• ARKO Reports Second Quarter 2022 Results

    Source: Nasdaq GlobeNewswire / 08 Aug 2022 15:30:01   America/Chicago

    RICHMOND, Va., Aug. 08, 2022 (GLOBE NEWSWIRE) -- ARKO Corp. (Nasdaq: ARKO) (“ARKO” or the “Company”), one of the largest convenience store operators and fuel wholesalers in the United States, today announced financial results for the quarter ended June 30, 2022.

    Second Quarter 2022 Key Highlights

    • Operating income was $48.3 million for the quarter, an increase of 5.5% compared to $45.8 million in Q2 2021
    • Net income was $31.8 million, an increase of $6.2 million or 24.4% compared to $25.6 million in Q2 2021
    • Adjusted EBITDA increased 4.4% to $79.0 million for the quarter compared to $75.7 million in Q2 2021
    • Merchandise revenue of $431.8 million for the second quarter compared to $426.4 million in Q2 2021; total merchandise contribution increased $9.0 million, or 7.3%, to $131.4 million, compared to Q2 2021
    • Merchandise margin increased 170 basis points to 30.4% compared to 28.7% in Q2 2021
    • Second quarter same store merchandise sales excluding cigarettes was 5.7% on a two-year stack1
    • Second quarter total fuel gross profit of $130.8 million increased 15.1% versus Q2 2021
    • Approximately 3.1 million shares of common stock repurchased during Q2 2022 at an average price of $8.65, for $27.0 million
    • The Company paid a quarterly dividend on June 15, 2022, of $0.02 per share of common stock, for a total cash payment of $2.4 million; and the board of directors declared a quarterly dividend of $0.02 per share of common stock, to be paid on September 12, 2022, with a record date of August 29, 2022

    Same store merchandise sales increase on a two-year stack basis is the same store merchandise sales increase in the current year added to the same store merchandise sales increase in the prior year period. This measure may be helpful to improve the understanding of trends in periods that are affected by variations in prior year growth rates. See also “Use of Non-GAAP Measures” below.

    “ARKO has continued to successfully execute our growth strategy, delivering for our loyal customers while creating long-term value for our stockholders. This quarter’s record results are a testament to our ability to manage margin and volume while staying competitive,” said Arie Kotler, President, Chairman and Chief Executive Officer of ARKO. “While we delivered excellent results in an environment of higher fuel prices, we believe that our fuel strategy also enables strong results as fuel prices decline. Despite inflation pressures, we kept customers coming to our Family of Community Brands with compelling offerings, growing same store merchandise sales in key categories while increasing margins. As these excellent financial results show, our differentiated business model is very resilient, and I believe we are well-positioned to continue our growth.”   

    Second Quarter 2022 Segment Highlights

    Retail

     For the Three Months Ended June 30, For the Six Months Ended June 30, 
     2022 2021 2022 2021 
     (in thousands) 
    Fuel gallons sold 253,243   264,967   492,801   491,079  
    Same store fuel gallons sold (decrease) increase (%) 1 (10.6%)  11.9%  (7.1%)  (1.7%) 
    Fuel margin, cents per gallon 2 41.3   34.3   39.4   33.3  
    Merchandise revenue$431,751  $426,365  $798,736  $785,646  
    Same store merchandise sales (decrease) increase (%) 1 (2.7%)  2.4%  (3.1%)  4.0% 
    Same store merchandise sales excluding cigarettes increase (%) 1 1.4%  4.3%  0.8%  6.5% 
    Merchandise contribution 3$131,364  $122,413  $239,556  $220,940  
    Merchandise margin 4 30.4%  28.7%  30.0%  28.1% 
             
    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. 


    For the second quarter, retail fuel profitability (excluding intercompany charges by ARKO’s wholesale fuel distribution subsidiary, GPM Petroleum LP (“GPMP”)) increased approximately $13.7 million compared to the prior year period to $104.7 million. Strong fuel margin capture of 41.3 cents per gallon in the second quarter of 2022 increased 20.4% compared to Q2 2021. There was an increase in same store fuel profit of $8.5 million compared to Q2 2021 (excluding intercompany charges by GPMP).

