Arko (ARKO) 12 May 232023 Q1 Earnings call transcript

Greetings and welcome to Arko Corp First Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Ross Parman. you. Thank

begin. may You

Don morning call to call and President, Officer, Kotler, Good Officer. XXXX are first earnings Chairman, and Executive Chief conference webcast. and Chief and you. Financial Arko's welcome quarter Arie Bassell, Thank On today's

report release, with first Arko's filed Form XX-Q SEC website available on and our at Our quarter quarterly for XXXX of earnings on press are arkocorp.com. as the the earnings presentation

similar the Private of is course please These today, speak could to and that uncertainties these first-quarter references unaudited. from to note identified will, cause and may plan, And today words use beliefs statements. and those information results described forward-looking may, management's expect, XXXX. meaning during Reform future by this Before only within and we begin statements and of be intend, of current such as make that of XXXX based all statements actual project, management could, on Securities are call, risks the financial expectations may as Act forward-looking materially the These involve statements periods. of Litigation the differ in estimate,

our quarterly Form for XXXX, Form that those cause XX-K report from expressed quarter discussion the statements release, refer detailed XX-Q of SEC, XX, press made actual filings risks any materially forward-looking and could ended Annual on March with or today. other Report differ on Please the our results the to our our implied including in for to a

and adjusted financial management refer non-GAAP EBITDA, including on measures same-store that call, measures, Please will today's note EBITDA. to

GAAP. this considered is investors, financial our or measures a in not information substitute accordance the believes intended these presentation useful provide While with be in non-GAAP information presented the financial as for isolation to for information of company

our earnings our directly to respective the release from and for we're call Please note that conducting measures GAAP our refer comparable of like our most non-GAAP today to reconciliations remote measures locations. press to also

thank advance As issues be your in and you patience or delays, minor call. brief may there cross-talk other for technical such, We during this understanding.

the like And turn now, to over I'd to call Arie.

Good you joining We Ross. the you, call. morning, Thank appreciate everyone.

Yesterday, we show to our two into positioned seen the the continue we well growth how have you Company major believe are strategy, that executing made may well announcements future.

GPM subsidiary, and $XXX banks we credit upside Petroleum to million XXXX. has maturity of Our from the until its extended million of line May also $XXX syndicate by

We affiliates to with aggregate, including Agreement. purchase credit $X.X also up Oak increased capital $X M&A through extended in which and its has available to cash, lines Program to Oak can more program for continued XX, GPM agreement or September Street XXXX. billion estate billion the extended activity, than real and lease the provide currently In Company's Street of and Arko

stockholders. strategy our to focused acquisition on We value for continuing are our enhance

results. Turning quarter This merchandise strong to was another for our higher acquisitions. contribution and

on merchandise increase detail cigarettes in categories quarter continued excluding X.X%. presentation grew sales arkocorp.com. sales performance destination X.X%. First Same-store on by sales, including by driven our first in same-store same-store strong high-margin in-depth categories was these quarter in increased The

was Some included and of X.X%, increased categories increased highlights beer beverages destination candy up these which sales, packaged X.X%. XX.X%

grew Another XX.X% in of X.X% to basis. XXXX compared the points dollars or on headline quarter contribution XXX growth this a merchandise million merchandising XX.X% key $X.X Total is same-store to margin QX in basis

working increase and sales fuel in-store decline contribution of prior in prior $XXX.X quarter quarter, $XXX.X of year year fuel million that a Total to driving adjusted quarter, the contribution EBITDA recent $XX.X customers of show our resonating million marketing initiative the X.X%. growth. and in to margin million the We lower $XX.X numerous believe million that to are acquisition offset with to increase an merchandise and compared increased contribution a Higher expenses, compared $XX.X for and million in resulting operating merchandising helped these results

same-store a majority contribution $XX.X lower million which $XX.X dollars in with were retail sites compared fuel declined total to same-store was versus XXXX. XXXX. contribution The the of fuel million, March wholesale legacy related QX to TPG margin including elevated On was XXXX. XXXX per per decline gallon in this sites, $X.XXX fuel March basis compared at $XXX.X in to million March $X.XXX gallon

increased fuel This part was Ukraine. in invasion that would driven by still remain, due prices higher We believe of the given increase to operating margin pressures. structurally in

to performance, merchandising three I in-store key on our our will strong now update marketing Going back and you pillars.

and core category. decision strong Our in destination supplier categories is are first with sale a Cigarettes to partnerships. data-driven certainly destination pillar grow

However, as sweet categories snacks, our core QX sales These snacks, beer, such capital. and destination beverages, salty cigarettes and space, are drove categories, our and resources, snacks. our people, same-store of of candy, XX% sales. total refocused These alternative excluding investment XX% same-store packaged on

in deserve basis to us space categories. XX% in sales approximately in XXX XXXX by over categories expect right rates Our points XXXX grew QX categories and and these over customers in XXXX. core these QX six XXXX. for margin have Same-store QX the QX these in The grew value assortment,

We can criteria of continue right strategy these is that and The proposition. add customers stores to where our ensure our refine value. value acquire are we and our of assortment company-operated to we the to core chain, categories drive across offering the expansion M&A

expertise marketing performance events, promotional to purchasing the and and loyalty. the that improve stores product merchandising by scale, of power, has company placement, product the improving and we assortment, enabled Arko's purchase

add Handy our ability which XXXX. XX that North in to is One Carolina, we example of November our stores acquired in Mart value

to make the call, As in follow-up to detail we on last we stores. progress shared continue our

