Arko (ARKO) 7 Nov 242024 Q3 Earnings call transcript

Good day, everyone, and welcome to today's ARKO Corp.

Third Quarter 2024 Earnings. [Operator Instructions] Please note this call is being recorded [Operator Instructions]. It is now my pleasure to turn today's program over to Jordan Mann, Senior Vice President of Corporate Strategy, Capital Markets and Investor Relations. Please go ahead.

you. Thank welcome Quarter and Call Earnings ARKO's Webcast. and to afternoon, XXXX Third Conference Good are Chairman, and Arie Executive call today's On Kotler, Rob Executive Officer. Officer; President Giammatteo, Vice Financial President Chief and Chief and

earnings third of are the available release XX-Q the website ARKO's filed quarter quarterly on XXXX report Our Form press at for on with as SEC and www.arkocorp.com.

otherwise XXXX. results to period in During compare our the will call stated, management today, unless same

XXXX we begin, that note information Before unaudited. all third financial is quarter please

a a in as or as XX, XXXX. adjusted release September accordance in reported with for events basis results as make quarterly these forward-looking statements of result the third our of the GAAP at management within Form may cautionary our we of management various earnings Private Securities share future Act of meaning quarter section call, forward-looking law. Reform call, both the new release results on information, XX-Q for XXXX. income On call except during such factors basis. Descriptions to operating reflect non-GAAP will detailed this ended to no and During from our forward-looking statements non-GAAP otherwise, earnings these the financial end as a measures update future statements forward-looking this on required adjusted that reconciliations respect the XXXX call Litigation whether this as report under revise on could actual made review EBITDA statements Please measures made current and quarter are of during call, and forward-looking cause results and today. Any in this views with events, of obligation on use, or our to differ our made and or operating is by GAAP to that our ARKO materially statements

intercompany charges fuel segments, individual to exclude like by Arie. fuel turn would over calculated is GPMP. And now share revenue Additionally, fuel less our management for subsidiary, measures costs along I as will business with to profit call and which contribution, the our

will and quarter, we delivered highly all both by Jordan, dealerization joining. XX% managing operators our and our you, as the cover through are consumers categories inflation In at guidance groceries persistent thank on they of and in level fundamental We, for shortly. remaining retail and store increased grapple cost along since with with XXXX. daily Thank within initiative, you expenses, for in other like I industry, operating prices with operations adjusted our fuel more at than of pressure the midpoint focused goods advancing up EBITDA the which our on necessities third seeing

equipped consumer are and earlier to as the spending from summer these times always, value of we remained to everyday believe we in accelerate promotion in continue consumer our XXXX. and this help to look environment our continue merchandising said, to customers challenging During navigate resilience strong as and we to restrained believe soft to the industry offer quarter them trends in during That unable year. were spending the

quarter. our and customers value we ways continue deliver focus quarter, move discounts coming a consumers trends multiple and seeing with purchasing are to we shift as of Looking a loyalty the we to at our into in growing Traffic remained and find online merchandise throughout to number challenging prioritizing value. best promotional on to efforts, offers behavior through the fourth bundles channels exploring the

year, As balance we look online. the of value-oriented ahead have to coming promotions the we

a value Tyson a our enabling couple, price. Chicken a full customers Just fountain our and to offering we at name reasonable Sandwich are drink large $X.XX, with have chips for meal a only meal to

the both just free customers. strategies supports our we to purchase for any examples around to $X.XX. of provide large ability the promotion many These Nathan customers are of offering are fountain our only our to Hotdog are drink much value enhancing couple needed Foodservice the we offering available program. grab our same-store and Additionally, This promotions than launching a quarter with offering of the Nathan's and our which stores customer loyalty Foodservice the with seen for response retail expanded than On XX%. more now hot the are Hotdog, ready famous in we more foodservice, sales XXX strong country. We've second up in quarter, of hotdog across with our a third

