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TravelCenters Of America LLC Announces Third Quarter 2011 Results

Business Commentary

TA’s net income of $20.7 million for the third quarter of 2011 reflected an increase of $16.2 million as compared to the 2010 third quarter. Net income increased primarily due to increases in fuel and nonfuel sales and margin levels, and from a reduction in rent and interest expenses as a result of the January 2011 lease amendment with Hospitality Properties Trust, or HPT. TA’s results also reflected improvement in EBITDAR, which increased by $3.3 million in the 2011 third quarter over the 2010 third quarter. TA’s fuel sales volume and fuel gross margin per gallon increased by 4.8% and 4.2%, respectively, in the 2011 third quarter as compared to the 2010 third quarter, resulting in total fuel gross margin that was $6.7 million higher in the 2011 third quarter than the 2010 third quarter. Nonfuel sales for the 2011 third quarter increased 10.2% over the 2010 third quarter largely due to increased customer spending in TA’s travel centers.

The following table presents the quarterly changes in fuel sales volumes on a percentage basis compared to the same quarter of the prior year.
Change in Total Fuel Sales Volume (1) 2011 compared to 2010 2010 compared to 2009 2009 compared to 2008 2008 compared to 2007
First quarter ended March 31 -0.5% 8.9% -17.3% 22.7%
Second quarter ended June 30 4.3% 6.4% -9.7% 0.2%
Third quarter ended September 30 4.8% 4.8% -2.5% -19.0%
Fourth quarter ended December 31 1.6% 3.3% -15.4%
Full year 5.3% -7.0% -4.7%

  Includes volumes sold by TA’s predecessor prior to January 31, 2007, and excludes volumes sold at Petro sites prior to the May 30, 2007 acquisition by TA.

Capital Expenditures, Working Capital and Other Matters

TA’s business of operating high sales volume travel centers open 24 hours every day requires that TA make regular capital investments in its existing travel centers to maintain or increase their competitive attractiveness to TA’s customers. During the nine months ended September 30, 2011, TA spent $104.9 million on capital expenditures and acquisitions of new locations, $35.1 million of which was incurred during the third quarter. During the nine months ended September 30, 2011, pursuant to the terms of its leases, TA sold to HPT certain improvements that TA previously made to the properties that it leases from HPT for $45.6 million, $9.7 million of which was incurred during the third quarter. These sales resulted in an increase in annual rent of approximately $3.9 million, as provided under the leases.

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