ALIMENTATION COUCHE-TARD INC.
INVESTOR PRESENTATION
July 2018 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 authorities in Canada, including those risks described in Couche-Tard’s management’s discussion and analysis (MD&A) for the year ended April 29, 2018. 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 29, 2018 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 AGENDA
1. Company Highlights (1) 2. Ambitions & Strategy
3. Value Creation & Financial Review (1) 4. Recent acquisitions summary
(1) All data presented is excluding CAPL unless specifically mentioned.
3 KEY DATA
• Listed on the Toronto Stock Exchange ATD.B
• Market Cap1 Approx. CA$33B
• Revenue US$50.0B Fiscal Year 2018
• Gross Profit US$8.0B Fiscal Year 2018
• EBITDA US$2.9B Fiscal Year 2018
• Number of stores2 16,108 North America 10,015 Europe 2,725 CAPL network 1,346 Circle K branded sites under licensing agreements 2,022
• Net Debt / Leverage3 FY2018 US$7.7B / 2.46x
• Ratings S&P BBB (Stable outlook) Moody’s Baa2 (Stable outlook)
1. As at June 26, 2018. 2. Includes Couche-Tard’s Company-Owned/Dealer-Operated and Dealer-Owned-Dealer-Operated sites as at April 29, 2018. 3. Long term interest-bearing debt, net of cash and cash equivalents and temporary investments divided by EBITDA adjusted for non-recurring 4 items. Refer to the Corporation’s MD&As for more details. ALIMENTATION COUCHE-TARD INC.
COMPANY HIGHLIGHTS OUR COMPANY TIMELINE
Acquisition of the assets Acquisition of The Pantry Inc., a of Johnson Oil Company, leading convenience store operator Inc., owner of 225 Bigfoot in the southeastern United States. stores, all located in the Global Circle K brand is launched U.S. Midwest Acquisition of 278 Esso- Couche-Tard becomes branded Canadian fuel and an active player in the convenience sites located in US market Ontario and Québec from consolidation. Imperial Oil
Start of operations with Acquisition of The Acquisition of Statoil Acquisition of Topaz, Acquisition of CST Brands, 4th the opening of a first Circle K Corporation Fuel & Retail, a leading the leading largest chain in North America, convenience store from ConocoPhillips Scandinavian road convenience and fuel and Holiday Stationstores, a located in Laval, Québec. Company transport fuel retailer retailer in Ireland. Midwest powerhouse Consolidation of Canadian Market WHO WE ARE Couche-Tard is a canadian 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.
• 10,015 convenience stores throughout North America, including 8,705 stores offering road transportation fuel in all 10 Canadian provinces and 48 U.S. States, and employing about North America 105,000 people. • More than 1,300 locations in the U.S. supplied with road transportation fuel through CrossAmerica Partners LP.
• 2,725 stores, comprising a broad retail network across Scandinavia (Norway, Sweden and Denmark), Ireland, the Baltics (Estonia, Latvia and Lithuania), Poland and Russia. Including Europe employees at its branded franchise stations, about 25,000 people work in its retail network, terminals and service offices across Europe.
• More than 2,000 stores operated by independent operators under the Circle K banner in 14 other International countries or territories worldwide which brings the number of sites in Couche-Tard’s network to over 16,000.
Store count as at April 29, 2018.
7 A DISCIPLINED CONVENIENCE STORE OPERATOR AND INTEGRATOR
Broad Geographic Footprint with Leading Market • World class retailer and leading C-store operator with geographically diverse footprint • Strong banners, with our new global convenience brand “Circle KTM” and our fuel banner “Ingo” at unmanned stations in Positions Scandinavia
• Increasing focus on private label, fresh food products and famous for concepts Superior Product Offerings • Industry leading merchandise gross margin
• Proven integrator Track Record of Highly Disciplined Growth and • Well positioned to lead further consolidation in fragmented industry Debt Reduction • Committed to investment grade credentials 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 25.0% Return on equity1 •Significant FCF generation (2013-2018) CAGR of 14%
•Proven ability to extract significant synergies from acquisitions Attractive Synergy Potential •Transferring best practices across entire platform
•Management team with strong track record. Disciplined Management Culture •Decentralized operating model
Proven Capacity to Transform and Innovate •Company successfully went trough 3 transformations over its existence
(1) As of April 29, 2018.
