Good morning. My name is Julie, and I will be your conference operator today. [Foreign Language] I will now introduce Mr. Jean Marc Ayas, Manager, Investor Relations at Alimentation Couche-Tard. [Foreign Language]

[Foreign Language] Good morning. I would like to welcome everyone to this web conference presenting Alimentation Couche-Tard's financial results for its third quarter of fiscal 2020. All lines will be kept on mute to prevent any background noise. After the presentation, we will answer questions that were forwarded to us beforehand by analysts. 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 caveats. 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. Brian Hannasch, President and Chief Executive Officer; and Mr. Claude Tessier, Chief Financial Officer. Brian, you may begin your conference.

All right. Thank you, Jean Marc, and good morning, everyone. Thank you for joining us for this presentation of our strong third quarter 2020 results. But before I turn to the results of the quarter, I want to discuss how COVID-19 is impacting our operations and our business to date. As you all know, this is a very fluid and uncertain situation. With the size of our global network and the millions of customers we interact with every day, we have enacted emergency procedures and preparations knowing each of our regions and business units will need to take additional measures deemed necessary, protect our people and our customers as we attempt to limit further spread of the virus. At all times, we are following the advice of local and global health authorities and putting the health and safety of our employees and our customers at the forefront of our decision making. All of our support center teams are hard at work to keep our businesses operating and assist our stores and customers. A good portion of that office work is now being done remotely to support critical business continuity, such as payroll, IT, supply chain ordering, and HR support, and also to reduce the density of our office locations. While we've issued information for preventative health procedures such as handwashing, proper handwashing, as well as strict guidelines for hygiene and cleaning inside our stores and at our pumps to protect our employees and our customers. Perhaps most important for the health of our North American hourly store employees, we also instituted an emergency sick care plan so that these workers have some financial relief if they need to stay away from work to be tested for COVID-19 or bring diagnosed with the virus. We are also carefully assessing our regional workforce capacity and scheduling to keep stores open operating and serving our customers in this time of crisis. As we make these necessary contingency plans for business and supply chain continuity, I want to stress that Couche-Tard is in a very strong place to face the financial volatility and headwinds created by the COVID-19. We have good cash liquidity, a very healthy balance sheet and solid contingency plans, which enable us to stay focus on meeting the needs of our people and our customers. I also want to briefly comment on where we are at with our proposal to acquire Caltex, a leading Australian integrated downstream company. In mid-February, we made a revised non-binding indicative offer to the Board of Caltex to acquire 100% of Caltex by means of a scheme of arrangement with a price of AUD 35, AUD 25 per share. While it does not guarantee an agreement will be reached or transaction will be concluded, we are now actively engaged in due diligence to work with Caltex. As we said before, Couche-Tard is focused on strategically developing our Asia Pacific presence to drive continued growth in that region in the future. Now let me turn to the results of the quarter, where we had overall strong performance, especially on the convenience side of the business. Same-store sales during the quarter were solid despite cycling against strong results from prior year. In U.S., we saw an increase in same-store merchandise revenue of 3% compared with the same quarter last year. In Canada, same-store merchandise revenues increased by 4.2%, and in Europe, same-store revenues increased by 2.1%. Across the network, we continue to see positive benefits driven by the successful rebranding activities, continued improvements to our offerings as well as various initiatives to drive traffic into our stores. Shifting to fuel. In the U.S., fuel volumes were stable and once again outperformed the industry with same-store road transportation fuel volumes increasing by 0.1% compared to the same quarter last year, and fuel margins continued to experience positive trends even as we cycled against an exceptional performance last year. In Canada, same-store road transportation fuel volumes decreased by 3.1%, and in Europe, by 0.8%, both decreases attributable to the competitive landscape and softer demand in those regions. The presence of our Circle K Fuel brand continued its growth in North America this quarter with more than – adding more than 2,300 sites. We are also testing modified branding strategies with our fuel business aimed at elevating the Circle K brand awareness, where we are positioned prominently on the canopy, either on its own or next to that of our fuel branded partners. To date, we have 150 sites participating in these tests in four markets across the U.S., and results have been generally positive. Also in the U.S., our Easy Pay program which provides fuel discounts every day to our most loyal customers is now