EX-99.1 2 a20160930exhibit991.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1


earningsreleas_image2a01.jpg
FOR IMMEDIATE RELEASE
Contact:
Katie Strohacker, Senior Director of Investor Relations
(617) 796-8251
www.ta-petro.com

TravelCenters of America LLC Announces Third Quarter 2016 Financial Results
Third Quarter Net Income Attributable to Common Shareholders up 10.9%,
Adjusted EBITDA up 22.3%
____________________________________________________________________________________

Westlake, OH (November 8, 2016): TravelCenters of America LLC (Nasdaq: TA) today announced financial results for the three and nine months ended September 30, 2016:
(in thousands, except per share and per gallon amounts
   unless indicated otherwise)
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
2016
 
2015
 
2016
 
2015
Total revenues
$
1,477,603

 
$
1,508,993

 
$
4,087,118

 
$
4,499,577

Income before income taxes
17,238

 
15,983

 
7,187

 
48,485

Net income attributable to common shareholders
10,898

 
9,826

 
4,475

 
29,327

 
 
 
 
 
 
 
 
Net income per common share attributable to
   common shareholders:
 
 
 
 
 
 
 
Basic and diluted
$
0.28

 
$
0.26

 
$
0.12

 
$
0.76

 
 
 
 
 
 
 
 
Supplemental Data:
 
 
 
 
 
 
 
Fuel sales volume (gallons):
 
 
 
 
 
 
 
Diesel fuel
419,176

 
439,850

 
1,260,095

 
1,301,603

Gasoline
148,264

 
110,456

 
409,503

 
284,108

Total fuel sales volume (gallons)
567,440

 
550,306

 
1,669,598

 
1,585,711

 
 
 
 
 
 
 
 
Fuel gross margin
$
110,033

 
$
102,550

 
$
303,727

 
$
311,224

Fuel gross margin per gallon
$
0.194

 
$
0.186

 
$
0.182

 
$
0.196

 
 
 
 
 
 
 
 
Total nonfuel revenues
$
525,516

 
$
474,646

 
$
1,485,686

 
$
1,330,786

Nonfuel gross margin
280,234

 
252,729

 
796,724

 
722,157

Nonfuel gross margin percentage
53.3
%
 
53.2
%
 
53.6
%
 
54.3
%
 
 
 
 
 
 
 
 
Adjusted EBITDA(1)
$
47,059

 
$
38,470

 
$
92,352

 
$
128,534

Adjusted EBITDAR(1)
113,632

 
99,086

 
287,190

 
298,062

(1)
A reconciliation of earnings before interest, taxes, depreciation and amortization, and loss on extinguishment of debt, or Adjusted EBITDA, and Adjusted EBITDA before rent expense, or Adjusted EBITDAR, from net income attributable to common shareholders, the most directly comparable financial measure calculated and presented in accordance with U.S. generally accepted accounting principles, or GAAP, appears in the supplemental data below.

1

Thomas M. O'Brien, TA's CEO, made the following statement regarding the 2016 third quarter results:
"During the 2016 third quarter, our business strategies resulted in gains in fuel volume, fuel gross margin, nonfuel gross margin and continued improvements in site level operating expense controls. We grew site level gross margin in excess of site level operating expenses in total and on a same site basis. The combination of our internal and external growth activities outpaced headwinds of increased fuel efficiency for heavy duty truck engines and a softness in freight volume, resulting in an increase in net income attributable to common shareholders and Adjusted EBITDA of 10.9% and 22.3%, respectively. While the rate of increased financial contributions from our recently acquired sites were modestly less than the improvement realized in the prior (sequential) quarter, I remain confident in the prospect of realizing the expected results from these investments."
Third Quarter 2016 Business Commentary
Generally lower market prices for fuel and lower fuel sales volume in our travel center segment in the 2016 third quarter led to an $83.6 million, or 8.1%, decline in fuel revenue. Acquisition of sites since the beginning of the 2015 third quarter was principally responsible for a 17.1 million gallon, or 3.1%, increase in fuel sales volume, partially offsetting a 25.0 million gallon, or 4.7%, decrease in same site fuel sales volume. Same site fuel sales volume decreased due to fuel efficiency gains by TA's commercial diesel customers and TA's continued effort to manage fuel gross margin by balancing competitive fuel pricing decisions with their impact on volume. This loss of fuel volume was partially offset by gasoline demand increases experienced at some of TA's same site travel center locations. All of these factors netted a fuel gross margin increase of $7.5 million ($0.008 per gallon), to $110.0 million ($0.194 per gallon).
Sites acquired since the beginning of the 2015 third quarter contributed $52.7 million to a $50.9 million, or 10.7%, increase in nonfuel revenue for the 2016 third quarter compared to the 2015 third quarter, partially offset by a $1.8 million, or 0.4%, decrease in same site nonfuel revenue. These new sites contributed to the increase in nonfuel gross margin of $27.5 million, or 10.9%, for the 2016 third quarter compared to the 2015 third quarter. These recently acquired sites accounted for $20.2 million of this increase, while $7.3 million of the increase was attributable to growth in same site nonfuel gross margin, despite the slight decline in same site fuel volume and nonfuel revenue. Same site nonfuel gross margin in the 2016 third quarter was 55.6% of nonfuel revenue, compared to 53.8% in the 2015 third quarter, a change largely attributable to the positive impact of TA's strategies for purchasing and pricing goods for resale and TA's marketing initiatives.
Site level operating expenses increased $18.4 million, or 8.0%, in the 2016 third quarter compared to the 2015 third quarter: a $20.2 million increase due to sites acquired since the beginning of the 2015 third quarter, partially offset by a $1.8 million decrease in same site, site level operating expenses.
Selling, general and administrative expenses for the 2016 third quarter increased $5.1 million, or 17.0%, compared to the 2015 third quarter, principally as a result of increased personnel costs, which resulted from increased field management and corporate staffing required to support the growth of TA's business, as well as planned increased spending on marketing and promotional activities. 
Real estate rent expense increased $6.0 million, or 9.8%, in the 2016 third quarter compared to the 2015 third quarter primarily resulting from 2015 and 2016 sale and leaseback transactions with Hospitality Properties Trust, or HPT.
Interest expense, net, increased $2.2 million in the 2016 third quarter compared to the 2015 third quarter, primarily as a result of TA's issuance in October 2015 of $100.0 million of 8.00% Senior Notes due in 2030.
Net income attributable to common shareholders for the 2016 third quarter was $10.9 million ($0.28 per common share), a 10.9% increase compared to $9.8 million ($0.26 per common share) for the 2015 third quarter. Adjusted EBITDA and Adjusted EBITDAR for the 2016 third quarter increased by $8.6 million, or 22.3%, and $14.5 million, or 14.7%, respectively, compared to the 2015 third quarter. The increases in net income attributable to common shareholders, Adjusted EBITDA and Adjusted EBITDAR were primarily attributable to recently acquired sites.
Travel Centers Segment
Lower market prices for fuel and decreases in fuel sales volume in the 2016 third quarter resulted in a $134.9 million, or 14.3%, decrease in fuel revenue as compared to the 2015 third quarter.

