Exhibit 99.1

 

ARKO REPORTS THIRD QUARTER 2022 RESULTS

 

Operating Income of $65.7 Million Increased Year-over-Year by 20.1%; Net Income of $25 Million; Q3 2022 Adjusted EBITDA Reaches $99.5 Million, all-time Company High and 24.1% Increase Compared to Q3 2021; Board Raises Quarterly Dividend by 50%

RICHMOND, VA, November 7, 2022 – ARKO Corp. (Nasdaq: ARKO) (“ARKO” or the “Company”), a Fortune 500 company and one of the largest convenience store operators in the United States, today announced financial results for the quarter ended September 30, 2022.

 

Third Quarter 2022 Key Highlights:

Operating income was $65.7 million for the quarter, an increase of 20.1% compared to $54.7 million in Q3 2021
Net income for the third quarter was $25.0 million, which includes a one-time, non-cash tax expense of approximately $8.7 million in connection with an internal entity realignment and streamlining, compared to net income of $35.6 million in Q3 2021, which included a tax benefit the Company recorded of approximately $5.5 million
Adjusted EBITDA increased 24.1% to $99.5 million, the Company’s strongest to date, compared to $80.2 million in Q3 2021
Merchandise revenue of $445.8 million for the third quarter compared to $434.7 million in Q3 2021; total merchandise contribution increased $5.8 million, or 4.3%, to $138.9 million, compared to Q3 2021
Merchandise margin reached all-time high, increased 60 basis points to 31.2% compared to 30.6% in Q3 2021
Third quarter same store merchandise sales excluding cigarettes increased 4.3% compared to Q3 2021, or 6.1% on a two-year stack*
Fuel profitability increased 28.5%, to $155.1 million for the quarter compared to $120.7 million in Q3 2021
ARKO Corp.’s Board of Directors increased the quarterly dividend by 50%

* 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. See also “Use of Non-GAAP Measures” below.


 

Acquired Quarles Petroleum’s fleet fueling and dealer business; ARKO’s 21st acquisition in less than 10 years, including 121 proprietary Quarles-branded cardlock sites, 63 third-party cardlock sites for fleet fueling operations, and 46 independent dealer locations

“ARKO delivered excellent results and performance across our business this quarter,” said Arie Kotler, President, Chairman and Chief Executive Officer of ARKO. “In addition, following the acquisition in July of the Quarles fleet fueling and dealer business, since the end of the second quarter we also announced agreements to complete two more strategic and accretive acquisitions. This quarter’s significant dividend increase reflects our record of strong results, confidence in the business, and desire to enhance returns for stockholders.”

“We continued to execute our long-term growth strategy with an agreement signed in the third quarter to acquire Transit Energy Group’s approximately 150 company-operated convenience stores and large dealer business, as well as an agreement signed in the fourth quarter to acquire the 31-convenience store chain Pride Convenience Holdings. Performance in our core convenience store business was very strong. The Company increased its market share, excluding cigarettes, underscoring how our multiple initiatives, favorable assortment, and loyalty and marketing programs are resonating with customers. With our record of solid cash flow and strong balance sheet, we will continue to pursue growth opportunities. Our emphasis is on efficient use of capital and staying focused on long term fundamentals.”

 

Third Quarter 2022 Segment Highlights

Retail

 


 

 

For the Three Months
Ended September 30,

 

 

For the Nine Months
Ended September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

(in thousands)

 

Fuel gallons sold

 

262,010

 

 

 

280,079

 

 

 

754,811

 

 

 

771,158

 

Same store fuel gallons sold decrease (%) 1

 

(9.7

%)

 

 

(1.4

%)

 

 

(8.0

%)

 

 

(1.6

%)

Fuel margin, cents per gallon 2

 

44.8

 

 

 

34.5

 

 

 

41.3

 

 

 

33.7

 

Merchandise revenue

$

445,822

 

 

$

434,652

 

 

