Anthony Bonadio's questions to ARKO (ARKO) leadership • Q2 2025
Question
Anthony Bonadio from Wells Fargo questioned the competitive landscape for fuel margins, asking if the market remains rational despite soft volumes. He also sought details on trends in the Other Tobacco Products (OTP) category and the potential impact of an FDA crackdown on the illicit market.
Answer
CEO Arie Kotler explained that strong fuel margins are supported by their strategic pricing systems and the industry's need to offset lower volumes. He noted that OTP was a top-performing category in Q2, with sales up 2.6% and margin up 170 bps, driven by the back-bar refresh. Kotler believes an FDA crackdown on illicit products would benefit Arko as they only sell legal products. CFO Rob Giammatteo added that OTP's profit contribution is now nearly equal to cigarettes despite lower sales penetration.