2

TA believes that the positive impact of TA's strategies for purchasing and pricing goods for resale and TA's marketing initiatives led to a $9.3 million increase in nonfuel gross margin for the 2016 third quarter and that this was the principal driver of a $10.5 million, or 8.7%, increase in site level gross margin in excess of site level operating expenses compared to the 2015 third quarter. Also contributing to higher site level gross margin in excess of site level operating expenses in the 2016 third quarter was a $1.7 million increase in fuel gross margin due to a continued focus on managing fuel sales pricing to balance sales volume and profitability.
Convenience Stores Segment
Sites acquired since the beginning of the 2015 third quarter (153 sites) resulted in increases in fuel sales volume and in nonfuel revenues to produce higher total revenues by $88.3 million, or 78.3%, in the 2016 third quarter compared to the 2015 third quarter. The increase in fuel sales volume and nonfuel revenues was partially offset by decreases in market prices for fuel and a 1.8% decrease in same site fuel sales volume due to retail pricing strategies to improve profits.
Recently acquired sites also produced an increase in site level gross margin in excess of site level operating expenses in the 2016 third quarter by $4.8 million, or 65.1%, compared to the 2015 third quarter that was partially offset by a $0.7 million decrease from same site locations.

Investment Activity
On September 30, 2016, TA sold a newly developed travel center to HPT for $16.6 million, and simultaneously leased back this travel center from HPT; TA's minimum annual rent payable to HPT increased by $1.4 million as a result. TA has one travel center under construction that is currently expected to be completed during the first quarter of 2017 and sold to, and leased back from, HPT soon thereafter. TA estimates the remaining development cost of this travel center to be approximately $9.4 million.
From the beginning of 2011, when TA began its acquisition program, to September 30, 2016, TA has invested $798.4 million to purchase and improve travel centers, convenience stores and restaurants and related businesses. For the twelve months ended September 30, 2016, these investments have produced site level gross margin in excess of site level operating expenses of $90.0 million, or, on a sequential basis, $10.7 million, or 13.4%, greater than site level gross margin in excess of site level operating expenses for the twelve months ended June 30, 2016.
TA currently has agreements to acquire an additional six standalone restaurants for an aggregate purchase price of $6.0 million and a travel center for a purchase price of $13.1 million. TA expects to complete these acquisitions by December 31, 2016. TA currently intends to continue to selectively acquire additional locations and to otherwise expand its business.

3

Conference Call:
On Tuesday, November 8, 2016, at 10:00 a.m. Eastern Time, TA will host a conference call to discuss its financial results and other activities for the three months ended September 30, 2016. Following management's remarks, there will be a question and answer period.
The conference call telephone number is 877-329-4614. Participants calling from outside the United States and Canada should dial 412-317-5437. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available for about a week after the call. To hear the replay, dial 412-317-0088. The replay pass code is 10093018.
A live audio webcast of the conference call will also be available in a listen only mode on TA's website at www.ta-petro.com. To access the webcast, participants should visit TA's website about five minutes before the call. The archived webcast will be available for replay on TA's website for about one week after the call. The transcription, recording and retransmission in any way of TA's third quarter conference call is strictly prohibited without the prior written consent of TA. The Company's website is not incorporated as part of this press release.

About TravelCenters of America LLC:
TA's nationwide business includes travel centers located in 43 U.S. states and in Canada, standalone convenience stores in 11 states and standalone restaurants in 15 states. TA's travel centers operate under the "TravelCenters of America," "TA," "Petro Stopping Centers" and "Petro" brand names and offer diesel and gasoline fueling, restaurants, truck repair services, travel/convenience stores and other services which are designed to provide attractive and efficient travel experiences to professional drivers and other motorists. TA's convenience stores operate principally under the "Minit Mart" brand name and offer gasoline fueling as well as nonfuel products and services such as coffee, groceries, fresh food offerings and other convenience items. TA's standalone restaurants operate principally under the "Quaker Steak & Lube" brand name.


