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TravelCenters Of America LLC Announces Third Quarter 2011 Results

RESULTS THAT DIFFER FROM THOSE STATED OR IMPLIED BY TA’S FORWARD LOOKING STATEMENTS MAY ALSO BE CAUSED BY VARIOUS CHANGES IN TA’S BUSINESS OR MARKET CONDITIONS, AS DESCRIBED MORE FULLY IN TA’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2010, INCLUDING UNDER “WARNING CONCERNING FORWARD LOOKING STATEMENTS” AND “RISK FACTORS”, AND UNDER “WARNING CONCERNING FORWARD LOOKING STATEMENTS” AND ELSEWHERE IN TA’S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2011. COPIES OF TA’S ANNUAL AND QUARTERLY REPORTS ARE AVAILABLE AT THE WEBSITE OF THE U.S. SECURITIES AND EXCHANGE COMMISSION: WWW.SEC.GOV.

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS. EXCEPT AS REQUIRED BY LAW, TA UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

     
TRAVELCENTERS OF AMERICA LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)

 
Three Months Ended September 30,
 
2011   2010
Revenues:
Fuel $ 1,734,621 $ 1,192,949
Nonfuel 348,790 316,639
Rent and royalties   3,874   3,522
Total revenues 2,087,285 1,513,110
 
Cost of goods sold (excluding depreciation):
Fuel 1,653,299 1,118,307
Nonfuel   152,780   134,520
Total cost of goods sold (excluding depreciation) 1,806,079 1,252,827
 
Operating expenses:
Site level operating 176,274 160,500
Selling, general & administrative 22,360 20,465
Real estate rent 48,202 58,595
Depreciation and amortization   11,831   10,611
Total operating expenses   258,667   250,171
 
Income from operations 22,539 10,112
 
Equity in income of equity investees 497 467
Interest income 319 311
Interest expense   (2,438 )   (6,181 )
Income before income taxes 20,917 4,709
Provision for income taxes   259   243
Net income $ 20,658 $ 4,466
 
Net income per share:
Basic and diluted $ 0.74 $ 0.26
Weighted average shares outstanding:
Basic and diluted   28,053   17,324
 

These financial statements should be read in conjunction with TA’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, to be filed with the Securities and Exchange Commission.

     
TRAVELCENTERS OF AMERICA LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)

 
Nine Months Ended September 30,
2011   2010
Revenues:
Fuel $ 4,989,927 $ 3,512,206
Nonfuel 963,676 878,821
Rent and royalties   10,753   10,193
Total revenues 5,964,356 4,401,220
 
Cost of goods sold (excluding depreciation):
Fuel 4,761,943 3,312,619
Nonfuel   415,348   370,279
Total cost of goods sold (excluding depreciation) 5,177,291 3,682,898
 
Operating expenses:
Site level operating 511,035 470,487
Selling, general & administrative 65,768 59,844
Real estate rent 143,339 175,675
Depreciation and amortization   34,640   31,310
Total operating expenses   754,782   737,316
 
Income (loss) from operations 32,283 (18,994 )
 
Equity in income of equity investees 714 768
Acquisition costs (446 )
Interest income 655 912
Interest expense   (6,910 )   (17,576 )
Income (loss) before income taxes 26,296 (34,890 )
Provision for income taxes   710   687
Net income (loss) $ 25,586 $ (35,577 )
 
Net income (loss) per share:
Basic and diluted $ 1.13 $ (2.06 )
Weighted average shares outstanding:
Basic and diluted   22,687   17,297

These financial statements should be read in conjunction with TA’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, to be filed with the Securities and Exchange Commission.