First our QX of as our first to quarter operation. all follows XXXX, were Mart full compared at and XXXX quarter stores QX Handy results

increased Merchandise quarter. core to increased grew and merchandise the X.X% categories, Sales increased points XXX prior-year to sales, I cigarettes earlier, six excluding basis destination XX.X%. sales of XX.X% Merchandise margin by compared mentioned in the XX.X% XX.X%.

we reset. currently We recently the in we believe have TG at resetting. of and process early encouraged similar also acquired stores Pride by that the are stores results We results at will are that we the

the March and launched customers, our app while XX Moving a program. more to fas relationship drive implemented develop with to loyal pillar, second upgrade our with new attracting existing REWARDS that customers trips customers our our to new was We loyalty major and loyalty strengthen

We which pre-launch enrollment XXX offer currently XX. in upgraded customer our the launch the of number of million new our their email Since each stores that of members. approximately spend on X.XX enrolled customers of need to enroll the approximately enjoy to increased BUCKS summer to fas enrolling excited with numbers app, with average in in has also wallet XX% loyalty week compared participating and May to on $XX phone The announce enrollment. days We're we new rewarded address will delivered be valid categories. start these app member

excited than about our offer, very are members non-enrolled as this know and enrolled we marketable stores that make more members. We promotional more in spend trips

average members more XXXX, members made an spend trips almost approximately month non-enrolled XXXX, on our QX average members. in more fact, per enrolled month per than $XX.XX In non-enrolled members. of versus QX six enrolled In

to QX the spend members monthly Additionally, XXXX. compared enrolled XXXX increase QX average by their X.X%

order new in in-app-only as by of redemption While new well and early, in-app delivery deals of HOT app, we the including use functionality. as encouraged our our the engagement are

fresh and including prepared third chicken, our food and packaged pizza, pillar foods, options. The expanding other offerings is

Same-store as quarter year. prior sales compared to in the all franchise across first brands XX.X% the increased

and progress frozen prepared value go-to-market and we early great still strategy. our we our have Sbarro partnership assortment and go franchise defining consumer foods in stage price with are strategy for along with the made grab proposition the with of foods, While Dunkin', 'n' this and

to Our goal is for fresh to further look packaged, forward destination prepared, and become providing we and updates. food

ride. to expectation. the and business continue of Right core exceeding now in objective continuous visits store midst of through our position Our pride delivering make as our customers' cleaning. stores. every in stores each inspection and of results to year all improvement our this great is do We our spring operation and at going annual pillar including convenience our team We store this for think

together we big gears summer, and selling allow for Switching selling the of EV. our for customer ensure days ready the and XXX to rally event to This season. are that biggest prepare season to us

We charging the to vehicle with than included the continue network on across progress ports, more country. to electric more plans charging At QX, charging. our end add capacity of make XX

Turning M&A. to

closing acquisition March TEG the our the well southern territory retail we Alabama TEG XXXX. acquisition as XXX locations. as XXXX, Quarles of X, on closed in into and Mississippi, expanded and and Following stores Pride added dealer XXX convenience

with This acquisition the results the is enhance this pleased the significantly are western in WTG Company's will We attractive anticipated quarter. The footprint so close far. to acquisition Texas. second of in acquisition

address me acquire briefly proposal our Now, America. TravelCenters of to let

acquirer and intention has record has of that made open transparency consistent negotiation. been an choice, track with strategy Our our and very and successful were Arko

at to financing and best acquisition an opportunity given immediate proposal, believe the contingencies diligent premium other significant had have next proposal to ever any value nor contingencies, the perform We have been our stockholders provided no with had cash previous could we neither to our TA to record, customary financing TA for offer

public when of repeated so deal. and take management met wider with us. flexible rapidly rather a and Arko opportunity press firm very fully condition can TA's the and We the move how arrive. We were cash others filings investors and create resistance, Oak engage appreciate reserve appreciate Board financing, a for a with rapidly to We right now right through can in discussions. along Our Street to believe moving conversation advantage attempts with than resulting group more releases productive maintain we

continue concentrating on our traditional capital we consistent evaluate disciplined liquidity, to will approach. our with deal on Given return

driving inside sales business, also to margin are we than profit in committed our gross sustainable investing growth, long-term are We ever expanding more dollars. and

given seasonal the believe currently Don, I is We seasonality and consider quarterly want reiterate not guidance, hand and over cadence our historical detail an call important to I to factor historical when we're our to performance. Before evaluating that providing performance. that

contributes about second average our XXXX third adjusted historically least our XXXX, the first Using about The XX%. and while period, sales strongest. is is the quarter an overall of quarter active EBITDA first of quarter quarter and XX% the

quarter XX% about fourth and quarter the about The has contributed third historically XX%.

