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Q3 2009 Alimentation Couche-Tard Inc. Earnings Conference Call - Final.

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OPERATOR: Good afternoon, ladies and gentlemen. Welcome to the Alimentation Couche-Tard third quarter results Webcast presentation. At this time, all will be in a listening mode only. Following the presentation, we will answer questions that were forwarded before hand by analysts via e-mail. I would like to remind everyone that this Webcast presentation will be available on our website at www.couchetard.com for a 90-day period.

I will now turn this presentation over to Mr. Alain Bouchard, President and Chief Executive Officer. Please go ahead, sir.

ALAIN BOUCHARD, PRESIDENT, CEO, ALIMENTATION COUCHE-TARD INC.: Thank you, and good afternoon, ladies and gentlemen. Thank you for listening to us via this Webcast regarding Couche-Tard's third quarter. With me is Raymond Pare, Vice President and CFO. As usual, we will briefly run down the results and offer some background before answering questions you submitted us earlier today.

I would like to remind you that some of the issues discussed during this Webcast might include forward-looking information which is provided by the Company with the usual caveats. These caveats are risks and uncertainties are outlined in our financial reporting. Our future results could differ from the information discussed today.

In introduction, I would like to take a brief moment to reiterate a small change announced last week. This live Webcast will initiate our new approach to communicate our quarterly results going forward instead of doing that in parallel with a conference call. The only difference will be in the way the analysts ask their questions. The Management's presentation will be similar in format and shall address questions from analysts and hopefully help the investors to better understand our results. We believe it will improve the quality of our comments, while respecting our disclosure obligations and will be more efficient. We have informed the analysts community prior to announcing this change. We really appreciated their support and are confident that, as before, the appropriate information will be communicated to them and to our investors. IT technology gives us the opportunity to improve our way to -- of communicating. That's all.

Let's talk about the third quarter now. Let me look first at business highlights for the first quarter-- for the third quarter. During the quarter, we added 51 Company-operated stores to our network, including 37 new Irving stores. Following quarter end, we also concluded the acquisition of seven Company-operated stores in North Carolina, while signing an agreement to acquire another 13 Company-operated stores in the Province of Quebec. We have worked on other opportunities during the quarter, even though we have not yet been successful. Our biggest challenge is still the asking price. We believe that it is better to be patient and wait for the right opportunities at the right price in order to create real value for our stakeholders instead of focusing on adding sites for the wrong reasons. The actual economic situation and the credit constraints should facilitate some deals in the future.

Considering the cash flow that we are generating and our credit facilities, we will be there at the right time for the right opportunities without putting excessive pressure on the excellent balance sheet that we have. We would like to keep the advantage that we have today with our healthy financial situation in order to go through this challenging period to continue to be one of the strongest players in our industry.

On the franchise side, in January following the sale by ConocoPhillips Company of 314 stores that were operating under the Circle K banner we find with the buyers Convenience Retailer LLC and PCF Saleco LLC new franchise agreements for these stores. Additionally in January we concluded another franchise agreement with Jump Oil Company for the conversion of 45 of their stores operated in Missouri to the Circle K banner. Now, in light of the current economic crisis, I must say we are satisfied with our third quarter results in the United States. We successfully maintained our same-store merchandise sales as well as our merchandise gross margin. While in Canada our same-store merchandise sales showed an interesting growth which was offset in part by the decrease of the gross margin. Our recent acquisitions also had an interesting contribution to our results, even though the merchandise and service gross margin post-- posted is not yet at the desired level. However, we are confident that the situation will improve in the future, following the full implementation of our integration and supply strategies.

On the fuel side, while our Canadian business unit showed a good performance on the volume growth side, our US foreign business units continue to suffer from the overall decrease in demand in these regions. Despite this overall satisfying performance, we will keep our focus at optimizing our sales and margins and keep looking for cost reduction in order to get even stronger than before this crisis. With that said, I will let Raymond expose our financial highlights in more details. Ray?

RAYMOND PARE, VP, CFO, ALIMENTATION COUCHE-TARD INC.: Thank you, Alain. Good afternoon, everyone. Let's take a look at our financial highlights. Total revenue for the 16-week period ended February 1st, 2009 amounted to $3.9 billion, down $679 million or 15% over the comparable quarter last year which breaks down as follows: The drop in motor fuel price accounted for a decrease of $890 million, the weakening Canadian Dollars contribute for a decrease of $173 million, the decrease in same-store motor fuel volume in the US contributed to the decrease as well. On that side, we saw some positive signs related to the trend considering the decrease in the motor fuel prices. These negative factor were offset in part by our contribution of almost $500 million from acquisition, the growth in the same-store merchandise revenue in both US and Canada, as well as the growth in the same-store motor fuel volume in Canada.

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