Net Loss of $5.7 Million Improved $12.8
Million for the 2021 First Quarter Over Prior Year Period
Net Loss Per Share of Common Stock
Attributable to Common Stockholders of $0.40 Improved $1.83 for the
2021 First Quarter Over Prior Year Period
Adjusted EBITDA Increased 106.9% for the
2021 First Quarter Over Prior Year Period
Adjusted EBITDAR Increased 19.5% for the
2021 First Quarter Over Prior Year Period
TravelCenters of America Inc. (Nasdaq: TA) today announced
financial results for the quarter ended March 31, 2021.
Jonathan M. Pertchik, TA's CEO, made the following statement
regarding the 2021 first quarter results:
"Our improved operating results in the first quarter demonstrate
the early progress of our Transformation Plan, despite the
continuing adverse impact of the pandemic on our full service
restaurants and gasoline volumes. We reduced our net loss from
$18.5 million to $5.7 million and more than doubled adjusted EBITDA
from $13.8 million to $28.6 million compared to the prior year
first quarter, with the improvement driven primarily by a $12.4
million increase in nonfuel gross margin and a $9.3 million
reduction in site level operating expense. Our discipline in
rationalizing and managing expenses continues to be a primary
factor in delivering improved results, helping to drive a 230 basis
point improvement in adjusted EBITDAR margin versus the prior year
first quarter.
"While diesel fuel sales volume increased 13.6% over the prior
year first quarter, overall fuel gross margin decreased 5.5%
because of low volatility in the diesel fuel market that began
during the fourth quarter and persisted into early March of 2021 as
well as lower gasoline volume as a result of reduced four wheel
traffic. Total nonfuel revenues increased 5.4% over the prior year
first quarter, driven by significant growth in store and retail
services, truck service and diesel exhaust fluid, or DEF. Excluding
full service restaurants, many of which remain closed due to
governmental mandates and our own precautions and decisions, total
nonfuel revenues increased 12.0% over the prior year first
quarter.
"We continue to move forward with our expansive capital plan,
which focuses on improving the customer experience through remedial
site improvements, reimagined restaurant offerings, information
technology upgrades and increased availability of biodiesel and
DEF. We also recently announced our commitment to sustainability
and alternative energy with the creation of a new business
division, eTA, to serve the changing needs of our customers and
their energy requirements. With eTA we plan to be a leader in the
area of sustainability and alternative energy in the travel center
industry. We were recently awarded a California Energy Commission
grant and are developing collaborative relationships with groups in
both electric and hydrogen vehicles."
Reconciliations to GAAP:
Adjusted net loss, adjusted net loss per share of common stock
attributable to common stockholders, 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.
First Quarter 2021 Highlights:
- Cash and cash equivalents of $520.0 million and availability
under TA's revolving credit facility of $84.3 million for total
liquidity of $604.3 million as of March 31, 2021.
- The following table presents detailed results for TA's fuel
sales for the 2021 and 2020 first quarters.
(in thousands, except per gallon
amounts)
Three Months Ended
March 31,
2021
2020
Change
Fuel sales volume (gallons):
Diesel fuel
487,219
429,022
13.6
%
Gasoline
56,553
59,764
(5.4
)%
Total fuel sales volume
543,772
488,786
11.2
%
Fuel gross margin
$
77,430
$
81,955
(5.5
)%
Fuel gross margin per gallon
$
0.142
$
0.168
(15.5
)%
- The following table presents detailed results for TA's nonfuel
revenues for the 2021 and 2020 first quarters.
(in thousands, except percentages)
Three Months Ended
March 31,
2021
2020
Change
Nonfuel revenues:
Store and retail services
$
171,772
$
151,818
13.1
%
Truck service
171,131
153,967
11.1
%
Restaurant
73,869
94,212
(21.6
)%
Diesel exhaust fluid
31,142
25,010
24.5
%
Total nonfuel revenues
$
447,914
$
425,007
5.4
%
Nonfuel gross margin
$
275,692
$
263,288
4.7
%
Nonfuel gross margin percentage
61.6
%
61.9
%
(30
) pts
- Net loss of $5.7 million improved $12.8 million, or 69.0%, and
adjusted net loss of $5.3 million improved $7.1 million, or 57.5%,
as compared to the prior year period.
