Attached files
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| 8-K - 8-K - TravelCenters of America Inc. /MD/ | a20160630form8k.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact: Katie Strohacker, Senior Director of Investor Relations (617) 796-8251 www.ta-petro.com |
TravelCenters of America LLC Announces Second Quarter 2016 Financial Results
Second Quarter Fuel Gross Margin up 5.9%, Nonfuel Gross Margin up 10.5%
____________________________________________________________________________________
Westlake, OH (August 8, 2016): TravelCenters of America LLC (Nasdaq: TA) today announced financial results for the three and six months ended June 30, 2016:
(in thousands, except per share and per gallon amounts unless indicated otherwise) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Total revenues | $ | 1,445,065 | $ | 1,582,883 | $ | 2,609,515 | $ | 2,990,584 | |||||||
Income (loss) before income taxes | 5,570 | 6,287 | (10,051 | ) | 32,502 | ||||||||||
Net income (loss) attributable to common shareholders | 3,521 | 3,772 | (6,423 | ) | 19,501 | ||||||||||
Net income (loss) per common share attributable to common shareholders: | |||||||||||||||
Basic and diluted | $ | 0.09 | $ | 0.10 | $ | (0.17 | ) | $ | 0.51 | ||||||
Supplemental Data: | |||||||||||||||
Fuel sales volume (gallons): | |||||||||||||||
Diesel fuel | 418,519 | 439,189 | 840,919 | 861,753 | |||||||||||
Gasoline | 142,635 | 95,607 | 261,239 | 173,652 | |||||||||||
Total fuel sales volume (gallons) | 561,154 | 534,796 | 1,102,158 | 1,035,405 | |||||||||||
Fuel gross margin | $ | 101,993 | $ | 96,287 | $ | 193,694 | $ | 208,674 | |||||||
Fuel gross margin per gallon | $ | 0.182 | $ | 0.180 | $ | 0.176 | $ | 0.202 | |||||||
Total nonfuel revenues | $ | 509,524 | $ | 454,630 | $ | 960,170 | $ | 856,140 | |||||||
Nonfuel gross margin | 272,175 | 246,340 | 516,490 | 469,428 | |||||||||||
Nonfuel gross margin percentage | 53.4 | % | 54.2 | % | 53.8 | % | 54.8 | % | |||||||
Adjusted EBITDA(1) | $ | 33,568 | $ | 39,992 | $ | 45,293 | $ | 90,064 | |||||||
Adjusted EBITDAR(1) | 98,304 | 93,300 | 173,558 | 198,976 | |||||||||||
(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 (loss) 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. |
1
Thomas M. O'Brien, TA's CEO, made the following statement regarding the 2016 second quarter results:
"During the second quarter of 2016, our plans to offset any decline in diesel fuel sales due to improving truck engine efficiency and a modest recent decline in over the road freight volume with increasing gasoline sales at our growing convenience store business and to increase profits by growing our nonfuel businesses seemed to begin to show results. I believe that many of our acquisitions are not yet performing to their full stabilized potential. I remain confident that the continued improvements in recently acquired sites and businesses, including our recent acquisition of Quaker Steak & Lube restaurants, will prove that our investments have been done at attractive multiples of operating earnings."
Second Quarter 2016 Business Commentary
Fuel revenue for the 2016 second quarter declined by $193.9 million, or 17.2%, primarily due to significantly lower market prices for fuel compared to the 2015 second quarter, partially offset by increases in the convenience store segment as a result of newly acquired sites. Fuel sales volume increased 26.4 million gallons, or 4.9%, in the 2016 second quarter compared to the 2015 second quarter: a 55.5 million gallon increase from sites acquired since the beginning of the 2015 second quarter, offset by a 29.1 million gallon decrease in same site fuel sales volume.
Fuel gross margin increased $5.7 million, or $0.002 per gallon, to $102.0 million, or $0.182 per gallon, primarily due to managing fuel pricing to balance sales volume and profitability.
Nonfuel revenue for the 2016 second quarter increased $54.9 million, or 12.1%, compared to the 2015 second quarter: a $59.2 million increase due to sites acquired since the beginning of the 2015 second quarter, offset by a $4.3 million decrease in same site nonfuel revenue.
Nonfuel gross margin for the 2016 second quarter increased by $25.8 million, or 10.5%, compared to the 2015 second quarter: a $21.9 million increase due to sites acquired since the beginning of the 2015 second quarter and a $3.9 million increase due to an increase in same site nonfuel gross margin.
Nonfuel gross margin as a percentage of nonfuel revenue for the 2016 second quarter was 53.4%, a 0.8 percentage point decline compared to the 2015 second quarter. This decline was due to a change in sales mix as a result of the larger number of standalone convenience stores in the 2016 second quarter results. Nonfuel gross margin percentage in standalone convenience store operations is typically lower than the nonfuel gross margin percentage for travel center operations; standalone convenience store revenue represented 15.2% of total nonfuel revenue in the 2016 second quarter compared to 7.0% in the 2015 second quarter.
