UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DCD.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~June 30, ~~2021~~2023.


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission ~~file number~~File Number ~~001-33528~~001-39828

ARKO Corp.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		85-2784337
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

8565 Magellan Parkway

Suite 400

Richmond, Virginia 23227-1150

(Address of Principal Executive Offices) (Zip Code)

(804) 730-1568

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading ~~Symbol~~Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.0001 par value per share	ARKO	Nasdaq~~Nasdaq~~ Capital Market
Warrants to purchase common stock	ARKOW	Nasdaq~~Nasdaq~~ Capital Market

~~Securities registered pursuant to Section 12(g) of the Act:~~

~~None~~

Indicate by check mark whether the ~~registrant:~~registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company”

in Rule 12b-2 of the Exchange ~~Act:~~Act.


Large accelerated filer	☐☒	Accelerated filer	☐
Non-accelerated filer	☒☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): ☐ YES ☒ NO

As of ~~May 13, 2021,~~August 4, 2023, the registrant had ~~124,427,805~~118,656,855 shares of its common stock, par value $0.0001 per share (“common stock”) outstanding.

Table of Contents

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	5
	Condensed Consolidated Balance Sheets as of ~~March 31, 2021~~June 30, 2023 and December 31, ~~2020~~2022 (unaudited)	5
	Condensed Consolidated Statements of Operations for the three and six months ended ~~March 31, 2021~~June 30, 2023 and ~~2020~~2022 (unaudited)	6
	~~Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2021 and 2020 (unaudited)~~	7
	Condensed Consolidated Statements of Changes in Equity for the three and six months ended ~~March 31, 2021~~June 30, 2023 and ~~2020~~2022 (unaudited)	87
	Condensed Consolidated Statements of Cash Flows for the ~~three~~six months ended ~~March 31, 2021~~June 30, 2023 and ~~2020~~2022 (unaudited)	98
	Notes to Condensed Consolidated Financial Statements (unaudited)	1211
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2326
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3444
Item 4.	Controls and Procedures	3644
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	3746
Item 1A.	Risk Factors	3746
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3746
Item 3.	Defaults Upon Senior Securities	3746
Item 4.	Mine Safety Disclosures	3746
Item 5.	Other Information	3746
Item 6.	Exhibits	3847
Signatures		3948

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended, ~~(the “Securities Act”),~~ and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements about our expectations, beliefs or intentions regarding our product development efforts, business, financial condition, results of operations, strategies or ~~prospects, including the potential impact of the COVID-19 pandemic on our businesses, operating results, cash flows and/or financial condition.~~prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described below and in “Item 1A-Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2022 and this Quarterly Report on Form 10-Q, and described from time to time in our other filings with the Securities and Exchange Commission (the “SEC”). We do not undertake any obligation to update forward-looking statements, except to the extent required by applicable law. We intend that all forward-looking statements be subject to the safe-harbor provisions of the PSLRA. These forward-looking statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance.

Risks and uncertainties, the occurrence of which could adversely affect our business, include the following:

•

changes in economic conditions and consumer confidence in the ~~U.S. could materially adversely affect our business;~~United States;

•

~~if we do not~~our ability to make acquisitions on economically acceptable ~~terms, our future growth may be limited;~~terms;

•

~~we may be unable~~our ability to successfully integrate ~~Empire’s~~acquired operations or otherwise realize the expected benefits from ~~the Empire Acquisition (as defined below);~~our acquisitions;

•

~~our future growth depends on~~ our ability to successfully implement our organic growth ~~strategy, a major part of which consists of remodeling our convenience stores;~~strategies;

•

~~significant changes~~labor, raw materials and building supply shortages and price fluctuations in ~~current consumption~~the construction industry could delay or increase the costs of our store upgrade and ~~regulations related to tobacco~~remodel programs and ~~nicotine products;~~our maintenance capital expenditures;

•

changes in the wholesale prices of motor fuel;

•

significant changes in the current consumption of, and related regulations and litigation related to, cigarettes and other tobacco products;

•

significant changes in demand for fuel-based modes of transportation;

•

~~we operate in a~~the highly competitive industry characterized by low entry ~~barriers;~~barriers in which we operate;

•

negative events or developments associated with branded motor fuel suppliers;

•

we depend on ~~four~~several principal suppliers for ~~the majority of~~ our ~~gross~~ fuel purchases and two principal suppliers for merchandise;

•

a portion of our revenue is generated under fuel supply agreements with ~~independent~~ dealers that must be renegotiated or replaced periodically;

•

the retail sale, distribution, transportation and storage of motor fuels is subject to environmental protection and operational safety laws and regulations that may expose us or our customers to significant costs and liabilities;

•

business disruption and related risks resulting from ~~the outbreak of COVID-19;~~global pandemics;

•

failure to comply with applicable laws and regulations;

•

the loss of key senior management personnel or the failure to recruit or retain qualified personnel;

•

unfavorable weather conditions;

•

we may be held liable for fraudulent credit card transactions on our fuel dispensers;

•

payment-related risks that may result in higher operating costs or the inability to process payments;

•

significant disruptions of ~~our~~ information technology systems, or breaches of ~~our~~ data ~~security;~~security or compromised data;

•

~~we depend~~evolving laws, regulations, standards, and contractual obligations related to data privacy and security regulations, and our actual or perceived failure to comply with such obligations;

•

our failure to adequately secure, maintain, and enforce our intellectual property rights;

Table of Contents

•

third-party claims of infringement upon their intellectual property rights;

•

our dependence on third-party transportation providers for the transportation of ~~all~~most of our motor fuel;

•

our operations present risks which may not be fully covered by insurance;

•

our variable rate debt;

~~Table of Contents~~

•

the agreements governing our ~~credit facilities have substantial~~indebtedness contain various restrictions and financial covenants;

•

~~the proposed phase out of the London Interbank Offered Rate (“LIBOR”);~~our principal stockholders and management control us, and their interests may conflict with yours;



~~we will incur significant increased expenses and administrative burdens as a public company;~~



~~we may not be able to timely and effectively implement controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act;~~

•

our corporate structure includes Israeli subsidiaries that may have adverse tax consequences and expose us to additional tax liabilities;

•

we may not be able to maintain an effective system of internal control over financial reporting and we may not be able to accurately report our financial results or prevent fraud;

•

the market price and trading volume of our common stock may be volatile and could decline significantly;

•

if securities or industry analysts do not publish research, publish inaccurate or unfavorable research, or cease publishing research about us or the convenience store industry; and

•

sales of a substantial number of shares of our common stock in the public ~~market.~~market could cause the prices of our common stock to decline.

Table of Contents

PART I. FINANCIAL INFORMATION

Unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q to the “Company,” “ARKO,” “we,” “our,” “ours,” and “us” refer to ARKO Corp., a Delaware corporation, including our consolidated subsidiaries.

Item 1. Financial Statements

ARKO Corp.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands)


	March 31, 2021			December 31, 2020			June 30, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	204,986		$	293,666		$	220,142		$	298,529
Restricted cash with respect to bonds		—			1,230
Restricted cash		18,017			16,529			15,136			18,240
Short-term investments								3,319			2,400
Trade receivables, net		57,597			46,940			135,663			118,140
Inventory		171,123			163,686			256,116			221,951
Other current assets		80,425			87,355			101,435			87,873
Total current assets		532,148			609,406			731,811			747,133
Non-current assets:
Property and equipment, net		493,420			491,513			748,697			645,809
Right-of-use assets under operating leases		947,568			961,561			1,418,902			1,203,188
Right-of-use assets under financing leases, net		203,706			198,317			174,221			182,113
Goodwill		173,937			173,937			277,795			217,297
Intangible assets, net		212,144			218,132			219,598			197,123
Restricted investments		31,825			31,825
Non-current restricted cash with respect to bonds		—			1,552
Equity investment		2,612			2,715			2,861			2,924
Deferred tax asset		42,345			40,655			57,007			22,728
Other non-current assets		10,849			10,196			40,565			36,855
Total assets	$	2,650,554		$	2,739,809		$	3,671,457		$	3,255,170
Liabilities
Current liabilities:
Long-term debt, current portion	$	29,495		$	40,988		$	13,369		$	11,944
Accounts payable		172,910			155,714			233,459			217,370
Other current liabilities		108,021			133,637			166,056			154,097
Operating leases, current portion		49,590			48,878			63,811			57,563
Financing leases, current portion		7,598			7,834			4,916			5,457
Total current liabilities		367,614			387,051			481,611			446,431
Non-current liabilities:
Long-term debt, net		644,764			708,802			810,302			740,043
Asset retirement obligation		53,351			52,964			79,837			64,909
Operating leases		961,621			973,695			1,422,736			1,218,045
Financing leases		233,575			226,440			223,871			225,907
Deferred tax liability		2,663			2,816
Other non-current liabilities		107,644			96,621			275,584			178,945
Total liabilities		2,371,232			2,448,389			3,293,941			2,874,280
Commitments and contingencies - see Note 10
Series A redeemable preferred stock (0 par value) - authorized: 1,000 shares; issued and outstanding: 1,000 and 1,000 shares, respectively; redemption value: $100,000 and $100,000, respectively		100,000			100,000
Commitments and contingencies - see Note 12
Series A redeemable preferred stock (no par value) - authorized: 1,000 shares; issued and outstanding: 1,000 and 1,000 shares, respectively; redemption value: $100,000 and $100,000, in the aggregate respectively								100,000			100,000
Shareholders' equity:
Common stock (par value $0.0001) - authorized: 400,000 shares; issued and outstanding: 124,428 and 124,132 shares, respectively		12			12
Common stock (par value $0.0001) - authorized: 400,000 shares; issued: 125,269 and 124,727 shares, respectively; outstanding: 118,843 and 120,074 shares, respectively								12			12
Treasury stock, at cost - 6,426 and 4,653 shares, respectively								(53,804	)		(40,042	)
Additional paid-in capital		214,727			212,103			238,617			229,995
Accumulated other comprehensive income		9,119			9,119			9,119			9,119
Accumulated deficit		(44,389	)		(29,653	)
Retained earnings								83,533			81,750
Total shareholders' equity		179,469			191,581			277,477			280,834
Non-controlling interest		(147	)		(161	)		39			56
Total equity		179,322			191,420			277,516			280,890
Total liabilities, redeemable preferred stock and equity	$	2,650,554		$	2,739,809		$	3,671,457		$	3,255,170

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

ARKO Corp.

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)


	For the three months ended March 31,						For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2021			2020			2023			2022			2023			2022
Revenues:
Fuel revenue	$	1,102,947		$	563,041		$	1,957,100		$	2,085,854		$	3,618,764		$	3,669,380
Merchandise revenue		359,281			323,679			484,561			431,751			884,849			798,736
Other revenues, net		22,128			13,160			27,480			22,658			53,904			44,958
Total revenues		1,484,356			899,880			2,469,141			2,540,263			4,557,517			4,513,074
Operating expenses:
Fuel costs		1,012,798			499,803			1,801,103			1,955,019			3,338,985			3,425,668
Merchandise costs		260,754			239,091			329,903			300,387			607,226			559,180
Store operating expenses		144,938			128,830			218,002			178,077			410,685			344,615
General and administrative expenses		26,713			18,893			42,660			32,956			83,076			64,741
Depreciation and amortization		24,242			17,071			32,837			24,353			61,236			48,989
Total operating expenses		1,469,445			903,688			2,424,505			2,490,792			4,501,208			4,443,193
Other expenses, net		1,672			4,176			4,956			1,197			7,676			2,318
Operating income (loss)		13,239			(7,984	)
Operating income								39,680			48,274			48,633			67,563
Interest and other financial income		2,407			3,245			2,428			8,997			9,630			6,710
Interest and other financial expenses		(31,024	)		(9,896	)		(22,588	)		(16,336	)		(43,392	)		(30,024	)
Loss before income taxes		(15,378	)		(14,635	)
Income tax benefit		722			2,011
Loss from equity investment		(6	)		(233	)
Net loss	$	(14,662	)	$	(12,857	)
Less: Net income (loss) attributable to non-controlling interests		74			(2,401	)
Net loss attributable to ARKO Corp.	$	(14,736	)	$	(10,456	)
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		(1,402	)					(1,434	)		(1,434	)		(2,852	)		(2,852	)
Net loss attributable to common shareholders	$	(16,138	)
Net loss per share attributable to common shareholders - basic and diluted	$	(0.13	)	$	(0.16	)
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 and Diluted		124,361			66,731
Basic								119,893			121,529			120,073			122,909
Diluted								121,280			130,558			120,767			123,245

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

~~ARKO Corp.~~

~~Condensed Consolidated Statements of Comprehensive Loss~~

~~(Unaudited, in thousands)~~

For the three months ended March 31,

2021

2020

Net loss

$
(14,662
)

$
(12,857
)
Other comprehensive loss:

Foreign currency translation adjustments

0

(1,709
)
Total other comprehensive loss

—

(1,709
)
Comprehensive loss

$
(14,662
)

$
(14,566
)
Less: Comprehensive income (loss) attributable to non-controlling interests

74

(2,401
)
Comprehensive loss attributable to ARKO Corp.

$
(14,736
)

$
(12,165
)

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

~~Table of Contents~~

ARKO Corp.

Condensed Consolidated Statements of Changes in Equity

(Unaudited, in thousands)


	Common Stock					Treasury			Additional			Accumulated Other		Retained			Total			Non-
	Shares			Par Value		Stock, at Cost			Paid-in Capital			Comprehensive Income		Earnings			Shareholders' Equity			Controlling Interests			Total Equity
Balance at April 1, 2022		123,190		$	12	$	(13,084	)	$	220,449		$	9,119	$	24,993		$	241,489		$	243		$	241,732
Share-based compensation		—			—		—			3,108			—		—			3,108			—			3,108
Distributions to non-controlling interests		—			—		—			—			—		—			—			(60	)		(60	)
Dividends on redeemable preferred stock		—			—		—			—			—		(1,434	)		(1,434	)		—			(1,434	)
Dividends declared (2 cents per share)		—			—		—			—			—		(2,415	)		(2,415	)		—			(2,415	)
Common stock repurchased		(3,115	)		—		(26,954	)		—			—		—			(26,954	)		—			(26,954	)
Net income		—			—		—			—			—		31,754			31,754			52			31,806
Balance at June 30, 2022		120,075		$	12	$	(40,038	)	$	223,557		$	9,119	$	52,898		$	245,548		$	235		$	245,783

Balance at April 1, 2023		120,305		$	12	$	(42,352	)	$	234,158		$	9,119	$	74,143		$	275,080		$	(45	)	$	275,035
Share-based compensation		—			—		—			4,555			—		—			4,555			—			4,555
Transactions with non-controlling interests		—			—		—			(96	)		—		—			(96	)		96			—
Distributions to non-controlling interests		—			—		—			—			—		—			—			(60	)		(60	)
Dividends on redeemable preferred stock		—			—		—			—			—		(1,434	)		(1,434	)		—			(1,434	)
Dividends declared (3 cents per share)		—			—		—			—			—		(3,607	)		(3,607	)		—			(3,607	)
Common stock repurchased		(1,499	)		—		(11,452	)		—			—		—			(11,452	)		—			(11,452	)
Vesting and settlement of restricted share units		37			—		—			—			—		—			—			—			—
Net income		—			—		—			—			—		14,431			14,431			48			14,479
Balance at June 30, 2023		118,843		$	12	$	(53,804	)	$	238,617		$	9,119	$	83,533		$	277,477		$	39		$	277,516

Common Stock

Additional
Paid-in

Accumulated
Other
Comprehensive

Accumulated

Total
Shareholders'

Non-
Controlling

Total

Shares

Par Value

Capital

Income

Deficit

Equity

Interests

Equity

Balance at January 1, 2020

65,541

$
6

$
104,686

$
4,444

$
(43,363
)

$
65,773

$
129,117

$
194,890

Share-based compensation

—

—

127

—

—

127

—

127

Conversion of convertible bonds

6

—

26

—

—

26

—

26

Transactions with non-controlling
   interests

—

—

(777
)

—

—

(777
)

20,194

19,417

Distributions to non-controlling
   interests

—

—

—

—

—

—

(2,375
)

(2,375
)
Other comprehensive loss

—

—

—

(1,709
)

—

(1,709
)

—

(1,709
)
Net loss

—

—

—

—

(10,456
)

(10,456
)

(2,401
)

(12,857
)
Balance at March 31, 2020

65,547

$
6

$
104,062

$
2,735

$
(53,819
)

$
52,984

$
144,535

$
197,519

Balance at January 1, 2021

124,132

$
12

$
212,103

$
9,119

$
(29,653
)

$
191,581

$
(161
)

$
191,420

Share-based compensation

—

—

1,026

—

—

1,026

—

1,026

Distributions to non-controlling
   interests

—

—

—

—

—

—

(60
)

(60
)
Dividends on redeemable
   preferred stock

—

—

(1,402
)

—

—

(1,402
)

—

(1,402
)
Issuance of shares

296

—

3,000

—

—

3,000

—

3,000

Net (loss) income

—

—

—

—

(14,736
)

(14,736
)

74

(14,662
)
Balance at March 31, 2021

124,428

$
12

$
214,727

$
9,119

$
(44,389
)

$
179,469

$
(147
)

$
179,322


	Common Stock					Treasury			Additional			Accumulated Other		Retained			Total			Non-
	Shares			Par Value		Stock, at Cost			Paid-in Capital			Comprehensive Income		Earnings			Shareholders' Equity			Controlling Interests			Total Equity
Balance at January 1, 2022		124,428		$	12	$	—		$	217,675		$	9,119	$	26,646		$	253,452		$	224		$	253,676
Share-based compensation		—			—		—			5,882			—		—			5,882			—			5,882
Distributions to non-controlling interests		—			—		—			—			—		—			—			(120	)		(120	)
Dividends on redeemable preferred stock		—			—		—			—			—		(2,852	)		(2,852	)		—			(2,852	)
Dividends declared (4 cents per share)		—			—		—			—			—		(4,889	)		(4,889	)		—			(4,889	)
Common stock repurchased		(4,652	)		—		(40,038	)		—			—		—			(40,038	)		—			(40,038	)
Vesting of restricted share units		286			—		—			—			—		—			—			—			—
Issuance of shares		13			—		—			—			—		—			—			—			—
Net income		—			—		—			—			—		33,993			33,993			131			34,124
Balance at June 30, 2022		120,075		$	12	$	(40,038	)	$	223,557		$	9,119	$	52,898		$	245,548		$	235		$	245,783

Balance at January 1, 2023		120,074		$	12	$	(40,042	)	$	229,995		$	9,119	$	81,750		$	280,834		$	56		$	280,890
Share-based compensation		—			—		—			8,624			—		—			8,624			—			8,624
Transactions with non-controlling interests		—			—		—			(2	)		—		—			(2	)		2			—
Distributions to non-controlling interests		—			—		—			—			—		—			—			(120	)		(120	)
Dividends on redeemable preferred stock		—			—		—			—			—		(2,852	)		(2,852	)		—			(2,852	)
Dividends declared (6 cents per share)		—			—		—			—			—		(7,216	)		(7,216	)		—			(7,216	)
Common stock repurchased		(1,773	)		—		(13,762	)		—			—		—			(13,762	)		—			(13,762	)
Vesting and settlement of restricted share units		542			—		—			—			—		—			—			—			—
Net income		—			—		—			—			—		11,851			11,851			101			11,952
Balance at June 30, 2023		118,843		$	12	$	(53,804	)	$	238,617		$	9,119	$	83,533		$	277,477		$	39		$	277,516

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ARKO Corp.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)


	For the three months ended March 31,						For the Six Months Ended June 30,
	2021			2020			2023			2022
Cash flows from operating activities:
Net loss	$	(14,662	)	$	(12,857	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Net income							$	11,952		$	34,124
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		24,242			17,071			61,236			48,989
Deferred income taxes		(1,843	)		389			(14,115	)		2,671
Loss on disposal of assets and impairment charges		1,375			3,382			3,278			1,971
Foreign currency gain		(1,042	)		(2,874	)
Amortization of deferred financing costs, debt discount and premium		(185	)		1,780
Foreign currency loss								58			228
Amortization of deferred financing costs and debt discount								1,213			1,262
Amortization of deferred income		(2,484	)		(2,380	)		(3,929	)		(5,292	)
Accretion of asset retirement obligation		445			327			1,118			829
Non-cash rent		1,771			1,801			6,558			3,737
Charges to allowance for credit losses		141			49			573			351
Loss from equity investment		6			233
Loss (income) from equity investment								63			(37	)
Share-based compensation		1,026			127			8,624			5,882
Fair value adjustment of financial assets and liabilities		11,049			(418	)		(5,248	)		(6,590	)
Other operating activities, net		224			—			976			707
Changes in assets and liabilities:
(Increase) decrease in trade receivables		(10,798	)		7,732
(Increase) decrease in inventory		(7,437	)		17,402
Decrease in other assets		7,688			4,737
Increase (decrease) in accounts payable		17,309			(10,996	)
Increase in trade receivables								(18,173	)		(31,491	)
Increase in inventory								(8,208	)		(35,947	)
(Increase) decrease in other assets								(10,965	)		7,607
Increase in accounts payable								14,580			46,407
Decrease in other current liabilities		(15,829	)		(966	)		(7,651	)		(11,324	)
Decrease in asset retirement obligation		(89	)		(36	)
Increase (decrease) in non-current liabilities		369			(591	)
Increase (decrease) in asset retirement obligation								46			(34	)
Increase in non-current liabilities								4,000			8,112
Net cash provided by operating activities	$	11,276		$	23,912		$	45,986		$	72,162

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ARKO Corp.

