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    ARKO
    Earnings call· Jun 2026(Q2 FY26)

    ARKO Q2 FY26 earnings call ARKO

    Aug 7, 2026 Source

    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

    8
    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

    3
    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

    Operational metrics

    27
    Adjusted EBITDA
    $72 milliondown from $76.9 million
    Q2 FY26

    Compared to prior year period, largely driven by increased credit card fees.

    Adjusted EBITDA
    $123 millionup 14% year-over-year from $108 million
    H1 FY26

    Solid first half performance.

    Net income
    $9.4 milliondown from $20.1 million
    Q2 FY26

    Prior year period included approximately $21 million noncash gain related to a sale leaseback.

    G&A expenses
    $43.7 millionup from $40.7 million
    Q2 FY26

    Primarily driven by increased stock-based compensation and normalized incentive compensation.

    Credit card fees
    $3.3 millionincreased
    Q2 FY26

    Associated with elevated fuel prices.

    Cash and cash equivalents
    $246 million
    Q2 FY26 end

    Healthy balance sheet.

    Total liquidity
    $1 billion
    Q2 FY26 end

    Includes cash and credit line capacity.

    Long-term debt (excluding lease related financing liabilities)
    $675 milliondecrease of $29 million versus Q1
    Q2 FY26 end

    Managed debt levels.

    GPM credit line with P&C
    $74 millionincreased
    subsequent to Q2 FY26

    Increased subsequent to quarter end, bringing aggregate capacity to $214 million.

    Net debt to adjusted EBITDA target
    3x to 3.5x
    post USPP deal

    Target range after the USPP acquisition closes.

    Cost of capital
    6.75%
    current

    Very attractive cost of capital for APC.

    Loyalty members added
    100,0005% increase
    Q2 FY26

    New members added during the quarter.

    Enrolled sales growth
    30 bpsvs Q1 FY26
    Q2 FY26

    Growth in sales from loyalty program members.

    Enrolled margin growth
    30 bpsvs Q1 FY26
    Q2 FY26

    Growth in margin from loyalty program members.

    Remodel sales and gallon growth
    double-digitversus pre-remodel period
    post-remodel

    Generated by completed remodels.

    New-to-industry store returns
    approaching 20%
    current

    Returns from new-to-industry stores, some still in ramp-up stage.

    Card lock location expected returns
    mid-to-high teen
    expected

    Attractive return profile for card lock locations.

    Fuel discount program savings
    $4 million
    since inception

    Savings provided to enrolled members through 'Fueling America's Future' program.

    Loyalty member average monthly spend
    more than 2x higherthan non-enrolled members
    Q2 FY26

    Demonstrates higher engagement and value from loyalty members.

    Loyalty member visits and average basket size
    almost 50% higherversus non-enrolled members
    Q2 FY26

    Demonstrates higher engagement and value from loyalty members.

    Tencent Tuesdays gallons sold growth
    double digit
    since launch

    Demonstrating strong engagement with the loyalty program.

    Stores with food service offering
    approximately 140
    current

    Company expects to expand to additional locations this year.

    Dealerization conversions
    21
    Q2 FY26

    Additional retail stores converted to dealer locations during the quarter.

    Total dealerization conversions
    471
    since mid-2024

    Total conversions since the program began.

    SNAP EBT sales impact on ex-cigarette sales growth
    approximately 75 bpsreduced
    Q2 FY26

    Lower EBT spend, primarily across 3 states, due to tightened eligibility rules.

    OPIS reported decline
    -5.8%
    last quarter

    OPIS reported decline in fuel, also cited as -5.5%.

    Fuel discount per gallon
    $2.50
    current

    Maximum stackable fuel discount available through loyalty programs.

    Industry KPIs

    7
    MetricValueDetails
    Sg a OPEX ratio$156.5 millionUSD
    Comparable sales-0.9%%
    Store count growth2stores
    Gross margin drivers34.7%%
    Active customers nspac100,000members
    Net debt to adjusted EBITDA3x to 3.5x
    Share buyback capital return$38 millionUSD

    Deals & partnerships

    1
    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 earnoutEarnout 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

    5
    Challenging consumer backdrop and softened retail demandQ2 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 pricesQ2 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 salesQ2 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 FuelingQ2 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 EBITDAH2 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

    5

    USPP Acquisition Close and Contribution

    Next quarter (Q3 FY26)
    CurrentAnnounced, expected to close later this year.
    TargetClosed, 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.

    Q&A highlights

    6

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

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