8 NORTH AMERICAN NETWORK Largest independent convenience store operator in the US in terms of number of company operated stores • In the US, the convenience sector is fragmented and in a consolidation phase • On June 28, 2017, Couche-Tard acquired 100% of the outstanding shares of CST Brands, the 4th largest chain in North America. • On December 22, 2017, Couche-Tard acquired all the membership interest of Holiday Stationstores, LLC., an important convenience store and fuel player in the U.S. Midwest region. 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.
Total network of 10,015 stores in North America
As at April 29, 2018.
9 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
2,725 stores in 9 countries or regions in Europe
As at April 29, 2018.
10 INTERNATIONAL PRESENCE
Central / South Asia America
China United Arab 80 Emirates Saudi 33 Arabia 4 • Convenience stores operated by independent Mexico Hong Kong operators under the 715 333 Circle K brand Egypt Philippines • License agreement to 12 25 use the brand name Macau Circle K Honduras 29 Guam 28 Costa Rica 13 Vietnam 10 272 Malaysia Indonesia 14 454
More than 2,000 licensed Circle K stores in Asia, Costa Rica, Egypt, Honduras, Mexico, U.A.E and Saudi Arabia
As at April 29, 2018.
11 CONSOLIDATED NETWORK RECAP
Canada U.S. Europe Total
COCO(1) 1,587 6,133 1,998 9,718 CODO(2) 250 138 334 722 DODO(3) - 659 392 1,051 Franchise/Affiliated(4) 370 878 1 1,249
Number of sites, end of period 2,207 7,808 2,725 12,740 CAPL network - - - 1,346 Circle K branded sites under licensing agreements (5) - - - 2,022 Total network 16,108 Of which: Automats - - 978 978 # With fuel 1,200 7,505 2,723 11,428 % With fuel 54% 96% 99.9% 89.7%
(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 April 29, 2018.
12 COUCHE-TARD IS A WORLD LEADER
Couche-Tard is a leading global convenience store operator with EBITDA of $3.0 billion • Well diversified across geographies • Focus on growing high margin categories
REVENUES
Merchandises and services Motor Fuel Other Total
$12,899M $35,831M $1,270M $50,001M US Europe Canada Merchandise and 2% Other 11% 2% services Europe 2% Revenues 21% 26% Canada By Products 16% LTM Q4 2018 Canada 14% US 65% Europe Motor fuel US 96% 73% 72%
GROSS PROFITS
Merchandises and services Motor Fuel Other Total
$4,450M $3,317M $225M $7,992M
Europe US Other Europe 31% 10% 3% 13% Merchandise and Gross Profit services Canada 56% By Products 12% Canada LTM Q4 16% 2018
US Europe Motor fuel 56% US Canada 78% 41% 71% 13%
Financial data presented for the LTM as of Q4 2018.
13 A HISTORY OF STRONG FINANCIAL PERFORMANCE Gross Profit Same Store Sales Growth
2013 2014 2015 2016 2017 2018 (in millions of US Dollars) Merchandise sales
US 1.0% 3.8% 3.9% 4.6% 1.6% 0.8% +11% CAG 7,992 Europe 1.6% 2.0% 2.8% 2.7% 2.7% 6,482 6,082 Canada 2.0% 1.9% 3.4% 2.9% -0.9% 0.4% 4,988 5,268 4,610 Motor Fuel Volume
US 0.6% 1.7% 3.4% 6.6% 1.7% -0.4%
Europe 2.5% 2.4% 2.6% 0.7% 0.0% 2013 2014 2015 2016 2017 2018 Canada 0.0% 1.3% -0.1% 0.9% -0.2% -1.4%
EBITDA Free Cash Flow (1)
(in millions of US Dollars) (in millions of US Dollars)
+16% CAG +14% CAG 2,919 2,331 2,396 1,226 1,876 979 1,065 1,640 865 890 1,376 614
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
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.
14 STELLAR STOCK PERFORMANCE
800% 800%
700% 700%
600% 600%
500% 500%
400% 400%
300% 300%
200% 200%
100% 100%
0% 0% 2013-06-12 2014-06-12 2015-06-12 2016-06-12 2017-06-12 2018-06-12 2013-06-12 2014-06-12 2015-06-12 2016-06-12 2017-06-12 2018-06-12
Couche-Tard C-Stores Grocery Couche-Tard Casey's Delek Home Improv. Drugstores Mass Merch. Marathon Murphy CST Brands(1) Dollar Stores
Source: Yahoo Finance. As of June 13, 2018. (1) On June 28, 2017, ACT acquired CST Brands.
