Net Loss of $7.2 Million and Net Loss Per
Share of Common Stock Attributable to Common Stockholders of $0.42
for the 2020 Fourth Quarter
Adjusted EBITDA Increased 36.1% for the 2020
Fourth Quarter Over Prior Year Period
Adjusted EBITDAR Increased 9.6% for the 2020
Fourth Quarter Over Prior Year Period
TravelCenters of America Inc. (Nasdaq: TA) today announced
financial results for the three months and year ended December 31,
2020.
Jonathan M. Pertchik, TA's CEO, made the following statement
regarding the 2020 fourth quarter results:
"The COVID-19 pandemic continues to have an extensive impact on
demand and our operations; however, through our mission to 'Return
every traveler to the road better than they came', the early
effectiveness of our Transformation Plan and our discipline around
managing expenses, we were able to deliver improved operating
results in the fourth quarter. We reduced our adjusted net loss by
$2.1 million and posted a $7.2 million, or 36.1%, improvement in
adjusted EBITDA and a $7.9 million, or 9.6%, improvement in
adjusted EBITDAR over the prior year fourth quarter.
"Our continued focus on our fleet customers drove a 16.2%
increase in diesel fuel sales volume over the prior year fourth
quarter, although our adjusted fuel gross margin, which excludes
the federal biodiesel blenders' tax credit recognized during 2020
and December 2019, was down 8.8% due to lower gasoline sales volume
as a result of reduced four wheel traffic and low volatility in the
diesel fuel wholesale market, which unfavorably impacted fuel gross
margin per gallon. Additionally, the 2020 fourth quarter was
impacted by diesel fuel gross margin market volatility and
headwinds which also impacted the quarter results, and may continue
to create challenges going forward. Nonetheless, our enhanced
leadership has demonstrated its ability to effectively execute
through challenging times caused by COVID-19 pandemic.
"Total nonfuel revenues decreased 1.0% over the prior year
period driven almost entirely by a decline in revenues at our full
service restaurants, many of which remain closed due to
governmental mandates and our own precautions taken in response to
the COVID-19 pandemic. Excluding full service restaurants, total
nonfuel revenues improved 7.1% over the prior year due to solid
improvements in our store and retail services and truck service
departments, as well as a significant improvement in revenues from
diesel exhaust fluid. Our sound discipline in managing expenses,
resulted in decreases of 8.7% and 4.5% in site level operating
expense and selling, general and administrative expense,
respectively, were primary factors in delivering improved quarter
over quarter results.
"Looking ahead, while fuel gross margin headwinds may persist,
we are extremely excited about our 2021 capital expenditures plans
that focus on both remediation and growth on top of the operational
improvements we have implemented. We expect to target a 15% to 20%
cash on cash return for those capital expenditures related to
growth initiatives. Equally as exciting are our burgeoning plans in
the area of alternative energy, where we are moving toward
onboarding dedicated leadership and finalizing a clear strategy
going forward that we expect may include meaningful collaborations
and ventures. This is a challenging, yet exciting and opportune
time at TA."
Reconciliations to GAAP:
Adjusted net loss, adjusted net loss per share of common stock
attributable to common stockholders, adjusted fuel gross margin,
adjusted fuel gross margin per gallon, adjusted fuel gross margin
and nonfuel revenues, EBITDA, adjusted EBITDA, adjusted EBITDAR and
adjusted EBITDAR margin are non-GAAP financial measures. The U.S.
generally accepted accounting principles, or GAAP, financial
measures that are most directly comparable to the non-GAAP measures
disclosed herein are included in the supplemental tables below.
Fourth Quarter 2020 Highlights:
- Cash and cash equivalents of $483.2 million and availability
under TA's revolving credit facility of $70.0 million for total
liquidity of $553.2 million as of December 31, 2020.
- The following table presents detailed results for TA's fuel
sales for the 2020 and 2019 fourth quarters.
(in thousands, except per gallon
amounts)
Three Months Ended
December 31,
2020
2019
Change
Fuel sales volume (gallons):
Diesel fuel
492,674
423,943
16.2
%
Gasoline
63,246
73,259
(13.7)
%
Total fuel sales volume
555,920
497,202
11.8
%
Fuel gross margin
$
79,374
$
147,691
(46.3)
%
Adjusted fuel gross margin(1)
70,641
77,462
(8.8)
%
Fuel gross margin per gallon
$
0.143
$
0.297
(51.9)
%
Adjusted fuel gross margin per
gallon(1)
0.127
0.156
(18.6)
%
(1)
In December 2019, the U.S. government
retroactively reinstated the federal biodiesel blenders' tax credit
for 2018 and 2019. The 2020 and 2019 fourth quarter amounts exclude
$8.7 million and $70.2 million, respectively, of benefits
recognized from the federal biodiesel blenders' tax credit. See the
reconciliations from fuel gross margin to adjusted fuel gross
margin and fuel gross margin per gallon to adjusted fuel gross
margin per gallon in the supplemental tables below.
