First Quarter Fuel Sales Volume Increased
3.0%
Nonfuel Revenues Increased 4.0%
TravelCenters of America LLC (Nasdaq: TA) today announced
financial results for the three months ended March 31,
2019:
(in thousands, except per share amounts)
Three Months EndedMarch 31, 2019
2018 Loss from continuing operations $ (12,729 ) $
(6,027 ) Net loss (12,729 ) (10,078 ) Net loss attributable to
common shareholders (12,747 ) (10,112 )
Loss per common share from continuing
operations attributable to common shareholders (basic and
diluted)
$ (0.32 ) $ (0.15 ) Non-GAAP Measures:(1) Adjusted loss from
continuing operations $ (14,576 ) $ (22,136 )
Adjusted loss per common share from
continuing operations attributable to common shareholders (basic
and diluted)
$ (0.36 ) $ (0.55 ) EBITDA $ 13,813 $ 14,385 Adjusted EBITDA 11,360
(2,957 ) (1) Reconciliations from loss from
continuing operations, loss per common share from continuing
operations attributable to common shareholders and net loss, as
applicable, the financial measures determined in accordance with
U.S. generally accepted accounting principles, or GAAP, to the
non-GAAP measures disclosed herein are included in the supplemental
tables below.
Andrew J. Rebholz, TA's CEO, made the following statement
regarding the 2019 first quarter results:
"We believe our operating results for the first quarter of 2019
demonstrated that the business initiatives and plans we outlined
earlier this year are continuing to succeed. During the 2019 first
quarter both fuel sales volume and nonfuel revenues showed solid
growth, improving by 3.0% and 4.0%, respectively, in total and by
2.0% and 2.7%, respectively, on a same site basis as compared to
the prior year quarter. These improvements were aided by our
introduction of our revamped UltraONE 2.0 loyalty program that
customers are embracing. Designed to incentivize and reward
customers for their loyalty while providing the TA full service
array of redemption offers to suit customers’ varying needs, this
program attracted approximately 30,000 new and reactivated members
in the first quarter. In addition, we kept our site level operating
expense in line with our nonfuel revenue increases, experiencing
only a slight 20 basis point increase in the ratio of those
expenses to nonfuel revenues that is due in part to increased
staffing in advance of increased business in our truck service
programs.
"While we sustained a net loss for the quarter of $12.7 million
that is $2.7 million more than the prior year quarter, the net loss
for the 2019 first quarter is less than it was in the first quarter
of 2018 after removing the effects of the one time items included
in each period's GAAP results. Adjusted EBITDA for 2019 of $11.4
million is an improvement of $14.3 million over the 2018 first
quarter. It is worth noting that a net loss is not unusual for our
first quarter because the first quarter typically generates our
weakest financial results given the seasonality in our
business.
"Our efforts to reduce leverage following the December 2018 sale
of our standalone convenience stores business culminated in the
January 2019 transactions with Hospitality Properties Trust that
reduced our annual minimum rent payable to HPT by $43.1 million and
contributed to our improved adjusted loss from continuing
operations and adjusted EBITDA, as well as to a $10.0 million
increase over the 2018 first quarter in our cash provided by
operations.
"Additionally, our network expansion program is underway. Thus
far in 2019, we have signed franchise agreements for four sites and
have a robust pipeline of potential additional franchisees. This
success to date buoys our confidence that our network expansion can
be a largely asset-light growth area, although we do also have a
pipeline of site acquisition opportunities being pursued. I believe
the momentum of the first quarter’s results combined with the
strength of our business plans will translate to increased EBITDA
and cash flow this year."
Financial Results Commentary
Fuel: The following table presents details
for TA's fuel sales during the quarter.
