ALIMENTATION COUCHE-TARD INC.
INVESTORS PRESENTATION
September 2017 FORWARD-LOOKING INFORMATION AND CAUTIONARY LANGUAGE
This presentation and the accompanying oral presentation contain forward-looking statements within the meaning of applicable securities legislation. Forward-looking statements are typically identified by words such as “projected”, “estimate”, “may”, “anticipate”, “believe”, “expect”, “plan”, “intend” or similar words suggesting future outcomes or statements regarding an outlook. All statements other than statements of historical fact contained in these slides are forward-looking statements.
Forward-looking statements involve numerous assumptions, risks and uncertainties. A variety of factors, many of which are beyond Alimentation Couche-Tard Inc.’s (“Couche-Tard”) control, may cause actual results to differ materially from the expectations expressed in its forward-looking statements. These factors include, but are not limited to, the effects of the integration of acquired businesses and the ability to achieve projected synergies, fluctuations in margins on motor fuel sales, competition in the convenience store and retail motor fuel industries, foreign exchange rate fluctuations, and such other risks as described in detail from time to time in documents filed by Couche-Tard with securities regulatory authoritiesin Canada, including those risks described in Couche-Tard’s management’s discussion and analysis (MD&A) for the year ended April 30, 2017. Couche-Tard’s MD&A and other publicly filed documents are available on SEDAR at www.sedar.com.
Unless otherwise required by law, Couche-Tard does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by it or on its behalf. No financial information presented in this presentation as of a date more recent than April 30, 2017 has been audited.
While the information contained in this presentation is believed to be accurate, Couche-Tard expressly disclaims any and all liability for any losses, claims or damages of whatsoever kind based upon the information contained in, or omissions from, this presentation or any oral communication transmitted in connection therewith. In addition, none of the statements contained in this presentation are intended to be, nor shall be deemed to be, representations or warranties of Couche-Tard and its affiliates. Where the information is from third-party sources, the information is from sources believed to be reliable, but Couche-Tard has not independently verified any of such information contained herein.
This presentation is not, and under no circumstances is to be construed as, a prospectus, an offering memorandum, an advertisement or a public offering of securities. Under no circumstances should the information contained herein be considered an offer to sell or a solicitation of an offer to buy any securities.
2 COMPANY REPRESENTATIVES
Claude Tessier Chief Financial Officer
Mathieu Descheneaux Vice President Finance
3 AGENDA
1. Company Highlights 2. Ambitions & Strategy 3. Network Development 4. Value Creation & Financial Review 5. CST Case Study
4 KEY DATA
• Listed on the Toronto Stock Exchange ATD.B
• Market Cap1 Approx. CA$34B
• Revenue US$37.9B Fiscal Year 20172 US$9.8B Q1 2018 YTD2 (+16.9%)
• Gross Profit US$6.5B Fiscal Year 20172 US$1.7B Q1 2018 YTD2 (+14.4%)
• EBITDA US$2.4B Fiscal Year 20172 US$0.7B Q1 2018 YTD2 (+12.2%)
• Number of stores3 13,974 North America 9,471 Europe 2,754 International 1,749
• Net Debt / Leverage4 FY2017 US$2.7B / 1.09x Q1 2018 US$6.4B / 2.31x • Ratings S&P BBB (Stable outlook) Moody’s Baa2 (Stable outlook)
1.Close as at September 8, 2017. 2.Fiscal Year ended 30/04/2017 and Q1 2018 YTD being 12 weeks to 23/07/2017. 3.Includes Couche-Tard’s Company-Owned/Dealer-Operated and Dealer-Owned-Dealer-Operated sites as at July 23, 2017. 4.Long term interest-bearing debt, net of cash and cash equivalents and temporary investments divided by EBITDA adjusted for 5 non-recurring items. Refer to the Corporation’s MD&As for more details. ALIMENTATION COUCHE-TARD INC.
COMPANY HIGHLIGHTS WHO WE ARE
Couche-Tard is a Canada based group and a world leader in the convenience store and road transportation fuel retail sector • In North America, Couche-Tard is the largest independent convenience store operator in terms of number of company-operated stores. • In Europe, Couche-Tard is a leader in convenience store and road transportation fuel retail in Scandinavia, Ireland and the Baltic countries, with a significant presence in Poland.
• 9,471 convenience stores throughout North America, including 8,129 stores offering road transportation fuel in all 10 Canadian provinces and 42 U.S. North America States, and employing about 95,000 people. • More than 1,200 locations in the U.S. supplied with road transportation fuel through CrossAmerica Partners LP.
• 2,754 stores, comprising a broad retail network across Scandinavia (Norway, Sweden and Denmark), Ireland, the Baltics (Estonia, Latvia and Europe Lithuania), Poland and Russia. Including employees at its branded franchise stations, about 25,000 people work in its retail network, terminals and service offices across Europe.
• More than 1,700 stores operated by independent operators under the International Circle K banner in 13 other countries or regions worldwide which brings the number of sites in Couche-Tard’s network to over 15,000.
Store count as at July 23, 2017.
