Good morning. My name is Anders and I will be your conference operator today. [Foreign Language] I will now introduce Mr. Mathieu Descheneaux, Vice President, Finance 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 fourth quarter and fiscal year 2021. All lines will be kept on mute to prevent any background noise. After the presentation, we will answer questions that were forwarded to us before end 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 and 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.

Thank you, Mathieu and good morning everyone. Thanks for joining us for this presentation of our annual and fourth quarter 2021 results. Overall, we had a remarkable year both in terms of financially and operationally despite the pain we all felt through this last year and persistent pressures of the pandemic on our customers, our team members and our supply partners. Across our network, we made notable progress in our strategy of accelerating organic growth by expanding our fresh food offer to 2,000 stores, rolling out more frictionless payment options, progressing our data and analytics work and our fuel procurement and transport capabilities. We have also expanded our brands, particularly online and on the forecourt, making them increasingly more modern and recognizable in every part of our customers’ journey. Through the acquisition of Circle K Hong Kong, we made a long planned entry into the dynamic Asian market. And through our Norway lab, we pushed forward our ambition to become a world leader in electric vehicle solutions. Despite all the challenges brought on by the pandemic, we remain focused and committed to our long-term strategy, hitting key milestones on all of our key work streams throughout the year. I am also pleased to report that we had a solid fourth quarter, with results strengthening where we are seeing COVID restrictions ease. Across the board, we have had positive trends in same-store sales and volumes as traffic is returning to our locations with rural and suburban recovering at a faster rate than urban. While fuel volumes remain impacted by restricted measures, steady improvements carried through parts of the network, especially in the U.S., where we are seeing a return to more normal driving patterns. We also continue to realize good fuel margins in all our regions of the business despite significant increases in product costs during the quarter. 15 months after the start of the pandemic, the continued commitment to the business and care for our customers has been exceptional. And during my almost 7 years as CEO of this company, I have never been more proud of our team members in this past year. I want to take a moment to address the recent cyber attacks in the Colonial pipeline. While it happened after the quarter, it did cause significant disruption in the U.S. supply. As you know, the pipeline was completely shut down for several days, which especially impacted our fuel supply in our business and for the industry, spanning all the way from Texas up through the North and Great Lakes regions. I want to thank our fuel and operational teams and our supply partners for their tireless work over the course of these many weeks, actively buying products at alternative locations, shuffling resources with areas with limited product availability and over longer hauls and putting in massive efforts to get our sites wet for our customers, especially prior to the Memorial holiday. Today, I am glad to report, we are fully operational and ready for the summer holiday driving season. Turning to the results for the quarter, same-store sales growth was 8.1% in the U.S., 1.6% in Canada, and 9.7% in Europe compared with the same quarters last year. During the last weeks of the quarter, restrictions began to be lifted in parts of our network, particularly in the U.S. and we are cautiously optimistic that as vaccination ramps up across the world, we will continue to see traffic improve. Along the way, we continue to make sure that we have the right value propositions, including our Sip & Save subscription beverage program, our smart value program, our Lyft, which is a basket building tool and gamified promotions to keep our customers engaged with us in driving traffic to our locations as people get out and about. This quarter, we have expanded the reach of our Fresh Food Fast program bringing the offering to Canada. Our focus remains on the quality and ease of our operational execution and we continue to optimize our program by launching new items. Customer feedback remains strong. And as morning commutes resume, we expect the offer will become even more popular. While food in general has been impacted by the pandemic and decreased traffic, when we look at our new program in isolation, it continues to perform very well compared to sites that are not on the program in the same markets. Based on these results in fiscal year ‘22, we plan on adding more than 3,000 additional stores across the network. In Europe, we continue to develop the new Fresh Food Fast concept to the platform for future growth with a goal to maintain our high level of food quality and sales, while reducing our labor requirements. We now have a pilot in Denmark for the new self-service options and have introduced more freshly produced and hot food choices. This service option is making it easier for our customers to have a fast overview of the offerings as well as more simplified ordering and picking up of a full meal, including cold drinks. In Q4, we piloted our new Sip & Save beverage subscription across 122 stores, allowing customers to redeem one beverage of their choice hot or cold for everyday for a monthly cost of $5.99. The Sip & Save subscription includes all dispensed and is redeemable for any size, including resales up to 64 ounces. Based on very early positive results, the program has now scaled nationally and we are growing our subscription base rapidly now exceeding over 500,000 enrolls. Overall, packaged beverage continues to remain strong over the quarters. We have seen a shift away from larger packages possibly during the pandemic and back to more normal instant consumption single-serve packages. Our alcohol business continues to be strong, especially in Canada, which is