2023 financial results conference call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ross Parman. Thank you. You may begin. Thank you. Good morning and welcome to ARKO's Q1 2023 earnings conference call and webcast. On today's call are Arie Kotler, Chairman, President, and Chief Executive Officer, and Don Bassell, Chief Financial Officer. Our earnings press release, quarterly report on Form 10-Q for the Q1 of 2023, as filed with the SEC, and our earnings presentation are available on ARKO's website at arkocorp.com. Before we begin today, please note that all Q1 2023 financial information is unaudited. During the course of this call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of words such as will, may, expect, plan, intend, could, estimate, project, and similar references to future periods. These statements speak only as of today and are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to our press release, our quarterly report on Form 10-Q for the quarter ended March 31, 2023, and our other filings with the SEC, including our annual report on Form 10-K for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Please note that on today's call, management will refer to non-GAAP financial measures, including same-store measures, EBITDA, and adjusted EBITDA. While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for our financial information presented in accordance with GAAP. Please refer to our earnings press release for reconciliations of our non-GAAP measures to the most directly comparable GAAP measures. I'd also like to note that we're conducting our call today from our respective remote locations. As such, there may be brief delays, crosstalk, or other minor technical issues during this call. We thank you in advance for your patience and understanding. Now, I'd like to turn the call over to Arie. Thank you, Ross. Good morning, everyone. We appreciate you joining the call. Yesterday, you may have seen two major announcements the company made that we believe show how well we are positioned to continue executing our growth strategy well into the future. Our subsidiary, GPM Petroleum, has upside its credit line by $300 million to $800 million from syndicate of banks, and we also extended the maturity until May of 2028. We also increased and extended the company's program agreement with Oak Street, which can provide up to $1.5 billion to purchase and lease real estate to GPM or its affiliates through September 30, 2024. In aggregate, ARKO currently has more than $2 billion in available capital for continued M&A activity, including cash, lines of credit, and the extended Oak Street program agreement. We are focused on continuing our acquisition strategy to enhance value for our stockholders. Turning to our results. This was another strong quarter for higher merchandise contribution and acquisitions. Q1 same-store merchandise sales, excluding cigarettes, grew 7.6%. Same-store sales increased by 3.8%. The increase in same-store sales was driven by continued strong performance in high-margin destination categories. We include in-depth detail on these categories in our Q1 presentation on arkocorp.com. Some highlights of these destination categories included packages, beverages sales, which increased 9.6%. Candy was up 18.3%. Beer increased 6.2%. Another key headline is the growth in merchandising contribution dollars of $8.1 million or 7.7% on a same-store basis. Total merchandise margin grew 120 basis points to 30.7% this quarter, compared to 29.5% in Q1 2022. We believe that these results show that our numerous marketing and merchandising initiatives are working, resonating with customers and driving sales growth. Higher merchandise contribution margin and a recent acquisition helped to offset lower fuel contribution and increased in-store operating expenses, resulting in adjusted EBITDA of $47.5 million for the quarter, compared to $50.1 million in the prior year quarter, a decline of 5.2%. Total fuel contribution increased to $123.8 million compared to $112.9 million in the prior year quarter, an increase of $10.9 million. On a same-store basis, including legacy wholesale sites, total fuel contribution dollars were $95.2 million, which declined $15.4 million compared to $110.6 million in Q1 2022. The fuel contribution was lower, with the majority of this decline related to elevated fuel margin in March 2022 at same-store retail sites compared to March 2023. PPG was $0.477 per gallon versus $0.373 per gallon in March 2023. This was driven by increase in fuel prices due in part to the invasion of Ukraine. We still believe that structurally, higher margin will remain given increased operating pressures. Going back to our strong in-store performance, I will now update you on our three key merchandising and marketing pillars. Our first pillar is to grow sales in core destination categories through data-driven decisions and strong supplier partnerships. Cigarettes are certainly a destination category. However, core destination categories are where we focus investment or resources such as people, space, and capital. These are packaged beverages, beer, candy, salty snacks, sweet snacks, and alternative snacks. These categories drove 63% of our Q1 same-store sales excluding cigarettes, and 43% of our total same-store sales. Our customers expect and deserve for us to have the right assortment, space, and value in these categories. Same-store sales in these six core categories grew by approximately 10% in Q1 2023 over Q1 2022. The margin rates in these categories grew 110 basis points in Q1 2023 over Q1 2022. We continue to refine and drive the expansion of these categories across our company-operated stores to ensure that we are offering our customers the right assortment and value proposition. A core criteria of our M&A strategy is to acquire chains where we can add value. Our core scale purchasing power and merchandising and marketing expertise has enabled the company to improve the performance of stores that we purchase by improving the product assortment, product placement, promotional events, and loyalty. One example of our ability to add value is at our 36 Handy Mart stores in North Carolina, which we acquired in November 2021. As follow-up to detail we shared on our last call, we continue to make progress in the stores. Q1 results at Handy Mart stores were as follows, are all Q1, 2023 compared to Q1, 2022, our first full quarter of operations. Merchandise sales increased 6.7%, and merchandise sales excluding cigarettes increased 12.2%. Merchandise margin increased 400 basis points to 33.2% compared to 29.2% in the prior year quarter. Sales of the six core destination categories I mentioned earlier grew by 14.9%. We are also encouraged by early results at the Pride stores that we recently acquired and