Condensed Consolidated Statements of Cash Flows (cont’d)

(Unaudited, in thousands)


	For the three months ended March 31,						For the Six Months Ended June 30,
	2021			2020			2023			2022
Cash flows from investing activities:
Purchase of property and equipment	$	(17,525	)	$	(12,048	)	$	(50,038	)	$	(45,168	)
Purchase of intangible assets		—			(30	)		(35	)		(125	)
Proceeds from sale of property and equipment		880			—			296,485			7,261
Prepayment for business acquisition								—			(5,000	)
Business acquisitions, net of cash		—			(320	)		(481,636	)		(6,853	)
Loans to equity investment		—			(143	)
Decrease in investments, net								—			27,109
Repayment of loans to equity investment								—			174
Net cash used in investing activities		(16,645	)		(12,541	)		(235,224	)		(22,602	)
Cash flows from financing activities:
Lines of credit, net		—			(39,364	)
Repayment of related-party loans		—			(4,517	)
Receipt of long-term debt, net		1,115			156,694			74,233			—
Repayment of debt		(75,963	)		(41,722	)		(10,511	)		(6,093	)
Principal payments on financing leases		(1,990	)		(2,124	)		(2,912	)		(3,304	)
Investment of non-controlling interest in subsidiary		—			19,325
Payment of Merger Transaction issuance costs		(4,686	)		—
Proceeds from sale-leaseback								80,397			—
Payment of Additional Consideration								—			(2,085	)
Payment of Ares Put Option								(9,808	)		—
Common stock repurchased								(13,563	)		(40,038	)
Dividends paid on common stock								(7,216	)		(4,889	)
Dividends paid on redeemable preferred stock		(1,559	)		—			(2,852	)		(2,852	)
Distributions to non-controlling interests		(60	)		(2,375	)		—			(120	)
Net cash (used in) provided by financing activities		(83,143	)		85,917
Net (decrease) increase in cash and cash equivalents and restricted cash		(88,512	)		97,288
Net cash provided by (used in) financing activities								107,768			(59,381	)
Net decrease in cash and cash equivalents and restricted cash								(81,470	)		(9,821	)
Effect of exchange rate on cash and cash equivalents and restricted cash		(1,462	)		(1,306	)		(21	)		(121	)
Cash and cash equivalents and restricted cash, beginning of period		312,977			52,763			316,769			272,543
Cash and cash equivalents and restricted cash, end of period	$	223,003		$	148,745		$	235,278		$	262,601
Reconciliation of cash and cash equivalents and restricted cash
Cash and cash equivalents, beginning of period	$	293,666			32,117		$	298,529			252,141
Restricted cash, beginning of period		16,529			14,423			18,240			20,402
Restricted cash with respect to bonds, beginning of period		2,782			6,223
Cash and cash equivalents and restricted cash, beginning of period	$	312,977		$	52,763		$	316,769		$	272,543
Cash and cash equivalents, end of period	$	204,986			128,513		$	220,142		$	248,518
Restricted cash, end of period		18,017			12,609			15,136			14,083
Restricted cash with respect to bonds, end of period		—			7,623
Cash and cash equivalents and restricted cash, end of period	$	223,003		$	148,745		$	235,278		$	262,601

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ARKO Corp.

Condensed Consolidated Statements of Cash Flows (cont’d)

(Unaudited, in thousands)


	For the three months ended March 31,				For the Six Months Ended June 30,
	2021		2020		2023		2022
Supplementary cash flow information:
Cash received for interest	$	55	$	403	$	4,274	$	107
Cash paid for interest		18,057		8,083		38,402		27,740
Cash received for taxes		9		67		512		78
Cash paid for taxes		72		226		20,845		4,797
Supplementary noncash activities:
Prepaid insurance premiums financed through notes payable		2,171		2,872	$	5,619	$	2,279
Purchases of equipment in accounts payable and accrued expenses		3,715		3,310		9,367		10,857
Purchase of property and equipment under leases		11,534		2,448		3,034		10,363
Disposals of leases of property and equipment		2,254		1,447		2,669		404
Issuance of shares		3,000		—
Receipt of related-party receivable payment offset by related-party loan payments		—		7,133
Deferred consideration related to business acquisition						45,845		—

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ARKO Corp.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. General

ARKO Corp. (the “Company”) is a Delaware corporation whose common stock, par value ~~$0.0001~~$0.0001 per share (“common stock”), and publicly-traded warrants ~~were registered to trade~~are listed on the Nasdaq Stock Market ~~on December 22, 2020~~(“Nasdaq”) under the symbols “ARKO” and ~~commenced trading on December 23, 2020. The Company’s common stock is also listed on the Tel Aviv Stock Exchange.~~

On September 8, 2020, the Company (a newly-formed company) entered into a business combination agreement, as amended on November 18, 2020 (the “Merger Agreement”), together with Arko Holdings Ltd. (“Arko Holdings”), Haymaker Acquisition Corp. II, a Delaware corporation and special purpose acquisition company (“Haymaker”), and additional newly-formed wholly owned subsidiaries of Haymaker that were formed in order to enable the consummation of the merger transaction (the “Merger Transaction”). Arko Holdings is a corporation incorporated in Israel, whose securities were listed on the Tel Aviv Stock Exchange prior to the consummation of the Merger Transaction and which held a majority of the outstanding equity of GPM Investments, LLC, a Delaware limited liability company (“GPM”). On December 22, 2020, the Merger Transaction was consummated (the “Merger Closing Date”), following which Arko Holdings and Haymaker became wholly owned subsidiaries of the Company.“ARKOW,” respectively.

The Company’s operations are primarily performed by its subsidiary, GPM ~~which became~~Investments, LLC (“GPM”), a ~~wholly owned subsidiary, indirectly, upon consummation of the Merger Transaction.~~Delaware limited liability company. GPM is primarily engaged directly and through fully owned and controlled subsidiaries (directly or indirectly) in retail activity, which includes the operations of a chain of convenience stores, most of which include adjacent gas ~~stations, and~~stations. The Company is also engaged in wholesale activity, which includes the supply of fuel to gas stations operated by third ~~parties.~~parties, and in fleet fueling, which includes the operation of 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. As of ~~March 31, 2021,~~June 30, 2023, GPM’s activity included the ~~self-operation~~operation of ~~1,324 sites and~~1,547 retail convenience stores, the supply of fuel to ~~1,625~~1,824 gas stations operated by ~~external operators (dealers),~~dealers and the operation of 293 cardlock locations, throughout 33more than 30 states and the District of Columbia in the Mid-Atlantic, Midwestern, Northeastern, Southeastern and Southwestern United States (“~~US”~~U.S.”).

The Company has ~~three reporting~~four reportable segments: retail, wholesale, fleet fueling, and GPMP. Refer to Note 911 below for further information with respect to the segments.

~~Accounting Treatment of the Merger Transaction~~

The Merger Transaction was accounted for as a reverse recapitalization. Under this method of accounting, Haymaker was treated as the “acquired” company and Arko Holdings was considered the accounting acquirer for accounting purposes. The Merger Transaction was treated as the equivalent of Arko Holdings’ issuing stock in exchange for the net assets of Haymaker, accompanied by a recapitalization. The net assets of Arko Holdings and Haymaker were stated at historical cost. NaN goodwill or intangible assets were recorded in connection with the Merger Transaction.

Because Arko Holdings was deemed the accounting acquirer, upon the consummation of the Merger Transaction, the historical financial statements of Arko Holdings became the historical financial statements of the combined company. As a result, the financial statements included in this Quarterly Report on Form 10-Q reflect the historical operating results of Arko Holdings prior to the Merger Closing Date and the combined results of the Company, including those of Haymaker, following the Merger Closing Date. Additionally, the Company’s equity structure has been reclassified in all comparative periods up to the Merger Closing Date to reflect the number of shares of the Company’s common stock issued to Arko Holdings’ stockholders in connection with the recapitalization transaction. As such, the share counts, corresponding common stock amounts and earnings per share related to Arko Holdings’ common stock prior to the Merger Transaction have been retroactively reclassified as shares reflecting the exchange ratio established in accordance with the Merger Agreement.

2. Summary of Significant Accounting Policies

Basis of Presentation

All significant intercompany balances and transactions have been eliminated in the accompanying condensed consolidated financial statements, which are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Interim Financial Statements

The accompanying condensed consolidated financial statements (“interim financial statements”) as of ~~March 31, 2021~~June 30, 2023 and for the three and six months ~~periods~~ ended ~~March 31, 2021~~June 30, 2023 and ~~2020 (“interim financial statements”)~~2022 are unaudited and have been prepared in accordance with GAAP for interim financial information and Regulation S-X set forth by the Securities and Exchange Commission (the “SEC”) for interim reporting. In the opinion of

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management, all adjustments (consisting of normal and recurring adjustments except those otherwise described herein) considered necessary for a fair presentation have been included in the accompanying interim financial statements. However, they do not include all of the information and disclosures required by GAAP for complete financial statements. Therefore, the interim financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes of the Company included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020~~2022 (the “annual financial statements”).

The same significant accounting policies, presentation and methods of computation have been followed in these interim financial statements as were applied in the preparation of the annual financial statements.

Accounting Periods

The Company’s fiscal periods end on the last day of the month, and its fiscal year ends on December 31. This results in the Company experiencing fluctuations in current assets and current liabilities due to purchasing and payment patterns which change based upon the day of the week. As a result, working capital can change from period to period not only due to changing business operations, but also due to a change in the day of the week inon which each period ends. The Company earns a disproportionate amount of its annual operating income in the second and third quarters as a result of the climate and seasonal buying patterns of its customers. Inclement weather, especially in the Midwest and Northeast regions of the USU.S. during the winter months, can negatively impact financial results.

Use of Estimates

In the preparation of interim condensed consolidated financial statements, management may make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual

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results could differ from those estimates. Significant estimates include right-of-use assets and lease liabilities; impairment of goodwill, intangible, right-of-use and fixed assets; ~~useful lives of fixed assets;~~ environmental assets and liabilities; deferred tax assets; and asset retirement obligations.

Cash and Cash Equivalents

The Company considers all unrestricted highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents are maintained at several financial institutions, and in order to have sufficient working capital on hand, the Company maintains concentrations of cash in several financial institutions in amounts that are above the FDIC standard deposit insurance limit of $250,000.

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to the customers. This requires the Company to identify contractual performance obligations and determine whether revenue should be recognized at a single point in time or over time, based on when control of goods and services transfers to a customer. Control is transferred to the customer over time if the customer simultaneously receives and consumes the benefits provided by the Company’s performance. If a performance obligation is not satisfied over time, the Company satisfies the performance obligation at a single point in time.

Revenue is recognized in an amount that reflects the consideration to which the Company expects to be entitled in exchange for goods or services.

When the Company satisfies a performance obligation by transferring control of goods or services to the customer, revenue is recognized against contract assets in the amount of consideration ~~for~~to which the Company is entitled. When the consideration amount received from the customer exceeds the amounts recognized as revenue, the Company recognizes a contract liability for the excess.

An asset is recognized related to the costs incurred to obtain a contract ~~(i.e.~~(e.g. sales commissions) if the costs are specifically identifiable to a contract, the costs will result in enhancing resources that will be used in satisfying performance obligations in the future and the costs are expected to be recovered. These capitalized costs are recorded as a part of other current assets and other non-current assets and are amortized on a systematic basis consistent with the pattern of transfer of the goods or services to which such costs relate. The Company expenses the costs to obtain a contract, as and when they are incurred, in cases where the expected amortization period is one year or less.

The Company evaluates if it is a principal or an agent in a transaction to determine whether revenue should be recorded on a gross or a net basis. In performing this analysis, the Company considers first whether it controls the goods before they are transferred to the customers and if it has the ability to direct the use of the goods or obtain benefits from them. The Company also considers the following indicators: (1) the primary obligor, (2) the latitude in establishing prices and selecting suppliers, and (3) the inventory risk borne by the Company before and after the goods have been transferred to the customer. When the Company acts as principal, revenue is recorded on a gross basis. When the Company acts as agent, revenue is recorded on a net basis.

Fuel revenue and fuel ~~costs~~cost of revenue included fuel taxes of ~~$222.5~~$307.2 million, $243.7 million, $571.5 million and ~~$115.1~~$475.5 million for the three and six months ended ~~March 31, 2021~~June 30, 2023 and ~~2020,~~2022, respectively.

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Refer to Note 911 for disclosure of the revenue disaggregated by segment and product line, as well as a description of the reportable segment operations.

~~New Accounting Pronouncements Adopted During 2021~~3. Acquisitions

~~Simplifying~~Transit Energy Group, LLC

On March 1, 2023, the ~~Accounting~~Company completed the acquisition of certain assets from Transit Energy Group, LLC and certain of its affiliated entities (collectively, “TEG”) pursuant to a purchase agreement entered on September 9, 2022, as amended (the “TEG Purchase Agreement”), including (i) 135 Company-operated convenience stores and gas stations, (ii) fuel supply rights to 181 dealer locations, (iii) a commercial, government, and industrial business, including certain bulk plants, and (iv) certain distribution and transportation assets, all in the southeastern United States (the “TEG Acquisition”).

The purchase price for ~~Income Taxes –~~ the TEG Acquisition was approximately $~~In December 2019,~~370 million, as adjusted in accordance with the ~~FASB issued ASU 2019-12, Simplifying~~terms of the ~~Accounting~~TEG Purchase Agreement, plus the value of inventory at the closing, of which $50 million was deferred and payable in two annual payments of $25 million, which the Company may elect to pay in either cash or, subject to the satisfaction of certain conditions, shares of common stock (the “Installment Shares”), on the first and second anniversaries of the closing. Pursuant to the TEG Purchase Agreement, at closing, ARKO and TEG entered into a registration rights agreement, pursuant to which ARKO agreed to prepare and file a registration statement with the SEC, registering the Installment Shares, if any, for ~~Income Taxes.~~ resale by TEG.

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The ~~amendments~~Company paid approximately $81.7 million of the non-deferred purchase price including the value of inventory and other closing adjustments, of which $55.0 million was financed with the Capital One Line of Credit (as defined in Note 4 below). An affiliate of Oak Street Real Estate Capital Net Lease Property Fund, LP (including its affiliates, “Oak Street”), under the Company’s standby real estate purchase, designation and lease program agreement with Oak Street, dated as of May 3, 2021 (as amended, the “Program Agreement”), paid the balance of the non-deferred purchase price for fee simple ownership in 104 sites. At the closing, pursuant to the Program Agreement, the Company entered into a master lease with Oak Street for the sites Oak Street acquired in the transaction under customary lease terms. For accounting purposes, the transaction with Oak Street was treated as a sale-leaseback. Because the sale-leaseback was off-market, a financial liability of $51.6 million was recorded, resulting in interest expense recognized over the lease term. Additionally, right-of-use assets and operating lease liabilities of approximately $131.3 million were recorded in connection with the operating lease, after reducing for accounting purposes from the contractual lease payments the amount attributable to the repayment of the additional financing.

The details of the TEG Acquisition were as follows:


	Amount
	(in thousands)
Fair value of consideration transferred:
Cash	$	26,702
GPMP Capital One Line of Credit		55,000
Liability resulting from deferred purchase price		45,845
Receivable from TEG		(62	)
Consideration provided by Oak Street		258,019
Total consideration	$	385,504
Assets acquired and liabilities:
Cash and cash equivalents	$	379
Inventory		20,259
Other assets		1,304
Property and equipment, net		268,879
Intangible assets		20,000
Right-of-use assets under operating leases		69,254
Environmental receivables		2,664
Deferred tax asset		19,135
Total assets		401,874
Other liabilities		(2,087	)
Environmental liabilities		(2,939	)
Asset retirement obligations		(11,187	)
Operating leases		(57,569	)
Total liabilities		(73,782	)
Total identifiable net assets		328,092
Goodwill	$	57,412

Consideration paid in cash	$	81,702
Consideration provided by Oak Street		258,019
Less: cash and cash equivalent balances acquired		(379	)
Net cash outflow	$	339,342

The initial accounting treatment of the TEG Acquisition reflected in these interim financial statements is provisional as the Company has not yet finalized the initial accounting treatment of the business combination, and, in this ~~ASU simplify~~regard, has not finalized the ~~accounting for income taxes by removing certain exceptions to the general principles in ASC 740. The amendments also improve consistent application~~valuation of and simplify GAAP for other areas of ASC 740 by clarifying and amending existing guidance, such as the accounting for a franchise tax (or similar tax) that is partially based on income. This standard is effective January 1, 2021 for the Company. The adoption of this guidance had no material impact on the Company’s consolidated financial statements.

~~New Accounting Pronouncements Not Yet Adopted~~

~~Reference Rate Reform –~~ ~~In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation~~some of the ~~Effects of Reference Rate Reform on Financial Reporting. This standard included optional guidance for a~~assets and liabilities acquired and the goodwill resulting from the TEG Acquisition, mainly due to the limited period of time between the TEG Acquisition closing date and the date of these interim financial statements. Therefore, some of the financial information presented with respect to ~~help ease~~ the ~~burden~~TEG Acquisition in these interim financial statements remains subject to change.

The Company included identifiable tangible assets and identifiable liabilities at their respective fair values based on the information available to the Company’s management on the TEG Acquisition closing date, including, among other things, a preliminary valuation performed by external consultants for this purpose. The useful life of both the wholesale fuel supply contracts and the trade name was estimated at five years.

As a result of the preliminary accounting treatment of the TEG Acquisition, the Company recorded goodwill of approximately $57.4 million, of which $55.0 million was allocated to the GPMP segment and the remainder to the retail segment, and attributable to

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the opportunities to expand into new geographic locations and add a significant amount of volume to the GPMP segment. None of the goodwill recognized is tax deductible for U.S. income tax purposes.

Acquisition-related costs amounting to approximately $0.7 million and $2.9 million have been excluded from the consideration transferred and have been recognized as an expense within other expenses, net in the condensed consolidated statements of operations for the ~~effects~~three and six months ended June 30, 2023, respectively. No acquisition-related costs were recognized for the three and six months ended June 30, 2022.

Results of ~~reference rate reform.~~ operations for the TEG Acquisition for the period subsequent to the acquisition closing date were included in the condensed consolidated statement of operations for the three and six months ended June 30, 2023. For the period from the TEG Acquisition closing date through June 30, 2023, the Company recognized $317.1 million in revenues and $2.7 million of net loss related to the TEG Acquisition. For the three months ended June 30, 2023, the Company recognized $240.2 million in revenues and $2.7 million of net loss related to the TEG Acquisition.

WTG Fuels Holdings, LLC

On June 6, 2023, certain of the Company’s subsidiaries completed the acquisition of certain assets from WTG Fuels Holdings, LLC and certain other sellers party thereto (collectively, “WTG”) pursuant to an asset purchase agreement entered on December 6, 2022, including (i) 24 company-operated Uncle’s convenience stores located across Western Texas, and (ii) 68 proprietary GASCARD-branded cardlock sites and 43 private cardlock sites for fleet fueling operations located in Western Texas and Southeastern New Mexico (the “WTG Acquisition”).

The purchase price for the WTG Acquisition was approximately $140.0 million, plus the value of inventory at the closing.The Company paid approximately $29.9 million of the purchase price including the value of inventory and other closing adjustments, of which $19.2 million was financed with the Capital One Line of Credit (as defined in Note 4 below). Oak Street, under the Program Agreement, paid the balance of the purchase price for fee simple ownership in 33 properties. At the closing, pursuant to the Program Agreement, the Company entered into master leases with Oak Street for the sites Oak Street acquired in the transaction under customary lease terms. For accounting purposes, the transaction with Oak Street was treated as a sale-leaseback. Because the sale-leaseback was off-market, a financial liability of $28.8 million was recorded, resulting in interest expense recognized over the lease term. Additionally, right-of-use assets and operating lease liabilities of approximately $49.0 million were recorded in connection with the operating lease, after reducing for accounting purposes from the contractual lease payments the amount attributable to the repayment of the additional financing.

The details of the WTG Acquisition were as follows:

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	Amount
	(in thousands)
Fair value of consideration transferred:
Cash	$	10,653
GPMP Capital One Line of Credit		19,200
Payable to WTG		818
Consideration provided by Oak Street		115,041
Total consideration	$	145,712
Assets acquired and liabilities:
Cash and cash equivalents	$	60
Inventory		5,694
Other assets		149
Property and equipment, net		128,396
Intangible assets		14,800
Right-of-use assets under operating leases		1,812
Environmental receivables		4
Total assets		150,915
Other liabilities		(598	)
Environmental liabilities		(136	)
Asset retirement obligations		(2,730	)
Operating leases		(1,739	)
Total liabilities		(5,203	)
Total identifiable net assets		145,712
Goodwill	$	—

Consideration paid in cash	$	29,853
Consideration provided by Oak Street		115,041
Less: cash and cash equivalent balances acquired		(60	)
Net cash outflow	$	144,834

The initial accounting treatment of the WTG Acquisition reflected in these interim financial statements is provisional as the Company has not yet finalized the initial accounting treatment of the business combination, and, in this regard, has not finalized the valuation of some of the assets and liabilities acquired and the goodwill resulting from the WTG Acquisition, mainly due to the limited period of time between the WTG Acquisition closing date and the date of these interim financial statements. Therefore, some of the financial information presented with respect to the WTG Acquisition in these interim financial statements remains subject to change.

The Company included identifiable tangible assets and identifiable liabilities at their respective fair values based on the information available to the Company’s management on the WTG Acquisition closing date, including, among other things, a preliminary valuation performed by management. The useful life of the contracts related to the third-party cardlock sites, the customer relationships related to the proprietary cardlock sites and the proprietary fuel cards, the wholesale fuel supply contracts and the trade name was each estimated at five years.

The Company’s preliminary accounting treatment of the WTG Acquisition resulted in no goodwill being recorded.

Acquisition-related costs amounting to approximately $1.8 million and $2.1 million have been excluded from the consideration transferred and have been recognized as an expense within other expenses, net in the condensed consolidated statements of operations for the three and six months ended June 30, 2023, respectively. No acquisition-related costs were recognized for the three and six months ended June 30, 2022.

Results of operations for the WTG Acquisition for the period subsequent to the acquisition closing date were included in the condensed consolidated statement of operations for the three and six months ended June 30, 2023. For the period from the WTG Acquisition closing date through June 30, 2023, the Company recognized $14.9 million in revenues and $0.2 million of net income related to the WTG Acquisition.

Pride Convenience Holdings, LLC

On December 6, 2022, the Company acquired all of the issued and outstanding membership interests in Pride Convenience Holdings, LLC, which operated at closing 31 convenience stores and gas stations in Connecticut and Massachusetts (the “Pride

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Acquisition”). In the second quarter of 2023, the Company updated the initial accounting treatment of the Pride Acquisition, including the valuation of some of the assets acquired, liabilities assumed and the goodwill resulting from the acquisition. As a result, the Company primarily reduced property and equipment by approximately $4.7 million, increased accounts payable and other liabilities by a net $1.0 million, and increased the deferred tax asset by approximately $1.0 million. The adjustments to the assets acquired and liabilities assumed resulted in an increase in goodwill of approximately $3.1 million, of which $0.4 million was allocated to the GPMP segment and the remainder was allocated to the retail segment attributable to the opportunities to expand into new ~~standard is effective~~geographic locations. These adjustments resulted in a reduction in depreciation and amortization expenses recorded, approximately $0.2 million that related to amounts recorded for ~~all entities through~~the year ended December 31, ~~2022.~~ 2022 and approximately $0.6 million that related to the three months ended March 31, 2023.