    Same store merchandise sales excluding cigarettes increased 1.4% for the quarter and increased 5.7% on a two-year stack basis for the quarter. Merchandise margin increased 170 basis points, and total merchandise contribution increased to $131.4 million, or approximately 7.3%, both compared to Q2 2021. This was primarily due to higher contribution from packaged beverages, center-store items, beer and wine, and other tobacco products.

    Wholesale

     For the Three Months Ended June 30, For the Six Months Ended June 30, 
     2022 2021 2022 2021 
     (in thousands) 
    Fuel gallons sold – fuel supply locations193,164 214,761 374,105 398,406 
    Fuel gallons sold – consignment agent locations37,996 41,964 73,993 79,875 
    Fuel margin, cents per gallon1 – fuel supply locations7.2 5.6 7.1 5.4 
    Fuel margin, cents per gallon1 – consignment agent locations32.3 25.4 30.7 23.7 
             
    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. 
             
             

    Wholesale fuel profitability for the quarter (excluding intercompany charges by GPMP) increased approximately $3.5 million compared to the prior year quarter. Fuel contribution from fuel supply locations grew by $1.9 million (excluding intercompany charges by GPMP) compared to Q2 2021, primarily due to greater prompt pay discounts related to higher fuel costs and greater fuel rebates.

    Fuel contribution from consignment agent locations increased by $1.6 million (excluding intercompany charges by GPMP) compared to the prior year quarter. Fuel margin also increased over the second quarter of 2021 primarily due to greater prompt pay discounts related to higher fuel costs, greater fuel rebates and improved rack-to-retail margins.

    Store Operating Expenses

    For the second quarter of 2022, our convenience store operating expenses increased $22 million, or 15.1%, compared to Q2 2021, primarily due to approximately $10 million of incremental expenses related to the 2021 Handy Mart and ExpressStop acquisitions and an increase in expenses at same stores, including a 15.8% increase, or $8.4 million, in personnel costs, and a 22.5% increase, or $4.1 million, in credit card fees due to higher retail prices.

    Internal Entity Realignment and Streamlining

    Subsequent to the reporting period, the Company approved an internal realignment of certain direct and indirect subsidiaries. The restructuring is intended to streamline business operations and provide long term synergies and other cost savings and is occurring in a series of steps, the majority of which are expected to be completed by the end of third quarter of 2022. As part of the internal restructuring plan, the tax status of certain subsidiaries will change from non-taxable to taxable. The recognition and derecognition of certain deferred taxes will be reflected in the continuing operations as of the respective dates that changes in tax status occur. As a result of this restructuring, the Company expects to record a one-time, non-cash tax expense in the amount of approximately $8.5 million in the third quarter of 2022.

    Quarles Acquisition

    The Company continued its successful acquisition strategy, closing its 21st acquisition in less than 10 years. On July 22, 2022, the Company acquired from Quarles Petroleum, Incorporated (“Quarles”) certain assets, including 121 proprietary Quarles-branded cardlock sites, management of 63 third party cardlock sites for fleet fueling operations, and 46 independent dealer locations, including certain lessee-dealer sites. The Company also acquired a small transportation fleet.

    Using estimated forward-looking non-GAAP measures, the Company expects that the Quarles Acquisition will add approximately $17.5 million of adjusted EBITDA on an annualized basis.2 The total consideration for the transaction was approximately $170 million plus the value of inventory on the closing date. The Company financed approximately $40 million of the purchase price using its GPMP line of credit, and Oak Street Real Estate Capital, a Division of Blue Owl Capital, a private equity real estate firm, paid approximately $130 million of the aggregate purchase price, for the fee simple ownership of 39 sites.

    2 At this time, ARKO is unable to provide a quantitative reconciliation of estimated forward-looking non-GAAP performance measures without unreasonable efforts due to the carve-out nature of the Quarles Acquisition.

    Other Strategic Initiatives

    The Company continued to pursue multiple strategic initiatives in the second quarter, completing five store remodels while continuing to implement aspects of its remodel program including investment in high-margin categories and improved foodservice in stores throughout its footprint. This included remodeling store deli areas to open four Sbarro pizza locations in the second quarter, for a total of eight open for business. The Company continues with its plan to open 50 Sbarro locations by the end of 2022.

