About Arko

ARKO Corp. operates independent convenience stores. As of December 31, 2023, the company operated its stores under regional store brands that have been in existence for an average of approximately 50 years, which it considers a Family of Community Brands. The company leverages their long-term community involvement, highly recognizable brands and customer loyalty in their respective markets. While maintaining established diversified store brands, the company’s stores derive significant value from the scale, corporate infrastructure and centralized marketing programs associated with its large network, including a common operating platform and a loyalty program network that it uses as a platform for promotions and marketing initiatives throughout its convenience stores. The company’s fas REWARDS loyalty program with approximately 2.0 million enrolled members is available in the majority of its stores and offers exclusive savings on merchandise and gas to its enrolled members. The company is a leading wholesale distributor of motor fuel, and as of December 31, 2023, it supplied fuel to 1,825 dealer locations. Additionally, the company operates a fleet fueling business that included, as of December 31, 2023, the operation of 298 proprietary and third-party cardlock locations (unstaffed fueling locations) and issuance of proprietary fuel cards that provide customers access to a nationwide network of fueling sites. The company is a diversified geographically and, as of December 31, 2023, operated in the District of Columbia and in more than 30 states in the Mid-Atlantic, Midwestern, Northeastern, Southeastern and Southwestern U.S. The company has traditionally acquired its stores in smaller towns that have lower concentrations of national-chain convenience stores. Segments Retail The company’s primary business is the operation of convenience stores, and it generates a significant portion of its revenue from the retail sale of products and the fuel at its stores. Consequently, the company’s retail stores generate a large proportion of its profitability. The company intentionally focuses its marketing and merchandising initiatives at its retail stores to offer its customers an assortment of products with an attractive value proposition. The company’s retail store offering includes a wide array of cold and hot foodservice, beverages, cigarettes and other tobacco products, candy, salty snacks, grocery, beer and general merchandise. The company has foodservice offerings at retail stores, which include hot and fresh grab-n-go foods, deli, fried chicken, bakery, pizza, roller grill items and other prepared foods. In 2024, the company launched an extensive new pizza program that offers private label pizza, which is offered at various stores as take-and-bake from the freezer, and also as fresh and hot pizza either whole or by the slice. The company supplements its foodservice offering with quick service major national brand restaurants. Additionally, the company provides a number of traditional convenience store services that generate additional income, including lottery, prepaid products, gift cards, money orders, ATMs, gaming, and other ancillary product and service offerings. The company also generates revenues from car washes at approximately 95 of its locations. Almost all stores sell fuel, and the company had 70 electric vehicle (EV) chargers at various stores as of December 31, 2023. The company operates its stores under regional store brands (which it considers a Family of Community Brands), including 1-Stop, Admiral, Apple Market, BreadBox, Corner Mart, Dixie Mart, ExpressStop, E-Z Mart, fas mart, fastmarket, Flash Market, Handy Mart, Jetz, Jiffi Stop, Jiffy Stop, Li’l Cricket, Market Express, Next Door Store, Pride, Roadrunner Markets, Rose Mart, Rstore, Scotchman, shore stop, Speedy’s, Town Star, Uncle’s, Village Pantry and Young’s. The retail segment sold a total of more than 1.1 billion gallons of branded and unbranded fuel to the company’s retail customers. Wholesale The wholesale segment supplies fuel to dealers, sub-wholesalers and bulk and spot purchasers, on either a consignment or cost plus basis. The wholesale segment adds significant fuel volumes to the company’s robust retail fuel sales, which enhances its purchasing power for its entire platform, including its retail segment, and improves its competitiveness as an acquirer of choice. Consignment Contracts — 288 sites as of December 31, 2023: In arrangements of this type, the company owns the fuel until the date of sale to the final customer (the consumer), and the gross profit created from the sale of the fuel is allocated between it and the dealer based on the terms of the relevant agreement with the dealer. In certain cases, gross profit is split based on a percentage and in others the company pays a fixed fee per gallon to the dealer. Fuel Supply Contracts (Cost Plus) — 1,537 sites as of December 31, 2023, plus bulk and spot purchasers. In arrangements of this type, the dealer purchases the fuel from the company. The company makes final sales to dealers, sub-wholesalers and bulk and spot purchasers on a fixed-fee basis. For the year ended December 31, 2023, the wholesale segment sold 969.3 million gallons of fuel (approximately 43.2% of its total gallons sold in 2023). Fleet Fueling The company added its fleet fueling segment as part of its acquisition of certain assets from Quarles Petroleum, Incorporated (Quarles) in 2022 that included 184 cardlock locations, and it added an additional 111 cardlock locations in its 2023 acquisition of the GASCARD fleet fueling