7 COMPANY HISTORY
• 1980 Start of operations with the opening of a first convenience store located in Laval, Québec. • 80’s-90’s Consolidation of the Canadian market. • 2001 First breakthrough of Couche-Tard in the United States : acquisition of the assets of Johnson Oil Company, Inc., owner of 225 Bigfoot stores, all located in the U.S. Midwest. • 2003 Acquisition of The Circle K Corporation from ConocoPhillips Company that operates 1,663 Circle K corporate stores located in 16 States and has a franchising or licensing relationship with 627 additional stores in the U.S. and worldwide. • 2004 Couche-Tard becomes an active player in the US market consolidation. • 2012 Acquisition of Statoil Fuel & Retail, a leading Scandinavian road transport fuel retailer. Statoil Fuel & Retail operates a broad retail network across Scandinavia (Norway, Sweden, Denmark), Poland, the Baltics (Estonia, Latvia, Lithuania) and Russia with approximately 2,300 stores, the majority of which offer fuel and convenience products while the others are automated (fuel only) stations. • 2015 Acquisition of The Pantry Inc., a leading convenience store operator in the southeastern United States and one of the largest independently operated convenience store chains in the United States. The Pantry operates approximately 1,500 stores in 13 States under select banners, including Kangaroo Express®, its primary operating banner. • 2015 Couche-Tard launches its global Circle K brand, the world’s preferred destination for convenience and fuel. • 2016 Acquisition of Topaz, the leading convenience and fuel retailer in Ireland, made up of 444 stores. • 2016 Couche-Tard signs an agreement with Imperial Oil to acquire 278 Esso-branded Canadian fuel and convenience sites located in the provinces of Ontario and Québec. • 2017 Couche-Tard enters into a merger agreement to acquire 100% of the outstanding shares of CST Brands, Inc. (NYSE:CST) which stands as the 4th largest chain in North America with 1,146 locations in the US due to a strong presence in Texas and 873 locations in Canada. • 2018 Couche-Tard enters into a merger agreement to acquire 100% of the outstanding shares of Holiday Stationstores, Inc. an important convenience store player in the U.S. Midwest region, with 522 stores, a food commissary and a fuel terminal in Newport, Minnesota, which supplies one third of the stations.
8 A DISCIPLINED CONVENIENCE STORE OPERATOR AND INTEGRATOR
• Combines world class retailer and leading C-store operator with geographically Broad Geographic Footprint with diverse footprint Leading Market Positions • Strong banners, with our new global convenience brand “Circle KTM” and our fuel banner “Ingo” at unmanned stations in Scandinavia
• Increasing focus on private label, fresh food products and famous for concepts Superior Product Offerings • Industry leading merchandise gross margin
Track Record of Highly Disciplined • Proven integrator • Well positioned to lead further consolidation in fragmented industry Growth and Debt Reduction • Committed to investment grade post acquisition
•Steady industry performance throughout downturns with strong projected growth Attractive Sector Dynamics •C-store sector well positioned to gain share from traditional food retail •Industry-leading returns in recessions
•Strong and consistent financial performance throughout all economic cycles Powerful Financial Results •Prolific history of positive same-store comps and 22.5% Return on equity1 •Significant FCF generation (2012-2017) CAGR of 17%
•Proven ability to extract significant synergies from acquisitions Attractive Synergy Potential •Transferring best practices across entire platform
•Management team with strong track record and founders have 22% equity ownership as of April 30, 2017 Disciplined Management Culture •Management and Board need to hold a multiple of their salary in Shares •Decentralized operating model
(1) As of April 30, 2017.
9 EXPERIENCED MANAGEMENT TEAM
Alain Bouchard Brian P. Hannasch Claude Tessier Founder and Executive President and Chief Chief Financial Officer Chairman of the Board Executive Officer On September 24, 2014, President and Chief Claude Tessier, CPA, CA, is Mr. Bouchard stepped down Executive Officer since Couche-Tard’s Chief as President and Chief 2014. Previously Chief Financial Officer since Executive Officer and took Operating Officer since 2010 January 2016. Beforehand, on a new role as Founder and Senior Vice-President, Mr. Tessier was President of and Executive Chairman of U.S. Operations from 2008 the IGA Operations the Board of Directors. to 2010. Business Unit part of Sobeys since 2012.
Jean Bernier Geoffrey C. Haxel Dennis Tewell Darrell Davis Group President Global Senior Vice-President, Senior Vice-President, Senior Vice-President, Fuels and North-East Operations Operations Operations Operations Appointed Senior Vice- Appointed Senior Vice- Appointed Senior Vice- Appointed Group President President, Operations in President, Operations in President, Operations in Global Fuels and North-East January 2011. He was June 2013. Prior to his May 2012. Previously, he Operations on July 30, 2012. formerly Vice-President, current appointment, He had been Vice-President He has over 25 years of Operations, U.S. Arizona held the position of Vice- Operations, Florida since experience in the Region since December President, Worldwide March 2011. convenience store, fuel and 2003. Franchise as he joined grocery store sectors of the Couche-Tard in January retail industry. 2011.
Alex Miller Jacob Schram Jørn Madsen Hans-Olav Høidahl Senior Vice President, Group President, European Executive Vice-President, Executive Vice-President, Global Fuels Operations Central & Eastern Europe Scandinavia Appointed Senior Vice- Appointed Group President, Appointed Executive Vice- Appointed Executive Vice- President Global Fuels on European Operations in President, Central & Eastern President, Scandinavia on February 16, 2016. June, 2012. He was formerly Europe on October 1, 2010. October 1, 2010. He was Previously, he had been Chief Executive Officer for He was formerly Vice formerly Vice President for Vice-President North Statoil Fuel & Retail from President for country Energy Europe in the Statoil American Fuels since October 1st, 2010. He joined operations in Statoil Energy Group since 2006. October 2012. He joined Statoil in 1996. & Retail since 2007. He Couche-Tard in January joined Statoil in 1990. 2012 as Director of Operations Midwest.
