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Arko (ARKO) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Discretionary· Aug 7, 2026

Source: earnings call transcript

Executive summary

Arko Corp. Q2 FY26 — Strategic Acquisition and Resilient Performance Amidst Challenging Consumer Backdrop

Arko Corp. navigated a challenging Q2 FY26 with a strategic acquisition for its APC subsidiary, expanding its fuel distribution platform and expected EBITDA contribution. Despite a volatile fuel pricing environment and softened retail demand, the company demonstrated resilience through disciplined pricing, merchandise margin expansion, and strong loyalty program engagement. Management reaffirmed its full-year adjusted EBITDA outlook, highlighting confidence in its diversified earnings base and operational levers.

Highlights

5

  • First half adjusted EBITDA increased 14% year-over-year to $123 million, demonstrating strong overall profitability.

  • APC's planned acquisition of USPP is expected to add approximately $30 million in annual adjusted EBITDA and 280 million gallons of annual fuel volume.

  • Merchandise margin expanded by 110 basis points to 34.7% on a same-store basis, with nearly flat merchandise margin dollars despite consumer pressure.

  • Loyalty program members' average monthly spend was more than 2x higher than non-enrolled members, with visits and basket size almost 50% higher.

  • Reaffirmed full-year 2026 adjusted EBITDA guidance of $245 million to $265 million, reflecting confidence in business durability.

Concerns

4

  • Second quarter adjusted EBITDA declined to $72 million from $76.9 million in the prior year, primarily due to increased credit card fees and softening retail demand.

  • Same-store merchandise sales, excluding cigarettes, declined a modest 0.9%, impacted by lower SNAP EBT sales in certain states.

  • Same-store fuel gallons decreased 5.7% year-over-year, reflecting pressure on household budgets from elevated fuel prices.

  • Fleet Fueling operating income was relatively flat year-over-year, with margin compression due to falling index prices outpacing weighted average inventory cost.

Guidance & targets

CategoryTargetConfidence
Full-year Adjusted EBITDA
$245 million to $265 million
high materiality
High
Full-year Retail Fuel Margin
$0.455 to $0.475 per gallon
medium materiality
High
Annual Adjusted EBITDA contribution from USPP acquisition
$30 million
high materiality
High
Annual Fuel Volume contribution from USPP acquisition
280 million gallons
medium materiality
High
Retail Store Remodels
approximately 25
low materiality
High
New Card Lock Locations
20 new locations
low materiality
High
Food Service Expansion
additional locations
low materiality
Medium
Dealerization Conversions
approximately 70 additional stores
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Retail
Same-store merchandise sales ex-cigarettes declined modestly, impacted by lower SNAP EBT sales. Merchandise margin expanded significantly due to disciplined pricing and favorable product mix. Same-store fuel gallons declined, but fuel cents per gallon margin increased, leading to growth in fuel contribution. Operating expenses were managed, with a reduction in regular personnel expenses.
Same-store merchandise sales (excluding cigarettes): -0.9%Same-store merchandise sales (overall): -1.7%Merchandise margin: 34.7%Same-store merchandise margin: 34.7%Same-store fuel gallons: -5.7%Same-store fuel cents per gallon margin: $0.487Same-store fuel contribution: $97.8 millionTotal retail site level operating expenses: $160 millionSame-store operating expenses: $156.5 million
————
Wholesale
Operating income increased 7.1% to $24.9 million from $23.2 million in the prior year period. Gallons were 241 million compared with 252 million in the prior year. Fuel margin increased 8.7% to $0.109 per gallon from $0.101 in the prior year period.
Gallons: 241 millionFuel margin: $0.109 per gallon
—7.1%—$24.9 million
Fleet Fueling
Operating income slightly increased 1.6% to $13.3 million from $13.1 million for the prior year period. Gallons were $36.4 million, broadly unchanged from $36.3 million in the prior year period. Fuel margin was $0.469 per gallon compared with $0.49 in the prior year period, primarily due to higher-than-average margins in the prior period and falling index prices outpacing inventory costs in Q2 FY26.
Gallons: $36.4 millionFuel margin: $0.469 per gallon
—1.6%—$13.3 million

Deals & partnerships

U.S. Petroleum Partners (USPP) Acquisition of USPP's business, a vertically integrated fuel distribution platform, by Arko's 74% owned subsidiary, APC. $205 million cash plus cost of inventory at closing, plus $30 million in Class A common stock for earnout Earnout based on EBITDA targets in the first 4 quarters post-closing

The acquisition expands APC's scale and presence in the Great Lakes region, adds 2 fuel terminals on the Buckeye Pipeline, and a transportation fleet. The earnout is subject to achieving specific EBITDA targets ($31.7 million EBITDA and $2.2 million EBITDA from certain fuel-related components) and may increase if results exceed targets.

