| SEC Schedule, Article 12-04, Condensed Financial Information of Registrant |
SCHEDULE I
ARKO Corp. (Parent Company Only)
Condensed Balance Sheets
(in thousands)
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As of December 31, |
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2022 |
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2021 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
93,721 |
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$ |
88,508 |
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Short-term loans to subsidiaries |
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— |
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40,119 |
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Other current assets |
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16,168 |
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10,110 |
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Total current assets |
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109,889 |
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138,737 |
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Non-current assets: |
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Investment in subsidiaries |
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312,708 |
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255,444 |
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Loans to subsidiaries |
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450,000 |
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450,000 |
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Deferred tax asset |
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2,239 |
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2,403 |
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Total assets |
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$ |
874,836 |
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$ |
846,584 |
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Liabilities |
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Current liabilities: |
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Long-term debt, current portion |
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$ |
1,145 |
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$ |
1,500 |
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Other current liabilities |
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17,364 |
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7,436 |
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Total current liabilities |
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18,509 |
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8,936 |
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Non-current liabilities: |
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Long-term debt, net |
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443,648 |
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442,889 |
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Other non-current liabilities |
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31,845 |
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41,307 |
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Total liabilities |
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$ |
494,002 |
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$ |
493,132 |
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Series A redeemable preferred stock |
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100,000 |
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100,000 |
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Shareholders' equity |
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280,834 |
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253,452 |
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Total liabilities, redeemable preferred stock and shareholders' equity |
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$ |
874,836 |
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$ |
846,584 |
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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)
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For the Year Ended December 31, |
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2022 |
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2021 |
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2020 |
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Income: |
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Income from loans to subsidiaries and other investee |
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$ |
23,645 |
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$ |
6,016 |
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$ |
3,960 |
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Other income |
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— |
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— |
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597 |
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23,645 |
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6,016 |
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4,557 |
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Expenses: |
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General and administrative |
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7,437 |
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6,152 |
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4,562 |
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Expenses related to loans to subsidiaries and other investee |
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— |
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— |
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2,692 |
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7,437 |
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6,152 |
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7,254 |
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Income (loss) before interest and financial income (expenses) |
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16,208 |
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(136 |
) |
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(2,697 |
) |
Interest and other financial income |
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1,577 |
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1,005 |
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1,093 |
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Interest and other financial expenses |
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(23,641 |
) |
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(10,855 |
) |
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(8,225 |
) |
Loss before income taxes |
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(5,856 |
) |
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(9,986 |
) |
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(9,829 |
) |
Income tax benefit (expense) |
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3,579 |
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(2,771 |
) |
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(324 |
) |
Equity income from subsidiaries |
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74,024 |
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71,955 |
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23,863 |
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Net income |
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$ |
71,747 |
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$ |
59,198 |
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$ |
13,710 |
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Accretion of redeemable preferred stock |
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— |
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— |
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(3,120 |
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Series A redeemable preferred stock dividends |
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(5,750 |
) |
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(5,735 |
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(157 |
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Net income attributable to common shareholders |
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$ |
65,997 |
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$ |
53,463 |
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$ |
10,433 |
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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)
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For the Year Ended December 31, |
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2022 |
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2021 |
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2020 |
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Net income |
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$ |
71,747 |
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$ |
59,198 |
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$ |
13,710 |
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Other comprehensive income: |
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Foreign currency translation adjustments |
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— |
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— |
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4,675 |
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Total other comprehensive income |
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— |
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— |
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4,675 |
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Comprehensive income |
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$ |
71,747 |
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$ |
59,198 |
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$ |
18,385 |
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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)
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For the Year Ended December 31, |
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2022 |
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2021 |
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2020 |
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Cash flows from operating activities: |
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Net income |
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$ |
71,747 |
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$ |
59,198 |
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$ |
13,710 |
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Adjustments to reconcile net income to net cash used in operating activities: |
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Equity income from subsidiaries |
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(74,024 |
) |
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(71,955 |
) |
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(23,863 |
) |
Deferred income taxes |
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(164 |
) |
