Arko Corp. · NASDAQ:ARKO
Arko — SPAC Merger (November 2020)
54 slides from Arko's SPAC merger presentation, Nov 19, 2020
Slide 1: Investor Presentation November 2020
INVESTOR PRESENTATION NOVEMBER 2020 Exhibit 99.3
Slide 2: Disclaimer
Disclaimer This investor presentation (“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, debt o
Slide 3: Disclaimer: Forward Looking Statements
Disclaimer Forward Looking Statements These materials include “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 Corp., Haymaker, Arko and GPM
Slide 4: Other Information: Parties Involved in the Transaction
Other Information Parties Involved in the Transaction Prior to the closing of the business combination, Arko Holdings Ltd., a holding company, owns a majority of the outstanding equity of GPM Investments, LLC, which is the entity responsible for operating the business described in this presentation.
Slide 5: Today's Participants
Today’s Participants ARKO TEAM HAYMAKER TEAM ARIE KOTLER Founder, Director, CEO & President DON BASSELL CFO Acquired GPM Investments, LLC in 2011 at which time it operated and supplied 320 sites Seasoned executive experienced in international financial markets and publicly-traded companies/entities
Slide 6: Material Updates Enhance Likelihood of Close
Material Updates Enhance Likelihood of Close Recent developments Secured a commitment for an up to $100 million private placement in convertible preferred stock from MSD Capital Provides additional validation of the transaction from a highly sophisticated investor that completed substantial due dili
Slide 7: Potential Incremental EBITDA
Potential Incremental EBITDA EMBEDDED UPSIDE TO 2021E PROJECTIONS Retail fuel margins, which outperformed expectations throughout much of 2020 and remain robust today, are assumed to be 26.0¢/gal versus 31.6¢ in 2020E. For each 1.0¢/gal. increase to retail fuel margins, EBITDA would be $11.0 million
Slide 8: Transaction Timeline
Transaction Timeline November 19th Revised projections for 2020, 2021 Announces MSD investment and favorable Israeli shareholder vote First half of December HYAC redemption election deadline HYAC shareholder meeting Second half of December Israeli cash vs. stock election period Anticipated closing
Slide 9: Why Haymaker Loves ARKO
Why Haymaker Loves ARKO 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 Acquiror of Choice 4 Significant Embedded Growth via Empire Acquisition
Slide 10: Transaction Summary
Transaction Summary Note: Transaction summary includes the acquisition of the Empire Petroleum business; assumes no Haymaker shareholder redemptions. Adjusted EBITDA is calculated as EBITDA adjusted to exclude the gain or loss on disposal of assets, impairment charges, acquisition costs, other non-c
Slide 11: Transaction Summary (Cont'd)
Transaction Summary (Cont’d) Note: Transaction summary includes the acquisition of the Empire Petroleum business; assumes no Haymaker shareholder redemptions. 1.0 million founder shares have been cancelled; 4.2 million founder shares will only be issued upon achieving the following milestones and ar
Slide 12: World-Class Investor Base Rolling 100%
World-Class Investor Base Rolling 100% 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. Pro forma Adjusted EBITDA gives effect to acquisitions a
Slide 13: Rapidly Growing Leader in U.S. C-Store Industry
RAPIDLY GROWING LEADER IN U.S. C-STORE INDUSTRY
Slide 14: ARKO: A Rapidly Growing Leader in the U.S. Convenience Store Industry
ARKO: A Rapidly Growing Leader 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 6/30/20 and Empire’s store count as of 10/6/20. Includes full year contribution of Empire. Adjusted EB
Slide 15: 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 16: 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 17: Dedicated M&A Team with Well-Developed Diligence 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 18: Strong Return on Capital: Sustained Price Discipline
Strong Return on Capital: Sustained Price Discipline Augmented by Significant Synergy 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-pri
Slide 19: Empire Petroleum: Highly Strategic Combination
Empire Petroleum: Highly Strategic Combination that Meaningfully Increases the Company’s 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
Slide 20: Current Business Mix is Diversified and Stable
Current Business Mix is Diversified and Stable, Magnified 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 6/30/20 and Empire’s store count as of 10/6/20. Based on Empire’s 2019 financials. ARKO STANDALONE BUSI
Slide 21: Financial Overview
FINANCIAL OVERVIEW
Slide 22: Updates to 2020E and 2021E Projections
Updates to 2020E and 2021E Projections 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. Pro forma Adjusted EBITDA gives effect to acquisitions a
Slide 23: EBITDA Bridge 2019-2020
EBITDA Bridge 2019-2020 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. Excluding extraordinary bonuses related to 2020 performance, 2020E Adju
Slide 24: EBITDA Bridge 2020-2021
EBITDA Bridge 2020-2021 Note: Includes $3.5 million of public company expenses. 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. Pro forma Adjus
Slide 25: Valuation Perspective
VALUATION PERSPECTIVE QB = || tue Perfect Harvest Coffee Co. al re Artisanal s. oon Brew, Py )- Flavor Smooth
Slide 26: Publicly Traded Peer Analysis
2016-2019 RETURN ON INCREMENTAL INVESTED CAPITAL(5) NET DEBT / 2020E PRO FORMA ADJ. EBITDA(4) Publicly Traded Peer Analysis (3)Median multiple of ten most recent publicly disclosed U.S. transactions exceeding $1 billion (excluding ARKO related transactions). Excludes capital leases. Incremental EBIT
