Good morning. My name is Sylvie, 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, everyone. I would like to welcome everyone to this Web Conference presenting Alimentation Couche-Tard's Financial Results for its First Quarter of Fiscal Year 2022. 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 Web site 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.

Thank you, Mathieu, and good morning, everyone. Thank you for joining us for our presentation of our first quarter 2022 results. Overall, across the global network, we had a solid first quarter, both in convenience and in fuel, even when we compared to a very strong quarter last year. Same-store sales were especially good in Europe, and across all regions we've seen positive growth in food as the ease and the quality of our offers are resonating with our customers. While remaining impacted by COVID-19 traffic patterns, fuel volumes are improving and we continue to achieve healthy margins as well as expand our Circle K fuel rebranding efforts. No doubt as the pandemic continues to present operational and supply chain challenges, I remain incredibly proud and grateful for the care and commitment to the business shown by our team members, our customers and our business partners. I'm also pleased to report we made noticeable strides in the growth of our network this quarter. On the acquisition front, we entered into a definitive agreement to purchase Wilsons Gas Stops and Go!, a network of 226 corporate owned and dealer locations and a fueled terminal, allowing us to expand our presence in Atlantic Canada. This transaction is expected to close in the first half of 2022 calendar. We're excited to welcome many of these strong sites and dedicated team members to the Couche-Tard family. We also announced the binding agreement to acquire 35 sites currently operated under the Porter's brand, predominantly in Oregon and Washington. These fuel and convenience assets are high quality locations and have a track record of growth and a network of experienced employees. On the network optimization front, we completed the divestment of older locations primarily in the U.S., Midwest and the South. And we've added 30 new build stores to our portfolio, which better support our organic platforms and brand promise. Growing the size and scale the network is essential to our strategic ambition. And as always, we remain disciplined in our approach to create value for our shareholders. Before moving to the results of the quarter, I want to take a moment to address the recent rise in COVID cases, especially in the Delta variant. During much of the quarter, I was optimistic that we were seeing the waning days of the pandemic. Yet now, we're once again carefully watching the spread of the virus, and again reinforcing health and safety measures in our stores, as well as promoting vaccinations to protect our team members and our customers. This renewed situation, as I mentioned, continues to impact our supply chain as it is doing so across the retail landscape. It has also put a greater pressure on the labor situation, particularly in the United States, which is the most difficult labor market I've ever seen in my career. On the face of this, we're working hard to maintain staffing levels, including a heavy focus on online hiring and we've put centralized recruiting and hiring resources in place in each of our U.S. business units. In early May, we advertised for 20,000 open positions and during that period hired nearly 19,700 by the end of the quarter. We've also put into place retention bonuses and focused on better training and onboarding, making sure that those who want to come in the door understand the job and are able to do it. No silver bullets, but it's a constant battle as we work to get through this labor situation. I also want to say a few words about Hurricane Ida, a catastrophic Category 4 that barreled [ph] Louisiana and our Gulf Coast states the last few days. Most of our stores have reopened. At last count, we had approximately 50 still closed generally for lack of power. I’m thankful that most of our stores could reopen quickly to support the communities in need. And currently, we're confirming the safety of all of our team members, assessing damage to those locations that we've not been able to reopen. Given the magnitude of the storm, it could have been much worse for so many, and our thoughts and prayers go out to all those impacted. Now let's turn to our results, beginning with convenience. As we cycled against a quarter fully impacted by COVID-19, results varied by region as the pandemic and restrictive measures were at different levels year-over-year. Compared to same quarter last year, same-store merchandize revenues decreased 0.2% in the U.S. and 9.6% in Canada, while increasing 5.9% in Europe and other regions. Convenience performed well on a two-year basis with same-store merchandize revenues increasing at a compound annual growth rate of 3.7% in United States, 4.9% in Europe and 4.2% in Canada. And the categories most impacted by COVID, such as food, continued to show positive trends. I should also note that we believe based on our analysis that our U.S. same-store growth would have been up slightly more, excluding the impact of the Colonial Pipeline disruption, which affected a large number of our sites in the Southeast U.S. early in the quarter. Globally, we maintained our focus on expanding our Fresh Food, Fast program adding nearly 500 Fast stores in the U.S. and Canada, Denmark, Sweden and Lithuania, bringing the total to about 2,000. As we expanded the offering, we continue to gain valuable insights and believe we're building the right production platform, one that's taking into account a very tight labor market and supply chain challenges. We're preparing additional new initiatives that simplify operation and execution, reduce labor, and allow us to create a full food culture for our