ARKO ARKO Corp (A)

ARKO Corp. Reports Second Quarter 2024 Results

ARKO Corp. Reports Second Quarter 2024 Results

RICHMOND, Va., Aug. 06, 2024 (GLOBE NEWSWIRE) -- 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%.

________________________

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).



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:
    • 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.
    • Increased focus on both pricing and procurement strategies across the Company’s retail stores to support ongoing merchandise margin rate growth.
    • 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 Segment2024  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 12024  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 Segment2024  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 /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: To learn more about ARKO, visit:

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.

Investor Contact

Sean Mansouri, CFA

Elevate IR

(720) 330-2829



    
  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   19,586 
Other revenues, net 263   54   227   544 
Total revenues 31,395   7,784   20,321   59,500 
Operating expenses:           
Fuel costs 17,373   4,578   11,814   33,765 
Merchandise costs 6,505   1,651   4,873   13,029 
Site operating expenses 4,603   922   3,058   8,583 
Total operating expenses 28,481   7,151   19,745   55,377 
Operating income 2,914   633   576   4,123 
Intercompany charges by GPMP 4 294   79   193   566 
Operating income, as adjusted$3,208  $712  $769  $4,689 
Fuel gallons sold 5,872   1,587   3,857   11,316 
Fuel contribution 5$3,849  $587  $1,735  $6,171 
Merchandise contribution 6$3,699  $993  $1,865  $6,557 
Merchandise margin 7 36.3%  37.6%  27.7%   



 For the Six 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$40,697  $9,354  $13,356  $63,407 
Merchandise revenue 19,351   4,909   6,738   30,998 
Other revenues, net 491   106   227   824 
Total revenues 60,539   14,369   20,321   95,229 
Operating expenses:           
Fuel costs 34,437   8,473   11,814   54,724 
Merchandise costs 12,378   3,093   4,873   20,344 
Store operating expenses 9,293   2,112   3,058   14,463 
Total operating expenses 56,108   13,678   19,745   89,531 
Operating income$4,431  $691  $576  $5,698 
Intercompany charges by GPMP 4 585   150   193   928 
Operating income, as adjusted$5,016  $841  $769  $6,626 
Fuel gallons sold 11,693   3,003   3,857   18,553 
Fuel contribution 5$6,845  $1,031  $1,735  $9,611 
Merchandise contribution 6$6,973  $1,816  $1,865  $10,654 
Merchandise margin 7 36.0%  37.0%  27.7%   
            
1 Acquisition from WTG Fuels Holdings, LLC ("WTG"); includes only the retail stores acquired in the WTG acquisition. 
            
2 Acquisition of seven Speedy's retail stores. 
            
3 Acquisition of 21 SpeedyQ retail stores. 
            
4 Represents the estimated fixed margin paid to GPMP for the cost of fuel. 
            
5 Calculated as fuel revenue less fuel costs; excludes the estimated fixed margin paid to GPMP for the cost of fuel. 
            
6 Calculated as merchandise revenue less merchandise costs. 
            
7 Calculated as merchandise contribution divided by merchandise revenue. 
  



Wholesale Segment

 For the Three Months

Ended June 30,
  For the Six Months

Ended June 30,
 
 2024  2023  2024  2023 
 (in thousands) 
Revenues:           
Fuel revenue$762,693  $811,139  $1,427,207  $1,495,987 
Other revenues, net 6,850   6,110   13,708   12,601 
Total revenues 769,543   817,249   1,440,915   1,508,588 
Operating expenses:           
Fuel costs 750,846   800,286   1,405,959   1,474,977 
Site operating expenses 9,566   10,196   18,865   19,294 
Total operating expenses 760,412   810,482   1,424,824   1,494,271 
Operating income 9,131  $6,767  $16,091  $14,317 
Intercompany charges by GPMP 1 12,139   12,931   23,468   23,969 
Operating income, as adjusted$21,270  $19,698  $39,559  $38,286 
            
1 Represents the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel. 
  

The table below shows financial information and certain key metrics of recent acquisitions in the Wholesale Segment that have only partial comparable information for prior periods.

