ARKO Corp

Previous wording

Based in Richmond, VA, we are a leading independent convenience store operator and, as of March 31, 2024, we were the sixth largest convenience store chain in the United States (“U.S.”) ranked by store count, operating 1,540 retail convenience stores. As of March 31, 2024, we operated the stores under more 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®, Speedy’s, Town Star, Uncle’s, Village Pantry® and Young’s. As of March 31, 2024, we also supplied fuel to 1,816 dealers and operated 296 cardlock locations (unstaffed fueling locations). We are well diversified geographically and as of March 31, 2024, operated in the District of Columbia and more than 30 states in the Mid-Atlantic, Midwestern, Northeastern, Southeastern and Southwestern U.S.

Current wording

Based in Richmond, VA, we are a leading independent convenience store operator and, as of June 30, 2024, we were the sixth largest convenience store chain in the United States (“U.S.”) ranked by store count, operating 1,548 retail convenience stores. As of June 30, 2024, we operated the stores under more 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®, Speedy’s, SpeedyQ, Town Star, Uncle’s, Village Pantry® and Young’s. As of June 30, 2024, we also supplied fuel to 1,794 dealers and operated 294 cardlock locations (unstaffed fueling locations). We are well diversified geographically and as of June 30, 2024, operated in the District of Columbia and more than 30 states in the Mid-Atlantic, Midwestern, Northeastern, Southeastern and Southwestern U.S.

Previous wording

Our primary business is the operation of convenience stores, and we generate a significant portion of our revenue from the retail sale of products and fuel at our stores. Consequently, our retail stores generate a large proportion of our profitability. We focus our marketing and merchandising initiatives at our retail stores on offering our customers an assortment of products with an attractive value proposition. Our retail offering includes 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 approximately 1,260 stores, which include hot and fresh grab-n-go foods, deli, fried chicken, bakery, pizza, roller grill items and other prepared foods. In the first quarter of 2024, we launched an extensive new pizza program that offers private label pizza, at an attractive value of $4.99 for enrolled loyalty members. We currently offer our private label pizza at approximately 1,085 stores as take-and-bake from the freezer, and as fresh and hot pizza either whole or by the slice at approximately 225 stores. We supplement our foodservice offering with approximately 130 quick service major national brand restaurants. Relevant and delicious food offerings are a key strategic priority for us, and we expect to maintain a high degree of focus on frozen grab-n-go and enhanced hot food capabilities. Additionally, we provide a number of traditional convenience store services, 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 95 of our locations.

Current wording

Our primary business is the operation of convenience stores, and we generate a significant portion of our revenue from the retail sale of products and fuel at our stores. Consequently, our retail stores generate a large proportion of our profitability. We focus our marketing and merchandising initiatives at our retail stores on offering our customers an assortment of products with an attractive value proposition. Our retail offering includes 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 approximately 1,240 stores, which include hot and fresh grab-n-go foods, deli, fried chicken, bakery, pizza, roller grill items and other prepared foods. In the first quarter of 2024, we launched an extensive new pizza program that offers private label pizza, at an attractive value of $4.99 for enrolled loyalty members. We currently offer our private label pizza at approximately 1,200 stores as take-and-bake from the freezer, and as fresh and hot pizza either whole or by the slice at approximately 240 stores. We supplement our foodservice offering with approximately 124 quick service major national brand restaurants. Relevant and delicious food offerings are a key strategic priority for us, and we expect to maintain a high degree of focus on frozen grab-n-go and enhanced hot food capabilities. Additionally, we provide a number of traditional convenience store services, 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 95 of our locations.

Previous wording

We had approximated 2.09 million enrolled members in our fas REWARDS® loyalty program at the end of the first quarter of 2024, representing an increase of 54.1% from the end of the first quarter of 2023. Our fas REWARDS® loyalty program is available in the majority of our stores and offers enrolled loyalty members in store exclusive promotional pricing, in-app member only HOT deals not available in stores, as well as the ability to earn points that can be redeemed for either fuel or merchandise savings. Other in-app features include order and delivery, age verified offers on tobacco and alcohol, and a store locator with current gas prices at GPM stores nearby to members.

