RICHMOND, Va., May 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 first quarter ended March 31, 2024.
First Quarter 2024 Key Highlights (vs. Year-Ago Quarter)1,2
- Net loss for the quarter was $0.6 million compared to $2.5 million.
- Adjusted EBITDA for the quarter was $36.6 million compared to $47.5 million, with the variance driven by lower fuel contribution, regulatory state-wide elimination of Virginia gaming income, and increases in same store operating expenses.
- Merchandise revenue increased 3.6% to $414.7 million.
- Merchandise contribution increased by 9.7% to $134.9 million. Merchandise margin expanded approximately 180 basis points to 32.5%, supported by key marketing and merchandising initiatives.
- Retail fuel contribution increased 5.5% to $92.9 million, with margin increasing to 36.4 cents per gallon from 35.4. Retail same store fuel gallons sold decreased 6.7% compared to a decrease in national OPIS average same-station fuel gallon volume of approximately 5.9%.
Other Key Highlights
- As part of the Company’s focus on accelerating organic growth, it is in the process of developing a multi-year transformation plan, including the following elements:
- More aggressive and targeted capital allocation toward strategic sub-segments of its retail stores to drive traffic and improve profitability.
- Continued development and execution of a pilot program to improve customer experience and value proposition, in partnership with a nationally renowned consulting firm, with plans to expand refined offering across larger store network.
- Fully leveraging the Company’s unique, multi-segment operating model through more active conversion of retail stores to dealer sites within its wholesale segment to improve profitability.
- Additional details will be provided in further investor communications and will be detailed in full at the Company’s investor day that will take place later this year.
- Continuation of the Company’s enhanced food program rollout, including its January 2024 new pizza program launch and the upcoming re-launch of its hot dog and roller grill program anchored by Nathan’s Famous as its new supplier of quality, 100% all beef hot dogs.
- ARKO’s Board of Directors (“Board”) approved the expansion of the Company’s stock repurchase program from $100 million to $125 million.
- The Board declared a quarterly dividend of $0.03 per share of common stock to be paid on May 31, 2024 to stockholders of record as of May 20, 2024.
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).
“Our first quarter results reflect our ongoing efforts to navigate the current macroeconomic environment, while aggressively positioning ARKO for future organic growth and improved profitability,” said Arie Kotler, Chairman, President and Chief Executive Officer of ARKO. “Over the past decade, we have gained significant scale through acquisitions and believe there is meaningful value embedded within our network of retail stores. We have a strong balance sheet and substantial available liquidity, which we plan to use to selectively and methodically increase our investments in our retail store base to drive traffic and improve profitability."
Mr. Kotler continued: “We firmly believe our current valuation does not fully reflect the underlying value of our business, which has grown to become one of the largest convenience store operators in the United States and a Fortune 500 company. Given this disconnect, I am pleased to announce that the Board has approved an expansion of our share repurchase program to $125 million, which we believe will support long-term value creation for our valued stockholders.”
First Quarter 2024 Segment Highlights
Retail
| For the Three Months Ended March 31, | |||||||
| 2024 | 2023 | ||||||
| (in thousands) | |||||||
| Fuel gallons sold | 255,464 | 248,906 | |||||
| Same store fuel gallons sold decrease (%)1 | (6.7 | %) | (5.8 | %) | |||
| Fuel contribution2 | $ | 92,933 | $ | 88,096 | |||
| Fuel margin, cents per gallon3 | 36.4 | 35.4 | |||||
| Same store fuel contribution1,2 | $ | 82,048 | $ | 84,832 | |||
| Same store merchandise sales (decrease) increase (%)1 | (4.1 | %) | 3.8 | % | |||
| Same store merchandise sales excluding cigarettes (decrease)increase (%)1 | (3.0 | %) | 7.6 | % | |||
| Merchandise revenue | $ | 414,655 | $ | 400,408 | |||
| Merchandise contribution4 | $ | 134,918 | $ | 122,965 | |||
| Merchandise margin5 | 32.5 | % | 30.7 | % | |||
| Same store merchandise contribution1,4 | $ | 118,676 | $ | 117,814 | |||
| Same store site operating expenses1 | $ | 172,619 | $ | 167,112 | |||
| 1Same 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 toUse of Non-GAAP Measuresbelow for discussion of this measure. | |||||||
| 2Calculated as fuel revenue less fuel costs; excludes the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel. | |||||||
| 3Calculated as fuel contribution divided by fuel gallons sold. | |||||||
| 4Calculated as merchandise revenue less merchandise costs. | |||||||
| 5Calculated as merchandise contribution divided by merchandise revenue. | |||||||
Same store merchandise sales, excluding cigarettes, decreased 3.0% for the first quarter of 2024 compared to the first quarter of 2023. Same store merchandise sales decreased 4.1% for the first quarter of 2024 compared to the prior year period.
