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ARKO Reports Second Quarter 2021 Financial Results
来源: Nasdaq GlobeNewswire / 12 8月 2021 06:00:02 America/Chicago
Net Income of $25.6 million
Adjusted EBITDA Increases 10.5% to $75.7 million
Same Store Merchandise Sales Increase 2.4% and 7.4% on a Two-Year Stack Basis*
Same Store Merchandise Sales Excluding Cigarettes Increase of 4.3% and 10.2% on a Two-Year Stack Basis*
RICHMOND, Va., Aug. 12, 2021 (GLOBE NEWSWIRE) -- ARKO Corp. (Nasdaq: ARKO) (“ARKO” or the “Company”), a growing leader in the U.S. convenience store industry, today announced financial results for the second quarter ended June 30, 2021.
Second Quarter 2021 Key Highlights*
- Operating income of $45.8 million for the quarter compared to $47.7 million in second quarter of 2020
- Net income for the quarter of $25.6 million compared to $32.5 million for the second quarter of 2020
- Adjusted EBITDA of $75.7 million, or a 10.5% increase compared to the prior year period, supported by strong results in the overall profitability of our Empire acquisition
- Successfully completed 19th acquisition of the Company’s history, closing on the 60 retail convenience stores from the ExpressStop transaction during the quarter, and added 19 net new dealers during the quarter
- Same store merchandise sales increase of 2.4% compared to the prior year period, and 7.4% on a two-year stack basis, while merchandise margin increased 140 basis points to 28.7% from 27.3%
- Same store merchandise sales excluding cigarettes increase of 4.3% compared to the prior year period, and 10.2% on a two-year stack basis
- Retail fuel margin cents per gallon decreased by 19% to 34.3 cents per gallon; same store fuel gallons sold increased by 11.9%
- Extended wholesale merchandise agreement with Core-Mark International and expanded coverage to include 1,055 locations, up from 865 previously
- DoorDash delivery partnership continues its expansion, now operating in 684, or nearly half, of all Company-operated stores
“As a testament to the hard work and dedication of our team as well as our multi-faceted growth strategy, during the second quarter, we once again delivered strong financial performance,” said Arie Kotler, Chairman, President and Chief Executive Officer of ARKO. “Not only was our in-store merchandising strategy on full display, but our M&A engine also proved to be highly productive, led by the continued successful integration of Empire and the acquisition of the ExpressStop stores. Integration efforts for the differentiated wholesale asset are running ahead of expectations as we’ve managed to extract notable cost synergies and generate incremental growth. With a strong balance sheet and clear strategic vision, we are excited to continue the strong execution of our priorities as we aim to drive growth and increase shareholder value.”
* Same store merchandise sales increase on a two-year stack basis is the same store merchandise sales increase in the current year added to the same store merchandise sales increase in the prior year period. This measure may be helpful to improve the understanding of trends in periods that are affected by variations in prior year growth rates.
Second Quarter 2021 Segment Highlights
Retail
For the Three Months
Ended June 30,For the Six Months
Ended June 30,2021 2020 2021 2020 (in thousands) Fuel gallons sold 264,967 208,861 491,079 443,676 Same store fuel gallons sold increase (decrease) (%) 1 11.9 % (26.4 %) (1.7 %) (17.5 %) Fuel margin, cents per gallon 2 34.3 42.5 33.3 33.9 Merchandise revenue $ 426,365 $ 391,697 $ 785,646 $ 715,376 Same store merchandise sales increase (%) 1 2.4 % 5.0 % 4.0 % 2.7 % Same store merchandise sales excluding cigarettes increase (%) 1 4.3 % 5.9 % 6.5 % 3.0 % Merchandise contribution 3 $ 122,413 $ 107,120 $ 220,940 $ 191,708 Merchandise margin 4 28.7 % 27.3 % 28.1 % 26.8 % 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 has 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 divided by fuel gallons sold; excludes the estimated fixed margin paid to GPM Petroleum ("GPMP") for the cost of fuel. 3 Calculated as merchandise revenue less merchandise costs. 4 Calculated as merchandise contribution divided by merchandise revenue. Same store merchandise sales increased 2.4% for the quarter and 4.3% excluding cigarettes as compared to the second quarter of 2020. Total merchandise contribution increased $15.3 million for the quarter compared to the prior year due to same store sales growth coupled with a 140-basis point increase in merchandise margin and a $10.1 million contribution from the ExpressStop and Empire acquisitions.
