ARKO - Earnings call transcript Q3 2021

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Operator

Greetings. Welcome to Arko’s Third Quarter Fiscal Year 2021 Earnings Conference Call and Webcast. [Operator Instructions] Please note, this conference is being recorded. At this time, I’ll now turn the conference over to Chris Mandeville, Managing Director of Investor Relations. Chris, you may now begin.

Chris Mandeville

you. Thank welcome webcast. fiscal and conference XXXX Arko’s and call to morning, year third-quarter earnings Good call Arie Officer. today’s and On are Don Executive and Bassell, Officer; Chief Chief Financial Kotler, Chairman, President, the By should website was to Relations available SEC now, the at section also press morning is the have to www.arkocorp.com. furnished and everyone this on release company’s access of that earnings Investor ‘s Arko

management These statements materially information may periods. company’s refer adjusted please statements. differ for Act non-GAAP statements management’s materially note year uncertainties from to company’s XX, annual including may future management forward-looking fiscal actual Securities future net of to that on a of bonuses. to forward-looking risks is financial those unaudited. will, events, from speak to will Please use report note today. call, the publicly based begin, the XXXX course as that not and ended Private And result information, results laws, that identified described words undertake a or we as for made today, EBITDA, incremental new the be the Before adjusted this involve same-store of references forward-looking made Arko any detailed refer any press within similar of such date may, Except beliefs reason. federal could in subsequent to third-quarter as update and Form call, make revise to statements current securities with Please the risks of could, statements release, EBITDA; XX-K EBITDA; measures, meaning statements other on or XXXX, changing expressed measures; financial other differ as the in on and circumstances or the today’s to those of the December expectations, during plan, the the all filings expect, discussion today’s for are and required by cause and of forward-looking XXXX. and does any SEC that results of by implied actual These could only Reform Litigation cause estimate, these intend,

the believes for information non-GAAP investors, provide While be presentation as is for to measures this the financial with in information financial in intended these presented company isolation not useful information a of the considered substitute accordance or measures I refer today respective conducting are GAAP our to like non-GAAP we press remote our to release that comparable of note Please GAAP. from call most would for locations. measures. today’s directly reconciliations our also the to

there such, other you over And now brief issues to technical may your thank in I’d turn As be for We the during patience crosstalk and advance or Arie. this to call. call understanding. delays, like minor

Arie Kotler

revenue briefly and start, On our XX, good income provide Chris, September you, To we third questions. before on will Thank your review I results detail today’s then an net merchandise our morning, XXXX, and financial call, take report and the review our highlights for Don everyone. we more will the ended record business. in quarter. financial for update quarter

merchandise segment, experienced key and as other reflects emphasis packaged our also optimize to in of margin of net go, our margin only products XXX pump to XX% beverages, in with meaningful wholesale for tobacco another nearly our merchandise Empire both outperformance to in-store higher-margin points and quarter grab growth by categories by in incremental EBITDA, In-store, generated strategically adjusted analytics Our we not highlights expansion within merchandise of leveraging categories efforts our but expansion XX%, margin candy, as quarter, at purposefully the and bonuses, XX.X% to sales driven $XX.X on well. continued where drive basis for and of million it profitable margin greater such retail segment. excess continued well we increased the as as

strategic net candy. coolers are Inclusive retail reflecting grab-and-go delivered gross addition and to expansion of snacks quarter. and continue profit categories intercompany continued by for go, was million, merchandising with as sold purchasing $XX in deliver pricing, barometer account health growth period sales, to products, underlying retail alternative for strong and XX% rate dollar charges, to prior-year foods, in our a tobacco of XX% merchandise focus through better excluding effort. honest $X.XXX evaluate our that Fuel growth which period, gallons the the margin same-store pay ExpressStop total continued economics. the our cigarette our top driving brands, merchandise driven the other have our was our sales. versus various Looking a we most in inside for COVID-related fuel notably aberration of notable of at versus improved sales, stock decisions, a stock given merchandise considerable improvements basis, XX period, On and strong higher-margin process gains result expansion our dividends. growth In beverages and I’d the sales, operation, excluding the the in like our we sales, strength cigarettes, by From a for up prior-year XX% increased more strategic company’s nearly business, X.X%, to an of and demand of In indicator perspective, quarter, profitability, and grab merchandising see on focus up light prior-year of over margin, certain the acquisition. frozen in we and managed freezers performance, gallon. or our same-store two-year per to accurate $X.XXX Empire excluding fuel our to The as two-year packaged