Total merchandise contribution for the first quarter of 2024 increased $12.0 million, or 9.7%, compared to the first quarter of 2023, due to $11.3 million of incremental merchandise contribution from acquisitions closed in 2023, as well as an increase in merchandise contribution at same stores of approximately $0.9 million.
Merchandise contribution at same stores increased in the first quarter of 2024 primarily due to higher contribution from other tobacco products and franchises partially offset by lower contribution from the Company’s core destination categories. Merchandise margin increased 180 basis points to 32.5% for the first quarter of 2024, supported by key marketing and merchandising initiatives.
For the first quarter of 2024, retail fuel contribution increased $4.8 million to $92.9 million compared to the prior year period, with resilient fuel margin capture of 36.4 cents per gallon, an increase of 1.0 cent per gallon for the first quarter of 2024 as compared to the first quarter of 2023. Same store fuel contribution was $82.0 million for the first quarter of 2024, compared to $84.8 million for the prior year quarter. This decrease in same store fuel contribution was offset by approximately $7.8 million of incremental fuel contribution from acquisitions closed in 2023.
Wholesale
| For the Three Months Ended March 31, | |||||||
| 2024 | 2023 | ||||||
| (in thousands) | |||||||
| Fuel gallons sold – fuel supply locations | 186,731 | 182,427 | |||||
| Fuel gallons sold – consignment agent locations | 37,504 | 37,962 | |||||
| Fuel contribution1– fuel supply locations | $ | 11,562 | $ | 11,156 | |||
| Fuel contribution1– consignment locations | $ | 9,168 | $ | 10,039 | |||
| Fuel margin, cents per gallon2– fuel supply locations | 6.2 | 6.1 | |||||
| Fuel margin, cents per gallon2– consignment agent locations | 24.4 | 26.4 | |||||
| 1Calculated as fuel revenue less fuel costs; excludes the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel. | |||||||
| 2Calculated as fuel contribution divided by fuel gallons sold. | |||||||
In wholesale, total fuel contribution was approximately $20.7 million for the first quarter of 2024. Fuel contribution from fuel supply locations increased by $0.4 million for the quarter compared to the prior year period, and fuel margin increased, primarily due to incremental contribution from acquisitions closed in 2023, which was partially offset by decreased prompt pay discounts related to lower fuel costs and lower volumes at comparable wholesale sites.
Fuel contribution from consignment agent locations decreased by $0.9 million for the first quarter of 2024 compared to the prior year period. Fuel margin also decreased for the quarter ended March 31, 2024 compared to the prior year period, primarily due to lower rack-to-retail margins and decreased prompt pay discounts related to lower fuel costs, which was partially offset by the incremental contribution from acquisitions closed in 2023.
Fleet Fueling
| For the Three Months Ended March 31, | |||||||
| 2024 | 2023 | ||||||
| (in thousands) | |||||||
| Fuel gallons sold – proprietary cardlock locations | 33,449 | 31,016 | |||||
| Fuel gallons sold – third-party cardlock locations | 3,199 | 1,610 | |||||
| Fuel contribution1– proprietary cardlock locations | $ | 13,669 | $ | 13,813 | |||
| Fuel contribution1– third-party cardlock locations | $ | 247 | $ | 22 | |||
| Fuel margin, cents per gallon2– proprietary cardlock locations | 40.9 | 44.5 | |||||
| Fuel margin, cents per gallon2– third-party cardlock locations | 7.7 | 1.3 | |||||
| 1Calculated as fuel revenue less fuel costs; excludes the estimated fixed fee paid to GPMP for the cost of fuel. | |||||||
| 2Calculated as fuel contribution divided by fuel gallons sold. | |||||||
Fuel contribution increased $0.1 million to approximately $13.9 million for the first quarter of 2024 compared to the prior year period. At proprietary cardlocks, fuel margin decreased by 3.6 cents per gallon as compared to the first quarter of 2023, when diesel margins were at significantly elevated levels. At third-party cardlock locations, fuel margin per gallon increased by 6.4 cents per gallon for the first quarter of 2024 compared to the first 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 March 31, 2024, convenience store operating expenses increased $22.5 million, or 12.8% as compared to the prior year period, primarily due to $18.5 million of incremental expenses related to acquisitions closed in 2023. Same store expenses were up $5.5 million from the prior year period, or 3.3%, with the increase related to hourly wage rate growth, accelerated repair and maintenance, and elevated worker’s compensation claims related to first quarter events. 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 March 31, 2024, the Company’s total liquidity was approximately $764 million, consisting of approximately $184 million of cash and cash equivalents and approximately $579 million of availability under lines of credit. Outstanding debt was $885 million, resulting in net debt, excluding lease related financing liabilities, of approximately $700 million. The Company’s program agreement with affiliates of Oak Street, a division of Blue Owl Capital, provides for an aggregate up to $1.5 billion of capacity, almost all of which is currently available to the Company through September 30, 2024. Capital expenditures were approximately $29.2 million for the quarter ended March 31, 2024, including the purchase of certain fee properties, upgrades to fuel dispensers and other investments in stores.