 For the Three Months

Ended June 30, 2024
  For the Six Months

Ended June 30, 2024
 
 WTG 1 
 (in thousands) 
Date of Acquisition:Jun 6, 2023 
Revenues:     
Fuel revenue$2,882  $5,966 
Other revenues, net 14   29 
Total revenues 2,896   5,995 
Operating expenses:     
Fuel costs 2,741   5,700 
Site operating expenses 68   136 
Total operating expenses 2,809   5,836 
Operating income 87   159 
Intercompany charges by GPMP 2 40   84 
Operating income, as adjusted$127  $243 
Fuel gallons sold 811   1,682 
      
1 Includes only the wholesale business acquired in the WTG acquisition. 
      
2 Represents the estimated fixed margin paid to GPMP for the cost of fuel. 
  



Fleet Fueling Segment

 For the Three Months

Ended June 30,
  For the Six Months

Ended June 30,
 
 2024  2023  2024  2023 
 (in thousands) 
Revenues:           
Fuel revenue$140,140  $121,146  $272,333  $248,640 
Other revenues, net 2,284   1,676   4,669   2,627 
Total revenues 142,424   122,822   277,002   251,267 
Operating expenses:           
Fuel costs 124,149   108,435   244,207   223,666 
Site operating expenses 6,442   5,043   12,985   9,833 
Total operating expenses 130,591   113,478   257,192   233,499 
Operating income 11,833   9,344   19,810   17,768 
Intercompany charges by GPMP 1 1,869   1,673   3,650   3,245 
Operating income, as adjusted$13,702  $11,017  $23,460  $21,013 
            
1 Represents the estimated fixed fee paid to GPMP for the cost of fuel. 
  

The table below shows financial information and certain key metrics of recent acquisitions in the Fleet Fueling Segment that have only partial comparable information for the prior periods.

 For the Three Months

Ended June 30, 2024
  For the Six Months

Ended June 30, 2024
 
 WTG 1 
 (in thousands) 
Date of Acquisition:Jun 6, 2023 
Revenues:     
Fuel revenue$18,535  $34,770 
Other revenues, net 1,028   2,198 
Total revenues 19,563   36,968 
Operating expenses:     
Fuel costs 16,065   30,803 
Site operating expenses 1,152   2,263 
Total operating expenses 17,217   33,066 
Operating income 2,346   3,902 
Intercompany charges by GPMP 2 250   482 
Operating income, as adjusted$2,596  $4,384 
Fuel gallons sold 5,177   9,733 
      
1 Includes only the fleet fueling business acquired in the WTG acquisition. 
      
2 Represents the estimated fixed fee paid to GPMP for the cost of fuel. 


EN
06/08/2024

Underlying

To request access to management, click here to engage with our
partner Phoenix-IR's CorporateAccessNetwork.com

Reports on ARKO Corp (A)

 PRESS RELEASE

ARKO Corp. Reports Third Quarter 2024 Results

ARKO Corp. Reports Third Quarter 2024 Results RICHMOND, Va., Nov. 07, 2024 (GLOBE NEWSWIRE) -- 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 third quarter ended September 30, 2024. Third Quarter 2024 Key Highlights (vs. Year-Ago Quarter)1,2 Net income for the quarter was $9.7 million compared to $21.5 million.Adjusted EBITDA for the quarter was $78.8 million, as compared to $87.3 million for the prior year period; performance...

 PRESS RELEASE

ARKO Corp. Opens New Handy Mart Store in Newport, North Carolina

ARKO Corp. Opens New Handy Mart Store in Newport, North Carolina RICHMOND, Va., Aug. 28, 2024 (GLOBE NEWSWIRE) -- ARKO Corp. (Nasdaq: ARKO), a Fortune 500 company and one of the largest convenience store operators in the United States, today announces the opening of its newest Handy Mart store in Newport, North Carolina. Officially open as of August 26th, the 5,600-square-foot store, located at 2934 Highway 24, offers delicious food and beverage selection, including fresh coffee, Frazil frozen drinks, and a variety of grab-and-go items like breakfast sandwiches, donuts, cheeseburgers a...

VRS RESEARCH TEAM
  • VRS RESEARCH TEAM

ARKO CORP. Flash Note

ARKO Corp. operates as a holding company. The Company, through its subsidiaries, operates convenience stores.

 PRESS RELEASE

ARKO Corp. Reports Second Quarter 2024 Results

ARKO Corp. Reports Second Quarter 2024 Results RICHMOND, Va., Aug. 06, 2024 (GLOBE NEWSWIRE) -- 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 ...

 PRESS RELEASE

ARKO to Report Second Quarter 2024 Financial Results on August 6, 2024

ARKO to Report Second Quarter 2024 Financial Results on August 6, 2024 RICHMOND, Va., July 25, 2024 (GLOBE NEWSWIRE) -- ARKO Corp. (Nasdaq: ARKO) (the “Company”) a Fortune 500 company and one of the largest convenience store operators in the United States, today announced that the Company will host a conference call on Tuesday, August 6, 2024 at 5:00 p.m. Eastern time to discuss its financial results for the second quarter ended June 30, 2024. ARKO Corp.’s management team will host the conference call, followed by a question-and-answer period. The Company will provide its financial resul...

ResearchPool Subscriptions

Get the most out of your insights

Get in touch