ARKO Corp.

ARKO Corp. is a significant operator of convenience stores and a wholesaler of fuel in the United States, measured by store count and gallons sold, respectively ¹. As of December 31, 2025, the company operated 1,118 retail convenience stores under more than 25 regional brands and supplied fuel to 2,099 dealer locations ². Additionally, it managed a fleet fueling business with 295 proprietary and third-party cardlock locations ³. The company has achieved substantial growth through acquisitions, completing 26 acquisitions from 2013 through 2025, expanding its site count from 320 in 2011 to 3,512 as of December 31, 2025 ⁴. A multi-year Transformation Plan, initiated in the second half of 2024, involves converting retail stores to dealer locations ⁵.

The core business model revolves around four segments: retail, wholesale, fleet fueling, and GPMP ⁶. The retail segment generates revenue from fuel and merchandise sales at convenience stores, with a significant portion of profitability derived from in-store sales ⁷. The wholesale segment supplies fuel to dealers, sub-wholesalers, and bulk purchasers on either a consignment or cost-plus basis ⁸. The fleet fueling segment operates cardlock locations and earns commissions from proprietary fuel card sales to commercial and municipal entities ⁹. The GPMP segment primarily engages in inter-segment wholesale fuel distribution to the retail and wholesale segments at cost plus a fixed margin ¹⁰.

The retail segment, as of December 31, 2025, operated 1,118 convenience stores, selling fuel and merchandise under brands like 1-Stop, Admiral, and fas mart ¹¹. These stores offer a variety of products including grab-n-go foods, beverages, snacks, tobacco products, and traditional convenience store services such as lottery and ATMs ¹². Approximately 965 stores feature foodservice, with 140 offering delis, and 90 hosting quick-service national brand restaurants like Dunkin' and Subway ¹³. Fuel is sold at 1,095 retail sites, and 211 electric vehicle (EV) chargers are available at 72 locations ¹⁴. For the year ended December 31, 2025, the retail segment generated $4.4 billion in total revenues, including $1.5 billion from in-store sales and other revenues ¹⁵. Gross profit from in-store merchandise accounted for 52.4% of the retail segment's gross profit dollars ¹⁶. The segment sold 922.7 million gallons of fuel ¹⁷.

The wholesale segment, for the year ended December 31, 2025, sold 989.1 million gallons of fuel, representing approximately 47.9% of total gallons sold, and generated revenues of $2.8 billion ¹⁸. This segment supplies fuel to 1,801 sites under fuel supply contracts and 298 sites under consignment contracts as of December 31, 2025 ¹⁹. The fleet fueling segment sold 142.8 million gallons of fuel, generating revenues of $483.8 million for the year ended December 31, 2025 ²⁰. Diesel fuel constitutes approximately 80% of fleet fueling sales ²¹. The GPMP segment sells fuel at its cost plus a fixed margin (5.0 cents per gallon through December 31, 2025, increasing to 6.0 cents per gallon thereafter) to the retail and wholesale segments, and charges an inter-segment fixed fee to fleet fueling sites not supplied by GPMP ²².

For the year ended December 31, 2025, total revenues were $7.643 billion, a decrease from $8.732 billion in 2024 ²³. Fuel revenue decreased by $820.0 million, or 12.0%, to $6.039 billion ²⁴. Merchandise revenue decreased by $284.9 million, or 16.1%, to $1.482 billion ²⁵. Other revenues, net, increased by $16.4 million, or 15.5%, to $122.1 million ²⁶. Total operating expenses decreased by $1.082 billion, or 12.5%, to $7.548 billion ²⁷. Operating income increased to $102.3 million from $94.0 million in 2024 ²⁸. Net income attributable to ARKO Corp. was $22.7 million, up from $20.8 million in 2024 ²⁹. Diluted EPS was $0.15, compared to $0.13 in 2024 ³⁰. Adjusted EBITDA was $248.7 million, a slight decrease from $248.9 million in 2024 ³¹. Cash and cash equivalents were $305.0 million as of December 31, 2025 ³². Total debt, net, was $912.1 million ³³.

