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ARKO Corp. Reports Third Quarter 2024 Results

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ARKO Corp. reported Q3 2024 financial results with net income of $9.7 million, down from $21.5 million year-over-year. Adjusted EBITDA was $78.8 million compared to $87.3 million in Q3 2023. The company achieved a retail fuel margin of 41.3 cents per gallon and merchandise margin of 32.8%. As part of its transformation plan, ARKO converted 51 retail stores to dealer sites and plans to convert approximately 100 more by Q4 2024. The company expects these conversions to generate an annualized benefit of $8.5 million to Operating Income. ARKO declared a quarterly dividend of $0.03 per share and provided Q4 2024 Adjusted EBITDA guidance of $53-63 million.

ARKO Corp. ha comunicato i risultati finanziari del terzo trimestre 2024, con un utile netto di 9,7 milioni di dollari, in calo rispetto ai 21,5 milioni dell'anno precedente. L'EBITDA rettificato è stato di 78,8 milioni di dollari rispetto ai 87,3 milioni nel terzo trimestre 2023. L'azienda ha ottenuto un margine di guadagno sulla vendita di carburante al dettaglio di 41,3 centesimi per gallone e un margine sulla merce del 32,8%. Come parte del suo piano di trasformazione, ARKO ha convertito 51 punti vendita in siti per concessionari e prevede di convertirne circa 100 in più entro il quarto trimestre del 2024. L'azienda si aspetta che queste conversioni generino un beneficio annualizzato di 8,5 milioni di dollari per l'utile operativo. ARKO ha dichiarato un dividendo trimestrale di 0,03 dollari per azione e ha fornito una guida per l'EBITDA rettificato del quarto trimestre 2024 di 53-63 milioni di dollari.

ARKO Corp. informó los resultados financieros del tercer trimestre de 2024, con un ingreso neto de 9,7 millones de dólares, una disminución respecto a los 21,5 millones del año anterior. El EBITDA ajustado fue de 78,8 millones de dólares en comparación con los 87,3 millones en el tercer trimestre de 2023. La compañía alcanzó un margen de combustible al por menor de 41,3 centavos por galón y un margen de mercadería del 32,8%. Como parte de su plan de transformación, ARKO convirtió 51 tiendas minoristas en sitios de concesionarios y planea convertir aproximadamente 100 más para el cuarto trimestre de 2024. La empresa espera que estas conversiones generen un beneficio anualizado de 8,5 millones de dólares para el ingreso operativo. ARKO declaró un dividendo trimestral de 0,03 dólares por acción y proporcionó una guía de EBITDA ajustado para el cuarto trimestre de 2024 de 53 a 63 millones de dólares.

ARKO Corp.는 2024년 3분기 재무 결과를 보고했으며, 순이익 970만 달러로 전년 동기 2150만 달러에서 감소했습니다. 조정된 EBITDA는 7880만 달러로 2023년 3분기의 8730만 달러와 비교되었습니다. 회사는 리테일 연료 마진을 갤런당 41.3센트로, 상품 마진을 32.8%로 달성했습니다. ARKO는 전환 계획의 일환으로 51개의 소매 매장을 딜러 사이트로 전환했으며, 2024년 4분기까지 약 100개를 더 전환할 계획입니다. 회사는 이러한 전환이 운영 수익에 연간 850만 달러의 이익을 발생시킬 것으로 예상합니다. ARKO는 주당 0.03 달러의 분기 배당금을 선언했으며, 2024년 4분기 조정된 EBITDA 가이던스를 5300만~6300만 달러로 제공했습니다.

ARKO Corp. a annoncé les résultats financiers du troisième trimestre 2024, avec un revenu net de 9,7 millions de dollars, en baisse par rapport à 21,5 millions de dollars l'année précédente. L'EBITDA ajusté était de 78,8 millions de dollars contre 87,3 millions de dollars au troisième trimestre 2023. L'entreprise a réalisé une marge de carburant de détail de 41,3 cents par gallon et une marge sur les marchandises de 32,8%. Dans le cadre de son plan de transformation, ARKO a converti 51 magasins de détail en sites de concessionnaires et envisage de convertir environ 100 autres d'ici le quatrième trimestre 2024. L'entreprise s'attend à ce que ces conversions génèrent un bénéfice annualisé de 8,5 millions de dollars pour le résultat d'exploitation. ARKO a déclaré un dividende trimestriel de 0,03 dollar par action et a fourni des prévisions d'EBITDA ajusté pour le quatrième trimestre 2024 de 53 à 63 millions de dollars.

