Alimentation Couche-Tard Inc. (ATD:CA) Q3 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlighted strong financial performance, with positive ROE and ROCE, and robust liquidity. Despite some margin pressures from new distribution centers, the company demonstrated resilience in volatile environments, showing growth in same-store sales and promising results from the Inner Circle program. The Q&A session revealed management's confidence in their strategies, though lacked specific details on some concerns. Overall, the positive trends in sales and strategic initiatives, coupled with a disciplined approach to M&A, outweigh the minor uncertainties, suggesting a positive stock price movement.
Key Financial Performance
Net Earnings Net earnings attributable to shareholders stood at $757 million or $0.82 per share on a diluted basis. Adjusted net earnings were approximately $751 million or $0.81 per share on an adjusted diluted basis, representing an increase of 19.1% compared to the corresponding quarter of last year. The increase was driven by higher road transportation fuel gross margin, contributions from acquisitions, and organic growth.
Adjusted EBITDA Adjusted EBITDA for the third quarter of fiscal 2026 increased by approximately $196 million or 11.9% year-over-year. This was mainly due to higher road transportation fuel gross margin, contributions from acquisitions of approximately $79 million, and organic growth, partly offset by the impact of regulatory divestiture related to the GetGo acquisition.
Merchandise and Service Revenues Merchandise and service revenues increased by approximately $351 million or 6.6%, primarily driven by contributions from acquisitions of approximately $205 million and organic growth, partly offset by the impact of regulatory divestiture related to the GetGo acquisition of approximately $23 million.
Merchandise and Service Gross Profit Gross profit increased by approximately $150 million or 6.2%, primarily due to contributions from acquisitions of approximately $71 million and organic growth, partly offset by the impact of the regulatory divestiture related to the GetGo acquisition of approximately $8 million.
Fuel Margins Fuel gross margin in the United States was $47.71 per gallon, an increase of $3.43. In Europe and other regions, it was $10.87 per liter, an increase of $1.58. In Canada, fuel margins were CAD 15.82 per liter, reflecting an increase of $2.28. The increase was attributed to the strength of supply chain capabilities and in-store execution.
SG&A Expenses Normalized SG&A expenses for the third quarter increased by 4% year-over-year, primarily reflecting inflationary pressures, targeted investments supporting strategic initiatives, and pre-operating costs associated with new distribution centers. Despite this, normalized expenses growth of 3.3% year-to-date remained broadly aligned with inflation.
Depreciation Expense Depreciation expense increased by approximately $46 million or 7% year-over-year. The increase was driven by acquisitions and ongoing investments across the network, including equipment upgrades, store remodel programs, new store openings, and technology enhancements.
Return on Equity (ROE) and Return on Capital Employed (ROCE) As of February 1, 2026, ROE was 18.3%, and ROCE stood at 12.4%. The positive shift in return profile was supported by disciplined capital allocation, acquisitions performing as expected, improving profitability, and progress on working capital.
Leverage Ratio and Liquidity The leverage ratio stood at 2.25. The company had $1.5 billion in cash and an additional $3 billion available through its revolving unsecured operating credit facility.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
New Store Construction: Completed construction of 37 stores in Q3, totaling 80 stores since the beginning of fiscal 2026. Another 58 stores are under construction, aiming for 100 new sites this fiscal year. Plan to add at least 750 new sites by 2030.
Food Category Expansion: Strong momentum in food sales, with mid- to high single-digit growth in the U.S. and mid-single-digit growth in Canada. Meal deals sold 13.3 million bundles this quarter. Europe is preparing a unified food platform with a focus on breakfast, lunch, and dinner.
EV Charging Expansion: Deployed over 430 DC ultrafast Circle K branded charge points in Europe in Q3, reaching 675 locations with chargers. European fast charging network now has over 4,300 charge points, up 31% year-over-year.
Same-Store Sales Growth: Positive same-store sales for the third consecutive quarter across all regions. U.S. sales grew by 2.8%, Canada by 0.3%, and Europe by 0.4%. Excluding Asia, Europe delivered 1.4% growth.
Loyalty Program Expansion: Inner Circle loyalty program in the U.S. added 1.2 million members in Q3, reaching 13.7 million members. Engagement and app usage are increasing. Europe’s Extra program also showed growth in visits and sign-ups.