Year-over-year, total revenues decreased by $1.088 billion from 2024 to 2025 ³⁴. Retail fuel revenue decreased by $674.3 million, or 19.2%, due to a 5.4% decrease in same-store gallons sold and a $0.18 per gallon decrease in average retail fuel price ³⁵. Retail merchandise revenue decreased by $284.9 million, or 16.1%, with same-store merchandise sales declining by $61.1 million, or 4.1% ³⁶. Wholesale fuel revenue decreased by $99.0 million, or 3.5%, despite a 4.2% increase in gallons sold ³⁷. Retail fuel margin per gallon increased to 42.8 cents from 39.6 cents in 2024 ³⁸. Merchandise margin increased to 33.7% from 32.8% in 2024 ³⁹. The company converted 256 retail stores to dealer locations in 2025, contributing approximately $11.8 million in incremental operating income before general and administrative expenses ⁴⁰.

During 2025, the company launched its new fas craves flagship location as part of its Transformation Plan, focusing on food offerings and modernized store designs ⁴¹. It also opened one Dunkin' store and two new-to-industry (NTI) retail stores ⁴². The company repurchased approximately 6.1 million shares of common stock for $25.7 million, at an average price of $4.19 per share, exhausting its $125.0 million share repurchase program ⁴³. A gain of approximately $20.8 million was recorded in the second quarter of 2025 related to the expiration of a real estate purchase option ⁴⁴.

Management anticipates continued benefits from its Transformation Plan, which includes the conversion of a meaningful number of additional retail stores to dealer locations throughout 2026 ⁴⁵. These conversions are expected to yield greater profitability from ongoing fuel supply agreements and rental income compared to operating them as retail stores ⁴⁶. The company also plans to open one more NTI retail store and three Dunkin' stores in 2026 ⁴⁷. Additionally, 20 NTI fleet fueling locations are targeted for opening in 2026, with 10 currently advancing, which are expected to positively impact results due to the attractive, durable cash flow profile of the fleet fueling business ⁴⁸.

A key growth area is the retail organic growth strategy, focusing on improving store performance through enhanced marketing and merchandising initiatives ⁴⁹. This includes increasing focus on pricing and procurement strategies to support merchandise margin rate growth, particularly within six core destination merchandise categories: packaged beverages, candy, salty snacks, packaged sweet snacks, alternative snacks, and beer, which represented approximately 54% of same-store merchandise contribution in 2025 ⁵⁰. The fas REWARDS loyalty program, with approximately 2.4 million enrolled members, is being strengthened, with a relaunch of the app planned for the first quarter of 2026 to include personalized features, member-only deals, and enhanced fuel savings up to $2.50 per gallon for America's 250th anniversary in 2026 ⁵¹.

The company is allocating additional targeted capital toward strategic remodels and new-to-industry (NTI) stores ⁵². Approximately 25 remodels are planned, all featuring the fas craves food and beverage elements, with components of fas craves also expanding to certain non-remodel stores where space permits ⁵³. The wholesale segment is expected to continue its organic growth by expanding its fuel distribution network through the conversion of retail stores to dealer locations throughout 2026 ⁵⁴. The fleet fueling business plans to increase fuel volumes with existing commercial and municipal accounts, grow its network, and invest in targeted equipment upgrades and branding enhancements ⁵⁵.

Inorganic growth remains a strategic priority, leveraging the fragmented nature of the fuel distribution and retail convenience store industries ⁵⁶. The company has a dedicated in-house M&A team continually evaluating opportunities, aiming to capitalize on industry consolidation through small bolt-on acquisitions to large-scale transactions ⁵⁷. The business model provides flexibility to acquire chains with retail, dealer, and cardlock locations, with the expectation of value accretion through organic growth strategies in acquired assets and economies of scale ⁵⁸.