Don. call I will now the over turn to

you, Thank Arie.

to The Company record results. excellent has continued

convenience are stable deal-making initiatives flow clearly traction. wholesale enhanced our our cash flexibility core Our and augments ratable from segments business. store The fueling have the investment further fleet in and gaining

strong continues be have balance we and position. liquidity very to currently good Our sheet a

million. $XXX XXXX, approximately equivalents of cash cash we March XX, of As and had

resulting outstanding approximately million, capital debt $XXX of excluding million. leases $XXX net debt Our in was

to excellent Additionally, we continue flow. cash realize

$XX.X versus $XX.X quarter, for first net activities provided cash operating the million XXXX. For the quarter by was of million

working Getting for in revenue in the quarter versus million in merchandise first acquisition. investment increased million compared QX million associated XXXX. expenditures of were quarter. capital $XXX Merchandise $XXX.X Total an to TEG stores, included prior margin with $XX.X to to our by the This million XXXX quarter. increased This convenience of quarter-over-quarter capital for approximately expenditures XX.X%. the basis the capital into results points year $XX.X XXX for

excluding profitability offset fuel fuel first charges million quarter the was Retail X.X% decline and fuel $X.X XXXX. by a of $XX.X QX excluding same-store from TEG primarily in profit intercompany quarter acquisitions. XXXX $XX.X charges decrease million There Pride million was versus million. the declined in $XX.X contribution for This intercompany to this

relatively QX fuel The XXXX strong QX $X.XXX compared $X.XXX to Company XXXX. for retail gallon of per in maintain margin gallon per

First an stores, of quarter increased acquisitions at personnel increase the and QX million quarter related or million same to and operating of versus $XX.X costs prior-year higher convenience store compared million XXXX. approximately $XX.X expenses the to due X.X% or expenses TEG expenses $X in to including XX.X% Pride

underperforming operating store closed in by that retail The expenses converted was dealers. or stores partially offset to increase we

wholesale contribution intercompany excluding quarter. million. charges Wholesale decreased approximately to for $X.X Moving fuel the

fleet approximately fleet Fuel first the quarter. excluding fueling for approximately The quarter. million intercompany contribution from was business $XX.X generated $XXX.X of revenues new fueling million the for relatively the sites fuel charges

proprietary of $XX.X $XX.X $XX.X in million. of to by was net decreased million cents first XXXX. Net prior and million $X.X year per Fuel was million loss quarter margin period. in versus $X.X $X.X to the the gallon. for EBITDA was first intercompany the cardlock for Net million other prior expenses charges the financial million gallon per year $X.XXX quarter for excluding quarter interest versus the compared Adjusted locations income quarter the

under to the continued approximately of announced first remaining repurchased Because repurchase quarter, million company shares previously of a There stockholders, per of stock June common enhance our the approximately stockholders $X.XX of results total of paid and Directors XXXX program. a common our Arko's XXXX. of to for million XX, quarterly approximately In our stock stock declared record Board XX,XXX $XX be as dividend share $XXX,XXX. for May to on are of returns of $XX.X X, desire

Arie back I will to over the And now, turn call

another be hard will believe XXXX that I by Don. close the we their company's of than strong to employees growth. would for more work and year and XX,XXX want Thanks, I dedication. saying performance thank

your will take we questions. Now,

comes Bonadio with your with Our first from proceed Please Instructions] question. question Wells [Operator Anthony Fargo.

Yes. Hi, good morning, guys.

the facility Oak just on start. to So Street quickly

Beyond you can the else terms new how of the upsizing tell about the versus last year? the you last from year, then anything differ is agreement there can tell rate? anything cap us about And us

competitive. this I'm This the deal over be but as here. can morning, secret other able start about to going be more Good now, any Anthony. the move And can sharing is we are to assuming we're information transact, Right point every sauce. to along, say as that going to attractive our as mean, is we that only terms not be active and we at provide actually soon is I thing order be program agreement in I to that we amended different.

Understood. about per latest versus thinking volume? balance your gaps between just side gallon that's how can the And fuel of the potentially just to fuel in gross driving profit your then on in additional incremental achieving historically? color price the trended on business, then that on talk peers any context, And versus you gallon

topic a It's good Sure. good and very question. very

break because XXXX, really I as by down is will March basically earlier. bit little QX decline explained what QX, in basically So a it maybe I happened in the

XXXX we decrease move X.X% with of the towards, I -- enter continue less we in invasion decrease the So we And of in mean, basically February. as much a Ukraine, X% cycling of saw January. along to

as March, March enter the and X.X% X.X%. only only we was decrease was decrease the example, For

going So as we to are be always. competitive

but the the difficulty] was unleaded we see the [technical was year, competitive, that think price on know We here over XXX. the in unleaded price price always what, are you fuel I what This is average XXX. minute started March, of

over year, environment, think, when much going in price we're So I have bit flexibility I here. fuel this prior a of little lower to is think, the than more

competitive. more. And said, always mean are between we very that, continue the people being will but think any, drive as can dollars, to you and And going at gross little inside basically say sales. we I is look correlation, for there if to as an see, sales time I I profit same outside

outside believe offering in very, I that to expenses are continue be that operating again, people mean, making sure higher. competitive and have we I the very are are are given going to But high ultra-competitive margins come we great for and inside to the

Thanks, Arie

course, you. Of thank

next with Kelly Please Our is BMO question with Bania from Markets. Capital proceed your question.

would if our Hi, it, Quarles good you just terms just maybe into on there Arie questions. and Pride could Don, you of missed maybe the morning. or an wondering back the for Thanks to and from was EBITDA could do of EBITDA quarter. in us we for in contribution what taking kind quarter basis, was help Any help and organic be the great. I just trying

