constant, a hypothetical variation of 5.0% of the US-dollar would have had a net impact of
$19.0 on Other comprehensive income (loss) which would be offset by equivalent amounts from the hedged net investments.
For the cash and cash equivalent denominated in foreign currencies, as at April 26, 2020 and with all other variables held
constant, a hypothetical variation of 5.0% of the various foreign currencies would have had a net impact of $152.1 on Net
earnings attributable to shareholders of the Corporation, which would be partially offset by a net impact of $112.5 from the
long-term debts denominated in US dollars not designated as net investment hedges of foreign operations.
130
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Interest rate risk
The Corporation’s fixed rate long-term debt is exposed to a risk of change in fair value due to changes in interest rates. To
mitigate a portion of this risk, the Corporation entered into fixed-to-floating interest rate swaps in order to hedge a portion of the
interest rate fair value risk associated with fixed interest rate debt (Note 24).
The Corporation is exposed to a risk of change in cash flows due to changes in interest rates on its variable rate long-term
debt. As at April 26, 2020, the Corporation did not hold any derivative instruments to mitigate this risk. The Corporation
analyzes its cash flow exposure on an ongoing basis. Various scenarios are simulated taking into consideration refinancing,
renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Corporation calculates the
impact on net financial expenses of a defined interest rate shift. Based on variable rate long-term debt balances as at
April 26, 2020, the annual impact on net financial expenses of a 1.0% shift in interest rates would be $15.0 ($14.2 based on
balances as at April 28, 2019).
The Corporation is exposed to a risk of change in cash flows due to changes in interest rates on future debt issuance. To
mitigate this risk, the Corporation enters from time to time into interest rate locks in order to hedge the interest rates on
forecasted debt issuance (Note 23).
Credit risk
The Corporation is exposed to credit risk with respect to Cash and cash equivalents, Trade accounts receivable and vendor
rebates receivable, Credit and debit cards receivable, net investment in subleases and the indexed deposit contract and
derivative financial instruments when their fair value is favorable to the Corporation.
Key elements of the Corporation’s credit risk management approach include credit risk policies, credit mandates, an internal
credit rating process, credit risk mitigation tools and continuous monitoring and management of credit exposures. Prior to
entering into transactions with new counterparties, the Corporation’s credit policy requires counterparties to be formally
identified, approved, and assigned internal credit ratings as well as exposure limits. Once established, counterparties are
reassessed according to policy and monitored on a regular basis. Counterparty risk assessments are based on a quantitative
and qualitative analysis of recent financial statements, when available, and other relevant business information. In addition, the
Corporation evaluates any past payment performance, the counterparties’ size and business diversification, and the inherent
industry risk. The internal credit ratings reflect the Corporation’s assessment of the counterparties’ credit risk. The Corporation
has maximum credit exposures for individual counterparties. The Corporation monitors outstanding balances and individual
exposures against limits on a regular basis.
Credit risk related to Trade accounts receivable and vendor rebates receivable related to convenience store operations is
limited considering the nature of the Corporation’s activities and its counterparties. As at April 26, 2020, no single creditor
accounted for over 10.0% of total Trade accounts receivable and vendor rebates receivable and the related maximum credit
risk exposure corresponds to their carrying amount.
The Corporation mitigates the credit risk related to Cash and cash equivalents and Credit and debit cards receivable by
dealing with major financial institutions that have very low or minimal credit risk. As at April 26, 2020, the maximum credit risk
exposure related to Cash and cash equivalents and Credit and debit cards receivable corresponds to their carrying amount in
addition to the credit risk exposure related to the Circle K / MasterCard credit cards as described below.
In some European markets, customers can settle their purchases at the Corporation’s multiple points of sale or at any other
merchants with a combined Circle K / MasterCard credit card. The Corporation has entered into agreements whereby the risks
and rewards related to the credit cards, such as fee income, administration expenses and bad debt, are shared between the
Corporation and external banks. Outstanding balances are charged to the customer monthly. The Corporation’s exposure as at
April 26, 2020, relates to receivables of $92.3, of which $57.2 was interest-bearing. These receivables from cardholders are
not recognized in the Corporation’s consolidated balance sheet. For fiscal year 2020, the expensed losses were not significant.
In light of accurate credit assessments and continuous monitoring of outstanding balances, the Corporation believes that the
credits do not represent any significant risk. The income and risks related to these arrangements with the banks are reported
and accounted for on a monthly basis and settlements are occurring every four months.
The Corporation is exposed to credit risk arising from the indexed deposit contract and from derivative financial instruments
when their fair value is favorable to the Corporation. In accordance with its risk management policy, to reduce this risk, the
Corporation has entered into these derivatives with major financial institutions with a very low credit risk.
