Good morning, my name is Joelle and I will be your conference Operator today. Bonjour, je m’appelle Joelle et je serais votre operatrice pour la conference aujourd’hui. I will now introduce Mr. Jean-Philippe Lachance, Vice President, Investor Relations and Treasury at Alimentation Couche-Tard. Je vais maintenant passer le programme à M. Jean-Philippe Lachance, vice-président, relations avec les investisseurs et trésorerie pour Alimentation Couche-Tard. Jean-Philippe Lachance: English will follow. [French] Good morning. I would like to welcome everyone to this web conference presenting Alimentation Couche-Tard’s financial results for the fourth quarter of fiscal year 2023. All lines will be kept on mute to prevent any background noise. After the presentation, we will answer questions from analysts asked live during the web conference. We would like to remind everyone that this webcast presentation will be available on our website for a 90-day period. Also, please remember that some of the issues discussed during this webcast might be forward-looking statements which are provided by the corporation with its usual caveats. These caveats or risks and uncertainties are outlined in our financial reporting, therefore our future results could differ from the information discussed today. Our financial results will be presented by Mr. Brian Hannasch, President and Chief Executive Officer, and Mr. Claude Tessier, Chief Financial Officer. Mr. Felipe Da Silva, Senior Vice President, Finance and future Chief Financial Officer, effective July 1, is also present with us on this call. Brian, you may begin your conference.

