Income Before Income Taxes up 45%
TravelCenters of America LLC (NYSE: TA) today
announced financial results for the three and six months ended June
30, 2014.
At June 30, 2014, TA’s business included 248 travel centers in
43 U.S. states and in Canada, 173 of which were operated under the
“TravelCenters of America” or “TA” brand names and 75 of which were
operated under the “Petro” brand name. At June 30, 2014, TA also
operated 34 convenience stores with retail gas stations, primarily
under the “Minit Mart” brand name. TA’s results were:
Three Months Ended
June 30,
Six Months Ended
June 30,
2014 2013 2014 2013 (in
thousands, except per share amounts) Revenues $ 2,076,109 $
2,018,754 $ 4,043,418 $ 3,976,105 Income before income taxes $
22,622 $ 15,643 $ 22,841 $ 3,238 Net income $ 13,634 $ 15,984 $
13,831 $ 3,845 Net income per share: Basic and diluted $
0.36 $ 0.54 $ 0.37 $ 0.13 Supplemental Data: Total fuel
sales volume (gallons) 517,205 521,086 1,012,052 1,016,799 Total
fuel revenues $ 1,658,172 $ 1,635,400 $ 3,247,818 $ 3,260,507 Fuel
gross margin $ 99,123 $ 89,812 $ 191,440 $ 166,740 Total
nonfuel sales $ 414,854 $ 380,041 $ 789,520 $ 709,235 Nonfuel gross
margin $ 222,887 $ 208,103 $ 429,137 $ 391,932 Nonfuel gross margin
percentage 53.7 % 54.8 % 54.4 % 55.3 % EBITDAR(1) $ 97,003 $
86,618 $ 171,844 $ 143,586
(1) A reconciliation of earnings before
interest, taxes, depreciation, amortization and rent, or EBITDAR,
from net income determined in accordance with U.S. generally
accepted accounting principles, or GAAP, appears in the
supplemental data below.
Business Commentary
TA’s EBITDAR for the second quarter of 2014 increased by
approximately $10.4 million, or 12.0%, to $97.0 million, versus
EBITDAR for the 2013 second quarter of $86.6 million. The increase
in EBITDAR is primarily attributable to an increase in fuel gross
margin per gallon, which averaged $0.192 during the 2014 second
quarter versus $0.172 during the 2013 second quarter, and the
continued improvements in the results of sites TA acquired in 2011
through 2013.
Income before income taxes for the second quarter of 2014 was
$22.6 million, reflecting a $7.0 million, or 44.6% increase over
income before income taxes for the 2013 second quarter of $15.6
million. The dollar amount of this increase was less than the
dollar amount of the increase in EBITDAR for the 2014 second
quarter versus the 2013 second quarter due to increased
depreciation associated with our investments in our new and
existing sites and rent expense that principally is associated with
sales of improvements to Hospitality Properties Trust, or HPT, our
principal landlord.
Net income for the second quarter of 2014 was $13.6 million
($0.36 per share), reflecting a $2.4 million decrease from the net
income for the 2013 second quarter of $16.0 million ($0.54 per
share). The decrease in net income for the 2014 period was due to
increased income tax provision as a result of TA having reversed
most of its valuation allowance against its deferred tax assets in
the 2013 fourth quarter. In the 2013 period, the income tax
provision was small, largely because TA was able to offset income
tax provision with deferred tax assets not previously recognized in
light of TA’s then having a full valuation allowance against its
deferred tax assets.
Capital improvements to recently purchased travel centers are
often substantial and require a long period of time to plan,
design, permit and complete, and once improvements are completed
the improved travel centers require a period of time to produce
stabilized financial results. TA estimates that the travel centers
it acquires generally will reach stabilization in approximately the
third year after acquisition, but actual results can vary widely
from this estimate due to many factors, some of which are outside
TA’s control. The 31 travel centers and 31 gas/convenience stores
TA acquired during 2011 through 2014 generated gross revenues in
excess of cost of goods sold and site level operating expenses as
follows:
Number of
Three Months Ended June 30, (amounts in thousands, except
numbers of properties)
Properties Acquired 2014
2013 Properties acquired in 2011 6 $
3,858 $ 1,848 Properties acquired in 2012 14 5,434 4,208 Properties
acquired in 2013 41(1) 4,646 593 Properties acquired in 2014 1
52 — Total 62 $ 13,990 $ 6,649
Number of Twelve
Months Ended June 30, (amounts in thousands, except numbers of
properties)
Properties Acquired 2014
2013 Properties acquired in 2011 6 $ 13,693 $ 6,018
Properties acquired in 2012 14 17,312 7,083 Properties acquired in
2013 41(1) 9,832 855 Properties acquired in 2014 1 (146 )
— Total 62 $ 40,691 $ 13,956
(1) Includes 31 convenience stores acquired
in December 2013; all other acquisitions are travel centers.