131
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Liquidity risk
Liquidity risk is the risk that the Corporation will encounter difficulties in meeting its obligations associated with financial
liabilities and lease liabilities. The Corporation is exposed to this risk mainly through its Long-term debt, Accounts payable and
accrued liabilities, lease liabilities and derivative financial instruments when their fair value is unfavorable to the Corporation.
The Corporation’s liquidity is provided mainly by cash flows from operating activities and borrowings available under its
revolving credit facilities.
On an ongoing basis, the Corporation monitors rolling forecasts of its liquidity reserve on the basis of expected cash flows
taking into account operating needs, the tax situation and capital requirements and ensures that it has sufficient flexibility
under its available liquidity resources to meet its obligations.
The contractual maturities of financial liabilities and their related interest as at April 26, 2020, are as follows:
Carrying
amount
Contractual
cash flows
Less than
one year
Between one
and two years
Between two
and five
years
More than
five years
$
$
$
$
$
Non-derivative financial liabilities(1)
Accounts payable and accrued liabilities(2)
US-dollar-denominated senior unsecured notes
Canadian-dollar-denominated senior unsecured
2,025.2
3,970.7
2,025.2
6,028.6
2,025.2
135.6
—
—
135.6
1,339.3
4,418.1
$
—
notes
1,384.8
1,580.5
258.1
40.1
775.1
507.2
US-dollar-denominated term revolving unsecured
operating credit D
1,500.0
1,502.4
1,502.4
Euro-denominated senior unsecured notes
NOK-denominated senior unsecured notes
Lease liabilities - Current contractual maturities
Lease liabilities - Future renewal options
Other debts
Cross-currency interest rate swaps payable(1)
Cross-currency interest rate swaps receivable(1)
806.8
63.3
2,648.8
4.9
916.4
77.5
2,037.7
1,156.6
5.4
237.4
1,606.7
(1,362.4)
15.2
2.4
437.3
17.0
1.7
48.9
(40.1)
12,641.9
15,574.6
4,403.7
—
15.2
2.4
363.2
52.9
1.6
48.9
(40.1)
619.8
—
45.6
7.2
643.0
298.8
1.7
928.2
(775.0)
—
840.4
65.5
594.2
787.9
0.4
580.7
(507.2)
3,263.9
7,287.2
(1) Based on spot rates, as at April 26, 2020, for balances in Canadian dollars, in Norwegian krone, in Euros and for balances bearing interest at variable rates.
(2) Excludes deferred credits as well as statutory accounts payable and accrued liabilities such as sales taxes, excise taxes and property taxes.
Price risk
The Corporation’s sales of refined oil products, which include road transportation fuel and energy for stationary engines,
constitute a material share of its gross profit. As a result, its business, financial position, results of operation and cash flows are
affected by changes in the commodity prices of such products. The Corporation seeks to pass on any changes in purchase
prices to its customers by adjusting sale prices to reflect changes in refined oil product prices. The time lag between a change
in refined oil product prices and a change of prices of fuel sold by the Corporation can impact the gross profit on sales of these
products. From time to time, based on purchases timing and price risk assessments, the Corporation enters into
commodity financial derivatives to mitigate a portion of this risk for its sales and purchases of road transportation fuel and other
fossil fuels. As at April 26, 2020, the notional volume of such financial derivatives was 193,500 metric tons of road
transportation fuel and other fossil fuels and hedge accounting was not applied for any of these financial derivatives.
The Corporation’s obligations related to its PSU plan and DSU plan create a form of price risk as the recorded amounts of the
related liabilities fluctuate in part with the fair value of the Corporation’s Class B shares. To mitigate this risk, the Corporation
has entered into a indexed deposit contract with an investment grade financial institution with an underlying index representing
Class B shares. The indexed deposit contract is recorded at fair market value on the consolidated balance sheets under Other
assets and Accounts receivable. As at April 26, 2020, the nominal of the indexed deposit contract was 1,854,307 Class B
shares. The indexed deposit contract is adjusted as needed to reflect new awards, adjustments and/or settlements of PSUs
and DSUs. As at April 26, 2020, the impact on net earnings or shareholders’ equity of a 5.0% shift in the value of the
Corporation’s share price would not have been significant.
132
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Fair value
The fair value of Trade accounts receivable and vendor rebates receivable, Credit and debit cards receivable and Accounts
payable and accrued liabilities is comparable to their carrying amounts given their short maturity. The carrying values of the
term revolving unsecured operating credit D and the CAPL senior secured revolving credit facility (in 2019) approximate their
fair values given that their credit spreads are similar to the credit spread the Corporation would obtain under similar conditions
at the reporting date.