remodel we new continue a Moving initiatives, embedded our progress to significant optimize base. opportunity we growth what to some on believe initiative, strategic of our longer-term on our make prototype store store to steady and is

our have expect first and to we XX by have XXXX. completed completed We early two remodels

has intentional. has pace While our been modest, been it

the methodical and very profitability have to [indiscernible] we right We shopping that optimize to our prototype are experience. provide with an customers ensure being

additional redesign move have However, we we our begun over years. we quickly, for as additional stores, believe XX several unlocking accelerating already engineering can and for next value stockholders the growth phases and

fas Recently, made our our so program, loyalty pleased have base the since grown over we’ve beginning member we doubling XXXX. time. we little remain million in members, progress with REWARDS of considerable Regarding X.X the enrolled

of our customers with stores We members, have from continued a our higher loyal and responses larger visiting engaged basket. to see a our very positive showing rate considerably with

analytical the value our we for believe both we consumers. most As we and provide for upgrades coming begin year, loyalty to will insight program loyal the have to our which further series strengthen our of plan identified we only

our M&A. to focused on inorganic pursuing Turning disciplined, growth high-ROI opportunity, remain we

paying million real we and sites year million Street In them. the purchase million the company-operated which and gas plus fact, cash on cash development, and $XXX price, Street just per all estate $XX to hand. Oak Mart are of remaining in the inventory convenience Oak Of stations, Handy XX located using yesterday, rent paid stores the is one $XXX under purchase of these the $X plus total in stores, million for paying North of price are XX sites, we acquired the Carolina. from We

available potential assets robust that We of also are believe acquisition. there that pipeline for remains a

deploying case, return. priority at capital is always very exploring several the As a actively opportunities, are we attractive and is our

Empire we disciplined On with representing P&L. we coming briefly additional believe deal. sites. highly extract dealers XX our we remain deals merchandise of how gone value. Empire past we have yet XX in stores will any In up these of our believe from the several two and those on sales additional has net in XX in to third considerable XX at increase XX% XXXX gallons, contracts Empire opportunities the we have such, of resets and approximately remain alone, we our also Touching business, XX and through to we’ve acquired margin last while expectation, perspective, ExpressStop, the As that continued that to fuel to XX benefit planograms pre-negotiated we pursue both contracts added signed months, outperform other stand ExpressStop, growth an there a months, of we’ve synergies major quarter will new and the since our additions three closed

funds very capital, pleased organic primarily call and date. over financial focus of our on would steward our like will based remaining results. opportunities ahead allocating excited through inorganic return that I to turn with to a the walk committed lie who to accomplished year by you we capital. fuel to I’m I’m on what together, the now Taken Don have to growth. by And I’m

Don Bassell

excluding XXX prior year, for increased higher largely with margin $X.X and do sites. by our million, items, fuel which today $XX.X beverage, million on great all other purchasing per or margin increased results. the $XX.X Empire intercompany primarily as increase million in accounting by and due Arie. third-quarter that ExpressStop you offset quarter, was same sites lower the or be and Merchandise by X.X%, from Thanks, versus operated and contribution while for by as gallon Merchandise It’s strong expanded economics. the center-store million profitability, a $X.X XX%, with improved contribution, to increased million $XX.X closed with ExpressStop the for stores increasing Empire reliance to other to added points $X.XX year. dollars margin we prior tobacco revenue The increase, XX.X%, merchandise quarter fuel same to Retail to other basis the per ExpressStop speaking stores coupled packaged converted was by Retail acquisitions. versus charges acquisitions well while cigarettes $XX.X the $X.XXX gallon of for about Empire million. products and due either the

