Exhibit 99.1

ARKO REPORTS SECOND QUARTER 2021 FINANCIAL RESULTS

Net Income of $25.6 million

Adjusted EBITDA Increases 10.5% to $75.7 million

Same Store Merchandise Sales Increase 2.4% and 7.4% on a Two-Year Stack Basis*

Same Store Merchandise Sales Excluding Cigarettes Increase of 4.3% and 10.2% on a Two-Year Stack Basis*

 

RICHMOND, VA, August 12, 2021 – ARKO Corp. (Nasdaq: ARKO) (“ARKO” or the “Company”), a growing leader in the U.S. convenience store industry, today announced financial results for the second quarter ended June 30, 2021.

 

Second Quarter 2021 Key Highlights*

Operating income of $45.8 million for the quarter compared to $47.7 million in second quarter of 2020
Net income for the quarter of $25.6 million compared to $32.5 million for the second quarter of 2020
Adjusted EBITDA of $75.7 million, or a 10.5% increase compared to the prior year period, supported by strong results in the overall profitability of our Empire acquisition
Successfully completed 19th acquisition of the Company’s history, closing on the 60 retail convenience stores from the ExpressStop transaction during the quarter, and added 19 net new dealers during the quarter
Same store merchandise sales increase of 2.4% compared to the prior year period, and 7.4% on a two-year stack basis, while merchandise margin increased 140 basis points to 28.7% from 27.3%
Same store merchandise sales excluding cigarettes increase of 4.3% compared to the prior year period, and 10.2% on a two-year stack basis
Retail fuel margin cents per gallon decreased by 19% to 34.3 cents per gallon; same store fuel gallons sold increased by 11.9%
Extended wholesale merchandise agreement with Core-Mark International and expanded coverage to include 1,055 locations, up from 865 previously
DoorDash delivery partnership continues its expansion, now operating in 684, or nearly half, of all Company-operated stores

 

“As a testament to the hard work and dedication of our team as well as our multi-faceted growth strategy, during the second quarter, we once again delivered strong financial performance,” said Arie Kotler, Chairman, President and Chief Executive Officer of ARKO. “Not only was our in-store merchandising strategy on full display, but our M&A engine also proved to be highly productive, led by the continued successful integration of Empire and the acquisition of the ExpressStop stores. Integration efforts for the differentiated wholesale asset are running ahead of expectations as we’ve managed to extract notable

 


 

cost synergies and generate incremental growth. With a strong balance sheet and clear strategic vision, we are excited to continue the strong execution of our priorities as we aim to drive growth and increase shareholder value.”

 

* Same store merchandise sales increase on a two-year stack basis is the same store merchandise sales increase in the current year added to the same store merchandise sales increase in the prior year period. This measure may be helpful to improve the understanding of trends in periods that are affected by variations in prior year growth rates.

 

Second Quarter 2021 Segment Highlights

 

Retail

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

(in thousands)

 

Fuel gallons sold

 

264,967

 

 

 

208,861

 

 

 

491,079

 

 

 

443,676

 

Same store fuel gallons sold increase (decrease) (%) 1

 

11.9

%

 

 

(26.4

%)

 

 

(1.7

%)

 

 

(17.5

%)

Fuel margin, cents per gallon 2

 

34.3

 

 

 

42.5

 

 

 

33.3

 

 

 

33.9

 

Merchandise revenue

$

426,365

 

 

$

391,697

 

 

$

785,646

 

 

$

715,376

 

Same store merchandise sales increase (%) 1

 

2.4

%

 

 

5.0

%

 

 

4.0

%

 

 

2.7

%

Same store merchandise sales excluding cigarettes increase (%) 1

 

4.3

%

 

 

5.9

%

 

 

6.5

%

 

 

3.0

%

Merchandise contribution 3

$

122,413

 

 

$

107,120

 

 

$

220,940

 

 

$

191,708

 

Merchandise margin 4

 

28.7

%

 

 

27.3

%

 

 

28.1

%

 

 

26.8

%

 

 

 

 

 

 

 

 

 

1 Same store is a common metric used in the convenience store industry. We consider a store a same store beginning in the first quarter in which the store has a full quarter of activity in the prior year. Refer to Use of Non-GAAP Measures below for discussion of this measure.

