Greetings, and welcome to the Arko Corp. First Quarter 2026 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jordan Mann, Senior Vice President, Corporate Strategy and Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to Arko's First Quarter 2026 Earnings Conference Call and Webcast. On today's call are Arie Kotler, Chairman, President and Chief Executive Officer; and Jeff Gallagher, Chief Financial Officer. Our earnings press release and quarterly report on Form 10-Q for the first quarter of 2026 as filed with the SEC are available on Arko's website at www.arkocorp.com. During our call today, unless otherwise stated, management will compare results to the same period in 2025. Before we begin, please note that all first quarter 2026 financial information is unaudited. During this call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please review the forward-looking and cautionary statements section at the end of our first quarter 2026 earnings press release for various factors that could cause actual results to differ materially from forward-looking statements made during our call today. All forward-looking statements made during this call reflect our current views with respect to future events, and Arko is under no obligation to update or revise forward-looking statements made on this call, whether as a result of new information, future events or otherwise, except as required by law. On this call, management will share operating results on both a GAAP and on a non-GAAP basis. Descriptions of the non-GAAP financial measures that we use, such as adjusted EBITDA and reconciliations of those numbers to our results as reported in accordance with GAAP are detailed in our earnings press release or in our quarterly report on Form 10-Q for the quarter ended March 31, 2026. Additionally, management will share profit measures for our individual business segments, along with fuel contribution, which is calculated as fuel revenue less fuel costs and exclude intercompany charges by our GP&P segment. And now I'd like to turn the call over to Arie.

