Exhibit 99.1

ARKO Corp. Reports Fourth Quarter and Full Year 2023 Results

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 and full year ended December 31, 2023.

Fourth Quarter and Full Year 2023 Key Highlights1,2

 

Net income for the quarter was $1.1 million, compared to $12.9 million for the prior year quarter. For the year, net income was $34.6 million, compared to $72.0 million for the prior year.
Adjusted EBITDA for the quarter was $65.5 million, compared to $72.4 million for the prior year quarter, primarily due to reduced fuel contribution at same stores, with retail cents per gallon (“CPG”) of 39.2 in the fourth quarter of 2023 compared to retail CPG of 41.4 in the fourth quarter of 2022. For the year, adjusted EBITDA was $290.4 million, compared to $301.1 million for the prior year, primarily due to reduced fuel contribution at same stores, with retail CPG of 38.8 in 2023 compared to retail CPG of 41.4 in 2022.
Merchandise revenue for the fourth quarter of 2023 was $446.7 million, an increase of $43.6 million compared to the prior year period. Merchandise revenue for 2023 was $1.84 billion, an increase of $190.4 million compared to 2022.
Merchandise contribution increased by $24.0 million for the fourth quarter of 2023, or 19.6%, and increased by $83.9 million for the year ended December 31, 2023, or 16.7%, as compared to the respective prior year periods. Merchandise margin expanded, increasing approximately 240 basis points to 32.9% for the quarter and 140 basis points for the full year, primarily due to execution of key marketing and merchandising initiatives.
Retail fuel contribution increased 4.8% for the fourth quarter of 2023 to $109.3 million and increased 4.6% for the full year to $435.3 million. Retail same store fuel gallons sold decreased 7.5% for the fourth quarter of 2023 and 5.3% for the year.

 

Other Key Highlights

Completed five acquisitions in the last eighteen months, with the largest one in March 2023.
Ended 2023 with more than two million enrolled loyalty members.
In January 2024, the Company launched a new pizza program, the culmination of over one year of development, which is currently offered at more than 1,000 of the Company’s stores as take-and-bake from the freezer, offering a great quality whole pizza at a value price for enrolled loyalty members, and as a fresh, hot pizza, either whole or by the slice, at approximately 225 of those stores.
ARKO’s Board of Directors declared a quarterly dividend of $0.03 per share of common stock to be paid on March 21, 2024, to stockholders of record as of March 11, 2024.

 

1 See Use of Non-GAAP Measures below.

2 All references to fuel contribution and fuel margin per gallon are excluding the estimated fixed margin or fixed fee paid to the Company’s wholesale fuel distribution subsidiary, GPM Petroleum LP (“GPMP”) for the cost of fuel (intercompany charges by GPMP).


 

Welcomed Robb Giammatteo to the Company to serve as Executive Vice President and Chief Financial Officer, recognizing his experience in relevant financial and transformation roles in retail and convenience.

 

“Reflecting on our first three years as a public company, we have significantly broadened our geographic footprint through acquisitions, and have delivered approximately $166 million in net income and approximately $850 million in cumulative adjusted EBITDA over this period,” said Arie Kotler, Chairman, President and Chief Executive Officer of ARKO. “For the full year 2023, we delivered $290.4 million in adjusted EBITDA, holding performance within 3.5% of 2022, which was a record retail CPG year of over 41 cents per gallon, in the context of a 3.4% decline in national OPIS fuel gallon demand, with a more pronounced decline in the fourth quarter. As we move into 2024, we are focusing more of our management’s time on driving organic growth and unlocking the value of our retail segment, and I believe we have many levers to pull. Our team is focused on improving the experience of our customers and the productivity of our stores, and later this year, we are planning to host an investor day during which we will share with you our multi-year roadmap and specific milestones to enhance organic performance and drive shareholder value. We continue to execute on our three key merchandise and marketing pillars, including our fas REWARDS loyalty program, which we designed to enhance our relationship with our customers and provide them with extraordinary value, focus on our core destination categories and our food service offering."

 

Fourth Quarter and Full Year 2023 Segment Highlights

Retail

 

For the Three Months
Ended December 31,

 

 

For the Year
Ended December 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

(in thousands)

 

Fuel gallons sold

 

279,035

 

 

 

251,658

 

 

 

1,122,321

 

 

 

1,006,469

 

Same store fuel gallons sold decrease (%) 1

 

(7.5

%)

 

 

(8.3

%)

 

 

(5.3

%)

 

 

(8.1

%)

Fuel contribution 2

$

109,336

 

 

$

104,304

 

 

$

435,322

 

 

$

416,228

 

Fuel margin, cents per gallon 3

 

39.2

 

 

 

41.4

 

 

 

38.8

 

