TravelCenters of America LLC Announces Fourth Quarter and Year End 2013 Results

Fourth Quarter

Gross Margin Up 7.9%

Gross Margin Over Site Operating Costs Up 8.2%

Contribution from Acquisitions Accelerates

WESTLAKE, Ohio--()--TravelCenters of America LLC (NYSE:TA) today announced financial results for the fourth quarter and year ended December 31, 2013.

At December 31, 2013, TA’s business included 247 travel centers, 172 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 December 31, 2013, TA also operated 34 convenience stores with retail gasoline stations, primarily under the “Minit Mart” brand name. TA’s results were:

   
Three Months Ended

December 31,

Year Ended

December 31,

 
2013   2012 2013   2012
(in thousands, except per share amounts)
 
Revenues $ 1,906,530 $ 1,925,195 $ 7,944,731 $ 7,995,724
Net income (loss) $ 11,975 $ (2,459 ) $ 31,623 $ 32,198
 
Net income (loss) per share:
Basic and diluted $ 0.39 $ (0.08 ) $ 1.06 $ 1.12
 
Supplemental Data:
Total fuel sales volume (gallons) 498,157 486,963 2,034,929 2,039,960
Total fuel revenues $ 1,553,281 $ 1,597,287 $ 6,481,252 $ 6,636,297
Fuel gross margin $ 84,086 $ 76,484 $ 342,172 $ 326,047
 
Total nonfuel sales $ 350,238 $ 324,456 $ 1,450,792 $ 1,344,755
Nonfuel gross margin $ 193,554 $ 180,183 $ 797,968 $ 745,281
Nonfuel gross margin percentage 55.3 % 55.5 % 55.0 % 55.4 %
 
EBITDAR(1) $ 58,162 $ 65,598 $ 289,589 $ 293,023
Adjusted EBITDAR(2) $ 68,162 $ 65,598 $ 299,589 $ 293,023
 

(1) A reconciliation that shows the calculation of earnings before interest, taxes, depreciation, amortization and rent, or EBITDAR and Adjusted EBITDAR, from net income (loss) determined in accordance with U.S. generally accepted accounting principles, or GAAP, appears in the supplemental data below.

(2) Excludes a $10 million charge in the 2013 fourth quarter related to a previously disclosed settlement of litigation.

Business Commentary

TA’s Adjusted EBITDAR for the fourth quarter of 2013 increased by approximately $2.6 million, or 3.9%, to $68.2 million, versus EBITDAR for the 2012 fourth quarter of $65.6 million. The increase in Adjusted EBITDAR is primarily attributable to an increase in fuel gross margin per gallon, which was $0.169 during the 2013 fourth quarter versus $0.157 during the 2012 fourth quarter.

Net income for the fourth quarter of 2013 improved by approximately $14.4 million, to $12.0 million ($0.39 per share), versus a net loss for the 2012 fourth quarter of $2.5 million ($0.08 per share). The increase is primarily due to the $29.9 income tax benefit from the reversal of TA’s valuation allowance on most of its deferred tax assets, partially offset by the $10 million litigation settlement described above and an increase in depreciation and amortization expense attributable to acquisitions and other capital investments TA has made during 2012 and 2013 and the related acquisition and financing costs.

The improvements to travel center properties TA acquires are often substantial and require a long period of time to plan, design, permit and complete, and after completion the acquired sites then require a period of time to produce stabilized financial results and become part of our customers’ networks. TA estimates that the travel centers it has acquired generally will reach financial stabilization in approximately the third year after acquisition, but the actual result can vary widely from this estimate due to many factors. The table below shows the gross revenues in excess of cost of goods sold and site level operating expenses for the properties 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 dates TA began to operate such sites for its own account, if later).

  Revenues in Excess of Cost of Goods Sold and Site
Level Operating Costs
Three Months Ended   Year Ended
December 31, December 31,
(amounts in thousands) 2013   2012   2013   2012
Properties acquired in 2011 (6 sites) $ 3,171 $ 1,130 $ 9,437   $ 5,260
Properties acquired in 2012 (14 sites) 3,833 555 14,100 643
Properties acquired in 2013 (41 sites)*   1,254  

-

  2,941  

-

Total $ 8,258 $ 1,685 $ 26,478 $ 5,903

* Includes 31 convenience stores acquired in December 2013.