ARKO Corp. hat die Finanzzahlen für das dritte Quartal 2024 veröffentlicht und meldete ein Nettoeinkommen von 9,7 Millionen Dollar, ein Rückgang im Vergleich zu 21,5 Millionen Dollar im Vorjahr. Das bereinigte EBITDA betrug 78,8 Millionen Dollar im Vergleich zu 87,3 Millionen Dollar im dritten Quartal 2023. Das Unternehmen erzielte eine Einzelhandelsbenzinmarge von 41,3 Cent pro Gallone und eine Handelsmarge von 32,8%. Im Rahmen seines Transformationsplans hat ARKO 51 Einzelhandelsgeschäfte in Händlerstandorte umgewandelt und plant, bis zum vierten Quartal 2024 etwa 100 weitere zu konvertieren. Das Unternehmen erwartet, dass diese Umwandlungen einen jährlichen Nutzen von 8,5 Millionen Dollar für das Betriebsergebnis bringen werden. ARKO erklärte eine vierteljährliche Dividende von 0,03 Dollar pro Aktie und gab eine EBITDA-Prognose für das vierte Quartal 2024 von 53 bis 63 Millionen Dollar ab.

Positive
  • Retail fuel margin increased to 41.3 cents per gallon from 40.3 cents
  • Merchandise margin rate improved to 32.8% from 31.7%
  • Store conversion strategy expected to yield $15-20 million in annual operating income benefits
  • Strong liquidity position of $869 million as of September 30, 2024
Negative
  • Net income declined 54.9% to $9.7 million from $21.5 million
  • Adjusted EBITDA decreased 9.7% to $78.8 million from $87.3 million
  • Same store merchandise sales decreased 7.7%
  • Merchandise contribution declined 4.2% to $154.0 million

Insights

The Q3 2024 results reveal significant challenges and strategic shifts for ARKO. Net income dropped 55% to $9.7 million from $21.5 million, while Adjusted EBITDA decreased to $78.8 million from $87.3 million. The company's performance shows resilience in margins despite volume pressures, with retail fuel margins improving to 41.3% and merchandise margins strengthening to 32.8%.

Key strategic initiatives include:

  • Converting 151 retail stores to dealer sites by Q4 2024, targeting $8.5 million in annualized benefits
  • Expanding NTI store pipeline to 8 locations
  • Maintaining quarterly dividend of $0.03 per share
The transformation plan and strong liquidity position ($869 million) provide some stability, but declining same-store metrics and reduced customer transactions reflect ongoing macroeconomic pressures.

Consumer behavior trends are significantly impacting ARKO's performance, with same-store merchandise sales declining by 7.7% and fuel gallons sold decreasing by 6.6%. This reflects broader economic pressures on consumer spending and changing shopping patterns. The company's strategic response through store conversions and focus on operational efficiency demonstrates adaptation to market conditions.

The Q4 2024 guidance of $53-63 million in Adjusted EBITDA suggests continued challenges, but the margin improvement strategy appears to be offsetting some volume declines. The expansion into NTI stores, particularly with Dunkin' partnerships, indicates a focus on diversifying revenue streams and capturing higher-margin opportunities in the convenience store sector.

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 for the quarter was at the midpoint of the Company’s previously issued guidance of $70 million to $86 million.
  • Retail fuel margin for the quarter was 41.3 cents per gallon, as compared to 40.3 cents for the prior year period.
  • Merchandise margin rate for the quarter was 32.8%, as compared to 31.7% for the prior year period.
  • Merchandise contribution for the quarter was $154.0 million, as compared to $160.7 million for the prior year period.
  • Retail fuel contribution for the quarter was $117.1 million, as compared to $121.3 million for the prior year period.