Quarterly Dividend and Share Repurchase Program
The Company’s ability to return cash to its stockholders through its cash dividend program and share repurchase program is consistent with its capital allocation framework and reflects the Company’s confidence in the strength of its cash generation ability and financial position and its belief that the Company’s current share price does not fully reflect the underlying value of its business.
The Board declared a quarterly dividend of $0.03 per share of common stock to be paid on May 31, 2024 to stockholders of record as of May 20, 2024.
During the quarter, the Company repurchased approximately 4.8 million shares of common stock under the repurchase program for approximately $28.3 million, or an average share price of $5.89. Repurchases during the quarter included the repurchase of shares originally issued to the sellers in the Company’s TEG acquisition. There was approximately $0.7 million remaining under the share repurchase program as of March 31, 2024.
Subsequent to quarter-end, the Board approved the expansion of the Company’s share repurchase program to $125 million, up from $100 million.
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 March 31, | |||||||
| Retail Segment | 2024 | 2023 | |||||
| Number of sites at beginning of period | 1,543 | 1,404 | |||||
| Acquired sites | — | 135 | |||||
| Newly opened or reopened sites | 1 | 1 | |||||
| Company-controlled sites converted to consignment or fuel supply locations, net | — | (5 | ) | ||||
| Closed, relocated or divested sites | (4 | ) | (4 | ) | |||
| Number of sites at end of period | 1,540 | 1,531 | |||||
| For the Three Months Ended March 31, | |||||||
| Wholesale Segment1 | 2024 | 2023 | |||||
| Number of sites at beginning of period | 1,825 | 1,674 | |||||
| Acquired sites | — | 192 | |||||
| Newly opened or reopened sites2 | 9 | 7 | |||||
| Consignment or fuel supply locations converted from Company-controlled or fleet fueling sites, net | — | 5 | |||||
| Closed, relocated or divested sites | (18 | ) | (26 | ) | |||
| Number of sites at end of period | 1,816 | 1,852 | |||||
| 1Excludes bulk and spot purchasers. | |||||||
| 2Includes all signed fuel supply agreements irrespective of fuel distribution commencement date. | |||||||
| For the Three Months Ended March 31, | |||||||
| Fleet Fueling Segment | 2024 | 2023 | |||||
| Number of sites at beginning of period | 298 | 183 | |||||
| Closed, relocated or divested sites | (2 | ) | — | ||||
| Number of sites at end of period | 296 | 183 | |||||
Full Year and Second Quarter 2024 Guidance Range
The Company currently expects second quarter 2024 Adjusted EBITDA in the range of $70 to $77 million, with an assumed range of average retail fuel margin from 37 to 40 cents per gallon. The Company is maintaining its full year total Company Adjusted EBITDA range of $250 to $290 million, with an assumed range of average retail fuel margin from 36 to 40 cents per gallon.
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 to discuss these results at 5:00 p.m. Eastern Time on May 7, 2024. Investors and analysts interested in participating in the live call can dial 800-267-6316 or 203-518-9783.
A simultaneous, live webcast will also be available on the Investor Relations section of the Company’s website at www.arkocorp.com/news-events/ir-calendar. The webcast will be archived for 30 days.
About ARKO Corp.
