ARKO Corp. Reports Second Quarter 2023 Results

Strong Quarter Led by Higher Merchandise Contribution and Acquisitions


RICHMOND, Va., Aug. 07, 2023 (GLOBE NEWSWIRE) -- ARKO Corp. (Nasdaq: ARKO) (“ARKO” or the “Company”), a Fortune 500 company and one of the largest convenience store operators in the United States, today announced financial results for the quarter ended June 30, 2023.

Second Quarter 2023 Key Highlights1

  • Net income for the quarter was $14.5 million, compared to $31.8 million in the prior year quarter, primarily due to an approximately $15 million increase in depreciation and amortization expenses in connection with recent acquisitions, and favorable fair-value adjustments in the prior year quarter.
  • Adjusted EBITDA for the quarter was $86.2 million, an increase of $7.2 million, as compared to $79.0 million in the prior year quarter.
  • Same store merchandise sales excluding cigarettes increased 3.8% for the quarter compared to the prior year period; same store merchandise sales increased 0.7% for the quarter compared to the prior year period.
  • Merchandise gross profit contribution grew by $6.5 million for the quarter, or 5.0%, on a same store basis, as compared to the prior year period.
  • Merchandise margin continued to increase by 150 basis points to 31.9% for the quarter compared to 30.4% in the prior year period.
  • Total retail gallons increased 15.9% in Q2 2023 compared to Q2 2022, while volumes on a same store basis declined 2.6%.

Other Key Highlights

  • On June 6, 2023, closed the acquisition of the retail, wholesale and fleet fueling assets of WTG Fuels Holdings, LLC (“WTG”), the owner of Uncle’s Convenience Stores and GASCARD fleet fueling operations (the “WTG Acquisition”).
  • Currently available financing of more than $2 billion, including cash, lines of credit and Oak Street agreement.
    • Renewal and increase of GPMP credit line to $800 million, extending maturity to 2028.
    • Amended and extended the program agreement with Oak Street, a division of Blue Owl Capital (“Oak Street”), with capacity of up to $1.5 billion (in addition to the funding for the WTG Acquisition).
  • Ended quarter with 1.48 million total enrolled fas REWARDS® members, representing a 10.5% increase in enrolled marketable members since the first quarter of 2023.
  • On June 30, 2023, introduced a new Pride location in South Windsor, Connecticut, boasting almost 5,000 square feet, indoor and outdoor seating, and a drive through for even more convenience.
  • Named for the second consecutive year to the 2023 Fortune 500 list, ranking 460th, moving up 38 places from 2022.
  • ARKO Corp.’s Board of Directors increased the Company’s authorized share repurchase program from $50 million to $100 million.
  • ARKO Corp.’s Board of Directors declared a quarterly dividend of $0.03 per share of common stock to be paid on September 1, 2023, to stockholders of record as of August 15, 2023.

“I am very proud of the results and performance that the employees of our company were able to achieve this quarter,” said Arie Kotler, Chairman, President and Chief Executive Officer of ARKO. “The team’s key focus is to improve our core convenience store operations through targeted initiatives, like increasing assortment and merchandising mix to give our customers the options and convenience they seek. We always strive to provide the best service and store experience for our customers. We are very pleased with the pace of integration and early results of recent acquisitions. ARKO’s results this quarter demonstrate that our organic initiatives and core M&A and integration capabilities help create long-term stockholder value.”

1 See Use of Non-GAAP Measures below.

Second Quarter 2023 Segment Highlights

Retail

 For the Three Months
Ended June 30,
  For the Six Months
Ended June 30,
 
 2023  2022  2023  2022 
 (in thousands) 
Fuel gallons sold 293,584   253,243   542,490   492,801 
Same store fuel gallons sold decrease (%) 1 (2.6%)  (10.6%)  (4.2%)  (7.1%)
Fuel margin, cents per gallon 2 39.7   41.3   37.7   39.4 
Merchandise revenue$484,561  $431,751  $884,849  $798,736 
Same store merchandise sales increase
(decrease) (%) 1
 0.7%  (2.7%)  2.1%  (3.1%)
Same store merchandise sales excluding
cigarettes increase (%) 1
 3.8%  1.4%  5.6%  0.8%
Merchandise contribution 3$154,658  $131,364  $277,623  $239,556 
Merchandise margin 4 31.9%  30.4%  31.4%  30.0%
            
1 Same store is a common metric used in the convenience store industry. We consider a store a same store beginning in the first quarter in which the store had a full quarter of activity in the prior year. Refer to Use of Non-GAAP Measures below for discussion of this measure. 
            
