ARKO (NASDAQ:ARKO) outlined its transformation strategy and recent portfolio moves during a company presentation led by Chairman and CEO Arie Kotler, joined by executive Galagher, emphasizing a shift toward clearer segment reporting, retail efficiency initiatives, and growth plans tied to its newly public wholesale and fleet fueling subsidiary, ARKO Petroleum.
Company scale and acquisition-driven growth
Kotler said ARKO is a Fortune 500 company and described it as one of the largest retail operators in the United States, as well as a major wholesale and fleet fuel distributor. Since listing on Nasdaq in 2020, he said ARKO has generated approximately $1.5 billion in cumulative adjusted EBITDA. The company operates in more than 30 states and has about 3,500 locations across its platform, including retail, dealer, and fleet fueling sites.
Dealerization and a renewed focus on core retail markets
A central theme of the presentation was ARKO’s effort to “dealerize” a portion of its retail store base—shifting certain locations into the wholesale segment by leasing them to independent dealers under long-term agreements. Kotler said ARKO previously had more than 1,540 retail locations through 2024, but is now operating around 1,100. The company is targeting further dealerization of about 120 locations after converting 410 locations through December 2025.
Kotler said the dealerization strategy is intended to improve profitability and reduce complexity in regions where ARKO lacks sufficient scale, while allowing the company to concentrate investment on roughly 1,000 core stores. He outlined expected financial benefits from the conversions, including:
- Approximately $20 million of annual profitability improvement from the conversions discussed
- About $10 million reduction in G&A
- Estimated $10 million to $15 million savings in maintenance capex due to fewer company-operated stores
On the retail side, Kotler pointed to a diversified gross profit mix and said 59% of gross profit comes from inside sales and other income. He also described centralized procurement from the company’s Richmond, Virginia headquarters, and a common loyalty program that works across banners including E-Z Mart, fas mart, Scotchman, and others.
Loyalty, fuel promotions, tobacco mix, and foodservice initiatives
Management said industrywide fuel volumes declined in 2024 and continued to decline in 2025, which influenced ARKO’s promotional strategy. Kotler described a campaign called “Fueling America’s Future,” where in-store purchases are tied to cents-per-gallon discounts at the pump, supported by vendor partners. He gave examples ranging from early offers such as buying two Gatorades for $5.55 with a $0.50-per-gallon discount (up to 20 gallons) to current discounts that can reach $2.50 off per gallon under the program.
In tobacco, Kotler said cigarette sales have been declining year after year, prompting the company to invest more heavily in other tobacco products such as vapes and other nicotine products. He said ARKO grew other tobacco products by 4% in 2025 versus 2024 and emphasized the difference in margin profile, citing cigarette margins of roughly 12% to 14% compared with 30%-plus margins for other tobacco products.
Foodservice was presented as another key initiative. Kotler said ARKO launched a food brand called “fas craves” in mid-2025 and is investing in remodels and “new to industry” store builds. He highlighted results from a pilot remodel store in Ashland, Virginia (Store 14), where management cited average daily results showing a 14% increase in inside sales and a 12% increase in gallons on a daily basis. In a later Q&A, Kotler said ARKO had seven remodels underway and was working on another 25 for 2026.
ARKO Petroleum IPO and wholesale/fleet growth plans
Kotler said ARKO’s business mix has shifted materially over time. While retail once represented nearly all EBITDA, he said that by the end of 2025 roughly 50% to 55% of EBITDA came from wholesale and fleet fueling. He said ARKO took those segments public three weeks prior through a carve-out IPO of ARKO Petroleum, which he described as trading at an approximately $900 million valuation. Kotler said the offering raised $200 million in primary proceeds and reduced debt by $184 million. ARKO retains a majority stake, which he cited as 76% during the presentation (and also referenced 75% earlier).
He emphasized that the wholesale model is largely cost-plus and contract-based, describing typical 10-year dealer agreements and stating that the average margin over the past three years was around $0.09 to $0.095 per gallon. Kotler also noted that 86% of the contracts are cost-plus, which he said supports predictable cash flow.
ARKO Petroleum, he said, supplies fuel to 2,053 dealer locations and operates 288 cardlock (fleet fueling) locations. He framed the opportunity against a fragmented market, stating that 63% of U.S. convenience stores are still run by “mom-and-pop” operators and noting that ARKO’s 2.1 billion gallons represent roughly 1% share of an estimated 195 billion gallon gasoline and diesel market.
Kotler highlighted liquidity and leverage metrics at ARKO Petroleum, citing approximately $650 million of liquidity and a cost of capital of about 6.5% to 6.75%. He said net debt-to-adjusted EBITDA was reduced to below 2.5x following the IPO.
For fleet fueling, he said the company plans to build at least 20 cardlock sites in 2026 and had already identified 10, with efforts underway to add another 10. He also said ARKO had two acquisitions in preliminary due diligence representing nearly 400 million gallons combined.
Recent financial results and “dry powder” for execution
Galagher closed the presentation by pointing to what he called improved momentum in ARKO’s results. He cited $249 million of adjusted EBITDA for full-year 2025 and net income of $9.1 million, describing net income as up 9.1%. He also said retail operating expenses fell 13.3%, same-store sales were “basically flat,” and Q4 adjusted EBITDA was up 16%.
In Q4, Galagher highlighted improvements in fuel and merchandise metrics, including retail cents-per-gallon (CPG) up $0.058 per gallon and merchandise margin up 140 basis points. He said “every single metric that we care about was up in Q4 versus the full year,” adding that some of the momentum continued into Q1.
On liquidity, Galagher said ARKO ended the year with $305 million in cash on hand and access to $760 million of additional liquidity—“over $1 billion” in total—positioning the company to continue executing its strategy, invest in stores, and pursue M&A opportunities.
About ARKO (NASDAQ:ARKO)
ARKO Corp (NASDAQ: ARKO) is a downstream energy and convenience retail company based in Matthews, North Carolina. The company’s core operations encompass fuel supply, distribution and retailing through a network of terminals, independent dealer locations and company-operated convenience stores. ARKO’s fuel offerings include branded and unbranded gasoline and diesel, as well as lubricants and other petroleum products marketed under various regional and private labels.
In its retail segment, ARKO operates a portfolio of convenience stores under the Kangaroo Express banner, serving on-site customers with fuel, grab-and-go food items, beverages and everyday household essentials.
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