ARKO — Q2 2026 Financial Report Analysis

ARKO's second-quarter revenue jumped 17.4% to $2.35 billion, but almost all of that came from pricier fuel rather than a busier business. ARKO sold 9.0% fewer gallons, and in-store merchandise sales fell 13.2%. Profit attributable to ARKO shareholders fell from $20.1 million to $6.1 million ($0.04 per diluted share, down from $0.16). Most of that drop is a one-off: last year's quarter included a $20.8 million non-cash real-estate gain. Strip that out and the underlying picture is roughly flat. Wider fuel margins, caused by an oil market shaken by the Middle East conflict, offset weaker store traffic and rising store costs.

At a glance

• Retail fuel margin of 48.6 cents per gallon, up from 44.9. Fuel margin is the profit per gallon after paying the wholesale cost of the fuel. It swings quarter to quarter mostly with oil-price volatility, not with how well the stores are run. This quarter it carried the retail business.
• Same-store merchandise sales down 1.7%. "Same-store" compares only stores open a full year in both periods, so closures don't distort the figure. Customers spent less inside the stores, and management says more than half of the decline came from cigarettes.
• Adjusted EBITDA of $72.0 million, down 6.4%. This is management's preferred profit measure: earnings before interest, tax, depreciation and one-off items. It slipped even though fuel margins rose, mainly because same-store operating costs went up, including $3.3 million more in card fees caused by higher pump prices.

Q2 2026 results

A note on the margin: an operating margin around 1% is normal for a fuel retailer. Revenue includes the full pump price of every gallon, and that price contains the wholesale cost of fuel and $247.3 million of excise taxes that pass straight through. A 17% jump in revenue driven by fuel prices therefore says almost nothing about profitability.

Why revenue rose while the business shrank

ARKO's revenue line moves with the price of gasoline. Retail fuel revenue rose $118.9 million (15.9%), which the 10-Q attributes to "a $1.12 per gallon increase in the average retail price of fuel," partly offset by two volume losses:

• 25.1 million fewer gallons from stores closed or handed to dealers. This is deliberate. Since mid-2024 ARKO has been "dealerizing" weaker company-run stores: it turns them over to independent operators who buy fuel from ARKO's wholesale arm and pay rent. Another 21 stores were converted this quarter, bringing the total to 471, and the retail count is down to 1,057 from 1,254 a year ago.
• A 5.7% drop in same-store gallons (12.0 million gallons). The 10-Q blames "the challenging macroeconomic environment including high retail gas prices." In plain terms, people drove less or bought fuel elsewhere when pump prices jumped.

Merchandise revenue fell $52.7 million (13.2%). Of that, $48.7 million came from the closed or converted stores. The remaining $6.0 million was a genuine same-store decline of 1.7%. That is a smaller drop than a year ago (-4.2%), and excluding cigarettes same-store sales fell only 0.9%.

Segment picture

ARKO now reports four segments. Since February 2026, three of them (wholesale, fleet fueling and GPMP, its internal fuel-supply arm) sit inside ARKO Petroleum Corp. (APC), a subsidiary ARKO floated on Nasdaq and still controls with a 73.6% economic stake.

• Retail fell because it now has about 200 fewer stores. Within comparable stores, fuel contribution rose only $0.5 million (0.5%): the higher per-gallon margin (same-store 48.7 vs 45.7 cents, "primarily as a result of significant volatility in the fuel market due to the geopolitical environment") was almost fully offset by selling fewer gallons. Same-store operating expenses rose $8.3 million (5.6%) "primarily due to higher credit card fees associated with elevated fuel prices, insurance, personnel costs and rent."
• Wholesale gained from the converted stores, which added 17.1 million gallons and extra rental income. Volumes at comparable wholesale sites fell enough to fully cancel those new gallons, and total wholesale gallons were down 4.6%.
• GPMP rose mainly because the fixed margin it charges ARKO's own sites went from 5.0 to 6.0 cents per gallon. This is an internal transfer price: the extra profit here is a cost to the other segments, and it washes out in the consolidated totals.