2 Calculated as fuel revenue less fuel costs divided by fuel gallons sold; excludes the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel. 
            
3 Calculated as merchandise revenue less merchandise costs. 
            
4 Calculated as merchandise contribution divided by merchandise revenue. 
  

The table below shows financial information and certain key metrics of recent acquisitions in the Retail Segment that do not have comparable information for the prior periods.

 For the Three Months Ended June 30, 2023  For the Six Months Ended June 30, 2023 
 Pride 1  TEG 2  Uncle’s
(WTG)
3
  Total  Pride  TEG  Uncle’s
(WTG)
3
  Total 
 (in thousands)
Date of Acquisition:Dec 6, 2022  Mar 1, 2023  Jun 6, 2023     Dec 6, 2022  Mar 1, 2023  Jun 6, 2023    
Revenues:                       
Fuel revenue$71,388  $99,128  $6,098  $176,614  $139,425  $131,202  $6,098  $276,725 
Merchandise revenue 15,629   39,381   2,846   57,856   29,143   52,324   2,846   84,313 
Other revenues,
net
 1,397   1,322   54   2,773   2,784   1,731   54   4,569 
Total revenues 88,414   139,831   8,998   237,243   171,352   185,257   8,998   365,607 
Operating expenses:                       
Fuel costs 64,335   90,832   5,020   160,187   125,299   120,617   5,020   250,936 
Merchandise costs 10,185   27,189   1,927   39,301   19,383   36,126   1,927   57,436 
Store operating
expenses
 10,495   18,064   1,225   29,784   20,030   23,576   1,225   44,831 
Total operating
expenses
 85,015   136,085   8,172   229,272   164,712   180,319   8,172   353,203 
Operating income$3,399  $3,746  $826  $7,971  $6,640  $4,938  $826  $12,404 
Fuel gallons sold 19,387   30,165   1,714   51,266   37,278   40,057   1,714   79,049 
Merchandise
contribution 4
 5,444   12,192   919   18,555   9,760   16,198   919   26,877 
Merchandise margin 5 34.8%  31.0%  32.3%     33.5%  31.0%  32.3%   
                        
1 Acquisition of Pride Convenience Holdings, LLC (“Pride”)    
                        
2 Acquisition from Transit Energy Group and affiliates (“TEG”); includes only the retail stores acquired in the TEG acquisition.    
                        
3 Includes only the retail stores acquired in the WTG acquisition.    
                        
4 Calculated as merchandise revenue less merchandise costs.          
                        
5 Calculated as merchandise contribution divided by merchandise revenue.          
                        

For the second quarter, retail fuel profitability (excluding intercompany charges by the Company’s wholesale fuel distribution subsidiary, GPM Petroleum LP (“GPMP”)) increased approximately $11.9 million to $116.6 million compared to the prior year period, with resilient fuel margin capture of 39.7 cents per gallon, which decreased 1.6 cents per gallon for the second quarter of 2023 compared to the prior year period. Same store fuel profit was $97.5 million (excluding intercompany charges by GPMP), compared to $102.7 million for the prior year quarter. This decrease in same store fuel profit was fully offset by approximately $19.0 million incremental fuel profit from recent acquisitions.

Same store merchandise sales excluding cigarettes increased 3.8% for the quarter compared to the second quarter of 2022. Same store merchandise sales increased 0.7% compared to the prior year period, primarily due to higher revenue from the Company’s six core destination categories (packaged beverages, candy, salty snacks, packaged sweet snacks, alternative snacks and beer), other tobacco products and franchises as a result of marketing initiatives, including expanded category assortments, new franchise food offerings and investments in coolers and freezers, which was partially offset by lower revenue from cigarettes. Total merchandise contribution for the quarter increased $23.3 million, or 17.7%, compared to the second quarter of 2022, with merchandise margin increasing 150 basis points, to 31.9% from 30.4% in the second quarter of 2022, primarily due to higher contribution from the Company’s six core destination categories and franchises. The increase in merchandise contribution was due to $18.6 million from recent acquisitions, and an increase at same stores of $6.5 million.