Thank you, Jordan, and good morning, everyone. Q1 marked a clear inflection point for Arko. The momentum we built late last year accelerated into 2026, and the results this quarter show meaningful progress across the business. Adjusted EBITDA increased approximately 65% year-over-year to $51 million, driven by strong execution across retail, wholesale and fleet fueling, coupled with disciplined cost control and strong fuel contribution. Importantly, this performance was broad-based and structural, not driven by any single lever. In retail, same-store merchandise sales, excluding cigarettes, returned to growth for the first time in 2 years, reflecting improved execution, sharper promotions, our Fueling America's campaign and stronger customer engagement. Same-store fuel gallons had the strongest year-over-year trends we've seen in 2 years and outperformed the OPIS U.S. average by roughly a full point. In fuel, we have navigated a volatile pricing environment effectively, delivering strong cents per gallon that more than offset lower volumes early in the quarter. Notably, fuel transactions and gallon trends strengthened materially in March, even as retail prices increased. We believe that this is evidence that our value messaging and promotional strategy are resonating with customers. Across the organization, we stayed sharply focused on costs. G&A declined 4% year-over-year, reflecting a leaner structure and continued operating discipline. Despite weather disruption from the significant number and intensity of storms in January and early February, the takeaway from the quarter is straightforward. The operational and strategic work we've been executing — dealerization, loyalty, fuel pricing discipline, merchandising focus and capital allocation — is showing up in our financial results. The initial public offering of minority interest in our subsidiary, Arko Petroleum Corp in February 2026 was an important milestone in our story and we believe that it gives investors a clear view of the strength and value of our wholesale, fleet fueling and GP&P businesses, their attractive margins and its cash flow attributes. We believe that Arko is currently positioned with strong growth opportunities across both operating channels, the retail on the one hand and the wholesale and fleet fueling on the other end. As of March 31, 2026, Arko owns 35 million shares of APC, representing an implied value today of roughly $650 million based on APC's market capitalization of approximately $900 million. We'll keep the APC discussion short, but it's important investors recognize both the transparency and the embedded value that APC structure provides. Turning to the operating environment. The consumer remains value focused and deliberate, especially in this elevated fuel cost environment. We continue to see customers taking advantage of promotions and actively using our app for savings on both fuel and merchandise. That reinforces the importance of sharp pricing, clear value communication and compelling in-store offers. Importantly, underlying trends improved as we moved through the quarter. After weather-related disruptions early on, traffic, transactions and gallons all improved in March, reinforcing our confidence in the trajectory of the business. Dealerizations continue to be one of the most powerful levers reshaping Arko. We converted 41 retail stores to dealer locations in the first quarter, bringing total converted locations to 450 since we adopted our transformation plan in 2024, with approximately 75 additional stores committed either under letter of intent, under contract or already converted since quarter end. We expect to complete those plus additional conversions by the end of 2026. The benefits are increasingly evident: lower operating costs, reduced maintenance CapEx, stronger cash flow generation and a more focused retail portfolio that is positioned for growth. As we progress through 2026, we believe our reported KPIs will increasingly reflect the quality of the remaining portfolio, something that is already apparent in our Q1 performance. Retail performance clearly improved this quarter. Same-store merchandise sales, excluding cigarettes, returned to growth, marking our strongest results in 2 years. This was driven by better execution across promotions, pricing and customer engagement. Merchandise margin grew 70 basis points year-over-year and finished Q1 at 33.9%. This 70 basis points margin improvement is on top of the 70 basis points we grew margin in Q1 of last year. Cigarette sales performed better than expected due to promotional pricing and manufacturer support, while other tobacco products continue to grow strongly, supporting traffic and transactions without undermining margin integrity. Overall, our retail performance reflects a healthier business with improving trends and a more productive store base. We are not trading margin for volume. Fuel was a significant earnings contributor in the quarter. We operated through a highly volatile fuel environment and executed effectively, delivering retail cents per gallon of $47.9 and driving same-store fuel contribution up approximately 20%. While gallons were pressured early in the quarter by the weather, they improved throughout the quarter, even in a higher price environment, and fuel transactions increased approximately 7% in March. While fuel volatility was supportive this quarter for CPG, it was not the only driver of improved results. Higher fuel prices can lead to smaller fill-ups, but it can also drive more frequent visits. This reinforced our strategy: being competitive to drive traffic and offering promotions like the Fueling America's Future discount fuel campaign to give dollars back to the consumer. In honor of America's 250th birthday, Fueling America's Future is now offering $2.50 off per gallon up to 20 gallons. We remain focused on delivering value as we head into the summer driving season. That brings me to loyalty. Our Fueling America's Future campaign and Fast Rewards platform remains central to our growth strategy in trip frequency, customer engagement and basket size. Enrollment increased 98% in the first quarter compared to the same period last year with approximately 53,000 new members. Notably, almost half of new enrollees joined since the launch of the new app and $10 enrollment program in early March. We believe that these programs are important in any environment, but especially in one where customers are actively looking for value. Our relaunched loyalty app on a new technology platform positions us to better personalize offers, improve communication and more deliberately use loyalty as a traffic and retention engine, especially as we add into our 100 days of summer promotional season. Remodels and new-to-industry locations also remain key components of our long-term growth strategy. In the first quarter, we opened 2 NTI retail stores and 1 NTI cardlock location, and we remain on track for 3 new Dunkin' stores and 1 NTI retail store, 20 NTI cardlocks and 25 remodels in 2026. Early performance from recent remodels has been encouraging, reinforcing our conviction that modern, put-forward formats can drive higher sales, stronger fuel performance and improved store-level economics. On the fleet fueling side, building new cardlocks continues to represent one of our most attractive uses of capital given the low investment, modest labor model and compelling returns. Before I turn it over to Gallagher, let me leave you with this. The first quarter was not driven by a one-time margin event or a single metric. It reflected structural progress across fuel pricing, dealerization, cost discipline, portfolio quality and retail execution. We are not going to overstate one quarter, but we are encouraged by what we are seeing. Our transformation plan has been gaining traction and promotions are driving sales and loyalty program enrollment, which is visible in our financial performance. With that, I will turn the call over to Gallagher.