operations of WTG Fuels Holdings, LLC (the WTG Acquisition), one of the largest fleet fueling operations in West Texas. The fleet fueling segment includes the operation of proprietary and third-party cardlock locations (unstaffed fueling locations) with sales to commercial and municipal entities, and issuance of proprietary fuel cards that provide customers access to a nationwide network of fueling sites. Fleet fueling complements the company’s retail and wholesale segments, from which it can grow and expand its fleet fueling segment. Commercial companies using the Quarles fleet cards have gradually shifted from the proprietary fleet card useable only at Quarles-branded locations to the Universal fleet card which is a cobranded with Voyager (U.S. Bank) and which can be used at more than 230,000 fleet fueling sites. Diesel fuel accounts for approximately 82% of the company’s fleet fueling sales, and, as opposed to retail volumes, commercial volumes have been less impacted by retail fuel consumption trends. Within its fleet fueling segment, the company achieves fuel margins that are higher than those in its wholesale segment. As of December 31, 2023, the company operated 298 cardlock locations, and, for the year ended December 31, 2023, the fleet fueling segment sold 140.8 million gallons of fuel. GPMP The GPMP segment engages in the wholesale distribution of fuel to substantially all of the company’s sites that sell fuel in the retail and wholesale segments and a limited number of third-party dealers and bulk purchasers. GPM Petroleum LP (GPMP) sells fuel at GPMP’s cost of fuel (including taxes and transportation) plus a fixed margin and charges a fixed fee primarily to sites in the fleet fueling segment which are not supplied by GPMP. The company owns 100% of the general partner of GPMP and, as of December 31, 2023, 99.8% of the GPMP limited partner units. Strategy The key elements of the company’s strategy are to expand foodservice offerings and margin in response to changing consumer behavior; pursue numerous in-store sales growth and margin enhancement opportunities through marketing and merchandising initiatives across its expansive footprint; remodel, Raze-and-rebuild and new-to-industry opportunities; pursue acquisitions in existing and contiguous markets; and pursue grants and subsidies across its footprint to expand its EV charging capacity. Suppliers In 2023, the company purchased merchandise inventory from two primary wholesale distributors, Core-Mark and Grocery Supply Company, as well as approximately 850 direct store delivery supplier distributors. The company leverages its relationships to generate economies of scale across its store base. The company purchases motor fuel primarily from large, integrated oil companies and independent refiners under supply agreements. In addition, the company purchases unbranded fuel from branded and unbranded fuel suppliers to supply 267 unbranded retail fueling locations and 298 cardlock locations. As of December 31, 2023, approximately 82% of the company’s retail fuel locations sold branded fuel. The company sells branded fuel under brand names including, among others, Valero, Marathon, BP, Exxon and Shell brand names. Intellectual Property The company relies on trademarks that it owns and trademarks it licenses from third-parties to protect its brands and identify the source of its goods and services. The company has registered or applied to register many of its trademarks with the United States Patent and Trademark Office. The company licenses various marks in relation to the branded fuels that it supplies, including ExxonMobil, Marathon, BP, Shell, and Valero. In its quick service food offerings, the company licenses trademarks, such as Subway and Dunkin to use at its applicable franchised or licensed outlets. The company also licenses the Jetz trademark for use at certain of its convenience stores in Wisconsin. Competition The company faces significant competition from other large chain operators, such as 7-Eleven/Speedway; Circle K; Casey’s; Murphy USA; Quik Trip; Royal Farms; Sheetz; and Wawa. In order to mitigate competition, the company typically offers its dealers competitive pricing within the framework of its existing fuel supply agreements, such as those it has with Valero, BP, Shell, Motiva, Marathon and ExxonMobil, with the advantage that it distributes fuel sourced from a number of major oil company suppliers which allows it to approach a wide variety of branded and unbranded dealers in order to offer a variety of alternative supply arrangements. Government Regulation In the company’s Wholesale and GPMP segments, it is also subject to the Petroleum Marketing Practices Act, which is a federal law that applies to the relationships between fuel suppliers and wholesale distributors, as well as between wholesale distributors and independent dealers, regarding the marketing of branded fuel. With respect to environmental regulations, the company is subject to local, state and federal laws and regulations that address its properties and operations, including, without limitation the transportation, storage and sale of fuel, which have a considerable impact on its operations, including compliance with the requirements and regulations of the U.S. Environmental Protection Agency (EPA) and comparable state counterparts. The company is required to comply with the following regulations, among others: the Comprehensive Environmental Response, Compensation, and Liability Act of 1980; the Resource Conservation and Recovery Act; the Clean Air Act; and the federal Occupational Safety and Health Act.