Thank you, Jean-Philippe. Good morning everyone. Thank you for joining us for this presentation of our quarterly results. We’re pleased to report strong results this quarter as well as exceptional results for the fiscal year. Before I go into more detail, I want to highlight some of the other significant investments in our business. First, let me say a few remarks on our five-year Double Again strategy, which came to a successful close at the end of this fiscal year. Many organizations chart ambitious strategic plans, but along the way they can lose momentum and don’t stay their course. We were able to march forward, growing, innovating and producing exceptional financial results thanks to our team members and their focus on their customers. Even with a global pandemic, labor shortages and supply chain issues, our stores [indiscernible] continued evolving for the future of convenience and mobility, introducing new programs and initiatives, always striving to make it easier for our customers and creating value for our shareholders. We’re very proud of keeping on track with all of our strategic goals and we look forward to going into more detail on Double Again and the next legs of our strategic journey at our upcoming analyst and investor conference on October 11 in Phoenix, Arizona. Keeping to our customary financial and operational discipline, we did not close on any large acquisitions through most of this five-year time frame. We’re excited in recent months by the progress and more positive environment for M&A after many years of inflated multiples that we did not think would create shareholder value. As opposed to sitting back, we took the opportunity during those five years to focus on organic growth and were more than pleased with the EBIT results of almost $5.8 billion, well above our Double Again objective that we set five years ago. At the beginning of the quarter, we announced our game-changing proposed acquisition of certain assets from TotalEnergies in four new European markets that are very strategically place versus our existing network in Europe, and we’re looking forward to closing on that transaction by the end of the calendar year. We also reached an agreement during the quarter to acquire 112 fuel and convenience retail sites to be carved out from MAPCO, which includes a very strong network of modern, well-located sites in attractive markets, predominantly in Tennessee and Alabama. During the quarter, we also closed on the acquisition of 55 high quality locations in Arkansas and Florida and 65 Express Tunnel car wash sites primarily in Arizona and Illinois that are very close to our existing network. In each case, we see significant opportunities to bring value to these businesses. I also want to take a moment to go over our recent announcement that Claude Tessier will retire as our CFO on July 1 of this year. At that time, Felipe Da Silva will become Executive Vice President and Chief Financial Officer. Claude has been our CFO for more than seven years and it’d be hard to list all the ways his leadership has impacted the business, adding tremendous value over those years. During his tenure, we launched and successfully completed our Double Again strategy, we made sustainability a lens to the business with transparent reporting, we greatly expanded the scale and reach of the organization with acquisitions of Topaz, CST and Holiday, in addition to [indiscernible], and more recently announced the transactions in Europe and the U.S. that I just outlined, and our stock price more than doubled during Claude’s tenure. Through his wise counsel and leadership, Claude made us a better, stronger business. We will miss him and wish him all the best in the future. We’re also pleased that Claude identified and mentored his successor in Felipe and that Claude will be around for a while to help with a seamless transition. Felipe brings a wealth of international retail and financial expertise to Couche-Tard. He started his career with Total Energy in Argentina and then joined the Carrefour group, where he worked in Buenos Aires, Colombia, India, and Indonesia. He later worked with Grupo Éxito, one of South America’s largest big box retailers, before joining Wal-Mart’s Central American subsidiary as its CFO and then later becoming Wal-Mart Canada’s CFO. The last four months, Felipe has been Senior Vice President of Finance here at Couche-Tard and I have greatly enjoyed getting to know him, and I’m sure you will too. I’m also confident that he will help drive our exceptional and disciplined growth journey in the years ahead. I’ll ask Felipe to make a few short comments following Claude’s presentation. Now let me turn to our results for the quarter, beginning with convenience. Compared to same quarter last year, same store merchandise revenues increased 3.3% in the United States, 3% in Europe and other regions, and 5.9% in Canada driven by strong performance in the beverage category as well as continued growth of our fresh food fast programs, and also private label. This has been offset a little bit by continued softness in our cigarette and other tobacco products, driven from illicit trade here in Canada and then also increased restrictions in some of our markets. Across the network, our fresh food fast program is now in nearly 4,860 sites globally. Sales and profits continue to grow double digit as store teams dial up execution and our customers drive strong trial and repeat purchase of our products. Our griddle cake limited time breakfast sandwich offer concluded this quarter and was the most successful LTO, or limited time offer in our company history. The current limited time offer Philly cheese steak sandwich has now launched and is showing very strong early results. [Indiscernible] localization in the food category is increasing as business units refine their offers for local tastes while leveraging our national supplier relationships and scale. We introduced a digital time and temperature systems that’s been implemented across North America, allowing for more efficient monitoring and rapid resolution of any quality issues. This is just one of the many operational innovations to make lives easier for our team members and ensure high quality, safe food for our customers. Total company packed beverage sales across the network were up significantly from prior year. Currently, we’re gearing up for the warmer weather with our 100 Days of Summer promotion in North America, including a 33-stop Purple Thunder anniversary tour celebrating the highly successful first anniversary of Mountain Dew Purple Thunder, which was a Circle K exclusive in North America. In age-restricted beverages, global alcohol sales had a strong performance. In the U.S. we now have private label wins selling in nearly 3,100 stores. Our exclusive Sunshine Bliss wines include seven varieties priced under $8, while our six premium Fine Wines range in price between $10 and $25. Both Sunshine Bliss and Fine Wines boast strong tasting point ratings and received several gold and silver awards, and have been named best buys by Tasting.com and The Wine Enthusiast. These proprietary wine offers, as well as our private brand products in general are doing very well and providing highly competitive products at good value for our customers. I also want to share that earlier this month, actually three weeks ago today, our Inner Circle loyalty program went live in 429 sites across the Florida business unit. Inner Circle is a free membership program delivering targeted value via a seamless experience to our customers with fuel rewards, food rewards and much more, while also providing new personalized experiences. No doubt launching Inner Circle turned out to be more difficult than we expected as we navigated a highly complex technical roadmap and our goal to get it right developing a unique, valuable and easy to use program for our customers. Three weeks in, I couldn’t be more pleased with the roll-out so far with over 1.2 million people enrolled in just three weeks. I want to thank the many team members across the organization who have contributed to bringing Inner Circle to life. We plan to expand to more business units starting in the southeast U.S. as this year progresses. Moving to our fuel business, same store road transportation fuel volume increased 0.8% in the U.S. and by 6% in Canada, favorably impacted by lower pricing and pent-up demand for travel. In Europe and other regions, same store fuel transportation volume decreased by 2.4%, unfavorably impacted by challenging macroeconomic conditions particularly in Eastern Europe, higher inflation in the cycling of the Ukraine war that created an influx of refugees last year into our Baltic countries and Poland. In our Circle K fuel rebranding work, we completed nearly 360 new sites in the quarter, bringing our total to nearly 4,200 Circle K fuel-branded sites in the U.S. and Canada. We also continued with our fuel promotional events, hosting over 140 local events to help alleviate some of the cost pressures at the pump for our customers. In May, we had two national fuel days in the U.S. and Canada which included over 6,500 sites and created great saving opportunities for our customers in both countries. Our EV fast charging network in Europe now consists of 1,570 charging stalls covering more than 320 sites. We also have 1,600 truck charging locations in Sweden and Norway alone, and year to date we have sold over 10,000 home and workplace chargers. In fiscal ’23, we had 1.5 million charging transactions on Circle K transit chargers, doubling the amount from last year. The increase was driven both by network expansion and higher utilization of our existing network. We continue to expand the charging network in Europe with increased focus on Ireland and pilots in the Baltics and Poland. In North America, we expanded our owned and operated network to Virginia and California, and BC in Canada as we progress on our commitment of 200 EV sites in the next two years. We’re received good customer feedback on our integrated offer and our well located sites. Before I turn it over to Claude, I want to discuss a notable improvement in the labor situation. Candidates in the last fiscal year topped 1 million versus 670,000 in the year prior. This was due to more robust internal sourcing of candidates, better employer marketing and recruiting tools, and then the macroeconomic environment allowed us to be far more selective with our candidates that we hire, and we’re seeing turnover for stores decreasing over 13% this year versus prior year, and the trend continues to improve. Retention has also continued to improve as well as we pilot innovative approaches, including employee store discounts and new manager hiring and training programs. I’ll pause there and let Claude take you through more of our fourth quarter and annual financial results. Claude?