    Like the Company’s successful grab-and-go and freezer strategy, the Company installed high-quality, on-demand bean-to-cup coffee machines in 548 stores, exceeding its stated goal of 525 stores.

    In addition, this year the Company is planning to break ground on three new Dunkin’s, and remodel two additional Dunkin’ stores. Two Dunkin’s have been remodeled so far this year. One Subway was remodeled in Q2, for six total Subway remodels this year. The Company remains on track to commence engineering on a new-to-industry store in Atlanta, Texas.

    The Company recently installed level 3 fast chargers at a Village Pantry in Marysville, Ohio, deployed by ChargePoint, which can support all types of EVs. The Company previously announced that chargers will be installed at two stores in Colorado, with the goal of continually growing its EV charging footprint and capabilities.

    Environmental, Social and Governance Policy

    ARKO is committed to creating long-term value for our stockholders, employees, and communities. As a leading convenience store and gas station operator, we are focused on integrating environmental sustainability, social responsibility, and corporate governance (ESG) principles that are aligned with our long-term business strategy. On July 9, 2022, the Nominating and Corporate Governance Committee of ARKO’s Board of Directors formally adopted the Company’s ESG policy, which is available online: arkocorp.com/company-information/responsibility.

    Liquidity and Capital Expenditures

    As of June 30, 2022, the Company’s total liquidity was approximately $727 million, consisting of cash and cash equivalents and short-term investments of approximately $282 million, and approximately $445 million available under lines of credit.

    Outstanding debt excluding capital leases was approximately $714 million, resulting in net debt of approximately $432 million. In the second quarter of 2022, the Company spent $24.5 million for capital expenditures, including bean-to-cup coffee equipment, upgrades to fuel dispensers and other investments in our stores, including the completion of five store remodels, building-out four in-store Sbarro pizza sites, and other investments noted above.

    Quarterly Dividend and Share Repurchase Program

    The Company’s board of directors declared a quarterly dividend of $0.02 per share of common stock, to be paid on September 12, 2022, to stockholders of record as of August 29, 2022. This is the Company’s third consecutive quarterly dividend.

    In the second quarter of 2022, the Company repurchased approximately 3.1 million shares of common stock for approximately $27.0 million at an average price of $8.65, following which approximately $11 million remained available in the Company’s previously announced original $50 million share repurchase program. As of June 30, 2022, the Company had approximately 120.1 million shares of common stock outstanding.

    The Company’s continued ability to return cash to our stockholders through a quarterly cash dividend program and a share repurchase program is consistent with our capital allocation framework and reflects the Company’s confidence in the strength of our cash generation ability and strong financial position.

    Store Network Update

    The following tables present certain information regarding changes in the store network for the periods presented.

     For the Three Months Ended June 30, For the Six Months Ended June 30,
    Retail Segment2022 2021 2022 2021
    Number of sites at beginning of period1,396  1,324  1,406  1,330 
    Acquired sites  61    61 
    Newly opened or reopened sites  1    1 
    Company-controlled sites converted to consignment locations or fuel supply locations, net(1) (3) (7) (3)
    Closed, relocated or divested sites(7) (2) (11) (8)
    Number of sites at end of period1,388  1,381  1,388  1,381 


     For the Three Months Ended June 30, For the Six Months Ended June 30, 
    Wholesale Segment 12022 2021 2022 2021 
    Number of sites at beginning of period1,625  1,597  1,628  1,597  
    Newly opened or reopened sites 221  20  40  34  
    Consignment or fuel supply locations        
    converted from Company-controlled sites, net1  3  7  3  
    Closed, relocated or divested sites(27) (10) (55) (24) 
    Number of sites at end of period1,620  1,610  1,620  1,610  
             
    1 Excludes bulk and spot purchasers. 
    2 Includes all signed fuel supply agreements irrespective of fuel distribution commencement date. 

    Conference Call and Webcast Details

    The Company will host a conference call to discuss these results at 10:00 a.m. Eastern Time on August 9, 2022. Investors interested in participating in the live call can dial 877-605-1792 or 201-689-8728. A telephone replay will be available approximately two hours after the call concludes through August 23, 2022, by dialing 877-660-6853 or 201-612-7415 and entering confirmation code 13731897.

