ARKO Petroleum Corp. (APC) has delivered robust second-quarter results for 2026, punctuated by the strategic acquisition of U.S. Petroleum Partners (USPP). This significant move, valued at $205 million in cash, is set to substantially broaden APC's wholesale distribution network, adding two fuel storage terminals and a trucking fleet, marking the company's inaugural foray into terminal infrastructure. The quarter saw an uplift in both net income and adjusted EBITDA, leading to the revalidation of APC's financial forecasts for the entire year, a testament to its strong fee-based wholesale model and integrated operational strategy.
On Thursday, August 6, 2026, at 5:00 p.m. ET, ARKO Petroleum Corp. held its second-quarter earnings call. Key participants included Chairman, President, and CEO Arie Kotler, Chief Financial Officer Jordan Mann, and Senior Vice President of Investor Relations Priya Trivedi. The company highlighted several financial achievements: net income rose to $12.2 million from $10.0 million in the previous year, demonstrating operational efficiency. Adjusted EBITDA saw a 4% increase year-over-year, reaching $39.8 million, driven by platform expansion. Discretionary cash flow grew by 12% to $27.1 million, reflecting robust cash conversion capabilities.
However, operating cash flow decreased to $10.4 million from $23.2 million, mainly due to increased working capital demands from higher fuel costs. Wholesale fuel contribution climbed 3.7% to $26.3 million, even with a decline in gallons, as market dynamics bolstered margins. The wholesale fuel margin per gallon increased from $0.101 to $0.109, benefiting from better prompt pay discounts. Wholesale fuel gallons saw a 4.6% reduction to 240.8 million, attributed to the conversion of retail sites to dealer locations. Fleet fueling margin normalized to $0.469 per gallon, while gallons remained stable at 36.4 million. GPMP related party gallons dropped 15.1% to 191.4 million due to retail site transitions, but the fixed margin per gallon for these locations increased to 6.0 cents.
The acquisition of USPP, priced at $205 million in cash plus inventory costs, signifies ARKO's entry into the fuel terminal sector. An earn-out provision of $30 million in common stock is contingent on USPP achieving specific EBITDA targets ($31.7 million from the acquired business and $2.2 million from certain fuel components). Post-acquisition, the pro forma leverage is projected to be 3x to 3.5x net debt to adjusted EBITDA, well within the company's target range. ARKO's net debt stood at $324.2 million, with a leverage ratio of 2.2x, supported by $724 million in total liquidity. The company also reported $2.7 million in maintenance capital expenditures and $7.1 million in growth capital, including investments in 20 new cardlock locations, with three already operational. A quarterly dividend of $0.50 per share was declared, maintaining an annual target of $2.00 per share. Management reaffirmed its 2026 adjusted EBITDA guidance of $156 million and discretionary cash flow guidance of $110 million, citing consistent first-half performance.
During the call, CEO Arie Kotler emphasized the strategic importance of the USPP acquisition, noting it would add 280 million annual gallons, enhance relationships with major fuel suppliers, and increase overall wholesale platform value. The acquired terminals in Michigan and Ohio will allow ARKO to manage its product pull more efficiently, capturing storage fees previously paid to third parties. Kotler also highlighted that 80% of USPP's business is supported by its own trucking fleet, providing greater control over logistics. CFO Jordan Mann further explained that the 4.6% decline in wholesale volumes was a direct result of the "dealerization program," converting company-operated retail sites to independent dealer accounts. The company anticipates mid-to-high teen returns per location from its new cardlock sites. The management team stressed their commitment to disciplined capital allocation and shareholder value creation through accretive growth and a stable dividend philosophy.
In conclusion, ARKO Petroleum Corp.'s second quarter of 2026 demonstrates robust financial health and a clear strategic vision for growth. The acquisition of U.S. Petroleum Partners is a pivotal step in expanding its vertical integration and market footprint, promising enhanced earnings and cash flow. Despite some volume shifts due to strategic dealer conversions, the company's core business segments performed strongly. ARKO's reaffirmed guidance and consistent dividend policy underscore its confidence in its operational model and ability to generate sustainable returns for shareholders.