Site level operating expenses increased $21.8 million, or 9.8%, in the 2016 second quarter compared to the 2015 second quarter: a $24.1 million increase due to sites acquired since the beginning of the 2015 second quarter, offset by a $2.3 million decrease in same site, site level operating expenses.
Selling, general and administrative expenses increased $5.9 million, or 19.8%, in the 2016 second quarter compared to the 2015 second quarter, principally as a result of increased personnel costs, which resulted from increased staffing required to support the growth of TA's business, as well as increased spending on marketing and promotional activities.
Real estate rent expense increased $11.4 million, or 21.4%, in the 2016 second quarter compared to the 2015 second quarter primarily due to increased rent resulting from TA's 2015 and 2016 transactions with Hospitality Properties Trust, or HPT: $5.1 million of this increase was attributable to the sale leaseback transactions to HPT during 2015 and 2016 and $2.1 million was attributable to TA's sale to, and leaseback from, HPT of improvements at leased sites since the beginning of 2015.
Interest expense, net, increased $1.7 million in the 2016 second quarter compared to the 2015 second 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 second quarter was $3.5 million, or $0.09 per common share, compared to net income attributable to common shareholders of $3.8 million, or $0.10 per common share, for the 2015 second quarter. The change in net income attributable to common shareholders is primarily due to costs associated with recently acquired sites that have not yet reached their expected stabilized financial results. The higher expenses experienced during the 2016 second quarter were partially offset by increases in total gross margins in excess of site level operating expenses, as described above.
2
Travel Centers Segment
Revenues from TA's travel center segment for the 2016 second quarter decreased by $270.4 million, or 18.1%, compared to the 2015 second quarter, principally due to lower market prices for fuel and decreases in fuel sales volume.
Site level gross margin in excess of site level operating expenses for the 2016 second quarter increased by $1.2 million, or 1.0%, compared to the 2015 second quarter: a $7.1 million increase in nonfuel gross margin, due to a favorable change in a mix of products and services sold, partially offset by a $5.2 million decrease in fuel gross margin and a $0.7 million increase in site level operating expenses.
Convenience Stores Segment
Revenues for the 2016 second quarter increased by $121.4 million, or 161.4%, compared to the 2015 second quarter, due to increases in fuel sales volume from 172 sites acquired since the beginning of the 2015 second quarter, partially offset by decreases in market prices for fuel and a 6.0% decrease in same site fuel sales volume due to retail pricing strategies to improve profits. Revenues also increased as a result of increased nonfuel revenues from sites acquired since the beginning of the 2015 second quarter.
Site level gross margin in excess of site level operating expenses for the 2016 second quarter increased by $7.2 million, or 210.4%, compared to the 2015 second quarter: $7.0 million of this increase is from sites acquired since the beginning of the 2015 second quarter and $0.2 million primarily from a same site increase in fuel gross margin.
Investment Activity
Agreements with Hospitality Properties Trust
On June 22, 2016, TA entered a First Amendment to Transaction Agreement with HPT to, among other things, replace one of the development properties that TA had agreed to develop and then sell to, and lease back from, HPT with two existing travel centers owned by TA, and amend the Petro Lease to extend its term to 2032. On June 22, 2016, TA sold these two travel centers to HPT, for an aggregate of $23.9 million, and amended the TA Lease 1 and TA Lease 3 to add these properties. The minimum annual rent under the TA Lease 1 and TA Lease 3 increased by $1.1 million and $0.9 million, respectively, as a result of the completion of these sale and lease back transactions. The $11.8 million gain from the sale of these two properties was deferred and will be amortized on a straight line basis over the terms of the related leases as a reduction of rent expense.
On June 30, 2016, in connection with the Transaction Agreement, as amended, TA sold a development property to HPT for $22.3 million, and amended the TA Lease 2 to add this property. The minimum annual rent under the TA Lease 2 increased by $1.9 million as a result of the completion of this sale and lease back.
As of June 30, 2016, the sale and lease back of the two remaining development properties pursuant to the terms of the Transaction Agreement, as amended, is expected to be completed before June 30, 2017.
Acquisition and Development Activity
From the beginning of 2011, when TA began its acquisition program, to June 30, 2016, TA has invested $784.5 million to purchase and improve travel centers, standalone convenience stores and standalone restaurants. For the twelve months ended June 30, 2016, these investments have produced gross margin in excess of site level operating expenses of $79.3 million, or, on a sequential basis, $9.8 million, or 14.1%, greater than gross margin in excess of site level operating expenses for the twelve months ended March 31, 2016.
TA's 2016 second quarter investment activities included the acquisition of five standalone convenience stores for $10.0 million and 50 standalone restaurants, 39 of which are operated by franchisees of TA, for an aggregate purchase price of $26.8 million, as well as $12.9 million of improvements made to these and other recently acquired locations.
