Third Quarter Net Income Attributable to
Common Shareholders up 10.9%, Adjusted EBITDA up 22.3%
TravelCenters of America LLC (Nasdaq: TA) today announced
financial results for the three and nine months ended
September 30, 2016:
(in thousands, except per share and per
gallon amounts
unless indicated otherwise)
Three Months Ended September 30, Nine Months
Ended September 30, 2016 2015
2016 2015 Total revenues $ 1,477,603 $
1,508,993 $ 4,087,118 $ 4,499,577 Income before income taxes 17,238
15,983 7,187 48,485 Net income attributable to common shareholders
10,898 9,826 4,475 29,327 Net income per common share
attributable to
common shareholders:
Basic and diluted $ 0.28 $ 0.26 $ 0.12 $ 0.76 Supplemental
Data: Fuel sales volume (gallons): Diesel fuel 419,176 439,850
1,260,095 1,301,603 Gasoline 148,264 110,456 409,503
284,108 Total fuel sales volume (gallons) 567,440
550,306 1,669,598 1,585,711 Fuel
gross margin $ 110,033 $ 102,550 $ 303,727 $ 311,224 Fuel gross
margin per gallon $ 0.194 $ 0.186 $ 0.182 $ 0.196 Total
nonfuel revenues $ 525,516 $ 474,646 $ 1,485,686 $ 1,330,786
Nonfuel gross margin 280,234 252,729 796,724 722,157 Nonfuel gross
margin percentage 53.3 % 53.2 % 53.6 % 54.3 % Adjusted
EBITDA(1) $ 47,059 $ 38,470 $ 92,352 $ 128,534 Adjusted EBITDAR(1)
113,632 99,086 287,190 298,062
(1) A reconciliation of earnings before interest, taxes,
depreciation and amortization, and loss on extinguishment of debt,
or Adjusted EBITDA, and Adjusted EBITDA before rent expense, or
Adjusted EBITDAR, from net income attributable to common
shareholders, the most directly comparable financial measure
calculated and presented in accordance with U.S. generally accepted
accounting principles, or GAAP, appears in the supplemental data
below.
Thomas M. O'Brien, TA's CEO, made the following statement
regarding the 2016 third quarter results:
"During the 2016 third quarter, our business strategies resulted
in gains in fuel volume, fuel gross margin, nonfuel gross margin
and continued improvements in site level operating expense
controls. We grew site level gross margin in excess of site level
operating expenses in total and on a same site basis. The
combination of our internal and external growth activities outpaced
headwinds of increased fuel efficiency for heavy duty truck engines
and a softness in freight volume, resulting in an increase in net
income attributable to common shareholders and Adjusted EBITDA of
10.9% and 22.3%, respectively. While the rate of increased
financial contributions from our recently acquired sites were
modestly less than the improvement realized in the prior
(sequential) quarter, I remain confident in the prospect of
realizing the expected results from these investments."
Third Quarter 2016 Business
Commentary
Generally lower market prices for fuel and lower fuel sales
volume in our travel center segment in the 2016 third quarter led
to an $83.6 million, or 8.1%, decline in fuel revenue. Acquisition
of sites since the beginning of the 2015 third quarter was
principally responsible for a 17.1 million gallon, or 3.1%,
increase in fuel sales volume, partially offsetting a 25.0 million
gallon, or 4.7%, decrease in same site fuel sales volume. Same site
fuel sales volume decreased due to fuel efficiency gains by TA's
commercial diesel customers and TA's continued effort to manage
fuel gross margin by balancing competitive fuel pricing decisions
with their impact on volume. This loss of fuel volume was partially
offset by gasoline demand increases experienced at some of TA's
same site travel center locations. All of these factors netted a
fuel gross margin increase of $7.5 million ($0.008 per gallon), to
$110.0 million ($0.194 per gallon).
Sites acquired since the beginning of the 2015 third quarter
contributed $52.7 million to a $50.9 million, or 10.7%, increase in
nonfuel revenue for the 2016 third quarter compared to the 2015
third quarter, partially offset by a $1.8 million, or 0.4%,
decrease in same site nonfuel revenue. These new sites contributed
to the increase in nonfuel gross margin of $27.5 million, or 10.9%,
for the 2016 third quarter compared to the 2015 third quarter.
These recently acquired sites accounted for $20.2 million of this
increase, while $7.3 million of the increase was attributable to
growth in same site nonfuel gross margin, despite the slight
decline in same site fuel volume and nonfuel revenue. Same site
nonfuel gross margin in the 2016 third quarter was 55.6% of nonfuel
revenue, compared to 53.8% in the 2015 third quarter, a change
largely attributable to the positive impact of TA's strategies for
purchasing and pricing goods for resale and TA's marketing
initiatives.
