Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries ARKO Corp. Reports Fourth Quarter and Full Year 2023 Results By: ARKO CORP. via GlobeNewswire February 27, 2024 at 17:00 PM EST RICHMOND, Va., Feb. 27, 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 quarter and full year ended December 31, 2023. Fourth Quarter and Full Year 2023 Key Highlights1,2 Net income for the quarter was $1.1 million, compared to $12.9 million for the prior year quarter. For the year, net income was $34.6 million, compared to $72.0 million for the prior year.Adjusted EBITDA for the quarter was $65.5 million, compared to $72.4 million for the prior year quarter, primarily due to reduced fuel contribution at same stores, with retail cents per gallon (“CPG”) of 39.2 in the fourth quarter of 2023 compared to retail CPG of 41.4 in the fourth quarter of 2022. For the year, adjusted EBITDA was $290.4 million, compared to $301.1 million for the prior year, primarily due to reduced fuel contribution at same stores, with retail CPG of 38.8 in 2023 compared to retail CPG of 41.4 in 2022.Merchandise revenue for the fourth quarter of 2023 was $446.7 million, an increase of $43.6 million compared to the prior year period. Merchandise revenue for 2023 was $1.84 billion, an increase of $190.4 million compared to 2022.Merchandise contribution increased by $24.0 million for the fourth quarter of 2023, or 19.6%, and increased by $83.9 million for the year ended December 31, 2023, or 16.7%, as compared to the respective prior year periods. Merchandise margin expanded, increasing approximately 240 basis points to 32.9% for the quarter and 140 basis points for the full year, primarily due to execution of key marketing and merchandising initiatives.Retail fuel contribution increased 4.8% for the fourth quarter of 2023 to $109.3 million and increased 4.6% for the full year to $435.3 million. Retail same store fuel gallons sold decreased 7.5% for the fourth quarter of 2023 and 5.3% for the year. 1 See Use of Non-GAAP Measures below.2 All references to fuel contribution and fuel margin per gallon are excluding 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 Completed five acquisitions in the last eighteen months, with the largest one in March 2023.Ended 2023 with more than two million enrolled loyalty members.In January 2024, the Company launched a new pizza program, the culmination of over one year of development, which is currently offered at more than 1,000 of the Company’s stores as take-and-bake from the freezer, offering a great quality whole pizza at a value price for enrolled loyalty members, and as a fresh, hot pizza, either whole or by the slice, at approximately 225 of those stores.ARKO’s Board of Directors declared a quarterly dividend of $0.03 per share of common stock to be paid on March 21, 2024, to stockholders of record as of March 11, 2024.Welcomed Robb Giammatteo to the Company to serve as Executive Vice President and Chief Financial Officer, recognizing his experience in relevant financial and transformation roles in retail and convenience. “Reflecting on our first three years as a public company, we have significantly broadened our geographic footprint through acquisitions, and have delivered approximately $166 million in net income and approximately $850 million in cumulative adjusted EBITDA over this period,” said Arie Kotler, Chairman, President and Chief Executive Officer of ARKO. “For the full year 2023, we delivered $290.4 million in adjusted EBITDA, holding performance within 3.5% of 2022, which was a record retail CPG year of over 41 cents per gallon, in the context of a 3.4% decline in national OPIS fuel gallon demand, with a more pronounced decline in the fourth quarter. As we move into 2024, we are focusing more of our management’s time on driving organic growth and unlocking the value of our retail segment, and I believe we have many levers to pull. Our team is focused on improving the experience of our customers and the productivity of our stores, and later this year, we are planning to host an investor day during which we will share with you our multi-year roadmap and specific milestones to enhance organic performance and drive shareholder value. We continue to execute on our three key merchandise and marketing pillars, including our fas REWARDS loyalty program, which we designed to enhance our relationship with our customers and provide them with extraordinary value, focus on our core destination categories and our food service offering." Fourth Quarter and Full Year 2023 Segment Highlights Retail For the Three MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Fuel gallons sold 279,035 251,658 1,122,321 1,006,469 Same store fuel gallons sold decrease (%) 1 (7.5%) (8.3%) (5.3%) (8.1%)Fuel contribution 2$109,336 $104,304 $435,322 $416,228 Fuel margin, cents per gallon 3 39.2 41.4 38.8 41.4 Same store fuel contribution 1,2$86,183 $99,778 $360,141 $406,262 Same store merchandise sales (decrease) increase (%) 1 (2.8%) 1.2% 0.4% (1.0%)Same store merchandise sales excluding cigarettes (decrease) increase (%) 1 (1.8%) 4.3% 2.5% 2.6%Merchandise revenue$446,727 $403,084 $1,838,001 $1,647,642 Merchandise contribution 4$146,773 $122,771 $585,122 $501,219 Merchandise margin 5 32.9% 30.5% 31.8% 30.4%Same store merchandise contribution 1,4$125,050 $120,346 $513,112 $492,537 Same store store operating expenses 1$164,925 $162,019 $660,082 $647,396 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. Same store merchandise sales excluding cigarettes decreased 1.8% for the fourth quarter of 2023 compared to the fourth quarter of 2022, reflecting macroeconomic headwinds. Same store merchandise sales decreased 2.8% for the fourth quarter of 2023 compared to the prior year period. Penetration of the Company’s core destination categories (packaged beverages, candy, salty snacks, packaged sweet snacks, alternative snacks and beer) as a percent of same store merchandise sales increased 90 basis points for the quarter. Total merchandise contribution for the fourth quarter of 2023 increased $24.0 million, or 19.6%, compared to the fourth quarter of 2022, due to $19.7 million in incremental merchandise contribution from the businesses acquired in 2023, and the acquisition of Pride (the “Pride Acquisition”), and an increase in merchandise contribution at same stores of approximately $4.7 million. Merchandise margin increased 240 basis points, to 32.9% for the fourth quarter of 2023 from 30.5% in the fourth quarter of 2022, primarily due to execution of key marketing and merchandising initiatives. Same store merchandise sales excluding cigarettes increased 2.5% for the year ended December 31, 2023 compared to 2022. Same store merchandise sales increased 0.4% for 2023 compared to the prior year. Total merchandise contribution for 2023 increased $83.9 million or 16.7%, compared to 2022, due to $68.6 million in incremental merchandise contribution from the businesses acquired in 2023, and the Pride Acquisition, and an increase in merchandise contribution at same stores of approximately $20.6 million. Merchandise margin increased 140 basis points, to 31.8% for the year ended December 31, 2023 from 30.4% in 2022, primarily due to execution of key marketing and merchandising initiatives. For the fourth quarter of 2023, retail fuel contribution increased $5.0 million to $109.3 million compared to the prior year period, with resilient fuel margin capture of 39.2 cents per gallon, a decrease of 2.2 cents per gallon for the fourth quarter of 2023 as compared to the fourth quarter of 2022. Same store fuel contribution was $86.2 million for the fourth quarter of 2023, compared to $99.8 million for the prior year quarter. This decrease in same store fuel contribution was fully offset by approximately $19.3 million of incremental fuel contribution from recent acquisitions. For the year ended December 31, 2023, retail fuel contribution increased $19.1 million to $435.3 million compared to the prior year, with fuel margin of 38.8 cents per gallon, a decrease of 2.6 cents per gallon compared to the prior year. Same store fuel contribution was $360.1 million for the year ended December 31, 2023, compared to $406.3 million for the prior year. This decrease in same store fuel contribution was fully offset by approximately $70.7 million of incremental fuel contribution from recent acquisitions. Wholesale For the Three MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Fuel gallons sold – fuel supply locations 199,861 182,871 801,260 746,513 Fuel gallons sold – consignment agent locations 40,144 40,921 168,005 156,059 Fuel contribution1 – fuel supply locations$11,499 $11,379 $48,396 $51,065 Fuel contribution1 – consignment agent locations$10,101 $10,966 $44,512 $47,092 Fuel margin, cents per gallon2 – fuel supply locations 5.8 6.2 6.0 6.8 Fuel margin, cents per gallon2 – consignment agent locations 25.2 26.8 26.5 30.2 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 $21.6 million for the fourth quarter of 2023 and $92.9 million for the year. Fuel contribution from fuel supply locations increased by $0.1 million for the quarter and decreased by $2.7 million for the full year compared to the prior year periods, while fuel margin decreased, primarily due to decreased prompt pay discounts related to lower fuel costs and lower volumes at wholesale sites not part of the 2023 and 2022 acquisitions, which was partially offset by the incremental contribution from recent acquisitions. Fuel contribution from consignment agent locations decreased by $0.9 million for the fourth quarter of 2023 and $2.6 million for the full year compared to the prior year periods. Fuel margin also decreased for the quarter and for the year ended December 31, 2023, compared to the prior year periods, 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 recent acquisitions. Fleet Fueling The fleet fueling segment commenced operations on July 22, 2022; therefore, the year ended December 31, 2022 does not reflect the operations of this segment for the entirety of such period, which affects period-over-period comparability. For the Three MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Fuel gallons sold – proprietary cardlock locations 33,285 31,040 130,995 57,104 Fuel gallons sold – third-party cardlock locations 3,201 1,585 9,832 2,882 Fuel contribution1 – proprietary cardlock locations$13,146 $16,742 $54,685 $27,632 Fuel contribution1 – third-party cardlock locations$245 $124 $1,215 $189 Fuel margin, cents per gallon2 – proprietary cardlock locations 39.5 53.9 41.7 48.4 Fuel margin, cents per gallon2 – third-party cardlock locations 7.6 7.8 12.4 6.5 1 Calculated as fuel revenue less fuel costs; excludes the estimated fixed fee paid to GPMP for the cost of fuel. 2 Calculated as fuel contribution divided by fuel gallons sold. Fuel contribution was approximately $13.4 million for the fourth quarter of 2023 and $55.9 million for the year, a decrease of $3.5 million for the quarter and an increase of $28.1 million for the year, compared to the prior year periods reflecting a full year of operations from the Quarles Acquisition, which closed in July 2022, as compared to a partial year of operations in the prior year, and the WTG Acquisition, which closed in June 2023. At proprietary cardlocks, fuel margin per gallon decreased as compared to 2022, which year was impacted by historically high rack-to-retail margins and fuel price volatility. Store Operating Expenses For the fourth quarter of 2023, convenience store operating expenses increased $31.0 million, or 18.2% as compared to the prior year period, primarily due to $31.5 million of incremental expenses related to recent acquisitions. Same store expenses were up less than 2%, with increases in repairs and maintenance expenses, rent and personnel expenses partially offset by lower credit card fees. At same stores, personnel expenses for the fourth quarter of 2023 were up $0.7 million from the prior year period, or 1.1%, with wage increases partially offset by reduced overtime and incentives. The total increase in store operating expenses was partially offset by underperforming retail stores that the Company closed or converted to dealer locations. For the year ended December 31, 2023, convenience store operating expenses increased by $109.6 million, or 16.4%, as compared to the prior year, primarily due to $110.7 million of incremental expenses related to recent acquisitions and an increase in expenses at same stores, including approximately $11.1 million, or 4.1%, of higher personnel costs. The increase in store operating expenses was partially offset by lower credit card fees at same stores and underperforming retail stores that the Company closed or converted to dealer locations. Long-Term Growth Strategy Updates Acquisitions and M&A The Company continued to execute its long-term growth strategy, closing three transactions in 2023, marking 25 total acquisitions since 2013. In December 2022, the Company completed its acquisition of Pride, which operated 31 Pride retail convenience stores at closing and had one store under construction that is now opened. Since closing the Pride Acquisition, the Company has earned back in Adjusted EBITDA approximately 65% of its consideration paid for that transaction. Liquidity and Capital Expenditures As of December 31, 2023, the Company’s total liquidity was approximately $831 million, consisting of approximately $218 million of cash and cash equivalents and approximately $613 million of availability under lines of credit. Outstanding debt was $845 million, resulting in net debt, excluding lease related financing liabilities, of approximately $627 million. On May 2, 2023, the Company amended its program agreement (the “Program Agreement”) with affiliates of Oak Street, a division of Blue Owl Capital (“Oak Street”). This amendment extended the term of the Program Agreement and 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 $111.2 million for the year ended December 31, 2023, 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. The Company’s Board of Directors declared a quarterly dividend of $0.03 per share of common stock to be paid on March 21, 2024 to stockholders of record as of March 11, 2024. During the quarter, the Company repurchased approximately 1.1 million shares of common stock under the repurchase program for approximately $8.5 million, or an average share price of $7.49. There was approximately $29 million remaining under the expanded share repurchase program as of December 31, 2023. 