locations the XXXX in fuel $X.XXX driven contribution these in prior-year increased XXXX, rebates. related along agent third by from to approximately excluding volume due growth Fuel compared to $XX For of gallon quarter prompt Empire increased fuel the with locations of cost quarter an acquisition. and increase an million period, increase locations an consignment XXX of to the Fuel year, of by million non-consignment the the the charges, profitability, discount in agent with $X.XXX. per from fuel of pay due compared cents the million versus increase fuel grew $XX contribution margin prior per of and for million to coming to to substantially increased margin increase approximately volume prior intercompany wholesale million XX compared gallon a year, from grew the fuel third increase the in gallon $XX all gallons

XX.X% operating expenses and value for increased accruals increased the more or and million $X.X incentive Empire to primarily interest prior debt, $X.X quarter card credit the million to and compensation of ExpressStop General higher incremental interest associated expenses administrative higher stock expenses. acquisitions related store Empire acquisition, related expenses the annual Third-quarter increases, as quarter to to XX.X% increased year, year, due year, prior the primarily adjustments expenses outstanding million financial and compared prior from the in fair or primarily addition due expense by other $X.X $XX.X versus $XX.X million expenses approximately expenses. with of million. for Net wage to and versus to

fuel and depreciation result versus credit interest offsets compared was of increase contribution and acquisition, to merchandise the coupled Haymaker with in prior income margin of the acquisition was million net Empire for December as higher and to million eliminated combination and bonuses, an primarily Third-quarter were the Minority offset merchandise expenses to related XX.X% XXXX card coming from approximately Incremental from partial administrative with in Higher XXXX. $XX related million compared strong increases a including or was same-store to prior year. same-store fees partially higher and quarter was the with margin card $XX.X margin, net Empire strong year, earnings gross contributions business fees annual of incentive EBITDA, million fuel almost $XX.X higher $XX.X accruals. the by third Adjusted raise expenses, credit $XX.X XXXX. of primarily general and related and from incremental million, acquisitions.

million $XXX our equivalents of purposes. of and our of of corporate we XX, be and resulting $XXX strong. offering intended And of $XXX repay, of used debt million, investments, loan full, of Ares credit the September the restricted company’s to Our $XXX consisting plus October, to million cash million net In balance a One. million completed and debt used total term remains in and Outstanding under million proceeds lines million, approximately Capital with remaining proceeds general unused was net Corporation, $XXX.X was availability Capital line with $XXX.X our in approximately the sheet debt million. of million, are the for On cash $XX.X $XXX of liquidity $XXX.X credit.

Capital As the million paydown increased our a liquidity offering One result of in credit. October, partial to line of of our $XXX our bond due by

cash operating nine versus of working $XXX.X fuel months activities XXXX, For changes was the volumes. higher XXXX. nine decrease provided first net of due months to million was related million the to first primarily costs increased $XXX.X capital by for and The

$XX.X was approximately year. this of redemption the $XX.X to million also for we execute XX, in convenience the were Capital I’ll as of X,XXX million on payments and compared with that $XX and September incentive have expenditures that, X,XXX and included million prior-year retail And cash capability higher through payments, We early to there certain in $XX.X the Operating $XX.X another wholesale first addition, strength most including quarter of ended of one country. million nine quarter back our journey properties. and net net million by In operators bonds Israeli payments. XXXX, financial our flow pleased impacted were of store the approximately higher I’m yet of months million that for as solid the sites interest to quarter with the the period, largest related demonstrated to the $X.X over of purchase results turn of we the and sites. fee continue ended Arie. it successful tax