team members and our customers. In our dispense beverage category, we launched a new Sip & Save beverage subscription offering that's now active across the entire United States network. Here we have an innovative offer, a great value proposition for our customers. Sip & Save is receiving very positive feedback and we're in the process of enhancing the program to make it easier to enroll and participate when working to drive broader awareness of the program. Overall growth in packaged beverage remains positive even when cycling against a strong comparable quarter last year with the closures of the bars and restaurants. Energy and sports drinks remain the bright spots, while both purchasing and larger packages continue to be key drivers of growth. The supply chain issues noted earlier have been a clear pressure point in this category as manufacturers are challenged to keep up with the heightened demand and drivers are in short supply to get the items to our stores on a DSD basis. In the age-restricted category, cigarette sales were down slightly while margins slightly improved with our U.S. business showing the largest increase. Other tobacco products continue to show growth, particularly in Europe. To enhance the in-store customer journey, we completed over 1,120 queue line [ph] installs. Queue lines continue to bring sales growth in several key impulse categories and are clear basket builder and create more visibility for our private label brands. In our data analytics work, five additional business units went live during the quarter with our localized pricing efforts, which add to the 11 business units that were previously live. We're looking at finalizing this rollout towards the end of the year and additionally through the quarter, expanding the categories in SKUs and scope in each of these businesses. We’re also in the early stages of our work to better optimize our promotional activity in our assortment, utilizing similar analytical approaches and machine learning models. Initial results indicate a positive value case in these areas. We see this as a big opportunity, making us even better and a more localized retailer. Moving to our fuel business, same-store road transportation fuel volumes increased 11.8% in United States, 6.3% in Europe and 10.4% in Canada, due to higher fuel demand compared with the comparable quarter when lockdowns were in place across much of the network. On the two-year comparison, same-store road transportation fuel volumes decreased at a compound annual rate of 6.1% in the U.S., 3.3% in Europe and 9.4% in Canada. Fuel volumes continue to be challenged by work-from-home trends and changes in local restrictions. As I mentioned earlier, fuel margins have remained healthy across the network compensating for the loss in volume. In our Circle K fuel rebranding work over the quarter, we completed 79 additional rebrands bringing our total site count with Circle K fuel to nearly 2,900 stores in North America. Results continue to be encouraging and we’ll complete an additional 680 sites in the U.S. and Canada by the end of the fiscal year. We're also formally launching our Circle K premium claim, double the claim detergent and supporting it with various campaign initiatives. Early pilots have shown that this message resonates with our premium customers. In Europe, in our B2B work, we've had a strong start this quarter trading with volumes in card and bulk segments, both trending ahead of prior year. We'll continue to upgrade our core B2B card transaction platform as we launch new solutions in several key markets, which substantially increase our customer value proposition and digitize the experience for our customers. We made good progress also in our electric vehicle work this quarter, adding 44 new fast chargers in Europe, bringing the total to 876 charge points primarily in Scandinavia. We also continue to develop and expand the EV offer, completing our first destination charging installation with our Norwegian hotel chain. Circle K owns and operates a charging service at this hotel and will further expand with this chain going forward. We're now in the process of summarizing the learnings from our Norway EV lab to facilitate further expansion, including building the foundation for our journey in North America. Our efforts within e-mobility continue to play an important part of our states sustainability journey. As part of that sustainability work, this quarter we were the first in the industry to issue Green Bonds to finance their efforts and further our commitments to their success. You can find out more on our third sustainability report published this quarter and available on our Web site. Here you also see that we more clearly defined our ESG framework with three clear pillars; people, planet and prosperity and probably added diversity inclusion to our sustainability efforts with the ambition of creating equitable pay and representation in our workplace. Turning to innovation, after successful launch across Sweden, our Pay by Plate frictionless license plate payment recognition system, we're now starting to deploy that platform in Denmark, Estonia and Norway. In the U.S., we've also added 400 self checkouts in three of our business units this quarter. As we gather the learnings from these areas, we are preparing to introduce more easy checkout solutions across the network globally. Finally, I want to touch on developments and delivery this quarter. In Canada, we expanded our deployment with DoorDash from nearly 30 stores to over 400 across three business units. Customers in those areas can now order ahead and have their goods delivered to their home or office via the DoorDash app. Overall, we continue to explore the most optimal delivery solutions for both the business and for making our customers lives a bit easier. So I'm going to pause there and let Claude take you through more of the detailed quarter results. Claude?

