ARKO - Earnings call 3 2023

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Operator

Greetings. Welcome to Arko Corp.'s Third Quarter 2023 Results. [Operator Instructions] Please note, this conference is being recorded.I will now turn the conference over to your host, Jordan Mann, Senior Vice President of Corporate Strategy, Capital Markets and Investor Relations. Thank you.

You may begin.

Jordan Mann

you. Thank welcome Quarter and Call Earnings Arkoâ€™s Webcast. and to morning, XXXX Third Conference Good are Chairman, Arie Executive call today's On Kotler, Don Chief Officer; President Bassell, Financial Officer. and Chief and

XX-Q release, report XXXX press filed SEC available presentation the our with third at on earnings Our Arkoâ€™s as on Form website quarter for quarterly of earnings are and the www.arkocorp.com.

our earnings Arie. would in quarter the operating basis. XX-Q a these as on third basis or financial to and of to reported within the posted XXXX. result our of stated, for quarter to share XXXX future the During Securities in a our I results quarter Management like make cause measures Act call our results our Please respect of our use, EBITDA information, compare or both may presentation made call of that of on for section statements our release measures will this management review call, third On in materially our description and quarterly call during today, forward-looking will factors earnings now the the this forward-looking our Litigation such release non-GAAP or of Reform call as during turn the events, third accordance made statements views detailed we are this those management unless and future to reconciliations end on over on of the not with earnings today.Any Private that will actual today various Cautionary update GAAP as new a of revise period otherwise. GAAP in in meaning call, reflect results at to adjusted otherwise forward-looking and whether XXXX. XXXX report same Form with Statement events from website.And could Arko management results differ and current non-GAAP to made as XXXX forward-looking statements statements Forward-Looking

Arie Kotler

you joining you, Thank Jordan. Good call. everyone. the appreciate We morning,

always, members third focus would their improving I'm our our off continued to performance. driving businesses. thanking and As their merchandising continuous of for our the marketing dedicated with quarter customers through our experience stockholders integration by to our value execution team long-term like on start dedication newly strategies very I our of and pleased to for acquired

navigated quarter. prior to economic and favorably strong we quarter, we that a what varying This believe macro year and our results was environment, compare

and us the for and team of You'll integration we in our quarter and remember, last even our and improve continually confident program of QX strategy remain industry. positioned were and I contribution more QX are growth our for includes margin. quarters our in our unlock from our strong significant our year value believe our to well points loyalty acquired merchandise platform expanding this execution the businesses, stockholders.Key and and

Our industry-wide helped and offset prior demand. elevated lower efforts the fuel by gallon in fuel organic these areas per sales contribution driven quarter this to lower year quarter's X

since the acquisitions of and across had locations approximately XX beginning adding X and segments. wholesale XXX months, a retail, closing last last We QX have fleet on busy year our

acquired provide case our release filings of press public was and businesses. our key financial As information metrics quarter, the and recently last

We EBITDA, have impressive proud delivered consistent in of. adjusted very I'm and which growth

quarter lower due in contribution with decline of million $XX.X to adjusted compared EBITDA $XX.X are was the we to record adjusted with prior year EBITDA a explain million said, our same I stores, shortly. fuel very I primarily at As quarter.The pleased which this performance will the year-over-year of

noted significant last of We we from our I stores the our generating excluding believe fuel the operation best in the merchandise sales, sales our same-store of segments, convenience projects performance. of offered quarter large the know, merchandise although a derive of cigarettes, strength retail with you primary revenues As multiple portion is stores. our that we our profitability. have organic a of reflects proportion business

XX-basis backdrop, reduction XX.X%. grow This basis QX million QX caused XXXX. This merchandise on stack.Total same-store in still goal with this to is in we and program, increased associated to service. the X.X% the total were X% sales expect again the is to merchandise of company. over merchandise quarter, quarter, membership high-margin margin in a with expanding in in have we work the increased acquisition able X.X% and base core experienced the the improving of loyalty right them XXXX and on approximately sales, our promotions QX XXXX.We destination cigarettes, improvement rewards a investments that related that while of impacted long-term excellent approximately to assortment expansion point X-year past merchandise excluding were providing $X compared That membership XXXX, With other customer loyalty grew XX same-store This to of customersâ€™ to approximately the loyalty X.X%. compared of loyalty by sales QX which want same-store top points merchandise growth