For the second quarter of 2021, retail fuel profitability (excluding intercompany charges by our wholesale fuel distribution subsidiary, GPM Petroleum LP (“GPMP”)) increased approximately $2.2 million compared to the prior year period primarily due to the $15.6 million contribution from the ExpressStop and Empire acquisitions, which was offset by a decrease in same store fuel profit of $11.9 million (excluding intercompany charges by GPMP). Although same store gallons sold increased by 11.9% compared to the second quarter of 2020, retail fuel margin cents per gallon decreased 19% to 34.3 cents per gallon primarily due to record-setting impact of the COVID-19 pandemic in the prior year.
Wholesale
For the Three Months
Ended June 30,For the Six Months
Ended June 30,2021 2020 2021 2020 (in thousands) Fuel gallons sold – non-consignment agent locations 214,761 7,288 398,406 14,815 Fuel gallons sold – consignment agent locations 41,964 5,012 79,875 10,601 Fuel margin, cents per gallon1 – non-consignment agent locations 5.6 5.4 5.4 5.7 Fuel margin, cents per gallon1 – consignment agent locations 25.4 30.1 23.7 24.3 1 Calculated as fuel revenue less fuel costs divided by fuel gallons sold; excludes the estimated fixed margin paid to GPMP for the cost of fuel. For the second quarter of 2021, wholesale fuel profitability (excluding intercompany charges by GPMP) increased approximately $20.9 million compared to the prior year period, with the Empire acquisition accounting for approximately $20.6 million of the growth. Fuel contribution from non-consignment agent locations grew by $11.7 million compared to the prior year due to a 207 million gallon increase in fuel volume. Fuel margin cents per gallon for these locations increased 0.2 cents compared to the second quarter of 2020.
Fuel contribution from consignment agent locations grew $9.2 million compared to the prior year due to a quarter over quarter increase in volume of 37 million gallons, although fuel margin cents per gallon declined 4.7 cents due to the record-setting fuel margin in the prior year. Although volume sold through consignment locations aggregated 16% of the combined total, fuel margin dollars realized accounted for approximately 47% of the fuel margin dollar contribution.
Liquidity and Capital Expenditures
As of June 30, 2021, the Company’s total liquidity was approximately $509 million, consisting of cash and cash equivalents of $229.4 million, plus $31.8 million of restricted investments, and approximately $248 million of unused availability under lines of credit. Outstanding debt was $685.7 million, resulting in net debt of $424.5 million. Capital expenditures were $32.6 million for the six months ended June 30, 2021, compared to $20.5 million for the prior year period.
Store Network Update
The following tables present certain information regarding changes in the store network for the periods presented:
For the Three Months
Ended June 30,For the Six Months
Ended June 30,Retail Segment 2021 2020 2021 2020 Number of sites at beginning of period 1,324 1,271 1,330 1,272 Acquired sites 61 — 61 — Newly opened or reopened sites 1 — 1 — Company-controlled sites converted to consignment locations and independent and lessee dealers, net (3 ) — (3 ) (1 ) Closed, relocated or divested sites (2 ) (5 ) (8 ) (5 ) Number of sites at end of period 1,381 1,266 1,381 1,266 For the Three Months
Ended June 30,For the Six Months
Ended June 30,Wholesale Segment 2021 2020 2021 2020 Number of sites at beginning of period 1,625 128 1,614 128 Newly opened or reopened sites 21 — 35 — Consignment locations or independent and lessee dealers converted from Company-controlled sites, net 3 — 3 1 Closed, relocated or divested sites (2 ) (1 ) (5 ) (2 ) Number of sites at end of period 1,647 127 1,647 127 Conference Call and Webcast Details
The Company will host a conference call to discuss these results today at 10:00 a.m. Eastern Time. Investors interested in participating in the live call can dial 877-605-1792 or 201-689-8728. A telephone replay will be available approximately two hours after the call concludes through August 23, 2021, by dialing 877-660-6853 or 201-612-7415 and entering confirmation code 13720407.