As of June 30, 2016, TA had completed development of one travel center expected to be sold to and leased back from HPT during the third quarter of 2016, and had one other travel center under construction that is currently expected to be completed during the first quarter of 2017. As of June 30, 2016, TA had invested $27.0 million (including land costs) for these two development properties and estimates a remaining development cost of $18.1 million.
TA intends to continue to selectively acquire and develop additional locations and to otherwise expand its business.
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Conference Call:
On Monday, August 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 June 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 10088754.
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 second quarter conference call is strictly prohibited without the prior written consent of TA. The Company's website is not incorporated as part of this press release.
About TravelCenters of America LLC:
TA's 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.
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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," "MAY" 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 HAS AGREED TO DEVELOP ADDITIONAL LOCATIONS FOR SALE TO, AND LEASE BACK FROM, HPT. THESE ACTIVITIES ARE SUBJECT TO CONDITIONS WHICH MAY NOT BE MET AND MAY NOT BE COMPLETED OR MAY BE DELAYED OR THEIR 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, AND 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 PENDING DEVELOPMENT PROJECTS. MOREOVER, MANAGING AND INTEGRATING DEVELOPED 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 |
• | MR. O'BRIEN'S STATEMENT THAT HE BELIEVES THAT MANY OF TA'S ACQUISITIONS ARE NOT PERFORMING TO THEIR STABILIZED POTENTIAL AND THAT CONTINUED IMPROVEMENTS IN RECENTLY ACQUIRED SITES AND BUSINESSES WILL PROVE THAT TA'S INVESTMENTS HAVE BEEN AT ATTRACTIVE MULTIPLES OF OPERATING EARNINGS MAY IMPLY THAT TA WILL REALIZE INCREASING FUTURE PROFITS. HOWEVER, TA'S FUTURE PROFITS WILL BE DETERMINED BY MANY FACTORS INCLUDING TA'S ABILITY TO CONTROL ITS EXPENSES AND OTHER FACTORS WHICH ARE BEYOND TA'S CONTROL SUCH AS THE DEMAND FOR TA'S GOODS AND SERVICES CREATED BY THE ECONOMY'S GENERAL CONDITIONS. THERE IS NO ASSURANCE THAT TA'S FUTURE PROFITS WILL INCREASE, AND, IN FACT, TA MAY EXPERIENCE FUTURE LOSSES. |
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 AND JUNE 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.
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TRAVELCENTERS OF AMERICA LLC
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share amounts)
Three Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Revenues: | |||||||
Fuel | $ | 931,211 | $ | 1,125,086 | |||
Nonfuel | 509,524 | 454,630 | |||||
Rent and royalties from franchisees | 4,330 | 3,167 | |||||
Total revenues | 1,445,065 | 1,582,883 | |||||
Cost of goods sold (excluding depreciation): | |||||||
Fuel | 829,218 | 1,028,799 | |||||
Nonfuel | 237,349 | 208,290 | |||||
Total cost of goods sold | 1,066,567 | 1,237,089 | |||||
Operating expenses: | |||||||
Site level operating | 244,120 | 222,334 | |||||
Selling, general and administrative | 36,009 | 30,062 | |||||
Real estate rent | 64,736 | 53,308 | |||||
Depreciation and amortization | 21,322 | 18,116 | |||||
Total operating expenses | 366,187 | 323,820 | |||||
Income from operations | 12,311 | 21,974 | |||||
Acquisition costs | 1,092 | 1,127 | |||||
Interest expense, net | 6,740 | 5,087 | |||||
Income from equity investees | 1,091 | 1,029 | |||||
Loss on extinguishment of debt | — | 10,502 | |||||
Income before income taxes | 5,570 | 6,287 | |||||
Provision for income taxes | 1,985 | 2,515 | |||||
Net income | 3,585 | 3,772 | |||||
Less net income for noncontrolling interests | 64 | — | |||||
Net income attributable to common shareholders | $ | 3,521 | $ | 3,772 | |||
Net income per common share attributable to common shareholders: | |||||||
Basic and diluted | $ | 0.09 | $ | 0.10 | |||
These financial statements should be read in conjunction with TA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, to be filed with the U.S. Securities and Exchange Commission.