in all markets except Northern Tier. The program continues to show strong attachment by customers, delivering increased trip frequency and growing transaction sizes. In our mobility work, we just passed a milestone of 400 fast chargers at our sites in Norway. And based on internal surveys, Circle K is already the best-known charging destination in Norwegian market among EV drivers. We also continue our deployment of IONITY in our other European markets and have rolled out our first Circle K branded chargers in Sweden and Ireland this quarter. We are now in the fourth year of the global rebranding project. Following the completion of our work in Europe, we now have more than 85% of in-scope North American sites displaying the new Circle K brand. All of the former CST sites in the U.S. have been rebranded the Circle K, and we are now progressing nicely on the Canadian locations. As one drives across the network in the U.S., and Europe, and parts of Canada, we are now proudly showing the unified Circle K brand across the majority of our markets. I continue to be pleased with the traction we are seeing with the meaningful reverse synergies from Holiday integration. In particular, we scaled Holiday's labor program on a new IT platform, which we now have rolled out across our entire U.S. network. Combining best-in-class labor model with a labor schedule is allowing us to optimize our investment in people and make sure we have the right capacity to meet our customer's needs. We also continue to bring Holiday's homegrown promotional activities and tools to the wider network, such as the Smart Value program, which we've continued to expand and accelerate across our global footprint, and of course, there's a food pilots, which I'll touch on separately in a moment. From Circle K's best practices; we finished installing Lift, our digital upsell platform, into all of the Holiday locations this quarter as a way to help them drive basket and market share gains into that market. I want to turn now to growth and innovation in our store, starting with the rollout of our food at scale pilot, which is based heavily on the Holiday food program. We are opening nearly a dozen stores a week and plan to accelerate our pace as we approach the spring. We have strong engagement across the company with multiple cross-functional teams established to gather insights and quickly react to learnings as we optimize this program. We've rolled out the food program to different format stores intentionally to help us understand how we can make this work broadly across the network and feel great about the performance and learnings we are receiving so far. Potential this program provides for our customers as well as the related sales and traffic impacts for our stores is exciting; I couldn't be more pleased with the positive results and customer acceptance that we are seeing thus far. In hot dispensed beverage, based on over 90% completion of our Coffee on Demand machines across the U.S., we've launched a national media campaign in January to drive incremental trial with incredible value starting at $1 during our campaign period. We have approximately 13,500 bean-to-cup machines installed, serving fresh coffee 24 hours a day. In cold dispensed beverages, our Froster program is now in over 140 sites in Europe, largely in Ireland where we had tremendous success this past summer. We plan to expand the rollout to most of our business units in the region by the end of the fiscal year. In addition, we've expanded our Polar Pop presence in Canada to additional 110 stores in the quarter. Packaged beverage sales continue to add the same-store sales growth and the market share expansion in Q3. Energy drinks contributed nicely to growth in the category, and we saw strength across all the top brands. A number of other bright spots, including hard seltzers and low-calorie beer options help offset some of the softest that we are seeing in the traditional premium beer brands. Other tobacco products continue to be a main driver of our overall nicotine sales with vapor products continuing to provide the largest gains in the U.S. and Canadian markets. This quarter brought significant regulation and change to this category in the U.S. with the signing into law of a bill that raise the minimum age of sale of all tobacco products to 21. In addition, the FDA announced all flavored e-cig pods be removed from retail locations, limiting the sale to tobacco and menthol flavored pods. Both changes are significant, and while our focus remains squarely on making sure that we are selling responsibly to those of age, we are monitoring the impact on the business in the coming months. That said, we are seeing robust growth in other areas of OTP, in particular with modern white nicotine products, which have been a key driver of growth in the smokers category in the U.S. Our new store concept in Europe continues to focus on enhancing the customer journey and experience and drive new traffic into our stores. We've now built 240 newly refurbished Circle K remodel stores across all of our nine European countries and we are piloting a similar approach here in the U.S. Lastly, by the end of the quarter, Lift, our basket building program was in more than 7,700 sites in North America and we continue to see strong engagement from our customers and associates, driving increased loyalty and market basket growth from the platform. So I’m going to pause here and let Claude take you through more of our third quarter financial results. Claude?

