Arko (ARKO) Q4 2023 earnings summary

Executive summary

• FY2023 revenue was $9.41B, net income $34.6M and Adjusted EBITDA $290.4M, down from $301.1M; lower same-store fuel contribution weighed on EBITDA.

• Merchandise contribution and margins expanded, while Q4 same-store merchandise sales weakened; priorities for 2024 include organic growth and retail productivity.

Financial highlights

• FY merchandise sales were $1,838.0M versus $1,647.6M; merchandise contribution rose to $585.1M from $501.2M.

• Q4 revenue was $2.23B versus $2.18B; net income was $1.1M versus $12.9M. FY net income was $34.6M versus $72.0M.

• Adjusted EBITDA was $65.5M in Q4 versus $72.4M and $290.4M for FY versus $301.1M; FY diluted EPS was $0.24 versus $0.53.

Outlook and guidance

• FY2024 Adjusted EBITDA guidance is $250M-$290M, based on average retail fuel margin of 36-40 CPG.

• Q1 is expected to contribute 12%-14% of FY Adjusted EBITDA; Q1 retail fuel margin guidance is 35-39 CPG, with current trends expected to normalize after Q1.

• Growth priorities include organic performance, in-store marketing and acquisitions; an investor day later in 2024 is planned to present a multi-year roadmap.