Supply Chain Optimization: Opened 3 new distribution centers in Q3, now supporting 3,200 stores in North America. Focus on self-distribution to improve margins, product availability, and assortment.
Cost Management: Normalized expenses grew by 4% year-over-year, aligned with inflation. Continued focus on efficiency and cost-saving initiatives, including the RELEX platform for inventory management.
Core + More Strategy: Refreshed strategy focusing on customer-centric priorities and operational execution. Aims to drive traffic and customer engagement while expanding the network and improving supply chain capabilities.
B2B Fuel Growth: Expanded B2B fuel share in the U.S., focusing on commercial diesel growth and strategic partnerships. European B2B fuel business showed strong margins despite slight volume decline.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Regulatory and Illicit Market Headwinds: Nicotine trends in Canada are facing challenges due to regulatory pressures and competition from illicit markets, which could impact sales and profitability.
Economic and Consumer Sentiment Challenges: Soft consumer sentiment in Asia and a softer economic backdrop in Europe and Canada could negatively affect sales and overall performance.
Fuel Volume Decline in Europe: Fuel volumes in Europe declined by 1.6%, attributed to macroeconomic conditions and extreme weather, which could impact revenue from this segment.
Inflationary Pressures: Inflationary pressures are increasing SG&A expenses, which could strain profitability if not managed effectively.
Pre-Operating Costs for Distribution Centers: Temporary pre-operating costs associated with new distribution centers are impacting margins, though these are expected to be short-term.
Regulatory Divestiture Impact: The regulatory divestiture related to the GetGo acquisition has resulted in a financial impact of approximately $9 million, which could affect short-term financial performance.
Soft Consumer Sentiment in Asia: Results in Asia declined in the mid-single digits due to continued soft consumer sentiment, which could hinder growth in this region.
Weather-Related Challenges in Europe: Extreme weather conditions in parts of Europe have negatively impacted fuel volumes, adding to operational challenges.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Network Expansion: The company plans to accelerate network expansion to add at least 750 new sites by 2030, with 58 stores currently under construction and a goal of 100 new sites by the end of fiscal 2026.
Supply Chain Optimization: Investments in supply chain capabilities include 3 newly opened distribution centers, supporting approximately 3,200 stores across North America. The company aims to take greater control of its supply chain to improve margins, product availability, and assortment.
Food Service Growth: The company is focusing on food service as a key growth lever, with mid- to high single-digit same-store sales growth in the U.S. and mid-single-digit growth in Canada and Europe. Plans include launching a unified food platform in Europe by May 2026, targeting breakfast, lunch, and dinner occasions.
E-Mobility Expansion: The company added over 430 DC ultrafast Circle K branded charge points in Europe during Q3, with a total of 675 locations now offering EV charging. Utilization reached all-time highs, and the European fast charging network grew by 31% year-over-year.
Loyalty Program Enhancements: The Inner Circle loyalty program in the U.S. added 1.2 million members in Q3, reaching 13.7 million total members. Engagement is supported by a redesigned mobile app, with monthly active users up nearly 50% year-over-year. A redesigned app will also launch in Europe later this fiscal year.
Fuel Business Performance: The company continues to gain market share in the fuel business, supported by greater control over the fuel supply chain and promotional activities. Fuel margins remain healthy across all regions.
Digital and Operational Efficiency: The rollout of the RELEX platform is expected to improve product availability, reduce spoilage, and enhance inventory efficiency. Early results from the pilot phase are encouraging, and broader deployment is planned.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Quarterly Dividend Declared: The Board of Directors declared a quarterly dividend of CAD 0.215 per share for the third quarter of fiscal 2026 to shareholders on record as of March 2026, with payment effective April 9, 2026.
Share Repurchase Program: During the quarter, 1.9 million shares were repurchased for an amount of $684.4 million. Subsequent to the end of the quarter, an additional 0.4 million shares were repurchased for an amount of $21.6 million.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:What is the impact of fuel prices on demand and in-store purchases?
A:Higher fuel prices do not necessarily lead to demand destruction but can stress consumers. There is no exact price point identified for demand destruction, but prices over $4-$5 per gallon can strain consumers. In-store traffic and performance do not show direct correlation with higher fuel prices. The company has been able to outperform in volatile environments due to its integrated supply chain and margin capture capabilities.