10 Largest independent convenience store operator in the US in terms of number of NORTH AMERICAN NETWORK company operated stores • In the US, the convenience sector is fragmented and in a consolidation phase • Couche-Tard acquired The Pantry in March 2015, one of the largest independently operated convenience stores in the US • On June 28, 2017, Couche-Tard acquired 100% of the outstanding shares of CST Brands, the 4th largest chain in North America. Leader in the Canadian convenience store industry • In Canada, the convenience store sector is dominated by a few major players including Couche-Tard and integrated oil companies. Some of the latter are selling, or expected to sell their retail assets. • On September 7, 2016, Couche-Tard received the approval from the Canadian Competition Bureau to acquire from Imperial Oil Limited 279 sites in Ontario and Quebec and finalized the integration of these sites during the third quarter of fiscal 2017.
Canada US Couche-Tard Circle K Circle K Kangaroo Express Mac’s, Esso & CST (will be & CST (will be rebranded to Circle K) rebranded to Circle K)
Total network of 9,471 stores in North America
As at July 23, 2017.
11 EUROPEAN NETWORK
Leader in convenience store and road transportation fuel retail in the Scandinavian and Baltic countries and Ireland • The European convenience store sector is often dominated by a few major players, including integrated oil companies. Some of these are in the process of selling, or are expected to sell their retail assets • Key brands: Circle K Being rebranded from Statoil Ingo Unmanned Scandinavian stations Topaz Will be rebranded to Circle K
2,754 stores in 9 countries or regions in Europe
As at July 23, 2017.
12 INTERNATIONAL PRESENCE
Central / South Asia America
China United Arab Mexico Emirates 86 461 31
Guam • Convenience stores Honduras 13 operated by independent 25 operators under the Hong Kong Circle K brand Egypt 332 • License agreement to 9 Costa Rica Philippines use the brandname 5 Macau Vietnam 16 Circle K 30 246
Malaysia 6 Indonesia 489
More than 1,700 licensed Circle K stores in Asia, Costa Rica, Egypt, Honduras, Mexico and U.A.E
As at July 23, 2017.
13 CONSOLIDATED NETWORK RECAP
Canada U.S. Europe International Total presence COCO(1) 1,602 5,759 1,968 - 9,329 CODO(2) 251 131 360 - 742 DODO(3) 1 623 426 - 1,050 Franchise/Affiliated(4) 377 727 - - 1,104
Licensed(5) - - - 1,749 1,749
Total 2,231 7,240 2,754 1,749 13,974
Of which: Automats - - 981 - 981 # With fuel 1,194 6,935 2,752 - 10,881 % With fuel 54% 96% 99.9% - 78%
(1) 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. (2) 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. (3) 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. (4) Stores operated by an independent operator through a franchising, licensing or another similar agreement under one of our main or secondary banners. (5) Stores operated by independent operators under the Circle K banner in other countries or regions worldwide.
As at July 23, 2017. Excludes CrossAmerica Parners LP
14 COUCHE-TARD IS A WORLD LEADER
Couche-Tard is a leading global convenience store operator with EBITDA of $2.5 billion • Well diversified across geographies • Focus on growing high margin categories
REVENUES
Merchandises and services Motor Fuel Other Total
$10,971M $27,213M $1,147M $39,331M
Europe US Canada Other 12% 1% 2% 3% Merchandise Europe and services 25% 28% Canada Revenues 17% By Products Canada US 13% 62% LTM Q1 US Europe 97% Motor fuel 2018 71% 69%
GROSS PROFITS
Merchandises and services Motor Fuel Other Total
$3,780M $2,700M $221M $6,701M
US Other Europe Europe 3% 7% Canada 14% 35% 9% Motor fuel Gross 40% Profit By Canada 17% Products LTM Q1 US 2018 US 54% Europe Merchandise 69% Canada 84% and services 11% 57%
Financial data presented for the LTM as of Q1 2018.
15 COUCHE-TARD IS A WORLD LEADER
REVENUES
U.S. Canada Europe Total
$24,792M $5,444M $9,095M $39,331M
Other Other Merchandise 0.1% 0.4% Other Europe Merchandise and services Merchandise 12% 23% and services 14% and services 34% Revenues 32% By Geography Canada US Motor fuel Motor fuel 14% 63% LTM Q1 68% 65% 2018 Motor fuel 74%
GROSS PROFIT
U.S. Canada Europe Total
$4,066M $966M $1,669M $6,701M
Other Other 0.4% 2% Other 11% Merchandise Europe and services 25% Motor fuel Motor fuel 32% Gross 36% 32% Profit By Geography US LTM Q1 Canada 61% Merchandise Merchandise 14% 2018 and services and services Motor fuel 66% 64% 57%
Financial data presented for the LTM as of Q1 2018.
