EX-99.1 2 a20190630exhibit991.htm EXHIBIT 99.1 Exhibit

Exhibit 99.1


talogoimage.jpg
FOR IMMEDIATE RELEASE
Contact:
Katie Strohacker, Senior Director of Investor Relations
(617) 796-8251
www.ta-petro.com
TravelCenters of America Inc. Announces Second Quarter 2019 Financial Results
Second Quarter Fuel Sales Volume Increased 3.3%
Fuel Gross Margin Increased 3.3%

 
Westlake, OH (August 5, 2019): TravelCenters of America Inc. (Nasdaq: TA) today announced financial results for the three and six months ended June 30, 2019:
(in thousands, except per share amounts)
Three Months Ended
June 30,
 
Six Months Ended
June 30,
2019
 
2018
 
2019
 
2018
Income (loss) from continuing operations
$
1,209

 
$
8,638

 
$
(11,520
)
 
$
2,611

Net income (loss)
1,209

 
(33,924
)
 
(11,520
)
 
(44,002
)
Net income (loss) attributable to common shareholders
1,178

 
(33,978
)
 
(11,569
)
 
(44,090
)
 
 
 
 
 
 
 
 
Income (loss) per common share from continuing
   operations attributable to common shareholders
   (basic and diluted)(1)
$
0.15

 
$
1.07

 
$
(1.43
)
 
$
0.32

 
 
 
 
 
 
 
 
Non-GAAP Measures:(2)
 
 
 
 
 
 
 
Adjusted income (loss) from continuing operations
$
1,209

 
$
1,996

 
$
(13,355
)
 
$
(20,141
)
Adjusted income (loss) per common share from
   continuing operations attributable to common
   shareholders (basic and diluted)(1)
$
0.15

 
$
0.24

 
$
(1.66
)
 
$
(2.53
)
EBITDA
$
31,184

 
$
37,697

 
$
44,997

 
$
56,133

Adjusted EBITDA
31,184

 
29,444

 
42,544

 
26,486

(1)
Income (loss) per common share from continuing operations attributable to common shareholders has been retrospectively adjusted to reflect the reverse stock split of TA's outstanding common shares effective August 1, 2019, which is described further below.
(2)
Reconciliations from income (loss) from continuing operations and income (loss) per common share from continuing operations attributable to common shareholders, as applicable, the financial measures determined in accordance with U.S. generally accepted accounting principles, or GAAP, to the non-GAAP measures disclosed herein are included in the supplemental tables below.
Andrew J. Rebholz, TA's CEO, made the following statement regarding the 2019 second quarter results:
"We believe that through the first six months of 2019 our strategy to refocus our efforts on our core travel center operations have been successful, including in the second quarter despite cooler, wetter temperatures that generally tempered demand for our truck service business. We have generated increases in both fuel sales volume and nonfuel revenues on both a consolidated and same site basis, and the modest growth in our site level operating expenses and adjusted selling, general and administrative expenses are in line with expectations given our future growth plans.

1


"Net income for the second quarter of $1.2 million was a $35.1 million improvement over the prior year second quarter, which included a $42.6 million loss from discontinued operations, net of taxes and a net $8.8 million pre-tax benefit from certain unusual items. Adjusted EBITDA for the second quarter was a $1.7 million, or 5.9%, improvement over the prior year.
"Also, we were successful in expanding our travel center network during the second quarter, signing franchise agreements for five additional travel centers. We have a number of additional potential franchise locations in the pipeline and expect to acquire one operating travel center and two development parcels before the end of this year."

Financial Results Commentary
Fuel. The following table presents details for TA's fuel sales during the 2019 second quarter as compared to the 2018 second quarter.
(in thousands, except per gallon amounts)
Three Months Ended
June 30,
 
 
2019
 
2018
 
Change
Fuel sales volume (gallons):
 
 
 
 
 
Diesel fuel
426,543

 
407,929

 
4.6
 %
Gasoline
75,803

 
78,518

 
(3.5
)%
Total fuel sales volume
502,346

 
486,447

 
3.3
 %
 
 
 
 
 