Don, would to it? like you take

or -- Pride organic hard out I Sure, And only or of quarter TEG again the one for Good of not morning. it's know, Kelly. year-over-year. did from We sure. Quarles to because do break it's specific Hi, models. that

fuel. message we offset I fuel Quarles results, were acquisitions because great wanted TEG, to margin to think that a that in in pass we're on had very March look, that up -- loss tough merchandise Pride, our we able with we're we and against had and of basically the is

we last all you take keep think headwinds were against if this, doing think close to I from EBITDA So without basically the we anything I specifically very year it, away faced. our able to

acquisitions, message those we numbers, help the that that forward, will that again can year-over-year. consider have downs away model us up weather and we we the take this these and to go fuel balance is but disclosing As

to add the to line just one. on further, just finish And this

on on profit million we Don only $XX.X dollar year. year are as EBITDA prior a We compared gross million to are to on prior mentioned, and same-store $X.X

basically that's So last finished million how offset as and inside basically you see, we those very help to quarter the the was year. acquisitions $XX.X close of quarter the can the and with sales

key as those frame kind mind, in the good the Don, I pattern, as any that's through? are years. would it. margins for or you other and well year guess the fuel to volatility rough mentioned still the Got of all And last this M&A at historically suggesting you items Are reference seasonality, in of what seasonality two well be the the comparisons keep given flowing as over

Sure, sure.

So like again company, things a public a and relatively we're they -- not public. so look give just 'XX, you historical to out major at We provide could again acquisitions and a -- like the any it past acquisitions information with that and It's that there if historical but as of at lot Empire going are. I to an to provide there project weren't the you we're that. more the try what mean, going look you to and on. new things out, 'XX were historical

at I different also you think, when not not it's how it's volume, what -- just sales happening. was just it's things interesting the seasonality, look

the higher-margin in in are things year. your exception last will summer, buying quarter being and example, you margins because see margins merchandise first fuel the lower Typically, that. you're like For higher stuff. The

attention, bring we to just as again, to potential from perspective that everyone's guidance. just point out historical a not and want So -- that

seeing. think own, again certainly least used be been unique. pattern even to a be acquisitions And happens we or in know to belief probably more, as last but sometimes our of can are it's what the two sort it each what But know 'XX my we provides to have but have you we've I I year that seen, kind we've its and seen 'XX years returned three think confusing, more of with -- that we've again, but normal at back yet

same-store a sales. ask more. little of us And a I'll items on for just one helpful. just unpack really inside the same-store bit kind more sales breakdown little you inflation, basket, the Can that's give of traffic, then color more per just Okay, on figure that

do want sure. Yes Arie, me you say do want you or to? to

Go ahead.

Okay.

So we're and part up, in, there and with see again, on. see mean, continuing and loyalty driven talked drive we're less at coming we there is it pass before, also prices pattern we're I inflation the time to and yes same a continuing go to about of obviously people trying obviously, too. that's we try the basket trips to bigger every in what

very do, but people are we personnel doing could on most really what where can on in and a As expenses cigarettes at of are our and our we're the you it focused can our the boost margin, GP obviously, what is because looking high, at from cigarette. tell, sell just we you is look dollars? increase that come Because sales really lot doing both

lot hard store, some very, making and it's the inflation base. the from of inside opportunity again all focused it, we stay that's the still sales we but focused also on, and we is break [indiscernible] really piece about apart I this, the on So and categories to can sure, but the without very new why of much only can already store other Arie we there's as lot on. our that a think, from unlock not mean but things categories, key of inside we talked extract acquisitions, a we're as as can doing

add, of a And couple want points. I Kelly, to

know. to everybody for important it's think I

$X.XX I On point to the the just asked, versus want you that $X.XX. first the question

basically all said, difference increase don't the And I at of everybody This quarter over We I something settled quarter or not of a March. invasion the anticipate. $X.XX the we after anticipate to Ukraine. things month. think big really that in in month we sudden it's It's saw as know is $X.XX March. important for

don't that those this event a March. we basis. think I a saw regular I So things one-time on happening is anticipate in

$XX.X sales. a important by the I the think, the offset this something was course inside very That's and and reason of the million $XX really That is really that's million out in of acquisition March. happened decrease.

go you're number of XX% actually and basically these categories the we on in the to sweet core categories question, I Arko categories pack think I snacks. if six comment Arko bev six and month, if those were profit to and and in XX.X%. our presentation dollars describe sales, you I increase RA candy to almost looking we mean represent categories the really X.X%, regarding that's categories. core excluding -- those actually it why mean up margin describe for snacks, merchandise Number from look So mean, of Corp was one. by the able you increase salty two, we There that's your I gross core cigarettes. basically the all are categories.

our wanted to add I example, XXX thing adding is machines the talking, of last about we for that we The coffee to bean-to-cup talked year initiative, all last kept stores.

