0001193125-26-071464
SEC filingRevenue declined 12.5% due to lower fuel prices and store conversions, but operating income rose 8.8% on higher fuel margins and a sale-leaseback gain.
ARKO Corp., based in Richmond, Virginia, describes itself as one of the largest operators of convenience stores and wholesalers of fuel in the United States, ranked by store count and gallons sold. As of December 31, 2025, the company operated 1,118 retail convenience stores under more than 25 regional store brands, which it collectively calls a "Family of Community Brands." These brands have been in existence for an average of more than 50 years. The company also supplied fuel to 2,099 dealer locations and operated a fleet fueling business with 295 proprietary and third-party cardlock locations. ARKO is geographically diversified, operating in the District of Columbia and more than 30 states across the Mid-Atlantic, Midwestern, Northeastern, Southeastern, and Southwestern U.S.
ARKO operates in four segments: retail, wholesale, fleet fueling, and GPMP. The retail segment includes the operation of convenience stores selling fuel and merchandise, generating approximately $4.4 billion in total revenues for the year ended December 31, 2025, with in-store sales and other revenues of about $1.5 billion. Gross profit from in-store merchandise accounted for 52.4% of the retail segment's gross profit. The wholesale segment supplies fuel to dealers, sub-wholesalers, and bulk/spot purchasers, selling 989.1 million gallons in 2025 and generating revenues of approximately $2.8 billion. The fleet fueling segment operates cardlock locations and issues proprietary fuel cards, selling 142.8 million gallons and generating revenues of about $483.8 million in 2025. The GPMP segment engages in wholesale distribution of fuel to substantially all sites in the retail and wholesale segments, selling at cost plus a fixed margin (5.0 cents per gallon through December 31, 2025, and 6.0 cents thereafter).
ARKO's retail offering includes a wide array of grab-n-go hot and cold prepared foods, dispensed beverages, packaged beverages, beer, candy, salty snacks, bakery items, general merchandise, cigarettes, and other tobacco products. The company has foodservice offerings at approximately 965 stores, including hot and cold grab-n-go items, and 140 stores with delis offering fried chicken, pizza, and breakfast sandwiches. It also operates approximately 90 quick service national brand restaurants such as Dunkin' and Subway. The company sells fuel at 1,095 of its retail sites and had 211 electric vehicle chargers at 72 locations across 16 states as of December 31, 2025. The fas REWARDS loyalty program is available in all retail stores, with approximately 2.4 million enrolled customers. The company launched its new fas craves format in June 2025, focusing on foodservice.
ARKO reaches customers through multiple channels: company-operated retail stores, wholesale fuel supply to dealers and sub-wholesalers, fleet fueling via cardlock locations and proprietary fuel cards, and internal distribution through GPMP. The company's retail stores are centrally operated with consistent marketing and merchandising strategies, but occasionally offer regional items. The wholesale segment supplies fuel under fuel supply contracts (1,801 sites) and consignment contracts (298 sites). The fleet fueling segment sells to commercial and municipal entities, with diesel fuel accounting for approximately 80% of fleet fueling sales. No single customer concentration is disclosed in the Business section.
The retail convenience market, wholesale motor fuel distribution, and fleet fueling business are all characterized by intense competition and fragmentation. Named competitors include 7-Eleven/Speedway, Circle K, Casey's, Murphy USA, Quik Trip, Royal Farms, Sheetz, and Wawa. The company also faces competition from grocery stores (Costco, Wal-Mart), dollar stores (Family Dollar, Dollar General), and pharmacies (CVS, Walgreens). In wholesale, ARKO competes with refiners and independent motor fuel distributors. For fleet fueling, cardlocks compete with retail gas stations and delivered fuel providers. The company believes primary barriers to entry are the significant financial strength required for fuel supply agreements and competition from other fuel companies and retail chains.
ARKO's strategy is centered on its multi-year Transformation Plan, which includes converting retail stores to dealer locations (dealerization) to realize higher profit from fuel supply agreements and rental income. During 2025, the company converted 256 retail stores to dealer locations, with a total of 409 conversions since mid-2024. Retail organic growth strategies focus on enhanced marketing and merchandising, the fas REWARDS loyalty program, remodels featuring the fas craves format, and new-to-industry (NTI) store development. The wholesale segment aims to grow through further dealer conversions. Fleet fueling growth targets increasing volumes with existing accounts, equipment upgrades, and 20 NTI fleet fueling locations in 2026. Inorganic growth is pursued through a dedicated M&A team, leveraging industry consolidation.
As of December 31, 2025, ARKO employed 9,748 employees, with 8,438 employed in stores and 1,310 in corporate and field management positions. None of the employees are represented by a labor union. The company emphasizes training programs, including role-specific targeted training, delivered through a Learning Management System. Employee benefits include medical, dental, 401(k) retirement plan, and insurance. The company uses mobile technology for recruiting and has implemented virtual recruiting methods.