Site level operating expenses increased $18.4 million, or 8.0%,
in the 2016 third quarter compared to the 2015 third quarter: a
$20.2 million increase due to sites acquired since the beginning of
the 2015 third quarter, partially offset by a $1.8 million decrease
in same site, site level operating expenses.
Selling, general and administrative expenses for the 2016 third
quarter increased $5.1 million, or 17.0%, compared to the 2015
third quarter, principally as a result of increased personnel
costs, which resulted from increased field management and corporate
staffing required to support the growth of TA's business, as well
as planned increased spending on marketing and promotional
activities.
Real estate rent expense increased $6.0 million, or 9.8%, in the
2016 third quarter compared to the 2015 third quarter primarily
resulting from 2015 and 2016 sale and leaseback transactions with
Hospitality Properties Trust, or HPT.
Interest expense, net, increased $2.2 million in the 2016 third
quarter compared to the 2015 third quarter, primarily as a result
of TA's issuance in October 2015 of $100.0 million of 8.00% Senior
Notes due in 2030.
Net income attributable to common shareholders for the 2016
third quarter was $10.9 million ($0.28 per common share), a 10.9%
increase compared to $9.8 million ($0.26 per common share) for the
2015 third quarter. Adjusted EBITDA and Adjusted EBITDAR for the
2016 third quarter increased by $8.6 million, or 22.3%, and $14.5
million, or 14.7%, respectively, compared to the 2015 third
quarter. The increases in net income attributable to common
shareholders, Adjusted EBITDA and Adjusted EBITDAR were primarily
attributable to recently acquired sites.
Travel Centers Segment
Lower market prices for fuel and decreases in fuel sales volume
in the 2016 third quarter resulted in a $134.9 million, or 14.3%,
decrease in fuel revenue as compared to the 2015 third quarter.
TA believes that the positive impact of TA's strategies for
purchasing and pricing goods for resale and TA's marketing
initiatives led to a $9.3 million increase in nonfuel gross margin
for the 2016 third quarter and that this was the principal driver
of a $10.5 million, or 8.7%, increase in site level gross margin in
excess of site level operating expenses compared to the 2015 third
quarter. Also contributing to higher site level gross margin in
excess of site level operating expenses in the 2016 third quarter
was a $1.7 million increase in fuel gross margin due to a continued
focus on managing fuel sales pricing to balance sales volume and
profitability.
Convenience Stores Segment
Sites acquired since the beginning of the 2015 third quarter
(153 sites) resulted in increases in fuel sales volume and in
nonfuel revenues to produce higher total revenues by $88.3 million,
or 78.3%, in the 2016 third quarter compared to the 2015 third
quarter. The increase in fuel sales volume and nonfuel revenues was
partially offset by decreases in market prices for fuel and a 1.8%
decrease in same site fuel sales volume due to retail pricing
strategies to improve profits.
Recently acquired sites also produced an increase in site level
gross margin in excess of site level operating expenses in the 2016
third quarter by $4.8 million, or 65.1%, compared to the 2015 third
quarter that was partially offset by a $0.7 million decrease from
same site locations.
Investment Activity
On September 30, 2016, TA sold a newly developed travel
center to HPT for $16.6 million, and simultaneously leased back
this travel center from HPT; TA's minimum annual rent payable to
HPT increased by $1.4 million as a result. TA has one travel center
under construction that is currently expected to be completed
during the first quarter of 2017 and sold to, and leased back from,
HPT soon thereafter. TA estimates the remaining development cost of
this travel center to be approximately $9.4 million.
From the beginning of 2011, when TA began its acquisition
program, to September 30, 2016, TA has invested $798.4 million
to purchase and improve travel centers, convenience stores and
restaurants and related businesses. For the twelve months ended
September 30, 2016, these investments have produced site level
gross margin in excess of site level operating expenses of $90.0
million, or, on a sequential basis, $10.7 million, or 13.4%,
greater than site level gross margin in excess of site level
operating expenses for the twelve months ended June 30,
2016.
TA currently has agreements to acquire an additional six
standalone restaurants for an aggregate purchase price of $6.0
million and a travel center for a purchase price of $13.1 million.
TA expects to complete these acquisitions by December 31, 2016. TA
currently intends to continue to selectively acquire additional
locations and to otherwise expand its business.
Conference Call:
On Tuesday, November 8, 2016, 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 September 30,
2016. Following management's remarks, there will be a question and
answer period.
The conference call telephone number is 877-329-4614.
Participants calling from outside the United States and Canada
should dial 412-317-5437. 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 412-317-0088. The replay pass code is
10093018.
A live audio webcast of the conference call will also be
available in a listen only mode on TA's website at
www.ta-petro.com. To access the webcast, participants should visit
TA's website about five minutes before the call. The archived
webcast will be available for replay on TA's website for about one
week after the call. The transcription, recording and
retransmission in any way of TA's third 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 nationwide business includes travel centers located in 43
U.S. states and in Canada, standalone convenience stores in 11
states and standalone restaurants in 15 states. 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 services, travel/convenience
stores and other services which are designed to provide attractive
and efficient travel experiences to professional drivers and other
motorists. TA's convenience stores operate principally under the
"Minit Mart" brand name and offer gasoline fueling as well as
nonfuel products and services such as coffee, groceries, fresh food
offerings and other convenience items. TA's standalone restaurants
operate principally under the "Quaker Steak & Lube" brand
name.