The company expects its capital spending program in the short- to medium-term to primarily focus on remodeling and updating stores as part of its Transformation Plan, adding NTI retail stores and fleet fueling locations, strategic acquisitions, and maintaining properties and equipment ⁵⁹. In the medium- to long-term, capital spending is expected to align with the Transformation Plan ⁶⁰. Environmental capital expenditures were approximately $3.3 million for the year ended December 31, 2025, and are not expected to be material for the year ending December 31, 2026 ⁶¹.

Management explicitly flagged several structural headwinds and execution risks. These include changes in economic conditions, trade policies, and consumer confidence in the U.S., which could negatively impact demand for fuel and other products ⁶². The success of the multi-year Transformation Plan, including the anticipated benefits of converting retail stores to dealer locations, is a key risk ⁶³. The ability to successfully implement growth strategies, make acquisitions on economically acceptable terms, and integrate acquired operations are also noted risks ⁶⁴. Significant changes in the consumption of cigarettes and other tobacco products, and related regulations, could materially adversely affect the business, as these products accounted for approximately 38% of total merchandise revenues in 2025 ⁶⁵. Changes in wholesale motor fuel prices, which influence 79% of total revenues and 47% of combined fuel, merchandise, and other income margin, are a significant factor ⁶⁶. The highly competitive and fragmented industry, dependence on principal suppliers for fuel and one primary merchandise supplier, and the need to renegotiate fuel supply agreements with dealers periodically are also identified risks ⁶⁷.

The company faces material risks from changes in economic conditions, trade policies, and consumer confidence in the U.S., which could lead to lower demand for fuel and other products, exacerbated by inflationary pressures ⁶⁸. Geopolitical conflicts, such as the Russia-Ukraine War and Israel-Hamas War, and instability in oil-producing regions, could significantly affect the global economy, lead to market volatility, supply chain disruptions, and adverse impacts on energy prices and margins ⁶⁹. The highly competitive and fragmented industry, with many similar competing products and services, poses a risk to the company's ability to maintain market position ⁷⁰. Dependence on several principal fuel suppliers and one major merchandise vendor creates supply disruption risks, and the renegotiation of fuel supply agreements with dealers, which generate a significant portion of revenue, is subject to factors beyond the company's control ⁷¹. Environmental protection and operational safety laws and regulations, particularly concerning motor fuels, expose the company to significant costs and liabilities, with capital expenditures for compliance and remediation totaling approximately $3.3 million in 2025 ⁷². Failure to comply with various federal, state, and local laws and regulations, including those related to the sale of age-restricted products and food safety, could result in sanctions, fines, or license suspension ⁷³. Cybersecurity threats, including information security breaches and ransomware, pose a risk to IT systems and data security, potentially leading to reputational damage, loss of data, and significant costs ⁷⁴. Variable rate debt, which constituted approximately 50% of total debt as of December 31, 2025, exposes the company to interest rate fluctuations, with a 1% increase in applicable interest rates potentially increasing annual debt service by approximately $4.7 million ⁷⁵.

Management's message to shareholders emphasizes a strategic focus on a multi-year Transformation Plan, which includes leveraging the company's multi-segment operating model to convert retail stores to dealer locations, aiming for increased profitability from fuel supply agreements and rental income. This plan also prioritizes enhancing the remaining retail store base through targeted investments and expanding foodservice offerings, as exemplified by the new fas craves flagship locations. The company is committed to organic growth through enhanced marketing and merchandising initiatives, including the relaunch of the fas REWARDS loyalty program app in the first quarter of 2026, which will offer personalized features and fuel savings up to $2.50 per gallon for America's 250th anniversary ⁷⁶. Furthermore, management intends to pursue inorganic growth opportunities by identifying and integrating acquisitions within the fragmented fuel distribution and retail convenience store industries, leveraging its experienced M&A team. The company's capital spending program in the short- to medium-term will be primarily directed towards remodeling and updating stores, adding new-to-industry retail stores and fleet fueling locations, strategic acquisitions, and maintaining existing properties and equipment.