Yesway Q3 Earnings Call Highlights

Key Points

• Third-quarter earnings improved: Net income rose to $25 million from $16 million, and adjusted EBITDA increased 8.6% to $60 million. Wider fuel margins and growth in same-store merchandise sales and fuel volumes supported results.
• 2026 outlook reaffirmed: Yesway expects adjusted EBITDA of $235 million to $245 million, merchandise sales growth of 1.25% to 3.25%, and six to eight new stores. The EBITDA forecast assumes fuel margins normalize; sustained elevated margins could provide upside.
• Expansion and brand conversions continue: Yesway ended the quarter with 423 stores and is converting 24 Texas Yesway locations to the Allsup’s brand, with completion expected by the end of Q1 2027.

Yesway NASDAQ: YSWY reported higher third-quarter earnings as fuel margins widened and same-store merchandise sales and fuel volumes increased, prompting the convenience store operator to reaffirm its full-year outlook.

Net income rose to $25 million from $16 million a year earlier, while adjusted EBITDA, a non-GAAP measure, increased 8.6% to $60 million. The company reported the gains despite elevated fuel prices and inflationary pressure on consumers.

Same-store inside merchandise sales rose 1.9% year over year, marking growth in 19 of the past 20 quarters, Chairman and Chief Executive Officer Tom Trkla said on the November 12 earnings call. Same-store fuel gallons increased 1.1%, the fifth consecutive quarter of growth.

Fuel Margins and Merchandise Sales Rise

Fuel sales increased 51.6% to $713 million, and total fuel margin rose to 46.1 cents per gallon from 40.3 cents a year earlier. Chief Financial Officer Ericka Ayles attributed the margin increase to the company’s diesel exposure and elevated fuel-price volatility during the quarter.

Diesel accounted for 38% of Yesway’s fuel volume, compared with a 27% industry average cited from NACS. Ayles said diesel volatility picked up in September and moderated slightly in October, though it remained elevated. She added that volatility typically supports higher margins.

Inside merchandise sales rose 4% to a record $246 million. The merchandise margin was 35.1%, compared with 35.2% a year earlier, as diesel surcharges offset the benefit of pricing actions. Ayles said most of those surcharges ended in October and that, if they remain absent, the change could benefit fourth-quarter margin.

Ayles said packaged beverages, general merchandise, and candy and snacks were among the strongest categories. Despite higher fuel prices, she said the company had not observed meaningful consumer trade-downs, including shifts from national brands to private-label products or from larger packs to smaller ones.

Same-store operating expenses rose 8.9%, with credit card fees accounting for approximately 56% of the increase. Same-store labor hours fell 1.3%, marking a sixth consecutive quarter of year-over-year improvement. Ayles said the company expects labor hours to remain relatively stable going forward.

Outlook Assumes Fuel Margins Normalize

Yesway reaffirmed its 2026 outlook, including:

• Adjusted EBITDA of $235 million to $245 million.
• Same-store inside merchandise sales growth of 1.25% to 3.25%.
• Capital expenditures of $85 million to $95 million.
• Six to eight new store openings.

Ayles said the adjusted EBITDA outlook assumes fourth-quarter fuel margins normalize to levels seen before developments in the Middle East. If elevated margins persist, they could provide upside to the outlook, she said. She also noted that the company faces a comparison with a particularly strong fourth quarter last year and typically sees a seasonal decline in the period.

The company ended the third quarter with $105 million in cash and $252 million in total available liquidity. Total debt, including financing and financing lease obligations, was $608 million. Yesway said it had fully repaid its revolver.

Expansion and Brand Conversions

Yesway ended the quarter with 423 stores after opening two locations and selling 29 stores in Iowa and Kansas. It opened a second Arizona store in October, bringing its year-to-date openings to five. Ayles said the 2026 openings were ramping quickly, in line with previous new builds.

Trkla said Arizona and Oklahoma account for a significant portion of the development pipeline, with a disproportionate amount in Arizona. He reaffirmed the company’s 130-store growth model and said Yesway expects to provide 2027 opening guidance on its next earnings call.

The company is also converting its 24 Yesway-branded stores in Texas to the Allsup’s brand, with completion expected by the end of the first quarter of 2027. Trkla said management expects the conversions to lift performance because of Allsup’s local name recognition, although the company has not quantified that potential benefit. Yesway plans to retain its other 26 Yesway-branded stores.

On acquisitions, Trkla said the company is focusing on smaller portfolios and single-store operators in Oklahoma, Arizona, Texas and New Mexico. He said management sees opportunities to buy smaller businesses at attractive multiples, but did not announce any transactions.

About Yesway (NASDAQ:YSWY)

Yesway is a convenience-store operator serving customers across the central and southwestern United States. Its stores sell fuel, beverages, snacks, grocery and household essentials, along with prepared foods and other convenience items. The company operates under the Yesway and Allsup's brands. Yesway was established in 2015, and its 2019 acquisition of Allsup's expanded its presence and added a long-running convenience-store brand known for its prepared food, including burritos. Yesway and Allsup's locations serve communities in states including Texas, New Mexico, Oklahoma, Kansas and Iowa, as well as other nearby markets.

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