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.
WHENEVER TA USES WORDS SUCH AS "BELIEVE," "EXPECT," "ANTICIPATE,"
"INTEND," "PLAN," "ESTIMATE," "WILL," "MAY" AND NEGATIVES OR
DERIVATIVES OF THESE 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 TA'S 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 STATEMENTS
THAT:
- TA'S CEO, MR. O'BRIEN, STATES IN THIS
PRESS RELEASE HIS CONFIDENCE IN THE PROSPECT OF TA REALIZING THE
EXPECTED RESULTS FROM ITS INVESTMENTS IN TA'S RECENTLY ACQUIRED
SITES. THIS STATEMENT IMPLIES THAT THE RECENTLY ACQUIRED SITES WILL
GENERATE INCREASED NET INCOME. HOWEVER, MANY OF THE LOCATIONS TA
HAS ACQUIRED OR MAY ACQUIRE PRODUCED OPERATING RESULTS THAT CAUSED
THE PRIOR OWNERS TO EXIT THE BUSINESSES AND TA'S ABILITY TO OPERATE
THESE LOCATIONS PROFITABLY DEPENDS UPON MANY FACTORS, SOME OF WHICH
ARE BEYOND TA'S CONTROL. ACCORDINGLY, TA'S ACQUIRED SITES MAY NOT
GENERATE INCREASED NET INCOME OR IT MAY TAKE LONGER THAN TA EXPECTS
FOR ITS NET INCOME TO INCREASE;
- TA HAS AGREED TO DEVELOP AN ADDITIONAL
LOCATION FOR SALE TO, AND LEASE BACK FROM, HPT. THIS SALE AND
LEASEBACK IS SUBJECT TO CONDITIONS WHICH MAY NOT BE MET AND MAY NOT
BE COMPLETED OR MAY BE DELAYED OR ITS TERMS MAY CHANGE. TA INTENDS
TO CONTINUE TO SELECTIVELY ACQUIRE AND DEVELOP ADDITIONAL LOCATIONS
AND OTHERWISE EXPAND ITS BUSINESS. THERE ARE MANY FACTORS THAT MAY
RESULT IN TA NOT BEING ABLE TO ACQUIRE, RENOVATE AND DEVELOP
ADDITIONAL LOCATIONS, OR TO OTHERWISE EXPAND ITS BUSINESS, AT
PRICES OR COSTS THAT YIELD PROFITS, INCLUDING COMPETITION FOR
ACQUISITIONS FROM OTHER BUYERS, TA'S INABILITY TO NEGOTIATE
ACCEPTABLE PURCHASE TERMS AND THE POSSIBILITY THAT TA MAY NEED TO
USE ITS AVAILABLE FUNDS FOR OTHER PURPOSES. TA MAY DETERMINE TO
DELAY OR NOT TO PROCEED WITH ITS PENDING DEVELOPMENT PROJECT.
MOREOVER, MANAGING AND INTEGRATING DEVELOPED OR ACQUIRED LOCATIONS
CAN BE DIFFICULT, TIME CONSUMING AND/OR MORE EXPENSIVE THAN
ANTICIPATED AND CAN INVOLVE RISKS OF FINANCIAL LOSSES. TA MAY NOT
OPERATE ITS ACQUIRED OR DEVELOPED LOCATIONS AS PROFITABLY AS IT NOW
EXPECTS; AND
- TA HAS AGREED TO ACQUIRE AN ADDITIONAL
SIX STANDALONE RESTAURANTS FOR AN AGGREGATE PURCHASE PRICE OF $6.0
MILLION AND A TRAVEL CENTER FOR A PURCHASE PRICE OF $13.1 MILLION,
AND TA EXPECTS TO COMPLETE THESE ACQUISITIONS BY DECEMBER 31, 2016.
THESE ACQUISITIONS ARE SUBJECT TO CONDITIONS AND MAY NOT OCCUR, MAY
BE DELAYED OR THEIR TERMS MAY CHANGE.
THE INFORMATION CONTAINED IN TA'S PERIODIC REPORTS, INCLUDING
TA'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
2015, WHICH HAS BEEN FILED WITH THE U.S. SECURITIES AND EXCHANGE
COMMISSION, OR SEC, AND TA'S QUARTERLY REPORTS ON FORM 10-Q FOR THE
PERIODS ENDED MARCH 31, 2016, JUNE 30, 2016, AND SEPTEMBER 30,
2016, WHICH HAVE BEEN OR WILL BE FILED WITH THE SEC, UNDER THE
CAPTION "RISK FACTORS," OR ELSEWHERE IN THOSE REPORTS, OR
INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD
CAUSE DIFFERENCES FROM TA'S FORWARD LOOKING STATEMENTS. TA'S
FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC'S WEBSITE AT
WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING
STATEMENTS.