- The following table presents detailed results for TA's nonfuel
revenues for the 2020 and 2019 fourth quarters.
(in thousands)
Three Months Ended
December 31,
2020
2019
Change
Nonfuel revenues:
Store and retail services
$
171,346
$
161,237
6.3
%
Truck service
166,263
153,147
8.6
%
Restaurant
75,156
107,951
(30.4)
%
Diesel exhaust fluid
29,979
24,767
21.0
%
Total nonfuel revenues
$
442,744
$
447,102
(1.0)
%
Nonfuel gross margin
$
270,137
$
274,035
(1.4)
%
Nonfuel gross margin percentage
61.0
%
61.3
%
(30)
pts
- Adjusted fuel gross margin and nonfuel revenues of $513.4
million decreased $11.2 million, or 2.1%, as compared to the prior
year period.
- Net loss of $7.2 million decreased $50.3 million, or 116.6%,
and adjusted net loss of $5.1 million improved $2.1 million, or
29.4%, as compared to the prior year period.
- Adjusted EBITDA of $27.0 million increased $7.2 million, or
36.1%, as compared to the prior year period.
- Adjusted EBITDAR of $90.9 million increased $7.9 million, or
9.6%, as compared to the prior year period.
- Adjusted EBITDAR margin increased to 17.7%, or 190 basis
points, from 15.8% for the prior year period.
Term Loan Facility
On December 14, 2020, TA entered into a $200.0 million term loan
facility, or the Term Loan Facility, which is secured by a pledge
of all the equity interests of substantially all of TA's wholly
owned subsidiaries and a pledge of substantially all of TA's other
assets and the assets of such wholly-owned subsidiaries. TA expects
to use the net proceeds from the Term Loan Facility for general
business purposes, including the funding of deferred capital
expenditures, updates to key information technology infrastructure
and growth initiatives consistent with its Transformation Plan, as
defined below.
QSL Business Sale
TA has entered an agreement to sell its Quaker Steak & Lube,
or QSL, business, which includes 41 of its standalone restaurants,
for approximately $5.0 million, excluding costs to sell and certain
closing adjustments. As of December 31, 2020, TA classified the QSL
business as held for sale, and as a result, recorded an impairment
charge of $13.7 million in the 2020 fourth quarter. This sale is
expected to close during the 2021 first quarter; however, it is
subject to certain conditions. Accordingly, TA cannot be certain
that it will complete this sale, that this sale will not be delayed
or that the terms will not change.
Growth and Cost Control Strategies
TA has commenced numerous initiatives across its organization
under the Transformation Plan, for the purpose of expanding its
travel center network, improving and enhancing operational
efficiencies and profitability and in support of its core mission
to "Return every traveler to the road better than they came." TA
believes these and certain other initiatives will expand its
franchise base, increase diesel fuel and gasoline gross margin and
fuel sales volume, increase market share in the truck service
industry, improve merchandising and gross margin in store and
retail services and improve operating effectiveness in its food
service offerings while focusing on opportunities to continue to
control costs in field operations.
On April 30, 2020, TA committed to and initiated the
Reorganization Plan to improve the efficiency of its operations. As
part of the Reorganization Plan, TA reduced its headcount and
eliminated certain positions, which TA expects to result in
approximately $13.1 million of net annual savings in selling,
general and administrative expense. In addition, TA has made
certain changes in its leadership and their roles and created both
a corporate development team and a procurement team. The
non-recurring costs of the Reorganization Plan were $4.3 million,
which were comprised primarily of severance, outplacement services,
stock based compensation expense associated with the accelerated
vesting of previously granted stock awards for certain employees
and fees for recruitment of certain executive positions. These
costs, along with additional separation costs of $1.1 million
recognized in the fourth quarter of 2020, were recognized in
selling, general and administrative expense in TA's consolidated
statements of operations and comprehensive (loss) income during the
year ended December 31, 2020.
During the 2020 second quarter, TA commenced a strategic
transformation consisting of numerous initiatives across its
organization, including the Reorganization Plan, to enhance
operations, strengthen its financial position, reduce costs and
expand its nationwide network by increasing its franchising
business, or the Transformation Plan. These initiatives included
significant leadership appointments of qualified candidates who
bring new and valuable experiences as well as initiative, critical
skills and new visions and approaches to TA's business. Key among
these initiatives was the creation of a centralized procurement
group to drive economies of scale in pricing, increased leverage in
vendor negotiations and ultimately lead to substantial purchasing
savings and a streamlined operation. Other key initiatives are
focused in areas of liquidity, identifying opportunities for
realizing both costs savings and increased revenues, including
merchandising in the convenience stores, internal distribution of
merchandise delivery, truck repair training and staffing and
information technology systems.