before first also because quarter. in positive loyalty, we increased being a of and of per to yesterday $XXX the customers. kicked of the the customers the per enrolled member. Enrolled often sold in than grow value value value-oriented the customers units Fas pizza that additional loyalty efforts sales visit continue in launched pizza results times almost see or in to QX our almost just average Same-store approximately to XX.X%. respect enrollment provide We off to twice spend continue or we XX.X% and continue XX% non-enrolled as offering we base non-enrolled members month associated In our our to Million non-franchise increased holidays, more month program an members With Sweepstakes. the focusing and as loyalty X with

coupons remainder Fas be any over at of stores. purchased any items who of members year, XXX the qualifying our card that a checkout items can has prices receive of that retail For Rewards at for scratch redeemed or will the

enrolled elements future. some our assortment, for time our changes These I are and about into Fas to business to entered such the win structural spend $X that be Sweepstakes, more to strategy the for NPIs. will the drawing Rewards price merchandising near-term of back a also of channel want million. members are our part Pulling from building to addition with price we of card talking scratch In chance operations, the the a instant portion grand foundation

with our it merchandising our assortment, on First, offering. been tobacco and some we discussed since has cigarettes time you all

Recognizing been back category. bar the the to allocating Cigarettes approximately our shift margin seeing demand-driven has XX term higher of install mix our than that tobacco longer have new space We rate assortment. assortment, we OTP fixtures contribution to has strength and points started OTP a across are which growing our is percentage products,

support of by to first quarter to the positive. bar XXXX installation roll category be expect story end X,XXX We expect new to this growth this and to growing OTP back the stores

that out two consumers, Given loyalty increasing are of will or additional on our these them focus value. be members of OTP XXXX and in to our approximately we with enrolled cigarettes provide one customers plan

Next, our to on an I'd like update optimization share channel efforts.

XX we shared call, end are dealer rental stores target, by from we to sites segment. On of converting retail operate our expect end to stores the in the part agreements quarter, we to dealer expected higher approximately plan, stores retail third where income these we dealer quarter, continuing convert to profit retail retail As retail of the sites. that ongoing we realize to believe fuel convert and we another fourth our and the transformation of supply from sites than XX can we stores to our last converting stores. By that exceeded this XXX

benefit segment cumulatively million. we wholesale segment conversion into of account on wholesale Taken income at expect and operating together, and we approximately expect $X.X we operating $XX of retail combined this channel To income retail an million. provide approximately approximately to initiative to of XXX magnitude stores, the retail expected million benefit taking by represent $XX scale are optimization this combined segment to future detail undergoing stores the segment annualized will more

uplift of jewels the focus lead opportunity We while allowing will prioritize retail work with location. expect G&A of to we supporting the the of to on increase We our the and investments see us retail economic us segments. we compound our all an this our will to which doing, tremendous to in our We potential to with believe footprint. maximize that as of reduction future we refine costs expect this it are this conversion portfolio enable

In I opened the on Newport for another this, Handy of the our delivering high-quality with NTIs. experience organic our X store Moving value to community. Carolina, pipeline Newport, We to new-to-industry wanted markedly touch third on, we quarter, shopping in a North of NTI and leg one our Mart expanded ARKO, growth stores.

in at efforts seen month location penetration with of QX. store it This that pleased are the are success in been by the have for has end performance supports We and course sales with over of opened the expect the Foodservice we new-to-industry XXXX. further developing the XX% we over the pipeline, balance into this offering. Of stores year the putting open more our three remaining the of to Foodservice the

for assortment, part our that as will efforts development a of our we the our design You We this of have note marked X in our anticipate plan. support to and will finalized program the growth role that program an prior the implement offering. of to pipeline our give branding touch transformation to will now to discussing plan, these our play increase organic NTI which efforts at you NTIs, Further, we to update expect growth, represents cadence we Day. Concurrent long-term in I look new reflects our of business. design our essential upcoming the pilot of wanted support organic to in all and on forward to with store activity begin guidance new Investor detail and transformation merchandise and to year. stores To-date, including to remodel Foodservice our an greater for call enhanced fourth our permitting and upon full early our pilot in our third for beginning quarter system-wide Rob remodeling results the XXXX. I in financial for over quarter turn fourth review the quarter layout this

Good afternoon, Arie. you, Thank everyone.