15 ALIMENTATION COUCHE-TARD INC.
AMBITIONS & STRATEGY OUR VISION
TO BECOME THE WORLD’S PREFERRED DESTINATION FOR CONVENIENCE AND FUEL
17 OUR GLOBAL BRAND: CIRCLE K REBRANDING STATUS
Project well under way: More than 3,350 stores(1) in North America and more than 1,650 stores(1) in Europe are now proudly displaying our new global convenience brand Circle K • Statoil sites completed • Scandinavia and Baltics markets already completed – Outstanding success • Canada is underway and results up to now are promising • United States ongoing
(1) As of April 29, 2018.
19 THE PROMISE BEHIND THE BRAND
20 NEW GLOBAL BRAND – SAME APPROACH TO SERVING OUR CUSTOMERS
SUPER GLOBAL SUPER LOCAL
21 STRATEGIC VISION & PRIORITIES: WORKING AT TWO-CLOCK SPEED
FOCUSINGLOOKING ON TOTHE THE COREFUTURE BUSINESS To enhance company value, we are focusing on: • Key Categories of FoodTo and remain Fuel a growth company for • Growing Customer basethe shareholders we must find the • Lean and Efficient Operationsrecipe for the future • Engaged and Productive Employees
FOCUSINGLOOKING ON THE INTO CORE THE FUTURE To enhanceStrategic company initiatives: value, we need to focus • Executing our Brand Vision on our core• Digital business priorities: • Key Categories• Growing of Foodthe Global and Fuel Network • Growing• CustomerFood Journey base • Lean and• MobilityEfficient Operations • Engaged and Productive Employees OUR TWO STRONGEST PRODUCT CATEGORIES
TIME & CONVENIENCE
23 TIME & CONVENIENCE
Shoppers recognize the c-store channel of trade for its convenient locations, extended hours of operations, one-stop shopping, grab- and-go foodservice, variety of merchandise and fast transactions
Industry offers speed of service to time-starved consumers who want to get in and out of the store quickly
Addresses consumer desires to satisfy and immediate need for food, refreshment and fuel
83% of the in-store merchandise that convenience stores sell is consumed within one hour of purchase, and 65% is immediately consumed
24 US C-STORE INDUSTRY FACTS
Convenience stores have an unmatched speed of transaction: The average time it takes a customer to walk in, purchase an item and depart is between 3 to 4 minutes
Convenience stores are everywhere. There are 155 thousand convenience stores in the United States—or one store for about every 2,100 people— and c-stores account for more than one-third (34.1%) of all outlets in the United States.
The convenience store industry is a destination for food and refreshments
An average convenience store selling fuel has around 1,100 customers per day, or more than 400,000 per year. Cumulatively, the U.S. convenience store industry alone serves nearly 160 million customers per day, and 58 billion customers every year.
The convenience store industry is America's primary source for fuel - Self-serve at the pump is a part of most convenience stores' fueling operations
25 MAKING IT EASY BRAND PILLARS SUPPORTING OUR PROMISE
26 BRAND PILLARS – PRODUCTS FOR PEOPLE ON THE GO
Cold Hot Dispensed Food Dispensed Car Wash Private Label Fuel Beverages Beverages
27 BRAND PILLARS – EASY VISITS
Predictable in-store and forecourt experience
Clean In-stock Fast transaction #2 reason impacting shoppers’ Out-of-stock is #1 reason for 88% of US adults want their store decision of which c-store to visit missed sale in checkout experience to be faster (after location) c-stores
Source Convenience store news
28 BRAND PILLARS – FAST & FRIENDLY SERVICE
Recruitment Employee Employee Service Training Physical & Hiring engagement turnover standards appearance
29 We completed the LOCATION construction, relocation or reconstruction of 88 stores during fiscal 2018.
30 STRATEGIC INIATIVES - PREPARING FOR THE ROAD AHEAD
31 AN OPEN DOOR ON NEW TECHNOLOGIES DIGITAL – CONTROL OUR DESTINY AND CREATE OUR FUTURE
Employee Experience Customer Experience & & Value Proposition Brand Promise
Fuel
Construction Operations Network, Procurement Warehousing Logistics & & Format & Sales & maintenance HSE Concept Service
Convenience
Backbone Stem Front-end Make it easy Define right quality and deliver at lowest possible cost Constantly sharpen to hit the the customer offer target
We view digitialization as a tremendous opportunity to drive growth and create value throughout our organization.
