ARKO Corp. cut its first-quarter loss and sharply lifted profitability as fuel margins improved, dealer conversions accelerated and the company used proceeds from a subsidiary IPO to pay down debt.
The company reported a net loss of $5.6 million for the quarter ended March 31, 2026, narrowing from a loss of $12.7 million a year earlier. Adjusted EBITDA rose 65.1% to $50.9 million from $30.9 million.
Revenue trends were mixed, but the company posted stronger margin performance across key lines. Same-store merchandise sales excluding cigarettes rose 0.4%, reversing a 5.2% decline a year ago and marking what the company called its strongest ex-cigarette performance in two years. Overall same-store merchandise sales fell 0.5%, a smaller decline than the 6.9% drop in the prior-year quarter.
Merchandise margin widened to 33.9% from 33.2%. Merchandise contribution fell to $103.5 million from $117.6 million, a drop of $14.1 million, or 12.0%, driven mainly by store conversions and closures. Same-store merchandise contribution was essentially flat at $101.2 million, down from $101.8 million.
Fuel performance improved more sharply. Retail same-store fuel margin rose to 48.0 cents per gallon from 38.7 cents per gallon, while retail same-store fuel contribution increased 20.1%. Total retail fuel contribution climbed to $93.3 million from $85.3 million, and fuel margin increased to 47.9 cents per gallon from 37.9 cents per gallon. Same-store fuel gallons sold fell 3.2%, but that was an improvement from a 6.2% decline a year earlier.
Site operating expenses in retail rose to $150.9 million from $146.1 million on a same-store basis, but total site operating expenses fell $21.4 million, or 12.1%, to reflect the impact of stores that were closed or converted to dealer locations.
In wholesale, fuel gallons sold at fuel supply locations increased to 198.4 million from 191.1 million, while consignment agent gallons slipped to 35.5 million from 36.5 million. Wholesale fuel contribution rose to $12.7 million from $11.5 million at fuel supply locations and to $10.2 million from $8.6 million at consignment agent locations. Fuel margin per gallon improved to 6.4 cents from 6.0 cents at fuel supply locations and to 28.8 cents from 23.5 cents at consignment agent locations.
Wholesale operating income increased $4.4 million year over year. Other revenues, net, rose $6.2 million, while site operating expenses increased $5.2 million, both largely tied to converted dealer locations.
Fleet fueling also improved. Fuel contribution increased to $16.7 million from $15.3 million, with proprietary cardlock fuel contribution up to $15.9 million from $14.7 million and third-party cardlock contribution up to $0.8 million from $0.6 million. Fuel margin per gallon rose to 52.2 cents from 46.1 cents at proprietary cardlock locations and to 23.4 cents from 18.7 cents at third-party locations.
ARKO ended the quarter with about $1.1 billion in total liquidity, including $272 million in cash and cash equivalents and $794 million of credit availability. Outstanding debt was about $704 million, leaving net debt at roughly $432 million.
During the quarter, ARKO’s subsidiary ARKO Petroleum Corp. completed an IPO that generated about $206.8 million in net proceeds. The company used $206.7 million of that amount to reduce debt.
The company converted 41 retail stores to dealer locations in the quarter, bringing total conversions since the program began in 2024 to 450 sites. It said about 75 more sites are already committed or converted since quarter-end. Retail store count fell to 1,079 from 1,329 a year earlier, while wholesale sites increased to 2,126 from 1,961 and fleet fueling sites rose to 292 from 280.
Capital expenditures totaled $30.9 million in the quarter, and the board declared a quarterly dividend of $0.03 per share, unchanged from the company’s cash-return program. As a result of these announcements, the company's shares have moved 0.61% on the market, and are now trading at a price of $6.61. For more information, read the company's full 8-K submission here.