Wholesale

 For the Three Months
Ended June 30,
  For the Six Months
Ended June 30,
 
 2023  2022  2023  2022 
 (in thousands) 
Fuel gallons sold – fuel supply locations 213,136   193,164   395,563   374,105 
Fuel gallons sold – consignment agent locations 44,534   37,996   82,496   73,993 
Fuel margin, cents per gallon1 – fuel supply locations 5.9   7.2   6.0   7.1 
Fuel margin, cents per gallon1 – consignment agent
locations
 25.3   32.3   25.8   30.7 
            
1 Calculated as fuel revenue less fuel costs divided by fuel gallons sold; excludes the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel. 
  

The table below shows financial information and certain key metrics of recent acquisitions in the Wholesale Segment that do not have comparable information for the prior periods.

 For the Three Months Ended June 30, 2023  For the Six Months Ended June 30, 2023 
 Quarles 1  TEG 2  WTG 3  Total  Quarles 1  TEG 2  WTG 3  Total 
 (in thousands)
Date of Acquisition:Jul 22, 2022  Mar 1, 2023  Jun 6, 2023     Jul 22, 2022  Mar 1, 2023  Jun 6, 2023    
Revenues:                       
Fuel revenue$19,564  $93,660  $648  $113,872  $37,327  $122,054  $648  $160,029 
Other revenues,
net
 310   667   1   978   588   854   1   1,443 
Total revenues 19,874   94,327   649   114,850   37,915   122,908   649   161,472 
Operating expenses:                       
Fuel costs 18,912   92,267   622   111,801   36,064   119,779   622   156,465 
Store operating
expenses
 488   850   17   1,355   937   1,094   17   2,048 
Total operating
expenses
 19,400   93,117   639   113,156   37,001   120,873   639   158,513 
Operating income$474  $1,210  $10  $1,694  $914  $2,035  $10  $2,959 
Fuel gallons sold 5,936   35,508   218   41,662   11,443   45,987   218   57,648 
                        
1 Acquisition from Quarles Petroleum, Incorporated (“Quarles”); includes only the wholesale business acquired in the Quarles acquisition.
                        
2 Includes only the wholesale business acquired in the TEG acquisition.
                        
3 Includes only the wholesale business acquired in the WTG acquisition.
     

Wholesale fuel contribution (excluding intercompany charges by GPMP) decreased by approximately $2.5 million for the quarter.

Fuel contribution from fuel supply locations (excluding intercompany charges by GPMP) decreased by $1.5 million for the quarter, primarily due to decreased prompt pay discounts related to lower fuel costs and lower volumes at legacy wholesale sites, which was partially offset by the contribution from recent acquisitions.

Fuel contribution from consignment agent locations (excluding intercompany charges by GPMP) decreased approximately $1.0 million for the quarter, primarily due to lower rack-to-retail margins and decreased prompt pay discounts related to lower fuel costs, which was partially offset by the contribution from recent acquisitions.

Fleet Fueling

The fleet fueling segment reflects a commencement of operations of such segment on July 22, 2022.

 For the Three Months
Ended June 30,
  For the Six Months
Ended June 30,
 
 2023  2023 
 (in thousands) 
Fuel gallons sold – proprietary cardlock locations 32,417   63,433 
Fuel gallons sold – third-party cardlock locations 2,036   3,646 
Fuel margin, cents per gallon1 – proprietary cardlock locations 43.9   44.2 
Fuel margin, cents per gallon1 – third-party cardlock locations 7.7   4.9 
      
1 Calculated as fuel revenue less fuel costs divided by fuel gallons sold; excludes the estimated fixed fee charged by GPMP to sites in the fleet fueling segment. 
  