$

1,244,558

 

 

$

1,220,298

 

Same store merchandise sales increase (decrease) (%) 1

 

0.7

%

 

 

(1.3

%)

 

 

(1.8

%)

 

 

2.1

%

Same store merchandise sales excluding cigarettes increase (%) 1

 

4.3

%

 

 

1.8

%

 

 

2.0

%

 

 

4.8

%

Merchandise contribution 3

$

138,892

 

 

$

133,119

 

 

$

378,448

 

 

$

354,059

 

Merchandise margin 4

 

31.2

%

 

 

30.6

%

 

 

30.4

%

 

 

29.0

%

 

 

 

 

 

 

 

 

 

 

 

 

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 had 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 GPMP for the cost of fuel.

 

 

 

 

 

 

 

 

 

 

 

 

 

3 Calculated as merchandise revenue less merchandise costs.

 

 

 

 

 

 

 

 

 

 

 

 

 

4 Calculated as merchandise contribution divided by merchandise revenue.

 

 

For the third quarter, retail fuel profitability (excluding intercompany charges by ARKO’s wholesale fuel distribution subsidiary, GPM Petroleum LP (“GPMP”)) increased approximately $20.8 million compared to the prior year period to $117.5 million. Strong fuel margin capture of 44.8 cents per gallon in the third quarter of 2022 increased 29.9% compared to Q3 2021. There was an increase in same store fuel profit of $17.8 million compared to Q3 2021 (excluding intercompany charges by GPMP).

 

Same store merchandise sales, excluding cigarettes, increased 4.3% for the quarter and increased 6.1% on a two-year stack basis for the quarter. Merchandise margin increased 60 basis points, and total merchandise contribution increased $5.8 million, or 4.3% to $138.9 million from $133.1 million, both compared to Q3 2021.

 

Wholesale

 

 


 

 

For the Three Months
Ended September 30,

 

 

For the Nine Months
Ended September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

(in thousands)

 

Fuel gallons sold – fuel supply locations

 

189,537

 

 

 

215,428

 

 

 

563,642

 

 

 

613,834

 

Fuel gallons sold – consignment agent locations

 

41,145

 

 

 

42,970

 

 

 

115,138

 

 

 

122,845

 

Fuel margin, cents per gallon1 – fuel supply locations

 

6.9

 

 

 

5.8

 

 

 

7.0

 

 

 

5.5

 

Fuel margin, cents per gallon1 – consignment agent locations

 

32.7

 

 

 

26.9

 

 

 

31.4

 

 

 

24.9

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

 

 

Wholesale fuel profitability for the quarter (excluding intercompany charges by GPMP) increased approximately $2.6 million compared to the prior year quarter, of which approximately $1.0 million was attributable to the Quarles Acquisition. Contribution from fuel supply locations grew by $0.9 million (excluding intercompany charges by GPMP) compared to Q3 2021, primarily due to contribution from the Quarles Acquisition, greater prompt pay discounts related to higher fuel costs and greater fuel rebates.

 

Contribution from consignment agent locations increased by $1.7 million (excluding intercompany charges by GPMP) compared to the prior year quarter. Fuel margin also increased during the third quarter of 2022 primarily due to contribution from the Quarles Acquisition, greater prompt pay discounts related to higher fuel costs, greater fuel rebates and improved rack-to-retail margins.

 

Fleet Fueling

 

 

For the Three and Nine Months Ended

 

 

September 30, 2022

 

 

(in thousands)

 

Fuel gallons sold – proprietary cardlock locations

 

26,064

 

Fuel gallons sold – third-party cardlock locations

 

1,297

 

Fuel margin, cents per gallon1 – proprietary cardlock locations

 

41.8

 

Fuel margin, cents per gallon1 – third-party cardlock locations

 

4.8

 

 

 

 

1 Calculated as fuel revenue less fuel costs divided by fuel gallons sold; excludes the estimated fixed fee charged by GPMP to sites in the fleet fueling segment.