The amounts presented in the above tables are the amounts
recognized during the periods presented (from the beginning of the
period shown, or if later, the date TA began to operate such
property for its own account).
Thomas M. O’Brien, TA’s CEO, made the following statement
regarding the 2014 second quarter results:
“Our second quarter 2014 results included strong growth in key
measures like EBITDAR and pre-tax income, and continued the growth
of financial contributions from our recently acquired sites,
including travel centers and convenience stores. Since the end of
the second quarter, we closed the acquisitions of two additional
travel center properties and entered agreements to acquire three
travel centers and seven gasoline/convenience stores.”
Investment Activity
During the six months ended June 30, 2014, TA purchased a travel
center for $3.2 million and made capital investments of $60.6
million, including $10.9 million to improve locations TA purchased
since the beginning of 2011. During the third quarter of 2014, TA
completed two acquisitions of travel centers for an aggregate
amount of approximately $22.6 million. TA currently intends to
continue its efforts to selectively acquire additional
properties.
The table below shows the number of properties acquired by year,
the amounts TA has invested through June 30, 2014, and the total
estimated additional amounts TA currently plans to invest in the
near term in these properties.
Site Count
AcquisitionCost
Renovation CostIncurred
ThroughJune 30, 2014
AdditionalEstimatedRenovationCost to
beSpent
Properties acquired in 2011 6 $ 36,333 $ 47,737 $ — Properties
acquired in 2012 14 46,910 33,603 — Properties acquired in 2013(1)
41 111,602 25,259 26,060 Properties acquired in 2014 first quarter
1 2,999 1,706 4,012 Total 62 $ 197,844 $
108,305 $ 30,072
( 1) Includes 31 convenience stores acquired
in December 2013.
Supplemental Data
In addition to the historical financial results prepared in
accordance with GAAP, TA furnishes supplemental data that it
believes may help investors better understand TA’s business.
Included in this supplemental data is same site operating data for
the locations that were operated by TA continuously since the
beginning of the earliest applicable period presented and operating
data for those sites that TA acquired since the beginning of 2011.
A presentation of EBITDAR, and a reconciliation that shows the
calculation of EBITDAR from net income, the most directly
comparable financial measure calculated and presented in accordance
with GAAP, also appears in the supplemental data.
Conference Call:
On Tuesday, September 30, 2014, at 10:00 a.m. Eastern Time, TA
will host a conference call to discuss its financial results and
other activities for the three months ended June 30, 2014.
Following management’s remarks, there will be a question and answer
period.
The conference call telephone number is (800) 230-1096.
Participants calling from outside the United States and Canada
should dial (612) 332-0634. No pass code is necessary to access the
call from either number. Participants should dial in about 15
minutes prior to the scheduled start of the call. A replay of the
conference call will be available for about a week after the call.
To hear the replay, dial (320) 365-3844. The replay pass code is
337794.
A live audio webcast of the conference call will also be
available in a listen only mode on our web site at
www.ta-petro.com. To access the webcast, participants should visit
our web site about five minutes before the call. The archived
webcast will be available for replay on our web site for about one
week after the call. The transcription, recording and
retransmission in any way of TA’s second quarter conference call is
strictly prohibited without the prior written consent of TA.
The Company’s website is not incorporated as part of this press
release.
About TravelCenters of America LLC:
TA’s travel centers operate under the “TravelCenters of
America”, “TA”, “Petro Stopping Centers” and “Petro” brand names
and offer diesel and gasoline fueling, restaurants, truck repair
facilities, stores and other services. TA’s nationwide business
includes travel centers located in 43 U.S. states and in Canada. TA
also operates convenience stores with gasoline stations principally
under the “Minit Mart” brand name, primarily in Kentucky.