Good morning everyone. Thank you Brian for the kind words. I truly appreciate them and will say more about my announced departure as CFO at the end of my remarks; however, being a finance guy, I want to first turn to the numbers in our quarterly and annual results. Our results for both the fourth quarter and fiscal year ’23 have exceeded our expectations on many fronts, allowing us to significantly surpass our Double Again strategic ambitions, bringing our adjusted EBITDA for fiscal ’23 to almost $5.8 billion. For the fourth quarter of fiscal ’23, adjusted diluted net earnings per share increased by 29.1% compared to the fourth quarter of fiscal ’22, driven by strong results on all our key metrics, including a decelerating normalized growth of expenses which was below inflation for the fourth quarter when normalized for the additional week in this quarter. Our balance sheet continues to be particularly strong and our key return metrics are also healthy, with returns on equity and return on capital employed reaching 24.7% and 17.5%. We are also happy to report that following the end of the quarter, Moody’s has upgraded our long term senior unsecured rating to Baa1 from Baa2 with a stable outlook, as a reflection of our strong track record, enhanced scale, broad geographic footprint and conservative balance sheet. I will now go over some key figures for the quarter. For more details, please refer to our MD&A available on our website. For the fourth quarter of fiscal ’23, we are happy to report net earnings of $670.7 million or $0.68 per share on a diluted basis. Excluding certain items described in more detail in our MD&A, adjusted net earnings were approximately $698 million or $0.71 per share on a diluted basis for the fourth quarter of fiscal ’23, compared with $573 million or $0.55 per share on a diluted basis for the fourth quarter of fiscal ’22, an increase of approximately 29.1% in the adjusted diluted earnings per share. For fiscal ’23, net earnings stood at $3.1 billion, an increase of $407.6 million or 15.2% compared with fiscal ’22. Diluted net earnings per share stood at $3.06 compared with $2.52 for the previous fiscal year. Adjusted net earnings stood at $3.2 billion, an increase of $382 million or 13.8% compared with fiscal ’22. Adjusted net earnings per share were $3.12 compared with $2.60 for fiscal ’22, an increase of 20%. During the fourth quarter, excluding the net impact from foreign currency translation, merchandise and service revenues increased by approximately $472 million or 12.5%. This increase is primarily attributable to the impact of the 13th week in the fourth quarter of fiscal ’23, to organic growth, as well as to contribution from acquisitions which amounted to approximately $33 million. During fiscal ’23, excluding the net impact from foreign currency translation, merchandise and service revenues increased by approximately $1 billion or 6.1%. Including the net impact from foreign currency translation, merchandise and service gross profit increased by approximately $250 million or 16.9%. This is primarily due to organic growth as well as to the impact of the 13th week in the fourth quarter of fiscal ’23. Our gross margin increased by 1% in the U.S. to 34.1%, by 2.6% in Europe and other regions to 40.9%, and in Canada by 1.7% to 34.1%, all impacted favorably by a change in product mix. Fiscal ’23 excluding the net impact from foreign currency translation, merchandise and service gross profit increased by approximately $409.3 million or 7.2%. Our gross margins in the U.S. increased by 0.1% to 33.8%, by 0.6% in Europe and other regions to 38.8%, and by 0.9% in Canada to 33.1%. Moving onto the fuel side of our business, in the fourth quarter of fiscal ’23, our road transportation fuel gross margin was $0.4534 per gallon in the U.S., a decrease of $0.78 per gallon. In Canada, it was CA $0.1213 per liter, a decrease of CA $1.28 per liter. In Europe and other regions, our road transportation fuel margin was $0.1060 per liter, an increase of $0.0309 per liter due to geopolitical context and difficult supply condition in the comparable quarter last year. Fuel margins remained healthy throughout our network due to favorable market conditions and the continued work on the optimization of our supply chain. During fiscal ’23, our road transportation fuel gross profit was $6 billion, an increase of $779.5 million compared with fiscal ’22. Our road transportation fuel gross margin was $0.4751 per gallon in the U.S., $0.0998 per liter in Europe and other regions, and CA $0.1275 per liter in Canada. Now looking at SG&A for the fourth quarter of fiscal ’23, normalized operating expenses increased by 9.9% year-over-year. This is mainly driven by the impact of the 13th week in the fourth quarter of fiscal ’23 in addition to the costs from rising minimum wages, inflationary pressures, increased usage of software-as-a-service solutions, increased investments to support our strategic initiatives, as well as by charges for the early termination of an existing fuel supply agreement while being partly offset by the impact of lower pressure in the employment market. When factoring in the estimated impact of the 13th week in the fourth quarter of ’23, our normalized growth of expenses remained lower than the average inflation observed throughout our network of 5.8% as we have continued to deploy strategic efforts in order to mitigate the impact of the higher inflation level and continued pressure on wages. Excluding specific items described in more detail in our MD&A, the adjusted EBITDA for the fourth quarter of fiscal ’23 increased by $189.6 million or 16.7% compared with the corresponding quarter of fiscal ’22, mainly due to the impact of the 13th week in the fourth quarter of fiscal ’23, organic growth in our convenience store operations, as well as higher road transportation fuel gross profit in Europe and other regions partly offset by higher expenses by the translation of our foreign currency operations into U.S. dollars, which had a negative impact of approximately $14 million. During fiscal ’23 on the same basis, the adjusted EBITDA increased by $509.3 million or 9.7% compared with fiscal ’22, mainly attributable to higher road transportation fuel gross profit, organic growth in our convenience store operations as well as to the impact of the 53rd week in fiscal ’23, partly offset by higher expenses and by the translation of our foreign currency operations in U.S. dollars, which had a negative impact of approximately $133 million. From a tax perspective, the income tax rate for the fourth quarter of fiscal ’23 was 19.2% compared with 22.6% for the corresponding period of fiscal ’22. The decrease mainly stems from the impact of the different mix in our earnings across various jurisdictions in which we operate. As of April 30, 2023, our return on equity remains strong at 24.7% and our return on capital employed stood at 17.5%, both figures higher sequentially compared to the third quarter. During the fiscal year, we continued to generate strong free cash flows and our leverage ratio stood at 1.49 times despite having repurchased 52 million shares for $2.3 billion during the year under our NCIB. Subsequent to the end of fiscal ’23 and under the renewed program, we repurchased more than 4.1 million shares for an amount of $204.1 million. We also had strong balance sheet liquidity with $834 million in cash and an additional $3.5 billion available through our main revolving credit facility. Turning to the dividend, the board of directors declared yesterday a quarterly dividend of CA $0.14 per share for the fourth quarter of fiscal ’23 to shareholders on record as of July 7, 2023, and approved its payment effective July 21, 2023. Before I go, I would like to say a few personal words as this will be my last call as Couche-Tard’s CFO. Believe me, deciding to leave was not an easy decision, yet being at the end of our Double Again strategy, it was the right time for the business and for me to focus on my family and other challenges ahead. I leave with a great sense of pride and accomplishment, and I would like to take this opportunity to sincerely thank our founder and Executive Chairman of the Board, Alain Bouchard; Brian and the executive leadership team, all my wonderful colleagues around the world, and the board members for their support over my years spent with Couche-Tard. I would also like to thank all of you on this call today. It has been a pleasure working with you, being a steward of your trust and your investment in our business. My parting promise is that you can expect the transition to be seamless and transparent as I pass the baton, as we say, to my friend and colleague, Felipe Da Silva. On this, Felipe, you want to address the call?