4

WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. WHENEVER TA USES WORDS SUCH AS "BELIEVE," "EXPECT," "ANTICIPATE," "INTEND," "PLAN," "ESTIMATE," "WILL," "MAY" AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, TA IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON TA'S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY TA'S FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. AMONG OTHERS, THE FORWARD LOOKING STATEMENTS WHICH APPEAR IN THIS PRESS RELEASE THAT MAY NOT OCCUR INCLUDE STATEMENTS THAT:
•
TA'S CEO, MR. O'BRIEN, STATES IN THIS PRESS RELEASE HIS CONFIDENCE IN THE PROSPECT OF TA REALIZING THE EXPECTED RESULTS FROM ITS INVESTMENTS IN TA'S RECENTLY ACQUIRED SITES. THIS STATEMENT IMPLIES THAT THE RECENTLY ACQUIRED SITES WILL GENERATE INCREASED NET INCOME. HOWEVER, MANY OF THE LOCATIONS TA HAS ACQUIRED OR MAY ACQUIRE PRODUCED OPERATING RESULTS THAT CAUSED THE PRIOR OWNERS TO EXIT THE BUSINESSES AND TA'S ABILITY TO OPERATE THESE LOCATIONS PROFITABLY DEPENDS UPON MANY FACTORS, SOME OF WHICH ARE BEYOND TA'S CONTROL. ACCORDINGLY, TA'S ACQUIRED SITES MAY NOT GENERATE INCREASED NET INCOME OR IT MAY TAKE LONGER THAN TA EXPECTS FOR ITS NET INCOME TO INCREASE;
•
TA HAS AGREED TO DEVELOP AN ADDITIONAL LOCATION FOR SALE TO, AND LEASE BACK FROM, HPT. THIS SALE AND LEASEBACK IS SUBJECT TO CONDITIONS WHICH MAY NOT BE MET AND MAY NOT BE COMPLETED OR MAY BE DELAYED OR ITS TERMS MAY CHANGE. TA INTENDS TO CONTINUE TO SELECTIVELY ACQUIRE AND DEVELOP ADDITIONAL LOCATIONS AND OTHERWISE EXPAND ITS BUSINESS. THERE ARE MANY FACTORS THAT MAY RESULT IN TA NOT BEING ABLE TO ACQUIRE, RENOVATE AND DEVELOP ADDITIONAL LOCATIONS, OR TO OTHERWISE EXPAND ITS BUSINESS, AT PRICES OR COSTS THAT YIELD PROFITS, INCLUDING COMPETITION FOR ACQUISITIONS FROM OTHER BUYERS, TA'S INABILITY TO NEGOTIATE ACCEPTABLE PURCHASE TERMS AND THE POSSIBILITY THAT TA MAY NEED TO USE ITS AVAILABLE FUNDS FOR OTHER PURPOSES. TA MAY DETERMINE TO DELAY OR NOT TO PROCEED WITH ITS PENDING DEVELOPMENT PROJECT. MOREOVER, MANAGING AND INTEGRATING DEVELOPED OR ACQUIRED LOCATIONS CAN BE DIFFICULT, TIME CONSUMING AND/OR MORE EXPENSIVE THAN ANTICIPATED AND CAN INVOLVE RISKS OF FINANCIAL LOSSES. TA MAY NOT OPERATE ITS ACQUIRED OR DEVELOPED LOCATIONS AS PROFITABLY AS IT NOW EXPECTS; AND
•
TA HAS AGREED TO ACQUIRE AN ADDITIONAL SIX STANDALONE RESTAURANTS FOR AN AGGREGATE PURCHASE PRICE OF $6.0 MILLION AND A TRAVEL CENTER FOR A PURCHASE PRICE OF $13.1 MILLION, AND TA EXPECTS TO COMPLETE THESE ACQUISITIONS BY DECEMBER 31, 2016. THESE ACQUISITIONS ARE SUBJECT TO CONDITIONS AND MAY NOT OCCUR, MAY BE DELAYED OR THEIR TERMS MAY CHANGE.
THE INFORMATION CONTAINED IN TA'S PERIODIC REPORTS, INCLUDING TA'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2015, WHICH HAS BEEN FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION, OR SEC, AND TA'S QUARTERLY REPORTS ON FORM 10-Q FOR THE PERIODS ENDED MARCH 31, 2016, JUNE 30, 2016, AND SEPTEMBER 30, 2016, WHICH HAVE BEEN OR WILL BE FILED WITH THE SEC, UNDER THE CAPTION "RISK FACTORS," OR ELSEWHERE IN THOSE REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM TA'S FORWARD LOOKING STATEMENTS. TA'S FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC'S WEBSITE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
EXCEPT AS REQUIRED BY LAW, TA DOES NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENT AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

5



TRAVELCENTERS OF AMERICA LLC
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share amounts)


 
Three Months Ended 
 September 30,
 
2016
 
2015
Revenues:
 
 
 
Fuel
$
947,558

 
$
1,031,146

Nonfuel
525,516

 
474,646

Rent and royalties from franchisees
4,529

 
3,201

Total revenues
1,477,603

 
1,508,993

 
 
 
 
Cost of goods sold (excluding depreciation):
 
 
 