 
Fuel revenues
$
1,117,671

 
$
1,149,486

 
(2.8
)%
Fuel gross margin
76,822

 
74,378

 
3.3
 %
Fuel gross margin per gallon
$
0.153

 
$
0.153

 
 %
Fuel sales volume for the 2019 second quarter increased by 15.9 million gallons, or 3.3%, as compared to the 2018 second quarter, due to the following factors:
a same site fuel sales volume increase of 11.9 million gallons, or 2.5%, which primarily resulted from improved market conditions and the success of TA's marketing initiatives; and
a net increase of 4.0 million gallons at sites opened or closed since the beginning of the 2018 second quarter.
Fuel revenues decreased by $31.8 million, or 2.8%, in the 2019 second quarter as compared to the 2018 second quarter, primarily due to a decrease in market prices for fuel during the 2019 second quarter, which was partially offset by the increase in fuel sales volume.
Fuel gross margin for the 2019 second quarter increased by $2.4 million, or 3.3%, as compared to the 2018 second quarter. Diesel fuel gross margin was essentially flat for the 2019 second quarter as compared to the 2018 second quarter due to a slightly lower gross margin per gallon, which was largely offset by a 4.6% increase in diesel fuel sales volume. Gasoline gross margin increased for the 2019 second quarter as compared to the 2018 second quarter primarily as a result of TA better managing sales pricing.
Although, the U.S. government has not yet retroactively reinstated the federal biodiesel blenders' tax credit for 2018 or 2019, TA believes the U.S. government may do so before the end of 2019. If the federal biodiesel blenders' tax credit is reinstated for 2018 and 2019, TA expects to recognize reductions in fuel cost of goods sold of approximately $35.0 million relating to 2018 and $17.0 million relating to the first six months of 2019 in the period the U.S. government enacts the tax credit reinstatement. Although TA believes reinstatement of this credit is possible, TA cannot be certain that the U.S. government will do so. TA has not recognized any amount of the expected federal biodiesel blenders' tax credit for 2018 or 2019.

2


Nonfuel. The following table presents details for TA's nonfuel revenues during the 2019 second quarter as compared to the 2018 second quarter.
(in thousands)
Three Months Ended
June 30,
 
 
2019
 
2018
 
Change
Nonfuel revenues:
 
 
 
 
 
Store and retail services
$
193,895

 
$
187,935

 
3.2
 %
Truck service
173,431

 
176,115

 
(1.5)
 %
Restaurant
108,756

 
107,392

 
1.3
 %
Total nonfuel revenues
476,082

 
471,442

 
1.0
 %
 
 
 
 
 
 
Nonfuel gross margin
$
288,584

 
$
287,198

 
0.5
 %
Nonfuel gross margin percentage
60.6
%
 
60.9
%
 
(30
)pts
Nonfuel revenues increased by $4.6 million, or 1.0%, in the 2019 second quarter as compared to the 2018 second quarter, due to the following factors:
a $3.3 million net increase at sites opened and closed since the beginning of the 2018 second quarter; and
$1.3 million same site increase primarily due to the positive impact of certain of TA's marketing initiatives in store and retail services, partially offset by a 1.5% decrease in truck service revenues primarily as a result of a decrease in demand due to the impact of cooler weather patterns.
Nonfuel gross margin increased by $1.4 million, or 0.5%, in the 2019 second quarter as compared to the 2018 second quarter, due to the following factors:
the $4.6 million increase in nonfuel revenues; and
a decline in the nonfuel gross margin percentage that primarily resulted from a change in the mix of products and services sold, which partially offset the increase in nonfuel revenues.
Income from Continuing Operations and Adjusted Income from Continuing Operations. Income from continuing operations for the 2019 second quarter was $1.2 million, as compared to $8.6 million for the 2018 second quarter. The decrease in income from continuing operations is primarily due to the $10.1 million of reimbursed litigation costs collected from Comdata Inc., or Comdata, during April 2018. Adjusted income from continuing operations for the 2019 second quarter was $1.2 million, as compared to $2.0 million for the 2018 second quarter. The decrease in adjusted income from continuing operations is primarily due to an increase in selling, general and administrative expense as a result of annual salary increases and increased headcount and the decrease in site level gross margin in excess of site level operating expense.
(in thousands)
Three Months Ended
June 30,
 
 
2019
 
2018
 
Change
Fuel gross margin
$
76,822

 
$
74,378

 
3.3
 %
Nonfuel gross margin
288,584

 
287,198

 
0.5
 %
Rent and royalties from franchisees gross margin
3,611

 
4,049

 
(10.8
)%
Total site level gross margin
369,017

 
365,625

 
0.9
 %
Less: site level operating expense
234,645

 
228,861

 
2.5
 %
Site level gross margin in excess of site level operating expense
$
134,372

 
$
136,764

 
(1.7
)%
Site level operating expense as a percentage of nonfuel revenues
49.3
%
 
48.5
%
 
80
pts
Net Income (Loss) and Adjusted EBITDA. Net income (loss) for the 2019 second quarter improved by $35.1 million, as compared to the 2018 second quarter and adjusted EBITDA for the 2019 second quarter increased by $1.7 million, as compared to the 2018 second quarter. The net income (loss) improvement was largely due to a $42.6 million loss from discontinued operations, net of taxes, during the 2018 second quarter.


