Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on ARKO Corp. (ARKO), and emphasizes the importance of using these recommendations in conjunction with other research tools like the Zacks Rank to make informed investment decisions [1][5][10]. Group 1: Brokerage Recommendations - ARKO has an average brokerage recommendation (ABR) of 2.00, indicating a Buy, based on recommendations from four brokerage firms, with two of them being Strong Buy, representing 50% of the total recommendations [2]. - Despite the positive ABR, the article cautions against making investment decisions solely based on this metric, as studies show limited success of brokerage recommendations in predicting stock price increases [5][10]. - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, often issuing five "Strong Buy" recommendations for every "Strong Sell" [6][10]. Group 2: Zacks Rank vs. ABR - The Zacks Rank is presented as a more reliable indicator of a stock's near-term price performance, classifying stocks into five groups from Strong Buy to Strong Sell, based on earnings estimate revisions [8][11]. - Unlike the ABR, which is based solely on brokerage recommendations, the Zacks Rank is a quantitative model that reflects timely changes in earnings estimates, making it a more current indicator of future price movements [9][12]. - The Zacks Consensus Estimate for ARKO has remained unchanged at $0.08 over the past month, suggesting that analysts have steady views on the company's earnings prospects [13]. Group 3: Investment Outlook for ARKO - The recent consensus estimate changes and other related factors have resulted in a Zacks Rank 3 (Hold) for ARKO, indicating a cautious approach despite the Buy-equivalent ABR [14].

Core Insights - ARKO Corp. has opened its first food-focused remodeled store in Ashland, Virginia, featuring its new food brand, fas craves, aimed at enhancing the convenience store experience [1][4][6] Group 1: Store Launch and Concept - The Ashland location is part of a pilot program that includes eight sites, with six remodels and two new builds, focusing on a menu of hot and cold grab-n-go items [2] - The fas craves menu includes a variety of offerings such as crispy chicken biscuits, potato wedges, mozzarella sticks, and various beverages like nitro cold brew and frozen coffee [3] Group 2: Customer Experience and Design - The remodeled store features a customer-friendly layout, digital menu boards, and a contemporary design, all aimed at improving the shopping experience [4] - The store's product assortment is shaped by customer feedback, ensuring it meets the needs of today's on-the-go consumers [4] Group 3: Promotions and Future Plans - To celebrate the opening, special food deals are offered, including Ultimate Chicken Tenders and discounted drinks [5] - The fas craves brand will continue to expand alongside store remodels across ARKO's network, bringing new food options to a wider customer base [6]

Company Performance - ARKO Corp. shares decreased by 2.55% to $4.20, underperforming the S&P 500's daily loss of 0.03% [1] - Over the last month, the stock has declined by 13.97%, contrasting with the Consumer Staples sector's loss of 0.73% and the S&P 500's gain of 0.6% [1] Upcoming Earnings - The company is expected to report an EPS of $0.12, reflecting a 9.09% increase from the prior-year quarter [2] - Revenue is anticipated to be $2.08 billion, indicating a 12.82% decrease from the same quarter last year [2] Fiscal Year Estimates - For the entire fiscal year, earnings are projected at $0.08 per share, down 38.46% from the previous year [3] - Revenue for the fiscal year is estimated at $7.97 billion, representing an 8.74% decline from the prior year [3] Analyst Estimates - Recent adjustments to analyst estimates for ARKO Corp. may indicate changing near-term business trends, with positive revisions suggesting a favorable outlook on business health and profitability [4] - The Zacks Rank system, which incorporates estimate changes, currently ranks ARKO Corp. at 3 (Hold) [6] Valuation Metrics - ARKO Corp. is trading at a Forward P/E ratio of 53.88, significantly higher than the industry average of 18.98, indicating a premium valuation [7] - The Consumer Products - Staples industry, part of the Consumer Staples sector, holds a Zacks Industry Rank of 169, placing it in the bottom 32% of over 250 industries [7]

Core Insights - ARKO Corp. has been recognized on the 2025 Fortune 500 list, ranking No. 488, marking its fourth consecutive year on the list, which highlights companies based on total revenue in the United States [1][2] Company Overview - ARKO Corp. is one of the largest convenience store operators and fuel wholesalers in the United States, owning 100% of GPM Investments, LLC [5] - The company operates approximately 3,600 locations as of March 31, 2025, having grown from 169 stores since its founding in 2003 [3] - The operational structure includes approximately 1,330 company-operated stores, over 1,960 independent dealer sites, and around 280 unmanned fleet fueling locations [3] Business Strategy - In 2024, the company initiated a multi-year transformation plan, converting 153 company-operated stores to dealer sites and investing strategically in high-growth areas such as food service and tobacco products [3] - The company emphasizes customer engagement and delivering value, aiming for long-term growth and optimization of its store portfolio [2]