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 MonthsEnded December 31, For the YearEnded December 31,Retail Segment2023 2022 2023 2022Number of sites at beginning of period 1,552 1,383 1,404 1,406 Acquired sites — 32 166 32 Newly opened or reopened sites — — 4 — Company-controlled sites converted to consignment or fuel supply locations, net (3) (8) (16) (17)Closed, relocated or divested sites (6) (3) (15) (17)Number of sites at end of period 1,543 1,404 1,543 1,404 For the Three MonthsEnded December 31, For the YearEnded December 31,Wholesale Segment 12023 2022 2023 2022Number of sites at beginning of period 1,825 1,670 1,674 1,628 Acquired sites — — 190 46 Newly opened or reopened sites 2 25 14 83 74 Consignment or fuel supply locations converted from Company-controlled or fleet fueling sites, net 2 8 15 17 Closed, relocated or divested sites (27) (18) (137) (91)Number of sites at end of period 1,825 1,674 1,825 1,674 1 Excludes bulk and spot purchasers. 2 Includes all signed fuel supply agreements irrespective of fuel distribution commencement date. For the Three MonthsEnded December 31, For the YearEnded December 31,Fleet Fueling Segment2023 2022 2023 2022Number of sites at beginning of period 295 183 183 — Acquired sites — — 111 184 Newly opened or reopened sites 2 — 6 — Fleet fueling locations converted from fuel supply locations, net 1 — 1 — Closed, relocated or divested sites — — (3) (1)Number of sites at end of period 298 183 298 183 2024 Full Year Guidance Range The following table provides the Company’s guidance for the year ending December 31, 2024, including a reconciliation of net income to EBITDA and Adjusted EBITDA: For the Year Ending December 31, 2024 (E) Low High (in millions) Net income$2 $29 Interest and other financing expenses, net 1 89 89 Income tax expense 2 1 10 Depreciation and amortization 134 134 EBITDA 226 262 Non-cash rent expense 3 13 13 Share-based compensation expense 4 11 15 Adjusted EBITDA$250 $290 1 Excludes fair value adjustments of financial assets and liabilities. For variable rate debt, assumes that SOFR remains at 5.34% 2 Assumes an effective tax rate of 25% 3 Eliminates the expected non-cash portion of rent, which reflects the extent to which our GAAP rent expense recognized exceeds (or is less than) our cash rent payments. The GAAP rent expense adjustment varies 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. 4 Eliminates expected 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 our Board. The 2024 full year earnings guidance assumes a range of average retail fuel margin from 36 CPG to 40 CPG. Based on quarter-to-date trends, the Company expects its first quarter to contribute less to the full year Adjusted EBITDA than in prior years, representing 12% to 14% of the 2024 full year rather than the approximately 16.5% historical contribution to the full year. The Company’s full year guidance framework anticipates current trends to normalize coming out of the first quarter of 2024. The first quarter guidance corresponds to a range of average retail fuel margin from 35 CPG to 39 CPG. Conference Call and Webcast Details The Company will host a conference call to discuss these results at 10:00 a.m. Eastern Time on February 28, 2024. Investors and analysts interested in participating in the live call can dial 877-605-1792 or 201-689-8728. A simultaneous, live webcast will also be available on the Investor Relations section of the Company’s website at https://www.arkocorp.com/news-events/ir-calendar. The webcast will be archived for 30 days. About ARKO Corp. ARKO Corp. (Nasdaq: ARKO) is a Fortune 500 company that owns 100% of GPM Investments, LLC and is one of the largest operators of convenience stores and wholesalers of fuel in the United States. Based in Richmond, VA, we operate A Family of Community Brands that offer delicious, prepared foods, beer, snacks, candy, hot and cold beverages, and multiple popular quick serve restaurant brands. Our high value fas REWARDS® loyalty program offers exclusive savings on merchandise and gas. We operate in four reportable segments: retail, which includes convenience stores selling merchandise and fuel products to retail customers; wholesale, which supplies fuel to independent dealers and consignment agents; GPM Petroleum, which sells and supplies fuel to our retail and wholesale sites and charges a fixed fee, primarily to our fleet fueling sites; and fleet fueling, which includes the operation of proprietary and third-party cardlock locations, and issuance of proprietary fuel cards that provide customers access to a nationwide network of fueling sites. To learn more about GPM stores, visit: www.gpminvestments.com. To learn more about ARKO, visit: www.arkocorp.com. Forward-Looking Statements This document includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may address, among other things, the Company’s expected financial and operational results and the related assumptions underlying its expected results. These forward-looking statements are distinguished by use of words such as “anticipate,” “aim,” “believe,” “continue,” “could,” “estimate,” “expect,” “guidance,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and the negative of these terms, and similar references to future periods. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to, among other things, changes in economic, business and market conditions; the Company’s ability to maintain the listing of its common stock and warrants on the Nasdaq Stock Market; changes in its strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; expansion plans and opportunities; changes in the markets in which it competes; changes in applicable laws or regulations, including those relating to environmental matters; market conditions and global and economic factors beyond its control; and the outcome of any known or unknown litigation and regulatory proceedings. Detailed information about these factors and additional important factors can be found in the documents that the Company files with the Securities and Exchange Commission, such as Form 10-K, Form 10-Q and Form 8-K. Forward-looking statements speak only as of the date the statements were made. The Company does not undertake an obligation to update forward-looking information, except to the extent required by applicable law. Use of Non-GAAP Measures The Company discloses certain measures on a “same store basis,” which is a non-GAAP measure. Information disclosed on a “same store basis” excludes the results of any store that is not a “same store” for the applicable period. A store is considered a same store beginning in the first quarter in which the store had a full quarter of activity in the prior year. The Company believes that this information provides greater comparability regarding its ongoing operating performance. Neither this measure nor those described below should be considered an alternative to measurements presented in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company defines EBITDA as net income before net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by excluding the gain or loss on disposal of assets, impairment charges, acquisition costs, 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. Consolidated Statements of Operations For the Three Months Ended December 31, For the Year Ended December 31, 2023 2022 2023 2022 (in thousands) Revenues: Fuel revenue$1,759,216 $1,752,136 $7,464,372 $7,401,090 Merchandise revenue 446,727 403,084 1,838,001 1,647,642 Other revenues, net 27,217 24,858 110,358 94,067 Total revenues 2,233,160 2,180,078 9,412,731 9,142,799 Operating expenses: Fuel costs 1,613,230 1,606,546 6,876,084 6,856,651 Merchandise costs 299,954 280,313 1,252,879 1,146,423 Store operating expenses 222,751 186,977 860,134 721,174 General and administrative expenses 38,102 39,274 165,294 139,969 Depreciation and amortization 32,648 26,702 127,597 101,752 Total operating expenses 2,206,685 2,139,812 9,281,988 8,965,969 Other expenses, net 1,168 6,547 12,729 9,816 Operating income 25,307 33,719 118,014 167,014 Interest and other financial income 2,197 2,721 20,273 3,178 Interest and other financial expenses (25,099) (19,016) (91,516) (62,583)Income before income taxes 2,405 17,424 46,771 107,609 Income tax expense (1,317) (4,497) (12,166) (35,557)Income (loss) from equity investment 38 (67) (39) (74)Net income$1,126 $12,860 $34,566 $71,978 Less: Net income attributable to non-controlling interests 48 49 197 231 Net income attributable to ARKO Corp.$1,078 $12,811 $34,369 $71,747 Series A redeemable preferred stock dividends (1,449) (1,449) (5,750) (5,750)Net (loss) income attributable to common shareholders$(371) $11,362 $28,619 $65,997 Net (loss) income per share attributable to common shareholders - basic$(0.00) $0.09 $0.24 $0.54 Net (loss) income per share attributable to common shareholders - diluted$(0.00) $0.09 $0.24 $0.53 Weighted average shares outstanding: Basic 116,638 120,074 118,782 121,476 Diluted 116,638 121,508 119,605 123,224 Consolidated Balance Sheets December 31, 2023 December 31, 2022 (in thousands) Assets Current assets: Cash and cash equivalents$218,120 $298,529 Restricted cash 23,301 18,240 Short-term investments 3,892 2,400 Trade receivables, net 134,735 118,140 Inventory 250,593 221,951 Other current assets 118,472 87,873 Total current assets 749,113 747,133 Non-current assets: Property and equipment, net 742,610 645,809 Right-of-use assets under operating leases 1,384,693 1,203,188 Right-of-use assets under financing leases, net 162,668 182,113 Goodwill 292,173 217,297 Intangible assets, net 214,552 197,123 Equity investment 2,885 2,924 Deferred tax asset 52,293 22,728 Other non-current assets 49,377 36,855 Total assets$3,650,364 $3,255,170 Liabilities Current liabilities: Long-term debt, current portion$16,792 $11,944 Accounts payable 213,657 217,370 Other current liabilities 179,536 154,097 Operating leases, current portion 67,053 57,563 Financing leases, current portion 9,186 5,457 Total current liabilities 486,224 446,431 Non-current liabilities: Long-term debt, net 828,647 740,043 Asset retirement obligation 84,710 64,909 Operating leases 1,395,032 1,218,045 Financing leases 213,032 225,907 Other non-current liabilities 266,602 178,945 Total liabilities 3,274,247 2,874,280 Series A redeemable preferred stock 100,000 100,000 Shareholders' equity: Common stock 12 12 Treasury stock (74,134) (40,042)Additional paid-in capital 245,007 229,995 Accumulated other comprehensive income 9,119 9,119 Retained earnings 96,097 81,750 Total shareholders' equity 276,101 280,834 Non-controlling interest 16 56 Total equity 276,117 280,890 Total liabilities, redeemable preferred stock and equity$3,650,364 $3,255,170 Consolidated Statements of Cash Flows For the Three Months Ended December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Cash flows from operating activities: Net income$1,126 $12,860 $34,566 $71,978 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 32,648 26,702 127,597 101,752 Deferred income taxes (652) 1,572 (4,680) 22,300 Loss on disposal of assets and impairment charges 660 2,342 6,203 5,731 Foreign currency (gain) loss (101) (14) 29 227 Amortization of deferred financing costs, debt discount and premium 661 620 2,518 2,514 Amortization of deferred income (1,840) (2,455) (8,142) (9,724)Accretion of asset retirement obligation 709 574 2,399 1,833 Non-cash rent 3,750 2,189 14,168 7,903 Charges to allowance for credit losses 244 186 1,265 659 (Income) loss from equity investment (38) 67 39 74 Share-based compensation 1,777 3,134 15,015 12,161 Fair value adjustment of financial assets and liabilities 842 452 (10,785) (3,396)Other operating activities, net 352 (80) 2,631 775 Changes in assets and liabilities: Decrease (increase) in trade receivables 44,550 9,638 (17,937) (50,229)Decrease (increase) in inventory 15,373 7,720 (2,013) (6,850)(Increase) decrease in other assets (957) 8,843 (29,386) 1,476 (Decrease) increase in accounts payable (35,836) (5,848) (6,169) 31,645 (Decrease) increase in other current liabilities (8,002) (747) 990 6,884 Decrease in asset retirement obligation (69) (1) (23) (95)Increase in non-current liabilities 2,090 1,739 7,809 11,638 Net cash provided by operating activities 57,287 69,493 136,094 209,256 Cash flows from investing activities: Purchase of property and equipment (35,561) (25,693) (111,164) (98,595)Purchase of intangible assets — — (45) (176)Proceeds from sale of property and equipment 3,134 147,521 310,240 287,901 Business acquisitions, net of cash 33 (228,523) (494,871) (419,726)Prepayment for acquisitions (1,000) (4,000) (1,000) (4,000)Decrease in investments — — — 58,934 Loans to equity investment, net 18 — 18 174 Net cash used in investing activities (33,376) (110,695) (296,822) (175,488)Cash flows from financing activities: Receipt of long-term debt, net 20,810 19,446 99,643 70,896 Repayment of debt (5,640) (3,576) (22,157) (45,948)Principal payments on financing leases (1,260) (1,529) (5,497) (6,543)Proceeds from sale-leaseback — 54,988 80,397 54,988 Payment of Additional Consideration (3,505) (3,828) (3,505) (5,913)Payment of Ares Put Option — — (9,808) — Common stock repurchased (8,495) — (33,694) (40,042)Dividends paid on common stock (3,497) (3,602) (14,272) (10,893)Dividends paid on redeemable preferred stock (1,449) (1,449) (5,750) (5,750)Distributions to non-controlling interests — (60) — (240)Net cash (used in) provided by financing activities (3,036) 60,390 85,357 10,555 Net increase (decrease) in cash and cash equivalents and restricted cash 20,875 19,188 (75,371) 44,323 Effect of exchange rate on cash and cash equivalents and restricted cash 106 12 23 (97)Cash and cash equivalents and restricted cash, beginning of period 220,440 297,569 316,769 272,543 Cash and cash equivalents and restricted cash, end of period$241,421 $316,769 $241,421 $316,769 Supplemental Disclosure of Non-GAAP Financial Information Reconciliation of EBITDA and Adjusted EBITDA For the Three MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 2021 (in thousands) Net income$1,126 $12,860 $34,566 $71,978 $59,427 Interest and other financing expenses, net 22,902 16,295 71,243 59,405 71,207 Income tax expense 1,317 4,497 12,166 35,557 11,634 Depreciation and amortization 32,648 26,702 127,597 101,752 97,194 EBITDA 57,993 60,354 245,572 268,692 239,462 Non-cash rent expense 1 3,750 2,189 14,168 7,903 6,359 Acquisition costs 2 1,099 4,985 9,079 8,162 5,366 Loss on disposal of assets and impairment charges 3 660 2,342 6,203 5,731 1,384 Share-based compensation expense 4 1,777 3,134 15,015 12,161 5,804 (Income) loss from equity investment 5 (38) 67 39 74 (186)Adjustment to contingent consideration 6 68 (128) (604) (2,204) (1,740)Internal entity realignment and streamlining 7 — 67 — 475 — Other 8 230 (577) 956 60 126 Adjusted EBITDA$65,539 $72,433 $290,428 $301,054 $256,575 1 Eliminates the non-cash portion of rent, which reflects the extent to which our GAAP rent expense recognized exceeded (or was less than) our cash rent payments. The GAAP rent expense adjustment varies depending on the terms of our lease portfolio, 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. 