Thank you, Brian. Ladies and gentlemen, good morning. For the first quarter of fiscal 2022, we're happy to report net earnings of $764.4 million or $0.71 per share on a diluted basis. Excluding certain items for both comparable periods, adjusted net earnings were approximately $758 million compared with $795 million for the first quarter of fiscal 2021. Adjusted diluted net earnings per share were $0.71, unchanged compared to the corresponding quarter of fiscal 2021. I will now go over some key figures for the quarter. For more details, please refer to our MD&A available on our Web site. During this most recent quarter, excluding the net impact from foreign currency translation, merchandize and service revenues for the first quarter of fiscal '22 increased by approximately $92 million, or 2.4%. This increase is broadly attributable to the contribution from acquisitions, which amounted to approximately $154 million, partially offset by a decline in same-store merchandize revenues in North America as the compare against a very strong quarter last year. On a two-year basis, same-store merchandize revenues increased at a solid compound annual rate of 3.7% in the United States, 4.9% in Europe and 4.2% in Canada. For the first quarter of fiscal 2022, excluding the net impact from foreign currency translation, merchandize and service gross profit increased by approximately $39 million, or 2.9%, mainly attributable to the contribution from acquisitions, which amounted to approximately $45 million. Our gross margin decreased by 0.1% in the United States to 34.2%. But excluding the accelerated recognition of deferred credit in the prior quarter, our gross margin in the United States would have increased by 0.8% favorably impacted by changing product mix and pricing initiatives. Our gross margin decreased by 2.2% in Europe and other regions to 38.4%, mainly due to the integration of Circle K Hong Kong which has a different product mix from our European operations. Excluding Circle K Hong Kong, our gross margins in Europe and other regions would have been 41.8%, an improvement from 40.6% during the first fiscal quarter last year impacted by favorable change in product mix. In Canada, our gross margins increased by 1.2% to 32.3% also impacted by favorable changes in product mix. We now move on to the fuel side of our business. In the first quarter of fiscal 2022, our road transportation fuel gross margin was $36.75 per gallon in the United States, a decrease of $4.55 per gallon, and US$10.32 per liter in Europe, a decrease of $0.19 per liter, mainly driven by the unusual higher margins in the comparative quarter. In Canada, it was CA$10.92 per liter, an increase of CA$0.67 per liter. Fuel margins remained healthy, driven by favorable market conditions, procurement initiatives and fuel rebranding. For the first quarter of fiscal 2022, normalized operating expenses increased by 3.5% driven by an increased level of marketing activities and other discretionary expenses, which were significantly reduced in the prior year quarter due to the beginning of the pandemic as well as by normal inflation, higher labor costs from minimum wage increase and pressure from low employment rates in certain region and incremental investments in our stores to support our strategic initiatives. This increase was partly offset by lower COVID-19 related expenses compared to the corresponding quarter of the previous fiscal year. On a three-year basis, we maintained our strong cost discipline as demonstrated by a compound annual growth rate of only 1.2% in normalized expenses. Excluding specific items described in more detail in our MD&A, the adjusted EBITDA for the first quarter of fiscal 2022 decreased by $1.1 million or 0.1% compared with the corresponding quarter of the previous fiscal year, mainly due to the lower road transportation fuel gross margins and -- [Technical Difficulty]

I’m sorry, Mr. Tessier, we’re having difficulty hearing you at this time.