3


Growth Strategies
Thus far in 2019, TA has entered into seven franchise agreements with four franchisees under TA's travel center brand names; one of these franchised travel centers opened during the 2019 second quarter and TA anticipates the remaining six travel centers will be added to TA's network by the end of the 2020 first quarter. In addition, TA has entered into agreements with one of these franchisees pursuant to which TA expects to add two additional franchised travel centers to its network, one within five years and the other within 10 years.
Revolving Credit Facility
On July 19, 2019, TA and certain of its subsidiaries, as borrowers or guarantors, entered into an amendment, or the Amendment, to its amended and restated loan and security agreement, or the Credit Facility, with Wells Fargo Capital Finance, LLC, as administrative agent for various lenders. The Amendment amended the Credit Facility to, among other things: (i) extend the maturity of the Credit Facility from December 19, 2019, to July 19, 2024; (ii) reduce the applicable margins on borrowings and standby letter of credit fees by 25 basis points and on commercial letter of credit fees by 12.5 basis points; (iii) make certain adjustments to the limitations on investments, dividends and stock repurchases under the Credit Facility in a manner favorable to TA; (iv) reduce the sublimit for issuance of letters of credit under the Credit Facility from $170.0 million to $125.0 million; and (v) make certain adjustments to the borrowing base calculation in a manner TA believes to be favorable. Under the Credit Facility, a maximum of $200.0 million may be drawn, repaid and redrawn until maturity.
Reverse Stock Split
On July 30, 2019, TA announced a reverse stock split of its outstanding common shares at an exchange ratio of five to one, which became effective as of August 1, 2019. As a result of the reverse stock split, every five shares of TA's issued and outstanding common shares were combined into one share. No fractional common shares were issued in the reverse stock split. Instead, fractional shares that otherwise would have resulted from the reverse stock split were purchased by TA at the closing price of TA's common shares on July 31, 2019. The common share information included herein has been retrospectively adjusted to reflect this reverse stock split.
Conversion to Corporation
On May 23, 2019, TA announced its plan to convert from a Delaware limited liability company to a Maryland corporation, which became effective as of August 1, 2019. Following the conversion to a Maryland corporation, among other things, TA's common shares will have a par value of $0.001 per share.
Conference Call
On Monday, August 5, 2019, at 10:00 a.m. Eastern time, TA will host a conference call to discuss its financial results and other activities for the three months ended June 30, 2019. 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 10132754.
A live audio webcast of the conference call will also be available in a listen only mode on TA's website at www.ta-petro.com. To access the webcast, participants should visit TA's website about five minutes before the call. The archived webcast will be available for replay on TA's website for about one week after the call. The transcription, recording and retransmission in any way of TA's second quarter conference call is strictly prohibited without the prior written consent of TA. The Company's website is not incorporated as part of this press release.
About TravelCenters of America Inc.
TA's nationwide business includes travel centers located in 43 U.S. states and in Canada, standalone truck service facilities located in two states and standalone restaurants located in 13 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" brand name.

4




TRAVELCENTERS OF AMERICA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)


 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Revenues:
 

 
 

 
 

 
 

Fuel
$
1,117,671

 
$
1,149,486

 
$
2,100,812

 
$
2,135,831

Nonfuel
476,082

 
471,442

 
916,956

 
895,317

Rent and royalties from franchisees
3,611

 
4,049

 
6,888

 
8,159

Total revenues
1,597,364

 
1,624,977

 
3,024,656

 
3,039,307

 
 
 
 
 
 
 
 
Cost of goods sold (excluding depreciation):
 

 
 

 
 
 
 
Fuel
1,040,849

 
1,075,108

 
1,949,243

 
1,978,556

Nonfuel
187,498

 
184,244

 
355,766

 
345,655

Total cost of goods sold
1,228,347

 
1,259,352

 
2,305,009

 
2,324,211

 
 