 

 

41.4

 

Same store fuel contribution 1,2

$

86,183

 

 

$

99,778

 

 

$

360,141

 

 

$

406,262

 

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

 

(2.8

%)

 

 

1.2

%

 

 

0.4

%

 

 

(1.0

%)

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

 

(1.8

%)

 

 

4.3

%

 

 

2.5

%

 

 

2.6

%

Merchandise revenue

$

446,727

 

 

$

403,084

 

 

$

1,838,001

 

 

$

1,647,642

 

Merchandise contribution 4

$

146,773

 

 

$

122,771

 

 

$

585,122

 

 

$

501,219

 

Merchandise margin 5

 

32.9

%

 

 

30.5

%

 

 

31.8

%

 

 

30.4

%

Same store merchandise contribution 1,4

$

125,050

 

 

$

120,346

 

 

$

513,112

 

 

$

492,537

 

Same store store operating expenses 1

$

164,925

 

 

$

162,019

 

 

$

660,082

 

 

$

647,396

 

 

 

 

 

 

 

 

 

 

 

 

 

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; excludes the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel.

 

3 Calculated as fuel contribution divided by fuel gallons sold.

 

4 Calculated as merchandise revenue less merchandise costs.

 

5 Calculated as merchandise contribution divided by merchandise revenue.

 

 

Same store merchandise sales excluding cigarettes decreased 1.8% for the fourth quarter of 2023 compared to the fourth quarter of 2022, reflecting macroeconomic headwinds. Same store merchandise sales decreased 2.8% for the fourth quarter of 2023 compared to the prior year period. Penetration of the Company’s core destination categories (packaged beverages, candy, salty snacks, packaged sweet snacks, alternative snacks and beer) as a percent of same store merchandise sales increased 90 basis points for the quarter. Total merchandise contribution for the fourth quarter of 2023 increased $24.0 million, or 19.6%, compared to the fourth quarter of 2022, due to $19.7 million in incremental merchandise contribution from the businesses acquired in 2023, and the acquisition of Pride (the “Pride Acquisition”), and an increase in merchandise contribution at same stores of approximately $4.7 million. Merchandise margin increased 240 basis points, to 32.9% for the fourth quarter of 2023 from 30.5% in the fourth quarter of 2022, primarily due to execution of key marketing and merchandising initiatives.

Same store merchandise sales excluding cigarettes increased 2.5% for the year ended December 31, 2023 compared to 2022. Same store merchandise sales increased 0.4% for 2023 compared to the prior year. Total merchandise contribution for 2023 increased $83.9 million or 16.7%, compared to 2022, due to $68.6 million in incremental merchandise contribution from the businesses acquired in 2023, and the Pride Acquisition, and an increase in merchandise contribution at same stores of approximately $20.6 million. Merchandise margin increased 140 basis points, to 31.8% for the year ended December 31, 2023 from 30.4% in 2022, primarily due to execution of key marketing and merchandising initiatives.

For the fourth quarter of 2023, retail fuel contribution increased $5.0 million to $109.3 million compared to the prior year period, with resilient fuel margin capture of 39.2 cents per gallon, a decrease of 2.2 cents per gallon for the fourth quarter of 2023 as compared to the fourth quarter of 2022. Same store fuel contribution was $86.2 million for the fourth quarter of 2023, compared to $99.8 million for the prior year quarter. This decrease in same store fuel contribution was fully offset by approximately $19.3 million of incremental fuel contribution from recent acquisitions.

For the year ended December 31, 2023, retail fuel contribution increased $19.1 million to $435.3 million compared to the prior year, with fuel margin of 38.8 cents per gallon, a decrease of 2.6 cents per gallon compared to the prior year. Same store fuel contribution was $360.1 million for the year ended December 31, 2023, compared to $406.3 million for the prior year. This decrease in same store fuel contribution was fully offset by approximately $70.7 million of incremental fuel contribution from recent acquisitions.

Wholesale

 


 

 

For the Three Months
Ended December 31,

 

 

For the Year
Ended December 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

(in thousands)

 

Fuel gallons sold – fuel supply locations

 

199,861

 

 

 

182,871

 

 

 

801,260

 

 

 

746,513

 

Fuel gallons sold – consignment agent locations

 

40,144

 

 

 

40,921

 

 

 

168,005

 

 

 

156,059

 

Fuel contribution1 – fuel supply locations

$

11,499

 

 

$

11,379

 

 

$

48,396

 

 

$

51,065

 

Fuel contribution1 – consignment agent locations

$

10,101

 

 

$

10,966

 

 

$

44,512

 

 

$

47,092

 

Fuel margin, cents per gallon2 – fuel supply locations

 

5.8

 

 

 

6.2

 

 

 

6.0

 

 

 

6.8

 

Fuel margin, cents per gallon2 – consignment agent locations

 

25.2

 

 

 

26.8

 

 

 

26.5

 

 

 

30.2

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Calculated as fuel revenue less fuel costs; excludes the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel.