Fair value hierarchy
Fair value measurements are categorized in accordance with the following levels:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2: Inputs other than quoted prices included in Level 1 but which are observable for the asset or liability, either directly or
indirectly; and
Level 3: Inputs for the asset or liability which are not based on observable market data.
The estimated fair value of each class of financial instruments, the methods and assumptions that were used to determine
them and their fair value hierarchy are as follows:
Financial instruments at fair value on the consolidated balance sheets:
•
•
•
•
•
The fair value of the indexed deposit contract, which is mainly based on the fair market value of the Corporation’s
Class B shares, was $52.7 as at April 26, 2020 ($49.5 as at April 28, 2019) (Level 2). As at April 26, 2020, they are
presented as Accounts receivable for an amount of $18.3 ($9.8 as at April 28, 2019) and Other assets for an amount
of $34.4 ($39.7 as at April 28, 2019) on the consolidated balance sheets;
The fair value of the cross-currency interest rate swaps, which is determined based on market rates, was $237.4 as at
April 26, 2020 ($250.1 as at April 28, 2019) (Level 2). As at April 26, 2020, they are presented as Other long-term
financial liabilities for an amount of $237.4 on the consolidated balance sheets. As at April 28, 2019, they are
presented as Other short-term financial liabilities for an amount of $115.0 and as Other long-term financial liabilities
for an amount of $135.1 on the consolidated balance sheets;
The fair value of the investments in equity instruments, which is based on unadjusted quoted prices, was $78.5 as at
April 26, 2020 ($0.7 as at April 28, 2019) (Level 1). They are presented as Other assets on the consolidated balance
sheets;
The fair value of the fuel swaps, which is determined based on market rates, was $23.8 as at April 26, 2020 ($4.7 as
at April 28, 2019) (Level 2).They are presented as Other short-term financial assets as at April 26, 2020 and as Other
short-term financial liabilities as at April 28, 2019 on the consolidated balance sheets; and
The fair value of the fixed-to-floating interest rate swaps was determined based on market rates and they had
matured as at April 26, 2020 ($3.9 as at April 28, 2019) (Level 2). As at April 28, 2019, they are presented as Other
short-term financial liabilities on the consolidated balance sheets.
Financial instruments not at fair value on the consolidated balance sheets:
•
The table below presents the fair value, which is based on unadjusted quoted prices (Level 1) or on observable
market data (Level 2), and the carrying value of the Corporation’s senior unsecured notes which are not measured at
fair value on the consolidated balance sheets:
US-dollar-denominated senior unsecured notes (Level 2)
Canadian-dollar-denominated senior unsecured notes (Level 1)
Euro-denominated senior unsecured notes (Level 2)
NOK-denominated senior unsecured notes (Level 2)
Carrying value
Fair value
Carrying value
2020
$
3,970.7
1,384.8
806.8
63.3
$
4,026.3
1,436.9
795.6
68.5
$
3,379.9
1,774.5
831.2
77.4
2019
Fair value
$
3,347.6
1,815.0
869.2
86.0
•
See Note 7 for information on the measurement of the investment in Fire & Flower.
133
Alimentation Couche-Tard Inc.Annual Report © 2020
Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Capital risk management
The Corporation’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to
provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce its
cost of capital. The Corporation’s capital comprises total Shareholders’ equity and net interest-bearing debt. Net interest-
bearing debt refers to Long-term debt and its current portion as well as lease liabilities, net of Cash and cash equivalents and
temporary investments, if any.
In order to maintain or adjust its capital structure, the Corporation may issue new shares, redeem its shares, sell less
performing assets to reduce debt or adjust the amount of dividends paid to shareholders (Notes 22 and 27).
In its capital structure, the Corporation considers its stock option, PSU and DSU plans (Note 28). From time to time, the
Corporation uses share repurchase programs to achieve its capital management objectives (Note 27).
The Corporation monitors capital on the basis of the net interest-bearing debt to total capitalization ratio and also monitors its
credit ratings as determined by third parties. For 2019, this measure was presented as if the Corporation’s investment in CAPL
was reported using the equity method as the Corporation believes it allowed a more relevant presentation of its underlying
performance. Also, for the purpose of this calculation for 2019, CAPL’s long-term debt was excluded as it was a non-recourse
debt to the Corporation.