(in thousands, except per gallon amounts)
Three Months EndedMarch 31,
2019 2018 Change Fuel sales
volume (gallons): Diesel fuel 408,422 391,740 4.3 % Gasoline 63,480
66,506 (4.5 )% Total fuel sales volume 471,902
458,246 3.0 % Fuel revenues $ 983,141 $ 986,345 (0.3
)% Fuel gross margin 74,747 82,897 (9.8 )% Adjusted fuel gross
margin(1) 71,907 59,646 20.6 % Fuel gross margin per gallon $ 0.158
$ 0.181 (12.7 )% Adjusted fuel gross margin per gallon(1) 0.152
0.130 16.9 % (1) The 2019 amount excludes $2.8
million of a one time reversal of loyalty award accruals recognized
in connection with introducing a revised customer loyalty program
and the 2018 amount excludes the $23.3 million benefit from the
federal biodiesel blenders' tax credit that the U.S. government
retroactively reinstated for 2017 in February 2018. The U.S.
government has not yet reinstated the federal biodiesel blenders'
tax credit for 2018 or 2019. See the reconciliations from fuel
gross margin in total and per gallon in the supplemental tables
below.
Fuel sales volume for the 2019 first quarter increased by
13.7 million gallons, or 3.0%, as compared to the 2018
first quarter due to the following factors:
- a same site fuel sales
volume increase of 9.0 million gallons, or 2.0%,
which primarily resulted from improved market conditions and the
success of TA's marketing initiatives; and
- a net increase of 4.7 million gallons
at sites opened or closed since the beginning of the
2018 first quarter.
Fuel revenues decreased by $3.2 million, or 0.3%,
in the 2019 first quarter as compared to the 2018 first
quarter, primarily due to the following factors:
- a decrease in market prices for fuel
during the 2019 first quarter; and
- the increase in fuel sales volume,
which partially offset the decrease in market prices for fuel.
Fuel gross margin for the 2019 first quarter decreased
by $8.2 million, or 9.8%, as compared to the 2018 first
quarter, primarily due to the following factors:
- the $23.3 million benefit recognized in
the first quarter of 2018 in connection with the February 2018
reinstatement for 2017 of the federal biodiesel blenders' tax
credit that did not recur in the first quarter of 2019; and
- the 13.7 million gallon increase in
fuel sales volume and a more favorable fuel purchasing environment
in the 2019 first quarter.
Although, the U.S. government has not yet retroactively
reinstated the federal biodiesel blenders' tax credit for 2018 or
2019, TA believes the U.S. government may do so by the third
quarter of 2019. If the federal biodiesel blenders’ tax credit is
reinstated for 2018 and 2019, TA expects to recognize reductions in
fuel cost of goods sold of approximately $35.0 million relating to
2018 and $5.9 million relating to the 2019 first quarter in the
period the U.S. government enacts the tax credit reinstatement.
Although TA believes reinstatement of this credit is possible, TA
cannot be certain that the U.S. government will choose to do
so.
Nonfuel: The following table presents details
for TA's nonfuel revenues during the quarter.
(in thousands)
Three Months
EndedMarch 31, 2019
2018 Change Nonfuel revenues: Store and retail
services $ 180,425 $ 170,390 5.9 % Truck service 161,195 156,520
3.0 % Restaurants 99,254 96,965 2.4 % Total nonfuel
revenues 440,874 423,875 4.0 % Nonfuel gross
margin 272,606 262,464 3.9 % Nonfuel gross margin percentage 61.8 %
61.9 % (10 )pts
Nonfuel revenues increased by $17.0 million, or 4.0%,
in the 2019 first quarter as compared to
the 2018 first quarter, due to the following
factors:
- an $11.5 million same site
increase primarily due to the positive impact of certain of TA's
marketing initiatives in store and retail services and growth in
TA's truck service program; and
- a $5.5 million net
increase attributable to sites opened and closed since the
beginning of the 2018 first quarter.
Nonfuel gross margin increased by $10.1 million,
or 3.9%, in the 2019 first quarter as compared to the 2018
first quarter, due to the following factors:
- the $17.0 million increase in nonfuel
revenues; and
- a slight decline in the nonfuel gross
margin percentage that primarily resulted from a change in mix of
products and services sold, which partially offset the increase in
nonfuel revenues.