Group 1: Earnings Performance - ARKO Corp. reported a quarterly loss of $0.12 per share, better than the Zacks Consensus Estimate of a loss of $0.17, but worse than a loss of $0.02 per share a year ago, indicating a 29.41% earnings surprise [1] - The company posted revenues of $1.83 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.06%, but down from $2.07 billion year-over-year [2] - Over the last four quarters, ARKO has surpassed consensus EPS estimates only once and topped consensus revenue estimates just once [2] Group 2: Stock Performance and Outlook - ARKO shares have declined approximately 37.6% since the beginning of the year, compared to a decline of 4.3% for the S&P 500 [3] - The company's earnings outlook is mixed, with current consensus EPS estimates at $0.12 on $2.09 billion in revenues for the coming quarter and $0.08 on $7.95 billion in revenues for the current fiscal year [7] - The Zacks Rank for ARKO is currently 3 (Hold), indicating that shares are expected to perform in line with the market in the near future [6] Group 3: Industry Context - The Consumer Products - Staples industry, to which ARKO belongs, is currently in the bottom 28% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact ARKO's stock performance [5]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 2025 was $30.9 million, down from $33.2 million in the same period last year, primarily due to lower retail fuel and merchandise contributions [21] - The net loss for the quarter was $12.7 million compared to a net loss of $0.6 million in the year-ago period [24] - Total capital expenditures for the quarter were $27.4 million [25] Business Line Data and Key Metrics Changes - Retail segment operating income was approximately $40.2 million, down from $46.5 million in the year-ago period [21] - Same store merchandise sales excluding cigarettes were down 5.2%, while total same store merchandise sales were down 6.9% [22] - Wholesale segment operating income was $18.6 million, compared to $18.3 million in the year-ago period [23] - Fleet segment operating income increased to $11 million from $9.8 million in the year-ago period [24] Market Data and Key Metrics Changes - Same store fuel contribution decreased by approximately $3.2 million due to a 6.2% decline in gallons sold [22] - Fuel margin for the wholesale segment was $0.88 per gallon, down from $0.92 per gallon in the year-ago period [23] - Total gallons from channel optimization were approximately 14 million for the quarter, offsetting declines from comparable sites [23] Company Strategy and Development Direction - The company is focused on a transformation strategy that includes dealerization, expansion of high-margin categories, and targeted promotional initiatives [9][10] - The Fueling America Future campaign aims to provide discounts on fuel and enhance customer engagement [10][12] - The company is committed to organic growth and store-level reinvestment, with plans for remodels and new store openings [15][17] Management's Comments on Operating Environment and Future Outlook - Management noted headwinds from lower traffic, consumer spending, and severe weather impacting store visits [6][8] - There is optimism for Q2 2025, with slight improvements in sales observed in April [34] - The company remains focused on execution and is optimistic about the path forward despite a dynamic environment [28] Other Important Information - The company repurchased approximately 1.3 million shares at an average price of $4.1 per share during the quarter [19] - The company ended the quarter with $880 million in long-term debt and maintained liquidity of approximately $847 million [25] Q&A Session Summary Question: How has the business performed recently after winter weather? - Management noted that sales were down 6.9% for the quarter, with February being particularly impacted by severe weather, but there has been slight improvement in April [32][34] Question: Are savings from the dealerization starting to flow through the P&L? - The $20 million savings is expected at scale, with $2.4 million delivered this quarter from channel optimization [36][38] Question: When will the remodel initiative be accelerated? - The first pilot stores are expected to be completed by Q3 2025, with potential acceleration in 2026 based on results [40][42] Question: What is driving the fuel margins? - Fuel margins are influenced by market volatility and the need for businesses to adjust prices to remain competitive [48][50] Question: How is the company balancing share buybacks versus bond buybacks? - Management is analyzing capital allocation strategies but did not provide specific details on the cadence of buybacks [82] Question: What characteristics define strategic retail stores for capital allocation? - Strategic stores are identified based on favorable demographics, competitive landscape, and physical plant conditions [72][73] Question: How has the dealerization program performed against expectations? - The stores pushed to the wholesale channel are performing in line with expectations, with significant incremental gallons being realized [74][76]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 2025 was $30.9 million, down from $33.2 million in Q1 2024, primarily due to lower retail fuel and merchandise contributions [21] - The net loss for the quarter was $12.7 million compared to a net loss of $0.6 million in the year-ago period [24] - Total capital expenditures for the quarter were $27.4 million [25] Business Line Data and Key Metrics Changes - Retail segment operating income was approximately $40.2 million, down from $46.5 million in the year-ago period [21] - Same store merchandise sales excluding cigarettes decreased by 5.2%, while total same store merchandise sales were down 6.9% [22] - Wholesale segment operating income was $18.6 million, slightly up from $18.3 million in the year-ago period [23] - Fleet segment operating income increased to $11 million from $9.8 million in the year-ago period [24] Market Data and Key Metrics Changes - Same store fuel contribution decreased by approximately $3.2 million due to a 6.2% decline in gallons sold [22] - Fuel margin for the wholesale segment was $0.88 per gallon, down from $0.92 per gallon in the year-ago period [23] - Total gallons from channel optimization were up, contributing close to 14 million gallons for the quarter [23] Company Strategy and Development Direction - The company is focused on a transformation strategy that includes dealerization, expansion of high-margin categories, and targeted promotional initiatives [9][10] - The Fueling America Future campaign aims to provide discounts on fuel and enhance customer engagement [10][12] - The company is committed to organic growth and store-level reinvestment, with plans to remodel stores and introduce new food offerings [15][16] Management's Comments on Operating Environment and Future Outlook - Management noted challenges from lower traffic, consumer spending, and severe weather impacting store visits [6][7] - Despite these challenges, management expressed optimism for Q2, citing improvements in sales as weather conditions normalize [34] - The company expects total adjusted EBITDA for Q2 2025 to be in the range of $70 million to $80 million [25] Other Important Information - The company repurchased approximately 1.3 million shares at an average price of $4.1 per share during the quarter [19] - The loyalty program saw an increase in enrolled members, with approximately 27,000 new members added in Q1 2025 [17] Q&A Session Summary Question: Performance post-winter weather - Management indicated that sales improved slightly in April following severe weather in February, which had a significant negative impact on sales [34] Question: Dealerization savings impact - The $20 million annualized savings from dealerization will be realized at scale, with $2.4 million delivered this quarter from transitioned sites [38] Question: Remodel initiative timeline - The company plans to complete seven pilot remodels by Q3 2025, with potential for accelerated rollout based on results [40] Question: Fuel margins and price dynamics - Management noted that fuel margins are currently strong due to market volatility and competitive pricing strategies [45][49] Question: Capital allocation and buybacks - Management is analyzing the cadence of stock repurchases but did not provide specific guidance on future buybacks [50] Question: Dealerization pace and visibility - The company is on track with its dealerization plan, having closed 77 locations and having 130 under contract [56][58] Question: Loyalty program continuity post-dealerization - Loyalty members will continue to access benefits at other locations, as the program is tied to company-operated stores [76] Question: G&A expenses and dealerization impact - Management is focused on reducing G&A expenses as more retail sites transition to the wholesale channel [82]