showing the highest increase over plan in last year. In the U.S., we expect sales to moderate a bit as we see obviously more restaurants and bars reopen. During the quarter, we expanded our Q Line systems to about 900 U.S. stores, creating a clear path to purchase and the ability to place high-impulse items in front of the customers immediately before checkout. We continue to progress with this initiative as we see accretive growth in future categories, including private label. Our plans this fiscal year to expand this to an additional 3,500 sites. In other age-restricted products, cigarettes sales remained strong in the quarter although margins continue to be pressured due to more multiunit sales, excuse me. Other tobacco products sales remained strong, especially driven by the European business and modern white oral nicotine products continue to show strong growth in both the U.S. and Europe markets. Over the year, we committed to be a more data-centric convenience business. And again, this quarter, we worked hard to develop our capabilities. This is one of our top strategic initiatives and we are pleased with the results so far. In our store-by-store pricing, we are seeing an improvement in gross margin dollars and with significant learnings in place, we are expanding the in-scope SKUs. Next on the agenda, we will focus on the data and analytics teams on optimizing assortment and promotional activities at the local store level. We have multiple pilots in place and feel this is a very material opportunity for our company. Moving to the fuel side of the business, for the quarter, same-store road transportation fuel increased 5.4% in the U.S., 3.6% in Europe and other regions, and 4.9% in Canada due to higher fuel demand compared to the comparative quarter. However, fuel volumes continue to be challenged by work from home and local restrictions in the various geographies in which we operate. And as I mentioned earlier, fuel margins remains healthy really across the network. Turning to our Circle K fuel supply, over the course of the year, we converted 450 refiner branded sites to Circle K fuel. At the end of the quarter, we had nearly 2,800 sites in the U.S. with our Circle K fuel brand. In this coming fiscal year, we will rebrand over 800 additional sites. These conversions dramatically increase brand awareness, improve underlying costs and give us the ability to control and simplify the customer journey. We are also on a journey to create additional consumer benefits for the brand. One example is we are piloting various premium claim strategies in specific markets at over 780 sites. Here, we are pleased with the initial results and are planning forward a national rollout of this promotional activity. Over this past year, we have also been investing in our fleets and building more optionality in our fuel procurement with our partnership with Musket. We believe this relationship will dramatically accelerate our supply and trading capabilities, again further differentiating how we procure and deliver fuel from other competitors in the industry. Also through a partnership with both Musket and Trillium, a leading provider of alternative fuels, we recently began converting our company-owned fuel delivery tankers in California to renewable natural gas as part of our sustainability efforts to reduce methane emissions. Despite the general impact on traffic by the pandemic, our e-mobility business continued to grow throughout the year. In Norway, EV charging now currently makes up approximately 13% of all energy transactions at our store with about 80,000 monthly charging transactions. We are also growing out our in-home charging business and have expanded this offer outside of Norway to all of our Scandinavian countries. Our B2B mobility offer has been especially well received since its launch this year and this business now accounts for more than 20% of all transactions on public chargers. With the recent introduction of our Circle K Pro digital platform, we have made it easier for our valued fleet customers to get charging services combined with fuel and convenience since you are getting all their Circle K needs at the lowest total cost of mobility. We also opened this quarter an exciting flagship store in Kongsberg, Norway, with our first forecourt is fully electric with 300-kilowatt speed chargers under large canopy covered in solar panels. This is the first electric forecourt in our history. This two-level store also have extensive food offers, large dining and a back area offering a full section of fuels, biofuels and AdBlue for internal combustion customers. Our experience in Norway shown us that convenience and fuel sites have rolled the play in the build-out of the EV infrastructure and we continue to explore how we will apply our experiences to participate at the right level, at the right time in North America. This year, we made significant strides in frictionless capabilities. In this quarter, we are especially proud of our work on the forecourt, with the expansion of our Pay by Plate program. Following successful pilot in Norway, we launched Pay by Plate as a frictionless payment method to our fuel customers across our entire Swedish network. Pay by Plate customers simply drive into the forecourt, fill up with fuel through number plate recognition automatically and safely pay on the Circle K Easy app. We are the first retailer in the world to launch this technology on a national scale and we recently won the NACS European Convenience Retail Technology Award for our work in this area. In the coming months, we are looking forward to expand this solution to more European business units. Our new stores remain an important organic growth lever across the network and we are seeing the solid return on investment. Across the network this year, we opened new horizon concepts with a refreshed brand look and feel in the U.S., Canada, Sweden and Lithuania. These new horizon stores enhance the customer experience by showcasing our Fresh Food Fast initiatives, our bean-to-cup coffee offer and touch-free options and we are pleased with the early performance results. I am going to pause there and let Claude take you through more of the fourth quarter and annual financial results. Claude?