___________________
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 the Company’s developing transformation plan, the Company converted 51 retail stores to dealer sites in the nine months ended on September 30, 2024. The Company expects to convert another approximately 100 retail stores by the end of the fourth quarter of 2024, which together with the initial 51 stores is expected to represent a cumulative annualized benefit to combined wholesale segment and retail segment Operating Income of approximately $8.5 million. Such conversions are part of our channel optimization strategy, which is expected to yield a cumulative annualized benefit to combined wholesale segment and retail segment Operating Income of approximately $15 million to $20 million.
  • The Company has expanded its pipeline to eight NTI (new to industry) stores, including two Dunkin’ locations. During the quarter, the Company opened a NTI Handy Mart store in Newport, North Carolina. The Company expects to open three more NTI stores later this year, with the balance over the course of 2025.
  • The Board declared a quarterly dividend of $0.03 per share of common stock to be paid on December 3, 2024 to stockholders of record as of November 19, 2024.

“As our customers continue to face macroeconomic pressure related to inflation and elevated prices for everyday goods, we continue to focus on delivering essential value to our customers,” said Arie Kotler, Chairman, President, and CEO of ARKO.

Mr. Kotler continued: “Our focus on operational excellence, improving customer offerings, and strengthening store-level performance remains a top priority. We believe that we are well-positioned to manage near-term macroeconomic challenges, and we remain confident in ARKO’s long-term potential for sustained growth. We believe the improvements in our operations and investments in our stores will guide us through the current environment and build the foundation for our multi-year transformation.”

Third Quarter 2024 Segment Highlights

Retail

 For the Three Months
Ended September 30,
  For the Nine Months
Ended September 30,
 
 2024  2023  2024  2023 
 (in thousands) 
Fuel gallons sold 283,189   300,796   822,134   843,286 
Same store fuel gallons sold decrease (%) 1 (6.6%)  (5.3%)  (6.6%)  (4.5%)
Fuel contribution 2$117,090  $121,266  $328,004  $325,986 
Fuel margin, cents per gallon 3 41.3   40.3   39.9   38.7 
Same store fuel contribution 1,2$113,192  $118,250  $306,673  $317,828 
Same store merchandise sales (decrease) increase (%) 1 (7.7%)  0.1%  (5.7%)  1.4%
Same store merchandise sales excluding cigarettes (decrease) increase (%) 1 (5.7%)  1.0%  (4.3%)  3.9%
Merchandise revenue$469,616  $506,425  $1,358,519  $1,391,274 
Merchandise contribution 4$154,019  $160,726  $444,696  $438,349 
Merchandise margin 5 32.8%  31.7%  32.7%  31.5%
Same store merchandise contribution 1,4$147,223  $154,719  $413,992  $424,789 
Same store site operating expenses 1$192,548  $195,334  $557,425  $555,631 
            
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 third quarter of 2024 decreased $6.7 million, or 4.2%, compared to the third quarter of 2023, primarily due to a decrease in same store merchandise contribution of approximately $7.5 million and a decrease from underperforming retail stores that were closed or converted to dealers, which was partially offset by approximately $2.7 million in incremental merchandise contribution from recent acquisitions. Same store merchandise contribution decreased primarily due to lower same store sales caused by a decline in customer transactions reflecting the challenging macro-economic environment. The impact of the same store sales decline was partially offset by an increase in same store merchandise margin rate, which increased 100 basis points as compared to the year-ago period.

For the third quarter of 2024, retail fuel contribution decreased $4.2 million to $117.1 million compared to the prior year period, with gallon demand declines reflecting the challenging macro-economic environment. The impact of the gallon demand decline was partially offset by resilient fuel margin capture of 41.3 cents per gallon, which was up 1.0 cent per gallon compared to the third quarter of 2023. The decline in retail fuel contribution was caused by a reduction in same store fuel contribution of $5.1 million and a decrease from underperforming retail stores that were closed or converted to dealers, which was partially offset by incremental fuel contribution from recent acquisitions of approximately $2.2 million.