PART I. FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, prepared in accordance with U.S. GAAP - The company operates across retail, wholesale, fleet fueling, and GPMP segments, with **1,329 retail stores**, **1,961 dealer gas stations**, and **280 cardlock locations** as of March 31, 2025[33](index=33&type=chunk)[34](index=34&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $265,420 | $261,758 | | Total current assets | $719,230 | $722,208 | | Total assets | $3,602,555 | $3,620,658 | | **Liabilities & Equity** | | | | Total current liabilities | $462,931 | $445,490 | | Long-term debt, net | $866,097 | $868,055 | | Total liabilities | $3,247,329 | $3,243,792 | | Total shareholders' equity | $255,226 | $276,866 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2025 vs Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenues | $1,828,905 | $2,072,454 | | Total operating expenses | $1,838,452 | $2,074,844 | | Operating loss | $(11,764) | $(4,866) | | Net loss attributable to ARKO Corp. | $(12,672) | $(594) | | Net loss per share (basic and diluted) | $(0.12) | $(0.02) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 vs Q1 2024 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $43,402 | $12,755 | | Net cash used in investing activities | $(26,904) | $(28,175) | | Net cash used in financing activities | $(19,365) | $(20,268) | | **Net decrease in cash** | **$(2,867)** | **$(35,688)** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company declared and paid a dividend of **$0.03 per share** on March 21, 2025, totaling approximately **$3.5 million**[56](index=56&type=chunk) - During Q1 2025, the company repurchased approximately **1.3 million shares** for about **$5.2 million**, with **$20.5 million** remaining under the repurchase program as of March 31, 2025[58](index=58&type=chunk) - The company accrued approximately **$2.0 million** for a potential wage and hour collective action settlement, with a possible additional loss of up to **$1.2 million**[96](index=96&type=chunk)[97](index=97&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q1 2025 performance to macroeconomic challenges and the Transformation Plan, with total revenues decreasing to **$1.83 billion** and a net loss of **$12.7 million**, while maintaining **$847 million** in liquidity - The company is implementing a multi-year Transformation Plan to convert retail stores to dealer sites, invest in remaining stores, and improve pricing and procurement[111](index=111&type=chunk)[112](index=112&type=chunk) - During Q1 2025, **59 retail stores** were converted to dealer sites as part of the Transformation Plan[112](index=112&type=chunk)[113](index=113&type=chunk) Consolidated Key Metrics Q1 2025 vs Q1 2024 | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Fuel gallons sold (thousands) | 490,340 | 519,313 | | Fuel margin (cents per gallon) | 24.9 | 24.8 | | Merchandise contribution (in thousands) | $117,570 | $134,918 | | Merchandise margin | 33.2% | 32.5% | | Adjusted EBITDA (in thousands) | $30,855 | $33,165 | [Segment Results](index=24&type=section&id=Segment%20Results) Retail Segment Performance Q1 2025 vs Q1 2024 | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating income (in thousands) | $40,151 | $46,513 | | Same store fuel gallons sold decrease | (6.2%) | (6.7%) | | Fuel margin (cents per gallon) | 37.9 | 36.4 | | Same store merchandise sales decrease | (6.9%) | (4.1%) | | Merchandise margin | 33.2% | 32.5% | - The Wholesale segment's operating income slightly increased to **$18.6 million**, with gallon volume growing **1.5%** due to new dealer site conversions[157](index=157&type=chunk)[158](index=158&type=chunk) - The Fleet Fueling segment's operating income increased to **$11.0 million** from **$9.8 million** year-over-year, driven by favorable diesel margins despite a **4.2%** decrease in gallons sold[165](index=165&type=chunk)[166](index=166&type=chunk) [Use of Non-GAAP Measures](index=31&type=section&id=Use%20of%20Non-GAAP%20Measures) Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net loss** | **$(12,672)** | **$(594)** | | Interest and other financing expenses, net | 13,851 | 2,457 | | Income tax benefit | (12,922) | (6,707) | | Depreciation and amortization | 34,887 | 31,716 | | **EBITDA** | **23,144** | **26,872** | | Adjustments (Acquisition costs, impairment, etc.) | 7,711 | 6,293 | | **Adjusted EBITDA** | **$30,855** | **$33,165** | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) - As of March 31, 2025, the company maintained a strong liquidity position of approximately **$847 million**, including **$265 million** in cash and **$582 million** in credit availability[184](index=184&type=chunk) - Net cash from operating activities increased to **$43.4 million** in Q1 2025 from **$12.8 million** in Q1 2024, driven by dealer deposits, vendor incentives, and favorable working capital[191](index=191&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's primary market risks, including commodity price volatility and interest rate fluctuations, where a **1%** increase in variable rates would raise annual debt service by approximately **$4.3 million** - The company faces commodity price risk, as rising fuel prices can reduce consumer demand and increase credit card processing fees[206](index=206&type=chunk) - Approximately **49%** of the company's debt carries variable interest rates, with a **1%** rate increase leading to an approximate **$4.3 million** rise in annual debt