ARKO Corp.

Greetings. Welcome to the ARCO's first quarter 2022 financial results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Ross Parman, Vice President, Investor Relations. You may begin.

Thank you. Good morning and welcome to ARCO's first quarter fiscal year 2022 earnings conference call and webcast. On today's call are Ari Kotler, Chairman, President, and Chief Executive Officer, and Don Bassell, Chief Financial Officer. Our earnings press release quarterly report that was filed with the SEC and earnings presentation are available on ARCO's website at arcocorp.com. Before we begin, Please note that all first quarter 2022 financial information is unaudited, and during the course of this call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of words such as will, may, expect, plan, intend, could, estimate, project, and similar references to future periods. These statements speak only as of today, and 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. Please refer to today's press release, our quarterly report on Form 10-Q for the quarter ended March 31, 2022, and our other filings with the SEC, including our annual report on Form 10-K, for a 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. Please note that on today's call, management will refer to non-GAAP financial measures, including same-store measures, EBITDA, and adjusted EBITDA. While the company believes 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. And now, I would like to turn the call over to Ari.

Thank you, Ross, and good morning, everyone. We are pleased to report strong results for the first quarter of 2022. On today's call, I will briefly review our financial highlights for the quarter ended March 31st, 2022. I will also provide an update on our business and key trends. Don will review our financial results in more detail, and we will take your questions. Our first quarter adjusted EBITDA was $50.1 million. This is an increase of 18.4% versus the prior year period. We have achieved double-digit adjusted EBITDA growth in each of the five full quarters since we became publicly listed on NASDAQ. We are comparing these strong results to a banner first quarter in 2021. Both quarters had their challenges, but they were much different from a consumer and business perspective. In the first quarter of 2021, COVID vaccine were rolling out. Consumers had significant spending power, Fuel prices were approximately $1 less. This year, rapid inflation and issues created by the tragic war in Ukraine led to completely different market conditions and a considerably different consumer environment than in the first quarter of 2021. We believe that we are well positioned for an economic environment characterized by increased price sensitivity. For example, we are expending our offering of lower-priced pizza, food, and fresh coffees. Even with much higher inflation and rising fuel prices in the first quarter of 2022, we had a very strong quarter. On a two-year stock basis, same-store merchandise sales, excluding cigarettes, increased 9.3%. We see a promising sales trajectory and velocity heading into the second quarter. Merchandise gross margin increased to 29.5%, or 210 basis points compared to the prior year quarter. Game Store merchandise gross profit increased by $3.8 million compared to the prior year quarter. We strive to price our fuel competitively. Retail fuel gallons sold grew by 5.9% compared to the prior year quarter. Retail fuel margin increased to 37.5 cents per gallon from 32.1 cents per gallon in the prior year quarter. This resulted in an increase same store fuel gross profit of $9.7 million, excluding intercompany charges, compared to the prior year quarter. We remain committed to our organic grow initiative. We are announcing our store base with this strategic long-term program to ensure that our offering is competitive for both our loyal customers and attract new customers. In the quick-serve restaurants, we opened two Sabara franchises in Q1 and Bearing any supply chain difficulties with equipment, we are on track and expect to open a total of 50 Sbarro this year. We believe these partnerships add value to our stores and resonate with price-conscious consumers. In the first quarter, we installed bean-to-cup coffee at 75 stores. As of today, we have installed bean-to-cup in more than 270 stores. These stores are now in the coffee business 24-7. We remain on track to deliver on this initiative, and like we stated in Q4, we plan to install machines in 525 stores in 2022. This quarter, we also completed one remodel in Easy Mart in Broken Bow, Oklahoma. As of today, we have completed six remodels in 2022, including one being completed this week. Turning to raise and rebuild. I want to walk you through early results from a recent raise and rebuild. Store 3894 has catchment on Interstate 77, close to the border of North and South Carolina. The following numbers reflect the first quarter of 2022 compared to the same period in 2021. Customer count increased by 50%. Gallon sold increased 112.7%. Same-store sales increased 66%. Importantly, same-store sales, excluding cigarettes, increased 94%. We are pleased with these results. We are continuing to assess raise and rebuild, remodel, and new-to-industry stores as part of our organic growth strategy. We continue to announce our loyalty program. We are pleased with key matrix of this program, which posted nearly 600,000 opt-in members as of the end of the first quarter. This represents a large base of loyalty members' consumers with whom we can directly communicate and provide special offers. Two metrics I'd like to share show the value of our loyalty program. And our customers have made seven more trips per month, and these customers have spent about an additional $90 per month, more than non-enrolled customers. We consider this to be excellent numbers. We believe continuing investment in this program is essential. We remain on track to deliver our announced loyalty app this year. Moving to other business updates. We announced the Quartz Petroleum acquisition in late February. We expect the closing to occur late second quarter, early third quarter of 2022. Also, we'll then add the following operating segments in addition to GPMP. Our retail business, one of the largest convenience stores operator in America. Our national wholesale operation and Quartz, the largest catalog fueling operation on the east coast of the United States. Importantly, day-to-day operation of each operating segment are overseen by highly skilled leadership with decades of diverse experience. This includes employees who are experts in convenience stores, full-box multi-unit retailing, merchandising, fuel, environmental, human resources, and sales. We plan to continue to report results of each operating unit and GPMT separately. Our goal is to provide investors visibility into our finances and operations. We believe there are long-term growth opportunities in each operating segment. Our in-store initiative and merchandising strategy, combined with our scale at AllSales, are an advantage when pursuing these opportunities. Our priority continues to be deploying capital at attractive returns. We believe our program agreement with Oak Street Real Estate Capital is the only competitive advantage. On April 13, we announced an amendment to our agreement with Oak Street, including a one-year extension to the agreement and a $1.15 billion real property commitment from Oak Street that may be used during the extended term of the agreement. This is in addition to approximately $253 million, which has already been utilized under the original Oak Street agreement, and to the $130 million in real estate they have agreed to purchase in the QALS acquisition. We have an aggressive growth strategy. Working with Oak Street is giving us significant deal-making flexibility and the ability to close deals at highly attractive multiples. As a result of our cash generation ability and our strong financial position, we have continued to return capital to our loyal stockholders. Our Board of Directors has declared our second quarterly dividend, and we continue our publicly announced share repurchase program up to an aggregate of $50 million. Our excellent results demonstrate our strength and capabilities. We continue to execute our differentiated strategy. We believe our liquidity, dealmaking ability, and other strategic partnerships put us in a very good place as dealmaking velocity increased in the market. Importantly, we believe that our skill and strategy allow us to succeed while remaining highly competitive, both on fuel and merchandise. We strive to put our customer first, particularly in uncertain times. I would like now to turn the call over to Don, who will walk you through our financial results.