Loss from continuing operations and adjusted loss from
continuing operations: Loss from continuing operations for the 2019
first quarter was $12.7 million, as compared to $6.0 million
for the 2018 first quarter. The larger loss in the 2019 period is
due to the $23.3 million benefit related to the federal biodiesel
blenders' tax credit recognized in the 2018 period not recurring in
2019. Adjusted loss from continuing operations for the 2019 first
quarter was $14.6 million, as compared to $22.1 million for the
2018 first quarter. The improvement in adjusted loss from
continuing operations is primarily due to an improvement in site
level gross margin in excess of site level operating expense, after
excluding the federal biodiesel blenders' tax credit recognized in
the 2018 first quarter.
(in thousands)
Three Months
EndedMarch 31, 2019
2018 Change Fuel gross margin(1) $ 74,747 $ 82,897
(9.8 )% Nonfuel gross margin 272,606 262,464 3.9 % Rent and
royalties from franchisees gross margin 3,277 4,110
(20.3 )% Total site level gross margin(1) 350,630 349,471 0.3 %
Less: site level operating expense 232,720 223,012
4.4 % Site level gross margin in excess of site level operating
expense(1) $ 117,910 $ 126,459 (6.8 )% Site level
operating expense as a percentage of nonfuel revenues 52.8 % 52.6 %
20 pts (1) The 2019 amount includes $2.8 million of a
one time reversal of loyalty award accruals recognized in
connection with introducing a revised customer loyalty program and
the 2018 amount includes the $23.3 million benefit from the federal
biodiesel blenders' tax credit that was retroactively reinstated
for 2017 in February 2018.
Net loss and adjusted EBITDA: Net loss for the 2019
first quarter decreased by $2.7 million, as compared to the
2018 first quarter and adjusted EBITDA for the 2019
first quarter increased by $14.3 million, as
compared to the 2018 first quarter.
Lease Amendments and Travel Center Purchases
In January 2019, TA acquired from Hospitality Properties Trust,
or HPT, 20 travel centers it previously leased from HPT for $309.6
million, including $1.4 million of transaction related costs, and
amended its leases with HPT such that: (i) the 20 purchased travel
centers were removed from the HPT leases and TA's annual minimum
rent was reduced by $43.1 million; (ii) the term of each of the
five leases was extended by three years; (iii) the amount of the
deferred rent obligation to be paid to HPT was reduced to $70.5
million and TA agreed to pay that amount in 16 equal quarterly
installments beginning April 1, 2019; and (iv) commencing with
the year ended December 31, 2020, TA will be obligated to pay
to HPT an additional amount of percentage rent equal to one-half
percent (0.5%) of the excess of the annual nonfuel revenues at
leased sites over the nonfuel revenues for each respective site for
the year ending December 31, 2019.
Growth Strategies
Thus far in 2019, TA has signed four franchise agreements with a
franchisee under the TA Express brand name. TA anticipates these
four TA Express branded travel centers will be added to its network
by the 2020 first quarter. In addition, TA has signed agreements
with this franchisee pursuant to which TA expects to add two
additional TA Express branded travel centers to its network, one
within five years and one within ten years.
Adoption of New Lease Accounting Standard
In February 2016, the Financial Accounting Standards Board,
or the FASB, issued Accounting Standards Update
2016-02, Leases, or ASU 2016-02, and in August 2018, the FASB
issued Accounting Standards Update 2018-11, Targeted Improvements
to ASC 842, or ASU 2018-11, collectively referred to as ASC 842,
which established a comprehensive lease standard under GAAP for
virtually all industries. TA adopted ASC 842 on January 1, 2019,
using the modified retrospective transition method, and elected to
not restate prior year comparative periods. As a result of adopting
ASC 842 on January 1, 2019, TA recognized operating lease assets of
$1.8 billion, operating lease liabilities of $2.0 billion and an
adjustment to its beginning accumulated deficit of $86.2
million.
Conference Call
On Tuesday, May 7, 2019, 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 March 31, 2019.
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
10130290.
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 first 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 and standalone restaurants in 14 states.
