Yesway Lifts Q3 Net Income 56% to $25 Million on Fuel Margins

Net income of $25 million, up from $16 million a year earlier. That is the headline Yesway (NASDAQ:YSWY) delivered on November 12, as wider fuel margins and steady merchandise growth carried the convenience-store operator through a quarter of elevated fuel prices and inflation-weary consumers. Adjusted EBITDA, a non-GAAP measure, rose 8.6% to $60 million.

Chairman and Chief Executive Officer Tom Trkla pointed to a record of consistency. Same-store inside merchandise sales rose 1.9% year over year — growth in 19 of the past 20 quarters, he said on the earnings call. Same-store fuel gallons increased 1.1%, the fifth consecutive quarter of gains.

What Drove the Fuel Margin Expansion?

Fuel sales climbed 51.6% to $713 million, and total fuel margin widened to 46.1 cents per gallon from 40.3 cents a year earlier. Chief Financial Officer Ericka Ayles attributed the jump to two forces: the company's diesel exposure and elevated fuel-price volatility during the quarter.

Diesel made up 38% of Yesway's fuel volume, against a 27% industry average cited from NACS. Ayles said diesel volatility picked up in September and moderated slightly in October, though it stayed elevated. Volatility typically supports higher margins, she noted.

Inside merchandise sales rose 4% to a record $246 million. Merchandise margin held nearly flat at 35.1%, versus 35.2% a year earlier, as diesel surcharges offset the benefit of pricing actions. Most of those surcharges ended in October, Ayles said, and if they stay away, the change could benefit fourth-quarter margin.

Packaged beverages, general merchandise, and candy and snacks ranked among the strongest categories. Despite higher pump prices, Ayles said Yesway had not observed meaningful consumer trade-downs — no shift from national brands to private label, no move from larger packs to smaller ones.

Takeaway: diesel-heavy volumes plus volatile prices pushed margins to a level management itself calls elevated.

Where Are Costs Heading?

Same-store operating expenses rose 8.9%, with credit card fees accounting for roughly 56% of the increase. Same-store labor hours fell 1.3% — a sixth straight quarter of year-over-year improvement — and Ayles said the company expects labor hours to remain relatively stable going forward.

What Does the Reaffirmed Outlook Assume?

Yesway reaffirmed its 2026 guidance:

• Adjusted EBITDA of $235 million to $245 million
• Same-store inside merchandise sales growth of 1.25% to 3.25%
• Capital expenditures of $85 million to $95 million
• Six to eight new store openings

Ayles said the EBITDA outlook assumes fourth-quarter fuel margins normalize to levels seen before developments in the Middle East. If elevated margins persist, they could provide upside, she said. She also flagged two headwinds: a comparison against a particularly strong fourth quarter last year and a typical seasonal decline in the period.

The balance sheet held $105 million in cash at quarter-end and $252 million in total available liquidity. Total debt, including financing and financing lease obligations, stood at $608 million. The company has fully repaid its revolver.

How Is the Store Footprint Changing?

Yesway ended the quarter with 423 stores after opening two locations and selling 29 stores in Iowa and Kansas. A second Arizona store opened in October, bringing year-to-date openings to five. Ayles said the 2026 openings are ramping quickly, in line with previous new builds.

Arizona and Oklahoma account for a significant portion of the development pipeline, with a disproportionate share in Arizona, Trkla said. He reaffirmed the 130-store growth model and said Yesway expects to give 2027 opening guidance on its next earnings call.

The company is converting its 24 Yesway-branded Texas stores to the Allsup's brand by the end of the first quarter of 2027, keeping its other 26 Yesway-branded locations. Trkla said management expects the conversions to lift performance through Allsup's local name recognition, though the company has not quantified the benefit.

On acquisitions, Trkla said Yesway is targeting smaller portfolios and single-store operators in Oklahoma, Arizona, Texas and New Mexico, where management sees opportunities at attractive multiples. No transactions were announced.

In plain words: margins did the heavy lifting this quarter, and management is betting they settle back to earth in the fourth.