reset. We believe we will have similar results at the TEG stores that we are currently in the process of resetting. Moving to the second pillar, our fas REWARDS loyalty program, we implemented a major new upgrade to our loyalty app that was launched March 29 to develop and strengthen relationship with our customers and drive more trips with our existing customers while attracting new loyal customers. We currently enjoy approximately 1.38 million enrolled members. Since the launch of the upgraded app, the number of member enrolling each week has increased an average of approximately 30% compared to pre-launch enrollment. We are also excited to announce our 100 days of summer loyalty enrollment offer that starts on May 17. A new customer who enrolls with valid email address and phone number will be rewarded with $10 in fas BUCKS delivered to their new app wallet, which these customers may spend in our stores on participating categories. We are very excited about this promotional offer as we know that enrolled marketable members make more trips and spend more in our stores than non-enrolled members. In fact, in Q1 2023, our enrolled members made an average of almost six more trips per month versus non-enrolled members. In Q1 2023, enrolled members spent on average approximately $68.50 more per month than non-enrolled members. Additionally, the Q1 2023 enrolled members increased their average monthly spend by 8.2% compared to Q1 2022. While early, we are encouraged by engagement in the new app, including the redemption of our in-app only hot deals, as well as use of our new in-app order and delivery functionality. The third pillar is expanding our packaged and fresh food offerings, including pizza, chicken, prepared foods, and other options. Same-store franchise sales across all brands increased 24.5% in the Q1 as compared to the prior year. While we have made great progress with our grab-and-go prepared foods, frozen foods, and franchise partnership with Sbarro and Dunkin', we are still in the early stage of defining this strategy along with assortment and price value proposition for the consumer and our go-to-market strategy. Our goal is to become destination for packaged, prepared, and fresh food, and we look forward to providing further updates. Our objective is to make continuous improvement in each pillar and position our core convenience store business to continue delivering great results and exceeding our customers' expectations. We're now in the midst of our store operation team annual Pride Ride. We think of this as going through our stores for spring cleaning. We do this every year, including visits and inspection at all of our stores. This event allows us to rally together and prepare for the 100 days of summer, our biggest selling season, and to ensure that we are customer-ready for the big selling season. Switching gears to EV. We continue to make progress on electric vehicle charging. At the end of Q1, our network included more than 50 charging ports, with plans to add more charging capacity across the country. Turning to M&A. Following the closing of Quarles and Pride acquisition in 2022, we closed the TEG acquisition on March 1, 2023. TEG added 135 convenience stores and expanded our southern retail territory into Alabama and Mississippi, as well as 192 dealer locations. We are pleased with the results of this acquisition so far. The WTG acquisition is anticipated to close in the Q2. This acquisition will significantly enhance the company's footprint in attractive western Texas. Let me briefly address our proposal to acquire TravelCenters of America. Our intentions were consistent with our track record and strategy that has been very successful and has made ARKO an acquirer of choice, transparency and open negotiation. We believe our proposal, had we been given an opportunity to perform customer due diligence, would have provided immediate cash value to TA stockholders at significant premium to the next best offer with no financing contingencies. For the record, neither our proposal to TA nor any other previous acquisition have ever had financing contingencies. Our repeated attempts to engage with TA's management and board were met with firm resistance, resulting in a more public conversation through press releases and filings rather than productive discussions. We believe a wider group of investors now fully appreciate how rapidly ARKO can move to create the right condition for a deal. We appreciate Oak Street and others moving very rapidly along with us. We reserve cash and maintain flexible financing so we can take advantage when the right opportunity arrives. Given our liquidity, we will continue to evaluate deals concentrating on return on capital consistent with our traditional discipline approach. We are also investing in our business. We are more committed than ever to driving long-term, sustainable inside sales growth, expanding margin, and gross profit dollars. Before I hand the call over to Don, and given that we're not currently providing guidance, I want to detail seasonality and reiterate our historical seasonal performance. We believe that historical quarterly cadence is an important factor to consider when evaluating our performance. The Q1 historically is our least active sales period, while the Q3 is our strongest. Using an average of 2021 and 2022, the Q1 contributes about 17% of overall adjusted EBITDA, and the Q2, about 28%. The Q3 has historically contributed about 32%, and the Q4, about 23%. I will now turn the call over to Don. Thank you, Ari. The company has continued to record excellent results. Our initiatives are clearly gaining traction. The stable ratable cash flow from the wholesale and fleet fueling segments have enhanced our deal-making flexibility and augments further investment in our core convenience store business. Our balance sheet continues to be strong. We currently have a very good liquidity position. As of March 31, 2023, we had cash and cash equivalents of approximately $256 million. Our outstanding debt, excluding capital leases, was approximately $809 million, resulting in net debt of $553 million. We continue to realize excellent cash flow. For the quarter, net cash provided by operating activities was $15.9 million versus $30.1 million for the Q1 of 2022. This included an investment in working capital associated with the TEG acquisition. Getting to results for our convenience stores. Merchandise revenues for the Q1 of 2023 increased to $400.4 million versus $367 million in the prior year quarter. Merchandise margin increased quarter-over-quarter by 120 basis points to 30.7%. Total capital expenditures were approximately $23.4 million for the quarter. This compared to capital expenditures of $20.7 million in Q1 2022. Retail fuel profitability, excluding intercompany