Arko Corp. · NASDAQ:ARKO
Arko — Investor Presentation (January 2021)
30 slides from Arko's investor presentation, Jan 11, 2021
Slide 1: Investor Presentation January 11, 2021
INVESTOR PRESENTATION JANUARY 11, 2021 Exhibit 99.1
Slide 2: Disclaimer
Disclaimer This investor presentation (this “Investor Presentation”) and any oral statements made in connection with this Investor Presentation are for informational purposes only and do not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to purchase any equity, d
Slide 3: Disclaimer: Forward Looking Statements
Disclaimer Forward Looking Statements This Investor Presentation includes “forward looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The expectations, estimates, and projections of the businesses of ARKO may differ from actu
Slide 4: Today's Participants
Today’s Participants ARKO PRESENTERS ARIE KOTLER Founder, Chairman & CEO DON BASSELL CFO Acquired GPM Investments, LLC in 2011, now a wholly owned subsidiary of ARKO, at which time it operated and supplied 320 sites Grew ARKO to 3,000 current sites through a series of 18 acquisitions Spearheaded var
Slide 5: Investment Highlights
Investment Highlights 1 Leader in the Highly Attractive Convenience Store Sector 2 Successful, Differentiated Strategy Embracing Community C-Store Brands 3 Demonstrated History of Rapid, High-ROI Growth Led by Reputation as an Acquirer of Choice 4 Significant Embedded Growth via Empire Acquisition &
Slide 6: Team with Talent and Track Record to Execute Growth Plan
Team with Talent and Track Record to Execute Growth Plan Other Senior Management Experienced individuals covering operations, finance, marketing, IT, merchandising, and M&A diligence and integration 20-40 YEARS EXPERIENCE ARIE KOTLER Founder, Chairman & CEO Acquired GPM Investments, LLC in 2011; ope
Slide 7: A High Growth, Scaled Consolidator in the U.S. Convenience Store Industry
A High Growth, Scaled Consolidator in the U.S. Convenience Store Industry According to CSP’s Top 202 Convenience Stores 2020; includes only company-operated locations. Reflects ARKO’s store count as of 9/30/20 and Empire’s store count as of 10/6/20. Includes full year contribution of Empire based on
Slide 8: Acquiror-of-Choice in Highly Fragmented Industry with a Long Runway of Opportunities Ahead
Acquiror-of-Choice in Highly Fragmented Industry with a Long Runway of Opportunities Ahead National Association of Convenience Stores (“NACS”) 2018 NACS State of the Industry Report. Data from CSP’s Top 202 Convenience Stores 2020 Reflects ARKO’s store count as of 9/30/20 and Empire’s store count as
Slide 9: Significant Community Brand Equity Across Expansive Store Portfolio
Significant Community Brand Equity Across Expansive Store Portfolio
Slide 10: Entrenched, Local Brands Plus Benefits of Participation in Large Network
Entrenched, Local Brands Plus Benefits of Participation in Large Network ~48 Years Average Local Brand History ROI-Focused Acquiror of Choice Differentiated Strategy Preserves Long-Established Community Brand Equity Centralized Procurement and Merchandising Leverage Network Scale Optimized Purchasin
Slide 11: Diversified Community Brands with Regional Footprints
Diversified Community Brands with Regional Footprints Note: Store count as of 9/30/20; excludes nine Dunkin’ locations, two standalone Subway locations, as well as 36 additional stores carrying banners with less than ten locations across network including one banner acquired in 2019. Excludes 84 ret
Slide 12: Multi-Faceted Growth Strategy
Multi-Faceted Growth Strategy Highly fragmented U.S. convenience store industry Well-developed acquisition and integration capabilities Ability to acquire both small and large chains; ARKO reviews all opportunities Actionable pipeline of opportunities In-house M&A team performs in-depth reviews of ~
Slide 13: Dedicated M&A Team with Well-Developed Target Diligence, Transaction Execution, and Integration Capabilities
Dedicated M&A Team with Well-Developed Target Diligence, Transaction Execution, and Integration Capabilities Sample size based on 14 transactions completed (excludes 2019 and 2020 acquisitions for lack of visibility into post-transaction performance). Gas Mart, Road Ranger, Arey Oil, and Hurst Harve
Slide 14: Strong Return on Capital: Sustained Price Discipline Augmented by Significant Synergies Opportunities
Strong Return on Capital: Sustained Price Discipline Augmented by Significant Synergies Opportunities ARKO has maintained purchase price discipline over time and focused intently on capturing cost savings and synergies post-transaction. Thorough diligence on the front end has been key to avoid mis-p
Slide 15: Capturing Synergies Has and Is Expected to Continue to Create Substantial Value