low demand continued offset sale. in offset I was contributed quarter versus merchandise want cigarettes, expansion, the that period, fuel for caused reflecting results, per in external methodology sales $X.XX excluding Same-store decline segment gallons margin single-digit X.X% basis approximately points income On a to quarter decrease offset million income gallon. year-on-year to X.X% year-ago increase X.X%, XXX the EBITDA per segment contribution. At by gallon were with for the X.X% compared million in per the high of was compared the million single quarter, total compared quarter, period, the compared our partially partially year-ago merchandise basis, include was operating consistent the offset portion were EBITDA on from gallon the this decline points. retail with a by with in average Same-store level, the the reported for period. $XX.X dollar change contribution gallon $XX.X continued as down lower reiterate the articulated from stronger turning up rate sales, partially the Adjusted adjusted down quarter down $XX.X $X.XXX was Retail primarily down contribution million was for decline adjusted X.X% in approximately approximately same-store down per down margin million with margin of period. operating rate third by decline, of period. quarter. for Total Before quarter down down fuel sales to Total gallon X.X% expense, for of year-ago down transactions was was in year-ago to expansion to $XX in rent XXX expenses last was the margin Same-store transactions quarter. same-store fuel contribution and partially $X.XX XXXX for with the results X.X% were sales for the the were merchandise merchandise fuel by fuel basis X.X% of margin X.X%. noncash the fuel were was increase which while operating while digits to headwinds. our a retail impact we the year-ago by gallon. Same-store The $XX.X approximately quarter, The period. Same-store retail merchandise year-ago $XX.X up million the

in in on was million quarter was million $X.X income million period. decline our by to gallon pay in for versus in from year-ago resulted per a year-ago margin gallon gallon, prompt operating $X.XXX for discounts. the quarter gallons $XX Fuel was year-ago segment; $XX.X lower per versus the $X.XXX Moving the caused compared period, operating reduced million which period. Adjusted margin Wholesale income and fuel $XX.X primarily to per the the

year-ago year-ago operating gallons strong was segment, the performance, was versus to versus roughly expense period, gallon Fleet year-ago by $XX.X period. segment the driven for and our the change fair was in year. Increased adjusted was to primarily favorability with general with compensation $XX.X with timing period. income compensation margin the million to income the For million versus million year-ago $XX.X caused company release was press reconciliation million income the $XX.X for company and the million Adjusted the period, driven operating value $XX.X quarter expense for the compared $X.XXX million for the Total Net quarter the total in $X.X administrative in in $X.XXX other our period, prior for million compared operating $XX.X the in quarter million flat period. Please year-ago to which a in financial lower compared income per for by per fuel gallon interest detailed quarter stock-based year-on-year related accruals. Net incentive year-ago million of $X.X $XX.X EBITDA. expenses warrants. $XX.X income by and adjustments reference quarter the the changes to for for was total to our net from million were quarter

financing Turning to million our and primarily related the estate excluding we balance $XXX real XXXX comprised in remainder financing. the notes, to sheet; quarter ended equipment liabilities, outstanding long-term the senior lease-related our balance debt, line on the third of Capital One with and

at million availability including as capital operating end, We remains remaining we needs expenditures cash were the our $XX.X completely substantial cash quarter of quarter of flow. on $XXX ABL $XXX hand for liquidity million, lines million to on from $XXX with undrawn maintained Our capital continue working in along million. manage approximately credit. Total

retail the and lower higher $X.XX to include expect decline fourth quarter gallon guidance. gallon range margin in to in and end demand $X.XX low our a we to to of a fuel per decline of million fourth adjusted per Turning guidance; same-store a mid-single-digit and full gallon the our our sales, Supporting EBITDA assumptions in million. a year on $XX on be $XX of mid-single-digit end retail quarter

fuel growth and Fleet segments, and benefit in of retail overall expectations in in the driven wholesale optimization our channel our Our guide work by margin for strength channel. our reflects Wholesale accumulating continued EBITDA Fleet

Arie $XXX EBITDA that, guide translates remarks. it quarter revised full range fourth to our with reduced The million fourth of closing hand year reflecting adjusted our of below guide, expectation I'll our $X to same-store EBITDA to year of XXXX merchandise a million. for is $XXX midpoint Our back outlook sales. And quarter million for beginning

