Arko Corp. Finishes First Public Year With Strong Momentum

RICHMOND, Va. — Arko Corp., parent company of GPM Investments LLC, closed out its first full year as a public company with positive financial results and growth in both store count and in-store initiatives, which it intends to continue through 2022.

The company made significant additions to its portfolio last year through GPM, including its acquisition of the 60-store, Midwest-based Express Stop chain in May, and its purchase of 36 Handy Mart stores in November. GPM acquired a total of 97 sites in 2021.

Throughout the year, Arko also saw positive results stemming from its acquisition of Empire Petroleum Partners' fuel distribution and retail locations, which closed in October 2020.

As of Dec. 31, 2021, Arko had 1,406 retail sites and 1,628 wholesale sites. The company's dual convenience and wholesale model is delivering excellent results, according to Arko Chairman, President and CEO Arie Kotler.

"Our in-store initiatives, merchandising strategy, scale at wholesale and M&A capabilities are working together as an engine for growth in this environment," Kotler said during Arko's fourth-quarter 2021 earnings call, held Feb. 23. "The rapid integration of Empire exceeded our expectations, with notable cost synergies and incremental growth, showing once again we are capable of dealmaking at any scale."

Successful moves last year included a strategic pivot into grab-and-go and frozen foods, which was "a hit" with customers and saw considerable margin growth. Arko also grew its retail fuel margin during the fourth quarter, despite rising fuel prices.

2022 Growth Strategy

The company is already on a growth path for 2022. Prior to the earnings call, Arko announced the acquisition of Quarles Petroleum Inc.'s fueling cardlock and fuel distribution business, as Convenience Store News previously reported.

"This is a business that we believe cannot be replicated today," Kotler said of the deal. "The acquisition of these assets complement and expand our cohorts of strategy, and add a mature fleet fueling platform, and boost our supply and distribution capabilities within our 33 states and Washington, D.C., fuel supply footprint."

The Quarles acquisition is expected to add approximately $17.3 million of adjusted EBITDA on an annualized basis.

Growth plans for 2022 also include several store remodels, a new-to-industry store in Atlanta late in the year, and the opening of more Dunkin' locations.

Additional areas of focus are pizza, based on extremely positive feedback to the company's partnership with Sbarro; bean-to-cup coffee; and its fas REWARDS loyalty program, which will see the launch of a redesigned mobile app.

"We're investing heavily in this program," Kotler said. "We know our most loyal customers shop more often and have larger baskets."

Arko's net income for the fourth quarter of 2021 was $12.9 million, compared to a loss of $6.2 million in the prior-year period. For the full year, net income was $59.4 million, vs. $30.6 million in 2020. Adjusted EBITDA increased 43.8 percent to $58.4 million for the quarter, and increased 39 percent to $256.6 million for the year. Same-store merchandise sales, excluding cigarettes, rose 4.9 percent for the quarter and 4.8 percent for the year.

"I'd like to thank all of our 11,000 team members for their exceptional efforts to exceed our customers' expectations. That's why we achieved these excellent results," Kotler said. "We are excited to continue to drive growth and increase stockholders' value. We believe that we are a unique business and differentiated market leader, and I'm pleased with the progress we have made so far."