ARKO Q4 Earnings Call Highlights

25 Feb 2026, 18:32 by Teresa Graham · The Cerbat Gem

ARKO (NASDAQ:ARKO) executives said the company’s transformation initiatives drove a stronger finish to 2025, highlighted by higher profitability in the fourth quarter, improved margin performance, and a sharp reduction in retail operating expenses tied to store closures and dealer conversions.

On the company’s fourth quarter 2025 earnings call, Chairman, President and CEO Arie Kotler and CFO Galagher Jeff also emphasized a major corporate milestone completed earlier this month: the initial public offering of ARKO’s subsidiary, ARKO Petroleum Corp. (APC), which now houses the company’s wholesale, fleet fueling, and GPMP segments.

Fourth quarter performance improves as margins expand

Jeff reported fourth quarter net income of $1.9 million, reversing a net loss of $2.3 million in the prior-year period. Adjusted EBITDA rose 16% year over year to $65.7 million (management also cited $66 million), which Kotler attributed to execution on merchandising margin initiatives, disciplined fuel pricing, dealerization, and tighter expense control.

In the retail segment, ARKO posted merchandising margin of 34.4%, up 140 basis points from the prior year. Same-store merchandise sales declined 3% in the quarter, while same-store merchandise sales excluding cigarettes fell 1.8%. Management said trends strengthened through the quarter and carried into early 2026.

Fuel volumes remained pressured but showed improvement exiting the year. Retail fuel same-store gallons were down 4.1% in the fourth quarter, and retail fuel margin improved to approximately $0.445 cents per gallon, which Jeff said reflected disciplined pricing in a volatile environment.

A key driver of earnings growth was lower retail site operating expenses. Jeff said site operating expenses declined $29.5 million, or 15.7%, primarily due to $31.1 million of reduced expenses tied to stores that were closed or converted to dealer locations. Same-store operating expenses were nearly flat, up 0.6%, as labor management and other cost controls largely offset increases in rent and wage rates.

APC IPO brings new structure and debt reduction

Kotler described 2025 as “a pivotal year” and framed the APC IPO as a strategic inflection point. The company issued about 11.1 million APC Class A shares at $18 per share and retains 35 million Class B shares, representing 75.9% of the economic interest in APC. Kotler said the IPO raised $200 million of new equity, while Jeff reported approximately $184 million in net proceeds, which were used to reduce debt.

Management said the separate listing is intended to increase transparency and allow the retail and wholesale/fleet businesses to be valued independently. Kotler said APC has distributed more than 2 billion gallons in the last 12 months but holds roughly 1% market share in a fragmented industry, which he characterized as providing a substantial runway for growth.

In response to a question on M&A capacity at APC, Kotler said the business has “over $635 million” available for acquisitions and described leverage as “very, very low,” citing ARKO’s track record of acquisitions over the past decade.

Dealerization, loyalty, and food initiatives highlighted as key levers

Kotler said dealerization remains one of the company’s most important transformation levers. As of year-end 2025, ARKO had completed 409 conversions and had about 120 additional sites committed (via letters of intent, contracts, or already converted since year-end). He said the company expects to complete those conversions plus additional conversions by the end of 2026.

He added that stores converted within the last 12 months generated more than a $5 million benefit to operating income in the fourth quarter, before G&A savings.

ARKO also pointed to loyalty and promotional initiatives as drivers of engagement. Kotler said loyalty members spent more than 48% higher than non-enrolled customers and made 51% more trips in the fourth quarter. Since the company’s “Fueling America’s Future” campaign launched, management said average daily enrollment rose 38% through 2025. Kotler also said ARKO is working on a new version of its app with enhanced personalization and vendor-supported benefits.

Food and store refresh efforts were another focus. Kotler shared early performance from “food-forward” remodels, including:

Ashland, Virginia: In the first six months after reopening in June 2025, average daily sales rose 14% and gallons rose 12%, with average daily sales more than doubling in four categories.
Mechanicsville: After reopening later in 2025, sales improved over 10% through year-end and gallons grew over 20%.

During Q&A, Kotler said a “major remodel” costs roughly $900,000 to $1.1 million (about $1 million). He also discussed “soft remodel” options that focus on adding fas craves food elements, estimating a cost range of roughly $400,000 to $700,000 (around $500,000). Jeff added that the company is analyzing which remodel elements drive results so it can bring lower-cost upgrades to more stores without a full remodel.

ARKO said it is planning approximately 25 remodels featuring Fast Grade food and beverage elements and is also expanding food and beverage in non-remodeled stores where space allows.

Segment results and 2026 outlook

In wholesale, fourth quarter fuel contribution increased 8% to $24 million, with gallons up 4% to 249 million and fuel margin of about $0.097 per gallon. For full-year 2025, wholesale fuel contribution increased 5% to $94.5 million on 989 million gallons, with fuel margin of about $0.096 per gallon.

In fleet fueling, fourth quarter fuel contribution was $15.9 million versus $16.3 million a year earlier, with gallons of 34.9 million and margin of $0.456 per gallon. For the full year, fleet fueling fuel contribution was $65.7 million on 142.8 million gallons, with a margin of $0.460 per gallon.

For the full year 2025, ARKO reported Adjusted EBITDA of $248.7 million, essentially flat versus $248.9 million in 2024, and net income of $22.7 million compared with $20.8 million the prior year. Jeff said margin expansion and cost control helped offset volume headwinds.

Looking ahead, ARKO guided to 2026 Adjusted EBITDA of $245 million to $265 million, assuming average retail fuel margin of 41.5 to 43.5 cents per gallon. Jeff said each 1-cent change in retail same-store fuel margin is estimated to impact Adjusted EBITDA by $8 million to $9 million. Management expects 2026 same-store retail sales to be “relatively flat” and improve by several hundred basis points versus 2025, with same-store margin expected between 35.5% and 36.5%.

Jeff also referenced APC’s prospectus guidance calling for approximately $156 million in Adjusted EBITDA in 2026, noting APC includes wholesale, fleet fueling, and GPMP results, including a $0.06 fuel margin on fuel distributed by GPMP to ARKO retail stores.

On capital allocation, Kotler and Jeff emphasized continued investment in remodels, selective new-to-industry (NTI) store development, and cardlock growth in the fleet fueling business. Kotler said ARKO is targeting 20 NTI cardlock locations in 2026 and has identified 10 so far, estimating a typical build cost of $1 million to $2 million and targeting mid- to high-teens returns.

Management also discussed early 2026 demand trends, saying January and early February saw mid-single-digit growth in same-store merchandise sales and positive same-store gallons growth before winter storms caused disruption. Kotler said the consumer remains value-focused, but emphasized that ARKO’s recent improvements reflect execution rather than a favorable macro environment.

About ARKO (NASDAQ:ARKO)

ARKO Corp (NASDAQ: ARKO) is a downstream energy and convenience retail company based in Matthews, North Carolina. The company’s core operations encompass fuel supply, distribution and retailing through a network of terminals, independent dealer locations and company-operated convenience stores. ARKO’s fuel offerings include branded and unbranded gasoline and diesel, as well as lubricants and other petroleum products marketed under various regional and private labels.