 

 

 

 

 

 

 

 

 

 

 

 

 

2 Calculated as fuel revenue less fuel costs divided by fuel gallons sold; excludes the estimated fixed margin paid to GPM Petroleum ("GPMP") for the cost of fuel.

 

 

 

 

 

 

 

 

 

 

 

 

 

3 Calculated as merchandise revenue less merchandise costs.

 

 

 

 

 

 

 

 

 

 

 

 

 

4 Calculated as merchandise contribution divided by merchandise revenue.

 

 

Same store merchandise sales increased 2.4% for the quarter and 4.3% excluding cigarettes as compared to the second quarter of 2020. Total merchandise contribution increased $15.3 million for the quarter compared to the prior year due to same store sales growth coupled with a 140-basis point increase in merchandise margin and a $10.1 million contribution from the ExpressStop and Empire acquisitions.

 

For the second quarter of 2021, retail fuel profitability (excluding intercompany charges by our wholesale fuel distribution subsidiary, GPM Petroleum LP (“GPMP”)) increased approximately $2.2 million compared to the prior year period primarily due to the $15.6 million contribution from the ExpressStop and Empire acquisitions, which was offset by a decrease in same store fuel profit of $11.9 million (excluding intercompany charges by GPMP). Although same store gallons sold increased by 11.9% compared to the

 


 

second quarter of 2020, retail fuel margin cents per gallon decreased 19% to 34.3 cents per gallon primarily due to record-setting impact of the COVID-19 pandemic in the prior year.

 

Wholesale

 

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

(in thousands)

 

Fuel gallons sold – non-consignment agent locations

 

214,761

 

 

 

7,288

 

 

 

398,406

 

 

 

14,815

 

Fuel gallons sold – consignment agent locations

 

41,964

 

 

 

5,012

 

 

 

79,875

 

 

 

10,601

 

Fuel margin, cents per gallon1 – non-consignment agent locations

 

5.6

 

 

 

5.4

 

 

 

5.4

 

 

 

5.7

 

Fuel margin, cents per gallon1 – consignment agent locations

 

25.4

 

 

 

30.1

 

 

 

23.7

 

 

 

24.3

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Calculated as fuel revenue less fuel costs divided by fuel gallons sold; excludes the estimated fixed margin paid to GPMP for the cost of fuel.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the second quarter of 2021, wholesale fuel profitability (excluding intercompany charges by GPMP) increased approximately $20.9 million compared to the prior year period, with the Empire acquisition accounting for approximately $20.6 million of the growth. Fuel contribution from non-consignment agent locations grew by $11.7 million compared to the prior year due to a 207 million gallon increase in fuel volume. Fuel margin cents per gallon for these locations increased 0.2 cents compared to the second quarter of 2020.

 

Fuel contribution from consignment agent locations grew $9.2 million compared to the prior year due to a quarter over quarter increase in volume of 37 million gallons, although fuel margin cents per gallon declined 4.7 cents due to the record-setting fuel margin in the prior year. Although volume sold through consignment locations aggregated 16% of the combined total, fuel margin dollars realized accounted for approximately 47% of the fuel margin dollar contribution.

 

Liquidity and Capital Expenditures

 

As of June 30, 2021, the Company’s total liquidity was approximately $509 million, consisting of cash and cash equivalents of $229.4 million, plus $31.8 million of restricted investments, and approximately $248 million of unused availability under lines of credit. Outstanding debt was $685.7 million, resulting in net debt of $424.5 million. Capital expenditures were $32.6 million for the six months ended June 30, 2021, compared to $20.5 million for the prior year period.