- Operating margin increased to 0.4% from negative 1.3% from the
prior year period.
- Adjusted EBITDA of $28.6 million increased $14.8 million, or
106.9%, as compared to the prior year period.
- Adjusted EBITDAR of $92.5 million increased $15.1 million, or
19.5%, as compared to the prior year period.
- Adjusted EBITDAR margin increased to 17.6% from 15.3% for the
prior year period.
QSL Business Sale
On April 21, 2021, TA completed the sale of its Quaker Steak
& Lube, or QSL, business, which includes 41 of its standalone
restaurants, for $5.0 million, excluding costs to sell and certain
closing adjustments.
Growth and Cost Control Strategies
During the 2020 second quarter, TA commenced a strategic
transformation, or its Transformation Plan, consisting of numerous
initiatives across its organization for the purpose of expanding
its travel center network, improving and enhancing operational
efficiencies and profitability, strengthening its financial
position and in support of its core mission to "Return every
traveler to the road better than they came." Among these
initiatives was a corporate restructuring that resulted in
immediate selling, general and administrative expense savings and
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, expanding
TA's franchise base, increasing diesel fuel and gasoline gross
margin and fuel sales volume, increasing market share in the truck
service business, improving merchandising and increasing gross
margin in store and retail services, improving operating
effectiveness in TA's food service offerings and improving
information technology systems, while focusing on opportunities to
rationalize and control costs.
Since the beginning of 2019, TA has entered into franchise
agreements covering 38 travel centers to be operated under its
travel center brand names; four of these franchised travel centers
began operations during 2019, 10 began operations during 2020, one
began operations during the 2021 first quarter, one began
operations in the 2021 second quarter to date and TA expects the
remaining 22 to open by the 2022 second quarter.
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 TA expects will 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 have formed a new business division,
eTA, that will seek to deliver sustainable and alternative energy
to the marketplace and focus on partnering with the public sector,
private companies and customers to facilitate industry
transformation. This business division will extend TA's commitment
to providing the widest range of non-fuel offerings across its
sites. Recent accomplishments include continued expansion of TA's
biodiesel blending capabilities and availability of DEF at the
pump. Moreover, TA has hired a senior leader and has begun to
onboard additional dedicated internal resources, as well as create
relationships within the supply, storage and distribution chain,
with respect to its alternative energy initiative. TA believes its
large, well-located sites and its focus as a pure supplier may
provide TA with the opportunity to make both fossil and,
eventually, non-fossil fuels available and to potentially balance
or adjust its product and service offerings as it may determine and
subject to availability.
Conference Call
On May 4, 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 ended March 31, 2021. 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
10153756.
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 first 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 and standalone truck service facilities
located in three 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.
TRAVELCENTERS OF AMERICA INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
(in thousands, except per share
amounts)
Three Months Ended
March 31,
2021
2020
Revenues:
Fuel
$
1,077,258
$
874,929
Nonfuel
447,914
425,007
Rent and royalties from franchisees
3,924
3,412
Total revenues
1,529,096
1,303,348
Cost of goods sold (excluding
depreciation):
Fuel
999,828
792,974
Nonfuel
172,222
161,719
Total cost of goods sold
1,172,050
954,693
Site level operating expense
227,230
236,564
Selling, general and administrative
expense
35,930
37,228
Real estate rent expense
63,869
63,588
Depreciation and amortization expense
23,829
28,560
Income (loss) from operations
6,188
(17,285
)
Interest expense, net
11,384
7,456
Other expense, net
1,397
541
Loss before income taxes
(6,593
)
(25,282
)
Benefit for income taxes
850
6,741
Net loss
(5,743
)
(18,541
)
Less: net income for noncontrolling
interest
76
20
Net loss attributable to common
stockholders
$
(5,819
)
$
(18,561
)
Net loss per share of common stock
attributable to common stockholders:
Basic and diluted
$
(0.40
)
$
(2.23
)
Weighted average vested shares of common
stock
14,227
7,905
Weighted average unvested shares of common
stock
344
407
These financial statements should be read in
conjunction with TA's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2021, 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 attributable to common
stockholders, net loss, income (loss) from operations, operating
margin, total fuel gross margin and nonfuel revenues or net loss
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, EBITDA and
adjusted EBITDA 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
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 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 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 total fuel
gross margin and nonfuel revenues.