Rob. Thanks,

initiatives. concentration for up, continued that, and you quarters thank the to on wrap to employees open the We and our for store to company's the look want hard it work joining the forward landscape. market adapting over I I support strategic shareholder We announcing questions. transformation we focused As today's Thank value-driven Foodservice to remain to reiterate dynamic ongoing value. With on your their call. we up quarter come. will and to appreciate want

[Operator question Bobby Instructions] with James. Griffin Our Raymond first from

you like about a detail pilot are it building are about, X-store So you going Arie, stores? to include? pilot it's be under? talked on What the some of the the I larger guess the other out strategy And things you maybe might to want a what successful, provide first little a more that of to there? initiatives roll timeline base some little go-to-market bit of that big of thing talk I guys the the brands this what's bit to out. Can if Like some

Yes, Sure. problem. a not

a foodservice. the We development actually customer recruited right looking it for consultant -- third-party be went and our this that, here, sure to it right we us. crucial test was feedback. And to not explain are sure all the -- the do make carefully. now we this This including basically merchandise In for just finalizing right, sure hired we of announced that over their we also we to is group to large So food the got that only people assortment, in we actually of very branding layout is everything very, and store a have a what make make of to to is right the very finish system-wide process making after of order pilot to for.

that now the We attached name with be foodservice. brand, will a are to right a coming up brand

basically, it to we'll actually this actually to working permits the actually to disclose layout. But on to during the finish is prepared We're permits and go time. next in through is construction after and QX, couple QX start and beginning we the -- implementing disclose it the we're of idea going XXXX. start the idea that, the start not are really immediately at We

Assuming successful, is more stores which we on, region and in those going start to market. to basically actually the we're X to working that's basically stores actually pilot are the be Richmond we what around that add more stores believe, will the

about be. Okay. back what back more you of a just sense could there there anything the get be share of the trying done gave And that? that like contribution tell stores? bar still Is updated guys to in too you that and have can early is it to or able I'm subset on OTP you the a then details to space, adding of bar

just So in and test yes, investing back seeing the uplift. the test is minute successful. there order bar, that's call other actually shifting that the they're looking tobacco basically moving cannot just tobacco actually They're -- really to the in to our People we sure not margin that's stores. from moving -- idea stores. consumer. of by about least no and much from the stopped over higher our for other At question when are the are is want the of we customers we we are basically We see and to day, many there We out sure XXXX. We -- them was It's X,XXX but make is moving The a our sure And we're is towards one smoking. we we're actually end we products. provide like members, rolling products. what it, results. there. that. don't at I'll you're out -- started two to basically convert the tobacco a why see is -- are cigarettes we the OTP new People actually enrolled that to reason end where for of goal your to very are are have said, have the going. At them check want in The that not have the to we're customers to And over -- that talking the with the OTP. features make installation, that to early, QX this results. in cigarette moment a industry we is here the I make benefit, -- And consumers finish everything cigarettes too the

and of about or talking about see talking cigarette a tobacco are other our than products. we And sales. consuming OTP, that more between that given as either XX% actually for you're smokers of opportunity cigarettes us we're huge So customers almost XX% our

Bobby, penetration. total OTP, merchandise represents XX% And about

is So it significant.

guess And a given these helpful. things, kind good just side bit I in seeing. focusing and the I'm you regions. That's of kind Okay. trends on of I of operate if you're handful or a merchandise different just know we're guys you Like, of questions of by the -- different it unpack some brands

rural weakness X.X% got in? Are you of areas terms in regional a anything point it from delta that difference country maybe some big operate some not you can urban the You or some exposure, of exposure. the chain difference like that's comp across brand at, unanimous the look across pretty we to seeing of is different that the a or negative