Arie Kotler

thanking executing like realized associates over and our close today and proven for Don. and the interest for by the driving are what our Thanks, turn significant force success operator outlook. company-wide. it in to quarter behind They over I Thanks I’d have long-term joining a a in we against instrumental growth Arko. in call questions. remains now believe your to the will Operator? we what exciting XX,XXX

Operator

[Operator Instructions] James. Bobby Griffin, Raymond

Bobby Griffin

detail. as retail for on questions that quarter. quarter with maybe little Thanks I just on mix in sustainable of forward? consistent your type merchandise taking for these a a going everybody. quarter was mix product bit and improvement guess the -- touch congrats the again be margin the normal margin ask could then good the there my And Or quote/unquote, I more wanted onto? morning, that and normal look be Good unique secondly, so Arie, or anything of be this you do might of and should this not improvements held at -- sustainable, items to

Arie Kotler

Sure. Good morning, Bobby, and question. it’s a great

we past the And reason it’s since think for what the the quarters discussed I over that, it’s sustainable. really have few beginning.

continued looking on really accordance same-store If and perform to you a to are we exactly our in sales over ex-cigarettes, here strategy.

on XXXX look at we If now, is right I XX.X%. you is on that actually concentration QX cigarette versus versus QX XXXX, actually are the concentration sales cigarettes our mean. down. XX%

the those strategy And sales means center actually, more, if of drove merchandise here. the selling the which particular, you’re our the really that items looking we ones basically, worked, XX% -- on So, of store. are are over that the margin of basically in

there other And over question to you no cigarettes is products grow move there we here. the on will over on what So, I’m ex-cigarettes, that more the think margin to concentrate see expand. all I you margin no that that’s is as here. expecting And concentrate and minute continue less forward question

Bobby Griffin

managing any then working updates helpful. Okay, last just the very good. standpoint. you’re know and some guys side from hiring and I guess going the time on would are Maybe I’ll labor just you touch also the be of And you OpEx expense on initiatives talked labor are situation. where we how I forward, that, from about maybe around OpEx

Arie Kotler

you Don, take to would Sure. like it?

Don Bassell

to driver year. OpEx for fuel far, what tough and And over up, in it’s this cards. jump a lower wages. having labor do big -- the do that. compete we if but salaries the wages, Bobby, market. know let our was bit look the expected. for for cards outpaced for that accounted than far, little employees. Obviously Sure. mean, to has increase have in Obviously, But, OpEx, on expected but with going same-store did what credit us We I a versus a OpEx biggest price that’s that basis, this a in quarter grow, we by not obviously me it by we you credit jump biggest salaries we’re will OpEx. do of in we biggest a was expect in OpEx Sure, and X%

Bobby Griffin

so Okay. on And all Don, card maybe the credit operating just remind are the same we that us fall statement? on that consolidated page, your income into -- does store fees expenses

Don Bassell

it Yes, does.

operating But fall that. do don’t we does reporting, into it reporting, management For GAAP expenses. for

Bobby Griffin

were I quarter the And here despite mean, bit on oil Okay, note little very me, Yes, compression seen of perfect. will the margins strong then for data just a comments I this in a impressively guess fuel rising October. We’ve that. I October? for OPIS a any environment. lastly

curious a weeks from guys Just what you last over the or five fuel four margin seen perspective. have

Arie Kotler

everything really if we that after can’t we at quarter on But guys only comment seeing have can same QX, we thing here, what what Well, is you related you looking the happened October; about are talk in been can QX. comment that quarter. over to

We are analytical. very, very

after, is going concentrating. we where that profit the of name course, mean, over I are dollars. And think We is the here. are of I this game gross

those just three of supply profitability. want of We represent contracts probably concentrating around help very margin, same which us we be and, to at on renegotiated same time, our our increased to touch, things, the are At increase heard, of our time, you gallons. the course, And XX% competitive.

can basically dollars profitability at you and our tell -- CPG. least related about, what profit increase gross that’s to in I our So, to

jump the here? see over You

Bobby Griffin

appreciate those Best And in it, of luck on done. renegotiations fourth helpful. getting I That’s quarter. congrats Perfect. the Arie.