Fuel
837,525

 
928,596

Nonfuel
245,282

 
221,917

Total cost of goods sold
1,082,807

 
1,150,513

 
 
 
 
Operating expenses:
 
 
 
Site level operating
247,584

 
229,215

Selling, general and administrative
34,812

 
29,760

Real estate rent
66,573

 
60,616

Depreciation and amortization
22,698

 
17,445

Total operating expenses
371,667

 
337,036

 
 
 
 
Income from operations
23,129

 
21,444

 
 
 
 
Acquisition costs
225

 
1,755

Interest expense, net
7,200

 
5,042

Income from equity investees
1,534

 
1,336

Income before income taxes
17,238

 
15,983

Provision for income taxes
6,263

 
6,157

Net income
10,975

 
9,826

Less net income for noncontrolling interests
77

 
—

Net income attributable to common shareholders
$
10,898

 
$
9,826

 
 
 
 
Net income per common share attributable to common shareholders:
 
 
 
Basic and diluted
$
0.28

 
$
0.26

These financial statements should be read in conjunction with TA's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, to be filed with the U.S. Securities and Exchange Commission.

6



TRAVELCENTERS OF AMERICA LLC
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share amounts)


 
Nine Months Ended 
 September 30,
 
2016
 
2015
Revenues:
 

 
 

Fuel
$
2,588,297

 
$
3,159,399

Nonfuel
1,485,686

 
1,330,786

Rent and royalties from franchisees
13,135

 
9,392

Total revenues
4,087,118

 
4,499,577

 
 
 
 
Cost of goods sold (excluding depreciation):
 

 
 

Fuel
2,284,570

 
2,848,175

Nonfuel
688,962

 
608,629

Total cost of goods sold
2,973,532

 
3,456,804

 
 
 
 
Operating expenses:
 

 
 

Site level operating
725,754

 
657,133

Selling, general and administrative
101,787

 
87,438

Real estate rent
194,838

 
169,528

Depreciation and amortization
64,545

 
53,086

Total operating expenses
1,086,924

 
967,185

 
 
 
 
Income from operations
26,662

 
75,588

 
 
 
 
Acquisition costs
2,286

 
3,296

Interest expense, net
20,761

 
16,461

Income from equity investees
3,572

 
3,156

Loss on extinguishment of debt
—

 
10,502

Income before income taxes
7,187

 
48,485

Provision for income taxes
2,571

 
19,158

Net income
4,616

 
29,327

Less net income for noncontrolling interests
141

 
—

Net income attributable to common shareholders
$
4,475

 
$
29,327

 
 
 
 
Net income per common share attributable to common shareholders:
 

 
 

Basic and diluted
$
0.12

 
$
0.76

These financial statements should be read in conjunction with TA's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, to be filed with the U.S. Securities and Exchange Commission.



7



TRAVELCENTERS OF AMERICA LLC
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)


 
September 30,
2016
 
December 31,
2015
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents 
$
137,288

 
$
172,087

Accounts receivable, net
118,103

 
91,580

Inventory
195,229

 
183,492

Other current assets
39,014

 
48,181

Total current assets
489,634

 
495,340

 
 
 
 
Property and equipment, net
1,070,757

 
989,606

Goodwill and intangible assets, net
127,153

 
105,977

Other noncurrent assets
31,333

 
30,618

Total assets
$
1,718,877

 
$
1,621,541

 
 
 
 
Liabilities and Shareholders' Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
146,454

 
$
125,079

Current HPT Leases liabilities
39,697

 
37,030

Other current liabilities
191,817

 
133,513

Total current liabilities
377,968

 
295,622

 
 
 
 
Long term debt
318,472

 
316,447

Noncurrent HPT Leases liabilities
385,134

 
385,498

Other noncurrent liabilities
78,232

 
74,655

Total liabilities
1,159,806

 
1,072,222

 
 
 
 
Shareholders' equity (38,853 and 38,808 common shares outstanding
   at September 30, 2016, and December 31, 2015, respectively)
559,071

 
549,319

Total liabilities and shareholders' equity
$
1,718,877

 
$
1,621,541

These financial statements should be read in conjunction with TA's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, to be filed with the U.S. Securities and Exchange Commission.


8



TRAVELCENTERS OF AMERICA LLC
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands)


Non-GAAP financial measures are financial measures that are not determined in accordance with U.S. generally accepted accounting principles, or GAAP. TA believes the non-GAAP financial measures presented in the table below to be meaningful supplemental disclosures because they may help investors gain a better understanding of changes in TA's operating results and its ability to pay rent or service debt, make capital expenditures and expand its business. These non-GAAP financial measures also may help investors to make comparisons between TA and other companies on both a GAAP and a non-GAAP basis. TA calculates Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization and loss on extinguishment of debt, and TA calculates Adjusted EBITDAR as Adjusted EBITDA plus real estate rent expense, as shown below. TA believes Adjusted EBITDA and Adjusted EBITDAR are useful indications of operating performance and its ability to pay rent or service debt, make capital expenditures and expand its business. TA leases a majority of the travel centers that it operates and believes that presenting investors with Adjusted EBITDAR may help investors compare TA's results with other companies that, instead of leasing, own and finance ownership of their properties with debt financing, or to consider how TA's results might compare if TA owned its leased properties and financed that ownership with debt. If TA, instead of leasing, owned its leased properties and financed that ownership with debt financing, the interest expense TA incurred for that debt financing would be added back by TA when calculating Adjusted EBITDA. TA also believes that Adjusted EBITDA and Adjusted EBITDAR are meaningful disclosures that may help investors to better understand its financial performance, including by allowing investors to compare TA's performance between periods and to the performance of other companies, as well as the form, extent and implications of TA's form of leverage for the travel centers it leases. The non-GAAP financial measures presented are used by management to evaluate TA's financial performance and comparing TA's performance over time and to the performance of its competitors. This information should not be considered as an alternative to net income or income from operations, as an indicator of TA's operating performance or as a measure of TA's liquidity. Also, Adjusted EBITDA and Adjusted EBITDAR as presented may not be comparable to similarly titled amounts calculated by other companies.
TA believes that net income attributable to common shareholders is the most comparable financial measure, determined according to GAAP, to TA's presentation of Adjusted EBITDA and Adjusted EBITDAR. The following table presents the reconciliation of these non-GAAP financial measures to net income attributable to common shareholders, the most directly comparable financial measure under GAAP reported in TA's consolidated financial statements, for the three and nine months ended September 30, 2016 and 2015.
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2016
 