EXCEPT AS REQUIRED BY LAW, TA DOES NOT INTEND TO UPDATE OR
CHANGE ANY FORWARD LOOKING STATEMENT AS A RESULT OF NEW
INFORMATION, FUTURE EVENTS OR OTHERWISE.
TRAVELCENTERS OF AMERICA LLC
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands, except per share
amounts)
Three Months Ended September
30,
2016 2015 Revenues: Fuel $ 947,558 $
1,031,146 Nonfuel 525,516 474,646 Rent and royalties from
franchisees 4,529 3,201 Total revenues 1,477,603
1,508,993
Cost of goods sold (excluding
depreciation): Fuel 837,525 928,596 Nonfuel 245,282
221,917 Total cost of goods sold 1,082,807 1,150,513
Operating expenses: Site level operating 247,584 229,215
Selling, general and administrative 34,812 29,760 Real estate rent
66,573 60,616 Depreciation and amortization 22,698 17,445
Total operating expenses 371,667 337,036
Income
from operations 23,129 21,444 Acquisition costs 225
1,755 Interest expense, net 7,200 5,042 Income from equity
investees 1,534 1,336
Income before income taxes
17,238 15,983 Provision for income taxes 6,263 6,157
Net
income 10,975 9,826 Less net income for noncontrolling
interests 77 —
Net income attributable to common
shareholders $ 10,898 $ 9,826
Net income per
common share attributable to common shareholders: Basic and
diluted $ 0.28 $ 0.26
These financial statements should be read in conjunction with
TA's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2016, to be filed with the U.S. Securities and
Exchange Commission.
TRAVELCENTERS OF AMERICA LLC
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands, except per share
amounts)
Nine Months Ended September 30,
2016 2015 Revenues: Fuel $ 2,588,297 $
3,159,399 Nonfuel 1,485,686 1,330,786 Rent and royalties from
franchisees 13,135 9,392 Total revenues 4,087,118
4,499,577
Cost of goods sold (excluding
depreciation): Fuel 2,284,570 2,848,175 Nonfuel 688,962
608,629 Total cost of goods sold 2,973,532 3,456,804
Operating expenses: Site level operating 725,754 657,133
Selling, general and administrative 101,787 87,438 Real estate rent
194,838 169,528 Depreciation and amortization 64,545 53,086
Total operating expenses 1,086,924 967,185
Income
from operations 26,662 75,588 Acquisition costs 2,286
3,296 Interest expense, net 20,761 16,461 Income from equity
investees 3,572 3,156 Loss on extinguishment of debt —
10,502
Income before income taxes 7,187 48,485 Provision for
income taxes 2,571 19,158
Net income 4,616 29,327
Less net income for noncontrolling interests 141 —
Net
income attributable to common shareholders $ 4,475 $
29,327
Net income per common share attributable to common
shareholders: Basic and diluted $ 0.12 $ 0.76
These financial statements should be read in conjunction with
TA's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2016, to be filed with the U.S. Securities and
Exchange Commission.
TRAVELCENTERS OF AMERICA LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
September 30, 2016
December 31, 2015 Assets Current assets: Cash
and cash equivalents $ 137,288 $ 172,087 Accounts receivable, net
118,103 91,580 Inventory 195,229 183,492 Other current assets
39,014 48,181 Total current assets 489,634 495,340
Property and equipment, net 1,070,757 989,606 Goodwill and
intangible assets, net 127,153 105,977 Other noncurrent assets
31,333 30,618
Total assets $ 1,718,877 $
1,621,541
Liabilities and Shareholders' Equity
Current liabilities: Accounts payable $ 146,454 $ 125,079 Current
HPT Leases liabilities 39,697 37,030 Other current liabilities
191,817 133,513 Total current liabilities 377,968 295,622
Long term debt 318,472 316,447 Noncurrent HPT Leases
liabilities 385,134 385,498 Other noncurrent liabilities 78,232
74,655 Total liabilities 1,159,806 1,072,222
Shareholders' equity (38,853 and 38,808
common shares outstandingat September 30, 2016, and December 31,
2015, respectively)
559,071 549,319
Total liabilities and shareholders'
equity $ 1,718,877 $ 1,621,541
These financial statements should be read in conjunction with
TA's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2016, to be filed with the U.S. Securities and
Exchange Commission.