So if coffee almost business over stores year. cups added to by bean-to-cup basically our reference, 'XX QX on just those and cups. looking you're really cups, that up business there 'XX QX coffee prior for coffee XXX,XXX versus for business, $X.XX But the compared if It's XXX machine, on we XXX%. sold is basically everybody's up XX% you're were looking coffee was XXX that our up

all actually start -- and that the see this think believe now, things we I you we're see to I results I mean, this all working. in the initiative the and that to actually only for going increase those profit in play, the initiatives basically So we're fruits and we of think all basically is acquisition. gross them, made not including what dollars gross XXXX, to deliver that the of pulling

that mentioned the XXX I Handy items Mart around, approximately store. added we to

on Pride finished adding everybody's the items. Pride, just to resetting, Just added reset we items X,XXX average TEG a which benefit ago, over are stores we on we X,XXX months process also in for couple and another to of which we

XX% categories. This core in belong in the XX%, items almost of increase that is store increase an to

where our very basically understand achieve what a in what you focus able we're think, to I is -- and So short order. guys

Thanks, Arie, I'll get back queue. in the

Thank you.

with Please Griffin is with your question James. next question. Bobby Raymond from Our proceed

and Don, to first, growth wanted for OpEx you little Arie and guess, Good maybe my talk more. I questions. I bit morning, Thank a just unpack guys. taking

in had up you GAAP XX% some of are any good least faster is or control going comparisons forward? So there and to new just even that tough that of about on drivers a actually against growth quarter slow opportunities talk growth at acquisitions growth gross profit bringing of and but the the on basis a OpEx kind pretty of OpEx kind year-over-year. that Can

Yes.

great question. So,

So let me try and apart. pick that

Okay.

first just look the it huge for So Pride, then if OpEx. we retail I went about was take you it look at and -- on TEG retail. we OpEx, at amount let's $XX a was out take that just $X most $XX of up all, just of and I but about at portion Pride, think mean, we same talked most that stores. labor, -- taking-- on million million it's the and you million on was, out If TEG was about

like So, decrease sign and too, it's that's and because so increase at due you filling last as to when filled. though one a look not in, things inflation good to dealer that also more that we rest of labor the also you is so had but so positions, the coming at positions if that not much it's things also open look convert were had lot we and is inflation, versus even year we a would that, stores be our a that's

We the these do with for all. get and them and is we to they that as expect at about that's increasing were, too these think is sign, you acquisitions non-cash we award, much still at and synergy you from positive sure a sign they from G&A a acquisitions, further going we to on, also forward. still not the believe take operate what look the want I that equity talked When expenses G&A, So again we make perspective a to off wanted bring synergies acquisitions. when that

lot this is acquisitions. the by really So driven a by being -- of

being take were labor well I the by up as positions is also G&A, not we're away but labor, filled. this in that labor store going that message filling more both that but think this that from of Some much to true driven as is rates in the And and not the

Don EBITDA were the acquisition G&A, bridge line? inside the the is as that at that all, the should we costs hit impacting out about look in all X.XXX G&A those in comment called

different other acquisition those hit that it costs, line expenses. No, inside under

I'm about talk stock like G&A things acquisition businesses was about we but in because you -- the mean, because a we million the again available. brought got about too when the field. believe our We've So double people new what example, the like, the people within managers expenses in expense, also comp of of having had do of I line. $X.X many did that lot hiring duty. field talking issue huge about I when as competitors I the in for that on weren't talked We're isn't to well,

positions want are amount it us what emphasize of sure positions those with level making open back too. again helps I think, to to filled, the being I So better right people store the point, which and making you're also seeing those is sure filled, that and have go execute we

long from efficient are run a we've be too. going also and technology too So added some the in to more help us standpoint, resources which

So are see growth and keeps down the acquisitions. linear it this just also not just road, and synergies we there's in more where also cash like those, there anticipate going. We growth from a coming is some but definitely non-cash there

me secondly, question. then that guys for detail. acquisition at. my mean, last Okay. and you I guess big the appreciate acquisition I looked obviously potential a TA I the was And Arie,

at and putting philosophy you've philosophy of of about new just was little at program you'd out repurchase bit could there context in then talk you and the I And pretty have outstanding a considering maybe us. targets you a company's the also maybe compelling So on view, share that look size hoping, in updated least your stock financing our at valuation. an now the especially is

you how two so, do those aspects? kind Just balance of

those aspects two think them of one stand are I on -- own. Yes, every its

I We us than no the enough do other double acquisition repurchase opportunity have of mean, going the a end, one with liquidity right the before. to acquisition, to are great end, acquisition for share big continue what a was different value we to probably it was TravelCenters company. on size now on we this

going multiples EBITDA, and were much lot synergies that And able and we size much felt we synergies that their stronger. double over and great we achieve bigger on approach EBITDA a look of that multiply to the and and more to reason probably Double we a felt this is to focused. opportunity pursue something mean the this we it and way them size. is than the is with were great probably given and given I here company by we this try just make that's because this our

the approach. acquisition, acquisition We're that of to M&A mid-sized are approach, not to team we I we that there, our continue are anything think to Bobby. given was the acquisitions don't that in out large really I marketplace. acquisition, going the small have don't their think change paying So in all basically pursue attention

be disciplined. to We're going going continue We're our our continue capital shareholders. on look to to basically to to return on

think over price. as probably it's mentioned, similar you yours. So I stock really the opinion, here, don't My anything changed to

done is on what and that need stock right we and be else cheap our the now to end. see think I evaluate will actually

in details. the Okay. Best here I of second appreciate the luck quarter

We your appreciate very Bobby. Thank question. much, you

question. Our Astrachan your with is with Please proceed from question next Stifel. Mark

