TMCnet News
TravelCenters of America LLC Announces Second Quarter 2017 Financial ResultsTravelCenters of America LLC (Nasdaq: TA) today announced financial results for the three and six months ended June 30, 2017:
(1) A reconciliation from net (loss) income to earnings before interest, taxes and depreciation and amortization, or EBITDA, appears in the supplemental data below. TA believes that net (loss) income is the most directly comparable financial measure calculated and presented in accordance with U.S. generally accepted accounting principles, or GAAP. Thomas M. O'Brien, TA's CEO, made the following statement regarding the 2017 second quarter results: "During the second quarter of 2017 our dispute with FleetCor/Comdata increased our operating expenses by about $5.3 million in legal fees and what we believe to be excessive fuel card transaction fees. The status of our dispute with FleetCor/Comdata remained unchanged since the time of our first quarter report: we are awaiting a ruling from the Delaware Court of Chancery. "We incurred about $1.3 million of site level operating expenses during the 2017 second quarter that we did not incur in the second quarter of 2016 in connection with certain operating initiatives, particularly in staffing our commercial tire efforts and to expand the capacity of our RoadSquad business. "Our efforts to achieve stabilized results at our recently acquired locations continued largely as expected for our travel centers and restaurants, but we have encountered certain challenges at our convenience stores, including challenges that are impacting the convenience store industry generally. While I believe these challenges may increase the time it will take TA to achieve expected results at these stores, I believe TA's fuel pricing, merchandising and cost control strategies will continue positively impacting our financial results at these stores. "Last quarter I reported that TA had identified certain cost savings initiatives that would begin to be realized in the second half of 2017. These initiatives have begun and we are starting to see the benefits in our financial results." Second Quarter 2017 Business Commentary Fuel sales volume decreased by 8.8 million gallons, or 1.6%, and same site fuel sales volume decreased by 11.1 million gallons, or 2.0%, each in the 2017 second quarter compared to the 2016 second quarter. TA believes fuel volume decreases experienced during the 2017 second quarter resulted from comparatively weak consumer demand for gasoline, a relatively weak trucking freight environment and especially continued fuel efficiency gains and especially by TA's commercial diesel fuel customers. Fuel revenue increased by $59.1 million, or 6.3%, in the 2017 second quarter compared to the 2016 second quarter primarily due to higher market prices for fuel during the 2017 second quarter compared to the 2016 second quarter. Fuel gross margin increased by $3.8 million ($0.010 per gallon), to $105.8 million ($0.192 per gallon) primarily as a result of increased fuel gross margin per gallon achieved as a result of declining fuel prices during the 2017 second quarter and the impact of TA's pricing and purchasing strategies. Nonfuel revenue increased $9.6 million, or 1.9%, in the 2017 second quarter compared to the 2016 second quarter due to a $7.1 million increase attributable to sites acquired and developed since the beginning of the 2016 second quarter and a $2.5 million same site increase due to favorable effects of certain pricing and marketing initiatives. Nonfuel gross margin increased $8.0 million, or 2.9%, in the 2017 second quarter compared to the 2016 second quarter due to a $4.1 million increase from sites acquired and developed since the beginning of the 2016 second quarter, and a $3.9 million, or 1.5%, increase in same site nonfuel gross margin. Same site nonfuel gross margin in the 2017 second quarter was 55.4% of nonfuel revenue, compared to 54.9% in the 2016 second quarter, a change largely attributable to the positive impact of TA's purchasing and pricing strategies and TA's marketing initiatives. Site level operating expenses increased $8.8 million, or 3.6%, in the 2017 second quarter compared to the 2016 second quarter primarily due to a $4.9 million increase from sites acquired and developed since the beginning of the 2016 second quarter and what TA believes to be excess transaction fees of $2.8 million TA incurred related to the dispute with FleetCor Technologies, Inc. and its subsidiary Comdata Inc., or FleetCor/Comdata. On a same site basis, site level operating expenses as a percentage of nonfuel revenues increased versus the prior year quarter by 50 basis points to 50.0%. The change in this percentage is primarily due to the increased transaction fees being charged by FleetCor/Comdata. Selling, general and administrative expenses for the 2017 second quarter increased $1.9 million, or 5.2%, compared to the 2016 second quarter, primarily attributable to litigation costs of $2.5 million related to TA's dispute with FleetCor/Comdata. Real estate rent expense increased $4.4 million, or 6.8%, in the 2017 second quarter compared to the 2016 second quarter primarily from TA's sale to, and lease back from, Hospitality Properties Trust, or HPT, of five travel centers and improvements at leased sites since the beginning of the 2016 second quarter. Depreciation and amortization expense increased $7.3 million, or 34.4%, in the 2017 second quarter compared to the 2016 second quarter primarily resulting from the locations acquired and other capital investments TA completed (and did not subsequently sell to HPT) since the beginning of the 2016 second quarter. The increase was partially offset by the reduction in TA's depreciable assets as a result of the sale to, and lease back from, HPT of two travel centers in June 2016. Interest expense, net, increased by $1.1 million, or 16.3%, in the 2017 second quarter compared to the 2016 second quarter primarily due to capitalizing a smaller amount of total interest expense as a result of a reduced amount of assets under construction in the 2017 second quarter compared to the 2016 second quarter. Net loss attributable