Exhibit 99.1

ARKO Corp. Reports Second Quarter 2024 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 second quarter ended June 30, 2024.

Second Quarter 2024 Key Highlights (vs. Year-Ago Quarter)1,2

 

Net income for the quarter was $14.1 million compared to $14.5 million, with recent acquisitions and higher fuel margin partially offsetting continued declines in gallon demand and lower same store merchandise contribution.
Adjusted EBITDA for the quarter was $83.8 million compared to $86.2 million, which was above the Company’s previously issued guidance of $70 million to $77 million, driven by higher retail fuel margin per gallon.
Merchandise revenue decreased by 2.1% to $474.2 million, with incremental merchandise sales from recent acquisitions offset by a mid-single digit decline in same store merchandise sales.
Merchandise margin expanded approximately 90 basis points to 32.8%, supported by key marketing and merchandising initiatives.
Merchandise contribution increased 0.7% to $155.8 million.
Retail fuel contribution increased 1.2% to $118.0 million, driven by the combined impact of margin increases and incremental gallons from recent acquisitions, which more than offset a decline in same store fuel gallons sold.
Retail fuel margin increased to 41.6 cents per gallon from 39.7, while same store fuel gallons sold declined 6.6% compared to a decrease in national OPIS average same-station fuel gallon volume of approximately 4.2%.

 

Other Key Highlights

As part of ARKO’s focus on accelerating organic growth, the Company continues to develop its multi-year transformation plan, which is expected to include the following elements:
o
Additional targeted capital allocation toward strategic sub-segments of its retail stores intended to drive traffic and improve profitability. The Company plans to allocate capital based in part on a pilot program, currently in development, designed to improve the customer experience and value proposition, potentially including an expanded and refined offering across a larger store network, with a focus on food and an enhanced in-store experience. Currently, the pilot will focus on seven stores within one region, with the goal of a region-wide roll out before, ultimately, the expansion of this program across the Company’s retail footprint. The Company expects to begin implementing the new design in our pilot stores in the fourth quarter of 2024.
o
Increased focus on both pricing and procurement strategies across the Company’s retail stores to support ongoing merchandise margin rate growth.

 

1 See Use of Non-GAAP Measures below.

2 All figures for fuel contribution and fuel margin per gallon exclude 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).


 

o
Leveraging the Company’s unique, multi-segment operating model through more active conversion of retail stores within the Company’s retail segment to dealer sites within its wholesale segment. Following the Company’s review of its retail store portfolio, a meaningful number of retail locations were identified for potential conversion, which are expected to yield greater profitability after conversion. The Company expects to have converted approximately 40 retail stores to dealer sites by the end of the third quarter of 2024, of which a small number had converted as of the end of the second quarter of 2024.

 

Additional details of the Company’s multi-year transformation plan will be provided at the Company’s investor day that is being scheduled for the fourth quarter of 2024. Details will be shared at a later date.

The Company continued its enhanced food program rollout, including expansion of a re-launched hot dog and roller grill program anchored by Nathan’s Famous as its supplier of quality, 100% all beef hot dogs, to more than 460 of its retail stores.
The Board declared a quarterly dividend of $0.03 per share of common stock to be paid on August 30, 2024 to stockholders of record as of August 19, 2024.

 

“This quarter, we continued to navigate a challenging macroeconomic environment alongside our customers,” said Arie Kotler, Chairman, President and Chief Executive Officer of ARKO. “We continued to see pressure on consumers as they struggle with inflation and elevated prices for everyday goods, especially in markets with a large percentage of lower income consumers. While this negatively impacted our retail sales, our team worked hard to control same store expenses and leverage our strong vendor partner relationships to deliver another quarter of merchandise margin growth, while providing much-needed value to our customers. When combined with higher fuel margins, we exceeded our Adjusted EBITDA guidance for the second quarter.”

 

Mr. Kotler continued: “Our commitment to strong execution, enhancing customer value, and improving store level economics remain a top priority. We are well positioned to navigate the near-term macro headwinds, and we continue to believe in the long-term opportunities for ARKO. We expect the ongoing enhancements to our operations will guide us through this environment, while also laying the foundation for our multi-year transformation plan.”

