Arko Corp. Q3 FY2025 earnings call

• Dealerization: Converted ~350 stores since mid-2024, with 185 additional sites committed. Expected cumulative annualized operating income benefit of over $20M before G&A. - fas REWARDS: Average daily loyalty enrollment grew 37% quarter-over-quarter and 43% from promotion start. Added nearly 35,000 new enrollees, total enrolled members at 2.4 million. Enrolled customers spend ~$110/month, 53% more than nonmembers. - OTP and back bar: OTP basket grew ~16% y/o/y, OTP same-store sales up 6.6% with margin rate increase of over 300 basis points. Redesigned back bars drive incremental traffic and margins. - Store remodels: First remodel location reopened, one opened in Aug 2025, third planned Q4 2025, with more in permitting. New format stores built around food-forward model. - New-to-industry stores: Opened Dunkin' and 2 new stores, working on 3 more, with one NTI location in NC exceeding food and beverage sales target. - Fuel performance: Disciplined pricing and network optimization drove strong per gallon margin, despite modest gallon decline. Wholesale and fleet fueling remain strong contributors.

Retail segment: Operating income was approximately $77.5 million in Q3 2025, compared to $85.1 million in the year-ago period. Same-store merchandise sales excluding cigarettes were down 0.9% year-over-year, while total same-store merchandise sales were down 2.2%. Same-store fuel contribution was down approximately $1.3 million with a 4.7% decline in gallons, partially offset by a $0.015 per gallon increase in fuel margin. Wholesale segment: Operating income was $24.1 million in Q3 2025 vs $20.3 million year-ago. Gallons were up approximately 7.5% due to retail sites converted since mid-2024. Fleet fueling segment: Operating income was $12.2 million in Q3 2025 vs $12.6 million year-ago. Total gallons were down 1.6%, with fuel margin at $0.458 per gallon vs $0.435 per gallon year-ago.

• Fourth quarter 2025: Adjusted EBITDA expected $50M-$60M. Retail segment: Q4 average ~1,150 sites, merchandise sales up low-mid single digits, gallons up mid-single digits, fuel margin $0.425-$0.445 per gallon. Wholesale: Mid-teens operating income growth. Fleet fueling: Operating income down mid-to-high single digits. - Full year 2025: Adjusted EBITDA updated to $233M-$243M.

Q: Bobby Griffin asked about store remodels, dealerization impact on same-store sales, and fleet card growth. Arie Kotler responded on store remodel progress, dealerization benefits including reduced CapEx, and fleet card opportunities with 5 planned in 2026.

Q: Ben Wood inquired about sequential organic metric improvement and dealerization impact. Arie Kotler discussed OTP, back bar, and promotion effects, with Jordan Mann mentioning underlying same-store sales and gallon trends.

Q: Daniel Guglielmo asked about best return CapEx projects and dealer appetite. Arie Kotler talked about ROI on capital projects, dealer entrepreneurial nature and continued presence in the industry