• 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 locations214,761 7,288 398,406 14,815
    Fuel gallons sold – consignment agent locations41,964 5,012 79,875 10,601
    Fuel margin, cents per gallon1 – non-consignment agent locations5.6 5.4 5.4 5.7
    Fuel margin, cents per gallon1 – consignment agent locations25.4 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 Segment2021  2020  2021  2020 
            
    Number of sites at beginning of period1,324  1,271  1,330  1,272 
    Acquired sites61    61   
    Newly opened or reopened sites1    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 period1,381  1,266  1,381  1,266 
            


     For the Three Months
    Ended June 30,
     For the Six Months
    Ended June 30,
    Wholesale Segment2021  2020  2021  2020 
            
    Number of sites at beginning of period1,625  128  1,614  128 
    Newly opened or reopened sites21    35   
    Consignment locations or independent and lessee dealers converted from Company-controlled sites, net3    3  1 
    Closed, relocated or divested sites(2) (1) (5) (2)
    Number of sites at end of period1,647  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.com

    Investor Contact

    Chris Mandeville
    ICR on behalf of ARKO
    ARKO@icrinc.com


      
      
     Consolidated 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. 
             


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