Thank you, Brian. Ladies and gentlemen, good morning. For the third quarter of fiscal 2020, we are happy to report net earnings attributable to shareholders of the corporation of $659.9 million or $0.59 per share on a diluted basis. Excluding certain items for both comparable periods, adjusted net earnings for the third quarter of fiscal 2020 would have been approximately $583 million or $0.52 per share on a diluted basis, compared with $0.53 per share for the third quarter of fiscal 2019, which represents a 1.9% decrease year-over-year for reasons we will explain shortly. Net earnings were $1.8 billion for the first three quarters of fiscal 2020 compared with $1.5 billion for the comparable period of fiscal 2019, an increase of 15.3%. Diluted net earnings per share stood at $1.58 compared with $1.36 the previous year. Excluding certain items from the net earnings for both comparable periods, net earnings would have been approximately $1.7 billion compared with $1.6 billion for the previous year, which represents an increase of $143 million or 9.2%. Adjusted diluted net earnings per share would have been at $1.51 for the first three quarters of fiscal 2020 compared with $1.38 for the corresponding period of fiscal 2019, an increase of 9.4%. As we previously announced, on November 19, 2019, we sold our interest in CAPL for an amount of $190 million, which resulted in a pre-tax net gain on disposal of $61.5 million. On the same date, we also announced an asset exchange agreement with CAPL under which a portion of our U.S. wholesale road transportation fuel operations will be exchanged against CAPL's 17.5% limited partnership interest in CST Fuel Supply, bringing our interest in this entity to 100%. This transaction is expected to close during the first half of calendar 2020. I will now go over some key figures for the quarter. For more detail, please refer to our MD&A available on our website. During this most recent quarter, excluding CAPL's revenue as well as the net negative impact from foreign currency translation, merchandise and service revenues for the third quarter of fiscal 2020 increased by approximately $137 million or 3.3%. This increase is primarily attributable to continued strong organic growth even as we cycled against a strong third quarter last year. For the first three quarters of fiscal 2020, on the same basis, merchandise and service revenues increased by $355 million or 3.2%. For the third quarter of the fiscal 2020 on the same basis, merchandise and service gross profit increased by approximately $61 million or 4.2%, mainly attributable to our organic growth. Our gross margin increased by 0.3% in the United States to 34% and by 0.5% in Europe to 42.3%. This strong performance reflects changes in our product mix towards higher margin categories. In Canada, our gross margin decreased by 0.2% to 32.9% due to the conversion of our Esso stores from the agent models to the corporate model, also partially offset by improved supply conditions. During the first three quarters of fiscal 2020, on the same basis, consolidated merchandise and service gross profit increased by approximately $123 million or 3.2%. The gross margin was 34% in the United States, an increase of 0.2%, it was 41.7% in Europe, a decrease of 0.1% and it was 32.8% in Canada, a decrease of 0.9%. Now moving onto the fuel side of our business. In the third quarter of fiscal 2020, our road transportation fuel gross margin was strong at $0.2704 per gallon in the United States, a decrease of $0.0238 per gallon compared to the markedly high fuel margins in the same quarter last year. In Europe, the road transportation fuel gross margin was at US$0.085 per liter, an increase of US$0.002 per liter, while in Canada, the road transportation fuel gross margin was at CAD 0.0806 per liter, a decrease of CAD 0.0005 per liter. The road transportation fuel gross margin in the first three quarters of fiscal 2020 was $0.2737 per gallon in the United States, US$0.0843 per liter in Europe and CAD 0.0781 per liter in Canada. For the third quarter of fiscal 2020, growth in normalized operating expense was 3.7%, excluding the conversion of our Esso stores from the agent model to the corporate model, the remaining variants for the third quarter of fiscal 2020 would have been 3.4% driven by normal inflation, higher labor costs due to the increase in minimum wages