Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company”

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): ☐ YES ☒ NO

As of ~~November 10, 2021,~~May 3, 2022, the registrant had ~~124,427,805~~122,251,579 shares of its common stock, par value $0.0001 per share (“common stock”) outstanding.

This Quarterly Report on Form 10-Q contains “forward-looking statements,”�� as that term is defined under the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements about our expectations, beliefs or intentions regarding our product development efforts, business, financial condition, results of operations, strategies or prospects, including the potential impact of the COVID-19 pandemic on our businesses, operating results, cash flows and/or financial condition. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described below and in “Item 1A-Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 and this Quarterly Report on Form 10-Q, and described from time to time in our other filings with the Securities and Exchange Commission (the “SEC”). We do not undertake any obligation to update forward-looking statements, except to the extent required by applicable law. We intend that all forward-looking statements be subject to the safe-harbor provisions of the PSLRA. These forward-looking statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance.

Risks and uncertainties, the occurrence of which could adversely affect our business, include the following:

Unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q to the “Company,” “ARKO,” “we,” “our,” “ours,” and “us” refer to ARKO Corp., a Delaware corporation, including our consolidated subsidiaries.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Condensed Consolidated Statements of ~~Changes in Equity (cont'd)~~Cash Flows (cont’d)

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

The accompanying notes are an integral part of these condensed consolidated financial statements.

and the transactions related to the offering, issuance and sale of the Senior Notes, (iii) removed references to the Ares Credit Agreement and (iv) limited the collateral granted as security under the PNC Credit Agreement to a first priority lien on only receivables, inventory and deposit accounts. The Company did not incur additional debt or receive any proceeds in connection with this fifth amendment.

On June 24, 2021 (the “M&T Closing Date”), GPM entered into (i) a Second Amended, Restated and Consolidated Credit Agreement, by and among GPM, certain of its subsidiaries as co-borrowers and M&T Bank (the “A&R M&T Credit Agreement”) and (ii) a Second Amended and Restated Master Covenant Agreement, by and between GPM and M&T Bank (the “A&R M&T Master Covenant Agreement”).

~~On October 14, 2021, GPM entered into an amendment to each of the A&R M&T Credit Agreement and the A&R M&T Master Covenant Agreement (the~~ “~~M&T Credit Amendments~~”). The M&T Credit Amendments (i) permitted the Company to issue the Senior Notes and GPM and certain of the other guarantors to guarantee the Senior Notes, (ii) modified and introduced certain definitions in connection with permitting the Senior Notes and the transactions related to the offering, issuance and sale of the Senior Notes and (iii) removed references to the Ares Credit Agreement.

~~On October 21, 2021, the Company completed a private offering of $450~~ ~~million aggregate principal amount of~~ ~~5.125~~% Senior Notes due 2029 (the “Senior Notes”), pursuant to a note purchase agreement dated October 14, 2021, by and among the Company, certain of the Company’s wholly owned domestic subsidiaries (the “Guarantors”), and BofA Securities, Inc., as representative of the several initial purchasers named therein. The Senior Notes are guaranteed, on an unsecured senior basis, by all of the Guarantors.

~~The Company used the net proceeds from the issuance and sale of the Senior Notes to repay in full the approximately $223~~ ~~million of outstanding obligations under the Ares Credit Agreement, repay $200~~ million of the outstanding obligations under the Capital One line of credit and intends to use the remaining proceeds for general corporate purposes. The indenture governing the Senior Notes contains customary restrictive covenants that, among other things, generally limit the ability of the Company and substantially all of its subsidiaries to (i) create liens, (ii) pay dividends, acquire shares of capital stock and make payments on subordinated debt, (iii) place limitations on distributions from certain subsidiaries, (iv) issue or sell the capital stock of certain subsidiaries, (v) sell assets, (vi) enter into transactions with affiliates, (vii) effect mergers and (viii) incur indebtedness.

The Senior Notes and the guarantees rank equally in right of payment with all of the Company’s and the Guarantors’ respective existing and future senior unsubordinated indebtedness and are effectively subordinated to all of the Company’s and the Guarantors’

existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness; and are structurally subordinated to any existing and future obligations of subsidiaries of the Company that are not Guarantors.

The Board has also authorized a share repurchase program for up to an aggregate of $50 million of outstanding shares of common stock. ~~On January 21, 2021,~~The share repurchase program does not have a stated expiration date. In the three months ended March 31, 2022, the Company ~~issued~~repurchased approximately ~~296,150~~1.4 million shares of common stock ~~to Nomura in a private placement.~~under the repurchase program for approximately $12.0 million, or an average share price of $8.49.

7.6. Share-Based Compensation

~~In March 2021, the~~The Compensation Committee of the ~~Company’s~~ Board ~~of Directors (the “Board”)~~has approved the grant of non-qualified stock options, ~~and~~ restricted stock units (“RSUs”), and shares to certain employees, non-employees and members of the Board under the ARKO Corp. 2020 Incentive Compensation Plan (the “Plan”). Stock options granted under the Plan expire no later than ten years from the date of grant and the exercise price may not be less than the fair market value of the shares on the date of grant. Vesting periods are assigned to stock options and restricted share units on a grant-by-grant basis at the discretion of the Board. The Company issues new shares of common stock upon exercise of stock options and vesting of RSUs.

Additionally, a non-employee director may receive RSUs in lieu of up to 100% of his or her cash fees, which RSUs will be settled in common stock upon the director’s departure from the Board or an earlier change in ~~control. There~~control of the Company. In the three months ended March 31, 2022, 78,103 RSUs were issued to non-employee directors with a weighted average grant date fair value of $~~89,570~~8.77 per share, or $0.7 million. These awards are included in the table below under restricted stock units. As of March 31, 2022, 167,673 RSUs issued to non-employee directors ~~outstanding at September 30, 2021.~~were outstanding.

1913

Table of Contents

The following table summarizes share activity related to stock options and restricted stock units:


	Stock Options		Restricted Stock Units			Stock Options		Restricted Stock Units
	(in thousands)					(in thousands)
Options Outstanding/Nonvested RSUs, December 31, 2020		0		0
Options Outstanding/Nonvested RSUs, December 31, 2021							126		1,606
Granted		126		1,600			771		1,892
Options Exercised/RSUs released		0		(90	)		0		(364	)
Forfeited		0		0			0		(19	)
Options Outstanding/Nonvested RSUs, September 30, 2021		126		1,510
Options Outstanding/Nonvested RSUs, March 31, 2022							897		3,115

The following table summarizes the stock options granted in ~~2021:~~2022:


Weighted average fair value	$	9.60	$	2.70
Weighted average exercise price	$	10.00	$	9.11
Remaining average contractual term (years)		9.5		9.9

The fair value of each stock option award is estimated by management on the date of the grant using the Black-Scholes option pricing model. The following table summarizes the assumptions utilized in the valuation of the stock option awards granted in ~~2021:~~the three months ended March 31, 2022:


Expected dividend rate	~~0.0~~0.9	%
Expected stock price volatility	~~28.8~~28.3	%
Risk-free interest rate	~~1.6~~1.7	%
Expected term of options (years)	10.0

The expected stock price volatility is based on the historical volatility of the Company’s peer group’s stock price. The volatilities are estimated for a period of time equal to the expected term of the related option. The risk-free interest rate is based on the implied yield of U.S. Treasury zero-coupon issues with an equivalent remaining term. The expected term of the options represents the estimated period of time until exercise and is determined by considering the contractual terms, vesting schedule and expectations of future employee behavior. ~~All~~444,489 of ~~the~~ stock option awards were out of the money as of ~~September 30, 2021.~~March 31, 2022.

~~The~~In the three months ended March 31, 2022, the Company granted 693,590 time-vested RSUs with a weighted average grant date fair value of ~~time-vested~~$8.47 per share, or $5.9 million, and vesting over a weighted average period of 2.9years as of March 31, 2022.

In the three months ended March 31, 2022, the Company granted a target of 1,120,354 performance-based RSUs ~~granted in March 2021 was $9.60~~with a weighted average grant date fair value of $~~8.3~~8.35 ~~million and vesting over~~ ~~2.4~~ ~~years as of September 30, 2021.~~

~~In the first quarter of 2021, the Company granted a target of~~ ~~644,867~~ ~~performance-based RSUs with a grant date fair value of~~per share, or $~~6.2~~9.3 million. The ~~2021~~2022 performance-based RSUs were awarded to certain members of senior management in connection with the achievement of specific key financial metrics primarily measured over a three-year period and cliff vest at the end of such ~~three-year~~period. The number of ~~2021~~2022 performance-based RSUs that will ultimately vest is contingent upon the achievement of these key financial metrics by the end of ~~year three.~~the performance period. The Company assesses the probability of achieving these metrics on a quarterly ~~basis.~~basis except for performance-based RSUs with market conditions. For these awards, the Company recognizes the fair value expense ratably over the performance and vesting period. These awards are included in the table above in RSUs Granted.

During the three months ended March 31, 2022, the Company granted 13,332 shares of common stock to certain members of senior management, with a weighted average grant date fair value of $7.58 per share, or $0.1 million, with no vesting period.

Total compensation cost recorded for employees, non-employees and members of the Board for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was $~~1.6~~ ~~million, $0.1~~ ~~million, $4.1~~2.8 million and $~~0.4~~1.0 million, respectively, and included in general and administrative expenses on the condensed consolidated statements of operations. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, total unrecognized compensation cost related to unvested shares, stock options and RSUs granted was approximately $~~12.3~~26.7 million and $~~0.6~~11.6 million, respectively.

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8.7. Earnings per Share

The following table sets forth the computation of basic and diluted net income (loss) per share of common stock:

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

2021

2020

2021

2020

(in thousands)

Net income available to common stockholders

$
34,085

$
9,688

$
42,032

$
21,127

Dividends on redeemable preferred stock

1,449

0

—

0

Change in fair value of Ares Put Option

(2,578
)

0

(2,899
)

0

Net income available to common stockholders after assumed conversions

$
32,956

$
9,688

$
39,133

$
21,127

Weighted average common shares outstanding — Basic

124,428

71,390

124,406

69,221

Effect of dilutive securities:

  Restricted share units

234

0

170

0

  Ares warrants

0

0

6

0

  Ares Put Option

930

0

772

0

  Redeemable preferred stock

8,333

0

0

0

Weighted average common shares outstanding — Diluted

133,925

71,390

125,354

69,221

Net income per share available to common stockholders
   — Basic

$
0.27

$
0.14

$
0.34

$
0.31

Net income per share available to common stockholders
   — Diluted

$
0.25

$
0.14

$
0.31

$
0.31

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	For the Three Months Ended March 31,
	2022			2021
	(in thousands)
Net income (loss) available to common stockholders	$	821		$	(16,138	)
Change in fair value of Ares Put Option		(1,062	)		0
Net loss available to common stockholders after assumed conversions	$	(241	)	$	(16,138	)

Weighted average common shares outstanding — Basic		124,301			124,361
Effect of dilutive securities:
Restricted share units		4			0
Ares Put Option		1,128			0
Weighted average common shares outstanding — Diluted		125,433			124,361
Net income (loss) per share available to common stockholders — Basic	$	0.01		$	(0.13	)
Net loss per share available to common stockholders — Diluted	$	(0.00	)	$	(0.13	)

The following potential shares of common stock have been excluded from the computation of diluted ~~earnings~~net income (loss) per share because their effect would have been antidilutive:


	As of September 30,				As of March 31,
	2021		2020		2022		2021
	(in thousands)				(in thousands)
Public and Private warrants		17,333		0
Stock options		126		0		897		126
Ares warrants		1,100		0		1,100		1,100
Public and Private warrants						17,333		17,333
Series A redeemable preferred stock						8,347		8,333
Restricted share units		0		96		0		1,511
Convertible bonds (par value)		0		20
Ares Put Option						0	*

~~The effect of the potential shares of common stock related~~* Refer to the ~~redeemable preferred stock was antidilutive for the nine month period ended September 30, 2021.~~description of this instrument in Note 8.

9.8. Fair Value Measurements and Financial Instruments

The fair value of cash and cash equivalents, restricted cash and investments, ~~and restricted cash with respect to bonds,~~ trade receivables, accounts payable and other current liabilities approximated their carrying values as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 primarily due to the short-term maturity of these instruments. On October, 21, 2021, the Company completed a private offering of $450 million aggregate principal amount of 5.125% Senior Notes due 2029 (the “Senior Notes”). Based on market trades of the Senior Notes close to March 31, 2022 and December 31, 2021 (Level 1 fair value measurement), the fair value of the Senior Notes was estimated at approximately $411million and $436 million, respectively, compared to a gross carrying value of $450 million at March 31, 2022 and December 31, 2021. The fair value of the other long-term debt approximated their carrying values as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 due to the frequency with which interest rates are reset based on changes in prevailing interest rates.

~~The Bonds (Series C) were presented in the condensed consolidated balance sheets at amortized cost. The fair value of the Bonds (Series C) was $80.6~~ ~~million as of December 31, 2020. The fair value measurements were classified as Level 1.~~

The contingent consideration from the acquisition of the Empire business is measured at fair value at the end of each reporting period and amounted to $~~6.0~~6.3 million and $~~7.4~~6.2 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. The fair value methodology for the contingent consideration liability is categorized as Level 3 because inputs to the valuation methodology are unobservable and significant to the fair value adjustment. Approximately $~~1.7~~0.1 million and $~~1.4~~0.2 million ~~of income~~ were ~~recorded in~~

~~Table of Contents~~

the condensed consolidated statements of operations for the change in the fair value of the contingent consideration for the three and nine months ended September 30, 2021, respectively, primarily as a component of other (income) expenses, net.

~~The Public Warrants (as defined in Note 14) are measured at fair value at the end of each reporting period and amounted to $29.1~~ ~~million and $18.1~~ ~~million as of September 30, 2021 and December 31, 2020, respectively. The fair value methodology for the Public Warrants is categorized as Level 1. Approximately $2.5~~ ~~million and $10.9~~ ~~million was~~ recorded as acomponent of interest and other financial expenses in the condensed consolidated statements of operations for the change in the fair value of the ~~Public Warrants~~contingent consideration for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, respectively.

The ~~Private Warrants (as defined in Note 14)~~public warrants to purchase the Company’s common stock (the “Public Warrants”), of which approximately 14.6 million were outstanding as of March 31, 2022, are measured at fair value at the end of each reporting period and amounted to $~~9.1~~27.7 million and $~~6.7~~23.6 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. The fair value methodology for the Public Warrants is categorized as Level 1. Approximately $1.9 million and $9.2 million were recorded as a component of interest and other financial

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expenses in the condensed consolidated statements of operations for the change in the fair value of the Public Warrants for the three months ended March 31, 2022 and 2021, respectively.

The private warrants to purchase the Company’s common stock (the “Private Warrants”), of which approximately 2.8 million were outstanding as of March 31, 2022, are measured at fair value at the end of each reporting period and amounted to $5.3 million and $7.2 million as of March 31, 2022 and December 31, 2021, respectively. The fair value methodology for the Private Warrants is categorized as Level 2 because certain inputs to the valuation methodology are unobservable and significant to the fair value adjustment. The Private Warrants have been recorded at fair value based on a Black-Scholes option pricing model with the following material assumptions based on observable and unobservable inputs:


	September 30, 2021			March 31, 2022
Expected term (in years)	4.23			3.7
Expected dividend rate					0.9	%
Volatility		32.2	%		36.8	%
Risk-free interest rate		0.81	%		2.4	%
Strike price	$	11.50		$	11.50

~~Approximately~~For the change in the fair value of the Private Warrants, approximately $~~1.0~~0.3 million and $~~2.4~~2.8 million ~~was~~were recorded as a component of interest and other financial expenses in the condensed consolidated statements of operations for the ~~change in the fair value of the Private Warrants for the~~ three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, respectively.

The ~~Deferred Shares~~Haymaker Founders (as defined in Note ~~14)~~17 to the annual financial statements) will be entitled to up to 200 thousand shares of common stock to be issued subject to the number of incremental shares of common stock issued to the holders of the Series A redeemable preferred stock not being higher than certain thresholds (the “Deferred Shares”). The Deferred Shares are measured at fair value at the end of each reporting period and amounted to $~~1.8~~ ~~million and $~~1.6 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020, respectively.~~2021. The fair value methodology for the Deferred Shares is categorized as Level 3 because inputs to the valuation methodology are unobservable and significant to the fair value adjustment. The Deferred Shares have been recorded at fair value based on a Monte Carlo pricing model with the following material assumptions based on observable and unobservable inputs:


	September 30, 2021			March 31, 2022
Expected term (in years)	5.67			5.2
Volatility		33.5	%		36.3	%
Risk-free interest rate		1.09	%		2.4	%
Stock price	$	10.10		$	9.10

Approximately $0.03 million and $0.2 million was recorded as a component of interest and other financial expenses in the condensed consolidated statements of operations for the change in the fair value of the Deferred Shares for ~~each of~~ the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2022 and 2021, respectively.

~~On the Merger Closing Date, the~~The Company entered into an agreement with Ares Capital Corporation (“Ares”) and certain of its affiliates (the “Ares Put Option”), which generally guarantees Ares a value of approximately $27.3 million at the end of February 2023 for the shares of common stock that the Company issued in consideration for its acquisition in December 2020 of equity in GPM. The Ares Put Option is measured at fair value at the end of each reporting period and amounted to $~~6.9~~7.8 million and $~~9.8~~8.9 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. The fair value methodology for the Ares Put Option is categorized as Level 3 because inputs to the valuation methodology are unobservable and significant to the fair value adjustment. The Ares Put Option has been recorded at its fair value based on a Monte Carlo pricing model with the following material assumptions based on observable and unobservable inputs:


	September 30, 2021			March 31, 2022
Expected term (in years)	1.41			0.9
Volatility		28.8	%		28.6	%
Risk-free interest rate		0.17	%		1.5	%
Strike price	$	12.935		$	12.915

~~Table of Contents~~

Approximately $~~2.6~~1.1 million and $~~2.9~~1.2 million ~~was~~were recorded as a component of interest and other financial income in the condensed consolidated statements of operations for the change in the fair value of the Ares Put Option for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, respectively.

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~~10.~~9. Segment Reporting

The reportable segments were determined based on information reviewed by the chief operating decision maker for operational decision-making purposes and the segment information is prepared on the same basis that our chief operating decision maker reviews such financial information. The Company’s reporting segments are the retail segment, the wholesale segment and the GPMP segment. The Company defines segment earnings as operating income.

