ARKO Corp.

the future periods. These statements speak only as of today, are based on management's current expectations and beliefs, and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Today's press release and the company's filings with the SEC include detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. The company expects to file its annual report on Form 10-K for the year ended December 31, 2021, on February 25, 2022. Except as required by federal securities laws, ARCO does not undertake to publicly update or revise any forward-looking statements subsequent to the date made as a result of new information, future events, changing circumstances, or for any other reason. Please note that on today's call, management will refer to non-GAAP financial measures, including same-store measures EBITDA, adjusted EBITDA, and adjusted EBITDA net of incremental bonuses. While the company believes that these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Please refer to today's press release for reconciliations of our non-GAAP measures to the most directly comparable GAAP measures. I would also like to note that we are conducting our call today from our respective remote locations. As such, there may be brief delays, crosstalk, or other minor technical issues during this call. We thank you in advance for your patience and understanding. On today's call, Ari will review the quarter and year ended December 31, 2021. Don will then review our financial results in more detail before they take your questions. And now, I would like to turn the call over to Ari. Good morning, everyone.

We are pleased to report strong results for the fourth quarter and fiscal year 2021. For the full year, adjusted EBITDA net of incremental bonuses was a record $256.6 million. Fourth quarter 2021 adjusted EBITDA net of incremental bonuses was $58.4 million, a 44% increase versus the fourth quarter of 2020. We have undertaken long-term strategic initiative in our convenience stores and in our wholesale division that we believe position us well for considerable long-term profitable growth. Inside the store, merchandise margin expanded 290 basis points in the fourth quarter to 30%. We continue to drive margin expansion broadly and in key categories. We also saw considerable margin grow in grab-and-go and frozen food, a strategic pivot that has been a hit with our customers and currently continues to see substantial growth. In fuel, we were able to grow our retail margin to 33.5 cents per gallon for the fourth quarter, despite rising fuel prices. In May, we acquired 60 express stop stores and gas station in Michigan and Ohio. In November, we acquired 36 company operated and be marked convenience stores and gas station, plus the development sites all located in North Carolina. And during 2021, we rapidly integrated and realized significant synergies with Empire. For the year, this acquisition added $36.8 million of merchandise contribution and $53.9 million in retail fuel profitability. We recently announced that we have agreed to buy the Cardlock business and certain other assets of Quartz Petroleum. Quartz Footprint is in prime locations along the Northeast and Southeast seaboard, our own territory. These are easily accessible commercial sites exclusively for fleet fueling of light industrial trucks and commercial vehicles. This is an exciting and unique deal that we believe will drive strategic growth. With 185 card lock sites, Quartz is the largest fleet fueling card lock operator on the US East Coast. This is a business that we believe cannot be replicated today. The acquisition of these assets complement and expand our core wholesale strategy add the mature fleet fueling platform, and boost our supply and distribution capabilities within our 33 states and Washington, D.C. fuel supply footprint. At the time of signing the asset purchase agreement, using estimated forward-looking non-gap measures, the company expects that this acquisition will add approximately $17.3 million of adjusted EBITDA on an analyzed basis after incremental rent of approximately $7.7 million to be paid to Oak Streets the private equity real estate firm that will fund approximately $130 million of the purchase price. The company intends to finance from its own sources the value of inventory acquired at the closing and the remaining approximately $40 million of this purchase price. Most importantly, we believe we can rapidly synergize and strategically grow this business. Moving to some of our strategic longer-term initiatives. On a remodel and organic grow opportunity, we believe that we have an expensive embedded opportunity to enhance our existing store base through multiple organic grow initiatives. We constantly monitor macroeconomic factors such as rising material costs, shortages, construction industry price fluctuations, and labor shortages. And we closely analyze key performance indicators in a remodel program. Two stores were remodeled in 2021, and we completed the raise and rebuild in Rock Hill, South Carolina in November 2021. We have seen encouraging results so far from this location. We opened one new Duncan location in 2021. Six stores are undergoing remodels to be completed in the first half of 2022. We plan to break ground on a new two industry store in Atlanta, Texas in the