and a tight labor by market backdrop as well as the incremental investments to support our strategy notably in the area of data and analytics. In line with our strategic initiatives and objectives, the optimization of our cost base will remain focused in a focus area over the next quarters. Excluding the specific items described in our – in more detail in our MD&A, the adjusted EBITDA for the third quarter decreased by $35.6 million or 2.9% year-over-year, mainly from lower road transportation fuel gross margins in the U.S. The higher level will also have initiative throughout the organization. The disposals of our interest in CAPL as well as the net negative impact from foreign currencies translation representing approximately $5 million partially offset by organic growth. During the first three quarters of fiscal 2020, on the same basis, the adjusted EBITDA of $3.3 billion increased by $152 million or 4.8% year-over-year, mainly attributable to the higher road transportation fuel margins in the U.S. and Europe into organic growth. The variation in exchange rates had a negative impact of approximately $32 million. Excluding specific items described in more detail in our MD&A, that income tax rate for the third quarter of fiscal 2020 was 90.6%, compared with an income tax rate of 18.7% for the third quarter of fiscal 2019. The adjusted income tax rate for the first three quarters of fiscal 2020 was 19.6% compared with an income tax rate of 18% for the comparable period. The increase for both the third quarter and the first three quarters is mainly stemming from the impact of a different mix in our earnings across the various jurisdiction in which we operate. As of February 2, 2020, our return on equity remains strong at 22% and our return on capital employed at 13.7%. During the quarter, we continued to generate significant free cash flows and saw our adjusted leverage ratio declined further to 1.84x and in the third quarter of fiscal 2020, we fully repaid at maturity, our US$600 million dominated senior unsecured notes and our CAD 450 million dominated senior unsecured notes. We also issued US$1.5 billion dominated senior unsecured notes at favorable terms. As of February 2, 2020, our liquidity position remains strong with $1.8 billion in cash, which adds to the $2.5 billion available through our revolving unsecured operating credit facility. As mentioned by Brian, we are comforted by the health of our balance sheet and available liquidities and are proud of the financial discipline that we had to exercise year in and year out to place the company in this enviable position. As we evolve through this crisis, our financial strength and stability permits us to focus on operational execution and meeting the high expectations of all our stakeholders. Importantly, we will continue to apply our typical discipline and hard-working culture to protect our customers, our people as well as the value for our shareholders going forward. It is also worth noting that we are monitoring our potential exposures daily and have plans in place to mitigate our financial and customer credit risk, should any issues arise. In keeping with our usual approach, we remain proactive in facing this challenge as we have for other disruptions in the past. We rely on our experience, our financial strength, nimble execution and constant sharing of best practices across our organization to get through this difficult period. We are confident that we will come out on the other side in a solid position to continue meeting the needs of our people and our customers. During the third quarter and the first three quarters of fiscal 2020, we repurchased 2 million and 7 million Class B subordinate voting shares respectively. These repurchases were settled for net amount of $64.2 million and $236.9 million respectively. On March 17, 2020, we announced, subject to TSX approval, our intention to renew our share repurchase program, which will allow us to repurchase up to 4% of our Class B subordinated voting shares. Finally, on the same date, the Board of Director declared a quarterly dividend of $0.07 per share to be paid on April 9, 2020, which represents an increase of 12% and demonstrates confidence in our team and in the execution of our strategy despite the recent volatility in the industry. On this, thank you for your attention, and now back to you Brian.