ARKO Corp. (Nasdaq: ARKO) is a Fortune 500 company that owns 100% of GPM Investments, LLC and is one of the largest operators of convenience stores and wholesalers of fuel in the United States. Based in Richmond, VA, we operate A Family of Community Brands that offer delicious, prepared foods, beer, snacks, candy, hot and cold beverages, and multiple popular quick serve restaurant brands. Our high value fas REWARDS® loyalty program offers exclusive savings on merchandise and gas. We operate in four reportable segments: retail, which includes convenience stores selling merchandise and fuel products to retail customers; wholesale, which supplies fuel to independent dealers and consignment agents; GPM Petroleum, which sells and supplies fuel to our retail and wholesale sites and charges a fixed fee, primarily to our fleet fueling sites; and fleet fueling, which includes the operation of proprietary and third-party cardlock locations, and issuance of proprietary fuel cards that provide customers access to a nationwide network of fueling sites. To learn more about GPM stores, visit: www.gpminvestments.com. To learn more about ARKO, visit: www.arkocorp.com.
Forward-Looking Statements
This document includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may address, among other things, the Company’s expected financial and operational results and the related assumptions underlying its expected results. These forward-looking statements are distinguished by use of words such as “anticipate,” “aim,” “believe,” “continue,” “could,” “estimate,” “expect,” “guidance,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and the negative of these terms, and similar references to future periods. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to, among other things, changes in economic, business and market conditions; the Company’s ability to maintain the listing of its common stock and warrants on the Nasdaq Stock Market; changes in its strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; expansion plans and opportunities; changes in the markets in which it competes; changes in applicable laws or regulations, including those relating to environmental matters; market conditions and global and economic factors beyond its control; and the outcome of any known or unknown litigation and regulatory proceedings. Detailed information about these factors and additional important factors can be found in the documents that the Company files with the Securities and Exchange Commission, such as Form 10-K, Form 10-Q and Form 8-K. Forward-looking statements speak only as of the date the statements were made. The Company does not undertake an obligation to update forward-looking information, except to the extent required by applicable law.
Use of Non-GAAP Measures
The Company discloses certain measures on a “same store basis,” which is a non-GAAP measure. Information disclosed on a “same store basis” excludes the results of any store that is not a “same store” for the applicable period. A store is considered a same store beginning in the first quarter in which the store had a full quarter of activity in the prior year. The Company believes that this information provides greater comparability regarding its ongoing operating performance. Neither this measure nor those described below should be considered an alternative to measurements presented in accordance with generally accepted accounting principles in the United States (“GAAP”).
The Company defines EBITDA as net income before net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by excluding the gain or loss on disposal of assets, impairment charges, acquisition costs, other non-cash items, and other unusual or non-recurring charges. Each of Operating Income, as adjusted, EBITDA and Adjusted EBITDA is a non-GAAP financial measure.
At the segment level, the Company defines Operating Income, as adjusted as operating income excluding the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel.
The Company uses EBITDA and Adjusted EBITDA for operational and financial decision-making and believe these measures are useful in evaluating its performance because they eliminate certain items that it does not consider indicators of its operating performance. Additionally, the Company believes Operating Income, as adjusted provides greater comparability regarding its ongoing segment operating performance by eliminating intercompany charges at the segment level. EBITDA and Adjusted EBITDA are also used by many of its investors, securities analysts, and other interested parties in evaluating its operational and financial performance across reporting periods. The Company believes that the presentation of EBITDA and Adjusted EBITDA provides useful information to investors by allowing an understanding of key measures that it uses internally for operational decision-making, budgeting, evaluating acquisition targets, and assessing its operating performance.
Operating Income, as adjusted, EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be considered as a substitute for net income or any other financial measure presented in accordance with GAAP. These measures have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of its results as reported under GAAP. The Company strongly encourages investors to review its financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.
Because non-GAAP financial measures are not standardized, same store measures, Operating Income, as adjusted, EBITDA and Adjusted EBITDA, as defined by the Company, may not be comparable to similarly titled measures reported by other companies. It therefore may not be possible to compare the Company’s use of these non-GAAP financial measures with those used by other companies.