TA believes that net loss is the most directly comparable GAAP
financial measure to adjusted net loss, EBITDA, adjusted EBITDA and
adjusted EBITDAR and net loss 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.
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 ended March 31, 2021 and
2020.
Calculation of adjusted net
loss:
Three Months Ended
March 31,
2021
2020
Net loss
$
(5,743
)
$
(18,541
)
Add: QSL impairment(1)
650
—
Add: Asset write offs(2)
—
5,162
Add: Executive compensation expense(3)
—
1,710
Add: Field employee bonus expense(4)
—
1,388
Less: Net loss tax impact(5)
(164
)
(2,082
)
Adjusted net loss
$
(5,257
)
$
(12,363
)
Calculation of adjusted net loss per
share of common stock attributable to
common stockholders (basic and
diluted):
Three Months Ended
March 31,
2021
2020
Net loss per share of common stock
attributable to common stockholders
(basic and diluted)
$
(0.40
)
$
(2.23
)
Add: QSL impairment(1)
0.04
—
Add: Asset write offs(2)
—
0.62
Add: Executive compensation expense(3)
—
0.20
Add: Field employee bonus expense(4)
—
0.17
Less: Net loss tax impact(5)
(0.01
)
(0.25
)
Adjusted net loss per share of common
stock attributable to common stockholders
(basic and diluted)
$
(0.37
)
$
(1.49
)
Calculation of EBITDA, adjusted EBITDA
and adjusted EBITDAR:
Three Months Ended
March 31,
2021
2020
Net loss
$
(5,743
)
$
(18,541
)
Less: Benefit for income taxes
(850
)
(6,741
)
Add: Depreciation and amortization
expense
23,829
28,560
Add: Interest expense, net
11,384
7,456
EBITDA
28,620
10,734
Add: Executive compensation expense(3)
—
1,710
Add: Field employee bonus expense(4)
—
1,388
Adjusted EBITDA
28,620
13,832
Add: Real estate rent expense
63,869
63,588
Adjusted EBITDAR
$
92,489
$
77,420
Calculation of operating
margin:
Three Months Ended
March 31,
2021
2020
Total revenues
$
1,529,096
$
1,303,348
Income (loss) from operations
6,188
(17,285
)
Operating margin
0.4
%
(1.3
)%
Calculation of adjusted EBITDAR
margin:
Three Months Ended
March 31,
2021
2020
Fuel gross margin
$
77,430
$
81,955
Nonfuel revenues
447,914
425,007
Total fuel gross margin and nonfuel
revenues
$
525,344
$
506,962
Adjusted EBITDAR(6)
$
92,489
$
77,420
Adjusted EBITDAR margin
17.6
%
15.3
%
(1)
QSL Impairment. On April 21, 2021, TA
completed the sale of its QSL business for $5.0 million, excluding
costs to sell and certain closing adjustments. TA had classified
its QSL business as held for sale as of December 31, 2020. During
the three months ended March 31, 2021, TA recorded an additional
impairment charge of $0.7 million relating to its QSL business,
which was included in depreciation and amortization expense in TA's
consolidated statement of operations and comprehensive loss.
(2)
Asset Write Offs. During the three months
ended March 31, 2020, TA wrote off $5.2 million related to truck
service programs that were canceled. This amount was included in
depreciation and amortization expense in TA's consolidated
statement of operations and comprehensive loss.
(3)
Executive Compensation Expense. 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 $1.7 million for the three months ended March 31, 2020,
which were included in selling, general and administrative expense
in TA's consolidated statement of operations and comprehensive
loss.
(4)
Field Employee Bonus Expense. In March
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 $1.4 million for the
three months ended March 31, 2020, which were included in site
level operating expense in TA's consolidated statement of
operations and comprehensive loss.