This X quarter, stores, key the organic focus strategic XX.X% result in In same-store. and primarily contribution on a marketing continue acquisition over of our our the merchandising merchandise year our we performance period, and as our stable or increased prior recent pillars. $XX.X million to

of and enrolment customers, in members. detail XX% enhance have increase more been and a the our develops XX program, than a commenced with concluded in on we sales during have $XX categories We loyalty fast new on investments members and September program including expanding customers. drive in that May loyalty $XX total for loyal March as previously relationship our quarter special QX, believe mentioned, year reward since with members our is major promotion service. loyalty core XXXX.We of more upgrade beverage We enrolment attribute in merchandise and like results growing rewards and added the enrolment. loyalty our food went XX. initiatives.As and which making promotion. significant the Our very enrolled our loyalty would QX we our program, that customers app, to fast existing our I enrolled our XX rewards to destination on end XXX,XXX to live This of trips spend loyalty with quarter. enrolled and our our And attract was the This increase strong million the this X.XX active

member-only In offer loyalty, I X to impacted this our XXXX. which value loyalty of advantage our members addition, very efforts the said activity in plan that to metrics, quarter. we the before promotional more that and greater pleased our and end of are of enrolled in I'm members we continue invested our taking by we loyalty expand merchandise same-store base, targeting million sales membership participated

trips conviction per to strong enrolled non-enrolled and active more members. members.This more have month enrolled quarter, active our make spend more members as investment made We more than compared members X an trips average non-enrolled behind this than of

the For period, they $XX on per non-involved same than average also lot more spend members.

You'll are lower note we spend quarter. the the last frequency that than and average referenced numbers

welcome not from the to members yet the were given family.To normalize these to later opportunity We and large will believe see we and upside new no not around addition who will the the loyalty had average However, percent particularly of recently context mature period where them new XX-plus enrolled hope loyalty members, can give in to this and we members have spending by habits. negatively some program quarter, believe loyalty impacted our our achieve program, implemented have our to to from of acquired location merchandise sales that were our any implementation merchandise for time initiatives, prior quarter members. grow time. acquisition We or we excluding at penetration our over yet XX.X% sales loyalty mix sales of

Our salty allows snacks, to active This this These needle. snacks core for snacks, our of initiatives on our packaged our packaged sweet quarter. focus believe greater contribution alternative merchandise members and customers.Let's destination non-enrolled beer. that candy, and the which categories contribution will enrolled to categories, compared beverages, are generate us categories we X concentration sales move accounted the to XX% move

We have we partnerships. grow continued from strong decisions in speak and using leverage category. dollars to results for execution, our these contribution themselves. categories our data-driven approach have a we Year-over-year, our deliberate supplier And this to

last categories for contribution approximately year and has annual to concentration in the approximately the compounded sales XX% Over categories from points expanded as these by increased prior these at basis period. this Same-store merchandise contribution quarter these categories years, grown our rate. of X has compared growth from merchandise XXX X.X%

Food. business. a our our food We had are as the and seeing addition efforts the announced are along the see track has our extremely we opportunities. Senior tremendous are is about Vice how stores.Our is and X We stores our partners record development visiting of and leadership around see joining of President we suppliers In newly growth execution GPM's October, long beverage to believe created role as organization, initiatives We as opportunity partners, team. understand meeting of drive inside underscore multiyear we to with We our and wins and merchandise these built pleased working share where operate. to mailing even our strategy, with of results a and we service the results, pillar expanding stores third improvement the margin with our shifts strategy continue the better sales growth up food foods GPM, in we positive been Since and with speed, getting meeting distinguished he experience serious of way.