TRAVELCENTERS OF AMERICA LLCRECONCILIATION OF
NON-GAAP FINANCIAL MEASURES(in thousands)
Non-GAAP financial measures are financial measures that are not
determined in accordance with U.S. generally accepted accounting
principles, or GAAP. TA believes the non-GAAP financial measures
presented in the table below to be meaningful supplemental
disclosures because they may help investors gain a better
understanding of changes in TA's operating results and its ability
to pay rent or service debt, make capital expenditures and expand
its business. These non-GAAP financial measures also may help
investors to make comparisons between TA and other companies on
both a GAAP and a non-GAAP basis. TA calculates Adjusted EBITDA as
earnings before interest, taxes, depreciation and amortization and
loss on extinguishment of debt, and TA calculates Adjusted EBITDAR
as Adjusted EBITDA plus real estate rent expense, as shown below.
TA believes Adjusted EBITDA and Adjusted EBITDAR are useful
indications of operating performance and its ability to pay rent or
service debt, make capital expenditures and expand its business. TA
leases a majority of the travel centers that it operates and
believes that presenting investors with Adjusted EBITDAR may help
investors compare TA's results with other companies that, instead
of leasing, own and finance ownership of their properties with debt
financing, or to consider how TA's results might compare if TA
owned its leased properties and financed that ownership with debt.
If TA, instead of leasing, owned its leased properties and financed
that ownership with debt financing, the interest expense TA
incurred for that debt financing would be added back by TA when
calculating Adjusted EBITDA. TA also believes that Adjusted EBITDA
and Adjusted EBITDAR are meaningful disclosures that may help
investors to better understand its financial performance, including
by allowing investors to compare TA's performance between periods
and to the performance of other companies, as well as the form,
extent and implications of TA's form of leverage for the travel
centers it leases. The non-GAAP financial measures presented are
used by management to evaluate TA's financial performance and
comparing TA's performance over time and to the performance of its
competitors. This information should not be considered as an
alternative to net income or income from operations, as an
indicator of TA's operating performance or as a measure of TA's
liquidity. Also, Adjusted EBITDA and Adjusted EBITDAR as presented
may not be comparable to similarly titled amounts calculated by
other companies.
TA believes that net income attributable to common shareholders
is the most comparable financial measure, determined according to
GAAP, to TA's presentation of Adjusted EBITDA and Adjusted EBITDAR.
The following table presents the reconciliation of these non-GAAP
financial measures to net income attributable to common
shareholders, the most directly comparable financial measure under
GAAP reported in TA's consolidated financial statements, for the
three and nine months ended September 30, 2016 and 2015.
Three Months Ended September
30, Nine Months Ended September 30, 2016
2015 2016 2015 Calculation of
Adjusted EBITDA and
Adjusted EBITDAR:
Net income attributable to common shareholders $ 10,898 $ 9,826 $
4,475 $ 29,327 Add: provision for income taxes 6,263 6,157 2,571
19,158 Add: depreciation and amortization 22,698 17,445 64,545
53,086 Add: interest expense, net(1) 7,200 5,042 20,761 16,461 Add:
loss on extinguishment of debt — — — 10,502
Adjusted EBITDA 47,059 38,470 92,352 128,534 Add: real estate rent
expense(2) 66,573 60,616 194,838 169,528
Adjusted EBITDAR $ 113,632 $ 99,086 $ 287,190
$ 298,062
(1) Interest expense, net, included the following:
Three Months Ended September
30, Nine Months Ended September 30, 2016
2015 2016 2015 Interest related
to TA's Senior Notes
and Credit Facility
$ 6,899 $ 4,913 $ 20,746 $ 14,746 Rent classified as interest 433
446 1,297 2,866 Amortization of deferred financing costs 308 232
917 688 Capitalized interest (340 ) (309 ) (1,876 ) (720 ) Interest
income (143 ) (260 ) (484 ) (1,292 ) Other 43 20 161
173 Interest expense, net $ 7,200 $ 5,042
$ 20,761 $ 16,461
(2) Real estate rent expense recognized differs from TA's
obligation to pay cash for rent under its leases. The differences
between rent paid and rent expense result from the required
recognition under GAAP of rent expense on an accrual basis. For
example, a portion of the rent TA paid 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, TA amortizes on a straight line basis as a
reduction of rent expense the deferred tenant improvement allowance
liability and deferred gains from sales of assets to HPT that TA
leased back. A reconciliation of these amounts is as follows.
Three Months Ended September
30, Nine Months Ended September 30, 2016
2015 2016 2015 Cash payments to
HPT for rent $ 67,040 $ 62,445 $ 197,063 $ 178,818 Rent paid to
others(A) 3,294 2,693 9,219 7,858 Total
cash payments under real property leases 70,334 65,138 206,282
186,676 Change in accrued estimated percentage rent 384 (878 ) 667
(1,275 ) Adjustments to recognize rent expense on a
straight line basis – HPT
(53 ) (52 ) (180 ) (4,639 ) Adjustments to recognize rent expense
on a
straight line basis for other leases
(66 ) (87 ) (239 ) (288 ) Less sale leaseback financing obligation
amortization
(126 ) (64 ) (350 ) (1,132 ) Less portion of rent payments
recognized as
interest expense
(433 ) (446 ) (1,297 ) (2,866 ) Less deferred tenant improvements
allowance
amortization
(942 ) (942 ) (2,827 ) (4,077 ) Amortization of deferred gain on
sale leaseback
transactions
(2,525 ) (2,053 ) (7,218 ) (2,871 ) Total amount expensed as rent $
66,573 $ 60,616 $ 194,838 $ 169,528
(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.
