Arko (ARKO) Q1 2025 earnings summary

Executive summary

• Reported a Q1 2025 net loss of $12.7 million, compared to a net loss of $0.6 million in Q1 2024, with results above the midpoint of guidance despite headwinds from lower traffic, consumer spending, and severe weather.

• Adjusted EBITDA was $30.9 million, down from $33.2 million year-over-year, mainly due to lower retail fuel and merchandise contribution.

• Transformation strategy advanced through dealerization, high-margin category expansion, and targeted promotions, including the Fueling America Future campaign and loyalty program enhancements.

• Loyalty program membership grew 10.9% year-over-year to 2.32 million, with members spending 47% more and visiting 2.5x more per month than non-members.

• ARKO operates 1,329 retail stores, supplies fuel to 1,961 dealer locations, and runs 280 cardlock sites across 30+ states as of March 31, 2025.

Financial highlights

• Q1 2025 revenue was $1.83 billion, down 11.7% year-over-year, mainly due to lower fuel and merchandise sales.

• Net loss for the quarter was $12.7 million, or $(0.12) per share, compared to a net loss of $0.6 million in Q1 2024.

• Adjusted EBITDA was $30.9 million, down from $33.2 million; merchandise margin improved to 33.2% from 32.5% despite a 14.5% drop in merchandise revenue.

• Retail segment contributed $40.2 million (down from $46.5 million); wholesale segment operating income was $18.6 million (up from $18.3 million); fleet segment operating income was $11 million (up from $9.8 million).

• Cash and cash equivalents at quarter-end were $265 million; total liquidity was $847 million; total debt was $880 million.

Outlook and guidance

• Q2 2025 adjusted EBITDA expected in the range of $70–80 million; full-year 2025 adjusted EBITDA guidance maintained at $233–253 million.

• Retail fuel margin forecasted at 42.5–44.5 cents per gallon for Q2; full-year margin guidance at 40–42 cents per gallon.

• Continued conversion of retail stores to dealer sites expected throughout 2025, with four new-to-industry stores in the pipeline for H2 2025.

• Capital spending will focus on store remodels and updates, with ongoing inflation and labor cost pressures mitigated through pricing and operational efficiencies.

• Q2 retail store count expected at ~1,300; merchandise sales per store projected flat to up low single digits, with same-store sales down low to mid single digits.