 
 
 
 
 
 
Site level operating expense
234,645

 
228,861

 
467,365

 
451,873

Selling, general and administrative expense
39,562

 
27,480

 
76,672

 
63,974

Real estate rent expense
63,770

 
70,684

 
130,183

 
140,920

Depreciation and amortization expense
23,213

 
21,123

 
47,972

 
41,669

 
 
 
 
 
 
 
 
Income (loss) from operations
7,827

 
17,477

 
(2,545
)
 
16,660

 
 
 
 
 
 
 
 
Interest expense, net
7,164

 
6,865

 
14,214

 
14,445

Other (income) expense, net
(144
)
 
903

 
430

 
2,196

Income (loss) before income taxes and
   discontinued operations
807

 
9,709

 
(17,189
)
 
19

Benefit (provision) for income taxes
402

 
(1,071
)
 
5,669

 
2,592

Income (loss) from continuing operations
1,209

 
8,638

 
(11,520
)
 
2,611

Loss from discontinued operations,
   net of taxes

 
(42,562
)
 

 
(46,613
)
Net income (loss)
1,209

 
(33,924
)
 
(11,520
)
 
(44,002
)
Less: net income for noncontrolling interest
31

 
54

 
49

 
88

Net income (loss) attributable to
   common shareholders
$
1,178

 
$
(33,978
)
 
$
(11,569
)
 
$
(44,090
)
 
 
 
 
 
 
 
 
Net income (loss) per common share
   attributable to common shareholders:(1)
 

 
 

 
 
 
 
Basic and diluted from continuing operations
$
0.15

 
$
1.07

 
$
(1.43
)
 
$
0.32

Basic and diluted from discontinued
   operations

 
(5.32
)
 

 
(5.83
)
Basic and diluted
0.15

 
(4.25
)
 
(1.43
)
 
(5.51
)
(1)
Net income (loss) per common share attributable to common shareholders has been retrospectively adjusted to reflect the reverse stock split of TA's outstanding common shares effective August 1, 2019.
These financial statements should be read in conjunction with TA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, to be filed with the U.S. Securities and Exchange Commission.

5




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 because they may help investors gain a better understanding of changes in TA's operating results and its ability to pay rent or service debt 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.
TA believes that adjusted income (loss) from continuing operations, adjusted income (loss) per common share from continuing operations attributable to common shareholders, 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 continuing 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. Management uses these measures in developing internal budgets and forecasts and analyzing TA's performance. TA calculates EBITDA as net income (loss) before loss from discontinued operations, interest, taxes, and depreciation and amortization, 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.
The non-GAAP financial measures TA presents should not be considered as alternatives to net income (loss) attributable to common shareholders, net income (loss), income (loss) from continuing operations, income (loss) from operations or income (loss) per common share from continuing operations attributable to common shareholders 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 income (loss) from continuing operations is the most directly comparable GAAP financial measure to adjusted income (loss) from continuing operations; income (loss) per common share from continuing operations attributable to common shareholders is the most directly comparable GAAP financial measure to adjusted income (loss) per common share from continuing operations attributable to common shareholders; net income (loss) is the most directly comparable GAAP financial measure to EBITDA and adjusted EBITDA; 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. The following tables present the reconciliations of the non-GAAP financial measures to the respective most directly comparable GAAP financial measures for the three and six months ended June 30, 2019 and 2018.
Calculation of adjusted income (loss)
   from continuing operations:
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Income (loss) from continuing operations
 
$
1,209

 
$
8,638

 
$
(11,520
)
 
$
2,611

Add: Costs of HPT transactions(1)
 

 

 
458

 

Less: Loyalty award expiration(2)
 

 

 
(2,911
)
 

Add: Executive officer retirement agreement
expenses
(3)
 

 
1,792

 

 
3,571

Less: Comdata interest income(4)
 

 
(568
)
 

 
(568
)
Less: Comdata legal reimbursements, net of expenses(4)
 

 
(10,045
)
 

 
(9,967
)
Less: Federal biodiesel blenders' tax credit(5)
 

 

 

 
(23,251
)
Add: Net tax impact(6)
 

 
2,179

 
618

 
7,463

Adjusted income (loss) from continuing operations
 
$
1,209

 
$
1,996

 
$
(13,355
)
 
$
(20,141
)