WARNING CONCERNING
FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD
LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO,
WHENEVER TA USES WORDS SUCH AS ‘‘BELIEVE’’, ‘‘EXPECT’’,
‘‘ANTICIPATE’’, ‘‘INTEND’’, ‘‘PLAN’’, ‘‘ESTIMATE’’ OR SIMILAR
EXPRESSIONS, TA IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD
LOOKING STATEMENTS ARE BASED UPON TA’S PRESENT INTENT, BELIEFS OR
EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO
OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY FORWARD LOOKING
STATEMENTS AS A RESULT OF VARIOUS FACTORS. AMONG OTHERS, THE
FORWARD LOOKING STATEMENTS WHICH APPEAR IN THIS PRESS RELEASE THAT
MAY NOT OCCUR INCLUDE:
- THIS PRESS RELEASE IMPLIES THAT THE
OPERATIONS AT MANY SITES ACQUIRED SINCE THE BEGINNING OF 2011 HAVE
NOT YET REACHED THE STABILIZED FINANCIAL RESULTS TA CURRENTLY
EXPECTS AND STATES THAT TA ESTIMATES THAT ACQUIRED TRAVEL CENTERS
GENERALLY WILL REACH STABILIZATION IN APPROXIMATELY THE THIRD YEAR
AFTER ACQUISITION AND THAT THE IMPROVEMENTS IN EBITDAR FOR THE
SECOND QUARTER OF 2014 AS COMPARED TO THE SAME PERIOD IN 2013 ARE
PARTIALLY ATTRIBUTABLE TO THE IMPROVED RESULTS AT RECENTLY ACQUIRED
SITES. THESE STATEMENTS MAY IMPLY THAT TA’S EXPECTED STABILIZATION
WILL IN FACT BE REALIZED AND WILL RESULT IN INCREASES IN TA’S
EBITDAR AND NET INCOME IN THE FUTURE. HOWEVER, TA’S ABILITY TO
OPERATE THESE LOCATIONS PROFITABLY DEPENDS UPON MANY FACTORS,
INCLUDING TA’S ABILITY TO SUCCESSFULLY INTEGRATE NEW OPERATIONS
INTO ITS EXISTING OPERATIONS AND OTHER FACTORS, SOME OF WHICH ARE
BEYOND TA’S CONTROL;
- THIS PRESS RELEASE REFERENCES
ACQUISITIONS THAT HAVE BEEN AGREED UPON BUT THAT HAVE NOT BEEN
COMPLETED AS OF THE DATE OF THIS PRESS RELEASE. IMPLICATIONS OF
THESE STATEMENTS MAY BE THAT THESE ACQUISITIONS WILL BE COMPLETED
AND THAT THEY MAY IMPROVE TA’S FUTURE PROFITS. HOWEVER, THESE
ACQUISITIONS ARE SUBJECT TO CONDITIONS AND MAY NOT BE COMPLETED OR
MAY BE DELAYED OR THEIR TERMS MAY CHANGE. MOREOVER, MANAGING AND
INTEGRATING OPERATIONS OF ACQUIRED TRAVEL CENTERS AND CONVENIENCE
STORES CAN BE DIFFICULT TO CONDUCT, TIME CONSUMING AND/OR MORE
EXPENSIVE THAN ANTICIPATED AND INVOLVE RISKS OF FINANCIAL LOSSES.
TA MAY NOT OPERATE ITS ACQUIRED LOCATIONS AS PROFITABLY AS IT NOW
EXPECTS; AND
- THIS PRESS RELEASE STATES THAT TA
CURRENTLY INTENDS TO CONTINUE ITS EFFORTS TO SELECTIVELY ACQUIRE
ADDITIONAL PROPERTIES. THE IMPLICATIONS OF THIS STATEMENT MAY BE
THAT TA WILL BE ABLE TO IDENTIFY AND COMPLETE ADDITIONAL
ACQUISITIONS. HOWEVER, TA MAY NOT SUCCEED IN IDENTIFYING AND/OR
ACQUIRING OTHER PROPERTIES OR PROFITABLY OPERATE ANY PROPERTIES IT
MAY ACQUIRE.