Current wording

We had approximated 2.14 million enrolled members in our fas REWARDS® loyalty program at the end of the first half of 2024, representing an increase of approximately 45% from the end of the first half of 2023. Our fas REWARDS® loyalty program is available in the majority of our stores and offers enrolled loyalty members in store exclusive promotional pricing, in-app member only HOT deals not available in stores, as well as the ability to earn points that can be redeemed for either fuel or merchandise savings. Other in-app features include order and delivery, age verified offers on tobacco and alcohol, and a store locator with current gas prices at GPM stores nearby to members.

Previous wording

Our wholesale segment supplies fuel to dealers, on either a consignment or cost plus 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 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.

Current wording

Our wholesale segment supplies fuel to dealers, on either a consignment or cost plus 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 dealers. For cost plus arrangements, we sell fuel to dealers and bulk and spot purchasers on a fixed-fee basis. The sales price is determined according to the terms of the relevant agreement, 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.

Previous wording

We achieved strong store growth over the last decade, driven primarily by a highly successful acquisition strategy, inclusive of 25 completed acquisitions from 2013 through March 31, 2024. Recently, on March 1, 2023, we acquired 135 convenience stores and gas stations, 181 dealer locations, a commercial, government, and industrial business, and certain distribution and transportation assets from Transit Energy Group, LLC (the “TEG Acquisition”). On June 6, 2023, we completed our acquisition of 24 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 from WTG Fuels Holdings, LLC (the “WTG Acquisition”). On August 15, 2023, we acquired seven Speedy’s convenience stores located in Arkansas and Oklahoma, which were previously locations operated by a dealer to which we supplied fuel (the “Speedy’s Acquisition” and, together with the TEG Acquisition and the WTG Acquisition, the “2023 Acquisitions”). Our strategic acquisitions have had, and may continue to have, a significant impact on our reported results and can make period to period comparisons of results difficult. We believe our significant size and scale aids our efforts to successfully deploy our organic growth strategies in our acquired assets, which we anticipate will result in value accretion.

Current wording

We achieved strong store growth over the last decade, driven primarily by a highly successful acquisition strategy, inclusive of 26 completed acquisitions from 2013 through June 30, 2024. On March 1, 2023, we acquired 135 convenience stores and gas stations, 181 dealer locations, a commercial, government, and industrial business, and certain distribution and transportation assets from Transit Energy Group, LLC (the “TEG Acquisition”). On June 6, 2023, we completed our acquisition of 24 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 from WTG Fuels Holdings, LLC (the “WTG Acquisition”). On August 15, 2023, we acquired seven Speedy’s convenience stores located in Arkansas and Oklahoma, which were previously locations operated by a dealer to which we supplied fuel (the “Speedy’s Acquisition” and, together with the TEG Acquisition and the WTG Acquisition, the “2023 Acquisitions”). On April 9, 2024, we completed our acquisition of 21 SpeedyQ Markets convenience stores located in Michigan (the “SpeedyQ Acquisition”). Our strategic acquisitions have had, and may continue to have, a significant impact on our reported results and can make period to period comparisons of results difficult. We believe our significant size and scale aids our efforts to successfully deploy our organic growth strategies in our acquired assets, which we anticipate will result in value accretion.

Previous wording

Additionally, the U.S. economy continues to endure price inflation and the effect of higher prevailing interest rates, which began in 2022 and which has increased merchandise costs and reduced consumer purchasing power. We have mitigated a portion of these higher costs with retail price increases. The persistence of, or increase in, inflation or high interest rates could negatively impact the demand for our products and services, including due to consumers reducing travel, which could reduce sales volumes. Additionally, because of current labor market conditions and the prevailing wage rates in the markets in which we operate, we have increased wages, which has increased our costs associated with recruiting and retaining qualified personnel.