 

2 Calculated as fuel contribution divided by fuel gallons sold.

 

 

In wholesale, total fuel contribution was approximately $21.6 million for the fourth quarter of 2023 and $92.9 million for the year. Fuel contribution from fuel supply locations increased by $0.1 million for the quarter and decreased by $2.7 million for the full year compared to the prior year periods, while fuel margin decreased, primarily due to decreased prompt pay discounts related to lower fuel costs and lower volumes at wholesale sites not part of the 2023 and 2022 acquisitions, which was partially offset by the incremental contribution from recent acquisitions.

Fuel contribution from consignment agent locations decreased by $0.9 million for the fourth quarter of 2023 and $2.6 million for the full year compared to the prior year periods. Fuel margin also decreased for the quarter and for the year ended December 31, 2023, compared to the prior year periods, primarily due to lower rack-to-retail margins and decreased prompt pay discounts related to lower fuel costs, which was partially offset by the incremental contribution from recent acquisitions.

Fleet Fueling

The fleet fueling segment commenced operations on July 22, 2022; therefore, the year ended December 31, 2022 does not reflect the operations of this segment for the entirety of such period, which affects period-over-period comparability.

 

For the Three Months
Ended December 31,

 

 

For the Year
Ended December 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

(in thousands)

 

Fuel gallons sold – proprietary cardlock locations

 

33,285

 

 

 

31,040

 

 

 

130,995

 

 

 

57,104

 

Fuel gallons sold – third-party cardlock locations

 

3,201

 

 

 

1,585

 

 

 

9,832

 

 

 

2,882

 

Fuel contribution1 – proprietary cardlock locations

$

13,146

 

 

$

16,742

 

 

$

54,685

 

 

$

27,632

 

Fuel contribution1 – third-party cardlock locations

$

245

 

 

$

124

 

 

$

1,215

 

 

$

189

 

Fuel margin, cents per gallon2 – proprietary
  cardlock locations

 

39.5

 

 

 

53.9

 

 

 

41.7

 

 

 

48.4

 

Fuel margin, cents per gallon2 – third-party
  cardlock locations

 

7.6

 

 

 

7.8

 

 

 

12.4

 

 

 

6.5

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Calculated as fuel revenue less fuel costs; excludes the estimated fixed fee paid to GPMP for the cost of fuel.

 

2 Calculated as fuel contribution divided by fuel gallons sold.

 

 

 


 

Fuel contribution was approximately $13.4 million for the fourth quarter of 2023 and $55.9 million for the year, a decrease of $3.5 million for the quarter and an increase of $28.1 million for the year, compared to the prior year periods reflecting a full year of operations from the Quarles Acquisition, which closed in July 2022, as compared to a partial year of operations in the prior year, and the WTG Acquisition, which closed in June 2023. At proprietary cardlocks, fuel margin per gallon decreased as compared to 2022, which year was impacted by historically high rack-to-retail margins and fuel price volatility.

Store Operating Expenses

For the fourth quarter of 2023, convenience store operating expenses increased $31.0 million, or 18.2% as compared to the prior year period, primarily due to $31.5 million of incremental expenses related to recent acquisitions. Same store expenses were up less than 2%, with increases in repairs and maintenance expenses, rent and personnel expenses partially offset by lower credit card fees. At same stores, personnel expenses for the fourth quarter of 2023 were up $0.7 million from the prior year period, or 1.1%, with wage increases partially offset by reduced overtime and incentives. The total increase in store operating expenses was partially offset by underperforming retail stores that the Company closed or converted to dealer locations.

For the year ended December 31, 2023, convenience store operating expenses increased by $109.6 million, or 16.4%, as compared to the prior year, primarily due to $110.7 million of incremental expenses related to recent acquisitions and an increase in expenses at same stores, including approximately $11.1 million, or 4.1%, of higher personnel costs. The increase in store operating expenses was partially offset by lower credit card fees at same stores and underperforming retail stores that the Company closed or converted to dealer locations.

Long-Term Growth Strategy Updates

Acquisitions and M&A

The Company continued to execute its long-term growth strategy, closing three transactions in 2023, marking 25 total acquisitions since 2013. In December 2022, the Company completed its acquisition of Pride, which operated 31 Pride retail convenience stores at closing and had one store under construction that is now opened. Since closing the Pride Acquisition, the Company has earned back in Adjusted EBITDA approximately 65% of its consideration paid for that transaction.

