Annual report pursuant to Section 13 and 15(d)

SCHEDULE I

v3.22.4
SCHEDULE I
12 Months Ended
Dec. 31, 2022
Statement of Financial Position [Abstract]  
SEC Schedule, Article 12-04, Condensed Financial Information of Registrant

SCHEDULE I

ARKO Corp. (Parent Company Only)

Condensed Balance Sheets

(in thousands)

 

 

 

 

As of December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

93,721

 

 

$

88,508

 

Short-term loans to subsidiaries

 

 

 

 

 

40,119

 

Other current assets

 

 

16,168

 

 

 

10,110

 

Total current assets

 

 

109,889

 

 

 

138,737

 

Non-current assets:

 

 

 

 

 

 

Investment in subsidiaries

 

 

312,708

 

 

 

255,444

 

Loans to subsidiaries

 

 

450,000

 

 

 

450,000

 

Deferred tax asset

 

 

2,239

 

 

 

2,403

 

Total assets

 

$

874,836

 

 

$

846,584

 

Liabilities

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Long-term debt, current portion

 

$

1,145

 

 

$

1,500

 

Other current liabilities

 

 

17,364

 

 

 

7,436

 

Total current liabilities

 

 

18,509

 

 

 

8,936

 

Non-current liabilities:

 

 

 

 

 

 

Long-term debt, net

 

 

443,648

 

 

 

442,889

 

Other non-current liabilities

 

 

31,845

 

 

 

41,307

 

Total liabilities

 

$

494,002

 

 

$

493,132

 

 

 

 

 

 

 

 

Series A redeemable preferred stock

 

 

100,000

 

 

 

100,000

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

280,834

 

 

 

253,452

 

Total liabilities, redeemable preferred stock and shareholders' equity

 

$

874,836

 

 

$

846,584

 

 

The accompanying notes are an integral part of the condensed financial statements.

 

SCHEDULE I

ARKO Corp. (Parent Company Only)

Condensed Statements of Operations

(in thousands)

 

 

 

For the Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Income:

 

 

 

 

 

 

 

 

 

Income from loans to subsidiaries and other investee

 

$

23,645

 

 

$

6,016

 

 

$

3,960

 

Other income

 

 

 

 

 

 

 

 

597

 

 

 

 

23,645

 

 

 

6,016

 

 

 

4,557

 

Expenses:

 

 

 

 

 

 

 

 

 

General and administrative

 

 

7,437

 

 

 

6,152

 

 

 

4,562

 

Expenses related to loans to subsidiaries and other investee

 

 

 

 

 

 

 

 

2,692

 

 

 

 

7,437

 

 

 

6,152

 

 

 

7,254

 

Income (loss) before interest and financial income (expenses)

 

 

16,208

 

 

 

(136

)

 

 

(2,697

)

Interest and other financial income

 

 

1,577

 

 

 

1,005

 

 

 

1,093

 

Interest and other financial expenses

 

 

(23,641

)

 

 

(10,855

)

 

 

(8,225

)

Loss before income taxes

 

 

(5,856

)

 

 

(9,986

)

 

 

(9,829

)

Income tax benefit (expense)

 

 

3,579

 

 

 

(2,771

)

 

 

(324

)

Equity income from subsidiaries

 

 

74,024

 

 

 

71,955

 

 

 

23,863

 

Net income

 

$

71,747

 

 

$

59,198

 

 

$

13,710

 

Accretion of redeemable preferred stock

 

 

 

 

 

 

 

 

(3,120

)

Series A redeemable preferred stock dividends

 

 

(5,750

)

 

 

(5,735

)

 

 

(157

)

Net income attributable to common shareholders

 

$

65,997

 

 

$

53,463

 

 

$

10,433

 

 

 

The accompanying notes are an integral part of the condensed financial statements.