TRAVELCENTERS OF AMERICA LLCSUPPLEMENTAL SAME
SITE OPERATING DATA(in thousands, except for number of locations,
percentage amounts and fuel gross margin per gallon)
CONSOLIDATED SAME SITE OPERATING
DATA
The following table presents consolidated operating data for the
periods noted for all of the locations in operation on
September 30, 2016, that were operated by TA continuously
since the beginning of the earliest period presented, with the
exception of five locations TA operates that are owned by an
unconsolidated joint venture in which TA owns a noncontrolling
interest. This data excludes revenues and expenses that were not
generated at locations TA operates, such as rents and royalties
from franchisees and corporate level selling, general and
administrative expenses. TA does not exclude locations from the
same site comparisons as a result of capital improvements to the
site or changes in the services offered.
Three Months Ended
September 30, Nine Months Ended September 30,
2016 2015 Change 2016
2015 Change Number of same site company
operated locations
296 296 — 249 249 — Diesel sales volume (gallons) 406,649
433,722 (6.2 ) % 1,222,635 1,283,485 (4.7 ) % Gasoline sales volume
(gallons) 96,842 94,724 2.2 % 237,892 239,336
(0.6 ) % Total fuel sales volume (gallons) 503,491
528,446 (4.7 ) % 1,460,527 1,522,821 (4.1 ) %
Fuel revenues $ 836,161 $ 986,203 (15.2 ) % $ 2,244,526 $
3,028,983 (25.9 ) % Fuel gross margin 98,519 99,188 (0.7 ) %
267,379 301,794 (11.4 ) % Fuel gross margin per gallon $ 0.196 $
0.188 4.3 % $ 0.183 $ 0.198 (7.6 ) % Nonfuel revenues $
461,804 $ 463,571 (0.4 ) % $ 1,288,569 $ 1,289,111 — % Nonfuel
gross margin 256,632 249,310 2.9 % 726,574 709,208 2.4 % Nonfuel
gross margin percentage 55.6 % 53.8 % 180 pts 56.4 % 55.0 % 140 pts
Total gross margin $ 355,151 $ 348,498 1.9 % $ 993,953 $
1,011,002 (1.7 ) % Site level operating expenses 222,667 224,461
(0.8 ) % 643,756 640,385 0.5 % Site level operating expenses as a
percentage of nonfuel revenues
48.2 % 48.4 % (20 )pts 50.0 % 49.7 % 30 pts Site level gross margin
in excess of
site level operating expenses
$ 132,484 $ 124,037 6.8 % $ 350,197 $ 370,617 (5.5 ) %
TRAVELCENTERS OF AMERICA LLCSUPPLEMENTAL SAME
SITE OPERATING DATA(in thousands, except for number of locations,
percentage amounts and fuel gross margin per gallon)
TRAVEL CENTERS SEGMENT SAME SITE OPERATING
DATA
The following table presents operating data for the periods
noted for all of the travel centers in operation
on September 30, 2016, that were operated by TA
continuously since the beginning of the earliest period presented,
with the exception of two travel centers TA operates that
are owned by an unconsolidated joint venture in which TA owns a
noncontrolling interest. This data also excludes revenues and
expenses that were not generated at travel centers TA operates,
such as rents and royalties from franchisees and corporate level
selling, general and administrative expenses. TA does not exclude
locations from the same site comparisons as a result of capital
improvements to the site or changes in the services offered.
