Arko Corp. · NASDAQ:ARKO
Arko — Investor Presentation (April 2021)
31 slides from Arko's investor presentation, Apr 6, 2021
Slide 1: Investor Presentation April 6, 2021
Exhibit 99.1 INVESTOR PRESENTATION April 6, 2021
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 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 various real estate and fuel transactions totaling >$2
Slide 5: 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 based on 2019 store counts with the exception of ARKO. Includes ‘Q1 – ‘Q3 2020 contribution of Empire in addition to ARKO’s FY2020 re
Slide 6: Investment Highlights
INVESTMENT HIGHLIGHTS
Slide 7: Investment Highlights
Investment Highlights 1 A Leader in the Large and Growing 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 Expected Significant Embedded Growth via Remodel O
Slide 8: Acquiror-of-Choice in Highly Fragmented Industry with Long Runway
(3) We Believe We Are an 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. As of 2020 there are 150,274 sites Data from CSP’s Top 202 Convenience Stores 2020 Reflects
Slide 9: Entrenched, Local Brands Plus Benefits of Participation in Large Network
Entrenched, Local Brands Plus Benefits of Participation in Large Network ~50 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 10: Diversified Community Brands with Regional Footprints
Diversified Community Brands with Regional Footprints Note: Store count as of 12/31/20; excludes ten Dunkin’ locations, two standalone Subway locations, as well as 57 additional stores carrying banners with less than ten locations across network. 265 2018 213 Legacy 144 2013 126 2016 88 2015 92 2017
Slide 11: 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 s
Slide 12: 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 13: Strong Return on Capital: Sustained Price Discipline and Synergies
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 14: 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 15: 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 s
Slide 16: Roughly Half of Company Operated Stores Are Candidates for 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: Remodeling Platform
Remodeling Platform 4 Remodel Platform to Drive Increased Foot Traffic and Inside Sales
Slide 19: 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. Virginia is allowing for gaming for a short period of time with fees being paid to a COVID Relief Fund and GPM is taking advantage of this window for the full period gaming i
Slide 20: 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 s
Slide 21: Attractive Business Mix with Enhanced Stability from Empire Petroleum
An Attractive Business Mix with Enhanced Stability Provided by Strategic Empire Petroleum Combination Note: Reflects ARKO’s store count as of 12/31/20. Includes ‘Q1 – ‘Q3 2020 contribution of Empire in addition to ARKO’s FY2020 results. Excludes wholesaler allowances. MERCHANDISE GROSS PROFIT MIX (F
Slide 22: Empire Petroleum: Highly Strategic Combination
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 23: 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 24: Recent Updates
Recent Updates FY 2020 EARNINGS ANNOUNCEMENT PENDING ACQUISITION OF EXPRESS STOP PILOT WITH CHAKRATEC Full year net income was $30.1 million for 2020 Adjusted EBITDA, net of incremental bonuses for the year was $183.4 million, an increase of 135% Same store merchandise sales increase 3.5% for full y
Slide 25: Financial Overview
FINANCIAL OVERVIEW
Slide 26: Large, Growing, Recession-Resistant Industry
Large, Growing, Recession-Resistant Industry U.S. IN-STORE C-STORE SALES VS. U.S. CONSUMPTION INDEX Industry has grown at a 3.4% CAGR over the last 12 years U.S. CONVENIENCE STORE IN-STORE SALES OVER TIME ($ in billions) ATTRACTIVE INDUSTRY DYNAMICS: Strong fundamentals Large, mature industry Consis
Slide 27: 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 28: Strong Track Record of Growth Projected to Continue
Strong Track Record of Growth Projected to Continue Adjusted EBITDA, net of incremental bonuses is calculated as EBITDA adjusted to exclude the gain or loss on disposal of assets, impairment charges, acquisition costs, other non-cash items, other unusual or non-recurring charges and incremental bonu
Slide 29: Capitalization
Capitalization Total capacity of up to $140 million. Current availability of $100 million with the option to add an accordion facility of $200 million. Bonds are denominated in New Israeli Shekels (NIS). USD value at 12/31/20 was ~$76 million (fully paid on March 30, 2021). ARKO cash and re4sbalance
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Slide 31: Reconciliation of ARKO GAAP Net Income to Adjusted EBITDA, Net of Incremental Bonuses
Reconciliation of ARKO GAAP Net Income to Adjusted EBITDA, Net of Incremental Bonuses 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