There will also be a simultaneous, live webcast available on the Investor Relations section of the Company’s website at https://www.arkocorp.com/. The webcast will be archived for 30 days.
About ARKO Corp.
ARKO Corp. (Nasdaq: ARKO) owns 100% of GPM Investments, LLC (“GPM”). Based in Richmond, VA, GPM was founded in 2003 with 169 stores and has grown through acquisitions to become the 6th largest convenience store chain in the United States, operating or supplying fuel to approximately 3,000 locations in 33 states and the District of Columbia, comprised of approximately 1,400 company-operated stores and approximately 1,650 dealer sites to which we supply fuel. We operate in three reportable segments: retail, which consists of fuel and merchandise sales to retail consumers; wholesale, which supplies fuel to third-party dealers and consignment agents; and GPM Petroleum, which supplies fuel to our sites (both in the retail and wholesale segments). Our stores offer fas REWARDS® high value loyalty program, a large selection of beverages, coffee, fountain drinks, candy, salty snacks, and many other products to meet the needs of the everyday customer. 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, our expected financial and operational results and the related assumptions underlying our expected results. These forward-looking statements are distinguished by use of words such as “anticipate,” “aim,” “believe,” “continue,” “could,” “estimate,” “expect,” “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; our ability to maintain the listing of our common stock and warrants on the Nasdaq Stock Market; changes in our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; expansion plans and opportunities; changes in the markets in which we compete; changes in applicable laws or regulations, including those relating to environmental matters; market conditions and global and economic factors beyond our control, including the potential adverse effects of the ongoing global coronavirus (COVID-19) pandemic on capital markets (including with respect to new variants of the virus), general economic conditions, unemployment and our liquidity, operations and personnel; 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 ARKO 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. ARKO assumes no obligation to update forward-looking information, except as required by applicable law.
Media Contact
Andrew Petro
Matter on behalf of ARKO
(978) 518-4531
apetro@matternow.comInvestor Contact
Chris Mandeville
ICR on behalf of ARKO
ARKO@icrinc.comConsolidated statements of operations For the Three Months Ended June 30, For the Six Months Ended June 30, 2021 2020 2021 2020 (in thousands) Revenues: Fuel revenue $ 1,460,763 $ 407,512 $ 2,563,710 $ 970,553 Merchandise revenue 426,365 391,697 785,646 715,376 Other revenues, net 22,686 15,066 44,814 28,226 Total revenues 1,909,814 814,275 3,394,170 1,714,155 Operating expenses: Fuel costs 1,347,109 316,891 2,359,907 816,694 Merchandise costs 303,952 284,577 564,706 523,668 Store operating expenses 154,668 126,023 299,606 254,853 General and administrative expenses 31,861 20,527 58,574 39,420 Depreciation and amortization 25,273 16,814 49,515 33,885 Total operating expenses 1,862,863 764,832 3,332,308 1,668,520 Other expenses, net 1,195 1,733 2,867 5,909 Operating income 45,756 47,710 58,995 39,726 Interest and other financial income 2,601 412 1,695 1,000 Interest and other financial expenses (14,598 ) (12,925 ) (42,309 ) (20,164 ) Income before income taxes 33,759 35,197 18,381 20,562 Income tax expense (8,212 ) (2,510 ) (7,490 ) (499 ) Income (loss) from equity investee 26 (178 ) 20 (411 ) Net income $ 25,573 $ 32,509 $ 10,911 $ 19,652 Less: Net income attributable to non-controlling interests 54 10,614 128 8,213 Net income attributable to ARKO Corp. $ 25,519 $ 21,895 $ 10,783 $ 11,439 Series A redeemable preferred stock dividends (1,434 ) (2,836 ) Net income attributable to common shareholders $ 24,085 $ 7,947 Net income per share attributable to common shareholders - basic and diluted $ 0.19 $ 0.32 $ 0.06 $ 0.17 Weighted average shares outstanding: Basic 124,428 69,490 124,395 68,118 Diluted 133,032 69,490 124,543 68,118 Consolidated balance sheets June 30, 2021 December 31, 2020 (in thousands) Assets Current assets: Cash and cash equivalents $ 229,399 $ 293,666 Restricted cash with respect to bonds — 1,230 Restricted cash 15,537 16,529 Trade receivables, net 67,720 46,940 Inventory 183,113 163,686 Other current assets 90,978 87,355 Total current assets 586,747 609,406 Non-current assets: Property