The retail segment includes the operation of a chain of retail stores, which includes convenience stores selling fuel products and other merchandise to retail customers. At its Company operated convenience stores, the Company owns the merchandise and fuel inventory and employs personnel to manage the store.

The wholesale segment supplies fuel to independent dealers, sub-wholesalers and bulk and spot purchasers, on either a cost plus or consignment basis. For consignment arrangements, the Company retains ownership of the fuel inventory at the site, is responsible for the pricing of the fuel to the end consumer, and shares the gross profit with the independent ~~outside operators.~~dealers.

The GPMP segment includes GPM Petroleum LP (“GPMP”) and primarily includes the sale and supply of fuel to GPM and its subsidiaries that sell fuel (both in the ~~Retail~~retail and ~~Wholesale~~wholesale segments) at GPMP’s cost of fuel ~~(currently including~~(including taxes and ~~certain transportation costs)~~transportation) plus a fixed margin (~~4.5~~ ~~cents per gallon prior to October 1, 2020 and~~(currently 5.0 cents per ~~gallon thereafter)~~gallon) and the supply of fuel to a small number of independent ~~outside operators~~dealers and bulk and spot purchasers.

The “All Other” segment includes the results of non-reportable segments which do not meet both quantitative and qualitive criteria as defined under ASC 280, Segment Reporting.

The majority of general and administrative expenses, depreciation and amortization, net other expenses, net interest and other financial expenses and income taxes are not allocated to the segments, as well as minor other income items including intercompany operating leases.

With the exception of goodwill, assets and liabilities relevant to the reportable segments are not assigned to any particular segment, but rather, managed at the consolidated level. All reportable segment revenues were generated from sites within the U.S. and substantially all of the ~~Company's~~Company’s assets were within the U.S.

~~Table of Contents~~

Inter-segment transactions primarily included the distribution of fuel by GPMP to GPM and its subsidiaries that sell fuel (both in the ~~Retail~~retail and ~~Wholesale~~wholesale segments). The effect of these inter-segment transactions was eliminated in the condensed consolidated financial statements.

Retail

Wholesale

GPMP

All Other

Total

For the Three Months Ended September 30, 2021

(in thousands)

Revenues

Fuel revenue

$
847,869

$
730,847

$
1,643

$
0

$
1,580,359

Merchandise revenue

434,652

0

0

0

434,652

Other revenues, net

14,488

5,275

287

0

20,050

Total revenues from external customers

1,297,009

736,122

1,930

0

2,035,061

Inter-segment

0

0

1,217,622

317

1,217,939

Total revenues from reportable segments

1,297,009

736,122

1,219,552

317

3,253,000

Operating income

75,285

5,837

24,593

317

106,032

Interest and financial expenses, net

(3,894
)

0

(3,894
)
Income tax expense

(55
)

(55
)
Income from equity investment

85

85

Net income from reportable segments

$
102,168

For the Three Months Ended September 30, 2020

Revenues

Fuel revenue

$
506,418

$
32,468

$
1,052

$
0

$
539,938

Merchandise revenue

403,665

0

0

0

403,665

Other revenues, net

13,860

2,409

245

0

16,514

Total revenues from external customers

923,943

34,877

1,297

0

960,117

Inter-segment

0

0

352,363

335

352,698

Total revenues from reportable segments

923,943

34,877

353,660

335

1,312,815

Operating income

62,221

1,674

9,360

335

73,590

Interest and financial expenses, net

(745
)

(184
)

(929
)
Income tax expense

(54
)

(54
)
Loss from equity investment

(24
)

(24
)
Net income from reportable segments

$
72,583

2417

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Retail

Wholesale

GPMP

All Other

Total

For the Nine Months Ended September 30, 2021

(in thousands)

Revenues

Fuel revenue

$
2,192,889

$
1,946,856

$
4,324

$
0

$
4,144,069

Merchandise revenue

1,220,298

0

0

0

1,220,298

Other revenues, net

48,717

15,426

806

0

64,949

Total revenues from external customers

3,461,904

1,962,282

5,130

0

5,429,316

Inter-segment

0

0

3,130,015

951

3,130,966

Total revenues from reportable segments

3,461,904

1,962,282

3,135,145

951

8,560,282

Operating income

186,847

14,137

68,326

951

270,261

Interest and financial expenses, net

(11,594
)

0

(11,594
)
Income tax expense

(166
)

(166
)
Income from equity investment

105

105

Net income from reportable segments

$
258,606

For the Nine Months Ended September 30, 2020

Revenues

Fuel revenue

$
1,424,823

$
82,687

$
2,981

$
0

$
1,510,491

Merchandise revenue

1,119,041

0

0

0

1,119,041

Other revenues, net

39,175

4,999

639

0

44,813

Total revenues from external customers

2,583,039

87,686

3,620

0

2,674,345

Inter-segment

0

0

961,666

2,713

964,379

Total revenues from reportable segments

2,583,039

87,686

965,286

2,713

3,638,724

Operating income

160,399

2,732

25,430

2,713

191,274

Interest and financial expenses, net

(2,513
)

(161
)

(2,674
)
Income tax expense

(259
)

(259
)
Loss from equity investment

(435
)

(435
)
Net income from reportable segments

$
187,906


	Retail		Wholesale		GPMP			All Other			Total
For the Three Months Ended March 31, 2022	(in thousands)
Revenues
Fuel revenue	$	854,667	$	727,697	$	1,162		$	0		$	1,583,526
Merchandise revenue		366,985		0		0			0			366,985
Other revenues, net		16,324		5,722		254			0			22,300
Total revenues from external customers		1,237,976		733,419		1,416			0			1,972,811
Inter-segment		0		0		1,275,721			302			1,276,023
Total revenues from reportable segments		1,237,976		733,419		1,277,137			302			3,248,834
Operating income		45,679		7,413		20,607			302			74,001
Interest and financial expenses, net						(2,445	)		0			(2,445	)
Income tax benefit									177			177
Income from equity investment									9			9
Net income from reportable segments											$	71,742

For the Three Months Ended March 31, 2021
Revenues
Fuel revenue	$	576,304	$	525,488	$	1,155		$	0		$	1,102,947
Merchandise revenue		359,281		0		0			0			359,281
Other revenues, net		16,977		4,939		255			0			22,171
Total revenues from external customers		952,562		530,427		1,410			0			1,484,399
Inter-segment		0		0		819,467			317			819,784
Total revenues from reportable segments		952,562		530,427		820,877			317			2,304,183
Operating income		40,347		2,308		20,123			317			63,095
Interest and financial expenses, net						(3,841	)		—			(3,841	)
Income tax expense									(56	)		(56	)
Loss from equity investment									(6	)		(6	)
Net income from reportable segments											$	59,192

A reconciliation of total revenues from reportable segments to total revenues on the condensed consolidated statements of operations iswas as follows:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2021			2020			2021			2020			2022			2021
	(in thousands)												(in thousands)
Total revenues from reportable segments	$	3,253,000		$	1,312,815		$	8,560,282		$	3,638,724		$	3,248,834		$	2,304,183
Other revenues, net		(38	)		(39	)		(123	)		(112	)		0			(43	)
Elimination of inter-segment revenues		(1,217,939	)		(352,698	)		(3,130,966	)		(964,379	)		(1,276,023	)		(819,784	)
Total revenues	$	2,035,023		$	960,078		$	5,429,193		$	2,674,233		$	1,972,811		$	1,484,356

A reconciliation of net income from reportable segments to net income (loss) on the condensed consolidated statements of operations iswas as follows:

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

2021

2020

2021

2020

(in thousands)

Net income from reportable segments

$
102,168

$
72,583

$
258,606

$
187,906

Amounts not allocated to segments:

Other revenues, net

(38
)

(39
)

(123
)

(112
)
Store operating expenses

1,118

(673
)

2,370

(2,366
)
General and administrative expenses

(31,941
)

(24,720
)

(89,011
)

(62,427
)
Depreciation and amortization

(20,187
)

(14,328
)

(66,017
)

(44,526
)
Other income (expenses), net

56

(1,381
)

(2,811
)

(7,290
)
Interest and other financial expenses, net

(10,851
)

(9,667
)

(44,399
)

(29,464
)
Income tax expense

(4,740
)

(4,618
)

(12,119
)

(4,912
)
Net income

$
35,585

$
17,157

$
46,496

$
36,809

2518

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	For the Three Months Ended March 31,
	2022			2021
	(in thousands)
Net income from reportable segments	$	71,742		$	59,192
Amounts not allocated to segments:
Other revenues, net		0			(43	)
Store operating expenses		584			577
General and administrative expenses		(31,079	)		(26,002	)
Depreciation and amortization		(22,794	)		(22,399	)
Other expenses, net		(1,121	)		(1,672	)
Interest and other financial expenses, net		(13,832	)		(25,093	)
Income tax (expense) benefit		(1,182	)		778
Net income (loss)	$	2,318		$	(14,662	)

~~11.~~10. Commitments and Contingencies

Environmental Liabilities and Contingencies

The Company is subject to certain federal and state environmental laws and regulations associated with sites ~~where~~at which it stores and sells fuel and other fuel ~~products.~~products, as well as at owned and leased locations leased or subleased to independent dealers. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, environmental obligations totaled $~~12.7~~12.6 million and $~~13.5~~12.9 million, respectively. These amounts were recorded as other current and non-current liabilities in the condensed consolidated balance sheets. Environmental reserves have been established on an undiscounted basis based upon internal and external estimates in regard to each site. It is reasonably possible that these amounts will be adjusted in the future due to changes in estimates of environmental remediation costs, the timing of the payments or whether the federal and/or state regulations in which the Company operates, and which deal with the environment, will be amended.

The Company maintains certain environmental insurance policies and participates in various state underground storage tank funds that entitle it to be reimbursed for environmental loss mitigation. Estimated amounts that will be recovered from its insurance policies and various state funds for the exposures totaled $5.0 million and $~~5.6~~5.1 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, and were recorded as other current and non-current assets in the condensed consolidated balance sheets.

Asset Retirement Obligations

As part of the fuel operations at its operated convenience stores, at most of the other owned and leased locations leased to independent dealers, and certain other independent dealer locations, there are underground storage tanks for which the Company is responsible. The future cost to remove an underground storage tank is recognized over the estimated remaining useful life of the underground storage tank or the termination of the applicable lease. A liability for the fair value of an asset retirement obligation with a corresponding increase to the carrying value of the related long-lived asset is recorded at the time an underground storage tank is installed. The estimated liability is based upon historical experience in removing underground storage tanks, estimated tank useful lives, external estimates as to the cost to remove the tanks in the future and current and anticipated federal and state regulatory requirements governing the removal of tanks, and discounted. The Company has recorded an asset retirement obligation of $~~56.7~~58.8 million and $~~53.2~~58.4 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. The current portion of the asset retirement obligation is included in other current liabilities in the condensed consolidated balance sheets.

Purchase Commitments

In the ordinary course of business, the Company has entered into various purchase agreements related to its fuel supply, which include varying volume commitments. In light of the reduction in the number of gallons sold due to the COVID-19 pandemic, the Company’s principal fuel suppliers have temporarily suspended (for periods that vary among the different suppliers) the requirements under their agreements with the Company to purchase minimum quantities of gallons, including such requirements under the incentive agreements from such suppliers. As of ~~September 30, 2021,~~March 31, 2022, the reduction in gallons sold did not affect the Company’s compliance with its commitments under the agreements with its principal suppliers.

Legal Matters

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The Company is a party to various legal actions, as both plaintiff and defendant, in the ordinary course of business. The Company’s management believes, based on estimations with support from legal counsel for these matters, that these legal actions are routine in nature and incidental to the operation of the Company’s business and that it is not reasonably possible that the ultimate resolution of these matters will have a material adverse impact on the Company’s business, financial condition, results of operations and cash flows.

~~12.~~11. Related Party Transactions

There have been no material changes to the description of related party transactions as set forth in the annual financial statements.

~~13. Income Taxes~~12. Potential Acquisition

On February 18, 2022, the Company entered into a purchase agreement with Quarles Petroleum, Inc. (“Quarles”), pursuant to which Quarles has agreed to sell to the Company certain assets, including:

•

121 proprietary Quarles-branded cardlock sites and management of 64 third party cardlock sites for fleet fueling operations; and

•

49 independent dealer locations, including certain lessee-dealer sites.

The ~~Company’s effective tax rate from continuing operations was~~ ~~11.9% and~~ ~~20.9~~%total consideration for the ~~three and nine months ended September 30, 2021, and~~ ~~21.4% and~~ ~~12.2% for~~transaction as set forth in the ~~three and nine months ended September 30, 2020. For both the three and nine months ended September 30, 2021, income tax expense reflected a discrete tax benefit of~~purchase agreement is approximately $~~5.5~~170 million ~~as a result~~plus the value of ~~releasing a valuation allowance previously recorded.~~inventory on the closing date. The ~~release~~Company intends to finance from its own sources approximately $40 million of the ~~valuation allowance was~~purchase price plus the value of inventory on the ~~basis of management’s~~

~~Table of Contents~~

~~reassessment of the amount of its deferred tax assets that were more likely than not to be realized. For the three~~closing date and ~~nine months ended September 30, 2020, income tax expense did not reflect taxes attributable to the non-controlling interest in partnership amounts of $7.5~~ ~~million and $15.7~~ ~~million, respectively.~~

~~14. Revisions of Previously Issued Financial Statements~~

~~As of the Merger Closing Date, there were~~ ~~17.3~~ ~~million warrants to purchase Haymaker common stock outstanding, consisting of~~ ~~13.3~~ ~~million public warrants (the “Public Warrants”) and~~ 4 million private warrants (the “Private Warrants”). Pursuant to the warrant agreement as amended on the Merger Closing Date, each whole warrant to purchase one share of Haymaker common stock became a warrant to purchase one share of the Company’s common stock. In addition, following the Merger Closing Date, Haymaker’s founders will be entitled to up to ~~200~~ thousand shares of common stock to be issued subject to the number of incremental shares of common stock issued to the holders of the Series A redeemable preferred stock not being higher than certain thresholds (the “Deferred Shares”).

The Company has adjusted its consolidated balance sheet as of December 31, 2020 in order to reflect its Public Warrants, Private Warrants and Deferred Shares as liability instruments measured at fair value rather than as equity instruments. The Company has evaluated the materiality of this adjustment and concluded it was not material to any of the prior periods presented and has elected to revise the previously issued financial statements contained within these interim financial statements for the periods impacted to correct the effect of this immaterial adjustment. ~~As a result, the condensed consolidated balance sheet as of December 31, 2020 included as comparative figures within these interim financial statements was revised as follows:~~

As of December 31, 2020

As Previously Reported

Adjustment

As Revised

(in thousands)

Other non-current liabilities

$
70,166

$
26,455

$
96,621

Total liabilities

2,421,934

26,455

2,448,389

Additional paid-in capital

239,081

(26,978
)

212,103

Accumulated deficit

(30,176
)

523

(29,653
)
Total equity

217,875

(26,455
)

191,420

~~15. Significant Events~~

~~Standby~~Oak Street Real Estate ~~Program~~

On ~~May 3, 2021~~Capital Net Lease Property Fund, LP (“Oak Street”), ~~GPM entered into~~pursuant to a standby real estate purchase, designation and lease program agreement (the “Program Agreement”), has agreed to pay the remaining approximately $130 million of consideration for the fee simple ownership in 39 sites. At the closing, pursuant to the Program Agreement, the Company plans to amend one of its master leases with Oak Street ~~Real Estate Capital Net Lease Property Fund, LP (“Oak Street”). Pursuant~~ to add the ~~Program Agreement,~~sites Oak Street has agreed to ~~purchase,~~acquire in the transaction under customary lease terms.

The closing of the transaction is subject to fulfillment of customary conditions precedent and the ~~conditions contained~~completion of various transition planning matters. The Company currently expects the closing to occur late in the ~~Program Agreement, up to~~second quarter or early in the third quarter of 2022. There is no certainty that the transaction will close.

13. Subsequent Event

As of March 31, 2022, approximately $252.8 million of the initial $1.0 billion available under the Program Agreement with Oak Street had been utilized. GPM, together with an affiliate of ~~convenience store~~Oak Street, entered into an amendment to the Program Agreement in April 2022, which extended the term of the Program Agreement from one to two years and ~~gas station real property,~~provides for up to $1.15 billion of capacity under the Program Agreement during the second year of the term, in addition to the approximately $130 million of funding described in Note 12, and including in connection with purchase agreements that ~~GPM~~the Company or an affiliate thereof may from time to time enter into to acquire convenience stores and gas ~~stations~~station real property from third ~~parties (each, a “Property”). Pursuant to~~parties. The term of the Program Agreement, upon any acquisition of a Property by Oak Street, or an affiliate thereof, GPM, or an affiliate thereof, would enter into a triple-net lease agreement with Oak Street or such affiliate pursuant to which GPM or such affiliate would lease such Property from Oak Street or such affiliate based upon commercial terms contained in the Program Agreement. The purchase price for any Property would similarly be subject to commercial terms agreed upon by GPM and Oak Street in the Program Agreement and if in connection with the acquisition of convenience stores and gas stations from third parties, consistent with the agreed upon purchase price or designation rights with the seller of the real estate. The Program Agreement has a one-year term, during which GPM may not sell or designate any Property pursuant to a sale-leaseback or similar transaction without first offering such Property to Oak Street in accordance with the terms and conditions of the Program Agreement. Certain Properties specified by GPM are not subject to the foregoing right of first offer, and the Program Agreement does not obligate GPM to sell any Property, or acquire any property from a third party for purposes of its sale, to Oak Street or assign the right to acquire the third party’s real estate to Oak Street, unless GPM elects, in its sole discretion, to enter into a sale-leaseback, designation or similar transaction governed by the Program Agreement.as amended, extends through May 2, 2023.

~~In October 2021, Oak Street purchased from third parties approximately $150~~ million of convenience store and gas station real property related to sites GPM leased as part of the Empire Acquisition in 2020 and the E-Z Mart Acquisition in 2018. Simultaneously, GPM entered into three triple-net lease agreements with Oak Street to lease the properties for a term of 20~~years, with six~~ ~~five-year~~ ~~renewal options. In addition, as part of these transaction, the Company purchased approximately $~~9 ~~million of convenience store and gas station real property.~~

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~~COVID-19 – Coronavirus~~

An outbreak of coronavirus (“COVID-19”) began in China in December 2019 and subsequently spread throughout the world. On March 11, 2020, the World Health Organization declared COVID-19 as a pandemic. Throughout the pandemic, the convenience stores and independent outside operations have continued to operate and have remained open to the public because convenience store operations and gas stations have been deemed an essential business by numerous federal and state authorities, including the U.S. Department of Homeland Security, and therefore are exempt from many of the closure orders that were, or are currently, imposed on U.S. businesses.