 

 

The Quarles Acquisition, completed on July 22, 2022, and the Company’s 21st acquisition in less than ten years, resulted in ARKO’s addition of the fleet fueling segment. The Company is pleased with the speed at which Quarles has integrated with ARKO and its performance to date.

 

For the portion of the third quarter since closing, fuel revenue was positively impacted by a high average price of diesel fuel. Fuel contribution for the fleet fueling segment (excluding intercompany charges by GPMP) was approximately $11.0 million, which was positively impacted by a historically high rack-to-retail margins.

 

Store Operating Expenses

 

 


 

For the third quarter of 2022, convenience store operating expenses increased $20.1 million, or 12.9%, compared to Q3 2021, primarily due to $6.8 million of incremental expenses related to the 2021 Handy Mart acquisition and an increase in expenses at same stores, including a 17.4% increase, or $10.3 million, in personnel costs, and a 13.9% increase, or $2.8 million, in credit card fees due to higher retail prices.

 

Acquisitions and Long-Term Growth Strategy

 

The Company continued to execute its systematic growth strategy intended to create long-term shareholder value with two acquisitions announced since the end of the second quarter. Since 2013, ARKO significantly increased cash flow and adjusted EBITDA and has grown its convenience store footprint from approximately 200 stores in seven states into one of the largest convenience store operators in the United States, with approximately 1,380 company-operated stores in 33 states and the District of Columbia during the course of 21 successful acquisitions.

 

Transit Energy Group Acquisition

 

On September 12, 2022, the Company announced that GPM Investments, LLC (“GPM”) a wholly owned subsidiary of ARKO, and certain of GPM’s subsidiaries agreed to acquire from Transit Energy Group (“TEG”) approximately 150 company-operated convenience stores, fuel supply rights to approximately 200 dealers, commercial, government, and industrial customers, as well as TEG’s bulk storage, distribution, and transportation assets, all in the Southeastern United States. This acquisition would expand ARKO’s retail footprint into Alabama and Mississippi.

 

Using estimated forward-looking non-GAAP measures, the Company expects that this acquisition will add approximately $18 million of Adjusted EBITDA on an annualized basis, which is expected to be $27 million on an annual run rate including synergies, after incremental rent of approximately $16 million to be paid to Oak Street Real Estate Capital, a Division of Blue Owl Capital (“Oak Street”). i

 

The purchase price is approximately $375 million plus the value of inventory, of which $50 million is deferred and payable in two annual payments of $25 million, which ARKO may elect to pay in either cash or, subject to certain conditions, shares of ARKO’s common stock, on the first and second anniversaries of the closing. At closing, ARKO intends to finance from its own sources approximately $60.0 million of the cash consideration plus the value of inventory and other closing adjustments. The remaining approximately $265 million is expected to be funded by Oak Street.

 

 

 


 

Pride Convenience Holdings Acquisition

 

On October 24, 2022, the Company announced that GPM agreed to acquire Pride Convenience Holdings LLC, which operates 31 convenience stores and a new-to-industry store under construction. This acquisition would expand ARKO’s convenience store footprint into Massachusetts.

 

Using estimated forward-looking non-GAAP measures, the Company expects that this acquisition will result in approximately $12.2 million of Adjusted EBITDA on an annual run rate including synergies, after incremental annual rent of approximately $12.2 million to be paid to Oak Street. ii

 

The total purchase price is approximately $230 million plus the value of inventory. At closing, ARKO intends to finance from its own sources approximately $28.0 million of the cash consideration plus the value of inventory and other closing adjustments. The remaining approximately $202 million is expected to be funded by Oak Street.

 

Consummation of the TEG and Pride acquisitions are subject to customary conditions, including the absence of legal restraints and, for the TEG acquisition, the termination or expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

Other Strategic Initiatives

 

The Company is currently continuing to work on expanding pizza offerings through Sbarro, the Original New York Pizza, and other potential opportunities. This quarter, the Company opened five Sbarro pizzas in remodeled deli areas. Year to date, 13 Sbarro locations have opened, with plans for an additional five locations this quarter.

