Alimentation Couche-Tard boosted its quarterly dividend for a third time in the past year, raising the payout 20 per cent after reporting strong cash flows, lower debt and improved adjusted profits in the fourth quarter and full year.
The Quebec-based convenience store operator says it will pay four cents per share on July 30 to shareholders of record as of July 16, the first payout since a three-for-one stock split in April.
The company, which reports in U.S. dollars, earned $145.1-million or 25 cents per diluted share during its fourth quarter, down from $146.4-million or 26 cents per dilute share a year ago.
Adjusting for one-time items, Couche-Tard (TSX:ATD.B) earned 22 cents per diluted share, up from 20 cents a year ago, but three cents below analysts' expectations.
The increase in adjusted earnings was mainly due to internal growth in merchandise and fuel volumes, acquisitions and lower financial expenses following repayment of a significant portion of its debt.
Revenues totalled $8.95-billion for the period ended April 27, up from $8.78-billion a year earlier.
"The results for the quarter, adjusted for the non-recurring items, show another solid performance despite the lower fuel margins in the United States," president and CEO Alain Bouchard said Monday.
"The success of our strategies is clearly reflected in both North America and Europe by our same-store performance," Bouchard said, referring to stores open for at least a year.
Same-store merchandise sales rose again in Canada, the U.S. and Europe, increasing 1.6 per cent, 4.4 per cent and 2.5 per cent respectively. Fuel volumes grew in all jurisdictions.
Couche-Tard said it remains on track to generate the targeted $150-million to $200-million of cost savings by the end of 2015, relating to its 2012 acquisition of Scandinavia's Statoil Fuel & Retail. It recorded $21-million in savings during the quarter, bringing the total to $85-million since the acquisition.
For the full-year, it earned $812.2-million or $1.43 per share, compared to $572.8-million or $1.02 per share in the prior year, marking the sixth consecutive year of significant growth due largely to acquisitions. Its adjusted profits was $1.35 per share, compared to $1.11 per share in fiscal 2013.
Revenues increased 6.8 per cent to $38-billion, from $35.5-billion.
Chief financial officer Raymond Pare said opportunities exist to expand its network "organically and by disciplined acquisitions."
Analyst Derek Dley of Canaccord Genuity said Couche-Tard's long-term growth strategies remain in tact, despite the fourth-quarter earnings miss.
"Overall, we believe Couche-Tard remains on track with its long-term growth strategies, and given the company's improving capital structure and reduction of debt over the last 12 months, we believe Couche-Tard is well positioned to pursue disciplined acquisition opportunities should they arise," he wrote in a report.
Irene Nattel of RBC Capital Markets said the dividend increase signalled management's confidence that cash flow momentum should be sustainable.
She said a large acquisition may be unlikely in the near-term because Couche-Tard made no mention of this in its report, saying it will focus on Statoil cost savings and reducing its debt to improve the company's credit rating.
Long-term debt was $2.6-billion, down nearly $1-billion from the prior year.