Since the beginning of 2019, TA has entered into franchise
agreements covering 33 travel centers to be operated under TA's
travel center brand names, including 21 new agreements in 2020.
Four of these franchised travel centers began operations during
2019, 10 began operations during 2020, one began operations thus
far in 2021 and TA anticipates the remaining 18 franchised travel
centers will begin operations by the end of the 2022 first
quarter.
As previously disclosed, on October 28, 2019, TA entered into a
multi unit franchise agreement with IHOP Franchisor LLC, a
subsidiary of IHOPĀ®, or IHOP, to rebrand and convert up to 94 of
its full service restaurants to IHOP restaurants. TA had opened one
location before the COVID-19 pandemic and is now proceeding with
the conversion of five additional locations at a cost of
approximately $1.4 million per location, following a period of
delay due to the COVID-19 pandemic in 2020. In addition, TA is
carefully evaluating other opportunities to drive value within its
full service restaurants.
TA's capital expenditures plan for 2021 contemplates aggregate
investments in the range of $175.0 million to $200.0 million
targeted towards improving and growing TA's core travel center
business. The 2021 capital expenditures plan includes projects to
upgrade TA's travel center locations and technology systems
infrastructure as well as growth initiatives. Approximately half of
TA's capital expenditure plan for 2021 is focused on growth
initiatives that meet or exceed TA's 15% to 20% cash on cash return
hurdle.
Importantly, TA is committed to embracing environmentally
friendly sources of energy and is currently planning on expanding
its biodiesel blending capabilities, as well as availability of
diesel exhaust fluid at the pump. Moreover, TA intends to onboard
dedicated internal resources, as well as create relationships
within the supply, storage and distribution chain for non-fossil
fuels. TA believes its large, irreplaceably well located sites and
its focus as a pure supplier provide a unique opportunity to make
both fossil and non-fossil fuels available as it determines the
appropriate timeframes to do so.
Conference Call
On Friday, February 26, 2021, at 10:00 a.m. Eastern time, TA
will host a conference call to discuss its financial results and
other activities for the three months and year ended December 31,
2020. Following management's remarks, there will be a question and
answer period.
The conference call telephone number is 877-329-4614.
Participants calling from outside the United States and Canada
should dial 412-317-5437. No pass code is necessary to access the
call from either number. Participants should dial in about 15
minutes prior to the scheduled start of the call. A replay of the
conference call will be available for about a week after the call.
To hear the replay, dial 412-317-0088. The replay pass code is
10150721.
A live audio webcast of the conference call will also be
available in a listen only mode on TA's website at
www.ta-petro.com. To access the webcast, participants should visit
TA's website about five minutes before the call. The archived
webcast will be available for replay on TA's website for about one
week after the call. The transcription, recording and
retransmission in any way of TA's fourth quarter conference call is
strictly prohibited without the prior written consent of TA.
The Company's website is not incorporated as part of this press
release.
About TravelCenters of America Inc.
TA's nationwide business includes travel centers located in 44
U.S. states and in Canada, standalone truck service facilities
located in three states and standalone restaurants located in 12
states. TA's travel centers operate under the "TravelCenters of
America," "TA," "TA Express," "Petro Stopping Centers" and "Petro"
brand names and offer diesel fuel and gasoline, restaurants, truck
repair services, travel/convenience stores and other services
designed to provide attractive and efficient travel experiences to
professional drivers and other motorists. TA's standalone truck
service facilities operate under the "TA Truck Service" brand name.
TA's standalone restaurants operate principally under the "Quaker
Steak & Lube," or QSL, brand name.