 

The Company’s high-quality, on-demand bean-to-cup coffee initiative continues to be a priority. The Company is pleased by customer’s response to the new coffee and receptiveness to marketing efforts that are building consumer awareness of its high-quality coffee. The number of enrolled loyal customers who made their first recorded coffee purchase increased 55.6% in the third quarter compared to Q3 2021. Unique coffee purchases by enrolled loyal customers increased 57.1%, and net total coffee spend by enrolled loyal customers increased approximately 51%, both in the third quarter compared to Q3 2021.

 

On August 29, 2022, level 3 fast chargers were opened to customers at a Village Pantry in Marysville, Ohio. Deployed by ChargePoint, these chargers support all types of EVs. The Company previously announced that chargers will be installed at two stores in Colorado, with the goal of continually growing its EV charging footprint and capabilities.

 

Quarterly Dividend and Share Repurchase Program

 

The Company’s Board of Directors increased the quarterly dividend by 50%, to $0.03 per share, to be paid on December 6, 2022, to stockholders of record as of November 22, 2022.

 

This is the Company’s fourth consecutive quarterly dividend and first quarterly dividend increase. The Company’s continued ability to return cash to its stockholders through a quarterly cash dividend program

 


 

and a share repurchase program is consistent with its capital allocation framework and reflects the Company’s confidence in the strength of its cash generation ability and strong financial position.

 

During the nine months ended September 30, 2022, the Company repurchased approximately 4.5 million shares of common stock under its previously announced repurchase program for approximately $39.0 million, or an average share price of $8.60. Approximately $11 million remained available in the Company’s previously announced original $50 million share repurchase program. As of September 30, 2022, the Company had approximately 120.1 million shares of common stock outstanding.

 

Internal Entity Realignment and Streamlining

 

The Company executed an internal realignment of certain direct and indirect subsidiaries intended to streamline business operations and provide long term synergies and other cost savings, occurring in a series of steps, the majority of which were completed by the end of the third quarter of 2022. As a result of this realignment, the Company recorded a one-time, non-cash tax expense in the amount of approximately $8.7 million for both the three and nine months ended September 30, 2022.

 

Formal Adoption of Environmental, Social and Governance Policy

 

ARKO is committed to creating long-term value for its stockholders, employees, and communities. As a leading convenience store and gas station operator, ARKO is focused on integrating environmental sustainability, social responsibility, and corporate governance (ESG) principles that are aligned with its long-term business strategy. On July 9, 2022, the Nominating and Corporate Governance Committee of ARKO’s Board of Directors formally adopted the Company’s ESG policy, which is available online: arkocorp.com/company-information/responsibility.

 

Liquidity and Capital Expenditures

 

As of September 30, 2022, the Company’s total liquidity was approximately $678 million, consisting of cash and cash equivalents of approximately $283 million and approximately $395 million available under various lines of credit.

 

Outstanding debt excluding capital leases was approximately $734 million, resulting in net debt of approximately $451 million. In the third quarter of 2022, the Company spent $27.7 million on capital expenditures, including the purchase of certain fee properties, deli renovations for Sbarro pizza, bean-to-cup coffee equipment, upgrades to fuel dispensers and other investments in stores.