THESE AND OTHER UNEXPECTED RESULTS MAY BE CAUSED BY VARIOUS
FACTORS, SOME OF WHICH ARE BEYOND TA’S CONTROL, INCLUDING:
- THE TREND TOWARDS IMPROVED FUEL
EFFICIENCY BY TA’S CUSTOMERS MAY CONTINUE TO REDUCE THE DEMAND FOR
FUEL AND MAY ADVERSELY AFFECT TA’S BUSINESS;
- THE IMPACT OF CHANGES IN THE ECONOMY
AND THE CAPITAL MARKETS ON TA, ITS CUSTOMERS AND ITS
FRANCHISEES;
- COMPLIANCE WITH, AND CHANGES TO,
FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS, ACCOUNTING RULES,
TAX RATES, ENVIRONMENTAL REGULATIONS AND SIMILAR MATTERS;
- COMPETITION WITHIN THE TRAVEL CENTER
AND CONVENIENCE STORE INDUSTRIES;
- FUTURE FUEL PRICE INCREASES, FUEL PRICE
VOLATILITY OR OTHER FACTORS MAY CAUSE TA TO NEED MORE WORKING
CAPITAL TO MAINTAIN ITS INVENTORIES AND CARRY ITS ACCOUNTS
RECEIVABLE THAN TA NOW EXPECTS;
- ACQUISITIONS MAY SUBJECT TA TO
ADDITIONAL OR GREATER RISKS THAN TA’S CONTINUING OPERATIONS,
INCLUDING THE ASSUMPTION OF UNKNOWN LIABILITIES;
- FUTURE INCREASES IN FUEL PRICES MAY
REDUCE THE DEMAND FOR THE PRODUCTS AND SERVICES THAT TA SELLS
BECAUSE HIGH FUEL PRICES MAY ENCOURAGE FUEL CONSERVATION, DIRECT
FREIGHT BUSINESS AWAY FROM TRUCKING OR OTHERWISE ADVERSELY AFFECT
THE BUSINESS OF TA’S CUSTOMERS. SOME OF THESE FACTORS MAY OCCUR OR
CONTINUE EVEN IF FUEL PRICES DO NOT INCREASE;
- TA’S SUPPLIERS MAY BE UNWILLING OR
UNABLE TO MAINTAIN TA’S CURRENT CREDIT TERMS FOR PURCHASES. IF TA
IS UNABLE TO PURCHASE GOODS ON REASONABLE CREDIT TERMS, TA’S
REQUIRED WORKING CAPITAL MAY INCREASE AND TA MAY INCUR MATERIAL
LOSSES. IN TIMES OF RISING FUEL AND NONFUEL PRICES, TA’S SUPPLIERS
MAY BE UNWILLING OR UNABLE TO INCREASE THE CREDIT AMOUNTS THEY
EXTEND TO TA, WHICH MAY REQUIRE TA TO INCREASE ITS WORKING CAPITAL
INVESTMENT. THE AVAILABILITY AND THE TERMS OF ANY CREDIT TA MAY BE
ABLE TO OBTAIN ARE UNCERTAIN;
- MOST OF TA’S TRUCKING COMPANY CUSTOMERS
TRANSACT BUSINESS WITH TA BY USE OF FUEL CARDS, MOST OF WHICH ARE
ISSUED BY THIRD PARTY FUEL CARD COMPANIES. THE FUEL CARD INDUSTRY
HAS ONLY A FEW SIGNIFICANT PARTICIPANTS. FUEL CARD COMPANIES
FACILITATE PAYMENTS TO TA AND CHARGE TA FEES FOR THESE SERVICES.
