ARKO's Revenue Slides 13% Amid Expense Cuts, Net Income Holds Steady

Ticker: ARKO · Form: 10-Q · Filed: 2025-11-05T00:00:00.000Z

Sentiment: mixed

Topics: Convenience Stores, Fuel Distribution, Wholesale Fuel, Retail Operations, Cost Management, Share Repurchase, 10-Q Analysis

Related Tickers: ARKO, ARKOW, CASY, ATD.TO

TL;DR

**ARKO's revenue dip is concerning, but their cost control is keeping them afloat – a cautious hold for now.**

AI Summary

ARKO Corp. reported a mixed financial performance for the nine months ended September 30, 2025. Total revenues decreased by 13.2% to $5.849 billion from $6.739 billion in the prior year, primarily driven by a 13.0% decline in fuel revenue to $4.616 billion and a 15.3% drop in merchandise revenue to $1.144 billion. Despite the revenue decline, net income attributable to ARKO Corp. decreased only slightly by 9.8% to $20.885 million from $23.143 million, largely due to a significant reduction in total operating expenses by 13.2% to $5.781 billion. Net income attributable to common shareholders also saw a modest decrease to $16.584 million from $18.838 million. The company generated $148.009 million in net cash from operating activities, a decrease from $199.130 million in the prior year, and used $93.725 million in investing activities, including $97.641 million for property and equipment purchases. ARKO also repurchased $20.773 million of common stock during the period, contributing to a decrease in total shareholders' equity to $273.126 million from $276.866 million at December 31, 2024.

Why It Matters

ARKO's ability to maintain relatively stable net income despite a substantial revenue drop highlights effective cost management, which is crucial for investor confidence in a competitive and volatile fuel and convenience store market. For employees, this could signal job security despite market headwinds. Customers might see continued competitive pricing and service as ARKO optimizes operations. The broader market will watch if ARKO's 'dealerization' strategy, converting retail stores to dealer sites, can sustainably improve profitability and market share against larger players like Alimentation Couche-Tard and Casey's General Stores.

Risk Assessment

Risk Level: medium — The company faces medium risk due to a significant 13.2% decline in total revenues for the nine months ended September 30, 2025, from $6.739 billion to $5.849 billion. This revenue pressure, coupled with a decrease in net cash provided by operating activities from $199.130 million to $148.009 million, indicates potential challenges in top-line growth and cash generation, despite effective cost management.

Analyst Insight

Investors should monitor ARKO's upcoming earnings calls for details on their 'dealerization' strategy and its impact on future revenue and profitability. While cost controls are positive, sustained revenue declines could erode long-term value, so investors should consider holding existing positions but deferring new investments until revenue trends stabilize.

Financial Highlights

revenue
$5.849B
net Income
$20.885M
eps
$0.10
revenue Growth
-13.2%

Revenue Breakdown

SegmentRevenueGrowth
Fuel$4.616B-13.0%
Merchandise$1.144B-15.3%

Key Numbers

Key Players & Entities

FAQ

How did ARKO Corp.'s revenue perform in the nine months ended September 30, 2025?

ARKO Corp.'s total revenues for the nine months ended September 30, 2025, decreased by 13.2% to $5.849 billion, down from $6.739 billion in the same period of 2024. This decline was primarily driven by a 13.0% decrease in fuel revenue and a 15.3% decrease in merchandise revenue.

What was ARKO Corp.'s net income for the third quarter of 2025?

For the three months ended September 30, 2025, ARKO Corp. reported net income attributable to common shareholders of $12.009 million, an increase from $8.228 million in the third quarter of 2024.

Did ARKO Corp. repurchase any common stock during the nine months ended September 30, 2025?

Yes, ARKO Corp. repurchased common stock totaling $20.773 million during the nine months ended September 30, 2025. This contributed to an increase in treasury stock to $127.037 million.