Store Network Update

 

The following tables present certain information regarding changes in the store network for the periods presented:

 

 


 

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

Retail Segment

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of sites at beginning of period.................................................

 

1,324

 

 

 

1,271

 

 

 

1,330

 

 

 

1,272

 

Acquired sites...................................................................................

 

61

 

 

 

 

 

 

61

 

 

 

 

Newly opened or reopened sites..........................................................

 

1

 

 

 

 

 

 

1

 

 

 

 

Company-controlled sites converted to................................................

 

 

 

 

 

 

 

 

 

 

 

   consignment locations and independent and lessee dealers, net.........

 

(3

)

 

 

 

 

 

(3

)

 

 

(1

)

Closed, relocated or divested sites......................................................

 

(2

)

 

 

(5

)

 

 

(8

)

 

 

(5

)

Number of sites at end of period.........................................................

 

1,381

 

 

 

1,266

 

 

 

1,381

 

 

 

1,266

 

 

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

Wholesale Segment

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of sites at beginning of period.................................................

 

1,625

 

 

 

128

 

 

 

1,614

 

 

 

128

 

Newly opened or reopened sites..........................................................

 

21

 

 

 

 

 

 

35

 

 

 

 

Consignment locations or independent and lessee

 

 

 

 

 

 

 

 

 

 

 

   dealers converted from Company-controlled sites, net.......................

 

3

 

 

 

 

 

 

3

 

 

 

1

 

Closed, relocated or divested sites......................................................

 

(2

)

 

 

(1

)

 

 

(5

)

 

 

(2

)

Number of sites at end of period.........................................................

 

1,647

 

 

 

127

 

 

 

1,647

 

 

 

127

 

 

Conference Call and Webcast Details

 

The Company will host a conference call to discuss these results today at 10:00 a.m. Eastern Time. Investors interested in participating in the live call can dial 877-605-1792 or 201-689-8728. A telephone replay will be available approximately two hours after the call concludes through August 23, 2021, by dialing 877-660-6853 or 201-612-7415 and entering confirmation code 13720407.

 

There will also be a simultaneous, live webcast available on the Investor Relations section of the Company’s website at https://www.arkocorp.com/. The webcast will be archived for 30 days.

 

About ARKO Corp.

 

ARKO Corp. (Nasdaq: ARKO) owns 100% of GPM Investments, LLC (“GPM”). Based in Richmond, VA, GPM was founded in 2003 with 169 stores and has grown through acquisitions to become the 6th largest convenience store chain in the United States, operating or supplying fuel to approximately 3,000 locations in 33 states and the District of Columbia, comprised of approximately 1,400 company-operated stores and

 


 

approximately 1,650 dealer sites to which we supply fuel. We operate in three reportable segments: retail, which consists of fuel and merchandise sales to retail consumers; wholesale, which supplies fuel to third-party dealers and consignment agents; and GPM Petroleum, which supplies fuel to our sites (both in the retail and wholesale segments). Our stores offer fas REWARDS® high value loyalty program, a large selection of beverages, coffee, fountain drinks, candy, salty snacks, and many other products to meet the needs of the everyday customer. To learn more about GPM stores, visit: www.gpminvestments.com. To learn more about ARKO, visit: www.arkocorp.com.

 

Forward-Looking Statements

 

This document includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may address, among other things, our expected financial and operational results and the related assumptions underlying our expected results. These forward-looking statements are distinguished by use of words such as “anticipate,” “aim,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and the negative of these terms, and similar references to future periods. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to, among other things, changes in economic, business and market conditions; our ability to maintain the listing of our common stock and warrants on the Nasdaq Stock Market; changes in our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; expansion plans and opportunities; changes in the markets in which we compete; changes in applicable laws or regulations, including those relating to environmental matters; market conditions and global and economic factors beyond our control, including the potential adverse effects of the ongoing global coronavirus (COVID-19) pandemic on capital markets (including with respect to new variants of the virus), general economic conditions, unemployment and our liquidity, operations and personnel; and the outcome of any known or unknown litigation and regulatory proceedings. Detailed information about these factors and additional important factors can be found in the documents that ARKO files with the Securities and Exchange Commission, such as Form 10-K, Form 10-Q and Form 8-K. Forward-looking statements speak only as of the date the statements were made. ARKO assumes no obligation to update forward-looking information, except as required by applicable law.