TA's travel centers operate under the "TravelCenters of America,"
"TA," "TA Express," "Petro Stopping Centers" and "Petro" brand
names and offer diesel and gasoline fueling, restaurants, truck
repair services, travel/convenience stores and other services
designed to provide attractive and efficient travel experiences to
professional drivers and other motorists. 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.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors, some of which are beyond TA's
control. Among others, the forward-looking statements which appear
in this press release that may not occur include:
- Statements about improved operating
results and increased nonfuel gross margins may imply that TA's
business may be profitable in the future. However, certain of those
improvements resulted from unique items that may not occur in the
future. In addition, since TA became publicly traded in 2007, TA's
operations have generated losses and only occasionally generated
profits. TA may be unable to produce future profits and TA's losses
may increase;
- Statements that TA’s purchase of 20
travel centers from HPT reduced TA’s annual minimum rent payable to
HPT by $43.1 million. TA's travel centers are open for business 24
hours per day, 365 days per year. Due to the nature and intensity
of the uses of TA's locations, they require regular and substantial
expenditures for maintenance and capital investments to remain
functional and attractive to customers. The reduction in annual
minimum rent TA achieved by purchasing travel centers from HPT may
be temporary and subsequently offset by increases to the annual
minimum rent payable to HPT as a result of HPT’s purchase of
qualifying improvements TA makes to its leased travel centers or
other transactions;
- Statements about TA's belief that the
U.S. government may retroactively reinstate the federal biodiesel
blenders’ tax credit for 2018 and 2019 by the third quarter of 2019
and the amounts by which that credit may reduce TA's fuel cost of
goods sold in the period the U.S. government enacts the tax credit
reinstatement. However, the U.S. government may not retroactively
reinstate this tax credit at the level TA expects or at all and TA
may not realize the reductions in its fuel cost of goods sold that
it expects;
- Statements about the improvements
experienced as a result of TA's revamped UltraONE 2.0 customer
loyalty program may imply that TA's operating results will improve
and that its business may be profitable in the future. However, the
increased interest in the UltraONE 2.0 customer loyalty program may
be temporary and may not continue in future periods, and may not
result in improved operating results;
- Statements about experiencing increased
site level operating expense due to staffing in advance of
increased business in TA's truck service programs may imply that TA
will in fact realize increased business in its truck service
programs and that its operating results will improve as a result.
However, TA's ability to realize increased business will depend on,
among other things, customer demand, TA's ability to offer
competitive services and TA's ability to procure customer orders
and purchases of those services. TA may not succeed in increasing
business in its truck service business and TA may not realize
profits from any such increased business;
- Statements about the seasonality of
TA's business and that it is not unusual for TA to realize a net
loss for the first quarter of the year in light of that seasonality
may imply that TA's business will be profitable in future quarters
and that TA will experience net income in those quarters. However,
TA’s business is subject to various risks and uncertainties. As a
result, TA may fail to realize net income in future quarters;
- Statements about the franchise
agreements TA entered with a franchisee pursuant to which TA
expects to add up to six TA Express branded travel centers to its
network, as well as, the pipeline of site acquisition opportunities
being pursued. These franchise agreements are subject to conditions
and these franchise arrangements may not occur or may be delayed,
and the terms of the arrangements may change. In addition,
acquisition opportunities may not occur or may subject TA to
greater risks than anticipated. These opportunities may not result
in the increased EBITDA and cash flows as expected; and
- Statements about TA's belief that the
momentum of TA's 2019 first quarter results combined with the
strength of TA's business plans will translate to increased EBITDA
and cash flow in 2019 may imply that TA will in fact realize these
increases in EBITDA and cash flow. However, TA's business is
subject to various risks and uncertainties, the positive momentum
that TA believes exists may not exist or could stop or reverse, and
TA's business plan may prove to not be successful. As a result, TA
may not experience increased EBITDA and cash flow in 2019 and its
EBITDA and cash flow could decline in 2019 and future periods.