fourth quarter of 2022. and we are planning to open additional Dunkin' locations in 2022. We also routinely remodel our Dunkin' locations. While we plan our pace moving forward, including review of food erase and rebuild and NTI opportunities, there are several organic growth strategies that we intend to deploy in 2022. I will detail our key areas of focus now. One area of focus is quick-serve restaurant partnerships. Last December, we launched a pilot program with two in-store Sbarro's pizzas. Pizza is one of the top food service items in convenience stores. We think this is an excellent program that aligns with key elements of a remodeled program and enhance the in-store experience. Customer feedback has been extremely positive. Based on preliminary results, including very promising early sales and margin growth, we are planning to build out approximately 50 more in-store Sbarro's in 2022. Importantly, because of our partnership with Sbarro, we plan to move forward very fast with this initiative. The second area that drives growth and enhance the overall customer experience has been to cup coffee. Consumption habits are changing. We believe that being in the always fresh, hot and iced coffee business 24 hours a day, seven days a week is very important. We are rapidly expanding this program with an initial target of 525 stores. This program eliminates waste and allows for the store associate to spend less time making coffee and more time on customer service. We are also working to expand our successful grab-and-go freezer strategy to even more stores. Another long-term strategic initiative that we are excited about is our Fast Rewards Customer Relationship Marketing Program. We're investing heavily in this program. We know our most loyal customers visit us more often and have larger baskets. One area of investment is the upgrade of our mobile app. This will be a significant redesign with a better user experience. The new app will also announce analytic capabilities to make us even more competitive across our footprint. This is important work that we believe will enable even deeper engagement and connection with our customers to drive trips, sales, and overall enrollment in the rewards program. There are exciting new features on the app. Customers will have the ability to order through the app for in-store pickup or delivery. There will be in-app messaging and advertising, customer-specific offers and deals. We will also enable geofencing for local fuel pricing and brand customization so users are sent to their local brands such as Fast Mart, Easy Mart, and Village Pantry, just to name a few of our community brands. On our ESG and EV initiative, we have two important areas where we continue to make progress. We take our responsibility to society very seriously. We believe that we manage this company in a highly responsible manner. It is an expectation of our stakeholders, including the communities where we operate, that we adopt formal environmental, social, and governance practices. We are working with a global service firm to help us establish an ESG framework aligned with the global standard. We will keep you updated on our progress. We also take the EV opportunity very seriously. ARCO successfully won grants for EV chargers to be installed in two stores in Colorado that we expect will come online in third quarter 2022. We are applying the learning from this process to future activities and building our capabilities. While we believe near-term adoption will center around our location on high traffic corridors, we are pursuing grants across our footprint. It is important to remember that our stores are primarily located in smaller towns and rural areas. As demand builds, we believe we are well positioned to make EV charging a serious part of our business and make EV drivers loyal customers of our stores. We also continue to pursue acquisitions. As you know, we look at many potential transactions. After more than 20 deals since 2013, we believe we have a winning strategy and can continue to acquire and successfully integrate at any scale. We have many levers for growth and we are very opportunistic and deliberate about pursuing them. We always consider the best way to strategically deploy capital in a highly disciplined manner. From a non-marketing initiative to food service opportunities, we are highly focused on growth. We will continue to pursue acquisition of convenience stores as well as bolt-on acquisition like the Cardlock, Walls Assets, and also we continue to pursue renewal and new independent dealer businesses. Today we announced that our board of directors declare our first ever quarterly dividend of two cents per share of common stock and authorize a share repurchase program for up to an aggregate amount of $50 million. Our ability to return cash to our stockholders is consistent with our capital allocation framework and reflects our confidence in the strength of our cash generation ability and strong financial position. We ended physical, 2021 in a very strong position. We were able to successfully grow our business while navigating a challenging environment. We look forward to building on these successes in 2022 and behind. I would like now to turn the call over to Don, who will walk you through our financial results in detail.

