TRAVELCENTERS OF AMERICA LLC | ||||
(Exact Name of Registrant as Specified in Its Charter) | ||||
Delaware | 20-5701514 | |||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||
24601 Center Ridge Road, Suite 200, Westlake, OH 44145-5639 | ||||
(Address of Principal Executive Offices) | ||||
(440) 808-9100 | ||||
(Registrant's Telephone Number, Including Area Code) |
Large accelerated filer o | Accelerated filer x | |
Non-accelerated filer o | Smaller reporting company o | |
(Do not check if a smaller reporting company) |
Page | ||
September 30, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 137,288 | $ | 172,087 | |||
Accounts receivable (less allowance for doubtful accounts of $715 and $850 as of September 30, 2016 and December 31, 2015, respectively) | 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: | |||||||
Common shares, no par value, 41,369 and 39,069 shares authorized as of September 30, 2016, and December 31, 2015, respectively, 38,853 shares issued and outstanding as of September 30, 2016, and 38,808 shares issued and outstanding as of December 31, 2015 | 685,714 | 682,219 | |||||
Accumulated other comprehensive income (loss) | 100 | (240 | ) | ||||
Accumulated deficit | (128,185 | ) | (132,660 | ) | |||
Total TA shareholders' equity | 557,629 | 549,319 | |||||
Noncontrolling interests | 1,442 | — | |||||
Total shareholders' equity | 559,071 | 549,319 | |||||
Total liabilities and shareholders' equity | $ | 1,718,877 | $ | 1,621,541 |
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 | |||
Other comprehensive income (loss), net of tax: | |||||||
Foreign currency loss, net of taxes of $(30) and $(131), respectively | $ | (46 | ) | $ | (240 | ) | |
Equity interest in investee's unrealized gain (loss) on investments | 80 | (72 | ) | ||||
Other comprehensive income (loss) attributable to common shareholders | 34 | (312 | ) | ||||
Comprehensive income attributable to common shareholders | $ | 10,932 | $ | 9,514 | |||
Net income per common share attributable to common shareholders: | |||||||
Basic and diluted | $ | 0.28 | $ | 0.26 |
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 | |||
Other comprehensive income (loss), net of tax: | |||||||
Foreign currency gain (loss), net of taxes of $102 and $(287), respectively | $ | 165 | $ | (540 | ) | ||
Equity interest in investee's unrealized gain (loss) on investments | 175 | (91 | ) | ||||
Other comprehensive income (loss) attributable to common shareholders | 340 | (631 | ) | ||||
Comprehensive income attributable to common shareholders | $ | 4,815 | $ | 28,696 | |||
Net income per common share attributable to common shareholders: | |||||||
Basic and diluted | $ | 0.12 | $ | 0.76 |
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 4,616 | $ | 29,327 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Noncash rent expense | (10,317 | ) | (11,835 | ) | |||
Depreciation and amortization expense | 64,545 | 53,086 | |||||
Deferred income tax provision | 3,545 | 531 | |||||
Loss on extinguishment of debt | — | 10,502 | |||||
Changes in operating assets and liabilities, net of effects of business acquisitions: | |||||||
Accounts receivable | (25,645 | ) | (18,968 | ) | |||
Inventory | (7,996 | ) | 1,651 | ||||
Other assets | 10,024 | (702 | ) | ||||
Accounts payable and other liabilities | 66,784 | 75,323 | |||||
Other, net | 3,551 | 1,746 | |||||
Net cash provided by operating activities | 109,107 | 140,661 | |||||
Cash flows from investing activities: | |||||||
Proceeds from asset sales | 157,749 | 348,498 | |||||
Capital expenditures | (229,217 | ) | (170,284 | ) | |||
Acquisitions of businesses, net of cash acquired | (72,137 | ) | (269,309 | ) | |||
Net cash used in investing activities | (143,605 | ) | (91,095 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from sale leaseback transactions with HPT | 216 | 1,190 | |||||
Sale leaseback financing obligation payments | (468 | ) | (46,174 | ) | |||
Other, net | (74 | ) | (150 | ) | |||
Net cash used in financing activities | (326 | ) | (45,134 | ) | |||
Effect of exchange rate changes on cash | 25 | (82 | ) | ||||
Net (decrease) increase in cash and cash equivalents | (34,799 | ) | 4,350 | ||||
Cash and cash equivalents at the beginning of the period | 172,087 | 224,275 | |||||
Cash and cash equivalents at the end of the period | $ | 137,288 | $ | 228,625 | |||
Supplemental disclosure of cash flow information: | |||||||
Interest paid (including rent classified as interest and net of capitalized interest) | $ | 20,587 | $ | 16,430 | |||
Income taxes paid, net of refunds | 420 | 1,519 |
1. | Basis of Presentation, Business Description and Organization |
2. | Acquisitions |
Convenience Stores | Corporate and Other(1) | Total | |||||||||
Inventory | $ | 3,175 | $ | 465 | $ | 3,640 | |||||
Property and equipment | 36,289 | 12,867 | 49,156 | ||||||||
Goodwill | 7,219 | — | 7,219 | ||||||||
Intangible assets | 370 | 15,910 | 16,280 | ||||||||
Other assets | 18 | 1,289 | 1,307 | ||||||||
Other liabilities | (1,918 | ) | (3,547 | ) | (5,465 | ) | |||||
Total aggregate purchase price | $ | 45,153 | $ | 26,984 | $ | 72,137 |
(1) | Includes standalone restaurants. See Note 7 for more segment information. |
3. | Shareholders' Equity |
Total TA Shareholders' Equity | Noncontrolling Interests | Total Shareholders' Equity | |||||||||
December 31, 2015 | $ | 549,319 | $ | — | $ | 549,319 | |||||
Grants under share award plan and share based compensation, net | 3,495 | — | 3,495 | ||||||||
QSL acquisition | — | 1,301 | 1,301 | ||||||||
Other comprehensive income, net of tax | 340 | — | 340 | ||||||||
Net income | 4,475 | 141 | 4,616 | ||||||||
September 30, 2016 | $ | 557,629 | $ | 1,442 | $ | 559,071 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income attributable to common shareholders, as reported | $ | 10,898 | $ | 9,826 | $ | 4,475 | $ | 29,327 | |||||||
Less: net income attributable to participating securities | 534 | 494 | 219 | 1,477 | |||||||||||
Net income available to common shareholders | $ | 10,364 | $ | 9,332 | $ | 4,256 | $ | 27,850 | |||||||
Weighted average common shares(1) | 36,953 | 36,467 | 36,922 | 36,435 | |||||||||||
Basic and diluted net income per common share | $ | 0.28 | $ | 0.26 | $ | 0.12 | $ | 0.76 |
(1) | Excludes unvested shares granted under our share award plans, which shares are considered participating securities because they participate equally in earnings and losses with all of our other common shares. The weighted average number of unvested shares outstanding for the three months ended September 30, 2016 and 2015, was 1,900 and 1,932, respectively. The weighted average number of unvested shares outstanding for the nine months ended September 30, 2016 and 2015, was 1,904 and 1,933, respectively. |
4. | Related Party Transactions |
• | On March 31, 2016, we sold one of the development properties to HPT for $19,683, and we and HPT amended our TA Lease 4 to add this property and our minimum annual rent under our TA Lease 4 increased by $1,673. |
• | On June 22, 2016, we sold two existing travel centers for an aggregate of $23,876, and we and HPT amended our TA Lease 1 and TA Lease 3 to add these properties, respectively, and our minimum annual rent under our TA Lease 1 and TA Lease 3 increased by $1,121 and $908, respectively. The sale of these two properties generated a gain of $11,794 that was deferred and will be amortized on a straight line basis over the terms of the related leases as a reduction of rent expense. We also amended the Petro Lease to extend its term to 2032. |
• | On June 30, 2016, we sold one of the development properties to HPT for $22,297, and we and HPT amended our TA Lease 2 to add this property and our minimum annual rent under our TA Lease 2 increased by $1,895. |
• | On September 30, 2016, we sold one of the two remaining development properties to HPT for $16,557, and we and HPT amended our TA Lease 2 to add this property and our minimum annual rent under our TA Lease 2 increased by $1,407. |
Number of Properties | Initial Term End Date(1) | Minimum Annual Rent as of September 30, 2016 | Deferred Rent(2) | ||||||||
TA Lease 1 | 40 | December 31, 2029 | $ | 50,885 | $ | 27,421 | |||||
TA Lease 2 | 40 | December 31, 2028 | 51,696 | 29,107 | |||||||
TA Lease 3 | 39 | December 31, 2026 | 52,262 | 29,324 | |||||||
TA Lease 4 | 39 | December 31, 2030 | 47,526 | 21,233 | |||||||
Petro Lease | 40 | June 30, 2032 | 66,685 | 42,915 | |||||||
Total | 198 | $ | 269,054 | $ | 150,000 |
(1) | We have two renewal options of 15 years each under each of our HPT Leases. |
(2) | Deferred rent for the TA Lease 1, TA Lease 2, TA Lease 3 and TA Lease 4 is due and payable on the respective initial term end dates noted above. Deferred rent for the Petro Lease is due and payable on June 30, 2024. Deferred rent is subject to acceleration at HPT's option upon an uncured default by, or a change in control of, us. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Cash payments for rent under the HPT Leases | $ | 67,040 | $ | 62,445 | $ | 197,063 | $ | 178,818 | |||||||
Change in accrued estimated percentage rent | 384 | (878 | ) | 667 | (1,275 | ) | |||||||||
Adjustments to recognize expense on a straight line basis | (53 | ) | (52 | ) | (180 | ) | (4,639 | ) | |||||||
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 | ) | |||||||
Rent expense related to HPT Leases | 63,345 | 58,010 | 185,858 | 161,958 | |||||||||||
Rent paid to others(1) | 3,294 | 2,693 | 9,219 | 7,858 | |||||||||||
Adjustments to recognize expense on a straight line basis for other leases | (66 | ) | (87 | ) | (239 | ) | (288 | ) | |||||||
Total real estate rent expense | $ | 66,573 | $ | 60,616 | $ | 194,838 | $ | 169,528 |
(1) | Includes rent paid directly to HPT's landlords under leases for properties we sublease from HPT as well as rent related to properties we lease from landlords other than HPT. |
September 30, 2016 | December 31, 2015 | ||||||
Current HPT Leases liabilities: | |||||||
Accrued rent | $ | 22,833 | $ | 21,098 | |||
Sale leaseback financing obligation(1) | 481 | 469 | |||||
Straight line rent accrual(2) | 2,458 | 2,458 | |||||
Deferred gain(3) | 10,155 | 9,235 | |||||
Deferred tenant improvements allowance(4) | 3,770 | 3,770 | |||||
Total Current HPT Leases liabilities | $ | 39,697 | $ | 37,030 | |||
Noncurrent HPT Leases liabilities: | |||||||
Deferred rent obligation(5) | $ | 150,000 | $ | 150,000 | |||
Sale leaseback financing obligation(1) | 20,568 | 20,719 | |||||
Straight line rent accrual(2) | 48,013 | 48,373 | |||||
Deferred gain(3) | 124,024 | 121,049 | |||||
Deferred tenant improvements allowance(4) | 42,529 | 45,357 | |||||
Total Noncurrent HPT Leases liabilities | $ | 385,134 | $ | 385,498 |
