Skip to content
    APC
    Earnings call· Jun 2026(Q2 FY26)

    ARKO Petroleum Q2 FY26 earnings call APC

    Aug 6, 2026 Source

    Executive summary

    ARKO Petroleum Corp. Q2 FY26 — Strong Execution and Strategic USPP Acquisition

    ARKO Petroleum Corp. delivered a strong Q2 FY26, marked by solid financial performance and the strategic acquisition of U.S. Petroleum Partners. This acquisition is expected to significantly expand the company's scale, infrastructure, and earnings profile, reinforcing its long-term growth strategy and commitment to shareholder value. The company maintains financial flexibility and a disciplined approach to capital allocation.

    Highlights

    5

    • Adjusted EBITDA grew approximately 4% year-over-year to $39.8 million.

    • Discretionary cash flow increased approximately 12% year-over-year to $27.1 million.

    • Wholesale fuel contribution rose 3.7% to $26.3 million.

    • Net income was $12.2 million, up from $10 million in the prior year period.

    • The USPP acquisition is expected to add approximately $30 million of annual adjusted EBITDA.

    Concerns

    3

    • Wholesale gallons declined 4.6% to 240.8 million gallons.

    • Fleet fueling blended margin decreased by $0.02 per gallon year-over-year due to margin compression.

    • Net cash provided by operating activities decreased to $10.4 million from $23.2 million, primarily due to increased working capital.

    Guidance & targets

    6
    CategoryTargetConfidence
    Full year Adjusted EBITDA
    $156 million
    high materiality
    High
    Full year Discretionary Cash Flow
    $110 million
    high materiality
    High
    USPP Acquisition Annual Adjusted EBITDA Contribution
    approximately $30 million
    high materiality
    High
    Pro forma Net Debt to Adjusted EBITDA
    3x to 3.5x
    medium materiality
    High
    Quarterly Dividend
    $0.50 per share
    medium materiality
    High
    New Cardlock Locations
    20
    low materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Wholesale
    Fuel contribution increased despite a decline in wholesale gallons, primarily due to incremental dealer locations from ARKO Corp.'s dealerization program and higher prompt pay discounts on increased fuel costs.
    Fuel contribution: $26.3 millionFuel contribution growth YoY: 3.7%Wholesale gallons: 240.8 millionWholesale gallons decline YoY: 4.6%Blended fuel margin: $0.109 per gallonBlended fuel margin prior year: $0.101 per gallon
    		———$26.3 million
    Fleet Fueling
    Fuel contribution slightly decreased due to margin compression as index prices declined faster than the cost of weighted average inventory, but the segment's durable earnings profile maintained healthy contribution. Investment continues in new cardlock locations.
    Fuel contribution: $17.1 millionFuel contribution prior year: $17.8 millionFleet fueling gallons: 36.4 millionFleet fueling gallons prior year: 36.3 millionBlended margin: $0.469 per gallonBlended margin prior year: $0.489 per gallon
    		———$17.1 million
    GPMP (Related Party Locations)
    Fuel contribution slightly increased, while gallons declined primarily due to the active conversion of ARKO retail sites to dealer locations.
    Fuel contribution: $11.5 millionFuel contribution prior year: $11.3 millionRelated party gallons: 191.4 millionRelated party gallons prior year: 225.3 million
    		———$11.5 million

    Operational metrics

    12
    Adjusted EBITDA
    $39.8 millionup approximately 4%
    Q2 FY26

    Compared to $38.3 million for Q2 FY25.

    Discretionary Cash Flow
    $27.1 millionup approximately 12%
    Q2 FY26

    Compared to $24.2 million for Q2 FY25, underscoring strong cash conversion.

    Net cash provided by operating activities
    $10.4 milliondown from $23.2 million
    Q2 FY26

    Primarily due to the increase in working capital resulting from the increase in the cost of fuel.

    Total debt net
    $184.7 million
    Q2 FY26

    As of quarter end.

    Net Debt
    $324.2 million
    Q2 FY26

    As of quarter end.

    Credit line availability
    $710 million
    Q2 FY26

    Providing meaningful financial flexibility.

    Cardlock locations opened
    3
    YTD 2026

    Part of the plan to invest in additional new cardlock locations.

    USPP annual wholesale fuel volume
    280 million gallonsincreasing APC's fuel volumes by about 14%
    Annual

    Volume added through the acquisition of U.S. Petroleum Partners for the 12 months ended June 30, 2026.

    USPP wholesale locations
    400
    post-acquisition

    Locations added through the USPP acquisition, expanding APC's network to more than 2,500 locations.

    USPP acquisition cash consideration
    $205 million
    at closing

    Part of the consideration for the acquisition of U.S. Petroleum Partners.

    USPP acquisition stock consideration
    $30 million
    at closing

    Part of the consideration for the acquisition of U.S. Petroleum Partners, tied to an earn-out.

    USPP earn-out EBITDA target
    $31.7 million
    first 4 full quarters post-closing

    Financial target for the acquired USPP business to trigger the release of escrowed stock, with potential for increase if results are greater.