Is this better?

It seems to be. Please proceed.

So just to finish the phrase, it was due to the net positive impact from translation of our Canadian and European operations into U.S. dollars, which amounted to approximately $41 million. Income tax rate for the first quarter of fiscal 2022 was 21.3% compared with 20.7% for the corresponding quarter of fiscal 2021. The increase in the income tax rate is mainly driven by a lesser use of unrecognized capital losses compared with the corresponding quarter of fiscal 2021. As of July 18, 2021, our return on equity remains strong at 22.9% and our return on capital employed stood at 15.8%. During the quarter, we continue to generate strong free cash flows and our leverage ratio stood at 1.23x. During the quarter, we successfully issued U.S. dollar denominated seniors unsecured notes totaling $1 billion at favorable terms that included a 350 million Green Bonds tranche. The net proceeds of the Green Bonds will be used to finance or refinance new or existing environmental-friendly projects and community initiatives, which further our commitments for a more responsible future. During the same period, we also fully repaid the $1 billion denominated senior unsecured notes that were set to mature in July 26, 2022. As of July 18, 2021, we have ample balance sheet flexibility with $3.4 billion in cash and an additional $2.5 billion available to our revolving credit facility. In addition, during the quarter, we repurchased close to $300 million of our shares through our new program, and continuing to provide value to our shareholders. Finally, on August 31, 2021, the Board of Directors declared a quarterly dividend of CA$8.75 per share and approved its payment effective September 23, 2021. To close, I would like to highlight the work of our teams and what they've accomplished throughout the past quarter, ensuring that we remain in this strong financial position and ready to accelerate capital deployment towards our strategic initiatives, while always remaining focused on driving value creation for our employees, customers and shareholders, despite still operating in a challenging environment impacted by COVID. With that, I thank you all for your attention and turn the call back over to you, Brian.

Thank you, Claude. As I said at the beginning of my remarks, early this summer, I've been optimistic that the pandemic would be in a rearview mirror. However, recent developments, especially with the Delta variant, show this is not the case. We're diligently monitoring the situation, we're updating our guidelines and procedures and putting the health and safety of our team members and our customers at the forefront of our decision making. Despite the ongoing challenges, I am proud that we continue to meet our strategic goals to grow the network both organically and through M&A. Once again, our thoughts and prayers go out to those employees and communities in the path of Hurricane Ida. I want to thank all of our team members, our customers and our partners for their continued commitment and support as we move forward on our journey. With that, now we’ll answer the questions we received from our analysts.

Great. Thank you, Brian. So our first two questions come from Bonnie Herzog at Goldman Sachs. First question, how has the Delta variant surge impacted your business in terms of customer traffic, fuel volumes until March? And could you share some quarter-to-date trends? Have you had to adjust hours or labor scheduling as a result? How disruptive has the Delta variant been for recovering your more rural versus urban market given wider vaccination gaps there?

Bonnie, with regard to the Delta, we’re monitoring the situation and we've updated guidelines, we're mandating vaccines for people in our offices, et cetera, trying to make sure that we're keeping both our team members and our customers safe. We’ve been actively supporting vaccinations, and our vaccination rates are generally above the general population in the majority of our markets, and we continue to push it on education in that side. Our stores continue to be open, but the Delta is magnified in an already difficult staffing environment. This has been particularly acute in the Southern U.S., think Texas, Florida, the Carolinas. And really for the first time we’ve really seen supply chain challenges across those markets most affected by COVID. That's just compounding the labor shortage, particularly our DSD vendors, getting deliveries on time [indiscernible] in some cases has been a challenge. So stocks have been higher than certainly we'd like to see them. And I'd say that, the Delta surge is clearly also going to delay many employers return to work plans. We've seen a lot delaying into January. So that meant morning daypart, which continues to be the weakest part of a recovery trend is likely to be pushed into the fall.