(1) | Sale Leaseback Financing Obligation. Prior to June 2015, the assets related to nine travel centers we leased from HPT were reflected in our consolidated balance sheets, as was the related financing obligation. This accounting was required primarily because, at the time of the inception of the applicable HPT Lease, more than a minor portion of these nine travel centers was subleased to third parties. In June 2015, we purchased five of these nine travel centers from HPT. That purchase was accounted for as an extinguishment of the related financing obligation and resulted in a loss on extinguishment of debt of $10,502 because the price we paid to HPT to purchase the five properties was $10,502 in excess of the then remaining related financing obligation. Also, because the TA Leases we entered into with HPT in connection with the Transaction Agreement were accounted for as new leases and two of the remaining four properties reflected as financings under the prior TA Lease then qualified for operating lease treatment, the remaining net assets and financing obligation related to these two properties were eliminated, resulting in a gain of $1,033, which was deferred and will be recognized over the terms of the applicable TA Leases as a reduction of rent expense. |
(2) | Straight Line Rent Accrual. We accrued rent expense from 2007 to 2012 for stated increases in our minimum annual rents due under our then existing TA lease. While the TA Leases we entered into with HPT in connection with the Transaction Agreement contain no stated rent payment increases, we continue to amortize this accrual on a straight line basis over the current terms of the TA Leases as a reduction to real estate rent expense. The straight line rent accrual also includes our obligation for the estimated cost of removal of underground storage tanks at properties leased from HPT at the end of the related lease; we recognize these obligations on a straight line basis over the term of the related leases as additional rent expense. |
(3) | Deferred Gain. The deferred gain primarily includes $145,462 of gains from the sales of travel centers and certain other assets to HPT during 2015 and 2016 pursuant to the Transaction Agreement. We amortize the deferred gains on a straight line basis over the terms of the related leases as a reduction of rent expense. |
(4) | Deferred Tenant Improvements Allowance. HPT funded certain capital projects at the properties we lease under the HPT Leases without an increase in rent payable by us. In connection with HPT's initial capital commitment, we recognized a liability for rent deemed to be related to this capital commitment as a deferred tenant improvements allowance. We amortize the deferred tenant improvements allowance on a straight line basis over the terms of the HPT Leases as a reduction of rent expense. |
(5) | Deferred Rent Obligation. Pursuant to a rent deferral agreement with HPT, from July 2008 through December 31, 2010, we deferred a total of $150,000 of rent payable to HPT. This deferred rent obligation was allocated among the HPT Leases. Deferred rent for the TA Leases is due at the end of the initial terms of the respective TA Leases as noted above, and deferred rent for the Petro Lease is due on June 30, 2024. |
5. | Contingencies |
6. | Inventory |
September 30, 2016 | December 31, 2015 | ||||||
Nonfuel products | $ | 163,641 | $ | 159,256 | |||
Fuel products | 31,588 | 24,236 | |||||
Total inventory | $ | 195,229 | $ | 183,492 |
7. | Segment Information |
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 |
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 |
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 |
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 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||
Revenues: | |||||||||||||||||||||
Fuel | $ | 947,558 | $ | 1,031,146 | (8.1 | )% | $ | 2,588,297 | $ | 3,159,399 | (18.1 | )% | |||||||||
Nonfuel | 525,516 | 474,646 | 10.7 | % | 1,485,686 | 1,330,786 | 11.6 | % | |||||||||||||
Rent and royalties from franchisees | 4,529 | 3,201 | 41.5 | % | 13,135 | 9,392 | 39.9 | % | |||||||||||||
Total revenues | 1,477,603 | 1,508,993 | (2.1 | )% | 4,087,118 | 4,499,577 | (9.2 | )% | |||||||||||||
Gross margin: | |||||||||||||||||||||
Fuel | 110,033 | 102,550 | 7.3 | % | 303,727 | 311,224 | (2.4 | )% | |||||||||||||
Nonfuel | 280,234 | 252,729 | 10.9 | % | 796,724 | 722,157 | 10.3 | % | |||||||||||||
Rent and royalties from franchisees | 4,529 | 3,201 | 41.5 | % | 13,135 | 9,392 | 39.9 | % | |||||||||||||
Total gross margin | 394,796 | 358,480 | 10.1 | % | 1,113,586 | 1,042,773 | 6.8 | % | |||||||||||||
Operating expenses: | |||||||||||||||||||||
Site level operating | 247,584 | 229,215 | 8.0 | % | 725,754 | 657,133 | 10.4 | % | |||||||||||||
Selling, general and administrative | 34,812 | 29,760 | 17.0 | % | 101,787 | 87,438 | 16.4 | % | |||||||||||||
Real estate rent | 66,573 | 60,616 | 9.8 | % | 194,838 | 169,528 | 14.9 | % | |||||||||||||
Depreciation and amortization | 22,698 | 17,445 | 30.1 | % | 64,545 | 53,086 | 21.6 | % | |||||||||||||
Total operating expenses | 371,667 | 337,036 | 10.3 | % | 1,086,924 | 967,185 | 12.4 | % | |||||||||||||
Income from operations | 23,129 | 21,444 | 7.9 | % | 26,662 | 75,588 | (64.7 | )% | |||||||||||||
Acquisition costs | 225 | 1,755 | (87.2 | )% | 2,286 | 3,296 | (30.6 | )% | |||||||||||||
Interest expense, net | 7,200 | 5,042 | 42.8 | % | 20,761 | 16,461 | 26.1 | % | |||||||||||||
Income from equity investees | 1,534 | 1,336 | 14.8 | % | 3,572 | 3,156 | 13.2 | % | |||||||||||||
Loss on extinguishment of debt | — | — | — | % | — | 10,502 | NM | ||||||||||||||
Income before income taxes | 17,238 | 15,983 | 7.9 | % | 7,187 | 48,485 | (85.2 | )% | |||||||||||||
Provision for income taxes | 6,263 | 6,157 | 1.7 | % | 2,571 | 19,158 | (86.6 | )% | |||||||||||||
Net income | 10,975 | 9,826 | 11.7 | % | 4,616 | 29,327 | (84.3 | )% | |||||||||||||
Less net income for noncontrolling interests | 77 | — | NM | 141 | — | NM | |||||||||||||||
Net income attributable to common shareholders | $ | 10,898 | $ | 9,826 | 10.9 | % | $ | 4,475 | $ | 29,327 | (84.7 | )% |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
Fuel Gallons Sold | 2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||
Travel centers | 487,114 | 507,196 | (4.0 | )% | 1,446,793 | 1,495,557 | (3.3 | )% | ||||||||||
Convenience stores | 68,680 | 34,493 | 99.1 | % | 189,867 | 67,509 | 181.2 | % | ||||||||||
Corporate and other | 11,646 | 8,617 | 35.2 | % | 32,938 | 22,645 | 45.5 | % | ||||||||||
Consolidated totals | 567,440 | 550,306 | 3.1 | % | 1,669,598 | 1,585,711 | 5.3 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
Fuel Revenues | 2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||
Travel centers | $ | 808,366 | $ | 943,291 | (14.3 | )% | $ | 2,222,962 | $ | 2,976,528 | (25.3 | )% | ||||||||||
Convenience stores | 119,375 | 69,733 | 71.2 | % | 311,199 | 134,600 | 131.2 | % | ||||||||||||||
Corporate and other | 19,817 | 18,122 | 9.4 | % | 54,136 | 48,271 | 12.2 | % | ||||||||||||||
Consolidated totals | $ | 947,558 | $ | 1,031,146 | (8.1 | )% | $ | 2,588,297 | $ | 3,159,399 | (18.1 | )% |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||
Number of company operated travel center locations | 225 | 223 | 2 | 225 | 223 | 2 | |||||||||||||||
Number of franchise operated travel center locations | 30 | 30 | — | 30 | 30 | — | |||||||||||||||
Fuel: | |||||||||||||||||||||
Fuel sales volume (gallons) | 487,114 | 507,196 | (4.0) | % | 1,446,793 | 1,495,557 | (3.3) | % | |||||||||||||
Fuel revenues | $ | 808,366 | $ | 943,291 | (14.3) | % | $ | 2,222,962 | $ | 2,976,528 | (25.3) | % | |||||||||
Fuel gross margin | 94,915 | 93,239 | 1.8 | % | 264,446 | 296,712 | (10.9) | % | |||||||||||||
Fuel gross margin per gallon | $ | 0.195 | $ | 0.184 | 6.0 | % | $ | 0.183 | $ | 0.198 | (7.6) | % | |||||||||
Nonfuel: | |||||||||||||||||||||
Nonfuel revenues | $ | 434,712 | $ | 431,318 | 0.8 | % | $ | 1,248,533 | $ | 1,234,468 | 1.1 | % | |||||||||
Nonfuel gross margin | 248,967 | 239,664 | 3.9 | % | 717,707 | 692,212 | 3.7 | % | |||||||||||||
Nonfuel gross margin percentage | 57.3 | % | 55.6 | % | 170 | pts | 57.5 | % | 56.1 | % | 140 | pts | |||||||||
Total revenues | $ | 1,246,316 | $ | 1,377,810 | (9.5) | % | $ | 3,482,051 | $ | 4,220,388 | (17.5) | % | |||||||||
Total gross margin | 347,120 | 336,104 | 3.3 | % | 992,709 | 998,316 | (0.6) | % | |||||||||||||
Site level operating expenses | 215,254 | 214,745 | 0.2 | % | 639,064 | 627,307 | 1.9 | % | |||||||||||||
Site level operating expenses as a percentage of nonfuel revenues | 49.5 | % | 49.8 | % | (30 | )pts | 51.2 | % | 50.8 | % | 40 | pts | |||||||||
Site level gross margin in excess of site level operating expenses | $ | 131,866 | $ | 121,359 | 8.7 | % | $ | 353,645 | $ | 371,009 | (4.7) | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||
Number of same site company operated travel center locations | 219 | 219 | — | 217 | 217 | — | |||||||||||||||
Fuel: | |||||||||||||||||||||
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: | |||||||||||||||||||||
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) | % |
Gallons Sold | Fuel Revenues | |||||
Results for the three months ended September 30, 2015 | 507,196 | $ | 943,291 | |||
Decrease due to petroleum products price changes | (102,059 | ) | ||||
Decrease due to same site volume changes | (24,549 | ) | (40,127 | ) | ||
Increase due to locations opened | 4,467 | 7,261 | ||||
Net change from prior year period | (20,082 | ) | (134,925 | ) | ||
Results for the three months ended September 30, 2016 | 487,114 | $ | 808,366 | |||
Results for the nine months ended September 30, 2015 | 1,495,557 | $ | 2,976,528 | |||
Decrease due to petroleum products price changes | (679,477 | ) | ||||
Decrease due to same site volume changes | (61,497 | ) | (93,166 | ) | ||
Increase due to locations opened | 12,733 | 19,077 | ||||
Net change from prior year period | (48,764 | ) | (753,566 | ) | ||
Results for the nine months ended September 30, 2016 | 1,446,793 | $ | 2,222,962 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||
Number of company operated convenience store locations | 232 | 183 | 49 | 232 | 183 | 49 | |||||||||||||||
Number of franchise operated convenience store locations | 1 | 1 | — | 1 | 1 | — | |||||||||||||||
Fuel: | |||||||||||||||||||||
Fuel sales volume (gallons) | 68,680 | 34,493 | 99.1 | % | 189,867 | 67,509 | 181.2 | % | |||||||||||||
Fuel revenues | $ | 119,375 | $ | 69,733 | 71.2 | % | $ | 311,199 | $ | 134,600 | 131.2 | % | |||||||||
Fuel gross margin | 15,059 | 9,299 | 61.9 | % | 38,905 | 14,621 | 166.1 | % | |||||||||||||
Fuel gross margin per gallon | $ | 0.219 | $ | 0.270 | (18.9) | % | $ | 0.205 | $ | 0.217 | (5.5) | % | |||||||||
Nonfuel: | |||||||||||||||||||||
Nonfuel revenues | $ | 81,691 | $ | 43,082 | 89.6 | % | $ | 220,562 | $ | 95,678 | 130.5 | % | |||||||||
Nonfuel gross margin | 25,015 | 12,897 | 94.0 | % | 67,721 | 29,497 | 129.6 | % | |||||||||||||