 

Media Contact

 

Andrew Petro

Matter on behalf of ARKO

(978) 518-4531

apetro@matternow.com

 

Investor Contact

 

Chris Mandeville

ICR on behalf of ARKO

ARKO@icrinc.com

 

 


 

 

 

Consolidated statements of operations

 

 

 

 

 

 

 

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

(in thousands)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

   Fuel revenue

$

1,460,763

 

 

$

407,512

 

 

$

2,563,710

 

 

$

970,553

 

   Merchandise revenue

 

426,365

 

 

 

391,697

 

 

 

785,646

 

 

 

715,376

 

   Other revenues, net

 

22,686

 

 

 

15,066

 

 

 

44,814

 

 

 

28,226

 

Total revenues

 

1,909,814

 

 

 

814,275

 

 

 

3,394,170

 

 

 

1,714,155

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

   Fuel costs

 

1,347,109

 

 

 

316,891

 

 

 

2,359,907

 

 

 

816,694

 

   Merchandise costs

 

303,952

 

 

 

284,577

 

 

 

564,706

 

 

 

523,668

 

Store operating expenses

 

154,668

 

 

 

126,023

 

 

 

299,606

 

 

 

254,853

 

General and administrative expenses

 

31,861

 

 

 

20,527

 

 

 

58,574

 

 

 

39,420

 

Depreciation and amortization

 

25,273

 

 

 

16,814

 

 

 

49,515

 

 

 

33,885

 

Total operating expenses

 

1,862,863

 

 

 

764,832

 

 

 

3,332,308

 

 

 

1,668,520

 

Other expenses, net

 

1,195

 

 

 

1,733

 

 

 

2,867

 

 

 

5,909

 

Operating income

 

45,756

 

 

 

47,710

 

 

 

58,995

 

 

 

39,726

 

   Interest and other financial income

 

2,601

 

 

 

412

 

 

 

1,695

 

 

 

1,000

 

   Interest and other financial expenses

 

(14,598

)

 

 

(12,925

)

 

 

(42,309

)

 

 

(20,164

)

Income before income taxes

 

33,759

 

 

 

35,197

 

 

 

18,381

 

 

 

20,562

 

   Income tax expense

 

(8,212

)

 

 

(2,510

)

 

 

(7,490

)

 

 

(499

)

   Income (loss) from equity investee

 

26

 

 

 

(178

)

 

 

20

 

 

 

(411

)

Net income

$

25,573

 

 

$

32,509

 

 

$

10,911

 

 

$

19,652

 

Less: Net income attributable to non-controlling interests

 

54

 

 

 

10,614

 

 

 

128

 

 

 

8,213

 

Net income attributable to ARKO Corp.

$

25,519

 

 

$

21,895

 

 

$

10,783

 

 

$

11,439

 

Series A redeemable preferred stock dividends

 

(1,434

)

 

 

 

 

 

(2,836

)

 

 

 

Net income attributable to common shareholders

$

24,085

 

 

 

 

 

$

7,947

 

 

 

 

Net income per share attributable to common
   shareholders - basic and diluted

$

0.19

 

 

$

0.32

 

 

$

0.06

 

 

$

0.17

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

  Basic

 

124,428

 

 

 

69,490

 

 

 

124,395

 

 

 

68,118

 

  Diluted

 

133,032

 

 

 

69,490

 

 

 

124,543

 

 

 

68,118

 

 

 


 

 

 Consolidated balance sheets

 

 

 

 

 

 

 

 

June 30, 2021

 

 

December 31, 2020

 

 

 (in thousands)

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

   Cash and cash equivalents

$

229,399

 

 

$

293,666

 