16 REVENUE & GROSS PROFIT
Gross Profit is the more accurate reflection of our business operations
Revenue (in millions of US dollars)
11% CAG • Revenue includes road transportation fuel 37,962 37,905 39,331 revenues which is the dollar amount of sales 35,543 2,800 34,530 34,145 1,147 1,126 2,676 1,972 767 • Revenue can therefore change with movements in the average selling price of road 22,980 26,054 27,213 6 27,209 23,306 transportation fuel 25,271 24,282
16,375 • In fiscal 2017, road transportation fuel revenue represented about : 10,072 10,724 10,971 6,599 7,596 7,953 8,276 63% of total revenue in Canada 2012 2013 2014 2015 2016 2017 LTM Q1 2018 Merchandise Motor Fuel Other 68% of total revenue in the US, and Gross profit (in millions of US dollars) 74% of total revenue in Europe 6,701 17% CAG 6,482 6,082 221 • Yet, road transportation fuel gross margins 213 211 5,268 represented only about 40% of Couche-Tard’s 4,988 2,700 4,610 334 2,587 overall gross profit 401 2,440 347 2,129 • Gross profit represents our income after cost of 1,888 2,975 1,664 sales 6 787
3,431 3,682 3,780 2,599 2,699 2,806 2,182
2012 2013 2014 2015 2016 2017 LTM Q1 2018 Merchandise Motor Fuel Other CAG: Five-year compounded annual growth - fiscal 2017 over fiscal 2012
17 A HISTORY OF STRONG FINANCIAL PERFORMANCE Gross Profit Same Store Sales Growth
2012 2013 2014 2015 2016 2017
17% CAG Merchandise sales (in millions of US Dollars) US 2.7% 1.0% 3.8% 3.9% 4.6% 2.0% 6,482 6,082 Europe 1.6% 2.0% 2.8% 3.5% 5,268 4,988 2.8% 2.0% 1.9% 3.4% 2.9% 0.1% 4,610 Canada Motor Fuel Volume 2,975 US 0.1% 0.6% 1.7% 3.4% 6.6% 2.6%
Europe 2.5% 2.4% 2.6% 1.0% 2012 2013 2014 2015 2016 2017 Canada -0.9% 0.0% 1.3% -0.1% 0.9% -0.3% EBITDA Free Cash Flow (1)
23% CAG 17% CAG
(in millions of US Dollars) (in millions of US Dollars)
1,065 2,331 2,396 979 865 890 1,876 1,640 614 1,376 404 841
2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 Proven track record of consistent growth
(1) Free Cash Flow defined as: EBITDA minus total CAPEX (excluding price paid for acquisitions), net dividends paid, net interests paid and net income taxes paid plus proceeds from disposal.
18 STOCK PERFORMANCE – COMPARED TO PUBLIC COMPETITORS AND RETAIL INDUSTRY
800% 800%
700% 700%
600% 600%
500% 500%
400% 400% 300% 300% 200% 200% 100% 100% 0%
0%
Couche-Tard C-Stores Grocery Couche-Tard Casey's Home Improv. Drugstores Mass Merch. Delek Marathon Dollar Stores Murphy CST Brands(1)
Source: Yahoo Finance. As of September 1, 2017. (1) On June 28, 2017, ACT acquired CST Brands.
19 ALIMENTATION COUCHE-TARD INC.
AMBITIONS & STRATEGY OUR VISION
TO BECOME THE WORLD’S PREFERRED DESTINATION FOR CONVENIENCE AND FUEL
21 GET HIGH OUR GLOBAL BRAND DEF
22 GLOBAL CIRCLE K BRAND
• On September 22, 2015, Couche-Tard announced the creation of a new, global convenience brand, “Circle KTM” • The existing Circle K is already Couche-Tard’s largest and most international brand. It can be seen today serving the needs of customers in 22 countries around the world • The new Circle K brand will replace the existing brands:
Circle K®, Statoil®, Mac’s® , Kangaroo Express®, Topaz®
• Couche-Tard has chosen to retain the company’s founding Couche-Tard retail brand in the province of Québec, Canada • The new Circle K brand will also appear on licensed stores worldwide • The Company’s goal in the coming years is to have a single convenience retail brand across our worldwide network
Before After Before After
23 REBRANDING STATUS
Project well under way: More than 1,800 stores(1) in North America and 1,300 stores(1) in Europe are now proudly displaying our new global convenience brand Circle K • Scandinavia market already completed – Outstanding success • Baltics, Poland and Canada underway • United States ongoing
(1) As of July 23, 2017
24 NEW GLOBAL BRAND – SAME APPROACH TO SERVING OUR CUSTOMERS
SUPER GLOBAL SUPER LOCAL
25 THE PROMISE BEHIND THE BRAND
26 MAKING IT EASY BRAND PILLARS SUPPORTING OUR PROMISE
27 BRAND PILLARS – FAST & FRIENDLY SERVICE
Recruitment Physical Employee Employee Service Training & Hiring engagement turnover standards appearance
28 BRAND PILLARS – EASY VISTS
Predictable in-store and forecourt experience
Clean In-stock Fast transaction #2 reason impacting Out-of-stock is #1 reason 88% of US adults want shoppers’ decision of for missed sale in their store checkout which c-store to visit c-stores experience to be faster (after location)
Source Convenience store news
29 BRAND PILLARS – PRODUCTS FOR PEOPLE ON THE GO
Hot Cold Private Food Dispensed Dispensed Car Wash Fuel Label Beverages Beverages
30 CONVENIENCE KEY CATEGORIES
31 PRIVATE LABEL
Better value proposition to customers
Increased Circle K brand awareness
Higher penny profit
32 FUEL
Consumer Payment & experience Loyalty
Pillars
Product Pricing Differentiation
33 ALIMENTATION COUCHE-TARD INC.
NETWORK DEVELOPMENT NEW FORMAT DEVELOPMENT
Larger fuel offering
Food service expansion
High traffic locations
Focus on site layouts & critical dimensions
Circle K Branded store & customized fuel branding
Standardization of building, interior layout & image
35 We completed the NEW SITES construction, relocation or reconstruction of 91 stores during fiscal 2017 and 23 since the beginning of fiscal 2018.