Nonfuel gross margin percentage | 30.6 | % | 29.9 | % | 70 | pts | 30.7 | % | 30.8 | % | (10 | )pts | |||||||||
Total revenues | $ | 201,124 | $ | 112,815 | 78.3 | % | $ | 532,010 | $ | 230,278 | 131.0 | % | |||||||||
Total gross margin | 40,132 | 22,196 | 80.8 | % | 106,875 | 44,118 | 142.2 | % | |||||||||||||
Site level operating expenses | 27,883 | 14,775 | 88.7 | % | 79,687 | 31,668 | 151.6 | % | |||||||||||||
Site level operating expenses as a percentage of nonfuel revenues | 34.1 | % | 34.3 | % | (20 | )pts | 36.1 | % | 33.1 | % | 300 | pts | |||||||||
Site level gross margin in excess of site level operating expenses | $ | 12,249 | $ | 7,421 | 65.1 | % | $ | 27,188 | $ | 12,450 | 118.4 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||
Number of same site company operated convenience store locations | 77 | 77 | — | 32 | 32 | — | |||||||||||||||
Fuel: | |||||||||||||||||||||
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: | |||||||||||||||||||||
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 | % |
Gallons Sold | Fuel Revenues | |||||
Results for the three months ended September 30, 2015 | 34,493 | $ | 69,733 | |||
Decrease due to petroleum products price changes | (7,240 | ) | ||||
Decrease due to same site volume changes | (406 | ) | (692 | ) | ||
Increase due to locations opened | 34,593 | 57,574 | ||||
Net change from prior year period | 34,187 | 49,642 | ||||
Results for the three months ended September 30, 2016 | 68,680 | $ | 119,375 | |||
Results for the nine months ended September 30, 2015 | 67,509 | $ | 134,600 | |||
Decrease due to petroleum products price changes | (10,730 | ) | ||||
Decrease due to same site volume changes | (797 | ) | (1,242 | ) | ||
Increase due to locations opened | 123,155 | 188,571 | ||||
Net change from prior year period | 122,358 | 176,599 | ||||
Results for the nine months ended September 30, 2016 | 189,867 | $ | 311,199 |
• | cash balance; |
• | operating cash flow; |
• | revolving credit facility with a current maximum availability of $200,000, or our Credit Facility, subject to limits based on our qualified collateral; |
• | sales to HPT, for an increase in our rent, of improvements we make to the sites we lease from HPT and the development site to be sold to HPT under the Transaction Agreement; |
• | potential issuances of new debt and equity securities; and |
• | potential financing or selling of unencumbered real estate that we own. |
• | the risk of a renewed economic slowdown or recession; |
• | continuing decreased demand for our fuel products resulting from regulatory and market efforts for improved engine fuel efficiency and fuel conservation generally; |
• | decreased demand for our products and services that we may experience as a result of competition; |
• | a significant portion of our expenses are fixed in nature, which may restrict our ability to realize a sufficient reduction in our expenses to offset a reduction in our revenues; |
• | the negative impacts on our gross margins and working capital requirements if there were a return to the higher level of prices for petroleum products we experienced during the first half of 2014 and in prior years, as well as the volatility of those prices; and |
• | the possible inability of recently acquired or developed properties to generate the stabilized financial results we expect. |
• | WE EXPECT THAT LOCATIONS WE ACQUIRE WILL PRODUCE STABILIZED FINANCIAL RESULTS AFTER A PERIOD OF TIME FOLLOWING ACQUISITION, AND THAT THESE LOCATIONS WILL GENERATE ADDITIONAL AMOUNTS OF SITE LEVEL GROSS MARGIN IN EXCESS OF SITE LEVEL OPERATING EXPENSES ONCE FULLY STABILIZED. THIS STATEMENT IMPLIES THAT THE EXPECTED STABILIZATION OF OUR ACQUIRED SITES WILL GENERATE INCREASED NET INCOME. HOWEVER, MANY OF THE LOCATIONS WE HAVE ACQUIRED OR MAY ACQUIRE PRODUCED OPERATING RESULTS THAT CAUSED THE PRIOR OWNERS TO EXIT THESE BUSINESSES AND OUR ABILITY TO OPERATE THESE LOCATIONS PROFITABLY DEPENDS UPON MANY FACTORS, SOME OF WHICH ARE BEYOND OUR CONTROL. ACCORDINGLY, OUR ACQUIRED SITES MAY NOT GENERATE INCREASED NET INCOME OR IT MAY TAKE LONGER THAN WE EXPECT FOR OUR NET INCOME TO INCREASE; |
• | WE HAVE MADE ACQUISITIONS AND MAY MAKE ADDITIONAL ACQUISITIONS. THESE STATEMENTS IMPLY THAT PENDING ACQUISITIONS WILL BE COMPLETED AND THAT COMPLETED AND PENDING ACQUISITIONS WILL IMPROVE OUR FUTURE EARNINGS. HOWEVER, OUR PENDING ACQUISITIONS ARE SUBJECT TO CONDITIONS WHICH MAY NOT BE MET. THESE ACQUISITIONS MAY NOT BE COMPLETED OR MAY BE DELAYED OR THEIR TERMS MAY CHANGE. THERE ARE MANY FACTORS THAT MAY RESULT IN OUR NOT BEING ABLE TO ACQUIRE AND RENOVATE ADDITIONAL LOCATIONS TO PRODUCE EARNINGS, INCLUDING COMPETITION FOR SUCH ACQUISITIONS FROM OTHER BUYERS OR OUR INABILITY TO NEGOTIATE ACCEPTABLE PURCHASE TERMS. MOREOVER, MANAGING AND INTEGRATING ACQUIRED LOCATIONS CAN BE DIFFICULT, TIME CONSUMING AND/OR MORE EXPENSIVE THAN ANTICIPATED. ALL OF OUR ACQUISITIONS CREATE RISKS OF FINANCIAL LOSSES. WE MAY NOT OPERATE OUR ACQUIRED LOCATIONS PROFITABLY; |
• | WE HAVE AGREED TO SELL AND LEASE BACK TO HPT, UPON COMPLETION OF ITS DEVELOPMENT, A FULL SERVICE TRAVEL CENTER. THIS STATEMENT IMPLIES THAT THIS DEVELOPMENT PROJECT AND RELATED SALE AND LEASEBACK TRANSACTION WILL BE COMPLETED. HOWEVER, THERE ARE MANY FACTORS THAT MAY RESULT IN OUR NOT BEING ABLE TO DEVELOP AND SELL AND LEASE BACK THIS ADDITIONAL LOCATION, INCLUDING PERMITTING REQUIREMENTS. ALSO, OUR AND HPT'S OBLIGATIONS UNDER THIS AGREEMENT IS SUBJECT TO VARIOUS TERMS AND CONDITIONS TYPICAL OF LARGE, COMPLEX REAL ESTATE TRANSACTIONS. SOME OF THESE TERMS AND CONDITIONS MAY NOT BE SATISFIED AND, AS A RESULT, THIS TRANSACTION MAY BE DELAYED, MAY NOT OCCUR OR THE TERMS MAY CHANGE; |
• | WE CURRENTLY PLAN TO RENOVATE RECENTLY ACQUIRED PROPERTIES AND TO COMPLETE THE DEVELOPMENT OF A PROPERTY. IN ADDITION, THE NATURE OF OUR BUSINESS REQUIRES US TO REGULARLY EXPEND CAPITAL TO RENOVATE, REPAIR AND IMPROVE OUR PROPERTIES. AN IMPLICATION OF THESE STATEMENTS MAY BE THAT WE WILL HAVE SUFFICIENT CAPITAL TO MAKE THESE CAPITAL INVESTMENTS. HOWEVER, THE AMOUNT AND TIMING OF CAPITAL EXPENDITURES ARE OFTEN DIFFICULT TO PREDICT. SOME CAPITAL PROJECTS COST MORE AND TAKE LONGER TO COMPLETE THAN ANTICIPATED. CURRENTLY UNANTICIPATED PROJECTS THAT WE MAY BE REQUIRED TO COMPLETE IN THE FUTURE (AS A RESULT OF GOVERNMENT PROGRAMS OR REGULATION, ADVANCES OR CHANGES MADE BY OUR COMPETITION, OR FOR OTHER REASONS) MAY ARISE AND CAUSE US TO SPEND MORE THAN CURRENTLY ANTICIPATED. AS A RESULT OF MARKET CONDITIONS OR OTHER CONSIDERATIONS, WE MAY DEFER CERTAIN CAPITAL PROJECTS AND SUCH DEFERRALS MAY HARM OUR BUSINESS OR |
• | WE HAVE A CREDIT FACILITY WITH A CURRENT MAXIMUM AVAILABILITY OF $200.0 MILLION SUBJECT TO OUR HAVING QUALIFIED COLLATERAL, INCLUDING ELIGIBLE CASH, ACCOUNTS RECEIVABLE AND INVENTORY THAT VARY IN AMOUNT FROM TIME TO TIME. ACCORDINGLY, THE AMOUNT AVAILABLE FOR BORROWING (INCLUDING ISSUING LETTERS OF CREDIT) AT ANY TIME MAY BE LESS THAN $200.0 MILLION. AT SEPTEMBER 30, 2016, OUR BORROWING AND LETTER OF CREDIT AVAILABILITY WAS $116.2 MILLION AND WE HAD USED $31.8 MILLION OF THAT AMOUNT FOR OUTSTANDING LETTERS OF CREDIT. THE MAXIMUM AMOUNT AVAILABLE UNDER THE CREDIT FACILITY MAY BE INCREASED TO $300.0 MILLION, SUBJECT TO AVAILABLE COLLATERAL AND LENDER PARTICIPATION. HOWEVER, IF WE DO NOT HAVE SUFFICIENT COLLATERAL OR IF WE ARE UNABLE TO IDENTIFY LENDERS WILLING TO INCREASE THEIR COMMITMENTS OR JOIN OUR CREDIT FACILITY, WE MAY NOT BE ABLE TO INCREASE THE CREDIT FACILITY OR THE AVAILABILITY OF BORROWINGS WHEN WE NEED OR WANT TO DO SO; |
• | WE MAY FINANCE OR SELL UNENCUMBERED REAL ESTATE THAT WE OWN. HOWEVER, WE DO NOT KNOW THE EXTENT TO WHICH WE COULD MONETIZE OUR EXISTING REAL ESTATE OR HOW LONG IT MAY TAKE TO DO SO; AND |
• | WE DO NOT BELIEVE THAT COMDATA HAS THE RIGHT TO TERMINATE ITS AGREEMENTS WITH US, AS COMDATA PURPORTED TO DO BY LETTER DATED NOVEMBER 3, 2016. THESE STATEMENTS IMPLY THAT WE WILL PREVAIL IN OUR CONTRACT DISPUTE WITH COMDATA, OR THAT WE AND COMDATA WILL OTHERWISE RESOLVE THIS DISPUTE AND THAT OUR AGREEMENTS WITH COMDATA WILL REMAIN IN EFFECT WITH NO MATERIAL CHANGES TO THEIR TERMS. HOWEVER, OUTCOMES OF CONTRACT DISPUTES ARE DIFFICULT TO PREDICT AND DEPEND ON MANY FACTORS, SOME OF WHICH ARE BEYOND OUR CONTROL. COMDATA MAY SEEK TO RENEGOTIATE ITS AGREEMENTS WITH US TO INCLUDE HIGHER COSTS TO US OR OTHER TERMS THAT ARE UNFAVORABLE TO US, OR COMDATA MAY STOP SERVICES TO US CAUSING US BUSINESS DISRUPTION OR LOSSES. ALSO, OUR DISPUTE WITH COMDATA MAY RESULT IN LITIGATION. THE OUTCOME OF ANY SUCH LITIGATION IS DIFFICULT TO PREDICT AND SUCH LITIGATION MAY BE EXPENSIVE AND DISTRACTING TO OUR MANAGEMENT. |
• | THE TREND TOWARDS IMPROVED FUEL EFFICIENCY OF MOTOR VEHICLE ENGINES AND OTHER FUEL CONSERVATION PRACTICES BY OUR CUSTOMERS MAY CONTINUE TO REDUCE THE DEMAND FOR FUEL AND ADVERSELY AFFECT OUR BUSINESS; |
• | COMPETITION WITHIN THE TRAVEL CENTER AND CONVENIENCE STORE INDUSTRIES MAY ADVERSELY IMPACT OUR FINANCIAL RESULTS; |
• | FUTURE INCREASES IN FUEL PRICES MAY REDUCE THE DEMAND FOR THE PRODUCTS AND SERVICES THAT WE SELL BECAUSE HIGH FUEL PRICES MAY ENCOURAGE FUEL CONSERVATION, DIRECT FREIGHT BUSINESS AWAY FROM TRUCKING OR OTHERWISE ADVERSELY AFFECT THE BUSINESS OF OUR CUSTOMERS; |
• | FUTURE COMMODITY FUEL PRICE INCREASES, FUEL PRICE VOLATILITY OR OTHER FACTORS MAY CAUSE US TO NEED MORE WORKING CAPITAL TO MAINTAIN OUR INVENTORY AND CARRY OUR ACCOUNTS RECEIVABLE THAN WE NOW EXPECT; |
• | OUR SUPPLIERS MAY BE UNWILLING OR UNABLE TO MAINTAIN THE CURRENT CREDIT TERMS FOR OUR PURCHASES. IF WE ARE UNABLE TO PURCHASE GOODS ON REASONABLE CREDIT TERMS, OUR REQUIRED WORKING CAPITAL MAY INCREASE AND WE MAY INCUR MATERIAL LOSSES. ALSO, IN TIMES OF RISING FUEL AND NONFUEL PRICES, OUR SUPPLIERS MAY BE UNWILLING OR UNABLE TO INCREASE THE CREDIT AMOUNTS THEY EXTEND TO US, WHICH MAY INCREASE OUR WORKING CAPITAL REQUIREMENTS. THE AVAILABILITY AND THE TERMS OF ANY CREDIT WE MAY BE ABLE TO OBTAIN ARE UNCERTAIN; |
• | ACQUISITIONS OR PROPERTY DEVELOPMENT MAY SUBJECT US TO GREATER RISKS THAN OUR CONTINUING OPERATIONS, INCLUDING THE ASSUMPTION OF UNKNOWN LIABILITIES; |
• | MOST OF OUR TRUCKING COMPANY CUSTOMERS TRANSACT BUSINESS WITH US BY USE OF FUEL CARDS, MOST OF WHICH ARE ISSUED BY THIRD PARTY FUEL CARD COMPANIES. THE FUEL CARD INDUSTRY HAS ONLY A FEW SIGNIFICANT PARTICIPANTS. FUEL CARD COMPANIES FACILITATE PAYMENTS TO US AND CHARGE US FEES FOR THESE SERVICES. COMPETITION, OR LACK THEREOF, AMONG FUEL CARD COMPANIES MAY RESULT IN FUTURE INCREASES IN OUR TRANSACTION FEE EXPENSES OR WORKING CAPITAL REQUIREMENTS, OR BOTH; |
• | COMPLIANCE WITH, AND CHANGES TO, FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS, ACCOUNTING AND FINANCIAL REPORTING STANDARDS AND REGULATIONS, TAX RATES, ENVIRONMENTAL REGULATIONS, PAYMENT CARD INDUSTRY REQUIREMENTS AND SIMILAR MATTERS MAY INCREASE OUR OPERATING COSTS AND REDUCE OUR PROFITS OR CAUSE US TO EXPERIENCE INCREASED LOSSES; |