Thomas M. O’Brien, TA’s CEO, made the following statement:

Although the administrative process of completing our fourth quarter and full year 2013 financial results did not end with a timely communication of those results, I am pleased to report growth in EBITDAR and other key measures, adjusting for our previously disclosed litigation settlement charge and our recognition of benefits related to income taxes. My view of our operating metrics during these reported periods and continuing currently, and my view of our business outlook, remains positive. We continue to make progress acquiring new locations and integrating them into our nationwide network.

"Our pre tax income this quarter was lower than last year, but this was largely the result of the litigation charge and higher depreciation and interest costs in 2013 arising from recently acquired sites. Our plan is to offset the depreciation and interest costs from acquisitions as the operations at these sites are improved and begin to achieve stabilized financial results.”

Investment Activities

During the year ended December 31, 2013, TA made capital expenditures of $164.2 million, including $45.3 million to upgrade the travel centers and businesses we acquired in 2011, 2012 and 2013 and including certain capital expenditures which were sold to Hospitality Properties Trust, or HPT, our primary lessor.

From the beginning of 2011 through December 31, 2013, TA invested or expects to invest $325.6 million to acquire and improve 30 travel centers and 31 convenience stores. While the costs of ownership are fully reflected in TA’s results for the periods since each acquisition, TA believes the potential returns from these acquired properties are not yet fully reflected in its results of operations. TA believes that the improvements it has made and plans to make at the acquired travel centers may continue to improve the financial results at these locations. Typical improvements TA makes at acquired travel centers include adding truck repair facilities and quick serve restaurants, or QSRs, paving parking lots, replacing outdated fuel dispensers, installing diesel exhaust fluid dispensing systems, changing signage, installing point of sale and other IT systems and general building upgrades.

The table below shows the number of properties acquired by year and the amounts TA plans to invest and has invested through December 31, 2013, in these properties.

     
Estimated
Renovation Cost Renovation
Acquisition Incurred Through Cost to be
Site Count

Cost(1)

December 31, 2013 Spent
Properties acquired in 2011 6 $ 36,333 $ 47,731 $

-

Properties acquired in 2012 14 46,910 32,513

-

Properties acquired in 2013(2) 41   111,602   17,203   33,355
Total 61 $ 194,845 $ 97,447 $ 33,355
 

(1) Includes only cash amounts paid that were recorded as property and equipment or intangible assets. Excludes working capital assets and asset retirement obligations.

(2) Includes 31 convenience stores acquired in December 2013.

As of December 31, 2013, TA had agreed to purchase an additional travel center for $3.0 million, which purchase was completed in January 2014. During 2014 to the date of this press release, TA has entered agreements to acquire two additional travel centers for a total of $21.5 million and expects to complete these acquisitions before September 30, 2014; but these purchases are subject to conditions and may not occur, may be delayed or the terms may change. TA currently intends to continue its efforts to selectively acquire additional travel centers and convenience stores and to otherwise expand its business.

Capital Activity

During 2013, TA sold to HPT, $83.9 million of improvements to sites leased from HPT. On January 15, 2013, TA issued $110 million of 8.25% Senior Notes due 2028 in a public offering for net proceeds of approximately $105.1 million after underwriters discount and commission and other offering expenses. In December 2013, TA issued 7,475,000 common shares in a public offering, raising net proceeds of approximately $65.1 million after underwriters’ discounts and other costs of that offering.

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 that includes operating data for the travel centers that were operated by TA continuously since the beginning of the earliest applicable periods presented, and acquired operations data that includes operating data for the travel centers and convenience stores TA began to operate for its own account since the beginning of 2011. A presentation of EBITDAR and Adjusted EBITDAR, and a reconciliation that shows the calculation of EBITDAR and Adjusted 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:

Later today, at 10:00 a.m. Eastern Time, TA will host a brief conference call to discuss its financial results and other activities for the three months and year ended December 31, 2013. Following management's remarks, there will be a question and answer period.

The conference call telephone number is (800) 288 8968. Participants calling from outside the United States and Canada should dial (612) 332 0345. 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 328471.