Thank you. So the second question, can you give us an update on cost inflation pressures you're seeing and the impact on consumer demand, especially as government stimulus funds dried up in the U.S.? Are you still able to effectively pass on material cost increases to consumers without significant impact on demand at your stores?

Yes, we've seen cost increases across literally every single category and quite honestly, I expect more to come. To date, we've been able to pass along those costs into our retails while maintaining unit volumes and margin dollars. We've strived to continue to provide customers’ value through smart multi-pack pricing, offering large package sizes and working with the vendors to provide exclusive, innovative product values with the use of our scale. Based on supplier information, it looks like we continue to perform well versus our peers. And as you can see in the quarter, our margins have remained very solid. We are also seeing pressure on the cost side, particularly with wages and costs increasing on the construction side for new sites and remodels. Prior to these pressures, we've activated a large number of cost saving initiatives across our value chain and we believe we can mitigate a big part of these pressures in the coming quarters.

Our next two questions come from Irene Nattel at RBC Capital Markets. Can you share any reaction or commentary with respect to the disclosure that the Federal Trade Commission intends to take a closer look at fuel margins and trends, and particularly at transaction and implications on fuel cost stability?

Yes, Irene, I'd say we operate in one of the most fragmented and competitive industries in the world. It's the only industry I can think of that we put our prices on big signs on the street. The price increases referenced in these articles or releases can almost be entirely explained by increases in underlying product costs. And margins that we see in the U.S. are in line or lower than what we see in other markets around the world. So I think that's just part of normal up and down of prices, driven by product cost. In regard to M&A, I think there was a recent transaction that got the attention of the government. Despite our size in the U.S., we still have single digit market share. And we believe we have a lot of room to grow in the U.S. So we'll strive to be collaborative with the FTC and any other parties in any transactions that we do in the future.

Same-store sales looked quite good, as you noted in your remarks. Can you give us more color around categories’ regional performance, particularly where reopening is further along? And related to that, how you see normalization of daypart traffic and demand, particularly improvement?

Irene, we see positive growth in food service categories, including dispense beverages. A lot of those programs were closed or really impaired during COVID last year. So good recovery, but still below pre-COVID levels. Overall growth in packaged beverage has remained positive even when cycling against the strong comps last year and despite some of the challenges we had in the supply chain. Within that, energy and sport drinks remained the brightest spots. Large package purchasing has also continued to be a key driver of growth despite more openings in other channels. Our traffic patterns are improving. However, we remain cautious that with the Delta variant of COVID now impacting many of our markets in the U.S., Canada and Europe are not experiencing the same pressure so far.

The next two questions come from Michael Van Aelst at TD Securities. Can you elaborate on which categories are providing you with the favorable snacks improvement in all three divisions? Is this mostly a return to pre-COVID product mix, such as higher fresh food, lower tobacco and smaller package sizes? And you also mentioned pricing initiatives as a margin driver in the U.S. How many of business units in the U.S. and globally now have localized pricing and promotion capability deployed?

Michael, as I said, packaged beverage, the pool overall, even alcohol continues to be strong despite bars and restaurants being closed last year. With regard to localized or data driven pricing, in the first quarter, we did add five additional BUs, so now we on top of the 11 that were live, so we have a total of 16. But there's two metrics. So one is how many BUs, but then also what's the percentage of the SKUs inside of each of those that are on the program? And that continues to grow. So we're probably at about 50% of the SKUs in scope being activated. There will be a big push this quarter as we add tobacco in North America, which led significantly to the percentage of our sales covered by localized pricing. Also during the quarter, we launched a series of pilots across the U.S., Canada and Europe looking at optimizing both promotions and assortment using data and analytics. And early results from the pilots are very encouraging, as I mentioned in my remarks earlier.