33 OUR VIEWS ON DIGITAL
It is not a temporary thing … it is part of every aspect of how we do business It is not a one-time program … it is a shift of mindset and way of working It is not just IT or Marketing … it is orchestration across the entire arrow
34 OUR NEXT GEN RETAIL TECH IS ALL ABOUT MAKING IT EASY
Easy access to Easy visits Easy tools customer insight
Cloud enabled Mobile Hardware independent Internet of forecourt payments software Things . App payment at . In-store app . Centralized . Location based forecourt payment management marketing . Real time access . Easy integration . Seamless . “Things” status i-eg. to data with loyalty and deployment which coffee . Forecourt IoT other systems . Bring your own machines are not device working
Connected Seamless Real time cars Mobile POS integrations data
. Payment by car . Access through . Open architecture . Real time . Pre-ordering Web browser . Easy integrations campaign results . 2 ways . Can be opened at through APIs . Real time stock communication any device eg. . Loose coupling counts with customer in phone, tablet, etc. . Micro services . Real time upselling the car MOBILITY IS CHANGING – BRINGING SIGNIFICANT OPPORTUNITIES
36 TRANSPORTATION VEHICLES - USEFUL FACTS
Global vehicle fleet is more Worldwide electric vehicle 2016 Worldwide electric Average lifecycle of than 1.2 billion vehicles and fleet is approximately vehicle sales % total: vehicles is 16-19 years is expected to reach 2 million vehicles or 0.2% 1.10% 2 billion in 2035 of total fleet
Currently, total cost of US electric vehicles ownership for electric Limited line-up of electric #1 selling vehicle in the US: penetration is less than 1% vehicles is significantly vehicles Ford F-150 higher than ICE vehicles
Charging infrastructure and Electric vehicle range Number of vehicles is Number of miles driven per technology not mature remains limited increasing vehicle is increasing
US fuel retail industry is highly fragmented. More Countries that sopped or Countries with high EV In the US, the electric grid than 60% of the 154k c- significantly reduced penetration heavily is highly carbonized stores are operated by subsidies have seen EV subsidize EVs single store or small chain sales plunge operators (<11 stores)
37 COUCHE-TARD’S VIEW Gradual and manageable change process
Continuous Industry’s monitoring reaction
Opportunity
Continued ACT’s focus on competitive business advantages
38 A GRADUAL AND MANAGEABLE CHANGE PROCESS
Global mobility trends will change how we think about cars and demand for fuel is going to decline but Couche-Tard believes that this change is going to happen gradually because
In order for substantial electric vehicle penetration:
• Cost of electric vehicles will need to move closer to traditional internal combustion engine cars whether through reduction in manufacturing/battery costs or significant subsidies from the government authorities (which we do not believe are sustainable in most countries) • Charging infrastructure needs to expand, adapt and move to a more standard, predictable offer in order to convince the consumers of the practicality of the product and its resistance to obsolescence • Selection of electric vehicles needs to substantiate in order to meet needs and expectation of consumers • Range of EVs will need to increase in order to adapt to North American driving habits In order to deliver significant GHG emission reductions, transport electrification needs to go hand-in-hand with the decarbonisation of electricity generation Electric grid needs to be adapted in terms of capacity and battery production capabilities need to significantly ramp-up
39 12.7.2018 POSSIBLE OFFSETS TO DECLINING FUEL DEMAND
Possible decline in number of stations and fuel volume consolidation. Out of 155k convenience stores in the US, 60% are operated by single store operators
Increased fuel margins
Higher share of premium fuels (higher margins)
Expansion of current convenience offer towards higher margin categories
Increasing number of vehicles
Increasing number of miles driven per vehicle
Industry’s participation in the electrification process
40 12.7.2018 ACT’S COMPETITIVE ADVANTAGES
Experience in Scale & Buying Decentralized transforming Power model and adapting
Strong balance Proven capacity Norway sheet and to transform and Laboratory capacity to Innovate invest
41 COUCHE-TARD’S CONTINUED FOCUS ON OPTIMIZING BUSINESS
Continued commitment towards growing and improving our current fuel business • Continued improvement of offer and adaptation to changing customers needs • Excellence in execution and capacity to innovate • Continued adaptation of our fuel branding strategy • Improved supply conditions • Cost-efficiency of the our fuel value chain and other parts of the business • Leverage our scale and competitive supply condition in order to further consolidate the market Continued work towards our the transformation of our concept mainly through leveraging: • Using our past experience in adapting to changing market conditions (ex. Tobacco, grocers’ extended hours of operations) • Testing and introducing new and innovative convenience concepts • Using Norway as a live-pilot for upcoming changes
42 12.7.2018 CONTINOUS MONITORING
Although we believe that changing global mobility trends are going to happen gradually and that US fuel demand is going to continue to increase or be stable for another 5-10 years, we are committed to proactively monitor the change in trends and to work towards adapting our business model in order to take advantage of the opportunities these new trends will bring to our business.
