Yesway, Inc. (YSWY) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed picture: strong financial performance with high inside gross margins and positive customer behavior, but uncertainties remain due to fuel market volatility and deceleration in sales growth. The Q&A reveals cautious optimism with strategic plans for growth, but the lack of specific guidance and avoidance of concrete predictions suggest caution. These factors balance out, leading to a neutral sentiment rating.
Key Financial Performance
Adjusted EBITDA Increased 112.9% year-over-year to over $59 million. This was driven by broad-based strength across foodservice, merchandising, and fuel platforms, with fuel sales and margin materially higher year-over-year.
Same-store inside merchandise sales Increased 4.5% year-over-year. This growth continues a positive trend of growth in 12 of the past 13 quarters.
Same-store fuel gallons sold Increased 0.2% year-over-year. Total fuel margin increased 48.5% year-over-year to $0.494 per gallon, supported by strong local refinery partnerships, a strategic rural footprint, and a higher diesel mix.
Inside merchandise sales Increased 9.5% year-over-year to $213.7 million. The increase was driven primarily by pricing initiatives taken during Q4 2025 and Q1 2026.
Fuel sales Increased 16% year-over-year to $464.3 million. Fuel margin increased 48.5% year-over-year to $0.494 per gallon, benefiting from geopolitical developments in the Middle East that increased fuel price volatility.
Total same-store gross profit Increased 21.8% year-over-year, driven by strength across both fuel and inside merchandise businesses. Same-store fuel gross profit increased 38.5%, and same-store inside merchandise gross profit increased 9.8%.
Same-store operating expenses Declined by 2.8% year-over-year. This was attributed to a labor efficiency initiative rolled out at the beginning of the previous year, resulting in a 3.5% decline in same-store labor hours in Q1 2026.
Store contribution Increased 72.7% year-over-year to $74.6 million. This was driven by higher fuel margin, increased fuel volumes, and merchandise sales, as well as a higher contribution from new stores.
Net income Increased to $30.2 million compared to a net loss of $5.6 million in the prior year period. This was primarily attributable to higher fuel margin.
Net cash provided by operating activities Increased to $48.4 million compared to $13.6 million in the prior year period.
Capital expenditures Decreased to approximately $11 million compared to $26.3 million in the prior period.
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Operating Highlights
Foodservice Platform: Yesway offers a unique foodservice platform, including freshly prepared food, grocery items, beverages, snacks, and private label products. Allsup’s iconic deep-fried burrito is a key driver of customer traffic and loyalty.
Geographic Expansion: Yesway operates 449 stores across rural and suburban markets in the Southwest and Midwest, making it the 15th largest convenience store operator in the U.S.
IPO Proceeds Utilization: Raised $322 million through IPO, used for redeeming preferred equity, repaying $30 million in debt, and supporting growth initiatives.
Operational Efficiency: Implemented labor efficiency initiatives, reducing same-store labor hours by 3.5% in Q1 2026. Same-store operating expenses declined by 2.8% year-over-year.
Technology Investments: Invested in technology for smarter decision-making in merchandising, pricing, labor, fuel, food service, and capital allocation. Leveraged Yesway Rewards program for targeted promotions and customer engagement.
M&A Strategy: Focused on selective and disciplined acquisitions to build density, strengthen brand presence, and create value. Plans to sell 29 stores in Iowa and Kansas to sharpen operational focus.
Real Estate Strategy: Operates under a company-owned model, owning 65% of store real estate, providing flexibility for new developments and remodels.
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Risk or Challenges
Volatility in global oil prices: The company acknowledges that fluctuations in global oil prices could adversely impact its fuel margins and overall profitability.
General economic conditions: Economic uncertainties could affect consumer spending patterns, potentially impacting sales of fuel, food, and other merchandise.
Execution of growth strategy: Challenges in executing the company's growth strategy, including new store development and acquisitions, could hinder its expansion plans.
Geopolitical developments in the Middle East: These developments have increased fuel price volatility, which, while currently benefiting margins, could pose risks if the situation changes.
Sale of stores in Iowa and Kansas: The planned sale of 29 stores could lead to operational disruptions or financial impacts if not executed as planned.
Debt levels: The company has significant debt of approximately $649.5 million, which could limit financial flexibility and increase vulnerability to interest rate changes.
Fuel price volatility: While the company benefits from current pricing trends, ongoing volatility could negatively impact consumer demand or margins in the future.
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Guidance & Outlook
Same-store inside merchandise sales growth: Projected growth of 1.25% to 3.25% for fiscal year 2026.
Adjusted EBITDA: Expected to range between $210 million and $220 million for fiscal year 2026.