2 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. 3 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. 4 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. 5 Eliminates our share of (income) loss attributable to our unconsolidated equity investment. 6 Eliminates fair value adjustments to the contingent consideration owed to the seller for the 2020 acquisition of Empire. 7 Eliminates non-recurring charges related to our internal entity realignment and streamlining. 8 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 MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Revenues: Fuel revenue$913,534 $886,710 $3,858,777 $3,887,549 Merchandise revenue 446,727 403,084 1,838,001 1,647,642 Other revenues, net 17,104 17,638 74,406 67,280 Total revenues 1,377,365 1,307,432 5,771,184 5,602,471 Operating expenses: Fuel costs 818,125 794,986 3,479,531 3,521,648 Merchandise costs 299,954 280,313 1,252,879 1,146,423 Store operating expenses 200,952 169,956 779,448 669,848 Total operating expenses 1,319,031 1,245,255 5,511,858 5,337,919 Operating income 58,334 62,177 259,326 264,552 Intercompany charges by GPMP 1 13,927 12,580 56,076 50,327 Operating income, as adjusted$72,261 $74,757 $315,402 $314,879 1 Represents 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 periods. For the Three Months Ended December 31, 2023 Pride 1 TEG 2 Uncle's (WTG) 3 Speedy's 4 Total (in thousands) Date of Acquisition:Dec 6, 2022 Mar 1, 2023 Jun 6, 2023 Aug 15, 2023 Revenues: Fuel revenue$66,952 $88,309 $20,802 $4,412 $180,475 Merchandise revenue 14,219 36,628 9,156 2,349 62,352 Other revenues, net 1,351 1,367 207 51 2,976 Total revenues 82,522 126,304 30,165 6,812 245,803 Operating expenses: Fuel costs 58,066 81,122 17,011 3,924 160,123 Merchandise costs 9,315 24,803 5,851 1,583 41,552 Store operating expenses 10,372 18,202 4,611 1,249 34,434 Total operating expenses 77,753 124,127 27,473 6,756 236,109 Operating income 4,769 2,177 2,692 56 9,694 Intercompany charges by GPMP 5 884 1,402 293 69 2,648 Operating income, as adjusted$5,653 $3,579 $2,985 $125 $12,342 Fuel gallons sold 17,688 28,045 5,859 1,372 52,964 Fuel contribution 6$9,770 $8,589 $4,084 $557 $23,000 Merchandise contribution 7$4,904 $11,825 $3,305 $766 $20,800 Merchandise margin 8 34.5% 32.3% 36.1% 32.6% For the Year Ended December 31, 2023 Pride 1 TEG 2 Uncle's (WTG) 3 Speedy's 4 Total (in thousands) Date of Acquisition: Dec 6, 2022 Mar 1, 2023 Jun 6, 2023 Aug 15, 2023 Revenues: Fuel revenue$279,396 $324,361 $48,827 $7,550 $660,134 Merchandise revenue 59,440 128,728 21,627 3,749 213,544 Other revenues, net 5,521 4,489 464 74 10,548 Total revenues 344,357 457,578 70,918 11,373 884,226 Operating expenses: Fuel costs 249,183 298,332 40,828 6,722 595,065 Merchandise costs 39,221 88,147 14,036 2,532 143,936 Store operating expenses 40,554 60,151 10,983 1,945 113,633 Total operating expenses 328,958 446,630 65,847 11,199 852,634 Operating income$15,399 $10,948 $5,071 $174 $31,592 Intercompany charges by GPMP 5 3,673 4,911 669 111 9,364 Operating income, as adjusted$19,072 $15,859 $5,740 $285 $40,956 Fuel gallons sold 73,452 98,228 13,382 2,202 187,264 Fuel contribution 6$33,886 $30,940 $8,668 $939 $74,433 Merchandise contribution 7$20,219 $40,581 $7,591 $1,217 $69,608 Merchandise margin 8 34.0% 31.5% 35.1% 32.5% 1 Acquisition of Pride Convenience Holdings, LLC. 2 Acquisition from Transit Energy Group and affiliates ("TEG"); includes only the retail stores acquired in the TEG acquisition. 3 Acquisition from WTG Fuels Holdings, LLC ("WTG"); includes only the retail stores acquired in the WTG acquisition. 4 Acquisition of seven Speedy's retail stores. 5 Represents the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel. 6 Calculated as fuel revenue less fuel costs; excludes the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel. 7 Calculated as merchandise revenue less merchandise costs. 8 Calculated as merchandise contribution divided by merchandise revenue. Wholesale Segment For the Three MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Revenues: Fuel revenue$700,026 $712,578 $3,039,904 $3,234,145 Other revenues, net 6,909 6,303 25,775 23,451 Total revenues 706,935 718,881 3,065,679 3,257,596 Operating expenses: Fuel costs 690,300 701,571 2,995,398 3,181,189 Store operating expenses 10,400 11,104 39,703 42,543 Total operating expenses 700,700 712,675 3,035,101 3,223,732 Operating income 6,235 6,206 30,578 33,864 Intercompany charges by GPMP 1 11,874 11,338 48,402 45,201 Operating income, as adjusted$18,109 $17,544 $78,980 $79,065 1 Represents 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 periods. For the Three Months Ended December 31, 2023 Quarles 1 TEG 2 WTG 3 Total (in thousands) Date of Acquisition:Jul 22, 2022 Mar 1, 2023 Jun 6, 2023 Revenues: Fuel revenue$17,252 $91,340 $3,050 $111,642 Other revenues, net 240 730 9 979 Total revenues 17,492 92,070 3,059 112,621 Operating expenses: Fuel costs 16,600 90,500 2,899 109,999 Store operating expenses 454 871 72 1,397 Total operating expenses 17,054 91,371 2,971 111,396 Operating income$438 $699 $88 $1,225 Intercompany charges by GPMP 4 284 1,542 43 1,869 Operating income, as adjusted$722 $2,241 $131 $3,094 Fuel gallons sold 5,521 31,207 862 37,590 For the Year Ended December 31, 2023 Quarles 1 TEG 2 WTG 3 Total (in thousands) Date of Acquisition:Jul 22, 2022 Mar 1, 2023 Jun 6, 2023 Revenues: Fuel revenue$74,960 $335,477 $6,594 $417,031 Other revenues, net 1,103 2,229 15 3,347 Total revenues 76,063 337,706 6,609 420,378 Operating expenses: Fuel costs 72,357 332,129 6,227 410,713 Store operating expenses 1,884 2,798 153 4,835 Total operating expenses 74,241 334,927 6,380 415,548 Operating income$1,822 $2,779 $229 $4,830 Intercompany charges by GPMP 4 1,171 5,379 93 6,643 Operating income, as adjusted$2,993 $8,158 $322 $11,473 Fuel gallons sold 22,825 109,156 1,869 133,850 1 Acquisition from Quarles Petroleum, Incorporated ("Quarles"); includes only the wholesale business acquired in the Quarles acquisition. 2 Includes only the wholesale business acquired in the TEG acquisition. 3 Includes only the wholesale business acquired in the WTG acquisition. 4 Represents the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel. Fleet Fueling Segment For the Three MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Revenues: Fuel revenue$136,801 $149,857 $530,937 $270,670 Other revenues, net 2,616 1,255 7,818 2,178 Total revenues 139,417 151,112 538,755 272,848 Operating expenses: Fuel costs 125,182 134,571 481,885 245,733 Store operating expenses 6,259 4,788 22,298 8,733 Total operating expenses 131,441 139,359 504,183 254,466 Operating income 7,976 11,753 34,572 18,382 Intercompany charges by GPMP 1 1,772 1,580 6,848 2,884 Operating income, as adjusted$9,748 $13,333 $41,420 $21,266 1 Represents the estimated fixed fee paid to GPMP for the cost of fuel. The table below shows financial information and certain key metrics of recent acquisitions in the Fleet Fueling Segment that do not have (or have only partial) comparable information for the prior periods. For the Three Months Ended December 31, 2023 For the Year Ended December 31, 2023 Quarles 1 WTG 2 Total Quarles 1 WTG 2 Total (in thousands) Date of Acquisition:Jul 22, 2022 Jun 6, 2023 Jul 22, 2022 Jun 6, 2023 Revenues: Fuel revenue$120,857 $15,944 $136,801 $491,642 $39,295 $530,937 Other revenues, net 941 1,675 2,616 4,841 2,977 7,818 Total revenues 121,798 17,619 139,417 496,483 42,272 538,755 Operating expenses: Fuel costs 110,815 14,367 125,182 447,010 34,875 481,885 Store operating expenses 5,043 1,216 6,259 20,003 2,295 22,298 Total operating expenses 115,858 15,583 131,441 467,013 37,170 504,183 Operating income$5,940 $2,036 $7,976 $29,470 $5,102 $34,572 Intercompany charges by GPMP 3 1,563 209 1,772 6,313 536 6,849 Operating income, as adjusted$7,503 $2,245 $9,748 $35,783 $5,638 $41,421 Fuel gallons sold 32,246 4,240 36,486 130,382 10,445 140,827 1 Includes only the fleet fueling business acquired in the Quarles acquisition. 2 Includes only the fleet fueling business acquired in the WTG acquisition. 3 Represents the estimated fixed fee paid to GPMP for the cost of fuel. Investor and Media Contact Jordan Mann ARKO Corp. investors@gpminvestments.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
ARKO Corp. Reports Fourth Quarter and Full Year 2023 Results By: ARKO CORP. via GlobeNewswire February 27, 2024 at 17:00 PM EST RICHMOND, Va., Feb. 27, 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 quarter and full year ended December 31, 2023. Fourth Quarter and Full Year 2023 Key Highlights1,2 Net income for the quarter was $1.1 million, compared to $12.9 million for the prior year quarter. For the year, net income was $34.6 million, compared to $72.0 million for the prior year.Adjusted EBITDA for the quarter was $65.5 million, compared to $72.4 million for the prior year quarter, primarily due to reduced fuel contribution at same stores, with retail cents per gallon (“CPG”) of 39.2 in the fourth quarter of 2023 compared to retail CPG of 41.4 in the fourth quarter of 2022. For the year, adjusted EBITDA was $290.4 million, compared to $301.1 million for the prior year, primarily due to reduced fuel contribution at same stores, with retail CPG of 38.8 in 2023 compared to retail CPG of 41.4 in 2022.Merchandise revenue for the fourth quarter of 2023 was $446.7 million, an increase of $43.6 million compared to the prior year period. Merchandise revenue for 2023 was $1.84 billion, an increase of $190.4 million compared to 2022.Merchandise contribution increased by $24.0 million for the fourth quarter of 2023, or 19.6%, and increased by $83.9 million for the year ended December 31, 2023, or 16.7%, as compared to the respective prior year periods. Merchandise margin expanded, increasing approximately 240 basis points to 32.9% for the quarter and 140 basis points for the full year, primarily due to execution of key marketing and merchandising initiatives.Retail fuel contribution increased 4.8% for the fourth quarter of 2023 to $109.3 million and increased 4.6% for the full year to $435.3 million. Retail same store fuel gallons sold decreased 7.5% for the fourth quarter of 2023 and 5.3% for the year. 1 See Use of Non-GAAP Measures below.2 All references to fuel contribution and fuel margin per gallon are excluding 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 Completed five acquisitions in the last eighteen months, with the largest one in March 2023.Ended 2023 with more than two million enrolled loyalty members.In January 2024, the Company launched a new pizza program, the culmination of over one year of development, which is currently offered at more than 1,000 of the Company’s stores as take-and-bake from the freezer, offering a great quality whole pizza at a value price for enrolled loyalty members, and as a fresh, hot pizza, either whole or by the slice, at approximately 225 of those stores.ARKO’s Board of Directors declared a quarterly dividend of $0.03 per share of common stock to be paid on March 21, 2024, to stockholders of record as of March 11, 2024.Welcomed Robb Giammatteo to the Company to serve as Executive Vice President and Chief Financial Officer, recognizing his experience in relevant financial and transformation roles in retail and convenience. “Reflecting on our first three years as a public company, we have significantly broadened our geographic footprint through acquisitions, and have delivered approximately $166 million in net income and approximately $850 million in cumulative adjusted EBITDA over this period,” said Arie Kotler, Chairman, President and Chief Executive Officer of ARKO. “For the full year 2023, we delivered $290.4 million in adjusted EBITDA, holding performance within 3.5% of 2022, which was a record retail CPG year of over 41 cents per gallon, in the context of a 3.4% decline in national OPIS fuel gallon demand, with a more pronounced decline in the fourth quarter. As we move into 2024, we are focusing more of our management’s time on driving organic growth and unlocking the value of our retail segment, and I believe we have many levers to pull. Our team is focused on improving the experience of our customers and the productivity of our stores, and later this year, we are planning to host an investor day during which we will share with you our multi-year roadmap and specific milestones to enhance organic performance and drive shareholder value. We continue to execute on our three key merchandise and marketing pillars, including our fas REWARDS loyalty program, which we designed to enhance our relationship with our customers and provide them with extraordinary value, focus on our core destination categories and our food service offering." Fourth Quarter and Full Year 2023 Segment Highlights Retail For the Three MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Fuel gallons sold 279,035 251,658 1,122,321 1,006,469 Same store