COMPETITION, OR LACK THEREOF, AMONG FUEL CARD COMPANIES MAY RESULT
IN FUTURE INCREASES IN TA’S TRANSACTION FEE EXPENSES OR WORKING
CAPITAL REQUIREMENTS, OR BOTH;
- TA'S FAILURE TO TIMELY FILE ITS ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2013,
AND ITS QUARTERLY REPORTS OF FORM 10-Q FOR THE FISCAL QUARTERS
ENDED MARCH 31, AND JUNE 30, 2014, AND ITS CONSEQUENT INABILITY TO
USE ITS SHELF REGISTRATION STATEMENT ON FORM S-3 UNTIL IT HAS BEEN
CURRENT IN ITS FILINGS UNDER THE SECURITIES EXCHANGE ACT FOR A
PERIOD OF AT LEAST ONE YEAR MAY NEGATIVELY IMPACT TA'S ABILITY TO
ISSUE NEW DEBT AND EQUITY SECURITIES;
- TA IS ROUTINELY INVOLVED IN LITIGATION
AND OTHER LEGAL MATTERS INCIDENTAL TO THE ORDINARY COURSE OF ITS
BUSINESS. DISCOVERY AND COURT DECISIONS DURING LITIGATION OFTEN
HAVE UNANTICIPATED RESULTS. LITIGATION IS USUALLY EXPENSIVE AND
DISTRACTING TO MANAGEMENT. TA CAN PROVIDE NO ASSURANCE AS TO THE
OUTCOME OF ANY OF THE LITIGATION MATTERS IN WHICH IT IS OR MAY
BECOME INVOLVED;
- ACTS OF TERRORISM, GEOPOLITICAL RISKS,
WARS OR OTHER MANMADE OR NATURAL DISASTERS BEYOND TA’S CONTROL MAY
ADVERSELY AFFECT TA’S FINANCIAL RESULTS;
- ALTHOUGH TA BELIEVES THAT IT BENEFITS
FROM ITS CONTINUING RELATIONSHIPS WITH HPT, REIT MANAGEMENT &
RESEARCH LLC, OR RMR, AFFILIATES INSURANCE COMPANY, OR AIC, AND
THEIR AFFILIATED AND RELATED PERSONS AND ENTITIES, ACTUAL AND
POTENTIAL CONFLICTS OF INTEREST WITH HPT, RMR, AIC AND THEIR
AFFILIATED AND RELATED PERSONS AND ENTITIES MAY PRESENT A CONTRARY
PERCEPTION OR RESULT IN LITIGATION;
- AS A RESULT OF CERTAIN TRADING IN TA’S
SHARES DURING 2007, TA EXPERIENCED AN OWNERSHIP CHANGE AS DEFINED
BY SECTION 382 OF THE INTERNAL REVENUE CODE, OR THE CODE;
CONSEQUENTLY, TA MAY BE UNABLE TO USE ITS NET OPERATING LOSS
GENERATED IN 2007 TO OFFSET FUTURE TAXABLE INCOME TA MAY GENERATE
AND MAY OTHERWISE SUFFER LIMITATION OF TAX BENEFITS. IF TA
EXPERIENCES ADDITIONAL OWNERSHIP CHANGES, AS DEFINED IN THE CODE,
TA’S ABILITY TO USE ITS NET OPERATING LOSSES GENERATED AFTER 2007
COULD BE LIMITED OR ELIMINATED; AND
- TA’S LIMITED LIABILITY COMPANY
AGREEMENT AND BYLAWS AND CERTAIN OF TA’S OTHER AGREEMENTS AND
BUSINESS LICENSES, INCLUDING LICENSES TO OPERATE GAMING ACTIVITIES,
INCLUDE VARIOUS PROVISIONS WHICH MAY DETER A CHANGE OF CONTROL OF
TA AND, AS A RESULT, TA’S SHAREHOLDERS MAY BE UNABLE TO REALIZE A
TAKEOVER PREMIUM FOR THEIR SHARES.
RESULTS THAT DIFFER FROM THOSE STATED OR IMPLIED BY TA’S FORWARD
LOOKING STATEMENTS MAY ALSO BE CAUSED BY VARIOUS CHANGES IN TA’S
BUSINESS OR MARKET CONDITIONS, AS DESCRIBED MORE FULLY IN TA’S
PERIODIC REPORTS, INCLUDING TA’S ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 2013, FILED WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION, OR “SEC”, AND TA’S QUARTERLY REPORT ON FORM
10-Q FOR THE PERIOD ENDED JUNE 30, 2014, WHICH HAS BEEN OR WILL BE
FILED WITH THE SEC, UNDER “WARNING CONCERNING FORWARD LOOKING
STATEMENTS,” AND “RISK FACTORS” AND ELSEWHERE IN THOSE REPORTS.