charges for the Q1 of 2023, declined 1.9% this quarter to $88.1 million. This was a $1.7 million decline versus Q1 2022. There was a $11.4 million decrease in same-store fuel profits, excluding intercompany charges, primarily offset by $10.8 million in fuel contribution from the TEG and Pride acquisitions. The company maintained relatively strong retail fuel margin of $0.354 per gallon for Q1 2023 compared to $0.375 per gallon in Q1 2022. Q1 convenience store operating expenses increased $18.9 million or 12.1% versus the prior year quarter due to $15.9 million of expenses related to the TEG and Pride acquisitions. An increase in expenses at same stores, including approximately $6 million or 9.7% of higher personnel costs compared to Q1 2022. The increase in store operating expenses was partially offset by underperforming retail stores that we closed or converted to dealers. Moving to wholesale for the quarter. Wholesale fuel contribution, excluding intercompany charges, decreased approximately $1.8 million. The relatively new fleet fueling business generated fuel revenues of approximately $127.5 million for the Q1. Fuel contribution, excluding intercompany charges from the fleet fueling sites, was approximately $13.8 million for the quarter. Fuel margin cents per gallon, excluding intercompany charges for the proprietary cardlock locations, was $0.445 per gallon. Net interest and other financial expenses for the Q1 decreased by $2.4 million versus the prior year quarter to $13.6 million. Net loss for the quarter was $2.5 million versus net income of $2.3 million in the prior year period. Adjusted EBITDA was $47.5 million compared to $50.1 million in the Q1 of 2022. In the Q1, the company repurchased approximately 89,000 shares of our common stock for a total of approximately $700,000. There are approximately $10.3 million remaining under our previously announced $50 million stock repurchase program. Because of our continued results and desire to enhance returns for stockholders, ARKO's board of directors declared a quarterly dividend of $0.03 per share of common stock to be paid on June 1, 2023, to stockholders of record as of May 19, 2023. Now I'll turn the call back over to Arie. Thanks, Don. I will close by saying that we believe 2023 will be another year of strong performance and growth. I want to thank the company's more than 13,000 employees for their hard work and dedication. We will take your questions. Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from Anthony Bonadio with Wells Fargo. Please proceed with your question. Yeah. Hey, good morning, guys. Just quickly on the Oak Street facility to start. Beyond the upsizing versus last year, is there anything else you can tell us about how the terms of the agreement differ from last year? Anything you can tell us about the new cap rate? Yeah. You know. Good morning, Anthony. You know, this is our secret sauce. I mean, the only thing I can say about that is that, you know, every deal is gonna be different right now. We amended the program agreement, in order to be attractive and active over here. As we move along, I'm assuming we're gonna be able to provide more information as soon as we start to transact. We are not sharing at this point any other terms, that can actually be competitive. Understood. On the fuel side of the business, can you just talk about your latest thinking on the balance between achieving incremental per gallon gross profit versus potentially driving additional gallon volume? In that context, just any color on your price gaps to peers and fuel versus how that's trended historically. Sure. It's a very good topic and very good question. Maybe I will break it down a little bit by what happened in Q1, because the, you know, the Q1 basically decline is really in March 2023, as I basically explained earlier. We enter 2023 with a decrease of 8%, 8.3% in January. As we continue to move along, you know, towards basically the cycling of the invasion of Ukraine, I mean, we saw much less decrease. In February, for example, the decrease was only 4.7%, and as we enter March, the March decrease was only 4.5%. You know, we are going to be competitive as always. We are always competitive. You know what? I think what we see over here is that the minute the price of fuel started, in March, the unleaded price on average was $3.96. This year, the unleaded price was $3.29. I think in this environment, when the price of fuel is much lower than prior year, I think, you know, we're gonna have a little bit more flexibility over here. I think people are gonna drive more. As I said, we will continue to look for gross profit dollars, but at the same time being competitive. As you can see, you know, we always say that, I mean, there is very little correlation, if any, between inside sales and basically an outside sales. I mean, I believe margin gonna continue to be high given that operating expenses are higher. Again, we are making sure that we are ultra-competitive outside and very competitive inside and have the great offering for the people to come in. Thanks, Arie. Of course. Thank you. Our next question is from Kelly Bania with BMO Capital Markets. Please proceed with your question. Hi. Good morning. Thanks for taking our questions. Arie or Don, I was just wondering if you could help us, and maybe we missed it, just the contribution from Pride and Quarles in the quarter and on an EBITDA basis, just trying to kind of back into what maybe was organic in terms of EBITDA for the quarter. Any help you could do there would be great. Don, would you like to take it? Sure, sure. Hi, Kelly. Good morning. We did not specifically break out TEG or Pride or Quarles for that because, again, it's only one quarter of the, you know, of year-over-year. I know it's hard to do from organic models. I think that the message that we wanted to pass on is, look, we had great merchandise results. We had a very tough fuel margin in March that we're up against. Basically, because of our acquisitions with Pride, Quarles and TEG, we were able to offset that loss in fuel. I think if you take anything away from this, I think, you know, without specifically doing it, you know, we basically were able to keep our EBITDA very close to last year against all the headwinds we faced. You know, as we go forward, you know, we'll, we will consider disclosing those numbers. Again, the message to take away is we have this model that can weather these fuel up and downs and that these acquisitions help us balance that year over year. Just to add further, just to finish the line on this one, we are $15.4 million on gross profit dollar compared to prior year on the same-store. As Don mentioned, we are only $2.6 million on EBITDA to prior year. As you can see, the $15.4 million was basically offset, with, you