ARKO — Arko Corp.

ARKO Corp. Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics:

• Adjusted EBITDA: Increased 16% year-over-year to $66 million for Q4; full-year adjusted EBITDA was $248.7 million, flat compared to 2024.
• Net Income: Reported at $1.9 million for Q4, reversing a loss of $2.3 million in Q4 2024; full-year net income rose to $22.7 million from $20.8 million.
• Merchandising Margin: Improved by 140 basis points to 34.4% in Q4; full-year merchandising margin was 33.7%, up 90 basis points year-over-year.
• Same-store Merchandise Sales: Decreased 3% in Q4 and 4.1% for the full year; however, trends improved towards the end of the year.
• Retail Fuel Same-store Gallons: Down 4.1% in Q4 and 5.4% for the full year, but showed improvement in Q4.
• Cash Position: Ended 2025 with $305 million in cash; strong balance sheet following the IPO of ARKO Petroleum Corp., which raised approximately $184 million.

2. Strategic Updates and Business Highlights:

• Transformation Plan: Continued execution of a transformation plan focused on optimizing retail footprint and improving cost structure.
• Dealerization: Completed 409 conversions, with 120 additional sites committed for conversion by the end of 2026, reducing fixed costs and improving cash flow.
• Loyalty Program: The fas REWARDS platform drove significant engagement, with enrolled members spending 48% more than non-enrolled members.
• Remodels and New Stores: Positive early results from food-forward remodels, with sales growth exceeding targets. Plans for 25 additional remodels and expansion of NTI retail stores are underway.
• APC IPO: Successful IPO of ARKO Petroleum Corp. enhances transparency and positions ARKO for growth in the wholesale fuel distribution market.

3. Forward Guidance and Outlook:

• 2026 Adjusted EBITDA Guidance: Expected to range between $245 million and $265 million, with same-store retail sales anticipated to improve slightly from 2025 levels.
• Retail Fuel Margin: Expected to range from $0.415 to $0.435 per gallon.
• APC EBITDA Contribution: Anticipated to deliver approximately $156 million in adjusted EBITDA in 2026.

4. Challenges and Points of Concern:

• Cautious Consumer Behavior: The consumer remains value-focused, impacting same-store merchandise sales and overall retail performance.
• Regional Pressures: Continued pressure in the Midwest, though some easing was noted in other regions.
• Same-store Sales Declines: Despite improvements, same-store merchandise sales and fuel gallons were down for the year, indicating ongoing challenges in driving growth.

5. Notable Q&A Insights:

• Merchandise Sales Drivers: Management highlighted the impact of marketing initiatives, loyalty programs, and promotions in driving sales and margins.
• Remodel Costs: Major remodels cost approximately $1 million, while softer remodels could be executed for $400,000 to $700,000.
• M&A Opportunities: APC has significant potential for acquisitions in a fragmented industry, with over $635 million available for growth initiatives.
• Competitive Promotions: Promotions are vendor-supported, aimed at driving customer traffic without sacrificing margins, enhancing overall basket size.

Overall, ARKO Corp. demonstrated solid financial performance in Q4 2025, with strategic initiatives positioning the company for future growth despite facing challenges in consumer behavior and regional market pressures.