2015
 
2016
 
2015
Calculation of Adjusted EBITDA and
   Adjusted EBITDAR:
 
 
 
 
 
 
 
Net income attributable to common shareholders
$
10,898

 
$
9,826

 
$
4,475

 
$
29,327

Add: provision for income taxes
6,263

 
6,157

 
2,571

 
19,158

Add: depreciation and amortization
22,698

 
17,445

 
64,545

 
53,086

Add: interest expense, net(1)
7,200

 
5,042

 
20,761

 
16,461

Add: loss on extinguishment of debt
—

 
—

 
—

 
10,502

Adjusted EBITDA
47,059

 
38,470

 
92,352

 
128,534

Add: real estate rent expense(2)
66,573

 
60,616

 
194,838

 
169,528

Adjusted EBITDAR
$
113,632

 
$
99,086

 
$
287,190

 
$
298,062


9



TRAVELCENTERS OF AMERICA LLC
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands)


(1) 
Interest expense, net, included the following:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2016
 
2015
 
2016
 
2015
Interest related to TA's Senior Notes
   and Credit Facility
$
6,899

 
$
4,913

 
$
20,746

 
$
14,746

Rent classified as interest
433

 
446

 
1,297

 
2,866

Amortization of deferred financing costs
308

 
232

 
917

 
688

Capitalized interest
(340
)
 
(309
)
 
(1,876
)
 
(720
)
Interest income
(143
)
 
(260
)
 
(484
)
 
(1,292
)
Other
43

 
20

 
161

 
173

   Interest expense, net
$
7,200

 
$
5,042

 
$
20,761

 
$
16,461

(2) 
Real estate rent expense recognized differs from TA's obligation to pay cash for rent under its leases. The differences between rent paid and rent expense result from the required recognition under GAAP of rent expense on an accrual basis. For example, a portion of the rent TA paid to HPT is classified as interest expense and a portion of the rent payments to HPT is applied to amortize a sale leaseback financing obligation liability. Also, TA amortizes on a straight line basis as a reduction of rent expense the deferred tenant improvement allowance liability and deferred gains from sales of assets to HPT that TA leased back. A reconciliation of these amounts is as follows.
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2016
 
2015
 
2016
 
2015
Cash payments to HPT for rent
$
67,040

 
$
62,445

 
$
197,063

 
$
178,818

Rent paid to others(A)
3,294

 
2,693

 
9,219

 
7,858

Total cash payments under real property leases
70,334

 
65,138

 
206,282

 
186,676

Change in accrued estimated percentage rent
384

 
(878
)
 
667

 
(1,275
)
Adjustments to recognize rent expense on a
   straight line basis – HPT
(53
)
 
(52
)
 
(180
)
 
(4,639
)
Adjustments to recognize rent expense on a
   straight line basis for other leases
(66
)
 
(87
)
 
(239
)
 
(288
)
Less sale leaseback financing obligation
   amortization
(126
)
 
(64
)
 
(350
)
 
(1,132
)
Less portion of rent payments recognized as
   interest expense
(433
)
 
(446
)
 
(1,297
)
 
(2,866
)
Less deferred tenant improvements allowance
   amortization
(942
)
 
(942
)
 
(2,827
)
 
(4,077
)
Amortization of deferred gain on sale leaseback
   transactions
(2,525
)
 
(2,053
)
 
(7,218
)
 
(2,871
)
   Total amount expensed as rent
$
66,573

 
$
60,616

 
$
194,838

 
$
169,528

(A) 
Includes rent paid directly to HPT's landlords under leases for properties TA subleases from HPT as well as rent related to properties TA leases from landlords other than HPT.

10



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 September 30, 2016, that were operated by TA continuously since the beginning of the earliest period presented, with the exception of five locations TA operates that are owned by an unconsolidated joint venture in which TA owns a noncontrolling interest. This data excludes revenues and expenses that were not generated at locations TA operates, such as rents and royalties from franchisees and corporate level selling, general and administrative expenses. TA does not exclude locations from the same site comparisons as a result of capital improvements to the site or changes in the services offered.
 