~~16. Subsequent Events~~

~~Senior Notes Offering~~

~~As discussed in Note 4 above, on October 21, 2021, the Company completed a private offering of $450~~ ~~million aggregate principal amount of Senior Notes.~~

~~Consummated Acquisition~~

On ~~November 9, 2021, the Company acquired the operations and leasehold interest of~~ 36 self-operated convenience stores and gas stations and one development parcel, located in North Carolina (the “Handy Mart Acquisition”). The total consideration for the transaction, including the purchase of real estate by Oak Street pursuant to the Program Agreement as described above, will be approximately $~~112~~ million plus the value of inventory and cash in the stores on the closing date. The Company financed the consideration for the acquired operations from its own sources and Oak Street has agreed to pay the remaining consideration for certain of the seller’s sites it has agreed to acquire as described below.

At the closing of the transaction, the Company purchased and assumed, among other things, certain vendor agreements, equipment, inventory and goodwill with regard to the acquired assets and paid approximately $12 ~~million plus the value of inventory and cash in the stores on the closing date. At the closing, Oak Street purchased the fee simple ownership in~~ 5 ~~of the sites for approximately $~~16 ~~million and will lease an additional~~ 24 ~~sites from the seller until, pending completion of all necessary title work, Oak Street purchases the fee simple ownership in these~~ 24 ~~leased sites from the seller for approximately $~~84 million. Additionally, at the closing, pursuant to the Program Agreement, the Company entered into a master lease with Oak Street under customary lease terms for the sites Oak Street acquired or will acquire in the Handy Mart Acquisition. As of the closing of the transaction, the Company leases 1 ~~site, the development parcel and a maintenance facility from the seller and the remaining~~ 6 ~~sites from other third parties.~~

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read this discussion together with the unaudited Condensed Consolidated Financial Statements, related notes, and other financial information included elsewhere in this Quarterly Report on Form 10-Q together with our audited consolidated financial statements, related notes, and other information contained in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 (the “Form 10-K”). The following discussion contains assumptions, estimates and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors,” in Part I, Item 1A of the Form 10-K and in Part II, Item 1A of this Quarterly Report on Form 10-Q and as described from time to time in our other filings with the Securities and Exchange Commission. These risks could cause our actual results to differ materially from those anticipated in these forward-looking statements.

Overview

ARKO Corp. was incorporated under the laws of Delaware on August 26, 2020 for the purpose of facilitating the business combination, which we refer to as the Merger Transaction, of Haymaker Acquisition Corp. II, a Delaware corporation (“Haymaker”), and Arko Holdings Ltd., a company organized under the laws of the State of Israel, which we refer to as Arko Holdings.2020. Our shares of common stock, $0.0001 par value per share (“common stock”), and publicly-traded warrants ~~were registered to trade~~are listed on the Nasdaq Stock Market (“Nasdaq”) on December 22, 2020 and commenced trading on December 23, 2020, and our common stock is dual-listed on the Tel Aviv Stock Exchange (“TASE”); however, we have initiated delisting procedures and currently expect that our common stock will cease trading on the TASE during the first quarter of 2022. ~~Following the delisting of the Company~~’~~s common stock on the TASE, the Company’s common stock will continue to be listed on Nasdaq and the Company~~’~~s common stock now traded on the TASE is expected to be transferred to Nasdaq where they can continue to be traded.~~ ~~The main activity of Arko Holdings prior to the Merger Transaction was its holding, through its subsidiaries, of controlling rights in~~. GPM Investments, LLC, a Delaware limited liability company, which we refer to as GPM, ~~which~~ is our operating entity and ~~upon the consummation of the Merger Transaction became~~ our indirect wholly owned subsidiary.

Based in Richmond, VA, we are a leading independent convenience store operator and, as of ~~September 30, 2021,~~March 31, 2022, we were the sixth largest convenience store chain in the United States (“U.S.”) ranked by store count, operating ~~1,379~~1,396 retail convenience stores. As of ~~September 30, 2021,~~March 31, 2022, we operated the stores under 18 19regional store brands including 1-Stop, Admiral, Apple Market®, BreadBox, ExpressStop, E-Z Mart®, fas mart®, fastmarket®, Handy Mart, Jiffi Stop®, Li’l Cricket, Next Door Store®, Roadrunner Markets, Rstore, Scotchman®, shore stop®, Town Star, Village Pantry® and Young’s. As of ~~September 30, 2021,~~March 31, 2022, we also supplied fuel to ~~1,674 dealer-operated gas stations.~~1,625 independent dealers. We are well diversified geographically and as of ~~September 30, 2021,~~March 31, 2022, operated across 33 states and the District of Columbia in the Mid-Atlantic, Midwestern, Northeastern, Southeastern and Southwestern United States.

We derive our revenue from the retail sale of fuel and the products offered in our stores, as well as the wholesale distribution of fuel. Our retail stores offer a wide array of cold and hot foodservice, beverages, cigarettes and other tobacco products, candy, salty snacks, grocery, beer and general merchandise. We have foodservice offerings at over ~~250~~400 company-operated stores. The foodservice category includes hot and fresh foods, deli, fried chicken, bakery, pizza, roller grill items and other prepared foods. We are currently expanding our partnership with Sbarro, the Original New York Pizza, and anticipate adding 50 new locations in 2022. We offer a value food menu consisting of items such as hot dogs and chicken sandwiches. In addition, we operate over 8090 branded quick service restaurants consisting of major national brands. Additionally, we provide a number of traditional convenience store services that generate additional income, including lottery, prepaid products, gift cards, money orders, ATMs, gaming, and other ancillary product and service offerings. We also generate revenues from car washes at approximately ~~100~~90 of our locations.

Our reportable segments are described below.

Retail Segment

The retail segment includes the operation of a chain of retail stores, which includes convenience stores selling fuel products and other merchandise to retail customers. At our convenience stores, we own the merchandise and fuel inventory and employ personnel to manage the store.

Wholesale Segment

The wholesale segment supplies fuel to independent dealers ~~sub-wholesalers and bulk purchasers,~~ on either a cost plus or consignment basis. For consignment arrangements, we retain ownership of the fuel inventory at the site, are responsible for the pricing of the fuel to the end consumer and share a portion of the gross profit earned from the sale of fuel by the consignment ~~operators.~~

~~Table~~dealers. For cost plus arrangements, we sell fuel to independent dealers and bulk purchasers on a fixed-fee basis. The sales price to the independent dealer is determined according to the terms of ~~Contents~~

the relevant agreement with the independent dealer, which typically reflects our total fuel costs plus the cost of transportation, prompt pay discounts, rebates and a margin.

GPMP Segment

The GPMP segment includes the operations of GPM Petroleum LP, ~~(“GPMP”),~~referred to as GPMP, which primarily sells and supplies fuel to GPM and its fuel-selling subsidiaries (both in the ~~Retail~~retail and ~~Wholesale~~wholesale segments) at GPMP’s cost of fuel ~~(currently including~~(including taxes and ~~certain transportation costs)~~transportation) plus a fixed margin.

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Trends Impacting Our Business

We have achieved strong store growth over the last several years, primarily by implementing a highly successful acquisition strategy. From 2013 through ~~September 30, 2021,~~March 31, 2022, we completed 1920 acquisitions. As a result, our store count has grown from 320 sites in 2011 to ~~3,053~~3,021 sites as of ~~September 30, 2021,~~March 31, 2022, of which ~~1,379~~1,396 were operated as retail convenience stores, and ~~1,674~~ 1,625were locations at which we supplied fuel to ~~independently operated fueling stations.~~independent dealers. These strategic acquisitions have had, and we expect will continue to have, a significant impact on our reported results and can make period to period comparisons of results difficult. In November 2021, we completed our acquisition of 36 Handy Mart retail convenience stores, and in May 2021, we completed our acquisition of 60 ExpressStop retail convenience stores ~~(the “ExpressStop Acquisition”~~(collectively, the “2021 Acquisitions”). In October 2020, we completed our acquisition of the business of Empire Petroleum Partners, LLC, which business we refer to as Empire, which was significant and added 84 retail sites and 1,453 wholesale sites to our business (the “Empire Acquisition”). The Empire Acquisition was our only business acquisition in 2020. With our achievement of significant size and scale, we have enhanced our focus on organic growth, including implementing company-wide marketing and merchandising initiatives, which we believe will result in significant value accretion to all the assets we have acquired. ~~We believe that this complementary strategy will help further our growth through both acquisitions and organically and improve our results of operations.~~

The following table provides a history of our acquisitions, conversions and closings for the periods noted, for the retail and wholesale segments:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended March 31,
Retail Segment	2021			2020			2021			2020			2022			2021
Number of sites at beginning of period		1,381			1,266			1,330			1,272			1,406			1,330
Acquired sites		—			—			61			—			—			—
Newly opened or reopened sites		—			—			1			—
Company-controlled sites converted to consignment locations and independent and lessee dealers, net		—			(13	)		(3	)		(14	)
Company-controlled sites converted to consignment locations or fuel supply locations, net														(6	)		—
Closed, relocated or divested sites		(2	)		(3	)		(10	)		(8	)		(4	)		(6	)
Number of sites at end of period		1,379			1,250			1,379			1,250			1,396			1,324


	For the Three Months Ended September 30,					For the Nine Months Ended September 30,						For the Three Months Ended March 31,
Wholesale Segment	2021		2020			2021			2020
Wholesale Segment 1												2022			2021
Number of sites at beginning of period		1,647		127			1,614			128			1,628			1,597
Newly opened or reopened sites		27		—			62			—
Consignment locations or independent and lessee dealers converted from Company-controlled sites, net		—		13			3			14
Newly opened or reopened sites 2													19			14
Consignment or fuel supply locations converted from Company-controlled sites, net													6			—
Closed, relocated or divested sites		—		(1	)		(5	)		(3	)		(28	)		(14	)
Number of sites at end of period		1,674		139			1,674			139			1,625			1,597

1 Excludes bulk and spot purchasers.

~~Table~~2 Includes all signed fuel supply agreements irrespective of ~~Contents~~

fuel distribution commencement date.

There has been an ongoing trend in the convenience store industry focused on increasing and improving in-store foodservice offerings, including fresh foods, quick service restaurants or proprietary food offerings. We believe consumers may be more likely to patronize convenience stores that include such new and improved food offerings, which may also lead to increased inside merchandise sales or fuel sales for such stores. Although our ~~foodservice~~food and beverage sales have been negatively impacted during the COVID-19 pandemic, we believe this trend will reverse when the effects of the pandemic subside. Our current foodservice offering, which varies by store, primarily consists of hot and fresh foods, deli, fried chicken, bakery, pizza, roller grill items and other prepared foods. In select stores, we offer a value priced food ~~menu consisting of~~ items such as hot dogs and chicken sandwiches. We have historically relied upon a limited number of franchised quick service restaurants and in-store delis to drive customer traffic rather than other types of foodservice offerings. As a result, we believe that our under-penetration of foodservice presents an opportunity to expand foodservice offerings and margin in response to changing consumer behavior. In addition, we believe that continued investment in new technology platforms and applications to adapt to evolving consumer eating preferences, including contactless checkout, order ahead service, and delivery, will further drive growth in profitability.

Our ~~operations~~results of operation are significantly impacted by the retail fuel margins we receive on gallons sold. While we expect our same store fuel sales volumes to remain stable over time, even though they have been negatively impacted by COVID-19, and the fuel margins we realize on those sales to remain stable, these fuel margins can change rapidly as they are influenced by many factors including: the price of refined products; interruptions in supply caused by severe weather; ~~severe~~supply chain disruptions; refinery mechanical ~~failures for an extended period of time;~~failures; and competition in the local markets in which we operate.

The cost of our main products, gasoline and diesel fuel, is greatly impacted by the wholesale cost of fuel in the United States. We attempt to pass wholesale fuel cost changes through to our customers through retail price changes; however, we are not always able to do so. The timing of any related increase or decrease in retail prices is affected primarily by competitive conditions. As a

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result, we tend to experience lower fuel margins when the cost of fuel is increasing gradually over a longer period and higher fuel margins when the cost of fuel is declining or more volatile over a shorter period of time. For the three months ended March 31, 2022 and the year ended December 31, 2021, we experienced historically high fuel margins as a result of the volatile price of gasoline and diesel fuel.

We also operate in a highly competitive retail convenience market that includes businesses with operations and services that are similar to those that ~~are provided by us.~~we provide. We face significant competition from other large chain operators. In particular, large convenience store chains have increased their number of locations and remodeled their existing locations in recent years, enhancing their competitive position. We believe that convenience stores managed by individual operators who offer branded or non-branded fuel are also significant competitors in the market. The convenience store industry is also experiencing competition from other retail sectors including grocery stores, large warehouse retail stores, dollar stores and pharmacies.

Business Highlights

Both the ExpressStop Acquisition and the Empire Acquisition (the “ExpressStop and Empire Acquisitions”) contributed to the improvement in our results of operations for the third quarter of 2021, primarily in the wholesale segment, as compared to the third quarter of 2020. Increased merchandise contribution and fuel contribution at same stores combined with an increase in ~~other revenues have~~fuel contribution in our wholesale segment positively impacted our results of operations during the ~~third~~first quarter of 2022. In addition, the 2021 Acquisitions contributed to the improvement in our results of operations for the first quarter of 2022, as compared to the first quarter of 2021. General and administrative expenses increased in ~~2021,~~the first quarter of 2022 as compared to ~~2020,~~the first quarter of 2021, primarily as a result of wage increases and share-based compensation expense.

COVID-19

On March 11, 2020, the ~~Empire Acquisition.~~World Health Organization declared COVID-19 a pandemic. Throughout the pandemic, our convenience stores and independent dealers have continued to operate and have remained open to the public because convenience store operations and gas stations have been deemed essential businesses by numerous federal and state authorities, including the U.S. Department of Homeland Security, and therefore were exempt from many of the closure orders that were imposed on other U.S. businesses.

The COVID-19 pandemic has reduced the frequency of customer visits and the number of gallons sold at our sites, however, we have seen increases in fuel margin and merchandise basket which more than offset this reduction. Since the beginning of 2021, we have seen an increase in fuel volume as businesses have continued to reopen and customer traffic has increased. Additionally, our corporate offices transitioned to remote work, but we believe we have maintained or increased productivity while expanding the hiring universe for corporate roles nationwide. While we have seen shortages in labor and supply chain disruptions that have increased our operating costs, we have addressed these shortages and disruptions through several hiring initiatives and leveraging our strong partnerships with our suppliers. Notwithstanding the recent resurgence of economic activity, in light of variant strains of the virus that have emerged, the COVID-19 pandemic could continue to impact our operations and the operations of our customers and suppliers as a result of quarantines, location closures, illnesses, and travel restrictions. The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, a resumption of high levels of infection and hospitalization, new variants of the virus, the resulting impact on our employees, customers, suppliers, and vendors, supply chain disruptions and the remedial actions and any stimulus measures adopted by federal, state, and local governments, and to what extent normal economic and operating conditions are impacted. Therefore, we cannot reasonably estimate the future impact at this time.

Seasonality

Our business is seasonal, and our operating income in the second and third quarters has historically been significantly greater than in the first and fourth quarters as a result of the generally improved climate and seasonal buying patterns of our customers. Inclement weather, especially in the Midwest and Northeast regions of the United States during the winter months, can negatively impact our financial results.

Results of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

The period-to-period comparisons of our results of operations contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operation have been prepared using our condensed consolidated interim financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. The following discussion should be read in conjunction with such condensed interim consolidated financial statements and related notes.

~~COVID-19~~

An outbreak of COVID-19 began in China in December 2019 and subsequently spread throughout the world. On March 11, 2020, the World Health Organization declared COVID-19 as a pandemic. Throughout the pandemic, our convenience stores and independent outside operations have continued to operate and have remained open to the public because convenience store operations and gas stations have been deemed an essential business by numerous federal and state authorities, including the U.S. Department of Homeland Security, and therefore are exempt from many of the closure orders that were, or are currently, imposed on U.S. businesses.

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The COVID-19 pandemic has generally impacted our results of operations positively, principally due to the significant increase in fuel margin, which more than offset a reduction in the number of gallons sold at gas stations as a result of the pandemic. Since the beginning of 2021, we have seen an increase in fuel volume as vaccinations have become available, businesses have continued to re-open, and customer traffic has increased. Additionally, we have seen shortages in labor and supply chain disruptions which we have responded to through several hiring initiatives and leveraging our strong partnerships with our suppliers. Notwithstanding the recent resurgence of economic activity, in light of variant strains of the virus that have emerged, the COVID-19 pandemic could once again impact our operations and the operations of our customers and suppliers as a result of quarantines, location closures, illnesses, and travel restrictions. The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the resumption of high levels of infection and hospitalization, new variants of the virus, the resulting impact on our employees, customers, suppliers, and vendors, and the remedial actions and any stimulus measures adopted by federal, state, and local governments, and to what extent normal economic and operating conditions are impacted. Therefore, we cannot reasonably estimate the future impact at this time.

Consolidated Results

The Merger Transaction was accounted for as a reverse recapitalization. For accounting purposes, Haymaker was treated as the acquired company, and Arko Holdings was considered the accounting acquirer. Because Arko Holdings was deemed the accounting acquirer, upon the consummation of the Merger Transaction, the historical financial statements of Arko Holdings became the historical financial statements of the combined company. As a result, the financial statements included in this Quarterly Report on Form 10-Q and discussed herein reflect the historical operating results of Arko Holdings prior to December 22, 2020, which was the date on which the Merger Transaction closed (the “Merger Closing Date”) and our combined results, including those of Haymaker, following the Merger Closing Date.

The table below shows our consolidated results for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ together with certain key metrics.

