ARKO Corp (ARKO, Financial), a Fortune 500 company and one of the largest convenience store operators in the United States, announced its financial results for the quarter ended September 30, 2023, on November 6, 2023. The company reported a decrease in net income and adjusted EBITDA compared to the prior year quarter, primarily due to reduced fuel contribution at same stores. However, the company's merchandise gross profit contribution grew by 15.7% compared to the prior year period.
Financial Performance
ARKO Corp's net income for the 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. This decrease was primarily due to reduced fuel contribution at same stores, with retail cents per gallon ("CPG") of 40.3 in the current quarter compared to retail CPG of 44.8 in Q3 2022.
Merchandise Sales and Profit
Same store merchandise sales excluding cigarettes increased 1.0% for the quarter compared to the prior year period. Merchandise gross profit contribution grew by $21.8 million for the quarter, or 15.7%, as compared to the prior year period. Merchandise margin expanded, increasing approximately 50 basis points to 31.7% for the quarter compared to 31.2% for the prior year period, due to execution of key marketing and merchandising initiatives.
Acquisitions and Membership Growth
The company closed its 25th acquisition, marking five closed acquisitions since the beginning of Q3 2022, increasing the total number of locations by approximately 720. ARKO Corp also added more than 365,000 enrolled fas REWARDS® members during Q3 2023, representing a 50% increase in enrolled members since the end of Q3 2022.
Liquidity and Dividend Declaration
As of September 30, 2023, the company’s total liquidity was approximately $827 million, consisting of cash and cash equivalents of approximately $204 million and approximately $623 million of availability under lines of credit. ARKO Corp.’s Board of Directors declared a quarterly dividend of $0.03 per share of common stock to be paid on December 1, 2023, to stockholders of record as of November 17, 2023.
Future Outlook
ARKO Corp is well-positioned to continue executing its long-term growth strategy with a deep pipeline of potential acquisition opportunities and the liquidity to pursue deals. The company believes its successful track record of making disciplined and accretive acquisitions will continue to enhance value for stockholders.
Explore the complete 8-K earnings release (here) from ARKO Corp for further details.