know, inside sales and the help of those acquisitions. That's how we basically, you know, finished the quarter, very close to the quarter last year. Got it. Don, you mentioned the seasonality, the pattern, I guess, historically over the last two years. Are you at all suggesting those are a good kind of rough frame of reference for this year as well? What would be any other key seasonality items to keep in mind given the volatility in fuel margins and the comparisons as well as the M&A that's still flowing through? Sure. Sure. Again, we're not gonna project, you know, what they are. We try to give that out so that you could. Again, you know, we're a relatively new public company and with a lot of acquisitions and things going on. I mean, if you look at 2021 and 2022, there were acquisitions, but there weren't any major things like an Empire or anything like that. It's more just to look at a historical past and provide you the historical information out to the public. You know, I think what's interesting when you look at seasonality, it's not just sales volume, it's also how do different things happen. For example, in the summer, your merchandise margins are higher because you're buying, you know, higher margin stuff. You know, typically you'll see lower fuel margins in the Q1 and things like that, the exception being last year. Again, we just wanted to just point that out and, and bring that to everyone's attention from a historical perspective, not as guidance. Again, I know with our acquisitions that sometimes it can be confusing. I think we've, at least in my belief, we've sort of returned back to a, to a more, you know, normal pattern than we've seen. It, it's yet to be seen what happens. As you know, each year provides its own, but certainly the last two or three years have been kinda unique. We think 21 and 22, you know, again, have probably been more what we are used to seeing. Okay, that's helpful. I'll just ask one more on the inside same-store sales. Can you just give a little bit more color on the breakdown of traffic, inflation, items for basket? Just really kind of unpack that same-store sales figure for us a little more. Yeah, sure. Arie, do you wanna say it or do you want me to? Go ahead. Okay. Again, we're continuing to see the same patterns we talked about before. We're continuing to see, obviously people coming in and, you know, with less trips, at a bigger basket, and that's also part of what we're trying to drive the loyalty to. I mean, yes, there is inflation driven in there, and obviously every time, you know, prices go up, we try and, you know, pass it on, as most people do, because you can tell looking just at our personnel expenses are very high. What we're really focused on is what is it doing in our margin? Where are we doing on the GP dollars? Obviously we could sell a lot of cigarettes and, you know, really both, you know, boost our sales and you could look at the, you know, increases that come from cigarettes. It's really hard to break apart the inflation piece of it. What we're focused on, as Arie talked about, is the key categories inside the store, and we still think there's a lot of opportunity inside the store, without, you know, doing some other things that we can unlock a lot of this. That's why we stay very focused on, I mean, all categories, but again, on the sales at cigs and making sure we can extract as much as we can, not only from new acquisitions, but also from our base. I wanna add, Kelly, a couple of points. I think it's important, you know, for everybody to know. On the first question that you asked, I just wanna point the $0.47 versus the $0.37. I think it's important for everybody to know that, you know, we don't anticipate $0.10 difference, quarter-over-quarter or month after month. This is not something we anticipate. It's really the invasion of Ukraine. We saw all of a sudden a big increase in March. As I said, things settle, it's $0.37 basically in March. I think this is a one time event that we saw in March. I don't anticipate those things happening on a regular basis. I think this is something very important. That's the reason out of the 15.4, really $13 million really happened in March. That's the decrease. That was offset by the acquisitions and of course, the inside sales. I think that's comment number one. Number two, you know, regarding to your question, if you're really looking, we describe it actually in the ARKO. If you go to the ARKO Corp and you look on our presentation for the month, we basically describe, you know, the increase in the core categories. There are six core categories. Those six core categories basically, you know, represent almost 60% of merchandise sales excluding cigarettes. I mean, candy was up 18.3%. I mean, pack bev, 9.6%, salty snacks, sweet snacks. I'm trying. I mean, all of those categories are margin categories, and that's why we're able actually to increase the gross profit dollars from these categories. The last thing I wanted to add is that all of the initiatives. You know, we kept talking, for example, last year, we talked about adding 550 bean-to-cup coffee machines to our stores. Just for everybody's reference, if you're looking on our coffee business, our coffee business, Q1 2023 versus Q1 2022, it's up 133%. If you're really looking on those 550 stores that we added bean-to-cup coffee machines, the coffee business over there by cups, you know, cups basically that were sold for $0.99 were up 208,000 cups. It's almost 155% up, basically compared to prior years. I think all of the initiative and all of the things that we're actually putting to play are not only working, I mean, you see the results and, you know, deliver basically this gross increase in gross profit dollars. This is what we believe all of those initiatives that, you know, that we actually made in 2022, I think now we're gonna start to, you know, see basically the fruits for them, including the acquisitions. You know, I mentioned Handy Mart, that we added, around approximately 700, you know, items to the store. Just for everybody's benefit, on Pride, which we just finished to reset the stores a couple months ago, we added over 1,000 items to Pride. TEG, which we are in the process of resetting, we're also on average adding another 1,000 items. This is increase of almost 20%, 25% increase in items in the store, you know, that belongs to core categories. I think you guys understand where is our focus, and what basically what we're able to achieve in a very short order. Thanks, Arie. I'll get back in the queue. Thank you. Our next question is from Bobby Griffin with Raymond James. Please proceed with your question. Good morning, guys. Thank you for, taking my questions. I guess, Arie and Don, first, I just wanted to talk and maybe unpack OpEx growth a little