The table below shows financial information and certain key metrics of recent acquisitions in the Fleet Fueling Segment that do not have comparable information for the prior periods.

 For the Three Months Ended June 30, 2023  For the Six Months Ended June 30, 2023 
 Quarles 1  WTG 2  Total  Quarles 1  WTG 2  Total 
 (in thousands)    
Date of Acquisition:Jul 22, 2022  Jun 6, 2023     Jul 22, 2022  Jun 6, 2023    
Revenues:                 
Fuel revenue$115,986  $5,160  $121,146  $243,480  $5,160  $248,640 
Other revenues, net 1,640   36   1,676   2,591   36   2,627 
Total revenues 117,626   5,196   122,822   246,071   5,196   251,267 
Operating expenses:                 
Fuel costs 104,063   4,372   108,435   219,294   4,372   223,666 
Store operating expenses 4,915   128   5,043   9,705   128   9,833 
Total operating expenses 108,978   4,500   113,478   228,999   4,500   233,499 
Operating income$8,648  $696  $9,344  $17,072  $696  $17,768 
Fuel gallons sold 32,988   1,465   34,453   65,614   1,465   67,079 
                  
1 Includes only the fleet fueling business acquired in the Quarles acquisition. 
                  
2 Includes only the fleet fueling business acquired in the WTG acquisition. 
  

The Company recognized strong cash flow from the fleet fueling segment during the quarter. Fuel profitability (excluding intercompany charges by GPMP) was approximately $14.4 million for the quarter.

Store Operating Expenses

For the second quarter of 2023, convenience store operating expenses increased $29.5 million, or 17.5% as compared to the prior year period, primarily due to $29.8 million of expenses related to recent acquisitions and an increase of $3.2 million in expenses at same stores, mainly driven by $4.2 million, or 6.5% as compared to the prior year period, of higher personnel costs. The increase in store operating expenses was partially offset by underperforming retail stores that the Company closed or converted to dealer locations.

Long-Term Growth Strategy Updates

Credit Line Increase and Renewal

On May 5, 2023, GPMP renewed and extended its revolving credit facility with a syndicate of banks led by Capital One, National Association. The credit line was increased to $800 million, and its maturity was extended to May 2028.

Extension of Oak Street Program Agreement

On May 2, 2023, the Company and affiliates of Oak Street, entered into a third amendment to the Program Agreement, which, among other things, extended the term of the Program Agreement and the exclusivity period thereunder through September 30, 2024, and provides for up to $1.5 billion of capacity under the Program Agreement from the date of such amendment through September 30, 2024, not including the funding for the WTG Acquisition.

Acquisitions

On June 6, 2023, the Company closed on its acquisition of the assets of WTG, which, at closing, operated 24 company-operated Uncle’s convenience stores across western Texas. As part of this acquisition, the Company also acquired WTG’s GASCARD-branded fleet fueling network, including 68 proprietary fleet fueling cardlock sites strategically located in large industrial areas in Western Texas and Southeastern New Mexico and 43 private cardlock sites. The WTG Acquisition included three land parcels and nine independent dealer locations.

Liquidity and Capital Expenditures

As of June 30, 2023, the Company’s total liquidity was approximately $822 million, consisting of cash and cash equivalents of approximately $220 million and approximately $602 million of availability under lines of credit. Outstanding debt was $824 million, resulting in net debt, excluding financing leases, of approximately $604 million. Capital expenditures were approximately $26.7 million for the quarter.

Quarterly Dividend and Share Repurchase Program

The Company’s ability to return cash to its stockholders through its cash dividend program and share repurchase program is consistent with its capital allocation framework and reflects the Company’s confidence in the strength of its cash generation ability and financial position.

The Company’s Board of Directors declared a quarterly dividend of $0.03 per share of common stock, to be paid on September 1, 2023, to stockholders of record as of August 15, 2023.

On May 16, 2023, the Company’s Board of Directors increased the Company’s previously authorized share repurchase program from $50 million to $100 million. During the quarter, the Company repurchased approximately 1.5 million shares of common stock under the repurchase program for approximately $11.2 million, or an average share price of $7.55. There is approximately $49 million remaining under the expanded share repurchase program as of June 30, 2023.