Three Months Ended
September 30, Nine Months Ended September 30,
Travel Centers 2016 2015 Change
2016 2015 Change Number of same site
company
operated travel center locations
219 219 — 217 217 — Diesel sales volume (gallons) 404,935
431,946 (6.3 ) % 1,220,112 1,281,155 (4.8 ) % Gasoline sales volume
(gallons) 76,683 74,221 3.3 % 209,309 209,763
(0.2 ) % Total fuel sales volume (gallons) 481,618
506,167 (4.8 ) % 1,429,421 1,490,918 (4.1 ) %
Fuel revenues $ 799,060 $ 941,171 (15.1 ) % $ 2,194,658 $
2,967,144 (26.0 ) % Fuel gross margin 93,721 92,990 0.8 % 260,617
295,094 (11.7 ) % Fuel gross margin per gallon $ 0.195 $ 0.184 6.0
% $ 0.182 $ 0.198 (8.1 ) % Nonfuel revenues $ 428,110 $
430,026 (0.4 ) % $ 1,228,170 $ 1,229,329 (0.1 ) % Nonfuel gross
margin 245,655 238,993 2.8 % 706,735 689,541 2.5 % Nonfuel gross
margin percentage 57.4 % 55.6 % 180 pts 57.5 % 56.1 % 140 pts
Total gross margin $ 339,376 $ 331,983 2.2 % $ 967,352 $
984,635 (1.8 ) % Site level operating expenses 211,898 213,619 (0.8
) % 626,842 623,396 0.6 % Site level operating expenses as a
percentage of nonfuel revenues
49.5 % 49.7 % (20 )pts 51.0 % 50.7 % 30 pts Site level gross margin
in excess of
site level operating expenses
$ 127,478 $ 118,364 7.7 % $ 340,510 $ 361,239 (5.7 ) %
TRAVELCENTERS OF AMERICA LLCSUPPLEMENTAL SAME
SITE OPERATING DATA(in thousands, except for number of locations,
percentage amounts and fuel gross margin per gallon)
CONVENIENCE STORES SEGMENT SAME SITE
OPERATING DATA
The following table presents operating data for the periods
noted for all of the convenience stores in operation on
September 30, 2016, that were operated by TA continuously
since the beginning of the earliest period presented, with the
exception of three convenience stores TA operates that
are owned by an unconsolidated joint venture in which TA owns a
noncontrolling interest. This data also excludes revenues and
expenses that were not generated at convenience stores TA operates,
such as revenues from a dealer operated convenience store and
corporate level selling, general and administrative expenses. TA
does not exclude locations from the same site comparisons as a
result of capital improvements to the site or changes in the
services offered.
Three Months Ended
September 30, Nine Months Ended September 30,
Convenience Stores 2016 2015
Change 2016 2015 Change Number
of same site company
operated convenience store
locations
77 77 — 32 32 — Fuel sales volume (gallons) 21,873 22,279
(1.8 ) % 31,106 31,903 (2.5 ) % Fuel revenues $ 37,101 $ 45,032
(17.6 ) % $ 49,868 $ 61,839 (19.4 ) % Fuel gross margin 4,798 6,198
(22.6 ) % 6,762 6,700 0.9 % Fuel gross margin per gallon $ 0.219 $
0.278 (21.2 ) % $ 0.217 $ 0.210 3.3 % Nonfuel revenues $
33,694 $ 33,545 0.4 % $ 60,399 $ 59,782 1.0 % Nonfuel gross margin
10,977 10,317 6.4 % 19,839 19,667 0.9 % Nonfuel gross margin
percentage 32.6 % 30.8 % 180 pts 32.8 % 32.9 % (10 )pts
Total gross margin $ 15,775 $ 16,515 (4.5 ) % $ 26,601 $ 26,367 0.9
% Site level operating expenses 10,769 10,842 (0.7 ) % 16,914
16,989 (0.4 ) % Site level operating expenses as a
percentage of nonfuel revenues
32.0 % 32.3 % (30 )pts 28.0 % 28.4 % (40 )pts Site level gross
margin in excess of
site level operating expenses
$ 5,006 $ 5,673 (11.8 ) % $ 9,687 $ 9,378 3.3 %
TRAVELCENTERS OF AMERICA LLCBUSINESS SEGMENT
INFORMATION(in thousands)
The following tables present business segment information for
travel centers and convenience stores, or TA's reportable segments,
for the three and nine months ended September 30, 2016 and
2015.