Impact of Acquisitions (unaudited)

The unaudited supplemental pro forma financial information presented below was prepared based on the historical information of the Company ~~is examining~~and the acquired operations and gives pro forma effect to the acquisitions using the assumption that the WTG Acquisition, the TEG Acquisition, the Pride Acquisition and the acquisition of 184 Quarles cardlock sites and 46 dealer locations on July 22, 2022 (the “Quarles Acquisition”) had occurred at the beginning of each period presented below. The unaudited supplemental pro forma financial information does not give effect to the potential impact of ~~this standard on its consolidated~~current financial ~~statements.~~conditions, any anticipated synergies, operating efficiencies or cost savings that may result from the acquisitions or any integration costs.

The unaudited pro forma financial information is not necessarily indicative of what the actual results of operations would have been had the acquisitions occurred at the beginning of each period presented below nor is it indicative of future results.


	For the Six Months Ended June 30,
	2023		2022
	(unaudited)
	(in thousands)
Total revenue	$	4,969,737	$	5,938,441
Net income		10,398		36,523

4. Debt

The components of debt were as follows:


	March 31, 2021					December 31, 2020			June 30, 2023			December 31, 2022
	(in thousands)								(in thousands)
Bonds (Series C)	$	0		��	$		76,582
PNC term loans		32,362					32,354
Senior Notes									$	444,033		$	443,648
M&T debt		28,420					27,898			44,380			49,023
Ares term loan		215,208					215,433
Capital One line of credit										331,303			256,430
Insurance premium notes		3,935					3,488			3,955			2,886
Capital One line of credit		394,334					394,035
Total debt, net	$	674,259			$		749,790		$	823,671		$	751,987
Less current portion		(29,495	)				(40,988	)		(13,369	)		(11,944	)
Total long-term debt, net	$	644,764			$		708,802		$	810,302		$	740,043

~~Bonds (Series C)~~

On ~~March 30, 2021, Arko Holdings fully redeemed its Bonds (Series C) in accordance with the optional redemption provisions of the deed of trust governing the Bonds (Series C).~~ Arko Holdings redeemed the Bonds (Series C) at a redemption price equal to approximately NIS 1.084 for every NIS 1 par value (approximately $0.325 as of March 30, 2021 per NIS 1 par value) of Bonds (Series C) outstanding (including additional interest for the early redemption and accrued and unpaid interest thereon to the redemption date for the Bonds (Series C)). ~~The total amount paid to holders of the Bonds (Series C) was approximately NIS 264 million (approximately $79 million).~~

~~Ares Credit Agreement~~

~~On March 30, 2021,~~May 5, 2023, GPM ~~entered into an amendment to its credit agreement (the “Ares Credit Agreement”~~Petroleum LP (“GPMP”) ~~with Ares Capital Corporation (“Ares”) which amended~~renewed the credit agreement governing its revolving credit facility with a syndicate of banks led by Capital One, National Association, to ~~adjust~~increase the ~~interest rate effective~~aggregate principal amount of availability thereunder from $500 million to $800 million (as amended, the “Capital One Line of Credit”) and ~~after March 1, 2021, by (A) reducing~~extend the ~~applicable margin for~~maturity date from July 15, 2024 to May 5, 2028. At GPMP’s request, availability under the ~~term loan facility by 0.125%~~Capital One Line of Credit can be increased up to $1.0 billion, subject to obtaining additional financing commitments from current lenders or from other banks, and ~~(B) reducing the LIBOR Rate (as defined~~subject to certain other terms as detailed in the credit agreement) to be not less than 1.0%, such that following these changes, effective March 1, 2021, the term loan facility bears interest, as elected by GPM, at (a) a rate per annum equal to the Ares alternative base rate (“ABR”) plus a marginCapital One Line of ~~3.50%, or (b) the LIBOR Rate as defined in the credit agreement (not less than 1.0%) plus a margin of 4.50%.~~Credit.

4.5. Leases

As of ~~March 31, 2021,~~June 30, 2023, the Company leased ~~1,125~~1,278 of ~~its~~the convenience stores that it operates, ~~158~~ 209dealer locations, 157 cardlock locations and certain office and storage spaces, ~~used as its headquarters in the US,~~ including land and buildings in certain cases. Most of the lease agreements are for

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long-term periods, ranging from 15 to 20 years ~~years,~~, and generally include several renewal options for extension periods for five to 25 years ~~years~~ each. Additionally, the Company leases certain store equipment, office equipment, automatic tank gauges ~~store lighting~~ and fuel dispensers.

~~Under ASC 842, the~~The components of lease cost recorded on the condensed consolidated statements of operations were as follows:

For the three months ended
March 31,

2021

2020

(in thousands)

Finance lease cost:

Depreciation of right-of-use assets

$
3,317

$
3,192

Interest on lease liabilities

4,446

4,326

Operating lease costs included in store operating expenses

32,334

27,244

Operating lease costs included in general and administrative
expenses

396

327

Lease cost related to variable lease payments, short-term
leases and leases of low value assets

375

150

Right-of-use asset impairment charges

111

639

Total lease costs

$
40,979

$
35,878


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
	(in thousands)
Finance lease cost:
Depreciation of right-of-use assets	$	2,785	$	3,037	$	5,638	$	6,084
Interest on lease liabilities		4,142		4,260		8,304		8,631
Operating lease costs included in store operating expenses		45,752		34,358		87,336		68,653
Operating lease costs included in general and administrative expenses		587		351		1,121		738
Lease cost related to variable lease payments, short-term leases and leases of low value assets		711		569		1,401		1,213
Right-of-use asset impairment charges and loss (gain) on disposals of leases		1,994		—		1,454		—
Total lease costs	$	55,971	$	42,575	$	105,254	$	85,319

5.Supplemental balance sheet date related to leases was as follows:


	June 30, 2023			December 31, 2022
	(in thousands)
Operating leases
Weighted average remaining lease term (in years)		14.4			14.1
Weighted average discount rate		7.8	%		7.7	%
Financing leases
Weighted average remaining lease term (in years)		23.1			23.4
Weighted average discount rate		7.2	%		7.2	%

As of June 30, 2023, maturities of lease liabilities for operating lease obligations and financing lease obligations having an initial or remaining non-cancellable lease terms in excess of one year were presented in the table below. The minimum lease payments presented below include periods where an option is reasonably certain to be exercised and do not take into consideration any future consumer price index adjustments for these agreements.


	Operating			Financing
	(in thousands)
July 2023 through June 2024	$	174,609		$	21,279
July 2024 through June 2025		176,244			21,046
July 2025 through June 2026		176,841			20,914
July 2026 through June 2027		174,535			20,772
July 2027 through June 2028		171,421			20,860
Thereafter		1,688,912			414,378
Gross lease payments	$	2,562,562		$	519,249
Less: imputed interest		(1,076,015	)		(290,462	)
Total lease liabilities	$	1,486,547		$	228,787

6. Financial Derivative Instruments

The Company makes limited use of derivative instruments (futures contracts) to manage certain risks related to diesel fuel prices. The Company does not hold any derivatives for speculative purposes and it does not use derivatives with leveraged or complex features. The Company currently uses derivative instruments that are traded primarily over national exchanges such as the New York Mercantile Exchange (“NYMEX”). For accounting purposes, the Company has designated its derivative contracts as fair value hedges of firm commitments.

As of June 30, 2023, the Company had fuel futures contracts in place to hedge approximately 3.2 million gallons of diesel fuel for which the Company had a firm commitment to purchase. As of June 30, 2023 and December 31, 2022, the Company had asset derivatives with fair values of approximately $0.2 million and $0.5 million, respectively, recorded in other current assets and firm

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commitments with fair values of approximately $0.2 million and $0.5 million, respectively, recorded in other current liabilities on the condensed consolidated balance sheets.

As of June 30, 2023 and December 31, 2022, there was $0.2 million and $0.5 million, respectively, of cash collateral provided to counterparties that was classified as restricted cash on the condensed consolidated balance sheet. All cash flows associated with purchasing and selling fuel derivative instruments are classified as other operating activities, net cash flows in the condensed consolidated statements of cash flows.

7. Equity

~~On August~~The Company’s board of directors (the “Board”) declared and the Company paid a quarterly dividend of $0.03 per share of common stock on March 21, 2023 and on June 1, ~~2020, Haymaker~~2023, totaling $3.6 million each. The amount and ~~Nomura Securities International, Inc. (“Nomura”) entered into an engagement letter, pursuant to~~timing of dividends payable on the common stock are within the sole discretion of the Board, which ~~Nomura agreed to act as a placement agent in connection with~~will evaluate dividend payments within the context of the Company’s ~~issuance~~overall capital allocation strategy on an ongoing basis, giving consideration to its current and forecast earnings, financial condition, cash requirements and other factors. As a result of ~~its~~the aggregate amount of dividends paid on the common stock through June 30, 2023, the conversion price of the Company’s Series A ~~redeemable~~convertible preferred stock ~~and~~has been adjusted from $12.00 to $11.85 per share, as were the threshold share prices in the Deferred Shares agreement (as defined in Note 10). The Board declared a quarterly dividend of $0.03 per share of common stock, to be paid on September ~~8, 2020, Haymaker and Nomura entered into~~1, 2023 to stockholders of record as of August 15, 2023.

In February 2022, the Board authorized a share repurchase program for up to an engagement letter, pursuant to which Nomura agreed to act as a financial and capital markets advisor in connection with the Merger Transaction. On January 19, 2021, the Company, Haymaker and Nomura entered into a letter agreement, amending the engagement letters to provide that allaggregate of ~~the placement fee and the transaction fee, in each case at Haymaker’s option, may be paid to Nomura in the form~~$50 million of ~~296,150 shares of common stock. On January 21, 2021, the Company issued 296,150~~outstanding shares of common stock and in May 2023, the Board increased the size of the share repurchase program to ~~Nomura in a private placement.~~$100.0 million. The share repurchase program does not have an expiration date. In the three and six months ended June 30, 2023, the Company repurchased approximately 1.5 million and 1.6 million shares of common stock, respectively, under the repurchase program for approximately $11.2 million and $11.9 million, or an average share price of $7.55 and $7.57, respectively.

6.8. Share-Based Compensation

~~In March 2021, the~~The Compensation Committee of the ~~Company’s~~ Board ~~of Directors (the “Board”)~~has approved the grant of non-qualified stock options, ~~and~~ restricted stock units (“RSUs”), and shares to certain employees, non-employees and members of the Board under the ARKO Corp. 2020 Incentive Compensation Plan (the “Plan”). Stock options granted under the Plan expire no later than ten years from the date of grant and the exercise price ~~shall~~may not be less than the fair market value of the shares on the date of grant. Vesting periods are assigned to stock options and restricted share units on a grant-by-grant basis at the discretion of the Board. The Company issues new shares of common stock upon exercise of stock options and vesting of ~~restricted share units.~~RSUs.

Additionally, a non-employee director may ~~elect to defer~~receive RSUs in lieu of up to ~~100%~~100% of his or her cash fees, ~~and instead receive~~which RSUs ~~which must~~will be settled in common stock upon the director’s departure from the ~~Board. There were 60,000 RSUs issued to non-employee directors outstanding at March 31, 2021.~~Board or an earlier change in control of the Company.

Stock Options

The following table summarizes share activity related to stock ~~options and restricted stock units:~~options:

Stock
Options

Restricted
Stock Units

Options Outstanding/Nonvested RSUs, December 31, 2020

0

0

Granted

126,000

1,570,600

Options Exercised/RSUs released

0

(60,000
)
Forfeited

0

0

Options Outstanding/Nonvested RSUs, March 31, 2021

126,000

1,510,600


	Stock Options		Weighted Average Exercise Price		Weighted Average Fair Value		Remaining Average Contractual Term (Years)		Aggregate Intrinsic Value
	(in thousands)								(in thousands)
Options Outstanding, December 31, 2022		897	$	9.24				9.0	$	77
Granted		409		8.58		3.27
Options Outstanding, June 30, 2023		1,306	$	9.03				8.9	$	—

The ~~following table summarizes~~aggregate intrinsic value is the difference between the exercise price and the closing price of the Company’s common stock on June 30, 2023 and December 31, 2022.

In the six months ended June 30, 2023, 352 thousand stock options ~~granted in 2021:~~vested.

Weighted average fair value

$
9.60

Weighted average exercise price

$
10.00

Remaining average contractual term (years)

9.9

~~Table~~As of ~~Contents~~June 30, 2023, total unrecognized compensation cost related to unvested stock options was approximately $

2.3 million, which is expected to be recognized over a weighted average period of approximately 2.0 years.

The fair value of each stock option award is estimated by management on the date of the grant using the Black-Scholes option pricing model. The following table summarizes the assumptions utilized in the valuation of the stock option awards ~~for~~granted in the ~~three~~six months ended ~~March 31, 2021:~~ June 30, 2023:

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Expected dividend rate	~~0.0~~	1.4	%
Expected stock price volatility	28.8	%
Risk-free interest rate	~~1.6~~	4.0	%
Expected term of options (years)	10.0

The expected stock price volatility is based on the historical volatility of the Company’s stock price plus the Company’s peer group’s stock ~~price.~~price for the period prior to the Company’s listing on Nasdaq. The volatilities are estimated for a period of time equal to the expected term of the related option. The risk-free interest rate is based on the implied yield of U.S. Treasury zero-coupon issues with an equivalent remaining term. The expected term of the options represents the estimated period of time until exercise and is determined by considering the contractual terms, vesting schedule and expectations of future employee behavior. ~~All of~~

Restricted Stock Units

The following table summarizes share activity related to RSUs:


	Restricted Stock Units			Weighted Average Grant Date Fair Value
	(in thousands)
Nonvested RSUs, December 31, 2022		3,115		$	8.90
Granted		1,676			8.49
Released		(615	)		9.00
Forfeited		(37	)		9.22
Performance-based share adjustment		144			8.13
Nonvested RSUs, June 30, 2023		4,283		$	8.70

In the six months ended June 30, 2023, 110,390 RSUs were issued to non-employee directors. These awards are included in the table above under restricted stock ~~option awards~~units. There were ~~out of money~~272,476 and 198,170RSUs issued to non-employee directors outstanding as of ~~March~~June 30, 2023 and December 31, ~~2021.~~2022, respectively.

The ~~weighted average grant date~~ fair value of ~~time-vested~~ RSUs ~~granted in March 2021 was $9.60 with a grant date fair value of $8.3 million~~released during the ~~three~~six months ended ~~March 31, 2021 and vest over~~ June 30, 2023 was $~~2.8~~5.3 ~~years.~~million.

~~The~~In the six months ended June 30, 2023, the Company granted a target of ~~644,867~~1,097,740 performance-based RSUs ~~with a grant date fair value of $6.2 million during the three months ended March 31, 2021.~~(“PSUs”). The ~~2021 performance-based RSUs~~PSUs were awarded to certain members of senior management ~~in connection with~~and provide for cliff vesting, generally at the end of a three-year period, subject to the achievement of specific key financial metrics measured over a ~~three-year~~ ~~period and also vest over a~~ ~~three-year~~such period. The number of ~~2021 performance-based RSUs~~PSUs that will ultimately vest is contingent upon the achievement of these key financial metrics byat the end of ~~year three.~~the relevant performance period. The Company assesses the probability of achieving these metrics on a quarterly basis.

Given the Company’s strong performance in 2022, in the first quarter of 2023, the Compensation Committee of the Board approved the adjustment of the performance criteria for 2022 such that the percentage of PSUs that vest with respect to the target amount for 2022 would be 125% instead of 100% and would be applied to all PSUs granted as part of the 2021 and 2022 long-term incentives. As a result, the number of PSUs was adjusted for the probability of achieving these metrics, resulting in additional expense of $0.1 million being recorded in the first quarter of 2023, based on the fair value at the adjustment approval date. For ~~these awards,~~PSUs with market conditions, the Company recognizes the fair value expense ratably over the performance and vesting period. ~~These awards are included above in~~

As of June 30, 2023, total unrecognized compensation cost related to RSUs ~~Granted.~~and PSUs was approximately $23.1 million, which is expected to be recognized over a weighted average period of approximately 1.9 years.

Compensation Cost

Total compensation cost recorded collectively for employees, non-employees and members of the Board for the three and six months ended ~~March 31, 2021~~June 30, 2023 and ~~2020~~2022 was ~~$1.0~~$4.6 million, $3.1 million, $8.6 million and ~~$0.1~~$5.9 million, respectively, and included in general and administrative expenses on the condensed consolidated statements of operations. As of March 31, 2021 and December 31, 2020, total unrecognized compensation cost related to unvested shares, stock options and RSUs granted was approximately $15.1 million and $0.6 million, respectively.

7.9. Earnings per Share

The following table sets forth the computation of basic and diluted net income per share of common stock:

For the three months ended
March 31,

2021

2020

(in thousands)

Net loss available to common stockholders

$
(16,138
)

$
(10,456
)
Weighted average common shares outstanding — Basic

124,361

66,731

Effect of dilutive securities:

Common stock equivalents

0

0

Weighted average common shares outstanding — Diluted

124,361

66,731

Net loss per share available to common stockholders
— Basic and Diluted

$
(0.13
)

$
(0.16
)

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	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
	(in thousands)
Net income available to common stockholders	$	12,997	$	30,320	$	8,999	$	31,141
Dividends on redeemable preferred stock		—		1,434		—		—
Net income available to common stockholders after assumed conversions	$	12,997	$	31,754	$	8,999	$	31,141

Weighted average common shares outstanding — Basic		119,893		121,529		120,073		122,909
Effect of dilutive securities:
Restricted share units		1,387		668		694		336
Redeemable preferred stock		—		8,361		—		—
Weighted average common shares outstanding — Diluted		121,280		130,558		120,767		123,245
Net income per share available to common stockholders — Basic	$	0.11	$	0.25	$	0.07	$	0.25
Net income per share available to common stockholders — Diluted	$	0.11	$	0.24	$	0.07	$	0.25

The following potential shares of common stock have been excluded from the computation of diluted ~~earnings~~net income per share because their effect would have been antidilutive:


	As of March 31,				As of June 30,
	2021		2020		2023		2022
	(in thousands)				(in thousands)
Stock options		126		0		1,306		897
Ares warrants		1,100		0		1,100		1,100
Public and Private warrants		17,333		0		17,333		17,333
Series A redeemable preferred stock		8,333		0		8,439		—
Restricted share units		1,511		184
Convertible bonds (par value)		0		51
Ares Put Option	*			—	*		*

* Refer to the description of this instrument in Note ~~8 below.~~10.

The effect of the potential shares of common stock issuable upon conversion of the redeemable preferred stock was antidilutive for the three months ended June 30, 2023 and the six months ended June 30, 2023 and 2022, and such shares were excluded from the computation of diluted net income per share.

8.10. Fair Value Measurements and Financial Instruments

The fair value of cash and cash equivalents, restricted cash, ~~and~~short-term investments, ~~and restricted cash with respect to bonds,~~ trade receivables, accounts payable and other current liabilities approximated their carrying values as of ~~March 31, 2021~~June 30, 2023 and December 31, ~~2020~~2022 primarily due to the short-term maturity of these instruments. On October 21, 2021, the Company completed a private offering of $450 million aggregate principal amount of 5.125% Senior Notes due 2029 (the “Senior Notes”). Based on market trades of the Senior Notes close to June 30, 2023 and December 31, 2022 (Level 1 fair value measurement), the fair value of the Senior Notes was estimated at approximately $367.0 million and $354.7 million, respectively, compared to a gross carrying value of $450 million at June 30, 2023 and December 31, 2022. The fair value of the other long-term debt approximated their carrying values as of ~~March 31, 2021~~June 30, 2023 and December 31, ~~2020~~2022 due to the frequency with which interest rates are reset based on changes in prevailing interest rates.

~~The Bonds (Series C) were presented in the consolidated balance sheets at amortized cost.~~ The fair value of ~~the Bonds (Series C)~~fuel futures contracts was ~~$80.6 million as of December 31, 2020. The fair value measurements were classified as Level 1.~~determined using NYMEX quoted values.

The contingent consideration from the acquisition of the business of Empire ~~business~~Petroleum Partners, LLC is measured at fair value at the end of each reporting period and amounted to ~~$7.6~~$2.2 million and ~~$7.4~~$3.7 million as of ~~March 31, 2021~~June 30, 2023 and December 31, ~~2020,~~2022, respectively. The fair value methodology for the contingent consideration liability is categorized as Level 3 because inputs to the valuation methodology are unobservable and significant to the fair value adjustment. Approximately ~~$0.2~~$0.1 million, ~~was~~$(0.5) million, $0.2 million and $(0.4) million were recorded as ~~a component~~components of interest and other financial expenses (income) in the condensed consolidated statements of operations for the change in the fair value of the ~~Contingent Consideration~~contingent consideration for the three and six months ended ~~March 31, 2021.~~June 30, 2023 and 2022, respectively, and approximately $0.9 million, $0.5 million, $1.6 million and $0.5 million of income

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were recorded as components of other expenses, net in the condensed consolidated statements of operations for the three and six months ended June 30, 2023 and 2022, respectively.

The ~~Public Warrants (as defined in Note 12)~~public warrants to purchase the Company’s common stock (the “Public Warrants”), of which approximately 14.8 million were outstanding as of June 30, 2023, are measured at fair value at the end of each reporting period and amounted to ~~$27.3~~$22.1 million and ~~$18.1~~$25.9 million as of ~~March 31, 2021~~June 30, 2023 and December 31, ~~2020,~~2022, respectively. The fair value methodology for the Public Warrants is categorized as Level 1. Approximately ~~$9.2~~$0, $7.1 million, ~~was~~$3.8 million and $5.2 million were recorded as ~~a component~~components of interest and other financial ~~expenses~~income in the condensed consolidated statements of operations for the change in the fair value of the Public Warrants for the three and six months ended ~~March 31, 2021.~~June 30, 2023 and 2022, respectively.