43 ALIMENTATION COUCHE-TARD INC.
VALUE CREATION AND FINANCIAL REVIEW OUR FOUR PILLARS OF VALUE CREATION – THE EQUATION
Value Drivers Protect Value & Enable Growth
Capital Organic Cost Structure & Value Acquisitions Growth Discipline Financial Creation Discipline
45 ORGANIC GROWTH
Customer Focus
Digital Key Categories
Network Innovation Development Organic Growth
Branding Execution
Continuous Private Label Improvement
46 ORGANIC – FISCAL 2018 TOP-LINE GROWTH
Europe SSS +2,7%
Canada SSV Europe SSV (-1.4)% 0.0%
Organic Growth
Canada SSS US SSS +0.4% +0.8%
US SSV SSS: Same-store merchandise sales (-0.4)% SSV: Same-store volume
47 ORGANIC – SUSTAINABLE TOP-LINE GROWTH
Merchandise & Service Sales Road Transportation Fuel Volume (millions of US dollars) (millions of gallons)
+11% CAG 12,899 +15% CAG 14,525 10,724 10,072 11,793 8,276 10,502 7,596 7,953 7,626 8,135 6945
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
Same-store Merchandise Revenue Road Transportation Fuel Same-Store Growth Volume Growth
5% 5%
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 -5% -5%
US Europe Canada US Europe Canada
CAG: Five-year compounded annual growth - fiscal 2018 over fiscal 2013.
48 ORGANIC GROWTH – LEADING TO STRONG MARGINS IN ALL GEOGRAPHIES
Europe 44.0%
Organic Growth United Canada States 34.4% 33.6%
FISCAL 2018 MERCHANDISE & SERVICE MARGIN
49 NO CLEAR CORRELATION BETWEEN FUEL PRICES & MARGINS
U.S Market 16.99 18.77 18.11 21.74 • No clear correlation between fuel selling 20.15 18.56 19.39 price and margins • Our margins are not directly impacted by lower fuel selling prices 3.41 2.89 2.18 2.37 3.54 3.51 2.20 • Lower fuel prices leave customers more money in their pockets for their in-store 2012 2013 2014 2015 2016 2017 2018 shopping
Motor fuel price (US dollars per gallon) Motor fuel margin (US cents per gallon)
Canadian Fuel Margins (CPL) Norwegian Fuel Margins (NOK PL) U.S Fuel Margins (CPG) 12.00 1.4 30.00 1.2 10.00 25.00 1 8.00 20.00 0.8 6.00 15.00 0.6
4.00 10.00 0.4
0.2 5.00 2.00 0 - - Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017 Q1 2018 Q3 2018 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 Q3 2018 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 Q3 2018 CA margins (CPL) Trend US margins (CPG) Trend NOK margins per litre Trend
0.9 0.9 Swedish Fuel Margins (SEK PL) Danish Fuel Margins (DKK PL) 0.8 0.8 0.7 0.7 0.6 0.6 0.5 0.5 0.4 0.4 0.3 0.3 0.2 0.2 0.1 0.1 0 0 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017 Q1 2018 Q3 2018 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017 Q1 2018 Q3 2018 SEK margins per litre Trend DKK margins per litre Trend
50 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 24.00
22.00 +1.9 CAG 22.00 20.00 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 2018 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 maintain dominated by pure play retailers who need to maintain and grow margins in order to maintain profitability and grow margins in order to maintain 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.