Thank you, Brian. Ladies and gentlemen, good morning. So for the fourth quarter of 2021, we are happy to report net earnings attributable to shareholders of the corporation of $563.9 million, or $0.52 per share on a diluted basis. Excluding certain items for both comparable periods, adjusted net earnings for the quarter – our fourth quarter of fiscal 2021 were approximately $564 million or $0.52 per share on a diluted basis compared with $0.47 per share for the fourth quarter of fiscal 2020, which represents an increase of 10.6%. Net earnings were $2.7 billion for fiscal 2021 compared with $2.4 billion for fiscal 2020, an increase of 15%. Diluted net earnings per share stood at $2.44 compared with $2.09 for the previous fiscal year. Excluding certain items from net earnings for both comparable periods, net earnings would have been approximately $2.7 billion compared with $2.2 billion for the previous year, which represent an increase of $500 million or 22.6%. Adjusted diluted net earnings per share would have been $2.44 – $2.45 sorry for fiscal 2021 compared with $1.97 for fiscal 2020, an increase of 24.4%. While we operated in a perfectly challenging environment, one in which our fuel business saw meaningful volume declines, we maintain our focus on returns as well as our discipline on cost control and cash management. We also continue to invest in our business preparing for the future and eventual return to pre-pandemic traffic levels. The strong capital structure that we have diligently put in place serves us well during the past year as we had the means to support our team members to protect them as well as our customers and to continue to create value for our shareholders. I will now go over some key figures for the quarter. For more details, please refer to our MD&A available on our website. During this most recent quarter, excluding the net impact from foreign currency translation, merchandise and service revenues for the fourth quarter of fiscal 2021 increased by approximately $411 million, or 12.7%. This increase is primarily attributable to organic growth and on merchandise and service sales as well as the contribution from acquisitions, which amounted to approximately $165 million. For fiscal 2021, excluding CAPL’s revenues as well as the net impact from foreign currency translation, merchandise and service revenues increased by approximately $1.1 billion, or 7.6%. For the fourth quarter of 2021, excluding the net impact from foreign currency translation, merchandise and service gross profit increased by approximately $117 million, or 10.9%. The contribution from acquisition amounted to approximately $44 million. Our gross margin decreased by 0.7% in the United States to 31.8% and by 0.1% in Canada to 31%, mainly due to the inventory adjustment of $26.4 million and $3.2 million respectively, mostly related to a net realizable value provision on personal protective equipment. Excluding inventory adjustments, gross margins in the U.S. and Canada would have been 32.8% and 31.6% respectively favorably impacted by changes in product mix. Our gross margin decreased by 2.5% in Europe and other regions to 38.1%, mainly due to the integration of Circle K Hong Kong, which has a different product mix in our European operations. Excluding Circle K Hong Kong, our gross margin in Europe and other regions would have been 42.8% impacted by favorable changes in our product mix. During fiscal 2021, excluding CAPL’s gross profit as well as the net impact from foreign currency translation, merchandise and service gross profit increased by approximately $305 million or 6.2%. Our gross margin decreased by 0.2% to 33.1% in the United States, by 2.4% in Europe and other regions to 39.1% and by 0.4% in Canada to 31.4%. We will now move on to the fuel side of our business. In the fourth quarter of fiscal 2021, our road transportation fuel gross margin was $34.45 per gallon in the U.S., a decrease of $10.48 per gallon, mainly driven by unusually high margins in the comparative quarter due to the sharp decline in crude oil price last year. In Europe and other regions, the road transportation fuel gross margin was $0.85 per liter, an increase of $10.18 per liter. And in Canada, it was at CAD10.92 per liter, an increase of CAD2.56 per liter. Fuel margins remain healthy from favorable market conditions and improved underlying product costs driven by fuel rebranding and procurement initiatives. The road transportation fuel gross margin in fiscal 2021 was $0.3528 per gallon in the $0.1099 per liter in Europe and other regions, and in Canada, CAD0.1036 per liter. For the fourth quarter of fiscal 2021, normalized operating expense decreased by 2.9%, driven by government grants of $41 million, cost and labor efficiencies, lower level of COVID-19 related expenses as well as rigorous work in activities initiated to streamline and minimize our controllable expenses. These were partly offset by normal inflation, higher labor costs from minimum wage increases and pressure from low employment rates in certain regions and incremental investments in our stores to support our strategic initiatives. COVID-19 related expense for the fourth quarter of fiscal 2021 include 10-Q bonuses in Canada, additional cleaning and sanitizing supplies, mask and gloves for our employees as well as the donation of personal protective equipment to the company if these are on our stores. During fiscal 2021, normalized operating expenses decreased by 1.2% compared with the previous fiscal year. Excluding specific items described in more details in our MD&A, the adjusted EBITDA for the fourth quarter of fiscal 2021 increased by $38.8 million or 3.7% compared with the fourth quarter of fiscal 2020, mainly due to organic growth of our convenience activities, higher fuel demand, lower operating expenses and the net positive impact from foreign currency translation, which had a net positive impact of approximately $25 million as well as the contribution from acquisition, partly offset by lower fuel transportation gross margins in the U.S. During fiscal 2021, on the same basis, the adjusted EBITDA increased by $642.4 million or 14.7% compared with the previous fiscal year, mainly attributable to higher road transportation fuel gross margins, organic growth of our convenience activities, lower operating expenses as well as the net positive impact from foreign currency translation, partly offset by the negative impact of COVID-19 on fuel demand. The variation in exchange rate had a net positive impact of approximately $45 million. Also excluding specific items in the adjusted income tax rate for the fourth quarter of fiscal 2021 was 18.5% compared with 20.7% for the fourth quarter of fiscal 2020. The decrease for the fourth quarter of fiscal 2021 is mainly stemming from the impact of the different mix in our earnings across the various jurisdictions in which we operate as well as from gains taxable at a lower income tax rate. The adjusted income tax rate for fiscal 2021 was 19.5% compared with an adjusted income tax rate of 19.9% for fiscal 2020. As of April 25, 2021, our return on equity remains strong at 24.3%, and our return on capital employed stood at 15.9%. During the quarter, we continued to generate strong free cash flows and our leverage ratio stood at 1.32x. As of April 25, 2021, we had ample balance sheet flexibility with $3 billion in cash and an additional $2.5 billion available to our revolving credit facility. It’s also important to note that during the quarter in fiscal 2021, under our November 24, 2020 share repurchase program, we repurchased 17.4 million and 33.3 million Class B subordinate voting shares, respectively. These repurchases were settled for a net amount of $550 million and $1.1 billion, respectively. Also subsequent to year-end, under our new program, we repurchased approximately $300 million of shares. Finally, on June 29, 2021, the Board of Directors declared a quarterly dividend of CAD0.0875 per share and approved its payment for July 22, 2021. To close, I would like to highlight and thank our team for the work they have accomplished throughout the last year, ensuring that we emerge from the pandemic in a strong financial position and ready to accelerate capital deployment towards our strategic initiative while always remaining focused on driving value creation for our employees, customers and shareholders. I also wanted to mention our upcoming Investor Day. We hope that you are going to join us for our upcoming virtual event on July 14, where we will be hearing from several members of our management team regarding our businesses and some of our key initiatives. With that, I thank you all for your attention and turn it back – the call back to you, Brian.