What were ARKO Corp.'s cash flows from operating activities for the nine months ended September 30, 2025?

ARKO Corp. generated $148.009 million in net cash from operating activities for the nine months ended September 30, 2025. This represents a decrease from $199.130 million in the comparable period of 2024.

How many retail convenience stores does ARKO Corp. operate as of September 30, 2025?

As of September 30, 2025, ARKO Corp., through its subsidiary GPM Investments, LLC, operated 1,182 retail convenience stores. Additionally, it supplied fuel to 2,053 gas stations operated by dealers.

What is ARKO Corp.'s strategy regarding its retail stores?

ARKO Corp. is implementing a 'transformation plan' that includes the planned conversion of certain retail stores within its retail segment to dealer sites within its wholesale segment, a process referred to as 'dealerization.' This strategy aims to optimize its operational footprint.

What are the key risks ARKO Corp. highlights in its 10-Q filing?

Key risks highlighted include changes in economic conditions, the success of its transformation plan and 'dealerization' strategy, significant changes in tobacco product consumption, volatility in wholesale motor fuel prices, and the highly competitive industry in which it operates.

How did ARKO Corp.'s operating expenses change in the nine months ended September 30, 2025?

ARKO Corp.'s total operating expenses decreased by 13.2% to $5.781 billion for the nine months ended September 30, 2025, down from $6.656 billion in the prior year. This reduction helped mitigate the impact of declining revenues on net income.

What was ARKO Corp.'s diluted earnings per share for the nine months ended September 30, 2025?

ARKO Corp.'s diluted earnings per share attributable to common shareholders for the nine months ended September 30, 2025, was $0.14. This is a slight decrease from $0.16 reported for the same period in 2024.

What is the total value of ARKO Corp.'s goodwill as of September 30, 2025?

As of September 30, 2025, ARKO Corp.'s goodwill remained stable at $299.973 million, consistent with the value reported at December 31, 2024.

Risk Factors

Industry Context

ARKO Corp. operates in the highly competitive convenience store and fuel retail industry. This sector is characterized by thin margins, significant capital investment in real estate and fuel infrastructure, and sensitivity to fuel price volatility and consumer spending habits. Trends include a focus on in-store experience, private label brands, and adapting to evolving consumer preferences for food and beverage offerings.

Regulatory Implications

As a fuel retailer, ARKO faces stringent environmental regulations concerning fuel storage, handling, and emissions. Compliance with these regulations, including mine safety disclosures, is critical to avoid penalties and operational disruptions. Changes in fuel tax policies or environmental standards could also impact profitability and operational costs.

What Investors Should Do

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Key Dates

Glossary

Net Income Attributable to ARKO Corp.
The portion of the company's profit that belongs to its shareholders after all expenses, taxes, and preferred stock dividends have been paid. (Indicates the company's profitability for its common shareholders, showing a slight decrease of 9.8% to $20.885 million.)
Net Cash from Operating Activities
The cash generated or used by a company's normal business operations over a period. (Shows ARKO generated $148.009 million, a decrease from the prior year, indicating a reduced ability to fund operations and investments from core business activities.)
Treasury Stock
Shares of a company's own stock that it has repurchased from the open market. (ARKO's treasury stock increased to $127.037 million, reflecting $20.773 million in share repurchases during the period.)
Diluted EPS
Earnings per share calculated using the weighted average number of outstanding common shares, including the dilutive effect of potential common shares (like stock options or convertible securities). (For Q3 2025, diluted EPS was $0.10, an increase from $0.07 in Q3 2024, suggesting improved profitability on a per-share basis despite overall revenue declines.)

Year-Over-Year Comparison

ARKO Corp. reported a 13.2% decrease in total revenues for the nine months ended September 30, 2025, compared to the prior year, driven by declines in both fuel and merchandise sales. Despite this revenue drop, net income attributable to ARKO Corp. decreased by a smaller 9.8%, largely due to a significant 13.2% reduction in total operating expenses. Diluted EPS for Q3 2025 showed improvement, rising to $0.10 from $0.07 in Q3 2024. The company also increased its investment in property and equipment and continued its share repurchase program, leading to a decrease in common shares outstanding and an increase in treasury stock.

