Alimentation Couche-Tard Inc.

Good morning, my name is Joelle and I will be your conference operator today. Bonjour, je m'appelle Joelle et je serai votre opératrice pour la conférence aujourd'hui. I will now introduce Mr. Mathieu Brunet, Vice-President, Investor Relations and Treasury at Alimentation Couche-Tard. Je vais maintenant passer la parole à Mr. Mathieu Brunet, Vice-Président, Relations Investor et Trésorerie pour Alimentation Couche-Tard.

English will follow. Bonjour. J'aimerais d'abord vous souhaiter la bienvenue à la téléconférence qui porte sur la diffusion des résultats financiers du premier trimestre de l'exercice 20-27 d'alimentation Couche-Tard. Toutes les lignes seront placées en mode discrétion afin d'éviter tout bruit inutile. À la suite de la présentation, nous répondrons aux questions des analystes. Nous souhaitons vous rappeler que cette webdiffusion sera disponible sur notre site Internet pour une période de 90 jours. Good morning. I would like to welcome everyone to this web conference presenting Animentation Couche-Tard financial results for the first quarter of fiscal year 2027. All lines will be kept on mute to prevent any background noise. After the presentation, we will answer questions from analysts during the web conference. We would like to remind everyone that this webcast presentation will be available on our website for a 90-day period. Also, please remember that some of the issues discussed during this webcast might be forward-looking statements, which are provided by the corporation with its usual caveat. These caveats or risks and uncertainties are outlined in our financial reporting. Therefore, our future results could differ from the information discussed today. Our financial results will be presented by Mr. Alex Miller, President and Chief Executive Officer, and Mr. Filipe Da Silva, Chief Financial Officer. Alex, you may begin your conference.

