What ARKO (ARKO) Said on Its Q3 Earnings Call

Key Points

• ARKO raised the low end of its 2026 adjusted EBITDA outlook to $250 million, keeping the top end at $265 million. It cited year-to-date performance, business trends and the expected fourth-quarter acquisition closing.
• Third-quarter adjusted EBITDA increased to $75.7 million and net income to $14.3 million. Higher fuel and merchandise margins helped offset lower fuel volumes, softer merchandise sales and rising credit card fees.
• ARKO Petroleum expects to acquire U.S. Petroleum Partners in the fourth quarter; the business is projected to add about 280 million gallons in annual fuel volume and $30 million in annualized adjusted EBITDA. ARKO has also converted about 500 stores to dealer locations and expects that program to be largely complete by the end of 2027.

ARKO NASDAQ: ARKO raised the low end of its full-year earnings outlook after reporting higher third-quarter profit, as stronger fuel and merchandise margins helped offset lower fuel volumes and higher credit card fees.

The convenience store and fuel distributor now expects 2026 adjusted EBITDA of $250 million to $265 million, up from a previous lower bound of $245 million. Management attributed the revision to year-to-date performance, current business trends and the expected fourth-quarter closing of an acquisition by its ARKO Petroleum Corp. subsidiary.

Third-quarter adjusted EBITDA rose to $75.7 million from $75.2 million a year earlier, while net income increased to $14.3 million from $13.5 million. For the first nine months of 2026, adjusted EBITDA was approximately $199 million, up 8.5%.

Retail margins offset fuel volume pressure

Chairman, President and CEO Arie Kotler said elevated fuel prices weighed on demand. Regular gasoline ended the quarter at approximately $4.31 per gallon, about $1.32 above the prior year, while diesel exceeded $6.50 in September.

ARKO’s same-store retail fuel margin rose 10.4% to 48.8 cents per gallon from 44.2 cents, helping increase same-store fuel contribution by approximately $2.6 million to $98.3 million. The company expects a full-year retail fuel margin of 47 cents to 49 cents per gallon.

In stores, overall same-store merchandise sales fell 1.4%, while sales excluding cigarettes were essentially flat. Merchandise sales excluding cigarettes rose approximately 0.8% at stores ARKO expects to retain rather than convert to dealer locations. That portfolio has posted year-over-year growth on the same measure in each quarter of 2026.

Same-store merchandise margin increased 50 basis points to 34.8%, marking the 12th consecutive quarter of year-over-year expansion. CFO Galagher Jeff attributed the improvement to a favorable category mix and investments in food service, other tobacco products, loyalty and vendor-funded promotions.

Same-store operating expenses rose to $156.7 million from $150.6 million, including approximately $3.1 million in incremental credit card fees associated with higher fuel prices. Excluding credit card fees, those expenses increased approximately 2.2%.

Dealer conversions and store investments

ARKO has converted approximately 500 company-operated stores to dealer locations since the program began in 2024 and expects to be largely finished by the end of 2027. Kotler said the company had refined its plans and had another 55 sites committed under letters of intent.

Kotler said ARKO currently has 1,038 stores and estimated that it could ultimately retain around 900, while cautioning that the figure was a guess. He said retained stores generated approximately 98% to 99% of retail segment operating profit.

ARKO expects to complete more than 25 store remodels in 2026, with 11 already completed. Initial results show low-double-digit sales growth at remodeled stores, Kotler said. The company also opened three new-to-industry retail stores in the first nine months and plans to open four new-to-industry Dunkin’ stores between the call and early 2027.

Food service is another investment priority. Approximately 145 stores have delis, while more than 500 have some type of food offering, Kotler said. He did not provide a specific target or timetable for expanding food service across the retained portfolio.

Wholesale, fleet and acquisition outlook

Wholesale operating income rose 7% to $25.8 million as higher fuel margins more than offset a decline in gallons sold. Fleet fueling operating income increased 8.9% to $13.3 million, with gallons declining slightly to 36.2 million from 36.6 million.

ARKO Petroleum, which ARKO owns approximately 74%, expects its acquisition of U.S. Petroleum Partners to close in the fourth quarter. Kotler said the acquired business is expected to add approximately 280 million gallons of annual fuel volume across roughly 400 dealer locations and contribute about $30 million in annualized adjusted EBITDA.

ARKO ended the quarter with $184 million in cash and cash equivalents and $1 billion in total liquidity. It repurchased $62.1 million of senior notes for $56.8 million in cash during the quarter and finished with $625 million in long-term debt, excluding lease-related financing liabilities.

About ARKO (NASDAQ:ARKO)

ARKO Corp. NASDAQ: ARKO is a convenience store and fuel retail operator in the United States. Through its subsidiary GPM Investments, the company operates convenience stores that sell gasoline, diesel fuel, food, beverages, tobacco products, and other everyday consumer goods. Many locations also offer prepared food, loyalty programs, and additional retail services.

ARKO operates stores under a variety of regional and national banners, including fas mart, E-Z Mart, Scotchman, Young's, Li'l Cricket, BreadBox, and others.

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