Risks & headwinds

Challenging consumer backdrop and softened retail demand Q2 FY26, particularly June

Consumer sentiment reached historic lows; national average gasoline prices climbed from $4.24/gallon in April to $4.61/gallon in May before easing to $3.96/gallon at quarter end. Same-store merchandise sales ex-cigarettes declined 0.9%.

Mitigation:Disciplined pricing, category management, vendor-supported promotions, loyalty programs (Fueling America's Future, Tencent Tuesdays), value offerings, and store remodels.

Increased credit card fees due to elevated fuel prices Q2 FY26

$3.3 million increase on a same-store basis

Mitigation:Not explicitly stated, but generally managed through pricing strategies and loyalty programs to drive in-store purchases.

Lower SNAP EBT sales Q2 FY26

Reduced same-store sales growth ex-cigarettes by approximately 75 basis points in Q2 FY26. SNAP EBT accounts for less than 2% of sales.

Mitigation:Focus on offering value through loyalty programs and targeted in-store pricing.

Fuel price volatility and margin compression in Fleet Fueling Q2 FY26

Fleet Fueling fuel margin was $0.469 per gallon compared with $0.49 in the prior year period.

Mitigation:Fleet Fueling deals often use OPIS+ pricing, which can lead to margin compression in a falling price environment. No explicit mitigation mentioned beyond understanding the pricing structure.

General market uncertainty impacting second half EBITDA H2 FY26

Implied down EBITDA in the second half of FY26 compared to the first half's growth.

Mitigation:Executing brands, driving customers into stores for fuel and merchandising, APC delivering. Maintaining balance sheet flexibility.

What to watch in Q3 FY26

USPP Acquisition Close and Contribution

Next quarter (Q3 FY26)
Current Announced, expected to close later this year.
Target Closed, contributing $30M annual adjusted EBITDA and 280M gallons annual fuel volume.

Why it matters

This acquisition is a significant growth driver for APC and Arko, expected to materially impact consolidated EBITDA and fuel volume.

We expect the transaction to close later this year to be accretive upon closing and to add approximately $30 million of annual adjusted EBITDA to APC and announced its discretionary cash flow.

Find out whether ARKO delivers this. Inve re-checks your case every morning.

Q&A highlights

Is the USPP deal included in the full-year EBITDA guidance, and what explains the implied down EBITDA in the second half compared to the first half's growth?

The guidance range of $245M-$265M already accounted for potential acquisitions, so while USPP will contribute, it won't change the stated guidance. The implied second-half pressure is attributed to general market uncertainty and volatility in fuel and customer behavior, despite strong execution.

“When we did the guide, we had planned acquisitions but we really did not know the size or the timing of the acquisition, which was part of the reason we had the $20 million range. So based on the timing of close, we do expect some benefits this year, but we've not -- we feel that's captured in the $20 million guidance.”

asked by Bobby Griffin · answered by C. Jeff

2 min read 5 chapters

Detailed narrative

APC Strategic Acquisition of USPP

APC, Arko's 74% owned subsidiary, announced the acquisition of US Petroleum Partners (USPP) for $205 million cash plus inventory, and a $30 million earnout in Class A common stock. This deal is expected to add approximately 280 million gallons of annual fuel volume and $30 million in annual adjusted EBITDA to APC, expanding its scale in the Great Lakes region and adding terminal and transportation capabilities. The transaction is expected to close later this year and be accretive upon closing.

Challenging Consumer Backdrop

The second quarter saw a challenging consumer environment with historic low sentiment and volatile fuel prices. National average gasoline prices climbed from $4.24/gallon in April to $4.61/gallon in May before easing to $3.96/gallon by quarter-end. This led to softened retail demand, with pressure on both gallon sold and in-store spending, particularly in June.

Loyalty Program Success

Arko's "Fueling America's Future" and "Roll Fast Rewards" programs offer stackable fuel discounts up to $2.50 per gallon. Enrolled members showed significantly higher engagement, with average monthly spend more than 2x higher and visits/basket size almost 50% higher than non-enrolled members. The "Tencent Tuesdays" initiative, offering fuel discounts, led to double-digit growth in gallons sold on Tuesdays since its launch.

Retail Transformation Initiatives

The company completed 2 remodels with 12 more in progress, targeting 25 for the year, which have shown double-digit merchandise sales and gallon growth post-remodel. One new-to-industry (NTI) retail store was opened, with returns approaching 20%. The dealerization program continued, converting 21 additional retail stores to dealer locations, bringing the total to 471 since mid-2024, with approximately 70 more committed.

Capital Allocation and Liquidity

Arko repurchased $38 million of its 5.18% senior notes for $35 million cash, ending the quarter with $246 million cash and $1 billion in total liquidity. Subsequent to quarter-end, the GPM credit line was increased by $74 million to $214 million. This financial flexibility supports high-return organic projects, APC's growth strategy, and opportunistic debt repurchases.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.