   Restricted cash with respect to bonds

 

 

 

 

1,230

 

   Restricted cash

 

15,537

 

 

 

16,529

 

   Trade receivables, net

 

67,720

 

 

 

46,940

 

   Inventory

 

183,113

 

 

 

163,686

 

   Other current assets

 

90,978

 

 

 

87,355

 

Total current assets

 

586,747

 

 

 

609,406

 

Non-current assets:

 

 

 

 

 

   Property and equipment, net

 

545,321

 

 

 

491,513

 

   Right-of-use assets under operating leases

 

963,503

 

 

 

961,561

 

   Right-of-use assets under financing leases, net

 

200,587

 

 

 

198,317

 

   Goodwill

 

174,053

 

 

 

173,937

 

   Intangible assets, net

 

209,342

 

 

 

218,132

 

   Restricted investments

 

31,825

 

 

 

31,825

 

   Non-current restricted cash with respect to bonds

 

 

 

 

1,552

 

   Equity investment

 

2,697

 

 

 

2,715

 

   Deferred tax asset

 

39,506

 

 

 

40,655

 

   Other non-current assets

 

15,804

 

 

 

10,196

 

Total assets

$

2,769,385

 

 

$

2,739,809

 

Liabilities

 

 

 

 

 

Current liabilities:

 

 

 

 

 

   Long-term debt, current portion

$

10,119

 

 

$

40,988

 

   Accounts payable

 

182,050

 

 

 

155,714

 

   Other current liabilities

 

117,853

 

 

 

133,637

 

   Operating leases, current portion

 

50,730

 

 

 

48,878

 

   Financing leases, current portion

 

7,195

 

 

 

7,834

 

Total current liabilities

 

367,947

 

 

 

387,051

 

Non-current liabilities:

 

 

 

 

 

   Long-term debt, net

 

675,588

 

 

 

708,802

 

   Asset retirement obligation

 

56,035

 

 

 

52,964

 

   Operating leases

 

980,273

 

 

 

973,695

 

   Financing leases

 

232,236

 

 

 

226,440

 

   Deferred tax liability

 

3,737

 

 

 

2,816

 

   Other non-current liabilities

 

148,680

 

 

 

96,621

 

Total liabilities

 

2,464,496

 

 

 

2,448,389

 

 

 

 

 

 

 

Series A redeemable preferred stock

 

100,000

 

 

 

100,000

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

   Common stock

 

12

 

 

 

12

 

   Additional paid-in capital

 

214,781

 

 

 

212,103

 

   Accumulated other comprehensive income

 

9,119

 

 

 

9,119

 

   Accumulated deficit

 

(18,870

)

 

 

(29,653

)

Total shareholders' equity

 

205,042

 

 

 

191,581

 

   Non-controlling interest

 

(153

)

 

 

(161

)

Total equity

 

204,889

 

 

 

191,420

 

Total liabilities, redeemable preferred stock and equity

$

2,769,385

 

 

$

2,739,809

 

 

 


 

 

Consolidated statements of cash flows

 

 

For the Six Months Ended June 30,

 

 

2021

 

 

2020

 

 

(in thousands)

 

Cash flows from operating activities:

 

 

 

 

 

Net income

$

10,911

 

 

$

19,652

 

Adjustments to reconcile net income to net cash provided by
   operating activities:

 

 

 

 

 

Depreciation and amortization

 

49,515

 

 

 

33,885

 

Deferred income taxes

 

2,109

 

 

 

(950

)

Loss on disposal of assets and impairment charges

 

975

 

 

 

4,382

 

Foreign currency gain

 

(1,143

)

 

 

(235

)

Amortization of deferred financing costs, debt discount and premium

 

621

 

 

 

1,167

 

Amortization of deferred income

 

(4,411

)

 

 

(4,328

)

Accretion of asset retirement obligation

 

834

 

 

 

665

 

Non-cash rent

 

3,349

 

 

 

3,548

 