For the year ended December 31, 2025, total revenue decreased 12.5% to $7.64 billion from $8.73 billion in 2024. The decline was driven by a 12.0% drop in fuel revenue ($6.04B vs $6.86B) due to lower average fuel prices and a 5.4% decrease in same-store fuel gallons sold, exacerbated by severe weather in early 2025. Merchandise revenue fell 16.1% to $1.48B, primarily from store closures and conversions (256 retail stores converted to dealer locations in 2025) and a 4.1% decline in same-store merchandise sales, with cigarettes accounting for over half the drop. Other revenues increased 15.5% to $122.1M, largely from additional income on converted dealer locations.
Operating income rose 8.8% to $102.3 million (from $94.0M), despite the revenue headwinds. Key drivers included higher same-store fuel margins (42.8 cents per gallon vs 39.6 cpg), a $20.8 million gain from the expiration of a real estate purchase option, and cost savings from store conversions. Fuel costs decreased 12.6% and merchandise costs fell 17.3%, roughly in line with revenue declines. Site operating expenses dropped 10.3% to $785.4M, reflecting lower costs from closed/converted stores, partially offset by incremental expenses from the SpeedyQ acquisition. General and administrative expenses rose 1.7% to $165.7M, partly due to a $2.8M increase in share-based compensation. Net income attributable to ARKO Corp. increased to $22.7 million from $20.8 million, while Adjusted EBITDA was nearly flat at $248.7 million.
Retail Segment: Revenue fell 18.1% to $4.38B, with fuel revenue down 19.2% and merchandise revenue down 16.1%. Operating income decreased 5.0% to $268.4M, as merchandise contribution dropped 13.8% ($79.8M) due to store conversions and lower same-store sales. However, fuel contribution per gallon improved to 42.8 cpg (from 39.6 cpg), and same-store fuel contribution rose $1.5M. Merchandise margin expanded to 33.7% from 32.8%, reflecting better category management.
Wholesale Segment: Revenue declined 2.7% to $2.75B, but operating income increased 12.0% to $89.4M. The improvement was driven by $23.1M higher other revenues and $4.2M higher fuel contribution from retail stores converted to dealer locations (79.7 million incremental gallons). Fuel margins at supply locations improved to 6.3 cpg (from 6.0 cpg), while consignment margins rose to 27.5 cpg (from 27.4 cpg).
Fleet Fueling Segment: Revenue fell 7.8% to $483.8M, but operating income was essentially flat at $48.6M. Fuel contribution increased $1.4M, with proprietary cardlock margins rising to 49.0 cpg (from 46.0 cpg) on favorable diesel margins. Site operating expenses increased $1.2M due to higher rent and insurance.
GPMP Segment: Inter-segment revenue declined 13.8% to $4.85B, and operating income fell 6.2% to $92.9M, primarily due to fewer gallons sold to the retail segment at a fixed margin of 5.0 cpg.
Management's strategic focus remains on the Transformation Plan, which includes converting a meaningful number of additional retail stores to dealer locations in 2026 (409 converted since mid-2024, generating $11.8M incremental operating income in 2025). Capital allocation priorities include remodeling stores under the new fas craves format (approximately 25 planned), opening new-to-industry retail stores and fleet fueling locations (20 targeted NTI fleet fueling sites), and strategic acquisitions. The company also plans to relaunch its fas REWARDS loyalty app in Q1 2026 with personalized features. The APC IPO closed on February 13, 2026, with proceeds used to repay $184M of the Capital One Line of Credit, strengthening the balance sheet. Liquidity stood at approximately $888 million as of December 31, 2025, including $305M cash and $583M available credit. The company expects capital spending to focus on remodeling, NTI stores, and fleet fueling locations, with no adverse liquidity impact anticipated.
As of December 31, 2025, ARKO Corp. held cash and cash equivalents of $305.0M (plus $18.7M restricted cash) and short-term investments of $6.5M, for a total cash and liquid investments of $330.2M. Total debt stood at $912.1M (including current portion of $36.7M), up from $881.0M at the end of 2024. The debt composition includes $446.1M of Senior Notes (5.125% due 2029), $377.4M drawn on the Capital One revolving line of credit (with $418.7M unused), $84.3M of M&T debt, and $4.3M of insurance premium notes. Shareholders' equity was $267.2M, down from $276.9M in 2024 due to share repurchases and dividends exceeding net income. The balance sheet also reflects significant right-of-use assets and lease liabilities (operating leases: $1.34B assets, $1.45B liabilities; financing leases: $145M assets, $213M liabilities) and financial liabilities of $126.4M related to off-market sale-leasebacks.