Company-Operated Retail Store Count and Segment Update

The following tables present certain information regarding changes in the retail, wholesale and fleet fueling segments for the periods presented:

 For the Three Months
Ended June 30,
  For the Six Months
Ended June 30,
 
Retail Segment2023  2022  2023  2022 
Number of sites at beginning of period 1,531   1,396   1,404   1,406 
Acquired sites 24      159    
Newly opened or reopened sites 2      3    
Company-controlled sites converted to           
consignment or fuel supply locations, net (6)  (1)  (11)  (7)
Closed, relocated or divested sites (4)  (7)  (8)  (11)
Number of sites at end of period 1,547   1,388   1,547   1,388 


 For the Three Months
Ended June 30,
  For the Six Months
Ended June 30,
 
Wholesale Segment 12023  2022  2023  2022 
Number of sites at beginning of period 2 1,841   1,625   1,674   1,628 
Acquired sites 2 9      190    
Newly opened or reopened sites 3 17   21   24   40 
Consignment or fuel supply locations           
converted from Company-controlled sites, net 6   1   11   7 
Closed, relocated or divested sites (49)  (27)  (75)  (55)
Number of sites at end of period 1,824   1,620   1,824   1,620 
            
1 Excludes bulk and spot purchasers. 
2 As part of our review of the initial accounting for the TEG Acquisition, we have adjusted the number of acquired sites to exclude 11 spot purchasers acquired, consistent with our historical methodology. There was no impact on our previously reported gallons sold or financial results. 
3 Includes all signed fuel supply agreements irrespective of fuel distribution commencement date. 


 For the Three and Six
Months Ended June 30,
 
Fleet Fueling Segment2023 
Number of sites at beginning of period 183 
Acquired sites 111 
Closed, relocated or divested sites (1)
Number of sites at end of period 293 
    

Conference Call and Webcast Details

The Company will host a conference call to discuss these results at 10:00 a.m. Eastern Time on August 8, 2023. Investors and analysts interested in participating in the live call can dial 877-605-1792 or 201-689-8728.

A simultaneous, live webcast will also be available on the Investor Relations section of the Company’s website at https://www.arkocorp.com/news-events/ir-calendar. The webcast will be archived for 30 days.

About ARKO Corp.

ARKO Corp. (Nasdaq: ARKO) is a Fortune 500 company that owns 100% of GPM Investments, LLC and is one of the largest operators of convenience stores and wholesalers of fuel in the United States. Based in Richmond, VA, our highly recognizable family of community brands offers delicious, prepared foods, beer, snacks, candy, hot and cold beverages, and multiple popular quick serve restaurant brands. Our high value fas REWARDS® loyalty program offers exclusive savings on merchandise and gas. We operate in four reportable segments: retail, which includes convenience stores selling merchandise and fuel products to retail customers; wholesale, which supplies fuel to independent dealers and consignment agents; GPM Petroleum, which sells and supplies fuel to our retail and wholesale sites and charges a fixed fee, primarily to our fleet fueling sites; and fleet fueling, which includes the operation of proprietary and third-party cardlock locations, and issuance of proprietary fuel cards that provide customers access to a nationwide network of fueling sites. To learn more about GPM stores, visit: www.gpminvestments.com. To learn more about ARKO, visit: www.arkocorp.com.

Forward-Looking Statements

This document includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may address, among other things, the Company’s expected financial and operational results and the related assumptions underlying its expected results. These forward-looking statements are distinguished by use of words such as “anticipate,” “aim,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and the negative of these terms, and similar references to future periods. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to, among other things, changes in economic, business and market conditions; the Company’s ability to maintain the listing of its common stock and warrants on the Nasdaq Stock Market; changes in its strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; expansion plans and opportunities; changes in the markets in which it competes; changes in applicable laws or regulations, including those relating to environmental matters; market conditions and global and economic factors beyond its control; and the outcome of any known or unknown litigation and regulatory proceedings. Detailed information about these factors and additional important factors can be found in the documents that the Company files with the Securities and Exchange Commission, such as Form 10-K, Form 10-Q and Form 8-K. Forward-looking statements speak only as of the date the statements were made. The Company does not undertake an obligation to update forward-looking information, except to the extent required by applicable law.