 

Store Network Update

 

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

 

 


 

 

For the Three Months
Ended September 30,

 

 

For the Nine Months
Ended September 30,

 

Retail Segment

2022

 

 

2021

 

 

2022

 

 

2021

 

Number of sites at beginning of period

 

1,388

 

 

 

1,381

 

 

 

1,406

 

 

 

1,330

 

Acquired sites

 

 

 

 

 

 

 

 

 

 

61

 

Newly opened or reopened sites

 

 

 

 

 

 

 

 

 

 

1

 

Company-controlled sites converted to

 

 

 

 

 

 

 

 

 

 

 

 consignment locations or fuel supply locations, net

 

(2

)

 

 

 

 

 

(9

)

 

 

(3

)

Closed, relocated or divested sites

 

(3

)

 

 

(2

)

 

 

(14

)

 

 

(10

)

Number of sites at end of period

 

1,383

 

 

 

1,379

 

 

 

1,383

 

 

 

1,379

 

 

 

For the Three Months
Ended September 30,

 

 

For the Nine Months
Ended September 30,

 

Wholesale Segment 1

2022

 

 

2021

 

 

2022

 

 

2021

 

Number of sites at beginning of period

 

1,620

 

 

 

1,610

 

 

 

1,628

 

 

 

1,597

 

Acquired sites

 

46

 

 

 

 

 

 

46

 

 

 

 

Newly opened or reopened sites 2

 

20

 

 

 

27

 

 

 

60

 

 

 

61

 

Consignment or fuel supply locations

 

 

 

 

 

 

 

 

 

 

 

converted from Company-controlled sites, net

 

2

 

 

 

 

 

 

9

 

 

 

3

 

Closed, relocated or divested sites

 

(18

)

 

 

(4

)

 

 

(73

)

 

 

(28

)

Number of sites at end of period

 

1,670

 

 

 

1,633

 

 

 

1,670

 

 

 

1,633

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Excludes bulk and spot purchasers.

 

2 Includes all signed fuel supply agreements irrespective of fuel distribution commencement date.

 

 

 

For the Three and Nine Months Ended

 

Fleet Fueling Segment

September 30, 2022

 

Number of sites at beginning of period

 

 

Acquired sites

 

184

 

Closed, relocated or divested sites

 

(1

)

Number of sites at end of period

 

183

 

 

Conference Call and Webcast Details

 

The Company will host a conference call to discuss these results at 10:00 a.m. Eastern Time on November 8, 2022. Investors and analysts interested in participating in the live call can dial 877-605-1792 or 201-689-8728. A simultaneous, live webcast will also be available on the Investor Relations section of the Company’s website at https://www.arkocorp.com/news-events/ir-calendar. The webcast will be archived for 30 days.

 

A telephone replay will be available approximately three hours after the call concludes through November 22, 2022, by dialing 877-660-6853 or 201-612-7415 and entering access code 13733722.

 

 

 


 

About ARKO Corp.

 

ARKO Corp. (Nasdaq: ARKO) is a Fortune 500 company that owns 100% of GPM Investments, LLC and is one of the largest operators of convenience stores and wholesalers of fuel in the United States. Based in Richmond, VA, our highly recognizable family of community brands offers delicious prepared foods, beer, snacks, candy, hot and cold beverages, and multiple popular quick serve restaurant brands. Our high value fas REWARDS® loyalty program offers exclusive savings on merchandise and gas. We operate in four reportable segments: retail, which includes convenience stores selling fuel products and other merchandise to retail customers; wholesale, which supplies fuel to independent dealers and consignment agents; GPM Petroleum, which sells and supplies fuel to our retail and wholesale sites; and fleet fueling, which includes the operation of proprietary and third-party cardlock locations, and issuance of proprietary fuel cards that provide customers access to a nationwide network of fueling sites. 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, the Company’s expected financial and operational results and the related assumptions underlying its 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; the Company’s ability to maintain the listing of its common stock and warrants on the Nasdaq Stock Market; changes in its strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; expansion plans and opportunities; changes in the markets in which it competes; changes in applicable laws or regulations, including those relating to environmental matters; market conditions and global and economic factors beyond its 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 its 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 the Company 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. The Company does not undertake an obligation to update forward-looking information, except to the extent required by applicable law.