36 ALIMENTATION COUCHE-TARD INC.
VALUE CREATION AND FINANCIAL REVIEW OUR FOUR PILLARS OF VALUE CREATION – THE EQUATION
Protect Value & Enable Value Drivers Growth
Capital Organic Cost Structure & Value Acquisitions Growth Discipline Financial Creation Discipline
38 Focus on ORGANIC GROWTH customers’ needs and respond to market trends Emphasize on Construction, key categories relocation or – Food, coffee, reconstruction cold of stores beverages, fuel and car wash
Organic Innovation and Branding Growth technology
Private label Execution
Continuous improvement
39 ORGANIC – FISCAL 2017 TOP-LINE GROWTH
Europe SSS +3.5%
Canada Europe SSV SSV +1.0% (-0.3)%
Organic Growth
Canada US SSS SSS +0.1% +2.0%
US SSS: Same-store merchandise sales SSV +2.6% SSV: Same-store volume
40 ORGANIC – SUSTAINABLE TOP-LINE GROWTH
Merchandise & Service Sales Road Transportation Fuel Volume (millions of US dollars) (millions of gallons) 10% CAG 21% CAG 11,793 10,072 10,724 10,502 8,135 7,596 7,953 8,276 7,626 6,599 6,945 4,613
2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017
Same-store Merchandise Road Transportation Fuel Revenue Growth Same-Store Volume Growth
5% 5%
2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 -5% -5% US Europe Canada US Europe Canada
CAG: Five-year compounded annual growth - fiscal 2017 over fiscal 2012
41 ORGANIC GROWTH – LEADING TO STRONG MARGINS IN ALL GEOGRAPHIES
Europe 42.4%
Organic Growth United Canada States 33.8% 33.2%
FISCAL 2017 MERCHANDISE & SERVICE MARGIN
42 NO CLEAR CORRELATION BETWEEN FUEL PRICES & MARGINS
U.S Market(1) 3.54 3.51 3.41 21.74 20.15 No clear correlation between fuel selling price and 18.56 • 2.89 18.59 margins 2.20 2.18 2.19 18.77 18.11 16.99 • Our margins are not directly impacted by lower fuel selling prices • Lower fuel prices leave customers more money in their pockets for their in-store shopping 2012 2013 2014 2015 2016 2017 2018 Q1 LTM
Motor fuel price (US dollars per gallon) Motor fuel margin (US cents per gallon)
U.S Fuel Margins (CPG) (1) Canadian Fuel Margins (CPL) (1) Norwegian Fuel Margins (NOK PL)(2)
30.00 10.00 1.4 25.00 1.2 8.00 1 20.00 6.00 0.8 15.00 0.6 10.00 4.00 0.4 5.00 2.00 0.2 0 - - Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017 Q1 2018 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017 Q1 2018
US margins (CPG) Trend CA margins (CPL) Trend NOK margins per litre Trend
Swedish Fuel Margins (SEK PL)(2) Danish Fuel Margins (DKK PL) (2) 0.8 0.8 0.6 0.6 0.4 0.4 0.2 0.2 0 0 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018
SEK margins per litre Trend DKK margins per litre Trend
(1) For company-operated stores only (2) For total network
43 US FUEL MARGINS TRENDS Year-over-year volatility – Long term trend is up
ACT Historical US Fuel Margins (CPG) US Industry Historical Fuel Margins (CPG) 24.00 22.00 +1.9 CAG 24.00 20.00 22.00 20.00 18.00 18.00 16.00 16.00 14.00 14.00 12.00 12.00 10.00 10.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 • Large integrated oil companies out of retail. Market • Large integrated oil companies out of retail. Market dominated by pure play retailers who need to dominated by pure play retailers who need to maintain and grow margins in order to maintain maintain and grow margins in order to maintain profitability profitability • Higher premium fuel penetration • Higher premium fuel penetration • Improved, more sophisticated pricing strategies • Improved, more sophisticated execution • Improved supply conditions
ACT: Fiscal Year / Industry: Calendar Year Sources: ACT reporting documents and NACS SOI Annual Report. 44 Smart, ACQUISITIONS disciplined acquisition strategy – Spotting the right opportunities and striking the right deals at the right price
Identify the right Deleveraging opportunities
Acquisitions
Realization of Strike the right available deal at the right synergies price
Swift and efficient integration
45 PROVEN TRACK RECORD OF SUCCESSFUL ACQUISITIONS
Garvin oil
Compac Food Stores
Revenue Revenue ($) Winners Sterling Stores Pump N Shop
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Net Debt/ Adjusted 2.2 0.8 0.4 1.5 1.3 1.0 0.8 0.3 0.4 2.0 (2) 1.3 1.2 (3) 1.0 (3) 1.1 (3) 2.3 (3) EBITDA (1) Stores 1,706 45 75 421 46 107 70 47 326 2,506 166 1,660 515 442 1,362 Acquired
Agreement signed for additional stores acquisition in fiscal 2018 522
(1) This ratio represents the following calculation: long term 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. Refer to the Corporation’s MD&As for more details. (2) Including full-year results for SFR. 46 (3) Pro forma The Pantry for 2015, Topaz for 2016, ESSO for 2017 and CST for 2018. EXCEPTIONAL DELEVERAGING TRACK RECORD
• ACT is committed to maintaining a strong balance sheet and sustaining its investment grade credit rating