Use of Non-GAAP Measures

The Company discloses certain measures on a “same store basis,” which is a non-GAAP measure. Information disclosed on a “same store basis” excludes the results of any store that is not a “same store” for the applicable period. A store is considered a same store beginning in the first quarter in which the store had a full quarter of activity in the prior year. The Company believes that this information provides greater comparability regarding its ongoing operating performance. Neither this measure nor those described below should be considered an alternative to measurements presented in accordance with generally accepted accounting principles in the United States (“GAAP”).

The Company defines EBITDA as net income before net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by excluding the gain or loss on disposal of assets, impairment charges, acquisition costs, other non-cash items, and other unusual or non-recurring charges. Each of EBITDA and Adjusted EBITDA is a non-GAAP financial measure.

The Company uses EBITDA and Adjusted EBITDA for operational and financial decision-making and believe these measures are useful in evaluating its performance because they eliminate certain items that it does not consider indicators of its operating performance. EBITDA and Adjusted EBITDA are also used by many of its investors, securities analysts, and other interested parties in evaluating its operational and financial performance across reporting periods. The Company believes that the presentation of EBITDA and Adjusted EBITDA provides useful information to investors by allowing an understanding of key measures that it uses internally for operational decision-making, budgeting, evaluating acquisition targets, and assessing its operating performance.

EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be considered as a substitute for net income or any other financial measure presented in accordance with GAAP. These measures have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of its results as reported under GAAP. The Company strongly encourages investors to review its financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

Because non-GAAP financial measures are not standardized, same store measures, EBITDA and Adjusted EBITDA, as defined by the Company, may not be comparable to similarly titled measures reported by other companies. It therefore may not be possible to compare the Company’s use of these non-GAAP financial measures with those used by other companies.

   
 Condensed consolidated statements of operations 
      
 For the Three Months
Ended June 30,
  For the Six Months
Ended June 30,
 
 2023  2022  2023  2022 
 (in thousands) 
Revenues:           
Fuel revenue$1,957,100  $2,085,854  $3,618,764  $3,669,380 
Merchandise revenue 484,561   431,751   884,849   798,736 
Other revenues, net 27,480   22,658   53,904   44,958 
Total revenues 2,469,141   2,540,263   4,557,517   4,513,074 
Operating expenses:           
Fuel costs 1,801,103   1,955,019   3,338,985   3,425,668 
Merchandise costs 329,903   300,387   607,226   559,180 
Store operating expenses 218,002   178,077   410,685   344,615 
General and administrative expenses 42,660   32,956   83,076   64,741 
Depreciation and amortization 32,837   24,353   61,236   48,989 
Total operating expenses 2,424,505   2,490,792   4,501,208   4,443,193 
Other expenses, net 4,956   1,197   7,676   2,318 
Operating income 39,680   48,274   48,633   67,563 
Interest and other financial income 2,428   8,997   9,630   6,710 
Interest and other financial expenses (22,588)  (16,336)  (43,392)  (30,024)
Income before income taxes 19,520   40,935   14,871   44,249 
Income tax expense (5,014)  (9,157)  (2,856)  (10,162)
(Loss) income from equity investment (27)  28   (63)  37 
Net income$14,479  $31,806  $11,952  $34,124 
Less: Net income attributable to non-controlling
interests
 48   52   101   131 
Net income attributable to ARKO Corp.$14,431  $31,754  $11,851  $33,993 
Series A redeemable preferred stock dividends (1,434)  (1,434)  (2,852)  (2,852)
Net income attributable to common shareholders$12,997  $30,320  $8,999  $31,141 
Net income per share attributable to common
shareholders - basic
$0.11  $0.25  $0.07  $0.25 
Net income per share attributable to common
shareholders - diluted
$0.11  $0.24  $0.07  $0.25 
Weighted average shares outstanding:           
Basic 119,893   121,529   120,073   122,909 
Diluted 121,280   130,558   120,767   123,245 