bit more. You know, quarter actually, even against tough comparisons, had pretty good gross profit growth, but OpEx up on a GAAP basis at least 17% year-over-year. Can you kinda talk about some of the drivers in that? You know, are the new acquisitions just bringing on a faster growth of OpEx? Is there any opportunities to kinda control that or slow that growth going forward? Yeah. So great question. Let me try and pick that apart, okay. So first of all, let's look at at retail OpEx. I mean, I think we talked about, you know, that most of that OpEx, we went up about, you know, a huge amount, but most of that was taken. If you just take out the portion for TEG and Pride, I think it was $18 million on retail. If we take out TEG and Pride, it's about $18 million, and then you look at just labor was $6 million on same-store. If you look at the rest, that would be a decrease, and that's due to due to stores that we converted to dealer and things like that. Also when you look at our labor increase, that's also a good sign too, because one of the things we had versus last year is we had a lot more open positions. It's not so much as inflation, even though inflation is coming in, it's also filling positions that were not filled. I think that's a sign, a positive sign too going forward. When you look at G&A, when you take off the expenses for the acquisitions and also the non-cash, you know, equity awards, G&A is not increasing that much at all. We still believe, again, with these acquisitions, what we want to do is bring them on. We talked about from a synergy perspective that we wanted to make sure that they, you know, operated as they were, and we still expect to get further synergies from these acquisitions. A lot of this really is being driven by the acquisitions, some of it's being driven by labor. That labor, I think the message to take away from this is not as much the labor rates going up, but more that we're filling positions that were not filled. That is true both in the store and also in G&A as well. Don, is that the comment about G&A, should we look at the $3.576 in acquisition costs that were called out in the EBITDA bridge as impacting all, those all hit inside the G&A line? No. Those acquisition costs hit inside the different line item under other expenses. When you talk about things like when I talked about the stock comp expense, I believe that was about $1.4 million. That is within the G&A line. We've also got the acquisition expenses of the new businesses we brought on too as well. Again, what I'm talking about is, for example, you know, we had a, as many of our competitors did, huge issue in hiring people in the field. I mean, because a lot of people in the field, because managers weren't available, were having to, you know, do double duty. I think what you're also seeing is you know, making sure that we have the right amount of people and making sure those open positions are filled. Which again, I wanna go back and emphasize the point, with those positions being filled, it helps us to execute better at store level too. And we've also added some resources too from a technology standpoint, which are gonna help us be more efficient in the long run too. This is not like a linear growth where it just keeps going. We see more synergies definitely coming down the road and we anticipate those. There are also some non-cash growth in there and there's also cash just from acquisitions. Okay. I appreciate the detail. I guess secondly for me and my last question, Arie, I mean, the TA acquisition was obviously a big potential acquisition that you guys looked at. Maybe I was just hoping you could talk a little bit about your philosophy and the company's philosophy on size of targets that you would look at, especially now considering the new financing you've updated us. Maybe put it in context of also, you know, you have an outstanding share repurchase program out there, and the stock is, you know, at least in our view, at a pretty compelling valuation. How do you kind of, you know, balance those two aspects? I think those two aspects are, you know, every one of them stand on its own. We have enough liquidity right now to continue with share repurchase on one end. On the other end, we are going to value acquisition. Probably no different than what we do before. I mean, the travel center acquisition was a big acquisition. It was a great opportunity for us to double the size of this company, you know, double EBITDA and probably more than double EBITDA. You know, with synergies, we probably were, you know, able to achieve a lot of synergies over here, given our size and given their size. This is something that we focus. I mean, we look on multiply, and the multiples were just great, and we felt that this is a great opportunity. That's the reason, by the way, we approached them and tried to pursue it because we felt that this is going to, you know, make this company much bigger and much stronger. That was the approach. I don't think anything really changed in our approach, Bobby. We're gonna continue to pursue small acquisition, mid-size acquisition, large acquisition. You know, given that we have the M&A team out there, you know, I don't think we are basically, you know, not paying attention to all of the acquisitions that are in the marketplace. We're gonna continue to be disciplined. We're gonna continue to basically look on return on our capital to our shareholders. I don't really think anything changed over here. As you mentioned, the stock price, you know, my opinion, it's probably similar to yours. I think the stock is cheap right now, and we will actually evaluate that and, you know, see what else needs to be done on our end. Okay. I appreciate the details. Best of luck here in the Q2. Thank you very much, Bobby. We appreciate your question. Our next question is from Mark Astrachan with Stifel. Please proceed with your question. Yeah. Hey, morning, everyone. I appreciate you don't give guidance. I guess I'm curious how the quarter came in relative to your expectations, if there was anything that stood out through, you know, the totality of the results relative to what you thought three months ago? Well, it's a tricky question, Mark, good morning, first of all, because we are not providing guidance, so it's a little bit difficult for me to answer. I can tell you that the quarter didn't come, you know, very close to our expectation, let me put it this way, very close to our expectation. Not a big surprise. Again, I think that, you know, we didn't anticipate $0.47. I can tell you that. We were not anticipating $0.47 again in the month of March. You know, that was not a surprise to us. We still believe that, you know, margin CPG will continue to elevate and will continue to be high just because all of the other noise with