Thank you, Claude. Just a couple of remarks in closing. Certainly, when I look back at this year, one word comes to mind, and that’s gratitude. My gratitude goes out to all of our team members for their continued commitment to each other and to our business. Our standing operations team kept our employees and customers safe this past year, kept our stores open, ensured that we are part of the solution in communities where we live and work in the face, particularly in the U.S., one of the most difficult labor markets I have ever seen in my career. With the support of our global functions, we did more than maintain the status quo during this difficult year. We stayed focused. We stayed focused on our strategy. We innovated for the future. We expanded into the growing Asian market and sold them because of the hard work, engagement, and courage of our team members that our company culture and balance sheet are stronger than ever before, and we are getting ready for the future. A future beyond the pandemic where we continue to make our customers’ lives a bit easier every day and become the world’s preferred destination for convenience and mobility. Now with that, we will answer the questions we receive this morning from analysts. A - Mathieu Descheneaux: Thank you, Brian. Thank you, Claude. And our first question comes from Patricia Baker at Scotia. And the first question is with the U.S. opening up, what is your expectation around summer travel this year? Do you expect to see a rise in fuel volume associated with Americans and to a lesser degree, Canadians traveling more this summer by road compared to last year?

Yes, I think we fully expect to see leisure travel in particular, to grow significantly over last year’s levels. We saw that of Memorial Day in the U.S., but levels remain below 2019. They are continuing to grow. So as states and borders continue to open, we believe there is a pent-up demand and people will hit the roads. That said, they are still borders are closed. You can’t travel between the U.S. and Canada as an example, and then parts of Europe have the same restrictions. So, we are not at normal yet. And then I would also say we are seeing – I think the industry is seeing a lag in the recovery of the morning day-part as many office work environments remain either fully or partially remote. But – so it’s a journey, it’s a journey, but it’s headed in the right direction.

Claude, you noted that as part of your strategic review, you have been selling in certain locations and although saw it in the release, should we expect to see more of such sales in the fiscal year? And at what point do you believe you will have the network best positioned?

So, thank you, Patricia. So, we have reviewed our asset base in the fall of 2020 and identified stores that were not longer strategic for us. And out of that, the sale of 49 sites in Oklahoma for – to Casey’s and also putting for sales more than 300 sites that are currently being evaluated by potential buyers. So – and also, as you certainly know, we were optimistic on some of our high-value urban sites that were worth not more to a buyer than it would have been for our operations, so we elected to divest some of those. So, it’s however – it’s an ongoing process, and we are always looking for ways to optimize our network and to ensure that our stores are strategically relevant. And strategically relevant means we are focusing on sites that are able to represent our brand well and also can accommodate our commercial programs within the store. So, we are going to continue to divest as we go along our journey and maintain a nimble network and make sure that we are taking care of our tail end sites.