The information contained in TA's periodic reports, including
TA's Annual Report on Form 10-K for the year ended December 31,
2018, which has been filed with the U.S. Securities and Exchange
Commission, or SEC, and TA's Quarterly Report on Form 10-Q for the
period ended March 31, 2019, which has 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 LLCCONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)(in thousands, except per share
amounts)
Three Months EndedMarch
31, 2019 2018 Revenues: Fuel
$ 983,141 $ 986,345 Nonfuel 440,874 423,875 Rent and royalties from
franchisees 3,277 4,110 Total revenues 1,427,292
1,414,330
Cost of goods sold (excluding
depreciation): Fuel 908,394 903,448 Nonfuel 168,268
161,411 Total cost of goods sold 1,076,662 1,064,859
Site level operating expense 232,720 223,012 Selling, general and
administrative expense 37,110 36,494 Real estate rent expense
66,413 70,236 Depreciation and amortization expense 24,759
20,546
Loss from operations (10,372 ) (817 )
Interest expense, net 7,050 7,580 Other expense, net 574
1,293
Loss before income taxes and discontinued
operations (17,996 ) (9,690 ) Benefit for income taxes 5,267
3,663
Loss from continuing operations (12,729
) (6,027 ) Loss from discontinued operations, net of taxes —
(4,051 )
Net loss (12,729 ) (10,078 ) Less: net income for
noncontrolling interest 18 34
Net loss
attributable to common shareholders $ (12,747 ) $ (10,112 )
Net loss per common share attributable to common
shareholders: Basic and diluted from continuing operations $
(0.32 ) $ (0.15 ) Basic and diluted from discontinued operations —
(0.10 ) Basic and diluted (0.32 ) (0.25 )
These financial statements should be read
in conjunction with TA's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2019, to be filed with the U.S. Securities
and Exchange Commission.
TRAVELCENTERS OF AMERICA LLCRECONCILIATION OF
NON-GAAP FINANCIAL MEASURES(in thousands, except per share amounts
unless indicated otherwise)
TA believes the non-GAAP financial measures presented in the
tables below are 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 when
due, make capital expenditures and expand its business. These
non-GAAP financial measures also may help investors to make
comparisons between TA and other companies and to make comparisons
of TA's financial and operating results between periods.
TA believes that adjusted loss from continuing operations,
adjusted loss per common share from continuing operations
attributable to common shareholders, EBITDA, adjusted EBITDA,
adjusted fuel gross margin and adjusted fuel gross margin per
gallon are meaningful disclosures that may help investors to better
understand TA's financial performance by providing financial
information that represents the operating results of TA's
continuing operations without the effects of items that do not
result directly from TA's normal recurring operations and may allow
investors to better compare TA's performance between periods and to
the performance of other companies. Management uses these measures
in developing internal budgets and forecasts and analyzing TA's
performance. TA calculates EBITDA as net loss before interest,
taxes, and depreciation and amortization, as shown below. TA
calculates adjusted EBITDA by excluding items that it considers not
to be normal, recurring, cash operating expenses or gains or
losses.
The non-GAAP financial measures TA presents should not be
considered as alternatives to net loss attributable to common
shareholders, net loss, loss from continuing operations, loss from
operations or loss per common share from continuing operations
attributable to common shareholders as an indicator of TA's
operating performance or as a measure of TA's liquidity. Also, the
non-GAAP financial measures TA presents may not be comparable to
similarly titled amounts calculated by other companies.
TA believes that loss from continuing operations is the most
directly comparable GAAP financial measure to adjusted loss from
continuing operations; loss per common share from continuing
operations attributable to common shareholders is the most directly
comparable GAAP financial measure to adjusted loss per common share
from continuing operations attributable to common shareholders; net
loss is the most directly comparable GAAP financial measure to
EBITDA and adjusted EBITDA; and that fuel gross margin and fuel
gross margin per gallon are the most directly comparable GAAP
financial measures to adjusted fuel gross margin and adjusted fuel
gross margin per gallon, respectively. The following tables present
the reconciliations of the non-GAAP financial measures to the
respective most directly comparable GAAP financial measures for the
three months ended March 31, 2019 and 2018.
