ARKO Corp. Reports Third Quarter 2024 Results
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.
- 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
- 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
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
Consumer behavior trends are significantly impacting ARKO's performance, with same-store merchandise sales declining by
The Q4 2024 guidance of
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 to31.7% 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
For the third quarter of 2024, retail fuel contribution decreased
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
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
Site Operating Expenses
For the quarter ended September 30, 2024, convenience store operating expenses decreased
Liquidity and Capital Expenditures
As of September 30, 2024, the Company’s total liquidity was approximately
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
There was approximately
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 Segment | 2024 | 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 1 | 2024 | 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 Segment | 2024 | 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
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
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?
How many stores did ARKO convert to dealer sites in 2024?
What is ARKO's Q4 2024 Adjusted EBITDA guidance?