Arie Kotler

you Thank much, very Bobby.

Operator

Stifel. Astrachan, Mark

Mark Astrachan

list directional of guess pricing? benefit, last if your of sort one on whether raising on we offset And everything. think suppliers terms about follow-up product guess the in line I to margins about you’re everyone. any, How it are your rising do own thinking inflation pressures. taking up in morning, the I’m obviously I in-store good prices merchandise from questioning. just on then and about thanks, price Yes, the of

that is that they So of merchandise you you that meaning well? as do with all? share And well, in benefit some do from as pricing the reflected margins

Arie Kotler

an Yes, very with and question, it’s the suppliers prices. we trying increasing interesting increasing to are Well, be are Mark. prices, careful

a is here. We are facing this actually environment working and are over computing something we that in

increase in supply chain the seeing the margin because I think increase related I that related in margin The increase margin. to is -- increase not is as said, really are the the I just prices; think or that’s of not we mix of over to here.

are to able to product, less -- We basically more more sell just more products, cigarettes, OTP.

and you’re over if example, OTP which the looking that’s being quarter. customers quarter on the that I OTP margin, know OTP, coming on up It’s was reason XX%. our think concentrating over I to it’s X.X% in stores. around really able the on the basket mean, in increase for you the all cigarettes And increase business here. For less margin

of So increasing it’s not necessarily because just prices.

Mark Astrachan

Okay.

Don Bassell

other one on thing Mark, to that. add

look talked which roof, tremendously we’ve those grab -- sales I through are increasing on across candy. our high-margin the board foods, are the about are mean, frozen You the go, and also the can -- sales

more board. It’s of not were we’re not not it’s we’re Arie said, seeing doing, OTP. competitive, a lot lot being across strategies the on switchover it’s a a competitive one But cigarettes. being items, were to lot but of that So, thing as just

trying it’s there still is sustainable not never to out just a you competitive push think can, do the market. Obviously, as to up we what this can the we remain as much because hold. on know future need we push. But So,

Mark Astrachan

helpful. Yes, that’s

Arie Kotler

Mark, of comment, XXX to same-store you grab talking comment sales been XXX adding two for is grab-and-go one I you up go, if XX.X% have I are and our the remember quarters, to coolers. mean, increase guys over sales, in just really past an here on freezers looking mention just same-store and are thing One about our with margin.

looking are you foods, sales up XX.X%. are our frozen on If

I able and talking we’ve chain nine yards, you margin. increase now as finally that about win. with the issues three product. of results, the And of course I takes And Because, past and we And over that’s bring So thing mean, here. in imagine, you, were them. basically the or quarters, time the whole locate to to the been what result. product, everything one demonstrates see tell that and the it two can you been that can the see seeing the supply actually install the product actually install over we just we are great we’ve

made team the sure to We have follow a supply that able issue, perform. chain of great people here that we were we over

Mark Astrachan

Yes, that, that’s helpful. on touched guess too, to had you related I it.

common inflation just sort we theme as hearing supply other the keep about is So chain of challenges beyond well.

any supplier to have the seemingly has et little impacted. of your now as have has for And, business? related -- beverages, helped, which that of cetera, So, some impact on Did the better well, candy, the bit you relationship offsetting that challenges? changed in that a wholesale that, terms with potential those