The next questions come from Martin Landry at Stifel. First question, your 5-year plan for fiscal year ‘23 calls for EBITDA to double from the fiscal year ‘18 level of $3 billion, this suggests that if you reach your objective, fiscal year ‘23 EBITDA could reach $6 billion, which is significantly higher than current consensus expectations of $4.6 billion. Do you still feel confident in obtaining this goal? And what are the risks that could prevent you from reaching your 5-year objective?

Thanks, Martin. Just as a reminder, our 5-year plan was to accelerate organic growth to about 50% of our annual EBITDA growth with the remainder being M&A, which has historically been well over half of our growth. So setting aside the uncertainties of COVID, I feel we are right on track to deliver the organic growth rates we planned for 3 years ago. Those include things that we have talked about rolling out our Fresh Food Fast offer, localized pricing, fuel initiatives assortment, revamped and enhanced loyalty programs are on the agenda. That – I guess that turns us to the M&A side. We have talked a lot about it in past quarters. The appetite is absolutely there. We have taken some big swings at acquisitions, big and small over the past couple of years, but we have been concerned about valuation levels. We are not going to do a deal for the sake of hitting this target. But at the same time, we remain optimistic that M&A can and will be a part of our growth story. It’s part of our DNA. We are good at it. I think we integrate as well as anyone, if not better than anyone in the industry. So, it’s just a question of finding the right opportunities out there.

So Martin’s, second question. Historically, U.S. fuel margins have been inversely correlated to fuel prices. During the spring, we have seen an increase in fuel prices at the pump, but with limited to no impact on fuel margins. What explains the recent disconnect versus your Circle relationship?

Yes, I certainly can’t speak for our competitors. But as we think about it, we see fuel volumes have remained below their historical levels. So, I believe fuel retailers in general have been more focused on maintaining gross profit dollars in the face of rising costs, tobacco pressures, etcetera. So, that inherently means a sharp retention of fuel margins. And it’s been encouraging these past months, as you have noted, as costs have increased globally to see the industry remain rational and fuel margins, unit margins remaining very strong and compensating for the lack of volume

The next two questions come from Bonnie Herzog at Goldman Sachs. The industry is facing pressures from higher operating costs coming out of COVID, especially higher wages in the tight labor market. Can you talk through some of the pressures you might be facing in fiscal year ‘22 and if there are opportunities for you to potentially manage these expenses more efficiently than some of your smaller peers, given your scale.

Yes, a few things to share there. So, we have seen tremendous pressure to hire. I want to note this is important. It’s really a U.S. phenomenon for us. We are not feeling the same pressures in Canada or Europe. So, that gives me some hope that this is a part of economic stimulus and enhanced benefits that have created some of the situation. In the face of this, we are doing a lot to maintain staffing levels. We have a heavy focus online hiring, online visibility. We put centralized recruiting and hiring resources in place in each of our U.S. business units. We have got retention bonuses out there focused on better training and on-boarding, making sure that those that we do get in the door, understand the job and are able to do it. We certainly can’t ignore the wage levels that we are seeing in some of our markets, but we are striving to keep our costs as variable as we can, believing that some of this pressure is short-term. We are seeing some early signs of increased applicant flow. There is 25 states that have either announced or ended supplemental unemployment benefits in the U.S. And we are seeing again increased outflow in those states. And with rising vaccine rates, we are optimistic that people will be more comfortable returning to work force. So while trying to remain competitive, we are focused on trying to keep these costs as variable as we can until we truly understand how much of this is short-term versus sustained cost pressure. That said, we are doing a lot on the cost side, maybe, Claude, if you want to share some of the activities that we think are able to more than offset this.

Yes, Brian. Yes, Bonnie, we have a lot of going on. We have a comprehensive program internally to manage and optimize our costs. So our focus is on reducing costs at store level, primarily such as unnecessary labor hours or maintenance or noncustomer facing activities that could be done otherwise. So for this, we are using, as you mentioned, our scale and we are using technology, also the strength of our support function to help reduce our costs. Some examples are the consolidation of our vendors for maintenance. So, that’s one big activity that took place constantly using our scale and marketing with our POP purchases, robotics for back-office tasks in-store and also in our shared services. And a good example of offsetting technologies that we are using and are testing our Pay by Plate program that we are using in Europe that we just launched very successfully, also self-checkout that we are testing in multiple stores in the U.S. right now that has been proven pretty – giving us good results.

Thank you. Claude, a question for you on capital allocation, especially given the strength of your balance sheet and growing cash balance, as we look ahead to fiscal ‘22, do you plan to prioritize share repurchases, especially in the current M&A environment where there might not be as many large scale acquisition opportunities?