 


 

 

 


 

Second Quarter 2024 Segment Highlights

Retail

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

(in thousands)

 

Fuel gallons sold

 

283,481

 

 

 

293,584

 

 

 

538,945

 

 

 

542,490

 

Same store fuel gallons sold decrease (%) 1

 

(6.6

%)

 

 

(2.6

%)

 

 

(6.6

%)

 

 

(4.2

%)

Fuel contribution 2

$

117,981

 

 

$

116,624

 

 

$

210,914

 

 

$

204,720

 

Fuel margin, cents per gallon 3

 

41.6

 

 

 

39.7

 

 

 

39.1

 

 

 

37.7

 

Same store fuel contribution 1,2

$

111,433

 

 

$

114,746

 

 

$

193,481

 

 

$

199,578

 

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

 

(5.1

%)

 

 

0.7

%

 

 

(4.6

%)

 

 

2.1

%

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

 

(4.0

%)

 

 

3.8

%

 

 

(3.5

%)

 

 

5.6

%

Merchandise revenue

$

474,248

 

 

$

484,561

 

 

$

888,903

 

 

$

884,849

 

Merchandise contribution 4

$

155,759

 

 

$

154,658

 

 

$

290,677

 

 

$

277,623

 

Merchandise margin 5

 

32.8

%

 

 

31.9

%

 

 

32.7

%

 

 

31.4

%

Same store merchandise contribution 1,4

$

148,093

 

 

$

152,256

 

 

$

266,769

 

 

$

270,070

 

Same store site operating expenses 1

$

192,258

 

 

$

193,185

 

 

$

364,877

 

 

$

360,297

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

 

 

Total merchandise contribution for the second quarter of 2024 increased $1.1 million, or 0.7%, compared to the second quarter of 2023, due to $5.6 million in incremental merchandise contribution from recent acquisitions, which was partially offset by a decrease in same store merchandise contribution. Same store merchandise contribution decreased primarily due to lower contribution from certain core destination categories, as well as cigarettes.

Merchandise margin increased 90 basis points to 32.8% for the second quarter of 2024, supported by key marketing and merchandising initiatives.

For the second quarter of 2024, retail fuel contribution increased $1.4 million to $118.0 million compared to the prior year period, with resilient fuel margin capture of 41.6 cents per gallon, an increase of 1.9 cents per gallon compared to the second quarter of 2023. Incremental fuel contribution from recent acquisitions of approximately $5.0 million was partially offset by same store fuel contribution, which decreased to $111.4 million for the second quarter of 2024, compared to $114.7 million for the prior year quarter.

 


 

Wholesale

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

(in thousands)

 

Fuel gallons sold – fuel supply locations

 

203,561

 

 

 

213,136

 

 

 

390,292

 

 

 

395,563

 

Fuel gallons sold – consignment agent locations

 

39,338

 

 

 

44,534

 

 

 

76,842

 

 

 

82,496

 

Fuel contribution 1 – fuel supply locations

$

12,287

 

 

$

12,518

 

 

$

23,849

 

 

$

23,674

 

Fuel contribution 1 – consignment locations

$

11,699

 

 

$

11,266

 

 

$

20,867

 

 

$

21,305

 

Fuel margin, cents per gallon 2 – fuel supply locations

 

6.0

 

 

 

5.9

 

 

 

6.1

 

 

 

6.0

 

Fuel margin, cents per gallon 2 – consignment agent locations

 

29.7

 

 

 

25.3

 

 

 

27.2

 

 

 

25.8

 

 

 

 

 

 

 

 

 

 

 

 

 

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 $24.0 million for the second quarter of 2024. Fuel contribution was similar for the second quarters of 2024 and 2023. Other revenues, net increased by approximately $0.7 million primarily due to vendor rebates. For the second quarter of 2024, site operating expenses decreased $0.6 million compared to the prior year period primarily due to lower credit card fees.