to common shareholders for the 2017 second quarter was $3.0 million ($0.08 per common share) compared to net income attributable to common shareholders of $3.5 million ($0.09 per common share) for the 2016 second quarter. EBITDA for the 2017 second quarter decreased by $2.5 million, or 7.4%, as compared to the 2016 second quarter. A reconciliation from net (loss) income to EBITDA appears in the supplemental data below. Travel Centers Segment Both fuel and nonfuel revenues increased, resulting in an increase in total revenues of $60.9 million, or 5.0%, in the 2017 second quarter as compared to the 2016 second quarter. The increase in total revenues was primarily due to increases in market prices for fuel and from sales at recently developed properties opened in 2016 and 2017. Site level gross margin in excess of site level operating expenses increased in the 2017 second quarter by $2.3 million, or 1.9%, as compared to the 2016 second quarter primarily due to a $5.0 million increase in nonfuel gross margin and a $2.5 million increase in fuel gross margin, partially offset by what TA believes to be excess transaction fees of $2.8 million being charged by FleetCor/Comdata. On a same site basis, site level gross margin in excess of site level operating expenses increased by $2.8 million, or 2.4%, in the 2017 second quarter compared to the 2016 second quarter due to increases in nonfuel ($3.3 million) and fuel ($2.5 million) gross margin, which primarily resulted from an increase in fuel gross margin per gallon achieved as a result of declining fuel prices during the 2017 second quarter and the impact of TA's pricing and purchasing strategies, partially offset by an increase in site level operating expenses ($3.0 million) primarily due to what TA believes to be excess transaction fees being charged by FleetCor/Comdata. Convenience Stores Segment Both fuel and nonfuel revenues increased, resulting in an increase in total revenues of $5.3 million, or 2.8%, in the 2017 second quarter compared to the 2016 second quarter. The increase in total revenues was primarily due to the impact of the five locations acquired since the beginning of the 2016 second quarter and increases in market prices for fuel. Site level gross margin in excess of site level operating expenses increased in the 2017 second quarter by $1.1 million, or 10.8%, as compared to the 2016 second quarter due to improvements in operating results at same sites and locations acquired since the beginning of the 2016 second quarter. On a same site basis, site level gross margin in excess of site level operating expenses increased by $0.9 million, or 8.5%, in the 2017 second quarter compared to the 2016 second quarter due to increases in fuel ($1.2 million) and nonfuel ($0.6 million) gross margin, which primarily resulted from the impact of TA's continued improvements at recently acquired sites, partially offset by an increase in site level operating expenses. Investment and Growth Activities Since the beginning of 2011, when TA began its growth and acquisition program, to June 30, 2017, TA has invested $895.3 million to develop, purchase and improve travel centers, convenience stores and standalone restaurants. For the 12 months ended June 30, 2017, these investments produced site level gross margin in excess of site level operating expenses of $103.5 million, which, on a sequential basis, was $1.0 million, or 1.0%, more than the site level gross margin in excess of site level operating expenses for the 12 months ended March 31, 2017. TA believes that its investments require a period after they are developed or acquired and upgrades are completed to reach expected stabilized financial results, generally three years for travel centers and one year for convenience stores. TA acquired 37 travel centers during the 2011 to June 30, 2017, period. Of these stores, 36 are included in the "Travel Centers Segment Same Site Operating Data" for the six months ended June 30, 2017 and 2016. As of June 30, 2017, TA invested $313.4 million (including the cost of improvements) in these 36 locations, and these locations generated $53.2 million of site level gross margin in excess of site level operating expenses during the 12 months ended June 30, 2017. TA also developed four travel centers for a total investment of $95.9 million, and these locations generated $4.9 million of site level gross margin in excess of site level operating expenses during the 12 months ended June 30, 2017; TA operated these locations on average for less than a full year as of June 30, 2017 (one opened in each of January, March and May 2016, and March 2017). TA acquired 228 convenience stores during the 2013 to June 30, 2017, period. Of these stores, 199 are included in the "Convenience Store Segment Same Site Operating Data" for the six months ended June 30, 2017 and 2016. As of June 30, 2017, TA invested $394.4 million (including the cost of improvements) in these 199 locations, and these locations generated $33.5 million of site level gross margin in excess of site level operating expenses during the 12 months ended June 30, 2017. The remaining 29 locations were acquired by TA in 2016 for a total investment of $49.0 million (including the cost of improvements), and these convenience stores generated $3.2 million of site level gross margin in excess of site level operating expenses during the 12 months ended June 30, 2017. Some of the 29 convenience stores TA acquired during 2016 were fully or partially out of service while being renovated during the 12 months ended June 30, 2017. TA acquired one standalone restaurant during 2015 and 48 during 2016 (38 of which were operated by franchisees), and in 2017 acquired six of those 48 from one of TA's franchisees. As of June 30, 2017, TA invested $42.0 million (including the cost of improvements) in these 49 locations, and these locations generated $8.7 million of site level gross margin in excess of site level operating expenses during the 12 months ended June 30, 2017. Other Growth Initiatives In addition to the investments in new locations described above, TA made capital expenditures of $58.8 million during the six months ended June 30, 2017, some of which were site improvements of the type TA typically sells to HPT for an increase in rent and some of which were not yet complete as of June 30, 2017. Approximately $34.9 million of these expenditures are considered by TA to be investments designed to provide incremental returns. The returns on these investments may not exceed the cost of capital invested on a short term basis. TA does expect, however, that on a longer term basis, and especially during periods of economic and industry expansion, these investments may provide attractive returns. The remainder, or $23.9 million, is considered by TA to be investments to maintain TA's competitive position. Conference Call: On Tuesday, August 8, 2017, 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, 2017. 