more sharing Richard we team and welcome with as further We our Richard are to extremely develop work to full-service forward to excited to look strategy. the

is core As expectations. exceeding store great further convenience results business our position I for our we to while hope delivering clear, strive customers' growth,

demand X.X% saw over contributing gallons. the trends will note that of gallon to the fuel. Arko in a to with at year I according Turning nationally prior to Data, we quarter same-store decreased decrease to OPIS fuel compared that quarter, the

striking balance However, dollars. fuel to total contribution volumes team remains increase.As right acquisition. increased recent Retail million, contribution decreased because always, XX.X% to focused X.X% pricing gallons optimize the a fuel of on $XXX.X retail and our between our

demonstrates $X.XXX fuel Our margins We retail year at fuel this only $X.XXX of to quarter. strong prior sustainability margin per gallon, know We believe higher lower quarter-to-quarter. from remained that fuel compared margin. vary the the

believe look stockholder will we for increasing value, we cost remain operators their for operating higher pressures However, as fuel longer-term with foreseeable these structurally the creating to structure margin, to breakeven margin this M&A. support Marginal levels.Moving that have future. deliver faced and

increase example. footprint first our have to expanding our briefly base as and have an of to price, discuss recent new earnings to while the acquisition, the I'd territories. acquisition our like We continued into and all which most integrate adjacent TEG coal served WTG

the in in As portion entire EBITDA of we the acquisition in back quarter, as transaction.We to million the closing our arise. alone. show in this adjusted we our $XX XXXX, on presentation we that the have acquisition in last generated also for paid continue for cash Since businesses acquired invest approximately investor July opportunities the quarters earned X already coal consideration

strategy over available lines million availability have that provide walls all, to example, agreement $XXX Arko in business. of for with stages years, excited reviewed of plans now with deep hundreds of the our last have over X In more capitalized of work tremendous the billion capital remain of in over WTG, over potential opportunity capabilities your For XX to on our to a last with in here to XX, you investment been potential at continued the track on and Upstream, currently we out than believe stockholders, disciplined our and I hand capital and infrastructure turn almost million of I Thank program deploying We enhance are under well I to that, of we Don. remain had even industry particular, $X.X point $X XX before for with billion they more credit. more pipeline have for executing upside about liquidity we that September will to to moment. in the M&A to strategy, want closed arise.As I'm including of especially of to as in identified our put together CapEx a to accretive $XXX our fleet opportunities focus we its we allocation continue as upgrade to under development. Don. XXXX, has acquisitions the point see of year. many like successful In continue acquisitions acquisition we our for value for the opportunities of will access for available to record time the deals opportunities. and making execute just have call to capacity proud in in ahead importantly, cash achievable on activity. One us be the front turn And discipline last team call today.And I continue stores we've new of place and with us. different X line with to the

Donald Bassell

Thank Arie. you,

initiatives many record strong has to to gain our company As continued traction, the continue results.

continues Our be a liquidity we currently to balance very and have good position. sheet strong,

As we had and of million. equivalents September XX, cash $XXX approximately XXXX, cash of

excluding leases, debt, approximately million, was in net outstanding capital debt of million. $XXX Our resulting $XXX

year in Total quarter, offset Merchandise over to third gallon million the the a intercompany quarter the versus compared technical per for by in for by that on This includes million $XX.X EBITDA.Getting quarter. gallon million margin fuel This by million convenience decrease a lower by stores. and well million to relatively a expenses X.X% the of of the related of to revenue for convenience $X.X year primarily of third XXXX. provided the basis points XXXX.Third the fuel XXXX, strong closed to by $XX.X higher the charges for year to This same cash and same-store compared payments as our or recent as of million were quarter quarter prior QX prior quarter quarter, included expenditures million. increased tax XXXX. by quarter delay quarter $XX.X charges. QX company $XXX.X to underperforming million was intercompany for $XX.X routine quarter net to the For year approximately processor is we net million $X.XXX increased to XX million excluding card recent $XX.X of margin $X.XXX same-store versus of prior maintained fees profitability, XXXX XX.X%. or of than capital the $XXX.X $XX.X a driven increased due a in decrease in prior million in third More of Retail compared from basis excluding credit approximately receiving from stores, store contribution, activities in fuel period quarter capital operating fuel versus expenses $XX.X increased this sites dealers. approximately card into in $XX.X adjusted quarter. to operating million XX.X% by per million acquisitions, a retail offset mainly The acquisitions. at decrease contributions the $XXX.X converted Merchandise XXXX expenditures credit results interest for retail $XX.X third in the and

efficiencies always, seek period.Importantly, prior providing basis, personnel labor at over the stores. these same-store service. balance appropriately to a superior we only continue As by as increasing On expenses expenses same-store remained to operational our year over improve X% decreased year X.X% the period we flat, customer and prior expense

to up customers. We for our in continue fill positions to excellent ensure service

and continue to review, audit and tasks refine We size to associatesâ€™ to labor our hours reduce evaluate right inefficiencies.

