ARKO Corp. announced its 2022 financial results, which includes record numbers compared to 2021. The operating income for Q4 was $33.7 million, compared to $28.4 million in the prior year’s quarter. For the year, operating income was $167 million, compared to $142.1 million in 2021.
The net income for Q4 was $12.86 million, compared to $12.93 million in Q4 2021. The net income for the year was $72 million, compared to $59.4 million for the prior year.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $72.4 million for the quarter, compared to $58.4 million in Q4 2021. For the year, adjusted EBITDA was $301.1 million, compared to $256.6 million in 2021.
ARKO completed two accretive acquisitions, marking 22 acquisitions closed since 2013: certain assets of Quarles Petroleum Inc. and the equity of Pride Convenience Holdings LLC. It also announced two pending acquisitions to acquire the assets of Transit Energy Group LLC (TEG) and WTG Fuels Holdings LLC.
Same-store merchandise sales excluding cigarettes increased 4.3% for Q4 and 2.6% for the year compared to the prior year periods and increased 9.2% on a two-year stack basis for the quarter and 7.4% for the year.
Merchandise revenue for the year was $1.65 billion, an increase of $31.2 million compared to 2021. Merchandise revenue for the fourth quarter was $403.1 million, an increase of $7 million compared to the prior year’s period.
Retail fuel gross profit increased 16.3% for the fourth quarter to $104.3 million and increased 19% for the year to $416.2 million.
“ARKO had another excellent year in 2022, with strong performance that highlights our strength as a convenience retailer, with a clear strategy that has continued to drive growth in our business,” said Arie Kotler, chairman, president and CEO of ARKO. “Our core convenience store business performed very well as the many initiatives undertaken this year matured. We successfully pursued accretive acquisitions, closing two, with two more slated to close in the first half of the year. We are focused on disciplined capital allocation, enhancing stores, building value for our customers through multiple initiatives and pursuing strategic acquisitions. With our strong cash flow and balance sheet, I have confidence that we can continue to execute and create stockholder value over the long term.”
Store Operating Expenses
In 2022, store operating expenses increased $75.9 million, or 12.8%, as compared to 2021, due to approximately $36 million of incremental expenses related to the Pride acquisition and the acquisitions completed in 2021 and an increase in expenses at same stores, including $32 million of higher personnel costs, or 14.2%, and $10.4 million of higher credit card fees, or 14.5%, due to higher retail prices. The increase in store operating expenses was partially offset by underperforming retail stores that were closed or converted to independent dealers.
In 2022, the company fully remodeled six stores and commenced the planning and engineering phase of a new-to-industry store in Atlanta, Texas, with expected construction completion in 2024.
The company continued to make progress on numerous in-store sales growth and margin-enhancing initiatives, including preparing its store network for activation of the enhanced, customer relationship-focused fas REWARDS loyalty mobile app, with high-value features for the benefit of its approximately 1.3 million currently enrolled members and new loyalty customers.
For the year, the company successfully installed 548 bean-to-cup coffee machines. As this initiative matures and marketing gains traction, stores with bean-to-cup machines have increased coffee unit sales by an average of 7.2% since installation, and loyalty members taking advantage of the 99-cent coffee program enjoyed over 741,000 more cups compared to 2021.
The company now has 18 Sbarro locations and is currently working on additional new food offerings. The company continues to make progress identifying food offerings with a value proposition that resonates with its customers and increases margins, trips and average basket size.
ARKO Corp. owns 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., it offers prepared foods, beer, snacks, candy, hot and cold beverages and multiple popular quick-serve restaurant brands. It operates in four reportable segments: retail, wholesale, GPM Petroleum and fleet fueling.