Thank you, Claude. In closing, I want to take a moment to thank all Couche-Tard's dedicated leaders, employees, and offer them my sincere thanks and how they're operating in the face of the spread of the coronavirus. These are truly unprecedented times, and I'm deeply proud of how we've come together to make important, sometimes difficult decisions for the health and safety of our employees and our customers, and for the continuity of the business. We knew our customers depend on us during these times of crisis in their communities. And we are in a solid financial position to focus on meeting their needs in the best possible manner. No doubt, over the next several weeks, we'll be making prudent financial decisions both on a global and local level to protect and potentially grow the business and the value for our shareholders. We'll now answer the questions we receive from analysts. A - Jean Marc Ayas: Thank you, Brian. The first set of questions comes from Derek Dley at Canaccord Genuity.

Can you comment on Canadian same-store fuel volumes during the quarter? Why is the Canadian fuel environment looking increasingly competitive?

Yes. I'd say there's a few factors going on. Certainly, the soft economy in Western Canada continues to hurt volumes. When we look nationally, the industry data like Kent, we believe we are performing largely in line with overall Canadian demand. We're a disciplined operator and we're focused on maintaining that approach. We don't want to chase volumes at the expense of margins. We're trying to maintain a good balance. And overall, I was pleased this quarter to see industry margins or our margins at least over $0.08 a liter, which has stabilized year-over-year.

The second question. With respect to COVID-19, how do you expect the pandemic to impact your business? Will your c-store business benefit from panic reloading? How will COVID-19 coupled with lower oil prices impact fuel volumes over the coming months?

Yes. I'd say through this past week, our results have actually been strong and fuel margins have been good. But we fully expect sales and volumes to soften as people travel less. And then uncharted territories, that we won't know for sure how events will unfold and we're not in a position to provide any forward-looking information. What's important to remember in this time is that we are starting from a position of strength. We have a strong balance sheet, low leverage and a $2.5 billion credit facility available. Also, I would say our decentralized model allows us to react quickly, nimble, share best practices and keep in touch with our local markets. We're being very proactive and I'm pleased with the preparation work and contingency planning that has taken place. The health and safety of both our employees and our customers are our key priority. We've been through localized crises like hurricanes and we've got good processes and dedicated teams that will be there for our customers. And we've taken hundreds of actions, big and small to prepare. Some examples would include for shipping of cleaning and hygiene supplies to the stores. Early in this event, we've increased the frequency of cleaning, provided hand sanitizers, provided gloves to customers, the fur coats, where possible. And we certainly have been working with our supply partners to ensure that we have what we need for our stores and our customers. We feel good about our ability to stay in business today. But that said, we're looking at other scenarios that if we're forced to close or close at least the store portion of our business, that we are prepared to do so.

The next question comes from Patricia Baker at Scotia Capital.

In your press release, in the discussion of operating expense trends in Q3, you cite a tight labor market and incremental investments as impacting the quarter. And you know, you will be doubling your efforts to control expense growth. Can you provide some background on where we will see this effort and perhaps your outlook on that front in the coming quarters?

Thank you, Patricia. So we had a comprehensive program in place to use our scale at maximum level on expenses. So as much as we're doing it on our products and our – with our vendors, we're also looking at it on our vendors from the expense side. So we are putting a global procurement effort in a cost optimization program that is going on and to allow us to focus on specific high rewards area where we have important expenses such are – such expenses are supplies, maintenance, also our construction sector that we're looking into and IT and also marketing services at the store level that we're focusing on. We are also continuing our journey to deploy our labor model in our stores and that's going to help us control our costs and our labor costs, and also look at robotization activity and then robotization of task also in our shared services and also at AI to help us to be more efficient and reduce our work in our stores. So as you know, with one- hour save in productivity in a store, we can multiply that by thousands if we were able to deploy effectively those new savings. So it's a very important initiative that we have going on right now.

The next set of questions comes from Irene Nattel at RBC Capital Markets.

In the current uncertain environment, how do you think about M&A in general? And if you're willing to answer, how do you get comfortable with the outstanding Caltex conditional non-binding proposal of interest?