 

Liquidity and Capital Expenditures

As of December 31, 2023, the Company’s total liquidity was approximately $831 million, consisting of approximately $218 million of cash and cash equivalents and approximately $613 million of availability under lines of credit. Outstanding debt was $845 million, resulting in net debt, excluding lease related financing liabilities, of approximately $627 million. On May 2, 2023, the Company amended its program agreement (the “Program Agreement”) with affiliates of Oak Street, a division of Blue Owl Capital (“Oak Street”). This amendment extended the term of the Program Agreement and provides for an aggregate up to $1.5 billion of capacity, almost all of which is currently available to the Company through September 30, 2024. Capital expenditures were approximately $111.2 million for the year ended December 31, 2023, including the purchase of certain fee properties, upgrades to fuel dispensers and other investments in stores.

 


 

Quarterly Dividend and Share Repurchase Program

The Company’s ability to return cash to its stockholders through its cash dividend program and 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 financial position.

The Company’s Board of Directors declared a quarterly dividend of $0.03 per share of common stock to be paid on March 21, 2024 to stockholders of record as of March 11, 2024.

During the quarter, the Company repurchased approximately 1.1 million shares of common stock under the repurchase program for approximately $8.5 million, or an average share price of $7.49. There was approximately $29 million remaining under the expanded share repurchase program as of December 31, 2023.

Company-Operated Retail Store Count and Segment Update

The following tables present certain information regarding changes in the retail, wholesale and fleet fueling segments for the periods presented:

 

For the Three Months
Ended December 31,

 

 

For the Year
Ended December 31,

 

Retail Segment

2023

 

 

2022

 

 

2023

 

 

2022

 

Number of sites at beginning of period

 

1,552

 

 

 

1,383

 

 

 

1,404

 

 

 

1,406

 

Acquired sites

 

 

 

 

32

 

 

 

166

 

 

 

32

 

Newly opened or reopened sites

 

 

 

 

 

 

 

4

 

 

 

 

Company-controlled sites converted to

 

 

 

 

 

 

 

 

 

 

 

consignment or fuel supply locations, net

 

(3

)

 

 

(8

)

 

 

(16

)

 

 

(17

)

Closed, relocated or divested sites

 

(6

)

 

 

(3

)

 

 

(15

)

 

 

(17

)

Number of sites at end of period

 

1,543

 

 

 

1,404

 

 

 

1,543

 

 

 

1,404

 

 

 

For the Three Months
Ended December 31,

 

 

For the Year
Ended December 31,

 

Wholesale Segment 1

2023

 

 

2022

 

 

2023

 

 

2022

 

Number of sites at beginning of period

 

1,825

 

 

 

1,670

 

 

 

1,674

 

 

 

1,628

 

Acquired sites

 

 

 

 

 

 

 

190

 

 

 

46

 

Newly opened or reopened sites 2

 

25

 

 

 

14

 

 

 

83

 

 

 

74

 

Consignment or fuel supply locations converted

 

 

 

 

 

 

 

 

 

 

 

   from Company-controlled or fleet fueling sites, net

 

2

 

 

 

8

 

 

 

15

 

 

 

17

 

Closed, relocated or divested sites

 

(27

)

 

 

(18

)

 

 

(137

)

 

 

(91

)

Number of sites at end of period

 

1,825

 

 

 

1,674

 

 

 

1,825

 

 

 

1,674

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Excludes bulk and spot purchasers.

 

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

 

 

 


 

 

For the Three Months
Ended December 31,

 

 

For the Year
Ended December 31,

 

Fleet Fueling Segment

2023

 

 

2022

 

 

2023

 

 

2022

 

Number of sites at beginning of period

 

295

 

 

 

183

 

 

 

183

 

 

 

 

Acquired sites

 

 

 

 

 

 

 

111

 

 

 

184

 

Newly opened or reopened sites

 

2

 

 

 

 

 

 

6

 

 

 

 

Fleet fueling locations converted from fuel supply
  locations, net

 

1

 

 

 

 

 

 

1

 

 

 

 

Closed, relocated or divested sites

 

 

 

 

 

 

 

(3

)

 

 

(1

)

Number of sites at end of period

 

298

 

 

 

183

 

 

 

298

 

 

 

183

 

 

2024 Full Year Guidance Range

The following table provides the Company’s guidance for the year ending December 31, 2024, including a reconciliation of net income to EBITDA and Adjusted EBITDA:

 

For the Year Ending December 31, 2024 (E)

 

 

Low

 

 

High

 

 

(in millions)

 

Net income

$

2

 

 

$

29

 

Interest and other financing expenses, net 1

 

89

 

 

 

89

 

Income tax expense 2

 

1

 

 

 

10

 

Depreciation and amortization

 

134

 

 

 

134

 

EBITDA

 

226

 

 

 

262

 

Non-cash rent expense 3

 

13

 

 

 

13

 

Share-based compensation expense 4

 

11

 

 

 

15

 

Adjusted EBITDA

$

250

 

 

$

290

 

 

 

 

 

 

 

1 Excludes fair value adjustments of financial assets and liabilities. For variable rate debt, assumes that SOFR remains at 5.34%

 

2 Assumes an effective tax rate of 25%

 

3 Eliminates the expected 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 varies 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, whereas, for more mature leases, rent expense recognized is typically less than our cash rent payments.