6




TRAVELCENTERS OF AMERICA INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, unless indicated otherwise)


Calculation of adjusted income (loss) per common
   share from continuing operations attributable to
   common shareholders (basic and diluted):
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Income (loss) per common share from continuing
   operations attributable to common shareholders
   (basic and diluted)
 
$
0.15

 
$
1.07

 
$
(1.43
)
 
$
0.32

Add: Costs of HPT transactions(1)
 

 

 
0.06

 

Less: Loyalty award expiration(2)
 

 

 
(0.36
)
 

Add: Executive officer retirement agreement
   expenses(3)
 

 
0.23

 

 
0.45

Less: Comdata interest income(4)
 

 
(0.07
)
 

 
(0.07
)
Less: Comdata legal reimbursements, net of expenses(4)
 

 
(1.26
)
 

 
(1.25
)
Less: Federal biodiesel blenders' tax credit(5)
 

 

 

 
(2.91
)
Add: Net tax impact(6)
 

 
0.27

 
0.07

 
0.93

Adjusted income (loss) per common share from
   continuing operations attributable to common
   shareholders (basic and diluted)
 
$
0.15

 
$
0.24

 
$
(1.66
)
 
$
(2.53
)
Calculation of EBITDA and adjusted EBITDA:
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Net income (loss)
 
$
1,209

 
$
(33,924
)
 
$
(11,520
)
 
$
(44,002
)
Add: Loss from discontinued operations, net of taxes
 

 
42,562

 

 
46,613

Income (loss) from continuing operations
 
1,209

 
8,638

 
(11,520
)
 
2,611

(Less) add: (Benefit) provision for income taxes
 
(402
)
 
1,071

 
(5,669
)
 
(2,592
)
Add: Depreciation and amortization expense
 
23,213

 
21,123

 
47,972

 
41,669

Add: Interest expense, net
 
7,164

 
6,865

 
14,214

 
14,445

EBITDA
 
31,184

 
37,697

 
44,997

 
56,133

Add: Costs of HPT transactions(1)
 

 

 
458

 

Less: Loyalty award expiration(2)
 

 

 
(2,911
)
 

Add: Executive officer retirement agreement
   expenses(3)
 

 
1,792

 

 
3,571

Less: Comdata legal reimbursements, net of expenses(4)
 

 
(10,045
)
 

 
(9,967
)
Less: Federal biodiesel blenders' tax credit(5)
 

 

 

 
(23,251
)
Adjusted EBITDA
 
$
31,184

 
$
29,444

 
$
42,544

 
$
26,486

Calculation of adjusted fuel gross margin
   and adjusted fuel gross margin per gallon:
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Fuel gross margin
 
$
76,822

 
$
74,378

 
$
151,569

 
$
157,275

Less: Loyalty award expiration(2)
 

 

 
(2,840
)
 

Less: Federal biodiesel blenders' tax credit(5)
 

 

 

 
(23,251
)
Adjusted fuel gross margin
 
$
76,822

 
$
74,378

 
$
148,729

 
$
134,024

 
 
 
 
 
 
 
 
 
Fuel gross margin per gallon
 
$
0.153

 
$
0.153

 
$
0.156

 
$
0.166

Less: Loyalty award expiration(2)
 

 

 
(0.003
)
 

Less: Federal biodiesel blenders' tax credit(5)
 

 

 

 
(0.025
)
Adjusted fuel gross margin per gallon
 
$
0.153

 
$
0.153

 
$
0.153

 
$
0.141


7




TRAVELCENTERS OF AMERICA INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, unless indicated otherwise)