Thank you Claude, thank you Brian, and thank you to all on the call this morning. I won’t take time to go over my background as Brian covered that at the beginning of the call and I know there are many questions to be answered in the remaining time. Let me just take the opportunity to say that I am humbled and honored to be the next CFO of Couche-Tard. During my four months here, I have learned firsthand about Couche-Tard’s special One Team culture. It’s a great company with a strong financial foundation, a great future ahead, and with a welcoming and inclusive environment. I have been around long enough to know how rare and wonderful it is. I’m excited to get started as CFO and glad Claude is sticking around to further show me the ropes. I am also thrilled about the proposed acquisition of certain retail assets of Total Energy. As Brian stated earlier, I started my career there and I look forward to working again with this fantastic business. Finally as we look ahead to fiscal ’24, we are excited to hold our investor day on October 11 in Phoenix, Arizona, where we will be discussing our new multi-year strategic plan in greater detail, including the renewed focus around cost optimization. I look forward to meeting you all in person at this event. With that, I will turn it back over to Brian.

Thank you Felipe, and thank you sincerely, Claude. I want to finish my remarks by thanking all of our team members for their hard work and commitment to the business. They’re the ones that have produced the really strong results this year, and together we recently received the Gallup award for exceptional workplaces for the second year in a row. This award recognizes our efforts to create a culture where employees feel valued and respected, know and embrace their roles in our success, and seize opportunities for personal and professional growth. We’re among the largest organizations to win this award and I’m delighted and proud to see our engagement paying off, allowing each of us to reach our strategic goals, continue our exceptional and disciplined journey, growing together as one team. Now with that, I’ll turn it over to the Operator to answer analyst questions this morning. Operator?

Thank you. Ladies and gentlemen, we will now begin the question and answer session. [Operator instructions] Your first question comes from Vishal Shreedhar with National Bank. Please go ahead.

Hi, thanks for taking my questions. I wanted to focus in on the merchandising margin and maybe some help on understanding the quarter, the sequential progress that you’ve made in the merchandising margin - some notable strength there. Maybe if you go down the regions, if you can help me understand what changed sequentially to drive the improvement in the gross margin rates that we’re seeing.

