Q2 2026 Arko Corp. Earnings Call Transcript
Key Points
- ARKO Corp (ARKO) announced a strategic acquisition of US Petroleum Partners (USPP) by its subsidiary APC, expected to add approximately 280 million gallons of annual fuel volume and $30 million in annual adjusted EBITDA, enhancing scale and vertical integration.
- First half 2026 adjusted EBITDA increased 14% year-over-year, demonstrating strong execution despite a challenging consumer environment and volatile fuel prices.
- Merchandise margin expanded by 110 basis points to 34.7% in Q2, driven by disciplined category management, vendor-supported promotions, and the dealerization program, helping offset softer sales.
- Loyalty program engagement is strong, with enrolled members spending more than two times more than non-members, and the new $0.10 Tuesdays offering drove double-digit growth in gallons sold on Tuesdays.
- The company repurchased $38 million of its senior notes at a discount, reducing debt and improving balance sheet flexibility, while maintaining total liquidity of approximately $1 billion.
- Dealerization program continues to progress, with 471 stores converted since inception and approximately 70 additional stores committed, moving the company toward a lower-cost, more capital-efficient model.
- Second quarter adjusted EBITDA declined to $72 million from $76.9 million in the prior year, impacted by increased credit card fees of $3.3 million due to elevated fuel prices.
- Same-store gallons sold decreased 5.7% year-over-year, reflecting softer consumer demand and higher fuel prices, which pressured retail volumes.
- Same-store merchandise sales, excluding cigarettes, declined 0.9%, and overall same-store merchandise sales were down 1.7%, with June showing notable softening.
- Fleet fueling segment experienced margin compression, with fuel margin per gallon down to $0.469 from $0.49 in the prior year, due to falling index prices and higher-than-average prior-year margins.
- The company faces ongoing headwinds from elevated fuel prices, which are expected to continue pressuring consumer spending and credit card fees, creating uncertainty for the back half of 2026.
- SNAP EBT sales declined due to tightened eligibility rules in certain states, negatively impacting same-store sales growth by approximately 75 basis points in the quarter.
Greetings and welcome to ArcoCorp's Second Quarter 2026 Earnings Conference Call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press *0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Priya Trivedi, Investor Relations.
Thank you.
Thank you. Good morning and welcome to ARCO's second quarter 2026 earnings conference call and webcast. On today's call are Ari Kotler, Chairman, President and Chief Executive Officer and Gallagher Jeff, Chief Financial Officer.
Our earnings press release and quarterly report on Form 10-Q for the second quarter of 2026 as filed for the SEC are available on Arco's website at www.arcocorp.com.
During our call today, unless otherwise stated, management will compare results to
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