ARKO (US:ARKO)2025-11-05 21:01Business Operations - As of September 30, 2025, ARKO Corp. operated 1,182 retail convenience stores and supplied fuel to 2,053 dealer locations[108] - The company completed 26 acquisitions from 2013 through September 30, 2025, including the acquisition of 21 SpeedyQ Markets in April 2024[120] - The company opened 3 new format stores in 2025, with plans for a region-wide rollout and additional openings in 2026[116] - ARKO Corp. plans to continue expanding its wholesale fuel distribution network, which is expected to yield greater profitability[111] - The wholesale segment saw an increase in the number of sites from 1,922 at the beginning of 2025 to 2,053 by September 30, 2025[117] Financial Performance - For the three months ended September 30, 2025, fuel revenue decreased by $183.9 million, or 10.3%, compared to the same period in 2024, primarily due to a decrease in average fuel prices and fewer gallons sold[135] - Merchandise revenue for the same period decreased by $79.9 million, or 17.0%, mainly due to closed or converted retail stores and decreased same-store revenues[136] - Total revenues for the three months ended September 30, 2025, were $2,020.8 million, down from $2,279.2 million in 2024, reflecting a decrease of approximately 11.3%[132] - Operating income for the three months ended September 30, 2025, was $35.9 million, compared to $41.6 million in the same period of 2024, a decrease of 13.5%[142] - For the nine months ended September 30, 2025, fuel revenue decreased by $686.3 million, or 12.9%, compared to the same period in 2024, attributed to lower average fuel prices and fewer gallons sold[146] - Merchandise revenue for the nine months ended September 30, 2025, decreased by $214.2 million, or 15.8%, primarily due to closed or converted retail stores[147] - Total operating expenses for the nine months ended September 30, 2025, decreased by $874.9 million, or 13.1%, with fuel costs down by $659.6 million, or 13.6%[149] - Net income attributable to ARKO Corp. for the three months ended September 30, 2025, was $13.5 million, compared to $9.7 million in 2024, an increase of 39.1%[144] - Adjusted EBITDA for the three months ended September 30, 2025, was $75.2 million, compared to $78.8 million in the same period of 2024, a decrease of 4.9%[145] - For the nine months ended September 30, 2025, net income attributable to the Company was $20.9 million, a decrease from $23.1 million in the same period of 2024[155] - Adjusted EBITDA for the nine months ended September 30, 2025, was $183.0 million, down from $192.0 million in 2024, reflecting a decline of 4.2%[156] Market Conditions - Inflation and higher interest rates have increased merchandise costs, affecting consumer purchasing power and potentially reducing sales volumes[125] - Retail fuel margins are significantly impacted by wholesale fuel costs, which can fluctuate due to various market factors[122] - The company operates in a highly competitive retail convenience market, facing competition from both chain and individual operators[126] - Same store fuel gallons sold decreased by 4.7%, or approximately 11.5 million gallons, reflecting a challenging macroeconomic environment[163] Cash Flow and Liquidity - As of September 30, 2025, the company had a strong liquidity position of approximately $891 million, consisting of $307 million in cash and cash equivalents[216] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $148.0 million, compared to $199.1 million for the same period in 2024[223] - Cash flows from operating activities were primarily impacted by higher tax payments and a decrease in Adjusted EBITDA[225] - For the nine months ended September 30, 2025, cash flows provided by operating activities were $148.0 million, a decrease of 25.7% compared to $199.1 million for the same period in 2024[225] Shareholder Activities - The company repurchased approximately 4.5 million shares of common stock for approximately $18.5 million during the nine months ended September 30, 2025[219] - The company declared dividends of $0.03 per share on common stock, totaling approximately $10.3 million for the three payments made in 2025[218] Debt and Financing - Approximately 51% of the company's debt bore interest at variable rates as of September 30, 2025, increasing interest rate risk[217] - The Capital One Line of Credit had approximately $380.8 million drawn as of September 30, 2025, with $418.7 million available for use[237] - The company had $450 million in 5.125% Senior Notes due 2029, which are guaranteed by certain wholly owned domestic subsidiaries[231] - Financing activities for the nine months ended September 30, 2025, included net proceeds of $18.7 million from long-term debt and $20.8 million for common stock repurchases[229] Operational Efficiency - Site operating expenses decreased by $76.0 million, or 12.6%, for the nine months ended September 30, 2025, primarily due to reduced expenses from closed or converted retail stores[175] - Fuel margin per gallon at proprietary cardlock locations increased to 48.9 cents in Q3 2025 from 46.1 cents in Q3 2024, driven by favorable diesel margins[192] - Total operating expenses for the nine months ended September 30, 2025, were $3,652,152 thousand, a decrease from $4,279,157 thousand in the same period of 2024[198]