Charges to allowance for credit losses

 

322

 

 

 

68

 

(Income) loss from equity investment

 

(20

)

 

 

411

 

Share-based compensation

 

2,514

 

 

 

255

 

Fair value adjustment of financial assets and liabilities

 

9,833

 

 

 

 

Other operating activities, net

 

532

 

 

 

(204

)

Changes in assets and liabilities:

 

 

 

 

 

(Increase) decrease in trade receivables

 

(21,102

)

 

 

819

 

(Increase) decrease in inventory

 

(11,732

)

 

 

11,895

 

(Increase) decrease in other assets

 

(4,762

)

 

 

4,230

 

Increase in accounts payable

 

26,960

 

 

 

19,527

 

(Decrease) increase in other current liabilities

 

(6,933

)

 

 

5,237

 

Decrease in asset retirement obligation

 

(113

)

 

 

(116

)

Increase in non-current liabilities

 

758

 

 

 

2,000

 

Net cash provided by operating activities

 

59,017

 

 

 

101,908

 

Cash flows from investing activities:

 

 

 

 

 

Purchase of property and equipment

 

(32,638

)

 

 

(20,481

)

Purchase of intangible assets

 

(175

)

 

 

(30

)

Proceeds from sale of property and equipment

 

36,059

 

 

 

356

 

Business acquisitions, net of cash

 

(93,527

)

 

 

(320

)

Loans to equity investment

 

 

 

 

(189

)

Net cash used in investing activities

 

(90,281

)

 

 

(20,664

)

Cash flows from financing activities:

 

 

 

 

 

Lines of credit, net

 

 

 

 

(83,041

)

Repayment of related-party loans

 

 

 

 

(4,517

)

Buyback of long-term debt

 

 

 

 

(1,995

)

Receipt of long-term debt, net

 

35,056

 

 

 

156,535

 

Repayment of debt

 

(102,074

)

 

 

(54,240

)

Principal payments on financing leases

 

(4,013

)

 

 

(4,151

)

Proceeds from failed sale-leaseback

 

43,569

 

 

 

 

Proceeds from issuance of rights, net

 

 

 

 

11,332

 

Investment of non-controlling interest in subsidiary

 

 

 

 

19,325

 

Payment of Merger Transaction issuance costs

 

(4,764

)

 

 

 

Dividends paid on redeemable preferred stock

 

(2,993

)

 

 

 

Distributions to non-controlling interests

 

(120

)

 

 

(4,734

)

Net cash (used in) provided by financing activities

 

(35,339

)

 

 

34,514

 

Net (decrease) increase in cash and cash equivalents and restricted cash

 

(66,603

)

 

 

115,758

 

Effect of exchange rate on cash and cash equivalents and restricted cash

 

(1,438

)

 

 

(15

)

 

 


 

Cash and cash equivalents and restricted cash, beginning of period

 

312,977

 

 

 

52,763

 

Cash and cash equivalents and restricted cash, end of period

$

244,936

 

 

$

168,506

 

 

Use of Non-GAAP Measures

We disclose non-GAAP measures on a “same store basis,” which exclude the results of any store that is not a “same store” for the applicable period. A store is considered a same store beginning in the second quarter in which the store has a full quarter of activity in the prior year. We believe that this information provides greater comparability regarding our ongoing operating performance. These measures should not be considered an alternative to measurements presented in accordance with generally accepted accounting principles (“GAAP”) and are non-GAAP financial measures.

We define EBITDA as net income (loss) before net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by excluding the gain or loss on disposal of assets, impairment charges, acquisition costs, other non-cash items, and other unusual or non-recurring charges. None of EBITDA or Adjusted EBITDA are presented in accordance with GAAP and are non-GAAP financial measures.