fuel gallons sold decrease (%) 1 (7.5%) (8.3%) (5.3%) (8.1%)Fuel contribution 2$109,336 $104,304 $435,322 $416,228 Fuel margin, cents per gallon 3 39.2 41.4 38.8 41.4 Same store fuel contribution 1,2$86,183 $99,778 $360,141 $406,262 Same store merchandise sales (decrease) increase (%) 1 (2.8%) 1.2% 0.4% (1.0%)Same store merchandise sales excluding cigarettes (decrease) increase (%) 1 (1.8%) 4.3% 2.5% 2.6%Merchandise revenue$446,727 $403,084 $1,838,001 $1,647,642 Merchandise contribution 4$146,773 $122,771 $585,122 $501,219 Merchandise margin 5 32.9% 30.5% 31.8% 30.4%Same store merchandise contribution 1,4$125,050 $120,346 $513,112 $492,537 Same store store operating expenses 1$164,925 $162,019 $660,082 $647,396 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. Same store merchandise sales excluding cigarettes decreased 1.8% for the fourth quarter of 2023 compared to the fourth quarter of 2022, reflecting macroeconomic headwinds. Same store merchandise sales decreased 2.8% for the fourth quarter of 2023 compared to the prior year period. Penetration of the Company’s core destination categories (packaged beverages, candy, salty snacks, packaged sweet snacks, alternative snacks and beer) as a percent of same store merchandise sales increased 90 basis points for the quarter. Total merchandise contribution for the fourth quarter of 2023 increased $24.0 million, or 19.6%, compared to the fourth quarter of 2022, due to $19.7 million in incremental merchandise contribution from the businesses acquired in 2023, and the acquisition of Pride (the “Pride Acquisition”), and an increase in merchandise contribution at same stores of approximately $4.7 million. Merchandise margin increased 240 basis points, to 32.9% for the fourth quarter of 2023 from 30.5% in the fourth quarter of 2022, primarily due to execution of key marketing and merchandising initiatives. Same store merchandise sales excluding cigarettes increased 2.5% for the year ended December 31, 2023 compared to 2022. Same store merchandise sales increased 0.4% for 2023 compared to the prior year. Total merchandise contribution for 2023 increased $83.9 million or 16.7%, compared to 2022, due to $68.6 million in incremental merchandise contribution from the businesses acquired in 2023, and the Pride Acquisition, and an increase in merchandise contribution at same stores of approximately $20.6 million. Merchandise margin increased 140 basis points, to 31.8% for the year ended December 31, 2023 from 30.4% in 2022, primarily due to execution of key marketing and merchandising initiatives. For the fourth quarter of 2023, retail fuel contribution increased $5.0 million to $109.3 million compared to the prior year period, with resilient fuel margin capture of 39.2 cents per gallon, a decrease of 2.2 cents per gallon for the fourth quarter of 2023 as compared to the fourth quarter of 2022. Same store fuel contribution was $86.2 million for the fourth quarter of 2023, compared to $99.8 million for the prior year quarter. This decrease in same store fuel contribution was fully offset by approximately $19.3 million of incremental fuel contribution from recent acquisitions. For the year ended December 31, 2023, retail fuel contribution increased $19.1 million to $435.3 million compared to the prior year, with fuel margin of 38.8 cents per gallon, a decrease of 2.6 cents per gallon compared to the prior year. Same store fuel contribution was $360.1 million for the year ended December 31, 2023, compared to $406.3 million for the prior year. This decrease in same store fuel contribution was fully offset by approximately $70.7 million of incremental fuel contribution from recent acquisitions. Wholesale For the Three MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Fuel gallons sold – fuel supply locations 199,861 182,871 801,260 746,513 Fuel gallons sold – consignment agent locations 40,144 40,921 168,005 156,059 Fuel contribution1 – fuel supply locations$11,499 $11,379 $48,396 $51,065 Fuel contribution1 – consignment agent locations$10,101 $10,966 $44,512 $47,092 Fuel margin, cents per gallon2 – fuel supply locations 5.8 6.2 6.0 6.8 Fuel margin, cents per gallon2 – consignment agent locations 25.2 26.8 26.5 30.2 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 $21.6 million for the fourth quarter of 2023 and $92.9 million for the year. Fuel contribution from fuel supply locations increased by $0.1 million for the quarter and decreased by $2.7 million for the full year compared to the prior year periods, while fuel margin decreased, primarily due to decreased prompt pay discounts related to lower fuel costs and lower volumes at wholesale sites not part of the 2023 and 2022 acquisitions, which was partially offset by the incremental contribution from recent acquisitions. Fuel contribution from consignment agent locations decreased by $0.9 million for the fourth quarter of 2023 and $2.6 million for the full year compared to the prior year periods. Fuel margin also decreased for the quarter and for the year ended December 31, 2023, compared to the prior year periods, 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 recent acquisitions. Fleet Fueling The fleet fueling segment commenced operations on July 22, 2022; therefore, the year ended December 31, 2022 does not reflect the operations of this segment for the entirety of such period, which affects period-over-period comparability. For the Three MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Fuel gallons sold – proprietary cardlock locations 33,285 31,040 130,995 57,104 Fuel gallons sold – third-party cardlock locations 3,201 1,585 9,832 2,882 Fuel contribution1 – proprietary cardlock locations$13,146 $16,742 $54,685 $27,632 Fuel contribution1 – third-party cardlock locations$245 $124 $1,215 $189 Fuel margin, cents per gallon2 – proprietary cardlock locations 39.5 53.9 41.7 48.4 Fuel margin, cents per gallon2 – third-party cardlock locations 7.6 7.8 12.4 6.5 1 Calculated as fuel revenue less fuel costs; excludes the estimated fixed fee paid to GPMP for the cost of fuel. 2 Calculated as fuel contribution divided by fuel gallons sold. Fuel contribution was approximately $13.4 million for the fourth quarter of 2023 and $55.9 million for the year, a decrease of $3.5 million for the quarter and an increase of $28.1 million for the year, compared to the prior year periods reflecting a full year of operations from the Quarles Acquisition, which closed in July 2022, as compared to a partial year of operations in the prior year, and the WTG Acquisition, which closed in June 2023. At proprietary cardlocks, fuel margin per gallon decreased as compared to 2022, which year was impacted by historically high rack-to-retail margins and fuel price volatility. Store Operating Expenses For the fourth quarter of 2023, convenience store operating expenses increased $31.0 million, or 18.2% as compared to the prior year period, primarily due to $31.5 million of incremental expenses related to recent acquisitions. Same store expenses were up less than 2%, with increases in repairs and maintenance expenses, rent and personnel expenses partially offset by lower credit card fees. At same stores, personnel expenses for the fourth quarter of 2023 were up $0.7 million from the prior year period, or 1.1%, with wage increases partially offset by reduced overtime and incentives. The total increase in store operating expenses was partially offset by underperforming retail stores that the Company closed or converted to dealer locations. For the year ended December 31, 2023, convenience store operating expenses increased by $109.6 million, or 16.4%, as compared to the prior year, primarily due to $110.7 million of incremental expenses related to recent acquisitions and an increase in expenses at same stores, including approximately $11.1 million, or 4.1%, of higher personnel costs. The increase in store operating expenses was partially offset by lower credit card fees at same stores and underperforming retail stores that the Company closed or converted to dealer locations. Long-Term Growth Strategy Updates Acquisitions and M&A The Company continued to execute its long-term growth strategy, closing three transactions in 2023, marking 25 total acquisitions since 2013. In December 2022, the Company completed its acquisition of Pride, which operated 31 Pride retail convenience stores at closing and had one store under construction that is now opened. Since closing the Pride Acquisition, the Company has earned back in Adjusted EBITDA approximately 65% of its consideration paid for that transaction. Liquidity and Capital Expenditures As of December 31, 2023, the Company’s total liquidity was approximately $831 million, consisting of approximately $218 million of cash and cash equivalents and approximately $613 million of availability under lines of credit. Outstanding debt was $845 million, resulting in net debt, excluding lease related financing liabilities, of approximately $627 million. On May 2, 2023, the Company amended its program agreement (the “Program Agreement”) with affiliates of Oak Street, a division of Blue Owl Capital (“Oak Street”). This amendment extended the term of the Program Agreement and 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 $111.2 million for the year ended December 31, 2023, 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. The Company’s Board of Directors declared a quarterly dividend of $0.03 per share of common stock to be paid on March 21, 2024 to stockholders of record as of March 11, 2024. During the quarter, the Company repurchased approximately 1.1 million shares of common stock under the repurchase program for approximately $8.5 million, or an average share price of $7.49. There was approximately $29 million remaining under the expanded share repurchase program as of December 31, 2023. 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 MonthsEnded December 31, For the YearEnded December 31,Retail Segment2023 2022 2023 2022Number of sites at beginning of period 1,552 1,383 1,404 1,406 Acquired sites — 32 166 32 Newly opened or reopened sites — — 4 — Company-controlled sites converted to consignment or fuel supply locations, net (3) (8) (16) (17)Closed, relocated or divested sites (6) (3) (15) (17)Number of sites at end of period 1,543 1,404 1,543 1,404 For the Three MonthsEnded December 31, For the YearEnded December 31,Wholesale Segment 12023 2022 2023 2022Number of sites at beginning of period 1,825 1,670 1,674 1,628 Acquired sites — — 190 46 Newly opened or reopened sites 2 25 14 83 74 Consignment or fuel supply locations converted from Company-controlled or fleet fueling sites, net 2 8 15 17 Closed, relocated or divested sites (27) (18) (137) (91)Number of sites at end of period 1,825 1,674 1,825 1,674 1 Excludes bulk and spot purchasers. 2 Includes all signed fuel supply agreements irrespective of fuel distribution commencement date. For the Three MonthsEnded December 31, For the YearEnded December 31,Fleet Fueling Segment2023 2022 2023 2022Number of sites at beginning of period 295 183 183 — Acquired sites — — 111 184 Newly opened or reopened sites 2 — 6 — Fleet fueling locations converted from fuel supply locations, net 1 — 1 — Closed, relocated or divested sites — — (3) (1)Number of sites at end of period 298 183 298 183 2024 Full Year Guidance Range The following table provides the Company’s guidance for the year ending December 31, 2024, including a reconciliation of net income to EBITDA and Adjusted EBITDA: For the Year Ending December 31, 2024 (E) Low High (in millions) Net income$2 $29 Interest and other financing expenses, net 1 89 89 Income tax expense 2 1 10 Depreciation and amortization 134 134 EBITDA 226 262 Non-cash rent expense 3 13 13 Share-based compensation expense 4 11 15 Adjusted EBITDA$250 $290 1 Excludes fair value adjustments of financial assets and liabilities. For variable rate debt, assumes that SOFR remains at 5.34% 2 Assumes an effective tax rate of 25% 3 Eliminates the expected non-cash portion of rent, which reflects the extent to which our GAAP rent expense recognized exceeds (or is less than) our cash rent payments. The GAAP rent expense adjustment varies 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. 4 Eliminates expected 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 our Board. The 2024 full year earnings guidance assumes a range of average retail fuel margin from 36 CPG to 40 CPG. Based on quarter-to-date trends, the Company expects its first quarter to contribute less to the full year Adjusted EBITDA than in prior years, representing 12% to 14% of the 2024 full year rather than the approximately 16.5% historical contribution to the full year. The Company’s full year guidance framework anticipates current trends to normalize coming out of the first quarter of 2024. The first quarter guidance corresponds to a range of average retail fuel margin from 35 CPG to 39 CPG. Conference Call and Webcast Details The Company will host a conference call to discuss these results at 10:00 a.m. Eastern Time on February 28, 2024. Investors and analysts interested in participating in the live call can dial 877-605-1792 or 201-689-8728. A simultaneous, live webcast will also be available on the Investor Relations section of the Company’s website at https://www.arkocorp.com/news-events/ir-calendar. The webcast will be archived for 30 days. About ARKO Corp. ARKO Corp. (Nasdaq: ARKO) is a Fortune 500 company that owns 100% of GPM Investments, LLC and is one of the largest operators of convenience stores and wholesalers of fuel in the United States. Based in Richmond, VA, we operate A Family of Community Brands that offer delicious, prepared foods, beer, snacks, candy, hot and cold beverages, and multiple popular quick serve restaurant brands. Our high value fas REWARDS® loyalty program offers exclusive savings on merchandise and gas. We operate in four reportable segments: retail, which includes convenience stores selling merchandise and fuel products to retail customers; wholesale, which supplies fuel to independent dealers and consignment agents; GPM Petroleum, which sells and supplies fuel to our retail and wholesale sites and charges a fixed fee, primarily to our fleet fueling sites; and fleet fueling, which includes the operation of proprietary and third-party cardlock locations, and issuance of proprietary fuel cards that provide customers access to a nationwide network of fueling sites. To learn more about GPM stores, visit: www.gpminvestments.com. To learn more about ARKO, visit: www.arkocorp.com. Forward-Looking Statements This document includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may address, among other things, the Company’s expected financial and operational results and the related assumptions underlying its expected results. These forward-looking statements are distinguished by use of words such as “anticipate,” “aim,” “believe,” “continue,” “could,” “estimate,” “expect,” “guidance,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and the negative of these terms, and similar references to future periods. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to, among other things, changes in economic, business and market conditions; the Company’s ability to maintain the listing of its common stock and warrants on the Nasdaq Stock Market; changes in its strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; expansion plans and opportunities; changes in the markets in which it competes; changes in applicable laws or regulations, including those relating to environmental matters; market conditions and global and economic factors beyond its control; and the outcome of any known or unknown litigation and regulatory proceedings. Detailed information about these factors and additional important factors can be found in the documents that the Company files with the Securities and Exchange Commission, such as Form 10-K, Form 10-Q and Form 8-K. Forward-looking statements speak only as of the date the statements were made. The Company does not undertake an obligation to update forward-looking information, except to the extent required by applicable law. Use of Non-GAAP Measures The Company discloses certain measures on a “same store basis,” which is a non-GAAP measure. Information disclosed on a “same store basis” excludes the results of any store that is not a “same store” for the applicable period. A store is considered a same store beginning in the first quarter in which the store had a full quarter of activity in the prior year. The Company believes that this information provides greater comparability regarding its ongoing operating performance. Neither this measure nor those described below should be considered an alternative to measurements presented in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company defines EBITDA as net income before net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by excluding the gain or loss on disposal of assets, impairment charges, acquisition costs, 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. Consolidated Statements of Operations For the Three Months Ended December 31, For the Year Ended December 31, 2023 2022 2023 2022 (in thousands) Revenues: Fuel revenue$1,759,216 $1,752,136 $7,464,372 $7,401,090 Merchandise revenue 446,727 403,084 1,838,001 1,647,642 Other revenues, net 27,217 24,858 110,358 94,067 Total revenues 2,233,160 2,180,078 9,412,731 9,142,799 Operating expenses: Fuel costs 1,613,230 1,606,546 6,876,084 6,856,651 Merchandise costs 299,954 280,313 1,252,879 1,146,423 Store operating expenses 222,751 186,977 860,134 721,174 General and administrative expenses 38,102 39,274 165,294 139,969 Depreciation and amortization 32,648 26,702 127,597 101,752 Total operating expenses 2,206,685 2,139,812 9,281,988 8,965,969 Other expenses, net 1,168 6,547 12,729 9,816 Operating income 25,307 33,719 118,014 167,014 Interest and other financial income 2,197 2,721 20,273 3,178 Interest and other financial expenses (25,099) (19,016) (91,516) (62,583)Income before income taxes 2,405 17,424 46,771 107,609 Income tax expense (1,317) (4,497) (12,166) (35,557)Income (loss) from equity investment 38 (67) (39) (74)Net income$1,126 $12,860 $34,566 $71,978 Less: Net income attributable to non-controlling interests 48 49 197 231 Net income attributable to ARKO Corp.$1,078 $12,811 $34,369 $71,747 Series A redeemable preferred stock dividends (1,449) (1,449) (5,750) (5,750)Net (loss) income attributable to common shareholders$(371) $11,362 $28,619 $65,997 Net (loss) income per share attributable to common shareholders - basic$(0.00) $0.09 $0.24 $0.54 Net (loss) income per share attributable to common shareholders - diluted$(0.00) $0.09 $0.24 $0.53 Weighted average shares outstanding: Basic 116,638 120,074 118,782 121,476 Diluted 116,638 121,508 119,605 123,224 Consolidated Balance Sheets December 31, 2023 December 31, 2022 (in thousands) Assets Current assets: Cash and cash equivalents$218,120 $298,529 Restricted cash 23,301 18,240 Short-term investments 3,892 2,400 Trade receivables, net 134,735 118,140 Inventory 250,593 221,951 Other current assets 118,472 87,873 Total current assets 749,113 747,133 Non-current assets: Property and equipment, net 742,610 645,809 Right-of-use assets under operating leases 1,384,693 1,203,188 Right-of-use assets under financing leases, net 162,668 182,113 Goodwill 292,173 217,297 Intangible assets, net 214,552 197,123 Equity investment 2,885 2,924 Deferred tax asset 52,293 22,728 Other non-current assets 49,377 36,855 Total assets$3,650,364 $3,255,170 Liabilities Current liabilities: Long-term debt, current portion$16,792 $11,944 Accounts payable 213,657 217,370 Other current liabilities 179,536 154,097 Operating leases, current portion 67,053 57,563 Financing leases, current portion 9,186 5,457 Total current liabilities 486,224 446,431 Non-current liabilities: Long-term debt, net 828,647 740,043 Asset retirement obligation 84,710 64,909 Operating leases 1,395,032 1,218,045 Financing leases 213,032 225,907 Other non-current liabilities 266,602 178,945 Total liabilities 3,274,247 2,874,280 Series A redeemable preferred stock 100,000 100,000 Shareholders' equity: Common stock 12 12 Treasury stock (74,134) (40,042)Additional paid-in capital 245,007 229,995 Accumulated other comprehensive income 9,119 9,119 Retained earnings 96,097 81,750 Total shareholders' equity 276,101 280,834 Non-controlling interest 16 56 Total equity 276,117 280,890 Total liabilities, redeemable preferred stock and equity$3,650,364 $3,255,170 Consolidated Statements of Cash Flows For the Three Months Ended December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Cash flows from operating activities: Net income$1,126 $12,860 $34,566 $71,978 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 32,648 26,702 127,597 101,752 Deferred income taxes (652) 1,572 (4,680) 22,300 Loss on disposal of assets and impairment charges 660 2,342 6,203 5,731 Foreign currency (gain) loss (101) (14) 29 227 Amortization of deferred financing costs, debt discount and premium 661 620 2,518 2,514 Amortization of deferred income (1,840) (2,455) (8,142) (9,724)Accretion of asset retirement obligation 709 574 2,399 1,833 Non-cash rent 3,750 2,189 14,168 7,903 Charges to allowance for credit losses 244 186 1,265 659 (Income) loss from equity investment (38) 67 39 74 Share-based compensation 1,777 3,134 15,015 12,161 Fair value adjustment of financial assets and liabilities 842 452 (10,785) (3,396)Other operating activities, net 352 (80) 2,631 775 Changes in assets and liabilities: Decrease (increase) in trade receivables 44,550 9,638 (17,937) (50,229)Decrease (increase) in inventory 15,373 7,720 (2,013) (6,850)(Increase) decrease in other assets (957) 8,843 (29,386) 1,476 (Decrease) increase in accounts payable (35,836) (5,848) (6,169) 31,645 (Decrease) increase in other current liabilities (8,002) (747) 990 6,884 Decrease in asset retirement obligation (69) (1) (23) (95)Increase in non-current liabilities 2,090 1,739 7,809 11,638 Net cash provided by operating activities 57,287 69,493 136,094 209,256 Cash flows from investing activities: Purchase of property and equipment (35,561) (25,693) (111,164) (98,595)Purchase of intangible assets — — (45) (176)Proceeds from sale of property and equipment 3,134 147,521 310,240 287,901 Business acquisitions, net of cash 33 (228,523) (494,871) (419,726)Prepayment for acquisitions (1,000) (4,000) (1,000) (4,000)Decrease in investments — — — 58,934 Loans to equity investment, net 18 — 18 174 Net cash used in investing activities (33,376) (110,695) (296,822) (175,488)Cash flows from financing activities: Receipt of long-term debt, net 20,810 19,446 99,643 70,896 Repayment of debt (5,640) (3,576) (22,157) (45,948)Principal payments on financing leases (1,260) (1,529) (5,497) (6,543)Proceeds from sale-leaseback — 54,988 80,397 54,988 Payment of Additional Consideration (3,505) (3,828) (3,505) (5,913)Payment of Ares Put Option — — (9,808) — Common stock repurchased (8,495) — (33,694) (40,042)Dividends paid on common stock (3,497) (3,602) (14,272) (10,893)Dividends paid on redeemable preferred stock (1,449) (1,449) (5,750) (5,750)Distributions to non-controlling interests — (60) — (240)Net cash (used in) provided by financing activities (3,036) 60,390 85,357 10,555 Net increase (decrease) in cash and cash equivalents and restricted cash 20,875 19,188 (75,371) 44,323 Effect of exchange rate on cash and cash equivalents and restricted cash 106 12 23 (97)Cash and cash equivalents and restricted cash, beginning of period 220,440 297,569 316,769 272,543 Cash and cash equivalents and restricted cash, end of period$241,421 $316,769 $241,421 $316,769 Supplemental Disclosure of Non-GAAP Financial Information Reconciliation of EBITDA and Adjusted EBITDA For the Three MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 2021 (in thousands) Net income$1,126 $12,860 $34,566 $71,978 $59,427 Interest and other financing expenses, net 22,902 16,295 71,243 59,405 71,207 Income tax expense 1,317 4,497 12,166 35,557 11,634 Depreciation and amortization 32,648 26,702 127,597 101,752 97,194 EBITDA 57,993 60,354 245,572 268,692 239,462 Non-cash rent expense 1 3,750 2,189 14,168 7,903 6,359 Acquisition costs 2 1,099 4,985 9,079 8,162 5,366 Loss on disposal of assets and impairment charges 3 660 2,342 6,203 5,731 1,384 Share-based compensation expense 4 1,777 3,134 15,015 12,161 5,804 (Income) loss from equity investment 5 (38) 67 39 74 (186)Adjustment to contingent consideration 6 68 (128) (604) (2,204) (1,740)Internal entity realignment and streamlining 7 — 67 — 475 — Other 8 230 (577) 956 60 126 Adjusted EBITDA$65,539 $72,433 $290,428 $301,054 $256,575 1 Eliminates the non-cash portion of rent, which reflects the extent to which our GAAP rent expense recognized exceeded (or was less than) our cash rent payments. The GAAP rent expense adjustment varies depending on the terms of our lease portfolio, 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. 2 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. 3 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. 4 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. 5 Eliminates our share of (income) loss attributable to our unconsolidated equity investment. 6 Eliminates fair value adjustments to the contingent consideration owed to the seller for the 2020 acquisition of Empire. 7 Eliminates non-recurring charges related to our internal entity realignment and streamlining. 8 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 MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Revenues: Fuel revenue$913,534 $886,710 $3,858,777 $3,887,549 Merchandise revenue 446,727 403,084 1,838,001 1,647,642 Other revenues, net 17,104 17,638 74,406 67,280 Total revenues 1,377,365 1,307,432 5,771,184 5,602,471 Operating expenses: Fuel costs 818,125 794,986 3,479,531 3,521,648 Merchandise costs 299,954 280,313 1,252,879 1,146,423 Store operating expenses 200,952 169,956 779,448 669,848 Total operating expenses 1,319,031 1,245,255 5,511,858 5,337,919 Operating income 58,334 62,177 259,326 264,552 Intercompany charges by GPMP 1 13,927 12,580 56,076 50,327 Operating income, as adjusted$72,261 $74,757 $315,402 $314,879 1 Represents 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 periods. For the Three Months Ended December 31, 2023 Pride 1 TEG 2 Uncle's (WTG) 3 Speedy's 4 Total (in thousands) Date of Acquisition:Dec 6, 2022 Mar 1, 2023 Jun 6, 2023 Aug 15, 2023 Revenues: Fuel revenue$66,952 $88,309 $20,802 $4,412 $180,475 Merchandise revenue 14,219 36,628 9,156 2,349 62,352 Other revenues, net 1,351 1,367 207 51 2,976 Total revenues 82,522 126,304 30,165 6,812 245,803 Operating expenses: Fuel costs 58,066 81,122 17,011 3,924 160,123 Merchandise costs 9,315 24,803 5,851 1,583 41,552 Store operating expenses 10,372 18,202 4,611 1,249 34,434 Total operating expenses 77,753 124,127 27,473 6,756 236,109 Operating income 4,769 2,177 2,692 56 9,694 Intercompany charges by GPMP 5 884 1,402 293 69 2,648 Operating income, as adjusted$5,653 $3,579 $2,985 $125 $12,342 Fuel gallons sold 17,688 28,045 5,859 1,372 52,964 Fuel contribution 6$9,770 $8,589 $4,084 $557 $23,000 Merchandise contribution 7$4,904 $11,825 $3,305 $766 $20,800 Merchandise margin 8 34.5% 32.3% 36.1% 32.6% For the Year Ended December 31, 2023 Pride 1 TEG 2 Uncle's (WTG) 3 Speedy's 4 Total (in thousands) Date of Acquisition: Dec 6, 2022 Mar 1, 2023 Jun 6, 2023 Aug 15, 2023 Revenues: Fuel revenue$279,396 $324,361 $48,827 $7,550 $660,134 Merchandise revenue 59,440 128,728 21,627 3,749 213,544 Other revenues, net 5,521 4,489 464 74 10,548 Total revenues 344,357 457,578 70,918 11,373 884,226 Operating expenses: Fuel costs 249,183 298,332 40,828 6,722 595,065 Merchandise costs 39,221 88,147 14,036 2,532 143,936 Store operating expenses 40,554 60,151 10,983 1,945 113,633 Total operating expenses 328,958 446,630 65,847 11,199 852,634 Operating income$15,399 $10,948 $5,071 $174 $31,592 Intercompany charges by GPMP 5 3,673 4,911 669 111 9,364 Operating income, as adjusted$19,072 $15,859 $5,740 $285 $40,956 Fuel gallons sold 73,452 98,228 13,382 2,202 187,264 Fuel contribution 6$33,886 $30,940 $8,668 $939 $74,433 Merchandise contribution 7$20,219 $40,581 $7,591 $1,217 $69,608 Merchandise margin 8 34.0% 31.5% 35.1% 32.5% 1 Acquisition of Pride Convenience Holdings, LLC. 2 Acquisition from Transit Energy Group and affiliates ("TEG"); includes only the retail stores acquired in the TEG acquisition. 