Wholesale

 For the Three Months
Ended September 30,
  For the Nine Months
Ended September 30,
 
 2024  2023  2024  2023 
 (in thousands) 
Fuel gallons sold – fuel supply locations 203,187   205,836   593,479   601,399 
Fuel gallons sold – consignment agent locations 39,155   45,365   115,997   127,861 
Fuel contribution 1 – fuel supply locations$12,077  $13,222  $35,926  $36,896 
Fuel contribution 1 – consignment locations$11,283  $13,107  $32,150  $34,412 
Fuel margin, cents per gallon 2 – fuel supply locations 5.9   6.4   6.1   6.1 
Fuel margin, cents per gallon 2 – consignment agent locations 28.8   28.9   27.7   26.9 
            
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 $23.4 million for the third quarter of 2024 compared to $26.3 million for the third quarter of 2023. Fuel contribution for the third quarter of 2024 at fuel supply locations decreased by $1.2 million, and fuel contribution at consignment agent locations decreased by $1.8 million, compared to the prior year period, with corresponding decreases in fuel margin per gallon, primarily due to decreased prompt pay discounts related to lower fuel costs and lower volumes. For the third quarter of 2024, site operating expenses decreased by $0.2 million compared to the prior year period.

Fleet Fueling

 For the Three Months
Ended September 30,
  For the Nine Months
Ended September 30,
 
 2024  2023  2024  2023 
 (in thousands) 
Fuel gallons sold – proprietary cardlock locations 34,089   34,277   103,216   97,710 
Fuel gallons sold – third-party cardlock locations 3,105   2,985   9,575   6,631 
Fuel contribution 1 – proprietary cardlock locations$15,699  $13,497  $46,789  $41,539 
Fuel contribution 1 – third-party cardlock locations$482  $794  $1,168  $971 
Fuel margin, cents per gallon 2 – proprietary cardlock locations 46.1   39.4   45.3   42.5 
Fuel margin, cents per gallon 2 – third-party cardlock locations 15.5   26.6   12.2   14.6 
            
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. 


In fleet fueling, fuel contribution increased by $1.9 million compared to the third quarter of 2023. At proprietary cardlocks, fuel contribution increased by $2.2 million, and fuel margin per gallon also increased for the third quarter of 2024 compared to the third quarter of 2023. At third-party cardlock locations, fuel contribution decreased by $0.3 million, and fuel margin per gallon also decreased for the third quarter of 2024 compared to the third quarter of 2023. These changes were primarily due to differing market conditions impacting the third quarters of 2024 and 2023.

Site Operating Expenses

For the quarter ended September 30, 2024, convenience store operating expenses decreased $3.1 million, or 1.5%, as compared to the prior year period, primarily due to a decrease in same store expenses of $2.8 million, or 1.4%, and a decrease from underperforming retail stores that were closed or converted to dealers. This decline in same store expenses was primarily related to lower personnel costs and lower credit card fees. These decreases were partially offset by $3.8 million of incremental expenses related to recent acquisitions.

Liquidity and Capital Expenditures

As of September 30, 2024, the Company’s total liquidity was approximately $869 million, consisting of approximately $292 million of cash and cash equivalents and approximately $577 million of availability under lines of credit. Outstanding debt was $885 million, resulting in net debt, excluding lease related financing liabilities, of approximately $593 million. Capital expenditures were approximately $29.3 million for the quarter ended September 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 December 3, 2024 to stockholders of record as of November 19, 2024.

There was approximately $25.7 million remaining under the share repurchase program as of September 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 September 30,
  For the Nine Months
Ended September 30,
 
Retail Segment2024  2023  2024  2023 
Number of sites at beginning of period 1,548   1,547   1,543   1,404 
Acquired sites    7   21   166 
Newly opened or reopened sites 1   1   2   4 
Company-controlled sites converted to consignment or fuel supply locations, net (49)  (2)  (51)  (13)
Closed or divested sites (9)  (1)  (24)  (9)
Number of sites at end of period 1,491   1,552   1,491   1,552 


 For the Three Months
Ended September 30,
  For the Nine Months
Ended September 30,
 
Wholesale Segment 12024  2023  2024  2023 
Number of sites at beginning of period 1,794   1,824   1,825   1,674 
Acquired sites          190 
Newly opened or reopened sites 2 10   34   30   58 
Consignment or fuel supply locations converted from Company-controlled or fleet fueling sites, net 49   2   51   13 
Closed or divested sites (21)  (35)  (74)  (110)
Number of sites at end of period 1,832   1,825   1,832   1,825 
            
1 Excludes bulk and spot purchasers. 
2 Includes all signed fuel supply agreements irrespective of fuel distribution commencement date.