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

2021

2020

2021

2020

Revenues:

(in thousands)

Fuel revenue

$
1,580,359

$
539,938

$
4,144,069

$
1,510,491

Merchandise revenue

434,652

403,665

1,220,298

1,119,041

Other revenues, net

20,012

16,475

64,826

44,701

Total revenues

2,035,023

960,078

5,429,193

2,674,233

Operating expenses:

Fuel costs

1,459,664

462,373

3,819,571

1,279,067

Merchandise costs

301,533

290,856

866,239

814,524

Store operating expenses

164,432

131,780

464,038

386,633

General and administrative

32,696

25,403

91,270

64,823

Depreciation and amortization

22,031

16,171

71,546

50,056

Total operating expenses

1,980,356

926,583

5,312,664

2,595,103

Other (income) expenses, net

(56
)

1,381

2,811

7,290

Operating income

54,723

32,114

113,718

71,840

Interest and other financial expenses, net

(14,428
)

(10,261
)

(55,042
)

(29,425
)
Income before income taxes

40,295

21,853

58,676

42,415

Income tax expense

(4,795
)

(4,672
)

(12,285
)

(5,171
)
Income (loss) from equity investment

85

(24
)

105

(435
)
Net income

$
35,585

$
17,157

$
46,496

$
36,809

Less: Net income attributable to non-controlling interests

51

7,469

179

15,682

Net income attributable to ARKO Corp.

$
35,534

$
9,688

$
46,317

$
21,127

Series A redeemable preferred stock dividends

(1,449
)

(4,285
)

Net income attributable to common shareholders

$
34,085

$
42,032

Fuel gallons sold

539,202

260,173

1,509,909

730,682

Fuel margin, cents per gallon1

22.4

29.8

21.5

31.7

Merchandise contribution2

133,119

112,809

354,059

304,517

Merchandise margin3

30.6
%

27.9
%

29.0
%

27.2
%
Adjusted EBITDA, net of incremental bonuses4

80,183

57,327

198,203

142,810

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	For the Three Months Ended March 31,
	2022			2021
Revenues:	(in thousands)
Fuel revenue	$	1,583,526		$	1,102,947
Merchandise revenue		366,985			359,281
Other revenues, net		22,300			22,128
Total revenues		1,972,811			1,484,356
Operating expenses:
Fuel costs		1,470,649			1,012,798
Merchandise costs		258,793			260,754
Store operating expenses		166,538			144,938
General and administrative		31,785			26,713
Depreciation and amortization		24,636			24,242
Total operating expenses		1,952,401			1,469,445
Other expenses, net		1,121			1,672
Operating income		19,289			13,239
Interest and other financial expenses, net		(15,975	)		(28,617	)
Income (loss) before income taxes		3,314			(15,378	)
Income tax (expense) benefit		(1,005	)		722
Income (loss) from equity investment		9			(6	)
Net income (loss)	$	2,318		$	(14,662	)
Less: Net income attributable to non-controlling interests		79			74
Net income (loss) attributable to ARKO Corp.	$	2,239		$	(14,736	)
Series A redeemable preferred stock dividends		(1,418	)		(1,402	)
Net income (loss) attributable to common shareholders	$	821		$	(16,138	)
Fuel gallons sold		456,892			448,315
Fuel margin, cents per gallon1		24.7			20.1
Merchandise contribution2	$	108,192		$	98,527
Merchandise margin3		29.5	%		27.4	%
Adjusted EBITDA4	$	50,108		$	42,303

1 Calculated as fuel revenue less fuel costs divided by fuel gallons sold.

2 Calculated as merchandise revenue less merchandise costs.

3 Calculated as merchandise contribution divided by merchandise revenue.

4 Refer to “Use of Non-GAAP Measures” below for discussion of this non-GAAP performance measure and related ~~reconciliation.~~reconciliation to Net income (loss).

Three Months Ended ~~September 30, 2021~~March 31, 2022 versus Three Months Ended ~~September 30, 2020~~March 31, 2021

For the three months ended ~~September 30, 2021,~~March 31, 2022, fuel revenue increased by ~~$1.0 billion,~~$480.6 million, or ~~over 190%~~43.6%, compared to the ~~third~~first quarter of ~~2020.~~2021. The increase in fuel revenue was attributable primarily to incremental gallons sold related to the ~~ExpressStop and Empire~~2021 Acquisitions ~~and~~as well as a significant increase in the average price of fuel compared to the ~~third~~first quarter of ~~2020,~~2021, which was partially offset by ~~a slight decrease in~~fewer gallons sold at same stores in the ~~third~~first quarter of ~~2021~~2022 compared to the ~~third~~first quarter of ~~2020.~~2021.

For the three months ended ~~September 30, 2021,~~March 31, 2022, merchandise revenue increased by ~~$31.0~~$7.7 million, or ~~7.7%~~2.1%, compared to the ~~third~~first quarter of ~~2020~~2021 primarily due to the ~~ExpressStop and Empire~~2021 Acquisitions. Offsetting these increases was a decrease in same store merchandise sales and in merchandise revenue from underperforming retail stores that ~~were~~we closed or converted to dealer-operated sites.

For the three months ended ~~September 30, 2021,~~March 31, 2022, other revenue increased by ~~$3.5~~$0.2 million, or ~~21.5%~~0.8%, compared to the ~~third~~first quarter of ~~2020~~2021 primarily related to additional revenue from the ~~ExpressStop and Empire Acquisitions.~~2021 Acquisitions, which was partially offset by lower lottery commissions.

For the three months ended ~~September 30, 2021,~~March 31, 2022, total operating expenses increased by ~~$1.1 billion,~~$483.0 million, or ~~113.7%~~32.9%, compared to the ~~third~~first quarter of ~~2020.~~2021. Fuel costs increased ~~$997.3~~$457.9 million, or ~~over 215%~~45.2%, compared to the ~~third~~first quarter of ~~2020~~2021 due to fuel sold at higher

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average cost and higher volumes. Merchandise costs ~~increased $10.7~~decreased $2.0 million, or ~~3.7%~~0.8%, compared to the ~~third~~first quarter of ~~2020,~~2021, primarily due to ~~the ExpressStop and Empire Acquisitions, which was partially offset by~~ a corresponding decrease in same store merchandise ~~sales.~~sales, which was offset by increased costs related to the 2021 Acquisitions. For the three months ended ~~September 30, 2021,~~March 31, 2022, store operating expenses increased ~~$32.7~~$21.6 million, or ~~24.8%~~14.9%, compared to the ~~third~~first quarter of ~~2020~~2021 due to incremental expenses as a result of the ~~ExpressStop and Empire~~2021 Acquisitions and an increase in expenses at same stores.

For the three months ended ~~September 30, 2021,~~March 31, 2022, general and administrative expenses increased ~~$7.3~~$5.1 million, or ~~28.7%~~19.0%, compared to the ~~third~~first quarter of ~~2020,~~2021, primarily due to ~~expenses associated with the Empire Acquisition,~~ annual wage increases ~~incentive accruals~~ and ~~stock~~share-based compensation ~~expenses.~~expense.

For the three months ended ~~September 30, 2021,~~March 31, 2022, depreciation and amortization expenses increased ~~$5.9~~$0.4 million, or ~~36.2%~~1.6%, compared to the ~~third~~first quarter of ~~2020~~2021 primarily due to assets acquired in the previous twelve month period, largely related to the ~~Empire Acquisition.~~2021 Acquisitions.

For the three months ended ~~September 30, 2021,~~March 31, 2022, other expenses, net decreased by ~~$1.4~~$0.6 million compared to the ~~third~~first quarter of ~~2020~~2021 primarily due to ~~$1.7 million~~a reduction in losses on disposal of ~~income recorded for~~assets and impairment charges in the ~~fair value adjustment~~first quarter of ~~contingent consideration.~~2022.

Operating income was ~~$54.7~~$19.3 million for the ~~third~~first quarter of ~~2021,~~2022 compared to ~~$32.1~~$13.2 million for the ~~third~~first quarter of ~~2020.~~2021. The increase was primarily due to strong fuel and merchandise results along with incremental income from the ~~Empire Acquisition~~2021 Acquisitions which was partially offset by an increase in store operating expenses and general and administrative ~~expenses, depreciation and amortization~~ expenses.

For the three months ended ~~September 30, 2021,~~March 31, 2022, interest and other ~~financing~~financial expenses, net ~~increased~~decreased by ~~$4.2~~$12.6 million compared to the ~~third~~first quarter of ~~2020~~2021 primarily related to ~~$3.7~~a reduction of $9.9 million for ~~interest expense~~expenses related to fair value adjustments for the Public Warrants, Private Warrants and Deferred Shares (each as defined in Note 148 to the unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q) ~~and higher interest expense from a greater amount of~~, which were partially offset by lower rate debt outstanding in 2021 ~~partially offset by $2.6 million income related to fair value adjustments for the Ares Put Option~~ and a net period-over-period ~~increase~~decrease in foreign ~~current~~currency gains recorded of $1.1 million. In addition, $4.5 million of additional interest expense was recorded in the first quarter of 2021 for the early redemption of the Bonds (Series C).

For the three months ended March 31, 2022, income tax expense was $1.0 million. For the three months ended March 31, 2021, the income tax benefit was $0.7 million.

For the three months ended March 31, 2022, net income attributable to the Company was $2.2 million. For the three months ended March 31, 2021, net loss attributable to the Company was $14.7 million.

For the three months ended ~~September 30, 2021, income tax expense~~March 31, 2022, Adjusted EBITDA was ~~$4.8~~$50.1 million compared to ~~$4.7 million in the three months ended September 30, 2020.~~

~~Net income attributable to non-controlling interests primarily represented minority interests prior to the Merger Closing Date.~~

~~For the three months ended September 30, 2021, net income attributable to the Company was $35.5 million compared to $9.7~~$42.3 million for the three months ended ~~September 30, 2020.~~

~~Table~~March 31, 2021. The 2021 Acquisitions contributed approximately $4.0 million of ~~Contents~~

~~For the three months ended September 30, 2021,~~ Adjusted EBITDA ~~net of incremental bonuses, was $80.2 million compared to $57.3 million~~ for the ~~three months ended September 30, 2020. The Empire Acquisition contributed approximately $23 million of incremental Adjusted EBITDA, net of incremental bonuses, for the third~~first quarter of ~~2021.~~2022. Increased merchandise contribution and fuel contribution at same stores also positively impacted Adjusted EBITDA for the first quarter of 2022, as compared to the first quarter of 2021, which was partially offset by higher personnel costs, higher credit card fees related to an increase in the retail price of ~~fuel. An~~fuel and an increase in general and administrative expenses primarily related to annual wage ~~increases and incentive accruals also reduced Adjusted EBITDA, net of incremental bonuses, for the third quarter of 2021.~~increases. Refer to “Use of Non-GAAP Measures” below for discussion of this non-GAAP performance measure and related ~~reconciliation.~~

~~Nine Months Ended September 30, 2021 versus Nine Months Ended September 30, 2020~~

~~For the nine months ended September 30, 2021, fuel revenue increased by $2.6 billion, or over 174%, over the comparable nine months of 2020. The increase in fuel revenue was attributable primarily~~reconciliation to incremental gallons sold related to the ExpressStop and Empire Acquisitions and an increase in the average price of fuel, which was partially offset by fewer gallons sold in the first nine months of 2021 primarily due to the COVID-19 pandemic, as the pandemic did not have a significant impact on our results until the second half of March 2020.

For the nine months ended September 30, 2021, merchandise revenue increased by $101.3 million, or 9.0%, over the comparable nine months of 2020, primarily due to an increase in same store merchandise sales and the ExpressStop and Empire Acquisitions.

For the nine months ended September 30, 2021, other revenue increased by $20.1 million, or 45.0%, over the comparable nine months of 2020, primarily related to the ExpressStop and Empire Acquisitions and increased income from lottery commissions and temporary allowance for gaming machines in Virginia.

For the nine months ended September 30, 2021, total operating expenses increased by $2.7 billion, or 104.7%, over the comparable nine months of 2020. Fuel costs increased $2.5 billion, or 198.6%, over the comparable nine months of 2020 due to fuel sold at a higher average cost and higher volumes. Merchandise costs increased $51.7 million, or 6.3%, over the comparable nine months of 2020, primarily due to the ExpressStop and Empire Acquisitions as well as a corresponding increase in same store merchandise sales. For the nine months ended September 30, 2021, store operating expenses increased $77.4 million, or 20.0%, over the comparable nine months of 2020 due to incremental expenses from the ExpressStop and Empire Acquisitions and an increase in expenses at same stores.

For the nine months ended September 30, 2021, general and administrative expenses increased $26.4 million, or 40.8%, over the comparable nine months of 2020, primarily due to expenses associated with the Empire Acquisition, annual wage increases, incentive accruals and stock compensation expenses.

For the nine months ended September 30, 2021, depreciation and amortization expenses increased $21.5 million, or 42.9%, over the comparable nine months of 2020, primarily due to assets acquired in the previous twelve month period, largely related to the Empire Acquisition.

For the nine months ended September 30, 2021, other expenses, net decreased $4.5 million over the comparable nine months of 2020, primarily due to $1.7 million of income recorded for the fair value adjustment of contingent consideration in 2021 and a $3.7 million reduction in losses on disposal of assets and impairment charges in 2021 which was partially offset by a $0.5 million increase in acquisition costs.

Operating income was $113.7 million for the nine months ended September 30, 2021, compared to $71.8 million for the nine months ended September 30, 2020. The increase was primarily due to strong fuel and merchandise results along with incremental income from the ExpressStop and Empire Acquisitions, partially offset by an increase in general and administrative, depreciation and amortization expenses.

For the nine months ended September 30, 2021, interest and other financing expenses, net increased by $25.6 million compared to the nine months ended September 30, 2020, primarily related to higher interest expense from greater debt outstanding in 2021, $4.5 million additional interest for the early redemption of the Bonds (Series C) and $13.5 million for interest expense related to fair value adjustments for the Public Warrants, Private Warrants and Deferred Shares, partially offset by $2.9 million income related to fair value adjustments for the Ares Put Option and a net period-over-period increase in foreign currency gains recorded of $1.6 million.

For the nine months ended September 30, 2021, income tax expense was $12.3 million compared to $5.2 million for the nine months ended September 30, 2020, which increase was primarily attributable to the non-controlling interest in partnership amounts of $15.7 million not included in income tax expense for the nine months ended September 30, 2020.

Net income ~~attributable to non-controlling interests primarily represented minority interests prior to the Merger Closing Date.~~(loss).

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~~For the nine months ended September 30, 2021, net income attributable to the Company was $46.3 million compared to $21.1 million for the nine months ended September 30, 2020.~~

For the nine months ended September 30, 2021, Adjusted EBITDA, net of incremental bonuses, was $198.2 million compared to $142.8 million for the nine months ended September 30, 2020. The Empire Acquisition contributed approximately $58 million of incremental Adjusted EBITDA, net of incremental bonuses, for the nine months of 2021. Increased merchandise contribution at same stores also positively impacted 2021, which was partially offset by a slight decrease in gallons sold and fuel margin at same stores, as well as higher credit card fees related to an increase in the retail price of fuel. An increase in general and administrative expenses primarily related to annual wage increases and incentive accruals also reduced Adjusted EBITDA, net of incremental bonuses, for the nine months of 2021. Refer to “Use of Non-GAAP Measures” below for discussion of this non-GAAP performance measure and related reconciliation.

Segment Results

Retail Segment

The table below shows the results of the ~~Retail~~retail segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ together with certain key metrics for the segment.


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2021			2020			2021			2020			2022			2021
Revenues:	(in thousands)												(in thousands)
Fuel revenue	$	847,869		$	506,418		$	2,192,889		$	1,424,823		$	854,667		$	576,304
Merchandise revenue		434,652			403,665			1,220,298			1,119,041			366,985			359,281
Other revenues, net		14,488			13,860			48,717			39,175			16,324			16,977
Total revenues		1,297,009			923,943			3,461,904			2,583,039			1,237,976			952,562
Operating expenses:
Fuel costs		765,190			441,869			1,971,278			1,229,751			776,885			515,136
Merchandise costs		301,533			290,856			866,239			814,524			258,793			260,754
Store operating expenses		155,001			128,997			437,540			378,365			156,619			136,325
Total operating expenses		1,221,724			861,722			3,275,057			2,422,640			1,192,297			912,215
Operating income	$	75,285		$	62,221		$	186,847		$	160,399		$	45,679		$	40,347
Fuel gallons sold		280,079			243,578			771,158			687,254			239,558			226,112
Same store fuel gallons sold decrease (%)1		(1.4	%)		(15.1	%)		(1.6	%)		(16.7	%)		(3.1	%)		(13.8	%)
Fuel margin, cents per gallon2		34.5			31.0			33.7			32.9			37.5			32.1
Same store merchandise sales (decrease) increase (%)1		(1.3	%)		5.0	%		2.1	%		3.5	%		(3.5	%)		6.0	%
Same store merchandise sales excluding cigarettes increase (%)1		1.8	%		6.9	%		4.8	%		4.4	%		0.1	%		9.2	%
Merchandise contribution3	$	133,119		$	112,809			354,059			304,517		$	108,192		$	98,527
Merchandise margin4		30.6	%		27.9	%		29.0	%		27.2	%		29.5	%		27.4	%

1 Same store is a common metric used in the convenience store industry. We consider a store a same store beginning in the first quarter in which the store had a full quarter of activity in the prior year. Refer to “Use of Non-GAAP Measures” below for discussion of this measure.

2 Calculated as fuel revenue less fuel costs divided by fuel gallons sold; excludes the estimated fixed margin paid to GPMP for the cost of fuel.

3 Calculated as merchandise revenue less merchandise costs.

4 Calculated as merchandise contribution divided by merchandise revenue.

Three Months Ended ~~September 30, 2021~~March 31, 2022 versus Three Months Ended ~~September 30, 2020~~March 31, 2021

Retail Revenues

For the three months ended ~~September 30, 2021,~~March 31, 2022, fuel revenue increased by ~~$341.5~~$278.4 million, or ~~67.4%~~48.3%, compared to the ~~third~~first quarter of ~~2020. The ExpressStop and Empire Acquisitions contributed an additional 43.0 million gallons sold, or $133.9 million in fuel revenue.~~2021. The increase in fuel revenue was ~~also~~ attributable to a ~~$0.95~~$1.02 per gallon increase in the average retail price of fuel in the

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~~third~~ first quarter of ~~2021~~2022 as compared to the same period in ~~2020,~~2021, which was offset by a ~~slight~~ decrease in gallons sold at same stores of approximately ~~1.4%~~3.1%, or ~~3.4~~6.8 million gallons, primarily due to managing both volume and margin to optimize fuel margin. Underperforming retail stores, which were closed or converted to ~~dealer-operated sites~~independent dealers over the last 12 months in order to optimize profitability, negatively impacted gallons sold during the ~~third~~first quarter of ~~2021.~~2022. Additionally, the 2021 Acquisitions contributed 22.3 million gallons sold, or $79.2 million in fuel revenue.