Fleet Fueling

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

(in thousands)

 

Fuel gallons sold – proprietary cardlock locations

 

35,678

 

 

 

32,417

 

 

 

69,127

 

 

 

63,433

 

Fuel gallons sold – third-party cardlock locations

 

3,271

 

 

 

2,036

 

 

 

6,470

 

 

 

3,646

 

Fuel contribution 1 – proprietary cardlock locations

$

17,529

 

 

$

14,229

 

 

$

31,198

 

 

$

28,042

 

Fuel contribution 1 – third-party cardlock locations

$

331

 

 

$

155

 

 

$

578

 

 

$

177

 

Fuel margin, cents per gallon 2 – proprietary cardlock
  locations

 

49.1

 

 

 

43.9

 

 

 

45.1

 

 

 

44.2

 

Fuel margin, cents per gallon 2 – third-party cardlock
  locations

 

10.1

 

 

 

7.7

 

 

 

8.9

 

 

 

4.9

 

 

 

 

 

 

 

 

 

 

 

 

 

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 increased 24.2% to approximately $17.9 million for the second quarter of 2024 compared to the prior year period. At proprietary cardlocks, fuel margin increased by 5.2 cents per gallon compared to the second quarter of 2023. At third-party cardlock locations, fuel margin increased by 2.4 cents per gallon for the second quarter of 2024 compared to the second quarter of 2023. These changes were primarily due to higher volumes and the cardlocks acquired in the WTG Acquisition.

 

 


 

Site Operating Expenses

For the quarter ended June 30, 2024, convenience store operating expenses increased $4.8 million, or 2.4%, as compared to the prior year period, primarily due to $7.4 million of incremental expenses related to recent acquisitions. Same store expenses were down $0.9 million from the prior year period, or 0.5%, primarily related to lower personnel costs and lower credit card fees. The increase in site operating expenses was partially offset by underperforming retail stores that were closed or converted to dealers.

Liquidity and Capital Expenditures

As of June 30, 2024, the Company’s total liquidity was approximately $806 million, consisting of approximately $232 million of cash and cash equivalents and approximately $574 million of availability under lines of credit. Outstanding debt was $890 million, resulting in net debt, excluding lease related financing liabilities, of approximately $658 million. Capital expenditures were approximately $19.3 million for the quarter ended June 30, 2024.

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 strong financial position.

 

The Board declared a quarterly dividend of $0.03 per share of common stock to be paid on August 30, 2024 to stockholders of record as of August 19, 2024.

During the second quarter, the Board approved the expansion of the Company’s share repurchase program to $125 million, up from $100 million. There was approximately $25.7 million remaining under the share repurchase program as of June 30, 2024.

 

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 June 30,

 

 

For the Six Months
Ended June 30,

 

Retail Segment

2024

 

 

2023

 

 

2024

 

 

2023

 

Number of sites at beginning of period

 

1,540

 

 

 

1,531

 

 

 

1,543

 

 

 

1,404

 

Acquired sites

 

21

 

 

 

24

 

 

 

21

 

 

 

159

 

Newly opened or reopened sites

 

 

 

 

2

 

 

 

1

 

 

 

3

 

Company-controlled sites converted to

 

 

 

 

 

 

 

 

 

 

 

 consignment or fuel supply locations, net

 

(2

)

 

 

(6

)

 

 

(2

)

 

 

(11

)

Closed, relocated or divested sites

 

(11

)

 

 

(4

)

 

 

(15

)

 

 

(8

)

Number of sites at end of period

 

1,548

 

 

 

1,547

 

 

 

1,548

 

 

 

1,547

 

 

 


 

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

Wholesale Segment 1

2024

 

 

2023

 

 

2024

 

 

2023

 

Number of sites at beginning of period

 

1,816

 

 

 

1,841

 

 

 

1,825

 

 

 

1,674

 

Acquired sites

 

 

 

 

9

 

 

 

 

 

 

190

 

Newly opened or reopened sites 2

 

11

 

 

 

17

 

 

 

20

 

 

 

24

 

Consignment or fuel supply locations converted

 

 

 

 

 

 

 

 

 

 

 

from Company-controlled or fleet fueling sites, net

 

2

 

 

 

6

 

 

 

2

 

 

 

11

 

Closed, relocated or divested sites

 

(35

)

 

 

(49

)

 

 

(53

)

 

 

(75

)

Number of sites at end of period

 

1,794

 

 

 

1,824

 

 

 

1,794

 

 

 

1,824

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Excludes bulk and spot purchasers.

