TravelCenters of America LLC (TA)

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TravelCenters of America LLC (TA)

Q1 2013 Earnings Call

May 07, 2013 10:00 am ET

Executives

Carlynn Finn

Thomas M. O'Brien - Chief Executive Officer, President, Managing Director and Director

Andrew J. Rebholz - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer

Analysts

Benjamin Brownlow - Raymond James & Associates, Inc., Research Division

Chris Weng - UBS Investment Bank, Research Division

Bryan A. Maher - Craig-Hallum Capital Group LLC, Research Division

Presentation

Operator

Good day, and welcome to the TravelCenters of America First Quarter 2013 Financial Results Conference Call. This call is being recorded. At this time, for opening remarks and introductions, I'd like to turn the conference call over to the Senior Manager of Investor Relations, Ms. Carlynn Finn. Please go ahead.

Carlynn Finn

Thank you. Good morning, and welcome, everyone. Our agenda today includes remarks by Tom O’Brien, our Chief Executive Officer; and Andy Rebholz, our Chief Financial Officer. After the presentation, there will be a short question-and-answer session.

Today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and federal securities laws. These forward-looking statements are based on TA's present beliefs and expectations, as of today, May 7, 2013. TA undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made today other than as required by law. Actual results may differ materially from those implied or included in these forward-looking statements.

Additional information concerning factors that could cause our forward-looking statements not to occur is contained in our filings with the Securities and Exchange Commission. Investors are cautioned not to place undue reliance upon any forward-looking statements. The recording and retransmission of today's conference call is strictly prohibited without the prior written consent of TA.

Now, I will turn the call over to Tom O’Brien.

Thomas M. O'Brien

Good morning, and thank you for joining our call today. I'm pleased to report TA's first quarter 2013 financial results.

First quarter 2013 EBITDA was $57 million, or 15% over the 2012 first quarter. As expected, we incurred a net loss in the first quarter, that loss, however, was $2 million less than the loss in the 2012 first quarter, or $0.08 better than the prior year quarter on a pair share basis. I hope listeners understand that the first calendar quarter of each year is when TA has historically produced its weakest financial results.

Trucking activity is slowest in the first calendar quarter every year, it then picks up in the second and third quarters and slows again in the last 3 months every year.

While Andy will run down the first quarter results in more detail in a moment, a few highlights include: one, nonfuel revenues for the 2013 quarter were up by $21 million or 7% over the prior year; nonfuel gross margin dollars also increased to approximately 7% in the 2013 first quarter versus the prior year quarter; SG&A expenses were held essentially flat versus the prior year quarter; operations, excluded from the same site analysis, are actually sites acquired in 2012 and 2013 contributed $15.5 million of gross margin. I expect these results will continue to improve, over time, as many of the sites have been owned for only a short time and many have not yet seen completion of our planned improvements. Indeed, since the end of 2013 first quarter, we opened 2 new truck repair facilities, at sites acquired in 2011, and another 2 are expected to open in May.

During the first quarter, our total fuel sales volume declined by about 3.3% versus the prior year quarter. I believe this is a modest decline in the face of: one, our final exit from the wholesale fuel business, which was responsible for about 60% of the decline; two, effectively 2 fewer days of operations in 2013 versus 2012; and three, continuing fuel conservation efforts by our customers in the trucking industry.

I continue to believe that the attention that we've devoted to customer service to selectively buying new sites and to improving our facilities and controlling our operating costs had allowed us to improve our bottom line in a slowly improving economy, so far, in 2013, and positioned us for profitability for the full year 2013. While we have been highly focused on improving our operations and controlling costs, I want to highlight some initiatives that we've undertaken that, I believe, may make significant contributions to our future financial results.

First, we entered a definitive agreement with Shell Oil, pursuant to it, Shell agreed to construct a network of a natural gas fueling lanes, at up to 100 of our travel centers over the next several years. We expect that the first natural gas fueling lanes will be operational in early 2014.

Second, we continue to opportunistically take advantage of the distressed market conditions affecting specialized real estate by truck stops. To date, during 2013, we purchased 4 travel center businesses for an aggregate investment of $18.6 million. We also entered in an agreement to purchase another travel center for $4 million and we expect to close that in the near future.

Third, we completed a public offering of senior notes that provided us net proceeds of a little over $105 million that we intend to put to work in growing our business through acquisitions and other capital investments.

And now, Andy Rebholz, our Chief Financial Officer, will review our first quarter results in more detail. And after Andy's comments, I'll make some closing remarks and then we'll try to answer questions.

Read the rest of this transcript for free on seekingalpha.com