The ~~Private Warrants (as defined in Note 12)~~private warrants to purchase the Company’s common stock (the “Private Warrants”), of which approximately 2.5 million were outstanding as of June 30, 2023, are measured at fair value at the end of each reporting period and amounted to ~~$9.5~~$3.4 million and ~~$6.7~~$4.5 million as of ~~March 31, 2021~~June 30, 2023 and December 31, ~~2020,~~2022, respectively. The fair value methodology for the Private Warrants is categorized as Level 2 because certain inputs to the valuation methodology are unobservable and significant to the fair value adjustment. The Private Warrants have been recorded at fair value based on a Black-Scholes option pricing model with the following material assumptions based on observable and unobservable inputs:


	As of March 31, 2021			June 30, 2023
Expected term (in years)	4.73				2.5
Expected dividend rate					1.5	%
Volatility		32.3	%		44.5	%
Risk-free interest rate		0.85	%		4.7	%
Strike price	$	11.50		$	11.50

~~Approximately $2.8 million was recorded as a component of interest and other financial expenses in the consolidated statements of operations for~~For the change in the fair value of the Private Warrants, approximately $0.1 million, $1.2 million, $1.1 million and $0.9 million were recorded as components of interest and other financial income in the condensed consolidated statements of operations for the three and six months ended ~~March 31, 2021.~~June 30, 2023 and 2022, respectively.

The ~~Deferred Shares~~Haymaker Founders (as defined in Note ~~12)~~17 to the annual financial statements) will be entitled to up to 200 thousand shares of common stock to be issued subject to the number of incremental shares of common stock issued to the holders of the Series A redeemable preferred stock not being higher than certain thresholds (the “Deferred Shares”). The Deferred Shares are measured at fair value at the end of each reporting period and amounted to ~~$1.8~~$1.3 million and ~~$1.6~~$1.4 million as of ~~March 31, 2021~~June 30, 2023 and December 31, ~~2020,~~2022, respectively. The fair value methodology for the Deferred Shares is categorized as Level 3 because inputs to the valuation methodology are unobservable and significant to the fair value

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adjustment. The Deferred Shares have been recorded at fair value based on a Monte Carlo pricing model with the following material assumptions based on observable and unobservable inputs:


	As of March 31, 2021			June 30, 2023
Expected term (in years)	6.17				3.9
Volatility		36.1	%		36.2	%
Risk-free interest rate		1.21	%		4.3	%
Stock price	$	9.94		$	7.95

Approximately ~~$0.2~~$0.1 million, ~~was~~$0.2 million, $0.1 million and $0.2 million were recorded as ~~a component~~components of interest and other financial ~~expenses~~income in the condensed consolidated statements of operations for the change in the fair value of the Deferred Shares for the three and six months ended ~~March 31, 2021.~~June 30, 2023 and 2022, respectively.

The Company entered into an agreement with Ares Capital Corporation (“Ares”) and certain of its affiliates (the “Ares Put ~~Option,~~Option”), which ~~generally guarantees~~guaranteed Ares a value of approximately ~~$27.3~~$27.3 million (including all dividend payments received by Ares) at the end of February 2023 for the shares of common stock that the Company issued ~~on the Merger Closing Date~~ in consideration for its acquisition in December 2020 of equity in GPM is(the “Ares Shares”). The Company and Ares agreed that in lieu of the Company issuing to Ares additional shares of common stock in accordance with the Ares Put Option or purchasing the Ares Shares, Ares would retain the Ares Shares, and the Company would pay approximately $9.8 million in cash to Ares in full satisfaction of the Company’s obligations related to the Ares

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Put Option. This payment was made on April 14, 2023 and the Ares Put Option agreement was terminated. The Ares Put Option was measured at fair value at the end of each reporting period and amounted to ~~$8.6 million and $9.8~~$8.6 million as of ~~March 31, 2021 and~~ December 31, 2020, respectively. The fair value methodology for the Ares Put Option is categorized as Level 3 because inputs to the valuation methodology are unobservable and significant to the fair value adjustment. 2022.~~The Ares Put Option has been recorded at its fair value based on a Monte Carlo pricing model with the following material assumptions based on observable and unobservable inputs:~~

As of March 31,
2021

Expected term (in years)

1.91

Volatility

37.6
%
Risk-free interest rate

0.15
%
Strike price

$
12.935

Approximately ~~$1.2~~$0, $1.6 million, ~~was~~$1.2 million and $0.5 million were recorded as ~~a component~~components of interest and other financial ~~income~~expenses in the condensed consolidated statements of operations for the change in the fair value of the Ares Put Option for the three and six months ended ~~March 31, 2021.~~June 30, 2023 and 2022, respectively.

9.11. Segment Reporting

The reportable segments were determined based on information reviewed by the chief operating decision maker for operational decision-making purposes and the segment information is prepared on the same basis that ~~our~~the Company’s chief operating decision maker reviews such financial information. The Company’s ~~reporting~~reportable segments are ~~the~~ retail, ~~segment, the~~ wholesale, ~~segment~~fleet fueling and ~~the GPMP segment.~~GPMP. The Company defines segment earnings as operating income.

The retail segment includes the operation of a chain of retail stores, which includes convenience stores selling fuel products and other merchandise to retail customers. At its Company operated convenience stores, the Company owns the merchandise and fuel inventory and employs personnel to manage the store.

The wholesale segment supplies fuel to ~~independent~~ dealers, sub-wholesalers and bulk and spot purchasers, on either a cost plus or consignment basis. For consignment arrangements, the Company retains ownership of the fuel inventory at the site, is responsible for the pricing of the fuel to the end consumer, and shares the gross profit with the ~~independent outside operators.~~dealers.

The fleet fueling segment includes the operation of proprietary and third-party cardlock locations (unstaffed fueling locations), and commissions from the sales of fuel using proprietary fuel cards that provide customers access to a nationwide network of fueling sites.

The GPMP segment includes ~~GPM Petroleum LP (“GPMP”)~~GPMP and primarily includes ~~the~~its sale and supply of fuel to GPM and its subsidiaries ~~selling~~related to substantially all of its sites that sell fuel ~~(both~~ in the ~~Retail~~retail and ~~Wholesale segments)~~wholesale segments, at GPMP’s cost of fuel ~~(currently including~~(including taxes and ~~certain~~ transportation) plus a fixed margin ~~(4.5~~(currently 5.0 cents per gallon), and charges a fixed fee to sites in the fleet fueling segment and certain Company sites which are not supplied by GPMP (currently 5.0 cents per gallon ~~prior to October 1, 2020 and effective October 1, 2020 through September 30, 2021, 5.0 cents per gallon) and the supply of~~sold). GPMP also supplies fuel to a small number of ~~independent outside operators~~dealers and bulk and spot purchasers.

The “All Other” segment includes the results of non-reportable segments which do not meet both quantitative and qualitive criteria as defined under ASC 280, Segment Reporting. The Company revised the composition of the “All Other” segment in the third quarter of 2022 in conjunction with the closing of the Quarles Acquisition.

The majority of general and administrative expenses, depreciation and amortization, net other expenses, net interest and other ~~financing~~financial expenses, ~~and~~ income taxes ~~are not allocated to the segments, as well as~~and minor other income items including intercompany operating ~~leases.~~leases are not allocated to the segments.

~~Table of Contents~~

With the exception of goodwill, assets and liabilities relevant to the reportable segments are not assigned to any particular segment, but rather, managed at the consolidated level. All reportable segment revenues were generated from sites within the USU.S. and substantially all of the Company’s assets were within the ~~US.~~U.S.

Inter-segment transactions primarily included the distribution of fuel by GPMP to GPM and substantially all of its ~~subsidiaries selling~~sites that sell fuel (both in the ~~Retail~~retail and ~~Wholesale~~wholesale segments). and charges by GPMP to sites that sell fuel in the fleet fueling segment. The effect of these inter-segment transactions was eliminated in the condensed consolidated financial statements.

For the three months ended March 31, 2021

Retail

Wholesale

GPMP

All Other

Total

(in thousands)

Revenues

Fuel revenue

$
576,304

$
525,488

$
1,155

$
0

$
1,102,947

Merchandise revenue

359,281

0

0

0

359,281

Other revenues, net

16,977

4,939

255

0

22,171

Total revenues from external customers

952,562

530,427

1,410

0

1,484,399

Inter-segment

0

0

819,467

317

819,784

Total revenues from reportable segments

952,562

530,427

820,877

317

2,304,183

Operating income

40,347

2,308

20,123

317

63,095

Interest and financial expenses, net

(3,841
)

0

(3,841
)
Income tax expense

(56
)

(56
)
Loss from equity investment

(6
)

(6
)
Net income from reportable segments

$
59,192

For the three months ended March 31, 2020

Retail

Wholesale

GPMP

All Other

Total

(in thousands)

Revenues

Fuel revenue

$
532,886

$
28,938

$
1,217

$
0

$
563,041

Merchandise revenue

323,679

0

0

0

323,679

Other revenues, net

11,700

1,283

215

0

13,198

Total revenues from external customers

868,265

30,221

1,432

0

899,918

Inter-segment

0

0

379,125

2,378

381,503

Total revenues from reportable segments

868,265

30,221

380,557

2,378

1,281,421

Operating income

21,411

278

8,786

2,378

32,853

Interest and financial expenses, net

(847
)

23

(824
)
Income tax benefit

(162
)

(162
)
Loss from equity investment

(233
)

(233
)
Net income from reportable segments

$
31,634

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	Retail		Wholesale		Fleet Fueling		GPMP			All Other			Total
For the Three Months Ended June 30, 2023	(in thousands)
Revenues
Fuel revenue	$	1,015,365	$	811,139	$	121,146	$	1,057		$	8,393		$	1,957,100
Merchandise revenue		484,561		—		—		—			—			484,561
Other revenues, net		18,997		6,110		1,676		277			420			27,480
Total revenues from external customers		1,518,923		817,249		122,822		1,334			8,813			2,469,141
Inter-segment		—		—		—		1,366,786			4,545			1,371,331
Total revenues from reportable segments		1,518,923		817,249		122,822		1,368,120			13,358			3,840,472
Operating income		77,857		6,767		9,344		27,008			138			121,114
Interest and financial expenses, net								(6,840	)		—			(6,840	)
Loss from equity investment											(27	)		(27	)
Net income from reportable segments													$	114,247


	Retail		Wholesale		GPMP			All Other		Total
For the Three Months Ended June 30, 2022	(in thousands)
Revenues
Fuel revenue	$	1,117,849	$	966,434	$	1,571		$	—	$	2,085,854
Merchandise revenue		431,751		—		—			—		431,751
Other revenues, net		16,667		5,733		258			—		22,658
Total revenues from external customers		1,566,267		972,167		1,829			—		2,540,263
Inter-segment		—		—		1,738,243			302		1,738,545
Total revenues from reportable segments		1,566,267		972,167		1,740,072			302		4,278,808
Operating income		71,847		9,786		21,799			302		103,734
Interest and financial expenses, net						(1,819	)		—		(1,819	)
Income from equity investment									28		28
Net income from reportable segments										$	101,943


	Retail		Wholesale		Fleet Fueling		GPMP			All Other			Total
For the Six Months Ended June 30, 2023	(in thousands)
Revenues
Fuel revenue	$	1,858,838	$	1,495,987	$	248,640	$	1,798		$	13,501		$	3,618,764
Merchandise revenue		884,849		—		—		—			—			884,849
Other revenues, net		37,552		12,601		2,627		447			677			53,904
Total revenues from external customers		2,781,239		1,508,588		251,267		2,245			14,178			4,557,517
Inter-segment		—		—		—		2,509,408			7,603			2,517,011
Total revenues from reportable segments		2,781,239		1,508,588		251,267		2,511,653			21,781			7,074,528
Operating income		119,488		14,317		17,768		49,630			462			201,665
Interest and financial expenses, net								(12,090	)		—			(12,090	)
Loss from equity investment											(63	)		(63	)
Net income from reportable segments													$	189,512

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	Retail		Wholesale		GPMP			All Other		Total
For the Six Months Ended June 30, 2022	(in thousands)
Revenues
Fuel revenue	$	1,972,516	$	1,694,131	$	2,733		$	—	$	3,669,380
Merchandise revenue		798,736		—		—			—		798,736
Other revenues, net		32,991		11,455		512			—		44,958
Total revenues from external customers		2,804,243		1,705,586		3,245			—		4,513,074
Inter-segment		—		—		3,013,964			604		3,014,568
Total revenues from reportable segments		2,804,243		1,705,586		3,017,209			604		7,527,642
Operating income		117,526		17,199		42,406			604		177,735
Interest and financial expenses, net						(4,264	)		—		(4,264	)
Income tax benefit									177		177
Income from equity investment									37		37
Net income from reportable segments										$	173,685

A reconciliation of total revenues from reportable segments to total revenues on the condensed consolidated statements of operations was as follows:


	For the three months ended March 31,							For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2021				2020			2023			2022			2023			2022
	(in thousands)							(in thousands)
Total revenues from reportable segments	$	2,304,183		$		1,281,421		$	3,840,472		$	4,278,808		$	7,074,528		$	7,527,642
Other revenues, net		(43	)			(38	)
Elimination of inter-segment revenues		(819,784	)			(381,503	)		(1,371,331	)		(1,738,545	)		(2,517,011	)		(3,014,568	)
Total revenues	$	1,484,356		$		899,880		$	2,469,141		$	2,540,263		$	4,557,517		$	4,513,074

~~Table of Contents~~

A reconciliation of net income from reportable segments to net ~~loss~~income on the condensed consolidated statements of operations was as follows:


	For the three months ended March 31,							For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2021				2020			2023			2022			2023			2022
	(in thousands)							(in thousands)
Net income from reportable segments	$	59,192		$		31,634		$	114,247		$	101,943		$	189,512		$	173,685
Amounts not allocated to segments:
Other revenues, net		(43	)			(38	)
Store operating expenses		577				(892	)		(3,604	)		747			(6,281	)		1,331
General and administrative expenses		(26,002	)			(18,125	)		(41,879	)		(32,197	)		(81,523	)		(63,276	)
Depreciation and amortization		(22,399	)			(15,228	)		(30,995	)		(22,511	)		(57,552	)		(45,305	)
Other expenses, net		(1,672	)			(4,176	)		(4,956	)		(1,197	)		(7,676	)		(2,318	)
Interest and other financial expenses, net		(25,093	)			(8,205	)		(13,320	)		(5,822	)		(21,672	)		(19,654	)
Income tax benefit		778				2,173
Net loss	$	(14,662	)	$		(12,857	)
Income tax expense									(5,014	)		(9,157	)		(2,856	)		(10,339	)
Net income								$	14,479		$	31,806		$	11,952		$	34,124

~~10.~~12. Commitments and Contingencies

Environmental Liabilities and Contingencies

The Company is subject to certain federal and state environmental laws and regulations associated with ~~convenience store~~ sites ~~where~~at which it stores and sells fuel and other fuel ~~products.~~products, as well as at owned and leased locations leased or subleased to dealers. As of ~~March 31, 2021~~June 30, 2023 and December 31, ~~2020,~~2022, environmental obligations totaled ~~$13.3~~$14.5 million and ~~$13.5~~$12.1 million, respectively. These amounts were recorded as other current and non-current liabilities in the condensed consolidated balance sheets. Environmental reserves have been established on an undiscounted basis based upon internal and external estimates in regard to each site. It is reasonably possible that these amounts will be adjusted in the future due to changes in estimates of environmental remediation costs, the timing of the payments or ~~whether the~~changes in federal and/or state ~~regulations in which the Company operates, and which deal with the environment, will be amended.~~environmental regulations.

The Company maintains certain environmental insurance policies and participates in various state underground storage tank funds that entitle it to be reimbursed for environmental loss mitigation. Estimated amounts that will be recovered from its insurance

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policies and various state funds for the exposures totaled ~~$5.4~~$7.8 million and ~~$5.6~~$4.9 million as of ~~March 31, 2021~~June 30, 2023 and December 31, ~~2020,~~2022, respectively, and were recorded as other current and non-current assets in the condensed consolidated balance sheets.

Asset Retirement ~~Obligations~~Obligation

As part of the fuel operations at its operated convenience stores, at most of the ~~consignment dealer locations and at most of the~~ other owned and leased locations leased to dealers, certain other dealer locations and proprietary cardlock locations, there are aboveground and underground storage tanks for which the Company is responsible. The future cost to remove ~~an underground~~a storage tank is recognized over the estimated remaining useful life of the ~~underground~~ storage tank or the termination of the applicable lease. A liability for the fair value of an asset retirement obligation with a corresponding increase to the carrying value of the related long-lived asset is recorded at the time ~~an underground~~a storage tank is installed. The estimated liability is based upon historical experience in removing ~~underground~~ storage tanks, estimated tank useful lives, external estimates as to the cost to remove the tanks in the future and current and anticipated federal and state regulatory requirements governing the removal of tanks, and discounted. The Company has recorded an asset retirement obligation of ~~$53.6~~$80.4 million and ~~$53.2~~$65.3 million at ~~March 31, 2021~~June 30, 2023 and December 31, ~~2020,~~2022, respectively. The current portion of the asset retirement obligation is included in other current liabilities in the condensed consolidated balance sheets.

~~Purchase Commitments~~

~~In the ordinary course of business, the Company has~~Program Agreement

On May 2, 2023, GPM, together with Oak Street, entered into ~~various purchase agreements related~~a third amendment to ~~its fuel supply,~~the Program Agreement, which, ~~include varying volume commitments. In light~~among other things, (i) extended the term of the ~~reduction in~~Program Agreement and the ~~number~~exclusivity period thereunder through September 30, 2024 and (ii) provides for up to $1.5 billion of gallons sold due to the COVID-19 pandemic, the Company’s principal fuel suppliers have temporarily suspended (for periods that vary among the different suppliers) the requirements under their agreements with the Company to purchase minimum quantities of gallons, including such requirementscapacity under the ~~incentive agreements~~Program Agreement from ~~such suppliers. As~~the date of ~~March 31, 2021,~~ the ~~reduction in gallons sold did~~third amendment through September 30, 2024, not ~~affect~~including the ~~Company’s compliance with its commitments under~~funding for the ~~agreements with its principal suppliers.~~WTG Acquisition.

Legal Matters

~~Table of Contents~~

The Company is a party to various legal actions, as both plaintiff and defendant, in the ordinary course of business. The Company’s management believes, based on estimations with support from legal counsel for these matters, that these legal actions are routine in nature and incidental to the operation of the Company’s business and that it is not reasonably possible that the ultimate resolution of these matters will have a material adverse impact on the Company’s business, financial condition, results of operations and cash flows.

~~11.~~13. Related Party Transactions

There have been no material changes to the description of related party transactions as set forth in the annual financial statements.

~~12. Revision of Previously Issued Financial Statements~~

~~As of the Merger Closing Date, there were 17.3 million warrants to purchase Haymaker common stock outstanding, consisting of 13.3 million public warrants (the “Public Warrants”) and 4~~ million private warrants (the “Private Warrants”). Pursuant to the warrant agreement as amended on the Merger Closing Date, each whole warrant to purchase one share of Haymaker common stock became a warrant to purchase one share of the Company’s common stock. In addition, following the Merger Closing Date, Haymaker’s founders will be entitled to up to 200 thousand shares of common stock to be issued subject to the number of incremental shares of common stock issued to the holders of the Series A redeemable preferred stock not being higher than certain thresholds (the “Deferred Shares”).

The Company has adjusted its consolidated balance sheet as of December 31, 2020 in order to reflect its Public Warrants, Private Warrants and Deferred Shares as liability instruments measured at fair value rather than as equity instruments. The Company has evaluated the materiality of this adjustment and concluded it was not material to any of the prior periods presented and has elected to revise the previously issued financial statements contained within these interim financial statements for the periods impacted to correct the effect of this immaterial adjustment. ~~As a result, the consolidated balance sheet as of December 31, 2020 included as comparative figures within these interim financial statements was revised as follows:~~

As of December 31, 2020

As Previously Reported

Adjustment

As Revised

(in thousands)

Other non-current liabilities

$
70,166

$
26,455

$
96,621

Total liabilities

2,421,934

26,455

2,448,389

Additional paid-in capital

239,081

(26,978
)

212,103

Accumulated deficit

(30,176
)

523

(29,653
)
Total equity

217,875

(26,455
)

191,420

~~13. Significant Events~~

~~COVID-19 – Coronavirus~~

An outbreak of coronavirus (“COVID-19”) began in China in December 2019 and subsequently spread throughout the world. On March 11, 2020, the World Health Organization declared COVID-19 as a pandemic. Throughout the pandemic, the convenience stores and independent outside operations have continued to operate and have remained open to the public because convenience store operations and gas stations have been deemed an essential business by numerous federal and state authorities, including the US Department of Homeland Security, and therefore are exempt from many of the closure orders that were, or are currently, imposed on US businesses.

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Table of Contents

~~Potential Acquisition~~

On ~~March 8, 2021~~, the Company entered into an agreement with third parties for the acquisition of approximately 60 self-operated convenience stores and gas stations located in the Midwestern US for consideration of approximately $102 million plus the value of inventory and cash in stores on the closing date. The Company intends to finance a portion of the consideration from its own sources and two US real estate funds that are unrelated third parties (the “Real Estate Funds”) will pay the purchase agreement for the seller’s real estate as described below.

At the closing of the transaction, (i) the Company will purchase and assume, among other things, certain vendor agreements, fee simple ownership in some of the sites, equipment in the sites, inventory and goodwill with regard to the acquired activity; and (ii) according to agreements between the Company and each of the Real Estate Funds, in consideration of approximately $92 million, the Real Estate Funds will purchase the fee simple ownership in most of the sites. Such sites will be leased to the Company under customary lease terms. In addition, one of the Real Estate Funds will grant the Company an option to purchase the fee simple ownership in 26 of the sites following an initial ~~four-year~~ ~~period for consideration as was agreed between the parties.~~

~~The purchase agreement includes the sellers’ undertaking with regard to indemnification subject to certain scope, time and amounts limitations as determined in the purchase agreement.~~

The closing of the transaction is subject to fulfillment of conditions precedent which includes, among other things, obtaining the approvals required by law, including permits and licenses relating to the acquired activity. Subject to the above, the closing is planned to occur during the second quarter of 2021. There is no certainty that the transaction will close.