 

4 Eliminates expected 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.

 

 

The 2024 full year earnings guidance assumes a range of average retail fuel margin from 36 CPG to 40 CPG.

Based on quarter-to-date trends, the Company expects its first quarter to contribute less to the full year Adjusted EBITDA than in prior years, representing 12% to 14% of the 2024 full year rather than the approximately 16.5% historical contribution to the full year. The Company’s full year guidance framework anticipates current trends to normalize coming out of the first quarter of 2024. The first quarter guidance corresponds to a range of average retail fuel margin from 35 CPG to 39 CPG.

Conference Call and Webcast Details

 


 

The Company will host a conference call to discuss these results at 10:00 a.m. Eastern Time on February 28, 2024. 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.

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, we operate A Family of Community Brands that offer 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 merchandise and fuel products 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 charges a fixed fee, primarily to our fleet fueling 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,” “guidance,” “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; 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 Operating Income, as adjusted, EBITDA and Adjusted EBITDA is a non-GAAP financial measure.

At the segment level, the Company defines Operating Income, as adjusted as operating income excluding the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel.

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. Additionally, the Company believes Operating Income, as adjusted provides greater comparability regarding its ongoing segment operating performance by eliminating intercompany charges at the segment level. 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.

Operating Income, as adjusted, 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, Operating Income, as adjusted, 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.

 

Investor and Media Contact

Jordan Mann

ARKO Corp.

investors@gpminvestments.com

 

 

 


 

 

Consolidated Statements of Operations

 

 

 

 

 

 

 

 

For the Three Months Ended December 31,

 

 

For the Year Ended December 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

(in thousands)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

   Fuel revenue

$

1,759,216

 

 

$

1,752,136

 

 

$

7,464,372

 

 

$

7,401,090

 

   Merchandise revenue

 

446,727

 

 

 

403,084

 

 

 

1,838,001

 

 

 

1,647,642

 

   Other revenues, net

 

27,217

 

 

 

24,858

 

 

 

110,358

 

 

 

94,067

 

Total revenues

 

2,233,160

 

 

 

2,180,078

 

 

 

9,412,731

 

 

 

9,142,799

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

   Fuel costs

 

1,613,230

 

 

 

1,606,546

 

 

 

6,876,084

 

 

 

6,856,651

 

   Merchandise costs

 

299,954

 

 

 

280,313

 

 

 

1,252,879

 

 

 

1,146,423

 

Store operating expenses

 

222,751

 

 

 

186,977

 

 

 

860,134

 

 

 

721,174

 

General and administrative expenses

 

38,102

 

 

 

39,274

 

 

 

165,294

 

 

 

139,969

 

Depreciation and amortization

 

32,648

 

 

 

26,702

 

 

 

127,597

 

 

 

101,752

 

Total operating expenses

 

2,206,685

 

 

 

2,139,812

 

 

 

9,281,988

 

 

 

8,965,969

 

Other expenses, net

 

1,168

 

 

 

6,547

 

 

 

12,729

 

 

 

9,816

 

Operating income

 

25,307

 

 

 

33,719

 

 

 

118,014

 

 

 

167,014

 

   Interest and other financial income

 

2,197

 

 

 

2,721

 

 

 

20,273

 

 

 

3,178

 

   Interest and other financial expenses

 

(25,099

)

 

 

(19,016

)

 

 

(91,516

)

 

 

(62,583

)

Income before income taxes

 

2,405

 

 

 

17,424

 

 

 

46,771

 

 

 

107,609

 

   Income tax expense

 

(1,317

)

 

 

(4,497

)

 

 

(12,166

)

 

 

(35,557

)

   Income (loss) from equity investment

 

38

 

 

 

(67

)

 

 

(39

)

 

 

(74

)

Net income

$

1,126

 

 

$

12,860

 

 

$

34,566

 

 

$

71,978

 

Less: Net income attributable to non-controlling
  interests

 

48

 

 

 

49

 

 

 

197

 

 

 

231

 

Net income attributable to ARKO Corp.