Thank you, Arie. We continue to be encouraged by the broad-based performance we are seeing across the business. In Q1, we saw improvement in retail trends, strong fuel margin execution, continued benefit from dealerization and meaningful cost discipline at both the store and corporate levels. We remain focused on investing growth capital to drive strong returns in remodels, NTI retail stores and cardlocks. Turning to our first quarter results. Net loss of $5.6 million compared with $12.7 million for the prior year period, and adjusted EBITDA was approximately $51 million, up roughly 65% from the prior year period, as Arie mentioned. In our Retail segment, same-store merchandising sales were down 0.5% for the quarter, while same-store merchandising sales, excluding cigarettes, increased 0.4%, representing the strongest ex-cigarette performance we have seen in 2 years, and we achieved these results even with disruptions caused by winter storms in our footprint. Merchandising margin was 33.9%, up 70 basis points from the prior year, driven by product mix and targeted customer promotions. This 70 basis points improvement in margin is on top of the 70 basis points improvement we had last year in Q1, as Arie mentioned. On retail fuel, same-store gallons were down 3.2% year-over-year, but improved sequentially through the quarter with fuel transactions increasing approximately 7% in March year-over-year. Same-store fuel contribution increased 20% and retail cents per gallon increased by approximately $0.10 to $0.479 per gallon. That result reflects efficient pricing and strong execution in a volatile market. As mentioned, our merchandising and fuel trends were affected by the winter storms in Q1 across our core footprint. While difficult to quantify, we estimate same-store merchandising sales volumes would have been approximately 80 basis points stronger absent weather disruptions, reflecting the underlying strength of our base business. Similarly, we estimate the storm-related impact to total company fuel gallons was approximately 160 basis points. While we can't control the weather, we do feel the normalized performance of the business is even stronger than shown, and we expect to build on this momentum. Turning to expenses. We remain focused on disciplined cost management across the business. Total retail site level operating expenses were down 12% at $155.9 million compared with $177.2 million for the prior year period, primarily driven by our dealerization strategy. Same-store operating expenses increased 3.3% versus Q1 2025, driven by slightly higher labor rates, utilities and higher credit card fees as retail fuel prices increased in March. On a consolidated basis, G&A expenses were down 4% from the prior year. This is consistent with our transformation plan and reflects a leaner cost structure and tighter operating discipline that we expect to continue. In our Wholesale segment, operating income was approximately $23 million. Performance continued to benefit from dealerization and the related expansion of wholesale volume and profit contribution. Gallons were approximately 234 million gallons. Fuel margin was $0.098 per gallon, and we continue to expect dealerization to support both earnings quality and cash flow generation over time. In our Fleet Fueling segment, operating income was approximately $12 million, an increase of 9% year-over-year from the strong margin environment. Fleet fuel margin was $0.493 per gallon, while gallons declined 3.2% and were also impacted by weather events in the quarter. Fleet fuel remains a durable cash flow business and with around 20 cardlocks targeted in 2026, we believe that cardlock expansion continues to represent an attractive capital deployment opportunity given the return profile and modest labor model. On the balance sheet, we ended the quarter with cash of $272 million and total liquidity of approximately $1.1 billion. In Q1, we paid down $206.7 million in debt using the net proceeds from the APC IPO, with long-term debt now at $704 million, excluding lease-related financing liabilities. On capital allocation, our priorities remain clear. We will continue to execute on dealerization, invest in retail initiatives and remodels, support NTI and high-return cardlock growth, all while we maintain balance sheet discipline and a focus on returns. Capital expenditures were approximately $31 million in the first quarter, primarily focused on growth capital as we have 17 cardlocks and 25 remodels underway. The APC IPO has improved our financial flexibility, but our framework has not changed. We are focused on the highest return opportunities across the business and on improving cash flow over time. As we progress through 2026, we are encouraged by the momentum in the business. First quarter results reflected strong execution and improving underlying trends, particularly as the quarter progressed. While we are happy with our Q1 performance and strong start to 2026, we believe there is too much uncertainty in the market now to update our full year guidance at this point. Looking ahead, we remain focused on continuing to execute, capturing the structural benefits of dealerization and allocating capital to deliver strong returns. With that, I'll hand the call back to Arie.

Thank you, Gallagher. We are encouraged by the first quarter results, and our mindset remains the same. April has continued the year-to-date trends across the business. We plan to stay disciplined, keep executing and continue building on the progress we made through the end of last year and into 2026. Operator, please open the line for questions.

And the first question comes from the line of Bobby Griffin with Raymond James.

Congrats on some of the progress showing up in the business. Good to see. I guess, first, I wanted to maybe just touch on the dealerization aspect and now that we really are starting to see the inflection point in the operations on a consolidated basis. Does the end kind of pie of savings still look the same from a G&A standpoint that we've talked about in the past and from the SG&A standpoint? Or are you actually now kind of getting in the weeds and seeing that there might be more low-hanging fruit or more upside to some of those original estimates?