~~14. Subsequent Events~~

~~Amendment to Credit Facilities~~

On April 30, 2021, GPM entered into a sixth amendment (the “Sixth Amendment”) to the Ares Credit Agreement. The Sixth Amendment amended the Ares Credit Agreement as follows: the definition of Consolidated EBITDA was amended to increase the amount of fees, expenses and other charges related to Permitted Acquisitions (as defined in the Ares Credit Agreement) that can be added back when calculating Consolidated EBITDA; the definition of Consolidated Total Debt was amended to increase the amount of GPM’s cash and cash equivalents on hand deducted from GPM’s indebtedness when calculating Consolidated Total Debt; various changes were made to facilitate potential new equipment and real estate financings from M&T Bank; certain permitted debt baskets were increased to allow GPM to have more flexibility in its operations and the financial statement and budget delivery requirements were updated primarily to reflect that GPM currently owns 99.71% of GPMP.

On April 30, 2021, GPM entered into a fourth amendment to its credit agreement, dated February 28, 2020, by and among GPM, and certain of its subsidiaries as borrowers and guarantors, the lenders from time to time party thereto and PNC Bank, National Association, as lender and as agent (the “PNC Credit Agreement”). This amendment effected substantially similar changes to the PNC Credit Agreement as those made by the Sixth Amendment to the Ares Credit Agreement described above.

~~Standby Real Estate Program~~

On May 3, 2021, GPM entered into a standby real estate purchase, designation and lease program agreement (the “Program Agreement”) with Oak Street Real Estate Capital Net Lease Property Fund, LP (“Oak Street”). Pursuant to the Program Agreement, Oak Street has agreed to purchase, subject to the conditions contained in the Program Agreement, up to $1.0 billion of convenience store and gas station real property, including in connection with purchase agreements that GPM or an affiliate thereof, may from time to time enter into to acquire convenience stores and gas stations from third parties (each, a “Property”). Pursuant to the Program Agreement, upon any acquisition of a Property by Oak Street, or an affiliate thereof, GPM, or an affiliate thereof, would enter into a triple-net lease agreement with Oak Street or such affiliate pursuant to which GPM or such affiliate would lease such Property from Oak Street or such affiliate based upon commercial terms contained in the Program Agreement. The purchase price for any Property would similarly be subject to commercial terms agreed upon by GPM and Oak Street in the Program Agreement. The Program Agreement has a one-year term, during which GPM may not sell or designate any Property pursuant to a sale-leaseback or similar transaction without first offering such Property to Oak Street in accordance with the terms and conditions of the Program Agreement. Certain Properties specified by GPM are not subject to the foregoing right of first offer, and the Program Agreement does not obligate GPM to sell any Property, or acquire any property from a third party for purposes of its sale, to Oak Street, unless GPM elects, in its sole discretion, to enter into a sale leaseback (or similar transaction) governed by the Program Agreement.

~~Table of Contents~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read this discussion together with the unaudited Condensed Consolidated Financial Statements, related notes, and other financial information included elsewhere in this Quarterly Report on Form 10-Q together with our audited consolidated financial statements, related notes, and other information contained in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2022 (the “Form 10-K”). The following discussion contains assumptions, estimates and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors,” in Part I, Item 1A of the Form 10-K and in Part II, Item 1A of this Quarterly Report on Form 10-Q and as described from time to time in our other filings with the Securities and Exchange Commission. These risks could cause our actual results to differ materially from those anticipated in these forward-looking statements.

Overview

ARKO Corp. was incorporated under the laws of Delaware on August 26, 2020 for the purpose of facilitating the business combination, which we refer to as the Merger Transaction, of Haymaker Acquisition Corp. II, a Delaware corporation (“Haymaker”), and Arko Holdings Ltd., a company organized under the laws of the State of Israel, which we refer to as Arko Holdings.2020. Our shares of common stock, $0.0001 par value per share (“common stock”), and publicly-traded warrants ~~were registered to trade~~are listed on the Nasdaq Stock Market ~~on December 22, 2020~~(“Nasdaq”) and ~~commenced trading on December 23, 2020,~~trade under the symbols “ARKO” and our common stock is dual-listed on the Tel Aviv Stock Exchange (“TASE”). The main activity of Arko Holdings prior to the foregoing business combination was its holding, through its subsidiaries, of controlling rights in“ARKOW,” respectively. GPM Investments, LLC, a Delaware limited liability company, which we refer to as GPM, ~~which~~ is our operating entity and ~~upon the consummation of the Merger Transaction became~~ our indirect wholly owned subsidiary. Arko Holdings’ Bonds (Series C) had traded on the TASE since June 28, 2016 and were fully redeemed on March 30, 2021; consequently, Arko Holdings is no longer a reporting entity under Israeli securities laws.

Based in Richmond, VA, we are a leading independent convenience store operator and, as of ~~March 31, 2021,~~June 30, 2023, we were the ~~seventh~~sixth largest convenience store chain in the United States (“U.S.”) ranked by store count, operating ~~1,324~~1,547 retail convenience stores. As of ~~March 31, 2021,~~June 30, 2023, we operated the stores under 17more than 25 regional store 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®, Town Star, Uncle’s, Village Pantry® and Young’s. As of ~~March 31, 2021,~~June 30, 2023, we also supplied fuel to ~~1,625 dealer-operated gas stations.~~1,824 dealers and operated 293 cardlock locations (unstaffed fueling locations). We are well diversified geographically and as of ~~March 31, 2021,~~June 30, 2023, operated ~~across 33~~in more than 30 states and the District of Columbia in the Mid-Atlantic, Midwestern, Northeastern, Southeastern and Southwestern ~~United States.~~U.S.

WeOur primary business is the operation of convenience stores. As such, we derive a significant portion of our revenue from the retail sale of fuel and the products offered in our stores, ~~as well as the wholesale distribution~~resulting in our retail stores generating a large proportion of ~~fuel.~~our profitability. Our retail stores offer a wide array of cold and hot foodservice, beverages, cigarettes and other tobacco products, candy, salty snacks, grocery, beer and general merchandise. We have foodservice offerings at ~~over 250~~approximately 1,260 company-operated stores. The foodservice category includes hot and fresh grab-n-go foods, deli, fried chicken, bakery, pizza, roller grill items and other prepared foods. ~~We offer a value food menu consisting of items such as hot dogs and chicken sandwiches.~~ In addition, at our stores, we operate ~~over 70~~approximately 150 branded quick service restaurants consisting of major national brands. We have 18 new Sbarro, the Original New York Pizza, locations and are currently working on additional new food offerings of this kind. Additionally, we provide 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. We also generate revenues from car washes at approximately ~~100~~90 of our locations. Our high value fas REWARDS® loyalty program with approximately 1.48 million currently enrolled members is available in the majority of our stores and offers exclusive savings on merchandise and gas to our customers. In the first quarter of 2023, we launched our new fas REWARDS app, which offers enrolled loyalty members a variety of new features, including exclusive in-app member only HOT deals not available in stores, order and delivery, age verified offers on tobacco and alcohol, and a store locator with current gas prices at GPM stores close to members. We believe that these features contributed significantly to the approximately 10.5% increase in our enrolled marketable membership since the end of the first quarter of 2023.

We also derive revenue from the wholesale distribution of fuel and the sale of fuel at cardlock locations, and we earn commissions from the sales of fuel using proprietary fuel cards that provide customers access to a nationwide network of fueling sites. We believe these revenues result in stable, ratable cash flows which can quickly be deployed to pursue accretive acquisitions and investments in our retail stores. Additionally, these locations contribute to our overall size, which leads to economies of scale with our fuel and merchandise vendors.

Our reportable segments are described below.

Retail Segment

The retail segment includes the operation of a chain of retail stores, which includes convenience stores selling fuel products and other merchandise to retail customers. At our convenience stores, we own the merchandise and fuel inventory and employ personnel to manage the store.

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Wholesale Segment

The wholesale segment supplies fuel to ~~independent~~ dealers, ~~sub-wholesalers and bulk purchasers,~~ on either a cost plus or consignment basis. For consignment arrangements, we retain ownership of the fuel inventory at the site, are responsible for the pricing of the fuel to the end consumer and share a portion of the gross profit earned from the sale of fuel by the consignment ~~operators.~~dealers. For cost plus arrangements, we sell fuel to dealers and bulk and spot purchasers on a fixed-fee basis. The sales price to the dealer is determined according to the terms of the relevant agreement with the dealer, which typically reflects our total fuel costs plus the cost of transportation and a margin, with us generally retaining the prompt pay discounts and rebates.

Fleet Fueling Segment

The fleet fueling segment includes the operation of 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.

GPMP Segment

The GPMP segment includes the operations of GPM Petroleum LP, ~~(“GPMP”),~~referred to as GPMP, which primarily sells and supplies fuel to GPM and substantially all of its ~~fuel-selling~~ subsidiaries ~~(both~~that sell fuel in the ~~Retail~~retail and ~~Wholesale segments)~~wholesale segments at GPMP’s cost of fuel ~~(currently including~~(including taxes and ~~certain~~ transportation) plus a fixed ~~margin.~~margin and a fixed fee charged to sites in the fleet fueling segment and certain Company sites which are not supplied by GPMP.

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Trends Impacting Our Business

We have achieved strong store growth over the last ~~several years,~~decade, primarily by implementing a highly successful acquisition strategy. From 2013 through ~~March 31, 2021,~~June 30, 2023, we completed 1824 acquisitions. AsOn June 6, 2023, we completed our acquisition from WTG Fuels Holdings, LLC of 24 company-operated Uncle’s convenience stores located across Western Texas, 68 proprietary GASCARD-branded cardlock sites and 43 private cardlock sites for fleet fueling operations located in Western Texas and Southeastern New Mexico (the “WTG Acquisition”). On March 1, 2023, we completed our acquisition from Transit Energy Group, LLC of 135 Company-operated convenience stores and gas stations, 181 dealer locations, a ~~result,~~commercial, government, and industrial business, and certain distribution and transportation assets (the “TEG Acquisition” and, together with the WTG Acquisition, the “2023 Acquisitions”). For additional information regarding the 2023 Acquisitions, please see Note 3 to our condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q. In December 2022, we completed our acquisition of Pride Convenience Holdings, LLC, which operated at closing, 31 Pride retail convenience stores and had one store under construction at closing which is now opened (the “Pride Acquisition”), and in July 2022, we completed our acquisition of certain assets from Quarles Petroleum, Incorporated (the “Quarles Acquisition”), which included 121 proprietary Quarles-branded cardlock sites and 63 third-party cardlock sites for fleet fueling operations, and 46 dealer locations (collectively, the “2022 Acquisitions”). Our store count has grown from 320 sites in 2011 to ~~2,949~~3,664 sites as of ~~March 31, 2021,~~June 30, 2023, of which ~~1,324~~1,547 were operated as retail convenience stores, ~~and 1,625~~1,824 were locations at which we supplied fuel to ~~independently operated fueling stations.~~dealers and 293 were cardlock locations. These strategic acquisitions have had, and we expect will continue to have, a significant impact on our reported results and can make period to period comparisons of results difficult. We completed our acquisition of the business of Empire Petroleum Partners, LLC, which business we refer to as Empire, in October 2020, which was significant and added 84 retail sites and 1,453 wholesale sites to our business (the “Empire Acquisition”). The Empire Acquisition was our only business acquisition in 2020. With our achievement of significant size and scale, we have ~~added an additional~~enhanced our focus ofon organic growth, including implementing company-wide marketing and merchandising initiatives, which we believe will result in significant value accretion to ~~all the assets we have acquired. We believe that this complementary strategy will help further~~ our ~~growth through both acquisitions and organically and improve our results of operations.~~acquired assets.

The following table provides a history of our acquisitions, site conversions and site closings for the periods noted, for the retail, wholesale and ~~wholesale~~fleet fueling segments:


	For the three months ended March 31,						For the Three Months Ended June 30,						For the Six Months Ended June 30,
Retail Segment	2021			2020			2023			2022			2023			2022
Number of sites at beginning of period		1,330			1,272			1,531			1,396			1,404			1,406
Company-controlled sites converted to consignment locations and independent and lessee dealers, net		—			(1	)
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		(6	)		—			(4	)		(7	)		(8	)		(11	)
Number of sites at end of period		1,324			1,271			1,547			1,388			1,547			1,388

For the three months ended
March 31,

Wholesale Segment

2021

2020

Number of sites at beginning of period

1,614

128

Newly opened or reopened sites

14

—

Consignment locations or independent and lessee dealers
converted from Company-controlled sites, net

—

1

Closed, relocated or divested sites

(3
)

(1
)
Number of sites at end of period

1,625

128

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	For the Three Months Ended June 30,						For the Six Months Ended June 30,
Wholesale Segment 1	2023			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 sites acquired in the first quarter of 2023 to exclude 11 spot purchasers acquired, consistent with our historical methodology. There ~~has been an ongoing trend in~~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 Segment	2023
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

In recent years, the convenience store industry has focused on increasing and improving in-store foodservice offerings, including fresh foods, quick service restaurants or proprietary food offerings. We believe consumers may be more likely to patronize convenience stores that include such new and improved food offerings, which may also lead to increased inside merchandise sales or fuel sales for such stores. ~~Although our foodservice sales have been negatively impacted during the COVID-19 pandemic, we believe this trend will reverse when the effects of the pandemic subside.~~ Our current foodservice offering, which varies by store, primarily consists of hot and fresh grab-n-go foods, deli, fried chicken, bakery, pizza, roller grill items and other prepared foods. ~~We offer a value food menu consisting of items such as hot dogs and chicken sandwiches.~~ We have historically relied upon a limited number of franchised quick service restaurants and in-store delis to drive customer traffic rather than other types of foodservice offerings. As a result, we believe that our under-penetration of foodservice presents an opportunity to expand foodservice offerings and margin in response to changing consumer behavior. In addition, we believe that continued investment in new technology platforms and applications to adapt to evolving consumer eating preferences, including contactless checkout, order ahead service, and delivery, will further drive growth in profitability.

Our ~~operations~~results of operation are significantly impacted by the retail fuel margins we ~~receive~~earn on gallons sold. While we expect our same store fuel sales volumes to remain stable over time, even though they were recently impacted by COVID-19, and the fuel margins we realize on those sales to remain stable, theseThese fuel margins can change rapidly as they are influenced by many factors including: the price of refined products; interruptions in supply caused by severe weather; ~~severe~~supply chain disruptions; refinery mechanical ~~failures for an extended period of time;~~failures; and competition in the local markets in which we operate.

The cost of our main products, gasoline and diesel fuel, is greatly impacted by the wholesale cost of fuel in the United States. We attempt to pass ~~along~~ wholesale fuel cost changes through to our customers through retail price changes; however, we are not always able to do so. ~~The~~Competitive conditions primarily affect the timing of any related increase or decrease in retail ~~prices is affected by competitive conditions.~~prices. As a result, we tend to experience lower fuel margins when the cost of fuel is increasing gradually over a longer period and higher fuel margins when the cost of fuel is declining or more volatile over a shorter period of time. For the year ended December 31, 2022, we experienced historically high fuel margins as a result of the volatile market for gasoline and diesel fuel. In particular, in the first quarter of 2022, the war in Ukraine significantly affected market conditions and resulted in substantially higher fuel margins. Depending on future market and geopolitical conditions, the supply of fuel, including diesel fuel in particular, may become constrained. As such, we maintain terminal storage of diesel fuel for short-term supply needs for our fleet fueling sites.

~~Table~~Additionally, throughout 2022 and continuing in the first half of ~~Contents~~2023, the U.S. economy continued to experience inflationary pressures, which increase the cost of the merchandise we purchase and reduce consumer purchasing power. We have mitigated a portion of these higher costs with retail price increases. If this trend continues or increases, it could negatively impact demand for our products and services, as well as seasonal travel patterns, which could reduce future sales volumes. Additionally, because of current labor market conditions and the prevailing wage rates in the markets in which we operate, we have voluntarily increased wages, which has increased our costs associated with recruiting and retaining qualified personnel, and may continue to do so in the future.

We also operate in a highly competitive retail convenience market that includes businesses with operations and services that are similar to those that ~~are provided by us.~~we provide. We face significant competition from other large chain operators. In particular, large convenience store chains have increased their number of locations and remodeled their existing locations in recent years, enhancing their

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competitive position. We believe that convenience stores managed by individual operators who offer branded or non-branded fuel are also significant competitors in the market. The convenience store industry is also experiencing competition from other retail sectors including grocery stores, large warehouse retail stores, dollar stores and pharmacies.

We believe that we have a significant opportunity to increase our sales and profitability by continuing to execute our operating strategy, growing our store base in existing and contiguous markets through acquisitions, and enhancing the performance of current stores.

Business Highlights

~~The Empire Acquisition~~Our focus on our retail organic store growth strategy and the continuation of our accretive acquisition strategy positively impacted our results of operations for the second quarter of 2023. Merchandise contribution at same stores, the 2023 Acquisitions and the 2022 Acquisitions all contributed to the ~~increase~~improvement in our results of operations infor the ~~first~~second quarter of ~~2021, primarily in the wholesale segment,~~2023, as compared to the ~~first~~second quarter of ~~2020. Although~~2022 which was partially offset by less fuel contribution on a same store basis, primarily due to market conditions in the ~~impact~~second quarter of 2022. Store operating expenses increased in the ~~COVID-19 pandemic reduced total gallons sold thus far in 2021~~second quarter of 2023 as compared to ~~2020, higher fuel margins compared to~~ the ~~same period in 2020 resulted in improved results, partly~~second quarter of 2022, primarily due to ~~less competitive pricing pressure on fuel. Increased merchandise contribution at same stores combined with an increase in other revenues also positively impacted 2021.~~higher personnel costs. General and administrative expenses also increased in ~~2021,~~the second quarter of 2023 as compared to ~~2020, to support~~ the ~~Empire Acquisition.~~second quarter of 2022, primarily as a result of expenses associated with the 2023 Acquisitions and the 2022 Acquisitions, wage increases, and an increase in share-based compensation expense.

Seasonality

Our business is seasonal, and our operating income in the second and third quarters has historically been significantly greater than in the first and fourth quarters as a result of the generally improved climate and seasonal buying patterns of our customers. Inclement weather, especially in the Midwest and Northeast regions of the ~~United States~~U.S. during the winter months, can negatively impact our financial results.

Results of Operations for the three and six months ended ~~March 31, 2021~~June 30, 2023 and ~~2020~~2022

The period-to-period comparisons of our results of operations contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operation have been prepared using our condensed consolidated interim financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. The following discussion should be read in conjunction with such condensed interim consolidated financial statements and related notes.

~~COVID-19~~

An outbreak of coronavirus (“COVID-19”) began in China in December 2019 and subsequently spread throughout the world. On March 11, 2020, the World Health Organization declared COVID-19 as a pandemic. Throughout the pandemic, our convenience stores and independent outside operations have continued to operate and have remained open to the public because convenience store operations and gas stations have been deemed an essential business by numerous federal and state authorities, including the U.S. Department of Homeland Security, and therefore are exempt from many of the closure orders that were, or are currently, imposed on U.S. businesses.

The COVID-19 pandemic has generally impacted our results of operations positively, principally due to the significant increase in fuel margin, which more than offset a reduction in the number of gallons sold at gas stations as a result of the pandemic. Since the beginning of the first quarter of 2021, we have seen an increase in fuel volume as vaccinations have become available and COVID-19 cases have decreased in many areas. Businesses have continued to re-open, and customer traffic has increased.

Consolidated Results

The Merger Transaction was accounted for as a reverse recapitalization. Under this method of accounting, Haymaker was treated as the “acquired” company and Arko Holdings was considered the accounting acquirer for accounting purposes. Because Arko Holdings was deemed the accounting acquirer, upon the consummation of the Merger Transaction, the historical financial statements of Arko Holdings became the historical financial statements of the combined company. As a result, the financial statements included in this Quarterly Report on Form 10-Q and discussed herein reflect the historical operating results of Arko Holdings prior to December 22, 2020, which was the date on which the Merger Transaction closed (the “Merger Closing Date”) and our combined results, including those of Haymaker, following the Merger Closing Date.

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The table below shows our consolidated results for the three and six months ended ~~March 31, 2021~~June 30, 2023 and ~~2020,~~2022, together with certain key metrics.


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
Revenues:	(in thousands)
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 expenses, net		(20,160	)		(7,339	)		(33,762	)		(23,314	)
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
Fuel gallons sold		588,174			484,834			1,091,434			941,726
Fuel margin, cents per gallon1		26.5			27.0			25.6			25.9
Merchandise contribution2		154,658			131,364		$	277,623		$	239,556
Merchandise margin3		31.9	%		30.4	%		31.4	%		30.0	%
Adjusted EBITDA4		86,242			79,045			133,726		$	129,153

For the three months ended
March 31,

2021

2020

Revenues:

(in thousands)

Fuel revenue

$
1,102,947

$
563,041

Merchandise revenue

359,281

323,679

Other revenues, net

22,128

13,160

Total revenues

1,484,356

899,880

Operating expenses:

Fuel costs

1,012,798

499,803

Merchandise costs

260,754

239,091

Store operating expenses

144,938

128,830

General and administrative

26,713

18,893

Depreciation and amortization

24,242

17,071

Total operating expenses

1,469,445

903,688

Other expenses, net

1,672

4,176

Operating income (loss)

13,239

(7,984
)
Interest and other financial expenses, net

(28,617
)

(6,651
)
Loss before income taxes

(15,378
)

(14,635
)
Income tax benefit

722

2,011

Loss from equity investment

(6
)

(233
)
Net loss

$
(14,662
)

$
(12,857
)
Less: Net income (loss) attributable to non-controlling
interests

74

(2,401
)
Net loss attributable to ARKO Corp.

$
(14,736
)

$
(10,456
)
Series A redeemable preferred stock dividends

(1,402
)

Net loss attributable to common shareholders

$
(16,138
)

Fuel gallons sold

448,315

248,699

Fuel margin, cents per gallon1

20.1

25.4

Merchandise contribution2

98,527

84,588

Merchandise margin3

27.4
%

26.1
%
Adjusted EBITDA4

42,303

16,934

1 Calculated as fuel revenue less fuel costs divided by fuel gallons sold.

2 Calculated as merchandise revenue less merchandise costs.

3 Calculated as merchandise contribution divided by merchandise revenue.

4 Refer to “Use of Non-GAAP Measures” below for discussion of this non-GAAP performance measure and related ~~reconciliation.~~reconciliation to net income.