guess of good the quarter the through ago? came months Hi, If was I that three there appreciate what thought I in anything the guidance. stood your expectations. relative don't Yes. results you relative morning, totality to to how everyone. give you out curious I'm

question, Mark. a Well, Good it's morning. tricky

come so it's answer. because little the all, are not didn't I can to we close our bit that of a me providing difficult for First tell very to you guidance, expectation. quarter

a our it and think we can put We that. that Not tell $X.XX. again month me didn't anticipating of to surprise, you anticipate $X.XX expectation. I big again not way, I close this in very March. Let the were

the with So that I to were were -- expenses CPG was acquisition operating decrease will terms all we the because noise actually $XX able that that that we of million continue anticipate think a will to here. to And able still sales to offset able believe to us. that and that inside and to the actually had to not here surprise We actually be over over were offset with other just the strong being think margin, to high them we I did we with elevate continue perform we margin of high. in

a year increasing or start put that so then core at point, store on you in plays volumes but the to much to to the how into Then a and presentation. pricing margins, curious or -- the contribute highlighted place within those you companies lot conversion of relative it. purchases inflation-based as that also ago so same-store the could Thanks. starting Got lapping of I'm significant traffic if of categories sales, that sales growth did this inside the you potentially that categories store? the these unpack how into pricing drove or purchases

breakdown, the I but Well, this give can you I'm a example. because using just that's say the and think what and can going coffee I I back great is

reason the is with example. members I hard for keep Okay. this the loyal And talking pushing why so we're members. loyal about When

implement will stores, enroll, to and provide going are come about the There for that reason actually provide XX, for increase. $X.XX to a number. kept $XX program on We that are talking our his I email going May every telephone and we to customers this is

more, when you which sell mean, XXX,XXX a XXX.X%. I is cups

of You mean, to coming than the can more or more loyal some obviously actually understand non-loyal of customers of see loyal it, you often is coming times customers in lot an traffic to because there is our I mean, that our X because basket. a often. stores it. of I stores customers, increase it

purchase product you're I sales. Q increase in explain is think prior-year. and talking average that's about their than -- XXX% coffee on $XX.XX, coffee, that cardholders year, think, tell message other last the the the QX, lowest and about cardholders brought actually, which increase mean, When I in buying is it's I more

and let that. follow-up Yes me on Mark,

of Arie actions me there I increases unit tell -- mostly. part. more on we but this but cannot internally, kind off are moving not taken -- there, we -- the think biggest is can that. The going, more the in, is Arie to the is part Yes, that's units units to actually it increase some says follow-up inflation Let when tactics we inflation, by driven you what increase break talk products so put is it's Arie and these shelf. we we correct, Well that space, biggest out, taken, and right really shelf see but

on we question, this almost you this finish on and question to know, the we because if just environment, this industry, And Mart. finish and to in about small XXX,XXX Handy Mark, example you're competition competing, an just to are talk our specifically mom-and-pop are stores really wanted XX is This chains. looking just remember,

on we Mart since just number Handy over, acquisitions, looking XX example, we took but finished took sooner, we -- Mart the XX as you're remember, closing because So an we Handy acquisition, basis margin able since to mean example. margin, over year. mean, merchandise I I we XXX I increase were looking you're points on mean, by if sales, just, gross for last here,

Okay.

sales in grew of is sales XX.X%. looking of in you're Handy category just Mart, This increase If on all not our those price.

a mean inside that tactic all of those sales and small those of initiative they're growing in all initiative, initiative especially I this over acquisition. merchandising actually marketing we're including those -- using in sale all real really increase is and our of here, think, over I dramatically and here

I with Pride just that were said, reset. have large XX, we location As

we're reset XXX with locations to TEG have right now. We that finishing

continue I to mean the all big that acquisitions impacts believe, we'll just we we'll accomplished. see with we see,

months just Bigger, number has there? generally, it, same the of all X, X, X, the ago? curious Got smaller less relative lastly, volatility if macro, sort the okay. there any at XX And M&A, that targets maybe of or in just to given more impacted I'm are out how change

We are decrease see is all in rates. activities, see because is any side moving increase see all see little that's lot that we actually increase mentioned. here, I a you see to actually interest other just what should and an a multiply see what and believe bit an that happened on anticipate don't don't We think rate at forward, of things M&A the given actually M&A they change, over settle a with happening decrease those I whatsoever. I that bit, any least but little what of small all change interest I I opportunities. higher,

we sure basis granted to As want I increase achieve that one an points. make margin were XXX to grow able no those inside for I've it take of sales, said, in

as of going economy of small suppliers. scale the a Most they they relationship backwards actually the able, and don't are and are with we matter start of have not the have chain fact, because the capacity don't have they don't the they

you you given losing don't here. economy when of even capability, over maybe basically don't have scale have margin So you that those

minute the thing struggling, you out start how try to do the the do exit So, is I first mean, you you figure business.

Right.