TRAVELCENTERS OF AMERICA INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
(in thousands, except per share
amounts)
Three Months Ended
December 31,
Year Ended December
31,
2020
2019
2020
2019
Revenues:
Fuel
$
840,104
$
1,071,577
$
3,084,323
$
4,247,069
Nonfuel
442,744
447,102
1,747,418
1,856,147
Rent and royalties from franchisees
3,814
3,532
14,296
14,143
Total revenues
1,286,662
1,522,211
4,846,037
6,117,359
Cost of goods sold (excluding
depreciation):
Fuel
760,730
923,886
2,750,971
3,868,351
Nonfuel
172,607
173,067
685,391
726,418
Total cost of goods sold
933,337
1,096,953
3,436,362
4,594,769
Site level operating expense
214,379
234,705
870,329
943,810
Selling, general and administrative
expense
36,867
38,624
145,038
155,474
Real estate rent expense
63,850
63,668
255,743
257,762
Depreciation and amortization expense
38,676
28,142
127,789
100,260
(Loss) income from operations
(447
)
60,119
10,776
65,284
Interest expense, net
8,415
7,094
30,479
28,356
Other expense (income), net
270
(1,250
)
1,379
(880
)
(Loss) income before income
taxes
(9,132
)
54,275
(21,082
)
37,808
Benefit (provision) for income taxes
1,956
(11,158
)
6,178
(4,339
)
Net (loss) income
(7,176
)
43,117
(14,904
)
33,469
Less: net (loss) income for noncontrolling
interest
(1,109
)
35
(1,005
)
124
Net (loss) income attributable to
common stockholders
$
(6,067
)
$
43,082
$
(13,899
)
$
33,345
Net (loss) income per share of common
stock attributable to common stockholders:
Basic and diluted
$
(0.42
)
$
5.29
$
(1.23
)
$
4.12
Weighted average vested shares of common
shares
14,151
7,821
10,961
7,783
Weighted average unvested shares of common
shares
304
326
344
316
These financial statements should be read in
conjunction with TA's Annual Report on Form 10-K for the year ended
December 31, 2020, to be filed with the U.S. Securities and
Exchange Commission.
TRAVELCENTERS OF AMERICA INC. RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES (in thousands, unless indicated
otherwise)
TA believes the non-GAAP financial measures presented in the
tables below are meaningful supplemental disclosures. Management
uses these measures in developing internal budgets and forecasts
and analyzing TA's performance and believes that they may help
investors gain a better understanding of changes in TA's operating
results and its ability to pay rent or service debt when due, make
capital expenditures and expand its business. These non-GAAP
financial measures also may help investors to make comparisons
between TA and other companies and to make comparisons of TA's
financial and operating results between periods.
The non-GAAP financial measures TA presents should not be
considered as alternatives to net (loss) income attributable to
common stockholders, net (loss) income, (loss) income from
operations, operating margin or net (loss) income per share of
common stock attributable to common stockholders as an indicator of
TA's operating performance or as a measure of TA's liquidity. Also,
the non-GAAP financial measures TA presents may not be comparable
to similarly titled amounts calculated by other companies.
TA believes that adjusted net loss, adjusted net loss per share
of common stock attributable to common stockholders, adjusted fuel
gross margin and nonfuel revenues, EBITDA, adjusted EBITDA,
adjusted fuel gross margin, and adjusted fuel gross margin per
gallon are meaningful disclosures that may help investors to better
understand TA's financial performance by providing financial
information that represents the operating results of TA's
operations without the effects of items that do not result directly
from TA's normal recurring operations and may allow investors to
better compare TA's performance between periods and to the
performance of other companies. TA calculates EBITDA as net (loss)
income before interest, income taxes and depreciation and
amortization expense, as shown below. TA calculates adjusted EBITDA
by excluding items that it considers not to be normal, recurring,
cash operating expenses or gains or losses.
In addition, TA believes that, because it leases a majority of
its travel centers, presenting adjusted EBITDAR and adjusted
EBITDAR margin may help investors compare the value of TA against
companies that own and finance ownership of their properties with
debt financing, since these measures eliminate the effects of
variability in leasing methods and capital structures. These
measures may also help investors evaluate TA's valuation if it
owned its leased properties and financed that ownership with debt,
in which case the interest expense TA incurred for that debt
financing would be added back when calculating EBITDA. Adjusted
EBITDAR and adjusted EBITDAR margin are presented solely as
valuation measures and should not be viewed as measures of overall
operating performance or considered in isolation or as an
alternative to net (loss) income because they exclude the real
estate rent expense associated with TA's leases and they are
presented for the limited purposes referenced herein. TA calculates
EBITDAR as net (loss) income before interest, income taxes, real
estate rent expense and depreciation and amortization expense and
adjusted EBITDAR by excluding items that it considers not to be
normal, recurring, cash operating expenses or gains or losses. TA
calculates adjusted EBITDAR margin as adjusted EBITDAR as a
percentage of adjusted fuel gross margin and nonfuel revenues.
TA excluded the federal biodiesel blenders' tax credit when
calculating its adjusted non-GAAP financial measures. In December
2019, the U.S. government retroactively reinstated the federal
biodiesel blenders' tax credit for 2018 and 2019, as well as
approved the federal biodiesel blenders' tax credit through 2022.
As a result, adjusted non-GAAP financial measures for the three
months and year ended December 31, 2019, do not include the benefit
of the federal biodiesel blenders' tax credit and excluding the
benefit for the three months and year ended December 31 2020,
allows investors to better compare TA's performance between
periods.