Capturing Synergies Has and Is Expected to Continue to Create Substantial Value HURST HARVEY VPS – SOUTHEAST DIVISION AREY OIL Fuel Margin In-Store Margins(1) Store-Level EBITDA 2.8x Reduction 0.6x Reduction MULTIPLE REDUCTION AS SYNERGIES ARE REALIZED 2.4x Reduction +10.7¢ +3.6¢ +3.9¢ +9.8% (0.5%)(
Slide 16: Roughly Half of Existing Company Operated Stores Are Candidates for High Return Store Remodel
Roughly Half of Existing Company Operated Stores Are Candidates for High Return Store Remodel Program Will include select raze & rebuilds. Following significant acquisition growth, ARKO is re-investing in the in-store experience with numerous initiatives to drive sales and enhance returns Significan
Slide 17: Remodeling Efforts in the Past Have Generated Significant Returns
Remodeling Efforts in the Past Have Generated Significant Returns Note: ROI defined as EBITDA lift divided by total investment. Follows a three month re-opening period. Store #57 located in Quinton, Virginia. STORE 27 – “SOFT” REMODEL STORE 33 – “HARD” REMODEL STORE 57 – RAZE & REBUILD Investment: $
Slide 18: Continued Enhancement of Product Offering and Customer Engagement
Continued Enhancement of Product Offering and Customer Engagement ARKO also operates gaming machines at 12 sites in Illinois. GAMING INTRODUCTION Machines installed at 65 Virginia stores play began July 1, 2020(1) PRIVATE LABEL EXPANSION & ESSENTIAL ITEMS High margin snacks and packaged beverages an
Slide 19: An Attractive Business Mix with Enhanced Stability Provided by Strategic Empire Petroleum Combination
An Attractive Business Mix with Enhanced Stability Provided by Strategic Empire Petroleum Combination Note: Figures on pie chart do not add to 100% due to rounding. Reflects ARKO’s store count as of 9/30/20 and Empire’s store count as of 10/6/20. Based on Empire’s 2019 financials. ARKO STANDALONE BU
Slide 20: Empire Petroleum: Highly Strategic Combination that Meaningfully Increases Company Scale
Empire Petroleum: Highly Strategic Combination that Meaningfully Increases Company Scale Empire store count at closing (as of 10/6/20). Per management estimates; super-jobbers defined as fuel distributors with volumes greater than 1 billion gallons annually and significant scale with multiple major
Slide 21: Financial Overview
FINANCIAL OVERVIEW
Slide 22: Same Store In-Store Sales vs Prior Year
Same Store In-Store Sales vs Prior Year Slight retreat during the worst of the pandemic; accelerated in more recent months as consumer behavior shifted and state re-openings were initiated
Slide 23: Strong Track Record of Growth Projected to Continue
Strong Track Record of Growth Projected to Continue Adjusted EBITDA is calculated as EBITDA adjusted to exclude the gain or loss on disposal of assets, impairment charges, acquisition costs, other non-cash items, and other unusual or non-recurring charges.. Empire Q3 YTD based on historical results
Slide 24: ARKO Pro Forma Capitalization
ARKO Pro Forma Capitalization ‘Ase Commeniy Ee 4GPM ARKO Pro Forma Capital Structure Summary poe ARKO Empire GPMP Minority ARKO Pro Forma (Sin millions) at 9/30/20 Adj. dj. Closing ARKO QB GPM Investment PNC Line of Credit"? $0.0 - - - $0.0 ‘Ares Term Loan 161.2 63.0 : : 224.2 Lae M&qT Term 28.7 : :
Slide 25: Appendix 1: Industry Overview
APPENDIX 1: INDUSTRY OVERVIEW
Slide 26: Large, Growing, Recession-Resistant Industry
Large, Growing, Recession-Resistant Industry U.S. IN-STORE C-STORE SALES VS. U.S. CONSUMPTION INDEX Industry has grown at a 3.4% CAGR over the last 12 years U.S. CONVENIENCE STORE IN-STORE SALES OVER TIME ($ in billions) ATTRACTIVE INDUSTRY DYNAMICS: Strong fundamentals Large, mature industry Consis
Slide 27: Industry Continues to Experience Meaningful Consolidation Activity
Industry Continues to Experience Meaningful Consolidation Activity Source: Raymond James database. Note: Includes U.S. convenience store transactions, including acquisitions of dealer-operated sites. Excludes sale-leaseback transactions. Includes 3,900 store acquisition of Speedway by 7-Eleven. 24 3
Slide 28: Appendix 2: Supplementary Financial Information
APPENDIX 2: SUPPLEMENTARY FINANCIAL INFORMATION
Slide 29: Reconciliation of ARKO Holdings, Ltd. GAAP Net Income to Adjusted EBITDA
Reconciliation of ARKO Holdings, Ltd. GAAP Net Income to Adjusted EBITDA Eliminates the non-cash portion of rent, which reflects the extent to which our GAAP rent expense recognized exceeds (or is less than) our cash rent payments. The GAAP rent expense adjustment can vary depending on the terms of
Slide 30: Reconciliation of Empire Petroleum Partners, LLC GAAP Net Income to Adjusted EBITDA
Reconciliation of Empire Petroleum Partners, LLC GAAP Net Income to Adjusted EBITDA a) Eliminates the non-cash (gain) loss from the sale of property and equipment.