part, most mostly overtime a the same-store in were hours. For any in reduction hours increase offset by

and wholesale to Moving fleet.

contribution, Fuel as similar excluding fleet compared which year to as our to from last had $X.X benefited in not quarter. decrease. business wholesale, contribution, fuel prior QX as was from July quarter compared for period from benefited that on XXXX.In fueling Fuel excluding quarter, gallon, of QX, company was incremental a our $X.XXX charges, an margin Net a which million of locations interest to to This million approximately half prior price acquisitions quarter the recent in approximately income intercompany an we the a increase contribution approximately favorable quarter. Net million the the income charges year repurchased quarter, fleet acquired expenses million charges a $XX X.X year, locations of CPG to contribution This contraction is the net cents $XX.X from prior second remarkable by the volatility normal at we compared the in of for to quarter was offset reduced margin cardlock adjustments, excluding of an quarter ahead due per at versus of fueling third full year million. $X.XX. the financial sites year XX, that Quarles, offset not of in of million quarter.Adjusted the year In prior we $X.XXX total same an margin expect fair was of intercompany XXXX to million quarter. value margin gallon. year X.X-million-gallon intercompany to the per a cardlock prior segment average quarter.Looking decreased in the the related proprietary over quarter $X.XXX for increase due our the period. shares $XX.X proprietary to third do believe due be primarily fleet the XXXX, our $XX.X stores. this reflective and million million $XX.X year of of compared stock increase prior price in is prior margin quarter XXXX, to of XXXX, to EBITDA the income compared common majority fuel The $XX.X the high and for approximately for for $X.X the $XX.X of $XX.X million to million was other QX do was In

to As strong we Monday a XXXX, was over $XX.X there announced to be I'll upsized stockholders, of remaining now XX, to of and our XX, $X.XX enhance record returns dividend Arkoâ€™s paid Board as X, XXXX, approximately back $XXX on that repurchase desire share stockholders program. common for per Arie. under Directors September stock previously declared million XXXX.And million our continued results our Because the of announced November quarterly on of of turn stock of of to call December

Arie Kotler

of inorganic continuous and we needs we market We our a opportunity your sales store execute base through by through Don. profitability performance our increase on you, and acquisitions.Now to current our and existing growing will take store in meet that announced to strategies, believe customers' offering and improving significant organic questions. to our Thank have the our continuing

Operator

[Operator James. Instructions] with Bobby question first Our Griffin is Raymond from

William Reuter

particularly at side Are I first you some I question pretty were genesis the separation our seeing And some little, us the a total to when gallons acquired the the stores? the newly missed divergence the or legacy look of a total of business, but by a gallon model. underperformed our between actually of is retail. and guess my the stores gallons of question the in versus gallons is estimates, on or close comp

higher in perform bit at acquired that you just maybe legacy business? your per seeing are stores are So stores little than basis the store a gallon newer

Arie Kotler

really macro think I is I approach think that so. No, don't our not a approach.

about location we fuel market. you think really is If more how we price our business, our by And location, by compete. market relevant approach to

is different. But consistent different different between with that is don't all really legacy different acquisitions just if hard every we dollars. I strategy optimize anything And stores looking, with are we the gross think mean really footprints footprint. think the we is stores market acquired, I the profit working others. just really and Our some to than gallons about I have But it's acquired. you're

Robert Griffin

stores the legacy the or different older some base. they just not footprints per more that older, than generate footprints acquired footprints where Are comparable sales store gallons maybe the of in newly the are