The Notes do not disclose a separate table of purchase commitments or other contractual obligations in aggregate. However, several commitments are identified: (i) The Company has a Program Agreement with Blue Owl that terminated in March 2025; (ii) The Company had warrants (Public and Private) that expired on December 22, 2025; (iii) The Company has asset retirement obligations of $89.3M; (iv) Deferred vendor income totaling $53.5M ($16.5M current, $37.0M non-current); (v) Environmental liabilities of $10.6M ($2.7M current, $7.9M non-current); and (vi) Additional Consideration and Contingent Consideration to Empire sellers, with the final payment made on October 6, 2025. The Notes confirm the APC IPO subsequent to year-end, with net proceeds of $183.2M used to repay $184.0M of the Capital One Line of Credit.
In FY2025, the Company repurchased 6,610,478 shares for $27.96M, paid $13.62M in common dividends ($0.12 per share annual dividend) and $5.75M in Series A redeemable preferred stock dividends. Capital expenditures totaled $127.3M (1.67% of sales), supplemented by $57.6M of property and equipment acquired under leases. Net debt proceeds were $38.8M, and debt repayments were $24.1M. Share-based compensation was $15.2M. The Company also received proceeds from sale-leasebacks (none in FY2025, but $0 in FY2024 and $80.4M in FY2023). The gain from a failed sale-leaseback conversion was $20.8M in 2025.
The Notes identify four reportable segments (retail, wholesale, fleet fueling, GPMP) but only provide consolidated financial results at the total company level in the statements. Segment-level revenue, operating income, or margins are not separately disclosed in the Notes section. The retail segment consolidates fuel ($6.04B), merchandise ($1.48B), and other revenues ($122M). Geographic operations span >30 U.S. states and the District of Columbia with 1,118 retail stores, 2,099 dealer supply points, and 295 cardlock locations. No geographic revenue breakdown is provided.
Arko Corp.'s operations are sensitive to U.S. economic conditions, including inflationary pressures, interest rates, and unemployment. However, a distinct emphasis is placed on trade policy: recent U.S. tariff increases on foreign goods, along with potential retaliation, could force price increases or margin compression. The uncertainty around future tariffs and trade agreements is highlighted as a material risk.
Global conflicts (Russia-Ukraine, Israel-Hamas, Venezuela, Iran) are cited as risks to energy markets, impacting crude oil and refined product prices. Fuel sales constitute 79% of total revenue, making margins highly sensitive to wholesale price volatility. The company also notes that high diesel prices can reduce trucking demand, indirectly lowering fuel sales volume.
Tobacco products represent 38% of merchandise revenue, making the company vulnerable to legislation restricting flavored/menthol products, advertising, or taxation. Environmental regulations, particularly those addressing climate change (e.g., emissions limits, EV mandates), pose long-term demand risk for petroleum fuels. The recent U.S. policy shift under the current administration may alter the pace of regulations, but state-level actions remain a concern.
Arko faces intense competition from larger chains with greater resources. Its growth strategy relies on acquisitions, conversions of retail to dealer locations, and remodeling; integration failures or disappointing performance could harm results. The company also depends on a few principal suppliers for fuel and merchandise, and dealer fuel supply agreements must be renegotiated periodically (avg. 5.4 years remaining).
Approximately 50% of debt carries variable rates, exposing Arko to interest rate increases. Debt covenants restrict operations. The February 2026 IPO of a minority stake in APC (wholly owned before) introduces conflicts of interest, as Arko retains 75.9% economic interest and overlapping management. The market price of Arko stock is tied to APC's performance.
Reliance on IT systems for pricing, loyalty, and operations creates vulnerability to cyberattacks. Payment card data security (PCI DSS) compliance is mandatory. Though no material incidents have occurred, the risk is deemed significant, with potential for fines, litigation, and reputational harm.
Overall, the risk factors are comprehensive, with notable emphasis on tariffs, fuel margin volatility, tobacco regulation, and structural conflicts arising from the APC IPO.
The company generated $71.5 million in operating cash flow for FY2025, a significant decline from $125.0 million in the prior year. This decrease was primarily driven by unfavorable working capital changes, including a $61.8 million use of cash from accounts receivable and inventory. Capital expenditures (capex) of $76.7 million were slightly above operating cash flow, leading to a negative free cash flow of -$5.2 million. The investing cash flow was heavily impacted by $470.1 million spent on acquisitions, net of cash acquired. Financing activities provided $34.2 million, largely from borrowings. No share repurchases or dividends were reported. The negative free cash flow and reliance on debt financing highlight a period of aggressive expansion, with cash flow from operations not covering total investment outflows. The decline in CFO compared to net income may warrant further review of earnings quality, as the large working capital draw suggests potential buildup of receivables or inventory.