Calculation of adjusted loss from
continuing operations: Three Months EndedMarch
31, 2019 2018 Loss from continuing
operations $ (12,729 ) $ (6,027 ) Add: Costs of HPT transactions(1)
458 — Less: Loyalty award expiration(2) (2,911 ) — Add: Executive
officer retirement agreement expenses(3) — 1,780 Add: Comdata legal
expenses(4) — 78 Less: Federal biodiesel blenders' tax credit(5) —
(23,251 ) Add: Income tax benefit(6) 606 5,284
Adjusted loss from continuing operations $ (14,576 ) $ (22,136 )
Calculation of adjusted loss per common
share from continuing operations attributable to common
shareholders (basic and diluted):
Three Months EndedMarch 31, 2019 2018
Loss per common share from continuing
operations attributable to common shareholders (basic and
diluted)
$ (0.32 ) $ (0.15 ) Add: Costs of HPT transactions(1) 0.01 — Less:
Loyalty award expiration(2) (0.07 ) — Add: Executive officer
retirement agreement expenses(3) — 0.05 Less: Federal biodiesel
blenders' tax credit(5) — (0.58 ) Add: Income tax benefit(6) 0.02
0.13
Adjusted loss per common share from
continuing operations attributable to common shareholders (basic
and diluted)
$ (0.36 ) $ (0.55 )
Calculation of EBITDA and adjusted
EBITDA: Three Months EndedMarch 31, 2019
2018 Net loss $ (12,729 ) $ (10,078 ) Less: Benefit for
income taxes (5,267 ) (3,663 ) Add: Depreciation and amortization
expense 24,759 20,546 Add: Interest expense, net 7,050 7,580
EBITDA 13,813 14,385 Add: Costs of HPT transactions(1) 458 —
Less: Loyalty award expiration(2) (2,911 ) — Add: Executive officer
retirement agreement expenses(3) — 1,780 Add: Comdata legal
expenses(4) — 78 Add: Loss from discontinued operations, net of
taxes — 4,051 Less: Federal biodiesel blenders' tax credit(5) —
(23,251 ) Adjusted EBITDA $ 11,360 $ (2,957 )
Calculation of adjusted fuel gross
margin and adjusted fuel gross margin per gallon:
Three Months EndedMarch 31, 2019 2018
Fuel gross margin $ 74,747 $ 82,897 Less: Loyalty award
expiration(2) (2,840 ) — Less: Federal biodiesel blenders' tax
credit(5) — (23,251 ) Adjusted fuel gross margin $ 71,907
$ 59,646 Fuel gross margin per gallon $ 0.158
$ 0.181 Less: Loyalty award expiration(2) (0.006 ) — Less: Federal
biodiesel blenders' tax credit(5) — (0.051 ) Adjusted fuel
gross margin per gallon $ 0.152 $ 0.130 (1) Costs of
HPT Transactions. In January 2019, TA entered transaction
agreements pursuant to which it amended its leases with HPT. During
the three months ended March 31, 2019, TA incurred $0.5 million of
expenses associated with the amendments of the leases. (2) Loyalty
Award Expiration. During the three months ended March 31, 2019, TA
introduced a new customer loyalty program, UltraONE 2.0. As a
result of introducing the new customer loyalty program, shower
awards earned under the program now expire in 10 days for all
loyalty members. This update resulted in the immediate expiration
of certain shower awards upon adoption of the new customer loyalty
program, generating $2.9 million additional revenue during the
three months ended March 31, 2019. (3) Executive Officer Retirement
Agreement Expenses. As part of TA's retirement agreement with a
certain former officer, TA agreed to accelerate the vesting of
previously granted share awards and make a cash payment. This
acceleration and cash payment resulted in additional compensation
expense of $1.8 million for the three months ended March 31, 2018.
(4) Comdata Legal Expenses. During the three months ended March 31,
2018, TA incurred $0.1 million of legal fees in its litigation with
Comdata Inc., or Comdata. On April 9, 2018, the Court of Chancery
of the State of Delaware entered its final order and judgment, or
the Order. Pursuant to the Order, Comdata was required to, among
other things, reimburse TA for attorneys' fees and costs, together
with interest, in the amount of $10.7 million, which TA collected
in April 2018. (5) Federal Biodiesel Blenders' Tax Credit. On
February 8, 2018, the U.S. government retroactively reinstated the
2017 federal biodiesel blenders' tax credit. TA's recovery as a
result of this tax credit was $23.3 million and was recognized in
February 2018. TA collected this amount during the remainder of
2018. (6) Net Tax Impact. TA calculated the tax impact of the
adjustments described above by using its estimated statutory rate
of 24.7% for the three months ended March 31, 2019 and 2018.