operating expenses, you know, being high. I think that, we were able to, you know, offset the $15 million decrease over here that we didn't anticipate, in terms of margin. I think we were able to actually offset them with the acquisition that we had and, you know, with the strong inside sales, that we were actually able to actually perform over here. Got it. On the inside store sales, the core categories that you highlight in the presentation, I'm curious if you could unpack how much pricing drove the same-store sales growth relative to volumes of those categories and how that potentially plays into margins. Also, as you start lapping the significant inflation-based pricing that a lot of these companies put into place starting, you know, a year ago or so at this point, does that contribute to traffic increasing or purchases or conversion of purchases within the store? Thanks. Well, I can't give you the breakdown, but what I can say, and I think that's, you know, that's going back, and I'm, and I'm using the coffee just because this is a great example, okay? You know, when I, when I keep talking about the, you know, when I keep talking about the loyal members, for example, and this is the reason why we're pushing so hard, with loyal members. You know, we are going to implement this program, you know, on May 17. You know, we are going to provide $10 for every customer that will actually come to our stores, enroll, provide his email and telephone number. There is a reason for that. You know, I, I kept talking about the $0.99 increase. I mean, when you sell 326,000 cups more, which is 133.7%, you obviously understand that, you know, some of it or a lot of it is actually because of traffic, because of loyal customers coming to our stores more often. I mean, you can see it. I mean, loyal customers coming to our stores, you know, 6x more often than the non-loyal customers. There is an increase in basket. I mean, their average purchase in Q1, which is the lowest Q, is $68.50. I think that's actually, I think, you know, explain, you know, the message about increase in other products and sales. You know, when you're talking about, you know, increase on cardholders buying coffee, you know, it's 130% more than the cardholders that bought coffee last year, prior year. Yeah. Mark, let me follow up on that. Let me follow on that. Arie, What Arie said is correct. We cannot break it out. I can tell you that these kind of increases, and we, you know, when we talk internally, we think like it's driven by unit increase mostly. Yes, there's some inflation, but these are- These are actions taken, tactics taken to increase shelf space, to put the right products in so we actually see more units going. Inflation is there, but that's not the biggest part of it. The biggest part really is more units moving off the shelf. Just to finish this question, Mark. Just to finish the question. You know, we specifically wanted to talk about Handy Mart. This is just an example because remember, we are competing. If you're really looking on our competition on this environment, in this industry, almost 100,000 stores are mom-and-pop small chains. We took Handy Mart as an example because remember, we just, you know, we finished 23 acquisition, closing the, you know, number 24 sooner. If you're looking on Handy Mart acquisition, since we took over, I mean, we were able to increase gross margin, I mean, over here, I mean, merchandise margin by 400 basis points since last year. I mean, just. if you're looking on sales, for example, okay, if you're looking just on sales in Handy Mart, you know, our sales in all of those categories grew 14.9%. This is not, you know, increase of price. I mean, this is really a real increase in inside sales. I think all of those initiative and all of those, you know, tactics that we're using over here, including all of our, you know, marketing initiative and merchandising initiative, they're actually growing sales dramatically over here, especially in those small acquisition. As I said, we have Pride with 31 large location that we just reset. We have TEG with 135 locations that we're finishing to reset right now. I mean, we believe we'll continue to see big impact with those acquisition that we just, you know, we just accomplished. Got it. Okay. Just lastly, I'm curious, given the volatility in the macro, how that has impacted, if at all, just M&A generally. Are there more or less the same number of targets out there? Bigger, smaller, any sort of change relative to, you know, maybe three, six, nine, 12 months ago? I don't see any change. I actually see an increase in M&A activities and M&A opportunities. You know, we all see what happened to interest rates. We all see what is happening over here. I just think that, you know, given interest rate is higher, I believe multiply should actually decrease a little bit or settle a little bit. That's what we anticipate, at least moving forward, but don't see any decrease whatsoever. I see that actually an increase on the other side. A lot of small chain, with all of those things that you mentioned, you know, as I said, you know, I wanna make sure no one take it for granted that we're able to achieve those inside sales growth and increase in margin of 120 basis points. Most of the small chain are not able. As a matter of fact, they're actually going backwards with that because they don't have the economy of scale, and they don't have the capacity, and they don't have the relationship with the suppliers. When you don't have those capability, you basically, you know, maybe even losing margin, you know, given that you don't have economy of scale over here. The minute you start struggling, I mean, the first thing you do is try to figure out how do you exit the business. Right. I think that's. Yeah. Mark, one other thing, and one thing we really didn't talk about is, you know, with the renewal and upsize of our GPMP agreement now to 2028 and our bonds that are due in 2029, we have now long-term financing commitments that are not in the short term. So there's no near-term, you know, payments we have to get over or whatever. We designed it this way also. Same thing that what we do at Oak Street. I think that puts us in a really good position that, you know, our cash flow should remain very strong over the years to come with no big, you know, balloon payments that we have to make. That's one of the reasons why we went early on GPMP to get that not only upsized, but also to get it extended to 2028. Got it. Thank you. Thank you. Our next question is from William Reuter with Bank of America. Please proceed with your question. Hi. I have two. The first is, your merchandise comps were up. I think that this was mostly on inflation, although there was a comment just a bit ago about units being up as well. I