Yes. Irene, we built a company that we think has a very strong and geographically diversified foundation. I think it's very likely that the landscape for credit and M&A multiples will change dramatically, and our goal is to be ready if the right opportunities present themselves. With regard to Caltex, specifically, we're in the middle of our due diligence process and we'll get comfortable by applying our usual rigor and discipline around M&A. Our first and foremost goal is to make sure that any transaction we do will deliver appropriate returns to build long-term value for all of our stakeholders.

The second question. We continue to see a [indiscernible] forecourt and backcourt performance with forecourt under pressure and backcourt delivering nice same-store sales growth. Can you talk about the factors driving the backcourt and the competitive dynamic you referenced in the release that's moderating the forecourt?

Yes. Up until recent weeks, I was very, very pleased with the performance of the backcourt, and they're benefiting from a lot of different initiatives that really in the last couple of months since we've seen some of the strongest traffic trends that we'd seen in a number of years. Again, no silver bullets. It's a lot of activity across all fronts. Targeted traffic campaigns, including gamification, our Lift program, which we continue to increase penetration, which builds our baskets, the Smart Value program, which is also a basket building promotional program that we've stolen from Holiday and deployed throughout North America and now into Europe. As I mentioned in the comments, the OTP or nicotine category continues to see good growth, particularly in Canada. Hot dispensed beverage with a new coffee program, Coffee on Demand continues to perform well. I mentioned the national campaign supporting that that we had in January. And again, packaged beverages, new innovation like hard seltzers continue to drive strong growth in some of those categories. On the forecourt, I'm very pleased with the fuel performance overall with strong margins globally that have continued. The tougher environment we referenced in Canada and Europe is, I think, a reality. The demand has just been softer in those areas. While in the U.S., growth has been stable and we've outperformed our public competitors.

The next set of question comes from Vishal Shreedhar at National Bank Financial.

Management indicated that it would proceed with the restructuring of certain operations. Can you describe the scope of benefits expected and should we anticipate more restructuring initiatives in the near-term in order to maximize efficiency?

This is normal cost restructuring. Nothing that is – sorry, about that, Vishal. So normal cost restructuring. Nothing that is out of the ordinary for a company with large global operation like us. So it's mostly initiatives that took place across multiple business units in Europe right now. And we are always looking to improve our operation and our way to do business. And as we continued to do so, we are still generating synergies in benchmarking our multiple BUs, and we're continuing to refine our business model around the world, and this is always generating some synergies and restructuring going on.

The second question. Can you comment on any potential changes to the acquisition landscape because of concerns related to COVID-19? Does management believe that this may result in lower industry acquisition multiples, potentially more available assets and less competition for assets? What has management observed related to acquisitions in prior slowdowns?

If I look back over the years, I would say some of our best opportunities have come after a difficult period. I think it's normal to see contraction in multiples during periods of crisis and after. We’ve seen a lot of activity in recent years by consolidators, including private equity that we don't think will have the same balance sheet flexibility going forward. Financing is going to be more difficult to obtain. So as always, our approach has been to maintain a clean balance sheet and be able to get through these difficult times in good condition and take advantage of opportunities that may arise.

The next set of questions comes from Mark Petrie at CIBC World Markets.

Could you please provide additional detail around the magnitude of the contribution from each of the primary drivers of your U.S. merchandise same-store sales growth? Regarding the rollout of your food at scale program, could you please update us on the state of the rollout today and plans for Q4 and fiscal 2021?

Yes. I think we've already addressed the categories that have stood out for this quarter, some of them go right to food. With regard to what we call food at scale, we've expanded this quarter to 100 stores and very pleased with the results, not only in terms of the food sales itself, but the positive impact we're seeing it have on other categories in the store. And while we also know there's startup costs, I've been very pleased with the efficiency of the program from a labor perspective. So at this point, happy to share that we pushed the button to scale this program materially in the U.S., our current plan is to rollout to initial 1,500 stores by fall of this calendar year. Right now, we're rolling out at a pace of 12 stores per year and looking to accelerate this significantly as we enter the summer. And that's, of course, barring any impact from the COVID-19 virus.