Vishal, I’ll take a stab, focusing on North America. I’d say in Canada, largely driven by a mix issue where we’ve seen softness in cigarettes driven by illicit tobacco, it’s sad and I think it needs government intervention, but illicit is now approaching almost 40% of total volume in Canada, so that category has been weak for us. But we’ve seen strong growth in the beverage category in particular, so the mix has really driven the growth in Canada. The U.S. is a little different. Tobacco has been soft, our trends have been largely in line with market, which candidly is not good enough, so we’re working with our suppliers to engage with them on how do we use our loyalty properties to drive growth in that category, so you’ll see more activity from us in the coming quarters. So one, mix; two, food continues to grow and improve. The shrink, which is, one, better operational controls but also, two, just driven by sales - you know, the best thing to fix food spoilage is growing sales, and we continue to see sales grow strong double digits on a same store basis. Then third, beverage continues to do very, very well in the category, so that’s certainly accretive to the margin picture. I’d say those are the three drivers, and then we continue to work with our suppliers and with our procurement groups to optimize how we procure, and we’ve tried to take advantage of the scale where we can.

Okay, and maybe just a longer term question, your car wash initiative, how significant can car wash be? Is this a major driver or is it more of an adjunct driver for Couche-Tard, do you think, over the next few years, and maybe just on that, on an unrelated note, if someone could just--Claude, maybe you could just jump in and also help us understand how much the extra week added to EPS. That’s it, thanks.

Okay, car wash - we love the car wash business. When we complete the acquisition of TotalEnergies’ sites, we’ll have over 3,000 car washes in the network, so we’re in that business. The tunnel wash offer that we purchased in Illinois and Arizona, it’s a bit of an experiment. We like the model, we like the customer experience of that tunnel business. We know that cars will continue to get dirty no matter what propels them or powers them, and so we’re in the middle of several very disciplined pilots to see if we can drive car wash customers to our four court and to our stores at Circle K, and also can we create value with our Circle K customers, driving them to the car wash sites and maybe even to subscription membership, so early in that process but pleased with the initial results. Whether we go deeper or not remains to be seen, but we like the business. Claude?

Yes Vishal, on your question on the extra week, we are not providing exact information on that, as you know, but if you’re taking an estimate of 2% for the year and 8% for the quarter, I think you’re pretty close to the impact that it would have on our EBITDA, and you can translate that into net earnings and EPS, taking the same metrics. That’s the impact that we have from this 53rd or 13 weeks, depending on how you look at it.

Your next question comes from Mark Petrie with CIBC. Please go ahead.

Yes, good morning. I wanted to ask about the U.S. merchandise, but same store sales, and specifically the sales performance, specifically some color on the trends in basket and traffic, any commentary about the trajectory of same store sales growth through Q4 and then so far in Q1, and then I guess finally just any commentary on what you’re seeing in the market and the consumer, and if price is getting any tougher to pass through. Thanks.

Yes, thanks for the question, Mark. You know, the 3.5%, again hampered significantly by tobacco. We’re continuing to see growth in alternative nicotine, but the combustibles had a very soft year, and again you can see Altria and RAI’s results were largely in line with negative units in that category. If you say, hey, tobacco is 30% of sales and that’s either zero or negative growth, you can do some math and say that the rest of the business is actually very strong. One issue I missed before on the margin, too, was private label continues to be very robust for us - you know, 27% I think for the quarter year-over-year, so that continues to be very strong, and I think that’s an example of your question about the consumer. We’re certainly seeing the consumer in certain pockets of our geographies looking for more value, so we’re seeing some trade-down certainly in brands in the beer category. We’re seeing again strong private label growth, seeing some brand trading in the tobacco category as well, so. But overall, the consumer has held up pretty well - you know, employment has been good, and we’re not seeing some of the same weaknesses that maybe some of the other channels have had. Traffic, relatively flat, so most of the sales growth that you see is basket driven. Units relatively flat as well, but again overall pleased but certainly watching the consumer, and we’re focused on fuel or more impactful, value-oriented offers for our customers. On the opposite side, as we’ve seen fuel prices come down, volumes increased and we’re actually seeing premium sales recover as a percentage of total volume as well, so that’s obviously good for our margin profile, so a little bit of a mixed message there but again overall pleased, and as I think about what we’ve seen in the last six to eight weeks, I’d say largely the trends have continued, if not strengthened a little bit.

Okay, excellent. Appreciate the comments, and Claude, congratulations on an excellent career and run at Couche-Tard, and all the best.

Thank you Mark, appreciate it.

Your next question comes from Irene Nattel with RBC Capital Markets. Please go ahead.

Thanks and good morning everyone. Before I ask my questions, I want to echo what Mark just said - it’s been a pleasure working with Claude all these years. I wish you best of luck, and welcome Felipe. I have a couple of follow-up questions, please, from some of the commentary. On private label, can you give us an update on private label sales as a percentage of total, and also can you give us an update on food sales or food penetration as a percentage of total in the stores in which it is offered right now, the fresh food--?

Irene, I’ll take the private label and I’ll ask Claude on the food. Private label is roughly around 7% of inside sales in the U.S., slightly less in Canada, and then if you look at gross margin contribution, it’d be a bit higher than that. Food, we have 5,000-whatever stores that we talked about earlier--

Yes, we have 5,000 stores that we have deployed food into. I think we did during the quarter 320 more, and also we are still enjoying great sales performance, so we’re trending well over 20% in same store volume growth, and we still are excited about the results of our program and how the consumer likes our program. Obviously Brian told earlier that we are still working on the shrink side of the equation, but in terms of sales, the impact of there.