Three Months Ended ~~March 31, 2021~~June 30, 2023 versus Three Months Ended ~~March 31, 2020~~June 30, 2022

For the three months ended ~~March 31, 2021,~~June 30, 2023, fuel revenue ~~increased~~decreased by ~~$539.9~~$128.8 million, or ~~95.9%~~6.2%, compared to the ~~first~~second quarter of ~~2020.~~2022. The ~~increase~~decrease in fuel revenue was primarily attributable ~~primarily~~ to a decrease in the average price of fuel compared to the second quarter of 2022 and fewer gallons sold at same stores in the second quarter of 2023 compared to the second quarter of 2022, which was partially offset by incremental gallons sold related to the ~~Empire Acquisition, which was partially offset by fewer gallons sold in~~2023 Acquisitions and the ~~first quarter of 2021 primarily due to the COVID-19 pandemic, as the pandemic did not have a significant impact on our results until the second half of March 2020.~~2022 Acquisitions.

For the three months ended ~~March 31, 2021,~~June 30, 2023, merchandise revenue increased by ~~$35.6~~$52.8 million, or ~~11.0%~~12.2%, compared to the ~~first~~second quarter of ~~2020~~2022, primarily due to the 2023 Acquisitions and the Pride Acquisition and an increase in same store merchandise ~~sales and the Empire Acquisition.~~revenues. Offsetting these increases was a decrease in merchandise revenue from underperforming retail stores that were closed or converted to dealers.

For the three months ended ~~March 31, 2021,~~June 30, 2023, other revenue increased by ~~$9.0~~$4.8 million, or ~~68.1%~~21.3%, compared to the ~~first~~second quarter of ~~2020~~2022, primarily ~~related~~due to additional revenue from the ~~Empire Acquisition~~2023 Acquisitions, the 2022 Acquisitions and ~~increased income from~~greater lottery ~~commissions and temporary allowance for gaming machines in Virginia.~~commissions.

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For the three months ended ~~March 31, 2021,~~June 30, 2023, total operating expenses ~~increased~~decreased by ~~$565.8~~$66.3 million, or ~~62.6%~~2.7%, compared to the ~~first~~second quarter of ~~2020.~~2022. Fuel costs ~~increased $513.0~~decreased $153.9 million, or ~~102.6%~~7.9%, compared to the ~~first~~second quarter of ~~2020~~2022 due to ~~fuel~~both fewer gallons sold atand a ~~higher~~lower average cost of fuel on a same store basis which were partially offset by incremental gallons related to the 2023 Acquisitions and ~~higher volumes.~~the 2022 Acquisitions. Merchandise costs increased ~~$21.7~~$29.5 million, or ~~9.1%~~9.8%, compared to the ~~first~~second quarter of ~~2020,~~2022, primarily due to increased costs related to the ~~Empire~~2023 Acquisitions and the Pride Acquisition ~~as well as~~and a corresponding increase in same store merchandise sales. For the three months ended ~~March 31, 2021,~~June 30, 2023, store operating expenses increased ~~$16.1~~$39.9 million, or ~~12.5%~~22.4%,

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compared to the ~~first~~second quarter of ~~2020~~2022 due to incremental expenses ~~coming from~~as a result of the ~~Empire Acquisition~~2023 Acquisitions, the 2022 Acquisitions and ~~a slight~~an increase in expenses at same stores.

For the three months ended ~~March 31, 2021,~~June 30, 2023, general and administrative expenses increased ~~$7.8~~$9.7 million, or ~~41.4%~~29.4%, compared to the ~~first~~second quarter of ~~2020,~~2022, primarily due to ~~those~~approximately $7.1 million of expenses associated with the ~~acquired Empire business,~~2023 Acquisitions and the 2022 Acquisitions, annual wage increases and ~~stock~~an increase of $1.4 million in share-based compensation ~~expenses.~~expense primarily related to equity grants in the first quarter of 2023.

For the three months ended ~~March 31, 2021,~~June 30, 2023, depreciation and amortization expenses increased ~~$7.2~~$8.5 million, or ~~42.0%~~34.8%, compared to the ~~first~~second quarter of ~~2020~~2022 primarily due to assets acquired in the previous twelve month period, largely ~~related to~~in connection with the ~~Empire Acquisition.~~2023 Acquisitions and the 2022 Acquisitions.

For the three months ended ~~March 31, 2021,~~June 30, 2023, other expenses, net ~~decreased~~increased by ~~$2.5~~$3.8 million, compared to the ~~first~~second quarter of ~~2020~~2022 primarily due to ~~a $0.9 million decrease~~an increase in acquisition costs and ~~a $2.0 million reduction in~~greater losses on disposal of assets and impairment charges in ~~2021.~~the second quarter of 2023, which was partially offset by higher income recorded for the fair value adjustment of contingent consideration in the second quarter of 2023.

Operating income was ~~$13.2~~$39.7 million for the second quarter of 2023 compared to $48.3 million for the second quarter of 2022. The decrease was primarily due to an increase in depreciation and amortization expenses, share-based compensation expenses and other expenses, net.

For the three months ended ~~March 31, 2021,~~June 30, 2023, interest and other financial expenses, net increased by $12.8 million compared to ~~an operating loss~~the second quarter of ~~$8.0~~2022, primarily related to a decrease of $6.6 million in income, net, recorded in the second quarter of 2023 compared to the prior year period, for fair value adjustments for the ~~first quarter of 2020. The increase~~Ares Put Option, Public Warrants, Private Warrants and Deferred Shares (each as defined in Note 10 to the unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q) and greater debt at higher rates outstanding in 2023, which was ~~primarily due to strong fuel and merchandise results along with incremental income from the Empire Acquisition,~~ partially offset by ~~an increase~~additional interest income generated in ~~general and administrative, depreciation and amortization expenses.~~the second quarter of 2023.

For the three months ended ~~March 31, 2021, interest and other financing expenses, net increased by $22.0~~June 30, 2023, income tax expense was $5.0 million compared to ~~the first quarter~~income tax expense of ~~2020 primarily related to higher interest expense from greater debt outstanding in 2021, $4.5~~$9.2 million ~~additional interest~~ for the early redemption of the Bonds (Series C), $12.1 million for interest expense related to fair value adjustments for the Public Warrants, Private Warrants and Deferred Shares and a net period-over-period decrease in foreign currency gains recorded of $1.8 million.three months ended June 30, 2022.

For the three months ended ~~March 31, 2021, the~~June 30, 2023 and 2022, net income ~~tax benefit was $0.7 million compared to $2.0 million in the three months ended March 31, 2020.~~

~~Net income (loss)~~ attributable to ~~non-controlling interests primarily represented minority interests prior to~~ the ~~Merger Closing Date.~~Company was $14.4 million and $31.8 million, respectively.

For the three months ended ~~March 31, 2021, net loss attributable to the Company~~June 30, 2023, Adjusted EBITDA was ~~$14.7~~$86.2 million compared to ~~$10.5 million in the three months ended March 31, 2020.~~

~~For the three months ended March 31, 2021, Adjusted EBITDA was $42.3 million compared to $16.9~~$79.0 million for the three months ended ~~March 31, 2020. The Empire Acquisition contributed approximately $13 million of incremental~~June 30, 2022. Incremental Adjusted EBITDA from the 2023 Acquisitions and the 2022 Acquisitions and increased merchandise contribution positively impacted Adjusted EBITDA for the ~~first~~second quarter of ~~2021. Increased merchandise contribution at same stores also positively impacted 2021. Additionally, although the impact of the COVID-19 pandemic reduced gallons sold in the first quarter of 2021~~2023, as compared to the ~~first~~second quarter of ~~2020, the significant increase in fuel margin compared to the same period in 2020 contributed to increased Adjusted EBITDA in the first quarter of 2021. These increases were~~2022, which was partially offset by approximately $13.3 million of lower fuel contribution from retail same stores and legacy wholesale sites. In addition, higher personnel costs at same stores and an increase in general and administrative expenses reduced Adjusted EBITDA for the second quarter of 2023. Refer to ~~support the Empire Acquisition.~~“Use of Non-GAAP Measures” below for discussion of this non-GAAP performance measure and related reconciliation to net income.

Six Months Ended June 30, 2023 versus Six Months Ended June 30, 2022

For the six months ended June 30, 2023, fuel revenue decreased by $50.6 million, or 1.4%, compared to the first half of 2022. The decrease in fuel revenue was primarily attributable to a decrease in the average price of fuel compared to the first half of 2022 and fewer gallons sold at same stores in the first half of 2023 compared to the first half of 2022, which was partially offset by incremental gallons sold related to the 2023 Acquisitions and the 2022 Acquisitions.

27For the six months ended June 30, 2023, merchandise revenue increased by $86.1 million, or 10.8%, compared to the first half of 2022, primarily due to the 2023 Acquisitions and the Pride Acquisition and an increase in same store merchandise revenues. Offsetting these increases was a decrease in merchandise revenue from underperforming retail stores that were closed or converted to dealers.

For the six months ended June 30, 2023, other revenue increased by $8.9 million, or 19.9%, compared to the first half of 2022, primarily due to additional revenue from the 2023 Acquisitions, the 2022 Acquisitions and greater lottery commissions.

For the six months ended June 30, 2023, total operating expenses increased by $58.0 million, or 1.3%, compared to the first half of 2022. Fuel costs decreased $86.7 million, or 2.5%, compared to the first half of 2022 due to both fewer gallons sold and a lower average cost of fuel on a same store basis, which were partially offset by incremental gallons related to the 2023 Acquisitions and the 2022 Acquisitions. Merchandise costs increased $48.0 million, or 8.6%, compared to the first half of 2022, primarily due to increased

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costs related to the 2023 Acquisitions and the Pride Acquisition and a corresponding increase in same store merchandise sales. For the six months ended June 30, 2023, store operating expenses increased $66.1 million, or 19.2%, compared to the first half of 2022 due to incremental expenses as a result of the 2023 Acquisitions, the 2022 Acquisitions and an increase in expenses at same stores.

For the six months ended June 30, 2023, general and administrative expenses increased $18.3 million, or 28.3%, compared to the first half of 2022, primarily due to approximately $11.5 million in expenses associated with the 2023 Acquisitions and the 2022 Acquisitions, annual wage increases and an increase of $2.7 million in share-based compensation expense primarily related to equity grants in the first quarters of 2023 and 2022.

For the six months ended June 30, 2023, depreciation and amortization expenses increased $12.2 million, or 25.0%, compared to the first half of 2022 primarily due to assets acquired in the previous twelve month period, largely in connection with the 2023 Acquisitions and the 2022 Acquisitions.

For the six months ended June 30, 2023, other expenses, net increased by $5.4 million, compared to the first half of 2022 primarily due to an increase in acquisition costs and greater losses on disposal of assets and impairment charges in the first half of 2023 which was partially offset by higher income recorded for the fair value adjustment of contingent consideration in the first half of 2023.

Operating income was $48.6 million for the first half of 2023 compared to $67.6 million for the first half of 2022. The decrease was primarily due to an increase in depreciation and amortization expenses, share-based compensation expenses and other expenses, net.

For the six months ended June 30, 2023, interest and other financial expenses, net increased by $10.4 million compared to the first half of 2022, primarily related to a decrease of $1.9 million in income, net recorded for fair value adjustments for the Ares Put Option, Public Warrants, Private Warrants and Deferred Shares (each as defined in Note 10 to the unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q) and greater debt at higher rates outstanding in 2023, which was partially offset by additional interest income generated in the first half of 2023.

For the six months ended June 30, 2023, income tax expense was $2.9 million compared to income tax expense of $10.2 million for the six months ended June 30, 2022.

For the six months ended June 30, 2023 and 2022, net income attributable to the Company was $11.9 million and $34.0 million, respectively.

For the six months ended June 30, 2023, Adjusted EBITDA was $133.7 million compared to $129.2 million for the six months ended June 30, 2022. Incremental Adjusted EBITDA from the 2023 Acquisitions and the 2022 Acquisitions and increased merchandise contribution positively impacted Adjusted EBITDA for the first half of 2023, as compared to the first half of 2022. These benefits were partially offset by approximately $27.9 million of lower fuel contribution from retail same stores and legacy wholesale sites, of which approximately $12.8 million was incurred in March 2023. In addition, higher personnel costs at same stores and an increase in general and administrative expenses reduced Adjusted EBITDA for the first half of 2023. Refer to “Use of Non-GAAP Measures” below for discussion of this non-GAAP performance measure and related reconciliation to net income.

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Segment Results

Retail Segment

The table below shows the results of the ~~Retail~~retail segment for the three and six months ended ~~March 31, 2021~~June 30, 2023 and ~~2020,~~2022, together with certain key metrics for the segment.


	For the three months ended March 31,							For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2021				2020			2023			2022			2023			2022
Revenues:	(in thousands)							(in thousands)
Fuel revenue	$	576,304		$		532,886		$	1,015,365		$	1,117,849		$	1,858,838		$	1,972,516
Merchandise revenue		359,281				323,679			484,561			431,751			884,849			798,736
Other revenues, net		16,977				11,700			18,997			16,667			37,552			32,991
Total revenues		952,562				868,265			1,518,923			1,566,267			2,781,239			2,804,243
Operating expenses:
Fuel costs		515,136				481,751			913,437			1,025,811			1,681,245			1,802,696
Merchandise costs		260,754				239,091			329,903			300,387			607,226			559,180
Store operating expenses		136,325				126,012			197,726			168,222			373,280			324,841
Total operating expenses		912,215				846,854			1,441,066			1,494,420			2,661,751			2,686,717
Operating income	$	40,347		$		21,411		$	77,857		$	71,847		$	119,488		$	117,526
Fuel gallons sold		226,112				234,815			293,584			253,243			542,490			492,801
Same store fuel gallons sold decrease (%)1		(13.8	%)			(7.4	%)		(2.6	%)		(10.6	%)		(4.2	%)		(7.1	%)
Fuel margin, cents per gallon2		32.1				26.3			39.7			41.3			37.7			39.4
Same store merchandise sales increase (%)1		6.0	%			0.2	%
Same store merchandise sales excluding cigarettes increase (decrease) (%)1		9.2	%			(0.5	%)
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 contribution3		98,527				84,588		$	154,658		$	131,364		$	277,623		$	239,556
Merchandise margin4		27.4	%			26.1	%		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 ~~has~~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.

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	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 1			TEG 2			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 Pride Acquisition.

2 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.

Three Months Ended ~~March 31, 2021~~June 30, 2023 versus Three Months Ended ~~March 31, 2020~~June 30, 2022

Retail Revenues

For the three months ended ~~March 31, 2021,~~June 30, 2023, fuel revenue ~~increased~~decreased by ~~$43.4~~$102.5 million, or ~~8.1%~~9.2%, compared to the ~~first~~second quarter of ~~2020.~~2022. The ~~Empire Acquisition contributed an additional 27.2 million gallons sold, or approximately $71.5 million in fuel revenue. The increase~~decrease in fuel revenue was ~~also~~ attributable to a ~~$0.28~~$0.95 per gallon ~~increase~~decrease in the average retail price of fuel in the ~~first~~second quarter of ~~2021~~2023 as compared to the ~~comparable period~~second quarter of 2022, primarily due to market factors, as well as a decrease in ~~2020. However,~~ gallons sold at same stores. For the second quarter of 2023, gallons at same stores ~~were down, primarily due to the COVID-19 pandemic,~~decreased approximately ~~13.8%~~2.6%, or ~~31.7~~6.4 million gallons. Partially offsetting these decreases, the 2023 Acquisitions and the Pride Acquisition contributed 51.3 million gallons ~~which was a decrease of 12.8% when the first quarter of 2020 (to eliminate the effect of the 2020 leap year) was adjusted to be based on 90 days. Additionally,~~sold, or $176.6 million in fuel revenue. Underperforming retail stores, which were closed or converted to dealers over the last 12 months in order to optimize profitability, also negatively impacted gallons ~~sold.~~sold during the second quarter of 2023.

For the three months ended ~~March 31, 2021,~~June 30, 2023, merchandise revenue increased by ~~$35.6~~$52.8 million, or ~~11.0%~~12.2%, compared to the ~~first~~second quarter of ~~2020.~~2022. The ~~Empire~~2023 Acquisitions and the Pride Acquisition contributed ~~an additional $23~~approximately $57.9 million of merchandise revenue. Same store merchandise sales increased ~~$19.0~~$3.0 million, or ~~6.0%~~0.7%, for the ~~first~~second quarter of ~~2021~~2023 compared to the ~~first~~second quarter of ~~2020, which was an increase of 7.2% when the first quarter of 2020 (which was a leap year) was adjusted to be based on 90 days.~~2022. Same store merchandise sales increased primarily due to higher ~~grocery,~~revenue from the Company’s six core destination categories (packaged beverages, candy, salty snacks, packaged ~~beverages,~~sweet snacks, alternative snacks and beer), other tobacco products ~~cigarettes~~ and ~~beer~~franchises as a result of marketing initiatives, including expanded category assortments, new franchise food offerings and ~~wine~~investments in coolers and freezers, which was partially offset by lower revenue from ~~benefits of planogram initiatives and fact-based data to react to changing consumer needs.~~cigarettes. In addition, ~~2021 benefited from an overall increase in~~

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~~the consumer market basket and consumer demand shifting from other retail channels to convenience stores. Offsetting these increases~~there was a decrease in merchandise revenue from underperforming retail stores that were closed or converted to ~~dealer-owned sites.~~dealers.

For the three months ended ~~March 31, 2021,~~June 30, 2023, other revenues, net increased by ~~$5.3~~$2.3 million, or ~~45.1%~~14.0%, compared to the ~~first~~second quarter of ~~2020~~2022, primarily related to additional income from the ~~Empire~~2023 Acquisitions and the Pride Acquisition ~~higher~~and greater lottery ~~commissions and temporary allowances for gaming machines in Virginia.~~commissions.

Retail Operating Income

For the three months ended ~~March 31, 2021,~~June 30, 2023, fuel margin increased compared to the same period in ~~2020 primarily related to incremental~~2022. Incremental fuel profit from the ~~Empire~~2023 Acquisitions and the Pride Acquisition of approximately ~~$10.5~~$19.0 million ~~which~~(excluding intercompany charges by GPMP) was ~~slightly~~partially offset by a ~~slight~~ decrease in same store fuel profit of ~~$0.1~~$5.2 million (excluding intercompany charges by GPMP). Fuel margin

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per gallon at same stores for the second quarter of 2023 decreased to 40.3 cents per gallon from 41.4 cents per gallon for the second quarter of 2022 primarily due historically high fuel margins in 2022 principally as a result of the volatile market for gasoline and diesel fuel. A decrease in fuel profit related to underperforming retail stores that were closed or converted to dealers decreased fuel profit compared to the second quarter of 2022.

For the three months ended June 30, 2023, merchandise contribution increased $23.3 million, or 17.7%, compared to the same period in 2022, and merchandise margin increased to 31.9% as compared to 30.4% in the prior period. The increase was due to $18.6 million in merchandise contribution from the 2023 Acquisitions and the Pride Acquisition and an increase in merchandise contribution at same stores of $6.5 million. Merchandise contribution at same stores increased in the second quarter of 2023 primarily due to higher contribution from the Company’s six core destination categories and franchises. Merchandise margin at same stores was 31.9% in the second quarter of 2023 compared to 30.6% in the second quarter of 2022.

For the three months ended June 30, 2023, store operating expenses increased $29.5 million, or 17.5%, compared to the three months ended June 30, 2022 primarily due to $29.8 million of expenses related to the 2023 Acquisitions and the Pride Acquisition and an increase of $3.2 million in expenses at same stores, mainly driven by approximately $4.2 million, or 6.5%, of higher personnel costs. The increase in store operating expenses was partially offset by underperforming retail stores that were closed or converted to dealers.

Six Months Ended June 30, 2023 versus Six Months Ended June 30, 2022

Retail Revenues

For the six months ended June 30, 2023, fuel revenue decreased by $113.7 million, or 5.8%, compared to the first half of 2022. The decrease in fuel revenue was attributable to a $0.57 per gallon decrease in the average retail price of fuel in the first half of 2023 as compared to the first half of 2022, primarily due to market factors, as well as a decrease in gallons sold at same stores. For the first half of 2023, gallons at same stores decreased approximately 4.2%, or 20.0 million gallons. Offsetting these decreases, the 2023 Acquisitions and the Pride Acquisition contributed 79.0 million gallons sold, or $276.7 million in fuel revenue. Underperforming retail stores, which were closed or converted to dealers over the last 12 months in order to optimize profitability, also negatively impacted gallons sold during the first half of 2023.

For the six months ended June 30, 2023, merchandise revenue increased by $86.1 million, or 10.8%, compared to the first half of 2022. The 2023 Acquisitions and the Pride Acquisition contributed approximately $84.3 million of merchandise revenue. Same store merchandise sales increased $16.7 million, or 2.1%, for the first half of 2023 compared to the first half of 2022. Same store merchandise sales increased primarily due to higher revenue from the Company’s six core destination categories, 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. In addition, there was a decrease in merchandise revenue from underperforming retail stores that were closed or converted to dealers.

For the six months ended June 30, 2023, other revenues, net increased by $4.6 million, or 13.8%, compared to the first half of 2022, primarily related to additional income from the 2023 Acquisitions, the Pride Acquisition and greater lottery commissions.

Retail Operating Income

For the six months ended June 30, 2023, fuel margin increased compared to the same period in 2022. Incremental fuel profit from the 2023 Acquisitions and the Pride Acquisition of approximately $29.7 million (excluding intercompany charges by GPMP) was partially offset by a decrease in same store fuel profit of $15.9 million (excluding intercompany charges by GPMP). Fuel margin per gallon at same stores for ~~2021 was significantly higher at 31.2~~the first half of 2023 decreased to 37.8 cents per gallon ~~as compared to 26.9~~from 39.5 cents per gallon for ~~2020,~~the first half of 2022 primarily due to ~~less competitive pressure on~~historically high fuel ~~retail prices due to reductions~~margins in 2022 principally as a result of the volatile market for gasoline and diesel fuel, with the first quarter of 2022 particularly impacted by the war in Ukraine, which significantly affected market conditions and resulted in substantially higher fuel margins. A decrease in fuel ~~volume, which allowed for margin expansion.~~profit related to underperforming retail stores that were closed or converted to dealers also partially offset the increase in fuel profit compared to the first half of 2022.