TA believes that net (loss) income is the most directly
comparable GAAP financial measure to adjusted net loss, EBITDA,
adjusted EBITDA and adjusted EBITDAR; net (loss) income per share
of common stock attributable to common stockholders is the most
directly comparable GAAP financial measure to adjusted net loss per
share of common stock attributable to common stockholders; fuel
gross margin and nonfuel revenues are the most directly comparable
GAAP financial measure to adjusted fuel gross margin and nonfuel
revenues; and that fuel gross margin and fuel gross margin per
gallon are the most directly comparable GAAP financial measures to
adjusted fuel gross margin and adjusted fuel gross margin per
gallon, respectively.
TRAVELCENTERS OF AMERICA INC. RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES (in thousands, unless indicated
otherwise)
The following tables present the reconciliations of the non-GAAP
financial measures to the respective most directly comparable GAAP
financial measures for the three months and years ended December
31, 2020 and 2019.
Three Months Ended
December 31,
Year Ended December
31,
Calculation of adjusted net loss:
2020
2019
2020
2019
Net (loss) income
$
(7,176
)
$
43,117
$
(14,904
)
$
33,469
Add: QSL impairment(1)
13,715
ā
13,715
ā
Add: Asset write offs(2)
ā
ā
8,906
ā
Add: Reorganization Plan and other
separation costs(3)
1,076
ā
5,364
ā
Add: Field employee bonus expenses(4)
ā
ā
3,769
ā
Add: Goodwill impairment(5)
ā
ā
3,046
ā
Add: Executive officer retirement
agreement expenses(6)
ā
ā
2,109
ā
Add: Impairment of property and
equipment(7)
ā
2,369
6,574
2,369
Add: Impairment of operating lease
assets(7)
ā
579
1,262
579
Add: Costs of SVC transactions(8)
ā
ā
ā
458
Less: Loyalty award expiration(9)
ā
ā
ā
(2,911
)
Less: Employee retention tax
credit(10)
(3,268
)
ā
(3,268
)
ā
Less: Federal biodiesel blenders' tax
credit(11)
(8,733
)
(70,229
)
(29,521
)
(70,229
)
(Less) add: Net (loss) income tax
impact(12)
(703
)
16,954
(3,013
)
17,572
Adjusted net loss
$
(5,089
)
$
(7,210
)
$
(5,961
)
$
(18,693
)
Calculation of adjusted net
loss per share of common stock attributable to common
stockholders
Three Months Ended
December 31,
Year Ended December
31,
(basic and diluted):
2020
2019
2020
2019
Net (loss) income per share of common
stock attributable to common stockholders (basic and diluted)
$
(0.42
)
$
5.29
$
(1.23
)
$
4.12
Add: QSL impairment(1)
0.95
ā
1.21
ā
Add: Asset write offs(2)
ā
ā
0.79
ā
Add: Reorganization Plan and other
separation costs(3)
0.07
ā
0.47
ā
Add: Field employee bonus expenses(4)
ā
ā
0.33
ā
Add: Goodwill impairment(5)
ā
ā
0.27
ā
Add: Executive officer retirement
agreement expenses(6)
ā
ā
0.19
ā
Add: Impairment of property and
equipment(7)
ā
0.29
0.58
0.29
Add: Impairment of operating lease
assets(7)
ā
0.07
0.11
0.07
Add: Costs of SVC transactions(8)
ā
ā
ā
0.06
Less: Loyalty award expiration(9)
ā
ā
ā
(0.36
)
Less: Employee retention tax
credit(10)
(0.23
)
ā
(0.29
)
ā
Less: Federal biodiesel blenders' tax
credit(11)
(0.60
)
(8.62
)
(2.61
)
(8.67
)
(Less) add: Net (loss) income tax
impact(12)
(0.05
)
2.08
(0.26
)
2.17
Adjusted net loss per share of common
stock attributable to common stockholders (basic and diluted)
$
(0.28
)
$
(0.89
)
$
(0.44
)
$
(2.32
)
TRAVELCENTERS OF AMERICA INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(in thousands, unless indicated
otherwise)
Calculation of adjusted fuel gross
margin
Three Months Ended
December 31,
Year Ended December
31,
and nonfuel revenues:
2020
2019
2020
2019
Fuel gross margin
$
79,374
$
147,691
$
333,352
$
378,718
Nonfuel revenues
442,744
447,102
1,747,418
1,856,147
Total fuel gross margin and nonfuel
revenues
522,118
594,793
2,080,770
2,234,865
Less: Loyalty award expiration(9)
ā
ā
ā
(2,911
)
Less: Federal biodiesel blenders' tax
credit(11)
(8,733
)
(70,229
)
(29,521
)
(70,229
)
Adjusted fuel gross margin and nonfuel
revenues
$
513,385
$
524,564
$
2,051,249
$