Three Months Ended 
 September 30,
 
 
 
Nine Months Ended 
 September 30,
 
 
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Number of same site company
   operated locations
296

 
296

 
—

 
249

 
249

 
—

 
 
 
 
 
 
 
 
 
 
 
 
Diesel sales volume (gallons)
406,649

 
433,722

 
(6.2)
 %
 
1,222,635

 
1,283,485

 
(4.7)
 %
Gasoline sales volume (gallons)
96,842

 
94,724

 
2.2
 %
 
237,892

 
239,336

 
(0.6)
 %
Total fuel sales volume (gallons)
503,491

 
528,446

 
(4.7)
 %
 
1,460,527

 
1,522,821

 
(4.1)
 %
 
 
 
 
 
 
 
 
 
 
 
 
Fuel revenues
$
836,161

 
$
986,203

 
(15.2)
 %
 
$
2,244,526

 
$
3,028,983

 
(25.9)
 %
Fuel gross margin
98,519

 
99,188

 
(0.7)
 %
 
267,379

 
301,794

 
(11.4)
 %
Fuel gross margin per gallon
$
0.196

 
$
0.188

 
4.3
 %
 
$
0.183

 
$
0.198

 
(7.6)
 %
 
 
 
 
 
 
 
 
 
 
 
 
Nonfuel revenues
$
461,804

 
$
463,571

 
(0.4)
 %
 
$
1,288,569

 
$
1,289,111

 
—
 %
Nonfuel gross margin
256,632

 
249,310

 
2.9
 %
 
726,574

 
709,208

 
2.4
 %
Nonfuel gross margin percentage
55.6
%
 
53.8
%
 
180
pts
 
56.4
%
 
55.0
%
 
140
pts
 
 
 
 
 
 
 
 
 
 
 
 
Total gross margin
$
355,151

 
$
348,498

 
1.9
 %
 
$
993,953

 
$
1,011,002

 
(1.7)
 %
Site level operating expenses
222,667

 
224,461

 
(0.8)
 %
 
643,756

 
640,385

 
0.5
 %
Site level operating expenses as a
   percentage of nonfuel revenues
48.2
%
 
48.4
%
 
(20
)pts
 
50.0
%
 
49.7
%
 
30
pts
Site level gross margin in excess of
   site level operating expenses
$
132,484

 
$
124,037

 
6.8
 %
 
$
350,197

 
$
370,617

 
(5.5)
 %

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 September 30, 2016, that were operated by TA continuously since the beginning of the earliest period presented, with the exception of two travel centers TA operates that are owned by an unconsolidated joint venture in which TA owns a noncontrolling interest. This data also excludes revenues and expenses that were not generated at travel centers TA operates, such as rents and royalties from franchisees and corporate level selling, general and administrative expenses. TA does not exclude locations from the same site comparisons as a result of capital improvements to the site or changes in the services offered.
 
 
Three Months Ended 
 September 30,
 
 
 
Nine Months Ended 
 September 30,
 
 
Travel Centers
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Number of same site company
   operated travel center locations
 
219

 
219

 
—

 
217

 
217

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Diesel sales volume (gallons)
 
404,935

 
431,946

 
(6.3)
 %
 
1,220,112

 
1,281,155

 
(4.8)
 %
Gasoline sales volume (gallons)
 
76,683

 
74,221

 
3.3
 %
 
209,309

 
209,763

 
(0.2)
 %
Total fuel sales volume (gallons)
 
481,618

 
506,167

 
(4.8)
 %
 
1,429,421

 
1,490,918

 
(4.1)
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel revenues
 
$
799,060

 
$
941,171

 
(15.1)
 %
 
$
2,194,658

 
$
2,967,144

 
(26.0)
 %
Fuel gross margin
 
93,721

 
92,990

 
0.8
 %
 
260,617

 
295,094

 
(11.7)
 %
Fuel gross margin per gallon
 
$
0.195

 
$
0.184

 
6.0
 %
 
$
0.182

 
$
0.198

 
(8.1)
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonfuel revenues
 
$
428,110

 
$
430,026

 
(0.4)
 %
 
$
1,228,170

 
$
1,229,329

 
(0.1)
 %
Nonfuel gross margin
 
245,655

 
238,993

 
2.8
 %
 
706,735

 
689,541

 
2.5
 %
Nonfuel gross margin percentage
 
57.4
%
 
55.6
%
 
180
pts
 
57.5
%
 
56.1
%
 
140
pts
 
 
 
 
 
 
 
 
 
 
 
 
 
Total gross margin
 
$
339,376

 
$
331,983

 
2.2
 %
 
$
967,352

 
$
984,635

 
(1.8)
 %
Site level operating expenses
 
211,898

 
213,619

 
(0.8)
 %
 
626,842

 
623,396

 
0.6
 %
Site level operating expenses as a
   percentage of nonfuel revenues
 
49.5
%
 
49.7
%
 
(20
)pts
 
51.0
%
 
50.7
%
 
30
pts
Site level gross margin in excess of
   site level operating expenses
 
$
127,478

 
$
118,364

 
7.7
 %
 
$
340,510

 
$
361,239

 
(5.7)
 %


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 September 30, 2016, that were operated by TA continuously since the beginning of the earliest period presented, with the exception of three convenience stores TA operates that are owned by an unconsolidated joint venture in which TA owns a noncontrolling interest. This data also excludes revenues and expenses that were not generated at convenience stores TA operates, such as revenues from a dealer operated convenience store and corporate level selling, general and administrative expenses. TA does not exclude locations from the same site comparisons as a result of capital improvements to the site or changes in the services offered.
 