 Condensed consolidated balance sheets 
      
 June 30, 2023  December 31, 2022 
 (in thousands) 
Assets     
Current assets:     
Cash and cash equivalents$220,142  $298,529 
Restricted cash 15,136   18,240 
Short-term investments 3,319   2,400 
Trade receivables, net 135,663   118,140 
Inventory 256,116   221,951 
Other current assets 101,435   87,873 
Total current assets 731,811   747,133 
Non-current assets:     
Property and equipment, net 748,697   645,809 
Right-of-use assets under operating leases 1,418,902   1,203,188 
Right-of-use assets under financing leases, net 174,221   182,113 
Goodwill 277,795   217,297 
Intangible assets, net 219,598   197,123 
Equity investment 2,861   2,924 
Deferred tax asset 57,007   22,728 
Other non-current assets 40,565   36,855 
Total assets$3,671,457  $3,255,170 
Liabilities     
Current liabilities:     
Long-term debt, current portion$13,369  $11,944 
Accounts payable 233,459   217,370 
Other current liabilities 166,056   154,097 
Operating leases, current portion 63,811   57,563 
Financing leases, current portion 4,916   5,457 
Total current liabilities 481,611   446,431 
Non-current liabilities:     
Long-term debt, net 810,302   740,043 
Asset retirement obligation 79,837   64,909 
Operating leases 1,422,736   1,218,045 
Financing leases 223,871   225,907 
Other non-current liabilities 275,584   178,945 
Total liabilities 3,293,941   2,874,280 
      
Series A redeemable preferred stock 100,000   100,000 
      
Shareholders’ equity:     
Common stock 12   12 
Treasury stock (53,804)  (40,042)
Additional paid-in capital 238,617   229,995 
Accumulated other comprehensive income 9,119   9,119 
Retained earnings 83,533   81,750 
Total shareholders’ equity 277,477   280,834 
Non-controlling interest 39   56 
Total equity 277,516   280,890 
Total liabilities, redeemable preferred stock and equity$3,671,457  $3,255,170 


 Condensed consolidated statements of cash flows 
            
 For the Three Months
Ended June 30,
  For the Six Months
Ended June 30,
 
 2023  2022  2023  2022 
 (in thousands) 
Cash flows from operating activities:           
Net income$14,479  $31,806  $11,952  $34,124 
Adjustments to reconcile net income to net
cash provided by operating activities:
           
Depreciation and amortization 32,837   24,353   61,236   48,989 
Deferred income taxes (3,885)  5,248   (14,115)  2,671 
Loss on disposal of assets and impairment charges 2,991   1,207   3,278   1,971 
Foreign currency loss 24   191   58   228 
Amortization of deferred financing costs and debt discount 621   628   1,213   1,262 
Amortization of deferred income (2,069)  (2,214)  (3,929)  (5,292)
Accretion of asset retirement obligation 627   420   1,118   829 
Non-cash rent 3,760   1,791   6,558   3,737 
Charges to allowance for credit losses 290   216   573   351 
Loss (income) from equity investment 27   (28)  63   (37)
Share-based compensation 4,555   3,108   8,624   5,882 
Fair value adjustment of financial assets and liabilities (1,020)  (7,799)  (5,248)  (6,590)
Other operating activities, net 647   584   976   707 
Changes in assets and liabilities:           
Increase in trade receivables (6,991)  (18,605)  (18,173)  (31,491)
Increase in inventory (5,363)  (14,629)  (8,208)  (35,947)
(Increase) decrease in other assets (14,510)  (10,608)  (10,965)  7,607 
Increase in accounts payable 8,640   26,230   14,580   46,407 
Decrease in other current liabilities (7,524)  (6,763)  (7,651)  (11,324)
(Decrease) increase in asset retirement obligation (21)     46   (34)
Increase in non-current liabilities 1,988   6,964   4,000   8,112 
Net cash provided by operating activities 30,103   42,100   45,986   72,162 
Cash flows from investing activities:           
Purchase of property and equipment (26,658)  (24,501)  (50,038)  (45,168)
Purchase of intangible assets (35)  (125)  (35)  (125)
Proceeds from sale of property and equipment 88,049   328   296,485   7,261 
Prepayment for business acquisition          (5,000)
Business acquisitions, net of cash (143,294)  (107)  (481,636)  (6,853)
Decrease in investments, net    25,491      27,109 
Repayment of loans to equity investment    174      174 
Net cash (used in) provided by investing activities (81,938)  1,260   (235,224)  (22,602)
Cash flows from financing activities:           
Receipt of long-term debt, net 19,233      74,233    
Repayment of debt (4,919)  (2,936)  (10,511)  (6,093)
Principal payments on financing leases (1,494)  (1,652)  (2,912)  (3,304)
Proceeds from sale-leaseback 28,793      80,397    
Payment of Additional Consideration    (2,085)     (2,085)
Payment of Ares Put Option (9,808)     (9,808)   
Common stock repurchased (11,253)  (26,954)  (13,563)  (40,038)
Dividends paid on common stock (3,607)  (2,415)  (7,216)  (4,889)
Dividends paid on redeemable preferred stock (1,434)  (1,434)  (2,852)  (2,852)
Distributions to non-controlling interests    (60)     (120)
Net cash provided by (used in) financing activities 15,511   (37,536)  107,768   (59,381)
Net (decrease) increase in cash and cash equivalents and restricted cash (36,324)  5,824   (81,470)  (9,821)
Effect of exchange rate on cash and cash equivalents and restricted cash    (105)  (21)  (121)
Cash and cash equivalents and restricted cash, beginning of period 271,602   256,882   316,769   272,543 
Cash and cash equivalents and restricted cash, end of period$235,278  $262,601  $235,278  $262,601 


