0000950170-25-103987
SEC filingARKO's Q2 2025 revenue declined 16.3% YoY to $2.0B, with operating income up 32% to $56.7M driven by a $20.8M sale-leaseback gain.
For the three months ended June 30, 2025, ARKO reported total revenues of $2.00 billion, a decrease of 16.3% compared to $2.39 billion in the same quarter last year. Fuel revenue fell 16.8% to $1.57 billion, driven by a 6.5% decline in same-store gallons sold and a lower average fuel price. Merchandise revenue dropped 15.6% to $400.1 million, reflecting reduced customer transactions and the impact of store closures and conversions. Other revenues, net increased 13.1% to $29.9 million due to additional income from converted dealer sites.
Operating income rose to $56.7 million from $42.9 million, a 32% increase, largely due to a $20.8 million non-recurring gain from the expiration of a real estate purchase option accounted for as a sale-leaseback. Excluding this gain, operating income would have declined. Net income attributable to ARKO Corp. was $20.1 million compared to $14.1 million in the prior year. Adjusted EBITDA, a non-GAAP measure, decreased to $76.9 million from $80.1 million, reflecting lower fuel and merchandise contribution from converted and closed sites.
Retail segment revenues fell 20.8% to $1.16 billion, with operating income down 8.6% to $80.4 million. Fuel contribution decreased $10.1 million, while merchandise contribution declined $21.3 million, partially offset by $25.9 million lower site operating expenses from store conversions and closures. Same-store fuel gallons fell 6.5% and same-store merchandise sales dropped 4.2%.
Wholesale segment revenues decreased 7.8% to $709.2 million, but operating income rose 9.3% to $23.2 million, driven by increased gallons from converted retail stores (19.4 million incremental gallons) and higher other revenues. Fleet fueling segment revenues fell 15.5% to $120.4 million, while operating income slipped 4.5% to $13.1 million, as fuel margin per gallon improved but gallons sold declined. GPMP segment, primarily intercompany, saw revenues drop 21.4% to $1.01 billion, with operating income down 7.0% to $23.9 million, due to fewer gallons sold to retail.
Management’s transformation plan continues, with 282 retail stores converted to dealer sites since mid-2024, expected to yield greater profitability. The company opened its first new format store in June 2025, with a region-wide rollout planned. Capital allocation focuses on remodeling, EV chargers, and fuel dispenser upgrades. No specific numeric guidance was provided, but the company emphasizes a strong liquidity position of $875 million (including $294 million cash and $582 million available credit). The impact of the recently enacted One Big Beautiful Bill Act is being assessed. Management expects continued execution on store conversions and strategic investments, with seasonal strength in Q3 anticipated.
Total assets stood at $3.61B as of June 30, 2025, a slight decrease from $3.62B at year-end 2024. Cash and cash equivalents were $293.7M, with an additional $22.8M in restricted cash and $6.0M in short-term investments. The company had total debt of $916.4M (net of deferred costs), including $445.7M in Senior Notes, $376.7M on the Capital One line of credit, $88.7M in M&T debt, and $5.3M in insurance premium notes. The current portion of long-term debt increased to $39.9M from $12.9M at year-end. Shareholders' equity was $264.8M, down from $276.9M, primarily due to share repurchases and dividends exceeding net income. The company also reports $100M in Series A redeemable preferred stock. The weighted average discount rate on operating leases was 7.7% and on financing leases 7.9%.
Total lease liabilities (operating and financing) were $1.69B as of June 30, 2025. Future minimum lease payments total $2.93B gross ($2.45B operating, $0.48B financing), with imputed interest of $1.24B. A wage and hour collective action settlement was approved by the court in June 2025, with a $2.0M accrual recorded in Q1 2025 and a potential additional loss of up to $1.2M. As of June 30, 2025, environmental obligations totaled $11.4M, with $6.9M expected to be recovered from insurance/state funds.
During the six months ended June 30, 2025, the company repurchased 3.5M shares for $14.3M (average price $4.07). Authorization remaining: $11.3M. Dividends of $0.03 per share were declared and paid in Q1 and Q2 2025, totaling $6.9M. A further $0.03 per share dividend was declared for payment on August 29, 2025. Capital expenditures totaled $72.7M, including $44.0M under leases. The company borrowed $37.3M in gross new debt and repaid $12.2M. The Program Agreement with Blue Owl terminated in March 2025.
Four reportable segments are disclosed: retail, wholesale, fleet fueling, and GPMP. For the six months ended June 30, 2025, retail generated $2,222.6M in revenue (58% of total) and $120.5M in operating income (51.8% of segment total). Wholesale revenue was $1,349.0M, fleet fueling $240.9M, GPMP $1.2M (external), and all other $14.8M. GPMP's operating income of $45.9M is largely from inter-segment fuel supply margins. The CODM uses segment operating income for resource allocation. Total reportable segment operating income was $232.3M. All operations are within the United States.
Operating cash flow improved to $98.6M from $90.0M, a 9.6% increase. However, capex surged 50% to $72.7M, indicating higher investment intensity. Free cash flow, though not explicitly stated, appears pressured by the capex increase. Shareholder returns totaled $26.4M ($16.6M buybacks + $9.8M dividends), well covered by operating cash flow. Anomalies include a significant rise in capex and a decline in share repurchases. Working capital changes are not detailed in the excerpt but may have contributed to the operating cash flow improvement.