We use EBITDA and Adjusted EBITDA for operational and financial decision-making and believe these measures are useful in evaluating our performance because they eliminate certain items that we do not consider indicators of our operating performance. EBITDA and Adjusted EBITDA are also used by many of our investors, securities analysts, and other interested parties in evaluating our operational and financial performance across reporting periods. We believe that the presentation of EBITDA and Adjusted EBITDA provides useful information to investors by allowing an understanding of key measures that we use internally for operational decision-making, budgeting, evaluating acquisition targets, and assessing our operating performance.

EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be considered as a substitute for net income (loss), cash flows from operating activities, or other income or cash flow statement data. These measures have limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. We strongly encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

Because non-GAAP financial measures are not standardized, same stores measures, EBITDA and Adjusted EBITDA, as defined by us, may not be comparable to similarly titled measures reported by other companies. It therefore may not be possible to compare our use of these non-GAAP financial measures with those used by other companies.

The following table contains a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods presented:

 

 


 

 

Reconciliation of Adjusted EBITDA

 

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

(in thousands)

 

Net income

$

25,573

 

 

$

32,509

 

 

$

10,911

 

 

$

19,652

 

Interest and other financing expenses, net

 

11,997

 

 

 

12,513

 

 

 

40,614

 

 

 

19,164

 

Income tax expense

 

8,212

 

 

 

2,510

 

 

 

7,490

 

 

 

499

 

Depreciation and amortization

 

25,273

 

 

 

16,814

 

 

 

49,515

 

 

 

33,885

 

EBITDA

 

71,055

 

 

 

64,346

 

 

 

108,530

 

 

 

73,200

 

Non-cash rent expense (a)

 

1,578

 

 

 

1,746

 

 

 

3,349

 

 

 

3,548

 

Acquisition costs (b)

 

1,988

 

 

 

882

 

 

 

2,599

 

 

 

2,382

 

(Gain) loss on disposal of assets and impairment charges (c)

 

(400

)

 

 

1,000

 

 

 

975

 

 

 

4,382

 

Share-based compensation expense (d)

 

1,488

 

 

 

128

 

 

 

2,514

 

 

 

255

 

(Income) loss from equity investment (e)

 

(26

)

 

 

178

 

 

 

(20

)

 

 

411

 

Fuel taxes paid in arrears (f)

 

 

 

 

 

 

 

 

 

 

1,050

 

Other (g)

 

34

 

 

 

269

 

 

 

73

 

 

 

255

 

Adjusted EBITDA

$

75,717

 

 

$

68,549

 

 

$

118,020

 

 

$

85,483

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Eliminates the non-cash portion of rent, which reflects the extent to which our GAAP rent expense recognized exceeds (or is less than) our cash rent payments. The GAAP rent expense adjustment can vary depending on the terms of our lease portfolio, which has been impacted by our recent acquisitions. For newer leases, our rent expense recognized typically exceeds our cash rent payments, while for more mature leases, rent expense recognized is typically less than our cash rent payments.

 

 

 

 

 

 

 

 

 

 

 

 

 

(b) Eliminates costs incurred that are directly attributable to historical business acquisitions and salaries of employees whose primary job function is to execute our acquisition strategy and facilitate integration of acquired operations.

 

 

 

 

 

 

 

 

 

 

 

 

 

(c) Eliminates the non-cash loss (gain) from the sale of property and equipment, the gain recognized upon the sale of related leased assets, and impairment charges on property and equipment and right-of-use assets related to closed and non-performing stores.

 

 

 

 

 

 

 

 

 

 

 

 

 

(d) Eliminates non-cash share-based compensation expense related to the equity incentive program in place to incentivize, retain, and motivate our employees, certain non-employees and members of our Board of Directors.

 

 

 

 

 

 

 

 

 

 

 

 

 

(e) Eliminates our share of (income) loss attributable to our unconsolidated equity investment.

 

 

 

 

 

 

 

 

 

 

 

 

 

(f) Eliminates the payment of historical fuel tax liabilities owed for multiple prior periods.

 

 

 

 

 

 

 

 

 

 

 

 

 

(g) Eliminates other unusual or non-recurring items that we do not consider to be meaningful in assessing operating performance.