The Pantry, Topaz and IOL stores Circle K Acquisition No Transformational Acquisition SFR Acquisition Acquisitions
2,453 Stores Acquired 1,017 Stores Acquired 2,299 Stores Acquired 2,269 Stores Acquired Rapid deleveraging $804M (4) Acquisition after Leverage post SFR Strong credit metrics for several years $3.6B transformational Acquisition acquisition lower than acquisition Circle K $1.7B $1.7B $0.3B Acquisition Acquisition Acquisition 4.2 3.6 3.2 3.2 3.0 2.9 3.1 2.5 2.7 2.4 2.1 2.1 2.2 2.0 2.0 Adj. / Adj. Debt Net Adj. EBITDAR
F2004 F2005 F2006 F2007 F2008 F2009 F2010 F2011 F2012 Pro Forma F2013 F2014 F2015 (1) F2016 (2) F2017 (3)
Demonstrated track record of rapid deleveraging after acquisitions
(1) Pro forma The Pantry (2) Pro forma Topaz (3) Pro forma Esso (4) This ratio represents the following calculation: long-term interest-bearing debt, net of cash and cash equivalents and 47 temporary investments divided by EBITDA (Earnings Before Interest, Tax, Depreciation, Amortization and Impairment) adjusted for specific items. DELIVERING ON SYNERGIES THROUGH OUR ACQUISITIONS
Synergies Statoil Fuel and Retail
• Target: $150M - $200M • Realized: >$200M Synergies CST Brands, Inc
• Initial target for the first 36 months: $150M –$200M
Synergies The Pantry
• Target for the first 24 months: $125M • Realized: >$125M
48 COST CONTROL – PART OF OUR DNA
Year-over-year expense Disciplined Culture growth 2.3%
1.9% Scalable 1.5% Organization, Systems & Processes 0.8% 0.2% -0.9% Cost Control 2012 2013 2014 2015 2016 2017
Economies of Scale
5-year Average : +1.0%
Cost Efficient Systems
49 CAPITAL STRUCTURE & FINANCIAL DISCIPLINE
Competitive cost of debt
Rapid delevera- Well spread ging after maturities acquisitions
Cost Discipline Access to Disposal of liquidities – non-core Cash and assets credit facilities
Careful Dividend allocation of growth capital
50 STRONG EBITDA TO FCF CONVERSION Capital Investment primarily consists of the investment in property and equipment net of disposals and the ongoing improvement of our network: • Construction of new stores Strong FCF Growth • Relocation and construction of (millions of US dollars) existing stores • Replacement of equipment • Information technology 17% CAG • Rebranding
2016 CAPEX increased significantly because of the integration of more than 1,500 Pantry stores.
In addition, 2017 CAPEX increased due to the integration of the acquired stores from Esso and Dansk Fuel.
Capex spend has averaged about Couche-Tard generates strong cash flows, which allows rapid deleveraging to 30% of EBITDA since 2012 support a strong credit profile.
CAG: Five-year compounded annual growth - fiscal 2017 over fiscal 2012. (1) 2015 Free cash flow includes the proceeds from the disposal of the aviation fuel business. (2) 2016 Free cash flow includes the proceeds from the disposal of the lubricants business. 51 STRONG CAPITAL STRUCTURE & FINANCIAL DISCIPLINE
Adjusted Leverage Ratio (2) 3.07:1 Free Cash Flow Average Cost Investment of Debt Grade Credit (in million dollars US) 2.7 % Profile
FCF +17 % CAG1 Capital 1,065 Structure & 979 975 $2.5 Billion 865 890 Financial and Free Cash Discipline 614 Flow CA $700M of senior 404 ~$1.0 Billion unsecured notes (3) 2012 2013 2014 2015 2016 2017 2018 Q1 LTM ~$1.5 Billion available ~$1.0 Billion in under credit Cash facilities
Standard&Poors: BBB (Stable) Moody’s: Baa2 (Stable)
(1) CAG: Five-year compounded annual growth - fiscal 2017 over fiscal 2012. (2) Long term 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. Refer to the Corporation’s MD&As for more details. 52 (3) Issuance of the notes occurring subsequent to the end of the first quarter. RESULT OF THE VALUE CREATION EQUATION : ADJUSTED DILUTED NET EARNINGS PER SHARE AND RETURN ON EQUITY GROWTH
Adjusted Diluted Net Return on Equity Earnings per Share Value (USD) Creation
5-year compounded annual growth +22 % 2.21 2.08 27.0% 1.79 24.9% 22.0% 21.5% 22.6% 22.5% 1.35 1.11 0.81
2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017
53 RESULT OF THE VALUE CREATION EQUATION : DIVIDEND GROWTH
Dividends Paid – US Millions
5-year compounded Value 1 annual growth +24 % Creation 145 145
104 87 65 50 56 Dividend vs Free cash flow
1,065 2012 2013 2014 2015 2016 2017 2018 Q1 FCF +17 % CAG1 979 975 LTM 865 890
Quarterly dividend increased twice during 614 fiscal 2016, from CA 5.50¢ per share to 404 CA 7.75¢ per share, an increase of 41%. 145 145 87 104 65 In the second quarter of fiscal 2017, the 50 56 quarterly dividend increased to CA 9.00¢ per share (remained at CA 9.00¢ for the 2012 2013 2014 2015 2016 2017 2018 Q1 third and fourth quarters of fiscal 2017 as LTM well as for the first quarter of fiscal 2018). Free cash flow Dividend
(1) CAG: Five-year compounded annual growth - fiscal 2017 over fiscal 2012.