Current wording

Additionally, the significant increase in the rate of inflation in the U.S. in recent years and the effect of higher prevailing interest rates has increased merchandise costs and reduced consumer purchasing power. We have mitigated a portion of these higher costs with retail price increases. The persistence of, or increase in, inflation or high interest rates could negatively impact the demand for our products and services, including due to consumers reducing travel, which could reduce sales volumes. Additionally, because of current labor market conditions and the prevailing wage rates in the markets in which we operate, we have increased wages, which has increased our costs associated with recruiting and retaining qualified personnel.

Previous wording

Results of Operations for the three months ended March 31, 2024 and 2023

Current wording

Results of Operations for the three and six months ended June 30, 2024 and 2023

Previous wording

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. All figures for fuel contribution and fuel margin per gallon exclude the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel (intercompany charges by GPMP).

Current wording

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 “Quarterly Financial Statements”). The following discussion should be read in conjunction with such condensed interim consolidated financial statements and related notes. All figures for fuel contribution and fuel margin per gallon exclude the estimated fixed margin or fixed fee paid to GPMP for the cost of fuel (intercompany charges by GPMP).

Previous wording

The table below shows our consolidated results for the three months ended March 31, 2024 and 2023, together with certain key metrics.

Current wording

The table below shows our consolidated results for the three and six months ended June 30, 2024 and 2023, together with certain key metrics.

Previous wording

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

Current wording

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

Previous wording

For the three months ended March 31, 2024, other revenue was consistent with the first quarter of 2023, primarily due to additional revenue from the 2023 Acquisitions, which was offset by the regulatory state-wide elimination of Virginia skill gaming machines income.

Current wording

For the three months ended June 30, 2024, other revenue decreased $1.1 million or 4.0% compared to the second quarter of 2023, primarily due to the regulatory state-wide elimination of Virginia skill gaming machine income, which was partially offset by additional revenue from the WTG, Speedy’s and SpeedyQ Acquisitions.

Previous wording

For the three months ended March 31, 2024, other expenses, net decreased by $0.2 million, compared to the first quarter of 2023 primarily due to lower acquisition costs which were partially offset by greater losses on disposal of assets and impairment charges in the first quarter of 2024.

Current wording

For the three months ended June 30, 2024, other expenses, net decreased by $4.7 million, compared to the second quarter of 2023 primarily due to lower acquisition costs and lower losses from disposal of assets and impairment charges in the second quarter of 2024.

Previous wording

For the three months ended March 31, 2024 and 2023, net loss attributable to the Company was $0.6 million and $2.6 million, respectively.

Current wording

For the three months ended June 30, 2024 and 2023, net income attributable to the Company was $14.1 million and $14.4 million, respectively.

Previous wording

For the three months ended March 31, 2024, Adjusted EBITDA was $36.6 million compared to $47.5 million for the three months ended March 31, 2023. The decrease resulted primarily from approximately $6.0 million of lower fuel contribution and regulatory state-wide elimination of Virginia skill gaming machines income as well as higher general and administrative expenses and same store site operating expenses, partially offset by incremental Adjusted EBITDA from the 2023 Acquisitions and an increase in same store merchandise contribution. Refer to “Use of Non-GAAP Measures” below for discussion of this non-GAAP performance measure and related reconciliation to net loss.

Current wording

For the three months ended June 30, 2024, Adjusted EBITDA was $80.1 million compared to $82.5 million for the three months ended June 30, 2023. The decrease resulted primarily from lower same store merchandise and fuel contribution and regulatory state-wide elimination of Virginia skill gaming machine income, as well as higher general and administrative expenses, partially offset by higher fuel contribution at comparable fleet fueling sites, lower same store operating expenses and incremental Adjusted EBITDA from the WTG, Speedy’s and SpeedyQ Acquisitions. Refer to “Use of Non-GAAP Measures” below for discussion of this non-GAAP performance measure and related reconciliation to net income.

Previous wording

For the three months ended March 31, 2024, fuel revenue decreased by $30.3 million, or 1.8%, compared to the first quarter of 2023. The decrease in fuel revenue was attributable primarily to a decrease in the average price of fuel compared to the first quarter of 2023 and fewer gallons sold at same stores in the first quarter of 2024 compared to the first quarter of 2023, which was partially offset by incremental gallons sold related to the 2023 Acquisitions.