(5)
Net Loss Tax Impact. TA calculated the
income tax impact of the adjustments described above by using its
estimated statutory income tax rate of 25.2% for the three months
ended March 31, 2021 and 2020.
(6)
Reconciliation from net loss, the
financial measure determined in accordance with GAAP to the
non-GAAP financial measure disclosed herein, is included in the
supplemental table above.
TRAVELCENTERS OF AMERICA INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
(in thousands)
March 31, 2021
December 31,
2020
Assets:
Current assets:
Cash and cash equivalents
$
520,028
$
483,151
Accounts receivable, net
129,087
94,429
Inventory
163,397
172,830
Other current assets
27,658
35,506
Total current assets
840,170
785,916
Property and equipment, net
791,516
801,789
Operating lease assets
1,713,862
1,734,883
Goodwill
22,213
22,213
Intangible assets, net
11,365
11,529
Other noncurrent assets
117,219
87,530
Total assets
$
3,496,345
$
3,443,860
Liabilities and Stockholders'
Equity:
Current liabilities:
Accounts payable
$
213,157
$
158,075
Current operating lease liabilities
111,866
111,255
Other current liabilities
178,650
175,867
Total current liabilities
503,673
445,197
Long term debt, net
525,229
525,397
Noncurrent operating lease liabilities
1,735,080
1,763,166
Other noncurrent liabilities
96,532
69,121
Total liabilities
2,860,514
2,802,881
Stockholders' equity (14,564 and 14,574
shares of common stock outstanding
as of March 31, 2021 and December 31,
2020, respectively)
635,831
640,979
Total liabilities and stockholders'
equity
$
3,496,345
$
3,443,860
These financial statements should be read in
conjunction with TA's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2021, 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 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. 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 that 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. Further, TA's
statements about performance improvements it believes it has
already realized from certain of these changes. 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 TA's 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 TA's business. As a result, TA may be unable to
effectively execute if the pandemic continues for an extended
duration or worsens;
- Statements about TA's discipline around managing expenses.
However, TA may not realize or maintain these cost savings;
- Statements about various divisional changes and TA's expected
benefits from those changes. TA may not realize the benefits it
expects from these changes;
- Statements about TA's capital plan and the resulting benefits
TA expects for its business and performances. Capital plans may
take longer to complete and cost more than expected. Further, the
projects pursued may not turn out as planned and may result in TA
not realizing the benefits it expects;
- Statements about the commitment of TA's 2021 capital
expenditures plan being in the range of $175.0 million and $200.0
million. TA may spend less or more than that amount;
- Statements about expecting to expand TA's network by entering
into new franchise agreements. However, TA may not succeed in
entering these agreements and the commencement and stabilization of
any new franchisees may not occur or may be delayed, and these
franchises may not be successful or generate the royalties for TA
that it expects;
- Statements about TA's targeted returns on its capital
expenditures. TA may not be able to realize those returns;
- 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, and if TA does further pursue
this business or make these investments TA may not realize the
returns or other benefits it may expect and TA could realize
losses; and
- Statements about TA's new eTA division, its new management, its
strategy and plan development, its California Energy Commission
grant and its developing of collaborative relationships with groups
in both electric and hydrogen vehicles. The alternative fuel market
is still in its early stages and it is not clear which, if any, of
those fuels and technologies will achieve commercial success and
scale. As a result, it is uncertain how TA's business may change,
adapt or evolve for the new fuels and technologies. TA's pursuit of
any of these may not be successful and it may incur losses with
respect to these efforts.
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 filed with the U.S. Securities and Exchange
Commission, or SEC, and TA's Quarterly Report on Form 10-Q for the
period ended March 31, 2021, which has been or will be filed with
the SEC, under the caption "Risk Factors," or elsewhere in those
reports, or incorporated therein, identifies other important
factors that could cause differences from TA's forward-looking
statements. TA's filings with the SEC are available on the SEC's
website at www.sec.gov.
You should not place undue reliance upon forward-looking
statements. Except as required by law, TA does not intend to update
or change any forward-looking statement as a result of new
information, future events or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210503005733/en/
Kristin Brown, Director of Investor Relations (617) 796-8251
www.ta-petro.com
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