COPIES OF THOSE REPORTS ARE OR WILL BE AVAILABLE AT THE WEBSITE OF
THE U.S. SECURITIES AND EXCHANGE COMMISSION: WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING
STATEMENTS. EXCEPT AS REQUIRED BY LAW, TA UNDERTAKES NO OBLIGATION
TO UPDATE OR REVISE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF
NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
TRAVELCENTERS OF AMERICA LLC CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per
share data)
Three Months Ended June 30,
2014 2013 Revenues: Fuel $
1,658,172 $ 1,635,400 Nonfuel 414,854 380,041 Rent and royalties
3,083 3,313 Total revenues 2,076,109 2,018,754
Cost of goods sold (excluding depreciation): Fuel 1,559,049
1,545,588 Nonfuel 191,967 171,938 Total cost of goods
sold (excluding depreciation) 1,751,016 1,717,526
Operating expenses: Site level operating 203,526 190,646
Selling, general & administrative 25,100 24,482 Real estate
rent 53,731 52,104 Depreciation and amortization 15,797
14,025 Total operating expenses 298,154
281,257
Income from operations 26,939 19,971
Acquisition costs (149 ) (205 ) Interest income 45 307 Interest
expense (4,213 ) (4,430 )
Income before income
taxes 22,622 15,643 Provision for income taxes 9,673 382 Income
from equity investees 685 723
Net income $
13,634 $ 15,984 Net income per share: Basic and diluted $
0.36 $ 0.54
These financial statements should be read in conjunction with
TA’s Quarterly Report on Form 10-Q for the quarter ended June
30, 2014, to be filed with the U.S. Securities and Exchange
Commission.
TRAVELCENTERS OF AMERICA LLC CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per
share data)
Six Months Ended June 30,
2014 2013 Revenues: Fuel $
3,247,818 $ 3,260,507 Nonfuel 789,520 709,235 Rent and royalties
6,080 6,363 Total revenues 4,043,418 3,976,105
Cost of goods sold (excluding depreciation): Fuel 3,056,378
3,093,767 Nonfuel 360,383 317,303 Total cost of goods
sold (excluding depreciation) 3,416,761 3,411,070
Operating expenses: Site level operating 403,097 374,579
Selling, general & administrative 51,896 47,709 Real estate
rent 107,935 103,988 Depreciation and amortization 31,925
27,248 Total operating expenses 594,853
553,524
Income from operations 31,804 11,511
Acquisition costs (759 ) (320 ) Interest income 84 542 Interest
expense (8,288 ) (8,495 )
Income before income
taxes 22,841 3,238 Provision for income taxes 9,949 552 Income
from equity investees 939 1,159
Net income $
13,831 $ 3,845 Net income per share: Basic and diluted $
0.37 $ 0.13
These financial statements should be read in conjunction with
TA’s Quarterly Report on Form 10-Q for the quarter ended June
30, 2014, to be filed with the U.S. Securities and Exchange
Commission.
TRAVELCENTERS OF AMERICA LLC CONDENSED CONSOLIDATED
BALANCE SHEETS (UNAUDITED) (in thousands)
June 30, December 31, 2014
2013 Assets Current assets: Cash and cash equivalents
$ 105,394 $ 85,657 Accounts receivable, net 167,308 105,932
Inventories 187,414 199,201 Other current assets 72,555
79,604 Total current assets 532,671 470,394 Property
and equipment, net 717,751 704,866 Goodwill and intangible assets,
net 48,066 48,772 Other noncurrent assets 34,408
33,250 Total assets $ 1,332,896 $ 1,257,282
Liabilities
and Shareholders’ Equity Current liabilities: Accounts payable
$ 196,346 $ 149,645 Current HPT Leases Liabilities 30,817 29,935
Other current liabilities 137,884 124,033 Total
current liabilities 365,047 303,613 Noncurrent HPT Leases
liabilities 338,126 343,926 Senior Notes due 2028 110,000 110,000
Other noncurrent liabilities 50,010 45,866 Total
liabilities 863,183 803,405 Shareholders’ equity
469,713 453,877 Total liabilities and shareholders’ equity $
1,332,896 $ 1,257,282
These financial statements should be read in conjunction with
TA’s Quarterly Report on Form 10-Q for the quarter ended June
30, 2014, to be filed with the U.S. Securities and Exchange
Commission.