Slide 27: Publicly Disclosed M&A Comparable Transactions
Publicly Disclosed M&A Comparable Transactions Acquirer Target Date Deal Size ($MM) 4/20/18 $2,150 2/13/19 $1,075 $2,100 7/31/19 MEDIAN: 12.2X 1/23/18 $3,305 9/30/14 8/29/14 6/28/17 $4,278 $1,700 $2,874 $2,098 $1,600 12/22/17 PUBLICLY DISCLOSED EV / EBITDA MULTIPLES(1) 3/16/15 Source: Public filings
Slide 28: Appendix 1: Industry Overview
APPENDIX 1: INDUSTRY OVERVIEW
Slide 29: Large, Growing, Recession-Resistant Industry
Large, Growing, Recession-Resistant Industry U.S. IN-STORE C-STORE SALES VS. U.S. CONSUMPTION INDEX Industry has grown at a 3.4% CAGR over the last 12 years U.S. CONVENIENCE STORE IN-STORE SALES OVER TIME ($ in billions) ATTRACTIVE INDUSTRY DYNAMICS: Strong fundamentals Large, mature industry Consis
Slide 30: Adjusting to COVID-19's Impact on Convenience Store Channel
Adjusting to COVID-19’s Impact on Convenience Store Channel Convenience stores were designated as essential businesses Decline in fuel volumes due to unprecedented demand erosion was more than offset by historically high fuel margins Simultaneously, inside sales benefitted from shifting consumer beh
Slide 31: Solid Performance Amidst Changing Industry Dynamics
Solid Performance Amidst Changing Industry Dynamics Source: NACS; excludes three vehicles with MSRPs of $100,000 or more. Source: Office of Energy Efficiency & Renewable Energy. Source: ICF Strategic Consulting. (4)The Electric Vehicle World Sales Database. (5)Source: Equity research published by Ra
Slide 32: Appendix 2: Supplementary Company Information
APPENDIX 2: SUPPLEMENTARY COMPANY INFORMATION
Slide 33: 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, Director, CEO & President Acquired GPM Investments, LLC i
Slide 34: Haymaker's View: Compelling Transaction, Attractive End Market
Haymaker’s View: Compelling Transaction, Attractive End Market, Proven Operator, Acquiror & Differentiated Market Leader ARKO HAS A CONSISTENT RECORD OF DELIVERING EXCEPTIONAL GROWTH FOR ITS INVESTORS ~32% adjusted EBITDA(1) CAGR from 2016 to 2020E (2020E adjusted EBITDA of ~$163 - 167 million(2)) S
Slide 35: Competitive Differentiators: Unique Value Proposition
Competitive Differentiators: Unique Value Proposition One of the largest and most active consolidators in the convenience store industry with a proven track record of successful integration and exceptional return on capital Unique focus on secondary and tertiary markets with differentiated approach
Slide 36: Roughly Half of Existing Stores Are Candidates for Remodel Program
Roughly Half of Existing 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 Significant, embedded growt
Slide 37: 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 38: Capturing Synergies Has and Will Continue to Create Substantial Value
Capturing Synergies Has and Will 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%)(2) 4.2% +9
Slide 39: 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 40: Acquiror-of-Choice in Highly Fragmented Industry
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 6/30/20 and Empire’s store count a
Slide 41: 11/18 Press Release: ARKO Continues to Expand Its QSR Presence
11/18 Press Release: ARKO Continues to Expand Its QSR Presence ARKO CONTINUES TO EXPAND ITS QSR PRESENCE AS CONSUMER PREFERENCES CHANGE AMIDST THE PANDEMIC Source: Business Wire, Inc.
Slide 42: 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 43: Diversified Community Brands with Regional Footprints
Diversified Community Brands with Regional Footprints Note: Store count as of 6/1/20; 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 reta
Slide 44: Welcoming, Attractive In-Store Presentation
Welcoming, Attractive In-Store Presentation
Slide 45: ARKO Representative Site Photos
ARKO Represe ive Site Photos GPM Llu Haymaker Acquisition
Slide 46: ARKO Representative Site Photos
ARKO ve Site Photos GPM Llu Haymaker Acquisition
Slide 47: Appendix 3: Supplementary Financial Information
APPENDIX 3: SUPPLEMENTARY FINANCIAL INFORMATION
Slide 48: 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. Pro forma Adjusted EBITDA gives effect to a
Slide 49: Pro Forma Capitalization
Pro Forma Capitalization Total capacity of up to $140 million. Current availability of $100 million with the option to add an accordion facility of $200 million. Cash contributed to pro forma balance sheet comprised of $406 million of cash in Haymaker trust account increased by $100 million from the
Slide 50: Debt Schedule
Debt Schedule Until this loan is fully repaid, 98% of the outstanding principal amount of this loan is secured by U.S. Treasury or other investment grade securities. Facility Principal Interest Rate Prepayment Penalty Amortization Covenants Issue Date Maturity Estimated at Close As of 6/30/20 GPM In
Slide 51: Reconciliation of Arko Holdings, Ltd. GAAP Net Income to Adjusted EBITDA
Reconciliation of Arko Holdings, Ltd. GAAP Net Income to Adjusted EBITDA Note: See footnotes on following page.
Slide 52: Reconciliation of Arko Holdings, Ltd. GAAP Net Income to Adjusted EBITDA (Cont'd)
Reconciliation of Arko Holdings, Ltd. GAAP Net Income to Adjusted EBITDA (Cont’d) 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
Slide 53: Adjusted EBITDA Reconciliation: Arko Holdings Ltd. to ARKO
Adjusted EBITDA Reconciliation: Arko Holdings Ltd. to ARKO Includes Adjusted EBITDA attributable to the GPM minority investors.
Slide 54: Significant Community Brand Equity Across Expansive Store Portfolio
Significant Community Brand Equity Across Expansive Store Portfolio