I'll this. let Rob it's that. Its But but Rob, answer that different the to have to sure the brand. will But do. I not let I you want about take nothing make just brands regions

the Bobby, nothing regional specifically that seen we've level. at

macro we there are don't here, see is a mean think of I more and but region. significant takes pretty puts pockets issue. that's We by why point broad-based, any there, and So point it's it

your just want Bobby, thing, more one just benefit. add to to I with want something. finish for I

specific up see excluding the we our just were sales QSR. we the It's reason environment, on So including countrywide QX. add cigarettes concentration more while current countrywide. that area. basis to and trend, industry margin, QX. more That's at I the We our sentiment the XXX basically what Foodservice a mentioned I even we to concentration, though offering. The day, And is at favorable higher. that the down, X.X% the were -- But really the Sales And basically between end believe pressure way saw optimistic outcome concentration profitability, many excluding a see down of in And bit and the excluding more least, very you during margin is increase it's this pressure bullish sales forward. our moving trend margin this can across QX increase to XXXX. X.X%. is cigarettes. little was the about the I all cigarettes very this on than I'm the it's that consumer, it's in points. It's were as tell during that. I'm consumer. we not down how on earlier, see our very, focused

We'll next with Kelly from Markets. our Capital Bania question BMO take

to just touched on of outlook quarter kind due fourth it that but about bit, Is you that the sales your a just was Arie, to low improving into same-store I little area. for curious mid-single-digit you in little board was the better. maybe in to affected sounds the kind loop And business just comparisons? It a hurricane then the of like October could quarter? how the bit maybe activity across

Kelly, Yeah, that. take I'll

spot you're October markedly better on. than So September. was

markedly in quarter So but better cautiously QX we're and bottom. was was a optimistic why that's our to the September, that negative fourth low down guide than in still it is mid-single, that

of terms it hurricane, kind right the at hit of end third the quarter. us In the of

a in on Obviously, impact, financial impact only the So from days human had a the of standpoint, on but after a for third we material material of stores the week bulk tons QX. quarter. back no are third quarter, no that. of the within impact about couple And

material So we being QX. see for that don't hugely

standpoint? across you would And about from it. the And supporting that? you how third board what just vendors question activity. in And feel an of another what Got getting ARKO are in promotional doing funding of your activity characterize the How quarter? own you on terms on from promotions promotional the the do you're

Sure.

at of quarter. activities it, promotional I activity believe, most XXX%. the by third funded the the is the call. last tons our of in on mentioned beginning vendors, of I our as had I promotional being quarter, mentioned So We

our We have tons of vendors. promotional I including activity. suffering, Everybody mean, is

all the they're towards to QX. QX. vendors They're with make Our want had during working more. selling They issues that us same sure

out promotions a really, -- all ago. And a and that are promotion given we earlier, Fas mentioned was those for felt few one being holidays, either we success Fas that's given they're the at our the really $X win at said, before XXX by push activity OTP all promotional are vendor, finish the big yesterday XXX%. I is the a fourth launched customers Fas drive and actually very just OTP good with cigarette the million. at -- hard That's for years of big those a supported mentioned two are of significant as being to have And items our traffic. our supported launch launching we there deliver XXX and to with course, are of customers, chance why or Million. are December to Million to mean savings and just customers us funding least need year. your quarter we I Million to to benefit, customers we we OTP I a in a I As given that items that

And something year are the because push to this we on the just opportunity again, funded the conclude And this believe the are tag, We that of talking is before a we quarter. saving doing over fourth as it's promotion. which entirely have promotion we're I about the sales $XX price basically very big. of that by mean supplier. is we end $X.XX it this about talking

to fourth complete wanted store largely Is made it take kind about candidates be for the by we right that that something understand should will this more the to ask if or quarter the can kind wanted the through -- you I help just more should optimization. I of is what fit of also I you that us end we stores initiative just just message an of the one in. of the strategy? this how as ongoing be the years? selected move and them And can

Sure.

about the approximately to answer are to we stores, approximately be the That's by XXX When of of the -- quarter. completed those done benefit we're talking going $X.X benefit. going be with segments. is million the fourth between actually So stores we're XXX with a end the XXX

portion $XX As quarter of G&A they I there them million towards segment, first mentioned what talking don't just were rent those with retail continue at operators. We're and we're we're were benefit think retail to second majority the the finish all is in stores, making much to on believe, shifting the done about during with the that of way those day, supply don't segment. total it's actually them. going the from be the the upside savings. We're million the than money a that, to that agreement stores we're going end at means stores $XX to the collect increase our segment are we stores. investing when those We those capital between operators. actually And prior return see to earlier, of which And of just on -- those believe we wholesale fourth going profitability of to the the that taking going wholesale about by to have the big But and stores quarter, quarter. more make in we're will going them, basically the the I anywhere way basically end to the to XXX

the at that's the investment about of process end that. and behind thought return all on So capital the It's allocation. day