The second question. What if any impact have you seen in your business specifically regarding the availability of product and availability of labor as a result of the COVID-19 pandemic? And do you expect to keep stores open throughout the outbreak?

Again, it's very fluid, but as of right now, we've not seen any material issues in our supply chain. We have great long-term supply partners and they've done a great job communicating with us and adjusting their operations to meet our needs. We’ve certainly seen some items of higher demand, and you can think about kind of the staples that people are stocking up on the water, tobacco products, even beer. Again, on the labor side, the health and safety of our employees and our customers has got to be a top priority. We put in place a lot of measures to reinforce the right behaviors and decisions, including an emergency sick plan in place for a large portion of U.S. workforce. Under the current conditions, we plan to remain open, but it's again, very fluid. The communities where we work and live rely on our locations more than ever for fuel emergency items and staples. So when we've experienced these types of situations in the past, if you think about hurricanes, floods, et cetera, our industry has played a key role in helping our communities get through these situations and we’ll attempt to do the same here.

The next question comes from Michael Van Aelst at TD Securities.

Your refinancing and terming out of $1.5 billion of debt earlier this year looks timely at this point. Should you wish to complete an acquisition in addition to the cash balances? Would you expect to have full access to your $2.5 billion credit facility? Do you think you could raise additional debt in the current market conditions if attractive opportunities surface?

So yes, Michael, so we don't know how the situation will evolve and what impact it would potentially have on M&A. But we are monitoring the situation very closely. However, we are in a good position, like we said previously with an investment grade credit rating and that is recognized by investors. We also have good liquidity, strong cash position. As we mentioned, we have a full access to our $2.5 billion credit facility. And as of now, financing has not dried up for investment grade in the capital market, we're still assisting them every day. And if we're issuing them on the right day, there's still a market out there. So we saw good demand in our offering in January. So I think our credit is well off. And we also got attractive terms. So we're going to still monitor the market. The investors are still looking for good quality bonds to invest in. And we also think that once we will pass the peak of the coronavirus crisis, we're not going to see a desirable – and a desire to accelerate the investment to restart the economy. And this in an environment where conditions are and availability are going to be favorable to strong players like us. So we're monitoring that very closely. But we feel that we still have flexibility in this environment right now.

The next set of questions comes from Chris Li at Desjardins Securities.

As you increase the pace of food service rollout, do you expect it to be largely EBITDA margin neutral in the near-term with higher gross margins being largely offset by higher operating expenses?

Well, the big reason we took our time in the rollout was to ensure that we had a proxy model. And therefore, we're expecting it to be accretive with solid returns. We expect a positive impact on our sales and gross margin and also on our net margins. So we're going to – and we have our usual threshold when we're investing capital, then we're expecting to meet those thresholds. So on the other side, there will be a bit of front loading on SG&A due to the training and waste until we get to the critical scale and volumes. But based on our product experience and the fine-tuning we made also with those products, we're expecting a quick ramp up of the program and to contribute – for the program to contribute positively to our equation.

The second question. Based on government data, industry fuel volume in Norway declined by about 4% during the quarter, but Couche-Tard's European fuel volume declined by less than 1%. Recognizing that there are other countries as well as business mix differences for Couche-Tard, can you explain how you've been able to seemingly outperform the industry?

Yes. I mean, there's a lot of things that go into fuel demand. We believe marketing fuel is about a lot more than price or the price we see on the side. We do a lot of dynamic pricing, including down to the day part. Focus on just continuing our executions at the forecourt. We know that people have a strong preference for clean, well lit forecourts and for clean bathrooms. And when we look at our brand tracker, both in Europe and in North America, we continue to make progress on those fronts. And we're just – we're experimenting with a lot of other things that are kind of non-price related activities that contact our target customers and incentivize them to come in without just lowering the price at the street. So again, a lot of things going into that, but we believe we can continue to outperform the industry on the fuel side.