Takeaway: This quarter's profit depended on unusually wide fuel margins created by Middle East oil-price swings, not on more customers. Same-store gallons fell 5.7%, same-store store costs rose 5.6%, and Adjusted EBITDA still declined. Management's own full-year margin guidance assumes those per-gallon margins narrow in the second half.

What the headline numbers hide

• The year-ago one-off drives most of the EPS drop. Q2 2025 included a $20.8 million non-cash gain when a real-estate purchase option tied to the 2021 ExpressStop sale-leaseback expired. Pre-tax income was $16.4 million this quarter against $37.2 million a year earlier. Remove that gain and the prior year falls to about $16.4 million, so underlying pre-tax profit was roughly flat. Even that includes a $2.5 million gain from buying back $37.9 million of ARKO's 5.125% senior notes below face value, booked inside interest expense.
• ARKO shareholders now keep a smaller share of the profit. Since the APC IPO, outside APC shareholders own about 26% of that business, and $3.3 million of this quarter's $9.4 million consolidated net income went to them. In return, ARKO used $206.7 million of the IPO proceeds to pay down its Capital One credit line, and quarterly interest and financing costs fell $5.5 million.
• Cash conversion weakened. First-half operating cash flow was $60.9 million, down from $98.6 million. The 10-Q explains that "higher fuel prices... increased the cost of inventory and other working capital requirements," plus timing from the day of the week the quarter ended. Capital spending was $63.6 million over the same six months, so operating cash flow did not cover capex in the first half.
• Buybacks did little for EPS. Diluted shares were 115.9 million versus 115.4 million a year earlier, essentially unchanged.
• Margin versus volume. Fuel margin will not stay this wide indefinitely. Same-store gallons have fallen for several periods (-6.5% in Q2 2025, -5.7% now), so when margins normalise, the volume losses will show up directly in profit.

Outlook

Management reaffirmed full-year 2026 Adjusted EBITDA of $245 million to $265 million and raised its outlook for the average annual retail fuel margin to 45.5 to 47.5 cents per gallon. The release says "higher margins [are] expected to offset lower retail fuel volumes." The guidance implies a weaker second half on fuel: the first-half retail fuel margin was already 48.2 cents, so a full-year average of 45.5–47.5 cents means the second half runs below that. First-half Adjusted EBITDA was $122.9 million, so the guidance implies $122 million to $142 million for the second half. That is achievable, but it relies on the usually stronger third quarter (the 10-Q notes Q2 and Q3 are seasonally the best).

After quarter-end, APC agreed to buy the business of U.S. Petroleum Partners, a Great Lakes fuel distributor, for about $205 million in cash plus inventory, with up to $30 million more in APC stock held in escrow and released only if performance targets are met. Management expects it to add about 280 million gallons a year (roughly 14% of APC's trailing volume), more than 400 dealer sites and about $30 million of annualized Adjusted EBITDA. That shifts ARKO further toward wholesale fuel distribution and away from running stores itself, the same direction as the dealerization program.

Our read: ARKO is becoming a fuel wholesaler with a shrinking retail chain attached. Dealerization added $2.7 million of incremental operating income this quarter (before G&A), and the wholesale and GPMP segments grew, but the remaining stores are losing gallons and seeing costs rise faster than sales. Two things to watch in Q3: whether same-store merchandise sales turn positive outside cigarettes, and how far retail fuel margin falls from the 48-cent range as oil prices settle. The full-year EBITDA range depends mostly on the second of those.

Source: ARKO Corp. Form 10-Q for the quarter ended June 30, 2026 (filed 2026-08-07); full-year guidance and acquisition terms from the company's Q2 2026 earnings release (Form 8-K Exhibit 99.1, 2026-08-07).