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 this 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 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 STATES THAT THE OPERATIONS AT MANY OF TA’S SITES ACQUIRED IN 2011, 2012 AND 2013 HAVE NOT YET REACHED THE STABILIZED FINANCIAL RESULTS TA CURRENTLY EXPECTS AND THAT TA ESTIMATES THAT ACQUIRED SITES GENERALLY WILL REACH STABILIZATION IN APPROXIMATELY THE THIRD YEAR AFTER ACQUISITION. THE IMPLICATIONS OF THESE STATEMENTS ARE THAT OPERATIONS AT THESE ACQUIRED SITES WILL IMPROVE TO A LEVEL THAT WILL RESULT IN INCREASES IN TA’S OPERATING INCOME AND NET INCOME IN THE FUTURE. MANY OF THE LOCATIONS TA HAS ACQUIRED PRODUCED OPERATING RESULTS WHICH CAUSED THE PRIOR OWNERS TO EXIT THESE BUSINESSES AND TA’S ABILITY TO OPERATE THESE LOCATIONS PROFITABLY DEPENDS UPON MANY FACTORS, INCLUDING TA’S ABILITY TO INTEGRATE NEW OPERATIONS INTO ITS EXISTING OPERATIONS. IN FACT, THERE ARE MANY FACTORS WHICH WILL IMPACT TA’S FUTURE OPERATIONS THAT MAY CAUSE TA TO OPERATE LESS PROFITABLY OR UNPROFITABLY IN ANNUAL AND/OR QUARTERLY PERIODS IN ADDITION TO THESE STATED ITEMS, INCLUDING SOME FACTORS WHICH ARE BEYOND TA’S CONTROL SUCH AS SEASONALITY, THE CONDITION OF THE U.S. ECONOMY GENERALLY, THE FUTURE DEMAND FOR TA’S GOODS AND SERVICES AND COMPETITION IN TA’S BUSINESS;
  • THIS PRESS RELEASE STATES THAT TA CURRENTLY INTENDS TO CONTINUE ITS EFFORTS TO SELECTIVELY ACQUIRE ADDITIONAL PROPERTIES. THE IMPLICATIONS OF THESE STATEMENTS MAY BE THAT TA WILL BE ABLE TO CONTINUE TO IDENTIFY AND COMPLETE ADDITIONAL ACQUISITIONS. HOWEVER, TA MAY NOT SUCCEED IN IDENTIFYING AND/OR ACQUIRING OTHER PROPERTIES;
  • THIS PRESS RELEASE REFERENCES ACQUISITIONS WHICH HAVE BEEN AGREED 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;
  • THIS PRESS RELEASE STATES THAT DURING 2013 TA MADE CAPITAL INVESTMENTS OF $164.2 MILLION FOR IMPROVEMENTS TO EXISTING AND ACQUIRED TRAVEL CENTERS, AND SOLD TO HPT $83.9 MILLION OF IMPROVEMENTS TO TRAVEL CENTERS LEASED FROM HPT. TA’S REGULAR OPERATIONS REQUIRE LARGE AMOUNTS OF CAPITAL INVESTMENT TO MAINTAIN THE COMPETITIVENESS OF TA’S LOCATIONS AND HPT IS NOT OBLIGATED TO PURCHASE IMPROVEMENTS TO LEASED TRAVEL CENTERS FROM TA. THERE CAN BE NO ASSURANCE THAT TA WILL HAVE SUFFICIENT WORKING CAPITAL OR CASH LIQUIDITY TO FUND FUTURE CAPITAL INVESTMENTS; AND
  • THIS PRESS RELEASE STATES THAT TA HAS REVERSED ITS VALUATION ALLOWANCE ON MOST OF ITS DEFERRED TAX ASSETS. THIS MAY IMPLY THAT TA WILL BE PROFITABLE IN 2014 AND THEREAFTER. HOWEVER, THERE CAN BE NO ASSURANCE TA WILL BE PROFITABLE IN 2014 OR THEREAFTER, AND TA’S ESTIMATES AND ASSUMPTIONS REGARDING THE REVERSAL OF ITS DEFERRED TAX ASSET VALUATION ALLOWANCE MAY NOT BE REALIZED.