Three Months Ended September 30, 2016
TravelCenters ConvenienceStores
Corporateand Other Consolidated
Revenues: Fuel $ 808,366 $ 119,375 $ 19,817 $ 947,558
Nonfuel 434,712 81,691 9,113 525,516 Rent and royalties from
franchisees 3,238 58 1,233 4,529 Total
revenues 1,246,316 201,124 30,163 1,477,603
Site level gross margin in excess of site level
operating expenses $ 131,866 $ 12,249 $ 3,097
$ 147,212
Corporate operating expenses:
Selling, general and administrative $ 34,812 $ 34,812 Real estate
rent 66,573 66,573 Depreciation and amortization 22,698
22,698
Income from operations 23,129 Acquisition
costs 225 225 Interest expense, net 7,200 7,200 Income from equity
investees 1,534 1,534
Income before income taxes
17,238 Provision for income taxes 6,263 6,263
Net
income 10,975 Less net income for noncontrolling interests 77
Net income attributable to common shareholders $
10,898
Supplemental data:
Gross margin Fuel
$ 94,915 $ 15,059 $ 59 $ 110,033 Nonfuel 248,967 25,015 6,252
280,234 Rent and royalties from franchisees 3,238 58
1,233 4,529 Total gross margin $ 347,120 $ 40,132
$ 7,544 $ 394,796 Site level operating
expenses $ 215,254 $ 27,883 $ 4,447 $ 247,584
TRAVELCENTERS OF AMERICA LLCBUSINESS
SEGMENT INFORMATION(in thousands)
Three Months Ended September 30, 2015
TravelCenters ConvenienceStores
Corporateand Other Consolidated
Revenues: Fuel $ 943,291 $ 69,733 $ 18,122 $ 1,031,146
Nonfuel 431,318 43,082 246 474,646 Rent and royalties from
franchisees 3,201 — — 3,201 Total revenues
1,377,810 112,815 18,368 1,508,993
Site level gross margin in excess of site level operating
expenses $ 121,359 $ 7,421 $ 485 $ 129,265
Corporate operating expenses: Selling, general and
administrative $ 29,760 $ 29,760 Real estate rent 60,616 60,616
Depreciation and amortization 17,445 17,445
Income from
operations 21,444 Acquisition costs 1,755 1,755 Interest
expense, net 5,042 5,042 Income from equity investees 1,336
1,336
Income before income taxes 15,983 Provision for income
taxes 6,157 6,157
Net income 9,826 Less net income
for noncontrolling interests —
Net income attributable to
common shareholders $ 9,826
Supplemental data:
Gross
margin Fuel $ 93,239 $ 9,299 $ 12 $ 102,550 Nonfuel 239,664
12,897 168 252,729 Rent and royalties from franchisees 3,201
— — 3,201 Total gross margin $ 336,104 $
22,196 $ 180 $ 358,480 Site level operating
expenses $ 214,745 $ 14,775 $ (305 ) $ 229,215
TRAVELCENTERS OF AMERICA LLCBUSINESS
SEGMENT INFORMATION(in thousands)
Nine Months Ended September 30, 2016
Travel
Centers
Convenience
Stores
Corporate
and Other
Consolidated Revenues: Fuel $ 2,222,962 $
311,199 $ 54,136 $ 2,588,297 Nonfuel 1,248,533 220,562 16,591
1,485,686 Rent and royalties from franchisees 10,556 249
2,330 13,135 Total revenues 3,482,051 532,010
73,057 4,087,118
Site level gross margin in
excess of site level operating expenses $ 353,645
$ 27,188 $ 6,999 $ 387,832
Corporate
operating expenses: Selling, general and administrative $
101,787 $ 101,787 Real estate rent 194,838 194,838 Depreciation and
amortization 64,545 64,545
Income from operations
26,662 Acquisition costs 2,286 2,286 Interest expense, net
20,761 20,761 Income from equity investees 3,572 3,572
Income before income taxes 7,187 Provision for income taxes
2,571 2,571
Net income 4,616 Less net income for
noncontrolling interests 141
Net income attributable to
common shareholders $ 4,475
Supplemental data:
Gross margin Fuel $ 264,446 $ 38,905 $ 376 $ 303,727 Nonfuel
717,707 67,721 11,296 796,724 Rent and royalties from franchisees
10,556 249 2,330 13,135 Total gross margin $
992,709 $ 106,875 $ 14,002 $ 1,113,586
Site level operating expenses $ 639,064 $ 79,687 $
7,003 $ 725,754
TRAVELCENTERS OF AMERICA LLCBUSINESS
SEGMENT INFORMATION(in thousands)
Nine Months Ended September 30, 2015
Travel
Centers
Convenience
Stores
Corporate
and Other
Consolidated Revenues: Fuel $ 2,976,528 $
134,600 $ 48,271 $ 3,159,399 Nonfuel 1,234,468 95,678 640 1,330,786
Rent and royalties from franchisees 9,392 — —
9,392 Total revenues 4,220,388 230,278 48,911
4,499,577
Site level gross margin in excess of
site level operating expenses $ 371,009 $ 12,450
$ 2,181 $ 385,640
Corporate operating
expenses: Selling, general and administrative $ 87,438 $ 87,438
Real estate rent 169,528 169,528 Depreciation and amortization
53,086 53,086
Income from operations 75,588
Acquisition costs 3,296 3,296 Interest expense, net 16,461 16,461
Income from equity investees 3,156 3,156 Loss on extinguishment of
debt 10,502 10,502
Income before income taxes 48,485
Provision for income taxes 19,158 19,158
Net income
29,327 Less net income for noncontrolling interests —
Net income
attributable to common shareholders $ 29,327
Supplemental data:
Gross
margin Fuel $ 296,712 $ 14,621 $ (109 ) $ 311,224 Nonfuel
692,212 29,497 448 722,157 Rent and royalties from franchisees
9,392 — — 9,392 Total gross margin $ 998,316
$ 44,118 $ 339 $ 1,042,773 Site level
operating expenses $ 627,307 $ 31,668 $ (1,842 ) $
657,133
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161108005370/en/
TravelCenters of America LLCKatie Strohacker, 617-796-8251Senior
Director of Investor Relationswww.ta-petro.com
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