3 Acquisition from WTG Fuels Holdings, LLC ("WTG"); includes only the retail stores acquired in the WTG acquisition. 4 Acquisition of seven Speedy's retail stores. 5 Represents the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel. 6 Calculated as fuel revenue less fuel costs; excludes the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel. 7 Calculated as merchandise revenue less merchandise costs. 8 Calculated as merchandise contribution divided by merchandise revenue. Wholesale Segment For the Three MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Revenues: Fuel revenue$700,026 $712,578 $3,039,904 $3,234,145 Other revenues, net 6,909 6,303 25,775 23,451 Total revenues 706,935 718,881 3,065,679 3,257,596 Operating expenses: Fuel costs 690,300 701,571 2,995,398 3,181,189 Store operating expenses 10,400 11,104 39,703 42,543 Total operating expenses 700,700 712,675 3,035,101 3,223,732 Operating income 6,235 6,206 30,578 33,864 Intercompany charges by GPMP 1 11,874 11,338 48,402 45,201 Operating income, as adjusted$18,109 $17,544 $78,980 $79,065 1 Represents 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 periods. For the Three Months Ended December 31, 2023 Quarles 1 TEG 2 WTG 3 Total (in thousands) Date of Acquisition:Jul 22, 2022 Mar 1, 2023 Jun 6, 2023 Revenues: Fuel revenue$17,252 $91,340 $3,050 $111,642 Other revenues, net 240 730 9 979 Total revenues 17,492 92,070 3,059 112,621 Operating expenses: Fuel costs 16,600 90,500 2,899 109,999 Store operating expenses 454 871 72 1,397 Total operating expenses 17,054 91,371 2,971 111,396 Operating income$438 $699 $88 $1,225 Intercompany charges by GPMP 4 284 1,542 43 1,869 Operating income, as adjusted$722 $2,241 $131 $3,094 Fuel gallons sold 5,521 31,207 862 37,590 For the Year Ended December 31, 2023 Quarles 1 TEG 2 WTG 3 Total (in thousands) Date of Acquisition:Jul 22, 2022 Mar 1, 2023 Jun 6, 2023 Revenues: Fuel revenue$74,960 $335,477 $6,594 $417,031 Other revenues, net 1,103 2,229 15 3,347 Total revenues 76,063 337,706 6,609 420,378 Operating expenses: Fuel costs 72,357 332,129 6,227 410,713 Store operating expenses 1,884 2,798 153 4,835 Total operating expenses 74,241 334,927 6,380 415,548 Operating income$1,822 $2,779 $229 $4,830 Intercompany charges by GPMP 4 1,171 5,379 93 6,643 Operating income, as adjusted$2,993 $8,158 $322 $11,473 Fuel gallons sold 22,825 109,156 1,869 133,850 1 Acquisition from Quarles Petroleum, Incorporated ("Quarles"); includes only the wholesale business acquired in the Quarles acquisition. 2 Includes only the wholesale business acquired in the TEG acquisition. 3 Includes only the wholesale business acquired in the WTG acquisition. 4 Represents the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel. Fleet Fueling Segment For the Three MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Revenues: Fuel revenue$136,801 $149,857 $530,937 $270,670 Other revenues, net 2,616 1,255 7,818 2,178 Total revenues 139,417 151,112 538,755 272,848 Operating expenses: Fuel costs 125,182 134,571 481,885 245,733 Store operating expenses 6,259 4,788 22,298 8,733 Total operating expenses 131,441 139,359 504,183 254,466 Operating income 7,976 11,753 34,572 18,382 Intercompany charges by GPMP 1 1,772 1,580 6,848 2,884 Operating income, as adjusted$9,748 $13,333 $41,420 $21,266 1 Represents the estimated fixed fee paid to GPMP for the cost of fuel. The table below shows financial information and certain key metrics of recent acquisitions in the Fleet Fueling Segment that do not have (or have only partial) comparable information for the prior periods. For the Three Months Ended December 31, 2023 For the Year Ended December 31, 2023 Quarles 1 WTG 2 Total Quarles 1 WTG 2 Total (in thousands) Date of Acquisition:Jul 22, 2022 Jun 6, 2023 Jul 22, 2022 Jun 6, 2023 Revenues: Fuel revenue$120,857 $15,944 $136,801 $491,642 $39,295 $530,937 Other revenues, net 941 1,675 2,616 4,841 2,977 7,818 Total revenues 121,798 17,619 139,417 496,483 42,272 538,755 Operating expenses: Fuel costs 110,815 14,367 125,182 447,010 34,875 481,885 Store operating expenses 5,043 1,216 6,259 20,003 2,295 22,298 Total operating expenses 115,858 15,583 131,441 467,013 37,170 504,183 Operating income$5,940 $2,036 $7,976 $29,470 $5,102 $34,572 Intercompany charges by GPMP 3 1,563 209 1,772 6,313 536 6,849 Operating income, as adjusted$7,503 $2,245 $9,748 $35,783 $5,638 $41,421 Fuel gallons sold 32,246 4,240 36,486 130,382 10,445 140,827 1 Includes only the fleet fueling business acquired in the Quarles acquisition. 2 Includes only the fleet fueling business acquired in the WTG acquisition. 3 Represents the estimated fixed fee paid to GPMP for the cost of fuel. Investor and Media Contact Jordan Mann ARKO Corp. investors@gpminvestments.com
RICHMOND, Va., Feb. 27, 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 quarter and full year ended December 31, 2023. Fourth Quarter and Full Year 2023 Key Highlights1,2 Net income for the quarter was $1.1 million, compared to $12.9 million for the prior year quarter. For the year, net income was $34.6 million, compared to $72.0 million for the prior year.Adjusted EBITDA for the quarter was $65.5 million, compared to $72.4 million for the prior year quarter, primarily due to reduced fuel contribution at same stores, with retail cents per gallon (“CPG”) of 39.2 in the fourth quarter of 2023 compared to retail CPG of 41.4 in the fourth quarter of 2022. For the year, adjusted EBITDA was $290.4 million, compared to $301.1 million for the prior year, primarily due to reduced fuel contribution at same stores, with retail CPG of 38.8 in 2023 compared to retail CPG of 41.4 in 2022.Merchandise revenue for the fourth quarter of 2023 was $446.7 million, an increase of $43.6 million compared to the prior year period. Merchandise revenue for 2023 was $1.84 billion, an increase of $190.4 million compared to 2022.Merchandise contribution increased by $24.0 million for the fourth quarter of 2023, or 19.6%, and increased by $83.9 million for the year ended December 31, 2023, or 16.7%, as compared to the respective prior year periods. Merchandise margin expanded, increasing approximately 240 basis points to 32.9% for the quarter and 140 basis points for the full year, primarily due to execution of key marketing and merchandising initiatives.Retail fuel contribution increased 4.8% for the fourth quarter of 2023 to $109.3 million and increased 4.6% for the full year to $435.3 million. Retail same store fuel gallons sold decreased 7.5% for the fourth quarter of 2023 and 5.3% for the year. 1 See Use of Non-GAAP Measures below.2 All references to fuel contribution and fuel margin per gallon are excluding 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 Completed five acquisitions in the last eighteen months, with the largest one in March 2023.Ended 2023 with more than two million enrolled loyalty members.In January 2024, the Company launched a new pizza program, the culmination of over one year of development, which is currently offered at more than 1,000 of the Company’s stores as take-and-bake from the freezer, offering a great quality whole pizza at a value price for enrolled loyalty members, and as a fresh, hot pizza, either whole or by the slice, at approximately 225 of those stores.ARKO’s Board of Directors declared a quarterly dividend of $0.03 per share of common stock to be paid on March 21, 2024, to stockholders of record as of March 11, 2024.Welcomed Robb Giammatteo to the Company to serve as Executive Vice President and Chief Financial Officer, recognizing his experience in relevant financial and transformation roles in retail and convenience. “Reflecting on our first three years as a public company, we have significantly broadened our geographic footprint through acquisitions, and have delivered approximately $166 million in net income and approximately $850 million in cumulative adjusted EBITDA over this period,” said Arie Kotler, Chairman, President and Chief Executive Officer of ARKO. “For the full year 2023, we delivered $290.4 million in adjusted EBITDA, holding performance within 3.5% of 2022, which was a record retail CPG year of over 41 cents per gallon, in the context of a 3.4% decline in national OPIS fuel gallon demand, with a more pronounced decline in the fourth quarter. As we move into 2024, we are focusing more of our management’s time on driving organic growth and unlocking the value of our retail segment, and I believe we have many levers to pull. Our team is focused on improving the experience of our customers and the productivity of our stores, and later this year, we are planning to host an investor day during which we will share with you our multi-year roadmap and specific milestones to enhance organic performance and drive shareholder value. We continue to execute on our three key merchandise and marketing pillars, including our fas REWARDS loyalty program, which we designed to enhance our relationship with our customers and provide them with extraordinary value, focus on our core destination categories and our food service offering." Fourth Quarter and Full Year 2023 Segment Highlights Retail For the Three MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Fuel gallons sold 279,035 251,658 1,122,321 1,006,469 Same store fuel gallons sold decrease (%) 1 (7.5%) (8.3%) (5.3%) (8.1%)Fuel contribution 2$109,336 $104,304 $435,322 $416,228 Fuel margin, cents per gallon 3 39.2 41.4 38.8 41.4 Same store fuel contribution 1,2$86,183 $99,778 $360,141 $406,262 Same store merchandise sales (decrease) increase (%) 1 (2.8%) 1.2% 0.4% (1.0%)Same store merchandise sales excluding cigarettes (decrease) increase (%) 1 (1.8%) 4.3% 2.5% 2.6%Merchandise revenue$446,727 $403,084 $1,838,001 $1,647,642 Merchandise contribution 4$146,773 $122,771 $585,122 $501,219 Merchandise margin 5 32.9% 30.5% 31.8% 30.4%Same store merchandise contribution 1,4$125,050 $120,346 $513,112 $492,537 Same store store operating expenses 1$164,925 $162,019 $660,082 $647,396 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. Same store merchandise sales excluding cigarettes decreased 1.8% for the fourth quarter of 2023 compared to the fourth quarter of 2022, reflecting macroeconomic headwinds. Same store merchandise sales decreased 2.8% for the fourth quarter of 2023 compared to the prior year period. Penetration of the Company’s core destination categories (packaged beverages, candy, salty snacks, packaged sweet snacks, alternative snacks and beer) as a percent of same store merchandise sales increased 90 basis points for the quarter. Total merchandise contribution for the fourth quarter of 2023 increased $24.0 million, or 19.6%, compared to the fourth quarter of 2022, due to $19.7 million in incremental merchandise contribution from the businesses acquired in 2023, and the acquisition of Pride (the “Pride Acquisition”), and an increase in merchandise contribution at same stores of approximately $4.7 million. Merchandise margin increased 240 basis points, to 32.9% for the fourth quarter of 2023 from 30.5% in the fourth quarter of 2022, primarily due to execution of key marketing and merchandising initiatives. Same store merchandise sales excluding cigarettes increased 2.5% for the year ended December 31, 2023 compared to 2022. Same store merchandise sales increased 0.4% for 2023 compared to the prior year. Total merchandise contribution for 2023 increased $83.9 million or 16.7%, compared to 2022, due to $68.6 million in incremental merchandise contribution from the businesses acquired in 2023, and the Pride Acquisition, and an increase in merchandise contribution at same stores of approximately $20.6 million. Merchandise margin increased 140 basis points, to 31.8% for the year ended December 31, 2023 from 30.4% in 2022, primarily due to execution of key marketing and merchandising initiatives. For the fourth quarter of 2023, retail fuel contribution increased $5.0 million to $109.3 million compared to the prior year period, with resilient fuel margin capture of 39.2 cents per gallon, a decrease of 2.2 cents per gallon for the fourth quarter of 2023 as compared to the fourth quarter of 2022. Same store fuel contribution was $86.2 million for the fourth quarter of 2023, compared to $99.8 million for the prior year quarter. This decrease in same store fuel contribution was fully offset by approximately $19.3 million of incremental fuel contribution from recent acquisitions. For the year ended December 31, 2023, retail fuel contribution increased $19.1 million to $435.3 million compared to the prior year, with fuel margin of 38.8 cents per gallon, a decrease of 2.6 cents per gallon compared to the prior year. Same store fuel contribution was $360.1 million for the year ended December 31, 2023, compared to $406.3 million for the prior year. This decrease in same store fuel contribution was fully offset by approximately $70.7 million of incremental fuel contribution from recent acquisitions. Wholesale For the Three MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Fuel gallons sold – fuel supply locations 199,861 182,871 801,260 746,513 Fuel gallons sold – consignment agent locations 40,144 40,921 168,005 156,059 Fuel contribution1 – fuel supply locations$11,499 $11,379 $48,396 $51,065 Fuel contribution1 – consignment agent locations$10,101 $10,966 $44,512 $47,092 Fuel margin, cents per gallon2 – fuel supply locations 5.8 6.2 6.0 6.8 Fuel margin, cents per gallon2 – consignment agent locations 25.2 26.8 26.5 30.2 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 $21.6 million for the fourth quarter of 2023 and $92.9 million for the year. Fuel contribution from fuel supply locations increased by $0.1 million for the quarter and decreased by $2.7 million for the full year compared to the prior year periods, while fuel margin decreased, primarily due to decreased prompt pay discounts related to lower fuel costs and lower volumes at wholesale sites not part of the 2023 and 2022 acquisitions, which was partially offset by the incremental contribution from recent acquisitions. Fuel contribution from consignment agent locations decreased by $0.9 million for the