Current wording

For the six months ended June 30, 2024, fuel revenue decreased by $99.9 million, or 2.8%, compared to the first half of 2023. The decrease in fuel revenue was attributable primarily to a decrease in the average price of fuel compared to the first half of 2023 and fewer same store gallons sold in the first half of 2024 compared to the first half of 2023, which was partially offset by incremental gallons sold related to the 2023 Acquisitions and the SpeedyQ Acquisition.

Previous wording

For the three months ended March 31, 2024, merchandise revenue increased by $14.2 million, or 3.6%, compared to the first quarter of 2023, primarily due to the 2023 Acquisitions. Offsetting this increase was a decrease in same store merchandise revenues and a decrease in merchandise revenue from underperforming retail stores that we closed or converted to dealers.

Current wording

For the six months ended June 30, 2024, merchandise revenue increased by $4.1 million, or 0.5%, compared to the first half of 2023, primarily due to the 2023 Acquisitions and the SpeedyQ Acquisition. Offsetting this increase was a decrease in same store merchandise revenues and a decrease in merchandise revenue from underperforming retail stores that we closed or converted to dealers.

Previous wording

For the three months ended March 31, 2024, total operating expenses decreased by $2.0 million compared to the first quarter of 2023. Fuel costs decreased $35.6 million, or 2.3%, compared to the first quarter of 2023 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. Merchandise costs increased $2.3 million, or 0.8%, compared to the first quarter of 2023, primarily due to increased costs related to the 2023 Acquisitions, partially offset by a decrease in same store merchandise sales and a decrease in merchandise costs from underperforming retail stores that we closed or converted to dealers. For the three months ended March 31, 2024, site operating expenses increased $26.2 million, or 13.6%, compared to the first quarter of 2023 due to incremental expenses as a result of the 2023 Acquisitions and an increase in expenses at same stores, including higher personnel costs offset by lower credit card fees.

Current wording

For the six months ended June 30, 2024, total operating expenses decreased by $81.4 million, or 1.8%, compared to the first half of 2023. Fuel costs decreased $109.9 million, or 3.3%, compared to the first half of 2023 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 SpeedyQ Acquisition. Merchandise costs decreased $9.0 million, or 1.5%, compared to the first half of 2023, consistent with merchandise revenues trends. For the six months ended June 30, 2024, site operating expenses increased $31.9 million, or 7.8%, compared to the first half of 2023 due to incremental expenses as a result of the 2023 Acquisitions and the SpeedyQ Acquisition and an increase in same store expenses, including higher personnel costs offset by lower credit card fees.

Previous wording

For the three months ended March 31, 2024, general and administrative expenses increased $1.7 million, or 4.3%, compared to the first quarter of 2023, primarily due to incremental expenses associated with the 2023 Acquisitions, annual wage increases and consulting support for the development of our multi-year transformation plan, partially offset by a decrease of $0.7 million in share-based compensation expense and lower incentive accruals.

Current wording

For the six months ended June 30, 2024, general and administrative expenses increased $1.5 million, or 1.8%, compared to the first half of 2023, primarily due to incremental expenses principally associated with the 2023 Acquisitions, annual wage increases, and consulting support for the development of our Transformation Plan, partially offset by a decrease of $2.5 million in share-based compensation expense and lower incentive accruals.

Previous wording

For the three months ended March 31, 2024, depreciation and amortization expenses increased $3.3 million, or 11.7%, compared to the first quarter of 2023 primarily due to assets acquired in the previous twelve-month period, largely in connection with the 2023 Acquisitions.

Current wording

For the six months ended June 30, 2024, depreciation and amortization expenses increased $4.1 million, or 6.6%, compared to the first half of 2023 primarily due to assets acquired in the previous twelve-month period, largely in connection with the 2023 Acquisitions and the SpeedyQ Acquisition.