(1) 
Costs of HPT Transactions. In January 2019, TA entered transaction agreements pursuant to which it amended its leases with Hospitality Properties Trust, or HPT. During the six months ended June 30, 2019, TA incurred $0.5 million of expenses associated with the amendments of these leases, which were included in selling, general and administrative expense in TA's consolidated statements of operations and comprehensive income (loss).
(2) 
Loyalty Award Expiration. During the six months ended June 30, 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 in 10 days 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 six months ended June 30, 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 income (loss).
(3)
Executive Officer Retirement Agreement Expenses. As part of TA's retirement agreement with a certain former officer, TA agreed to accelerate the vesting of previously granted share awards and make a cash payment. This acceleration and cash payment resulted in additional compensation expense of $1.8 million and $3.6 million for the three and six months ended June 30, 2018, respectively, which was included in selling, general and administrative expense in TA's consolidated statements of operations and comprehensive income (loss).
(4)
Comdata Legal Reimbursements, Net of Expenses and Interest Income. On April 9, 2018, the Court of Chancery of the State of Delaware entered its final order and judgment with respect to TA's litigation with Comdata, or the Order. Pursuant to the Order, Comdata was required to, among other things, reimburse TA for attorneys' fees and costs, together with interest, in the amount of $10.7 million, which TA collected in April 2018. In addition, during the three and six months ended June 30, 2018, TA incurred $37 thousand and $0.1 million, respectively, of legal fees in its litigation with Comdata. The legal reimbursements and expenses were included in selling, general and administrative expense in TA's consolidated statements of operations and comprehensive income (loss).
(5)
Federal Biodiesel Blenders' Tax Credit. On February 8, 2018, the U.S. government retroactively reinstated the 2017 federal biodiesel blenders' tax credit. TA's recovery as a result of this tax credit was $23.3 million and was recognized in February 2018 as a reduction to fuel cost of goods sold in TA's consolidated statement of operations and comprehensive income (loss). TA collected this amount during the remainder of 2018.
(6)
Net Tax Impact. TA calculated the tax impact of the adjustments described above by using its estimated statutory rate of 25.2% and 24.7% for the three and six months ended June 30, 2019 and 2018, respectively.

8




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


 
June 30,
2019
 
December 31,
2018
Assets:
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
25,785

 
$
314,387

Accounts receivable, net
147,620

 
97,449

Inventory
199,715

 
196,721

Other current assets
27,437

 
35,119

Total current assets
400,557

 
643,676

 
 
 
 
Property and equipment, net
880,142

 
628,537

Operating lease assets
1,817,701

 

Goodwill
25,259

 
25,259

Intangible assets, net
21,683

 
22,887

Other noncurrent assets
99,988

 
121,749

Total assets
$
3,245,330

 
$
1,442,108

 
 
 
 
Liabilities and Shareholders' Equity:
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
194,895

 
$
120,914

Current operating lease liabilities
97,298

 

Current HPT Leases liabilities

 
42,109

Other current liabilities
153,717

 
125,668

Total current liabilities
445,910

 
288,691

 
 
 
 
Long term debt, net
320,971

 
320,528

Noncurrent operating lease liabilities
1,898,832

 

Noncurrent HPT Leases liabilities

 
353,756

Other noncurrent liabilities
52,853

 
28,741

Total liabilities
2,718,566

 
991,716

 
 
 
 
Shareholders' equity (8,087 and 8,080 common shares outstanding
   as of June 30, 2019 and December 31, 2018, respectively)(1)
526,764

 
450,392

Total liabilities and shareholders' equity
$
3,245,330

 
$
1,442,108

(1)
TA's common shares outstanding have been retrospectively adjusted to reflect the reverse stock split of TA's outstanding common shares effective August 1, 2019.
These financial statements should be read in conjunction with TA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, to be filed with the U.S. Securities and Exchange Commission.


9




TRAVELCENTERS OF AMERICA INC.
SUPPLEMENTAL SAME SITE OPERATING DATA
(dollars and gallons in thousands, unless indicated otherwise)


The following table presents operating data for the periods noted for all of the locations in operation on June 30, 2019, that were operated by TA continuously since the beginning of the earliest period presented, with the exception of three locations TA operates that are owned by an unconsolidated joint venture in which TA owns a noncontrolling interest. This data excludes revenues and expenses at locations TA does not operate, such as rents and royalties from franchisees, the results of TA's discontinued operations and corporate level selling, general and administrative expense. TA does not exclude locations from the same site comparisons as a result of capital improvements to the site or changes in the services offered.
 
Three Months Ended
June 30,
 
 
 
Six Months Ended
June 30,
 
 
 
2019
 
2018
 
Change
 
2019
 
2018
 
Change
Number of same site company
   operated locations(1)
241

 
241

 

 
241

 
241

 

 
 
 
 
 
 
 
 
 
 
 
 
Diesel sales volume (gallons)
417,930

 
402,612

 
3.8
 %
 
818,178

 
790,506

 
3.5
 %
Gasoline sales volume (gallons)
71,221

 
74,653

 
(4.6)
 %
 
131,059

 
137,840

 
(4.9)
 %
Total fuel sales volume (gallons)
489,151

 
477,265

 
2.5
 %
 
949,237

 
928,346

 
2.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
Fuel revenues
$
1,082,594