$

1,078

 

 

$

12,811

 

 

$

34,369

 

 

$

71,747

 

Series A redeemable preferred stock dividends

 

(1,449

)

 

 

(1,449

)

 

 

(5,750

)

 

 

(5,750

)

Net (loss) income attributable to common
  shareholders

$

(371

)

 

$

11,362

 

 

$

28,619

 

 

$

65,997

 

Net (loss) income per share attributable to
   common shareholders - basic

$

(0.00

)

 

$

0.09

 

 

$

0.24

 

 

$

0.54

 

Net (loss) income per share attributable to
   common shareholders - diluted

$

(0.00

)

 

$

0.09

 

 

$

0.24

 

 

$

0.53

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

  Basic

 

116,638

 

 

 

120,074

 

 

 

118,782

 

 

 

121,476

 

  Diluted

 

116,638

 

 

 

121,508

 

 

 

119,605

 

 

 

123,224

 

 

 


 

 

Consolidated Balance Sheets

 

 

 

 

 

 

 

 

December 31, 2023

 

 

December 31, 2022

 

 

(in thousands)

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

   Cash and cash equivalents

$

218,120

 

 

$

298,529

 

   Restricted cash

 

23,301

 

 

 

18,240

 

   Short-term investments

 

3,892

 

 

 

2,400

 

   Trade receivables, net

 

134,735

 

 

 

118,140

 

   Inventory

 

250,593

 

 

 

221,951

 

   Other current assets

 

118,472

 

 

 

87,873

 

Total current assets

 

749,113

 

 

 

747,133

 

Non-current assets:

 

 

 

 

 

   Property and equipment, net

 

742,610

 

 

 

645,809

 

   Right-of-use assets under operating leases

 

1,384,693

 

 

 

1,203,188

 

   Right-of-use assets under financing leases, net

 

162,668

 

 

 

182,113

 

   Goodwill

 

292,173

 

 

 

217,297

 

   Intangible assets, net

 

214,552

 

 

 

197,123

 

   Equity investment

 

2,885

 

 

 

2,924

 

   Deferred tax asset

 

52,293

 

 

 

22,728

 

   Other non-current assets

 

49,377

 

 

 

36,855

 

Total assets

$

3,650,364

 

 

$

3,255,170

 

Liabilities

 

 

 

 

 

Current liabilities:

 

 

 

 

 

   Long-term debt, current portion

$

16,792

 

 

$

11,944

 

   Accounts payable

 

213,657

 

 

 

217,370

 

   Other current liabilities

 

179,536

 

 

 

154,097

 

   Operating leases, current portion

 

67,053

 

 

 

57,563

 

   Financing leases, current portion

 

9,186

 

 

 

5,457

 

Total current liabilities

 

486,224

 

 

 

446,431

 

Non-current liabilities:

 

 

 

 

 

   Long-term debt, net

 

828,647

 

 

 

740,043

 

   Asset retirement obligation

 

84,710

 

 

 

64,909

 

   Operating leases

 

1,395,032

 

 

 

1,218,045

 

   Financing leases

 

213,032

 

 

 

225,907

 

   Other non-current liabilities

 

266,602

 

 

 

178,945

 

Total liabilities

 

3,274,247

 

 

 

2,874,280

 

 

 

 

 

 

 

Series A redeemable preferred stock

 

100,000

 

 

 

100,000

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

   Common stock

 

12

 

 

 

12

 

   Treasury stock

 

(74,134

)

 

 

(40,042

)

   Additional paid-in capital

 

245,007

 

 

 

229,995

 

   Accumulated other comprehensive income

 

9,119

 

 

 

9,119

 

   Retained earnings

 

96,097

 

 

 

81,750

 

Total shareholders' equity

 

276,101

 

 

 

280,834

 

   Non-controlling interest

 

16

 

 

 

56

 

Total equity

 

276,117

 

 

 

280,890

 

Total liabilities, redeemable preferred stock and equity

$

3,650,364

 

 

$

3,255,170

 

 

 


 

 

 

Consolidated Statements of Cash Flows

 

 

For the Three Months Ended December 31,

 

 

For the Year
Ended December 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

(in thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

Net income

$

1,126

 

 

$

12,860

 

 

$

34,566

 

 

$

71,978

 

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

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

32,648

 

 

 

26,702

 

 

 

127,597

 

 

 

101,752

 

Deferred income taxes

 

(652

)

 

 

1,572

 

 

 

(4,680

)

 

 

22,300

 

Loss on disposal of assets and impairment charges

 

660

 

 

 

2,342

 

 

 

6,203

 

 

 

5,731

 

Foreign currency (gain) loss

 

(101

)

 

 

(14

)

 

 

29

 

 

 

227

 

Amortization of deferred financing costs, debt
  discount and premium

 

661

 

 

 

620

 

 

 

2,518

 

 

 

2,514

 