• | WE ARE ROUTINELY INVOLVED IN LITIGATION. DISCOVERY AND COURT DECISIONS DURING LITIGATION OFTEN HAVE UNANTICIPATED RESULTS. LITIGATION IS USUALLY EXPENSIVE AND CAN BE DISTRACTING TO MANAGEMENT. WE CAN PROVIDE NO ASSURANCE AS TO THE OUTCOME OF ANY OF THE LITIGATION MATTERS IN WHICH WE ARE OR MAY BECOME INVOLVED; |
• | ACTS OF TERRORISM, GEOPOLITICAL RISKS, WARS, OUTBREAKS OF SO CALLED PANDEMICS OR OTHER MANMADE OR NATURAL DISASTERS BEYOND OUR CONTROL MAY ADVERSELY AFFECT OUR FINANCIAL RESULTS; AND |
• | ALTHOUGH WE BELIEVE THAT WE BENEFIT FROM OUR RELATIONSHIPS WITH OUR RELATED PARTIES, INCLUDING HPT, RMR, AIC AND OTHERS AFFILIATED WITH THEM, ACTUAL AND POTENTIAL CONFLICTS OF INTEREST WITH RELATED PARTIES MAY PRESENT A CONTRARY PERCEPTION OR RESULT IN LITIGATION. |
Exhibit 3.1 | Certificate of Formation of TravelCenters of America LLC (Incorporated by reference to Exhibit 3.1 to our Registration Statement on Form S-1 filed on December 12, 2006, File No. 333-139272) |
Exhibit 3.2 | Composite copy of Amended and Restated Limited Liability Company Agreement of TravelCenters of America LLC dated as of May 20, 2013, as amended to date (filed herewith) |
Exhibit 3.3 | Composite copy of Amended and Restated Limited Liability Company Agreement of TravelCenters of America LLC dated as of May 20, 2013, as amended to date (marked) (filed herewith) |
Exhibit 3.4 | Amended and Restated Bylaws of TravelCenters of America LLC, as amended and restated on September 7, 2016 (Incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed on September 9, 2016) |
Exhibit 4.1 | Form of share certificate (Incorporated by reference to Exhibit 4.1 to our Annual Report on Form 10-K for the year ended December 31, 2009, filed on February 24, 2010) |
Exhibit 4.2 | Indenture by and between TravelCenters of America LLC and U.S. Bank National Association, as trustee, dated as of January 15, 2013 (Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed January 15, 2013) |
Exhibit 4.3 | First Supplemental Indenture by and between TravelCenters of America LLC and U.S. Bank National Association, as trustee, dated as of January 15, 2013 (Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed January 15, 2013) |
Exhibit 4.4 | Second Supplemental Indenture by and between TravelCenters of America LLC and U.S. Bank National Association, as trustee, dated as of December 16, 2014 (Incorporated by reference to Exhibit 4.2 to our Registration Statement on Form 8-A (File No. 001-33274) filed December 16, 2014) |
Exhibit 4.5 | Third Supplemental Indenture by and between TravelCenters of America LLC and U.S. Bank National Association, as trustee, dated as of October 5, 2015 (Incorporated by reference to Exhibit 4.1 to our Registration Statement on Form 8-A (File No. 001-33274) filed December 16, 2014) |
Exhibit 4.6 | Form of 8.25% Senior Notes due 2028 (included in Exhibit 4.3 above) |
Exhibit 4.7 | Form of 8.00% Senior Notes due 2029 (included in Exhibit 4.4 above) |
Exhibit 4.8 | Form of 8.00% Senior Notes due 2030 (included in Exhibit 4.5 above) |
Exhibit 10.1 | Development Property Agreement, dated September 30, 2016, between HPT TA Properties LLC and TA Operating LLC (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on October 4, 2016) |
Exhibit 10.2 | Sixth Amendment to Amended and Restated Lease Agreement No. 2, dated September 30, 2016, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC (Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on October 4, 2016) |
Exhibit 10.3 | Sixth Amendment to Amended and Restated Lease Agreement No. 4 dated September 14, 2016, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC (filed herewith) |
Exhibit 12.1 | Statement of Computation of Ratio of Earnings to Fixed Charges (filed herewith) |
Exhibit 31.1 | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith) |
Exhibit 31.2 | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (filed herewith) |
Exhibit 32.1 | Section 1350 Certification of Chief Executive Officer and Chief Financial Officer (furnished herewith) |
Exhibit 99.1 | Amendment to Property Management Agreement, dated August 1, 2016, between The RMR Group LLC and TA Operating LLC (filed herewith) |
Exhibit 101.1 | The following materials from TravelCenters of America LLC's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income and Comprehensive Income, (iii) the Consolidated Statements of Cash Flows, and (iv) related notes to these financial statements, tagged as blocks of text (filed herewith) |
TRAVELCENTERS OF AMERICA LLC | |||||||
By: | /s/ Andrew J. Rebholz | ||||||
Date: | November 8, 2016 | Name: | Andrew J. Rebholz | ||||
Title: | Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) |
INITIAL SHAREHOLDER: | ADDITIONAL SHAREHOLDERS: | |||
HOSPITALITY PROPERTIES TRUST | All Shareholders hereafter admitted | |||
as Shareholders of the Company | ||||
pursuant to the Distribution or | ||||
otherwise in accordance with this | ||||
Agreement. | ||||
By: | /s/ John G. Murray | |||
Name: | John G. Murray | |||
Title: | President |
INITIAL SHAREHOLDER: | ADDITIONAL SHAREHOLDERS: | |||
HOSPITALITY PROPERTIES TRUST | All Shareholders hereafter admitted | |||
as Shareholders of the Company | ||||
pursuant to the Distribution or | ||||
otherwise in accordance with this | ||||
Agreement. | ||||
By: | /s/ John G. Murray | |||
Name: | John G. Murray | |||
Title: | President |
LANDLORD: | |
HPT TA PROPERTIES TRUST | |
By: | /s/ John G. Murray |
John G. Murray | |
President |
HPT TA PROPERTIES LLC | |
By: | /s/ John G. Murray |
John G. Murray | |
President |
TENANT: | |
TA OPERATING LLC | |
By: | /s/ Mark R. Young |
Mark R. Young | |
Executive Vice President |
TRAVELCENTERS OF AMERICA LLC | |
By: | /s/ Mark R. Young |
Mark R. Young | |
Executive Vice President |
TRAVELCENTERS OF AMERICA HOLDING COMPANY LLC | |
By: | /s/ Mark R. Young |
Mark R. Young | |
Executive Vice President |
Nine Months Ended September 30, 2016 | Years Ended December 31, | ||||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||||||
(in thousands, except ratio amounts) | |||||||||||||||||||||||
Income before income taxes, income from equity investees and noncontrolling interest | $ | 3,474 | $ | 40,202 | $ | 95,768 | $ | 2,331 | $ | 31,812 | $ | 23,784 | |||||||||||
Distributions received from equity investees | 3,000 | — | — | — | 4,800 | — | |||||||||||||||||
Fixed charges | 88,083 | 106,344 | 93,101 | 90,880 | 79,161 | 75,471 | |||||||||||||||||
Amortization of capitalized interest | 54 | 30 | 41 | 31 | — | — | |||||||||||||||||
Capitalized interest | (1,876 | ) | (1,797 | ) | (755 | ) | (1,033 | ) | — | — | |||||||||||||
Total Earnings | $ | 92,735 | $ | 144,779 | $ | 188,155 | $ | 92,209 | $ | 115,773 | $ | 99,255 | |||||||||||
Interest expense(1) | $ | 21,261 | $ | 24,425 | $ | 17,241 | $ | 17,650 | $ | 10,358 | $ | 9,005 | |||||||||||
Estimated interest within rent expense(2) | 64,946 | 80,122 | 75,105 | 72,197 | 68,803 | 66,466 | |||||||||||||||||
Capitalized interest | 1,876 | 1,797 | 755 | 1,033 | — | — | |||||||||||||||||
Total fixed charges | $ | 88,083 | $ | 106,344 | $ | 93,101 | $ | 90,880 | $ | 79,161 | $ | 75,471 | |||||||||||
Ratio of earnings to fixed charges | 1.05 | 1.36 | 2.02 | 1.01 | 1.46 | 1.32 | |||||||||||||||||
Deficiency of earnings available to cover fixed charges | $ N/A | $ N/A | $ N/A | $ N/A | $ N/A | $ N/A |
(1) | Includes interest expense and amortization of premiums and discounts related to indebtedness. |
(2) | Estimated interest within rent expense includes one third of rental expense, which approximates the interest component of operating leases. |
1. | I have reviewed this quarterly report on Form 10-Q of TravelCenters of America LLC; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: November 8, 2016 | /s/ THOMAS M. O'BRIEN |
Thomas M. O'Brien | |
President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of TravelCenters of America LLC; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: November 8, 2016 | /s/ ANDREW J. REBHOLZ |
Andrew J. Rebholz | |
Executive Vice President, Chief Financial | |
Officer and Treasurer |
Date: November 8, 2016 | /s/ Thomas M. O’Brien |
Thomas M. O’Brien | |
President and Chief Executive Officer | |
/s/ Andrew J. Rebholz | |
Andrew J. Rebholz | |
Executive Vice President, Chief Financial Officer and Treasurer |
THE RMR GROUP LLC | ||
By: | /s/ Matthew Jordan | |
Name: | Matthew Jordan | |
Title: | Senior Vice President, Chief Financial Officer & Treasurer | |
TA OPERATING LLC | ||
By: | /s/ Mark R. Young | |
Name: | Mark R. Young | |
Title: | Executive Vice President & General Counsel |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 07, 2016 |
|
Document and Entity Information | ||
Entity Registrant Name | TRAVELCENTERS OF AMERICA LLC | |
Entity Central Index Key | 0001378453 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 38,852,663 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) shares in Thousands, $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 715 | $ 850 |
Common shares, shares authorized (in shares) | 41,369 | 39,069 |
Common shares, shares issued (in shares) | 38,853 | 38,808 |
Common shares, shares outstanding (in shares) | 38,853 | 38,808 |
Consolidated Statements of Income and Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Revenues: | ||||
Fuel | $ 947,558 | $ 1,031,146 | $ 2,588,297 | $ 3,159,399 |
Nonfuel | 525,516 | 474,646 | 1,485,686 | 1,330,786 |
Rent and royalties from franchisees | 4,529 | 3,201 | 13,135 | 9,392 |
Total revenues | 1,477,603 | 1,508,993 | 4,087,118 | 4,499,577 |
Cost of goods sold (excluding depreciation): | ||||
Fuel | 837,525 | 928,596 | 2,284,570 | 2,848,175 |
Nonfuel | 245,282 | 221,917 | 688,962 | 608,629 |
Total cost of goods sold | 1,082,807 | 1,150,513 | 2,973,532 | 3,456,804 |
Operating expenses: | ||||
Site level operating | 247,584 | 229,215 | 725,754 | 657,133 |
Selling, general and administrative | 34,812 | 29,760 | 101,787 | 87,438 |
Real estate rent | 66,573 | 60,616 | 194,838 | 169,528 |
Depreciation and amortization | 22,698 | 17,445 | 64,545 | 53,086 |
Total operating expenses | 371,667 | 337,036 | 1,086,924 | 967,185 |
Income from operations | 23,129 | 21,444 | 26,662 | 75,588 |
Acquisition costs | 225 | 1,755 | 2,286 | 3,296 |
Interest expense, net | 7,200 | 5,042 | 20,761 | 16,461 |
Income from equity investees | 1,534 | 1,336 | 3,572 | 3,156 |
Loss on extinguishment of debt | 0 | 10,502 | ||
Income before income taxes | 17,238 | 15,983 | 7,187 | 48,485 |
Provision for income taxes | 6,263 | 6,157 | 2,571 | 19,158 |
Net income | 10,975 | 9,826 | 4,616 | 29,327 |
Less net income for noncontrolling interests | 77 | 0 | 141 | 0 |
Net income attributable to common shareholders | 10,898 | 9,826 | 4,475 | 29,327 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency (loss) gain, net of taxes | (46) | (240) | 165 | (540) |
Equity interest in investee's unrealized gain (loss) on investments | 80 | (72) | 175 | (91) |
