Yesway NASDAQ: YSWY reported record second-quarter results and raised its full-year adjusted EBITDA outlook, citing higher fuel margins, growth in fuel volumes and continued expansion in inside merchandise sales.
Chairman, President and Chief Executive Officer Tom Trkla said the quarter was the strongest in the company’s history, with records for fuel gallons, fuel gross profit, inside merchandise sales, inside merchandise gross profit and store contribution. Adjusted EBITDA rose 35% from a year earlier to $71 million.
“We grew both fuel volumes and inside merchandise sales while expanding margins and generating greater profitability,” Trkla said, describing the results as broad-based rather than dependent on a single factor.
Second-quarter results
Inside merchandise sales increased 4.4% year over year to $240 million. Same-store inside merchandise sales rose 1.2%, or 1.5% excluding 29 stores in Iowa and Kansas that Yesway has agreed to sell and expects to exit by the end of 2026.
Chief Financial Officer Ericka Ayles said the company gained share in merchandise sales and units despite modestly lower traffic associated with higher fuel prices, according to Nielsen data. Total inside merchandise margin expanded about 50 basis points to 35.7%, from 35.2% in the prior-year period. The expansion reflected store growth and pricing actions taken during 2025, she said.
Fuel sales increased 52.7% to $673 million. Same-store fuel gallons rose 1.4%, or 1.8% excluding the Iowa and Kansas portfolio. Fuel margin increased to $0.526 per gallon from $0.413 per gallon a year earlier, supported by fuel-price volatility, widening spreads between diesel and gasoline margins, and a larger diesel mix.
Diesel accounted for about 38% of total fuel volume during the quarter, compared with a 27% average cited by the company for the broader convenience-store industry. Ayles said the company’s newer locations, rural and suburban footprint, and investments in diesel capacity have contributed to that mix.
- Same-store fuel and inside merchandise gross profit increased 14% year over year.
- Same-store fuel gross profit increased 29%, while same-store inside merchandise gross profit rose 2.5%.
- Store contribution rose 29.5% to $88 million.
- Net income increased to $30 million from $24 million in the prior-year period.
Same-store operating expenses increased 4.8%, primarily due to credit card fees, which accounted for approximately 96% of the increase, Ayles said. Same-store labor hours declined 2.4%, the fifth consecutive quarterly reduction, as the company used standardized processes, employee training and technology across its stores.
Guidance raised as fuel margins remain elevated
Yesway increased its full-year 2026 adjusted EBITDA guidance to a range of $235 million to $245 million, from its previous outlook of $210 million to $220 million. The company maintained its expectation for same-store inside merchandise sales growth of 1.25% to 3.25%, capital expenditures of $85 million to $95 million, and six to eight new store openings during 2026.
The updated outlook assumes fuel margins moderate to the low-$0.40-per-gallon range in the second half, consistent with the company’s historical average. Management does not provide formal fuel-margin guidance because of volatility in fuel markets.
Ayles said July trends provided confidence entering the back half of the year. Same-store inside merchandise sales were tracking slightly ahead of the second-quarter rate, fuel gallons remained positive, and fuel margins were in the mid-$0.40-per-gallon range during July.
Management said it was not seeing significant consumer trade-down behavior in stores. Ayles noted some limited movement from premium gasoline to mid-grade fuel, but said that shift was not material.
Development, diesel and portfolio actions
Yesway opened one store during the second quarter and ended the period with 450 locations, including the 29 Iowa and Kansas stores slated for sale. The company opened two stores in the first half and said it remains on track for six to eight openings this year.
Trkla said Yesway has built 92 stores since 2020 through new-to-industry development and raze-and-rebuild projects. Its current development focus is Arizona, Oklahoma, New Mexico and Texas, with Arizona a near-term priority.
The company is also investing in its existing base through dispenser replacements, fuel expansions and additional diesel capacity. Ayles said 45 stores underwent pump changeouts in the previous 12 months and six locations received fuel expansions. Five new-to-industry stores also entered the comparable-store base during the reporting period.
Trkla said newer stores generate diesel contributions above 40%, while also carrying greater food-service contributions. The company expects its portfolio diesel mix to approach or exceed 40% after the Iowa and Kansas sale closes, he said.
Food service remains central to the company’s merchandising strategy, led by Allsup’s beef and bean burrito. Trkla said Yesway sells more than 24 million burritos annually and does not plan to change the product’s price point. The company is rationalizing low-volume food-service items to simplify operations, while evaluating limited new offerings for the fourth quarter and into 2027.
Capital allocation and acquisitions
Yesway ended the quarter with $82 million in cash and cash equivalents and $618 million in total debt, including financing and lease obligations. Operating cash flow totaled $57 million, compared with $36 million in the prior-year quarter, while capital expenditures were about $24 million.
Through June 30, the company had repaid $40 million of debt, including $10 million repaid using initial public offering proceeds. Management identified organic investment, balance-sheet flexibility and selective acquisitions as its capital-allocation priorities.
Trkla said Yesway is becoming more active in evaluating acquisitions while continuing to build stores. He said the company would weigh the relative returns of new development and mergers and acquisitions, with its activity concentrated in Arizona, Texas, New Mexico and Oklahoma. Management said it would remain disciplined and pursue transactions only when expected returns meet its criteria.
About Yesway (NASDAQ:YSWY)
Yesway, traded on NASDAQ under the ticker YSWY, is a U.S.-based convenience store and fuel retail company that operates retail locations under the Yesway brand. The company's core business is the operation of neighborhood convenience stores that provide quick-purchase retail items, on-site prepared foods, beverages and other convenience merchandise. Many locations also feature fuel dispensing, making Yesway a combined convenience and gasoline retailer for everyday consumers and motorists.
Yesway's stores focus on high-turnover product categories typical of the convenience-retail sector, including snacks, cold beverages, coffee, single-serve and prepared food offerings, and commonly purchased household items.
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