In our northern tier business, which was really the model for this program in North America, we would be north of 15% food penetration as a percentage of total sales, so that’s our--that’s certainly a goalpost that we’re shooting for as we grow the food culture and create awareness of trial in other geographies.

That’s great, thank you, very helpful. Moving onto the other question, one of the things--obviously gas margins really, really strong. Would it be possible for you to give us an idea of how much of the strength in the gas margins is really due to shifts that you have made in your procurement strategies and your more sophisticated pricing algorithms, and therefore how much of this gas margin, if you call it premium to the market, should be sustainable?

Yes, I’d say again we’re pleased with our results and also pleased with recent trends in the fuel category, both in terms of volume and margin. I’d say we continue to develop and strengthen our fuel trading and procurement practice. We’re now transporting 60% of our own fuel with our own trucks - two years ago, it was almost zero. That gives us tremendous flexibility to maximize cost arbitrages as they exist geographically. The rebrands to Circle K are not material - almost 400 for the quarter. The Circle K brand gives us a lot of flexibility to source from alternative points and it’s a better margin profile for us. Shrink control as we look at fuel, the fuel business, so it’s a hundred little things, Irene. Both Europe and North America, our trading business is certainly creating value. Then I would say just geographically, we’re a very diverse organization. Sometimes you’ve got areas that are compressed and other areas that are performing very well, and so geographic diversification, I think has been our friend in this case too.

Just to add maybe a point of reference is on Europe, I think we have improved margins. You need to think about last year also - with all the geopolitical disruption that we had last year, our quarter was not probably up to par, so we had an easy comparable also in Europe, and that explains the great performance of Europe this quarter.

Thank you, and then just a follow-up question, if I may. On M&A, the tone of the release was decidedly more positive than, let’s say, a couple of quarters ago. Can you talk about what you’re seeing right now and whether there’s been any changes in your geographic hierarchy, if you will?

Yes, so I’d say no change in focus. We still love North America. We would be open to South America, Asia as those opportunities would arise, and then opportunistic in Europe, as you saw with the Total Energy acquisition. We’ll do four, five material deals this year, and then again our hypothesis is that the competition has to be less than it was a year ago. High yield money is largely on the sideline, private equity should be largely on the sideline, so, and we’re in great shape - as Claude said, our balance sheet is robust, we’ve got plenty of dry powder, and we’ve got an organization that’s capable. We’re ready to do more and just need the right opportunities at the right values.

Thank you.

Your next question comes from Michael Van Aelst with TD Cowen. Please go ahead.

I’m going to ask on M&A, but just to finish off on that, can you just comment, maybe - you talked about four to five deals possible, and I think you’re talking about in fiscal ’24. What size range are you looking at? What kind of scale can we be thinking about?

Michael, you’ve kind of seen it, right? You’ve got at the high water mark, 2,200 sites in Europe, and then we did one for 10 stores, so I think anything in between there is likely in play. Again, I think it’s going to be a variety of things, but I really can’t say much more than that.

Well, that four to five deals that you commented on, is that including the ones already announced, or is that still to come?

It’s a combination, I guess.

All right. Then on the loyalty program, you gave us a little bit of an update there; but what do you see as the most attractive features on this loyalty program, since it is new, and what’s your geographic ramp roll-out looking like over the next year? How quickly are you going to be able to get this throughout North America?

Yes, so again we’re very early, and we took a long time to do this, but everybody’s got a loyalty card, a loyalty tag in their wallets, so we really focused on trying to do something that’s differentiated. It’s a tier-based program that will be across really all of our offers - you know, car wash subscriptions, sip-n-save, fuel, store, and we’re targeting the high value customers - the more you spend, the more you earn, instant gratification, easy to use, knock on wood. But if you look at the app store, I think we had a 4.8 or 4.9 rating on all of our downloads so far, so really it’s just focused on easy to use, clear value, focusing the value on the high value customers that we know are out there in our stores but also at our competitor sites. Claude, anything to add there?

No, I think you covered it well.

Okay, and to the roll-out piece, our plan right now is to roll out to about 2,500 stores before the end of the calendar, but we’ve got a Plan B that if we’ve got good technical performance on the platform by the end of July, so next month, we’d be prepared to expand that to another 2,000 stores, so making a total of about 4,500 stores for the year. That would cover a big chunk of the U.S.

Okay, so you’re starting in the U.S.--

Yes, the other piece I’d add is there’s an engine inside of this that allows for much more personalized and targeted offers, really getting to know the customer as a customer, not as just a someone, so we feel we’ve got the opportunity with the right work to just be more personalized and more in touch with our customers.

Great, thank you.

Please only ask one question. Your next question comes from George Doumet with Scotiabank. Please go ahead.