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 OF MOTOR VEHICLE ENGINES AND OTHER FUEL CONSERVATION PRACTICES EMPLOYED BY TA’S CUSTOMERS MAY CONTINUE TO REDUCE THE DEMAND FOR DIESEL 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 OR PROPERTY DEVELOPMENT 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 TRENDS MAY CONTINUE, WHICH MAY ADVERSELY AFFECT TA’S BUSINESS 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 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 CONSEQUENT INABILITY TO USE ITS SHELF REGISTRATION STATEMENT ON FORM S-3 UNTIL IT IS CURRENT AND HAS BEEN CURRENT IN ITS FILINGS UNDER THE EXCHANGE ACT FOR A PERIOD OF NOT LESS THAN TWELVE FULL CONSECUTIVE CALENDAR MONTHS MAY NEGATIVELY IMPACT TA'S ABILITY TO ISSUE NEW DEBT AND EQUITY SECURITIES AS NECESSARY TO FUND CAPITAL INVESTMENTS OR IMPLEMENT ITS BUSINESS STRATEGIES;
  • 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; 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 HAVE THE IMPACT OF DETERRING 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, AS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION, UNDER “WARNING CONCERNING FORWARD LOOKING STATEMENTS,” AND “RISK FACTORS” AND ELSEWHERE IN THAT ANNUAL REPORT. COPIES OF THAT TA ANNUAL REPORT ARE 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 STATEMENT 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 December 31,
2013   2012
Revenues:
Fuel $ 1,553,281 $ 1,597,287
Nonfuel 350,238 324,456
Rent and royalties   3,011   3,452
Total revenues 1,906,530 1,925,195
 
Cost of goods sold (excluding depreciation):
Fuel 1,469,195 1,520,803
Nonfuel   156,684   144,273
Total cost of goods sold (excluding depreciation) 1,625,879 1,665,076
 
Operating expenses:
Site level operating 185,935 172,560
Selling, general & administrative(1) 36,033 22,437
Real estate rent 52,908 50,897
Depreciation and amortization   17,034   14,396
Total operating expenses   291,910   260,290
 
Loss from operations (11,259 ) (171 )
 
Acquisition costs (1,177 ) (138 )
Interest income 152 391
Interest expense   (4,641 )   (2,726 )
Loss before income taxes (16,925 ) (2,644 )
Benefit (provision) for income taxes 28,244 (429 )
Income from equity investees   656   614
Net income (loss) $ 11,975 $ (2,459 )
 
Net income (loss) per share:
Basic and diluted $ 0.39 $ (0.08 )
 

(1) Includes litigation settlement charge of $10 million in 2013.

These financial statements should be read in conjunction with TA’s Annual Report on Form 10-K for the year ended December 31, 2013, as 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)

 
Year Ended December 31,
2013   2012
Revenues:
Fuel $ 6,481,252 $ 6,636,297
Nonfuel 1,450,792 1,344,755
Rent and royalties   12,687   14,672
Total revenues 7,944,731 7,995,724
 
Cost of goods sold (excluding depreciation):
Fuel 6,139,080 6,310,250
Nonfuel   652,824   599,474
Total cost of goods sold (excluding depreciation) 6,791,904 6,909,724
 
Operating expenses:
Site level operating 755,942 698,522
Selling, general & administrative(1) 107,447 95,547
Real estate rent 209,320 198,927
Depreciation and amortization   58,928   51,534
Total operating expenses 1,131,637 1,044,530
 
Income from operations 21,190 41,470
 
Acquisition costs (2,523 ) (785 )
Interest income 1,314 1,485
Interest expense   (17,650 )   (10,358 )
Income before income taxes 2,331 31,812
Benefit (provision) for income taxes 26,618 (1,491 )
Income from equity investees   2,674   1,877
Net income $ 31,623 $ 32,198
 
Net income per share:
Basic and diluted $ 1.06 $ 1.12
 

(1) Includes litigation settlement charge of $10 million in 2013.

These financial statements should be read in conjunction with TA’s Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the U.S. Securities and Exchange Commission.

