ARKO Petroleum Corp. reported stronger first-quarter 2026 results, with management pointing to fuel-margin discipline, wholesale growth and the company’s post-IPO balance sheet as key factors supporting its outlook.
Chairman, President and Chief Executive Officer Arie Kotler said adjusted EBITDA rose approximately 18% year over year during a quarter marked by significant fuel-cost volatility. Kotler said the results reflected the company’s “cost-plus” margin structure on roughly 85% of gallons distributed, as well as pricing execution on the remaining gallons sold through fleet fueling and consignment agent locations.
Chief Financial Officer Jordan Mann said net income was $8.1 million for the quarter, compared with $4.5 million in the prior-year period. Adjusted EBITDA increased to $36.4 million from $30.9 million a year earlier.
Wholesale and fleet fueling margins expand
In the wholesale segment, fuel contribution rose 14.2% to $22.9 million from $20 million in the first quarter of 2025. Wholesale gallons increased 2.8% to 233.9 million gallons, while fuel margin improved to approximately 9.8 cents per gallon from 8.8 cents per gallon a year earlier.
Kotler said the wholesale segment benefited from higher margin capture at consignment agent locations during volatile fuel markets and, to a lesser extent, increased prompt-pay discounts tied to higher fuel costs. He also said the segment gained from ARKO Corp.’s continued conversion of retail sites into dealer locations.
The company converted 41 ARKO retail sites to dealer locations during the first quarter, bringing total conversions since mid-2024 to 450. Kotler said approximately 75 additional sites were committed under letters of intent, contracts or had already converted after quarter-end, and he expects those and additional conversions to be completed by the end of 2026.
In fleet fueling, fuel contribution increased 9.4% to $16.7 million from $15.3 million a year earlier. Gallons declined 3.2% to 34 million, but margin expanded by 5.7 cents per gallon to 49.3 cents per gallon, more than offsetting the volume decline. Mann said the segment continued to reflect a “durable cash flow profile.”
Dealer conversions weigh on GPMP gallons
In the GPMP segment, fuel contribution from related-party locations, which are ARKO retail sites, increased to $11 million from $10.6 million. Related-party gallons fell to 182.7 million from 211.7 million, which Mann attributed to the shift of gallons from ARKO retail sites to wholesale as stores convert to dealer locations, as well as a decline in gallons at ARKO retail sites.
Mann said the segment’s margin was fixed at 5 cents per gallon through Dec. 31, 2025, and has since been fixed at 6 cents per gallon.
IPO proceeds reduce debt, support expansion plans
Management highlighted the company’s February initial public offering as a key development that strengthened the balance sheet. Mann said ARKO used $206.7 million of net proceeds to reduce debt and enhance liquidity.
As of quarter-end, Kotler said net leverage was 2.1 times, below the company’s expectations during its IPO roadshow of less than 2.5 times. He also said liquidity was approximately $731 million.
Mann said total debt net was $184.5 million, net debt was approximately $313.5 million and the ratio of net debt to adjusted EBITDA was approximately 2.1 times. The ratio of total debt net to net income was 5.1 times.
Kotler said the company’s liquidity positions it to pursue growth through new-to-industry fleet fueling locations and disciplined, accretive wholesale acquisitions. He said the IPO has increased the company’s exposure as a potential acquirer, leading to more opportunities, though he said during the Q&A that seller expectations had not materially changed in the recent volatile commodity environment.
Cardlock expansion and dividend plans
ARKO is continuing to invest in its fleet fueling segment, including its cardlock platform. Kotler said the company opened one new-to-industry location in the first quarter and has identified and is working on 17 additional locations as part of its target of 20.
In response to an analyst question, Kotler said additional locations are expected to begin opening more toward the third and fourth quarters, with most of the benefit likely appearing in 2027. He said sites typically take six to 12 months to ramp up, with roughly nine months a reasonable planning assumption.
On shareholder returns, Kotler said the company paid an initial dividend of 26 cents per share in April, representing the pro rata portion of the first quarter following the IPO. He said that payment was consistent with an annual target dividend rate of $2 per share. The company expects a second-quarter dividend of 50 cents per share to be paid after it reports second-quarter results.
Guidance unchanged despite strong first quarter
ARKO left its full-year 2026 outlook unchanged. Mann said the company continues to expect full-year adjusted EBITDA of approximately $156 million and discretionary cash flow of approximately $110 million.
During the Q&A, Kotler said the company did not see customers pulling back because of fuel-price volatility, though he noted that weak weather in late January and February contributed to a small decline in first-quarter gallons. He said gallons improved in March and April, and that customers were visiting more often while purchasing fewer gallons per visit.
Kotler added that if pump prices remain around $4.50 per gallon into the summer, the company would expect to see a decrease in gallons, though he said that would be offset by prompt-pay discounts tied to higher fuel prices.
In closing remarks, Kotler thanked employees for executing through a volatile macro environment and said the company remains focused on the growth strategies outlined at the time of its IPO, stable cash flow generation and a healthy dividend.
About Anadarko Petroleum NASDAQ: APC
Anadarko Petroleum Corporation engages in the exploration, development, production, and marketing of oil and gas properties. It operates through three segments: Exploration and Production, WES Midstream, and Other Midstream. The company explores for and produces oil, natural gas, and natural gas liquids (NGLs). It is also involved in gathering, processing, treating, and transporting oil, natural-gas, and NGLs production, as well as the gathering and disposal of produced water. The company's oil and natural gas properties are located in the United States onshore and deepwater Gulf of Mexico; and Algeria, Ghana, Mozambique, Colombia, Peru, and other countries.
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