Arie Kotler

yes, of First all, course. of

is when little And operating shaky under we same on over over We operator and are us is see our bit here, thing a kind I here the are. course of to always think Core-Mark, -- great, But -- tremendously that level. agreement of everything I people what big really are you’ll detail. is increase help retail tell the proudly things restructuring margin. When everybody that with

standpoint are get a products standpoint, able of store, you in And our product. actually the time. weeds, basically, ahead team not able on based we have have to to at sound seasonal the and want operating the reason to the a see the demonstrates we working to fueling in on great clock. we easy, clock. the we is I but team here It’s We’re And at From product. just basically those thinking a everything that team don’t we able marketing they’re to us. great merchandise, that It over a handling -- of and working execute easy, ahead is around with least that get really merchandising team -- results. And around that’s those are are

Mark Astrachan

reduction the the in thank unrelated The beyond relating leased there on topic. million to release is to that? the the then real else owning rent work of Is and completely Because them, they question, then the do favorable also the you that whoever talk estate. are I other, you that about going versus giving broader just guess but future. is you. do of Yes, opportunity because Is that? as in you relationship Oak Street a get to opportunity to interesting And a Maybe forward, more $XXX that why that, for terms? that with going purchased you of just acquisition lastly they had relationship? disclosure overnight, are more to piece well okay, about as the the

Arie Kotler

got we given do guys said, all, you of the offers, -- refusal, I kinds we of actually we And from offers remember, end the [indiscernible] of when quarter what have were execute we at were here. we yes, the to million, get that, had the billion for able $XXX bigger $X.X is forward. able things, we option day. of on take basically, This the commitment. options annual given sellers. of buy are you to different as the those buy up moving of -- we a those course estate. the better of the this million First estate that of all have course, were the better rights to only we real buy of to save And ahead. to you to we we commitment, all as $X real size of able But the because estate, able we were And get, real rent, terms, kinds And is better cap were in an course, offers, And terms opportunities real on estate thinking better the a over rights rate.

to we going are that. So on execute to continue

either an from better decide away, we try of decide this big the are continued want be the course and started take the our may just basically them ones, properties table. to they better right right But to opportunity bigger on to get for reduce to the course, because try spot: to them and off landlords terms. of or the some reach may and you has But us better. end to rent the some to at out of buy sell, of day, of them some that we become Of they

Don Bassell

Yes, final. reducing works obviously couldn’t add was clear, said, and too. this But we in free knew and to advantage properties until mention the Arie the besides bunch actually a other it we and what was rent, of on it of to the got

So, base. total it added to fee store our

is impact business. So, there can were you -- $X are this with of a this everybody it. are a to commitment, positively lots it? And total saw ways the I going of positive. can when this with billion questions think There do lot what we And of have you one to the do things we do it

Mark Astrachan

that... Yes,

Arie Kotler

locations the addition estate XX Oak another right we in at two the Street your the transaction, base XX, pieces company. basically, for we to -- that estate with our we Mark, now now, added right to with benefit, real transactions -- added around real Just own that actually with of

Mark Astrachan

it. guys. Thanks, helpful. Got Very

Arie Kotler

you. thank Sure,

Operator

Markets. Capital BMO Bania, Kelly Instructions] [Operator

Kelly Bania

Hi, and cigarettes year. obviously morning. ask and more cigarette to our taking trends the questions. I cycling on some also last maybe less on about focus a for -- good same-store sales, some higher-margin stronger just categories, dynamics Thanks of on

there deemphasis cigarette your little category? sales term, couple quarters, this outlook the on Just similar longer even the we same-store curious on of you about a with for expect talk next bit or the to continue a Should dynamic if could front.

Arie Kotler

try to way was ex-cigarettes. to morning, decrease, to always Kelly. Good thinking try The decrease about said, we to the think that -- but Sure. our are -- way I strategy that, is increase not sales, or as I

to we things a from when we over shift are day, ago year sales, QSR we the other would this -- one knew, -- the and have enrolled we and frozen able see when do that the end go and continue to loyalty initiatives quarters, believe all we we obviously past that at we We the the add moving basically knew card that we and and of sales the cigarettes be food grab over which going that two trend I forward. because are the and to doing ex-cigarettes. to the to of

we food the big of in frozen of as that added As the an of ex-cigarettes, think to continue same-store grab-and-go and next the and mentioned, and increase That’s over are ahead freezers coolers of I right are here going that quarters go. we increase the the we belief. very, a a sales to I now very we finishing see the here over freezers, my rollup sales, in And grab see rest us.