Well, we are still feeling very good about our capacity to create value to M&A. We still are focusing on the U.S. as our first priority. So, U.S. and convenience for us is number one. We also just opened a new platform of growth in Asia with our acquisition of Hong Kong, so that opens up a whole new area for us in terms of M&A. And we are still also looking in adjacent sectors, as you know, dollar stores, the travel retail, the grocery and QSR are the things that we are looking into. So patience is key, like Brian mentioned, we are involved in multiple opportunities and are opportunistic to continue our growth through M&A in the future. For the capital allocation, we are still going to be opportunistic on our buyback. It’s a tool in our tool belt that we are going to use when we are under our target leverage ratio of 2.25x. So any time we are under that, then we are going to consider, depending on the price of our stock to use our buyback program.

Great. The next two quick questions come from Irene Nattel at RBC Capital Markets. Can you give us color on the contribution of key initiatives to driving same-store sales growth? And how should we think about the evolution or performance of these as we go through reopening?

Yes. I would say that we have a lot going on. There is always a balance to do we have enough or too much. Certainly, we are excited about our merchandise pricing and promotion work. Packaged beverage has just continued to be a very, very strong category, up strong-double digits year-over-year. Strong performance in nicotine categories, noncombustible margin dollars have exceeded combustible in some of our key markets for the first time. That’s big. That’s non-cigarettes being greater than cigarette margins in our stores. So, there is life in the nicotine category. People are switching to healthier alternative ways to consume nicotine and will be a part of helping them on that journey. And then for the future, we have a lot of things keyed up. We talked about our Fresh Food Fast big ambition there to roll that out to 3,000 stores. We feel we have got the right offer. We think we have got the right production platform. It’s really a journey of creating a food culture in our stores that can execute that and then particularly executing that in a difficult labor market that we are seeing in North America. Claude touched on sip and safe. We think that’s pretty innovative, great value proposition for our customers and something that we think will certainly create loyalty to our brand. So, we continue to sign people up – this summer, you will see more around gamified promotions, gamified activities has been strong for us, both in Europe and in North America, and we will continue that with a strong focus on beverage to the summer months. We all know that 50% of the trips in our industry are focused on the beverage and satisfying a first need. So, you will see a lot of activity around thirst over the summer from us. And we feel good that as life returns to normal, although it’s hard to understand what good looks like that we will continue to grow our share in the industry.

Second question from Irene. Yes, yes. Fuel margins remain robust. Can you provide color around the contribution of Couche-Tard procurement strategies to margin? How should we think about sustainability to industry metrics?

Yes. I think we remain a leader in the fuels market, and we’re committed to win. We believe we can continue to create strategic advantages that a lot of the industry can’t achieve. We’re certainly seeing benefits early on from our Musket partnership combines one of the largest gasoline shorts in the world, ours with one of the largest diesel shorts from the Loves side. And you combine those it creates very unique opportunities around the procurement and around creating value for our refining partners. It accelerates our global training capabilities, enabling us to capture global arbitrages. An example would be HVO, which is 100% renewable fuel is mandated and required in many of our European markets. In this past quarter, we’ve been able to procure meaningful amounts of that in North America, shipping into our Scandinavian markets at a cost advantage basis. Transportation, we have deployed more of our own fleet now approaching, I think, 900 or so trucks. And that allows trucks. And that allows us capital allocation arbitrages across our geographies. And all this fits particularly well with the conversion to our own brands, which allows us to be a lot more flexible on the supply side. And again, as I started out saying, we believe it creates some sustainable advantages versus the industry overall.

Good. So next question is from Derek Dley at Canaccord Genuity. In regions that are ahead in terms of reopening, are you witnessing a normalization in terms of consumer purchasing behavior?

Derek, I wouldn’t call it normal yet for sure, but we are seeing some trends. Traffic is improving where we’ve got society opening up and more higher vaccination rates. Sales mix is trending back more toward normal, food which has shut down to a great degree in some of our markets, particularly in Europe, is up and operating and growing. We’re seeing more single-serve which both of those help margin. The basket is declining a bit, but still at levels well above pre-COVID. And then finally, I would touch on the morning daypart, which I mentioned earlier. It’s the one that is lagging as we’ve got work from home still in place in many, many parts of the world. But we anticipate that recovering as where places open up and people return either full-time or part-time to their places of work.

Good. Thank you. Moving to Graeme Kreindler’s from Eight Capital. The potential for cannabis reforms in the U.S. has many different pathways. Can you please discuss how the company views the scenario where interstate commerce is allowed versus a scenario where state markets are ring-fenced with respect to its strategic relationship with Fire & Flower.