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TRAVELCENTERS OF AMERICA LLC
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share amounts)
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Revenues: | |||||||
Fuel | $ | 1,640,739 | $ | 2,128,253 | |||
Nonfuel | 960,170 | 856,140 | |||||
Rent and royalties from franchisees | 8,606 | 6,191 | |||||
Total revenues | 2,609,515 | 2,990,584 | |||||
Cost of goods sold (excluding depreciation): | |||||||
Fuel | 1,447,045 | 1,919,579 | |||||
Nonfuel | 443,680 | 386,712 | |||||
Total cost of goods sold | 1,890,725 | 2,306,291 | |||||
Operating expenses: | |||||||
Site level operating | 478,170 | 427,918 | |||||
Selling, general and administrative | 66,975 | 57,678 | |||||
Real estate rent | 128,265 | 108,912 | |||||
Depreciation and amortization | 41,847 | 35,641 | |||||
Total operating expenses | 715,257 | 630,149 | |||||
Income from operations | 3,533 | 54,144 | |||||
Acquisition costs | 2,061 | 1,541 | |||||
Interest expense, net | 13,561 | 11,419 | |||||
Income from equity investees | 2,038 | 1,820 | |||||
Loss on extinguishment of debt | — | 10,502 | |||||
(Loss) income before income taxes | (10,051 | ) | 32,502 | ||||
(Benefit) provision for income taxes | (3,692 | ) | 13,001 | ||||
Net (loss) income | (6,359 | ) | 19,501 | ||||
Less net income for noncontrolling interests | 64 | — | |||||
Net (loss) income attributable to common shareholders | $ | (6,423 | ) | $ | 19,501 | ||
Net (loss) income per common share attributable to common shareholders: | |||||||
Basic and diluted | $ | (0.17 | ) | $ | 0.51 | ||
These financial statements should be read in conjunction with TA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, to be filed with the U.S. Securities and Exchange Commission.
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TRAVELCENTERS OF AMERICA LLC
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
June 30, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 133,799 | $ | 172,087 | |||
Accounts receivable, net | 125,819 | 91,580 | |||||
Inventory | 192,470 | 183,492 | |||||
Other current assets | 44,629 | 48,181 | |||||
Total current assets | 496,717 | 495,340 | |||||
Property and equipment, net | 1,042,687 | 989,606 | |||||
Goodwill and intangible assets, net | 127,760 | 105,977 | |||||
Other noncurrent assets | 32,694 | 30,618 | |||||
Total assets | $ | 1,699,858 | $ | 1,621,541 | |||
Liabilities and Shareholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 158,040 | $ | 125,079 | |||
Current HPT Leases liabilities | 38,799 | 37,030 | |||||
Other current liabilities | 176,774 | 133,513 | |||||
Total current liabilities | 373,613 | 295,622 | |||||
Long term debt | 318,262 | 316,447 | |||||
Noncurrent HPT Leases liabilities | 388,970 | 385,498 | |||||
Other noncurrent liabilities | 71,938 | 74,655 | |||||
Total liabilities | 1,152,783 | 1,072,222 | |||||
Shareholders' equity (38,853 and 38,808 common shares outstanding at June 30, 2016, and December 31, 2015, respectively) | 547,075 | 549,319 | |||||
Total liabilities and shareholders' equity | $ | 1,699,858 | $ | 1,621,541 | |||
These financial statements should be read in conjunction with TA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, to be filed with the U.S. Securities and Exchange Commission.
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TRAVELCENTERS OF AMERICA LLC
CONSOLIDATED SUPPLEMENTAL DATA
(in thousands)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Calculation of Adjusted EBITDA and Adjusted EBITDAR(1): | |||||||||||||||
Net income (loss) attributable to common shareholders | $ | 3,521 | $ | 3,772 | $ | (6,423 | ) | $ | 19,501 | ||||||
Add: provision (benefit) for income taxes | 1,985 | 2,515 | (3,692 | ) | 13,001 | ||||||||||
Add: depreciation and amortization | 21,322 | 18,116 | 41,847 | 35,641 | |||||||||||
Add: interest expense, net(2) | 6,740 | 5,087 | 13,561 | 11,419 | |||||||||||
Add: loss on extinguishment of debt | — | 10,502 | — | 10,502 | |||||||||||
Adjusted EBITDA | 33,568 | 39,992 | 45,293 | 90,064 | |||||||||||
Add: real estate rent expense(3) | 64,736 | 53,308 | 128,265 | 108,912 | |||||||||||
Adjusted EBITDAR | $ | 98,304 | $ | 93,300 | $ | 173,558 | $ | 198,976 | |||||||
(1) | 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 above. TA believes Adjusted EBITDA 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 leases a majority of the travel centers that it operates and believes that presenting investors with Adjusted EBITDAR may help investors to 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. This information should not be considered as an alternative to net income, income from operations, cash flow from operations or any other operating or liquidity performance measure prescribed by GAAP. Also, Adjusted EBITDA and Adjusted EBITDAR as presented may not be comparable to similarly titled amounts calculated by other companies. |