fourth quarter of 2023 and $2.6 million for the full year compared to the prior year periods. Fuel margin also decreased for the quarter and for the year ended December 31, 2023, compared to the prior year periods, 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 recent acquisitions. Fleet Fueling The fleet fueling segment commenced operations on July 22, 2022; therefore, the year ended December 31, 2022 does not reflect the operations of this segment for the entirety of such period, which affects period-over-period comparability. For the Three MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Fuel gallons sold – proprietary cardlock locations 33,285 31,040 130,995 57,104 Fuel gallons sold – third-party cardlock locations 3,201 1,585 9,832 2,882 Fuel contribution1 – proprietary cardlock locations$13,146 $16,742 $54,685 $27,632 Fuel contribution1 – third-party cardlock locations$245 $124 $1,215 $189 Fuel margin, cents per gallon2 – proprietary cardlock locations 39.5 53.9 41.7 48.4 Fuel margin, cents per gallon2 – third-party cardlock locations 7.6 7.8 12.4 6.5 1 Calculated as fuel revenue less fuel costs; excludes the estimated fixed fee paid to GPMP for the cost of fuel. 2 Calculated as fuel contribution divided by fuel gallons sold. Fuel contribution was approximately $13.4 million for the fourth quarter of 2023 and $55.9 million for the year, a decrease of $3.5 million for the quarter and an increase of $28.1 million for the year, compared to the prior year periods reflecting a full year of operations from the Quarles Acquisition, which closed in July 2022, as compared to a partial year of operations in the prior year, and the WTG Acquisition, which closed in June 2023. At proprietary cardlocks, fuel margin per gallon decreased as compared to 2022, which year was impacted by historically high rack-to-retail margins and fuel price volatility. Store Operating Expenses For the fourth quarter of 2023, convenience store operating expenses increased $31.0 million, or 18.2% as compared to the prior year period, primarily due to $31.5 million of incremental expenses related to recent acquisitions. Same store expenses were up less than 2%, with increases in repairs and maintenance expenses, rent and personnel expenses partially offset by lower credit card fees. At same stores, personnel expenses for the fourth quarter of 2023 were up $0.7 million from the prior year period, or 1.1%, with wage increases partially offset by reduced overtime and incentives. The total increase in store operating expenses was partially offset by underperforming retail stores that the Company closed or converted to dealer locations. For the year ended December 31, 2023, convenience store operating expenses increased by $109.6 million, or 16.4%, as compared to the prior year, primarily due to $110.7 million of incremental expenses related to recent acquisitions and an increase in expenses at same stores, including approximately $11.1 million, or 4.1%, of higher personnel costs. The increase in store operating expenses was partially offset by lower credit card fees at same stores and underperforming retail stores that the Company closed or converted to dealer locations. Long-Term Growth Strategy Updates Acquisitions and M&A The Company continued to execute its long-term growth strategy, closing three transactions in 2023, marking 25 total acquisitions since 2013. In December 2022, the Company completed its acquisition of Pride, which operated 31 Pride retail convenience stores at closing and had one store under construction that is now opened. Since closing the Pride Acquisition, the Company has earned back in Adjusted EBITDA approximately 65% of its consideration paid for that transaction. Liquidity and Capital Expenditures As of December 31, 2023, the Company’s total liquidity was approximately $831 million, consisting of approximately $218 million of cash and cash equivalents and approximately $613 million of availability under lines of credit. Outstanding debt was $845 million, resulting in net debt, excluding lease related financing liabilities, of approximately $627 million. On May 2, 2023, the Company amended its program agreement (the “Program Agreement”) with affiliates of Oak Street, a division of Blue Owl Capital (“Oak Street”). This amendment extended the term of the Program Agreement and 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 $111.2 million for the year ended December 31, 2023, 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. The Company’s Board of Directors declared a quarterly dividend of $0.03 per share of common stock to be paid on March 21, 2024 to stockholders of record as of March 11, 2024. During the quarter, the Company repurchased approximately 1.1 million shares of common stock under the repurchase program for approximately $8.5 million, or an average share price of $7.49. There was approximately $29 million remaining under the expanded share repurchase program as of December 31, 2023. 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 MonthsEnded December 31, For the YearEnded December 31,Retail Segment2023 2022 2023 2022Number of sites at beginning of period 1,552 1,383 1,404 1,406 Acquired sites — 32 166 32 Newly opened or reopened sites — — 4 — Company-controlled sites converted to consignment or fuel supply locations, net (3) (8) (16) (17)Closed, relocated or divested sites (6) (3) (15) (17)Number of sites at end of period 1,543 1,404 1,543 1,404 For the Three MonthsEnded December 31, For the YearEnded December 31,Wholesale Segment 12023 2022 2023 2022Number of sites at beginning of period 1,825 1,670 1,674 1,628 Acquired sites — — 190 46 Newly opened or reopened sites 2 25 14 83 74 Consignment or fuel supply locations converted from Company-controlled or fleet fueling sites, net 2 8 15 17 Closed, relocated or divested sites (27) (18) (137) (91)Number of sites at end of period 1,825 1,674 1,825 1,674 1 Excludes bulk and spot purchasers. 2 Includes all signed fuel supply agreements irrespective of fuel distribution commencement date. For the Three MonthsEnded December 31, For the YearEnded December 31,Fleet Fueling Segment2023 2022 2023 2022Number of sites at beginning of period 295 183 183 — Acquired sites — — 111 184 Newly opened or reopened sites 2 — 6 — Fleet fueling locations converted from fuel supply locations, net 1 — 1 — Closed, relocated or divested sites — — (3) (1)Number of sites at end of period 298 183 298 183 2024 Full Year Guidance Range The following table provides the Company’s guidance for the year ending December 31, 2024, including a reconciliation of net income to EBITDA and Adjusted EBITDA: For the Year Ending December 31, 2024 (E) Low High (in millions) Net income$2 $29 Interest and other financing expenses, net 1 89 89 Income tax expense 2 1 10 Depreciation and amortization 134 134 EBITDA 226 262 Non-cash rent expense 3 13 13 Share-based compensation expense 4 11 15 Adjusted EBITDA$250 $290 1 Excludes fair value adjustments of financial assets and liabilities. For variable rate debt, assumes that SOFR remains at 5.34% 2 Assumes an effective tax rate of 25% 3 Eliminates the expected non-cash portion of rent, which reflects the extent to which our GAAP rent expense recognized exceeds (or is less than) our cash rent payments. The GAAP rent expense adjustment varies 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. 4 Eliminates expected 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 our Board. The 2024 full year earnings guidance assumes a range of average retail fuel margin from 36 CPG to 40 CPG. Based on quarter-to-date trends, the Company expects its first quarter to contribute less to the full year Adjusted EBITDA than in prior years, representing 12% to 14% of the 2024 full year rather than the approximately 16.5% historical contribution to the full year. The Company’s full year guidance framework anticipates current trends to normalize coming out of the first quarter of 2024. The first quarter guidance corresponds to a range of average retail fuel margin from 35 CPG to 39 CPG. Conference Call and Webcast Details The Company will host a conference call to discuss these results at 10:00 a.m. Eastern Time on February 28, 2024. Investors and analysts interested in participating in the live call can dial 877-605-1792 or 201-689-8728. A simultaneous, live webcast will also be available on the Investor Relations section of the Company’s website at https://www.arkocorp.com/news-events/ir-calendar. The webcast will be archived for 30 days. About ARKO Corp. ARKO Corp. (Nasdaq: ARKO) is a Fortune 500 company that owns 100% of GPM Investments, LLC and is one of the largest operators of convenience stores and wholesalers of fuel in the United States. Based in Richmond, VA, we operate A Family of Community Brands that offer delicious, prepared foods, beer, snacks, candy, hot and cold beverages, and multiple popular quick serve restaurant brands. Our high value fas REWARDS® loyalty program offers exclusive savings on merchandise and gas. We operate in four reportable segments: retail, which includes convenience stores selling merchandise and fuel products to retail customers; wholesale, which supplies fuel to independent dealers and consignment agents; GPM Petroleum, which sells and supplies fuel to our retail and wholesale sites and charges a fixed fee, primarily to our fleet fueling sites; and fleet fueling, which includes the operation of proprietary and third-party cardlock locations, and issuance of proprietary fuel cards that provide customers access to a nationwide network of fueling sites. To learn more about GPM stores, visit: www.gpminvestments.com. To learn more about ARKO, visit: www.arkocorp.com. Forward-Looking Statements This document includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may address, among other things, the Company’s expected financial and operational results and the related assumptions underlying its expected results. These forward-looking statements are distinguished by use of words such as “anticipate,” “aim,” “believe,” “continue,” “could,” “estimate,” “expect,” “guidance,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and the negative of these terms, and similar references to future periods. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to, among other things, changes in economic, business and market conditions; the Company’s ability to maintain the listing of its common stock and warrants on the Nasdaq Stock Market; changes in its strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; expansion plans and opportunities; changes in the markets in which it competes; changes in applicable laws or regulations, including those relating to environmental matters; market conditions and global and economic factors beyond its control; and the outcome of any known or unknown litigation and regulatory proceedings. Detailed information about these factors and additional important factors can be found in the documents that the Company files with the Securities and Exchange Commission, such as Form 10-K, Form 10-Q and Form 8-K. Forward-looking statements speak only as of the date the statements were made. The Company does not undertake an obligation to update forward-looking information, except to the extent required by applicable law. Use of Non-GAAP Measures The Company discloses certain measures on a “same store basis,” which is a non-GAAP measure. Information disclosed on a “same store basis” excludes the results of any store that is not a “same store” for the applicable period. A store is considered a same store beginning in the first quarter in which the store had a full quarter of activity in the prior year. The Company believes that this information provides greater comparability regarding its ongoing operating performance. Neither this measure nor those described below should be considered an alternative to measurements presented in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company defines EBITDA as net income before net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by excluding the gain or loss on disposal of assets, impairment charges, acquisition costs, 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. Consolidated Statements of Operations For the Three Months Ended December 31, For the Year Ended December 31, 2023 2022 2023 2022 (in thousands) Revenues: Fuel revenue$1,759,216 $1,752,136 $7,464,372 $7,401,090 Merchandise revenue 446,727 403,084 1,838,001 1,647,642 Other revenues, net 27,217 24,858 110,358 94,067 Total revenues 2,233,160 2,180,078 9,412,731 9,142,799 Operating expenses: Fuel costs 1,613,230 1,606,546 6,876,084 6,856,651 Merchandise costs 299,954 280,313 1,252,879 1,146,423 Store operating expenses 222,751 186,977 860,134 721,174 General and administrative expenses 38,102 39,274 165,294 139,969 Depreciation and amortization 32,648 26,702 127,597 101,752 Total operating expenses 2,206,685 2,139,812 9,281,988 8,965,969 Other expenses, net 1,168 6,547 12,729 9,816 Operating income 25,307 33,719 118,014 167,014 Interest and other financial income 2,197 2,721 20,273 3,178 Interest and other financial expenses (25,099) (19,016) (91,516) (62,583)Income before income taxes 2,405 17,424 46,771 107,609 Income tax expense (1,317) (4,497) (12,166) (35,557)Income (loss) from equity investment 38 (67) (39) (74)Net income$1,126 $12,860 $34,566 $71,978 Less: Net income attributable to non-controlling interests 48 49 197 231 Net income attributable to ARKO Corp.