just wanted a little bit of clarification there. Two, historically, I think I've viewed this as a pretty recession-resistant category where you may benefit from some trade down as much as you benefit from some consumers trading out of purchases entirely. I guess, what are your thoughts on that? All right. Let me clarify my comment that I made earlier, okay. Yes, there is inflation. We see that. While we can't break it out, we do know internally that we look at the key categories that we do see more units moving on the higher margin items, okay. It's not all inflation, because again, one of our strategies is to make sure our stores are set with items that consumers want. I wanna make sure the message gets across. This is not all inflation. This is planned. This is making sure that, you know, the higher margin items that we're trying to get, finisher items, that we want consumers to buy is also more units moving, you know. As opposed to cigarettes, which we know the cigarette, smoker, you know, the units are declining and the prices are going up. I'm sorry. I'll let you go from there. Yeah. No, no. That's, you say exactly what I wanted to say, that I don't. I wanna be clear, this is not inflation. This is all initiative and all of the things that we're doing. That's actually gonna, you know, answer your second question, which is, you're absolutely correct. We are a very resilient business. I mean, we're in a very resilient industry. You know, this is probably the only industry or one of the only industry that during 2008, 2009. Basically didn't decrease. We were not impacted, you know, during 2008 and then during inflation. You see what is happening right now during inflation. You know, people are coming to our stores to buy the typical, you know, stuff that they're actually buying. We are, you know, a very essential business. I mean, people that smoke gonna continue to smoke. If it's good or bad, I know they're gonna continue to smoke regardless. The same thing goes to, you know, the beer category, which is a very big category. You see what is happening right now with salty snacks and what is happening with candy. I mean, people are not going to stop to eat a small, you know, candy bar. It doesn't matter, you know, what is happening with recession over here. I think what's gonna happen is that people are actually shifting from going to QSR and restaurants into their local convenience stores in order to basically buy a sandwich. I think those are the areas of opportunities for us that we're gonna continue to grow. I mean, you know, we have pizza located... We're selling pizza today in 200 locations. We have coffee in, you know, most of our locations, bean to cup coffee in over 550 locations. From a price standpoint, it's $0.99 for loyal members. You can find coffee today for $0.99 for loyal members. Again, when they come in and buy their coffee, they are grabbing, you know, some other things that, you know, that they actually, you know, wanted to buy. I actually think our business, in inflation should do much better than many other businesses out there. Sorry, just one more from me. You mentioned that you are seeing more M&A opportunities. You referenced interest rates. Does this mean that valuations of those opportunities are becoming more attractive and coming down, or are valuations remaining where they've been over the last year? You know, it's difficult to answer because maybe for some people, you know, valuation in their mind continue to stay high. When it comes to us, I mean, we will continue to basically evaluate those acquisition on what is our return on capital. That's the way we're looking on them. Maybe from a valuation standpoint, valuation didn't or are not changing a lot. Remember, given our size today and our economy of scale today and our purchasing power today, we probably are able to pay a little bit more than what we paid last year and what we paid maybe the year before. Again, this is driven just because of our size and just because of our capabilities. That's absolutely. I think, you know, the bigger we are, I think it give us opportunity, to be a little bit more attractive versus some other small chain that, you know, don't have the economy of scale over here. You know, I think that, you know, valuation did not change a lot. Again, this is just the beginning. Remember, interest rates start to increase only last year. We are at 5.25 right now, with the last increase, you know, just recent. I don't think there is a lot of acquisition that happened, you know, over the last, you know, three or four months. The ones that happened, I think were, you know, relatively, for a little bit lower valuation that we saw probably last year. It's not dramatic. I wanna be very clear. This is not something dramatic that multiple went from 10 to five, for example. you know, it's maybe a half a multiple or so. That's what I basically I see over here. Perfect. Thank you. Thank you. Our next question is from Hale Holden with Barclays. Please proceed with your question. Good morning. 99 cents is an unbelievable deal for a cup of coffee. I had two questions. The first one on travel centers. That's a slightly different model than your core, sort of the big 25 acre truck stop lots. I was wondering, as you think about M&A, is there or do you continue to have flexibility to think about transactions like travel centers that might be a little bit outside of, you know, what the core ARKO is now, or should we think about you more on the core safe station side? Travel center was really a unique opportunity, to be honest with you, there is only one travel center out there. Again, you have the big Pilots and Loves and some other big travel centers, but not a lot. I mean, they're a very unique company out there. We felt that this is a great opportunity. You know, in terms of fuel, we are selling fuel. We are in the fuel business. We are selling fuel. If you're looking on our revenue, I mean, 60% of our revenue come from fuel. You know, that's not something different for us. I think the similarity in travel center is that 65% of their profit came from the inside sales and services. Very similar to us, by the way. If you're really looking on our business today, around 61% came from the inside sales. Basically, I'm talking gross profit dollars, where most of the gross profit. They had restaurants over there. We actually felt that from, basically expanding our food service offering, that might be an opportunity for us. Just remember, we did 24 acquisition, we closed on 23, and we can operate 500 sq ft store, and we can operate 6,000 sq ft store. I don't think that the business from, you know, from an inside sales model, I don't think the business was really different. Again, the size matter and the size of this company was something