For the three months ended ~~September 30, 2021,~~March 31, 2022, merchandise revenue increased by ~~$31.0~~$7.7 million, or ~~7.7%~~2.1%, compared to the ~~third~~first quarter of ~~2020.~~2021. The ~~ExpressStop and Empire~~2021 Acquisitions contributed ~~an additional~~ approximately ~~$42~~$24 million of merchandise revenue. Same store merchandise sales decreased ~~$5.1~~$12.6 million, or ~~1.3%~~3.5%, for the ~~third~~first quarter of ~~2021~~2022 compared to the ~~third~~first quarter of ~~2020.~~2021. Same store merchandise sales decreased primarily due to lower revenue from cigarettes ~~face masks~~ and ~~sanitizers,~~reduced demand for essential products, which was partially offset by higher packaged ~~beverage,~~beverages, center-store items, frozen food, grab-n-go and other tobacco products revenue as a result of marketing initiatives, including expanded category assortments and investments in coolers and freezers. In addition, there was a decrease in merchandise revenue from underperforming retail stores that were closed or converted to ~~dealer-operated sites.~~independent dealers.

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For the three months ended ~~September 30, 2021,~~March 31, 2022, other revenues, net ~~increased~~decreased by ~~$0.6~~$0.7 million, or ~~4.5%~~3.8%, compared to the ~~third~~first quarter of ~~2020,~~2021, primarily related to lower lottery commissions which were partially offset by additional revenue from the ~~ExpressStop and Empire~~2021 Acquisitions.

Retail Operating Income

For the three months ended ~~September 30, 2021,~~March 31, 2022, fuel margin increased compared to the same period in ~~2020,~~2021, primarily related to ~~incremental~~ fuel profit from the ~~ExpressStop and Empire~~2021 Acquisitions of approximately ~~$18.5~~$7.9 million and an increase in same store fuel profit of ~~$3.7~~$9.7 million (excluding intercompany charges by GPMP). Fuel margin per gallon at same stores for the ~~third~~first quarter of ~~2021~~2022 was ~~33.0~~37.8 cents per gallon, as compared to ~~31.0~~32.2 cents per gallon for the ~~third~~first quarter of ~~2020.~~2021.

For the three months ended ~~September 30, 2021,~~March 31, 2022, merchandise contribution increased ~~$20.3~~$9.7 million, or ~~18.0%~~9.8%, compared to the same period in ~~2020,~~2021, and merchandise margin increased to ~~30.6%~~29.5% as compared to ~~27.9%~~27.4% in the prior period. The increase was due to ~~$12.7~~$6.6 million in ~~incremental~~ merchandise contribution from the ~~ExpressStop and Empire~~2021 Acquisitions and an increase in merchandise contribution at same stores of ~~$8.7~~$3.8 million. Merchandise contribution at same stores increased in the ~~third~~first quarter of ~~2021~~2022 primarily due to ~~a shift in product mix with a lower reliance on cigarettes and~~ higher contribution from packaged beverages, ~~frozen food, grab-n-go,~~center-store items, beer and wine and other tobacco ~~products and other center-store items, as well as improved purchasing economics.~~products. Merchandise margin at same stores was ~~30.5%~~29.4% in the ~~third~~first quarter of ~~2021~~2022 compared to ~~27.9%~~27.3% in the ~~third~~first quarter of ~~2020.~~2021.

For the three months ended ~~September 30, 2021,~~March 31, 2022, store operating expenses increased ~~$26.0~~$20.3 million, or ~~20.2%~~14.9%, compared to the three months ended ~~September 30, 2020~~March 31, 2021 due to approximately ~~$20~~$12 million of ~~incremental~~ expenses related to the ~~ExpressStop and Empire~~2021 Acquisitions and an increase in expenses at same stores, including higher ~~credit card fees due to higher retail prices. Store operating expenses were reduced from underperforming retail stores closed or converted to dealer-operated sites.~~

~~Nine Months Ended September 30, 2021 versus Nine Months Ended September 30, 2020~~

~~Retail Revenues~~

~~For the nine months ended September 30, 2021, fuel revenue increased by $768.1 million, or 53.9%, over the comparable nine months of 2020. The ExpressStop~~personnel costs and Empire Acquisitions contributed an additional 105.7 million gallons sold, or approximately $312.1 million in fuel revenue. The increase in fuel revenue was also attributable to a $0.77 per gallon increase in the average retail price of fuel in the nine months of 2021 over the comparable nine-month period in 2020. However, gallons sold at same stores were down approximately 1.6%, or 10.8 million gallons, which was a decrease of 1.2% when the nine months of 2020 (to eliminate the effect of the 2020 leap year) was adjusted to be based on 180 days, primarily due to the COVID-19 pandemic combined with managing both volume and margin to optimize fuel margin. Additionally, underperforming retail stores, which were closed or converted to dealer-operated sites over the last 12 months in order to optimize profitability, negatively impacted gallons sold.

For the nine months ended September 30, 2021, merchandise revenue increased by $101.3 million, or 9.0%, over the comparable nine months of 2020. The ExpressStop and Empire Acquisitions contributed an additional approximately $100 million of merchandise revenue. Same store merchandise sales increased $23.0 million, or 2.1%, for the nine months of 2021 compared to the nine months of 2020, which was an increase of 2.4% when the nine months of 2020 was adjusted to be based on 180 days. Same store merchandise sales increased primarily due to higher grocery, packaged beverage, center-store items, frozen food, grab-n-go, other tobacco products, beer and wine revenue from benefits of planogram, assortment and marketing initiatives and fact-based data to react to changing consumer needs. Offsetting these increases was a lower reliance on cigarette sales and a decrease in merchandise revenue from underperforming retail stores closed or converted to dealer-operated sites.

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For the nine months ended September 30, 2021, other revenues, net increased by $9.5 million, or 24.4%, over the comparable nine months of 2020 primarily related to the ExpressStop and Empire Acquisitions, higher lottery commissions and temporary allowances for gaming machines in Virginia.

~~Retail Operating Income~~

For the nine months ended September 30, 2021, fuel margin increased compared to the same period in 2020, primarily related to incremental fuel profit from the ExpressStop and Empire Acquisitions of approximately $44.6 million, which was offset by a decrease in same store fuel profit of $8.3 million (excluding intercompany charges by GPMP). Fuel margin per gallon at same stores for 2021 was lower at 32.4 cents per gallon, as compared to 33.1 cents per gallon for 2020.

For the nine months ended September 30, 2021, merchandise contribution increased $49.5 million, or 16.3%, over the comparable nine-month period in 2020, and merchandise margin increased to 29.0% as compared to 27.2% in the prior period. The increase was due to $29.2 million in incremental merchandise contribution from the ExpressStop and Empire Acquisitions and an increase in merchandise contribution at same stores of $23.8 million. Merchandise contribution at same stores increased in 2021 primarily due to a shift in product mix with a lower reliance on cigarettes and higher contribution from packaged beverage, frozen food, grab-n-go, other tobacco products and other center-store items, as well as improved purchasing economics. The nine months of 2020 was negatively impacted by a change in sales mix that began in March 2020 as consumers pantry loaded lower margin items due to the COVID-19 pandemic. Merchandise margin at same stores was 28.8% in the nine months ended September 30, 2021 compared to 27.2% in the nine months ended September 30, 2020.

For the nine months ended September 30, 2021, store operating expenses increased $59.2 million, or 15.6%, compared to the nine months ended September 30, 2020, primarily due to approximately $50 million of incremental expenses related to the ExpressStop and Empire Acquisitions and an increase in expenses at same stores, including higher credit card fees due to higher retail prices. ~~Store~~The increase in store operating expenses were ~~reduced from~~partially offset by underperforming retail stores that we closed or converted to ~~dealer-operated sites.~~independent dealers.

Wholesale Segment

The table below shows the results of the ~~Wholesale~~wholesale segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ together with certain key metrics for the segment.


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				For the Three Months Ended March 31,
	2021		2020		2021		2020		2022		2021
Revenues:					(in thousands)				(in thousands)
Fuel revenue	$	730,847	$	32,468	$	1,946,856	$	82,687	$	727,697	$	525,488
Other revenues, net		5,275		2,409		15,426		4,999		5,722		4,939
Total revenues		736,122		34,877		1,962,282		87,686		733,419		530,427
Operating expenses:
Fuel costs		719,736		31,093		1,919,277		79,052		715,503		518,929
Store operating expenses		10,549		2,110		28,868		5,902		10,503		9,190
Total operating expenses		730,285		33,203		1,948,145		84,954		726,006		528,119
Operating income	$	5,837	$	1,674	$	14,137	$	2,732	$	7,413	$	2,308
Fuel gallons sold – non-consignment agent locations		215,428		9,807		613,834		24,622
Fuel gallons sold – fuel supply locations										180,941		183,645
Fuel gallons sold – consignment agent locations		42,970		6,008		122,845		16,609		35,997		37,911
Fuel margin, cents per gallon1 – non-consignment agent locations		5.8		5.3		5.5		5.5
Fuel margin, cents per gallon1 – fuel supply locations										7.0		5.1
Fuel margin, cents per gallon1 – consignment agent locations		26.9		25.8		24.9		24.9		29.0		21.9

1 Calculated as fuel revenue less fuel costs divided by fuel gallons sold; excludes the estimated fixed margin paid to GPMP for the cost of fuel.

Three Months Ended ~~September 30, 2021~~March 31, 2022 versus Three Months Ended ~~September 30, 2020~~March 31, 2021

Wholesale Revenues

For the three months ended ~~September 30, 2021,~~March 31, 2022, fuel revenue increased by ~~$698.4~~$202.2 million compared to the ~~third~~first quarter of ~~2020, primarily due to approximately $677.5 million of incremental fuel revenue from the Empire Acquisition, which contributed sales of 240.3 million gallons.~~2021. Wholesale revenues ~~also~~ benefited from an increase in the average price of fuel in ~~2021~~the first quarter of 2022 as compared to

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~~2020.~~2021, which was partially offset by a 2.1% reduction in gallons sold. Of the total increase in fuel revenue, approximately ~~$594.9~~$170.6 million of the increase was attributable to ~~non-consignment agent~~fuel supply locations.

Wholesale Operating Income

For the three months ended ~~September 30, 2021,~~March 31, 2022, fuel contribution increased approximately ~~$22.0~~$5.4 million (excluding intercompany charges by GPMP) ~~with the Empire Acquisition accounting for substantially all of the increase. Fuel~~. At fuel supply locations, fuel contribution ~~at non-consignment agent locations~~ increased by ~~$12.0~~$3.3 million (excluding intercompany charges by GPMP), and fuel margin increased over the ~~third~~first quarter of ~~2020~~2021 primarily due to greater prompt pay discounts ~~and~~related to higher fuel costs and greater fuel rebates. ~~Fuel contribution at~~At consignment agent locations, fuel contribution increased ~~$10.0~~$2.1 million (excluding intercompany charges by

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GPMP) and fuel margin also increased over the ~~third~~first quarter of ~~2020~~2021 primarily due to greater prompt pay discounts related to higher fuel costs, greater fuel rebates and improved rack-to-retail margins.

For the three months ended ~~September 30, 2021,~~March 31, 2022, store operating expenses increased ~~$8.4~~$1.3 million compared to the three months ended ~~September 30, 2020 primarily due to the Empire Acquisition.~~

~~Nine Months Ended September 30, 2021 versus Nine Months Ended September 30, 2020~~

~~Wholesale Revenues~~

For the nine months ended September 30, 2021, fuel revenue increased by $1.9 billion over the comparable nine months of 2020, primarily due to approximately $1.8 billion of incremental fuel revenues from the Empire Acquisition, which contributed sales of 686.2 million gallons. Wholesale revenues also benefited from an increase in the average price of fuel in 2021 as compared to 2020. Of the total increase in fuel revenue, approximately $1.6 billion of the increase was attributable to non-consignment agent locations.

~~Wholesale Operating Income~~

For the nine months ended September 30, 2021, fuel contribution increased approximately $58.9 million (excluding intercompany charges by GPMP) with the Empire Acquisition accounting for approximately $58.6 million of the increase. Although fuel contribution at non-consignment agent locations increased by $32.5 million (excluding intercompany charges by GPMP) and fuel contribution at consignment agent locations increased $26.4 million (excluding intercompany charges by GPMP), fuel margin remained consistent for the first nine months of 2021 compared to the same period in the prior year primarily due to the mix of non-consignment fuel supply contracts acquired in the Empire Acquisition which tend to be priced with lower margins as compared to our existing non-consignment fuel supply contracts which was primarily offset by greater prompt pay discounts, higher fuel rebates and improved rack-to-retail margins.

~~For the nine months ended September 30, 2021, store operating expenses increased $23.0 million compared to the nine months ended September 30, 2020 primarily due to the Empire Acquisition.~~March 31, 2021.

GPMP Segment

The table below shows the results of the GPMP segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ together with certain key metrics for the segment.

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2021

2020

2021

2020

Revenues:

(in thousands)

Fuel revenue - inter-segment

$
1,217,622

$
352,363

$
3,130,015

$
961,666

Fuel revenue - external customers

1,643

1,052

4,324

2,981

Other revenues, net

287

245

806

639

Total revenues

1,219,552

353,660

3,135,145

965,286

Operating expenses:

Fuel costs

1,192,360

341,774

3,059,031

931,930

General and administrative expenses

755

683

2,259

2,396

Depreciation and amortization

1,844

1,843

5,529

5,530

Total operating expenses

1,194,959

344,300

3,066,819

939,856

Operating income

$
24,593

$
9,360

$
68,326

$
25,430

Fuel gallons sold - inter-segment

537,911

258,166

1,505,300

725,384

Fuel gallons sold - external customers

725

780

2,072

2,197

Fuel margin, cents per gallon1

5.0

4.5

5.0

4.5

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	For the Three Months Ended March 31,
	2022		2021
Revenues:	(in thousands)
Fuel revenue - inter-segment	$	1,275,721	$	819,467
Fuel revenue - external customers		1,162		1,155
Other revenues, net		254		255
Total revenues		1,277,137		820,877
Operating expenses:
Fuel costs		1,253,982		798,200
General and administrative expenses		706		711
Depreciation and amortization		1,842		1,843
Total operating expenses		1,256,530		800,754
Operating income	$	20,607	$	20,123
Fuel gallons sold - inter-segment		457,673		448,027
Fuel gallons sold - external customers		396		647
Fuel margin, cents per gallon1		5.0		5.0

1 Calculated as fuel revenue less fuel costs divided by fuel gallons sold.

Three Months Ended ~~September 30, 2021~~March 31, 2022 versus Three Months Ended ~~September 30, 2020~~March 31, 2021

GPMP Revenues

For the three months ended ~~September 30, 2021,~~March 31, 2022, fuel revenue increased by ~~$865.9~~$456.3 million compared to the ~~third~~first quarter of ~~2020.~~2021. The increase in fuel revenue was attributable to an increase in gallons sold and an increase in the average price of fuel as compared to the ~~third~~first quarter of ~~2020.~~2021.

For both the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ other revenues, net were $0.3 million, ~~and $0.2 million, respectively,~~ and primarily related to rental income from certain sites leased to independent dealers.

GPMP Operating Income

Fuel margin increased by ~~$15.3~~$0.5 million for the ~~third~~first quarter of ~~2021,~~2022, as compared to the ~~third~~first quarter of ~~2020,~~2021, primarily due to additional gallons sold to the retail and wholesale segments at a fixed ~~margin, which increased from 4.5 cents per gallon to 5.0 cents per gallon in the fourth quarter of 2020.~~margin.

For the three months ended ~~September 30, 2021, total general, administrative, depreciation and amortization expenses were comparable with those in the comparable prior period.~~

~~Nine Months Ended September 30, 2021 versus Nine Months Ended September 30, 2020~~

~~GPMP Revenues~~

For the nine months ended September 30, 2021, fuel revenue increased by $2.2 billion over the comparable nine months of 2020. The increase in fuel revenue was attributable to an increase in gallons sold and an increase in average price compared to the nine months of 2020.

For the nine months ended September 30, 2021 and 2020, other revenues, net were $0.8 million and $0.6 million, respectively, and primarily related to rental income from certain sites leased to independent dealers.

~~GPMP Operating Income~~

Fuel margin increased by $42.6 million for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, primarily due to additional gallons sold to the retail and wholesale segments at a fixed margin, which increased from 4.5 cents per gallon to 5.0 cents per gallon in the fourth quarter of 2020.

~~For the nine months ended September 30, 2021,~~March 31, 2022, total general, administrative, depreciation and amortization expenses were similar with those in the comparable prior period.

Use of Non-GAAP Measures

We disclose non-GAAP measures on a “same store basis,” which exclude the results of any store that is not a “same store” for the applicable period. A store is considered a same store beginning in the first quarter in which the store had a full quarter of activity in the prior year. We believe that this information provides greater comparability regarding our ongoing operating performance. Neither this measure nor those described below should be considered an alternative to measurements presented in accordance with generally accepted accounting principles in the United States (“GAAP”) and are non-GAAP financial measures.

We define EBITDA as net income (loss) before net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by excluding the gain or loss on disposal of assets, impairment charges, acquisition costs, other non-cash items, and other unusual or non-recurring charges. ~~Adjusted EBITDA, net of incremental bonuses further adjusts Adjusted EBITDA by excluding incremental bonuses based on 2020 performance.~~ Each of ~~EBITDA, Adjusted~~ EBITDA and Adjusted EBITDA ~~net of incremental bonuses~~ is a non-GAAP financial measure.

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We use ~~EBITDA, Adjusted~~ EBITDA and Adjusted EBITDA ~~net of incremental bonuses~~ for operational and financial decision-making and believe these measures are useful in evaluating our performance because they eliminate certain items that we do not consider indicators of our operating performance. EBITDA ~~Adjusted EBITDA~~ and Adjusted EBITDA ~~net of incremental bonuses~~ are also used by many of our investors, securities analysts, and other interested parties in evaluating our operational and financial performance across reporting periods. We believe that the presentation of EBITDA ~~Adjusted EBITDA~~ and Adjusted EBITDA ~~net of~~

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~~incremental bonuses~~ provides useful information to investors by allowing an understanding of key measures that we use internally for operational decision-making, budgeting, evaluating acquisition targets, and assessing our operating performance.