 
Three Months Ended 
 September 30,
 
 
 
Nine Months Ended 
 September 30,
 
 
Convenience Stores
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Number of same site company
   operated convenience store
   locations
 
77

 
77

 
—

 
32

 
32

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel sales volume (gallons)
 
21,873

 
22,279

 
(1.8)
 %
 
31,106

 
31,903

 
(2.5)
 %
Fuel revenues
 
$
37,101

 
$
45,032

 
(17.6)
 %
 
$
49,868

 
$
61,839

 
(19.4)
 %
Fuel gross margin
 
4,798

 
6,198

 
(22.6)
 %
 
6,762

 
6,700

 
0.9
 %
Fuel gross margin per gallon
 
$
0.219

 
$
0.278

 
(21.2)
 %
 
$
0.217

 
$
0.210

 
3.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonfuel revenues
 
$
33,694

 
$
33,545

 
0.4
 %
 
$
60,399

 
$
59,782

 
1.0
 %
Nonfuel gross margin
 
10,977

 
10,317

 
6.4
 %
 
19,839

 
19,667

 
0.9
 %
Nonfuel gross margin percentage
 
32.6
%
 
30.8
%
 
180
pts
 
32.8
%
 
32.9
%
 
(10
)pts
 
 
 
 
 
 
 
 
 
 
 
 
 
Total gross margin
 
$
15,775

 
$
16,515

 
(4.5)
 %
 
$
26,601

 
$
26,367

 
0.9
 %
Site level operating expenses
 
10,769

 
10,842

 
(0.7)
 %
 
16,914

 
16,989

 
(0.4)
 %
Site level operating expenses as a
   percentage of nonfuel revenues
 
32.0
%
 
32.3
%
 
(30
)pts
 
28.0
%
 
28.4
%
 
(40
)pts
Site level gross margin in excess of
   site level operating expenses
 
$
5,006

 
$
5,673

 
(11.8)
 %
 
$
9,687

 
$
9,378

 
3.3
 %

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 nine months ended September 30, 2016 and 2015.
 
Three Months Ended September 30, 2016
 
Travel
Centers
 
Convenience
Stores
 
Corporate
and Other
 
Consolidated
Revenues:
 
 
 
 
 
 
 
Fuel
$
808,366

 
$
119,375

 
$
19,817

 
$
947,558

Nonfuel
434,712

 
81,691

 
9,113

 
525,516

Rent and royalties from franchisees
3,238

 
58

 
1,233

 
4,529

Total revenues
1,246,316

 
201,124

 
30,163

 
1,477,603

 
 
 
 
 
 
 
 
Site level gross margin in excess of
site level operating expenses
$
131,866

 
$
12,249

 
$
3,097

 
$
147,212

 
 
 
 
 
 
 
 
Corporate operating expenses:
 
 
 
 
 
 
 
Selling, general and administrative
 
 
 
 
$
34,812

 
$
34,812

Real estate rent
 
 
 
 
66,573

 
66,573

Depreciation and amortization
 
 
 
 
22,698

 
22,698

Income from operations
 
 
 
 
 
 
23,129

 
 
 
 
 
 
 
 
Acquisition costs
 
 
 
 
225

 
225

Interest expense, net
 
 
 
 
7,200

 
7,200

Income from equity investees
 
 
 
 
1,534

 
1,534

Income before income taxes
 
 
 
 
 
 
17,238

Provision for income taxes
 
 
 
 
6,263

 
6,263

Net income
 
 
 
 
 
 
10,975

Less net income for noncontrolling interests
 
 
 
 
 
 
77

Net income attributable to
common shareholders
 
 
 
 
 
 
$
10,898

Supplemental data:
Gross margin
 
 
 
 
 
 
 
Fuel
$
94,915

 
$
15,059

 
$
59

 
$
110,033

Nonfuel
248,967

 
25,015

 
6,252

 
280,234

Rent and royalties from franchisees
3,238

 
58

 
1,233

 
4,529

Total gross margin
$
347,120

 
$
40,132

 
$
7,544

 
$
394,796

 
 
 
 
 
 
 
 
Site level operating expenses
$
215,254

 
$
27,883

 
$
4,447

 
$
247,584




14



TRAVELCENTERS OF AMERICA LLC
BUSINESS SEGMENT INFORMATION
(in thousands)


 
Three Months Ended September 30, 2015
 
Travel
Centers
 
Convenience
Stores
 
Corporate
and Other
 
Consolidated
Revenues:
 
 
 
 
 
 
 
Fuel
$
943,291

 
$
69,733

 
$
18,122

 
$
1,031,146

Nonfuel
431,318

 
43,082

 
246

 
474,646

Rent and royalties from franchisees
3,201

 
—

 
—

 
3,201

Total revenues
1,377,810

 
112,815

 
18,368

 
1,508,993

 
 
 
 
 
 
 
 
Site level gross margin in excess of
site level operating expenses
$
121,359

 
$
7,421

 
$
485

 
$
129,265

 
 
 
 
 
 
 
 
Corporate operating expenses:
 
 
 
 
 
 
 
Selling, general and administrative
 
 
 
 
$
29,760

 
$
29,760

Real estate rent
 
 
 
 
60,616

 
60,616

Depreciation and amortization
 
 
 
 
17,445

 
17,445

Income from operations
 
 
 
 
 
 
21,444

 
 
 
 
 
 
 
 
Acquisition costs
 
 
 
 
1,755

 
1,755

Interest expense, net
 
 
 
 
5,042

 
5,042

Income from equity investees
 
 
 
 
1,336

 
1,336

Income before income taxes
 
 
 
 
 
 
15,983

Provision for income taxes
 
 
 