 Reconciliation of EBITDA and Adjusted EBITDA 
            
 For the Three Months
Ended June 30,
  For the Six Months
Ended June 30,
 
 2023  2022  2023  2022 
 (in thousands) 
Net income$14,479  $31,806  $11,952  $34,124 
Interest and other financing expenses, net 20,160   7,339   33,762   23,314 
Income tax expense 5,014   9,157   2,856   10,162 
Depreciation and amortization 32,837   24,353   61,236   48,989 
EBITDA 72,490   72,655   109,806   116,589 
Non-cash rent expense (a) 3,760   1,791   6,558   3,737 
Acquisition costs (b) 3,277   823   6,853   1,504 
Loss on disposal of assets and impairment charges (c) 2,991   1,207   3,278   1,971 
Share-based compensation expense (d) 4,555   3,108   8,624   5,882 
Loss (income) from equity investment (e) 27   (28)  63   (37)
Adjustment to contingent consideration (f) (922)  (526)  (1,624)  (526)
Other (g) 64   15   168   33 
Adjusted EBITDA$86,242  $79,045  $133,726  $129,153 
            
(a) Eliminates the non-cash portion of rent, which reflects the extent to which our GAAP rent expense recognized exceeds (or is less than) our cash rent payments. The GAAP rent expense adjustment can vary depending on the terms of our lease portfolio, which has been impacted by our recent acquisitions. For newer leases, our rent expense recognized typically exceeds our cash rent payments, while for more mature leases, rent expense recognized is typically less than our cash rent payments. 
            
(b) Eliminates costs incurred that are directly attributable to historical business acquisitions and salaries of employees whose primary job function is to execute our acquisition strategy and facilitate integration of acquired operations. 
            
(c) Eliminates the non-cash loss (gain) from the sale of property and equipment, the loss (gain) recognized upon the sale of related leased assets, and impairment charges on property and equipment and right-of-use assets related to closed and non-performing sites. 
            
(d) Eliminates non-cash share-based compensation expense related to the equity incentive program in place to incentivize, retain, and motivate our employees, certain non-employees and members of the Board. 
            
(e) Eliminates our share of loss (income) attributable to our unconsolidated equity investment. 
            
(f) Eliminates fair value adjustments to the contingent consideration owed to the seller for the 2020 acquisition of Empire. 
            
(g) Eliminates other unusual or non-recurring items that we do not consider to be meaningful in assessing operating performance. 
 

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