 

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

 

 

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

Fleet Fueling Segment

2024

 

 

2023

 

 

2024

 

 

2023

 

Number of sites at beginning of period

 

296

 

 

 

183

 

 

 

298

 

 

 

183

 

Acquired sites

 

 

 

 

111

 

 

 

-

 

 

 

111

 

Closed, relocated or divested sites

 

(2

)

 

 

(1

)

 

 

(4

)

 

 

(1

)

Number of sites at end of period

 

294

 

 

 

293

 

 

 

294

 

 

 

293

 

 

Changes in Non-GAAP Definitions; Third Quarter and Full Year 2024 Guidance

Beginning in the third quarter of 2024, the Company has made certain changes to its definitions for Adjusted EBITDA that impact the comparability of the metric to prior periods. Specifically, the Company will no longer include non-cash rent expense adjustments in its calculation of Adjusted EBITDA. Accordingly, the Company’s third quarter 2024 Adjusted EBITDA and full year 2024 Adjusted EBITDA guidance reflects the Company’s updated definition of Adjusted EBITDA. See “Supplemental Disclosure of Non-GAAP Financial Information” below for a reconciliation of the definitions prior to the third quarter of 2024 to allow for like-for-like comparisons to the new definitions for all periods presented.

 

The Company currently expects third quarter 2024 Adjusted EBITDA, using the revised methodology to calculate Adjusted EBITDA, to range between $70 million and $86 million, with an assumed range of average retail fuel margin from 38 to 44 cents per gallon, and which now includes approximately $3.5 million of non-cash rent expense.

 

The Company currently expects full year 2024 Adjusted EBITDA, using the revised methodology to calculate Adjusted EBITDA, to range between $235 million and $275 million, which now includes approximately $15 million of non-cash rent expense. This guidance translates directly to the Company maintaining its full year Adjusted EBITDA range of $250 million to $290 million using the historical methodology. The Company’s full year Adjusted EBITDA range assumes a range of average retail fuel margin from 37 to 45 cents per gallon for the back half of the year.

 

The Company is not providing guidance on net income at this time due to the volatility of certain required inputs that are not available without unreasonable efforts, including future fair value

 


 

adjustments associated with its stock price, as well as depreciation and amortization related to its capital allocation as part of its focus on accelerating organic growth.

 

Conference Call and Webcast Details

The Company will host a conference call today to discuss these results at 5:00 p.m. Eastern Time. Investors and analysts interested in participating in the live call can dial 800-245-3047 or 203-518-9765.

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, share-based compensation expense, 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.

 

 

 


 

Change in Non-GAAP Definitions

Beginning on July 1, 2024, the Company has made certain changes to its calculation of Adjusted EBITDA that impact the comparability of the metrics to prior periods. Specifically, the Company will no longer include non-cash rent expense adjustments in its calculation of Adjusted EBITDA. Accordingly, the Company’s third quarter of 2024 and full year 2024 Adjusted EBITDA guidance reflect the Company’s updated definition of Adjusted EBITDA. See “Supplemental Disclosure of Non-GAAP Financial Information” below for a reconciliation of the definitions prior to July 1, 2024 to allow for like-for-like comparisons to the new definitions for all periods presented.

