Alimentation Couche-Tard bracing for Hurricane Dorian to hit U.S. stores

CTV National News: Dorian batters North Carolina Genevieve Beauchemin reports from North Carolina where the hurricane has caused widespread damage.

The owner of Circle K is bracing for damage at its network of convenience stores in the southeastern U.S. as Hurricane Dorian moves up the East Coast after pummelling the Bahamas.

Alimentation Couche-Tard chief executive Brian Hannasch says the Quebec-based retailer is watching the situation closely as the devastating storm moves along Florida and strikes the Carolinas.

"The safety of the thousands of our employees in those states is our primary concern," he said Thursday during a conference call about the results of its fiscal first quarter.

"However, we're committed to do our best, help our customers weather those storms as they prepare for Dorian and later recover from the impact."

The convenience store giant has hundreds of locations in states along the eastern seaboard but no presence in the Bahamas.

Couche-Tard is no stranger to the wrath of Mother Nature with its vast global chain occasionally sustaining flooding, hurricanes or earthquakes.

The retailer beat analyst expectations in the quarter even though unfavourable weather reduced traffic in Canada and Europe.

The growth of same-store merchandise revenues slowed from the prior year due to a combination of poor weather and a strong performance a year ago.

Fuel volumes and margins were strong in the United States, which drove the quarter's results.

Hannasch said the company is gaining traction from efforts to encourage spending, including direct mailers and its Lift digital platform that has begun to roll out in Canada. It is also testing home delivery in Texas and expanding its food and beverage offering.

The chief executive also told analysts Thursday that the company remains "very confident" about its strategy to double its business by 2023 despite the current high price of acquisition targets.

"We've seen these environments before...and it won't last and we'll be ready when it doesn't," he said. "Our footprint gives us a unique look at opportunities globally, and we'll remain open to many M&A activities -- opportunities not only in the U.S."

Chief financial officer Claude Tessier added that the company has significant financial firepower to do "significant" deals.

"Meanwhile, we continue to use opportunistically our share buyback and to, just to enhance shareholder value."

It repaid US$150 million in debt and repurchased $46 million worth of stock in the quarter.

The company said after markets closed Wednesday that it was @proceeding with a two-for-one split of its shares as the convenience store giant's profitability continued to grow.

Its net profit attributable to shareholders for the quarter surged 18 per cent year over year to US$538.8 million or 95 cents per diluted shares, up from US$455.6 million or 81 cents per share a year earlier.

Excluding one-time items, adjusted profits for the period ended July 21 equalled 97 cents per share, up from 87 cents per share a year earlier.

Revenues were US$14.16 billion, down 4.2 per cent from US$14.79 billion in the first quarter of 2019.

The retailer was expected to post 95 cents in adjusted earnings on US$15 billion in revenues, according to the financial markets data firm Refinitiv.

Derek Dley of Canaccord Genuity raised his target price by $2 to $92 as he said Couche-Tard continues to generate robust free cash flow and has the financial ability to expand.

"While transaction multiples remain elevated today, the company is continually evaluating acquisitions, and believes as the acquisition environment normalizes from a valuation perspective the company will be ready and well capitalized to act.