Other comprehensive income (loss) attributable to common shareholders | 34 | (312) | 340 | (631) |
Comprehensive income attributable to common shareholders | $ 10,932 | $ 9,514 | $ 4,815 | $ 28,696 |
Net income per common share attributable to common shareholders: | ||||
Basic and diluted (in usd per share) | $ 0.28 | $ 0.26 | $ 0.12 | $ 0.76 |
Consolidated Statements of Income and Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Statement [Abstract] | ||||
Foreign currency (loss) gain, tax | $ (30) | $ (131) | $ 102 | $ (287) |
Basis of Presentation, Business Description and Organization |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation, Business Description and Organization | Basis of Presentation, Business Description and Organization TravelCenters of America LLC, which we refer to as the Company or we, us and our, is a Delaware limited liability company. As of September 30, 2016, we operated and franchised 540 travel center, standalone convenience store, which we refer to as convenience stores, and standalone restaurant locations described below. Our customers include trucking fleets and their drivers, independent truck drivers, highway and local motorists and casual diners. We also collect rents, royalties and other fees from our tenants, franchisees and dealers. We manage our business on the basis of two reportable segments, travel centers and convenience stores. See Note 7 for more information about our reportable segments. We have a single travel center located in a foreign country, Canada, that we do not consider material to our operations. As of September 30, 2016, our business included 255 travel centers in 43 states in the United States, or U.S., primarily along the U.S. interstate highway system, and the province of Ontario, Canada. Our travel centers included 178 operated under the "TravelCenters of America" and "TA" brand names, or the TA brand, and 77 operated under the "Petro Stopping Centers" and "Petro" brand names, or the Petro brand. Of our 255 travel centers at September 30, 2016, we owned 29, we leased 199, including 197 that we leased from Hospitality Properties Trust, or HPT, we operated two for a joint venture in which we own a noncontrolling interest and our franchisees owned or leased from others 25. We operated 225 of our travel centers and franchisees operated 30 travel centers, including five we leased to franchisees. Our travel centers offer a broad range of products and services, including diesel fuel and gasoline, as well as nonfuel products and services such as truck repair and maintenance services, full service restaurants, quick service restaurants, and various customer amenities. We report this portion of our business as our travel center segment. As of September 30, 2016, our business included 233 standalone convenience stores in 11 states in the U.S. We operate our convenience stores primarily under the "Minit Mart" brand name, or the Minit Mart brand. Of these 233 convenience stores at September 30, 2016, we owned 198, we leased 32, including one that we leased from HPT, and we operated three for a joint venture in which we own a noncontrolling interest. Our convenience stores offer gasoline as well as a variety of nonfuel products, including coffee, groceries, fresh foods and quick service restaurants. We report this portion of our business as our convenience store segment. As of September 30, 2016, our business included 52 standalone restaurants in 15 states in the U.S. operated primarily under the "Quaker Steak & Lube" brand name, or the QSL brand. Of our 52 standalone restaurants at September 30, 2016, we owned five, we leased seven, we operated one for a joint venture in which we own a noncontrolling interest and 39 were owned or leased from others by our franchisees. We report this portion of our business within corporate and other in our segment information in Note 7. The accompanying consolidated financial statements are unaudited. These unaudited interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, applicable for interim financial statements. The disclosures presented do not include all the information necessary for complete financial statements in accordance with GAAP. These unaudited interim financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, or our Annual Report. In the opinion of our management, the accompanying consolidated financial statements include all adjustments, including normal recurring adjustments, considered necessary for a fair presentation. All intercompany transactions and balances have been eliminated. While our revenues are modestly seasonal, the quarterly variations in our operating results may reflect greater seasonal differences because our rent expense and certain other costs do not vary seasonally. For this and other reasons, our operating results for interim periods are not necessarily indicative of the results that may be expected for a full year. Certain prior year amounts have been reclassified to conform to the current year presentation. Fair Value Measurement Senior Notes We refer to our $110,000 of 8.25% Senior Notes due 2028, our $120,000 of 8.00% Senior Notes due 2029, and our $100,000 of 8.00% Senior Notes due 2030 collectively as our Senior Notes, which are our senior unsecured obligations. Our Senior Notes have been presented on our consolidated balance sheets as long term debt net of unamortized debt issuance costs totaling $12,804 and $13,553 as of September 30, 2016, and December 31, 2015, respectively. We estimate that, based on their trading prices (a Level 1 input), the aggregate fair value of our Senior Notes on September 30, 2016, was $337,760. Goodwill Impairment Goodwill is tested for impairment annually as of July 31 at the reporting unit level, which is equivalent to our two reportable segments, travel centers and convenience stores. Impairment testing for 2016 was performed using a quantitative analysis under which the fair value of our goodwill was estimated using both an income approach and a market approach. The income approach considered discounted forecasted cash flows that were based on our long term operating plan. A terminal value was used to estimate the cash flows beyond the period covered by the operating plan. The discount rate is an estimate of the overall after tax rate of return required by equity and debt market holders of a business enterprise. The market approach considered comparable publicly traded guideline companies' business value. For each comparable publicly traded guideline company, value indicators, or pricing multiples, were considered to estimate the value of our business enterprise. These analyses require the exercise of significant judgments, including judgments about appropriate discount rates, perpetual growth rates and the timing of expected future cash flows of the respective operating segment. We concluded based on this analysis that as of July 31, 2016, the fair values of our reporting units exceeded their respective carrying amounts. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers, which establishes a comprehensive revenue recognition standard under GAAP for almost all industries. The new standard will apply for annual periods beginning after December 15, 2017, including interim periods therein. We have not yet determined the effects, if any, the adoption of this update may have on our consolidated financial statements. In April 2015, the FASB issued Accounting Standards Update 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented on the balance sheet as a reduction of the associated debt liability. In August 2015, the FASB clarified the previous Accounting Standards Update and issued Accounting Standards Update 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Lines of Credit Arrangements- Amendments to SEC Paragraphs Pursuant to Staff Announcements on June 18, 2015 EITF Meeting, which addresses the presentation of debt issuance costs related to line of credit arrangements. These updates were effective for interim and annual reporting periods beginning after December 15, 2015, and required retrospective application. We adopted this standard during the three months ended March 31, 2016, and applied it to all periods presented. Adoption of this standard resulted in the reclassification of debt issuance costs from other noncurrent assets to long term debt in our consolidated balance sheets. Debt issuance costs related to our line of credit arrangements remain classified as other noncurrent assets. In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases, which establishes a comprehensive lease standard under GAAP for virtually all industries. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. The new standard will apply for annual periods beginning after December 15, 2018, including interim periods therein. Early adoption is permitted. We have not yet determined the effects the adoption of this update may have on us; however, we believe the adoption of this update will have a material impact on our consolidated balance sheets due to the recognition of the lease rights and obligations as assets and liabilities. While the adoption will have no effect on the cash we pay, amounts within our statements of income and comprehensive income are expected to change materially. In August 2016, the FASB issued Accounting Standards Update 2016-15, Statement of Cash Flows, which simplifies elements of cash flow classification and reduces diversity in practice across all industries. The new standard will apply for annual periods beginning after December 15, 2017, including interim periods therein, and requires retrospective application. Early adoption is permitted. The implementation of this update is not expected to cause any material changes to our consolidated financial statements. |
Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions During the nine months ended September 30, 2016, we acquired 29 convenience stores, 11 standalone restaurants and franchise agreements for an additional 39 restaurants, and accounted for these transactions as business combinations, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their respective fair values as of the date of acquisition. We have included the results of these acquired businesses in our consolidated financial statements from the dates of acquisition. The pro forma impact of these acquisitions, including the results of operations of the acquired convenience stores and standalone restaurants from the beginning of the periods presented, is not material to our consolidated financial statements. The following table summarizes the amounts we recorded for the assets acquired and liabilities assumed in the business combinations described above, along with resulting goodwill. We expect that amortization of all of the goodwill resulting from these acquisitions will be deductible for tax purposes.