Arie Kotler

because It's purchase stores. a of mix bag we

think per think are stores it, store see we in per store about in yes, probably gallons the Northeast, I Northeast. you And are the If the in the Southeast. the than higher that the gallons price

and in good the Southeast looking it is to were TG, lower example, Northeast. And and the is of in if TEG this point. question some Southwest, is thing than a actually I think you on So good a the that is gallon which for

all the diesel coal is piece in the is that about think other of actually the majority business. I it's acquisition, really

others. I the the So that's probably mix between think different

Robert Griffin

has gallon the continued of I here. part face that is And guess industry pressure second some to the

inside we think maybe into stores gallon, relates you want different the as Or and what on business? side gallon do the was during data down the pure showing? your same-store quarter. kind of when translating are the to it a traffic to traffic How OPIS the referenced sales? about think that Is the seeing merchandise You counts that to just that is you challenge traffic

Arie Kotler

So question. another great

I stores the at basically actually before price actually day, is that the really back assume on COVID, think inside I the So changes. in things based the to used happened think pump. the COVID, what traffic after

increased other the over the the you really it, destination core by around. I more And think inside I see that the Now tremendously have stores. with believe categories it's the here. way, you way offering that

members, we stores, to as inside As value that food to believe And to gallons as loyalty we continue basically impact offer will moving inside add basically actually we great I forward. continue the continue our our stores. increase our

So around. impact I way don't other become It's losing our actually sales. inside gallons think the

Robert Griffin

million last million a one just $XX me. on for that where pure one the that fourth aspect delay from processor, quarter? And credit get $XX you'll card that Don, the in timing is back

Donald Bassell

October. received They certain the week. first It first already and an just their event We already was isolated in set stores. back it changing at the of a were we of week end, received

Operator

Next from Markets. question is Kelly Bania BMO with Capital

Kelly Bania

if wondering the could talk a we more little gallons. about Also bit just

on you done both mentioned are just forward? gallons decline we on your just but a how you your use more continue think region, gallon high that going I any we're share gallon of of run those kind around for there, a segments? in but if about think And estimating an think OPIS I to wondering decline how good the segment think retail and as analysis dealer for customers organic your Arie, Is basis. you single-digit terms same-store doing, the kind also in should range data, I'm market you've of about maybe down rate that

Arie Kotler

a is I happen thing crystal future. the in that was close decrease OPIS don't data very the are know gallons that to going the to have basically do about I reported. The one what's

the that on likely concentrate donâ€™t I those example, don't back of believe one I be for some will thing gross to of The demand continue to we profit dollars gallons. see, lieu losing increased in that can you come as However, numbers. XXXX believe,

across, that's to But well. this I competitors I we think something It's related demand soft. basically see not just will as bit something Arko. continue little think that our a to across is be

to issue our with when guys related facing those the as really competitors. of same as it's lot dealing here. I And that I face earlier, the mentioned market, a we you're Mom-and-Pop stores think in believe I over are actually

again, So will bit because CPG softness actually more to that, think a we're exchange see I that. think of see for on increase gallons, basically going in but I we little of

Kelly Bania

about also investment And how rewards the investment of can made faster ROI the that? what just kind is of that loyalty you we the about talk you that for in the of quarter, cost reward think annualized the total And should expected program?

Arie Kotler

So as the I mentioned, we all all rewards, making have started â€“this our assortment. customers. It's about right providing year, fast to it's about value sure we

So launched huge in on would $XX any and in basically increase especially telephone means fast e-mail We cash with we valid and in have a that $XX a May we which XXth, enroll number actually like a address will him enrolment, back. us, that give a QX, to saw customers QX.

increase QX As the I customers in here XXXX. over more QX basically goal And that. than over in was you is XX% can mean, to in to see, loyal the increase continue

on on over basically the looking you're XX.X% purchased customers loyal of sales inside loyal there. -- of our If basically our basically customers, the