 

Use of Non-GAAP Measures

The Company discloses certain measures on a “same store basis,” which is a non-GAAP measure. Information disclosed on a “same store basis” excludes 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 first quarter in which the store had a full quarter of activity in the prior year. The Company believes that this information provides greater comparability regarding its ongoing operating performance. Neither this measure nor those described below should be considered an alternative to measurements presented in accordance with generally accepted accounting principles in the United States (“GAAP”).

 


 

The Company defines EBITDA as net income 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. Each of EBITDA and Adjusted EBITDA is a non-GAAP financial measure.

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

EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be considered as a substitute for net income or any other financial measure presented in accordance with GAAP. These measures have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of its results as reported under GAAP. The Company strongly encourages investors to review its 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 store measures, EBITDA and Adjusted EBITDA, as defined by the Company, may not be comparable to similarly titled measures reported by other companies. It therefore may not be possible to compare the Company’s use of these non-GAAP financial measures with those used by other companies.

 

 

 

Media Contact

 

Andrew Petro

Matter on behalf of ARKO

(978) 518-4531

apetro@matternow.com

 

Investor Contact

 

Ross Parman
ARKO Corp.
investors@gpminvestments.com

 

 


 

 

 

 

Condensed consolidated statements of operations

 

 

 

 

 

 

 

 

For the Three Months
Ended September 30,

 

 

For the Nine Months
Ended September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

(in thousands)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Fuel revenue

$

1,979,574

 

 

$

1,580,359

 

 

$

5,648,954

 

 

$

4,144,069

 

Merchandise revenue

 

445,822

 

 

 

434,652

 

 

 

1,244,558

 

 

 

1,220,298

 

Other revenues, net

 

24,251

 

 

 

20,012

 

 

 

69,209

 

 

 

64,826

 

Total revenues

 

2,449,647

 

 

 

2,035,023

 

 

 

6,962,721

 

 

 

5,429,193

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Fuel costs

 

1,824,437

 

 

 

1,459,664

 

 

 

5,250,105

 

 

 

3,819,571

 

Merchandise costs

 

306,930

 

 

 

301,533

 

 

 

866,110

 

 

 

866,239

 

Store operating expenses

 

189,582

 

 

 

164,432

 

 

 

534,197

 

 

 

464,038

 

General and administrative expenses

 

35,954

 

 

 

32,696

 

 

 

100,695

 

 

 

91,270

 

Depreciation and amortization

 

26,061

 

 

 

22,031

 

 

 

75,050

 

 

 

71,546

 

Total operating expenses

 

2,382,964

 

 

 

1,980,356

 

 

 

6,826,157

 

 

 

5,312,664

 

Other expenses (income), net

 

951

 

 

 

(56

)

 

 

3,269

 

 

 

2,811

 

Operating income

 

65,732

 

 

 

54,723

 

 

 

133,295

 

 

 

113,718

 

Interest and other financial income

 

2,676

 

 

 

2,937

 

 

 

2,509

 

 

 

4,613

 

Interest and other financial expenses

 

(22,472

)

 

 

(17,365

)

 

 

(45,619

)

 

 

(59,655

)

Income before income taxes

 

45,936

 

 

 

40,295

 

 

 

90,185

 

 

 

58,676

 

Income tax expense

 

(20,898

)

 

 

(4,795

)

 

 

(31,060

)

 

 

(12,285

)

(Loss) income from equity investment

 

(44

)

 

 

85

 

 

 

(7

)

 

 

105

 

Net income

$

24,994

 

 

$

35,585

 

 

$

59,118

 

 

$

46,496

 

Less: Net income attributable to non-controlling interests

 

51

 

 

 

51

 

 

 

182

 

 

 

179

 

Net income attributable to ARKO Corp.