The purchase price allocations included in the table above, primarily related to real estate, property and equipment, and intangibles, are based on valuations that are not yet finalized. The process for estimating the fair value of assets acquired and liabilities assumed requires the use of judgment in determining appropriate assumptions and estimates. As we obtain additional information to finalize these preliminary valuations, adjustments to the recorded amounts may be made during the measurement period (up to one year from the acquisition date). Acquisition costs, such as legal fees, due diligence costs and closing costs, are not included as a component of consideration transferred in business combinations but instead are expensed as incurred. As of September 30, 2016, we had entered agreements to acquire six restaurants for an aggregate purchase price of $6,000 and one travel center for a purchase price of $13,050, excluding closing costs and working capital adjustments. We expect to complete these acquisitions during 2016, but these purchases are subject to conditions and may not occur, may be delayed or the terms may change. |
Shareholders' Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders' Equity On May 19, 2016, our shareholders approved the 2016 Equity Compensation Plan, or the 2016 Plan, under which 2,300 shares were authorized for issuance under the terms of the 2016 Plan. Changes in Shareholders' Equity On April 20, 2016, we acquired the Quaker Steak & Lube restaurant business of Lube Holdings, Inc., or the QSL acquisition. The QSL acquisition included a 75% controlling interest in an entity that operates one restaurant and leases certain assets from another entity in which we own a 25% interest. These entities are consolidated in our consolidated financial statements. See Note 2 for more information about the QSL acquisition. The changes in shareholders' equity for the nine months ended September 30, 2016, follow:
Net Income Per Common Share Attributable to Common Shareholders The following table presents a reconciliation of net income attributable to common shareholders to net income available to common shareholders and the related earnings per share.
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Related Party Transactions | Related Party Transactions We have relationships and historical and continuing transactions with HPT, The RMR Group LLC, or RMR, and others related to them, including other companies to which RMR provides management services and which have trustees, directors and officers who are also our Directors or officers. For further information about these and other such relationships and certain other related party transactions, please refer to our Annual Report. Relationship with HPT HPT is our largest shareholder. As of September 30, 2016, HPT owned 3,420 of our common shares, representing approximately 8.8% of our outstanding common shares. HPT is also our principal landlord. We have five leases with HPT, the four TA Leases for 158 properties and the Petro Lease for 40 properties. We refer to the four TA Leases and the Petro Lease collectively as the HPT Leases. On June 1, 2015, we entered a transaction agreement with HPT. On June 22, 2016, we and HPT amended the transaction agreement. We refer to the amended transaction agreement as the Transaction Agreement. Under the Transaction Agreement, among other things, we agreed to sell to HPT four travel centers upon the completion of their development at a purchase price equal to their development costs, including the cost of the land, and two existing travel centers owned by us, and HPT agreed to lease back these properties to us under the HPT Leases. In connection with the Transaction Agreement:
As of September 30, 2016, the sale and lease back of the remaining development property pursuant to the terms of the Transaction Agreement, is expected to be completed before June 30, 2017. Because of the relationships between us and HPT, the terms of the Transaction Agreement and lease amendments described above were negotiated and approved by special committees of our Board of Directors and the HPT board of trustees composed of our Independent Directors and HPT's independent trustees who are not also Directors or trustees of the other party, which committees were represented by separate counsel. On September 14, 2016, HPT purchased a vacant land parcel located adjacent to a property we lease from HPT in Holbrook, Arizona for $325; and we and HPT amended our TA Lease 4 to add this parcel and our minimum annual rent under our TA Lease 4 increased by $28. As of September 30, 2016, the number of properties leased, the terms, the minimum annual rents and the deferred rent balances under our HPT Leases were as follows:
The following table summarizes the various amounts related to the HPT Leases and leases with other lessors that are reflected in real estate rent expense in our consolidated statements of income and comprehensive income.
The following table summarizes the various amounts related to the HPT Leases that are included in our consolidated balance sheets.
HPT waived percentage rent of $271 for the three months ended September 30, 2015, and $372 and $819 for the nine months ended September 30, 2016 and 2015, respectively. As of June 30, 2016, HPT had cumulatively waived all of the $2,500 of percentage rent it previously agreed to waive. The total amount of percentage rent (which is net of any waived amounts) was $408 and $0 for the three months ended September 30, 2016 and 2015, respectively, and $937 and $1,999 for the nine months ended September 30, 2016 and 2015, respectively. Pursuant to the terms of our HPT Leases, we sold improvements made to properties leased from HPT for $20,255 and $29,734 during the three months ended September 30, 2016 and 2015, respectively, and $75,314 and $70,150 during the nine months ended September 30, 2016 and 2015, respectively. As a result, our minimum annual rent payable to HPT increased by $1,722 and $2,527 for the three months ended September 30, 2016 and 2015, respectively, and $6,402 and $5,963 for the nine months ended September 30, 2016 and 2015, respectively. At September 30, 2016, our property and equipment balance included $55,308 of improvements of the type that we typically request that HPT purchase for an increase in minimum annual rent; however, HPT is not obligated to purchase these improvements. Relationship with RMR Pursuant to our business management agreement and property management agreement with RMR, we incurred aggregate fees of $3,935 and $3,567 for the three months ended September 30, 2016 and 2015, respectively, and $10,748 and $10,063 for the nine months ended September 30, 2016 and 2015, respectively. These amounts are included in selling, general and administrative expenses in our consolidated statements of income and comprehensive income. In August 2016, we and RMR amended our property management agreement to increase the property management fees we pay to RMR to $36 per year (previously, we paid $30 per year to RMR for property management fees). We have historically awarded share grants to certain RMR employees under our equity compensation plan. In addition, under our business management agreement we reimburse RMR for our allocable costs for internal audit services. The amounts recognized as expense for share grants to RMR employees and internal audit costs were $989 and $868 for the three months ended September 30, 2016 and 2015, respectively, and $3,186 and $2,555 for the nine months ended September 30, 2016 and 2015, respectively; these amounts are included in selling, general and administrative expenses in our consolidated statements of income and comprehensive income. Relationship with AIC We and six other companies to which RMR provides management services each own in equal amounts Affiliates Insurance Company, or AIC, an insurance company. We and the other AIC shareholders participate in a combined property insurance program arranged and reinsured in part by AIC. We paid aggregate annual premiums, including taxes and fees, of approximately $2,186 in connection with this insurance program for the policy year ending June 30, 2017, which amount may be adjusted from time to time as we acquire and dispose of properties that are included in this insurance program. As of September 30, 2016 and December 31, 2015, our investment in AIC had a carrying value of $7,110 and $6,828, respectively. These amounts are included in other noncurrent assets in our consolidated balance sheets. We recognized income (loss) of $14 and $(25) related to our investment in AIC for the three months ended September 30, 2016 and 2015, respectively, and $108 and $70 for the nine months ended September 30, 2016 and 2015, respectively. Our other comprehensive income includes our proportional share of unrealized gains (losses) on securities held for sale, which are owned by AIC, of $80 and $(72) for the three months ended September 30, 2016 and 2015, respectively, and $175 and $(91) for the nine months ended September 30, 2016 and 2015, respectively. Directors' and Officers' Liability Insurance We, The RMR Group Inc., the managing member of RMR, RMR and certain companies to which RMR provides management services participate in a combined directors' and officers' liability insurance policy. In September 2016, we participated in a one year extension of this combined directors' and officers' insurance policy through September 2018. Our premium for this policy extension was approximately $91 for the current policy year ending September 2017. Relationship with PTP We own a 40% minority interest in Petro Travel Plaza Holdings LLC, or PTP. As of September 30, 2016 and December 31, 2015, our investment in PTP had a carrying value of $20,507 and $20,042, respectively, which amounts are included in other noncurrent assets in our consolidated balance sheets. In February 2016, we began managing a third standalone convenience store PTP owns. As of September 30, 2016, we managed two travel centers, three convenience stores and one restaurant for PTP for which we receive management and accounting fees. We recognized management fee income of $323 and $200 for the three months ended September 30, 2016 and 2015, respectively, and $776 and $600 for the nine months ended September 30, 2016 and 2015, respectively. In addition to the management fees we earned, we recognized income of $1,520 and $1,361 during the three months ended September 30, 2016 and 2015, respectively, and $3,464 and $3,086 for the nine months ended September 30, 2016 and 2015, respectively. At September 30, 2016 and December 31, 2015, we had a net payable to PTP of $834 and net receivable from PTP of $43, respectively. |
Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies Legal Proceedings We are routinely involved in various legal and administrative proceedings, including tax audits, incidental to the ordinary course of our business, none of which we expect, individually or in the aggregate, to have a material adverse effect on our business, financial condition, results of operations or cash flows. Environmental Contingencies Extensive environmental laws regulate our operations and properties. These laws may require us to investigate and clean up hazardous substances, including petroleum or natural gas products, released at our owned and leased properties. Governmental entities or third parties may hold us liable for property damage and personal injuries, and for investigation, remediation and monitoring costs incurred in connection with any contamination and regulatory compliance at our locations. We use both underground storage tanks and above ground storage tanks to store petroleum products, natural gas and other hazardous substances at our locations. We must comply with environmental laws regarding tank construction, integrity testing, leak detection and monitoring, overfill and spill control, release reporting and financial assurance for corrective action in the event of a release. At some locations we must also comply with environmental laws relative to vapor recovery or discharges to water. Under the terms of the HPT Leases, we generally have agreed to indemnify HPT for any environmental liabilities related to properties that we lease from HPT and we are required to pay all environmental related expenses incurred in the operation of the leased properties. Under an agreement with Equilon Enterprises LLC doing business as Shell Oil Products US, or Shell, we have agreed to indemnify Shell and its affiliates from certain environmental liabilities incurred with respect to our travel centers where Shell has installed natural gas fueling lanes. From time to time we have received, and in the future likely will receive, notices of alleged violations of environmental laws or otherwise have become or will become aware of the need to undertake corrective actions to comply with environmental laws at our locations. Investigatory and remedial actions were, and regularly are, undertaken with respect to releases of hazardous substances at our locations. In some cases we received, and may receive in the future, contributions to partially offset our environmental costs from insurers, from state funds established for environmental clean up associated with the sale of petroleum products or from indemnitors who agreed to fund certain environmental related costs at locations purchased from those indemnitors. To the extent we incur material amounts for environmental matters for which we do not receive or expect to receive insurance or other third party reimbursement or for which we have not previously recorded a liability, our operating results may be materially adversely affected. In addition, to the extent we fail to comply with environmental laws and regulations, or we become subject to costs and requirements not similarly experienced by our competitors, our competitive position may be harmed. At September 30, 2016, we had a gross accrued liability of $4,951 for environmental matters as well as a receivable for expected recoveries of certain of these estimated future expenditures of $1,063, resulting in an estimated