54 RESULT OF THE VALUE CREATION EQUATION : STOCK VALUE GROWTH
5-Year Stock Performance
Value Creation 450.0%
350.0%
250.0%
150.0%
50.0%
-50.0% 2012-08-30 2013-08-30 2014-08-30 2015-08-30 2016-08-30 2017-08-30
Variance ACT stock price (%) Variance TSX index (%)
Source: Bloomberg. As of August 30, 2017.
55 SNAPSHOT – CONTINUED GROWTH
12-week period Q1-2018 ended July 23, 2017
Merchandise same-store revenues United States +1.4% Europe +1.4% Canada (0.2%) Road transportation fuel same-store volume United States +0.4% Europe (0.3%) Canada (0.2%)
Adjusted EBITDA $715.3M / +16.2% Adjusted Diluted Net Earnings per Share $0.67 / +17.5% Declared dividend per share 9.0 ¢ CA / +16.1%
56 ALIMENTATION COUCHE-TARD INC.
ACQUISITIONS COMPLETED DURING FY18
Value Creation CST TRANSACTION SUMMARY & OVERVIEW
Transaction Summary • Alimentation Couche-Tard Inc. (“ACT”) acquired 100% of the outstanding shares of CST Brands Inc. (“CST”), representing a total enterprise value of US $4.4 billion or approximately US $4.2 billion excluding the value of CST’s equity participation in CrossAmerica Partners LP (“CAPL”). In order to obtain approval from the regulatory authorities, ACT sold to Parkland Fuel Corporation certain Canadian assets of CST, retaining 157 company-operated stores. Inthe United States, ACT has agreed to sell 70 sites to Empire Petroleum Partners, LLC., a transaction which should close at the end of August or in early September 2017. Gross Profits (2) • CST shareholders received cash consideration of US$48.53 per share • Implied CST EBITDA multiple of 11.4x pre-synergies (1) 5% 30% Strategic & Financial Impact 41% 54% • Transaction is expected to generate between US$150M and US$200M in annual 70% cost synergies to be realized over the next 3 years • Provides ACT control over CAPL’s General Partner, ownership of associated Merch. & Serv. Incentive Distribution Rights and equity stake of 20.5% in CAPL (CAPL is a US Canada distributor of branded and unbranded petroleum for motor vehicles in the U.S.) Fuel
Financing • Couche-Tard financed the purchase of CST, including the refinancing of a portion of CST’s existing indebtedness through: • Capacity under existing revolving credit facilities • New acquisition debt financing consisting of term loans of which a portion will be termed-out over time • Available cash
(1) As of March 31, 2017. Excludes CrossAmerica Partners LP. (2) LTM for the period ended March 31, 2017. Excludes CrossAmerica Partners LP.
58 HIGHLIGHTS OF THE TRANSACTION
Significant Strategic Acquisition Synergies Rationale Importance Potential
• Unique opportunity to acquire • Operating model alignment • Top-line upside one of few remaining potential North American public targets • Strong geographic • Sharing of business awareness and best practices exceeding 1,000 stores • Entry in Texas • Cost optimization • ACT to approach 9,500 North • Void fill in US Southeast American stores • Optimization of supply conditions • Strenghtening of existing • Increased scale and leverage to network • Optimization of distribution create brand awareness and strategy take advantage of merchandise • Talent acquisition and cross- and fuel procurement learning potential • Elimination of redundant costs opportunities • Valuable real estate portfolio • MLP structure
59 CST’S RETAINED RETAIL NETWORK
1,106(1) company US Network operated sites
157(1) Canadian company Network operated sites
(1) Net of the Canadian divested sites to Parkland and the U.S. divested sites to Empire Petroleum
60 PRO FORMA NORTH AMERICA FOOTPRINT
• COUCHE-TARD (1)
US: 6,074
Canada: 2,087 • CST (2) (3)
US: 1,106
Canada: 157 • Total
US: 7,180
Canada: 2,244
North America: 9,424
CST acquisition has U.S. store count by State(4) allowed ACT to further AL 161 FL 942 KY 113 MS 113 NC 426 TN 160 diversify its operations AZ 615 GA 388 LA 307 MO 124 OH 313 TX 882 and cash flow with a AR 41 HI 5 ME 111 NV 34 OK 62 VT 7 stronger presence in CA 741 IL 256 MD 10 NH 60 OR 57 VA 56 Texas, a fast growing CO 209 IN 237 MA 32 NJ 27 PA 29 WA 47 and business friendly CT 3 IA 5 MI 29 NM 91 RI 1 WV 17 state.