51 ACQUISITIONS ROADMAP
Strike the Identify the Secure Swift and Realization of Reverse right deal at right acquired efficient available synergies and Deleverage the right opportunities talent integration synergies learnings price PROVEN TRACK RECORD OF SUCCESSFUL ACQUISITIONS 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
Leverage ratio(1) 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) 2.5 (3)
Stores 1,706 45 75 421 46 107 2,055 Acquired 70 47 326 2,506 166 1,660 515 442
(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. 53 (2) Including full-year results for SFR. (3) Pro forma The Pantry for 2015, Topaz for 2016, ESSO for 2017 and CST and Holiday for 2018. EXCEPTIONAL DELEVERAGING TRACK RECORD Acquisitions
ACT is committed to maintaining a strong balance sheet and sustaining its investment grade credit rating
Topaz, IOL, CST, Cracker Barrel, Circle K Acquisition No Transformational Acquisition SFR and The Pantry Acquisition Holiday and Jep Pep stores Acquisitions 2,453 Stores Acquired 1,017 Stores Acquired 2,299 Stores Acquired 4,203 Stores Acquired
Rapid deleveraging $804M Leverage post SFR Acquisition after acquisition lower than Strong credit metrics for several years transformational $3.6B Circle K
(5) Acquisition acquisition $1.7B $0.3B Acquisition $1.7B Acquisition $5.4B 4.2 Acquisition Acquisition 3.6 3.0 3.2 3.2 3.1 3.1 2.9 2.7 2.5 2.4 2.1 2.1 2.2 2.0 2.0 Adjusted ratioAdjusted Leverage
F2004 F2005 F2006 F2007 F2008 F2009 F2010 F2011 F2012 Pro Forma F2013 F2014 F2015 (1) F2016 (2) F2017 (3) F2018 (4)
Demonstrated track record of rapid deleveraging after acquisitions
(1) Pro forma The Pantry (2) Pro forma Topaz (3) Pro forma Esso (4) Pro forma CST and Holiday 54 (5) 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. DELIVERING ON SYNERGIES THROUGH OUR ACQUISITIONS Acquisitions
Synergies Statoil Fuel and Retail Synergies The Pantry
• Target: $150M - $200M • Target for the first 24 months: $125M • Realized: >$200M • Realized: >$125M
Synergies CST Brands, Inc Synergies Holiday Stationstores
• Target for the first 36 months: $215M • Target for the first 36-48 months: $50M-$60M • Realized for the first 10 months: $153M
55 COST CONTROL – PART OF OUR DNA
Disciplined Culture Year over year expense growth Optimization of Continuous Shared Services Benchmarking Strategy
2.1% 2.0% 1.5% 0.8% Sharing of Best 0.2% AI, Robotics Cost Control Practices
2014 2015 2016 2017 (1) 2018
Scalable Organization, Cost Efficient Systems & Systems Processes
5-YEAR AVERAGE: +1.3% Economies of Scale
(1) The fiscal 2017 includes 53 weeks. 56 CAPITAL STRUCTURE & FINANCIAL DISCIPLINE
Competitive cost of debt
Rapid delevera-ging Well spread after maturities acquisitions
Capital Structure & Financial Access to Disposal of Discipline liquidities – non-core Cash and assets credit facilities
Careful Dividend allocation of growth capital
57 STRONG CAPITAL STRUCTURE & FINANCIAL DISCIPLINE
Free Cash Flow (in million dollars US) Adjusted Leverage Ratio 3.13:1
1,226 +14 % CAG Average Cost of Investment Grade 1,065 Debt 3.0 % Credit Profile 979 865 890
614 Capital Structure & Financial Discipline $7.7 Billion Free Cash Flow of senior unsecured notes ~$1.2 Billion in USD, CAD, EURO and NOK 2013 2014 2015 2016 2017 2018
~$1.1 billion ~$684 millions in available under Cash credit facilities
Standard&Poors: BBB (Stable) Moody’s: Baa2 (Stable)
58 Capital STRONG AND SCALABLE FREE CASH FLOW CONVERSION Structure &Capital FinancialStructure & DisciplineFinancial Discipline
81 1,226
95 890 1,065
215 979 102 2,919 276 85 865 2,396 360 2,331 162 614 351 1,876 63 145 104 1,640 279 79 1,376 77 172 172 87 65 1,056 56 899 807 9581 563 4571,3764591,6405631,8768072,3962,331899 457 459
(17)
2013 2014 2015 2016 2017 2018