Previous wording

For the three months ended March 31, 2024, there was an operating loss of $4.9 million compared to operating income of $9.0 million for the three months ended March 31, 2023. The decrease in operating income was primarily due to reduced fuel contribution at same stores, wholesale sites not part of the 2023 Acquisitions (the “comparable wholesale sites”) and fleet fueling sites not part of the 2023 Acquisitions, and an increase in site operating expenses at same stores, which was partially offset by incremental income from the 2023 Acquisitions and an increase in merchandise contribution at same stores.

Current wording

For the six months ended June 30, 2024, operating income was $38.1 million compared to $48.6 million for the six months ended June 30, 2023. The decrease in operating income was primarily due to reduced fuel contribution at same stores, wholesale sites not part of the 2023 Acquisitions (the “comparable wholesale sites”) and the comparable fleet fueling sites, a decrease in same store merchandise contribution, and an increase in same store expenses, which was partially offset by incremental income from the 2023 Acquisitions and the SpeedyQ Acquisition.

Previous wording

For the three months ended March 31, 2024, interest and other financial expenses, net decreased by $11.1 million compared to the first quarter of 2023, primarily related to an increase of $6.0 million in income recorded in the first quarter of 2024 compared to the prior year period for fair value adjustments related to the Public Warrants, Private Warrants and Additional Deferred Shares (each as defined in Note 11 to the unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q) and approximately $9.2 million recorded as financial income related to the issuance of the First Installment Shares as payment of deferred consideration and the settlement of deferred consideration related to the TEG Acquisition, which was partially offset by higher average outstanding debt balances, a higher average interest rate for the first quarter of 2024 and higher interest expenses related to financial liabilities.

Current wording

For the six months ended June 30, 2024, interest and other financial expenses, net decreased by $9.9 million compared to the first half of 2023, primarily related to an increase of $7.0 million in income recorded in the first half of 2024 compared to the prior year period for fair value adjustments related to the Public Warrants, Private Warrants and Additional Deferred Shares and approximately $9.2 million recorded as financial income related to the issuance of the First Installment Shares (as defined in Note 4 to our Quarterly Financial Statements) as payment of deferred consideration and the settlement of deferred consideration related to the TEG Acquisition, which was partially offset by higher average outstanding debt balances, a higher average interest rate for the first half of 2024 and higher interest expenses related to financial liabilities.

Previous wording

The table below shows the results of the retail segment for the three months ended March 31, 2024 and 2023, together with certain key metrics for the segment.

Current wording

The table below shows the results of the retail segment for the three and six months ended June 30, 2024 and 2023, together with certain key metrics for the segment.

Previous wording

The table below shows financial information and certain key metrics of recent acquisitions in the retail segment that do not have (or have only partial) comparable information for the prior period.

Current wording

The tables below show financial information and certain key metrics of recent acquisitions in the retail segment that do not have (or have only partial) comparable information for any of the prior periods.

Previous wording

1 Includes only the retail stores acquired in the TEG Acquisition.

Current wording

1 Includes only the retail stores acquired in the WTG Acquisition.

Previous wording

3 Acquisition of seven Speedy’s retail stores.

Current wording

2 Acquisition of seven Speedy’s retail stores.

Previous wording

For the three months ended March 31, 2024, other revenues, net decreased by $1.9 million, or 10.1%, compared to the first quarter of 2023, primarily related to the regulatory state-wide elimination of Virginia skill gaming machines income, partially offset by additional income from the 2023 Acquisitions.

Current wording

For the three months ended June 30, 2024, other revenues, net decreased by $2.3 million, or 11.9%, compared to the second quarter of 2023, primarily related to the regulatory state-wide elimination of Virginia skill gaming machine income, partially offset by additional income from the WTG, Speedy’s and SpeedyQ Acquisitions.