Got it. And just one for last me. one

down quarter? I that see that's was can impacting this we about just if declines you -- there we think where expenses any something operating terms you that? expenses factors that you mentioned achieved talk same-store sustainable X.X%. for operating some or in Can of And how can

Yeah.

we're place same some there. softer so sales. that trends of we in stores Kelly, the overinvesting we're not are Certainly, rightsizing have think, I the as in that the labor

with conscious down. sales that, in it's go the -- So to but savings, again, stores to management rather the a hours that's of it's have labor we'd just but flex

credit helping You'd fees also the also some card lower and that. benefits that's from the have lower on gallons the sales

stores So kind management the again, you down. quarter type of that it's primarily trend and fourth continue. expect in diligent should of combination card to credit the that's of a guide, that the the labor for driving And

Fargo. Wells take our And Bonadio next we'll question Anthony with from

think wanted hitting It ask guys with expanding a about I time to on growth sort I sort ramp? a quickly build seems to are NTIs. think that go unit internally. bit know new sort that like of over X time? some muscle takes bit of you're could How So that pipeline could but you of it high growth, the do gas I growth boxes. the the that would guess, you organic I how

to starting NTI, opened. very short little Those X you're NTI order. Anthony, actually have just with in the one in very we that X We're going We're past. Yes, all right. no NTI way or the NTI a

We another between of during three and complete have end we're four another to going the and will have open that we that year, XXXX. the now

While working NTI, pipeline. as we start those we on on working X are imagine, can you the already

to right we end for XXXX. economy area up, then marketplace the scale, in at given us, and least if quantity the that what went a given that is now short the zero tell have believe X liquidity, can you that ramp of zero to I we to can't feel almost in from pipeline it's of our this the and course, up. ramp from between an finishing to moment, to an know at you but the start to at up XXXX we in going will ramp be we're very in future, this idea able the going opportunity be order, So we quantity I a during XXX our the and of I it now don't the we're provide moment. footprint

you acquisitive. way historically, just That's do out I boxes guys And on and the been acquiring back pretty like and it organic more guess you used capital versus then that you sort about of doing to? thinking return opening think How helpful. going have

I I areas cash our have given we the we of actually population of return in and right now, just growth a to spend than acquisition on way more us think the actually NTIs, with best long we are in -- from our are additional mean, hand and will our term require just opportunity the another just the continue end for what given day, to we not what capital But another of acquisition. given we allocate for on it's stopping best at investment investing the basically mean what's allocate at the opportunity, way capital. looking a and the what's balance on lot I short moment. We're in the economy. standpoint and we course, both. that see probably the capital sheet to in term. from

we're And squeeze to about sort just XXXX, idiosyncratic to early I that? and high-level yet you're thoughts takes, business as model it. how puts guys just any Got guidance more on aren't there, of one know in thinking the giving you in. starting drivers and backdrop the but

place, you merchandising more the I exclusively are a penetration, a I that yeah, the rate talked We've have record Anthony, But about side. of not period. to of mean, that here some themes we'll of had in -- larger to over talk on about Investor in share you accretive we think track accretion area. we've the on Look, we're initiative multiple front. That's the margin food an years think context today. to going Day you anything But look, as when multiyear

contribution. should to there. And of fuel macro fuel would that I the side had a of a I to that's some think again, But a the sort year, -- you front. we is I was important trend think, hopefully, pattern of continue factors, trend. that's on to time. pattern that, Fuel a It's it's bit a we've that up probably QX would probably and this growth price mentioned, a continue. that that for to And as next mean hopeful, again, get see a pick to gallons, expect into macro more bottom. on over again, And we secular thing industry we'll likely driver be us. starts we're continue And that optimize again.

little a Day. share So And hopefully multiyear there. more view color again, we'll when Investor at we're together the in