Company Contact
Jordan Mann
ARKO Corp.
investors@gpminvestments.com
Investor Contact
Sean Mansouri, CFA or James Bonifer
Elevate IR
(720) 330-2829
ARKO@elevate-ir.com
| Condensed Consolidated Statements of Operations | |||||||
| For the Three Months Ended March 31, | |||||||
| 2024 | 2023 | ||||||
| (in thousands) | |||||||
| Revenues: | |||||||
| Fuel revenue | $ | 1,631,332 | $ | 1,661,664 | |||
| Merchandise revenue | 414,655 | 400,408 | |||||
| Other revenues, net | 26,467 | 26,424 | |||||
| Total revenues | 2,072,454 | 2,088,496 | |||||
| Operating expenses: | |||||||
| Fuel costs | 1,502,302 | 1,537,882 | |||||
| Merchandise costs | 279,737 | 277,443 | |||||
| Site operating expenses | 218,931 | 192,683 | |||||
| General and administrative expenses | 42,158 | 40,416 | |||||
| Depreciation and amortization | 31,716 | 28,399 | |||||
| Total operating expenses | 2,074,844 | 2,076,823 | |||||
| Other expenses, net | 2,476 | 2,720 | |||||
| Operating (loss) income | (4,866 | ) | 8,953 | ||||
| Interest and other financial income | 22,014 | 7,210 | |||||
| Interest and other financial expenses | (24,471 | ) | (20,812 | ) | |||
| Loss before income taxes | (7,323 | ) | (4,649 | ) | |||
| Income tax benefit | 6,707 | 2,158 | |||||
| Income (loss) from equity investment | 22 | (36 | ) | ||||
| Net loss | $ | (594 | ) | $ | (2,527 | ) | |
| Less: Net income attributable to non-controlling interests | — | 53 | |||||
| Net loss attributable to ARKO Corp. | $ | (594 | ) | $ | (2,580 | ) | |
| Series A redeemable preferred stock dividends | (1,414 | ) | (1,418 | ) | |||
| Net loss attributable to common shareholders | $ | (2,008 | ) | $ | (3,998 | ) | |
| Net loss per share attributable to common shareholders – basic and diluted | $ | (0.02 | ) | $ | (0.03 | ) | |
| Weighted average shares outstanding: | |||||||
| Basic and diluted | 117,275 | 120,253 | |||||
| Condensed Consolidated Balance Sheets | |||||||
| March 31, 2024 | December 31, 2023 | ||||||
| (in thousands) | |||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 184,480 | $ | 218,120 | |||
| Restricted cash | 21,234 | 23,301 | |||||
| Short-term investments | 4,588 | 3,892 | |||||
| Trade receivables, net | 158,712 | 134,735 | |||||
| Inventory | 250,405 | 250,593 | |||||
| Other current assets | 116,144 | 118,472 | |||||
| Total current assets | 735,563 | 749,113 | |||||
| Non-current assets: | |||||||
| Property and equipment, net | 743,394 | 742,610 | |||||
| Right-of-use assets under operating leases | 1,365,200 | 1,384,693 | |||||
| Right-of-use assets under financing leases, net | 160,357 | 162,668 | |||||
| Goodwill | 292,173 | 292,173 | |||||
| Intangible assets, net | 207,416 | 214,552 | |||||
| Equity investment | 2,907 | 2,885 | |||||
| Deferred tax asset | 62,368 | 52,293 | |||||
| Other non-current assets | 51,505 | 49,377 | |||||
| Total assets | $ | 3,620,883 | $ | 3,650,364 | |||
| Liabilities | |||||||
| Current liabilities: | |||||||
| Long-term debt, current portion | $ | 17,297 | $ | 16,792 | |||
| Accounts payable | 233,960 | 213,657 | |||||
| Other current liabilities | 150,569 | 179,536 | |||||
| Operating leases, current portion | 68,403 | 67,053 | |||||
| Financing leases, current portion | 9,392 | 9,186 | |||||
| Total current liabilities | 479,621 | 486,224 | |||||
| Non-current liabilities: | |||||||
| Long-term debt, net | 867,661 | 828,647 | |||||
| Asset retirement obligation | 85,063 | 84,710 | |||||
| Operating leases | 1,378,302 | 1,395,032 | |||||
| Financing leases | 212,174 | 213,032 | |||||
| Other non-current liabilities | 236,822 | 266,602 | |||||
| Total liabilities | 3,259,643 | 3,274,247 | |||||
| Series A redeemable preferred stock | 100,000 | 100,000 | |||||
| Shareholders' equity: | |||||||
| Common stock | 12 | 12 | |||||
| Treasury stock | (106,055 | ) | (74,134 | ) | |||
| Additional paid-in capital | 267,671 | 245,007 | |||||
| Accumulated other comprehensive income | 9,119 | 9,119 | |||||
| Retained earnings | 90,493 | 96,097 | |||||
| Total shareholders' equity | 261,240 | 276,101 | |||||
| Non-controlling interest | — | 16 | |||||
| Total equity | 261,240 | 276,117 | |||||
| Total liabilities, redeemable preferred stock and equity | $ | 3,620,883 | $ | 3,650,364 | |||
