Financial Data and Key Metrics Changes - Adjusted EBITDA grew 16% year-over-year to $66 million in Q4 2025, reflecting the company's transformation efforts [5][23] - Net income for Q4 was $1.9 million, reversing a net loss of $2.3 million from the prior year [23] - Retail merchandising margin increased by 140 basis points to 34.4% [24] - Same-store merchandise sales were down 3% for Q4 and down 4.1% for the full year 2025 [25][29] - Retail fuel same-store gallons were down 4.1% for Q4 and down 5.4% for the full year 2025 [25][29] Business Line Data and Key Metrics Changes - Retail segment delivered a merchandising margin of 34.4%, an increase of 140 basis points year-over-year [24] - Wholesale fuel contribution increased 8% to $24 million in Q4, with total gallons increasing by 4% to 249 million [26] - Fleet Fueling fuel contribution was $15.9 million for Q4, compared to $16.3 million last year, with gallons totaling 34.9 million [27] Market Data and Key Metrics Changes - The company gained market share in every nicotine category in 2025, with OTP up 4% and energy drinks up 8% [18] - Same-store merchandise sales trends improved through Q4, with mid-single digit growth observed in January and February 2026 [18] Company Strategy and Development Direction - The company is focused on executing its transformation plan, optimizing its retail footprint, and improving cost structure [5][9] - The IPO of ARKO Petroleum Corp. was a major milestone, providing greater transparency and unlocking value for shareholders [7][8] - The dealerization strategy is a key lever in the transformation plan, with 409 conversions completed and additional sites committed [11] Management's Comments on Operating Environment and Future Outlook - Management noted that the consumer remains cautious and value-focused, but execution improvements are driving results [6][19] - The company expects adjusted EBITDA for 2026 to range between $245 million and $265 million, with same-store retail sales expected to improve [30][31] - Management believes there is substantial growth potential in the wholesale fuel distribution market, with only 1% market share currently [10][62] Other Important Information - The company finished 2025 with $305 million in cash, maintaining a strong balance sheet [29] - The leadership team has been strengthened with the appointment of a new CFO, Galagher Jeff, who brings extensive retail experience [19][20] Q&A Session Summary Question: What are the drivers of further improvement in merchandise sales for retail? - Management highlighted execution and marketing initiatives, including the Fueling America campaign, which increased loyalty transactions and customer engagement [36][37] Question: Can you explain the cost of capital for remodels? - The cost of a major remodel is approximately $1 million, while a soft remodel could cost between $400,000 and $700,000 [41][42] Question: Is the pressure in the Midwest still present? - Management confirmed that pressure in the Midwest continues, but noted an increase in customer transactions as fuel prices dropped below $2.50 [52] Question: Do the $3, $4, $5, $6 value meal deals drive merchandise margin expansion? - Promotions are supported by vendors and do not lower margins; they drive customer traffic and increase sales in higher-margin categories [54][55] Question: What is the M&A opportunity for APC now that it has a separate balance sheet? - The company has over $635 million available for acquisition in a fragmented industry, targeting 20 new cardlock locations in 2026 [61][62]

Financial Data and Key Metrics Changes - Net sales increased by 5.1% to $10.7 billion in Q2 compared to $10.2 billion in the same quarter last year, driven by strong performance from new stores and the mature store base [7] - Same store sales increased by 2.8%, with customer traffic growing by 1.5% and average basket size increasing by 1.2% [8] - Gross profit as a percentage of sales was 31.3%, an increase of 137 basis points, attributed to lower shrink, higher inventory markups, and lower inventory damages [17] - Operating profit for Q2 increased by 8.3% to $595 million, with operating profit margin increasing by 16 basis points to 5.6% [19] - EPS for the quarter increased by 9.4% to $1.86, exceeding internal expectations [20] Business Line Data and Key Metrics Changes - Positive comp sales were observed across all categories, including consumables, seasonal, home, and apparel [8] - The $1 value merchandising set, comprising over 500 rotating SKUs, showed same store sales growth more than twice the overall company rate [12] - Non-consumable categories experienced positive quarterly same store sales growth for the second consecutive quarter, with increases of at least 2.5% in each category [33] Market Data and Key Metrics Changes - Market share grew in both dollars and units in highly consumable product sales during the quarter [8] - Customers across all income brackets increased spending, with notable growth from middle and higher-income customers contributing to non-consumable category performance [10] Company Strategy and Development Direction - The company is focused on maintaining everyday low prices, with a commitment to keeping prices within three to four percentage points of mass retailers [11] - Strategic initiatives include expanding the real estate footprint, enhancing the mature store base, and improving digital capabilities through partnerships with DoorDash and Uber Eats [26][30] - The company plans to execute approximately 4,885 real estate projects in 2025, including 575 new store openings in the U.S. and up to 15 in Mexico [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for shrink reduction to contribute more than 80 basis points toward the operating margin goal of 6% to 7% [41] - The company raised its financial outlook for 2025, expecting net sales growth of approximately 4.3% to 4.8% and same store sales growth of approximately 2.1% to 2.6% [23] - Management acknowledged potential uncertainty in consumer behavior as the year progresses, particularly in Q4 [23] Other Important Information - The company generated cash flows from operations of $1.8 billion during the first half of the year, an increase of 9.8% compared to the prior year [21] - The company plans to redeem $600 million of senior notes in the third quarter, ahead of their April 2027 maturity [23] Q&A Session Summary Question: Expectations on shrink contributing to long-term financial framework - Management is optimistic about outperforming shrink expectations but maintains a target of 6% to 7% operating margin [41] Question: Gross margin expectations for Q3 - Management expects year-over-year improvement in gross margin but anticipates tougher comparisons in Q4 [46] Question: Insights on delivery partnerships with DoorDash and Uber - The DoorDash partnership has been successful, with a 60% year-over-year sales increase, and the Uber Eats partnership is expanding rapidly [56] Question: Customer behavior and value proposition - Management noted that customers are resilient and seeking value, with a strong value proposition across all income cohorts [64] Question: Relationship between shrink and inventory damages - Management indicated that improvements in shrink are also positively impacting inventory damages, with expectations for continued improvement [100]