 


 For the Three Months
Ended September 30,
  For the Nine Months
Ended September 30,
 
Fleet Fueling Segment2024  2023  2024  2023 
Number of sites at beginning of period 294   293   298   183 
Acquired sites          111 
Closed or divested sites (14)  (2)  (18)  (3)
Number of sites at end of period 281   295   281   295 


Fourth Quarter and Full Year 2024 Guidance

The Company currently expects fourth quarter 2024 Adjusted EBITDA to range between $53 million and $63 million, with an assumed range of average retail fuel margin from 38 to 42 cents per gallon. This outlook translates to a full year 2024 Adjusted EBITDA range of $245 million to $255 million.

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 800-343-4136 or 203-518-9848.

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 and divestiture costs, share-based compensation expense, other non-cash items, and other unusual or non-recurring charges.

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. Each of Operating Income, as adjusted, EBITDA and Adjusted EBITDA is a non-GAAP financial measure.

The Company uses EBITDA and Adjusted EBITDA for operational and financial decision-making and believe these measures are useful in evaluating its performance because they eliminate certain items that it does not consider indicators of its operating performance. 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.

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 September 30,
  For the Nine Months
Ended September 30,
 
 2024  2023  2024  2023 
 (in thousands) 
Revenues:           
Fuel revenue$1,783,871  $2,086,392  $5,302,734  $5,705,156 
Merchandise revenue 469,616   506,425   1,358,519   1,391,274 
Other revenues, net 25,749   29,237   78,600   83,141 
Total revenues 2,279,236   2,622,054   6,739,853   7,179,571 
Operating expenses:           
Fuel costs 1,626,399   1,923,869   4,855,462   5,262,854 
Merchandise costs 315,597   345,699   913,823   952,925 
Site operating expenses 222,744   226,698   665,366   637,383 
General and administrative expenses 38,636   44,116   123,230   127,192 
Depreciation and amortization 33,132   33,713   98,425   94,949 
Total operating expenses 2,236,508   2,574,095   6,656,306   7,075,303 
Other expenses, net 1,159   3,885   3,896   11,561 
Operating income 41,569   44,074   79,651   92,707 
Interest and other financial income 3,135   9,371   26,462   18,897 
Interest and other financial expenses (26,759)  (23,950)  (73,910)  (67,238)
Income before income taxes 17,945   29,495   32,203   44,366 
Income tax expense (8,300)  (7,993)  (9,139)  (10,849)
Income (loss) from equity investment 29   (14)  79   (77)
Net income$9,674  $21,488  $23,143  $33,440 
Less: Net income attributable to non-controlling interests    48      149 
Net income attributable to ARKO Corp.$9,674  $21,440  $23,143  $33,291 
Series A redeemable preferred stock dividends (1,446)  (1,449)  (4,305)  (4,301)
Net income attributable to common shareholders$8,228  $19,991  $18,838  $28,990 
Net income per share attributable to common shareholders – basic$0.07  $0.17  $0.16  $0.24 
Net income per share attributable to common shareholders – diluted$0.07  $0.17  $0.16  $0.24 
Weighted average shares outstanding:           
Basic 115,771   118,389   116,262   119,505 
Diluted 117,888   120,292   117,342   120,602 


   
 Condensed Consolidated Balance Sheets 
      
 September 30, 2024  December 31, 2023 
 (in thousands) 
Assets     
Current assets:     
Cash and cash equivalents$291,697  $218,120 
Restricted cash 27,314   23,301 
Short-term investments 5,132   3,892 
Trade receivables, net 117,890   134,735 
Inventory 236,487   250,593 
Other current assets 101,428   118,472 
Total current assets 779,948   749,113 
Non-current assets:     
Property and equipment, net 740,761   742,610 
Right-of-use assets under operating leases 1,406,429   1,384,693 
Right-of-use assets under financing leases, net 159,110   162,668 
Goodwill 300,032   292,173 
Intangible assets, net 187,999   214,552 
Equity investment 2,964   2,885 
Deferred tax asset 58,573   52,293 
Other non-current assets 52,485   49,377 
Total assets$3,688,301  $3,650,364 
Liabilities     
Current liabilities:     
Long-term debt, current portion$15,372  $16,792 
Accounts payable 209,102   213,657 
Other current liabilities 173,578   179,536 
Operating leases, current portion 70,120   67,053 
Financing leases, current portion 11,175   9,186 
Total current liabilities 479,347   486,224 
Non-current liabilities:     
Long-term debt, net 869,323   828,647 
Asset retirement obligation 87,331   84,710 
Operating leases 1,424,834   1,395,032 
Financing leases 211,380   213,032 
Other non-current liabilities 236,081   266,602 
Total liabilities 3,308,296   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 272,604   245,007 
Accumulated other comprehensive income 9,119   9,119 
Retained earnings 104,393   96,097 
Total shareholders' equity 280,005   276,101 
Non-controlling interest    16 
Total equity 280,005   276,117 
Total liabilities, redeemable preferred stock and equity$3,688,301  $3,650,364 