Q:Can you provide details on U.S. merchandise same-store sales and trends?
A:The U.S. merchandise same-store sales started negative at -0.1% but showed strength in the remaining quarter. Core categories like nicotine and beverages performed well, with energy drinks showing mid-teens growth and cigarettes high single-digit growth. All U.S. business units except one showed positive same-store sales, with strong performance in southern states and the Midwest. Trends have continued positively post-February 28, with food approaching double-digit growth.
Q:What is the status of the Inner Circle program rollout?
A:The Inner Circle program is fully rolled out across all U.S. business units. Active monthly users increased by 46%, average visits per member rose by 7%, and merchandise visits per member grew by 13%. In Europe, a rewards program pilot based on visits is showing promising results.
Q:What are the factors affecting U.S. merchandise gross margin rate?
A:The slight decrease in U.S. merchandise gross margin rate is due to a mix shift, with strong cigarette sales (lower margin) impacting overall performance. Additionally, the opening of new distribution centers (DCs) has incurred preopening costs and operational adjustments, which are expected to impact margins for a couple of quarters but will be accretive in the long run.
Q:How are fuel margins performing in the current volatile environment?
A:Fuel margins are performing well and are in line with year-to-date results. The company expects higher margins over the cycle due to its capabilities in fuel supply, trading, and logistics.
Q:What is the update on the M&A landscape?
A:The company remains active in pursuing multiple opportunities across its primary regions, maintaining capital discipline. It acquired 24 stores in the quarter and is focusing on single-store operator acquisitions as part of its Core + More strategy.
Q:What is the performance of European same-store sales excluding cigarettes?
A:European same-store sales excluding cigarettes grew by 3.2%. Legacy Europe grew by 2.7%, with strong growth in food (6%), energy drinks, and packed beverages. Weather impacts in January negatively affected sales in mid-Europe, but overall trends remain positive.
Q:What is the status of the self-distribution journey and its impact on the P&L?
A:The self-distribution journey is in its early stages, with 3,200 stores receiving products. Savings are not yet reflected in the P&L as the focus is on operational readiness. The strategy is expected to capture additional margin and lower working capital in the long term.
Q:What are the trends in promotional activity for modern oral nicotine and cigarettes?
A:Promotional activity in modern oral nicotine remains aggressive, with consistent category growth. Cigarette sales have shown strong growth, with the company outperforming the market by leveraging data analytics and pricing strategies. Cigarettes, being a low-margin category, impact the mix but contribute to gross profit dollars.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer to the question about the duration of the drag on gross margin from new distribution centers, stating only that it would last for a couple of quarters without further specifics. Similarly, the response to the question about fuel margins during the volatile period lacked detailed numerical evidence or comparisons to historical performance.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
BB
Canada
Core
Couche Tard
Energy
Europe region
Foreign Language
GetGo acquisition
Inner Circle
Mr
USD
United States
assortment
beverage
category
charge point
consumer
contribution acquisition
convenience
deal
distribution center
divestiture GetGo
engagement
experience
focus traffic
food
fuel
good
member
network
offer
platform
progress
store sale
team
update
VRT Transcript
Vertiv Holdings Co (VRT) Discusses Strategic Direction, Innovation, and Financial Performance at Investor Conference Transcript
Neutral5-21
Alimentation Couche-Tard Inc. (ATD:CA) Q3 2026 Earnings Call Transcript
Positive3-18
The earnings call highlighted strong financial performance, with positive ROE and ROCE, and robust liquidity. Despite some margin pressures from new distribution centers, the company demonstrated resilience in volatile environments, showing growth in same-store sales and promising results from the Inner Circle program. The Q&A session revealed management's confidence in their strategies, though lacked specific details on some concerns. Overall, the positive trends in sales and strategic initiatives, coupled with a disciplined approach to M&A, outweigh the minor uncertainties, suggesting a positive stock price movement.
Vertiv Holdings Co (VRT) Presents at JPMorgan Industrials Conference 2026 Transcript
Neutral3-18
Vertiv Holdings Co (VRT) Presents at Barclays 43rd Annual Industrial Select Conference Transcript
Neutral2-18
VRT Slides
VRT Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