EBITDA ~~Adjusted EBITDA~~ and Adjusted EBITDA ~~net of incremental bonuses~~ are not recognized terms under GAAP and should not be considered as a substitute for net income (loss) or any other financial measure presented in accordance with GAAP. These measures have limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. We strongly encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

Because non-GAAP financial measures are not standardized, same store measures, EBITDA ~~Adjusted EBITDA~~ and Adjusted EBITDA, ~~net of incremental bonuses,~~ as defined by us, may not be comparable to similarly titled measures reported by other companies. It therefore may not be possible to compare our use of these non-GAAP financial measures with those used by other companies.

The following table contains a reconciliation of net income (loss) to ~~EBITDA, Adjusted~~ EBITDA and Adjusted EBITDA ~~net of incremental bonuses~~ for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2021			2020			2021			2020			2022			2021
	(in thousands)												(in thousands)
Net income	$	35,585		$	17,157		$	46,496		$	36,809
Net income (loss)													$	2,318		$	(14,662	)
Interest and other financing expenses, net		14,428			10,261			55,042			29,425			15,975			28,617
Income tax expense		4,795			4,672			12,285			5,171
Income tax expense (benefit)														1,005			(722	)
Depreciation and amortization		22,031			16,171			71,546			50,056			24,636			24,242
EBITDA		76,839			48,261			185,369			121,461			43,934			37,475
Non-cash rent expense (a)		1,424			1,627			4,773			5,175			1,946			1,771
Acquisition costs (b)		1,182			958			3,781			3,340			681			611
Loss on disposal of assets and impairment charges (c)		923			1,183			1,898			5,565			764			1,375
Share-based compensation expense (d)		1,613			132			4,127			387			2,774			1,026
(Income) loss from equity investment (e)		(85	)		24			(105	)		435			(9	)		6
Fuel taxes paid in arrears (f)		—			(231	)		—			819
Adjustment to contingent consideration (g)		(1,740	)		—			(1,740	)		—
Other (h)		27			(413	)		100			(158	)
Other (f)														18			39
Adjusted EBITDA	$	80,183		$	51,541		$	198,203		$	137,024		$	50,108		$	42,303
Incremental bonuses (i)		—			5,786			—			5,786
Adjusted EBITDA, net of incremental bonuses	$	80,183		$	57,327		$	198,203		$	142,810

(a)

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 terms of our lease portfolio, which has been impacted by our recent acquisitions. For newer leases, our rent expense recognized typically exceeds our cash rent payments, while for more mature leases, rent expense recognized is typically less than our cash rent payments.

(b)

Eliminates costs incurred that are directly attributable to historical business acquisitions and salaries of employees whose primary job function is to execute our acquisition strategy and facilitate integration of acquired operations.

(c)

Eliminates the non-cash loss (gain) from the sale of property and equipment, the loss (gain) recognized upon the sale of related leased assets and impairment charges on property and equipment and right-of-use assets related to closed and non-performing ~~stores.~~sites.

(d)

Eliminates non-cash share-based compensation expense related to the equity incentive program in place to incentivize, retain, and motivate our employees, certain non-employees, and members of our Board.

(e)

Eliminates our share of (income) loss attributable to our unconsolidated equity investment.

(f)

Eliminates ~~the payment of historical fuel tax liabilities owed for multiple prior periods.~~

~~(g)~~

~~Eliminates fair value adjustments to the contingent consideration owed for the Empire Acquisition.~~

~~(h)~~

~~Eliminates~~ other unusual or non-recurring items that we do not consider to be meaningful in assessing operating ~~performance.~~

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~~(i)~~

~~Eliminates incremental bonuses based on 2020~~ performance.

Liquidity and Capital Resources

Our primary sources of liquidity are cash flows from operations, availability under our credit facilities and our cash balances. Our principal liquidity requirements are ~~for~~the financing of current operations, funding capital expenditures, including acquisitions, and servicing debt. We finance our inventory purchases primarily from customary trade credit aided by relatively rapid inventory turnover, as well as cash generated from operations. This turnover allows us to conduct operations without the need for large

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amounts of cash and working capital. We largely rely on internally generated cash flows ~~borrowings~~ and ~~equity contributions,~~borrowings, which we believe are sufficient to meet our liquidity needs for the foreseeable future.

Our ability to meet our debt service obligations and other capital requirements, including capital expenditures, as well as the cost of acquisitions, will depend on our future operating performance which, in turn, will be subject to general economic, financial, business, competitive, legislative, regulatory and other conditions, many of which are beyond our control. As a normal part of our business, depending on market conditions, we will from time to time consider opportunities to repay, redeem, repurchase or refinance our indebtedness. Changes in our operating plans, lower than anticipated sales, increased expenses, acquisitions or other events may cause us to seek additional debt or equity financing in future periods. There can be no guarantee that financing will be available on acceptable terms or at all. Debt financing, if available, could impose additional cash payment obligations and additional covenants and operating restrictions.

In October 2020, in connection with the Empire Acquisition, we increased the availability under our Capital One Line of Credit (as defined below) to $500 million from $300 million, which we can seek to increase, subject to obtaining additional financing commitments from lenders or other banks, and subject to certain other terms, up to $700 million, and the PNC Line of Credit (as defined below) increased from $110 million to $140 million.

In June 2021, we refinanced our credit agreement with M&T Bank to increase the aggregate principal amount of real estate loans to $35.0 million (from $23.2 million, the majority of which was due in December 2021), and added a three-year $20.0 million line of credit for purchases of equipment, of which $12.3 million remained available as of September 30, 2021.

As of ~~September 30, 2021,~~March 31, 2022, we were in a strong liquidity position of approximately ~~$551~~$744 million, ~~with $275.2 million~~consisting of cash and ~~$31.8~~short-term investments of approximately $300 million ~~of restricted investments as well as~~and approximately ~~$244~~$444 million of availability under our lines of credit. ~~Additionally, this~~This liquidity position currently provides us with adequate funding to satisfy our ~~other~~ contractual and other obligations, ~~out of~~from our ~~outstanding~~existing cash balances. As of ~~September 30, 2021,~~March 31, 2022, we had no outstanding borrowings under our ~~line~~$140.0 million PNC Line of ~~credit with PNC Bank,~~Credit (as defined below), $12.3 million of unused availability under the M&T equipment line of credit, described below, and ~~$101.0~~$301.0 million of unused availability under our $500.0 million Capital One Line of ~~Credit.~~Credit (as defined below), which we can seek to increase up to $700.0 million, subject to obtaining additional financing commitments from current lenders or other banks, and subject to certain other terms.

~~In October 2021,~~On February 23, 2022, we ~~issued~~announced that our board of directors (the “Board”) declared a quarterly dividend of $0.02 per share of common stock, paid on March 29, 2022 to stockholders of record as of March 15, 2022, totaling approximately $2.5 million. On May 4, 2022, we announced that our Board declared a quarterly dividend of $0.02 per share of common stock to be paid on June 15, 2022 to stockholders of record as of May 31, 2022. The amount and ~~sold $450.0~~timing of dividends payable on our common stock are within the sole discretion of our Board, which will evaluate dividend payments within the context of our overall capital allocation strategy on an ongoing basis, giving consideration to our current and forecast earnings, financial condition, cash requirements and other factors. There can be no assurance that we will continue to pay such dividends or the amounts of such dividends.

On February 23, 2022, we also announced that our Board had authorized a share repurchase program for up to an aggregate of $50 million ~~aggregate principal amount~~ of ~~5.125% Senior Notes due 2029. We used~~our outstanding shares of common stock. During the ~~net proceeds~~three months ended March 31, 2022, we repurchased approximately 1.4 million shares of common stock under the repurchase program for approximately $12.0 million, or an average share price of $8.49. The share repurchase program does not have a stated expiration date. Whether and the extent to which we repurchase shares depends on a number of factors, including our financial condition, capital requirements, cash flows, results of operations, future business prospects and other factors management may deem relevant. The timing, volume, and nature of repurchases are subject to market conditions, applicable securities laws, and other factors, and the program may be amended, suspended or discontinued at any time. Repurchases may be effected from time to time through open market purchases, including pursuant to a pre-set trading plan meeting the ~~offering~~ requirements of Rule 10b5-1(c)of the ~~Senior Notes~~Exchange Act, privately negotiated transactions, pursuant to repay in full the outstanding balance under our Ares Credit Agreement, partially repay our Capital One Line of Credit, which increased our availability under this line by $200 million, and intend to use the remaining net proceeds for general corporate purposes.accelerated share repurchase agreements entered into with one or more counterparties, or otherwise.

To date, we have funded capital expenditures primarily through funds generated from operations, funds received from vendors, sale-leaseback transactions, the issuance of debt, and existing cash. Future capital required to finance operations, acquisitions, and ~~raze~~raze-and-rebuild, remodel and ~~remodel~~update stores is expected to come from cash on hand, cash generated by operations, availability under lines of credit, and additional long-term debt and equipment leases as circumstances may dictate. In both the ~~future,~~short-term and long-term, we currently expect that our capital spending program will be primarily focused on expanding our store base through acquisitions, ~~razing~~razing-and-rebuilding, remodeling and ~~rebuilding, and remodeling~~updating stores, and maintaining our owned properties and equipment, including upgrading all fuel dispensers to be EMV-compliant. The estimated gross cost of these upgrades in 2021 is expected to be approximately $10 million, of which a portion will be offset by fuel supplier incentive programs, and the remainder is expected to be financed with leasing companies. We expect to spend a total of approximately ~~$10~~$16 million in subsequent years to upgrade all our fuel dispensers to be EMV-compliant. We do not expect such capital needs to adversely affect liquidity.

Cash Flows for the ~~Nine Month Periods~~Three Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

Net cash provided by (used in) operating activities, investing activities and financing activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ were as follows:

4130

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	For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2021			2020			2022			2021
	(in thousands)						(in thousands)
Net cash provided by (used in):
Operating activities	$	119,547		$	126,498		$	30,062		$	11,276
Investing activities		(105,187	)		(28,854	)		(23,862	)		(16,645	)
Financing activities		(35,792	)		31,192			(21,845	)		(83,143	)
Effect of exchange rates		(1,440	)		282			(16	)		(1,462	)
Total	$	(22,872	)	$	129,118		$	(15,661	)	$	(89,974	)

Operating Activities

Cash flows provided by operations are our main source of liquidity. We have historically relied primarily on cash provided by operating activities, supplemented as necessary from time to time by borrowings on our credit facilities and other debt or equity transactions to finance our operations and to fund our capital expenditures. Cash flow provided by operating activities is primarily impacted by our net income and changes in working capital.

For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, cash flows provided by operating activities was ~~$119.5~~$30.1 million compared to ~~$126.5~~$11.3 million for the first ~~nine months~~quarter of ~~2020.~~2021. The ~~2021 decrease~~increase for the first quarter of 2022 was primarily the result of approximately ~~$12.2~~$10.4 million of ~~higher net tax payments, approximately $16.0 million of higher~~lower net interest payments including approximately $5.2 million related to the early redemption of the Bonds (Series C), changes in working capital balances primarily due to greater fuel volumes at a higher average cost in the current year, and ~~the payment of approximately $13.6 million of annual incentives. These increases were partially offset by~~ an increase in Adjusted EBITDA primarily generated from an increase in merchandise and fuel contribution at same stores as well as the ~~Empire Acquisition.~~2021 Acquisitions.

Investing Activities

Cash flows used in investing activities primarily reflect capital expenditures for acquisitions and replacing and maintaining existing facilities and equipment used in the business.

For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, cash used in investing activities increased by ~~$76.3~~$7.2 million compared to the first ~~nine~~three months of ~~2020.~~2021. For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we spent ~~$48.1~~$20.7 million for capital expenditures, including the purchase of certain fee properties, and paid a ~~net amount of $59.2~~$5.0 million deposit for the ~~ExpressStop Acquisition, after considering the proceeds paid by one~~pending acquisition of ~~the Real Estate Funds.The proceeds paid from the second Real Estate Fund for the ExpressStop Acquisition~~certain assets of ~~$43.6 million were included~~Quarles Petroleum, Inc. (See Note 12 to our condensed consolidated financial statements contained in ~~financing activity, reflecting a net cash outflow~~this Quarterly report on ~~the ExpressStop Acquisition of $15.6 million which included approximately $8.0 million of cash and inventory in stores on the closing date.~~Form 10-Q.) For the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, we spent ~~$28.8~~$17.5 million for capital expenditures, including purchasing a ~~new Dunkin’ location.~~fee property.

Financing Activities

Cash flows from financing activities primarily consist of increases and decreases in the principal amount of our ~~line~~lines of credit and debt, ~~proceeds from failed sale-leaseback transactions and~~ distributions to non-controlling interests ~~as well as~~and issuance of common and preferred ~~stock.~~stock, net of dividends paid and common stock repurchases.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2022, financing activities consisted primarily of net payments of $3.2 millionfor long-term debt, repayments of $1.7 million for financing leases, $2.5 million for dividend payments on common stock, $1.4 million for dividend payments on the Series A redeemable preferred stock and $13.1 million for common stock repurchases. For the three months ended March 31, 2021, financing activities consisted primarily of net payments of ~~$63.9~~$74.8 millionfor long-term debt, including the early redemption of the Bonds (Series C), repayments of ~~$6.1~~$2.0 million for financing leases, ~~$4.4~~$1.6 million for dividend payments on the Series A redeemable preferred stock and ~~$4.8~~$4.7 million of issuance costs related to the ~~Merger Transaction,~~merger transaction which ~~were offset by $43.6 million~~closed in ~~consideration paid by a Real Estate Fund for the ExpressStop Acquisition. For the nine months ended September 30, 2020, financing activities consisted primarily of net proceeds of $15.8~~December 2020.million for long-term debt and lines of credit, repayments of $6.1 million for financing leases, net proceeds from the issuance of rights of $11.3 million, investment of non-controlling interest in subsidiary of $19.3 million, buyback of long-term debt of $2.0 million and $7.1 million in distributions to non-controlling interests.

Credit Facilities and Senior Notes

~~Ares Credit Agreement~~Senior Notes

~~GPM entered into~~On October 21, 2021, the Company completed a ~~credit agreement with Ares to provide financing in a total~~private offering of $450 million aggregate principal amount of up5.125% Senior Notes due 2029 (the “Senior Notes”). The Senior Notes are guaranteed, on an unsecured senior basis, by certain of the Company’s wholly owned domestic subsidiaries (the “Guarantors”). The indenture governing the Senior Notes contains customary restrictive covenants that, among other things, generally limit the ability of the Company and substantially all of its subsidiaries to ~~$225 million (the “Ares Credit Agreement”): an Initial Term Loan~~(i) create liens, (ii) pay dividends, acquire shares of ~~$162 million, which was drawn~~capital stock and make payments on ~~February 28, 2020,~~subordinated debt, (iii) place limitations on distributions from certain subsidiaries, (iv) issue or sell the capital stock of certain subsidiaries, (v) sell assets, (vi) enter into transactions with affiliates, (vii) effect mergers and (viii) incur indebtedness. The Senior Notes and the ~~Delayed Term Loan A~~guarantees rank equally in right of ~~$63~~payment with all of the Company’s and the Guarantors’ respective existing and future senior unsubordinated indebtedness and

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~~million, which was drawn on October 6, 2020 in order~~are effectively subordinated to ~~fund~~all of the ~~Empire Acquisition. We repaid in full our outstanding~~Company’s and the Guarantors’ existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness; and are structurally subordinated to any existing and future obligations ~~under, and terminated,~~of subsidiaries of the ~~Ares Credit Agreement in October 2021 with the proceeds from the Senior Notes offering described below.~~Company that are not Guarantors.

Financing agreements with PNC

GPM and certain subsidiaries have a financing arrangement with PNC Bank National Association (“PNC”), pursuant to that certain credit agreement, dated February 28, 2020, by and among GPM, and certain of its subsidiaries as borrowers and guarantors, the lenders from time to time party thereto and PNC, as lender and as agent (as amended, the “PNC Credit Agreement”), to provide term loans as well as a line of credit for purposes of financing working capital (the “PNC Line of Credit”). The PNC Line of Credit has an aggregate principal amount of up to $140 million.

The PNC Line of Credit bears interest, as elected by GPM at: (a) LIBOR plus a margin of 1.75% or (b) a rate per annum equal to the alternate base rate plus a margin of 0.5%, which is equal to the greatest of (i) the PNC base rate, (ii) the overnight bank funding rate plus 0.5%, and (iii) LIBOR plus 1.0%, subject to the definitions set in the agreement. Every quarter, the LIBOR margin rate and the alternate base rate margin rate are updated based on the quarterly average undrawn availability of the line of credit.

The calculation of the availability under the PNC Line of Credit is determined monthly subject to terms and limitations as set forth in the PNC Credit Agreement, taking into account the balances of receivables, inventory and letters of credit, among other things. As of ~~September 30, 2021, $8.0~~March 31, 2022, $7.7 million of letters of credit were outstanding under the PNC Credit Agreement.

~~On October 14, 2021, GPM entered into a fifth amendment to the PNC Credit Agreement,~~ ~~which became effective from the closing of the Senior Notes offering. T~~his fifth amendment (i) permitted the Company to issue the Senior Notes and GPM and certain of the other guarantors to guarantee the Senior Notes, (ii) modified certain of the covenants, including the indebtedness covenant, investment covenant, restricted payments covenant and payment of junior indebtedness covenant, in connection with permitting the Senior Notes and the transactions related to the offering, issuance and sale of the Senior Notes, (iii) removed references to the Ares Credit Agreement and (iv) limited the collateral granted as security under the PNC Credit Agreement to a first priority lien on only receivables, inventory and deposit accounts. The Company did not incur additional debt or receive any proceeds in connection with this fifth amendment.

GPMP also has a term loan with PNC in the total amount of $32.4 million (the “GPMP PNC Term Loan”). The GPMP PNC Term Loan is secured by U.S. Treasury or other investment grade securities equal to approximately 98% of the outstanding principal amount of the GPMP PNC Term Loan.