Previous wording

For the three months ended March 31, 2024, fuel revenue decreased by $19.0 million, or 2.3%, compared to the first quarter of 2023. The decrease in fuel revenue was attributable to a $0.16 per gallon decrease in the average retail price of fuel in the first quarter of 2024 compared to the first quarter of 2023, primarily due to market factors, as well as a decrease in gallons sold at same stores of approximately 6.7%, or 15.8 million gallons. Partially offsetting this decrease was an incremental 23.0 million gallons sold, or $72.2 million in fuel revenue contributed by the 2023 Acquisitions. Underperforming retail stores, which we closed or converted to dealers over the last 12 months in order to optimize profitability, also negatively impacted gallons sold during the first quarter of 2024.

Current wording

For the six months ended June 30, 2024, fuel revenue decreased by $58.0 million, or 3.1%, compared to the first half of 2024. The decrease in fuel revenue was attributable to a $0.09 per gallon decrease in the average retail price of fuel in the first half of 2024 compared to the first half of 2023, primarily due to market factors, as well as a decrease in same store gallons sold of approximately 6.6%, or 34.9 million gallons. Partially offsetting this decrease was an incremental 32.6 million gallons sold, or $105.5 million in fuel revenue contributed by the 2023 Acquisitions and the SpeedyQ Acquisition. Underperforming retail stores, which we 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 2024.

Previous wording

For the three months ended March 31, 2024, merchandise revenue increased by $14.2 million, or 3.6%, compared to the first quarter of 2023. The 2023 Acquisitions contributed approximately $32.6 million of incremental merchandise revenue. Same store merchandise sales decreased $15.6 million, or 4.1%, for the first quarter of 2024 compared to the first quarter of 2023. Same store merchandise revenue was impacted by lower revenue from cigarettes and the Company’s six core destination categories (packaged beverages, candy, salty snacks, packaged sweet snacks, alternative snacks and beer) which was partially offset by higher revenue from other tobacco products and franchises. In addition, there was a decrease in merchandise revenue from underperforming retail stores that we closed or converted to dealers.

Current wording

For the six months ended June 30, 2024, merchandise revenue increased by $4.1 million, or 0.5%, compared to the first half of 2023. The 2023 Acquisitions and the SpeedyQ Acquisition contributed approximately $49.3 million of incremental merchandise revenue. Same store merchandise sales decreased $39.7 million, or 4.6%, for the first half of 2024 compared to the first half of 2023. About half the decline in same store merchandise revenue was caused by lower revenue from cigarettes and the remaining decline related to lower revenue from the Company’s six core destination categories (packaged beverages, candy, salty snacks, packaged sweet snacks, alternative snacks and beer) and other categories, reflecting the challenging external environment. In addition, there was a decrease in merchandise revenue from underperforming retail stores that we closed or converted to dealers.

Previous wording

For the three months ended March 31, 2024, fuel contribution increased $4.8 million, or 5.5%, compared to the same period in 2023. Incremental fuel contribution from the 2023 Acquisitions of approximately $7.8 million was partially offset by a decrease in same store fuel contribution of $2.8 million. Fuel margin per gallon at same stores for the first quarter of 2024 increased to 37.0 cents per gallon from 35.7 cents per gallon for the first quarter of 2023 and improved sequentially throughout the quarter. In addition, a decrease in fuel contribution related to underperforming retail stores that we closed or converted to dealers decreased fuel contribution compared to the first quarter of 2023.

Current wording

For the six months ended June 30, 2024, fuel contribution increased $6.2 million, or 3.0%, compared to the same period in 2023. Incremental fuel contribution from the 2023 Acquisitions and the SpeedyQ Acquisition of approximately $12.8 million was partially offset by a decrease in same store fuel contribution of $6.1 million. Same store fuel margin per gallon for the first half of 2024 increased to 39.3 cents per gallon from 37.8 cents per gallon for the first half of 2023. In addition, a decrease in fuel contribution related to underperforming retail stores that we closed or converted to dealers decreased fuel contribution compared to the first half of 2023.