I think -- that's

our to term. and didn't And one are really think, is and short talk now One we our I with commitments Mark. and upsize that financing have XXXX, we are in that due GPMP the renewal thing other about XXXX thing. in agreement now not the bonds long-term

So there over is have payments no get or near-term to whatever. we

do we've So that we, same designed it way also, thing and with this Street. what we Oak

I the we that's no think strong to the early our make, that to XXXX. years of GPMP in really payments only into reasons to get that but and should position it extended get upsize we went good with very So have over on also not puts a big come that us remain to that one why cash balloon flow

Got it. Thank you.

you. Thank

Reuter next question. William America. of Please Our with with is proceed question your Bank from

Hi, I two. have

a was although ago So, your up just about there think being first as comment, well. merchandise the I mostly on is inflation, this that comps a units was bit were up,

on as a there. are what from guess, just I I that? you consumers view I from this as you then I think, some clarification trade-down out two, a wanted pretty of benefit as trading historically, may some purchases little recession-resistant category benefit And much bit So where entirely. your thoughts

to made I my earlier. comment want -- that clarify just me let So I

But we can't there that. on Yes, internally it do inflation, break while margin items. and moving categories we look do at that We that we units is key -- more we the out. Okay. see the know see higher

Okay.

again our consumers to stores are not it's because all with set our items want. one So of that is strategies inflation sure make

inflation, make So the to I this message gets is want not is planned. this all across, sure

to consumers margin we items I'll that making it we units prices sorry, the want sure you is higher I'm trying units up. the are which is And more opposed get are cigarettes, items This as or know, we're and declining cigarette-smoker from let -- that buy, finished go the the going to that also to moving, there.

absolutely just your This I not the that we're question want -- things say wanted you're of inflation. all you say actually exactly is all I which initiative that's, answer that's correct. but what that to no, don't is clear, Yes, be to going doing, I second is, to and

We resilient are business. a very

XXXX industry, a probably is is are then during basically, only the one in decrease. We very, industry. only and now. This the industry during inflation, impacted what very didn't that it We resilient happening XXXX-XXXX were right of not you during see

are people our they're typical stores stuff the coming to actually inflation, buying. During to buy that

to right smoke what category, mean essential and is and if bar to regardless. is very what candy good is they I going they're continue stop don't that which it's you'll continue are or beer bad, to a candy? going to doesn't mean happening with smoke, The people with smoke a it eat matter are We here. the thing the very people is know, I now to to I goes and business, category salty What happening over small recession see with big snacks. happening not same

I into for to continue grow. we have located. and those going -- are to I going know, going QSR that pizza the opportunities actually people that us mean, convenience you buy think to to shifting from a is we're basically order happen to I think, stores, local sandwich in those are their of and areas restaurants

today XXX pizza selling are We locations. in

most in our a over XXX price We standpoint, to location. have cup From in for coffee location, it's of bean members. loyal $X.XX

their they some and for coffee, when they wanted things can they members are in that other buy. coffee to for again grabbing loyal today $X.XX buy actually find You and come that

do actually So many should out there. other business inflation I our in than much businesses think better

where of they've are me, remaining from you down coming the opportunities, that just you this over seeing Sorry, been and mean you last one more valuations interest or are opportunities Does referenced mentioned year? those becoming more attractive more M&A that rates. are valuations

is When You mean, difficult their to we That's comes the evaluate to answer them. to I on maybe return because us, capital. looking what it will our those know, on some continue valuation people high. mind it's on we're for in to basically acquisition way stay continue

not And pay a standpoint, our -- a power last economy we bit little our probably more So changing year. size lot. and to than paid year what a are remember, valuation valuation what the today, we today and before. maybe are scale purchasing we today our But paid able given didn't from maybe of

this driven That's just just capabilities. our of is because And our and absolutely. size of again, because

the lot, think small economy opportunity we are, start I not give be I think more other attractive valuation is will but the this But change that last I -- bit to chain a a the versus little some just increase scale have year. beginning. that it us rate bigger I think of over here. again Remember, did So interest only don't

the with just increase last recent. now right XXX at are We

probably I three dramatic. be the see XX year It's a This of valuation to lot very we clear. that that dramatic lower multiple So happened maybe last I what want four a multiple over but it's acquisition that's to -- relatively or I X bit for last ones over went something example. here. there half little from don't a happened, basically I not or for is months, not I think so were that think is the that saw and

Perfect, you. thank

you. Thank

proceed from with Our Holden next is with Hale Please your Barclays. question question.

we I you Good on questions, big stop core That's -- coffee, deal lots for two morning. XX-acre first than -- a one more as so on be core is your $X.XX think TravelCenters. is is of truck model might M&A, of to the of you that -- what you continue was I TravelCenters slightly outside wondering, little should Arko I a different an think the sort bit about unbelievable had transactions do flexibility cup just to and the there cessation a or core like about have about now side. think or the flexible

are some unique only big there with center one company opportunity. a very, Lowe's the not is not and this TravelCenters Again, honest to felt is but a travel there big very opportunity, the great there a be you mean lot, there. lot. was but out that unique travel out other a have and you, really we pilot, I centers,

terms fuel, are we of In fuel. selling

if I We fuel. you're of fuel, on are from looking our business, the revenue, selling mean are we come a in fuel XX% revenue

you're different profit they're that's gross us something that of felt the to might restaurants around came if the food our for is really growing We I'm sales similar there. actually by So from inside basically be that where sales the and the looking dollars, inside talking XX% gross came over way, not expanding and -- most that profit similarity for from think of the profit. service an is today I us offering basically their There us. opportunity XX% in very on from sales TravelCenters services, our inside business