2,161,725
Calculation of EBITDA, adjusted EBITDA
and
Three Months Ended
December 31,
Year Ended December
31,
adjusted EBITDAR:
2020
2019
2020
2019
Net (loss) income
$
(7,176
)
$
43,117
$
(14,904
)
$
33,469
(Less) add: (Benefit) provision for income
taxes
(1,956
)
11,158
(6,178
)
4,339
Add: Depreciation and amortization
expense
38,676
28,142
127,789
100,260
Add: Interest expense, net
8,415
7,094
30,479
28,356
EBITDA
37,959
89,511
137,186
166,424
Add: Reorganization Plan and other
separation costs(3)
1,076
ā
5,364
ā
Add: Field employee bonus expenses(4)
ā
ā
3,769
ā
Add: Executive officer retirement
agreement expenses(6)
ā
ā
2,109
ā
Add: Impairment of operating lease
assets(7)
ā
579
1,262
579
Add: Costs of SVC transactions(8)
ā
ā
ā
458
Less: Loyalty award expiration(9)
ā
ā
ā
(2,911
)
Less: Employee retention tax
credit(10)
(3,268
)
ā
(3,268
)
ā
Less: Federal biodiesel blenders' tax
credit(11)
(8,733
)
(70,229
)
(29,521
)
(70,229
)
Adjusted EBITDA
27,034
19,861
116,901
94,321
Add: Real estate rent expense
63,850
63,668
255,743
257,762
Less: Impairment of operating lease
assets(7)
ā
(579
)
(1,262
)
(579
)
Adjusted EBITDAR
$
90,884
$
82,950
$
371,382
$
351,504
Three Months Ended
December 31,
Year Ended December
31,
Calculation of operating margin:
2020
2019
2020
2019
Total revenues
$
1,286,662
$
1,522,211
$
4,846,037
$
6,117,359
Operating (loss) income
(447
)
60,119
10,776
65,284
Operating margin
NM
3.9
%
0.2
%
1.1
%
TRAVELCENTERS OF AMERICA INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(in thousands, unless indicated
otherwise)
Three Months Ended
December 31,
Year Ended December
31,
Calculation of adjusted EBITDAR margin:
2020
2019
2020
2019
Adjusted EBITDAR(13)
$
90,884
$
82,950
$
371,382
$
351,504
Adjusted fuel gross margin and nonfuel
revenues(13)
513,385
524,564
2,051,249
2,161,725
Adjusted EBITDAR margin
17.7
%
15.8
%
18.1
%
16.3
%
Calculation of adjusted fuel
gross margin
Three Months Ended
December 31,
Year Ended December
31,
and adjusted fuel gross margin per gallon:
2020
2019
2020
2019
Fuel gross margin
$
79,374
$
147,691
$
333,352
$
378,718
Less: Loyalty award expiration(9)
ā
ā
ā
(2,840
)
Less: Federal biodiesel blenders' tax
credit(11)
(8,733
)
(70,229
)
(29,521
)
(70,229
)
Adjusted fuel gross margin
$
70,641
$
77,462
$
303,831
$
305,649
Fuel gross margin per gallon
$
0.143
$
0.297
$
0.161
$
0.191
Less: Loyalty award expiration(9)
ā
ā
ā
(0.001
)
Less: Federal biodiesel blenders' tax
credit(11)
(0.016
)
(0.141
)
(0.014
)
(0.035
)
Adjusted fuel gross margin per gallon
$
0.127
$
0.156
$
0.147
$
0.155
(1)
QSL Impairment. TA is party to an
agreement for it to sell the QSL business for approximately $5.0
million, excluding costs to sell and certain closing adjustments.
TA has classified its QSL business as held for sale as of
December 31, 2020. During the three months and year ended
December 31, 2020, TA recorded an impairment charge of $13.7
million relating to its QSL business, which is included in
depreciation and amortization expense in TA's consolidated
statement of operations and comprehensive (loss) income.
(2)
Asset Write Offs. During the year ended
December 31, 2020, TA wrote off $8.1 million and $0.8 million
related to programs that were canceled and intangibles relating to
three QSL franchises that closed in April 2020, respectively. These
amounts were included in depreciation and amortization expense in
TA's consolidated statements of operations and comprehensive (loss)
income.
(3)
Reorganization Plan and Other Separation
Costs. On April 30, 2020, TA commenced a company wide
Reorganization Plan. During the three months and year ended
December 31, 2020, TA recognized $1.1 million and $5.4 million,
respectively, of costs related to the Reorganization Plan and other
separation agreements, which were included in selling, general and
administrative expense in TA's consolidated statements of
operations and comprehensive (loss) income.