    There will also be a simultaneous, live webcast available on the Investor Relations section of the Company’s website at https://www.arkocorp.com/. The webcast will be archived for 30 days.

    About ARKO Corp.

    ARKO Corp. (Nasdaq: ARKO) is a Fortune 500 company that owns 100% of GPM Investments, LLC and is one of the largest operators of convenience stores and wholesalers of fuel in the United States. Based in Richmond, VA, our highly recognizable family of community brands offers delicious prepared foods, beer, snacks, candy, hot and cold beverages, and multiple popular quick serve restaurant brands. Our high value fas REWARDS® loyalty program offers exclusive savings on merchandise and gas. We operate in four reportable segments: retail, which includes convenience stores selling fuel products and other merchandise to retail customers; wholesale, which supplies fuel to independent dealers and consignment agents; GPM Petroleum, which sells and supplies fuel to our retail and wholesale sites; and fleet fueling, which operates proprietary cardlock locations, manages third-party cardlock locations, and markets fuel cards that give customers access to a nationwide network of fueling sites. To learn more about GPM stores, visit: www.gpminvestments.com. To learn more about ARKO, visit: www.arkocorp.com.

    Forward-Looking Statements
    This document includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may address, among other things, our expected financial and operational results and the related assumptions underlying our expected results. These forward-looking statements are distinguished by use of words such as “anticipate,” “aim,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and the negative of these terms, and similar references to future periods. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to, among other things, changes in economic, business and market conditions; our ability to maintain the listing of our common stock and warrants on the Nasdaq Stock Market; changes in our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; expansion plans and opportunities; changes in the markets in which we compete; changes in applicable laws or regulations, including those relating to environmental matters; market conditions and global and economic factors beyond our control, including the potential adverse effects of the ongoing global coronavirus (COVID-19) pandemic on capital markets (including with respect to new variants of the virus), general economic conditions, unemployment and our liquidity, operations and personnel; and the outcome of any known or unknown litigation and regulatory proceedings. Detailed information about these factors and additional important factors can be found in the documents that ARKO files with the Securities and Exchange Commission, such as Form 10-K, Form 10-Q and Form 8-K. Forward-looking statements speak only as of the date the statements were made. ARKO does not undertake an obligation to update forward-looking information, except to the extent required by applicable law.

    Use of Non-GAAP Measures

    We disclose certain measures on a “same store basis,” which is a non-GAAP measure. Information disclosed on a “same store basis” excludes 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 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. Each of EBITDA and Adjusted EBITDA is a non-GAAP financial measure.

    We use EBITDA and Adjusted EBITDA 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 and Adjusted EBITDA 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 and Adjusted EBITDA 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 and Adjusted EBITDA are not recognized terms under GAAP and should not be considered as a substitute for net income 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 and Adjusted EBITDA, 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.

    Media Contact

    Andrew Petro
    Matter on behalf of ARKO
    (978) 518-4531
    apetro@matternow.com

    Investor Contact

    Ross Parman
    ARKO Corp.
    investors@gpminvestments.com 


     Condensed consolidated statements of operations 
         
     For the Three Months Ended June 30, For the Six Months Ended June 30, 
     2022  2021  2022 2021 
     (in thousands) 
    Revenues:        
    Fuel revenue$2,085,854  $1,460,763  $3,669,380  $2,563,710  
    Merchandise revenue 431,751   426,365   798,736   785,646  
    Other revenues, net 22,658   22,686   44,958   44,814  
    Total revenues 2,540,263   1,909,814   4,513,074   3,394,170  
    Operating expenses:        
    Fuel costs 1,955,019   1,347,109   3,425,668   2,359,907  
    Merchandise costs 300,387   303,952   559,180   564,706  
    Store operating expenses 178,077   154,668   344,615   299,606  
    General and administrative expenses 32,956   31,861   64,741   58,574  
    Depreciation and amortization 24,353   25,273   48,989   49,515  
    Total operating expenses 2,490,792   1,862,863   4,443,193   3,332,308  
    Other expenses, net 1,197   1,195   2,318   2,867  
    Operating income 48,274   45,756   67,563   58,995  
    Interest and other financial income 8,997   2,601   6,710   1,695  
    Interest and other financial expenses (16,336)  (14,598)  (30,024)  (42,309) 
    Income before income taxes 40,935   33,759   44,249   18,381  
    Income tax expense (9,157)  (8,212)  (10,162)  (7,490) 
    Income from equity investment 28   26   37   20  
    Net income$31,806  $25,573  $34,124  $10,911  
    Less: Net income attributable to non-controlling interests 52   54   131   128  
    Net income attributable to ARKO Corp.$31,754  $25,519  $33,993  $10,783  
    Series A redeemable preferred stock dividends (1,434)  (1,434)  (2,852)  (2,836) 
    Net income attributable to common shareholders$30,320  $24,085  $31,141  $7,947  
    Net income per share attributable to common shareholders - basic$0.25  $0.19  $0.25  $0.06  
    Net income per share attributable to common shareholders - diluted$0.24  $0.19  $0.25  $0.06  
    Weighted average shares outstanding:        
    Basic 121,529   124,428   122,909   124,395  
    Diluted 130,558   133,032   123,245   124,543  