Thank you for this question. Thank you for participating. So as we mentioned before, Bobby, the transformation plan that we put together in 2024, we kept talking about a $20 million upside when this transaction is actually going to take place. So far, as you can see and as we disclosed, approximately $30 million benefit already is in place given the trailing 12 months. As I mentioned, we have 75 additional locations that we are about to execute. Some of them are under LOI. Some of them are already under contracts. So I think the goal is really to complete that, with maybe some additional others between now and the end of the year. And I think that's really the plan at the moment. If additional opportunities present themselves later on, of course we will execute on them. But I think we're going to stick to our plan at the moment.

Okay. And then Arie, that puts you — round numbers, call it, 1,000 stores at retail. When you get to that level, then kind of what's the go-forward, call it — I don't know if I want to call it a plan, but the go-forward kind of initiatives. You got the remodels that are starting to accelerate. You got some of the merchandising work, you've got loyalty. So maybe help us think about once we kind of get to this 1,000 store base at retail with those additional 75 stores to go, what is the moving parts or the initiatives that will be the focus point going forward there for us to grade the business on?

Sure, sure. So first of all, going back to the transformation in 2024, when we put the plan together, the goal was to move approximately 500-plus stores from the retail business to the wholesale business, concentrate in areas where we have an economy of scale, concentrate in areas where we can win, and concentrate in areas that are more competitive for us in terms of scale and where we operate. As you can see right now, the portfolio that we actually kept are the jewel of the jewel of the jewel when it comes to those stores. The goal moving forward is to continue to grow and to continue to invest in those stores. As you can see, we are remodeling an additional 25 stores this year. The goal will be to build MTI around those stores. The goal will be to continue to execute around those stores. I can tell you that the majority of the portfolio, or a large portion of the portfolio, is basically East Coast, Mid-Atlantic states, Southeast and Southwest. That's the concentration, and that's where we would like to continue moving forward and build around that. There is no question about that. We are very well capitalized when it comes to cash on hand — as Gallagher mentioned, over $270 million — and we have plenty of liquidity up to $1.1 billion to continue to grow the business.

Very quickly. No, it's okay. And Arie already covered it well. There's three big benefits we're starting to see in the business. One is operating expenses. As those stores get dealerized, it lowers operating expenses. Second is G&A. We are a more focused, lean organization in G&A. But the third, which I think you hit on with Arie, is it focuses our investments on retail stores that are positioned to win. So whether it's remodels, merchandising initiatives, the loyalty program, the approximately 1,000 stores that are left allow us to focus the capital on those and hopefully return very quickly to growth. We're almost there this quarter, but it really allows us to focus the investments to drive growth in those retail stores.

That's helpful. And then that's actually a dovetail into my final two questions. On the remodels, I think we took that number up a little of what we're targeting to now do. What's — can you share any of the early stats you're seeing as the lift from these remodels? We've talked in the past about the capital for kind of a soft remodel versus a hard remodel. So I'd imagine that's roughly about the same. But what about just the lifts now that you got maybe a little bit more data on what you're seeing?

Sure, sure. So I can talk about the early performance from the recent remodels. We are very, very encouraged — of course, it's proven that the minute you invest in foodservice and you put foodservice formats forward, that drives higher sales and stronger fuel performance. As a matter of fact, when people come into the stores, they're actually leaving the stores and going to the pump, and it just helps us with better store-level economics. There is no question. Now the plan for 2026, which we mentioned — approximately 25 stores remodeled — the whole idea is to continue concentrating on adding foodservice into those stores because the minute you invest in foodservice and you add foodservice into those stores, you're bringing more traffic and better customer engagement. There are other items that are attached to foodservice when people are coming to the store. So that's the goal moving forward: to make sure that in all of those stores that we are touching and remodeling, we're going to be adding foodservice. In addition to all of the promotions that we mentioned earlier, all of those promotions are very beneficial for us, especially in this environment when fuel prices are actually going up. All of those promotions attached to purchases, for example, when you purchase food — we talked about Fueling America's Future — think about it, Bobby. When you buy two Gatorades right now and get $0.50 off per gallon, in this environment you're talking about $10 off when you purchase 20 gallons. This is really important. So again, all of those things will be very beneficial for us into 2026.