| Condensed Consolidated Statements of Cash Flows | |||||||
| For the Three Months Ended March 31, | |||||||
| 2024 | 2023 | ||||||
| (in thousands) | |||||||
| Cash flows from operating activities: | |||||||
| Net loss | $ | (594 | ) | $ | (2,527 | ) | |
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 31,716 | 28,399 | |||||
| Deferred income taxes | (10,075 | ) | (10,230 | ) | |||
| Loss on disposal of assets and impairment charges | 2,664 | 287 | |||||
| Foreign currency loss | 27 | 34 | |||||
| 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 | 664 | 592 | |||||
| Amortization of deferred income | (1,946 | ) | (1,860 | ) | |||
| Accretion of asset retirement obligation | 616 | 491 | |||||
| Non-cash rent | 3,484 | 2,798 | |||||
| Charges to allowance for credit losses | 327 | 283 | |||||
| (Income) loss from equity investment | (22 | ) | 36 | ||||
| Share-based compensation | 3,329 | 4,069 | |||||
| Fair value adjustment of financial assets and liabilities | (10,772 | ) | (4,228 | ) | |||
| Other operating activities, net | 624 | 329 | |||||
| Changes in assets and liabilities: | |||||||
| Increase in trade receivables | (24,304 | ) | (11,182 | ) | |||
| Decrease (increase) in inventory | 188 | (2,845 | ) | ||||
| Decrease in other assets | 5,095 | 3,545 | |||||
| Increase in accounts payable | 21,347 | 5,940 | |||||
| Decrease in other current liabilities | (4,152 | ) | (127 | ) | |||
| (Decrease) increase in asset retirement obligation | (55 | ) | 67 | ||||
| Increase in non-current liabilities | 3,631 | 2,012 | |||||
| Net cash provided by operating activities | 12,755 | 15,883 | |||||
| Cash flows from investing activities: | |||||||
| Purchase of property and equipment | (29,228 | ) | (23,380 | ) | |||
| Proceeds from sale of property and equipment | 2,039 | 208,436 | |||||
| Business acquisitions, net of cash | — | (338,342 | ) | ||||
| Prepayment for acquisition | (1,000 | ) | — | ||||
| Loans to equity investment, net | 14 | — | |||||
| Net cash used in investing activities | (28,175 | ) | (153,286 | ) | |||
| Cash flows from financing activities: | |||||||
| Receipt of long-term debt, net | 41,588 | 55,000 | |||||
| Repayment of debt | (6,635 | ) | (5,592 | ) | |||
| Principal payments on financing leases | (1,135 | ) | (1,418 | ) | |||
| Early settlement of deferred consideration related to business acquisition | (17,155 | ) | — | ||||
| Proceeds from sale-leaseback | — | 51,604 | |||||
| Common stock repurchased | (31,921 | ) | (2,310 | ) | |||
| Dividends paid on common stock | (3,596 | ) | (3,609 | ) | |||
| Dividends paid on redeemable preferred stock | (1,414 | ) | (1,418 | ) | |||
| Net cash (used in) provided by financing activities | (20,268 | ) | 92,257 | ||||
| Net decrease in cash and cash equivalents and restricted cash | (35,688 | ) | (45,146 | ) | |||
| Effect of exchange rate on cash and cash equivalents and restricted cash | (19 | ) | (21 | ) | |||
| Cash and cash equivalents and restricted cash, beginning of period | 241,421 | 316,769 | |||||
| Cash and cash equivalents and restricted cash, end of period | $ | 205,714 | $ | 271,602 | |||
Supplemental Disclosure of Non-GAAP Financial Information
| Reconciliation of EBITDA and Adjusted EBITDA | |||||||
| For the Three Months Ended March 31, | |||||||
| 2024 | 2023 | ||||||
| (in thousands) | |||||||
| Net loss | $ | (594 | ) | $ | (2,527 | ) | |
| Interest and other financing expenses, net | 2,457 | 13,602 | |||||
| Income tax benefit | (6,707 | ) | (2,158 | ) | |||
| Depreciation and amortization | 31,716 | 28,399 | |||||
| EBITDA | 26,872 | 37,316 | |||||
| Non-cash rent expense (a) | 3,484 | 2,798 | |||||
| Acquisition costs (b) | 680 | 3,576 | |||||
| Loss on disposal of assets and impairment charges (c) | 2,664 | 287 | |||||
| Share-based compensation expense (d) | 3,329 | 4,069 | |||||
| (Income) loss from equity investment (e) | (22 | ) | 36 | ||||
| Fuel taxes received in arrears (f) | (565 | ) | — | ||||
| Adjustment to contingent consideration (g) | 18 | (702 | ) | ||||
| Other (h) | 189 | 104 | |||||
| Adjusted EBITDA | $ | 36,649 | $ | 47,484 | |||