Capital Expenditures: Guidance set at $85 million to $95 million for fiscal year 2026, including 3 stores moved from build-to-suit to self-funded.
New Store Openings: Plan to open 6 to 8 new stores in 2026, inclusive of 1 store opened during Q1.
Store Portfolio Adjustment: Sale of 29 operating stores in Iowa and Kansas expected to close by the end of fiscal 2026.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How has customer behavior been affected by higher gas prices in the last 8 weeks?
A:Management observed strong baskets and prices holding steady, with positive gallons sold. They attribute this to their rural focus and value-oriented pricing, including $4-$6 meals. While there has been some trading down in fuel grades (premium to mid-grade, mid-grade to regular), inside transactions and merchandise baskets have been positive. Overall, customers have been resilient despite higher costs.
Q:What drove the 190 basis points year-over-year increase in inside gross margins?
A:The increase was driven by new stores with higher foodservice contributions and stronger product mixes leaning towards higher-margin items. Price increases in late 2025 and early 2026 also contributed, along with positive transactions and unit growth.
Q:How is CPG (cents per gallon) trending in the second quarter and for the full year?
A:Post-quarter, CPG has been in the high 40s to low 50s. Management finds it too early to predict full-year trends due to ongoing fuel market volatility. Sustained volatility could lead to outsized margins.
Q:Will inside gross margins remain at the elevated levels seen in Q1?
A:Management expects some deceleration due to factors like weather benefits in Q1 and SKU groupings correlated to weather. They are not modeling the same level of same-store sales growth for the rest of the year.
Q:What is the pipeline for new store openings in 2026 and 2027?
A:The company has a strong pipeline with land under contract or negotiation, exceeding the required deliveries for 2026 and 2027. Arizona is a key growth state with higher fuel margins and strong customer receptivity. The first Arizona store is expected to open in late summer or early fall.
Q:What is the outlook for labor efficiency improvements?
A:Labor hours were down 3.5% in Q1, but management does not expect wide reductions going forward. They aim for continued efficiency through better data for operators, but the current labor model is already efficient.
Q:What factors could drive EBITDA towards the high or low end of the guidance range?
A:Higher fuel margins due to ongoing market volatility could drive EBITDA higher. However, sustained higher margins might stress customers inside the store, potentially offsetting some benefits.
Q:How is the company planning to reinvest excess cash from higher fuel margins?
A:The company plans to accelerate new builds, expand fuel offerings, upgrade technology, and explore M&A opportunities. They are also focusing on tying up land for future growth.
Q:Did $4 fuel prices trigger any noticeable behavior changes?
A:There was some trading down in fuel grades, but inside the store, there was no significant increase in private label penetration or trading down. Packaged beverage sales remained strong.
Q:Where were the recent price increases focused, and are there plans for further changes?
A:Price increases were based on strategic pricing analysis across various categories, reflecting the inflationary environment. There are no specific plans for increased promotions or price changes at this time.
Q:What is the current penetration of the loyalty program, and how is it being utilized?
A:Loyalty penetration is at 18.5% for inside sales and about 15% for fuel transactions. The company plans to use strategic marketing to incentivize loyalty members and potentially drive vendor-funded marketing efforts.
Q:Are there any updates or changes in the foodservice offerings?
A:The company is focusing on ideation at the margin, enhancing private label offerings, and simplifying menus. They aim to strengthen their signature burrito offering and related products.
Q:What merchandising trends are driving growth?
A:Packaged beverages, candy and snacks, and nicotine products showed strong performance in Q1. Vendor funding allowed customers to trade up in cigarette tiers, benefiting sales.
Q:What is the outlook for fuel margins and diesel penetration?
A:Structurally, fuel margins are expected to remain in the low 40s CPG. Diesel penetration reached 38% in Q1, and the company continues to add diesel offerings to new and existing locations. Diesel supply remains strong.
Q:How are same-store inside sales trending in Q2 compared to Q1?
A:Same-store inside sales are positive quarter-to-date but are expected to decelerate from the outsized growth seen in Q1 due to weather-related benefits.
Q:Review of Unclear Management Responses
A:Management avoided providing specific predictions for full-year CPG trends due to ongoing fuel market volatility. They also did not provide exact numbers for Q2 same-store sales trends, citing incomplete data. Additionally, while discussing potential M&A opportunities, no concrete plans or timelines were shared.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Allsup
CPG
Ericka
IPO
ability
acquisition
base
beverage
brand
capital
cash
community
consumer
contribution
convenience store
customer
day
debt
destination
development
diesel
employee
end
environment
estate
flexibility
food
foodservice
fuel margin
gallon
industry
market
merchandise sale
opportunity
period
platform
price
result
statement
store sale
strength
today
traffic
value
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
