0001193125-25-266837
SEC filingRevenue declined 11.3% in Q3 2025 due to lower fuel prices and macroeconomic headwinds, while net income rose 39% on lower tax and interest expense.
For Q3 2025, total revenue declined 11.3% year-over-year to $2.02 billion, driven by a 10.3% decrease in fuel revenue ($1.60B vs $1.78B) and a 17.0% drop in merchandise revenue ($389.7M vs $469.6M). The fuel revenue decline was attributed to lower average fuel prices and reduced gallon sales amid a challenging macroeconomic environment. Merchandise revenue fell primarily due to store closures and conversions to dealer sites since mid-2024, along with a 2.2% same-store sales decline. Despite the revenue headwinds, net income attributable to common shareholders improved to $12.0 million from $8.2 million, benefiting from a $5.9 million reduction in income tax expense and lower interest costs. Operating income fell to $35.9 million from $41.6 million, as lower fuel and merchandise contribution and higher G&A were only partially offset by savings from closed/converted stores. Adjusted EBITDA decreased to $75.2 million from $78.8 million.
Retail segment revenue fell 18.8% to $1.15 billion, with operating income down 8.9% to $77.5 million. The segment continued to shed stores through conversion to dealer sites (65 conversions in Q3, 194 YTD). Same-store fuel gallons declined 4.7%, while fuel margin per gallon improved to 43.6 cents from 41.3 cents. Merchandise margin expanded to 33.7% from 32.8%, driven by pricing and procurement initiatives. Wholesale segment revenue edged up 1.7% to $739.7 million, with operating income surging 18.9% to $24.1 million, benefiting from incremental gallon sales from converted retail stores. Fleet fueling revenue dipped 2.6% but operating income fell only 3.4%, as fuel margins improved on favorable diesel pricing. GPMP segment revenue declined 11.2%, and operating income fell 5.0% due to lower inter-segment volumes.
Management outlined continued execution of the Transformation Plan, including further retail-to-wholesale conversions (347 total since mid-2024) and a pilot new format store program. The OBBB Act is expected to reduce full-year 2025 cash taxes by approximately $8.0 million. No quantitative guidance was provided, but the company emphasized maintaining liquidity ($891 million) and opportunistic capital allocation toward acquisitions and store investments. Macro uncertainties (inflation, weather, competition) persist, but the conversion strategy is expected to improve profitability.
As of September 30, 2025, ARKO Corp. held $306.9 million in cash and cash equivalents, plus $18.8 million in restricted cash and $6.3 million in short-term investments. Total assets stood at $3.59 billion, with total liabilities of $3.21 billion. Shareholders' equity was $273.1 million, down slightly from $276.9 million at year-end 2024. The company's total debt (net) was $911.6 million, comprising $445.9 million in Senior Notes, $85.1 million in M&T debt, $377.0 million in Capital One Line of Credit, and $3.5 million in insurance premium notes. The current portion of long-term debt was $37.0 million. The fair value of the Senior Notes was estimated at $382.7 million, below the gross carrying value of $450 million.
The Notes disclose environmental liabilities of $11.1 million as of September 30, 2025, with expected recoveries of $6.8 million from insurance and state funds. Asset retirement obligations totaled $89.1 million. The company has operating lease liabilities of $1.47 billion and financing lease liabilities of $213.0 million. Future minimum payments for operating leases are $2.41 billion, with $184.6 million due within the next twelve months. For financing leases, future payments total $476.7 million, with $28.7 million due within one year. A wage and hour collective action settlement was accrued at $2.0 million, with potential additional loss of up to $1.2 million.
During the nine months ended September 30, 2025, ARKO repurchased 4.5 million shares for $18.5 million at an average price of $4.15 per share. The share repurchase program has $7.2 million remaining capacity. Dividends of $0.03 per share were paid quarterly, totaling $10.3 million for the nine months. The company also paid $4.3 million in Series A redeemable preferred stock dividends. Capital expenditures were $97.6 million, with $51.95 million in property and equipment acquired under leases. Net debt increased by $30.6 million, with $37.3 million in new borrowings and $18.6 million in repayments.
ARKO operates four reportable segments: Retail, Wholesale, Fleet Fueling, and GPMP. For the nine months ended September 30, 2025, Retail generated $3.37 billion in revenue (down 18.5% YoY) and $198.0 million in operating income. Wholesale revenue was $2.09 billion (down 3.7% YoY) with $66.0 million operating income. Fleet Fueling revenue was $365.8 million (down 9.7% YoY) with $36.3 million operating income. GPMP external revenue was $1.4 million, but inter-segment revenue was $3.72 billion, with $70.2 million operating income. All Other segment had $21.9 million revenue and a $0.2 million operating loss. All segments are U.S.-based.
Net cash provided by operating activities decreased to $148.0M for the nine months ended September 30, 2025, compared to $199.1M in the same period of 2024, a decline of 25.7%. The cash flow statement does not provide net income in the excerpt, preventing a direct CFO-to-Net Income comparison, but the CFO decline suggests weaker operational cash generation.
Capital expenditures (capex) rose to $97.6M from $77.8M, a 25.5% increase, indicating higher investment intensity. Free cash flow (CFO minus capex) was approximately $50.4M, down sharply from $121.3M in the prior period.
Capital returns to shareholders totaled $35.4M ($20.8M in share repurchases, $10.3M in common dividends, and $4.3M in preferred dividends), which exceeded free cash flow, implying reliance on other sources (debt or cash reserves) to fund distributions.
Anomalies include proceeds from sale of property and equipment dropping from $51.4M to $3.9M year-over-year, and a $42.4M non-cash extinguishment of financial liability in a sale-leaseback transaction. Business acquisitions were nil in 2025 versus $54.5M in 2024. Working capital details (e.g., changes in receivables, payables) were not provided in the excerpt, but the slight unfavorable swing in operating cash flow warrants monitoring in future filings.