ARKO Petroleum Corp. — Second Quarter 2026 Earnings Summary

Financial Performance

• Net income for the quarter increased to $12.2 million from $10.0 million in the prior year period.
• Adjusted EBITDA for the quarter increased to $39.8 million from $38.3 million in the prior year period.
• Net cash provided by operating activities was $10.4 million, compared to $23.2 million in the prior year period.
• Discretionary Cash Flow for the quarter was $27.1 million, compared to $24.2 million in the prior year period.
• Total debt, net was $184.7 million as of June 30, 2026.
• Net Debt was $324.2 million as of June 30, 2026.
• Total liquidity was approximately $724 million, consisting of $15 million in cash and cash equivalents and $709 million in availability under lines of credit.
• Total revenues for the quarter were $1,838.6 million, compared to $1,443.4 million in the prior year period.
• Operating income for the quarter was $23.5 million, compared to $23.8 million in the prior year period.

Guidance and Future Outlook

• The Company reaffirmed its full-year 2026 guidance, expecting Adjusted EBITDA to be approximately $156 million and Discretionary Cash Flow to be approximately $110 million.
• The Company expects to complete the conversion of approximately 70 additional ARKO Retail Sites to dealer locations, along with additional conversions, throughout 2026 and into 2027.
• The Company is targeting the opening of 20 new fleet fueling locations in 2026.

Business Segments and Product Lines

• Wholesale Segment: Operating income increased by $1.6 million compared to the prior year quarter, driven by additional income from 21 ARKO Retail Sites converted to dealer locations, partially offset by reduced income at comparable sites. Fuel contribution increased by $0.9 million; fuel margin at fuel supply locations increased 1.3 cents per gallon, while margin at consignment agent locations decreased 1.5 cents per gallon.
• Fleet Fueling Segment: Fuel contribution decreased by $0.7 million compared to the prior year quarter due to margin compression and higher prior-year margins. Fuel margin per gallon at proprietary cardlock locations decreased to 51.2 cents from 51.7 cents, and at third-party locations decreased to 9.0 cents from 21.2 cents.
• GPMP Segment: Fuel revenue from related party locations increased 18.5% to $716.0 million, driven by higher average fuel prices, partially offset by a 15.1% decrease in gallons sold. Fuel contribution from related party locations increased by $0.2 million due to an increase in the fixed margin from 5.0 cents to 6.0 cents per gallon.
• Strategic Acquisition: The Company signed an agreement to acquire U.S. Petroleum Partners, LLC (USPP), a vertically integrated fuel supply and distribution platform in the Great Lakes region. The transaction is expected to add approximately 400 dealer locations, increase annual fuel volumes by approximately 280 million gallons (14%), and add approximately $30 million in annual Adjusted EBITDA. Consideration includes approximately $205 million in cash plus inventory costs, plus $30 million in Class A common stock held in escrow subject to EBITDA targets.
• Site Conversions: 21 ARKO retail convenience stores were converted to wholesale dealer locations during the quarter, bringing the total conversions since 2024 to 471 sites.

Market and Competitive Landscape

• The Company operates in a volatile market environment, noting that margin compression occurred in the second quarter as market prices declined more quickly than the weighted average inventory cost.
• The GPMP segment faced a challenging macroeconomic environment resulting in a 15.1% decrease in gallons sold to related party locations.
• The acquisition of USPP is expected to strengthen supplier relationships, enhance vertical integration, and expand fee-based earnings streams through the addition of two fuel terminals and expanded transportation capabilities.

Risks and Challenges

• Forward-looking statements are subject to risks including changes in economic and market conditions, the ability to successfully integrate acquired businesses (specifically USPP), and the potential failure to realize expected benefits from acquisitions.
• Risks include liabilities of acquired businesses not known to the Company, changes in applicable laws or regulations (including environmental matters), and the success of the ARKO Parent transformation plan.
• The Company is unable to provide reconciliations of forward-looking non-GAAP measures (Adjusted EBITDA and Discretionary Cash Flow) to GAAP measures for the full year 2026 due to the unavailability of certain required inputs without unreasonable efforts.

Management Commentary and Tone

• Arie Kotler, Chairman, President and CEO, stated the Company delivered "another quarter of strong execution" with growth in Adjusted EBITDA and Discretionary Cash Flow.
• Management expressed confidence in the stability of cash flow generation and the ability to deliver on full-year guidance despite volatile market conditions.
• Management highlighted the strategic importance of the USPP acquisition as a milestone that expands the predominantly fee-based and fixed-margin earnings profile and enhances long-term value creation.

Other Key Points

• The Board of Directors declared a quarterly dividend of $0.50 per share of common stock, payable on August 28, 2026, consistent with an expected annual dividend rate of $2.00 per share.
• Maintenance capital expenditures for the quarter were $2.7 million, and growth capital expenditures were $7.1 million.
• The Company has approximately 70 additional ARKO Retail Sites committed for conversion under letter of intent, contract, or already converted since quarter-end.
• One fleet fueling location opened in March 2026, two opened in July 2026, and 17 are in process.
• The Company's IPO closed on February 13, 2026.