(4)
Field Employee Bonus Expense. In March and
April 2020, TA paid cash bonuses to certain employees who continued
to work at its locations during the COVID-19 pandemic. These
bonuses resulted in additional compensation expense of $3.8 million
for the year ended December 31, 2020, which were included in site
level operating expense in TA's consolidated statements of
operations and comprehensive (loss) income.
(5)
Goodwill Impairment. During the year ended
December 31, 2020, TA recognized a goodwill impairment charge of
$3.0 million with respect to its QSL reporting unit, which was
recognized in depreciation and amortization expense in TA's
consolidated statements of operations and comprehensive (loss)
income.
(6)
Executive Officer Retirement Agreement
Expenses. TA agreed to accelerate the vesting of previously granted
stock awards and make cash payments as part of TA's retirement and
separation agreements with certain former executive officers. The
accelerations and cash payments resulted in additional compensation
expense of $2.1 million for the year ended December 31, 2020, which
were included in selling, general and administrative expense in
TA's consolidated statements of operations and comprehensive (loss)
income.
(7)
Impairment of Property and Equipment and
Operating Lease Assets. During the year ended December 31, 2020, TA
recognized $6.6 million and $1.3 million of impairment charges to
property and equipment and operating lease assets, respectively,
related to certain standalone restaurants. During the three months
and year ended December 31, 2019, TA recognized $2.4 million and
$0.6 million of impairment charges to property and equipment and
operating lease assets, respectively, related to certain standalone
restaurants. The impairment charges were recognized in depreciation
and amortization expense and real estate rent expense,
respectively, in TA's consolidated statements of operations and
comprehensive (loss) income.
(8)
Costs of SVC Transactions. In January
2019, TA entered transaction agreements with SVC pursuant to which
they amended their leases. During the year ended December 31, 2019,
TA incurred $0.5 million of expenses associated with amendments of
these leases. These expenses were included in selling, general and
administrative expense in TA's consolidated statements of
operations and comprehensive (loss) income.
(9)
Loyalty Award Expiration. During the year
ended December 31, 2019, TA introduced a new customer loyalty
program, UltraONE 2.0. As a result of introducing the new customer
loyalty program, certain loyalty awards earned under the program
now expire 10 days after issuance for all loyalty members. This
update resulted in the immediate expiration of certain loyalty
awards upon adoption of the new customer loyalty program,
generating $2.9 million of additional revenue during the year ended
December 31, 2019, $2.8 million of which was recognized to fuel
revenues and $0.1 million to nonfuel revenues in TA's consolidated
statements of operations and comprehensive (loss) income.
(10)
Employee Retention Tax Credit. On March
27, 2020, the U.S. government enacted the Coronavirus Aid, Relief
and Economic Security Act, or the CARES Act, as a response to the
economic uncertainty resulting from the COVID-19 pandemic. The
CARES Act, among other things, includes provisions relating to
refundable payroll tax credits. As a result, TA recognized $3.3
million for the three months and year ended December 31, 2020,
which was recognized as a reduction to site level operating expense
in TA's consolidated statements of operations and comprehensive
(loss) income.
(11)
Federal Biodiesel Blenders' Tax Credit. In
December 2019, the U.S. government retroactively reinstated the
federal biodiesel blenders' tax credit for 2018 and 2019, as well
as approved the federal biodiesel blenders' tax credit through
2022. As a result, TA recognized $8.7 million and $70.2 million for
the three months ended December 31, 2020 and 2019, respectively,
and $29.5 million and $70.2 million for the years ended December
31, 2020 and 2019, respectively, which were recognized as a
reduction to fuel cost of goods sold in TA's consolidated
statements of operations and comprehensive (loss) income.
(12)
Net (Loss) Income Tax Impact. TA
calculated the income tax impact of the adjustments described above
by using its estimated statutory rate of 25.2% for each of the
three months and years ended December 31, 2020 and 2019.
(13)
Reconciliations from net (loss) income and
fuel gross margin and nonfuel revenues, the financial measures
determined in accordance with GAAP to the non-GAAP financial
measures disclosed herein, are included in the supplemental tables
above.
TRAVELCENTERS OF AMERICA INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
(in thousands)
December 31,
2020
2019
Assets:
Current assets:
Cash and cash equivalents
$
483,151
$
17,206
Accounts receivable, net
94,429
173,496
Inventory
172,830
196,611
Other current assets
35,506
32,456
Total current assets
785,916
419,769
Property and equipment, net
801,789
868,503
Operating lease assets
1,734,883
1,817,998
Goodwill
22,213
25,259
Intangible assets, net
11,529
20,707
Other noncurrent assets
87,530
78,659
Total assets
$
3,443,860
$
3,230,895
Liabilities and Stockholders'
Equity:
Current liabilities:
Accounts payable
$
158,075
$
147,440
Current operating lease liabilities
111,255
104,070
Other current liabilities
175,867
138,455
Total current liabilities
445,197
389,965
Long term debt, net
525,397
329,321
Noncurrent operating lease liabilities
1,763,166
1,880,188
Other noncurrent liabilities
69,121
58,885
Total liabilities
2,802,881
2,658,359
Stockholders' equity (14,574 and 8,307
shares of common stock outstanding as of December 31, 2020 and
2019, respectively)
640,979
572,536
Total liabilities and stockholders'
equity
$
3,443,860
$
3,230,895
These financial statements should be read in
conjunction with TA's Annual Report on Form 10-K for the year ended
December 31, 2020, to be filed with the U.S. Securities and
Exchange Commission.