 

SCHEDULE I

ARKO Corp. (Parent Company Only)

Condensed Statements of Comprehensive Income

(in thousands)

 

 

 

For the Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Net income

 

$

71,747

 

 

$

59,198

 

 

$

13,710

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

4,675

 

Total other comprehensive income

 

 

 

 

 

 

 

 

4,675

 

Comprehensive income

 

$

71,747

 

 

$

59,198

 

 

$

18,385

 

 

 

The accompanying notes are an integral part of the condensed financial statements.

 

SCHEDULE I

ARKO Corp. (Parent Company Only)

Condensed Statements of Cash Flows

(in thousands)

 

 

 

For the Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Net income

 

$

71,747

 

 

$

59,198

 

 

$

13,710

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

 

 

 

 

Equity income from subsidiaries

 

 

(74,024

)

 

 

(71,955

)

 

 

(23,863

)

Deferred income taxes

 

 

(164

)

 

 

519

 

 

 

(130

)

Amortization of deferred financing cost, debt discount and premium

 

 

759

 

 

 

152

 

 

 

(331

)

Depreciation and amortization

 

 

 

 

 

 

 

 

8

 

Foreign currency loss (gain) and interest related to intercompany balances

 

 

1,693

 

 

 

(4,656

)

 

 

4,703

 

Share-based compensation

 

 

955

 

 

 

868

 

 

 

1,891

 

Fair value adjustment of financial liabilities

 

 

(887

)

 

 

5,021

 

 

 

107

 

Other operating activities, net

 

 

 

 

 

 

 

 

(38

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

(Increase) decrease in other current assets

 

 

(11,542

)

 

 

(1,586

)

 

 

490

 

Increase in other current liabilities

 

 

6,752

 

 

 

3,713

 

 

 

942

 

Net cash used in operating activities

 

$

(4,711

)

 

$

(8,726

)

 

$

(2,511

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Loans to investees

 

$

 

 

$

(450,000

)

 

$

(68,939

)

Repayments of loans to subsidiaries and other investees

 

 

40,000

 

 

 

 

 

 

109,946

 

Distribution from subsidiary

 

 

28,109

 

 

 

 

 

 

 

Investment in subsidiary

 

 

 

 

 

 

 

 

(107,299

)

Net cash provided by (used in) investing activities

 

 

68,109

 

 

 

(450,000

)

 

 

(66,292

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Proceeds from issuance of long-term debt, net

 

 

 

 

 

442,737

 

 

 

 

Issuance of shares in Merger Transaction

 

 

 

 

 

 

 

 

60,318

 

Payment of Merger Transaction issuance costs

 

 

 

 

 

(4,773

)

 

 

 

Issuance of redeemable preferred stock, net

 

 

 

 

 

 

 

 

96,880

 

Common stock repurchased

 

 

(40,042

)

 

 

 

 

 

 

Dividends paid on common stock

 

 

(10,893

)

 

 

 

 

 

 

Dividends paid on redeemable preferred stock

 

 

(5,750

)

 

 

(5,892

)

 

 

 

Repayment of long-term debt

 

 

(1,500

)

 

 

(2,017

)

 

 

(10,953

)

Buyback of long-term debt

 

 

 

 

 

 

 

 

(1,995

)

Proceeds from issuance of rights, net

 

 

 

 

 

 

 

 

11,332

 

Net cash (used in) provided by financing activities

 

 

(58,185

)

 

 

430,055

 

 

 

155,582

 

Net increase (decrease) in cash and cash equivalents and
   restricted cash

 

 

5,213

 

 

 

(28,671

)

 

 

86,779

 

Effect of exchange rate on cash and cash equivalents and restricted cash

 

 

 

 

 

 

 

 

2,875

 

Cash and cash equivalents and restricted cash, beginning of year

 

 

88,508

 

 

 

117,179

 

 

 

27,525

 

Cash and cash equivalents, end of year

 

$

93,721

 

 

$

88,508

 

 

$

117,179

 

Reconciliation of cash and cash equivalents and restricted cash

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of year

 

 

88,508

 

 

 

117,179

 

 

 

21,302

 

Restricted cash with respect to bonds, beginning of year

 

 

 

 

 

 

 

 

6,223

 

Cash and cash equivalents and restricted cash, beginning of year

 

$

88,508

 

 

$

117,179

 

 

$

27,525

 

 

The accompanying notes are an integral part of the condensed financial statements.