(2) | Interest expense, net, included the following: |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Interest related to TA's Senior Notes and Credit Facility | $ | 6,916 | $ | 4,865 | $ | 13,847 | $ | 9,833 | |||||||
Rent classified as interest | 432 | 968 | 864 | 2,420 | |||||||||||
Amortization of deferred financing costs | 305 | 229 | 609 | 456 | |||||||||||
Capitalized interest | (589 | ) | (195 | ) | (1,536 | ) | (411 | ) | |||||||
Interest income | (131 | ) | (937 | ) | (341 | ) | (1,032 | ) | |||||||
Other | (193 | ) | 157 | 118 | 153 | ||||||||||
Interest expense, net | $ | 6,740 | $ | 5,087 | $ | 13,561 | $ | 11,419 | |||||||
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TRAVELCENTERS OF AMERICA LLC
CONSOLIDATED SUPPLEMENTAL DATA
(in thousands)
(3) | Real estate rent expense recognized under GAAP differs from TA's obligation to pay cash for rent under its leases. Cash paid under TA's real property lease agreements was $68,730 and $61,229 during the three months ended June 30, 2016 and 2015, respectively, while the total rent amounts expensed during the three months ended June 30, 2016 and 2015, were $64,736 and $53,308, respectively. Cash paid under real property lease agreements was $135,960 and $121,366 during the six months ended June 30, 2016 and 2015, respectively, while the total rent amounts expensed during the six months ended June 30, 2016 and 2015, were $128,265 and $108,912, respectively. The differences between rent paid and rent expense result from the required recognition under GAAP of rent expense on an accrual basis. For example, under GAAP, 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, under GAAP, 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 June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Cash payments to HPT for rent | $ | 65,595 | $ | 58,857 | $ | 130,035 | $ | 116,373 | |||||||
Rent paid to others(A) | 3,135 | 2,372 | 5,925 | 4,993 | |||||||||||
Total cash payments under real property leases | 68,730 | 61,229 | 135,960 | 121,366 | |||||||||||
Change in accrued estimated percentage rent | 37 | (293 | ) | 283 | (397 | ) | |||||||||
Adjustments to recognize rent expense on a straight line basis – HPT | (71 | ) | (4,791 | ) | (127 | ) | (5,243 | ) | |||||||
Adjustments to recognize rent expense on a straight line basis for other leases | (83 | ) | 727 | (173 | ) | 626 | |||||||||
Less sale leaseback financing obligation amortization | (118 | ) | (432 | ) | (236 | ) | (1,068 | ) | |||||||
Less portion of rent payments recognized as interest expense | (432 | ) | (968 | ) | (864 | ) | (2,420 | ) | |||||||
Less deferred tenant improvements allowance amortization | (942 | ) | (1,442 | ) | (1,885 | ) | (3,134 | ) | |||||||
Amortization of deferred gain on sale leaseback transactions | (2,385 | ) | (722 | ) | (4,693 | ) | (818 | ) | |||||||
Total amount expensed as rent | $ | 64,736 | $ | 53,308 | $ | 128,265 | $ | 108,912 | |||||||
(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. |
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TRAVELCENTERS OF AMERICA LLC
SUPPLEMENTAL 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 June 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 a joint venture. 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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||
Number of same site company operated locations | 276 | 276 | — | 249 | 249 | — | |||||||||||||||
Diesel sales volume (gallons) | 406,500 | 434,471 | (6.4 | )% | 818,416 | 851,743 | (3.9 | )% | |||||||||||||
Gasoline sales volume (gallons) | 87,885 | 89,032 | (1.3 | )% | 151,814 | 155,247 | (2.2 | )% | |||||||||||||
Total fuel sales volume (gallons) | 494,385 | 523,503 | (5.6 | )% | 970,230 | 1,006,990 | (3.7 | )% | |||||||||||||
Fuel revenues | $ | 811,941 | $ | 1,099,644 | (26.2 | )% | $ | 1,431,116 | $ | 2,068,728 | (30.8 | )% | |||||||||
Fuel gross margin | 89,577 | 95,299 | (6.0 | )% | 171,461 | 205,830 | (16.7 | )% | |||||||||||||
Fuel gross margin per gallon | $ | 0.181 | $ | 0.182 | (0.5 | )% | $ | 0.177 | $ | 0.204 | (13.2 | )% | |||||||||
Nonfuel revenues | $ | 447,309 | $ | 451,580 | (0.9 | )% | $ | 841,471 | $ | 839,117 | 0.3 | % | |||||||||
Nonfuel gross margin | 248,992 | 245,102 | 1.6 | % | 474,895 | 464,018 | 2.3 | % | |||||||||||||