Warning Concerning
Forward-Looking Statements
This press release contains statements that constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and other securities laws.
Whenever TA uses words such as "believe," "expect," "anticipate,"
"intend," "plan," "estimate," "will," "may" and negatives or
derivatives of these or similar expressions, TA is making
forward-looking statements. These forward-looking statements are
based upon TA's present intent, beliefs or expectations, but
forward-looking statements are not guaranteed to occur and may not
occur. Actual results may differ materially from those contained in
or implied by TA's forward-looking statements. Forward-looking
statements involve known and unknown risks, uncertainties and other
factors, some of which are beyond TA's control. Among others, the
forward-looking statements which appear in this press release that
may not occur include:
- Statements about increased and improved operating results may
imply that TA will realize similar or better results in the future
and that TA's business may be profitable in the future. TA operates
in a highly competitive industry and its business is subject to
various market and other risks and challenges, many of which are
beyond its control, including the COVID-19 pandemic. As a result,
TA may not be able to realize similar or better results in the
future and it may fail to be profitable in the future for these or
other reasons. Since TA became publicly traded in 2007, TA's
operations have generated losses and only occasionally generated
profits;
- Statements about TA commencing numerous initiatives which it
believes will improve and enhance its operational efficiencies and
profitability, increase diesel fuel and gasoline gross margin and
fuel sales volume, increase market share in the truck service
industry, improve merchandising and gross margin in store and
retail services, improve operating effectiveness in its full
service restaurants and expand its franchise base. However, TA may
not be able to recognize the improvements to its operating results
that it anticipates. In addition, the costs incurred to complete
the initiatives may cost more than TA anticipates;
- Statements about TAās ability to effectively execute through
challenging times caused by the COVID-19 pandemic may imply TA will
continue to be able to effectively execute during the pandemic and
its aftermath. However, it is uncertain when the pandemic may end
and what its ultimate impact will be on the economy, the travel
center industry and TAās business. As a result, TA may be unable to
effectively execute if the pandemic continues for an extended
duration or worsens;
- Statements about TAās targeted returns on its capital
expenditures. TA may not be able to realize those returns;
- Statements about the expectation that TA will recognize annual
cost savings of approximately $13.1 million as a result of the
Reorganization Plan, as well as certain other cost savings it
realized in the 2020 fourth quarter and its discipline around
managing expenses. However, TA may not realize or maintain these
cost savings;
- Statements about the successful expansion of TA's franchise
business will depend on TA's ability to increase the number of
sites available for franchising, to identify qualified franchisees
and to enter into franchising agreements with those franchisees on
agreeable terms. Further, the success of any franchise arrangements
will depend on the ability of the franchisees to profitably operate
those franchises;
- Statements about TA entering into a multi unit franchise
agreement with IHOP to rebrand and convert up to 94 of its full
service restaurants to IHOP restaurants. TA is only obligated to
convert the initial 20 full service restaurants to IHOP with the
remaining conversions at TA's discretion. TA may fail to convert
those 20 initial restaurants and may determine not to convert some
or all of the remaining 74 restaurants. The timing and costs for
these conversions may exceed TA's expectations and TA may fail to
complete these conversions in accordance with the schedule;
and
- Statements about investing capital into relationships with
companies that supply, distribute or store electric or other
non-fossil fuel, alternative energy resources. TA may decide not to
invest capital into these relationships and these relationships may
not materialize or become beneficial.
The information contained in TA's periodic reports, including
TA's Annual Report on Form 10-K for the year ended December 31,
2020, which has been or will be filed with the U.S. Securities and
Exchange Commission, or SEC, under the caption "Risk Factors," or
elsewhere in those reports, or incorporated therein, identifies
other important factors that could cause differences from TA's
forward-looking statements. TA's filings with the SEC are available
on the SEC's website at www.sec.gov.
You should not place undue reliance upon forward-looking
statements. Except as required by law, TA does not intend to update
or change any forward-looking statement as a result of new
information, future events or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210225006153/en/
Kristin Brown, Director of Investor Relations (617) 796-8251
www.ta-petro.com
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