Turning to you, Claude, can you give an estimate maybe in percentage terms as to how much lower marketing and other discretionary expenses were in the quarter compared to pre-COVID levels? And when do you see them returning in full? Also, are you seeing any improvement in labor ability yet, or can you at least be improving as stimulus rolls off in the coming months?

So, Michael, the increase in expenses was driven by the increased level of marketing activities and other discretionary expenses. And as far as the discretionary expenses that were affected by the decrease, they were mostly maintenance, supplies and marketing, so expenses that we could contract when we were in the midst of the COVID outbreak in 2021. So we have seen these categories of expense decrease close to 10% in terms of spending quarter-over-quarter in fiscal '20 versus fiscal 2021. Most of these expenses have come back to pre-COVID levels. However, we are still in a fluid environment with the variance and remain cautious in managing our stores. As far as labor is concerned, Brian mentioned earlier in his comments that it has been a difficult labor market. In early May, we advertised for 20,000 open positions and hired nearly 19,700 by the end of the quarter. And speaking now, we're almost at 21,000 sales positions. However, it remains a difficult market and we still have stores that are affected by the labor disruption, and we can also see the effect of this labor shortage in many areas of our supply chain in North America like I already mentioned. And we're trying to mitigate those impacts in our network.

Thank you. Next two questions come from Martin Landry at Stifel. Your results in Canada were impacted by significant lockdown measures which abated before quarter end. Can you discuss the evolution of the trends during the quarter in Canada as the lockdown measures abated, especially in terms of same-store fuel volume and merchandize same-store sales?

For Canada, same-store merchandize declined 9.6% and volume increased 10.4% during the quarter. On the merchandize side last quarter, we had strong growth in tobacco and alcohol as other channels were closed. These categories were lower. Others reopened this quarter. If you look at a two-year basis, same-store merchandize increased 4.2% and volume declined 9.4%. But we did clearly see, Martin, an improvement as the quarter progressed significantly better at the end of the quarter than at the beginning on both fuel and on merchandize.

In Europe, the Delta variant seems to have impacted the region earlier than in North America. As such, could you discuss what you have seen post quarter and in terms of traffic crammed into your European stores?

Yes, I'd say just at a macro level, despite Delta hitting there earlier, the vaccination rates are generally high in most of our markets in Europe, if you look at Scandinavian and Ireland, significantly higher than what we see in the U.S. or in North America in general. A bit lower in the Eastern Europe markets that we have, so we're going to continue to monitor the impact of Delta. We've been fortunate to not have experienced as much disruption in Europe. We're pleased with the same-store sales performance in Europe. We've had an increase of 5.9% and 6.3% in fuel volume for the quarter on top of strong performance last year. We've also seen our gross margin in Europe, excluding Hong Kong, improve from 40.6% in the first quarter of last year to 41.8% this year, again, impacted by favorable change in mix primarily.

The next two questions come from Chris Li at Desjardins Securities. In deriving your fiscal 2023 organic EBITDA target, the U.S. fuel volume will fully recover to pre-COVID level or do you expect your demand will remain structurally lower?

So, Chris, one, we're currently cautious because of the possible impact from the Delta variant of COVID. We do believe volumes post COVID should mostly recover to pre-COVID levels. So as we look at -- and in reference to our 2023 EBITDA, so as we look at our targets, we expect that it will come from a combination of pure margin and volume, so driven by some of the fuel initiatives that have been outlined in our last Investor Day. So that's where we stand as far as our expected pure volumes and our margins.

Chris' second question, do you see any attractive and many opportunities within the B2B fuel market? And is M&A part of the growth strategy in North America?