Nonfuel gross margin percentage | 55.7 | % | 54.3 | % | 140pts | 56.4 | % | 55.3 | % | 110pts | |||||||||||
Total gross margin | $ | 338,569 | $ | 340,401 | (0.5 | )% | $ | 646,356 | $ | 669,848 | (3.5 | )% | |||||||||
Site level operating expenses | 218,831 | 221,126 | (1.0 | )% | 427,215 | 421,982 | 1.2 | % | |||||||||||||
Site level operating expenses as a percentage of nonfuel revenues | 48.9 | % | 49.0 | % | (10)pts | 50.8 | % | 50.3 | % | 50pts | |||||||||||
Site level gross margin in excess of site level operating expense | $ | 119,738 | $ | 119,275 | 0.4 | % | $ | 219,141 | $ | 247,866 | (11.6 | )% | |||||||||
11
TRAVELCENTERS OF AMERICA LLC
SUPPLEMENTAL 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 June 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 a joint venture. 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 June 30, | Six Months Ended June 30, | |||||||||||||||||||||
Travel Centers | 2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||
Number of same site company operated travel center locations | 218 | 218 | — | 217 | 217 | — | ||||||||||||||||
Diesel sales volume (gallons) | 405,095 | 432,934 | (6.4 | )% | 816,819 | 850,238 | (3.9 | )% | ||||||||||||||
Gasoline sales volume (gallons) | 72,479 | 72,690 | (0.3 | )% | 133,246 | 135,983 | (2.0 | )% | ||||||||||||||
Total fuel sales volume (gallons) | 477,574 | 505,624 | (5.5 | )% | 950,065 | 986,221 | (3.7 | )% | ||||||||||||||
Fuel revenues | $ | 782,751 | $ | 1,062,628 | (26.3 | )% | $ | 1,399,531 | $ | 2,028,855 | (31.0 | )% | ||||||||||
Fuel gross margin | 86,255 | 92,231 | (6.5 | )% | 167,281 | 202,421 | (17.4 | )% | ||||||||||||||
Fuel gross margin per gallon | $ | 0.181 | $ | 0.182 | (0.5 | )% | $ | 0.176 | $ | 0.205 | (14.1 | )% | ||||||||||
Nonfuel revenues | $ | 417,995 | $ | 421,414 | (0.8 | )% | $ | 802,109 | $ | 800,466 | 0.2 | % | ||||||||||
Nonfuel gross margin | 239,522 | 235,426 | 1.7 | % | 462,109 | 451,072 | 2.4 | % | ||||||||||||||
Nonfuel gross margin percentage | 57.3 | % | 55.9 | % | 140pts | 57.6 | % | 56.4 | % | 120pts | ||||||||||||
Total gross margin | $ | 325,777 | $ | 327,657 | (0.6 | )% | $ | 629,390 | $ | 653,493 | (3.7 | )% | ||||||||||
Site level operating expenses | 209,951 | 212,055 | (1.0 | )% | 416,118 | 410,821 | 1.3 | % | ||||||||||||||
Site level operating expenses as a percentage of nonfuel revenues | 50.2 | % | 50.3 | % | (10)pts | 51.9 | % | 51.3 | % | 60pts | ||||||||||||
Site level gross margin in excess of site level operating expense | $ | 115,826 | $ | 115,602 | 0.2 | % | $ | 213,272 | $ | 242,672 | (12.1 | )% | ||||||||||
12
TRAVELCENTERS OF AMERICA LLC
SUPPLEMENTAL 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 June 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 a joint venture. This data also excludes revenues and expenses that were not generated at convenience stores TA operates, such as revenues from the 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 June 30, | Six Months Ended June 30, | |||||||||||||||||||||
Convenience Stores | 2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||
Number of same site company operated convenience store locations | 58 | 58 | — | 32 | 32 | — | ||||||||||||||||
Fuel sales volume (gallons) | 16,811 | 17,879 | (6.0 | )% | 20,165 | 20,769 | (2.9 | )% | ||||||||||||||
Fuel revenues | $ | 29,190 | $ | 37,016 | (21.1 | )% | $ | 31,585 | $ | 39,873 | (20.8 | )% | ||||||||||
Fuel gross margin | 3,322 | 3,068 | 8.3 | % | 4,180 | 3,409 | 22.6 | % | ||||||||||||||
Fuel gross margin per gallon | $ | 0.198 | $ | 0.172 | 15.1 | % | $ | 0.207 | $ | 0.164 | 26.2 | % | ||||||||||
Nonfuel revenues | $ | 29,314 | $ | 30,166 | (2.8 | )% | $ | 39,362 | $ | 38,651 | 1.8 | % | ||||||||||
Nonfuel gross margin | 9,470 | 9,676 | (2.1 | )% | 12,786 | 12,946 | (1.2 | )% | ||||||||||||||
Nonfuel gross margin percentage | 32.3 | % | 32.1 | % | 20pts | 32.5 | % | 33.5 | % | (100)pts | ||||||||||||
Total gross margin | $ | 12,792 | $ | 12,744 | 0.4 | % | $ | 16,966 | $ | 16,355 | 3.7 | % | ||||||||||
Site level operating expenses | 8,880 | 9,071 | (2.1 | )% | 11,097 | 11,161 | (0.6 | )% | ||||||||||||||
Site level operating expenses as a percentage of nonfuel revenues | 30.3 | % | 30.1 | % | 20pts | 28.2 | % | 28.9 | % | (70)pts | ||||||||||||
Site level gross margin in excess of site level operating expense | $ | 3,912 | $ | 3,673 | 6.5 | % | $ | 5,869 | $ | 5,194 | 13.0 | % | ||||||||||
13
TRAVELCENTERS OF AMERICA LLC
BUSINESS 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 six months ended June 30, 2016 and 2015.