   
 Condensed Consolidated Statements of Cash Flows 
            
 For the Three Months
Ended September 30,
  For the Nine Months
Ended September 30,
 
 2024  2023  2024  2023 
 (in thousands) 
Cash flows from operating activities:           
Net income$9,674  $21,488  $23,143  $33,440 
Adjustments to reconcile net income to net cash provided by operating activities:           
Depreciation and amortization 33,132   33,713   98,425   94,949 
Deferred income taxes 2,269   10,087   (3,660)  (4,028)
Loss on disposal of assets and impairment charges 1,752   2,265   5,137   5,543 
Foreign currency (gain) loss (16)  72   41   130 
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   644   2,000   1,857 
Amortization of deferred income (3,757)  (2,373)  (10,126)  (6,302)
Accretion of asset retirement obligation 628   572   1,871   1,690 
Non-cash rent 3,634   3,860   10,805   10,418 
Charges to allowance for credit losses 92   448   733   1,021 
(Income) loss from equity investment (29)  14   (79)  77 
Share-based compensation 2,149   4,614   8,262   13,238 
Fair value adjustment of financial assets and liabilities 1,443   (6,379)  (10,763)  (11,627)
Other operating activities, net 66   1,303   752   2,279 
Changes in assets and liabilities:           
Decrease (increase) in trade receivables 37,596   (44,314)  16,112   (62,487)
Decrease (increase) in inventory 14,655   (9,178)  17,427   (17,386)
Decrease (increase) in other assets 8,066   (17,464)  13,909   (28,429)
(Decrease) increase in accounts payable (32,614)  15,087   (6,137)  29,667 
Increase in other current liabilities 23,768   16,643   17,844   8,992 
(Decrease) increase in asset retirement obligation (163)     (283)  46 
Increase in non-current liabilities 6,143   1,719   22,754   5,719 
Net cash provided by operating activities 109,156   32,821   199,130   78,807 
Cash flows from investing activities:           
Purchase of property and equipment (29,269)  (25,565)  (77,781)  (75,603)
Purchase of intangible assets    (10)     (45)
Proceeds from sale of property and equipment 1,058   10,621   51,353   307,106 
Business acquisitions, net of cash (91)  (13,268)  (54,549)  (494,904)
Loans to equity investment, net 14      42    
Net cash used in investing activities (28,288)  (28,222)  (80,935)  (263,446)
Cash flows from financing activities:           
Receipt of long-term debt, net    4,600   47,556   78,833 
Repayment of debt (6,714)  (6,006)  (20,563)  (16,517)
Principal payments on financing leases (1,274)  (1,325)  (3,580)  (4,237)
Early settlement of deferred consideration related to business acquisition       (17,155)   
Proceeds from sale-leaseback          80,397 
Payment of Ares Put Option          (9,808)
Common stock repurchased    (11,636)  (31,989)  (25,199)
Dividends paid on common stock (3,473)  (3,559)  (10,542)  (10,775)
Dividends paid on redeemable preferred stock (1,446)  (1,449)  (4,305)  (4,301)
Net cash (used in) provided by financing activities (12,907)  (19,375)  (40,578)  88,393 
Net increase (decrease) in cash and cash equivalents and restricted cash 67,961   (14,776)  77,617   (96,246)
Effect of exchange rate on cash and cash equivalents and restricted cash 11   (62)  (27)  (83)
Cash and cash equivalents and restricted cash, beginning of period 251,039   235,278   241,421   316,769 
Cash and cash equivalents and restricted cash, end of period$319,011  $220,440  $319,011  $220,440 