and equipment, net 545,321 491,513 Right-of-use assets under operating leases 963,503 961,561 Right-of-use assets under financing leases, net 200,587 198,317 Goodwill 174,053 173,937 Intangible assets, net 209,342 218,132 Restricted investments 31,825 31,825 Non-current restricted cash with respect to bonds — 1,552 Equity investment 2,697 2,715 Deferred tax asset 39,506 40,655 Other non-current assets 15,804 10,196 Total assets $ 2,769,385 $ 2,739,809 Liabilities Current liabilities: Long-term debt, current portion $ 10,119 $ 40,988 Accounts payable 182,050 155,714 Other current liabilities 117,853 133,637 Operating leases, current portion 50,730 48,878 Financing leases, current portion 7,195 7,834 Total current liabilities 367,947 387,051 Non-current liabilities: Long-term debt, net 675,588 708,802 Asset retirement obligation 56,035 52,964 Operating leases 980,273 973,695 Financing leases 232,236 226,440 Deferred tax liability 3,737 2,816 Other non-current liabilities 148,680 96,621 Total liabilities 2,464,496 2,448,389 Series A redeemable preferred stock 100,000 100,000 Shareholders' equity: Common stock 12 12 Additional paid-in capital 214,781 212,103 Accumulated other comprehensive income 9,119 9,119 Accumulated deficit (18,870 ) (29,653 ) Total shareholders' equity 205,042 191,581 Non-controlling interest (153 ) (161 ) Total equity 204,889 191,420 Total liabilities, redeemable preferred stock and equity $ 2,769,385 $ 2,739,809 Consolidated statements of cash flows For the Six Months
Ended June 30,2021 2020 (in thousands) Cash flows from operating activities: Net income $ 10,911 $ 19,652 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 49,515 33,885 Deferred income taxes 2,109 (950 ) Loss on disposal of assets and impairment charges 975 4,382 Foreign currency gain (1,143 ) (235 ) Amortization of deferred financing costs, debt discount and premium 621 1,167 Amortization of deferred income (4,411 ) (4,328 ) Accretion of asset retirement obligation 834 665 Non-cash rent 3,349 3,548 Charges to allowance for credit losses 322 68 (Income) loss from equity investment (20 ) 411 Share-based compensation 2,514 255 Fair value adjustment of financial assets and liabilities 9,833 — Other operating activities, net 532 (204 ) Changes in assets and liabilities: (Increase) decrease in trade receivables (21,102 ) 819 (Increase) decrease in inventory (11,732 ) 11,895 (Increase) decrease in other assets (4,762 ) 4,230 Increase in accounts payable 26,960 19,527 (Decrease) increase in other current liabilities (6,933 ) 5,237 Decrease in asset retirement obligation (113 ) (116 ) Increase in non-current liabilities 758 2,000 Net cash provided by operating activities 59,017 101,908 Cash flows from investing activities: Purchase of property and equipment (32,638 ) (20,481 ) Purchase of intangible assets (175 ) (30 ) Proceeds from sale of property and equipment 36,059 356 Business acquisitions, net of cash (93,527 ) (320 ) Loans to equity investment — (189 ) Net cash used in investing activities (90,281 ) (20,664 ) Cash flows from financing activities: Lines of credit, net — (83,041 ) Repayment of related-party loans — (4,517 ) Buyback of long-term debt — (1,995 ) Receipt of long-term debt, net 35,056 156,535 Repayment of debt (102,074 ) (54,240 ) Principal payments on financing leases (4,013 ) (4,151 ) Proceeds from failed sale-leaseback 43,569 — Proceeds from issuance of rights, net — 11,332 Investment of non-controlling interest in subsidiary — 19,325 Payment of Merger Transaction issuance costs (4,764 ) — Dividends paid on redeemable preferred stock (2,993 ) — Distributions to non-controlling interests (120 ) (4,734 ) Net cash (used in) provided by financing activities (35,339 ) 34,514 Net (decrease) increase in cash and cash equivalents and restricted cash (66,603 ) 115,758 Effect of exchange rate on cash and cash equivalents and restricted cash (1,438 ) (15 ) Cash and cash equivalents and restricted cash, beginning of period 312,977 52,763 Cash and cash equivalents and restricted cash, end of period $ 244,936 $ 168,506 Use of Non-GAAP Measures
We disclose non-GAAP measures on a “same store basis,” which exclude 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 second quarter in which the store has a full quarter of activity in the prior year. We believe that this information provides greater comparability regarding our ongoing operating performance. These measures should not be considered an alternative to measurements presented in accordance with generally accepted accounting principles (“GAAP”) and are non-GAAP financial measures.