Yes, good morning. Congrats Felipe, and all the best, Claude. I just wanted to touch on the SG&A - it was a really strong performance in the quarter. Can you maybe talk to how much that extra week contributed and perhaps how you see that run rate evolving in the context of your commentary around renewed focus on cost optimization?

You know that 9.9% is the disclosed number that we have, and that was--a big part of it was mainly driven by the 13th week. Obviously the same buckets that we have been talking about the last two, three quarters were there, so there is inflation on the wages, there is inflation also in our expenses and [indiscernible] utilities and energy for our stores, as well as support to our strategic initiatives. But that’s all offset also a bit by our lower expense and the efforts that we’re taking to control our cost base. So if we’re looking at it and trying to look at the impact, the inflation for the quarter was 5.8%. If we’re taking out the 13th week, our number would be closer to 5.5% increase in terms of the SG&A. If you look at it by bucket, they’re probably split like--wages, it’s less impactful this quarter, and I think that’s what we said earlier this year, that at the end of the year, we would see an easier compare, and we would see the end of the cycle also--the start of the cycle happen early last year, so we’re cycling that right now. The 5.5% continues to be, I think, through the beginning of this year, but we’re going to see more, and our usual target for cost increase is to be lower than inflation, so I think you need to look at inflation, and we are trying to beat inflation and we’re taking the measures to make sure that we’re beating that.

Thanks.

Your next question comes from Chris Li with Desjardins. Please go ahead.

Hi, good morning everyone. Claude, let me also add my congratulations and best wishes. You’ll certainly be missed.

Thank you Chris.

Brian, maybe a question on the U.S. merchandise same store sales growth - you know, it was obviously very strong at over 4% in fiscal ’23. Just curious, do you think this rate of growth is sustainable in fiscal ’24 as you lap some of the price increases, and I know you touched on this already, but can you remind us, what are some of the major growth drivers in the upcoming 12 months? Thank you.

Yes Chris, thanks for the question. Yes, I think it’s watching the consumer, and I think every retailer is saying the same thing; but if we continue the trends we’re on and have a relatively soft landing, we feel pretty good that we can continue our trends. We think this industry continues to be uniquely positioned in the beverage category, and that is a big focus for us. You will see us push hard on both alcoholic and non-alcoholic beverages to drive traffic. We know food is a differentiator and a reason that people turn right versus left, and so if we can continue to grow that category double digit and then provide just true value to our customers where and when they need it, and we think our loyalty platform, while certainly not available in every site tomorrow, we’re on a path to have a tool that we think is pretty unique in the industry and can drive loyalty to help us gather new customers and increase frequency of visits. Pending no big change in the macro environment, we feel pretty good that we can maintain those trends.

Thanks, and all the best.

Your next question comes from Tamy Chen from BMO Capital Markets. Please go ahead.

Thanks, good morning. My one question is, I wanted to go back to the U.S. fuel margin specifically. The press release called out the optimization of the supply chain. Can you elaborate on what that’s referring to? Is that the fuel rebrand or is that something else? I was just curious, were there any favorable but transitory or opportunistic dynamics that occurred in the quarter, because your U.S. fuel margin was just such a strong outperformance versus what it looked like the industry was tracking to. Thanks.

Yes, so just in terms of one-offs, there were no one-offs in the quarter for the U.S., so it was just straight organic performance. And then I’ll be a little repetitive or redundant with earlier, but we’ve got a really unique relationship with Musket that allows us not only to bring the scale of both of our companies to bear but also has really accelerated our capabilities in the trading space, and then the fuel rebranding that’s occurred over the last couple years, shifting from mostly a major branded fuel offer to Circle K brand, just allowed a lot more flexibility in purchasing and procurement, so I think that’s been a big, big piece, and certainly we do focus also on the consumer side of this - you know, very thoughtful in our pricing, trying to bring more technology into those pricing decisions, and then when we’re trying to bring value to our customer, we’re trying to do it off MID in a lot of cases, whether that be through cards or fuel day promotions, as you saw over the Memorial Day holiday. It’s a combination of all those, Tamy, that we think continues to deliver strong results for us.

Great, thank you.

Your next question comes from Bonnie Herzog with Goldman Sachs. Please go ahead.

All right, thank you. Good morning. I just had a quick question on gallons and maybe traffic. Just hoping to hear a little bit more color on the consumer in terms of traffic, fill-up rates, and maybe anything else impacting volumes in the quarter or May-June. Did anything surprise you in the quarter, and then really, what are the trends that you’re seeing with the consumer this summer, any dynamics to call out maybe from a macro perspective? Thanks.

Yes, I guess I read the same things you do. I think in the Wall Street Journal, they talked about this being one of the busiest summers in the U.S. for travel, so we feel good about miles driven despite all the economic uncertainty that we read about. That’s showing up in our results a bit. We’ve been positive same store gallons, both in Canada and the U.S., and so far into June and--May and June, excuse me, those trends have continued. Now, they vary geographically. I would say that we’ve got some western markets that continue to be a little bit soft, but the center of the country in contrast has been very, very strong. We feel good that while we’re certainly not at pre-COVID levels, that we’ve stabilized and hopefully with the loyalty platform and other things we’re doing, we can start to ratably take share in the fuel space.