TRAVELCENTERS OF AMERICA LLC CONSOLIDATED
SUPPLEMENTAL DATA (in thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2014 2013 2014
2013 Calculation of EBITDAR:(1) Net income $ 13,634 $ 15,984
$ 13,831 $ 3,845 Add: income taxes 9,673 382 9,949 552 Add:
depreciation and amortization 15,797 14,025 31,925 27,248 Deduct:
interest income (45 ) (307 ) (84 ) (542 ) Add: interest expense(2)
4,213 4,430 8,288 8,495 Add: real estate rent expense(3)
53,731 52,104 107,935 103,988 EBITDAR $ 97,003
$ 86,618 $ 171,844 $ 143,586
(1) TA calculates EBITDAR as earnings before interest, taxes,
depreciation, amortization and rent. TA believes EBITDAR is a
useful indication of its operating performance and its ability to
pay rent or service debt, make capital expenditures and expand its
business. TA believes that EBITDAR is a meaningful disclosure that
may help investors to better understand its financial performance,
including comparing its performance between periods and to the
performance of other companies. However, EBITDAR as presented may
not be comparable to similarly titled amounts calculated by other
companies. This information should not be considered as an
alternative to net income, income from continuing operations,
operating profit, cash flow from operations or any other operating
or liquidity performance measure prescribed by GAAP.
(2) Interest expense included the following:
Three Months
Ended
June 30,
Six Months Ended
June 30,
2014 2013 2014
2013 Interest related to TA’s Senior Notes and Credit
Facility $ 2,699 $ 2,742 $ 5,379 $ 5,115 HPT rent classified as
interest $ 1,471 1,743 2,941 3,484 Amortization of deferred
financing costs 170 170 339 325 Capitalized interest (169 ) (316 )
(429 ) (641 ) Other 42 91 58 212 $
4,213 $ 4,430 $ 8,288 $ 8,495
(3) Real estate rent expense recognized under GAAP differs from
TA’s obligation to pay cash for rent under its leases. Cash paid
under real property lease agreements was $58,232 and $56,730 during
the three month periods ended June 30, 2014 and 2013, respectively,
while the total rent amounts expensed during the quarters ended
June 30, 2014 and 2013, were $53,731 and $52,104, respectively.
Cash paid under lease agreements was $116,064 and $112,323 during
the six month periods ended June 30, 2014 and 2013, respectively,
while the total rent amounts expensed during the six months ended
June 30, 2014 and 2013, were $107,935 and $103,988, respectively.
GAAP requires recognition of minimum lease payments payable during
the lease term in equal amounts on a straight line basis over the
lease term. In addition, under GAAP, a portion of the rent TA pays
to HPT is classified as interest expense and a portion of the rent
payments to HPT is applied to amortize a sale-leaseback financing
obligation liability. Also, under GAAP, TA amortizes as a reduction
of rent expense the deferred tenant improvement allowance that HPT
paid to TA during the four years from 2007 through 2010 and the
deferred gain realized on the sale of assets that TA leased back. A
reconciliation of these amounts is as follows.
Three Months Ended
June 30, Six Months Ended June 30, 2014
2013 2014 2013
Cash payments to HPT for rent $ 55,603 $ 54,139 $ 110,749 $ 107,125
Rent paid to others (A) 2,629 2,591 5,315
5,198 Total cash payments under real property leases 58,232
56,730 116,064 112,323 Change in accrued estimated percentage rent
(21 ) (82 ) 597 584 Adjustments to recognize expense on a straight
line basis – HPT (559 ) (523 ) (900 ) (900 ) Less sale-leaseback
financing obligation amortization (594 ) (512 ) (1,183 ) (1,022 )
Less portion of rent payments recognized as interest expense (1,471
) (1,743 ) (2,941 ) (3,484 ) Less deferred tenant improvements
allowance amortization (1,692 ) (1,692 ) (3,384 ) (3,384 )
Amortization of deferred gain on sale-leaseback transactions (96 )
(77 ) (192 ) (153 ) Adjustments to recognize expense on a straight
line basis for other leases (68 ) 3 (126 )
24 Total amount expensed as rent $ 53,731 $ 52,104 $ 107,935
$ 103,988
(A) Includes rent paid directly to HPT’s
landlords under leases for properties TA subleases from HPT as well
as rent related to properties TA leases from landlords other than
HPT.