we can But we operate and XX XX on square and foot just can X,XXX XXX store. acquisition, closed square did we foot operate we remember, store,

don't I inside really from sales think don't an different. I business the think was their that model, business So

why very our pursue for that matter it's future, very different don't was business. to the and that's and of multiple attractive The think, concentrating was we company going size attractive size the and for are retail us Again I was very, this the we something us. on this be in

any continue to of retail our no question opportunity going is that and there. the business There majority our comes is out that we're profit from pursue to

on but we the that's had of it's little And in understand your that from inflation. filling and And a structural forward bit I would or open was I wage more do rather terms largely on than as suggest, second go the positions, base. inflation, cost Okay. actually empty -- labor question

it this was you're as you right of thinking in down? about so Is if little a And way a through bit just labor step wondering can find you that to year? way. the leverage this up a I Until go

open on comment that still My wage positions. so of it's straight - have competitors just We different it inflation, let me inflation retail of types first. say, combination and a not a filling I I'd it's it's wage operations. -- there going from well all both. Yes It's answer was more

Just to clarify.

Go ahead, Arie.

And and a to add work street. if -- for not it. for can just And are little to in just come bit no to the problem. you guy and come mean, vacuum. us we I -- you go a operating can work maybe the across to come -- you to Remember,

So you are rural on locations. same basically go when competing the everybody to person, especially

end across in the QSR I Everybody the store, utilities, I street increase. work the can it in don't of can and are. the end day, to expense everybody think they the the how same period. is insurance, in street. for same have come have across us, enough matter, cost location a big we of increase the operate cost mean, go At the different they the day, to to at a doesn't the operate the work store

filling and I increase going I working increase thing inside sales. going increase the increase in that's inside about -- you is people to store labor that's in The that's basically good going think can in in profitability the to position, the the that the the what more sales. service, to people the have assure because you basically inside increase see with more exactly you minute

and the have you have also store. the the you need and two that in make also to one coolers register the and split have customers in person on you actually right a store, of can fill need be help one the When They sure day. them, to the also product on people you working shelf. during you the work When need you to

and is America right retailer in this industry. especially now, is almost facing that So every our again, something in

thing continue see of more that. as think to in see position the fill, I sales, I that to said I increase because is, going good just we think as we're

so I appreciate you it. Great, much. thank

you. Thank

Our next with question question. with is your Bania from Capital proceed Kelly Please Markets. BMO

also, allow more we Thanks. on of of cadence I quarter here about grow fit helpful, kind backdrop merchandising gallons of could as the on gallons. well And margin the gallons wanted as would examples as core gallons as if that conditions forward think or to from but what gallons? store of you that of the very the gave be step a term, to for I gallons the see lot the acquisitions base? what The wondering you or and do Arie, to the just declines? was stabilize you these through and commentary great happening you're longer doing And just would a one was back, kind going you where perspective, inside work these make but those in acquisitions, are

Sure.

First Kelly, providing think we're saw since maybe and you last and what help thank year going coming provide of back, little that's details I for bit you. not to another guidance, all, question. I And for to what a on tried more we maybe

if happened year $X.XX. last Price $X.XX. almost year unleaded just April, ago, the So it in remember basically June guys gallons. in was lost approximately last year, increase a in We price to you X.X%

price were XXX, on to July, Price We lost XX.X% X% gallons. in XX.X% down down June were August, be continued as lower in much and we minute prices. the in year. at to between high dropped July. the we X.XX% price decline, XXX a decline last gallons to high the to and continue continue Around basically fuel see The we at in in

the is following. theory My

not are highways. on We operating major

they of convenience any with driving. to stores stop before drive house price those think basically above rural We the leave to convenience $X, high locations. are minute or a lot in basically place, goes prices. they actually will people the a operating People to their -- or The walk twice stores

Xs all So saw to June, we to to compared way the going fuel small in in be as year. and long to last we're up go like very see of as the continue that the not price $X.XX I believe decline

it's all again, also competitive. And being not about only

to profit increase continue gross to on going also We of concentrate dollars.

the think Arko it across nation. way, And the by all going It's the on Kelly, economy is exceed when just to not depends that's entire fuel economy stores, I here on So over fuel dramatically or price prices. $X impact actually was convenience down that of message, here. entire the the average over

stay and prices I big thing actually But what that to oil believe not prior fuel a prices think the see I we continue believe year. compared will I today, if are see they to today, drop where again, that I

you. Thank

across When actually regarding answer to didn't them question using I same our entire platform, chain. the that we method use the put acquisition. we actually on your we're

and put So KSS. them, kind that are on making on those those it's do guys the software changes of any on we all, putting spot. This not usually, have we something, we first and is of stores algorithm are technology, the measuring not we're

measuring. are We

to used are here, little start We competition our and basically as in we the seeing long gross then profit continue is marketplace. be little as methodology competitive which who by increasing dollars is to the over we

We like the I'd have question of turn back now end closing for Arie reached Kotler and to the over call answer session. the to comments.

Thank season, be forward you, seeing entering And this Thank and morning. looking safe you is days This Robert. stores, a we participating summer. you XXX safe when to everybody over there. driving especially of now, for Thank are guys you. drive in our we're

today's conference. concludes This

this your time for lines disconnect may You and your participation. we at thank you