For the ~~three~~six months ended ~~March 31, 2021,~~June 30, 2023, merchandise contribution increased ~~$13.9~~$38.1 million, or ~~16.5%~~15.9%, compared to the same period in ~~2020~~2022, and merchandise margin increased to ~~27.4%~~31.4% as compared to ~~26.1%~~30.0% in the prior period. The increase was due to ~~$6.8~~$26.9 million in ~~incremental~~ merchandise contribution from the ~~Empire~~2023 Acquisitions and the Pride Acquisition and an increase in merchandise contribution at same stores of ~~$8.2~~$14.6 million. Merchandise contribution at same stores increased in ~~2021~~the first half of 2023 primarily due to ~~a shift in product mix with a lower reliance on cigarettes and~~ higher contribution from ~~packaged beverages~~the Company’s six core destination categories and other center-store items. The first quarter of 2020 was negatively impacted by a change in sales mix which began in March 2020 as consumers pantry loaded lower margin items due to the COVID-19 pandemic.franchises. Merchandise margin at same stores was ~~27.2%~~31.3% in the first ~~quarter~~half of ~~2021~~2023 compared to ~~26.2%~~30.1% in the first ~~quarter~~half of ~~2020.~~2022.

For the ~~three~~six months ended ~~March 31, 2021,~~June 30, 2023, store operating expenses increased ~~$10.3~~$48.4 million, or ~~8.2%~~14.9%, compared to the ~~three~~six months ended ~~March 31, 2020~~June 30, 2022 primarily due to ~~incremental~~$44.8 million of expenses related to the ~~Empire~~2023 Acquisitions and the Pride Acquisition and ~~a slight~~

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an increase of $9.2 million in expenses at same ~~stores. Store~~stores, including approximately $10.3 million or 8.0%, of higher personnel costs. The increase in store operating expenses ~~were also reduced from~~was partially offset by underperforming retail stores that were closed or converted to ~~dealer-owned sites.~~dealers.

Wholesale Segment

The table below shows the results of the ~~Wholesale~~wholesale segment for the three and six months ended ~~March 31, 2021~~June 30, 2023 and ~~2020,~~2022, together with certain key metrics for the segment.


	For the three months ended March 31,					For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021			2020		2023		2022		2023		2022
Revenues:	(in thousands)					(in thousands)
Fuel revenue	$	525,488	$		28,938	$	811,139	$	966,434	$	1,495,987	$	1,694,131
Other revenues, net		4,939			1,283		6,110		5,733		12,601		11,455
Total revenues		530,427			30,221		817,249		972,167		1,508,588		1,705,586
Operating expenses:
Fuel costs		518,929			28,017		800,286		951,779		1,474,977		1,667,282
Store operating expenses		9,190			1,926		10,196		10,602		19,294		21,105
Total operating expenses		528,119			29,943		810,482		962,381		1,494,271		1,688,387
Operating income	$	2,308	$		278	$	6,767	$	9,786	$	14,317	$	17,199
Fuel gallons sold – non-consignment agent locations		183,645			7,527
Fuel gallons sold – fuel supply locations							213,136		193,164		395,563		374,105
Fuel gallons sold – consignment agent locations		37,911			5,589		44,534		37,996		82,496		73,993
Fuel margin, cents per gallon1 – non-consignment agent locations		5.1			6.0
Fuel margin, cents per gallon1 – fuel supply locations							5.9		7.2		6.0		7.1
Fuel margin, cents per gallon1 – consignment agent locations	21.9			19.1			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 Quarles Acquisition; 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.

Three Months Ended ~~March 31, 2021~~June 30, 2023 versus Three Months Ended ~~March 31, 2020~~June 30, 2022

Wholesale Revenues

For the three months ended ~~March 31, 2021,~~June 30, 2023, fuel revenue ~~increased~~decreased by ~~$496.6~~$155.3 million, or 16.1%, compared to the ~~first~~second quarter of ~~2020,~~2022, of which ~~approximately $413.2 million of~~ the ~~increase~~majority was attributable to ~~non-consignment agent~~fuel supply locations. Wholesale ~~gallons sold increased~~revenues were negatively impacted by ~~208.4 million due~~a decrease in the average price of fuel in the second quarter of 2023 as compared to ~~an incremental 207.2 million gallons from~~ the ~~Empire Acquisition~~second quarter of 2022, which ~~resulted in approximately~~was partially offset by an

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~~$488.4 million of incremental fuel revenues. Wholesale revenues also benefited from an~~11.5% increase in gallons sold. Of total gallons sold, the ~~average price of fuel in 2021 as compared to 2020.~~ 2023 Acquisitions and the Quarles Acquisition contributed approximately 41.7 million, which were offset by lower volumes at legacy wholesale sites.

Wholesale Operating Income

For the three months ended ~~March 31, 2021,~~June 30, 2023, fuel contribution ~~increased~~decreased approximately ~~$16.2~~$2.5 million (excluding intercompany charges by GPMP) ~~with the Empire Acquisition accounting for approximately $16.0~~. Approximately $5.4 million of ~~the increase. Although~~total fuel contribution ~~at non-consignment agent~~was attributable to the 2023 Acquisitions and the Quarles Acquisition. At fuel supply locations, ~~increased~~fuel contribution decreased by ~~$8.9~~$1.5 million (excluding intercompany charges by GPMP), and fuel margin decreased ~~over~~for the ~~first~~second quarter of ~~2020~~2023 as compared to the second quarter of 2022, 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 ~~mix~~contribution from the 2023 Acquisitions and the Quarles Acquisition. At consignment agent locations, fuel contribution decreased $1.0 million (excluding intercompany charges by GPMP), and fuel margin also decreased for the second quarter of ~~wholesale fuel supply contracts acquired in the Empire Acquisition which tend to be priced with lower margins~~2023 as compared to ~~our existing wholesale~~the second quarter of 2022, 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 the 2023 Acquisitions and the Quarles Acquisition.

For the three months ended June 30, 2023, store operating expenses decreased $0.4 million compared to the three months ended June 30, 2022.

Six Months Ended June 30, 2023 versus Six Months Ended June 30, 2022

Wholesale Revenues

For the six months ended June 30, 2023, fuel revenue decreased by $198.1 million, or 11.7%, compared to the first half of 2022, of which the majority was attributable to fuel supply ~~contracts. Fuel~~locations. Wholesale revenues were negatively impacted by a decrease in the average price of fuel in the first half of 2023 as compared to the first half of 2022, which was partially offset by a 6.7% increase in gallons sold. Of total gallons sold, the 2023 Acquisitions and the Quarles Acquisition contributed approximately 57.6 million, which were offset by lower volumes at legacy wholesale sites.

Wholesale Operating Income

For the six months ended June 30, 2023, fuel contribution decreased approximately $4.3 million (excluding intercompany charges by GPMP). Approximately $7.7 million of total fuel contribution was attributable to the 2023 Acquisitions and the Quarles Acquisition. At fuel supply locations, fuel contribution decreased by $2.9 million (excluding intercompany charges by GPMP), and fuel margin decreased for the first half of 2023 as compared to the first half of 2022, 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 the 2023 Acquisitions and the Quarles Acquisition. At consignment agent locations, ~~increased $7.3~~fuel contribution decreased $1.4 million (excluding intercompany charges by GPMP) and fuel margin ~~increased over 2020~~also decreased for the first half of 2023 as compared to the first half of 2022, 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 the 2023 Acquisitions and the Quarles Acquisition.

For the six months ended June 30, 2023, store operating expenses decreased $1.8 million compared to the six months ended June 30, 2022.

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Fleet Fueling Segment

The table below shows the results of the fleet fueling segment for the three and six months ended June 30, 2023, together with certain key metrics for the segment. Because we added the fleet fueling segment only upon consummation of the Quarles Acquisition in July 2022, there are no comparable period results for three and six months ended June 30, 2022.


	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2023		2023
Revenues:	(in thousands)
Fuel revenue	$	121,146	$	248,640
Other revenues, net		1,676		2,627
Total revenues		122,822		251,267
Operating expenses:
Fuel costs		108,435		223,666
Store operating expenses		5,043		9,833
Total operating expenses		113,478		233,499
Operating income	$	9,344	$	17,768
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 ~~competitive pressure on~~ fuel ~~retail prices due~~costs divided by fuel gallons sold; excludes the estimated fixed fee charged by GPMP to ~~reductions~~sites in ~~fuel volume which allowed~~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 ~~margin expansion.~~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.

Three Months Ended June 30, 2023

Fleet Fueling Revenues

For the three months ended ~~March 31, 2021, store operating expenses increased $7.3 million compared to~~June 30, 2023, fuel revenue was primarily driven by the average price of diesel fuel in the second quarter of 2023.

Fleet Fueling Operating Income

For the three months ended ~~March 31, 2020~~June 30, 2023, fuel contribution was approximately $14.4 million (excluding intercompany charges by GPMP).

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Six Months Ended June 30, 2023

Fleet Fueling Revenues

For the six months ended June 30, 2023, fuel revenue was primarily ~~due to~~driven by the ~~Empire Acquisition.~~average price of diesel fuel in the first half of 2023.

Fleet Fueling Operating Income

For the six months ended June 30, 2023, fuel contribution was approximately $28.2 million (excluding intercompany charges by GPMP).

GPMP Segment

The table below shows the results of the GPMP segment for the three and six months ended ~~March 31, 2021~~June 30, 2023 and ~~2020,~~2022, together with certain key metrics for the segment.


	For the three months ended March 31,					For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021			2020		2023		2022		2023		2022
Revenues:	(in thousands)					(in thousands)
Fuel revenue - inter-segment	$	819,467	$		379,125	$	1,364,041	$	1,738,243	$	2,504,106	$	3,013,964
Fuel revenue - external customers		1,155			1,217		1,057		1,571		1,798		2,733
Other revenues, net		255			215		277		258		447		512
Other revenues, net - inter-segment							2,745		—		5,302		—
Total revenues		820,877			380,557		1,368,120		1,740,072		2,511,653		3,017,209
Operating expenses:
Fuel costs		798,200			369,160		1,338,489		1,715,672		2,456,786		2,969,654
General and administrative expenses		711			768		781		759		1,553		1,465
Depreciation and amortization		1,843			1,843		1,842		1,842		3,684		3,684
Total operating expenses		800,754			371,771		1,341,112		1,718,273		2,462,023		2,974,803
Operating income	$	20,123	$		8,786	$	27,008	$	21,799	$	49,630	$	42,406
Fuel gallons sold - inter-segment		448,027			248,238		532,050		481,794		982,269		939,467
Fuel gallons sold - external customers		647			768		397		431		680		827
Fuel margin, cents per gallon1		5.0			4.5		5.0		5.0		5.0		5.0

1 Calculated as fuel revenue less fuel costs divided by fuel gallons sold.

Three Months Ended ~~March 31, 2021~~June 30, 2023 versus Three Months Ended ~~March 31, 2020~~June 30, 2022

GPMP Revenues

For the three months ended ~~March 31, 2021,~~June 30, 2023, fuel revenue ~~increased~~decreased by ~~$440.3~~$374.7 million compared to the ~~first~~second quarter of ~~2020.~~2022. The ~~increase~~decrease in fuel revenue was attributable to a decrease in the average price of fuel, which was partially offset by an increase in gallons sold ~~and an increase in average price~~as compared to the ~~first~~second quarter of ~~2020.~~2022.

For the three months ended ~~March 31, 2021~~June 30, 2023 and ~~2020,~~2022, other revenues, net were each $0.3 million and ~~$0.2~~primarily related to rental income from certain sites leased to dealers. Inter-segment other revenues, net related to the fixed fee primarily charged to sites in the fleet fueling segment (currently 5.0 cents per gallon sold), which began in July 2022.

GPMP Operating Income

Fuel margin increased by $2.5 million for the second quarter of 2023, as compared to the second quarter of 2022, primarily due to greater gallons sold to the retail and wholesale segments at a fixed margin.

For the three months ended June 30, 2023, total general, administrative, depreciation and amortization expenses were similar with those in the comparable prior year period.

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Six Months Ended June 30, 2023 versus Six Months Ended June 30, 2022

GPMP Revenues

For the six months ended June 30, 2023, fuel revenue decreased by $510.8 million compared to the first half of 2022. The decrease in fuel revenue was attributable to a decrease in the average price of fuel, which was partially offset by an increase in gallons sold as compared to the first half of 2022.

For the six months ended June 30, 2023 and 2022, other revenues, net were $0.4 million and $0.5 million, respectively, and primarily related to rental income from certain sites leased to ~~independent~~ dealers. Inter-segment other revenues, net related to the fixed fee primarily charged to sites in the fleet fueling segment (currently 5.0 cents per gallon sold), which began in July 2022.

GPMP Operating Income

Fuel margin increased by ~~$11.2~~$2.1 million for the first ~~quarter~~half of ~~2021,~~2023, as compared to the first ~~quarter~~half of ~~2020,~~2022, primarily due to ~~additional~~greater gallons sold to the retail and wholesale segments at a fixed ~~margin, which increased from 4.5 cents per gallon to 5.0 cents per gallon in the fourth quarter of 2020.~~margin.

For the ~~three~~six months ended ~~March 31, 2021,~~June 30, 2023, total general, administrative, depreciation and amortization expenses were ~~consistent~~similar with those in the comparable prior year period.

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Use of Non-GAAP Measures

We disclose ~~non-GAAP~~certain measures on a “same store basis,” which ~~exclude~~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 ~~has~~had a full quarter of activity in the prior year. We believe that this information provides greater comparability regarding our ongoing operating performance. ~~These measures~~Neither this measure nor those described below should ~~not~~ be considered an alternative to measurements presented in accordance with generally accepted accounting principles in the United States (“GAAP”) ~~and are non-GAAP financial measures.~~.

We define EBITDA as net income ~~(loss)~~ 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. ~~None~~Each of EBITDA orand Adjusted EBITDA ~~are presented in accordance with GAAP and are~~is a non-GAAP financial ~~measures.~~measure.

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

EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be considered as a substitute for net income ~~(loss), cash flows from operating activities,~~ or any other ~~income or cash flow statement data.~~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 our results as reported under GAAP. We strongly encourage investors to review our 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 us, may not be comparable to similarly titled measures reported by other companies. It therefore may not be possible to compare our use of these non-GAAP financial measures with those used by other companies.

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The following table contains a reconciliation of net ~~loss~~income to EBITDA and Adjusted EBITDA for the three and six months ended ~~March 31, 2021~~June 30, 2023 and ~~2020.~~2022.


	For the three months ended March 31,							For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2021				2020			2023			2022			2023			2022
	(in thousands)							(in thousands)
Net loss	$	(14,662	)	$		(12,857	)
Net income								$	14,479		$	31,806		$	11,952		$	34,124
Interest and other financing expenses, net		28,617				6,651			20,160			7,339			33,762			23,314
Income tax benefit		(722	)			(2,011	)
Income tax expense									5,014			9,157			2,856			10,162
Depreciation and amortization		24,242				17,071			32,837			24,353			61,236			48,989
EBITDA		37,475				8,854			72,490			72,655			109,806			116,589
Non-cash rent expense (a)		1,771				1,801			3,760			1,791			6,558			3,737
Acquisition costs (b)		611				1,500			3,277			823			6,853			1,504
Loss on disposal of assets and impairment charges (c)		1,375				3,382			2,991			1,207			3,278			1,971
Share-based compensation expense (d)		1,026				127			4,555			3,108			8,624			5,882
Loss from equity investment (e)		6				233
Fuel taxes paid in arrears (f)		—				1,050
Loss (income) from equity investment (e)									27			(28	)		63			(37	)
Adjustment to contingent consideration (f)									(922	)		(526	)		(1,624	)		(526	)
Other (g)		39				(13	)		64			15			168			33
Adjusted EBITDA	$	42,303		$		16,934		$	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.

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(c)

Eliminates the non-cash loss (gain) from the sale of property and equipment, the ~~gain~~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 ~~stores.~~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 our ~~Board.~~board of directors (the “Board”).

(e)

Eliminates our share of loss (income) attributable to our unconsolidated equity investment.

(f)

Eliminates fair value adjustments to the ~~payment~~contingent consideration owed to the seller for the 2020 acquisition of ~~historical fuel tax liabilities owed for multiple prior periods.~~Empire.

(g)

Eliminates other unusual or non-recurring items that we do not consider to be meaningful in assessing operating performance.

Liquidity and Capital Resources

Our primary sources of liquidity are cash flows from operations, availability under our credit facilities and our cash balances. Our principal liquidity requirements are ~~for~~the financing of current operations, funding capital expenditures, including acquisitions, and servicing debt. We finance our inventory purchases primarily from customary trade credit aided by relatively rapid inventory turnover, as well as cash generated from operations. ~~This~~Rapid inventory turnover allows us to conduct operations without the need for large amounts of cash and working capital. We largely rely on internally generated cash flows ~~borrowings~~ and ~~equity contributions,~~borrowings, which we believe are sufficient to meet our liquidity needs for the foreseeable future.

Our ability to meet our debt service obligations and other capital requirements, including capital expenditures, as well as the cost of acquisitions, will depend on our future operating performance which, in turn, will be subject to general economic, financial, business, competitive, legislative, regulatory and other conditions, many of which are beyond our control. As a normal part of our business, depending on market conditions, we will from time to time consider opportunities to repay, redeem, repurchase or refinance our indebtedness. Changes in our operating plans, lower than anticipated sales, increased expenses, acquisitions, or other events may cause us to seek additional debt or equity financing in future periods. Additional debt financing could impose increased cash payment obligations, as well as covenants that may restrict our operations. There can be no guarantee that financing will be available on acceptable terms or at all. ~~Debt financing, if available, could impose additional cash payment obligations and additional covenants and operating restrictions.~~

In 2020, we entered into a financing agreement with Ares Capital Management (“Ares”), which allowed us to repay our outstanding long-term debt with PNC Bank, National Association (“PNC”), and allowed us to obtain additional financing, which we used to finance acquisitions. Additionally, the Ares financing agreement has a 1% annual amortization, which aids liquidity by limiting the capital required annually to repay this debt.

~~In October 2020, in connection with the Empire Acquisition, we increased the availability under our Capital One Line~~41

Table of Credit to $500 million from $300 million, which we can seek to increase, subject to certain conditions, up to $700 million, and our line of credit with PNC Bank increased from $110 million to $140 million.Contents

As of ~~March 31, 2021,~~June 30, 2023, we were in a strong liquidity position of approximately ~~$457~~$822 million, ~~with $205~~consisting of approximately $220 million of cash ~~including proceeds from the Merger Transaction, the issuance of preferred stock~~ and cash ~~generated from our operations,~~equivalents and ~~$31.8 million of restricted investments as well as~~ approximately ~~$220~~$602 million of availability under our lines of ~~credit, notwithstanding our full cash redemption of our Bonds (Series C) on March 30, 2021. Additionally, this~~credit. This liquidity position currently provides us with adequate funding to satisfy our ~~other~~ contractual and other obligations ~~out of~~from our ~~outstanding~~existing cash balances. As of ~~March 31, 2021,~~June 30, 2023, we had no outstanding borrowings under our ~~line~~$140 million PNC Line of ~~credit with PNC Bank and the~~Credit (as defined below), $7.7 million of unused availability under the M&T equipment line of credit, described below, and $461.2 million of unused availability under our $800 million Capital One Line of Credit ~~was $101~~(as defined below), which may increase to $1.0 billion, subject to obtaining additional financing commitments from current lenders or other banks, and subject to certain other terms.

The Board declared, and the Company paid, dividends of $0.03 per share of common stock on both March 21, 2023 and June 1, 2023, totaling approximately $7.2 million. Additionally, the Board 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. The amount and timing of dividends payable on our common stock are within the sole discretion of our Board, which will evaluate dividend payments within the context of our overall capital allocation strategy on an ongoing basis, giving consideration to our current and forecast earnings, financial condition, cash requirements and other factors. There can be no assurance that we will continue to pay such dividends or the amounts of such dividends.

In May 2023, we announced that our Board authorized an increase to our share repurchase program from $50.0 million to up to an aggregate of $100.0 million of our outstanding shares of common stock. During the six months ended June 30, 2023, we repurchased approximately 1.6 million shares of common stock under the repurchase program for approximately $11.9 million, or an average share price of $7.57. The share repurchase program does not have a stated expiration date. Whether and the extent to which we repurchase shares depends on a number of factors, including our financial condition, capital requirements, cash flows, results of operations, future business prospects and other factors management may deem relevant. The timing, volume, and nature of repurchases are subject to market conditions, applicable securities laws, and other factors, and the program may be amended, suspended or discontinued at any time. Repurchases may be effected from time to time through open market purchases, including pursuant to a pre-set trading plan meeting the requirements of Rule 10b5-1(c)of the Exchange Act, privately negotiated transactions, pursuant to accelerated share repurchase agreements entered into with one or more counterparties, or otherwise.

To date, we have funded capital expenditures primarily through funds generated from operations, funds received from vendors, sale-leaseback transactions, the issuance of debt, and existing cash. Future capital required to finance operations, acquisitions, and ~~raze~~raze-and-rebuild, functionally and fully remodel and update stores is expected to come from cash on hand, cash generated by operations, availability under lines of credit, and additional long-term debt and equipment leases, as circumstances may dictate. In both the ~~future,~~short-term and long-term, we currently expect that our capital spending program will be primarily focused on expanding our store base through acquisitions, ~~razing~~razing-and-rebuilding, remodeling and ~~remodeling~~updating stores, and maintaining our owned properties and equipment, including upgrading all fuel dispensers to be EMV-compliant. ~~The estimated gross cost~~We expect to spend a total of ~~these upgrades~~approximately $8 million in ~~2021 is approximately $30 million, of which a portion will be offset by~~the current year to upgrade substantially all our fuel ~~supplier incentive programs, and the remainder is expected~~dispensers to be ~~financed with leasing companies.~~EMV-compliant. We do not expect such capital needs to adversely affect liquidity.

Cash Flows for the ~~Three Month Periods~~Six Months Ended ~~March 31, 2021~~June 30, 2023 and ~~2020~~2022

Net cash provided by (used in) operating activities, investing activities and financing activities for the ~~periods presented~~six months ended June 30, 2023 and 2022 were as follows:


	For the Six Months Ended June 30,
	2023			2022
	(in thousands)
Net cash provided by (used in):
Operating activities	$	45,986		$	72,162
Investing activities		(235,224	)		(22,602	)
Financing activities		107,768			(59,381	)
Effect of exchange rates		(21	)		(121	)
Total	$	(81,491	)	$	(9,942	)

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For the three months ended March 31,

2021

2020

(in thousands)

Net cash provided by (used in):

Operating activities

$
11,276

$
23,912

Investing activities

(16,645
)

(12,541
)
Financing activities

(83,143
)

85,917

Effect of exchange rates

(1,462
)

(1,306
)
Total

$
(89,974
)

$
95,982

Operating Activities

Cash flows provided by operations are our main source of liquidity. We have historically relied primarily on cash provided by operating activities, supplemented as necessary from time to time by borrowings on our credit facilities and other debt or equity transactions to finance our operations and to fund our capital expenditures. Cash flow provided by operating activities is primarily impacted by our net income and changes in working capital.