Supplemental Disclosure of Non-GAAP Financial Information

  Reconciliation of EBITDA and Adjusted EBITDA 
             
  For the Three Months
Ended September 30,
  For the Nine Months
Ended September 30,
 
  2024  2023  2024  2023 
  (in thousands) 
Net income $9,674  $21,488  $23,143  $33,440 
Interest and other financing expenses, net  23,624   14,579   47,448   48,341 
Income tax expense  8,300   7,993   9,139   10,849 
Depreciation and amortization  33,132   33,713   98,425   94,949 
EBITDA  74,730   77,773   178,155   187,579 
Acquisition and divestiture costs (a)  1,729   1,127   3,919   7,980 
Loss on disposal of assets and impairment charges (b)  1,752   2,265   5,137   5,543 
Share-based compensation expense (c)  2,149   4,614   8,262   13,238 
(Income) loss from equity investment (d)  (29)  14   (79)  77 
Fuel and franchise taxes received in arrears (e)  (862)     (1,427)   
Adjustment to contingent consideration (f)  (706)  952   (998)  (672)
Other (g)  14   558   (957)  726 
Adjusted EBITDA $78,777  $87,303  $192,012  $214,471 
             
Additional information            
Non-cash rent expense (h) $3,634  $3,860  $10,805  $10,418 
             
             
(a) Eliminates costs incurred that are directly attributable to business acquisitions and divestitures (including conversion of retail stores to dealer sites) and salaries of employees whose primary job function is to execute the Company's acquisition and divestiture strategy and facilitate integration of acquired operations. 
             
(b) 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. 
             
(c) Eliminates non-cash share-based compensation expense related to the equity incentive program in place to incentivize, retain, and motivate employees, certain non-employees and members of the Board. 
             
(d) Eliminates the Company's share of (income) loss attributable to its unconsolidated equity investment. 
             
(e) Eliminates the receipt of historical fuel and franchise tax amounts for multiple prior periods. 
             
(f) Eliminates fair value adjustments to the contingent consideration owed to the seller for the 2020 Empire acquisition. 
             
(g) Eliminates other unusual or non-recurring items that the Company does not consider to be meaningful in assessing operating performance. 
             
(h) Non-cash rent expense reflects the extent to which GAAP rent expense recognized exceeded (or was less than) cash rent payments. GAAP rent expense varies depending on the terms of the Company's lease portfolio. For newer leases, rent expense recognized typically exceeds cash rent payments, whereas, for more mature leases, rent expense recognized is typically less than cash rent payments. 


Supplemental Disclosures of Segment Information

Retail Segment

 For the Three Months
Ended September 30,
  For the Nine Months
Ended September 30,
 
 2024  2023  2024  2023 
 (in thousands) 
Revenues:           
Fuel revenue$929,783  $1,086,405  $2,730,583  $2,945,243 
Merchandise revenue 469,616   506,425   1,358,519   1,391,274 
Other revenues, net 16,082   19,750   49,496   57,302 
Total revenues 1,415,481   1,612,580   4,138,598   4,393,819 
Operating expenses:           
Fuel costs 826,765   980,161   2,443,499   2,661,406 
Merchandise costs 315,597   345,699   913,823   952,925 
Site operating expenses 202,097   205,216   602,664   578,496 
Total operating expenses 1,344,459   1,531,076   3,959,986   4,192,827 
Operating income 71,022   81,504   178,612   200,992 
Intercompany charges by GPMP 1 14,072   15,022   40,920   42,149 
Operating income, as adjusted$85,094  $96,526  $219,532  $243,141 
            
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 Retail Segment that do not have (or have only partial) comparable information for any of the prior periods.