| (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 can vary depending on the terms of our lease portfolio, which has been impacted by our recent acquisitions. For newer leases, our rent expense recognized typically exceeds our cash rent payments, whereas, for more mature leases, rent expense recognized is typically less than our cash rent payments. | |||||||
| (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 March 31, | |||||||
| 2024 | 2023 | ||||||
| (in thousands) | |||||||
| Revenues: | |||||||
| Fuel revenue | $ | 824,428 | $ | 843,473 | |||
| Merchandise revenue | 414,655 | 400,408 | |||||
| Other revenues, net | 16,679 | 18,555 | |||||
| Total revenues | 1,255,762 | 1,262,436 | |||||
| Operating expenses: | |||||||
| Fuel costs | 744,241 | 767,808 | |||||
| Merchandise costs | 279,737 | 277,443 | |||||
| Site operating expenses | 198,017 | 175,554 | |||||
| Total operating expenses | 1,221,995 | 1,220,805 | |||||
| Operating income | 33,767 | 41,631 | |||||
| Intercompany charges by GPMP1 | 12,746 | 12,431 | |||||
| Operating income, as adjusted | $ | 46,513 | $ | 54,062 | |||
| 1Represents the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel. | |||||||
The tables below shows financial information and certain key metrics of recent acquisitions in the Retail Segment that do not have (or have only partial) comparable information for the prior period.
| For the Three Months Ended March 31, 2024 | |||||||||||||||
| TEG1 | Uncle's (WTG)2 | Speedy's3 | Total | ||||||||||||
| (in thousands) | |||||||||||||||
| Date of Acquisition: | Mar 1, 2023 | Jun 6, 2023 | Aug 15, 2023 | ||||||||||||
| Revenues: | |||||||||||||||
| Fuel revenue | $ | 80,249 | $ | 19,769 | $ | 4,268 | $ | 104,286 | |||||||
| Merchandise revenue | 34,127 | 9,147 | 2,265 | 45,539 | |||||||||||
| Other revenues, net | 1,293 | 228 | 52 | 1,573 | |||||||||||
| Total revenues | 115,669 | 29,144 | 6,585 | 151,398 | |||||||||||
| Operating expenses: | |||||||||||||||
| Fuel costs | 74,431 | 17,064 | 3,895 | 95,390 | |||||||||||
| Merchandise costs | 22,896 | 5,873 | 1,442 | 30,211 | |||||||||||
| Site operating expenses | 18,112 | 4,690 | 1,190 | 23,992 | |||||||||||
| Total operating expenses | 115,439 | 27,627 | 6,527 | 149,593 | |||||||||||
| Operating income | 230 | 1,517 | 58 | 1,805 | |||||||||||
| Intercompany charges by GPMP4 | 1,281 | 291 | 71 | 1,643 | |||||||||||
| Operating income, as adjusted | $ | 1,511 | $ | 1,808 | $ | 129 | $ | 3,448 | |||||||
| Fuel gallons sold | 25,616 | 5,821 | 1,416 | 32,853 | |||||||||||
| Fuel contribution5 | $ | 7,099 | $ | 2,996 | $ | 444 | $ | 10,539 | |||||||
| Merchandise contribution6 | $ | 11,231 | $ | 3,274 | $ | 823 | $ | 15,328 | |||||||
| Merchandise margin7 | 32.9 | % | 35.8 | % | 36.3 | % | |||||||||
| 1Acquisition from Transit Energy Group and affiliates ("TEG"); includes only the retail stores acquired in the TEG acquisition. | |||||||||||||||
| 2Acquisition from WTG Fuels Holdings, LLC ("WTG"); includes only the retail stores acquired in the WTG acquisition. | |||||||||||||||
| 3Acquisition of seven Speedy's retail stores. | |||||||||||||||
| 4Represents the estimated fixed margin paid to GPMP for the cost of fuel. | |||||||||||||||
| 5Calculated as fuel revenue less fuel costs; excludes the estimated fixed margin paid to GPMP for the cost of fuel. | |||||||||||||||
| 6Calculated as merchandise revenue less merchandise costs. | |||||||||||||||
| 7Calculated as merchandise contribution divided by merchandise revenue. | |||||||||||||||
Wholesale Segment
| For the Three Months Ended March 31, | |||||||
| 2024 | 2023 | ||||||
| (in thousands) | |||||||
| Revenues: | |||||||
| Fuel revenue | $ | 664,514 | $ | 684,848 | |||
| Other revenues, net | 6,858 | 6,491 | |||||
| Total revenues | 671,372 | 691,339 | |||||
| Operating expenses: | |||||||
| Fuel costs | 655,113 | 674,691 | |||||
| Site operating expenses | 9,299 | 9,098 | |||||
| Total operating expenses | 664,412 | 683,789 | |||||
| Operating income | 6,960 | $ | 7,550 | ||||
| Intercompany charges by GPMP1 | 11,329 | 11,038 | |||||
| Operating income, as adjusted | $ | 18,289 | $ | 18,588 | |||
| 1Represents the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel. | |||||||
The tables below shows financial information and certain key metrics of recent acquisitions in the Wholesale Segment that do not have (or have only partial) comparable information for prior period.