And I'm going to try to pin you down a little more. But on — so basically, when you remodel a store, you put in the fast-grabs and that stuff you're working on, you see a lift in merchandising same-store merchandise sales as well as same-store fuel gallons?

I'll jump in on that one. Yes. The first ones we did last year, we saw about a 12% increase in merchandising sales overall and a 14% increase in gallons versus the pre-period. Some categories were up 20% to 30%. So we continue to see really good results, which is why we're accelerating the program. Every store is different. The level of remodels are different, but we're very happy with what we're seeing, which is why we're trying to do even more.

And one more thing, Bobby, since you got me excited about that. When we talk about foodservice, it's not just the word foodservice. It's also to make sure that we have delicious value meals. I mean we launched in Q1 meals at $3, $4, $5, $6. Think about it: you come to our stores in the afternoon to buy a chicken sandwich and a drink for $5. You can come to our stores and buy a breakfast sandwich and a coffee for $4. So those are very important components. It's not just to add foodservice, it's also to make sure that you actually bring value to the consumers.

The next question comes from the line of Daniel Guglielmo with Capital One Securities.

Broader consumer trends have been mixed in this kind of complex macro environment. Can you just dig in a little more into your retail customer trends? Are you seeing strength in certain regions? And do you have any additional insights on April trends?

Sure, sure. So let me start with the first one about consumer trends. Putting the weather aside for a second, I can tell you that before the volatility in gas prices, January started very strong. Sales excluding cigarettes were basically above 5% and then, of course, we got impacted by the weather. Going into March, with the volatility of fuel pricing, we actually saw customer trips increasing because of that — just because the price of fuel is up. Customer trips are up. We see increasing penetration inside the stores because customers are coming more often. That brings me to the consumer and Fueling America promotions and all of the promotional activities that we are doing around cigarettes and other tobacco products and everything else. I mentioned earlier that cigarette trends are actually up; I believe this is the first time in a long period that cigarettes trends are up. So I believe the promotional activity that we are running in our stores, along with all the other promotions we are doing, actually bring traffic. For me, traffic means that we are grabbing market share from somewhere else. The same thing goes to fuel. This is the first time for a long period we've been trending even a little bit better than the OPIS average. So again, I think that's a mix of all the initiatives that we are doing in the stores to bring customers in while everybody feels the pressure.

Dan, let me just jump in a little bit. The customers are under pressure and we are having to take action to keep that traffic up. We are providing promotions and discounts that they can get in the store and using on fuel. You do see, especially as retail gas prices elevate, a need to differentiate, and we're continuing to put our promotions out there that will continue to drive the traffic — hopefully, in-store and with fuel through Fueling America's Future. We had some really strong pockets of geography despite the weather noise: parts of Indiana, Kentucky and Ohio were very strong. Our Southeast continues to be very strong. And some of what we call our Texarkana regions, which is Arkansas and Louisiana, are also continuing to perform. So we had a lot of very positive parts of the country and some that are a little more sluggish. But like I said, we're taking action now and not waiting on the customer. We're trying to drive value for them. They continue to bring their trips, both gallons and merchandise, to our stores.

That's great. I really appreciate all that color. That's really helpful. And just as, I guess, a follow-up to that, can you talk about how the dealers have been able to navigate this complex environment? I know they're kind of smaller entrepreneurs with less resources. So I'm curious if they've seen more headwinds in their businesses this year.

There is no question that the dealers are having the same challenges as everybody else. Remember, nearly 65% to 70% of the stores in America are operated by dealers. They are all in the same boat. When price goes up and we see volatility, there is no question they may see a decline in gallons, but that can be offset by an increase in CPG. That's how they're managing the business, and this is how they've managed the business for decades. There is no question, Daniel, that fuel prices will move through cycles. At some point prices will come down and consumers and those dealers will continue to drive gallons and sales as they have before.

This concludes the question-and-answer session. I'd like to turn the call back over to Arie Kotler for closing remarks.

Thank you, everyone, for participating this morning. It was great talking to you guys, and hope to see you in our stores. Have a great morning.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.