Thank you, Mathieu, and good morning, everyone. Thank you for joining us to discuss our first quarter results. We're encouraged by the start to fiscal 2027 and we're seeing evidence that our strategy is resonating with customers and strengthening the business for the long term. Our performance reflects the resilience and diversity of our business with our markets, capabilities and growth platforms coming together across our unique global footprint to drive the business forward. Over the summer, we activated some of our best promotional campaigns across the network such as our America 250 campaign and Fuel Day events. Delivering compelling value offers for our customers while helping expand our loyalty base for the long term. As I visited stores, I saw firsthand how our teams brought these campaigns to life while remaining focused on being customer ready. This is translating into deeper engagement and continued growth in loyalty, which I'll come back to in just a moment. Before I discuss the quarter, I want to touch on the most significant development of the summer. Our recent agreement to acquire a controlling stake in the Jopka Group. Jopka is one of Europe's most dynamic convenience retailers, with significant scale in Central and Eastern Europe, best-in-class capabilities in food and digital, and a talented entrepreneurial team we deeply admire. This acquisition accelerates our Core Plus More strategy, expands our global footprint, and adds complementary strengths in food, private brands, supply chain capabilities, Digital Engagement, Loyalty, and Personalization, while supporting our organic growth ambitions. We look forward to welcoming the Jopka team into the Couche-Tard family as we work toward closing, which we expect to be completed by the end of this calendar year. With that in mind, let's dive into our results. I'll start with convenience before walking through the quarter using the same lens that guides our Core Plus More strategies. Merchandise same-store sales increased 1.6% across the network, led by 1.7% growth in the United States, marking our fifth consecutive quarter of positive same-store sales growth. What we are seeing today is a consumer who is increasingly intentional about where they spend, and we are leveraging our strengths to adapt to those changes in behavior. Consistent with broader industry trends, elevated living costs and fuel prices continue to weigh on discretionary spending in certain markets. However, when the proposition is compelling, customers continue to engage. We see that come through in energy, other nicotine products, food offers, and loyalty-driven promotions. That shift in selective spending behavior is also reshaping the category mix. Packaged carbonated soft drinks, as well as traditional center store categories such as salty snacks and packaged sweets, remain softer than historical levels as consumers become more deliberate in what they put in their baskets. Excluding those categories, underlying merchandising performance would have been around the midpoint of our same-store sales growth algorithm. At the same time, we are seeing growth in areas where we have been investing, including functional, protein-rich, and better-for-you categories. Our teams are actively reallocating space, refining assortments, and tailoring promotions to ensure we are meeting customers where demand is moving. As Filipe will discuss, we are also being purposeful on pricing decisions in categories facing volume pressure, balancing profitability with customer relevance and long-term loyalty. More importantly, traffic improved as the quarter progressed, reinforcing our view that customers will engage and spend when the proposition is right. In Canada, same-store sales were stable. as continued strength and thirst helped offset regulatory pressure in nicotine. While the quarter finished flat overall, sales trends improved materially over the course of the quarter and turned positive in the final period. In Europe and other regions, same-store sales increased 1.2%. Despite softer trends in Asia, Europe delivered growth across key geographies and categories, particularly beverages and next-generation nicotine products. Turning to our core categories and starting with fuel, we saw mixed volume trends across our regions. Same-store fuel volumes were down 1.6% in the United States and 4.3% in Europe. Canada extended its positive trend to eight consecutive quarters of growth with volumes up 1.1% in the quarter. Importantly, every business unit across North America posted positive four-quart traffic during the quarter. Although customers purchased fewer gallons on average, They continued to choose our network, reinforcing the relevance of our value proposition and customer offer as our fuel business continued to generate attractive gross profit. Despite softer demand, our U.S. same-store volumes outperformed most peers, and our fuel margins remained well ahead of our competitive set. Market volatility and favorable supply conditions certainly contributed during the quarter. But these results are also a reflection of the fuel platform we've built over many years across sourcing, supply, pricing, and network management. That platform helped us gain sequential market share in the U.S. and deliver fuel profitability across the network. Beyond retail fuel, B2B continued to build momentum. Mobile payment adoption in Europe increased roughly 40% year over year, while our Circle K Pro car drove another quarter of growth with fleet operators in North America contributing to a 20% increase in B2B volumes. Together, these initiatives are extending the reach of our fuel platform and creating additional avenues for growth. Turning to Thirst, one of our most impactful traffic drivers and a category where we continue to gain share across the network. Energy was once again the standout, delivering double-digit growth in the U.S. and roughly 70% of the category's gains. Protein beverages and enhanced hydration also grew meaningfully, reflecting rising consumer demand for functional and wellness-oriented products. Carbonated soft drinks were pressured in part by changes to SNAP eligibility in certain markets. We continue to respond by focusing on value, leveraging our loyalty platform, and driving engagement across adjacent beverage, food, and convenience categories where we're seeing stronger customer demand. In Canada, energy delivered high single-digit growth, with similar performance across energy and functional beverages in Europe, highlighting the attractiveness of the category and the relevance of our customer offer. Turning to nicotine, in the U.S., other nicotine products delivered one of their best quarters in recent years, posting double-digit same-store sales growth led by pouches, significantly outpacing the broader market. In cigarettes, same-store sales increased for a third consecutive quarter. While growth moderated from the strong performance we saw in Q4, we still outperformed industry volume trends by roughly 400 basis points, reflecting the effectiveness of our pricing, promotional, and loyalty strategies. In Canada, the category remained broadly consistent with recent quarters. The illicit market and evolving regulatory environment continued to pressure legal volumes. which were partly offset by disciplined pricing and a targeted customer offer. In Europe, results benefited from growing adoption of next generation nicotine products alongside a stable cigarette business. Pouches remained a key contributor to growth with several markets, particularly across our legacy European network, delivering solid high single digit same store sales growth. Our assortment, digital capabilities, and engagement with age verified customers position us well as the category continues to evolve. Now let me turn to the more part of our strategy, where food remains our single biggest growth opportunity. If you look at our latest annual report published earlier this summer, you'll see the progress we're making reflected in our mix, with food now representing 13.2% of merchandise sales. In North America, value continues to anchor the food story through our meal deals, We sold nearly 14 million meal deal bundles during the quarter, up nearly 20% from last year, demonstrating the continued appeal of a compelling value proposition. We are also working closely with our vendor partners to keep the offer fresh and give customers new reasons to engage. A recent example in the U.S. is our Flamin' Hot Boneless Wings launch, our first hot food collaboration with PepsiCo and Frito-Lay. Following a successful rollout across our fresh food network, the product is now selling more than 40,000 units per week and helping drive larger food baskets. More broadly, we're seeing customers increasingly trade up into higher value prepared food offerings, with hot food mix increasing since launch, demonstrating our ability to pair everyday value with attractive premium offerings. We're also finding opportunities to further optimize our core assortment. Using data and consumer insights to refine menus at both the national and regional levels. Beyond the U.S., we're seeing progress across the network. In Canada, food sales and unit growth improved year over year, supported by value-focused offers, stronger food conversion, and continued engagement with our meal deal platforms. In Europe, food performance benefited from customers increasingly choosing larger and more satisfying meal options. Growth was led by burgers, while larger formats including extra-large kebabs and double burgers continued to resonate with consumers. Underpinning all of this is execution. We remain focused on improving availability across our hero items, refining our meal deal platforms, and simplifying operations to improve sell-through and reduce shrink. Food represents a significant opportunity for us, and we're continuing to build the capabilities needed to capture it. Turning to our network, during the quarter we added 26 sites across North America and Europe and today have approximately 42 stores under construction. We expect to open more than 100 stores in fiscal 2027 and continue to expand our development pipeline. While permitting and entitlement timelines remain longer in certain markets, we expect to supplement our new build program with a growing pipeline of single site acquisitions and remain on track toward our long-term target of 750 new stores by 2030. Our new stores continue to meaningfully outperform the broader network, with food sales 120% above the network average, while merchandise sales and basket size are 20% higher, demonstrating the strength of our site selection and customer offer. Moving back outside the store, e-mobility remains a good example of how we're building for the future while leveraging the strengths of our existing network. In Europe, our charging network now exceeds 4,900 charge points, up 32% from last year. Customer adoption continues to grow, with charging transactions increasing more than 40% and utilization moving higher across the network. Those results reflect the advantages of our model, prime locations, a reliable charging experience, and the ability to combine charging with food, beverages and other convenience purchases. As adoption continues to grow, we're well positioned to capture that opportunity. Finally, digital and loyalty continue to be increasingly important drivers of customer engagement across our network and are among the key enablers that power our 4 Plus More strategy. In the U.S., we added more than 1 million Inner Circle members during the quarter. bringing the program to nearly 16 million members. Nearly one in three transactions now comes from a loyalty member, while traffic attributable to Inner Circle increased 30% versus last year. We recently launched Inner Circle 2.0, enabling members to earn rewards across more of their purchases while unlocking personalized offers and challenges. This month, Inner Circle will be live in all U.S. business units with the expansion of the program into our northern tier business units. In Europe, Extra 2.0 is driving a 13% increase in traffic across our legacy markets. We also recently brought our EV and loyalty experiences into a single app, helping drive a 19% increase in EV traffic among app members and creating a simpler, more connected experience for customers. With that, I'll turn it over to Filipe.