DE 1 KS 35 MN 17 NY 36 SC 309 WI 1
(1) Couche-Tard’s store count as at June 30, 2017. (2) As at June 28, 2017. Excludes CrossAmerica Parners LP (3) Net of the Canadian divested sites to Parkland and the U.S. divested sites to Empire Petroleum (4) Pro forma store count by state. Includes Couche-Tard’s Company-Owned/Dealer-Operated and Dealer- 61 Owned/Dealer-Operated sites and excludes its RDK network operated under a joint venture. PRO FORMA PROFILE FOR CST - FINANCIAL
(1) (2) At Closing Pre-synergies EBITDA Contribution (billions of US Dollars) Pro Forma
Revenues 37.9 8.2 46.1
% of total 82% 18% 100%
GP 6.5 1.2 7.6 22%
% of total 85% 15% 100% 78% EBITDA(3) 2.4 0.7 3.1
Store network 12,664 1,263 13,927
Debt 7.6
DEBT/EBITDA 2.4
Couche-Tard has strengthened its leadership position as a global convenience store operator with pro forma EBITDA of $3.1B
(1) Couche-Tard Fiscal 2017 results (2) After reflecting sale to Parkland and the sales agreement with Empire Petroleum, CST LTM financial results as at March 31, 2017. EBITDA includes a gain of $347 million from disposal of assets. (3) Includes Couche-Tard’s Company-Owned/Dealer-Operated and Dealer-Owned/Dealer-Operated sites as well as its 62 International licensees as at June 30, 2017. Excludes CrossAmerica Parners LP CROSSAMERICA PARTNERS LP
ACT brings CrossAmerica: CrossAmerica U.S. Footprint(1) • Continuity with a general partner whose management culture is aligned with CrossAmerica –Disciplined operator with best practices in acquisitions and integration –Strong and consistent financial performance throughout all economic cycles –Heightened focus on growing Free Cash Flow, with particular expertise in cost management –Well capitalized with solid balance sheet; CST long- term debt is non-recourse to ACT –Well positioned to lead further consolidation in fragmented industry • Scale and global reach provides additional operational benefits –Further strengthens relationship with many of our key suppliers –Many turnkey branding and franchise programs that can complement dealer offerings –Supports dealer health, which impacts fuel volume growth and additional rental income potential • Wholesale operations with complementary geographic reach
(1) CrossAmerica’s network as of March 31, 2017
63 EXCEPTIONAL SYNERGIES POTENTIAL
TOP-LINE SYNERGIES COST SYNERGIES
Merchandise Supply Costs Increased brand Leveraging key penetration and awareness consumer
$150M- $200M in pre-tax cost synergies Leveraging Value drivers, best practices and e.g. loyalty, Operating Fuel cross- digital marketing, etc Expenses Sourcing & learning opportunities and Distribution Overhead Costs
64 INTEGRATION STRATEGY
Transfer Integrate Re- Roll-out key CST to support negotiate Evaluate Integrate programs– existing functions, Rebrand to ACT talent pool Sale of CST operations & Polar Pop, ACT non- Review technology Circle K/ existing and secure Canadian eliminate Simply fuel distribution and systems agreements key assets redundant Great Couche- agreements strategy & eliminate to leverage employees costs Coffee, Tard to unlock redundant increased ATMs, etc. procurement costs scale synergies
Build optimal strategy for CrossAmerica Partners LP
Well planned and efficient integration strategy – Similar to The Pantry
65 STRONG FINANCING PLAN
Transaction financing needs of ~$4.8 billion (including acquisition costs), funded through Capacity under ACT’s existing credit facilities New acquisition financing consisting of term loans – three tranches with 1, 2 and 3 years terms ACT expects to repay for the term loans through Proceeds from the sale of Canadian assets Proceeds from sale of other non-core assets Term out to the bonds market Free cash flow Financing strategy will allow Access to capital at competitive conditions Flexibility to repay debt rapidly Capacity to modulate debt maturities
Competitive, well balanced and flexible financing structure
66 ALIMENTATION COUCHE-TARD INC.
SIGNIFICANT ACQUISITION AGREEMENT - SUBSEQUENT TO FY17 HOLIDAY SNAPSHOT
• On July 10, 2017, Alimentation Couche-Tard Inc. announced that it had signed an agreement with Holiday Companies to acquire all of the issued and outstanding shares of Holiday Stationstores, Inc. and certain affiliated companies (“Holiday”), an important convenience store player in the Upper Midwest United-States, with 522 stores, a food commissary and a fuel terminal in Newport, Minnesota, which supplies one third of the stations. 374 stores are operated by Holiday and 148 by franchisees • Holiday has a strong car wash business with 221 locations • Allows Couche-Tard to expand it’s geographic footprint into the Upper Midwest U.S. and to gain a strong position in the Greater Twin Cities metropolitan area. The acquired sites are located in the following states: Minnesota, Wisconsin, Washington, Idaho, Montana, Wyoming, North Dakota, South Dakota, Michigan and Alaska. • The transaction is anticipated to close in the fourth quarter of Couche-Tard’s fiscal year 2018 and is subject to customary regulatory approvals and closing conditions. The Corporation expects to finance the transaction by using its available cash and existing credit facilities.
68 CONCLUSION
Broad Geographic Footprint with Leading Market Positions
Superior Product Offerings
Track Record of Highly Disciplined Growth and Debt Reduction
Attractive Sector Dynamics
Powerful Financial Results
Attractive Synergy Potential
Disciplined Management Culture
Poised for growth
69