 

SCHEDULE I

ARKO Corp. (Parent Company Only)

Condensed Statements of Cash Flows (cont’d)

(in thousands)

 

 

 

For the Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Supplementary cash flow information:

 

 

 

 

 

 

 

 

 

Cash received for interest

 

$

26,028

 

 

$

1,404

 

 

$

2,340

 

Cash paid for interest

 

 

24,610

 

 

 

14

 

 

 

3,840

 

Cash paid for taxes

 

 

735

 

 

 

6,175

 

 

 

305

 

Supplementary noncash activities:

 

 

 

 

 

 

 

 

 

Prepaid insurance premiums financed through notes payable

 

 

1,145

 

 

 

1,765

 

 

 

2,190

 

Issuance of shares

 

 

 

 

 

3,000

 

 

 

 

Ares Put Option

 

 

 

 

 

 

 

 

9,201

 

 

The accompanying notes are an integral part of the condensed financial statements.

 

ARKO Corp. (Parent Company Only)

Notes to Condensed Financial Statements

1. General

The condensed financial statements represent the financial information required by SEC Regulation S-X Rule 5-04 for ARKO Corp. (the “Company”), which requires the inclusion of parent company only financial statements if the restricted net assets of consolidated subsidiaries exceed 25% of total consolidated net assets as of the last day of its most recent fiscal year. As of December 31, 2022, the Company’s restricted net assets of its consolidated subsidiary, GPM Investments, LLC (“GPM”), were approximately $720.6 million and exceeded 25% of the Company’s total consolidated net assets. The primary restrictions as of December 31, 2022 were driven by GPM’s financing agreement with PNC which restrict the transfer of non-cash assets from GPM to the Company. This financing agreement also include restrictions on distributions according to which, among other things, GPM’s ability to distribute is subject to certain conditions as defined in the underlying agreement. For more information about GPM’s financing agreement with PNC, refer to Note 12 to the consolidated financial statements.

The Merger Transaction was accounted for as a reverse recapitalization. Under this method of accounting, Haymaker was treated as the “acquired” company and Arko Holdings was considered the accounting acquirer for accounting purposes. The Merger Transaction was treated as the equivalent of Arko Holdings issuing stock in exchange for the net assets of Haymaker, accompanied by a recapitalization. Because Arko Holdings was deemed the accounting acquirer, upon the consummation of the Merger Transaction, the historical financial statements of Arko Holdings became the historical financial statements of the combined company. As a result, the financial statements included in these parent only financial statements reflect the historical operating results of Arko Holdings prior to the Merger Closing Date.

2. Summary of Significant Accounting Policies

The accompanying condensed financial statements have been prepared to present the financial position, results of operations and cash flows of the Company on a stand-alone basis as a holding company. Investments in subsidiaries are accounted for using the equity method. The condensed parent company only financial statements should be read in conjunction with the Company's consolidated financial statements.

3. Long-Term Debt

Senior Notes

On October 21, 2021, the Company completed a private offering of $450 million aggregate principal amount of 5.125% Senior Notes due 2029 (the “Senior Notes”), pursuant to a note purchase agreement dated October 14, 2021, by and among the Company, certain of the Company’s wholly owned domestic subsidiaries (the “Guarantors”), and BofA Securities, Inc., as representative of the several initial purchasers named therein. The Senior Notes are guaranteed, on an unsecured senior basis, by all of the Guarantors. Refer to Note 12 to the consolidated financial statements for further details.

Insurance Premium Notes

The debt outstanding related to premium financing agreements are due within one year. Refer to Note 12 to the consolidated financial statements for further details.