| For the Three Months Ended March 31, 2024 | |||||||||||
| TEG1 | WTG2 | Total | |||||||||
| (in thousands) | |||||||||||
| Date of Acquisition: | Mar 1, 2023 | Jun 6, 2023 | |||||||||
| Revenues: | |||||||||||
| Fuel revenue | $ | 80,952 | $ | 3,084 | $ | 84,036 | |||||
| Other revenues, net | 758 | 15 | 773 | ||||||||
| Total revenues | 81,710 | 3,099 | 84,809 | ||||||||
| Operating expenses: | |||||||||||
| Fuel costs | 80,424 | 2,959 | 83,383 | ||||||||
| Site operating expenses | 874 | 68 | 942 | ||||||||
| Total operating expenses | 81,298 | 3,027 | 84,325 | ||||||||
| Operating income | 412 | 72 | 484 | ||||||||
| Intercompany charges by GPMP3 | 1,363 | 44 | 1,407 | ||||||||
| Operating income, as adjusted | $ | 1,775 | $ | 116 | $ | 1,891 | |||||
| Fuel gallons sold | 27,448 | 871 | 28,319 | ||||||||
| 1Includes only the wholesale business acquired in the TEG acquisition. | |||||||||||
| 2Includes only the wholesale business acquired in the WTG acquisition. | |||||||||||
| 3Represents the estimated fixed margin paid to GPMP for the cost of fuel. | |||||||||||
Fleet Fueling Segment
| For the Three Months Ended March 31, | |||||||
| 2024 | 2023 | ||||||
| (in thousands) | |||||||
| Revenues: | |||||||
| Fuel revenue | $ | 132,193 | $ | 127,494 | |||
| Other revenues, net | 2,385 | 951 | |||||
| Total revenues | 134,578 | 128,445 | |||||
| Operating expenses: | |||||||
| Fuel costs | 120,058 | 115,231 | |||||
| Site operating expenses | 6,543 | 4,790 | |||||
| Total operating expenses | 126,601 | 120,021 | |||||
| Operating income | 7,977 | 8,424 | |||||
| Intercompany charges by GPMP1 | 1,781 | 1,572 | |||||
| Operating income, as adjusted | $ | 9,758 | $ | 9,996 | |||
| 1Represents 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 do not have comparable information for the prior period.
| For the Three Months Ended March 31, 2024 | |||
| WTG1 | |||
| (in thousands) | |||
| Date of Acquisition: | Jun 6, 2023 | ||
| Revenues: | |||
| Fuel revenue | $ | 16,235 | |
| Other revenues, net | 1,170 | ||
| Total revenues | 17,405 | ||
| Operating expenses: | |||
| Fuel costs | 14,738 | ||
| Site operating expenses | 1,111 | ||
| Total operating expenses | 15,849 | ||
| Operating income | 1,556 | ||
| Intercompany charges by GPMP2 | 232 | ||
| Operating income, as adjusted | $ | 1,788 | |
| Fuel gallons sold | 4,556 | ||
| 1Includes only the fleet fueling business acquired in the WTG acquisition. | |||
| 2Represents the estimated fixed fee paid to GPMP for the cost of fuel. | |||