EBITDA Business disposals Net capex Dividends Distributions received from CAPL Income tax paid Interest paid FCF Capital Structure & DISCIPLINED CAPITAL ALLOCATION Financial Discipline CAPITAL EXPENDITURES ALLOCATION
23% 27%
Income 40% 32% Income producing producing 73% 73% 38% 41%
2017 2018 (1)
Development Commercial Programs Maintenance
Continuous improvement in capital allocation efficiency
(1) Excluding one-offs CAPEX. RESULT OF THE VALUE CREATION EQUATION : ADJUSTED DILUTED NET EARNINGS PER SHARE AND RETURN ON EQUITY GROWTH
Adjusted Diluted Net Earnings Return on Equity per Share (USD) Value Creation
+19% CAG
2.60 27.0% 2.21 24.9% 24.80% 2.08 22.6% 21.5% 22.5% 1.79
1.35 1.11
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
61 RESULT OF THE VALUE CREATION EQUATION : DIVIDEND GROWTH
Dividends Paid – US Millions
162 Value 145 +24 % CAG Creation
104 87
65 56 Dividend vs Free cash flow
1,226 FCF +14 % CAG 2013 2014 2015 2016 2017 2018 1,065 979 890 Quarterly dividend increased twice during 865 fiscal 2017, from CA 7.75¢ per share to CA 614 9.00¢ per share, an increase of 16%. In the 162 fourth quarter of fiscal 2018, the quarterly 145 104 dividend increased to CA 10.00¢ per share, 87 an increase of 11%. 56 65
2013 2014 2015 2016 2017 2018
Free cash flow Dividend
62 RESULT OF THE VALUE CREATION EQUATION : STOCK VALUE GROWTH
5-Year Stock Performance
Value
450.0% Creation
350.0%
250.0%
150.0%
50.0%
-50.0%
Variance ACT stock price (%) Variance TSX index (%)
Source: Bloomberg. As of June 4th, 2018.
63 ALIMENTATION COUCHE-TARD INC.
ACQUISITIONS COMPLETED DURING FY18
Value Creation CST TRANSACTION SUMMARY & OVERVIEW
Transaction Summary • 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 meet Canadian regulatory authorities’ requirements, ACT sold to Parkland Fuel Corporation a large portion of CST’s Gross Profits (2) assets in Canada and retained 157 company-operated stores. 5% • In order to meet US regulatory authorities’ requirements, ACT sold 70 sites to Empire Petroleum Partners, LLC. And retained 1,106 30% 41% 54% sites 70%
Strategic & Financial Impact • Transaction is expected to generate US$215M in annual Merch. & Serv. Fuel Others US Canada synergies to be realized over the next 3 years • Provides ACT control over CAPL’s General Partner, ownership of associated Incentive Distribution Rights and equity stake of 21.4% in CAPL (CAPL is a distributor of branded and unbranded petroleum for motor vehicles in the U.S.)
(1) As of March 31, 2017. Excludes CrossAmerica Partners LP. (2) LTM for the period ended March 31, 2017. Excludes CrossAmerica Partners LP.
65 • On December 22, 2017, Alimentation Couche-Tard Inc. acquired all the membership interest of Holiday Stationstores, LLC and certain affiliated companies (“Holiday”). Holiday is an important convenience store player in the Upper Midwest United-States, with 516 sites, 2 food commissaries and a fuel terminal in Newport, Minnesota, which supplies one third of the stations. At the closing of the transaction, 373 stores are operated by Holiday, 143 by franchisees and 27 by dealer contracts. • Holiday has a strong car wash business with 234 locations at the closing date. • 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 State, Idaho, Montana, Wyoming, North Dakota, South Dakota, Michigan and Alaska. • The transaction have been completed in the third quarter of Couche-Tard’s fiscal year 2018. The Corporation has financed the transaction by using its available cash and existing credit facilities.
66 A DISCIPLINED CONVENIENCE STORE OPERATOR AND INTEGRATOR
Broad Geographic Track Record of Highly Superior Product Footprint with Leading Disciplined Growth and Offerings Market Positions Debt Reduction
Attractive Sector Powerful Financial Attractive Synergy Dynamics Results Potential
Disciplined Management Proven Capacity to Culture Transform and Innovate
Optimistically transforming our future
67