 

Company Contact

Jordan Mann

ARKO Corp.

investors@gpminvestments.com

 

Investor Contact

Sean Mansouri, CFA

Elevate IR

(720) 330-2829

ARKO@elevate-ir.com

 

 

 


 

 

Condensed Consolidated Statements of Operations

 

 

 

 

 

 

 

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

(in thousands)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Fuel revenue

$

1,887,531

 

 

$

1,957,100

 

 

$

3,518,863

 

 

$

3,618,764

 

Merchandise revenue

 

474,248

 

 

 

484,561

 

 

 

888,903

 

 

 

884,849

 

Other revenues, net

 

26,384

 

 

 

27,480

 

 

 

52,851

 

 

 

53,904

 

Total revenues

 

2,388,163

 

 

 

2,469,141

 

 

 

4,460,617

 

 

 

4,557,517

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Fuel costs

 

1,726,761

 

 

 

1,801,103

 

 

 

3,229,063

 

 

 

3,338,985

 

Merchandise costs

 

318,489

 

 

 

329,903

 

 

 

598,226

 

 

 

607,226

 

Site operating expenses

 

223,691

 

 

 

218,002

 

 

 

442,622

 

 

 

410,685

 

General and administrative expenses

 

42,436

 

 

 

42,660

 

 

 

84,594

 

 

 

83,076

 

Depreciation and amortization

 

33,577

 

 

 

32,837

 

 

 

65,293

 

 

 

61,236

 

Total operating expenses

 

2,344,954

 

 

 

2,424,505

 

 

 

4,419,798

 

 

 

4,501,208

 

Other expenses, net

 

261

 

 

 

4,956

 

 

 

2,737

 

 

 

7,676

 

Operating income

 

42,948

 

 

 

39,680

 

 

 

38,082

 

 

 

48,633

 

Interest and other financial income

 

3,384

 

 

 

2,428

 

 

 

25,297

 

 

 

9,630

 

Interest and other financial expenses

 

(24,751

)

 

 

(22,588

)

 

 

(49,121

)

 

 

(43,392

)

Income before income taxes

 

21,581

 

 

 

19,520

 

 

 

14,258

 

 

 

14,871

 

Income tax expense

 

(7,546

)

 

 

(5,014

)

 

 

(839

)

 

 

(2,856

)

Income (loss) from equity investment

 

28

 

 

 

(27

)

 

 

50

 

 

 

(63

)

Net income

$

14,063

 

 

$

14,479

 

 

$

13,469

 

 

$

11,952

 

Less: Net income attributable to
  non-controlling interests

 

 

 

 

48

 

 

 

 

 

 

101

 

Net income attributable to ARKO Corp.

$

14,063

 

 

$

14,431

 

 

$

13,469

 

 

$

11,851

 

Series A redeemable preferred stock dividends

 

(1,445

)

 

 

(1,434

)

 

 

(2,859

)

 

 

(2,852

)

Net income attributable to common
  shareholders

$

12,618

 

 

$

12,997

 

 

$

10,610

 

 

$

8,999

 

Net income per share attributable to common
  shareholders – basic

$

0.11

 

 

$

0.11

 

 

$

0.09

 

 

$

0.07

 

Net income per share attributable to common
  shareholders – diluted

$

0.11

 

 

$

0.11

 

 

$

0.09

 

 

$

0.07

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

115,758

 

 

 

119,893

 

 

 

116,512

 

 

 

120,073

 

Diluted

 

116,880

 

 

 

121,280

 

 

 

117,073

 

 

 

120,767

 

 

 


 

 

Condensed Consolidated Balance Sheets

 

 

 

 

 

 

 

 

June 30, 2024

 

 

December 31, 2023

 

 

(in thousands)

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

231,647

 

 

$

218,120

 

Restricted cash

 

19,392

 

 

 

23,301

 

Short-term investments

 

4,860

 

 

 

3,892

 

Trade receivables, net

 

155,578

 

 

 

134,735

 

Inventory

 

251,142

 

 

 

250,593

 

Other current assets

 

107,145

 

 

 

118,472

 

Total current assets

 

769,764

 

 

 

749,113

 

Non-current assets:

 

 

 

 

 

Property and equipment, net

 

740,004

 

 

 

742,610

 

Right-of-use assets under operating leases

 

1,418,778

 

 

 

1,384,693

 

Right-of-use assets under financing leases, net

 

160,280

 