Three Months Ended June 30, 2016 | |||||||||||||||
Travel Centers | Convenience Stores | Corporate and Other | Consolidated | ||||||||||||
Revenues | |||||||||||||||
Fuel | $ | 792,016 | $ | 119,193 | $ | 20,002 | $ | 931,211 | |||||||
Nonfuel | 424,476 | 77,422 | 7,626 | 509,524 | |||||||||||
Rent and royalties from franchisees | 3,176 | 57 | 1,097 | 4,330 | |||||||||||
Total revenues | 1,219,668 | 196,672 | 28,725 | 1,445,065 | |||||||||||
Site level gross margin in excess of site level operating expenses | $ | 120,667 | $ | 10,568 | $ | 3,143 | $ | 134,378 | |||||||
Corporate operating expenses | |||||||||||||||
Selling, general and administrative | $ | 36,009 | $ | 36,009 | |||||||||||
Real estate rent | 64,736 | 64,736 | |||||||||||||
Depreciation and amortization | 21,322 | 21,322 | |||||||||||||
Income from operations | 12,311 | ||||||||||||||
Acquisition costs | 1,092 | 1,092 | |||||||||||||
Interest expense, net | 6,740 | 6,740 | |||||||||||||
Income from equity investees | 1,091 | 1,091 | |||||||||||||
Income before income taxes | 5,570 | ||||||||||||||
Provision for income taxes | 1,985 | 1,985 | |||||||||||||
Net income | 3,585 | ||||||||||||||
Less net income for noncontrolling interests | 64 | ||||||||||||||
Net income attributable to common shareholders | $ | 3,521 | |||||||||||||
Supplemental data:
Gross margin | |||||||||||||||
Fuel | $ | 87,731 | $ | 14,057 | $ | 205 | $ | 101,993 | |||||||
Nonfuel | 243,139 | 23,929 | 5,107 | 272,175 | |||||||||||
Rent and royalties from franchisees | 3,176 | 57 | 1,097 | 4,330 | |||||||||||
Total gross margin | $ | 334,046 | $ | 38,043 | $ | 6,409 | $ | 378,498 | |||||||
Site level operating expenses | $ | 213,379 | $ | 27,475 | $ | 3,266 | $ | 244,120 | |||||||
14
TRAVELCENTERS OF AMERICA LLC
BUSINESS SEGMENT INFORMATION
(in thousands)
Three Months Ended June 30, 2015 | |||||||||||||||
Travel Centers | Convenience Stores | Corporate and Other | Consolidated | ||||||||||||
Revenues | |||||||||||||||
Fuel | $ | 1,064,268 | $ | 43,481 | $ | 17,337 | $ | 1,125,086 | |||||||
Nonfuel | 422,651 | 31,751 | 228 | 454,630 | |||||||||||
Rent and royalties from franchisees | 3,167 | — | — | 3,167 | |||||||||||
Total revenues | 1,490,086 | 75,232 | 17,565 | 1,582,883 | |||||||||||
Site level gross margin in excess of site level operating expenses | $ | 119,421 | $ | 3,405 | $ | 634 | $ | 123,460 | |||||||
Corporate operating expenses | |||||||||||||||
Selling, general and administrative | $ | 30,062 | $ | 30,062 | |||||||||||
Real estate rent | 53,308 | 53,308 | |||||||||||||
Depreciation and amortization | 18,116 | 18,116 | |||||||||||||
Income from operations | 21,974 | ||||||||||||||
Acquisition costs | 1,127 | 1,127 | |||||||||||||
Interest expense, net | 5,087 | 5,087 | |||||||||||||
Income from equity investees | 1,029 | 1,029 | |||||||||||||
Loss on extinguishment of debt | 10,502 | 10,502 | |||||||||||||
Income before income taxes | 6,287 | ||||||||||||||
Provision for income taxes | 2,515 | 2,515 | |||||||||||||
Net income | 3,772 | ||||||||||||||
Less net income for noncontrolling interests | — | ||||||||||||||
Net income attributable to common shareholders | $ | 3,772 | |||||||||||||
Supplemental data:
Gross margin | |||||||||||||||
Fuel | $ | 92,873 | $ | 3,531 | $ | (117 | ) | $ | 96,287 | ||||||
Nonfuel | 236,066 | 10,114 | 160 | 246,340 | |||||||||||
Rent and royalties from franchisees | 3,167 | — | — | 3,167 | |||||||||||
Total gross margin | $ | 332,106 | $ | 13,645 | $ | 43 | $ | 345,794 | |||||||
Site level operating expenses | $ | 212,685 | $ | 10,240 | $ | (591 | ) | $ | 222,334 | ||||||
15
TRAVELCENTERS OF AMERICA LLC
BUSINESS SEGMENT INFORMATION