I earlier, million And see said, this transformation to that. XXXX. $XX finish, very, million comfortable to And going as take Antony, I just as moving very we the into we're you And the all wholesale. account, stores we that mentioned, as into just there feel is with around from retail mentioned This project, over stores you over from here. something between into can can XXXX, XXX $X.X that just million to moving I talking see $XX

as because sales. really there, are volatility I really it's one said, things same-store very on that it's segment. very, And the lower much, two segment shifting over think those feel I comfortable than we the between much another concentrating to

We'll Stifel. ] Connor take Internina our next question with from [

the trying to hotdogs are drinks. better category, I get want with and current you any like into the foot seeing declining know of pizza, to any First, outperformance. I traffic understand more mentioned in if pickup understanding traffic trends driving current are rate in that a tobacco, better conversion particular customer there's stores? gas prices, noticeable Just energy you

I'll from transaction with standpoint. a start

sort third some a months almost same-store assortment quarter. mentioned just prepared performer third range a an And down was assortment on mid-single-digit were but itself we again, in. was that there's pickup cigarettes standpoint, of the have relative the little than specific very we we that mean, the go, positioned more side, was front. better rest we improvement. Again, was in remarks, of bit OTP high couple And transactions, had in the but think, so don't seen decline. a than that's quarter. in a high came one think October digits, for a that. single a out From other sales as points the to OTP talked bit we other got flat. decline single-digit on again, strong I of any was a I are were call -- earlier where challenging, out So about the double on in month versus our how down why quarter I they digit two transactions it's of of for of seeing We've have the

you. Got

Okay. That's helpful.

to Just that. quick a follow-up

I the for expected of sort with dealerized the highlight I targeting you the of longer-term stores business? end into by locations dealerization, amount the figures So that the of expectations, kind are rationale total amount. this how the strategic noticed mean, guess, of you XXX Can vision I and outline the higher a year.

vision You're to the the of business. can of throwing out a how the this all these and figures in kind long-term for But you highlight terms of bit figures benefits just ARKO? motivation more little sort into of

Sure.

assets motivation, the sure course, on mentioned, that that jewel areas to to see #X opportunities. make on I we are is concentrate, of So growth concentrating as we

in different those approximately a grow. with the lot going location. the day, of the between location to some moving wholesale don't fuel opportunities are us third-party, us today because the than is is return some benefit we that, from states We opportunities selling not investment. And located an forward. And making those that capital an be going to for leasing that retail up stores. the to money is going pick of of in and to to being much pay us in moving retail areas the different that those business us a He's smaller just are do in areas we we location. will at to a segment. to feel the those that us just that There We're on wholesale purchase from converted that the feel going stores invest he's just is rent that standpoint not they're and wholesale XX may not stores lot There some to said, between area a we're or to and operator those segment. We of transition that Remember, stores. the to is store have more us a see for end of money of some there locations the to

So see need in invest I investment and just just to us future. We profit just standpoint, felt that's purely don't modeled just from the we in -- we there's we so that think that on areas return a the that for no those stores.

money which X,XXX-plus stores. We population. day, at make the the the the are those with end number stores, those and of segment is the best wholesale just to rest stores one. Related them the business, see feel That's market translate that over the future Foodservice. on more stores in in those of we just in to a of best investing Let's best lot

of Foodservice, opportunity the we best stores the figure that's I purely future. and spend us huge off better a doing It's X-X-X, As just operation as for that. out in said, and operation we in -- what we simple And it's it's as money portfolio. And X-X-X. are really money the invest concentrate

what got lend want quality. just make we our -- on really the as quality. we of to quantity stores, more believe on concentrate the and for about money it's opportunity. We You it's upside and the amount of that's as We about shareholders. concentrate that tremendous the that not stores simple And

the It there you. you that for you be future investment, helpful. stores, mean, into would I your you Got would you one just return really question. that expectations consider final of anticipate Is of mean periods? -- some to performance further like if these underperforming if on could That's if change the leaning they're I better-performing dealerization. in be the in going ramped future, up sounds be dealerization