Financing agreements with M&T Bank

~~On June 24, 2021 (the “M&T Closing Date”), the Company entered into (i)~~GPM has a ~~Second Amended, Restated and Consolidated Credit Agreement, by and among GPM, certain of its subsidiaries as co-borrowers and~~financing arrangement with M&T Bank ~~(the “A&R M&T Credit Agreement”) and (ii) a Second Amended and Restated Master Covenant Agreement, by and between GPM and M&T Bank (the “A&R M&T Master Covenant Agreement”).~~

The A&R M&T Credit Agreement amended and restated in its entirety that certain Amended and Restated Consolidated Credit Agreement, dated December 21, 2016, as amended, by and among GPM, M&T Bank and the other parties thereto and (i) addedto provide a three-year $20.0 million line of credit for purchases of equipment, which line may be borrowed in tranches, as described below, and ~~(ii) increased the~~an aggregate principal amount of ~~real estate loans thereunder to~~ $35.0 ~~million (the “New Term Loan”) from approximately $23.2 million outstanding as of the M&T Closing Date. On the M&T Closing Date, GPM refinanced the entirety of the existing $23.2~~ million of real estate ~~loans,~~loan (the “M&T Term Loan”). As of which $20.0 million was due to mature in December 2021, using the proceeds from the New Term Loan, which GPM drew in its entirety, resulting in approximately $10.7 million in net proceeds to GPM after paying costs and expenses. On the M&T Closing Date, approximately $2.5 million of outstanding equipment loans from M&T Bank were converted to become a part of the $20.0 million line of credit, of whichMarch 31, 2022, approximately $12.3 million remained available asunder the line of ~~September 30, 2021.~~credit.

Additionally, the real estate loans, which were originally at fixed interest rates ranging from 3.06% to 5.06% were converted to floating rate loans at LIBOR plus 3.00%. The real estate loans mature in June 2026 and are payable in monthly installments based on a fifteen-year amortization schedule, with the balance of the loans payable at maturity. The A&R M&T Credit Agreement provides that eachEach additional equipment loan tranche will have a three-year term, payable in ~~level~~equal monthly payments of principal plus interest, and will accrue a fixed rate of interest equal to M&T Bank’s three-year cost of funds as of the applicable date of such tranche, plus 3.00%.

~~On October 14, 2021, GPM entered into an amendment to each~~ The M&T Term Loan bears interest at LIBOR plus 3.00%, mature in June 2026 and is payable in monthly installments based on a fifteen-year amortization schedule, with the balance of the ~~A&R M&T Credit Agreement and the A&R M&T Master Covenant Agreement (the~~ loan payable at maturity.“~~M&T Credit Amendments~~”). ~~The M&T Credit Amendments (i) permitted the Company to issue the Senior~~

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Notes and GPM and certain of the other guarantors to guarantee the Senior Notes, (ii) modified and introduced certain definitions in connection with permitting the Senior Notes and the transactions related to the offering, issuance and sale of the Senior Notes and (iii) removed references to the Ares Credit Agreement.

Financing agreement with a syndicate of banks led by Capital One, National Association (“Capital One”)

GPMP has a ~~credit agreement for a~~ revolving credit facility with a syndicate of banks led by Capital One, National Association, ~~(the “Capital One Credit Facility”),~~ in an aggregate principal amount of up to $500 million (the “Capital One Line of Credit”). At GPMP’s request, the Capital One Line of Credit can be increased up to $700 million, subject to obtaining additional financing commitments from current lenders or from other banks, and subject to certain terms as detailed in the Capital One Line of Credit. ~~$200~~As of March 31, 2022, approximately $198.3 million ~~of outstanding obligations under~~was drawn on the Capital One Line of Credit, and approximately $301.0 million was ~~repaid in October 2021 with the proceeds from the Senior Notes offering described below.~~available thereunder.

The Capital One Line of Credit bears interest, as elected by GPMP at: (a) LIBOR plus a margin of 2.25% to 3.25% or (b) a rate per annum equal to base rate plus a margin of 1.25% to 2.25%, which is equal to the greatest of (i) Capital One’s prime rate, (ii) the one-month LIBOR plus 1.0%, and (iii) the federal funds rate plus 0.5%, subject to the definitions set in the agreement. The margin is determined according to a formula in the Capital One Line of Credit that depends on GPMP’s leverage. As of ~~September 30, 2021,~~March 31, 2022, $0.7 million of letters of credit were outstanding under the Capital One ~~Credit Facility.~~

~~Senior Notes Offering~~

~~On October 21, 2021, the Company completed a private offering~~Line of $450 million aggregate principal amount of 5.125% Senior Notes due 2029 (the “Senior Notes”), pursuant to a note purchase agreement dated October 14, 2021, by and among the Company, certain of the Company’s wholly owned domestic subsidiaries (the “Guarantors”), and BofA Securities, Inc., as representative of the several initial purchasers named therein. The Senior Notes are guaranteed, on an unsecured senior basis, by all of the Guarantors. The indenture governing the Senior Notes contains customary restrictive covenants that, among other things, generally limit the ability of the Company and substantially all of its subsidiaries to (i) create liens, (ii) pay dividends, acquire shares of capital stock and make payments on subordinated debt, (iii) place limitations on distributions from certain subsidiaries, (iv) issue or sell the capital stock of certain subsidiaries, (v) sell assets, (vi) enter into transactions with affiliates, (vii) effect mergers and (viii) incur indebtedness. The Senior Notes and the guarantees rank equally in right of payment with all of the Company’s and the Guarantors’ respective existing and future senior unsubordinated indebtedness and are effectively subordinated to all of the Company’s and the Guarantors’ existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness; and are structurally subordinated to any existing and future obligations of subsidiaries of the Company that are not Guarantors.Credit.

Critical Accounting Policies and Estimates

~~There~~For the three months ended March 31, 2022, there were no material changes to our critical accounting policies and estimates described in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 that have had a material impact on our ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements and related notes.

Item 3. Quantitative and Qualitative Disclosures ~~About~~about Market Risk

Commodity Price Risk

We have limited exposure to commodity price risk as a result of the payment and volume-related discounts in certain of our fuel supply contracts with our fuel suppliers, which are based on the market price of motor fuel. We do not engage in any fuel price

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hedging. Significant increases in fuel prices could result in significant increases in the retail price of fuel and in lower sales to consumers and independent dealers. When fuel prices rise, some of our independent dealers may have insufficient credit to purchase fuel from us at their historical volumes. In addition, significant and persistent increases in the retail price of fuel could also diminish consumer demand, which could subsequently diminish the volume of fuel we distribute. A significant percentage of our sales are made with the use of credit cards. Because the interchange fees we pay when credit cards are used to make purchases are based on transaction amounts, higher fuel prices at the pump and higher gallon movements result in higher credit card expenses. These additional fees increase operating expenses.

Interest Rate Risk

We may be subject to market risk from exposure to changes in interest rates based on our financing, investing, and cash management activities. ~~For the majority of~~The Senior Notes bear a fixed interest rate, therefore, an increase or decrease in prevailing interest rates has no impact on our debt ~~as of September 30, 2021, interest was calculated at a fixed margin over LIBOR.~~service for the Senior Notes. As of ~~September 30, 2021,~~March 31, 2022, the interest rate on ~~the full amount of~~ our Capital One Line of Credit was ~~3.3%~~3.6%, the interest rate on ~~the full amount of the term loans under the Ares Credit Agreement was 5.5%, the interest rate on the full amount of the~~our GPMP

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PNC Term Loan was ~~0.6%~~0.8% and the interest rate on ~~the full amount of the New~~our M&T Term Loan was ~~3.1%~~3.4%. As of March 31, 2021, the interest rate on our Capital One Line of Credit was 3.4% and the interest rate on our GPMP PNC Term Loan was 0.6%. The LIBOR interest rate as of ~~September 30, 2021~~March 31, 2022 was ~~very low,~~only approximately 0.4%, therefore, our exposure was not significant. In connection with the issuance and the sale of the Senior Notes, we repaid in full our outstanding obligations under the Ares Credit Agreement and repaid $200 million of our outstanding obligations under the Capital One Line of Credit.low. If our applicable interest rates increase by 1%, then our debt service on an annual basis would increase by approximately $2.7 million based on our debt structure after the issuance of the Senior Notes. The Senior Notes bear a fixed interest rate, therefore, an increase or decrease in prevailing interest rates will have no impact on our debt service thereafter.$2.6 million. Interest rates on commercial bank borrowings and debt offerings could be higher than current levels, causing our ~~financing~~financial costs to increase accordingly. Although this could limit our ability to raise funds in the debt capital markets, we expect to remain competitive with respect to acquisitions and capital projects, as our competitors would likely face similar circumstances.

In 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. However, in March 2021, the Ice Benchmark Administration announced that it will continue to publish the U.S. overnight, one-month, three-month, six-month and 12-month LIBOR through at least June 30, 2023. In July 2021, the Alternative Reference Rates Committee formally recommended the use of the CME’s Group’s forward-looking Secured Overnight Financing Rate (“SOFR”) as a replacement to LIBOR. As of ~~September 30, 2021,~~March 31, 2022, approximately ~~99%~~36% of our debt bore interest at variable rates. After the issuance of the Senior Notes in October 2021, our exposure to changes in interest rates was significantly reduced, as of the date of this Quarterly Report on Form 10-Q, approximately 37% of our debt bears interest at variable rates. Most of our credit agreements were entered into in the past three years. Such credit agreements, as amended, include mechanisms pursuant to which the underlying interest rates will be determined according to an alternative index replacing LIBOR, as customary in the market at such time. Since there is still great uncertainty in the market with respect to the elimination of LIBOR and the potential transition to a replacement rate, the impact of such changes on our future debt repayment obligations, results of operations and financial condition remains uncertain.

~~Exchange Rate Risk~~

As of September 30, 2021, and following the early redemption of the Bonds (Series C) which were denominated in New Israeli Shekels (“NIS”), our exposure to unfavorable exchange rate fluctuations between the NIS and the U.S. dollar was minimal.

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Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, management concluded that our disclosure controls and procedures were effective as of ~~September 30, 2021.~~March 31, 2022.

Changes to the Company’s Internal Control Over Financial Reporting

There have been no changes to the Company’s internal control over financial reporting that occurred during the calendar quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

During the reporting period covered by this Quarterly Report on Form 10-Q, there have been no material changes to the description of legal proceedings as set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Item 1A. Risk Factors

During the reporting period covered by this Quarterly Report on Form 10-Q, there have been no material changes to our risk factors as set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2020, except as described below. We are updating or supplementing those risk factors with the following risk factors:~~

We depend on five principal suppliers for the majority of our gross fuel purchases and two principal suppliers for merchandise. A failure by a principal supplier to renew its supply agreement, a disruption in supply or an unexpected change in supplier relationships could have a material adverse effect on our business.2021.

For the nine months ended September 30, 2021, Valero Marketing and Supply Company (“Valero Marketing”), Marathon Petroleum Company LP (“Marathon Petroleum”), Motiva Enterprises LLC (“Motiva”), BP Products North America Inc. (“BP North America”) and Equilon Enterprises LLC DBA Shell Oil Products US (“Shell”) each supplied over 10% of our gross fuel purchases. Our supply agreement with Valero Marketing expires in March 2026, our supply agreement with Marathon Petroleum expires in June 2023, our supply agreements with Motiva expire on various dates over the next five years, our supply agreement with BP North America expires in December 2022 and our supply agreement with Shell expires in August 2023. If any of Valero Marketing, Marathon Petroleum, Motiva, BP North America or Shell elects not to renew its contracts with us, we may be unable to replace the volume of motor fuel we currently purchase from such supplier on similar terms or at all. We rely upon our suppliers to timely provide the volumes and types of motor fuels for which they contract. We purchase motor fuels from a variety of suppliers under term contracts. In times of extreme market demand or supply disruption, we may be unable to acquire enough fuel to satisfy the demand of our customers. Any disruption in supply or a significant change in our relationship with our principal fuel suppliers could have a material adverse effect on our business, financial condition and results of operations.

We depend on two major vendors, Core-Mark and Grocery Supply Company, to supply a majority of our in-store merchandise. Due to COVID-19, driver shortages, and supply chain disruptions, manufacturers and our suppliers are currently experiencing stock shortages and shipping delays. A significant disruption or operational failure affecting the operations of Core-Mark or Grocery Supply Company, including their ability to provide timely deliveries, could materially impact the availability, quality and price of products sold at our convenience stores and gas stations, cause us to incur substantial unanticipated costs and expenses, and adversely affect our business, financial condition and results of operations.

We are subject to payment-related risks that may result in higher operating costs or the inability to process payments, either of which could harm our brand, reputation, business, financial condition and results of operations.

We accept a variety of credit cards and debit cards in our convenience stores and at our fuel pumps and, accordingly, we are, and will continue to be, subject to significant and evolving regulations and compliance requirements, including obligations to implement enhanced authentication processes that could result in increased costs and liability (as described in the risk factor entitled “~~We may be held liable for fraudulent credit card transactions on our fuel dispensers~~”) and reduce the ease of use of certain payment methods. In addition, we pay interchange and other fees, which may increase over time. We rely on independent service providers for payment processing, including credit and debit cards. If these independent service providers become unwilling or unable to provide these services to us, or if the cost of using these providers increases, our business could be harmed. We are also subject to payment card association operating rules and agreements, including data security rules and agreements and certification requirements which could change or be reinterpreted to make it difficult or impossible for us to comply. In particular, we must comply with the Payment Card Industry Data Security Standard, or PCI-DSS, a set of requirements designed to ensure that all companies that process, store or transmit payment card information maintain a secure environment to protect cardholder data. If we fail to comply with any of these rules or requirements, or if our data security systems are breached or compromised, we may be liable for losses incurred by card issuing banks or customers, subject to fines and higher transaction fees, lose our ability to accept credit or debit card payments from our customers, or process electronic fund transfers or facilitate other types of payments. Any failure to comply with such rules or requirements could significantly harm our brand, reputation, business, financial condition and results of operations.

~~Significant disruptions of information technology systems or breaches of data security could materially adversely affect our business.~~

We rely on multiple information technology systems and a number of third-party vendor platforms (collectively, “IT Systems”) in order to run and manage our daily operations, including for fuel pricing, loyalty programs, payroll, accounting, budgeting,

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reporting, and store operations. Such IT Systems allow us to manage various aspects of our business and to provide reliable analytical information to our management. The future operation, success and growth of our business depends on streamlined processes made available through our uninhibited access to information systems, global communications, internet activity and other network processes. Like most other companies, despite our current security measures, our information technology systems, and those of our third-party service providers, may be vulnerable to information security breaches, ransomware or extortion, acts of vandalism, computer viruses and interruption or loss of valuable business data. Stored data might be improperly accessed due to a variety of events beyond our control, including, but not limited to, damage and interruption from power loss or natural disasters, computer system and network failures, loss of telecommunications services, physical and electronic loss of access to data and information, terrorist attacks, hackers, security breaches or other security incidents, and computer viruses or attacks. We rely on third parties to provide maintenance and support of our IT systems, and a failure of any of these third parties to provide adequate and timely support could adversely affect the operation of our IT systems. We have technology security initiatives and disaster recovery plans in place to mitigate our risk to these vulnerabilities, but these measures may not be adequately designed or implemented to ensure that our operations are not disrupted or the data security breaches do not occur.

Hackers and data thieves are increasingly sophisticated and operate large-scale and complex automated attacks which may remain undetected until after they occur. Any breach of our network may result in damage to our reputation, the loss of valuable business data, the misappropriation of our valuable intellectual property or trade secret information, misappropriation of our consumers’ or employees’ personal information, key personnel being unable to perform duties or communicate throughout the organization, loss of retail sales, significant costs for data restoration and other adverse impacts on our business. Despite our existing security procedures and controls, if our network was compromised, it could give rise to unwanted media attention, materially damage our customer relationships, harm our business, reputation, results of operations, cash flows and financial condition, result in fines or litigation, and may increase the costs we incur to protect against such information security breaches, such as increased investment in technology, the costs of compliance with consumer protection laws and costs resulting from consumer fraud. In addition, successful cyberattacks or data breaches at one of our vendors, other convenience store operators, large retailers or other market participants, whether or not we are directly impacted, could lead to a general loss of customer confidence or affect our supply chain which could negatively affect us, including harming the market perception of the effectiveness of our security measures or harming the reputation of the industry in general, which could result in reduced use of our products and services.

The costs of mitigating cybersecurity risks are significant and are likely to increase in the future. These costs include, but are not limited to, retaining the services of cybersecurity providers; compliance costs arising out of existing and future cybersecurity, data protection and privacy laws and regulations; and costs related to maintaining redundant networks, data backups and other damage-mitigation measures. While we maintain cyber liability insurance, our insurance may not be sufficient to protect against all losses we may incur if we suffer significant or multiple attacks.

We are subject to evolving laws, regulations, standards, and contractual obligations related to data privacy and security regulations, and our actual or perceived failure to comply with such obligations could harm our reputation, subject us to significant fines and liability, or otherwise adversely affect our business.

As a fuel and merchandise retailer, we collect and store large amounts of data on our network, including personal data from customers and other sensitive information concerning our employees and vendors. As such, we are subject to, or affected by, a number of federal, state, and local laws and regulations, as well as contractual obligations and industry standards, that impose certain obligations and restrictions with respect to data privacy and security, and govern our collection, storage, retention, protection, use, processing, transmission, sharing and disclosure of personal information including that of our employees, customers, and others. If we are found to have breached any such laws or regulations, we may be subject to enforcement actions that require us to change our business practices in a manner which may negatively impact our revenue, as well as expose us to litigation, fines, civil and/or criminal penalties and adverse publicity that could cause our customers to lose trust in us, negatively impacting our reputation and business in a manner that harms our financial position.

The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Our failure to take any steps perceived by the FTC as appropriate to protect consumers’ personal information may result in claims by the FTC that we have engaged in unfair or deceptive acts or practices in violation of Section 5(a) of the FTC Act. State consumer protection laws provide similar causes of action for unfair or deceptive practices for alleged privacy, data protection and data security violations.

Further, we make public statements about our use and disclosure of personal information through our privacy policies that are posted on our websites. The publication of our privacy policies and other statements that provide promises and assurances about data privacy and security can subject us to potential government or legal action if they are found to be deceptive, unfair or misrepresentative of our actual practices.

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As described above, we are also subject to the PCI DSS, which is a standard designed to protect credit card account data as mandated by payment card industry entities. We rely on vendors to handle PCI DSS matters and to ensure PCI DSS compliance. Despite our compliance efforts, we may become subject to claims that we have violated the PCI DSS based on past, present, and future business practices. Our actual or perceived failure to comply with the PCI DSS can subject us to fines, termination of banking relationships, and increased transaction fees.

In addition, numerous states already have, and are looking to expand, data protection legislation requiring companies like ours to consider solutions to meet differing needs and expectations of consumers. Similar laws have been proposed at the federal level, reflecting a trend toward more stringent privacy legislation in the United States. The enactment of such laws could have potentially conflicting requirements that would make compliance challenging and we may not be able to monitor and react to all developments in a timely manner.