(in thousands)
Six Months Ended June 30, 2016 | |||||||||||||||
Travel Centers | Convenience Stores | Corporate and Other | Consolidated | ||||||||||||
Revenues | |||||||||||||||
Fuel | $ | 1,414,596 | $ | 191,824 | $ | 34,319 | $ | 1,640,739 | |||||||
Nonfuel | 812,961 | 138,871 | 8,338 | 960,170 | |||||||||||
Rent and royalties from franchisees | 7,318 | 191 | 1,097 | 8,606 | |||||||||||
Total revenues | 2,234,875 | 330,886 | 43,754 | 2,609,515 | |||||||||||
Site level gross margin in excess of site level operating expenses | $ | 221,698 | $ | 14,939 | $ | 3,983 | $ | 240,620 | |||||||
Corporate operating expenses | |||||||||||||||
Selling, general and administrative | $ | 66,975 | $ | 66,975 | |||||||||||
Real estate rent | 128,265 | 128,265 | |||||||||||||
Depreciation and amortization | 41,847 | 41,847 | |||||||||||||
Income from operations | 3,533 | ||||||||||||||
Acquisition costs | 2,061 | 2,061 | |||||||||||||
Interest expense, net | 13,561 | 13,561 | |||||||||||||
Income from equity investees | 2,038 | 2,038 | |||||||||||||
Loss before income taxes | (10,051 | ) | |||||||||||||
Benefit for income taxes | (3,692 | ) | (3,692 | ) | |||||||||||
Net loss | (6,359 | ) | |||||||||||||
Less net income for noncontrolling interests | 64 | ||||||||||||||
Net loss attributable to common shareholders | $ | (6,423 | ) | ||||||||||||
Supplemental data:
Gross margin | |||||||||||||||
Fuel | $ | 169,531 | $ | 23,846 | $ | 317 | $ | 193,694 | |||||||
Nonfuel | 468,122 | 42,706 | 5,662 | 516,490 | |||||||||||
Rent and royalties from franchisees | 7,318 | 191 | 1,097 | 8,606 | |||||||||||
Total gross margin | $ | 644,971 | $ | 66,743 | $ | 7,076 | $ | 718,790 | |||||||
Site level operating expenses | $ | 423,273 | $ | 51,804 | $ | 3,093 | $ | 478,170 | |||||||
16
TRAVELCENTERS OF AMERICA LLC
BUSINESS SEGMENT INFORMATION
(in thousands)
Six Months Ended June 30, 2015 | |||||||||||||||
Travel Centers | Convenience Stores | Corporate and Other | Consolidated | ||||||||||||
Revenues | |||||||||||||||
Fuel | $ | 2,033,237 | $ | 64,867 | $ | 30,149 | $ | 2,128,253 | |||||||
Nonfuel | 803,150 | 52,596 | 394 | 856,140 | |||||||||||
Rent and royalties from franchisees | 6,191 | — | — | 6,191 | |||||||||||
Total revenues | 2,842,578 | 117,463 | 30,543 | 2,990,584 | |||||||||||
Site level gross margin in excess of site level operating expenses | $ | 249,650 | $ | 5,029 | $ | 1,696 | $ | 256,375 | |||||||
Corporate operating expenses | |||||||||||||||
Selling, general and administrative | $ | 57,678 | $ | 57,678 | |||||||||||
Real estate rent | 108,912 | 108,912 | |||||||||||||
Depreciation and amortization | 35,641 | 35,641 | |||||||||||||
Income from operations | 54,144 | ||||||||||||||
Acquisition costs | 1,541 | 1,541 | |||||||||||||
Interest expense, net | 11,419 | 11,419 | |||||||||||||
Income from equity investees | 1,820 | 1,820 | |||||||||||||
Loss on extinguishment of debt | 10,502 | 10,502 | |||||||||||||
Income before income taxes | 32,502 | ||||||||||||||
Provision for income taxes | 13,001 | 13,001 | |||||||||||||
Net income | 19,501 | ||||||||||||||
Less net income for noncontrolling interests | — | ||||||||||||||
Net income attributable to common shareholders | $ | 19,501 | |||||||||||||
Supplemental data:
Gross margin | |||||||||||||||
Fuel | $ | 203,473 | $ | 5,322 | $ | (121 | ) | $ | 208,674 | ||||||
Nonfuel | 452,548 | 16,600 | 280 | 469,428 | |||||||||||
Rent and royalties from franchisees | 6,191 | — | — | 6,191 | |||||||||||
Total gross margin | $ | 662,212 | $ | 21,922 | $ | 159 | $ | 684,293 | |||||||
Site level operating expenses | $ | 412,562 | $ | 16,893 | $ | (1,537 | ) | $ | 427,918 | ||||||
(End)
17