Amortization of deferred income

 

(1,840

)

 

 

(2,455

)

 

 

(8,142

)

 

 

(9,724

)

Accretion of asset retirement obligation

 

709

 

 

 

574

 

 

 

2,399

 

 

 

1,833

 

Non-cash rent

 

3,750

 

 

 

2,189

 

 

 

14,168

 

 

 

7,903

 

Charges to allowance for credit losses

 

244

 

 

 

186

 

 

 

1,265

 

 

 

659

 

(Income) loss from equity investment

 

(38

)

 

 

67

 

 

 

39

 

 

 

74

 

Share-based compensation

 

1,777

 

 

 

3,134

 

 

 

15,015

 

 

 

12,161

 

Fair value adjustment of financial assets and
  liabilities

 

842

 

 

 

452

 

 

 

(10,785

)

 

 

(3,396

)

Other operating activities, net

 

352

 

 

 

(80

)

 

 

2,631

 

 

 

775

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

Decrease (increase) in trade receivables

 

44,550

 

 

 

9,638

 

 

 

(17,937

)

 

 

(50,229

)

Decrease (increase) in inventory

 

15,373

 

 

 

7,720

 

 

 

(2,013

)

 

 

(6,850

)

(Increase) decrease in other assets

 

(957

)

 

 

8,843

 

 

 

(29,386

)

 

 

1,476

 

(Decrease) increase in accounts payable

 

(35,836

)

 

 

(5,848

)

 

 

(6,169

)

 

 

31,645

 

(Decrease) increase in other current liabilities

 

(8,002

)

 

 

(747

)

 

 

990

 

 

 

6,884

 

Decrease in asset retirement obligation

 

(69

)

 

 

(1

)

 

 

(23

)

 

 

(95

)

Increase in non-current liabilities

 

2,090

 

 

 

1,739

 

 

 

7,809

 

 

 

11,638

 

Net cash provided by operating activities

 

57,287

 

 

 

69,493

 

 

 

136,094

 

 

 

209,256

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

(35,561

)

 

 

(25,693

)

 

 

(111,164

)

 

 

(98,595

)

Purchase of intangible assets

 

 

 

 

 

 

 

(45

)

 

 

(176

)

Proceeds from sale of property and equipment

 

3,134

 

 

 

147,521

 

 

 

310,240

 

 

 

287,901

 

Business acquisitions, net of cash

 

33

 

 

 

(228,523

)

 

 

(494,871

)

 

 

(419,726

)

Prepayment for acquisitions

 

(1,000

)

 

 

(4,000

)

 

 

(1,000

)

 

 

(4,000

)

Decrease in investments

 

 

 

 

 

 

 

 

 

 

58,934

 

Loans to equity investment, net

 

18

 

 

 

 

 

 

18

 

 

 

174

 

Net cash used in investing activities

 

(33,376

)

 

 

(110,695

)

 

 

(296,822

)

 

 

(175,488

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

Receipt of long-term debt, net

 

20,810

 

 

 

19,446

 

 

 

99,643

 

 

 

70,896

 

Repayment of debt

 

(5,640

)

 

 

(3,576

)

 

 

(22,157

)

 

 

(45,948

)

Principal payments on financing leases

 

(1,260

)

 

 

(1,529

)

 

 

(5,497

)

 

 

(6,543

)

Proceeds from sale-leaseback

 

 

 

 

54,988

 

 

 

80,397

 

 

 

54,988

 

Payment of Additional Consideration

 

(3,505

)

 

 

(3,828

)

 

 

(3,505

)

 

 

(5,913

)

Payment of Ares Put Option

 

 

 

 

 

 

 

(9,808

)

 

 

 

Common stock repurchased

 

(8,495

)

 

 

 

 

 

(33,694

)

 

 

(40,042

)

Dividends paid on common stock

 

(3,497

)

 

 

(3,602

)

 

 

(14,272

)

 

 

(10,893

)

 


 

Dividends paid on redeemable preferred stock

 

(1,449

)

 

 

(1,449

)

 

 

(5,750

)

 

 

(5,750

)

Distributions to non-controlling interests

 

 

 

 

(60

)

 

 

 

 

 

(240

)

Net cash (used in) provided by financing activities

 

(3,036

)

 

 

60,390

 

 

 

85,357

 

 

 

10,555

 

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

 

20,875

 

 

 

19,188

 

 

 

(75,371

)

 

 

44,323

 

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

 

106

 

 

 

12

 

 

 

23

 

 

 

(97

)

Cash and cash equivalents and restricted cash,
  beginning of period

 

220,440

 

 

 

297,569

 

 

 

316,769

 

 

 

272,543

 

Cash and cash equivalents and restricted cash, end
  of period

$

241,421

 