The next set of questions comes from Bobby Griffin at Raymond James.

Have you noticed any changes in customer behavior such as trip frequency, average ticket size or gallons sold in Europe as a result of the coronavirus that might illustrate what the impact will be to the U.S. and Canada business units?

Yes. It seems like Europe is just a couple of weeks ahead here in terms of impact of the virus with the most heavily impacted country being Norway, which closed its borders last week. It's too early, I guess to really understand what the full impact would be, but we’ve certainly seen softening fuel and merchandise demand, although so far fuel has been less impacted than merchandise. In the U.S. and Canada, we've seen pockets of similar restrictions on movement, but nothing in mass yet. But I guess, one of the benefits of being global is, we're able to share information and best practices and learnings across our business units and apply the lessons we learned in Europe to our North American businesses.

The second question. Given the cost pressures facing the smaller U.S. operators and competitive M&A market, is there an opportunity to accelerate the number of organic store openings in the U.S.?

Yes. I mean, we touched on M&A earlier, some of the focus on the NTIs. They are an important part of our growth strategy and our ability to capture market share in our core markets. As part of that strategy of doubling the company again, we have concrete plans in place, resources deployed to double the number of NTIs that we're deploying over the next three years.

The next set of questions comes from Jenny Wang at Eight Capital.

In response to COVID-19 many restaurants and retailers are shutting down or reducing hours temporarily, do you foresee reduced hours or closures of Couche-Tard stores and gas stations in the near-term?

Again, I think it's too early to say how this is going to play out and whether restrictions will be enacted. We have run several scenarios, and we're being proactive, preparing for supply chain disruptions and shortages of labor. For those areas that have restricted businesses so far, grocery, fuel and drugs seem to be three consistent exceptions to that. So right now we expect to remain open. However, we do have plans where we've identified sites that we would close and transfer employees to make sure that we keep our most strategic sites open in event of running short of available team members. We also are looking at opening hours and reducing evening shifts if we need to.

The second question. Are you seeing any benefits from the rapid decline in oil prices on fuel margins? Unit’s fuel margins were strong this quarter. Is there room to further increase these next quarter?

Yes, I mean, without looking forward, I would say that rapid price declines, product price declines are typically accompanied by higher than average fuel margins. And you all know what's happened to product prices in the last few weeks. Now that said, we also have a lot of internal initiatives to continue to help our fuel margins continue to outperform the industry. We have a lot of optionality built into our contracts just based on our scale. We have a procurement group that really is global in terms of where we source product from. And we've been very pleased with the rollout of Circle K. It's performing well with customers and that saves us margin as well versus major branded supply options.

The next set of questions comes from Karen Short at Barclays Capital.

Can you provide an official update on Caltex? How do you balance the complexity of acquiring the entire assets versus just the retail component?

As I mentioned in my comments, we're currently in the middle of due diligence and won't comment further on that process other than to say we’re committed to 100% of the business. We certainly feel we can leverage the experience of when we bought SFR almost nine years ago now, which includes very similar asset base. And then I would say due diligence has also reinforced the fact that Caltex has a very strong team with a high level of expertise around the full value chain.

The second question. Can you provide some color on what drove the strength in merchandise comps in Canada?

I would say that nicotine in varying shapes and sizes has driven strong comps versus last year. Last year, we were just launching, iQOS, JUUL, things like that, into Canada. A year later, continue to see very strong traction there. We're also proactively rolling out improved food offers while we wait for the food at scale program to be deployed in Canada. And just overall, the categories continue to perform well across the store.

Thank you, Brian. Thank you, Claude. That covers all the questions. Thank you all for joining us. We wish you a great day and look forward to discussing our fourth quarter 2020 results at the end of June.

Thank you, everyone.

Thank you.

This concludes today's conference call. You may now disconnect.