service[207](index=207&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded the company's disclosure controls and procedures were effective as of **March 31, 2025**[208](index=208&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the quarter ended **March 31, 2025**[209](index=209&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 11, detailing a term sheet to settle a wage and hour collective action, with **$2.0 million** accrued and a potential additional loss of up to **$1.2 million** - The company entered a term sheet to settle Fair Labor Standards Act allegations, accruing approximately **$2.0 million** with a potential additional loss of up to **$1.2 million**[96](index=96&type=chunk)[97](index=97&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred since the Annual Report on Form 10-K for the fiscal year ended **December 31, 2024** - No material changes to the company's risk factors were reported from the Annual Report on Form 10-K for the year ended **December 31, 2024**[211](index=211&type=chunk) [Unregistered Sales of Equity Securities, and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20and%20Use%20of%20Proceeds) This section details Q1 2025 share repurchase activity, with **1,775,587 shares** bought at an average of **$4.14 per share**, leaving approximately **$20.5 million** available Share Repurchase Activity for Q1 2025 | Period | Total Shares Purchased | Average Price Paid per Share | Maximum Value Remaining for Purchase (end of period) | | :--- | :--- | :--- | :--- | | Jan 2025 | — | — | $25,655,000 | | Feb 2025 | 252,344 | $4.51 | $25,605,000 | | Mar 2025 | 1,523,243 | $4.08 | $20,484,000 | | **Total Q1** | **1,775,587** | **$4.14** | **$20,484,000** | [Other Information](index=36&type=section&id=Item%205.%20Other%20Information) During Q1 2025, no officers or directors adopted or terminated any Rule 10b5-1(c) trading plans for company securities - No officers or directors adopted or terminated any Rule 10b5-1(c) trading plans during the three months ended **March 31, 2025**[215](index=215&type=chunk)

Core Insights - ARKO Corp. reported a net loss of $12.7 million for Q1 2025, a significant increase from a net loss of $0.6 million in the same quarter last year, indicating challenges in the current consumer environment [6][5] - The company achieved an adjusted EBITDA of $30.9 million, down from $33.2 million year-over-year, reflecting ongoing macroeconomic pressures [6][5] - Merchandise margin improved to 33.2% from 32.5%, despite a decline in merchandise contribution to $117.6 million from $134.9 million, primarily due to the dealerization program [6][10] - Retail fuel margin increased to 37.9 cents per gallon, up from 36.4 cents per gallon, although retail fuel contribution decreased to $85.3 million from $92.9 million [6][11] Financial Performance - Total revenues for Q1 2025 were $1.83 billion, down from $2.07 billion in Q1 2024, driven by a decrease in fuel revenue to $1.45 billion from $1.63 billion [38] - Fuel gallons sold decreased to 225,063 thousand gallons from 255,464 thousand gallons, with same-store fuel gallons sold down 6.2% [8][11] - Merchandise revenue also declined to $354.5 million from $414.7 million, with same-store merchandise sales decreasing by 6.9% [8][10] Strategic Initiatives - The company converted 59 retail stores to dealer sites in Q1 2025, with plans for further conversions throughout the year, expecting a cumulative annualized operating income benefit exceeding $20 million [6][5] - ARKO initiated a store remodeling initiative aimed at enhancing customer experience, with the first pilot remodel expected to begin construction in May 2025 [6][5] - The company launched the "Fueling America's Future" campaign, offering loyalty customers value promotions and discounts at the pump [6][5] Shareholder Returns - The Board declared a quarterly dividend of $0.03 per share, to be paid on May 30, 2025, reflecting confidence in cash generation capabilities [21][22] - During Q1 2025, the company repurchased approximately 1.3 million shares for about $5.2 million, indicating a commitment to shareholder returns [7][22] Liquidity and Capital Expenditures - As of March 31, 2025, ARKO's total liquidity was approximately $847 million, with $265 million in cash and cash equivalents and $582 million available under lines of credit [20] - Capital expenditures for the quarter were approximately $27.4 million, including investments in new stores and upgrades [20]

Exhibit 99.1 ARKO Corp. Reports First Quarter 2025 Results ARKO Corp. (Nasdaq: ARKO) ("ARKO" or the "Company"), a Fortune 500 company and one of the largest convenience store operators in the United States, today announced financial results for the first quarter ended March 31, 2025. First Quarter 2025 Key Highlights (vs. Year-Ago Quarter) 1,2 Other Key Highlights "Despite a pressured consumer environment, we effectively navigated ongoing macroeconomic headwinds in the first quarter," said Arie Kotler, Chai ...