       
TRAVELCENTERS OF AMERICA LLC
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)

 
September 30, December 31,
2011 2010
Assets
Current assets:
Cash and cash equivalents $ 130,541 $ 125,396
Accounts receivable (less allowance for doubtful accounts of $2,320 and $2,023 as of September 30, 2011, and December 31, 2010, respectively) 153,453 82,374
Inventories 156,596 139,810
Other current assets   63,529   54,596
Total current assets 504,119 402,176
 
Property and equipment, net 469,309 438,649
Intangible assets, net 23,380 25,749
Other noncurrent assets   29,342   27,515
Total assets $ 1,026,150 $ 894,089
 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 149,243 $ 110,228
Current HPT Leases liabilities 24,662 25,660
Other current liabilities   119,593   104,283
Total current liabilities 293,498 240,171
 
Noncurrent HPT Leases liabilities 363,367 367,845
Other noncurrent liabilities   38,024   34,768
Total liabilities 694,889 642,784
 
Shareholders’ equity   331,261   251,305
Total liabilities and shareholders’ equity $ 1,026,150 $ 894,089
 

These financial statements should be read in conjunction with TA’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, to be filed with the Securities and Exchange Commission.

   
TRAVELCENTERS OF AMERICA LLC
CONSOLIDATED SUPPLEMENTAL DATA

(in thousands)

 
Three Months Ended

September 30,

Nine Months Ended

September 30,

2011   2010 2011   2010
Calculation of EBITDAR: (1)
Net income (loss) $ 20,658 $ 4,466 $ 25,586 $ (35,577 )
Add: income taxes 259 243 710 687
Add: depreciation and amortization 11,831 10,611 34,640 31,310
Deduct: interest income (319 ) (311 ) (655 ) (912 )
Add: interest expense (2) 2,438 6,181 6,910 17,576
Add: real estate rent expense (3)   48,202   58,595   143,339   175,675  
EBITDAR (3) $ 83,069 $ 79,785 $ 210,530 $ 188,759  
     
(1) TA calculates EBITDAR as earnings before interest, taxes, depreciation, amortization and rent. TA believes EBITDAR is a useful indication of its operating performance and its ability to pay rent or service debt, make capital expenditures and expand its business. TA believes that EBITDAR is a meaningful disclosure that may help interested persons to better understand TA’s financial performance, including comparing its performance between periods. EBITDAR is not a measure determined according to GAAP and this information should not be considered as an alternative to net income, income from continuing operations, operating profit, cash flow from operations or any other operating or liquidity performance measure prescribed by GAAP.
 
(2) Interest expense included the following:
       
Three Months Ended

September 30,

Nine Months Ended

September 30,

2011   2010 2011   2010
 
HPT rent classified as interest expense $ 1,921 $ 2,186 $ 5,763 $ 6,558
Interest on deferred rent payable to HPT

3,750

9,900
Amortization of deferred financing costs 72 72 214 214
Other   445   173   933   904
$ 2,438 $ 6,181 $ 6,910 $ 17,576
 
    (3)   Real estate rent expense recognized under GAAP differs from TA’s obligation to pay cash under its leases. Cash paid under real property lease agreements was $51,778 and $50,084 during the three month periods ended September 30, 2011 and 2010, respectively, while the total rent amounts expensed during the quarters ended September 30, 2011 and 2010, were $48,202 and $58,595, respectively. Cash paid under lease agreements was $155,635 and $147,383 during the nine month periods ended September 30, 2011 and 2010, respectively, while the total rent amounts expensed during the nine months ended September 30, 2011 and 2010, were $143,339 and $175,675, respectively. GAAP requires recognition of minimum lease payments payable during the lease term in equal amounts on a straight line basis over the lease term. In addition, under GAAP, a portion of the rent TA pays to HPT is classified as interest expense and a portion of the rent payments made to HPT is charged against a sale/leaseback financing obligation. Also, under GAAP, TA amortizes as a reduction of rent expense the deferred tenant improvement allowance that HPT paid to TA during the four years from 2007 through 2010. The rent payments to HPT that TA deferred in 2010 were recognized in expense in 2010 under GAAP although they were not paid in cash. Further, during 2010 TA paid interest to HPT monthly in arrears on the deferred rent obligation at a rate of 1% per month. A reconciliation of these amounts is as follows:
      Three Months Ended

