Company News

Fuel Margins Take Toll on Arko Corp.’s Earnings

Retailer sees net income dip $3.5 million in 3rd quarter compared to previous year
Arko Corporation and GPM Investments
Logos/Arko Corp.

Arko Corp. is pointing to a drop in gasoline margins for a $3.5 million dip in its net income in the third quarter compared to the same period a year ago.

“Our retail fuel margin was lower than the prior year quarter’s elevated fuel margins, which we expected,” said Chairman, President and CEO Arie Kotler, “and we continue to execute our strategy of optimizing retail fuel gross profit dollars.”

In third-quarter 2022, Arko Corp. reported just more than 262 million gallons sold at an average margin of 44.8 cents per gallon (CPG). This year, total gallons sold was up over 300 million but margin averaged 40.3 CPG.

As a result, net income for the recent quarter was $21.5 million, compared to $25.0 million for the prior year quarter. Adjusted EBITDA for the quarter was $91.2 million, compared to $99.5 million for the prior year quarter, primarily due to reduced fuel contribution at same stores.

Same-store merchandise sales excluding cigarettes increased 1.0% for the quarter compared to the prior year period. With cigarettes, same-store merchandise sales for the quarter increased just 0.1% compared to the prior year period, including approximately $2 million in increased loyalty investments in customer acquisition related to expanding membership in the fas Rewards loyalty program, other loyalty promotions, and growth in the total loyalty membership base, part of a long-term goal of the company. This caused a reduction in same-store merchandise sales of approximately 0.4%, and same-store merchandise sales excluding cigarettes of approximately 0.6%.

“I am very pleased with our third-quarter performance, which we believe compares favorably to what was a strong prior year quarter,” Kotler said. “In the third quarter, our entire team continued to execute on our three key marketing and merchandise pillars, including significantly expanding the number of enrolled members in our fas Rewards loyalty program, which we designed to enhance our relationship with our customers and provide them with extraordinary value.”

  • GPM Investments is No. 6 on CSP’s 2023 Top 202 list of the largest U.S. convenience-store chains by store count.

Other highlights of the quarter:

  • The company closed its 25th acquisition, a seven-store deal in Arkansas and Oklahoma, marking five closed acquisitions since the beginning of third-quarter 2022, increasing the total number of locations by approximately 720 during the past year.
  • The company added more than 365,000 enrolled fas Rewards members, while offering a special $10 enrollment promotion commencing in mid-May 2023 through September 2023. As of the end of the third quarter, the company had 1.85 million total enrolled fas Rewards members, representing a 50% increase in enrolled members in the past year.
  • The company announced the expansion of the executive ranks at its subsidiary, GPM Investments LLC, with the hiring of Richard Guidry as GPM’s senior vice president of foodservice. He is being asked to expand its food strategy and scale it to GPM’s “Family of Community Brands.”
  • The retailer has current available liquidity for future acquisitions of more than $2 billion, including cash, lines of credit and availability under its Oak Street program agreement.
  • Arko Corp.’s board of directors declared a quarterly dividend of 3 cents per share of common stock to be paid on Dec. 1 to stockholders of record as of Nov. 17, 2023.

Arko Corp. is a Fortune 500 company that owns 100% of GPM Investments LLC and is one of the largest operators of convenience stores and wholesalers of fuel in the United States. Based in Richmond, Virginia, Arkos stores offer prepared foods, beer, snacks, candy, hot and cold beverages and multiple popular quick-serve restaurant brands. Its retail 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, among others.

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