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519 |
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(130 |
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Amortization of deferred financing cost, debt discount and premium |
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759 |
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152 |
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(331 |
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Depreciation and amortization |
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— |
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— |
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8 |
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Foreign currency loss (gain) and interest related to intercompany balances |
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1,693 |
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(4,656 |
) |
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4,703 |
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Share-based compensation |
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955 |
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868 |
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1,891 |
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Fair value adjustment of financial liabilities |
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(887 |
) |
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5,021 |
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107 |
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Other operating activities, net |
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— |
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— |
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(38 |
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Changes in assets and liabilities: |
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(Increase) decrease in other current assets |
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(11,542 |
) |
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(1,586 |
) |
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490 |
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Increase in other current liabilities |
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6,752 |
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3,713 |
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|
942 |
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Net cash used in operating activities |
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$ |
(4,711 |
) |
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$ |
(8,726 |
) |
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$ |
(2,511 |
) |
Cash flows from investing activities: |
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Loans to investees |
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$ |
— |
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$ |
(450,000 |
) |
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$ |
(68,939 |
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Repayments of loans to subsidiaries and other investees |
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40,000 |
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— |
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109,946 |
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Distribution from subsidiary |
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28,109 |
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— |
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— |
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Investment in subsidiary |
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— |
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— |
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(107,299 |
) |
Net cash provided by (used in) investing activities |
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68,109 |
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(450,000 |
) |
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(66,292 |
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Cash flows from financing activities: |
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Proceeds from issuance of long-term debt, net |
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— |
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442,737 |
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— |
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Issuance of shares in Merger Transaction |
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— |
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— |
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60,318 |
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Payment of Merger Transaction issuance costs |
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— |
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(4,773 |
) |
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— |
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Issuance of redeemable preferred stock, net |
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— |
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— |
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96,880 |
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Common stock repurchased |
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(40,042 |
) |
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— |
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— |
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Dividends paid on common stock |
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(10,893 |
) |
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— |
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— |
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Dividends paid on redeemable preferred stock |
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(5,750 |
) |
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(5,892 |
) |
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— |
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Repayment of long-term debt |
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(1,500 |
) |
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(2,017 |
) |
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(10,953 |
) |
Buyback of long-term debt |
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— |
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— |
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(1,995 |
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Proceeds from issuance of rights, net |
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— |
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— |
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11,332 |
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Net cash (used in) provided by financing activities |
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(58,185 |
) |
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430,055 |
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155,582 |
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Net increase (decrease) in cash and cash equivalents and
restricted cash |
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5,213 |
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(28,671 |
) |
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86,779 |
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Effect of exchange rate on cash and cash equivalents and restricted cash |
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— |
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— |
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2,875 |
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Cash and cash equivalents and restricted cash, beginning of year |
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|
88,508 |
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117,179 |
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|
27,525 |
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Cash and cash equivalents, end of year |
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$ |
93,721 |
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$ |
88,508 |
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$ |
117,179 |
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Reconciliation of cash and cash equivalents and restricted cash |
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Cash and cash equivalents, beginning of year |
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|
88,508 |
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117,179 |
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|
21,302 |
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Restricted cash with respect to bonds, beginning of year |
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— |
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— |
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|
6,223 |
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Cash and cash equivalents and restricted cash, beginning of year |
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$ |
88,508 |
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$ |
117,179 |
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$ |
27,525 |
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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)
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For the Year Ended December 31, |
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2022 |
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2021 |
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2020 |
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Supplementary cash flow information: |
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Cash received for interest |
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$ |
26,028 |
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$ |
1,404 |
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$ |
2,340 |
|
Cash paid for interest |
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24,610 |
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14 |
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|
3,840 |
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Cash paid for taxes |
|
|
735 |
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|
6,175 |
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|
305 |
|
Supplementary noncash activities: |
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Prepaid insurance premiums financed through notes payable |
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1,145 |
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1,765 |
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|
2,190 |
|
Issuance of shares |
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— |
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|
3,000 |
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— |
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Ares Put Option |
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— |
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— |
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|
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.
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