SUPPLEMENTAL SAME SITE OPERATING
DATA
The following table presents operating data for the periods
noted for all of the locations in operation on June 30, 2014, that
were operated by TA continuously since the beginning of the
earliest applicable period presented, with the exception of four
locations TA operates that are owned by a joint venture. This data
excludes revenues and expenses that were not generated at locations
TA operates, such as rents and royalties from franchises, and
corporate level selling, general and administrative expenses.
TRAVELCENTERS OF AMERICA LLC SAME SITE OPERATING DATA
(in thousands, except for number of locations and percentage
amounts)
Three Months
Ended June 30, Six Months Ended June 30, 2014
2013 Change
Fav/(Unfav)
2014 2013 Change
Fav/(Unfav)
Number of company operated locations 207 207 — 205 205
— Fuel sales volume (gallons) 484,207 509,312 (4.9) %
940,157 989,216 (5.0) % Fuel revenues $ 1,553,320 $
1,599,072 (2.9) % $ 3,022,221 $ 3,173,728 (4.8) % Fuel gross margin
$ 93,224 $ 89,229 4.5 % $ 179,345 $ 165,142 8.6 % Nonfuel
revenues $ 384,735 $ 377,124 2.0 % $ 728,422 $ 702,916 3.6 %
Nonfuel gross margin $ 211,346 $ 206,405 2.4 % $ 405,051 $ 388,326
4.3 % Nonfuel gross margin percentage 54.9 % 54.7 % 20 pts 55.6 %
55.2 % 40 pts Total gross margin $ 304,570 $ 295,634 3.0 % $
584,396 $ 553,468 5.6 % Site level operating expenses $ 192,486 $
188,609 2.1 % $ 378,933 $ 370,058 2.4 % Site level operating
expenses as a percentage of nonfuel revenues 50.0 % 50.0 % — pts
52.0 % 52.6 % 60 pts Site level gross margin in excess of site
level operating expense $ 112,084 $ 107,025 4.7 % $ 205,463 $
183,410 12.0 %
SUPPLEMENTAL RECENTLY ACQUIRED SITE
DATA
The following table presents operating data for
the periods noted for all of the properties that TA began to
operate for its own account since the beginning of 2011, whether by
way of acquisition from franchisees or others or takeover of
operations upon termination of a franchisee sublease, from the
beginning of the period shown or the date TA began to operate such
property for its own account, if later.
TRAVELCENTERS OF AMERICA LLC RECENTLY ACQUIRED SITE OPERATING DATA
(in thousands, except for number of locations and percentage
amounts)
Three Months
Ended June 30, Six Months Ended June 30, 2014
2013 Change
Fav/(Unfav)
2014 2013 Change
Fav/(Unfav)
Number of company operated locations 62 26 36 62 26 36 Total
fuel sales volume (gallons) 68,725 43,097 59.5 % 132,935 79,674
66.8 % Total fuel revenues $ 219,818 $ 136,747 60.7 % $
423,279 $ 256,824 64.8 % Total fuel gross margin $ 12,320 $ 7,384
66.8 % $ 23,668 $ 13,067 81.1 % Total nonfuel revenues $
62,739 $ 30,774 103.9 % $ 117,527 $ 53,983 117.7 % Total nonfuel
gross margin $ 29,176 $ 16,844 73.2 % $ 54,937 $ 29,661 85.2 %
Nonfuel gross margin percentage 46.5 % 54.7 % (820) pts 46.7 % 54.9
% (820) pts Total gross margin $ 41,496 $ 24,228 71.3 % $
78,605 $ 42,728 84.0 % Site level operating expenses $ 27,506 $
17,579 56.5 % $ 53,954 $ 32,304 67.0 % Site level operating
expenses as a percentage of nonfuel revenues 43.8 % 57.1 % 1,330
pts 45.9 % 59.8 % 1,390 pts Site level gross margin in excess of
site level operating expense $ 13,990 $ 6,649 110.4 % $ 24,651 $
10,424 136.5 %
TravelCenters of AmericaKatie Strohacker, 617-796-8251Director
of Investor Relationswww.ta-petro.com
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