     Condensed consolidated balance sheets
        
     June 30, 2022 December 31, 2021
     (in thousands)
    Assets   
    Current assets:   
    Cash and cash equivalents$248,518  $252,141
    Restricted cash 14,083   20,402
    Short-term investments 33,927   58,807
    Trade receivables, net 93,482   62,342
    Inventory 233,612   197,836
    Other current assets 83,298   92,095
    Total current assets 706,920   683,623
    Non-current assets:   
    Property and equipment, net 561,982   548,969
    Right-of-use assets under operating leases 1,043,533   1,064,982
    Right-of-use assets under financing leases, net 188,558   192,378
    Goodwill 197,742   197,648
    Intangible assets, net 176,155   185,993
    Equity investment 3,035   2,998
    Deferred tax asset 40,094   41,047
    Other non-current assets 31,749   24,637
    Total assets$2,949,768  $2,942,275
    Liabilities   
    Current liabilities:   
    Long-term debt, current portion$39,391  $40,384
    Accounts payable 221,048   172,918
    Other current liabilities 134,227   137,488
    Operating leases, current portion 54,004   51,261
    Financing leases, current portion 6,037   6,383
    Total current liabilities 454,707   408,434
    Non-current liabilities:   
    Long-term debt, net 675,102   676,625
    Asset retirement obligation 58,614   58,021
    Operating leases 1,056,351   1,076,905
    Financing leases 228,800   229,215
    Deferred tax liability 4,264   2,546
    Other non-current liabilities 126,147   136,853
    Total liabilities 2,603,985   2,588,599
        
    Series A redeemable preferred stock 100,000   100,000
        
    Shareholders' equity:   
    Common stock 12   12
    Treasury stock (40,038)  -
    Additional paid-in capital 223,557   217,675
    Accumulated other comprehensive income 9,119   9,119
    Retained earnings 52,898   26,646
    Total shareholders' equity 245,548   253,452
    Non-controlling interest 235   224
    Total equity 245,783   253,676
    Total liabilities, redeemable preferred stock and equity$2,949,768  $2,942,275
        



