0001193125-26-210273
SEC filingArko Corp.'s Q1 2026 operating income turned positive, driven by improved fuel margins and dealer conversions, though revenue declined.
For the three months ended March 31, 2026, Arko Corp. reported total revenues of $1,771.9 million, a decrease of 3.1% from $1,829.5 million in the prior-year period. The decline was primarily driven by a 13.8% drop in merchandise revenue and a 0.9% decrease in fuel revenue, as severe weather and a challenging macroeconomic environment weighed on volumes. Fuel gallons sold fell 5.2% to 464.9 million, while average fuel prices increased. Despite the revenue decline, operating income swung from a loss of $11.8 million to a profit of $10.0 million, fueled by a 65% surge in Adjusted EBITDA to $50.9 million. The key driver was a sharp expansion in fuel margins across all segments, particularly in retail where fuel margin per gallon rose from 37.9 cents to 47.9 cents, benefiting from wholesale cost volatility. Merchandise contribution decreased but margin improved to 33.9% from 33.2%, reflecting better core category execution. Net loss attributable to ARKO Corp. narrowed to $6.6 million from $12.7 million, aided by lower site operating expenses and a one-time wage settlement in the prior year.
Retail Segment: Revenue fell 10.8% to $945.2 million, impacted by 41 store conversions to dealer locations and same-store fuel gallons decline of 3.2%. However, operating income rose 33.5% to $53.6 million as fuel contribution increased 9.4%, driven by a 10-cent improvement in per-gallon margin. Same-store merchandise sales excluding cigarettes turned positive for the first time in two years. Site operating expenses decreased 12.1% due to store closures.
Wholesale Segment: Revenue grew 7.9% to $690.9 million, supported by a net addition of 127 dealer locations (including conversions) and higher fuel prices. Operating income increased 23.5% to $23.0 million, with fuel contribution rising at both fuel supply and consignment locations. Comparable wholesale sites saw volume declines, but higher margins offset.
Fleet Fueling Segment: Revenue increased 7.5% to $129.5 million on higher prices, despite a 3.2% drop in gallons sold at proprietary cardlocks. Operating income rose 8.8% to $12.0 million, driven by favorable diesel margins.
GPMP Segment: Inter-segment revenue grew 6.0% due to higher fixed margins (6.0 cents per gallon vs 5.0 cents) and the transition of fleet fueling to a fixed margin structure. Operating income increased 16.8% to $25.6 million.
Management's transformation plan continues to gain traction, with 41 dealer conversions in Q1 and cumulative 450 since inception, delivering $5.7 million in incremental operating income. Plans include 25 additional remodels featuring the fas craves format, two NTI retail stores, three NTI Dunkin' stores, and 20 NTI fleet fueling locations in 2026. The fas REWARDS loyalty program reached 2.5 million members (up 6.8% YoY). Liquidity remains strong at $1.1 billion, bolstered by the APC IPO proceeds used to repay $206.7 million in debt. The company expects ongoing market volatility to support fuel margins but remains cautious about inflation and geopolitical risks. No specific revenue or earnings guidance was provided.
As of March 31, 2026, the company held $272.1 million in cash and cash equivalents, down from $305.0 million at December 31, 2025. Total debt decreased significantly to $704.4 million from $912.1 million, driven by the use of $206.7 million of APC IPO net proceeds to repay the Capital One Line of Credit. The current portion of long-term debt fell to $13.4 million from $36.7 million. Shareholders' equity increased to $395.4 million from $267.2 million, reflecting the APC IPO and related non-controlling interest of $64.7 million.
The company disclosed environmental liabilities of $10.2 million and an asset retirement obligation of $90.2 million as of March 31, 2026. No other material purchase commitments or contractual obligations were detailed in the Notes. The company is party to various legal actions but believes they will not have a material adverse impact.
During Q1 2026, the company repurchased 0.7 million shares for $4.3 million. Dividends of $0.03 per share were declared and paid, totaling $3.4 million. Capital expenditures were $30.3 million. The company used $206.7 million of APC IPO proceeds to repay debt under the Capital One Line of Credit. APC declared a quarterly dividend of $0.26 per share (pro-rated) and intends to pay $0.50 per share quarterly going forward.
The company operates four reportable segments: Retail, Wholesale, Fleet Fueling, and GPMP. For Q1 2026, total segment operating income was $114.3 million, up from $91.7 million in Q1 2025. Retail generated $53.6 million in operating income on $945.2 million revenue; Wholesale $23.0 million on $690.4 million; Fleet Fueling $12.0 million on $129.5 million; and GPMP $25.6 million on $0.2 million external revenue (with $1,238.4 million in inter-segment revenue). All segments are U.S.-based.