Yes, I’d start by saying we’re proud of the role that we and our industry plays in selling age-restricted products globally. We’re exercising the same focus on responsible retailing as we look at cannabis. Our focus over the last 2 years has really been to understand the market and develop a consumer offer and associated technologies to win in that market with a goal to have a model to deploy in the U.S. when the time is right if we think the returns are there. And so we’ve been pleased with our partnerships with Canopy Growth and with Fire & Flower in Canada and pleased with the progress. We’re seeing continued sales growth and as we open sites, that business starts to become material to us. We are closely watching the regulatory front in North America and I am very pleased personally that [indiscernible] for a level and open playing field on behalf of our industry in the cannabis space. U.S. industry today in those legalized states is extremely fragmented on the retail side, so we believe there will be meaningful opportunities for a scaled retailer with the right offer. And to your point on interstate versus ring-fenced, if we do see ring-fenced, that certainly will create the need for partnerships, which we’ve got some foundations in place with Canopy Growth and conversations with others. We don’t see ourselves focused on the growing or extraction pieces of the business. We’re very much focused on retail. So again, partnerships could be a part of that solution if interstate is not allowed.

The next question comes from Bobby Griffin at Raymond James. On the merchandise side of the business, are you seeing any impact from cost inflation? And if so, what are we as of the product assortment? And is the inflation having any notable impact on customer demand?

Yes. It’s just happening now, but we certainly are seeing cost pressures in certain categories. You can talk about the cost of aluminum can, as an example. I mean it’s really across the board, seeing it in proteins and others. We can closely monitoring that and always evaluating their price and engaging our analytics teams to watch elasticity closely. Demand is hard to quantify right now as sales are very volatile with COVID openings and reopenings. But at the same time, household income levels are very healthy really globally. So we believe we will be able to effectively pass along any material cost increases without any significant impact on demand in our stores.

The next question is from Chris Li at Desjardins Securities. Do you have a sense of the breakeven fuel margin point for the single store and small chain operators? Has the breakeven point moderated compared to the height of the pandemic or has it remained largely the same because of rising cost pressures from labor shortages and EMV compliance?

Chris we don’t have industry data, at least not current right now, and I’d call it a moving target. Just the math would say overall breakevens should be down a bit as volumes are the key driver of that equation and they have recovered a bit. But there certainly these breakevens are higher than pre-COVID levels due to volume and the cost pressures that you point out, whether that be labor or the cost to EMV compliance. I’d emphasize the importance of the initiatives that we’ve got in place to create sustainable advantages versus the industry. Whether that’s initiatives we discussed inside the store, our fuel procurements, our branding efforts, or the efforts Claude mentioned to make sure that we’re continually taking costs out of the business and being a low-cost operator in our space.

Next question is from John Royall at JPMorgan. U.S. fuel same-store gallons came in below our expectations based on industry demand numbers relative to the same period of 2020, while CPG came in a bit ahead of our expectation relative to industry averages. Was there an effort to sacrifice some volume by raising margin? Or is there another color around the volumes?

First and foremost, we’re focused on providing a consistent value to our customers with our fuel pricing. So in no way have we consciously decided to sacrifice volume for margin. We’re very analytical and data-driven around those decisions daily. I would say volumes have been very volatile. And that’s not only across countries and markets as they reopen at different paces. But we’re also seeing differences within states between rural, urban and suburban with rural recovering at a faster pace than urban for obvious reasons. So it’s a moving target, but one that we’re committed to watching closely and again, just providing a consistent value to our customers as we go forward.

The next two questions are from Karen Short at Barclays Capital. How are you thinking about the fuel margin outlook this year? Specifically, how rationally do you think operators will react to higher wage and product cost inflation? How do you view the sustainability of high fuel – high margins in the U.S. relative to history? Any structural change to think about that are informing your views.

Karen, I’d say fuel margins have always been difficult to predict in the short-term. But if you look at the last decade, you’d see a consistent rise in unit margins for the industry. Underlying this is the need to generate septal level of return in the face of cost pressures, declining cigarettes for some parts of the network or the industry. And again, fuel volumes. Some players have bled volume out over this period, and they have got to make it up. COVID certainly has magnified these effects and the markets responded pretty rationally. To the extent these volumes are slow to recover and inflation is there in the short-term, we believe the margins will have to remain healthy to offset. I’m not really concerned about short-term volatility. It’s been a part of our industry forever. I just have our organization focused on widening the advantages that we have versus the overall industry. That includes investing in technology, loyalty, food, all the other things that we’ve talked about to you over the past quarters. And then compounding that with Circle K fuel, which gives us, again, more optionality, better procurement capabilities, better consumer offer. And obviously, we don’t incur those brand fees that we would have refiner brand.

With the new localized pricing strategy in more than half of the system, how should we think about the ability of these new systems to successfully manage the significant price volatility and high price inflation we are seeing in some categories? How are gross margins trending at these stores versus the control group?

We’re very happy with the progress and seeing clear improvement versus control sites and hopefully, we can share more during our Investor Day. We do now have this widely deployed across our geographies with the next step to continue to increase the percent of the categories covered. For example, tobacco has been a category that we really haven’t deployed this into, and we think there is big opportunities. So while we’ve deployed broadly across geographies, the categories of SKUs covered, that’s still a journey and what’s happening quickly. And concurrently, we’re piloting localized assortments and localized promotions. And we believe these are both very material opportunities and we will be learning a lot over the coming quarters with the three markets that we’ve got under pilot on both of those.