net amount of $3,888 that we expect to fund in the future. We cannot precisely know the ultimate costs we may incur in connection with currently known or future potential environmental related violations, corrective actions, investigation and remediation; however, we do not expect the costs for such matters to be material, individually or in the aggregate, to our financial position or results of operations. In February 2014, we reached an agreement with the California State Water Resources Control Board, or the State Water Board, to settle certain claims the State Water Board had filed against us in California Superior Court in 2010 relating to alleged violations of underground storage tank laws and regulations for a cash payment of $1,800; suspended penalties of $1,000 that may become payable by us in the future if, prior to March 2019, we fail to comply with specified underground storage tank laws and regulations; and our agreement to invest, prior to March 2018, up to $2,000 of verified costs that are directly related to the development and implementation of a comprehensive California Enhanced Environmental Compliance Program for the underground storage tank systems at all of our California facilities that is above and beyond minimum requirements of California law and regulations related to underground storage tank systems. The settlement, which was approved by the Superior Court on February 20, 2014, also included injunctive relief provisions requiring that we comply with certain California environmental laws and regulations applicable to underground storage tank systems. In October 2015, the State Water Board issued a notice of alleged suspended penalty conduct claiming that we are liable for the full amount of the $1,000 in suspended penalties as a result of five alleged violations of underground storage tank regulations and requesting further information concerning the alleged violations. In November 2015, we filed our response to the October 2015 notice of alleged suspended penalties and in June and September 2016 we met with the State Water Board to attempt to resolve these matters. We believe we have meritorious defenses to these alleged violations, but cannot predict whether any penalties relating to these matters will be assessed by the Superior Court, which has retained jurisdiction over such matters. The State Water Board also has retained the right to file a separate action relating to these violations, but to date has not done so. As of September 30, 2016, we have recognized a liability of $2,264 with respect to these matters concerning the State Water Board and believe, though we can provide no assurance, that any additional amount of loss we may realize above that accrued, if any, upon the ultimate resolution of this matter will not be material to us. We currently have insurance of up to $10,000 per incident and up to $25,000 in the aggregate for certain environmental liabilities, subject, in each case, to certain limitations and deductibles. However, we can provide no assurance that we will be able to maintain similar environmental insurance coverage in the future on acceptable terms. We cannot predict the ultimate effect changing circumstances and changing environmental laws may have on us in the future or the ultimate outcome of matters currently pending. We cannot be certain that contamination presently unknown to us does not exist at our sites, or that material liability will not be imposed on us in the future. If we discover additional environmental issues, or if government agencies impose additional environmental requirements, increased environmental compliance or remediation expenditures may be required, which could have a material adverse effect on us. Other Disputes Many of our customers use fuel cards issued by Comdata Inc., or Comdata, to make payments to us. On September 12, 2016, we received a letter from Comdata alleging that we were in default under the Comdata Merchant Agreement, of December 15, 2010, (as amended on December 14, 2011) by and between Comdata and us, or the Comdata Merchant Agreement, pursuant to which we agreed to accept Comdata fuel cards for certain purchases by our customers through January 2, 2022. The September 12, 2016, letter from Comdata alleges default under the Comdata Merchant Agreement due to our purported failure to comply with a separate agreement with Comdata to install radio frequency identification, or RFID, technology at 224 of our company operated travel center locations. In its letter, Comdata threatened to terminate both agreements unless we cured the alleged default on or before October 13, 2016. Although we disputed, and continue to dispute, Comdata's assertions, by letter dated October 13, 2016, we informed Comdata that we had substantially completed installation of the RFID technology, that the technology had been installed and was operational at 201 of our travel center locations, that one location had been operational but was damaged and under repair, and that the remaining 22 travel center locations would be outfitted with the RFID technology as soon as we received the required hardware and licenses previously ordered from Comdata. On November 3, 2016, we received a letter from Comdata purporting to terminate both agreements effective immediately and offering to continue the terms of the agreements for up to 90 days. The Comdata Merchant Agreement provides that in the event that either party engages legal counsel to enforce, protect or preserve any rights it might have under such agreement, the prevailing party shall be entitled to recover its reasonable attorney’s fees and associated costs, in addition to any other relief to which it may be entitled. We do not believe that Comdata has the right to terminate either of our agreements under the present circumstances and are considering our response. |
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Inventory | Inventory Inventory consisted of the following:
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information Reportable segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance. Our reportable segments are travel centers and convenience stores. We measure our reportable segments profitability based on site level gross margin in excess of site level operating expenses. See Note 1 above and Note 15 to the Notes to Consolidated Financial Statements of our Annual Report for more information about our reportable segments.
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Basis of Presentation, Business Description and Organization (Policies) |
9 Months Ended |
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Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Segment Reporting | We manage our business on the basis of two reportable segments, travel centers and convenience stores. See Note 7 for more information about our reportable segments. We have a single travel center located in a foreign country, Canada, that we do not consider material to our operations. |
Basis of Presentation | The accompanying consolidated financial statements are unaudited. These unaudited interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, applicable for interim financial statements. The disclosures presented do not include all the information necessary for complete financial statements in accordance with GAAP. These unaudited interim financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, or our Annual Report. In the opinion of our management, the accompanying consolidated financial statements include all adjustments, including normal recurring adjustments, considered necessary for a fair presentation. All intercompany transactions and balances have been eliminated. While our revenues are modestly seasonal, the quarterly variations in our operating results may reflect greater seasonal differences because our rent expense and certain other costs do not vary seasonally. For this and other reasons, our operating results for interim periods are not necessarily indicative of the results that may be expected for a full year. |
Reclassifications | Certain prior year amounts have been reclassified to conform to the current year presentation. |
Goodwill Impairment | Goodwill Impairment Goodwill is tested for impairment annually as of July 31 at the reporting unit level, which is equivalent to our two reportable segments, travel centers and convenience stores. Impairment testing for 2016 was performed using a quantitative analysis under which the fair value of our goodwill was estimated using both an income approach and a market approach. The income approach considered discounted forecasted cash flows that were based on our long term operating plan. A terminal value was used to estimate the cash flows beyond the period covered by the operating plan. The discount rate is an estimate of the overall after tax rate of return required by equity and debt market holders of a business enterprise. The market approach considered comparable publicly traded guideline companies' business value. For each comparable publicly traded guideline company, value indicators, or pricing multiples, were considered to estimate the value of our business enterprise. These analyses require the exercise of significant judgments, including judgments about appropriate discount rates, perpetual growth rates and the timing of expected future cash flows of the respective operating segment. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers, which establishes a comprehensive revenue recognition standard under GAAP for almost all industries. The new standard will apply for annual periods beginning after December 15, 2017, including interim periods therein. We have not yet determined the effects, if any, the adoption of this update may have on our consolidated financial statements. In April 2015, the FASB issued Accounting Standards Update 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented on the balance sheet as a reduction of the associated debt liability. In August 2015, the FASB clarified the previous Accounting Standards Update and issued Accounting Standards Update 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Lines of Credit Arrangements- Amendments to SEC Paragraphs Pursuant to Staff Announcements on June 18, 2015 EITF Meeting, which addresses the presentation of debt issuance costs related to line of credit arrangements. These updates were effective for interim and annual reporting periods beginning after December 15, 2015, and required retrospective application. We adopted this standard during the three months ended March 31, 2016, and applied it to all periods presented. Adoption of this standard resulted in the reclassification of debt issuance costs from other noncurrent assets to long term debt in our consolidated balance sheets. Debt issuance costs related to our line of credit arrangements remain classified as other noncurrent assets. In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases, which establishes a comprehensive lease standard under GAAP for virtually all industries. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. The new standard will apply for annual periods beginning after December 15, 2018, including interim periods therein. Early adoption is permitted. We have not yet determined the effects the adoption of this update may have on us; however, we believe the adoption of this update will have a material impact on our consolidated balance sheets due to the recognition of the lease rights and obligations as assets and liabilities. While the adoption will have no effect on the cash we pay, amounts within our statements of income and comprehensive income are expected to change materially. In August 2016, the FASB issued Accounting Standards Update 2016-15, Statement of Cash Flows, which simplifies elements of cash flow classification and reduces diversity in practice across all industries. The new standard will apply for annual periods beginning after December 15, 2017, including interim periods therein, and requires retrospective application. Early adoption is permitted. The implementation of this update is not expected to cause any material changes to our consolidated financial statements. |
Acquisitions (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of amounts assigned to assets acquired and liabilities assumed | The following table summarizes the amounts we recorded for the assets acquired and liabilities assumed in the business combinations described above, along with resulting goodwill. We expect that amortization of all of the goodwill resulting from these acquisitions will be deductible for tax purposes.
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Shareholders' Equity (Tables) |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in shareholders' equity | The changes in shareholders' equity for the nine months ended September 30, 2016, follow:
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Reconciliation from net income attributable to common shareholders to net income available to common shareholders | The following table presents a reconciliation of net income attributable to common shareholders to net income available to common shareholders and the related earnings per share.
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Related Party Transactions (Tables) |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summarized information for each HPT Lease | As of September 30, 2016, the number of properties leased, the terms, the minimum annual rents and the deferred rent balances under our HPT Leases were as follows:
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Summary of various amounts reflected in real estate rent expense | The following table summarizes the various amounts related to the HPT Leases and leases with other lessors that are reflected in real estate rent expense in our consolidated statements of income and comprehensive income.
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Summary of various amounts included in consolidated balance sheets | The following table summarizes the various amounts related to the HPT Leases that are included in our consolidated balance sheets.