 
$
1,127,213

 
(4.0)
 %
 
$
2,035,211

 
$
2,097,030

 
(2.9)
 %
Fuel gross margin(2)
76,289

 
73,598

 
3.7
 %
 
150,442

 
155,754

 
(3.4)
 %
Fuel gross margin per gallon
$
0.156

 
$
0.154

 
1.3
 %
 
$
0.158

 
$
0.168

 
(6.0)
 %
 
 
 
 
 
 
 
 
 
 
 
 
Nonfuel revenues
$
470,663

 
$
469,367

 
0.3
 %
 
$
904,890

 
$
892,085

 
1.4
 %
Nonfuel gross margin
285,272

 
285,764

 
(0.2)
 %
 
553,597

 
547,283

 
1.2
 %
Nonfuel gross margin percentage
60.6
%
 
60.9
%
 
(30
)pts
 
61.2
%
 
61.3
%
 
(10
)pts
 
 
 
 
 
 
 
 
 
 
 
 
Total gross margin(2)
$
361,561

 
$
359,362

 
0.6
 %
 
$
704,039

 
$
703,037

 
0.1
 %
Site level operating expense
230,520

 
226,961

 
1.6
 %
 
459,141

 
448,871

 
2.3
 %
Site level operating expense as a
   percentage of nonfuel revenues
49.0
%
 
48.4
%
 
60
pts
 
50.7
%
 
50.3
%
 
40
 pts
Site level gross margin in excess of
   site level operating expense(2)
$
131,041

 
$
132,401

 
(1.0)
 %
 
$
244,898

 
$
254,166

 
(3.6)
 %
(1) 
Same site operations for the three and six months ended June 30, 2019, included 227 travel centers, one standalone truck service facility and 13 standalone restaurants that TA operated since April 1, 2018 and January 1, 2018, respectively.
(2) 
The amount for the six months ended June 30, 2019, includes $2.8 million of a one time benefit due to the reversal of loyalty award accruals recognized in connection with introducing a revised customer loyalty program, and the amount for the six months ended June 30, 2018, includes the $23.2 million benefit from the federal biodiesel blenders' tax credit that the U.S. government retroactively reinstated for 2017 in February 2018. The U.S. government has not yet reinstated the federal biodiesel blenders' tax credit for 2018 or 2019.


10


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 improved operating results and increased fuel and nonfuel gross margins may imply that TA's business may be profitable in the future. However, 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 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. TA may be unable to produce future profits and TA's losses may increase;
Statements about TA's strategy to refocus its efforts on its core travel center operations being successful through the first six months of 2019. This may imply that this strategy will continue to be successful. TA operates in a dynamic business environment and its current strategy may not continue to be successful or as successful as other strategies and TA may fail to execute its strategy;
Statements about TA's belief that the U.S. government may retroactively reinstate the federal biodiesel blenders' tax credit for 2018 and 2019 before the end of 2019 and the amounts by which that credit may reduce TA's fuel cost of goods sold in the period the U.S. government enacts the tax credit reinstatement. However, the U.S. government may not retroactively reinstate this tax credit at the level TA expects or at all and TA may not realize the reductions in its fuel cost of goods sold that it expects; and
Statements about the franchise agreements TA entered with franchisees pursuant to which TA expects to add TA branded travel centers to its network, as well as, the pipeline of site acquisition opportunities being pursued. These franchise agreements are subject to conditions and these franchise arrangements may not occur or may be delayed, and the terms of the arrangements may change. In addition, acquisition opportunities may not occur or may subject TA to greater risks than anticipated. These opportunities may not result in the increased EBITDA and cash flows as expected.
The information contained in TA's periodic reports, including TA's Annual Report on Form 10-K for the year ended December 31, 2018, which has been filed with the U.S. Securities and Exchange Commission, or SEC, and TA's Quarterly Reports on Form 10-Q for the periods ended March 31, 2019 and June 30, 2019, which have been or will be filed with the SEC, under the caption "Risk Factors," or elsewhere in those reports, or incorporated therein, identifies other important factors that could cause differences from TA's forward-looking statements. TA's filings with the SEC are available on the SEC's website at www.sec.gov.
You should not place undue reliance upon forward-looking statements.
Except as required by law, TA does not intend to update or change any forward-looking statement as a result of new information, future events or otherwise.


(End)


11