Thanks, Ari. It's great to be speaking with you all today about both our strong fourth quarter and full year 2021 results. Beginning with the quarter, Total revenue excluding fuel was $418 million, a 6% increase from the prior year period. Merchandise margin dollars increased by $17.1 million versus prior year, while merchandise margin increased to 30% from 27.1%, largely due to our continued strategic efforts in the high-growth categories such as frozen food and grab-and-go. Retail fuel profitability, excluding intercompany charges for the quarter, increased $16.6 million compared to the prior year period, with Empire, Express Stop, and Handy Mart accounting for $9.3 million of the increase, coupled with same-store fuel profit increasing by $7.5 million. Retail fuel margin in the quarter was 33.5 cents per gallon versus 29.3 cents per gallon for the prior year. For the fourth quarter of 2021, wholesale fuel profitability including intercompany charges, increased $7.6 million compared to the prior year, with most of the growth a result of the Empire acquisition. Fuel contribution from fuel supply locations grew by $5 million for the quarter compared to the prior year, driven by an approximate 15 million gallon increase in fuel volume and a 2.1 cent increase in fuel margin per gallon for these locations versus the fourth quarter of 2020. Fuel contribution from consignment agent locations grew $2.6 million for the quarter compared to the prior year due to an increase in fuel margin cents per gallon of 6.5 cents. Volume was flat compared to the prior year period. Fourth quarter store operating expenses were up $20.7 million, or 14%, versus prior year due to incremental expenses related to the Express Stop, Handy Mart, and Empire acquisitions. in addition to higher credit card expenses and increase in expenses at same stores. General and administrative expenses increased $3.8 million, or 13%, for the fourth quarter as compared to the prior year, primarily reflecting support for our recent acquisitions as well as annual wage increases, incentive accruals, and stock compensation expenses. Net interest and other financial expenses decreased $4.3 million to $16.2 million in the quarter, primarily due to fair value adjustments or warrants and a net period-over-period increase in foreign currency gains. Net income for the quarter was $12.9 million versus a loss of $6.2 million for the prior year. Adjusted EBITDA net of incremental bonuses for the quarter was $58.4 million, an increase of 44% compared to the fourth quarter of 2020. Turning to our full-year results, Total revenue excluding fuel was $1.7 billion, a 9% increase from the prior year. Merchandise margin dollars increased by $66.6 million versus the prior year. The increase in merchandise margin dollars was primarily due to the acquisition of the Empire, Express Stop, and Handymart businesses, coupled with 1.6% same-store merchandise sales increase. Merchandise margin increased 210 basis points to 29.3% as a result of changes in the sales mix and improved purchasing economics. Retail fuel profitability, excluding intercompany charges for the year, increased $50.8 million as our strong fuel margin capture of 33.7 cents per gallon versus 31.9 cents per gallon in the prior year enabled us to more than offset same store volume losses of 1.3%. For the full year, wholesale fuel profitability including intercompany charges, increased $66.5 million compared to the prior year, with most of the growth a result of the Empire acquisition. Fuel contribution from fuel supply locations grew by $37.4 million compared to the prior year, driven by an approximate 605 million gallon increase in fuel volume and a 1.3 cent increase in fuel margin per gallon for fuel supply locations versus 2020. Fuel contribution from consignment agent locations grew $29.1 million compared to the prior year due to increases in both volume of approximately 106 million gallons and fuel margin cents per gallon of 3.5 cents. Store operating expenses for the year were up 18.4% versus prior year due to incremental expenses related to the Empire acquisition and our 2021 acquisitions and increased expenses at same stores. General and administrative expenses increased 32% for the year compared to the prior year, primarily due to expenses associated with the empire acquisition, annual wage increases, incentive accruals, and stock compensation expenses. Net interest and other financial expenses increased by $21.3 million to $71.2 million for the year, primarily due to higher interest expense for outstanding debt, $4.5 million additional interest for the early redemption of the Israeli bonds, $6.3 million write-off of deferred financing costs and $6 million fair value adjustment of our warrants. Net of period-over-period increase in foreign currency gains recorded of $8.1 million. Full-year net income was $59.4 million compared to $30.6 million for the prior year. Incremental earnings in 2021 were related to strong contribution from the Empire acquisition coupled with strong same-store returns merchandise gross margin with partial offsets coming from higher expenses, including credit card fees and depreciation related to the acquisitions. Adjusted EBITDA net of incremental bonuses for the year was $256.6 million, an increase of $73.2 million or 40% compared to 2020. Increased merchandise contribution at same stores and approximately $78 million of incremental adjusted EBITDA from the 2021 acquisitions and the Empire acquisition were partially offset by higher credit card fees, a slight decrease in gallons sold, and fuel profit at same stores. Our balance sheet remains very strong. On December 31st, 2021, our total liquidity was approximately $754 million, consisting of cash and cash equivalents and short-term investments of approximately $310 million and approximately $444 million available under our lines of credit. with net debt excluding capital leases was approximately $408 million, putting our net leverage at 1.6 times. For the full year, net cash provided by operating activities was $159.2 million. Capital expenditures were approximately $73 million for the year, representing capital expenditures of $226.2 million, net of $152.9 million of proceeds paid by Oak Street, for two transactions accounted for as sale-leasebacks and the purchase of certain fee properties, compared to $44.6 million in the prior year. Today, we announced that our board of directors declared our first-ever quarterly dividend of $0.02 per share of common stock. This is to be paid on March 29, 2022 to the stockholders of record as of March 15, 2022. The company's board of directors also authorized a share repurchase program for up to an aggregate amount of $50 million of our outstanding shares of common stock. As of December 31st, 2021, there were 124.4 million shares of our common stock outstanding. We ended the year with 1,406 retail sites and 1,628 wholesale sites. I'm pleased that we have demonstrated our strength and capabilities through our strong financial results for the year. We continue to execute as we navigated through a constantly changing consumer environment and we believe we are positioned to take our business to the next level. And with that, I'll turn it back over to Ari.