$XX that. impactful. is this question very very, So about No

added Our to That's probably to probably were you metric a of XXXX. goal, that's that And by I increase there best members to X.X%. give question the X.X%. measure think excluding our the which is up sales that's yourselves. $X another million is impact loyal naturalize members add I when same-store going X mentioned, sales as But yes, same-store the $XX, same-store reason another really And of no you the on the end X.X%. if business, cigarettes, impact sales, which will approximately will million, to

margin members It's Q-after-Q, an investment. So to inside XX.X% XXXX. XXXX to it's basis grew you're we to giving at able were around even that in concentration coming we members are actually tremendous XX one was We increasing And QX But looking QX to now more we by margin, increase of sales the loyal XXXX. keep points if are though notice investment. from compared QX XXXX. value And that XX.X% to basically long-term thing XX.X%. again, is those often, again a in loyal QX we in

Kelly Bania

by how how will do to next traffic? to at Is percent year? that to your promotion maybe that the of about terms to that base represent? get 'XX, continue million we of cycle get you If year? should program, $XX And or QX, level? impact we what X And customer about members Or going you just think sales enrolment as just expect that cycling QX we Or could this trying think next that in

Arie Kotler

$XX closed coming saw X, investment. we're we inside member And investment So you tell November all can for loyalty I September providing in in as of stores November over we customers well of we almost continue some that it basically on bit. And say to a X, members I are a spend as purchase of this it our per the long-term as we the actually grow The sent going to going just per a of have will when because drive they it's pump. XXth just they think little clear those the are a store. based for by inside over the that because be are that month. long-term is pump reason the I lot I way, often. inside counting we is this a for on. that And Those a I are to sales time offering, huge because to investing We impact started a the to to by is that. about what end is, nice and on want start to the come of offerings that big believe customers close to more gallon us, with members means mean with quarter. a more have regular trips takes tremendous because we I that but When off amount, not dollar offering just here. basically us. customers we the is a as over be And that to more actually enrolled offering that. Again, we And short X see impact here. we the maybe and great send actually get term And member the the very believe fuel trips base, again longer the from basis, basis. way, those as I that that's those that. get increase They daily mentioned members to on

I that's going us So as to future. well basically in think impact the

Kelly Bania

personnel Arie, expenses. operating flat. The on same-store nearly expenses

can the how a is wages out market terms just impacting reduction in what called that rates wage and overall you think and Maybe that cycle in you of the overtime seeing give you're to of OpEx magnitude today? starts order in hours. I when just us

Arie Kotler

let Don Kelly. that's if this answer question, I'll with you, okay

Donald Bassell

we're where overtime from switching regular to it at hours. is So we're hours looking

a So kind a the as rate. hours being And of obviously, up, had summer, summer. to gone we an and of all have incentive And not it's hours worked more have days we of promotion this incentive. for do did year, like the that employees, for rates worked XXX think is being at last difference overtime are regular thing versus I the mentioned those not other in necessarily rate we an

and that what there but the offered seeing is the So yes, past. have labor in you're wages, out that have a incentives we've you do in reduction rising been

increase. flat So this net-net, of sort you get

And and so we're a your spending incentives. personnel. than not rate we're rates really rather that's why the rate to happy It's are earlier. how we increasing, more that increasing putting flat they're see money into almost the but And wage you're at saw

Kelly Bania

terms us of when the get you And normal in you cycling can back overtime? kind of of the remind to

Donald Bassell

asking. your Could you please I'm question, not sure you're clarify what

Kelly Bania

Are comparison just stating normal. trying from I'm back couple a you the Well, start still to quarters? hours increases get when for some of to to next overtime standpoint the understand

Donald Bassell

that it of break of a And a was to lot doing. out, it lot wage increases we're

I to it really think temporary an the all bringing been by towards year. going has do this cycled year have -- resources that is get we end the to of It's done been toward be we in more effort that.

an been ongoing this So has effort.

life fill of we hours, of raise really some and give it focus this the done services those that year also down for in can been relief because terms quality end people better operations is wage major to this hourly in by then cycling, overtime a and the also people really be cut use has So on. from things of to a temporary give would

Kelly Bania

And start for that incorporating model. last CapEx just think how our we one to for you're planning thoughts can about maybe Any just into XXXX on me.