$

24,943

 

 

$

35,534

 

 

$

58,936

 

 

$

46,317

 

Series A redeemable preferred stock dividends

 

(1,449

)

 

 

(1,449

)

 

 

(4,301

)

 

 

(4,285

)

Net income attributable to common shareholders

$

23,494

 

 

$

34,085

 

 

$

54,635

 

 

$

42,032

 

Net income per share attributable to common shareholders - basic

$

0.20

 

 

$

0.27

 

 

$

0.45

 

 

$

0.34

 

Net income per share attributable to common shareholders - diluted

$

0.17

 

 

$

0.25

 

 

$

0.43

 

 

$

0.31

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

120,074

 

 

 

124,428

 

 

 

121,950

 

 

 

124,406

 

Diluted

 

130,388

 

 

 

133,925

 

 

 

123,527

 

 

 

125,354

 

 

 

 

 


 

 

Condensed consolidated balance sheets

 

 

 

 

 

 

 

 

September 30, 2022

 

 

December 31, 2021

 

 

(in thousands)

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

283,375

 

 

$

252,141

 

Restricted cash

 

14,194

 

 

 

20,402

 

Short-term investments

 

2,122

 

 

 

58,807

 

Trade receivables, net

 

121,736

 

 

 

62,342

 

Inventory

 

224,545

 

 

 

197,836

 

Other current assets

 

98,842

 

 

 

92,095

 

Total current assets

 

744,814

 

 

 

683,623

 

Non-current assets:

 

 

 

 

 

Property and equipment, net

 

591,024

 

 

 

548,969

 

Right-of-use assets under operating leases

 

1,127,100

 

 

 

1,064,982

 

Right-of-use assets under financing leases, net

 

185,518

 

 

 

192,378

 

Goodwill

 

197,711

 

 

 

197,648

 

Intangible assets, net

 

192,651

 

 

 

185,993

 

Equity investment

 

2,991

 

 

 

2,998

 

Deferred tax asset

 

17,773

 

 

 

41,047

 

Other non-current assets

 

29,683

 

 

 

24,637

 

Total assets

$

3,089,265

 

 

$

2,942,275

 

Liabilities

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Long-term debt, current portion

$

11,477

 

 

$

40,384

 

Accounts payable

 

211,125

 

 

 

172,918

 

Other current liabilities

 

148,199

 

 

 

137,488

 

Operating leases, current portion

 

55,952

 

 

 

51,261

 

Financing leases, current portion

 

5,741

 

 

 

6,383

 

Total current liabilities

 

432,494

 

 

 

408,434

 

Non-current liabilities:

 

 

 

 

 

Long-term debt, net

 

722,097

 

 

 

676,625

 

Asset retirement obligation

 

63,759

 

 

 

58,021

 

Operating leases

 

1,141,450

 

 

 

1,076,905

 

Financing leases

 

227,182

 

 

 

229,215

 

Deferred tax liability

 

 

 

 

2,546

 

Other non-current liabilities

 

132,276

 

 

 

136,853

 

Total liabilities

 

2,719,258

 

 

 

2,588,599

 

 

 

 

 

 

 

Series A redeemable preferred stock

 

100,000

 

 

 

100,000

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

Common stock

 

12

 

 

 

12

 

Treasury stock

 

(40,042

)

 

 

 

Additional paid-in capital

 

226,808

 

 

 

217,675

 

Accumulated other comprehensive income

 

9,119

 

 

 

9,119

 

Retained earnings

 

73,990

 

 

 

26,646

 

Total shareholders' equity

 

269,887

 

 

 

253,452

 

Non-controlling interest

 

120

 

 

 

224

 

Total equity

 

270,007

 

 

 

253,676

 

Total liabilities, redeemable preferred stock and equity

$

3,089,265

 

 

$

2,942,275

 

 

 


 

 

 

Condensed consolidated statements of cash flows

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months
Ended September 30,

 

 

For the Nine Months
Ended September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

(in thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

Net income

$

24,994

 

 

$

35,585

 

 

$

59,118

 

 

$

46,496

 

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

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

26,061

 

 

 

22,031

 

 

 

75,050

 

 

 

71,546

 

Deferred income taxes

 

18,057

 