 

 

162,668

 

Goodwill

 

299,972

 

 

 

292,173

 

Intangible assets, net

 

194,151

 

 

 

214,552

 

Equity investment

 

2,935

 

 

 

2,885

 

Deferred tax asset

 

60,822

 

 

 

52,293

 

Other non-current assets

 

53,163

 

 

 

49,377

 

Total assets

$

3,699,869

 

 

$

3,650,364

 

Liabilities

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Long-term debt, current portion

$

18,184

 

 

$

16,792

 

Accounts payable

 

239,169

 

 

 

213,657

 

Other current liabilities

 

151,434

 

 

 

179,536

 

Operating leases, current portion

 

68,725

 

 

 

67,053

 

Financing leases, current portion

 

10,856

 

 

 

9,186

 

Total current liabilities

 

488,368

 

 

 

486,224

 

Non-current liabilities:

 

 

 

 

 

Long-term debt, net

 

871,678

 

 

 

828,647

 

Asset retirement obligation

 

86,872

 

 

 

84,710

 

Operating leases

 

1,434,238

 

 

 

1,395,032

 

Financing leases

 

211,760

 

 

 

213,032

 

Other non-current liabilities

 

233,852

 

 

 

266,602

 

Total liabilities

 

3,326,768

 

 

 

3,274,247

 

 

 

 

 

 

 

Series A redeemable preferred stock

 

100,000

 

 

 

100,000

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

Common stock

 

12

 

 

 

12

 

Treasury stock

 

(106,123

)

 

 

(74,134

)

Additional paid-in capital

 

270,455

 

 

 

245,007

 

Accumulated other comprehensive income

 

9,119

 

 

 

9,119

 

Retained earnings

 

99,638

 

 

 

96,097

 

Total shareholders' equity

 

273,101

 

 

 

276,101

 

Non-controlling interest

 

 

 

 

16

 

Total equity

 

273,101

 

 

 

276,117

 

Total liabilities, redeemable preferred stock and equity

$

3,699,869

 

 

$

3,650,364

 

 

 


 

 

 

Condensed Consolidated Statements of Cash Flows

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

(in thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

Net income

$

14,063

 

 

$

14,479

 

 

$

13,469

 

 

$

11,952

 

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

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

33,577

 

 

 

32,837

 

 

 

65,293

 

 

 

61,236

 

Deferred income taxes

 

4,146

 

 

 

(3,885

)

 

 

(5,929

)

 

 

(14,115

)

Loss on disposal of assets and impairment
  charges

 

721

 

 

 

2,991

 

 

 

3,385

 

 

 

3,278

 

Foreign currency loss

 

30

 

 

 

24

 

 

 

57

 

 

 

58

 

Gain from issuance of shares as payment of
  deferred consideration related to business
  acquisition

 

 

 

 

 

 

 

(2,681

)

 

 

 

Gain from settlement related to business
  acquisition

 

 

 

 

 

 

 

(6,356

)

 

 

 

Amortization of deferred financing costs and
  debt discount

 

668

 

 

 

621

 

 

 

1,332

 

 

 

1,213

 

Amortization of deferred income

 

(4,423

)

 

 

(2,069

)

 

 

(6,369

)

 

 

(3,929

)

Accretion of asset retirement obligation

 

627

 

 

 

627

 

 

 

1,243

 

 

 

1,118

 

Non-cash rent

 

3,687

 

 

 

3,760

 

 

 

7,171

 

 

 

6,558

 

Charges to allowance for credit losses

 

314

 

 

 

290

 

 

 

641

 

 

 

573

 

(Income) loss from equity investment

 

(28

)

 

 

27

 

 

 

(50

)

 

 

63

 

Share-based compensation

 

2,784

 

 

 

4,555

 

 

 

6,113

 

 

 

8,624

 

Fair value adjustment of financial assets and
  liabilities

 

(1,434

)

 

 

(1,020

)

 

 

(12,206

)

 

 

(5,248

)

Other operating activities, net

 

62

 

 

 

647

 

 

 

686

 