TRAVELCENTERS OF AMERICA LLCCONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)(in thousands)
March 31,
2019 December 31, 2018 Assets: Current
assets: Cash and cash equivalents $ 24,749 $ 314,387 Accounts
receivable, net 138,561 97,449 Inventory 194,168 196,721 Other
current assets 29,290 35,119 Total current assets 386,768
643,676 Property and equipment, net 883,960 628,537
Operating lease assets 1,827,690 — Goodwill 25,259 25,259
Intangible assets, net 21,993 22,887 Other noncurrent assets 98,741
121,749
Total assets $ 3,244,411 $ 1,442,108
Liabilities and Shareholders' Equity: Current
liabilities: Accounts payable $ 189,023 $ 120,914 Current operating
lease liabilities 93,981 — Current HPT Leases liabilities — 42,109
Other current liabilities 145,573 125,668 Total current
liabilities 428,577 288,691 Long term debt, net 320,748
320,528 Noncurrent operating lease liabilities 1,918,377 —
Noncurrent HPT Leases liabilities — 353,756 Other noncurrent
liabilities 52,033 28,741 Total liabilities 2,719,735
991,716
Shareholders' equity (40,398 and 40,402
common shares outstanding as of March 31, 2019 and December 31,
2018, respectively)
524,676 450,392
Total liabilities and shareholders'
equity $ 3,244,411 $ 1,442,108
These financial statements should be read
in conjunction with TA's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2019, to be filed with the U.S. Securities
and Exchange Commission.
TRAVELCENTERS OF AMERICA LLCSUPPLEMENTAL SAME
SITE OPERATING DATA(dollars and gallons in thousands, except per
gallon amounts unless indicated otherwise)
The following table presents operating data for the periods
noted for all of the locations in operation on March 31, 2019,
that were operated by TA continuously since the beginning of the
earliest period presented, with the exception of three locations TA
operates that are owned by an unconsolidated joint venture in which
TA owns a noncontrolling interest. This data excludes revenues and
expenses at locations TA does not operate, such as rents and
royalties from franchisees, the results of TA's discontinued
operations and corporate level selling, general and administrative
expense. 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 EndedMarch
31, 2019 2018
Change Number of same site company operated locations(1) 241
241 — Diesel sales volume (gallons) 400,248 387,894 3.2 %
Gasoline sales volume (gallons) 59,838 63,187 (5.3 )
% Total fuel sales volume (gallons) 460,086 451,081
2.0 % Fuel revenues $ 952,617 $ 969,817 (1.8 ) % Fuel gross
margin(2) 74,153 82,156 (9.7 ) % Fuel gross margin per gallon $
0.161 $ 0.182 (11.5 ) % Nonfuel revenues $ 434,227 $ 422,718
2.7 % Nonfuel gross margin 268,325 261,519 2.6 % Nonfuel gross
margin percentage 61.8 % 61.9 % (10 )pts Total gross
margin(2) $ 342,478 $ 343,675 (0.3 ) % Site level operating expense
228,621 221,910 3.0 % Site level operating expense as a percentage
of nonfuel revenues 52.7 % 52.5 % 20 pts Site level gross margin in
excess of site level operating expense(2) $ 113,857 $ 121,765 (6.5
) % (1) Same site operations for the three months
ended March 31, 2019, included 228 travel centers and 13 standalone
restaurants that TA operated since January 1, 2018. (2) The 2019
amount includes $2.8 million of a one time reversal of loyalty
award accruals recognized in connection with introducing a revised
customer loyalty program and the 2018 amount includes the $23.2
million benefit from the federal biodiesel blenders' tax credit
that the U.S. government retroactively reinstated for 2017 in
February 2018. The U.S. government has not yet reinstated the
federal biodiesel blenders' tax credit for 2018 or 2019.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190507005285/en/
Katie Strohacker, Senior Director of Investor Relations(617)
796-8251www.ta-petro.com
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