ARKO Corp. recently announced its financial results for the first quarter, which ended March 31. Highlights from the quarter, compared to the same quarter last year, include:
- Net loss for the quarter was $0.6 million compared to $2.5 million.
- Adjusted EBITDA for the quarter was $36.6 million compared to $47.5 million, with the variance driven by lower fuel contribution, regulatory state-wide elimination of Virginia gaming income and increases in same store operating expenses.
- Merchandise revenue increased 3.6% to $414.7 million.
- Merchandise contribution increased by 9.7% to $134.9 million. Merchandise margin expanded approximately 180 basis points to 32.5%, supported by key marketing and merchandising initiatives.
- Retail fuel contribution increased 5.5% to $92.9 million, with margin increasing to 36.4 cents per gallon from 35.4. Retail same store fuel gallons sold decreased 6.7% compared to a decrease in national OPIS average same-station fuel gallon volume of approximately 5.9%.
Other Notable Highlights
As part of the company’s focus on accelerating organic growth, it is in the process of developing a multi-year transformation plan, including the following elements:
- More aggressive and targeted capital allocation toward strategic sub-segments of its retail stores to drive traffic and improve profitability.
- Continued development and execution of a pilot program to improve customer experience and value proposition, in partnership with a nationally renowned consulting firm, with plans to expand refined offering across larger store network.
- Fully leveraging the company’s unique, multi-segment operating model through more active conversion of retail stores to dealer sites within its wholesale segment to improve profitability.
Additional details will be provided at the company’s investor day that will take place later this year.
ARKO also plans to continue the rollout of its enhanced food program, including its January 2024 new pizza program launch and the upcoming re-launch of its hot dog and roller grill program, anchored by Nathan’s Famous as its hot dog supplier.
Additionally, ARKO’s board approved the expansion of the company’s stock repurchase program from $100 million to $125 million.
“Our first quarter results reflect our ongoing efforts to navigate the current macroeconomic environment, while aggressively positioning ARKO for future organic growth and improved profitability,” said Arie Kotler, chairman, president and CEO of ARKO. “Over the past decade, we have gained significant scale through acquisitions and believe there is meaningful value embedded within our network of retail stores. We have a strong balance sheet and substantial available liquidity, which we plan to use to selectively and methodically increase our investments in our retail store base to drive traffic and improve profitability.”
Kotler continued: “We firmly believe our current valuation does not fully reflect the underlying value of our business, which has grown to become one of the largest convenience store operators in the United States and a Fortune 500 company. Given this disconnect, I am pleased to announce that the Board has approved an expansion of our share repurchase program to $125 million, which we believe will support long-term value creation for our valued stockholders.”