As at the consolidated balance sheets dates, the net interest-bearing debt to total capitalization ratio was as follows:
Current portion of long-term debt and Current-portion of lease liabilities
Long-term debt and lease liabilities
Less: Cash and cash equivalents, including restricted cash
Net interest-bearing debt
Shareholders’ equity
Net interest-bearing debt
Total capitalization
2020
$
597.8
9,781.5
3,649.5
6,729.8
10,066.6
6,729.8
16,796.4
2019
$
1,308.4
5,103.8
736.6
5,675.6
8,923.2
5,675.6
14,598.8
Net interest-bearing debt to total capitalization ratio
40.1%
38.9%
Under its term revolving unsecured operating credits, the Corporation must meet the following ratios on a consolidated basis,
which however exclude CAPL’s results and financial position for 2019:
As at April 26, 2020
•
•
A leverage ratio, which is the ratio of Total debt less Cash and cash equivalents to EBITDA, which is a non-IFRS
measure, for the four most recent quarters; and
An interest coverage ratio, which is the ratio of EBITDA for the four most recent quarters to the total interest paid in
the same periods.
As at April 28, 2019
•
•
An adjusted leverage ratio, which is the ratio of total Long-term debt plus the product of eight times consolidated rent
expense of the Corporation less Cash and cash equivalents to Earnings before interest, taxes, depreciation and
amortization and rent, which is a non-IFRS measure, for the four most recent quarters; and
An interest coverage ratio, which is the ratio of EBITDA for the four most recent quarters to the total interest paid in
the same periods.
The Corporation monitors these ratios regularly and was in compliance with these covenants as at April 26, 2020, and
April 28, 2019.
The Corporation is not subject to any significant externally imposed capital requirements.
134
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
32.
CONTRACTUAL OBLIGATIONS
Purchase commitments
The Corporation has entered into various property purchase agreements, as well as product purchase agreements, which
require the Corporation to purchase minimum amounts or quantities of merchandise and road transportation fuel annually.
Failure to satisfy the minimum purchase requirements could result in termination of the contracts, penalties for shortfall
volumes, change in pricing of the products, payments to the applicable providers of a predetermined percentage of the
commitments and repayments of a portion of rebates received. Historically, the Corporation has generally exceeded such
minimum requirements and does not expect that any potential failure to meet those in the foreseeable future could lead to the
materialization of any of the outcomes described above.
33.
CONTINGENCIES AND GUARANTEES
Contingencies
Various claims and legal proceedings have been initiated against the Corporation in the normal course of its operations and
through acquisitions. Although the outcome of such matters is not predictable with assurance, the Corporation has no reason
to believe that the outcome of any such current matter could reasonably be expected to have a materially adverse impact on
the Corporation’s financial position, results of operations or its ability to carry on any of its business activities.
Guarantees
The Corporation assigned a number of lease agreements for premises to third parties. Under some of these agreements, the
Corporation retains ultimate responsibility to the landlord for payment of amounts under the lease agreements should the
sub lessees fail to pay. As at April 26, 2020, the total future lease payments under such agreements are approximately $14.1
and the fair value of the guarantee is not significant. Historically, the Corporation has not made any significant payments in
connection with these indemnification provisions and do not expect to make any in the foreseeable future.
The Corporation has also issued guarantees to third parties and on behalf of third parties for maximum undiscounted future
payments totaling $12.9. These guarantees primarily relate to financial guarantee commitments under car rental agreements
and on behalf of retailers in Sweden. Guarantees on behalf of retailers in Sweden comprise items such as guarantees towards
retailers’ store inventory, in addition to guarantees towards leased store equipment. The carrying amount and fair value of the
guarantee commitments recognized in the consolidated balance sheet as at April 26, 2020, were not significant.
34.
SEGMENTED INFORMATION
The Corporation operates convenience stores in the United States, in Europe and in Canada. It operates in one reportable
segment, the sale of goods for immediate consumption, road transportation fuel and other products mainly through company-
operated and franchised stores. The Corporation operates its convenience store chain under various banners, including
Circle K, Corner Store, Couche-Tard, Holiday, Ingo and Mac’s. Revenues from external customers mainly fall into three
categories: merchandise and services, road transportation fuel and other.