for of just finish in should the we just and we already different -- plan stores have work basically that that criteria are fuel us wholesale we concentration we the margin of this help be -- the I an don't that the brought good the it of I don't to is we is allocated to between. anticipate that after retail January, the come. as We process day, we we we but converting of consulting segment stores benefit do this don't we stores here, dollars were said, segment, that decided investing from much mean the move evaluate segments having just with up out future. Obviously, that upside make change. us them to came that started year. transformation basically those an what if to I having I call making them thing the the this not I something and But that months -- the stores to we to generate -- outside on look made that. I keep. But it's to wholesale, those are landed the the And see process, firm always three supplying -- be have a can process. long-term about -- it's something and was But stores, Since to opportunity will evaluation the basically just it decisions process, the anticipate more this yesterday. months more on think segments months for end those wholesale we the It's at day, at an That's think to in end as of of as at convert money. more and Wholesale beginning the of the the how there. we those and to clear. soon over the dealer way basically moving really

Holden next Barclays. question Hale with from our take We'll

just I XQ end guess. Arie, the of number the dealerizations, the into of is by this XQ two not lot about or clarifications, probably that run rate I am benefit the I correctly? there the the million $X.X baked from had quarter isn't EBITDA thinking a but

It's on You a correct. it's -- full mean a are year I million basically full the in run rate. run $X.X a rate. is on

we converted XX between completed mentioned, additional I stores. just just just all the up we XXX -- to way the completed about talking the additional as of QX an we're of that that of locations Given October. out We beginning XX today,

full another to That's to think have on with that. XX it's I a to don't about talking QX. the go of meaningful think $X.X we going So But the you're million. year for run an about stores. that think way another about be couple rate, months to way it

Right.

the then I earlier you got of I in had -- lost question. one an so And ways answered

rate So $XX XXXX? was million for year that's at it full run $X.X million as the $XX or to million annualized

XXX conversion $X.X only be about of will the conversion. We're talking year. the by it's the end basically million, done on XXX that

have on So you them. from stores, just from X, $X.X those XXX a that need you million January full starting just to XXXX, into account year, benefit take

QX to it's basically those a And going come $XX $XX when XXXX. to million. we're to going actually addition will additional that, finish that and have stores year to million conversion we additional have conversion into we'll rate, going to full QX between run In on be --

fuel very was declines. the was what question trough the giving in wondering were guys second at was we And implied very And you clear. that that? was of confidence or That I close volume had you Great. kind to in I

in gallon suggesting QX statement that. pleased a we strong a on we're what line for guiding October were I don't We were with we there mean the trough. I which don't larger I were mid-single -- thinking think think that was the is we're that about throw certainly down for fourth I'll that with hoping Arie demand. longer trends. the term. right, in was saw and quarter, fuel we to

XXXX. -- than is we all I the QX, listen, was suffering just there basically think, more suffering economy QX that know at in moment the

As in we're I XXXX. relief said, just see I QX. bullish we I some said, on in And like is QX. the XXXX. country relief some everybody happen in towards And think We to whole see working expects what

industry. rough see a every resilient very this we it's mean, relief was across that said, given industry. And QX I -- industry, a I As some quarter

are You familiar And have really getting to it. are really, -- bottom with think of you we the that that. I

change all always course, that's that I'm but points. already And get I points nothing And But this here, are my of but of the bit because better, over today, bottom. assuming oil to $X range bullish I here stick better over XXXX bad there here, believe people very, the now. expectation headline little right basically go, that change will we the of happened XX that's, a little basis to interest that is, rate think hopefully, bottom start that course, things at going think with more. another fuel basis will basically of down with I that goes $XXX, minute the stay economy mean, call to at of mean, really here last $X sudden a economy expectation a I'll happen. towards price of and a of the $X. We that. XX way towards the will month. a the is price -- price we're I something going Maybe from to I it, very subject price drive Again, over fuel to that versus will are believe to price, to touching

queue. I'll additional the in for over questions further no back remarks. Kotler any closing program have the or Arie to We turn

everybody, Thank Have great you, and joining coming. afternoon, this a you Brittany, for evening. much, almost season us very holiday have thank and great a evening,

you This participation. Thank does today's program. your conclude for

and any wonderful time, You may have day. disconnect a at