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 10110436. 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 14 states. TA's travel centers operate under the "TravelCenters of America," "TA," "Petro Stopping Centers" and "Petro" brand names and offer diesel and gasoline fueling, restaurants, truck repair services, travel/convenience stores and other services which are designed to provide attractive and efficient travel experiences to professional drivers and other motorists. TA's convenience stores operate principally under the "Minit Mart" brand name and offer gasoline fueling as well as nonfuel products and services such as coffee, groceries, fresh food offerings and other convenience items. TA's standalone restaurants operate principally under the "Quaker Steak & Lube" brand name. WARNING CONCERNING FORWARD LOOKING STATEMENTS THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. WHENEVER TA USES WORDS SUCH AS "BELIEVE," "EXPECT," "ANTICIPATE," "INTEND," "PLAN," "ESTIMATE," "WILL," "MAY" AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, TA IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON TA'S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY TA'S FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. AMONG OTHERS, THE FORWARD LOOKING STATEMENTS WHICH APPEAR IN THIS PRESS RELEASE THAT MAY NOT OCCUR INCLUDE:
THE INFORMATION CONTAINED IN TA'S PERIODIC REPORTS, INCLUDING TA'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2016, 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, 2017 AND JUNE 30, 2017, 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.
These financial statements should be read in conjunction with TA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, to be filed with the U.S. Securities and Exchange Commission.
These financial statements should be read in conjunction with TA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, to be filed with the U.S. Securities and Exchange Commission.
These financial statements should be read in conjunction with TA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, to be filed with the U.S. Securities and Exchange Commission.
TRAVELCENTERS OF AMERICA LLC Non-GAAP financial measures are financial measures that are not determined in accordance with GAAP. TA believes the non-GAAP financial measures presented in the table 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, make capital expenditures and expand its business. These non-GAAP financial measures also may help investors to make comparisons between TA and other companies on both a GAAP and a non-GAAP basis. TA calculates EBITDA as earnings before interest, taxes and depreciation and amortization, as shown below. TA believes that EBITDA is a meaningful disclosure 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. EBITDA is used by management to evaluate TA's financial performance and compare TA's performance over time and to the performance of other companies. This information should not be considered as an alternative to net (loss) income attributable to common shareholders, net (loss) income or income (loss) from operations, as an indicator of TA's operating performance or as a measure of TA's liquidity. Also, EBITDA as presented may not be comparable to similarly titled amounts calculated by other companies. TA believes that net (loss) income is the most comparable financial measure, determined according to GAAP, to TA's presentation of EBITDA. The following table presents the reconciliation of this non-GAAP financial measure to net (loss) income for the three and six months ended June 30, 2017 and 2016.
TRAVELCENTERS OF AMERICA LLC 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, 2017, that were operated by TA continuously since the beginning of the earliest period presented, with the exception of five locations TA operates that are owned by an unconsolidated joint venture in which TA owns a noncontrolling interest. This data excludes revenues and expenses at locations TA does not operate, 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.
TRAVELCENTERS OF AMERICA LLC 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, 2017, that were operated by TA continuously since the beginning of the earliest period presented, with the exception of two travel centers TA operates that are owned by an unconsolidated joint venture in which TA owns a noncontrolling interest. This data also excludes revenues and expenses at travel centers TA does not operate, 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.
TRAVELCENTERS OF AMERICA LLC 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, 2017, that were operated by TA continuously since the beginning of the earliest period presented, with the exception of three convenience stores TA operates that are owned by an unconsolidated joint venture in which TA owns a noncontrolling interest. This data also excludes revenues and expenses at convenience stores TA does not operate, such as revenues from a dealer operated convenience store, and corporate level selling, general and administrative expenses. TA does not exclude locations from the same site comparisons as a result of capital improvements to the site or changes in the services offered.
TRAVELCENTERS OF AMERICA LLC 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, 2017 and 2016.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170808005270/en/ |