Filing Stats: 4,325 words · 17 min read · ~14 pages · Grade level 18.9 · Accepted 2025-11-05 16:01:06

Key Financial Figures

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements 5 Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 (unaudited) 5 Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 (unaudited) 6 Condensed Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2025 and 2024 (unaudited) 7 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 (unaudited) 8 Notes to Condensed Consolidated Financial Statements (unaudited) 11 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 24 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 41 Item 4.

Controls and Procedures

Controls and Procedures 41

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 43 Item 1A.

Risk Factors

Risk Factors 43 Item 2. Unregistered Sales of Equity Securities, and Use of Proceeds 43 Item 3. Defaults Upon Senior Securities 43 Item 4. Mine Safety Disclosures 43 Item 5. Other Information 43 Item 6. Exhibits 44

Signatures

Signatures 45 2 Table of Contents CAUTIONARY STATEMENT REGARDIN G FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains "forward-looking statements," as that term is defined under the Private Securities Litigation Reform Act of 1995 ("PSLRA"), Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements include statements about our expectations, beliefs or intentions regarding our business, financial condition, results of operations, strategies or prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described below and in "Item 1A-Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2024 and this Quarterly Report on Form 10-Q, and described from time to time in our other filings with the Securities and Exchange Commission (the "SEC"). We do not undertake any obligation to update forward-looking statements, except to the extent required by applicable law. We intend that all forward-looking statements be subject to the safe-harbor provisions of the PSLRA. These forward-looking statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance. Risks a

FINANC IAL INFORMATION

PART I. FINANC IAL INFORMATION Unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q to the "Company," "ARKO," "we," "our," "ours," and "us" refer to ARKO Corp., a Delaware corporation, including our consolidated subsidiaries.

Financi al Statements

Item 1. Financi al Statements ARKO Corp. Condensed Consolidated Balance Sheets (Unaudited, in thousands, except share data) September 30, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 306,932 $ 261,758 Restricted cash 18,797 30,650 Short-term investments 6,295 5,330 Trade receivables, net 112,343 95,832 Inventory 202,290 231,225 Other current assets 106,497 97,413 Total current assets 753,154 722,208 Non-current assets: Property and equipment, net 733,372 747,548 Right-of-use assets under operating leases 1,360,130 1,386,244 Right-of-use assets under financing leases, net 145,744 157,999 Goodwill 299,973 299,973 Intangible assets, net 165,581 182,355 Equity investment 3,103 3,009 Deferred tax asset 62,066 67,689 Other non-current assets 63,861 53,633 Total assets $ 3,586,984 $ 3,620,658 Liabilities Current liabilities: Long-term debt, current portion $ 36,994 $ 12,944 Accounts payable 180,403 190,212 Other current liabilities 158,795 159,239 Operating leases, current portion 76,604 71,580 Financing leases, current portion 12,846 11,515 Total current liabilities 465,642 445,490 Non-current liabilities: Long-term debt, net 874,581 868,055 Asset retirement obligation 88,501 87,375 Operating leases 1,390,194 1,408,293 Financing leases 200,151 211,051 Other non-current liabilities 194,789 223,528 Total liabilities 3,213,858 3,243,792 Commitments and contingencies - see Note 11 Series A redeemable preferred stock ( no par value) - authorized: 1,000,000 shares; issued and outstanding: 1,000,000 and 1,000,000 shares, respectively; redemption value: $ 100,000 and $ 100,000 , in the aggregate, respectively 100,000 100,000 Shareholders' equity: Common stock (par value $ 0.0001 ) - authorized: 400,000,000 shares; issued: 131,697,481 and 1

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