135
Alimentation Couche-Tard Inc.Annual Report © 2020 Notes to the Consolidated Financial Statements
For the fiscal years ended April 26, 2020 and April 28, 2019
(in millions of US dollars (Note 2), except share and stock option data)
Information on the principal revenue categories as well as geographic information is as follows:
United
States
$
Europe
Canada
$
$
2020
Total
$
United
States
$
Europe
Canada
$
$
2019
Total
$
External customer revenues(a)
Merchandise and services
10,947.2
1,416.3
2,302.7
14,666.2
10,874.9
1,457.8
2,172.7
14,505.4
Road transportation fuel
26,802.5
7,481.1
4,415.7
38,699.3
29,962.7
8,380.7
4,957.9
43,301.3
Other
93.6
652.0
21.3
766.9
65.7
1,220.7
24.5
1,310.9
37,843.3
9,549.4
6,739.7
54,132.4
40,903.3
11,059.2
7,155.1
59,117.6
Gross profit
Merchandise and services
Road transportation fuel
Other
3,692.7
3,188.8
93.7
587.6
932.0
123.6
750.9
344.2
21.2
5,031.2
3,667.3
4,465.0
2,575.1
238.5
65.7
609.0
981.1
149.7
729.7
5,006.0
392.8
3,949.0
24.5
239.9
6,975.2
1,643.2
1,116.3
9,734.7
6,308.1
1,739.8
1,147.0
9,194.9
Total long-term assets(b)
13,079.8
3,565.3
2,504.8
19,149.9
12,617.5
3,402.1
2,104.1
18,123.7
(a) Geographic areas are determined according to where the Corporation generates operating income (where the sale takes place) and according to the location
of the long-term assets.
(b) Excluding financial instruments, deferred tax assets and post-employment benefit assets.
35.
SUBSEQUENT EVENT
Dividends
During its June 29, 2020 meeting, the Board of Directors declared a quarterly dividend of CA 7.0¢ per share for the fourth
quarter of fiscal 2020 to shareholders on record as at July 9, 2020, and approved its payment for July 23, 2020. This is an
eligible dividend within the meaning of the Income Tax Act (Canada).
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Alimentation Couche-Tard Inc.Annual Report © 2020
Corporate Governance &
Executive Leadership Team
BOARD OF DIRECTORS (As at April 26, 2020)
Alain Bouchard
Founder and Executive Chairman of the Board
Nathalie Bourque(1)
Jean Bernier
Eric Boyko(2)
Chair of the Audit Committee
Jacques D’Amours
Co-founder
Richard Fortin
Co-founder
Mélanie Kau(1)
Lead Director and Chair of the Human Resources and Corporate
Governance Committee
Marie-Josée Lamothe(2)
Monique F. Leroux(2)
Réal Plourde
Co-founder
Daniel Rabinowicz(1)
Louis Têtu
Brian Hannasch
President and Chief Executive Officer
(1) Member of the Human Resources and Corporate Governance Committee
(2) Member of the Audit Committee
EXECUTIVE COMMITTEE
(As at April 26, 2020)
Brian Hannasch
President and Chief Executive Officer
Darrell Davis
Executive Vice President, Operations, North America
Hans-Olav Høidahl
Executive Vice President, Operations, Europe
Deborah Hall Lefevre
Chief Technology Officer
Kevin A. Lewis
Chief Marketing Officer
Timothy Alexander Miller
Executive Vice President, Commercial Optimization
Ina Strand
Chief Human Resources Officer
Claude Tessier
Chief Financial Officer
GENERAL INFORMATION
Head Office
4204, Industriel Boulevard
Laval, Québec, H7L 0E3 Canada
Stock Exchange
Toronto Stock Exchange
Symbols: ATD.A and ATD.B
Constituent of the TSX 60 index.
Transfer Agent
AST Trust Company (Canada),
2001, Robert-Bourassa Boulevard, Suite 1600
Montréal, Québec, H3A 2A6 Canada
Auditors
PricewaterhouseCoopers LLP
1250, René-Lévesque Boulevard West, Suite 2500
Montréal, Québec, H3B 4Y1 Canada
EXECUTIVE LEADERSHIP TEAM
(As at April 26, 2020)
Niall Anderton
Senior Vice President, Operations
Brian Bednarz
Senior Vice-President, Operations
Kathleen K. Cunnington
Senior Vice President, Global Shared Services
Rick Johnson
Senior Vice President, Operations
Jørn Madsen
Senior Vice President, Operations
Dennis Tewell
Senior Vice President, Merchandising
Stéphane Trudel
Senior Vice President, Operations
Investor Relations
Jean Marc Ayas, Manager, Investor Relations
investor.relations@couche-tard.com
1-450-662-6632, ext. 4619
Corporate Secretary
Valéry Zamuner, Vice President, General Counsel and Corporate Secretary
valery.zamuner@couche-tard.com
1-450-662-6632, ext. 4549
Media Relations
Lisa Koenig, Head of Global Communications
communication@couche-tard.com
1-450-662-6632, ext. 6611
Annual Shareholders Meeting
September 16, 2020
Additional information on Alimentation Couche-Tard Inc. and press
releases are available on the company’s website at:
www.corpo.couche-tard.com
137
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Alimentation Couche-Tard Inc.Annual Report © 2020