ARKO (US:ARKO)2022-05-08 23:38Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 2022 was $50.1 million, an increase of 18.4% compared to the prior year period [8][22] - Total revenue, including fuel, was $389.3 million, a 2% increase from the prior year [19] - Net income improved to $2.3 million from a loss of $14.7 million in Q1 2021 [22] - Merchandise gross margin increased to 29.5%, up 210 basis points from the prior year [10][19] - Retail fuel margin increased to $37.50 per gallon from $32.10 in the prior year [19] Business Line Data and Key Metrics Changes - Same-store merchandise sales, excluding cigarettes, increased by 9.3% on a two-year basis [9] - Retail fuel gallons sold grew by 5.9% compared to the prior year [10] - Same-store fuel gross profit increased by $9.7 million, excluding intercompany charges [10] - Merchandise margin dollars increased by $9.7 million versus the prior year [19] Market Data and Key Metrics Changes - Same-store fuel volume decreased by 3.1% [19] - Customer count at a remodeled store increased by 50%, with gallons sold increasing by 112.7% [12] - Same-store sales, excluding cigarettes, increased by 94% at a specific remodeled store [12] Company Strategy and Development Direction - The company is expanding its offering of lower-priced items, such as pizza and fresh coffee, to cater to price-sensitive consumers [9][50] - Plans to open a total of 50 Savara franchises in 2022, with two opened in Q1 [11] - The company is committed to organic growth initiatives, including remodels and new store openings [10][14] - The acquisition of Quarles Petroleum is expected to close in Q2 or early Q3 2022, expanding operational segments [14][16] Management's Comments on Operating Environment and Future Outlook - Management noted that the current economic environment is characterized by increased price sensitivity due to inflation and rising fuel prices [9][50] - The company believes it is well-positioned for long-term success despite market challenges [24] - Management expressed confidence in the effectiveness of their loyalty program, which has nearly 600,000 opt-in members [13] Other Important Information - The company declared a quarterly dividend of $0.02 per share, payable on June 15, 2022 [23] - The company repurchased approximately $12 million worth of shares under its repurchase program [23] - Total liquidity as of March 31, 2022, was approximately $744 million [18] Q&A Session Summary Question: Can you provide more detail on the remodel referenced? - The remodel involved a full raise and rebuild of store 3894, increasing its size from 3,500 to approximately 5,600 square feet, and took less than a year to complete [27] Question: When will the pace of remodels increase? - The company plans to complete a total of nine remodels and is focusing on learning from recent results to increase the pace [30] Question: How have rising gas prices affected customer behavior? - Management observed that customers are making more frequent trips to fill gas due to higher prices, but this has not significantly impacted in-store sales [35] Question: How are same-store wages and credit card fees tracking? - Same-store credit card fees increased by about $3 million compared to Q1 2021, while personnel expenses were slightly below expectations [38][39] Question: What is the company's strategy regarding pricing in a price-sensitive environment? - The company is focusing on offering lower-priced items and adjusting its product mix to meet consumer needs during economic downturns [50][51]