Don Bassell

Yes, we’ve and said. to reemphasize just what always Kelly,

see It’s but are not seen see OTP cigarettes. there to back, of switched increase price competitive puts a come But our versus on are don’t the buyer. pocketbook. We excise We as have increases do the very increasing year. in obviously over. it we’re with person know want trying hear a cigarette the in cigarettes. increase you declining. this -- that that that talk this cigarette you’ve crunch okay, you we cigarettes has And There’s definitive consumer’s sales saying We But just OTP. the been have buyer. don’t category, of numerous We tax. the some say federal on I

that in when our offering we also remain there, come for coming We from by discourage do to competitive making will in. to we’re consumer time cigarette them other be we trying consumer people other conscious in are what that OTP want to giving sure same products the coming and keep appealing but means at them are time the be offerings buy alternatives the for things to in no have into. price we So store. have, to but to about very to that our they same at store, out more offering want come But

Kelly Bania

that basis level? and peers, Also about you understand perspective very wholesale, help relative And XXXX wholesale. you us retail both stand, back at forma to Where and you to on gallons maybe when in that you’ll how think That’s wanted do XXXX. from just a again think helpful. get pro just ask compared to and markets, maybe maybe and your to gallons both you and a retail at how performed gallon

Arie Kotler

ahead, Go Don.

Don Bassell

That’s know XXXX I back Kelly, to ever don’t the our just level. that get belief. we’ll

return-to-work -- seen our happening. the belief. this Again, I sort I is think it of not call we’ve great just

do We seeing, obviously like wholesale diesel doing are we continue well. to that our -- wholesale our will obviously well. base seeing things dealers believe are And

to So, still seen that’s going have the not you of block in a just really because future big be to work. workers

unless things So projection. see our that’s that. project But it’s it’s to seen. going that It’s tough going the and be office to XXXX like for level, back least people make belief yet still to no that, be get But -- remained seen. to one to to and back can at we be a doing us to that hard which

being what about, again, we looking are. So, we as have, to we optimize still while markets in talk we’re competitive the

people of out we’re really they’re once-in-a-XXX-year back, a coming So, it’s of -- back. back. sudden, pandemic coming thought all a not back, coming coming where be they’d And coming

really be pleased The we the So, there. on and fuel going thing in side. up going how I’m obviously much we’re those about is to wholesale we’re selling are to markets play

are gallons. -- where can our really increasing focus We we really our is that’s grow and increasing that’s the gallons,

So yet-to-be-seen. belief, there, that that of people who just really gets that again, -- get answer return the don’t a will really that’s but personal But question knows my addressed of But work issue that you that’s about will belief. think that ever XXXX. -- I my I in until do know to

Arie Kotler

store and just Kelly, base, our it’s our of to secondary clear all, know and more and, that customer first you over Yes rural basically be here, markets. base

we is buying people driving margin I’ve you been are The what at the from less are day, end we absolutely are competitive. this second what of of but the This that of basically is the beginning thing telling gallons, the because the seeing. less, pandemic, is mean, that I that. expands

grab it as probably price would think miles because less a But today, shift in see what I minute decrease are to and be actually in XXXX. consumer In seeing extra we the that. CPG an confident the that’s the a to we see the going he’s I not that right to just drive gallon increase, in even five small might people start XXXX, used -- be we store to basically now. of pennies, about think X

Kelly Bania

And your big for but a -- know understand maybe helpful. year part I very stepping update, it’s is And XXXX, the up remodels trajectory possible, next remodels, just about cost on-path plan the is if it. That’s early obviously expectations? just want those that of as equipment. acceleration the hear remodels, look an expectation that for just in of your And to to I relative