 For the Three Months Ended
September 30, 2024
  For the Nine Months Ended
September 30, 2024
 
 Speedy's 1  SpeedyQ 2  Total  Speedy's 1  SpeedyQ 2  Total 
 (in thousands) 
Date of Acquisition:Aug 15, 2023  Apr 9, 2024     Aug 15, 2023  Apr 9, 2024    
Revenues:                 
Fuel revenue$4,894  $14,222  $19,116  $14,248  $27,578  $41,826 
Merchandise revenue 2,668   7,512   10,180   7,577   14,250   21,827 
Other revenues, net 50   271   321   156   498   654 
Total revenues 7,612   22,005   29,617   21,981   42,326   64,307 
Operating expenses:                 
Fuel costs 4,400   12,466   16,866   12,873   24,280   37,153 
Merchandise costs 1,713   5,363   7,076   4,806   10,236   15,042 
Site operating expenses 1,195   3,329   4,524   3,307   6,387   9,694 
Total operating expenses 7,308   21,158   28,466   20,986   40,903   61,889 
Operating income 304   847   1,151  $995  $1,423  $2,418 
Intercompany charges by GPMP 3 79   212   291   229   405   634 
Operating income, as adjusted$383  $1,059  $1,442  $1,224  $1,828  $3,052 
Fuel gallons sold 1,590   4,240   5,830   4,593   8,097   12,690 
Fuel contribution 4$573  $1,968  $2,541  $1,604  $3,703  $5,307 
Merchandise contribution 5$955  $2,149  $3,104  $2,771  $4,014  $6,785 
Merchandise margin 6 35.8%  28.6%     36.6%  28.2%   
                  
1 Acquisition of seven Speedy's retail stores. 
                  
2 Acquisition of 21 SpeedyQ retail stores. 
                  
3 Represents the estimated fixed margin paid to GPMP for the cost of fuel. 
                  
4 Calculated as fuel revenue less fuel costs; excludes the estimated fixed margin paid to GPMP for the cost of fuel. 
                  
5 Calculated as merchandise revenue less merchandise costs. 
                  
6 Calculated as merchandise contribution divided by merchandise revenue. 


Wholesale Segment

 For the Three Months
Ended September 30,
  For the Nine Months
Ended September 30,
 
 2024  2023  2024  2023 
 (in thousands) 
Revenues:           
Fuel revenue$720,646  $843,891  $2,147,853  $2,339,878 
Other revenues, net 6,751   6,265   20,459   18,866 
Total revenues 727,397   850,156   2,168,312   2,358,744 
Operating expenses:           
Fuel costs 709,408   830,121   2,115,367   2,305,098 
Site operating expenses 9,817   10,009   28,682   29,303 
Total operating expenses 719,225   840,130   2,144,049   2,334,401 
Operating income 8,172  $10,026  $24,263  $24,343 
Intercompany charges by GPMP 1 12,122   12,559   35,590   36,528 
Operating income, as adjusted$20,294  $22,585  $59,853  $60,871 
            
1 Represents the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel. 


Fleet Fueling Segment

 For the Three Months
Ended September 30,
  For the Nine Months
Ended September 30,
 
 2024  2023  2024  2023 
 (in thousands) 
Revenues:           
Fuel revenue$125,933  $145,496  $398,266  $394,136 
Other revenues, net 2,335   2,575   7,004   5,202 
Total revenues 128,268   148,071   405,270   399,338 
Operating expenses:           
Fuel costs 111,554   133,037   355,761   356,703 
Site operating expenses 5,876   6,206   18,861   16,039 
Total operating expenses 117,430   139,243   374,622   372,742 
Operating income 10,838   8,828   30,648   26,596 
Intercompany charges by GPMP 1 1,802   1,832   5,452   5,077 
Operating income, as adjusted$12,640  $10,660  $36,100  $31,673 
            
1 Represents the estimated fixed fee paid to GPMP for the cost of fuel. 

FAQ

What was ARKO's net income in Q3 2024?

ARKO (Nasdaq: ARKO) reported net income of $9.7 million in Q3 2024, compared to $21.5 million in Q3 2023.

How many stores did ARKO convert to dealer sites in 2024?

ARKO converted 51 retail stores to dealer sites in the first nine months of 2024 and plans to convert approximately 100 more by the end of Q4 2024.

What is ARKO's Q4 2024 Adjusted EBITDA guidance?

ARKO expects Q4 2024 Adjusted EBITDA to range between $53 million and $63 million, with retail fuel margin assumptions of 38 to 42 cents per gallon.

What was ARKO's merchandise margin rate in Q3 2024?

ARKO's merchandise margin rate for Q3 2024 was 32.8%, compared to 31.7% in the prior year period.

ARKO Corp.

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815.03M
115.77M
29.65%
62.04%
2.79%
Specialty Retail
Retail-convenience Stores
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United States of America
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