$1,078 $12,811 $34,369 $71,747 Series A redeemable preferred stock dividends (1,449) (1,449) (5,750) (5,750)Net (loss) income attributable to common shareholders$(371) $11,362 $28,619 $65,997 Net (loss) income per share attributable to common shareholders - basic$(0.00) $0.09 $0.24 $0.54 Net (loss) income per share attributable to common shareholders - diluted$(0.00) $0.09 $0.24 $0.53 Weighted average shares outstanding: Basic 116,638 120,074 118,782 121,476 Diluted 116,638 121,508 119,605 123,224 Consolidated Balance Sheets December 31, 2023 December 31, 2022 (in thousands) Assets Current assets: Cash and cash equivalents$218,120 $298,529 Restricted cash 23,301 18,240 Short-term investments 3,892 2,400 Trade receivables, net 134,735 118,140 Inventory 250,593 221,951 Other current assets 118,472 87,873 Total current assets 749,113 747,133 Non-current assets: Property and equipment, net 742,610 645,809 Right-of-use assets under operating leases 1,384,693 1,203,188 Right-of-use assets under financing leases, net 162,668 182,113 Goodwill 292,173 217,297 Intangible assets, net 214,552 197,123 Equity investment 2,885 2,924 Deferred tax asset 52,293 22,728 Other non-current assets 49,377 36,855 Total assets$3,650,364 $3,255,170 Liabilities Current liabilities: Long-term debt, current portion$16,792 $11,944 Accounts payable 213,657 217,370 Other current liabilities 179,536 154,097 Operating leases, current portion 67,053 57,563 Financing leases, current portion 9,186 5,457 Total current liabilities 486,224 446,431 Non-current liabilities: Long-term debt, net 828,647 740,043 Asset retirement obligation 84,710 64,909 Operating leases 1,395,032 1,218,045 Financing leases 213,032 225,907 Other non-current liabilities 266,602 178,945 Total liabilities 3,274,247 2,874,280 Series A redeemable preferred stock 100,000 100,000 Shareholders' equity: Common stock 12 12 Treasury stock (74,134) (40,042)Additional paid-in capital 245,007 229,995 Accumulated other comprehensive income 9,119 9,119 Retained earnings 96,097 81,750 Total shareholders' equity 276,101 280,834 Non-controlling interest 16 56 Total equity 276,117 280,890 Total liabilities, redeemable preferred stock and equity$3,650,364 $3,255,170 Consolidated Statements of Cash Flows For the Three Months Ended December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Cash flows from operating activities: Net income$1,126 $12,860 $34,566 $71,978 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 32,648 26,702 127,597 101,752 Deferred income taxes (652) 1,572 (4,680) 22,300 Loss on disposal of assets and impairment charges 660 2,342 6,203 5,731 Foreign currency (gain) loss (101) (14) 29 227 Amortization of deferred financing costs, debt discount and premium 661 620 2,518 2,514 Amortization of deferred income (1,840) (2,455) (8,142) (9,724)Accretion of asset retirement obligation 709 574 2,399 1,833 Non-cash rent 3,750 2,189 14,168 7,903 Charges to allowance for credit losses 244 186 1,265 659 (Income) loss from equity investment (38) 67 39 74 Share-based compensation 1,777 3,134 15,015 12,161 Fair value adjustment of financial assets and liabilities 842 452 (10,785) (3,396)Other operating activities, net 352 (80) 2,631 775 Changes in assets and liabilities: Decrease (increase) in trade receivables 44,550 9,638 (17,937) (50,229)Decrease (increase) in inventory 15,373 7,720 (2,013) (6,850)(Increase) decrease in other assets (957) 8,843 (29,386) 1,476 (Decrease) increase in accounts payable (35,836) (5,848) (6,169) 31,645 (Decrease) increase in other current liabilities (8,002) (747) 990 6,884 Decrease in asset retirement obligation (69) (1) (23) (95)Increase in non-current liabilities 2,090 1,739 7,809 11,638 Net cash provided by operating activities 57,287 69,493 136,094 209,256 Cash flows from investing activities: Purchase of property and equipment (35,561) (25,693) (111,164) (98,595)Purchase of intangible assets — — (45) (176)Proceeds from sale of property and equipment 3,134 147,521 310,240 287,901 Business acquisitions, net of cash 33 (228,523) (494,871) (419,726)Prepayment for acquisitions (1,000) (4,000) (1,000) (4,000)Decrease in investments — — — 58,934 Loans to equity investment, net 18 — 18 174 Net cash used in investing activities (33,376) (110,695) (296,822) (175,488)Cash flows from financing activities: Receipt of long-term debt, net 20,810 19,446 99,643 70,896 Repayment of debt (5,640) (3,576) (22,157) (45,948)Principal payments on financing leases (1,260) (1,529) (5,497) (6,543)Proceeds from sale-leaseback — 54,988 80,397 54,988 Payment of Additional Consideration (3,505) (3,828) (3,505) (5,913)Payment of Ares Put Option — — (9,808) — Common stock repurchased (8,495) — (33,694) (40,042)Dividends paid on common stock (3,497) (3,602) (14,272) (10,893)Dividends paid on redeemable preferred stock (1,449) (1,449) (5,750) (5,750)Distributions to non-controlling interests — (60) — (240)Net cash (used in) provided by financing activities (3,036) 60,390 85,357 10,555 Net increase (decrease) in cash and cash equivalents and restricted cash 20,875 19,188 (75,371) 44,323 Effect of exchange rate on cash and cash equivalents and restricted cash 106 12 23 (97)Cash and cash equivalents and restricted cash, beginning of period 220,440 297,569 316,769 272,543 Cash and cash equivalents and restricted cash, end of period$241,421 $316,769 $241,421 $316,769 Supplemental Disclosure of Non-GAAP Financial Information Reconciliation of EBITDA and Adjusted EBITDA For the Three MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 2021 (in thousands) Net income$1,126 $12,860 $34,566 $71,978 $59,427 Interest and other financing expenses, net 22,902 16,295 71,243 59,405 71,207 Income tax expense 1,317 4,497 12,166 35,557 11,634 Depreciation and amortization 32,648 26,702 127,597 101,752 97,194 EBITDA 57,993 60,354 245,572 268,692 239,462 Non-cash rent expense 1 3,750 2,189 14,168 7,903 6,359 Acquisition costs 2 1,099 4,985 9,079 8,162 5,366 Loss on disposal of assets and impairment charges 3 660 2,342 6,203 5,731 1,384 Share-based compensation expense 4 1,777 3,134 15,015 12,161 5,804 (Income) loss from equity investment 5 (38) 67 39 74 (186)Adjustment to contingent consideration 6 68 (128) (604) (2,204) (1,740)Internal entity realignment and streamlining 7 — 67 — 475 — Other 8 230 (577) 956 60 126 Adjusted EBITDA$65,539 $72,433 $290,428 $301,054 $256,575 1 Eliminates the non-cash portion of rent, which reflects the extent to which our GAAP rent expense recognized exceeded (or was less than) our cash rent payments. The GAAP rent expense adjustment varies depending on the terms of our lease portfolio, 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. 2 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. 3 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. 4 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. 5 Eliminates our share of (income) loss attributable to our unconsolidated equity investment. 6 Eliminates fair value adjustments to the contingent consideration owed to the seller for the 2020 acquisition of Empire. 7 Eliminates non-recurring charges related to our internal entity realignment and streamlining. 8 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 MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Revenues: Fuel revenue$913,534 $886,710 $3,858,777 $3,887,549 Merchandise revenue 446,727 403,084 1,838,001 1,647,642 Other revenues, net 17,104 17,638 74,406 67,280 Total revenues 1,377,365 1,307,432 5,771,184 5,602,471 Operating expenses: Fuel costs 818,125 794,986 3,479,531 3,521,648 Merchandise costs 299,954 280,313 1,252,879 1,146,423 Store operating expenses 200,952 169,956 779,448 669,848 Total operating expenses 1,319,031 1,245,255 5,511,858 5,337,919 Operating income 58,334 62,177 259,326 264,552 Intercompany charges by GPMP 1 13,927 12,580 56,076 50,327 Operating income, as adjusted$72,261 $74,757 $315,402 $314,879 1 Represents 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 periods. For the Three Months Ended December 31, 2023 Pride 1 TEG 2 Uncle's (WTG) 3 Speedy's 4 Total (in thousands) Date of Acquisition:Dec 6, 2022 Mar 1, 2023 Jun 6, 2023 Aug 15, 2023 Revenues: Fuel revenue$66,952 $88,309 $20,802 $4,412 $180,475 Merchandise revenue 14,219 36,628 9,156 2,349 62,352 Other revenues, net 1,351 1,367 207 51 2,976 Total revenues 82,522 126,304 30,165 6,812 245,803 Operating expenses: Fuel costs 58,066 81,122 17,011 3,924 160,123 Merchandise costs 9,315 24,803 5,851 1,583 41,552 Store operating expenses 10,372 18,202 4,611 1,249 34,434 Total operating expenses 77,753 124,127 27,473 6,756 236,109 Operating income 4,769 2,177 2,692 56 9,694 Intercompany charges by GPMP 5 884 1,402 293 69 2,648 Operating income, as adjusted$5,653 $3,579 $2,985 $125 $12,342 Fuel gallons sold 17,688 28,045 5,859 1,372 52,964 Fuel contribution 6$9,770 $8,589 $4,084 $557 $23,000 Merchandise contribution 7$4,904 $11,825 $3,305 $766 $20,800 Merchandise margin 8 34.5% 32.3% 36.1% 32.6% For the Year Ended December 31, 2023 Pride 1 TEG 2 Uncle's (WTG) 3 Speedy's 4 Total (in thousands) Date of Acquisition: Dec 6, 2022 Mar 1, 2023 Jun 6, 2023 Aug 15, 2023 Revenues: Fuel revenue$279,396 $324,361 $48,827 $7,550 $660,134 Merchandise revenue 59,440 128,728 21,627 3,749 213,544 Other revenues, net 5,521 4,489 464 74 10,548 Total revenues 344,357 457,578 70,918 11,373 884,226 Operating expenses: Fuel costs 249,183 298,332 40,828 6,722 595,065 Merchandise costs 39,221 88,147 14,036 2,532 143,936 Store operating expenses 40,554 60,151 10,983 1,945 113,633 Total operating expenses 328,958 446,630 65,847 11,199 852,634 Operating income$15,399 $10,948 $5,071 $174 $31,592 Intercompany charges by GPMP 5 3,673 4,911 669 111 9,364 Operating income, as adjusted$19,072 $15,859 $5,740 $285 $40,956 Fuel gallons sold 73,452 98,228 13,382 2,202 187,264 Fuel contribution 6$33,886 $30,940 $8,668 $939 $74,433 Merchandise contribution 7$20,219 $40,581 $7,591 $1,217 $69,608 Merchandise margin 8 34.0% 31.5% 35.1% 32.5% 1 Acquisition of Pride Convenience Holdings, LLC. 2 Acquisition from Transit Energy Group and affiliates ("TEG"); includes only the retail stores acquired in the TEG acquisition. 3 Acquisition from WTG Fuels Holdings, LLC ("WTG"); includes only the retail stores acquired in the WTG acquisition. 4 Acquisition of seven Speedy's retail stores. 5 Represents the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel. 6 Calculated as fuel revenue less fuel costs; excludes the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel. 7 Calculated as merchandise revenue less merchandise costs. 8 Calculated as merchandise contribution divided by merchandise revenue. Wholesale Segment For the Three MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Revenues: Fuel revenue$700,026 $712,578 $3,039,904 $3,234,145 Other revenues, net 6,909 6,303 25,775 23,451 Total revenues 706,935 718,881 3,065,679 3,257,596 Operating expenses: Fuel costs 690,300 701,571 2,995,398 3,181,189 Store operating expenses 10,400 11,104 39,703 42,543 Total operating expenses 700,700 712,675 3,035,101 3,223,732 Operating income 6,235 6,206 30,578 33,864 Intercompany charges by GPMP 1 11,874 11,338 48,402 45,201 Operating income, as adjusted$18,109 $17,544 $78,980 $79,065 1 Represents 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 periods. For the Three Months Ended December 31, 2023 Quarles 1 TEG 2 WTG 3 Total (in thousands) Date of Acquisition:Jul 22, 2022 Mar 1, 2023 Jun 6, 2023 Revenues: Fuel revenue$17,252 $91,340 $3,050 $111,642 Other revenues, net 240 730 9 979 Total revenues 17,492 92,070 3,059 112,621 Operating expenses: Fuel costs 16,600 90,500 2,899 109,999 Store operating expenses 454 871 72 1,397 Total operating expenses 17,054 91,371 2,971 111,396 Operating income$438 $699 $88 $1,225 Intercompany charges by GPMP 4 284 1,542 43 1,869 Operating income, as adjusted$722 $2,241 $131 $3,094 Fuel gallons sold 5,521 31,207 862 37,590 For the Year Ended December 31, 2023 Quarles 1 TEG 2 WTG 3 Total (in thousands) Date of Acquisition:Jul 22, 2022 Mar 1, 2023 Jun 6, 2023 Revenues: Fuel revenue$74,960 $335,477 $6,594 $417,031 Other revenues, net 1,103 2,229 15 3,347 Total revenues 76,063 337,706 6,609 420,378 Operating expenses: Fuel costs 72,357 332,129 6,227 410,713 Store operating expenses 1,884 2,798 153 4,835 Total operating expenses 74,241 334,927 6,380 415,548 Operating income$1,822 $2,779 $229 $4,830 Intercompany charges by GPMP 4 1,171 5,379 93 6,643 Operating income, as adjusted$2,993 $8,158 $322 $11,473 Fuel gallons sold 22,825 109,156 1,869 133,850 1 Acquisition from Quarles Petroleum, Incorporated ("Quarles"); includes only the wholesale business acquired in the Quarles acquisition. 2 Includes only the wholesale business acquired in the TEG acquisition. 3 Includes only the wholesale business acquired in the WTG acquisition. 4 Represents the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel. Fleet Fueling Segment For the Three MonthsEnded December 31, For the YearEnded December 31, 2023 2022 2023 2022 (in thousands) Revenues: Fuel revenue$136,801 $149,857 $530,937 $270,670 Other revenues, net 2,616 1,255 7,818 2,178 Total revenues 139,417 151,112 538,755 272,848 Operating expenses: Fuel costs 125,182 134,571 481,885 245,733 Store operating expenses 6,259 4,788 22,298 8,733 Total operating expenses 131,441 139,359 504,183 254,466 Operating income 7,976 11,753 34,572 18,382 Intercompany charges by GPMP 1 1,772 1,580 6,848 2,884 Operating income, as adjusted$9,748 $13,333 $41,420 $21,266 1 Represents the estimated fixed fee paid to GPMP for the cost of fuel. The table below shows financial information and certain key metrics of recent acquisitions in the Fleet Fueling Segment that do not have (or have only partial) comparable information for the prior periods. For the Three Months Ended December 31, 2023 For the Year Ended December 31, 2023 Quarles 1 WTG 2 Total Quarles 1 WTG 2 Total (in thousands) Date of Acquisition:Jul 22, 2022 Jun 6, 2023 Jul 22, 2022 Jun 6, 2023 Revenues: Fuel revenue$120,857 $15,944 $136,801 $491,642 $39,295 $530,937 Other revenues, net 941 1,675 2,616 4,841 2,977 7,818 Total revenues 121,798 17,619 139,417 496,483 42,272 538,755 Operating expenses: Fuel costs 110,815 14,367 125,182 447,010 34,875 481,885 Store operating expenses 5,043 1,216 6,259 20,003 2,295 22,298 Total operating expenses 115,858 15,583 131,441 467,013 37,170 504,183 Operating income$5,940 $2,036 $7,976 $29,470 $5,102 $34,572 Intercompany charges by GPMP 3 1,563 209 1,772 6,313 536 6,849 Operating income, as adjusted$7,503 $2,245 $9,748 $35,783 $5,638 $41,421 Fuel gallons sold 32,246 4,240 36,486 130,382 10,445 140,827 1 Includes only the fleet fueling business acquired in the Quarles acquisition. 2 Includes only the fleet fueling business acquired in the WTG acquisition. 3 Represents the estimated fixed fee paid to GPMP for the cost of fuel. Investor and Media Contact Jordan Mann ARKO Corp. investors@gpminvestments.com