The next question is from Mark Petrie at CIBC World Markets. You have increasingly spoken about the attractiveness of business-to-business fueling and the importance of a local presence of the Circle K brand. Could you elaborate on the key steps that could lead to this being a larger part of your offering, be it capital infrastructure, marketing or otherwise.

Yes, Mark, B2B has been a great strength of our offer in Europe, and we continue to win and grow market share there. And we’ve seen during COVID that, that demand has been very resilient compared to the B2C business. And it’s been a little bit frustrating because over the 9 years, I’ve watched that since we bought that oil. But there have been material structural things that blocked our ability to deploy that at the same pace or have that same level of success in North America. The first and foremost is the brands. If you look back 3, 4 years ago, if you went to a certain market, you might see a Circle K with the B piece fuel, Shell fuel, a Chevron and it was literally impossible to get a consistent B2B offer out there to our customers. So the key first step is the brand conversions. We’re well underway. And as I said earlier, we will have another 800 sites converted this year and that consistency will allow us to create a strong network in many key markets for us and be able to present a consistent and compelling offer to our customers. Second, I’d add, we’ve brought in Louise Warner. She was a part of Caltex or Ampol in Australia. So as we did not end up with that network, we ended up with the next best thing, which is a great leader. She brings tremendous experience to us in the B2B space from her role, leading this in Caltex, and she is focused on plans to grow this materially as we finalize our conversions to our proprietary brands in North America, so more to come there, but it’s certainly an area that we see a big opportunity for us.

Next question comes from Michael Van Aelst at TD Securities. Many companies, particularly deals in the U.S. have pointed to challenges in attracting and maintaining labor as well as meaningful cost inflation tied to labor, transportation and various materials. Couche-Tard has managed to keep normalized OpEx close to nil in fiscal ‘21, and it declined 2.9% on a comparable basis in Q4. How much did the government grants contribute to lowering costs? And do you see the likelihood of OpEx requirements rising at an accelerated pace over the next few years because of these inflationary factors mentioned as well as a return to normal operations as the pandemic fades?

So Michael, I think Brian alluded to the labor challenges that we’re facing in the U.S., particularly. And on your specific question about the grants that we received from the government, we accounted for $41 million in government grants during the quarter. So if we are looking at it without the grand our OpEx would have increased by 0.5%. Still a strong performance in our view, testament to our cost discipline and commitment to all our expenses, growth under inflation rate like it’s always been a challenge and that we’ve communicated in previous meetings. So we’re pleased with the efforts that we’re doing to manage our cost base. As mentioned before, we have many programs in place to help this performance, and I’ve talked about them earlier on the call. But we’re using our scale and our technology and also our support portions to make sure that we’re maintaining those costs also in the future at a lower rate than inflation.

Thank you, Claude. The next question comes from Peter Sklar at BMO Capital Markets. Now that Circle K Hong Kong has been closed for a period of time, can you talk more about the potential M&A opportunities in Asia and which countries are attractive for Couche-Tard? Also, what is the M&A environment in Asia? And how do we evaluate the two valuations compared to North America?

Yes. First, I’d say we’ve been very pleased to bring Hong Kong into the family, a lot of innovation, a lot of energy, a lot of culture there. So despite not being able to meet them in person since the acquisition, we’ve had some great conversations and they have added value back to us already. That said, we didn’t buy that company to have 400 stores in Asia. It’s part of a long-term commitment to try to grow in that part of the region. And I think this is a platform for that. We’ve looked at several opportunities since the Hong Kong acquisition and having that team on the ground, I think one brings us credibility. But then to also brings us meaningful insights into some of the markets we’re looking at. I’d say our focus right now would be in Southeast Asia, countries like a Vietnam would be an example where we’ve got an emerging class with disposable income, which leads to modern retail meets the convenience. So, again, multiple conversations, but as I have always said, it’s a long-term play. So something may happen quickly or it may take a while. But I think just based on early feedback we are having more conversations as a result of actually being on the ground there today.

Great. Our last question comes from Vishal Shreedhar at National Bank Financial. Can you explain the nature of the $26 million inventory adjustment related to merchandise cost profits?

Yes, Vishal. So the net reliable value provision was taken consequences of the markets reopening and mandatory mask wearing in many jurisdictions was lifted. And we see improving conditions also with the COVID restrictions everywhere. So this reserve is mostly for inventories of mask and hand sanitizers that we had in inventory in our stores that we want to market in the current environment.

Great. Thank you, Brian. Thank you, Claude. That covers all of the questions for today’s call. We thank you, everyone, for joining me. And I want to wish you a great day, and we really look forward to virtually seeing you at our July 14 Investor Day. Have a great day, everyone.

Thanks, everyone. Take care.

Thank you everyone.

Yes. Thank you. Bye.

This concludes today’s conference. You are now invited to disconnect. [Foreign Language]