 
6,157

 
6,157

Net income
 
 
 
 
 
 
9,826

Less net income for noncontrolling interests
 
 
 
 
 
 
—

Net income attributable to
common shareholders
 
 
 
 
 
 
$
9,826

Supplemental data:
Gross margin
 
 
 
 
 
 
 
Fuel
$
93,239

 
$
9,299

 
$
12

 
$
102,550

Nonfuel
239,664

 
12,897

 
168

 
252,729

Rent and royalties from franchisees
3,201

 
—

 
—

 
3,201

Total gross margin
$
336,104

 
$
22,196

 
$
180

 
$
358,480

 
 
 
 
 
 
 
 
Site level operating expenses
$
214,745

 
$
14,775

 
$
(305
)
 
$
229,215


15



TRAVELCENTERS OF AMERICA LLC
BUSINESS SEGMENT INFORMATION
(in thousands)


 
Nine Months Ended September 30, 2016
 
Travel
Centers
 
Convenience
Stores
 
Corporate
and Other
 
Consolidated
Revenues:
 
 
 
 
 
 
 
Fuel
$
2,222,962

 
$
311,199

 
$
54,136

 
$
2,588,297

Nonfuel
1,248,533

 
220,562

 
16,591

 
1,485,686

Rent and royalties from franchisees
10,556

 
249

 
2,330

 
13,135

Total revenues
3,482,051

 
532,010

 
73,057

 
4,087,118

 
 
 
 
 
 
 
 
Site level gross margin in excess of
site level operating expenses
$
353,645

 
$
27,188

 
$
6,999

 
$
387,832

 
 
 
 
 
 
 
 
Corporate operating expenses:
 
 
 
 
 
 
 
Selling, general and administrative
 
 
 
 
$
101,787

 
$
101,787

Real estate rent
 
 
 
 
194,838

 
194,838

Depreciation and amortization
 
 
 
 
64,545

 
64,545

Income from operations
 
 
 
 
 
 
26,662

 
 
 
 
 
 
 
 
Acquisition costs
 
 
 
 
2,286

 
2,286

Interest expense, net
 
 
 
 
20,761

 
20,761

Income from equity investees
 
 
 
 
3,572

 
3,572

Income before income taxes
 
 
 
 
 
 
7,187

Provision for income taxes
 
 
 
 
2,571

 
2,571

Net income
 
 
 
 
 
 
4,616

Less net income for noncontrolling interests
 
 
 
 
 
 
141

Net income attributable to
common shareholders
 
 
 
 
 
 
$
4,475

Supplemental data:
Gross margin
 
 
 
 
 
 
 
Fuel
$
264,446

 
$
38,905

 
$
376

 
$
303,727

Nonfuel
717,707

 
67,721

 
11,296

 
796,724

Rent and royalties from franchisees
10,556

 
249

 
2,330

 
13,135

Total gross margin
$
992,709

 
$
106,875

 
$
14,002

 
$
1,113,586

 
 
 
 
 
 
 
 
Site level operating expenses
$
639,064

 
$
79,687

 
$
7,003

 
$
725,754


16



TRAVELCENTERS OF AMERICA LLC
BUSINESS SEGMENT INFORMATION
(in thousands)


 
Nine Months Ended September 30, 2015
 
Travel
Centers
 
Convenience
Stores
 
Corporate
and Other
 
Consolidated
Revenues:
 
 
 
 
 
 
 
Fuel
$
2,976,528

 
$
134,600

 
$
48,271

 
$
3,159,399

Nonfuel
1,234,468

 
95,678

 
640

 
1,330,786

Rent and royalties from franchisees
9,392

 
—

 
—

 
9,392

Total revenues
4,220,388

 
230,278

 
48,911

 
4,499,577

 
 
 
 
 
 
 
 
Site level gross margin in excess of
site level operating expenses
$
371,009

 
$
12,450

 
$
2,181

 
$
385,640

 
 
 
 
 
 
 
 
Corporate operating expenses:
 
 
 
 
 
 
 
Selling, general and administrative
 
 
 
 
$
87,438

 
$
87,438

Real estate rent
 
 
 
 
169,528

 
169,528

Depreciation and amortization
 
 
 
 
53,086

 
53,086

Income from operations
 
 
 
 
 
 
75,588

 
 
 
 
 
 
 
 
Acquisition costs
 
 
 
 
3,296

 
3,296

Interest expense, net
 
 
 
 
16,461

 
16,461

Income from equity investees
 
 
 
 
3,156

 
3,156

Loss on extinguishment of debt
 
 
 
 
10,502

 
10,502

Income before income taxes
 
 
 
 
 
 
48,485

Provision for income taxes
 
 
 
 
19,158

 
19,158

Net income
 
 
 
 
 
 
29,327

Less net income for noncontrolling interests
 
 
 
 
 
 
—

Net income attributable to
common shareholders
 
 
 
 
 
 
$
29,327

Supplemental data:
Gross margin
 
 
 
 
 
 
 
Fuel
$
296,712

 
$
14,621

 
$
(109
)
 
$
311,224

Nonfuel
692,212

 
29,497

 
448

 
722,157

Rent and royalties from franchisees
9,392

 
—

 
—

 
9,392

Total gross margin
$
998,316

 
$
44,118

 
$
339

 
$
1,042,773

 
 
 
 
 
 
 
 
Site level operating expenses
$
627,307

 
$
31,668

 
$
(1,842
)
 
$
657,133



(End)





17