Previous wording

For the three months ended March 31, 2024, merchandise contribution increased $12.0 million, or 9.7%, compared to the same period in 2023, and merchandise margin increased to 32.5% compared to 30.7% in the prior period. The increase was due to $11.3 million in incremental merchandise contribution from the 2023 Acquisitions and an increase in merchandise contribution at same stores of approximately $0.9 million. Merchandise contribution at same stores increased in the first quarter of 2024 primarily due to higher contribution from other tobacco products and franchises partially offset by lower contribution from the Company’s six core destination categories. Merchandise margin at same stores was 32.3% in the first quarter of 2024 compared to 30.8% in the first quarter of 2023.

Current wording

For the six months ended June 30, 2024, merchandise contribution increased $13.1 million, or 4.7%, compared to the same period in 2023, and merchandise margin increased to 32.7% compared to 31.4% in the prior period. The increase was due to $17.0 million in incremental merchandise contribution from the 2023 Acquisitions and the SpeedyQ Acquisition which was partially offset by a decrease in same store merchandise contribution of approximately $3.3 million. Same store merchandise contribution decreased in the first half of 2024 primarily due to lower contribution from several core destination categories and cigarettes, partially offset by higher contribution from other tobacco products and franchises. Same store merchandise margin was 32.6% in the first half of 2024 compared to 31.5% in the first half of 2023.

Previous wording

For the three months ended March 31, 2024, site operating expenses increased $22.5 million, or 12.8%, compared to the three months ended March 31, 2023 primarily due to $18.5 million of incremental expenses related to the 2023 Acquisitions. Same store site operating expenses increased $5.5 million, or 3.3%, with the increase related to hourly wage rate growth, accelerated repairs and maintenance, and elevated workers’ compensation claims related to first quarter 2024 events. The increase in site operating expenses was partially offset by underperforming retail stores that we closed or converted to dealers.

Current wording

For the six months ended June 30, 2024, site operating expenses increased $27.3 million, or 7.3%, compared to the six months ended June 30, 2023, primarily due to $25.9 million of incremental expenses related to the 2023 Acquisitions and the SpeedyQ Acquisition. Same store operating expenses increased $4.6 million, or 1.3%, with the increase related to hourly wage rate growth, accelerated repairs and maintenance, and elevated workers’ compensation claims related to first quarter 2024 events, offset by lower credit card fees. The increase in site operating expenses was partially offset by underperforming retail stores that we closed or converted to dealers.

Previous wording

The table below shows the results of the wholesale segment for the three months ended March 31, 2024 and 2023, together with certain key metrics for the segment.

Current wording

The table below shows the results of the wholesale segment for the three and six months ended June 30, 2024 and 2023, together with certain key metrics for the segment.

Previous wording

The table below shows financial information and certain key metrics of recent acquisitions in the wholesale segment that do not have (or have only partial) comparable information for the prior period.

Current wording

The table below shows financial information and certain key metrics of recent acquisitions in the wholesale segment that have only partial comparable information for the prior periods.

Previous wording

1 Includes only the wholesale business acquired in the TEG Acquisition.

Current wording

1 Includes only the wholesale business acquired in the WTG Acquisition.

Previous wording

For the three months ended March 31, 2024, fuel revenue decreased by $20.3 million, or 3.0%, compared to the first quarter of 2023. Wholesale revenues were negatively impacted by a decrease in the average price of fuel in the first quarter of 2024 compared to the first quarter of 2023, partially offset by the benefit of an 1.7% increase in gallons sold. Of total gallons sold, the 2023 Acquisitions contributed approximately 17.8 million incremental gallons, which were offset by lower volumes at comparable wholesale sites.

Current wording

For the six months ended June 30, 2024, fuel revenue decreased by $68.8 million, or 4.6%, compared to the first half of 2023. Wholesale revenues were negatively impacted by a 2.3% decrease in gallons sold and by a decrease in the average price of fuel in the first half of 2024 compared to the first half of 2023. Of total gallons sold, the 2023 Acquisitions contributed approximately 18.4 million incremental gallons, which were fully offset by lower volumes at comparable wholesale sites.

