[Management View]
Arko's management emphasized the execution of its dealerization program and structural cost initiatives as central to longer-term earnings growth. Sequential improvement was evident in several same-store and margin metrics, with growth in loyalty program adoption reinforcing higher in-store spend. Strategic investments in high-return capital projects and new-to-industry formats were highlighted. Wholesale and fleet fueling segments displayed resilience, with margin expansion during the quarter partially offsetting volume decreases from the prior-year period.

[Outlook]
For Q4 2025, Arko expects adjusted EBITDA to be between $50 million and $60 million, with a retail store count of approximately 1,150. Merchandise sales per store are forecasted to rise by low to mid-single digits, offset by expected same-store sales declines. Full-year 2025 adjusted EBITDA guidance is updated to $233 million to $243 million, reflecting year-to-date performance.

[Financial Performance]
Adjusted EBITDA for Q3 2025 was $75.2 million, down from $78.8 million in the prior-year period, primarily due to softer retail performance. Retail operating income was approximately $77.5 million, down from $85.1 million, while wholesale operating income increased to $24.1 million from $20.3 million. Fleet fueling operating income slightly decreased to $12.2 million from $12.6 million. Net income rose to $13.5 million from $9.7 million in Q3 2024.

[Q&A Highlights]
Question 1: Bobby Griffin from Raymond James inquired about the opportunity to accelerate store remodels given the positive results from early pilots.
Answer: Arie Kotler explained that they are working on increasing the number of stores beyond the initial seven, with plans for an additional 20-25 stores. The focus will be on food service and core categories, aiming for expansion in 2026.

Question 2: Bobby Griffin asked about the dealerization aspect and the performance difference between stores up for dealerization and those retained.
Answer: Kotler highlighted targeting stores with economies of scale, particularly in the Northeast, Southeast, and Mid-Atlantic regions. He emphasized the benefits of converting stores to dealers, including higher EBITDA and cash flow conversion, and reduced maintenance CapEx.

Question 3: Bobby Griffin queried about the fleet card segment's growth potential in 2026.
Answer: Kotler discussed plans to build additional CloudLock sites, noting the cost-effectiveness and cash flow benefits of these unmanned fueling sites. He mentioned identifying five new locations for 2026.

Question 4: Benjamin Wood from BMO Capital Markets asked about the improvement in organic metrics and the impact of dealerization.
Answer: Kotler attributed the performance to initiatives like OTP and loyalty programs, which improved margins and traffic. Jordan Mann added that retained stores showed higher productivity.

Question 5: Benjamin Wood inquired about the sustainability of gross margin expansion.
Answer: Kotler assured that vendor-supported promotions drive margin improvements, with plans to continue these efforts into 2026.

Question 6: Daniel Guglielmo from Capital One Securities asked about capital allocation for different project types.
Answer: Kotler emphasized focusing on high-return opportunities, with plans to scale costs for store remodels and leverage free cash from dealerization for other projects.

Question 7: Daniel Guglielmo questioned the appetite of mom-and-pop dealers for conversions in a challenging environment.
Answer: Kotler explained that mom-and-pop stores remain entrepreneurial and successful, capable of managing stores that do not meet Arko's investment criteria.

[Sentiment Analysis]
The tone of the analysts was inquisitive and focused on understanding the strategic initiatives and their impact on financial performance. Management was confident and detailed in their responses, emphasizing strategic growth and operational efficiency.

[Quarterly Comparison]
| Metric | Q3 2025 | Q3 2024 |
|---------------------------------|---------|---------|
| Adjusted EBITDA | $75.2M | $78.8M |
| Retail Operating Income | $77.5M | $85.1M |
| Wholesale Operating Income | $24.1M | $20.3M |
| Fleet Fueling Operating Income | $12.2M | $12.6M |
| Net Income | $13.5M | $9.7M |

[Risks and Concerns]
Potential risks include the impact of economic conditions on consumer behavior, regional disparities in performance, and the execution risks associated with dealerization and new store formats. The competitive landscape in the retail and fuel sectors also poses challenges.

[Final Takeaway]
Arko's Q3 2025 performance reflects strategic focus on dealerization and loyalty programs, driving growth despite softer retail performance. The company is poised for continued expansion, with plans to enhance store formats and increase CloudLock sites. Management's confidence in margin sustainability and strategic investments positions Arko for long-term value creation, though economic and competitive challenges remain.