    Industry KPIs

    3
    MetricValueDetails
    Store count growth2,500locations
    Net debt to adjusted EBITDA2.2xx
    Share buyback capital return$0.50per share

    Deals & partnerships

    1
    U.S. Petroleum PartnersAcquisition of a vertically integrated fuel distribution platform, including wholesale fuel volume, 400 wholesale locations, 2 fuel storage terminals, and a fleet of trucks.$205 million in cash plus the cost of inventory, and $30 million in Class A common stock to be held in escrow

    The acquisition will add approximately 280 million gallons of annual wholesale fuel volume, increasing APC's fuel volumes by about 14%. It will expand APC's network to more than 2,500 locations. Includes 2 fuel storage terminals along the Buckeye Pipeline system in Novi, Michigan, and Toledo, Ohio, and a fleet of trucks and trailers. The $30 million in stock is subject to the acquired business achieving certain EBITDA-based financial targets ($31.7 million EBITDA and $2.2 million fuel-related EBITDA) in the first 4 full quarters after closing.

    Risks & headwinds

    3
    Volatile fuel price environmentQ2 FY26

    null

    Mitigation: Durability of platform, strength of cash flow generation, and team's ability to execute effectively.

    Fuel margin compression in fleet fuelingQ2 FY26

    Blended margin down $0.02 from prior year

    Mitigation: Contribution remained healthy, reinforcing the durable earnings profile of this segment.

    Increase in working capital due to higher cost of fuelQ2 FY26

    Net cash provided by operating activities decreased from $23.2 million to $10.4 million

    Mitigation: Strong balance sheet and significant liquidity with $710 million in credit lines.

    What to watch in Q3 FY26

    5

    USPP acquisition closing

    next quarter
    Currentexpected to close later this year
    TargetClosed

    Why it matters

    The acquisition of U.S. Petroleum Partners is a major strategic move expected to significantly expand ARKO's scale, infrastructure, and earnings profile, reinforcing its long-term growth strategy.

    We expect to close the transaction later this year.

    Q&A highlights

    5

    How will the USPP acquisition's transport and terminal infrastructure offerings integrate with ARKO's footprint and generate synergies?

    The USPP business is complementary, adding 400 dealers to ARKO's platform and expanding the network to 2,500 locations. The acquired fleet of trucks enhances last-mile delivery, especially in the Great Lakes region. The terminals provide fee-generating storage and greater flexibility for ARKO to source its own products, expanding participation across the fuel value chain.

    “So my point is that everything that we're buying over here, which is adding another 400 dealers to basically to our platform, increasing our -- basically our business to 2,500 dealers is absolutely complementary.”

    asked by Joshua Silverstein · answered by Arie Kotler

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic USPP Acquisition

    ARKO Petroleum Corp. announced the signing of a purchase agreement to acquire U.S. Petroleum Partners (USPP), a vertically integrated fuel distribution platform. This acquisition will add approximately 280 million gallons of annual wholesale fuel volume, increasing APC's fuel volumes by about 14%. It will expand the company's network by over 400 wholesale locations to more than 2,500 total locations. The transaction also includes two fuel storage terminals and a fleet of trucks, enhancing infrastructure and logistics capabilities.

    02

    Financial Impact and Synergies of USPP

    The USPP acquisition is expected to be accretive and contribute approximately $30 million of annual adjusted EBITDA, enhancing discretionary cash flow. Synergies are anticipated to begin in 2027, with opportunities for additional operational efficiencies. The consideration for the acquisition includes $205 million in cash plus the cost of inventory, along with $30 million in Class A common stock held in escrow, subject to USPP achieving certain EBITDA-based financial targets.

    03

    Balance Sheet and Capital Allocation

    APC maintains a strong balance sheet with a leverage ratio of 2.2x net debt to adjusted EBITDA at quarter-end, well below its post-IPO target of 2.5x. The company has significant liquidity, with approximately $710 million available under its credit lines. Following the USPP acquisition, the pro forma Net Debt to Adjusted EBITDA is expected to be in the range of 3x to 3.5x, remaining comfortably within the communicated target range of 3x to 4x, reflecting disciplined capital allocation.

    04

    Wholesale Segment Performance

    The Wholesale segment reported a 3.7% increase in fuel contribution to $26.3 million for the quarter. This growth occurred despite a 4.6% decline in wholesale gallons to 240.8 million, primarily due to incremental dealer locations resulting from ARKO Corp.'s ongoing dealerization program. The blended fuel margin improved to $0.109 per gallon from $0.101 in the prior year, benefiting from higher prompt pay discounts on increased fuel costs.

    05

    Fleet Fueling Segment Performance

    The Fleet Fueling segment's fuel contribution was $17.1 million, a slight decrease from $17.8 million in the prior year. Fleet fueling gallons were slightly up at 36.4 million. The blended margin was $0.469 per gallon, down $0.02 from the prior year, reflecting a more normalized margin rate and compression due to index prices declining faster than inventory costs. The company continues to invest in new cardlock locations, with 3 opened and 17 in development for 2026.

    06

    GPMP Segment and Operational Highlights

    The GPMP segment's fuel contribution from related party locations was $11.5 million, a slight increase from $11.3 million last year. Related party gallons totaled 191.4 million, a decrease from 225.3 million gallons in the prior year, driven by the conversion of ARKO retail sites to dealer locations. The company declared a quarterly dividend of $0.50 per share, consistent with its annual target of $2 per share, reinforcing its commitment to shareholder returns.

    AI-generated summary of the company’s earnings call. Not investment advice.