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Inventory (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventory | Inventory consisted of the following:
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Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information |
|
Basis of Presentation, Business Description and Organization - Fair Value Measurement (Details) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Debt Instrument [Line Items] | ||
Unamortized debt issuance expense | $ 12,804,000 | $ 13,553,000 |
Senior Notes | Level 1 input | ||
Debt Instrument [Line Items] | ||
Fair value of debt instrument | 337,760,000 | |
Senior Notes | 8.25% Senior Notes due 2028 | ||
Debt Instrument [Line Items] | ||
Aggregate principal amount issued | $ 110,000,000 | |
Interest rate (as a percent) | 8.25% | |
Senior Notes | 8.00% Senior Notes due 2029 | ||
Debt Instrument [Line Items] | ||
Aggregate principal amount issued | $ 120,000,000 | |
Interest rate (as a percent) | 8.00% | |
Senior Notes | 8.00% Senior Notes due 2030 | ||
Debt Instrument [Line Items] | ||
Aggregate principal amount issued | $ 100,000,000 | |
Interest rate (as a percent) | 8.00% |
Acquisitions - Summary of Amounts Assigned to Assets Acquired and Liabilities Assumed (Details) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Acquisitions | |
Inventory | $ 3,640 |
Property and equipment | 49,156 |
Goodwill | 7,219 |
Intangible assets | 16,280 |
Other assets | 1,307 |
Other liabilities | (5,465) |
Total aggregate purchase price | 72,137 |
Corporate and other | Restaurants | |
Acquisitions | |
Inventory | 465 |
Property and equipment | 12,867 |
Goodwill | 0 |
Intangible assets | 15,910 |
Other assets | 1,289 |
Other liabilities | (3,547) |
Total aggregate purchase price | 26,984 |
Convenience stores | |
Acquisitions | |
Inventory | 3,175 |
Property and equipment | 36,289 |
Goodwill | 7,219 |
Intangible assets | 370 |
Other assets | 18 |
Other liabilities | (1,918) |
Total aggregate purchase price | $ 45,153 |
Acquisitions - Additional Information (Details) |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2016
restaurant
convenience_store
|
Dec. 31, 2016
USD ($)
restaurant
travel_center
|
|
Restaurants | ||
Acquisitions | ||
Number of properties acquired | 11 | |
Restaurants | Scenario, Forecast [Member] | ||
Acquisitions | ||
Number of properties acquired | 6 | |
Aggregate purchase price | $ | $ 6,000,000 | |
Restaurants | Franchisee operated sites | ||
Acquisitions | ||
Number of properties acquired | 39 | |
Convenience stores | ||
Acquisitions | ||
Number of properties acquired | convenience_store | 29 | |
Travel centers | Scenario, Forecast [Member] | ||
Acquisitions | ||
Number of properties acquired | travel_center | 1 | |
Aggregate purchase price | $ | $ 13,050,000 |
Shareholders' Equity - Equity Compensation Plan (Details) shares in Thousands |
May 19, 2016
shares
|
---|---|
Share award plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Additional shares approved for issuance under 2016 Equity Compensation Plan (in shares) | 2,300 |
Shareholders' Equity - Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Stockholders' Equity Note [Abstract] | ||||
Net income attributable to common shareholders, as reported | $ 10,898 | $ 9,826 | $ 4,475 | $ 29,327 |
Less: net income attributable to participating securities | 534 | 494 | 219 | 1,477 |
Net income available to common shareholders | $ 10,364 | $ 9,332 | $ 4,256 | $ 27,850 |
Weighted average common shares (in shares) | 36,953 | 36,467 | 36,922 | 36,435 |
Basic and diluted net income per common share (in usd per share) | $ 0.28 | $ 0.26 | $ 0.12 | $ 0.76 |
Weighted average number of unvested shares outstanding (in shares) | 1,900 | 1,932 | 1,904 | 1,933 |
Related Party Transactions - Relationship with RMR (Details) - Affiliated entity - RMR - Selling, general and administrative expenses - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|---|
Jul. 31, 2016 |
Aug. 31, 2016 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Business and property management agreement fees | ||||||
Related Party Transaction [Line Items] | ||||||
Management fees | $ 3,935 | $ 3,567 | $ 10,748 | $ 10,063 | ||
Annual property management fees | ||||||
Related Party Transaction [Line Items] | ||||||
Management fees | $ 30 | $ 36 | ||||
Share grants and internal audit costs | ||||||
Related Party Transaction [Line Items] | ||||||
Expense for share grants and internal audit fees | $ 989 | $ 868 | $ 3,186 | $ 2,555 |
Related Party Transactions - Relationship with AIC (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2015
USD ($)
|
Sep. 30, 2016
USD ($)
company
|
Sep. 30, 2015
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Related Party Transaction [Line Items] | |||||
Income (loss) related to investment | $ 1,534 | $ 1,336 | $ 3,572 | $ 3,156 | |
Unrealized gains (losses) on securities held for sale | 80 | (72) | 175 | (91) | |
Affiliated entity | AIC | Annual premium for property insurance | |||||
Related Party Transaction [Line Items] | |||||
Annual premium for property insurance | $ 2,186 | ||||
Affiliated entity | AIC | RMR | |||||
Related Party Transaction [Line Items] | |||||
Number of companies managed by RMR | company | 6 | ||||
Equity method investee | AIC | |||||
Related Party Transaction [Line Items] | |||||
Carrying value of investment | 7,110 | $ 7,110 | $ 6,828 | ||
Income (loss) related to investment | 14 | (25) | 108 | 70 | |
Unrealized gains (losses) on securities held for sale | $ 80 | $ (72) | $ 175 | $ (91) |
Related Party Transactions - Directors' and Officers' Liability Insurance (Details) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
RMR | Affiliated entity | |
Related Party Transaction [Line Items] | |
Combined directors' and officers' liability insurance policy premium | $ 91 |
Contingencies Environmental Contingencies (Details) |
1 Months Ended | 9 Months Ended | |
---|---|---|---|
Oct. 31, 2015
violation
|
Feb. 28, 2014
USD ($)
|
Sep. 30, 2016
USD ($)
|
|
Litigation by California State Water Resources Control Board | |||
Commitments and contingencies | |||
Loss contingency liability | $ 2,264,000 | ||
Settlement amount | $ 1,800,000 | ||
Suspended penalties | 1,000,000 | ||
Maximum verified costs | $ 2,000,000 | ||
Number of alleged violations | violation | 5 | ||
Environmental Issue | |||
Commitments and contingencies | |||
Total recorded liabilities | 4,951,000 | ||
Expected recoveries of future expenditures | 1,063,000 | ||
Loss contingency liability | 3,888,000 | ||
Loss contingency insurance limit for liabilities per incident | 10,000,000 | ||
Loss contingency insurance limit for liabilities | $ 25,000,000 |
Contingencies Other Disputes (Details) |
Oct. 13, 2016
travel_center
|
Sep. 30, 2016
store
travel_center
|
Sep. 12, 2016
travel_center
|
---|---|---|---|
Other Commitments [Line Items] | |||
Number of stores | store | 540 | ||
Travel centers | |||
Other Commitments [Line Items] | |||
Number of stores | 255 | ||
Travel centers | Number of sites under agreement | |||
Other Commitments [Line Items] | |||
Number of stores | 224 | ||
Travel centers | Number of sites under agreement with RFID | Subsequent Event [Member] | |||
Other Commitments [Line Items] | |||
Number of stores | 201 | ||
Travel centers | Number of sites with damaged RFID | Subsequent Event [Member] | |||
Other Commitments [Line Items] | |||
Number of stores | 1 | ||
Travel centers | Number of sites remaining to receive RFID | Subsequent Event [Member] | |||
Other Commitments [Line Items] | |||
Number of stores | 22 |
Inventory (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Inventory [Line Items] | ||
Total inventory | $ 195,229 | $ 183,492 |
Nonfuel products | ||
Inventory [Line Items] | ||
Total inventory | 163,641 | 159,256 |
Fuel products | ||
Inventory [Line Items] | ||
Total inventory | $ 31,588 | $ 24,236 |
Segment Information - Segment Results (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Revenues: | ||||
Fuel | $ 947,558 | $ 1,031,146 | $ 2,588,297 | $ 3,159,399 |
Nonfuel | 525,516 | 474,646 | 1,485,686 | 1,330,786 |
Rent and royalties from franchisees | 4,529 | 3,201 | 13,135 | 9,392 |
Total revenues | 1,477,603 | 1,508,993 | 4,087,118 | 4,499,577 |
Site level gross margin in excess of site level operating expenses | 147,212 | 129,265 | 387,832 | 385,640 |
Selling, general and administrative | 34,812 | 29,760 | 101,787 | 87,438 |
Real estate rent | 66,573 | 60,616 | 194,838 | 169,528 |
Depreciation and amortization | 22,698 | 17,445 | 64,545 | 53,086 |
Income from operations | 23,129 | 21,444 | 26,662 | 75,588 |
Acquisition costs | 225 | 1,755 | 2,286 | 3,296 |
Interest expense, net | 7,200 | 5,042 | 20,761 | 16,461 |
Income from equity investees | 1,534 | 1,336 | 3,572 | 3,156 |
Loss on extinguishment of debt | 0 | 10,502 | ||
Income before income taxes | 17,238 | 15,983 | 7,187 | 48,485 |
Provision for income taxes | 6,263 | 6,157 | 2,571 | 19,158 |
Net income | 10,975 | 9,826 | 4,616 | 29,327 |
Less net income for noncontrolling interests | 77 | 0 | 141 | 0 |
Net income attributable to common shareholders | 10,898 | 9,826 | 4,475 | 29,327 |
Operating Segments | Travel centers | ||||
Revenues: | ||||
Fuel | 808,366 | 943,291 | 2,222,962 | 2,976,528 |
Nonfuel | 434,712 | 431,318 | 1,248,533 | 1,234,468 |
Rent and royalties from franchisees | 3,238 | 3,201 | 10,556 | 9,392 |
Total revenues | 1,246,316 | 1,377,810 | 3,482,051 | 4,220,388 |
Site level gross margin in excess of site level operating expenses | 131,866 | 121,359 | 353,645 | 371,009 |
Operating Segments | Convenience stores | ||||
Revenues: | ||||
Fuel | 119,375 | 69,733 | 311,199 | 134,600 |
Nonfuel | 81,691 | 43,082 | 220,562 | 95,678 |
Rent and royalties from franchisees | 58 | 0 | 249 | 0 |
Total revenues | 201,124 | 112,815 | 532,010 | 230,278 |
Site level gross margin in excess of site level operating expenses | 12,249 | 7,421 | 27,188 | 12,450 |
Corporate and other | ||||
Revenues: | ||||
Fuel | 19,817 | 18,122 | 54,136 | 48,271 |
Nonfuel | 9,113 | 246 | 16,591 | 640 |
Rent and royalties from franchisees | 1,233 | 0 | 2,330 | 0 |
Total revenues | 30,163 | 18,368 | 73,057 | 48,911 |
Site level gross margin in excess of site level operating expenses | 3,097 | 485 | 6,999 | 2,181 |
Selling, general and administrative | 34,812 | 29,760 | 101,787 | 87,438 |
Real estate rent | 66,573 | 60,616 | 194,838 | 169,528 |
Depreciation and amortization | 22,698 | 17,445 | 64,545 | 53,086 |
Acquisition costs | 225 | 1,755 | 2,286 | 3,296 |
Interest expense, net | 7,200 | 5,042 | 20,761 | 16,461 |
Income from equity investees | 1,534 | 1,336 | 3,572 | 3,156 |
Loss on extinguishment of debt | 10,502 | |||
Provision for income taxes | $ 6,263 | $ 6,157 | $ 2,571 | $ 19,158 |
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