     
TRAVELCENTERS OF AMERICA LLC
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)

 
December 31, December 31,
2013 2012
Assets
Current assets:
Cash and cash equivalents $ 85,657 $ 35,189
Accounts receivable, net 105,932 106,273
Inventories 199,201 191,006
Other current assets   79,604   72,458
Total current assets 470,394 404,926
 
Property and equipment, net 704,866 576,512
Goodwill and intangible assets, net 48,772 20,041
Other noncurrent assets   33,250   28,240
Total assets $ 1,257,282 $ 1,029,719
 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 149,645 $ 143,605
Current HPT Leases Liabilities 29,935 28,354
Other current liabilities   124,033   111,168
Total current liabilities 303,613 283,127
 
Noncurrent HPT Leases liabilities 343,926 351,135
Senior Notes due 2028 110,000

-

Other noncurrent liabilities   45,866   42,023
Total liabilities 803,405 676,285
 
Shareholders’ equity   453,877   353,434
Total liabilities and shareholders’ equity $ 1,257,282 $ 1,029,719
 

These financial statements should be read in conjunction with TA’s Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the U.S. Securities and Exchange Commission.

   
TRAVELCENTERS OF AMERICA LLC
CONSOLIDATED SUPPLEMENTAL DATA

(in thousands)

 

 

 
Three Months Ended Year Ended
December 31, December 31,
2013   2012 2013   2012
Calculation of EBITDAR and Adjusted EBITDAR:(1)
Net income (loss) $ 11,975 $ (2,459 ) $ 31,623 $ 32,198
Add: income taxes (28,244 ) 429 (26,618 ) 1,491
Add: depreciation and amortization 17,034 14,396 58,928 51,534
Deduct: interest income (152 ) (391 ) (1,314 ) (1,485 )
Add: interest expense(2) 4,641 2,726 17,650 10,358
Add: real estate rent expense(3)   52,908   50,897   209,320   198,927
EBITDAR $ 58,162 $ 65,598 $ 289,589 $ 293,023
Adjusted EBITDAR $ 68,162 $ 65,598 $ 299,589 $ 293,023
 

(1) TA calculates EBITDAR as earnings before interest, taxes, depreciation, amortization and rent. Adjusted EBITDAR is EBITDAR plus, for each of the 2013 periods presented, a $10 million litigation settlement charge which is not expected to recur. TA believes EBITDAR and Adjusted EBITDAR are useful indications of its operating performance and its ability to pay rent or service debt, make capital expenditures and expand its business. TA believes that EBITDAR and Adjusted EBITDAR are meaningful disclosures that may help interested persons to better understand its financial performance, including comparing its performance between periods and to the performance of other companies. However, EBITDAR and Adjusted 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 December 31,

 

Year Ended
December 31,

2013   2012 2013   2012
Interest related to our Senior Notes and Credit Facility $ 2,691 $ 491 $ 10,537 $ 2,096
HPT rent classified as interest 2,158 1,894 7,400 7,330
Amortization of deferred financing costs 171 89 667 352
Capitalized interest (226 )

 

(1,033 )

 

Other   (153 )   252   79   580
Total interest expense $ 4,641 $ 2,726 $ 17,650 $ 10,358
 

(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 $57,473 and $55,217 during the three month periods ended December 31, 2013 and 2012, respectively, while the total rent amounts expensed during the quarters ended December 31, 2013 and 2012, were $52,908 and $50,897, respectively. Cash paid under lease agreements was $226,865 and $217,568, during the years ended December 31, 2013 and 2012, respectively, while the total rent amounts expensed were $209,320 and $198,927, 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. 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 are leased back. A reconciliation of these amounts is as follows.

Three Months Ended
December 31,

 

 

Year Ended
December 31,

 
2013   2012 2013   2012
 
Cash payments for rent under HPT Leases $ 54,896 $ 52,604 $ 216,659 $ 207,653
Rent paid to others (A)   2,577   2,613   10,206   9,915
Total cash payments under real property leases 57,473 55,217 226,865 217,568
Change in accrued estimated percentage rent (146 ) (11 ) 327 (11 )
Adjustments to recognize expense on a straight line basis - HPT (351 ) (358 ) (1,734 ) (2,664 )
Less sale-leaseback financing obligation amortization (97 ) (449 ) (1,644 ) (2,089 )
Less portion of rent payments recognized as interest expense (2,158 ) (1,894 ) (7,400 ) (7,330 )
Less deferred tenant improvement allowance amortization (1,692 ) (1,692 ) (6,769 ) (6,769 )
Amortization of deferred gain on sale-leaseback transactions (124 ) (50 ) (354 ) (103 )