     Condensed consolidated statements of cash flows
            
     For the Three Months Ended June 30, For the Six Months Ended June 30,
     2022 2021 2022 2021
     (in thousands)
    Cash flows from operating activities:       
    Net income$31,806  $25,573  $34,124  $10,911 
    Adjustments to reconcile net income to net cash provided by operating activities:       
    Depreciation and amortization 24,353   25,273   48,989   49,515 
    Deferred income taxes 5,248   3,952   2,671   2,109 
    Loss (gain) on disposal of assets and impairment charges 1,207   (400)  1,971   975 
    Foreign currency loss (gain) 191   (101)  228   (1,143)
    Amortization of deferred financing costs, debt discount and premium 628   806   1,262   621 
    Amortization of deferred income (2,214)  (1,927)  (5,292)  (4,411)
    Accretion of asset retirement obligation 420   389   829   834 
    Non-cash rent 1,791   1,578   3,737   3,349 
    Charges to allowance for credit losses 216   181   351   322 
    Income from equity investment (28)  (26)  (37)  (20)
    Share-based compensation 3,108   1,488   5,882   2,514 
    Fair value adjustment of financial assets and liabilities (7,799)  (1,216)  (6,590)  9,833 
    Other operating activities, net 584   308   707   532 
    Changes in assets and liabilities:       
    Increase in trade receivables (18,605)  (10,304)  (31,491)  (21,102)
    Increase in inventory (14,629)  (4,295)  (35,947)  (11,732)
    (Increase) decrease in other assets (10,608)  (12,450)  7,607   (4,762)
    Increase in accounts payable 26,230   9,651   46,407   26,960 
    (Decrease) increase in other current liabilities (6,763)  8,896   (11,324)  (6,933)
    Decrease in asset retirement obligation    (24)  (34)  (113)
    Increase in non-current liabilities 6,964   389   8,112   758 
    Net cash provided by operating activities 42,100   47,741   72,162   59,017 
    Cash flows from investing activities:       
    Purchase of property and equipment (24,501)  (15,113)  (45,168)  (32,638)
    Purchase of intangible assets (125)  (175)  (125)  (175)
    Proceeds from sale of property and equipment 328   35,179   7,261   36,059 
    Prepayment for Quarles Acquisition       (5,000)   
    Business acquisitions, net of cash (107)  (93,527)  (6,853)  (93,527)
    Decrease in investments, net 25,491      27,109    
    Repayment of loans to equity investment 174      174    
    Net cash provided by (used in) investing activities 1,260   (73,636)  (22,602)  (90,281)
    Cash flows from financing activities:       
    Receipt of long-term debt, net    33,941      35,056 
    Repayment of debt (2,936)  (26,111)  (6,093)  (102,074)
    Principal payments on financing leases (1,652)  (2,023)  (3,304)  (4,013)
    Proceeds from failed sale-leaseback    43,569      43,569 
    Payment of Additional Consideration (2,085)     (2,085)  - 
    Payment of merger transaction issuance costs    (78)     (4,764)
    Common stock repurchased (26,954)     (40,038)   
    Dividends paid on common stock (2,415)     (4,889)   
    Dividends paid on redeemable preferred stock (1,434)  (1,434)  (2,852)  (2,993)
    Distributions to non-controlling interests (60)  (60)  (120)  (120)
    Net cash (used in) provided by financing activities (37,536)  47,804   (59,381)  (35,339)
    Net increase (decrease) in cash and cash equivalents and restricted cash 5,824   21,909   (9,821)  (66,603)
    Effect of exchange rate on cash and cash equivalents and restricted cash (105)  24   (121)  (1,438)
    Cash and cash equivalents and restricted cash, beginning of period 256,882   223,003   272,543   312,977 
    Cash and cash equivalents and restricted cash, end of period$262,601  $244,936  $262,601  $244,936 
            

    The following table contains a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods presented:

     Reconciliation of EBITDA and Adjusted EBITDA 
             
     For the Three Months Ended June 30, For the Six Months Ended June 30, 
     2022 2021 2022 2021 
     (in thousands) 
    Net income$31,806  $25,573  $34,124  $10,911  
    Interest and other financing expenses, net 7,339   11,997   23,314   40,614  
    Income tax expense 9,157   8,212   10,162   7,490  
    Depreciation and amortization 24,353   25,273   48,989   49,515  
    EBITDA 72,655   71,055   116,589   108,530  
    Non-cash rent expense (a) 1,791   1,578   3,737   3,349  
    Acquisition costs (b) 823   1,988   1,504   2,599  
    Loss (gain) on disposal of assets and impairment charges (c) 1,207   (400)  1,971   975  
    Share-based compensation expense (d) 3,108   1,488   5,882   2,514  
    Income from equity investment (e) (28)  (26)  (37)  (20) 
    Adjustment to contingent consideration (f) (526)  -   (526)  -  
    Other (g) 15   34   33   73  
    Adjusted EBITDA$79,045  $75,717  $129,153  $118,020  
             
    (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 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 fair value adjustments to the contingent consideration owed to the seller for the 2020 acquisition of Empire. 
             
    (g) Eliminates other unusual or non-recurring items that we do not consider to be meaningful in assessing operating performance. 

     


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