Arie Kotler

would like to Don, that? answer you

Donald Bassell

mean, I Sure. our will stay. maintenance CapEx

this going CapEx year conversions, roughly Again, which think guidance, EMV I maintenance, of that between have. in X/X I year a forward. million looking to at specific will require total at is $XX out if giving CapEx, look $XX X/X last our our we the But talked that lot total, about investment. think with have without somewhere we have you about that a we of projects million we is big is

will for will will may that of But guideline that those there to require will a be be be CapEx, a with be you. a projects So up significant CapEx that coming them. lot but ROI

Operator

Stifel. with question next is from Alok Our Patel

Alok Patel

question is you so, notable of label? the or if if in kind first more on loan can then frame Alok answer around foot higher offering conditions is And for payments. demand of resumption which changes And the My for categories. given on trends. Mark. quarter-to-date private and whether This student traffic you're macro Any seeing

Arie Kotler

I'll and we with to where the question basically second related maybe So we start see. what focus

portion sales I the core in of a large mentioned our categories. actually as happened So of majority earlier, the

quarter. example, core another year quarter. So Beer, this prior was X.X% for for X.X%; X.X% more we see categories, in example, quarter is for year specific an salty increase in above strong than prior Candy snacks, those category, example, almost categories, basically

I basically and the we back taking advantage earlier, coming in this the of that value loyal of in to And see we mentioned those the think have increase that I loyal of an categories, those that, particular. is is think members members we I see that the offering over So inside here stores. what because

and Regarding your trends. question, regarding to traffic

have to is is in that right the our going believe, I that. to for more right them. including quarter and offering visit the think time quarter see quarter, because have is we less only category this of going categories, is very they're dollars to they're the not offering the food is core to to, touch trend. we core comes the job. convenience service. money. that inside we doing up and basically stores, it And I The look why And and question we something valuable the when need think things team the almost actually that need are about competitive saw all reason sure basically particular very I that there where trend customers. past inflation for spend to QX.But mean very, think this very, impact think to So when is I We comes that, spend years. for now And be is hitting I our And make including a People and again, after I'd terrific store. in the quarter after I X no can't only it it I say thing

Alok Patel

the that the which Within XXXX? categories, that provide awesome the year into be you can balance numbers year-over-year would beverages? also categories And those great strength sales the growth you you be in the core drive drivers then if and it packaged would destination for discuss categories if for can realized great. of And supporting the

Arie Kotler

I'll categories. X the with So start

the up hope little try I to right going broke I'm a I -- to question. You but hear bit,

X our So up I'll quarter. Packaged was Candy snacks those The very X.X%, with to if for took core they strong continue X.X%, around very, up snacks snacks quarter. X XXXX.But we on are sweet looking you was And at do and strategy. those up was start this And if really alternative was QX with are us we this up you salty really perform X.X%. X.X% was beer core categories, only categories not [indiscernible] the X.X%. really remember, a and had X.X% are very cycling up category. well aligned the categories.

Over is compounded really categories rate. points annual XXX categories, looking merchants these the XX% expanded approximately from of these from last if X approximately the total an years, growth which contribution contribution basis you're on

we from those basically see think that years. categories X that's I what So for the past X

Operator

is Karru from Jefferies. with question next Our Martinson

Karru Martinson

days a look driving when What's question. the going is Why in category? Ultimately, overall the fuel kind down the people more office. more Just of broader at the work picture we industry? to are big demand

Arie Kotler

right the relying are give probably will I the you answer, again, had the answer. we answer data. I But on If OPIS

data of on data. the OPIS see, shows decline approximately as OPIS you X.XX%. in relying body That's nationwide We And can are one thing.

footprint, The everybody, footprint. second thing I want our remind is its role to

stores. We lot have of a

when in our I I than operate those time, basic like of have couple XX,XXX of are are roll other driving some not think that some XX% you probably mentioned that less in think XX%, ago, of a quarters town areas. stores people.And people in I

are not stores Our locating for highways, on major example.

the market basically of other the think you and one the competitors that way, that's see consistent, that's in that business. with do basically we reasons So I the by basically that, in market

worth the have So similar metrics, markets. think I reported it's by other noting that way, in companies public those

Karru Martinson

about kind When seeing still you fuel, looking on environment in to talk per we the $X.XX of being able gallon? strong at margins are sustainable stable maintain over

