RICHMOND, Va. — ARKO Corp., parent company of GPM Investments LLC, reported “strong results” for first-quarter 2022, including a year-over-year increase in operational income, net income, retail fuel gallons, merchandise and more, President, Chairman and CEO Arie Kotler said during the company’s earnings call.
“ARKO had a great quarter, once again posting a quarter-versus-quarter double-digit increase in adjusted EBITDA as our growth story continues with excellent results,” said Kotler. “We are focused on disciplined capital allocation, with substantial liquidity that positions us well to pursue growth opportunities externally and through strategic investments in our stores and operations.”
- GPM Investments LLC, a subsidiary of ARKO Corp., is No. 6 on CSP’s 2022 Top 40 update to the 2021 Top 202 ranking of U.S. c-store chains by store count. Watch for the 2022 Top 202 ranking in the June issue of CSP magazine and in CSP Daily News.
Operating income was $19.3 million for the quarter, an increase of 46% compared to $13.2 million in first-quarter 2021. Net income was $2.3 million, an increase of almost $17 million compared to a loss of $14.7 million in first-quarter 2021.
“Our first-quarter adjusted EBITDA was $50.1 million. This is an increase of 18.4% versus the prior year period,” said Kotler. “We have achieved double-digit adjusted EBITDA growth in each of the five full quarters since we became publicly listed on NASDAQ. We are comparing these strong results to a banner first quarter in 2021. Both quarters had their challenges, but they were much different from a consumer and business perspective.”
In first-quarter 2021, the COVID vaccine was rolling out, and “consumers had significant spending power [and] fuel prices were approximately $1 less,” he said. “This year, rapid inflation and issues created by the tragic war in Ukraine led to a completely different market condition and a considerably different consumer environment. … We believe that we are well-positioned for an economic environment characterized by increased price sensitivity. For example, we are expanding our offering of lower price, pizza, food and fresh coffee. Even with much higher inflation and rising fuel prices in the first quarter of 2022, we had a very strong quarter. On a two-year stock basis, same-store merchandise sales, excluding cigarettes, increased 9.3%. We see a promising sale trajectory and velocity heading into the second quarter.”
In first-quarter 2022, ARKO scaled operations with 1,396 convenience stores and 1,625 wholesale sites. The company also announced an agreement in February with Quarles Petroleum for the acquisition of 121 branded and 64 contracted cardlock sites and dealer customers. Kotler said he expects the deal to close by the second or early third quarter of 2022.
Retail fuel gallons sold increased 5.9% compared to first-quarter 2021. Retail margin cents per gallon increased 16.8% to 37.5 cents per gallon for the first quarter.
ARKO reported merchandise revenue of $367 million for first quarter. Total merchandise contribution increased to $108.2 million, or approximately 10% compared to first-quarter 2021. Merchandise margin increased 210 basis points to 29.5% compared to 27.4% in first-quarter 2021. First quarter same store merchandise sales excluding cigarettes was 9.3% on a two-year stack basis.
“In the first quarter, we installed bean-to-cup coffee at 75 stores. As of today, we have installed bean-to-cup in more than 270 stores. These stores are now in the coffee business 24/7. We remain on track to deliver on this initiative and like we said in Q4, we plan to install machines in 525 stores in 2022,” said Kotler.
Kotler also gave an update on GPM’s loyalty program, which saw 600,000 opt-in members as of the end of the first quarter. “Our customers have made seven more trips per month and these customers have spent about an additional $90 per month, more than a non-involved customer. We consider these to be excellent numbers. We believe continued investment in this program is essential. We remain on track to deliver our announced loyalty app this year,” he said.
ARKO operates in three segments: retail, which includes c-stores selling fuel products, food, beverages and merchandise to retail customers; wholesale, which supplies fuel to independent dealers and consignment agents; and GPM Petroleum, which sells and supplies fuel to ARKO’s retail and wholesale sites. GPM’s c-store brands include Fas Mart, Shore Stop, Scotchman, BreadBox, Young's, Li'l Cricket, Next Door Store, Village Pantry, Apple Market, Jiffi Stop, Admiral, Roadrunner Markets, Jiffy Food Marts, E-Z Mart, 1 Stop, TownStar, ExpressStop and Handy Mart.
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