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For the ~~three~~six months ended ~~March 31, 2021,~~June 30, 2023, cash flows provided by operating activities ~~was $11.3~~were $46.0 million compared to ~~$23.9~~$72.2 million for the ~~first quarter of 2020.~~six months ended June 30, 2022. The ~~2021~~ decrease was primarily the result of ~~$10.3~~approximately $6.5 million of higher net interest payments, ~~including~~ approximately ~~$5.2~~$15.6 million ~~related to the early redemption~~ of ~~the Bonds (Series C),~~higher net tax payments and the ~~payment of approximately $13.6 million of annual incentives~~investment in working capital associated with the WTG Acquisition, which ~~were~~was partially offset by an increase in segment operating income of approximately $32.0 million primarily generated from an increase in fuel margin and merchandise contribution at same stores as well as the Empire Acquisition. The first quarter of 2020 benefited from a temporary change to extend payment terms with key merchandise suppliers which increased prior quarter operating cash flow by approximately $16.0 million.Adjusted EBITDA.

Investing Activities

Cash flows used in investing activities primarily reflect capital expenditures for acquisitions and replacing and maintaining existing facilities and equipment used in the business.

For the ~~three~~six months ended ~~March 31, 2021,~~June 30, 2023, cash used in investing activities increased by ~~$4.1~~$212.6 million compared to the ~~first quarter of 2020.~~six months ended June 30, 2022. For the ~~three~~six months ended ~~March 31, 2021,~~June 30, 2023, we spent ~~$17.5~~$50.0 million for capital expenditures, including ~~purchasing a~~the purchase of certain fee ~~property. For~~properties, upgrades to fuel dispensers and other investments in our stores. The net consideration paid for the ~~three months ended March 31, 2020, we spent $12.1~~recent acquisitions was $481.6 million, ~~for capital expenditures.~~which included $373.0 million paid by Oak Street, reflecting our net cash outflow of $108.6 million.

Financing Activities

Cash flows from financing activities primarily consist of increases and decreases in the principal amount of our ~~line~~lines of credit and debt, ~~and~~ distributions to non-controlling interests ~~as well as~~and issuance of common and preferred ~~stock.~~stock, net of dividends paid and common stock repurchases.

For the ~~three~~six months ended ~~March 31, 2021,~~June 30, 2023, financing activities consisted primarily of net ~~payments~~receipts of ~~$74.8~~$63.7 millionfor long-term debt, ~~including~~$80.4 million of consideration paid by Oak Street related to the ~~early redemption~~2023 Acquisitions, which transactions with Oak Street were accounted for as sale-leasebacks (see Note 3 to our condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q), payment of $9.8 million for the ~~Bonds (Series C),~~Ares Put Option, repayments of ~~$2.0~~$2.9 million for financing leases, ~~$1.6~~$7.2 million for dividend payments on common stock, $2.9 million for dividend payments on the Series A redeemable preferred stock and ~~$4.7 million of issuance costs related to the Merger Transaction. For the three months ended March 31, 2020, financing activities consisted primarily of net proceeds of $71.1~~$13.6 million for long-term debt and lines of credit and investment in non-controlling subsidiary of $19.3 million which was offset by repayments of $2.1 million for financing leases and $2.4 million in distributions to non-controlling interests.common stock repurchases.

Credit Facilities and Senior Notes

~~Ares Credit Agreement~~

GPM entered into a credit agreement with Ares to provide financing in a total amount of up to $225 million (the “Ares Credit Agreement”): an Initial Term Loan of $162 million, which was drawn on February 28, 2020, and the Delayed Term Loan A of $63 million, which was drawn on October 6, 2020 in order to fund the Empire Acquisition (the “Ares Loan”).Senior Notes

The ~~Ares Loan bears interest, as elected~~Company has $450 million aggregate principal amount of 5.125% Senior Notes due 2029 (the “Senior Notes”). The Senior Notes are guaranteed, on an unsecured senior basis, by ~~us, at: (a) a rate per annum equal~~certain of the Company’s wholly owned domestic subsidiaries (the “Guarantors”). The indenture governing the Senior Notes contains customary restrictive covenants that, among other things, generally limit the ability of the Company and substantially all of its subsidiaries to (i) create liens, (ii) pay dividends, acquire shares of capital stock and make payments on subordinated debt, (iii) place limitations on distributions from certain subsidiaries, (iv) issue or sell the capital stock of certain subsidiaries, (v) sell assets, (vi) enter into transactions with affiliates, (vii) effect mergers and (viii) incur indebtedness. The Senior Notes and the guarantees rank equally in right of payment with all of the Company’s and the Guarantors’ respective existing and future senior unsubordinated indebtedness and are effectively subordinated to all of the Company’s and the Guarantors’ existing and future secured indebtedness to the ~~Ares alternative base rate (as defined in~~extent of the ~~Ares Credit Agreement) plus a margin~~value of ~~3.50%, or (b) LIBOR (subject~~the collateral securing such indebtedness; and are structurally subordinated to ~~a floor~~any existing and future obligations of ~~1.0%) plus a margin~~subsidiaries of ~~4.50%.~~ the Company that are not Guarantors.

Financing ~~Agreements~~Agreement with PNC

~~Table of Contents~~

GPM and certain subsidiaries have a financing ~~agreement~~arrangement (as amended, the “PNC Credit Agreement”) with PNC ~~(the “GPM PNC Facility”~~Bank National Association (“PNC”) to provide ~~term loans as well as~~ a line of credit with an aggregate principal amount of up to $140 million for purposes of financing working capital (the “PNC Line of Credit”). ~~The PNC Credit Line Agreement has an aggregate principal amount of up to $140 million.~~

The PNC Line of Credit bears interest, as elected by GPM at: (a) ~~LIBOR~~SOFR Adjusted plus Term SOFR (as defined in the agreement) plus a margin of 1.25% to 1.75% or (b) a rate per annum equal to the alternate base rate (as defined in the agreement) plus a margin of ~~0.5%, which is equal~~0% to ~~the greatest of (i) the PNC base rate, (ii) the overnight bank funding rate plus 0.5%, and (iii) LIBOR plus 1.0%, subject to the definitions set in the agreement.~~0.50%. Every quarter, the ~~LIBOR~~SOFR margin rate and the alternate base rate margin rate are updated based on the quarterly average undrawn availability of the line of credit.

The calculation of the availability under the PNC Line of Credit is determined monthly subject to terms and limitations as set forth in the PNC Credit ~~Line~~ Agreement, taking into account the balances of receivables, inventory and letters of credit, among other things. As of ~~March 31, 2021, $6.6~~June 30, 2023, $7.3 million of letters of credit were outstanding under the ~~GPM~~ PNC ~~Facility.~~Credit Agreement.

~~GPMP~~Financing Agreements with M&T Bank

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GPM has a ~~term loan~~financing arrangement with ~~PNC~~M&T Bank to provide a three-year $20.0 million line of credit for purchases of equipment, which line may be borrowed in ~~the total~~tranches, as described below, and an aggregate principal amount of ~~$32.4~~$35.0 million of a real estate loan (the ~~“GPMP PNC~~“M&T Term Loan”). As of June 30, 2023, approximately $7.7 million remained available under the line of credit.

Each additional equipment loan tranche will have a three-year term, payable in equal monthly payments of principal plus interest, and will accrue a fixed rate of interest equal to M&T Bank’s three-year cost of funds as of the applicable date of such tranche, plus 3.00%. The ~~GPMP PNC~~M&T Term Loan bears interest at SOFR Adjusted (as defined in the agreement) plus 3.00%, matures in June 2026 and is ~~secured by U.S. Treasury or other investment grade securities equal to 98%~~payable in monthly installments based on a fifteen-year amortization schedule, with the balance of the ~~outstanding principal amount of the GPMP PNC Term Loan.~~ loan payable at maturity.

Financing agreement with a syndicate of banks led by Capital One, National Association (“Capital One”)

GPMP has a ~~credit agreement for a~~ revolving credit facility with a syndicate of banks led by Capital One, National Association, ~~(the “Capital One Credit Facility”),~~ in an aggregate principal amount of up to ~~$500~~$800 million (the “Capital One Line of Credit”). At GPMP’s request, the Capital One Line of Credit can be increased up to ~~$700 million,~~$1.0 billion, subject to obtaining additional financing commitments from current lenders or from other banks, and subject to certain terms as detailed in the Capital One Line of Credit. The revolving credit facility matures on May 5, 2028. As of June 30, 2023, approximately $338.3 million was drawn on the Capital One Line of Credit, and approximately $461.2 million was available thereunder.

The Capital One Line of Credit bears interest, as elected by GPMP at: (a) ~~LIBOR~~Adjusted Term SOFR (as defined in the agreement) plus a margin of 2.25% to 3.25% or (b) a rate per annum equal to the alternate base rate (as defined in the agreement) plus a margin of 1.25% to 2.25%~~, which is equal to the greatest of (i) Capital One’s prime rate, (ii) the one-month LIBOR plus 1.0%, and (iii) the federal funds rate plus 0.5%, subject to the definitions set in the agreement.~~. The margin is determined according to a formula in the Capital One Line of Credit that depends on GPMP’s leverage. As of ~~March 31, 2021, $0.7~~June 30, 2023, $0.5 million of letters of credit were outstanding under the Capital One ~~Credit Facility.~~Line of Credit.

Critical Accounting Policies and Estimates

~~There~~For the six months ended June 30, 2023, there were no material changes to our critical accounting policies and estimates described in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2022 that have had a material impact on our ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements and related notes.

Item 3. Quantitative and Qualitative Disclosures ~~About~~about Market Risk

Commodity Price Risk

We have limited exposure to commodity price risk as a result of the payment and volume-related discounts in certain of our fuel supply contracts with our fuel suppliers, which are based on the market price of motor fuel. ~~We do not engage in any fuel price hedging.~~ Significant increases in fuel prices could result in significant increases in the retail price of fuel and in lower sales to consumers and dealers. When fuel prices rise, some of our dealers may have insufficient credit to purchase fuel from us at their historical volumes. In addition, significant and persistent increases in the retail price of fuel could also diminish consumer demand, which could subsequently diminish the volume of fuel we distribute. A significant percentage of our sales are made with the use of credit cards. Because the interchange fees we pay when credit cards are used to make purchases are based on transaction amounts, higher fuel prices at the pump and higher gallon movements result in higher credit card expenses. These additional fees increase operating expenses. In connection with the Quarles Acquisition, we began to make use of derivative commodity instruments to manage risks associated with an immaterial number of gallons designed to offset changes in the price of fuel that are directly tied to firm commitments to purchase diesel fuel.

Interest Rate Risk

We may be subject to market risk from exposure to changes in interest rates based on our financing, investing, and cash management activities. ~~For the majority of~~The Senior Notes bear a fixed interest rate, therefore, an increase or decrease in prevailing interest rates has no impact on our debt ~~interest is calculated at a fixed margin over LIBOR.~~service for the Senior Notes. As of ~~March 31, 2021, we had locked in~~June 30, 2023, the interest rate on ~~the full amount of~~ our Capital One Line of Credit ~~at 3.35%, fixed~~was 7.7% and the interest rate on ~~the full amount~~our M&T Term Loan was 8.3%. As of ~~the term loans under the Ares Credit Agreement at 5.5%, and fixed~~June 30, 2022, the interest rate on ~~the full amount~~our Capital One Line of ~~GPMP’s PNC term loan at 0.61%. The LIBOR~~Credit was 3.6% and the interest rate ason our M&T Term Loan was 4.8%. As of ~~March 31, 2021 was very low,~~June 30, 2023, approximately 44% of our debt bore interest at variable rates, therefore, our exposure ~~is not significant.~~was marginally low. If our applicable interest rates increase by 1%, then our debt service on an annual basis would increase by approximately ~~$4.7~~$3.7 million. Interest rates on

~~Table of Contents~~

commercial bank borrowings and debt offerings could be higher than current levels, causing our financing costs to increase accordingly. Although this could limit our ability to raise funds in the debt capital markets, we expect to remain competitive with respect to acquisitions and capital projects, as our competitors would likely face similar circumstances.

In 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. However, in March 2021, the Ice Benchmark Administration announced that it will continue to publish the US overnight, one-month, three-month, six-monthItem 4. Controls and 12-month LIBOR through at least June 30, 2023. There is currently no definitive information regarding the future use of LIBOR or a replacement rate. As of March 31, 2021, approximately 95% of our debt bore interest at variable rates. Most of our credit agreements were entered into in 2019 and 2020. Such credit agreements include mechanisms pursuant to which the underlying interest rates will be determined according to an alternative index replacing LIBOR, as customary in the market at such time. Since there is still great uncertainty in the market with respect to the elimination of LIBOR and the potential transition to a replacement rate, the impact of such changes on our future debt repayment obligations, results of operations and financial condition remains uncertain.Procedures

~~Exchange Rate Risk~~

As of March 31, 2021, and following the early redemption of the Bonds (Series C) which were denominated in New Israeli Shekels (“NIS”), our exposure to unfavorable exchange rate fluctuations between the NIS and the U.S. dollar was minimal.

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~~Item 4. Controls and Procedures~~

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on ~~this~~management’s evaluation, ~~management~~our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~March 31, 2021.~~June 30, 2023.

Changes to the Company’s Internal Control Over Financial Reporting

There have been no changes to the Company’s internal control over financial reporting that occurred during the calendar quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

During the reporting period covered by this Quarterly Report on Form 10-Q, there have been no material changes to the description of legal proceedings as set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2022.

Item 1A. Risk Factors

During the reporting period covered by this Quarterly Report on Form 10-Q, there have been no material changes to our risk factors as set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On August 1, 2020, Haymaker Acquisition Corp. II (“Haymaker”) and Nomura Securities International, Inc. (“Nomura”) entered into an engagement letter, pursuant to which Nomura agreed to act as a placement agentThe following table presents our share repurchase activity for the quarter ended June 30, 2023 (dollars in connection with the subscription agreement with certain investors in connection with our business combination (the “PIPE Agreement”) and on September 8, 2020, Haymaker and Nomura entered into an engagement letter, pursuant to which Nomura agreed to act as a financial and capital markets advisor in connection with the Business Combination (the “Advisory Agreement”). On January 19, 2021, the Company, Haymaker and Nomura entered into a letter agreement amending the engagement letters to provide that allthousands, except per share amounts):


Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)		Maximum Dollar Value that May Yet Be Purchased Under the Plans or Programs (1)

April 1, 2023 to April 30, 2023		—	$	—		—	$	10,295
May 1, 2023 to May 31, 2023		642,461		7.36		642,461		55,566
June 1, 2023 to June 30, 2023		844,888		7.69		844,888		49,071
Total		1,487,349	$	7.55		1,487,349	$	49,071

(1)

All of the placement fee (pursuant to the PIPE Agreement) and the transaction fee (pursuant to the Advisory Agreement), in each case at Haymaker’s option, may be paid to Nomura in the form of 296,150 shares of common stock, valued for this purpose at $10.13 per share. On January 21, 2021, we issued 296,150 shares of common stock to Nomura (the “Nomura Shares”). The Nomura Sharesabove repurchases were ~~exempt from the registration requirements of the Securities Act in reliance~~made on the ~~exemptions afforded by Section 4(a)(2)~~open market at prevailing market rates plus related expenses under our stock repurchase program, which authorizes the repurchase of up to $100 million of our common stock. We publicly announced this program on February 23, 2022 and announced the ~~Securities Act.~~

increased amount authorized to be repurchased on May 16, 2023.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

~~None.~~During the three months ended June 30, 2023, none of our officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any “non-Rule 10b5-1 trading arrangement”, as defined in Item 408 of Regulation S-K.

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Item 6. Exhibits


Exhibit ~~10.1~~3.1		~~Fifth Amendment to the~~Composite Amended and Restated Certificate of Incorporation of ARKO Corp.

Exhibit 10.1+		Second Amended and Restated Credit Agreement, dated ~~February 28, 2020,~~May 5, 2023, by and among GPM ~~Investments, LLC,~~Petroleum LP, the guarantors party thereto, Capital One, National Association, and ~~certain of its subsidiaries as guarantors,~~ the lenders ~~from time to time~~ party thereto ~~and Ares Capital Corporation, as administrative agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed on April 2, 2021).~~

~~Exhibit 10.2~~		Sixth Amendment to the Credit Agreement, dated February 28, 2020, by and among GPM Investments, LLC, and certain of its subsidiaries as guarantors, the lenders from time to time party thereto and Ares Capital Corporation, as administrative agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed on May ~~6, 2021 (filed at 4:36 p.m. EDT))~~8, 2023).

Exhibit ~~10.3~~10.2*+		~~Fourth~~Third Amendment dated as of May 2, 2023 to ~~Third Amended, Restated~~Standby Real Estate Purchase, Designation and ~~Consolidated Revolving Credit and Security Agreement, dated October 6, 2020,~~Lease Program by and ~~among~~between GPM Investments, LLC and ~~certain of its subsidiaries as other borrowers~~GPM Portfolio Owner LLC and ~~guarantors thereto, the lenders party thereto and PNC Bank, National Association~~Oak Street Real Estate Capital Fund VI OP, LP (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed on May ~~6, 2021 (filed at 4:36 p.m. EDT))~~8, 2023).

Exhibit 10.4*		Standby Real Estate Purchase, Designation and Lease Program, dated as of May 3, 2021, by and between GPM Investments, LLC and Oak Street Real Estate Capital Net Lease Property Fund, LP. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed on May 6, 2021 (filed at 4:30 p.m. EDT)).

Exhibit 31.1		Certification by Arie Kotler, Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended ~~March 31, 2021.~~June 30, 2023.

Exhibit 31.2		Certification by Donald Bassell, Chief Financial Officer, pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended ~~March 31, 2021.~~June 30, 2023.

Exhibit 32.1		Certification by Arie Kotler, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended ~~March 31, 2021.~~June 30, 2023.

Exhibit 32.2		Certification by Donald Bassell, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended ~~March 31, 2021.~~June 30, 2023.

101		The following financial statements from the Company’s Form 10-Q for the quarter ended ~~March 31, 2021,~~June 30, 2023, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of ~~Comprehensive Loss, (iv) Condensed Consolidated Statements of~~ Changes in Equity, ~~(v)~~(iv) Condensed Consolidated Statements of Cash Flows, and ~~(vi)~~(v) Notes to Condensed Consolidated Financial Statements

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

+ Pursuant to Item 601(a)(5) of Regulation S-K, schedules and similar attachments to this exhibit have been omitted because they do not contain information material to an investment or voting decision and such information is not otherwise disclosed in such exhibit. The Company will supplementally provide a copy of any omitted schedule or similar attachment to the U.S. Securities and Exchange Commission or its staff upon request.

* Pursuant to Item 601(b)(10)(iv) of Regulation S-K, portions of this exhibit have been omitted because the Company customarily and actually treats the omitted portions as private or confidential, and such portions are not ~~material and would likely cause competitive harm to the Company if publicly disclosed.~~material. The Company will supplementally provide a copy of an unredacted copy of this exhibit to the U.S. Securities and Exchange Commission or its staff upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: ~~May 13, 2021~~August 7, 2023		ARKO Corp.

	By:	/s/ Arie Kotler
	Name:	Arie Kotler
		~~Chairman,~~ Title:	President, ~~and~~ Chief Executive Officer and Chairman of the Board
		(on behalf of the Registrant and as Principal Executive Officer)


	Common Stock				Additional Paid-in			Accumulated Other Comprehensive			Accumulated			Total Shareholders'			Non- Controlling			Total
	Shares		Par Value		Capital			Income			Deficit			Equity			Interests			Equity
Balance at January 1, 2020		65,541	$	6	$	104,686		$	4,444		$	(43,363	)	$	65,773		$	129,117		$	194,890
Share-based compensation		—		—		127			—			—			127			—			127
Conversion of convertible bonds		6		—		26			—			—			26			—			26
Transactions with non-controlling interests		—		—		(777	)		—			—			(777	)		20,194			19,417
Distributions to non-controlling interests		—		—		—			—			—			—			(2,375	)		(2,375	)
Other comprehensive loss		—		—		—			(1,709	)		—			(1,709	)		—			(1,709	)
Net loss		—		—		—			—			(10,456	)		(10,456	)		(2,401	)		(12,857	)
Balance at March 31, 2020		65,547	$	6	$	104,062		$	2,735		$	(53,819	)	$	52,984		$	144,535		$	197,519

Balance at January 1, 2021		124,132	$	12	$	212,103		$	9,119		$	(29,653	)	$	191,581		$	(161	)	$	191,420
Share-based compensation		—		—		1,026			—			—			1,026			—			1,026
Distributions to non-controlling interests		—		—		—			—			—			—			(60	)		(60	)
Dividends on redeemable preferred stock		—		—		(1,402	)		—			—			(1,402	)		—			(1,402	)
Issuance of shares		296		—		3,000			—			—			3,000			—			3,000
Net (loss) income		—		—		—			—			(14,736	)		(14,736	)		74			(14,662	)
Balance at March 31, 2021		124,428	$	12	$	214,727		$	9,119		$	(44,389	)	$	179,469		$	(147	)	$	179,322


	Stock Options		Restricted Stock Units
Options Outstanding/Nonvested RSUs, December 31, 2020		0		0
Granted		126,000		1,570,600
Options Exercised/RSUs released		0		(60,000	)
Forfeited		0		0
Options Outstanding/Nonvested RSUs, March 31, 2021		126,000		1,510,600


Weighted average fair value	$	9.60
Weighted average exercise price	$	10.00
Remaining average contractual term (years)		9.9


	As of March 31, 2021
Expected term (in years)	1.91
Volatility		37.6	%
Risk-free interest rate		0.15	%
Strike price	$	12.935


	As of December 31, 2020
	As Previously Reported				Adjustment				As Revised
	(in thousands)
Other non-current liabilities	$	70,166		$		26,455		$		96,621
Total liabilities		2,421,934				26,455				2,448,389
Additional paid-in capital		239,081				(26,978	)			212,103
Accumulated deficit		(30,176	)			523				(29,653	)
Total equity		217,875				(26,455	)			191,420