that was very attractive for us. The multiple was very attractive for us, that's why we pursued it. I don't think it's gonna be different in the future. We are concentrating on our retail business. There is no question that the majority of our profit comes from our retail business, and we're gonna continue to pursue any opportunity that is out there. Okay. The second question I had was on the on labor inflation, and I do understand that that's from largely filling, you know, empty or open positions rather than actually wage inflation. That would suggest it's a little bit more structural as we go forward in terms of your cost base. I was wondering if we were thinking about that the right way. Is this a little bit of a step up in labor as you go through this year until you can find a way to leverage it down? Yeah. Yeah. Let me answer first. Well, I said it's a combination of both. We still have wage inflation going on there from competitors from, you know, all different types of retail operations. My comment was more that it's not just straight wage inflation, it's filling open positions. Just to clarify. Go ahead, Arie. Yeah, no problem. maybe to add a little bit to it. Remember, we are operating, and not in a vacuum. I mean, you know, You can come to work for us, and you can come go work for the guy across the street. Everybody basically are competing on the same person, especially when you go to rural locations. I mean, they can come to work for us. They can go across the street and work at the QSR location across the street. Everybody have the same increase in utilities, in insurance. Everybody have the same expense increase. I don't think different enough at the end of the day. It doesn't matter how big we are. At the end of the day, the cost to operate a store is the cost to operate a store, period. I think the good thing about the increase in basically in labor inside the stores is what you exactly see with the increase in inside sales. The minute you have more people working and more people basically filling positions, I can assure you that that's gonna increase the profitability, because that's gonna increase the service, that's gonna increase the inside sales. You know, when you have one person, you know, working in a store, you know, you also need to be on the register, and you also need to help customers, and you also need to fill the coolers, you know, during the day. When you have two people in the store, you know, they can actually split the work and one of them makes sure that you have the right product on the shelves. Again, this is something that almost every retailer is facing in America right now, especially in our industry. I think the good thing is, as I said, that as we continue to see more positions filled, I think we're gonna see increase in sales, just because of that. Great. Thank you so much. I appreciate it. Thank you. Our next question is from Kelly Bania with BMO Capital Markets. Please proceed with your question. Thanks. Thanks. I just wanted to fit one more here, on gallons. The, the commentary on the cadence of gallons through the quarter was very helpful, but I was just wondering if you could kind of step back and, as we think about gallons longer term, what would be the conditions or the backdrop that would allow gallons to grow or stabilize in the declines? And Arie, also, you give a lot of examples of the great work that you're doing inside the store, from a margin and merchandising perspective. But as you make these acquisitions, what are happening to, gallons, and where do you see gallons going forward for those acquisitions as well as the core kind of space? Sure. First of all, thank you for coming back, Kelly, for another question. You know, since we're not providing guidance, I'm gonna try to provide maybe a little bit more details on what we saw last year, and I think maybe that's gonna help you. If you guys remember last year, you know, it says happened almost a year ago. Last year in, basically in April, the unleaded price was $3.86. We lost approximately 7.7% gallons. Price increase in June to $4.70. We lost 12.7% in gallons last year. Price continued to be high at the high four, $4.24 in July. Between June and July, around $4.24, we were at 12.6% down on gallons. The minute the price dropped to $3.64 in August, we were down 8%. As the price continued to decline, we continued to see a much lower decline in basically in fuel prices. My theory is the following: We are not operating on major highways. We are operating in a lot of rural locations. The minute the price goes above $4, you know, people stop driving. People will walk to their convenience stores, or think twice before they actually drive to a convenience stores or to any place they leave the house with basically those high prices. As long as the price of fuel continue to be in the $3 and not go all the way up to $4.70 like we saw in June, I believe that we're gonna see a very, you know, small decline compared to last year. Again, it's all about also being not only competitive, we're also going to, you know, continue to concentrate on increase of gross profit dollars. I think the message, Kelly, over here is that it all depends on fuel prices. By the way, that's going to impact the entire economy over here. It's not just ARKO or convenience stores. The entire economy was down dramatically when price of fuel actually exceeded $5 on average, across the nation. Again, I believe, just like seeing what I see today, I believe that if oil prices and fuel prices continue to stay where they are today, I actually think that we will not see a big drop, compared to prior year. Thank you. I didn't answer your questions regarding to acquisition. You know, when we actually put them on our platform, we're using the same method that we actually use across the entire chain. You know, it's something, you know. First of all, we are putting those stores on KSS. You know, this is the algorithm software that we put on. Usually those guys do not have any kind of technology, and we are measuring them. You know, we're not making changes on the spot. We are measuring, we are seeing with the competition. You know, little by little, we start to basically, you know, use our methodology over here, which is increasing gross profit dollars as long as we continue to be competitive in the marketplace. We have reached the end of the question and answer session. I'd now like to turn the call back over to Arie Kotler for closing comments. Thank you, Robert. Thank you everybody for participating this morning. You know, we're looking forward to seeing you guys in our stores, especially now when we are entering 100 days of summer. This is the driving season. Drive safe and be safe over there. Thank you. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.