Chris, the B2B business is a hugely important part of the European business and we've seen it hold up very well during COVID. In the U.S. or in North America in general, I'd call it an early stage development yet. We've got some pockets of strength. The key enabler for us to grow to B2B in North America is growing our Circle K fuel brand, and having a consistent value proposition for those customers in our key markets. If you think historically how we built the company, we had a myriad of supplier brands and a lot of great brands, but very difficult to provide a clear value proposition with multiple brands out there. So as we continue that rebranding effort, you'll see us double down on our B2B efforts in North America. In terms of M&A, we're really not focused on M&A as part of this growth journey in B2B. I wouldn't take it off the table. But right now, we're again focused on making sure we have a clear value proposition for these B2B drivers.

So the next question comes from Derek Dley at Canaccord Genuity. Given your healthy balance sheet, how do you think about capital allocation in the absence of any larger acquisitions? Should we expect Couche-Tard to remain active with its share buyback?

As part of our overall strategy, we should expect that we will use our free cash flow for many opportunities and we will report [indiscernible] repurchase our shares. Our policy has not changed. And we will look into opportunistic buybacks as long as leverage ratio is below 2.25x. So we remain committed to investment grade rating and like to maintain a strong balance sheet to be prepared for future M&A opportunity and also allocate capital to our organic growth initiatives, like new storage development, digital, IT and commercial programs.

Thank you. The next question comes from Graeme Kreindler at Eight Capital. The company has recently announced a number of tuck-in acquisitions, like Wilsons and Porter’s. Can you please discuss how these transactions fit within the company's larger M&A strategy? Can we expect additional transaction of this size moving forward? What does the current valuation landscape for larger targets look like?

Yes. Graeme, we're going to continue to look for opportunities of various sizes that include quality stores and talent with the infrastructure, the bones, if you will, to enable us to deliver our key programs to our customers. With these two recently announced transactions, we're acquiring strong fuel and convenience assets in the Pacific Northwest and Atlantic Canada, and both great fits for us. As we experience the new normal, we are seeing elevated deal flow in all three of our platforms. And then cautiously optimistic, we'll get some deals done in the coming quarters. As I said, our focus is on being disciplined in our approach. We have a clear set of criteria for the assets we're looking for. And we'll continue to strive to do the right things for our shareholders. In terms of valuations, they have remained surprisingly elevated given a lot of businesses have been impaired. But, again, we're optimistic with the level of deal flow that we'll be able to participate.

Moving to Mark Petrie’s questions at CIBC World Markets, as you look at pure volume trends across regions where behavior patterns have returned closer to normal, do you have a sense of the structural impact of shift, such as work from home on pure volume?

Mark, we're still not back to pre-COVID levels. Close in Europe, a little further away in North America. And that's I think purely focused on people staying at home and working from home and then some local restrictions is still impair driving. I believe when we started this, we thought we'd get a better answer to your question by now regarding whether this is structural or new normal, if you will. Now, however, with the Delta variant present, I’d just say this situation is very fluid. And at this point, I'm hesitant to call anything structural.

U.S. merchandize gross margin percentage have been well, lapping a strong result last year and was up materially, excluding the accelerated recognition of different credits. Can you help bridge the performance and share some context on the impact of shift in sales mix as well as the conclusion of your various initiatives, most specifically dynamic pricing and promotion and Fresh Food, Fast?

Yes, Mark, we did see strong performance during the quarter. I would say the primary driver was mix. I would say we have a new partnership with RAI in the U.S. that's enabled us to be more consistently price competitive with their products, while providing us with a better margin. So that's certainly helped that category. And then localized pricing, I'd say we talked earlier, I’d call that the third place of benefit here this quarter. I think we're just starting to see the benefits of our localized pricing efforts show up on the margin, but again very encouraged with the results so far.

The next question comes from Patricia Baker at Scotiabank. Can you talk about what you are anticipating for pure volume recovery as we move through the back half of calendar 2021 and into 2022? There are certainly mix experiences across markets with respect to returning to work mandate and there is a broad return to school movement, both of which will impact, right?

Patricia, we did see some improvement in same-store volumes during the quarter. If you look at a two-year basis, as I said earlier, we're still down both single digits with Europe being the closest to pre-COVID supported by a B2B business. Back to school certainly will help and we're cautiously optimistic that we'll continue to see a recurring fuel volume over the next 6 to 12 months. However, as we all know, COVID makes this a very fluid situation.