Adjustments to recognize expense on a straight line basis for other leases

 

  3   134   29   325
Total real estate rent expense $ 52,908 $ 50,897 $ 209,320 $ 198,927
 

(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 all of the travel centers in operation on December 31, 2013, that were operated by TA continuously since the beginning of the earliest applicable periods presented. This data excludes revenues and expenses that were not generated at travel centers 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(1)

(in thousands, except for number of travel centers and percentage amounts)

 
Three Months Ended December 31, Year Ended December 31,
      Change       Change
2013 2012   Fav/(Unfav) 2013 2012 Fav/(Unfav)
Number of company operated locations 201 201 191 191
 
Total fuel sales volume (gallons) 465,157 471,049 (1.3) % 1,865,018 1,924,646 (3.1) %
Total fuel revenues $ 1,452,345 $ 1,547,019 (6.1) % $ 5,945,639 $ 6,270,663 (5.2) %
Total fuel gross margin $ 80,705 $ 75,829 6.4 % $ 321,075 $ 319,840 0.4 %
 
Total nonfuel revenues $ 332,957 $ 322,301 3.3 % $ 1,353,534 $ 1,318,581 2.7 %
Total nonfuel gross margin $ 184,529 $ 178,983 3.1 % $ 744,940 $ 730,919 1.9 %
Nonfuel gross margin percentage 55.4 % 55.5 % (10) b.p. 55.0 % 55.4 % (40) b.p.
 
Total gross margin $ 265,234 $ 254,812 4.1 % $ 1,066,015 $ 1,050,759 1.5 %
 
Site level operating expenses $ 176,350 $ 172,112 (2.5) % $ 701,204 $ 679,237 (3.2) %
 
Site level operating expenses as a percentage of nonfuel revenues 53.0 % 53.4 % 40 b.p. 51.8 % 51.5 % (30) b.p.
Site level gross margin in excess of site level operating expense $ 88,884 $ 82,700 7.5 % $ 364,811 $ 371,522 (1.8) %
 

(1) Excludes two travel centers TA operates that are owned by a joint venture and travel centers operated by TA’s franchisees.

SUPPLEMENTAL ACQUIRED OPERATIONS DATA

The following table presents operating data for 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
ACQUISITION OPERATING DATA

(in thousands, except for number of travel centers and percentage amounts)

 
Three Months Ended December 31, Year Ended December 31,
    Change     Change
2013 2012 Fav/(Unfav) 2013 2012 Fav/(Unfav)
Number of company operated locations 61 20 41 61 20 41
 
Total fuel sales volume (gallons) 53,077 27,217 95.0 % 182,134 77,800 134.1 %
 
Total fuel revenues $ 164,458 $ 88,616 85.6 % $ 579,017 $ 252,148 129.6 %
Total fuel gross margin $ 8,897 $ 3,545 151.0 % $ 30,006 $ 12,060 148.8 %
 
Total nonfuel revenues $ 37,354 $ 17,045 119.1 % $ 127,006 $ 46,326 174.2 %
Total nonfuel gross margin $ 19,935 $ 9,307 114.2 % $ 68,839 $ 24,844 177.1 %
Nonfuel gross margin percentage 53.4 % 54.6 % (120) b.p. 54.2 % 53.6 % 60 b.p.
 
Total gross margin $ 28,832 $ 12,852 124.3 % $ 98,845 $ 36,904 167.8 %
Site level operating expenses $ 20,575 $ 11,168 (84.2) % $ 72,367 $ 31,001 (133.4) %
Site level operating expenses as a percentage of nonfuel revenues 55.1 % 65.5 % 1,040 b.p. 57.0 % 66.9 % 990 b.p.
Site level gross margin in excess of site level operating expense $ 8,257 $ 1,684 390.3 % $ 26,478 $ 5,903 348.6 %
 

Contacts

TravelCenters of America LLC
Katie Strohacker, 617-796-8251
Director, Investor Relations
www.ta-petro.com

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Contacts

TravelCenters of America LLC
Katie Strohacker, 617-796-8251
Director, Investor Relations
www.ta-petro.com