 

 

1,801

 

 

 

20,728

 

 

 

3,910

 

Loss on disposal of assets and impairment charges

 

1,418

 

 

 

923

 

 

 

3,389

 

 

 

1,898

 

Foreign currency loss (gain)

 

13

 

 

 

(33

)

 

 

241

 

 

 

(1,176

)

Amortization of deferred financing costs, debt discount and premium

 

632

 

 

 

802

 

 

 

1,894

 

 

 

1,423

 

Amortization of deferred income

 

(1,977

)

 

 

(2,691

)

 

 

(7,269

)

 

 

(7,102

)

Accretion of asset retirement obligation

 

430

 

 

 

432

 

 

 

1,259

 

 

 

1,266

 

Non-cash rent

 

1,977

 

 

 

1,424

 

 

 

5,714

 

 

 

4,773

 

Charges to allowance for credit losses

 

122

 

 

 

128

 

 

 

473

 

 

 

450

 

Loss (income) from equity investment

 

44

 

 

 

(85

)

 

 

7

 

 

 

(105

)

Share-based compensation

 

3,145

 

 

 

1,613

 

 

 

9,027

 

 

 

4,127

 

Fair value adjustment of financial assets and liabilities

 

2,742

 

 

 

(596

)

 

 

(3,848

)

 

 

9,237

 

Other operating activities, net

 

148

 

 

 

195

 

 

 

855

 

 

 

727

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

(Increase) decrease in trade receivables

 

(28,376

)

 

 

1,410

 

 

 

(59,867

)

 

 

(19,692

)

Decrease (increase) in inventory

 

21,377

 

 

 

(6,001

)

 

 

(14,570

)

 

 

(17,733

)

Increase in other assets

 

(14,974

)

 

 

(5,286

)

 

 

(7,367

)

 

 

(10,048

)

(Decrease) increase in accounts payable

 

(8,914

)

 

 

(1,799

)

 

 

37,493

 

 

 

25,161

 

Increase (decrease) in other current liabilities

 

18,955

 

 

 

10,426

 

 

 

7,631

 

 

 

3,493

 

Decrease in asset retirement obligation

 

(60

)

 

 

(15

)

 

 

(94

)

 

 

(128

)

Increase in non-current liabilities

 

1,787

 

 

 

266

 

 

 

9,899

 

 

 

1,024

 

Net cash provided by operating activities

 

67,601

 

 

 

60,530

 

 

 

139,763

 

 

 

119,547

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

(27,734

)

 

 

(15,485

)

 

 

(72,902

)

 

 

(48,123

)

Purchase of intangible assets

 

(51

)

 

 

(47

)

 

 

(176

)

 

 

(222

)

Proceeds from sale of property and equipment

 

133,119

 

 

 

626

 

 

 

140,380

 

 

 

36,685

 

Business acquisitions, net of cash

 

(179,350

)

 

 

 

 

 

(191,203

)

 

 

(93,527

)

Decrease in investments, net

 

31,825

 

 

 

 

 

 

58,934

 

 

 

 

Repayment of loans to equity investment

 

 

 

 

 

 

 

174

 

 

 

 

Net cash used in investing activities

 

(42,191

)

 

 

(14,906

)

 

 

(64,793

)

 

 

(105,187

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

Receipt of long-term debt, net

 

51,450

 

 

 

6,310

 

 

 

51,450

 

 

 

41,366

 

Repayment of debt

 

(36,279

)

 

 

(3,217

)

 

 

(42,372

)

 

 

(105,291

)

Principal payments on financing leases

 

(1,710

)

 

 

(2,037

)

 

 

(5,014

)

 

 

(6,050

)

Proceeds from failed sale-leaseback

 

 

 

 

 

 

 

 

 

 

43,569

 

Payment of Additional Consideration

 

 

 

 

 

 

 

(2,085

)

 

 

-

 

 

 


 

Payment of merger transaction issuance costs