ARKO Corp., the owner of Richmond, VA-based convenience store operator GPM Investments, has announced that it will remain actively engaged in considering mergers and acquisitions within the retail fuel sector. With over $2 billion available for investment, the company is well-positioned to pursue new deals.
In a recent earnings call with financial analysts, ARKO’s Chief Executive, Arie Kotler, emphasized the potential for acquisitions and growth in inside sales margins to counterbalance weaker fuel margins and revenue from tobacco sales.
Although ARKO reported a decrease in net income for the second quarter, dropping from $31.8 million to $14.5 million in comparison to the same period in 2022, the company’s purchase of Transit Energy Group and WTG Fuels contributed to a notable increase of approximately 16% in retail gallons sold during the quarter. This surge in sales offset a slight decrease of 2.6% in same-store gallons sold.
Fuel margins for the quarter averaged 39.7 cents per gallon, a slight decline from the year-ago figure of 41.3 cents per gallon.
Kotler expressed optimism regarding third-quarter margins, describing them as “resilient.” However, he cautioned that they would not match the exceptional 44.8 cents per gallon seen in Q3 2022.
Responding to inquiries from analysts about potential integration pauses following recent acquisitions, Kotler confirmed that ARKO’s core strategy revolves around pursuing growth through deals. He emphasized that there are no signs of a slowdown in the company’s mergers and acquisitions pipeline.
In a significant move, ARKO segregated its fleet fueling segment after acquiring Quarles Petroleum and GASCARD. This specific business segment contributed $14.4 million during the second quarter and achieved an impressive margin of 43.9 cents per gallon through cardlock operations.
ARKO’s store count at the end of the quarter reached 1,547, a notable increase from the previous year’s 1,388 sites. Additionally, the wholesale segment supplies fuel to 1,824 sites, while the fleet fueling division operates across 293 locations.
Reporting by Tom Kloza; Editing by Jeff Barber