September 30,

  Nine Months Ended

September 30,

2011   2010 2011   2010
 
Cash payments to HPT for rent and interest on deferred rent obligation $ 49,313 $ 47,646 $ 148,278 $ 140,063
Other cash rental payments   2,465   2,438   7,357   7,320  
Total cash payments under real property leases 51,778 50,084 155,635 147,383
Adjustments for:
Noncash straight line rent accrual – HPT 408 1,628 1,144 5,430
Noncash straight line rent accrual – other 67 57 163 185
Rent expensed but not paid pursuant to deferral agreement 15,000 45,000
Interest paid on deferred rent obligation (3,600 ) (1,450 ) (8,600 )
Amortization of sale/leaseback financing obligation (438 ) (696

)

(1,313

)

(2,088 )
Portion of rent payments classified as interest expense (1,921 ) (2,186 ) (5,763 ) (6,558 )
Amortization of deferred rent obligation   (1,692 )   (1,692 )   (5,077 )   (5,077 )
Total amount expensed as rent $ 48,202 $ 58,595 $ 143,339 $ 175,675  
 

SUPPLEMENTAL SAME SITE OPERATING DATA

The following table presents operating data for all of the travel centers in operation on September 30, 2011, that were operated by TA since January 1, 2010. This data excludes revenues and expenses that were not generated by TA, such as rents and royalties from franchises, and corporate level selling, general and administrative expenses.

       

TRAVELCENTERS OF AMERICA LLC

SAME SITE OPERATING DATA((1))

(in thousands, except for number of travel centers, per gallon data and percentage amounts)

 
Three Months Ended September 30, Nine Months Ended September 30,  
    Change     Change
2011 2010   Fav/(Unfav) 2011 2010   Fav/(Unfav)  
Number of company operated travel centers (2) 184 184 184 184
 
Total fuel sales volume (gallons) 506,746 497,971 1.8 % 1,476,869 1,464,404 0.9 %
 
Total fuel revenues $ 1,618,129 $ 1,147,752 41.0 % $ 4,687,655 $ 3,370,717 39.1 %
Total fuel gross margin $ 78,570 $ 74,695 5.2 % $ 222,454 $ 198,441 12.1 %
Total fuel gross margin per gallon $ 0.155 $ 0.150 3.3 % $ 0.151 $ 0.136 11.0 %
 
Total nonfuel revenues $ 341,310 $ 315,695 8.1 % $ 949,764 $ 874,380 8.6 %
Total nonfuel gross margin $ 192,214 $ 181,557 5.9 % $ 540,980 $ 505,831 6.9 %
Nonfuel gross margin percentage 56.3 % 57.5 % -120 b.p. 57.0 % 57.9 % -90 b.p.
 
Total gross margin $ 270,784 $ 256,252 5.7 % $ 763,434 $ 704,272 8.4 %
Site level operating expenses (3) $ 169,546 $ 159,529 6.3 % $ 499,477 $ 466,804 7.0 %
Site level operating expenses as a percentage of nonfuel revenues 49.7 % 50.5 % 80

b.p.

52.6 % 53.4 % 80 b.p.
Net site level gross margin in excess of site level operating expense $ 101,238 $ 96,723 4.7 % $ 263,957 $ 237,468 11.2 %
 
(1)   Includes operating data of company operated travel centers only, excluding two travel centers owned by a joint venture and the travel centers operated by TA’s franchisees. Two company operated sites were excluded from this same site comparison because they were temporarily closed during portions of the period as a result of flooding.
 
(2) Includes only those travel centers that were operated by TA during the entirety of the comparative periods presented.
 
(3) Excludes real estate rent expense.




Stock quotes in this article: TA 

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