Our failure, and/or the failure by the various third-party service providers and partners with which we do business, to comply with applicable privacy policies or federal or state laws and regulations or any other obligations relating to privacy, data protection or information security, or any compromise of security that results in the unauthorized release of personal data or other user data, or the perception that any such failure or compromise has occurred, could negatively harm our brand and reputation, result in a loss sales and/or result in fines and/or proceedings by governmental agencies and/or customers, any of which could have a material adverse effect on our business, results of operations and financial condition.

~~Our business could suffer if we fail to adequately secure, maintain, and enforce our intellectual property rights.~~

We rely on our trademarks, trade names, and brand names to distinguish our products and services from those of our competitors, and have registered or applied to register many of these trademarks. We cannot assure you that our trademark applications will be approved. Third parties may also oppose our trademark applications, or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products or services, which could result in loss of brand recognition, and could require us to devote resources advertising and marketing new brands. Further, we cannot assure you that competitors will not infringe our trademarks, or that we will have adequate resources to enforce our trademarks.

We also rely on trademarks that we license from third parties to identify the branded fuels that we supply, including the marks “ExxonMobil,” “Marathon,” “BP,” “Shell,” and “Valero.” In the fast food field, we license trademarks such as “Subway” and “Dunkin’” to use at our applicable franchised or licensed outlets. We also license the “Jetz” trademark for use at certain of our convenience stores in Wisconsin. If we violate the terms of these licenses, we could be liable for damages, and the licenses could be terminated. The termination or non-renewal of any of these licenses could require us to rebrand or to replace the licensed goods and services, and accordingly could have a material adverse effect on our business, reputation, financial condition and results of operations.

We also rely on unpatented proprietary technology. It is possible that others will independently develop the same or similar technology or otherwise obtain access to our unpatented technology. To protect our trade secrets and other proprietary information, we use access controls in an effort to prevent unauthorized use or disclosure of our proprietary or confidential information, however, we cannot assure you that these controls will not be circumvented. We also require employees, consultants, advisors and collaborators to enter into confidentiality agreements. We cannot assure you that these agreements will provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information. If we are unable to maintain the proprietary nature of our technologies, we could be materially adversely affected.

~~If third parties claim that we infringe upon their intellectual property rights, our operating profits could be adversely affected.~~

We face the risk of claims that we have infringed third parties’ intellectual property rights. Any claims of intellectual property infringement, even those without merit, could be expensive and time consuming to defend and divert management’s attention, cause us to cease making, licensing or using the products or services that incorporate the challenged intellectual property, require us to rebrand our products or services, if feasible, or require us to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property.

Any royalty or licensing agreements, if required, may not be available to us on acceptable terms or at all. A successful claim of infringement against us of third party intellectual property infringement could result in our being required to pay significant damages, enter into costly license or royalty agreements, or stop the sale of certain products, any of which could have a negative impact on our operating profits and harm our future prospects.

~~Table of Contents~~

The recent federal COVID-19 vaccine mandate for certain employers could negatively impact our ability to attract and retain employees and could add increased administrative burden, which could in turn adversely affect our profitability and ability to grow.

On September 9, 2021, President Biden announced a new COVID-19 Action Plan entitled the “Path out of the Pandemic” (the “Plan”). The Plan mandates COVID-19 vaccinations or at least weekly COVID-19 testing for all U.S. employers with 100 or more employees. The United States Department of Labor’s Occupational Safety and Health Administration issued on November 5, 2021 an emergency temporary standard (the “ETS”) entitled “COVID-19 Vaccination and Testing: Emergency Temporary Standard” to make certain requirements of the Plan effective beginning December 5, 2021 and other requirements of the Plan effective beginning January 4, 2022, pending issuance of a permanent rule. Legal challenges to the ETS are currently underway, and additional challenges are possible, which leads to uncertainty about the potential timing of when or if the ETS might actually take effect. The Fifth Circuit Court of Appeals has currently issued a stay of the effectiveness of the ETS. If the ETS becomes effective, whether due to the lifting of the Fifth Circuit Court of Appeals’ stay or otherwise, it could increase the challenges of maintaining and growing our number of employees across all functions and will create operational burdens necessary to track vaccination status and enforce weekly COVID-19 testing of non-vaccinated employees. Competition for employees has significantly increased, while high industry turnover rates remain. This mandate could lead to additional employee turnover caused by employees moving to smaller employers that are exempt from the ETS. If we are unable to continue to attract and retain employees at our current level, we could be required to increase employee compensation in an effort to prevent understaffing at our stores. An increase in our expenses or in the number of employee vacancies could materially and adversely affect our growth and profitability.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~None.~~The following table presents our share repurchase activity for the quarter ended March 31, 2022 (dollars in thousands, except per share amounts):


	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)		Maximum Dollar Value that May Yet Be Purchased Under the Plans or Programs (2)
Period
January 1, 2022 to January 31, 2022 (1)		119,142	$	8.77		—	$	—
February 1, 2022 to February 28, 2022		—		—		—		50,000
March 1, 2022 to March 31, 2022		1,417,862		8.49		1,417,862		37,961
Total		1,537,004	$	8.51		1,417,862	$	37,961

1 In addition to the shares of common stock we purchased under our publicly announced $50 million stock repurchase program, we repurchased 119,142 shares of our common stock at an aggregate cost of $1.04 million, or an average purchase price of $8.77 per share, in connection with the net settlement of shares issued as a result of the vesting of restricted stock units during the quarter ended March 31, 2022.

2 Except as noted in footnote 1 above, all of the above repurchases were made on the open market at prevailing market rates plus related expenses under our stock repurchase program, which authorized the repurchase of up to $50 million of our common stock. We publicly announced this program on February 23, 2022.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

On November 9, 2021, the Company acquired the operations and leasehold interest of 36 self-operated convenience stores and gas stations and one development parcel, located in North Carolina (the “Handy Mart Acquisition”). The total consideration for the transaction, including the purchase of real estate by Oak Street pursuant to the Program Agreement (as described in Note 15 to the unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q), will be approximately $112 million plus the value of inventory and cash in the stores on the closing date. The Company financed the consideration for the acquired operations from its own sources and Oak Street has agreed to pay the remaining consideration for certain of the seller’s sites it has agreed to acquire as described below.

At the closing of the transaction, the Company purchased and assumed, among other things, certain vendor agreements, equipment, inventory and goodwill with regard to the acquired assets and paid approximately $12 million plus the value of inventory and cash in the stores on the closing date. At the closing, Oak Street purchased the fee simple ownership in five of the sites for approximately $16 million and will lease an additional 24 sites from the seller until, pending completion of all necessary title work, Oak Street purchases the fee simple ownership in these 24 leased sites from the seller for approximately $84 million. Additionally, at the closing, pursuant to the Program Agreement, the Company entered into a master lease with Oak Street under customary lease terms for the sites Oak Street acquired or will acquire in the Handy Mart Acquisition. As of the closing of the transaction, the Company leases one site, the development parcel and a maintenance facility from the seller and the remaining six sites from other third parties.None.

5035

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Item 6. Exhibits


Exhibit 31.1		Certification by Arie Kotler, Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended ~~September 30, 2021.~~March 31, 2022.

Exhibit 31.2		Certification by Donald Bassell, Chief Financial Officer, pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended ~~September 30, 2021.~~March 31, 2022.

Exhibit 32.1		Certification by Arie Kotler, Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended ~~September 30, 2021.~~March 31, 2022.

Exhibit 32.2		Certification by Donald Bassell, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended ~~September 30, 2021.~~March 31, 2022.

101		The following financial statements from the Company’s Form 10-Q for the quarter ended ~~September 30, 2021,~~March 31, 2022, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of ~~Comprehensive Income, (iv) Condensed Consolidated Statements of~~ Changes in Equity, ~~(v)~~(iv) Condensed Consolidated Statements of Cash Flows, and ~~(vi)~~(v) Notes to Condensed Consolidated Financial Statements

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

5136

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: ~~November 10, 2021~~May 4, 2022		ARKO Corp.

	By:	/s/ Arie Kotler
	Name:	Arie Kotler
	Title:	Chairman, President and Chief Executive Officer

5237


Delaware		85-2784337
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, $0.0001 par value per share	ARKO	Nasdaq~~Nasdaq~~ Capital Market
Warrants to purchase common stock	ARKOW	Nasdaq~~Nasdaq~~ Capital Market


Large accelerated filer	☐☒	Accelerated filer	☐
Non-accelerated filer	☒☐	Smaller reporting company	☐
		Emerging growth company	☐


	September 30, 2021			December 31, 2020			March 31, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	275,185		$	293,666		$	241,220		$	252,141
Restricted cash with respect to bonds		0			1,230
Restricted cash		14,920			16,529			15,662			20,402
Short-term investments								59,110			58,807
Trade receivables, net		66,182			46,940			75,093			62,342
Inventory		189,026			163,686			219,154			197,836
Other current assets		93,515			87,355			76,091			92,095
Total current assets		638,828			609,406			686,330			683,623
Non-current assets:
Property and equipment, net		531,864			491,513			554,252			548,969
Right-of-use assets under operating leases		959,675			961,561			1,055,945			1,064,982
Right-of-use assets under financing leases, net		197,377			198,317			189,657			192,378
Goodwill		188,636			173,937			197,648			197,648
Intangible assets, net		201,318			218,132			180,951			185,993
Restricted investments		31,825			31,825
Non-current restricted cash with respect to bonds		0			1,552
Equity investment		2,809			2,715			3,007			2,998
Deferred tax asset		37,382			40,655			43,285			41,047
Other non-current assets		18,716			10,196			29,874			24,637
Total assets	$	2,808,430		$	2,739,809		$	2,940,949		$	2,942,275
Liabilities
Current liabilities:
Long-term debt, current portion	$	10,028		$	40,988		$	40,908		$	40,384
Accounts payable		180,677			155,714			193,571			172,918
Other current liabilities		122,700			133,637			135,167			137,488
Operating leases, current portion		51,522			48,878			52,840			51,261
Financing leases, current portion		6,957			7,834			6,189			6,383
Total current liabilities		371,884			387,051			428,675			408,434
Non-current liabilities:
Long-term debt, net		679,560			708,802			675,868			676,625
Asset retirement obligation		56,450			52,964			58,389			58,021
Operating leases		977,639			973,695			1,068,101			1,076,905
Financing leases		230,677			226,440			228,367			229,215
Deferred tax liability		356			2,816			2,207			2,546
Other non-current liabilities		151,286			96,621			137,610			136,853
Total liabilities		2,467,852			2,448,389			2,599,217			2,588,599
Commitments and contingencies - see Note 11
Series A redeemable preferred stock (no par value) - authorized: 1,000 shares; issued and outstanding: 1,000 and 1,000 shares, respectively; redemption value: $100,000 and $100,000, in the aggregate respectively		100,000			100,000
Commitments and contingencies - see Note 10
Series A redeemable preferred stock (0 par value) - authorized: 1,000 shares; issued and outstanding: 1,000 and 1,000 shares, respectively; redemption value: $100,000 and $100,000, in the aggregate respectively								100,000			100,000
Shareholders' equity:
Common stock (par value $0.0001) - authorized: 400,000 shares; issued and outstanding: 124,428 and 124,132 shares, respectively		12			12
Common stock (par value $0.0001) - Authorized: 400,000 shares; Issued: 124,727 and 124,428 shares, respectively; Outstanding: 123,190 and 124,428 shares, respectively								12			12
Treasury stock, at cost - 1,537 and 0 shares, respectively								(13,084	)		0
Additional paid-in capital		214,895			212,103			220,449			217,675
Accumulated other comprehensive income		9,119			9,119			9,119			9,119
Retained earnings (deficit)		16,664			(29,653	)
Retained earnings								24,993			26,646
Total shareholders' equity		240,690			191,581			241,489			253,452
Non-controlling interest		(112	)		(161	)		243			224
Total equity		240,578			191,420			241,732			253,676
Total liabilities, redeemable preferred stock and equity	$	2,808,430		$	2,739,809		$	2,940,949		$	2,942,275


	Common Stock				Additional Paid-in			Accumulated Other Comprehensive		Retained Earnings			Total Shareholders'			Non- Controlling			Total
	Shares		Par Value		Capital			Income		(Deficit)			Equity			Interests			Equity
Balance at July 1, 2020		71,384	$	7	$	115,514		$	4,439	$	(31,924	)	$	88,036		$	152,790		$	240,826
Share-based compensation		—		0		132			0		0			132			0			132
Conversion of convertible bonds		23		—		108			—		—			108			—			108
Distributions to non-controlling interests		—		0		0			0		0			0			(2,359	)		(2,359	)
Other comprehensive income		—		0		0			479		0			479			0			479
Net income		—		0		0			0		9,688			9,688			7,469			17,157
Balance at September 30, 2020		71,407	$	7	$	115,754		$	4,918	$	(22,236	)	$	98,443		$	157,900		$	256,343

Balance at July 1, 2021		124,428	$	12	$	214,781		$	9,119	$	(18,870	)	$	205,042		$	(153	)	$	204,889
Share-based compensation		—		0		1,613			0		0			1,613			0			1,613
Transactions with non-controlling interests		—		0		(50	)		0		0			(50	)		50			0
Distributions to non-controlling interests		—		0		0			0		0			0			(60	)		(60	)
Dividends on redeemable preferred stock		—		0		(1,449	)		0		0			(1,449	)		0			(1,449	)
Net income		—		0		0			0		35,534			35,534			51			35,585
Balance at September 30, 2021		124,428	$	12	$	214,895		$	9,119	$	16,664		$	240,690		$	(112	)	$	240,578


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	5
	Condensed Consolidated Balance Sheets as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 (unaudited)	5
	Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (unaudited)	6
	Condensed Consolidated Statements of ~~Comprehensive Income~~Changes in Equity for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (unaudited)	7
	Condensed Consolidated Statements of ~~Changes in Equity~~Cash Flows for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (unaudited)	8
	~~Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 (unaudited)~~	10
	Notes to Condensed Consolidated Financial Statements (unaudited)	1311
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2921
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4432
Item 4.	Controls and Procedures	4634
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	4735
Item 1A.	Risk Factors	4735
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5035
Item 3.	Defaults Upon Senior Securities	5035
Item 4.	Mine Safety Disclosures	5035
Item 5.	Other Information	5035
Item 6.	Exhibits	5136
Signatures		5237


	Common Stock					Treasury			Additional			Accumulated Other		Retained Earnings			Total			Non-
	Shares			Par Value		Stock, at Cost			Paid-in Capital			Comprehensive Income		(Accumulated Deficit)			Shareholders' Equity			Controlling Interests			Total Equity
Balance at January 1, 2021		124,132		$	12	$	0		$	212,103		$	9,119	$	(29,653	)	$	191,581		$	(161	)	$	191,420
Share-based compensation		—			0		0			1,026			0		0			1,026			0			1,026
Distributions to non-controlling interests		—			0		0			0			0		0			0			(60	)		(60	)
Dividends on redeemable preferred stock		0			0		0			(1,402	)		0		0			(1,402	)		0			(1,402	)
Issuance of shares		296			0		0			3,000			0		0			3,000			0			3,000
Net (loss) income		0			0		0			0			0		(14,736	)		(14,736	)		74			(14,662	)
Balance at March 31, 2021		124,428		$	12	$	0		$	214,727		$	9,119	$	(44,389	)	$	179,469		$	(147	)	$	179,322

Balance at January 1, 2022		124,428		$	12	$	0		$	217,675		$	9,119	$	26,646		$	253,452		$	224		$	253,676
Share-based compensation		—			0		0			2,774			0		0			2,774			0			2,774
Distributions to non-controlling interests		—			0		0			0			0		0			0			(60	)		(60	)
Dividends on redeemable preferred stock		0			0		0			0			0		(1,418	)		(1,418	)		0			(1,418	)
Dividends declared (2 cents per share)		—			0		0			0			0		(2,474	)		(2,474	)		0			(2,474	)
Common stock repurchased		(1,537	)		0		(13,084	)		0			0		0			(13,084	)		0			(13,084	)
Vesting of restricted share units		286			—		—			—			—		—			—			—			—
Issuance of shares		13			—		0			—			—		—			—			—			—
Net income		0			0		0			0			0		2,239			2,239			79			2,318
Balance at March 31, 2022		123,190		$	12	$	(13,084	)	$	220,449		$	9,119	$	24,993		$	241,489		$	243		$	241,732


	Amount
Fair value of consideration transferred:	(in thousands)
Cash	$	15,911
Consideration provided by the Real Estate Funds		77,877
Total consideration	$	93,788
Assets acquired and liabilities assumed at the date of acquisition:
Cash and cash equivalents		261
Inventory		7,695
Other assets		362
Property and equipment, net		85,081
Deferred tax asset		39
Intangible assets		2,965
Total assets		96,403
Other liabilities		(283	)
Asset retirement obligations		(2,448	)
Total liabilities		(2,731	)
Total identifiable net assets		93,672
Goodwill	$	116

Consideration paid in cash	$	15,911
Consideration provided by the Real Estate Funds		77,877
Less: cash and cash equivalent balances acquired		(261	)
Net cash outflow on acquisition closing date	$	93,527


	September 30, 2021			December 31, 2020
	(in thousands)
Bonds (Series C)	$	0		$	76,582
PNC term loans		32,377			32,354
M&T debt		44,460			27,898
Ares term loan		214,780			215,433
Insurance premium notes		3,038			3,488
Capital One line of credit		394,933			394,035
Total debt, net	$	689,588		$	749,790
Less current portion		(10,028	)		(40,988	)
Total long-term debt, net	$	679,560		$	708,802


	March 31, 2022			December 31, 2021
	(in thousands)
Senior Notes	$	443,078		$	442,889
PNC term loan		32,393			32,385
M&T debt		42,183			43,392
Capital One line of credit		195,532			195,232
Insurance premium notes		3,590			3,111
Total debt, net	$	716,776		$	717,009
Less current portion		(40,908	)		(40,384	)
Total long-term debt, net	$	675,868		$	676,625


	As of December 31, 2020
	As Previously Reported			Adjustment			As Revised
	(in thousands)
Other non-current liabilities	$	70,166		$	26,455		$	96,621
Total liabilities		2,421,934			26,455			2,448,389
Additional paid-in capital		239,081			(26,978	)		212,103
Accumulated deficit		(30,176	)		523			(29,653	)
Total equity		217,875			(26,455	)		191,420