Our next question comes from Bobby Griffin at Raymond James. Since the start of the pandemic, Couche-Tard’s U.S. fuel margins outperformance versus the U.S. industry average has notably increased compared to the pre-pandemic. Do you believe the outperformance is sustainable given some of the fuel-related initiatives the company is working on?

Bobby, we continue to be pleased with our overall growth in fuel gross profit. In regard to fuel margin itself, our focus is in leveraging our scale and our initiatives to outperform the industry. We do believe some of the initiatives we've outlined, including our move to our Circle K brand, driving more value from our supply chain, [indiscernible] in data and analytics for sharper pricing have and will create sustainable benefits to our fuel margin versus most of our competitors.

Our last two questions for today come from Karen Short at Barclays Capital. Please provide your latest thoughts on labor costs in the U.S. going forward. What does the labor picture look like in states that no longer had the federal unemployment benefits versus states that continue to have it? How should we think about potential pressures on OpEx for the remainder of the year and potential offsets?

So, Karen, again, as Brian mentioned, it has been very difficult labor markets. However, we are working hard to maintain staffing levels, including a heavy focus on online hiring and online visibility and have put the centralized recruiting and hiring resources in place in each of our U.S. business units. We've mentioned earlier and that helped us to achieve what we mentioned earlier. So up to now we’ve been able to hire 21,000 positions in the U.S. We also do have to react to competitive pressures for labor to maintain employment level in our stores and we are using variable measures to compensate and ensure adequate employment and are monitoring closely the situation to remain preferred employed. As far as total OpEx, while we did see a 3.5% increase in our normalized operating expenses for the quarter, the CAGR was 1.2% on a two-year basis, maintaining our strong costs. However, we continue to see some cost pressure from inflation, high labor costs and incremental investment in our stores, and we do expect to offset some of these expenses with our cost optimization efforts that I outlined in the past, et cetera, business process optimization and our operational excellence program, where we are reducing repair costs, maintenance costs, resumption costs, and also credit card fees. But most importantly, we are putting a special focus on all the cost optimization activities that are allowing us to help relieve the pressure on labor at store level. So in activities such as labor scheduling, elimination, back office, that's where our big focus is to make sure that we're providing proper help to our stores in this difficult environment.

Thank you, Claude. And our last question, we have seen several e-commerce [indiscernible] retailers such as GoCart, Aurella [ph] DashMart ensure a pop up in European markets with delivery times below 20 minutes of C-store type products. How well insulated do you think your run [ph] stores are from share gains by these retailers? And how are you thinking about ongoing development of your own delivery capabilities in light of what appears to be more competition in these markets?

I'd say, we have a relatively small urban presence. That said, we sell time to people. And as other people find ways to become convenience to customers whether it's our SKUs or more broadly, we're committed to understanding it. In terms of what we're doing today, we continue to look at the overall e-commerce landscape and expand and understand home delivery in our network, as we talked about earlier. At the same time, we are watching the emergence of quick commerce in the urban markets in Europe and the U.S. like the [indiscernible], as you mentioned. There's a lot of VC money in this space fueling these expansions. We're closely watching the ability to be profitable, and we will continue to study and stay close. In terms of outside of urban, it seems clear on the surface, the same delivery windows, which can be 10 minutes and less, are not economic in less dense markets. But again, this is early and we're committed to watching and watching it closely. And our mission is to provide our customers what they want, when they want it, where they want it and we will participate as we see fit.

Thank you, Brian. Thank you, Claude. That covers all of the questions for today's call. A reminder for our audience that the replay of the call will be available on our Web site under Events & Presentations in the Investors section. With that said, we thank you all for joining us today. We wish you a great day and hope you'll join us for our annual general meeting in just a few hours from now. Thank you, everyone.

All right. Thanks, everyone. Have a good day.

Thank you. This concludes today's conference call. You may now disconnect. [Foreign Language].