Arie Kotler

happen a $X.XX. if I can â€“ we to with have crystal a the question. going what's Again, good keep don't It's ball of

are some in we the the and think and today, with largest large chains, the the a with can of I are we lot Mom-and-Pop. and of sixth I chains -- country, small basically we one operator the are, competing thing say the competing

of fixed being because And it remain that every those As facing here. And you margin I business convenient one are higher for insurance, my many gas guys can with of basically almost the expenses we in place years. over based higher assumption chained industry, believe stores less, XX,XXX Mom-and-Pop. electricity, think of expenses, XX that's XXX,XXX, so stations or the I structurally appreciate think is have But just [indiscernible]. higher XX% basically are XX% in they will on again, that, of that

Karru Martinson

front inside And on merchandising? the you where to are the comes you pricing? Are seeing are then it what kind seeing we pressure of stores inflationary And your on still when there? on

Arie Kotler

continue the for as to the Well, This we customers. think important at that's here. mentioned, provide we continue value it's a sales, very our think the reason That's think the when on the I end if to I it's results important think going to to to I long as come to And come. very, It's loyalty. were component us. the us very, think very you're to I speak our day, provide see excluding I themselves. is very, And it. important cigarettes, of of that very And reason customers, for for looking value I they results

Operator

Reuter Bank William of [Operator Instructions] Our America. next from question with is

William Reuter

expansion. the first My on is merchandise margin

major Is of largely in having growth? You categories some food mentioned are bigger this mix and the marketing Or more based upon to X and mentioned those contributors merchandising. then of you expansion? and consumables what that

Arie Kotler

important. mix going call. mentioned think the X the I back of I very important They're course, tremendously. absolutely The Yes, driving margin, key core very, that pillars is categories on the to are very

the them an that course, is The mentioned again. go other service that invest. is categories, will to this driven something by they're grow you're categories, help want, versus sales categories growth QX on service. QX continue over of to margin basis these those basically our core categories if can on we that And core a all I are X of through is that pillars continue piece, candy sales food you Food I area I and by here.If it's X.X% looking again, up But XXXX. majority drive basically to led key basically basically X mentioned. those us seek those XXXX those same-store

William Reuter

that talking think these discussions. is correctly? can large dimensionalize I two, I I that that number you And pipeline, you Number how active of think then any hear the way are are guess, are? guess, you about And did some in that I there when sort I were X are one, M&A, mentioned there in

Arie Kotler

we correctly, calls, July unfortunately, on was closed July in we X execute. You acquisitions. great XXXX fleet until we quarter, was closed basically, which acquisitions business on on X did we didn't XXXX, since that the that for this the that closed opportunity of basically we -- hear end that at And

during just closed on store and PEG recently, QX, Now acquiring we was After months, had Pride WTG. then, Northeast, closed our Since that, acquisition Pride. then closing. we location. Pride. months stores we dealers. are And In XX X after XX one the in over great opened XX within another And of we another locations. from we

William Reuter

way the just program, not And to address time? each sure creating create e-mail on they're able for possible lastly would a $XX to this? any customers for to that question Just Are new to one? this each it me, doing there be a track you new time is addresses make

Arie Kotler

yes, is is answer there The for an people. opportunity

no needs you this targeting go But customers tried We the take we the someone I to try happening we think be it's in to a cases, not catch it, QX and on advantage? more way some them. to our I'll concentrate sure have those basically that something again, making figure I a out compliance watching some is concentration. with call to increase one is basically The some, on customers? concentration is see how can extreme. because sure that them mean place. Absolutely, someone what that in have measurement if execute making base how some to actually compliance do and -- have and we And versus taking advantage. we just and but have we we don't And

Operator

conference session. like turn closing for the over comments. the would I Arie to to have back read end question-and-answer We of our

Arie Kotler

excited with call questions. year. very our of you opportunities questions spent last quarter questions strong pleased you for again and joining the you comparison this thank remain was this morning. this for of front the time to morning this of many as achievable your It the great navigate in and we again us. really I'm a And half your Thank lot I about once back I the for very great results morning. for

Operator

conference. This you. today's Thank conclude will

thank You and may time, participation. your your at this for lines disconnect you

Arko (ARKO) 7 Nov 232023 Q3 Earnings call transcript