We define EBITDA as net income (loss) 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. None of EBITDA or Adjusted EBITDA are presented in accordance with GAAP and are non-GAAP financial measures.
We use EBITDA and Adjusted EBITDA for operational and financial decision-making and believe these measures are useful in evaluating our performance because they eliminate certain items that we do not consider indicators of our operating performance. EBITDA and Adjusted EBITDA are also used by many of our investors, securities analysts, and other interested parties in evaluating our operational and financial performance across reporting periods. We believe that the presentation of EBITDA and Adjusted EBITDA provides useful information to investors by allowing an understanding of key measures that we use internally for operational decision-making, budgeting, evaluating acquisition targets, and assessing our operating performance.
EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be considered as a substitute for net income (loss), cash flows from operating activities, or other income or cash flow statement data. These measures have limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. We strongly encourage investors to review our 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 stores measures, EBITDA and Adjusted EBITDA, as defined by us, may not be comparable to similarly titled measures reported by other companies. It therefore may not be possible to compare our use of these non-GAAP financial measures with those used by other companies.
The following table contains a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods presented:
Reconciliation of Adjusted EBITDA For the Three Months
Ended June 30,For the Six Months
Ended June 30,2021 2020 2021 2020 (in thousands) Net income $ 25,573 $ 32,509 $ 10,911 $ 19,652 Interest and other financing expenses, net 11,997 12,513 40,614 19,164 Income tax expense 8,212 2,510 7,490 499 Depreciation and amortization 25,273 16,814 49,515 33,885 EBITDA 71,055 64,346 108,530 73,200 Non-cash rent expense (a) 1,578 1,746 3,349 3,548 Acquisition costs (b) 1,988 882 2,599 2,382 (Gain) loss on disposal of assets and impairment charges (c) (400 ) 1,000 975 4,382 Share-based compensation expense (d) 1,488 128 2,514 255 (Income) loss from equity investment (e) (26 ) 178 (20 ) 411 Fuel taxes paid in arrears (f) — — — 1,050 Other (g) 34 269 73 255 Adjusted EBITDA $ 75,717 $ 68,549 $ 118,020 $ 85,483 (a) Eliminates the 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 can vary depending on the terms of our lease portfolio, which has been impacted by our recent acquisitions. For newer leases, our rent expense recognized typically exceeds our cash rent payments, while for more mature leases, rent expense recognized is typically less than our cash rent payments. (b) Eliminates costs incurred that are directly attributable to historical business acquisitions and salaries of employees whose primary job function is to execute our acquisition strategy and facilitate integration of acquired operations. (c) Eliminates the non-cash loss (gain) from the sale of property and equipment, the gain 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 stores. (d) Eliminates non-cash share-based compensation expense related to the equity incentive program in place to incentivize, retain, and motivate our employees, certain non-employees and members of our Board of Directors. (e) Eliminates our share of (income) loss attributable to our unconsolidated equity investment. (f) Eliminates the payment of historical fuel tax liabilities owed for multiple prior periods. (g) Eliminates other unusual or non-recurring items that we do not consider to be meaningful in assessing operating performance. 