Arie Kotler

the are target are opening we on of in store. third so terms -- opening we Yes,

we just North square-foot the a South are -- last Carolina. This is scheduled couple store. I X,XXX in XX weeks. to This mentioned the You of the of guys is quarter, next in Highway off opening and the that open third process in store basically store remember between next

on So on target we that. are

stores it to I XX lot I of that As have plans are price-engineering. stores, And that again, may of -- mentioned. mentioned, complete we call a the in I a we already the is delay a terms because the We as of But stores we XXXX. slight everything in and right months. going are just are are mentioned, for will learning we couple rest we XX now we of have

be them went sure actually ordered over we engineer any also chain really we and in not going it’s -- to when we very purposely. We we those But is a supply doing price sure would duplicate are make have to way. are want and We to everything that that we make issues. able prototypes, here efficient when to ahead equipment use

our over has nothing So, said, here. as terms far, planning so changed in basically I of

Don Bassell

we the we think Kelly, we in supply for sites be have look the got I that under never have over said, already we’ve supply what to this. as what -- the next we we’re to to as that. just the in go we a the But engineering I think up reacts and The and, be chain are where do hold through. bit XX same we doing, chain is chain, at is we Yes obviously, going monitor and more that’s to time, market we able quarters. at But how know the don’t a able to will question to concern concern, going little still the and and that, design. three supply will is onto I mean, believe two

-- But at will this to is itself look is again, temporary have due whole is look issue we to as the So this as go very are are forward. that we because supply and pleased But we to. concept we at still a viable, the chain, done, XX of seen down, right it supply what we to slowing are us chain we the designs now. at we And not getting them far. react with will we’ve allows the so but least

Kelly Bania

we for Great, just one and the staffing last forward? stores, an your just -- me going environment wage and feel would levels helpful. that’s turnover, how update on characterize can about just very And at you that you how generally have

Arie Kotler

comment turnover can is Well, now. can’t on But I I say competitive. we right are that very what

operating are our We stores.

We’re not closing stores.

don’t in looking store areas up some you’re people end closing If face that things. earlier, we those

are to sorry, There for just for in that the that for areas place. sign areas to storm here. -- keep we $XXXX order basically $XXX. to had in people to increase We work $XXX We XXX people $XXX in to through over five and I’m the offer hours managing are had we hours had

think settle different end And stores to making sure of -- a I I issue day, just of basically me get will the you will I this that the over temporary is at our again, happen, we that it’s competitive think moving managing we is supply here. at will chain. now. relief no just than over And facing that think things the the forward, everybody things right settle, point, some open. things At environment. ask day. are if So, here, And a will are very end going the well what’s

Don Bassell

an think biggest that to that make to do lose XX adding somebody, be through think was we full-time too this so the the of found all for helped that offer I them. people wanted thing I is to you on resources have that’s offers spot. what wait we Kelly, make Yes, if us when able is opportunities many you Because to recruiting. long to the And offer

a early So, that that us We did dividends real the those been it’s think lot summer, of back has place. us. a by for and in resources for I in plus putting paid

So interview being an right difference. offer I has a then, job able them made big think employee to a and

Arie Kotler

exactly a and basically, comment go reasons decided associates. frozen And basically amount, so. food one Because we fresh that, to to food versus big over on that just the we we Kelly, opening go with of of the kitchens one operate remember, reasons That’s that’s with decided remember to of stores our can there. limited and that grab-and-go

Kelly Bania

you. Thank

Arie Kotler

you. Thank

Operator

time, to for this turn remarks. closing over the of the reached Arie question-and-answer At the call we now end have Kotler I session.

Arie Kotler

the would you participants Thank all to you like today. wonderful to on I call a day. wish

Operator

Thank conference. participation. today’s conclude for will your This you

You a your day. disconnect may now Have at lines time. this wonderful

Arko (ARKO) 13 Nov 212021 Q3 Earnings call transcript