Previous wording

For the three months ended March 31, 2024, wholesale operating income decreased $0.6 million, primarily caused by a decline in fuel contribution of approximately $0.5 million. At fuel supply locations, fuel contribution increased by $0.4 million, and fuel margin per gallon also increased for the first quarter of 2024 compared to the first quarter of 2023, primarily due to incremental contribution from the 2023 Acquisitions which was partially offset by decreased prompt pay discounts related to lower fuel costs and lower volumes at comparable wholesale sites. At consignment agent locations, fuel contribution decreased $0.9 million, and fuel margin per gallon also decreased for the first quarter of 2024 compared to the first quarter of 2023, primarily due to lower rack-to-retail margins and decreased prompt pay discounts related to lower fuel costs, which was partially offset by the incremental contribution from the 2023 Acquisitions. In total, the 2023 Acquisitions added approximately $1.2 million of incremental fuel contribution.

Current wording

For the six months ended June 30, 2024, wholesale operating income increased $1.8 million, compared to the first half of 2023, primarily due to an increase in other revenues, net of $1.1 million. Fuel contribution decreased by approximately $0.3 million, inclusive of approximately $1.3 million of incremental fuel contribution from the 2023 Acquisitions. At fuel supply locations, fuel contribution increased by $0.2 million, and fuel margin per gallon also increased for the first half of 2024 compared to the first half of 2023, primarily due to incremental contribution from the 2023 Acquisitions which was partially offset by decreased prompt pay discounts related to lower fuel costs and lower volumes at comparable wholesale sites. At consignment agent locations, fuel contribution decreased $0.5 million, while fuel margin per gallon increased for the first half of 2024 compared to the first half of 2023, primarily due to the incremental contribution from the 2023 Acquisitions, which was partially offset by lower rack-to-retail margins and decreased prompt pay discounts related to lower fuel costs.

Previous wording

The table below shows the results of the fleet fueling segment for the three months ended March 31, 2024 and 2023, together with certain key metrics for the segment.

Current wording

The table below shows the results of the fleet fueling segment for the three and six months ended June 30, 2024 and 2023, together with certain key metrics for the segment.

Previous wording

For the three months ended March 31, 2024, fuel contribution increased by $0.1 million compared to first quarter of 2023. At proprietary cardlocks, fuel contribution decreased by $0.1 million, and fuel margin per gallon also decreased for the first quarter of 2024 compared to the first quarter of 2023, when diesel margins were at significantly elevated levels. At third-party cardlock locations, fuel contribution increased $0.2 million, and fuel margin per gallon also increased for the first quarter of 2024 compared to the first quarter of 2023. These changes were primarily due to higher volumes and the cardlocks acquired in the WTG Acquisition.

Current wording

For the three months ended June 30, 2024, fuel contribution increased by $3.5 million compared to the second quarter of 2023. At proprietary cardlocks, fuel contribution increased by $3.3 million, and fuel margin per gallon also increased for the second quarter of 2024 compared to the second quarter of 2023. At third-party cardlock locations, fuel contribution increased $0.2 million, and fuel margin per gallon also increased for the second quarter of 2024 compared to the second quarter of 2023. These changes were primarily due to higher volumes and the cardlocks acquired in the WTG Acquisition.

Previous wording

For the three months ended March 31, 2024, fuel revenue increased by $4.7 million, or 3.7%, compared to first quarter of 2023. Fleet fueling revenues benefited from a 12.3% increase in gallons sold, including from the WTG Acquisition, which were partially offset by a decrease in the average price of fuel in the first quarter of 2024 compared to the first quarter of 2023.

Current wording

For the six months ended June 30, 2024, fuel revenue increased by $23.7 million, or 9.5%, compared to the first half of 2023. Fleet fueling revenues benefited from a 12.7% increase in gallons sold, including from the WTG Acquisition, which were partially offset by a decrease in the average price of fuel in the first half of 2024 compared to the first half of 2023.

Previous wording

The table below shows the results of the GPMP segment for the three months ended March 31, 2024 and 2023, together with certain key metrics for the segment.

Current wording

The table below shows the results of the GPMP segment for the three and six months ended June 30, 2024 and 2023, together with certain key metrics for the segment.