 

$

316,769

 

 

$

241,421

 

 

$

316,769

 

 

Supplemental Disclosure of Non-GAAP Financial Information

 

Reconciliation of EBITDA and Adjusted EBITDA

 

 

For the Three Months
Ended December 31,

 

 

For the Year
Ended December 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

2021

 

 

(in thousands)

 

 

 

 

Net income

$

1,126

 

 

$

12,860

 

 

$

34,566

 

 

$

71,978

 

 

$

59,427

 

Interest and other financing expenses, net

 

22,902

 

 

 

16,295

 

 

 

71,243

 

 

 

59,405

 

 

 

71,207

 

Income tax expense

 

1,317

 

 

 

4,497

 

 

 

12,166

 

 

 

35,557

 

 

 

11,634

 

Depreciation and amortization

 

32,648

 

 

 

26,702

 

 

 

127,597

 

 

 

101,752

 

 

 

97,194

 

EBITDA

 

57,993

 

 

 

60,354

 

 

 

245,572

 

 

 

268,692

 

 

 

239,462

 

Non-cash rent expense 1

 

3,750

 

 

 

2,189

 

 

 

14,168

 

 

 

7,903

 

 

 

6,359

 

Acquisition costs 2

 

1,099

 

 

 

4,985

 

 

 

9,079

 

 

 

8,162

 

 

 

5,366

 

Loss on disposal of assets and impairment charges 3

 

660

 

 

 

2,342

 

 

 

6,203

 

 

 

5,731

 

 

 

1,384

 

Share-based compensation expense 4

 

1,777

 

 

 

3,134

 

 

 

15,015

 

 

 

12,161

 

 

 

5,804

 

(Income) loss from equity investment 5

 

(38

)

 

 

67

 

 

 

39

 

 

 

74

 

 

 

(186

)

Adjustment to contingent consideration 6

 

68

 

 

 

(128

)

 

 

(604

)

 

 

(2,204

)

 

 

(1,740

)

Internal entity realignment and streamlining 7

 

 

 

 

67

 

 

 

 

 

 

475

 

 

 

 

Other 8

 

230

 

 

 

(577

)

 

 

956

 

 

 

60

 

 

 

126

 

Adjusted EBITDA

$

65,539

 

 

$

72,433

 

 

$

290,428

 

 

$

301,054

 

 

$

256,575

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Eliminates the non-cash portion of rent, which reflects the extent to which our GAAP rent expense recognized exceeded (or was less than) our cash rent payments. The GAAP rent expense adjustment varies 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, whereas, for more mature leases, rent expense recognized is typically less than our cash rent payments.

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3 Eliminates the non-cash loss from the sale of property and equipment, the loss 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 sites.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4 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 the Board.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6 Eliminates fair value adjustments to the contingent consideration owed to the seller for the 2020 acquisition of Empire.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7 Eliminates non-recurring charges related to our internal entity realignment and streamlining.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Supplemental Disclosures of Segment Information

Retail Segment

 

For the Three Months
Ended December 31,

 

 

For the Year
Ended December 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

(in thousands)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Fuel revenue

$

913,534

 

 

$

886,710

 

 

$

3,858,777

 

 

$

3,887,549

 

Merchandise revenue

 

446,727

 

 

 

403,084

 

 

 

1,838,001

 

 

 

1,647,642

 

Other revenues, net

 

17,104

 

 

 

17,638

 

 

 

74,406

 

 

 

67,280

 

Total revenues

 

1,377,365

 

 

 

1,307,432

 

 

 

5,771,184

 

 

 

5,602,471

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Fuel costs

 

818,125

 

 

 

794,986

 

 

 

3,479,531

 

 

 

3,521,648

 

Merchandise costs

 

299,954

 

 

 

280,313

 

 

 

1,252,879

 

 

 

1,146,423

 

Store operating expenses

 

200,952

 

 

 

169,956

 

 

 

779,448

 

 

 

669,848

 

Total operating expenses

 

1,319,031

 

 

 

1,245,255

 

 

 

5,511,858

 

 

 

5,337,919

 

Operating income

 

58,334

 

 

 

62,177

 

 

 

259,326

 

 

 

264,552

 

Intercompany charges by GPMP 1

 

13,927

 

 

 

12,580

 

 

 

56,076

 

 

 

50,327

 

Operating income, as adjusted

$

72,261

 

 

$

74,757

 

 

$

315,402

 

 

$

314,879

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Represents the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel.

 

 

The tables below shows financial information and certain key metrics of recent acquisitions in the Retail Segment that do not have (or have only partial) comparable information for the prior periods.

 

 


 

 

For the Three Months Ended December 31, 2023

 

 

Pride 1

 

 

TEG 2