Okay, thank you.

Thanks Bonnie.

Your next question comes from Martin Landry with Stifel. Please go ahead.

Hi, good morning, and congratulations Claude on your achievement. Good luck with your future endeavors, and also congratulations on Felipe for your appointment. I just had maybe a high level question on when you look at your Double Again achievements, your fuel initiatives and your fresh food program have been a very important contributor to get there, and I’m trying to better understand where are we in that journey for these two programs? Are we getting towards the end of the life cycle of these programs, or is there still more to come?

I’ll start and then ask Claude to contribute there. Fresh food fast, I think we’re just scratching the surface, quite honestly. We’ve got a significant number of sites to roll out yet and sales continue to grow, and then I think the margin piece comes. Again, that comes with culture, that comes with execution, that comes with trial. We launched the program in the middle of COVID - you couldn’t sample, in some geographies you couldn’t even put out product, so we think we’ve got a lot to do to get that out in front of the customer and continue to grow that. The fuel journey, I think we’ve got a lot to do yet. We’ve, I think, tackled some of the big areas, but I think our opportunity is on the consumer side, how do we continue to bring targeted value to those customers on the fueling journey, and so whether that be seamless payment, whether that be our loyalty platform, whether that be just something as simple as having receipt paper in the card reader, so we’ve got lots of opportunities to continue to just provide a better experience for that customer across the experience, and so more to do. I don’t think that’s run its course.

And maybe if I can comment on a couple of things, you want to refer also to the document we shared with you at last investor day where we outlined the impact of our initiatives and what we think they would bring in the time frame of fiscal ’23 and then later. I think that is still very accurate in terms of what we think we have achieved and the potential further, so there’s still a lot of potential there. But the exciting thing, and Brian I thought would agree, is that putting loyalty on top of this is going to--it could also trigger more value, so we’re going to talk more about this and where growth came from and where it’s going to come from in the future in our investor day on October 11, and I invite you to stay tuned because then we’re going to be going into more details on the opportunities in the future and also giving you feedback on the performance for Double Again.

I’d also add data and analytics. We’ve got tremendous data from the customer visits we have. I’ve just returned from a week in India last week and met a really solid team that we’ve assembled there, that’s helping us on that journey. That’s another area, I’d say Martin, that we just are scratching the surface, using data to just be more personalized, whether that’s in the loyalty, whether that’s being very localized in our promotion activity, our pricing activity or our assortment. We’re excited, there’s just a lot more to do there.

Okay, that’s helpful. Thank you.

Your next question comes from Karen Short with Credit Suisse. Please go ahead.

Hi, this is actually Zane Brock [ph] on for Karen. Good morning everyone, great quarter. Also wanted to congratulate Felipe on his new role, and Claude, best of luck to you with your future endeavors. Our question is on the promotional environment in the U.S. It seems like the tone has continued to tick up a bit in the U.S. I was just wondering if you could talk a little bit about, first, what you’re seeing in the environment, and how you expect to manage promos going forward, and maybe comment on your philosophy around price investments in the coming year, especially in the wake of decelerating inflation and increasing competition. Maybe as a part of that, tie that into the analytics pilot you’re doing on the price and promo side.

I’ll take a shot at that. One, I would say just as a general theme, given the context of where the consumer is, I would say there’s a theme of fewer but more meaningful promotions, so not trying to be everything to everybody but those areas where we’ve got high frequency visits and really good consumer awareness of what good likes on price. We’re trying to be a consistent value in those areas. So the general theme, fewer but bigger promotions, and that includes fuel, which I think is a bit new to us. We’ve really gotten active both in Europe and North America on treating fuel as more of a category and being relevant with our customers in how we price it. Other than maybe tobacco, I really don’t see a big need for price investment, and tobacco will be thoughtful. As I said earlier, our trends have been very consistent with the industry. I think we need to do better than the industry, and so we’re going to figure out both their loyalty platform and other properties we have, like our list screens - you know, can we utilize those to be very targeted and drive additional sales in the combustible, in particular, category on tobacco. I don’t see us being compelled to make huge price investments today.

And if I may add also, price investment could take form of promoting or putting our private label upfront. That drives value for the consumer, for a consumer that might be hunting for value. We see that in our stores, we see that in the performance of our private label, like we highlighted earlier on the call.

Got it, appreciate it.

There are no further questions at this time. Please proceed. Jean-Philippe Lachance: Thank you Operator. Thank you Brian, Claude and Felipe. That covers the Q&A portion for today’s call as we are at the top of the hour. Thank you all for joining us. We wish you a great day and look forward to discussing our first quarter 2024 results in September. [French]

All right, thanks everyone. Have a great day.

Thank you all.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.