 

 

976

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

Decrease (increase) in trade receivables

 

2,820

 

 

 

(6,991

)

 

 

(21,484

)

 

 

(18,173

)

Decrease (increase) in inventory

 

2,584

 

 

 

(5,363

)

 

 

2,772

 

 

 

(8,208

)

Decrease (increase) in other assets

 

748

 

 

 

(14,510

)

 

 

5,843

 

 

 

(10,965

)

Increase in accounts payable

 

5,130

 

 

 

8,640

 

 

 

26,477

 

 

 

14,580

 

Decrease in other current liabilities

 

(1,772

)

 

 

(7,524

)

 

 

(5,924

)

 

 

(7,651

)

(Decrease) increase in asset retirement
  obligation

 

(65

)

 

 

(21

)

 

 

(120

)

 

 

46

 

Increase in non-current liabilities

 

12,980

 

 

 

1,988

 

 

 

16,611

 

 

 

4,000

 

Net cash provided by operating activities

 

77,219

 

 

 

30,103

 

 

 

89,974

 

 

 

45,986

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

(19,284

)

 

 

(26,658

)

 

 

(48,512

)

 

 

(50,038

)

Purchase of intangible assets

 

 

 

 

(35

)

 

 

 

 

 

(35

)

Proceeds from sale of property and equipment

 

48,256

 

 

 

88,049

 

 

 

50,295

 

 

 

296,485

 

Business acquisitions, net of cash

 

(53,458

)

 

 

(143,294

)

 

 

(54,458

)

 

 

(481,636

)

Loans to equity investment, net

 

14

 

 

 

 

 

 

28

 

 

 

 

Net cash used in investing activities

 

(24,472

)

 

 

(81,938

)

 

 

(52,647

)

 

 

(235,224

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

Receipt of long-term debt, net

 

5,968

 

 

 

19,233

 

 

 

47,556

 

 

 

74,233

 

Repayment of debt

 

(7,214

)

 

 

(4,919

)

 

 

(13,849

)

 

 

(10,511

)

Principal payments on financing leases

 

(1,171

)

 

 

(1,494

)

 

 

(2,306

)

 

 

(2,912

)

 


 

Early settlement of deferred consideration
  related to business acquisition

 

 

 

 

 

 

 

(17,155

)

 

 

 

Proceeds from sale-leaseback

 

 

 

 

28,793

 

 

 

 

 

 

80,397

 

Payment of Ares Put Option

 

 

 

 

(9,808

)

 

 

 

 

 

(9,808

)

Common stock repurchased

 

(68

)

 

 

(11,253

)

 

 

(31,989

)

 

 

(13,563

)

Dividends paid on common stock

 

(3,473

)

 

 

(3,607

)

 

 

(7,069

)

 

 

(7,216

)

Dividends paid on redeemable preferred stock

 

(1,445

)

 

 

(1,434

)

 

 

(2,859

)

 

 

(2,852

)

Net cash (used in) provided by financing
  activities

 

(7,403

)

 

 

15,511

 

 

 

(27,671

)

 

 

107,768

 

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

 

45,344

 

 

 

(36,324

)

 

 

9,656

 

 

 

(81,470

)

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

 

(19

)

 

 

 

 

 

(38

)

 

 

(21

)

Cash and cash equivalents and restricted cash,
  beginning of period

 

205,714

 

 

 

271,602

 

 

 

241,421

 

 

 

316,769

 

Cash and cash equivalents and restricted cash,
  end of period

$

251,039

 

 

$

235,278

 

 

$

251,039

 

 

$

235,278

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Supplemental Disclosure of Non-GAAP Financial Information

 

 

Reconciliation of EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

Net income

 

$

14,063

 

 

$

14,479

 

 

$

13,469

 

 

$

11,952

 

Interest and other financing expenses, net

 

 

21,367

 

 

 

20,160

 

 

 

23,824

 

 

 

33,762

 

Income tax expense

 

 

7,546

 

 

 

5,014

 

 

 

839

 

 

 

2,856

 

Depreciation and amortization

 

 

33,577

 

 

 

32,837

 

 

 

65,293

 

 

 

61,236

 

EBITDA

 

 

76,553

 

 

 

72,490

 

 

 

103,425

 

 

 

109,806

 

Non-cash rent expense (a)

 

 

3,687

 

 

 

3,760

 

 

 

7,171

 

 

 

6,558

 

Acquisition costs (b)

 

 

1,510

 

 

 

3,277

 

 

 

2,190

 

 

 

6,853

 

Loss on disposal of assets and impairment charges (c)

 

 

721

 

 

 

2,991

 

 

 

3,385

 

 

 

3,278

 

Share-based compensation expense (d)

 

 

2,784

 

 

 

4,555

 

 

 

6,113

 

 

 

8,624

 

(Income) loss from equity investment (e)

 

 

(28

)

 

 

27

 

 

 

(50

)

 

 

63

 

Fuel taxes received in arrears (f)

 

 

 

 

 

 

 

 

(565

)

 

 

 

Adjustment to contingent consideration (g)

 

 

(310

)

 

 

(922

)

 

 

(292

)

 

 

(1,624

)

Other (h)

 

 

(1,160

)

 

 

64

 

 

 

(971

)

 

 

168

 

Adjusted EBITDA, as defined through June 30, 2024

 

$

83,757

 

 

$

86,242

 

 

$

120,406

 

 

$

133,726

 

Non-cash rent expense (a)

 

 

(3,687

)

 

 

(3,760

)

 

 

(7,171

)

 

 

(6,558

)

Adjusted EBITDA, as defined beginning July 1, 2024

 

$

80,070

 

 

$

82,482

 

 

$

113,235

 

 

$

127,168

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) 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. 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. Beginning July 1, 2024, such expenses will no longer be an adjustment in the definition of Adjusted EBITDA.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b) 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(c) 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 the Board.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(f) Eliminates the receipt of historical fuel tax amounts for multiple prior periods.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(g) Eliminates fair value adjustments to the contingent consideration owed to the seller for the 2020 Empire acquisition.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(h) 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 June 30,

 

 

For the Six Months
Ended June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

(in thousands)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Fuel revenue

$

976,372

 

 

$

1,015,365

 

 

$

1,800,800

 

 

$

1,858,838

 

Merchandise revenue

 

474,248

 

 

 

484,561

 

 

 

888,903

 

 

 

884,849

 

Other revenues, net

 

16,735

 

 

 

18,997

 

 

 

33,414

 

 

 

37,552

 

Total revenues

 

1,467,355

 

 

 

1,518,923

 

 

 

2,723,117

 

 

 

2,781,239

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Fuel costs

 

872,493

 

 

 

913,437

 

 

 

1,616,734

 

 

 

1,681,245

 

Merchandise costs

 

318,489

 

 

 

329,903

 

 

 

598,226

 

 

 

607,226

 

Site operating expenses

 

202,550

 

 

 

197,726

 

 

 

400,567

 

 

 

373,280

 

Total operating expenses

 

1,393,532

 

 

 

1,441,066

 

 

 

2,615,527

 

 

 

2,661,751

 

Operating income

 

73,823

 

 

 

77,857

 

 

 

107,590

 

 

 

119,488

 

Intercompany charges by GPMP 1

 

14,102

 

 

 

14,696

 

 

 

26,848

 

 

 

27,127

 

Operating income, as adjusted

$

87,925

 

 

$

92,553

 

 

$

134,438

 

 

$

146,615

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

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

 

For the Three Months Ended June 30, 2024

 

 

Uncle's
(WTG)
1

 

 

Speedy's 2

 

 

SpeedyQ 3

 

 

Total

 

 

(in thousands)

 

Date of Acquisition:

Jun 6, 2023

 

 

Aug 15, 2023

 

 

Apr 9, 2024

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Fuel revenue

$

20,928

 

 

$

5,086

 

 

$

13,356

 

 

$

39,370

 

Merchandise revenue

 

10,204

 

 

 

2,644

 

 

 

6,738