TravelCenters of America LLC (TA)

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TravelCenters of America LLC (TA)

Q4 2010 Earnings Call

February 18, 2011 10:00 am ET


Carlynn Finn - Manager Investor Relations

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

Thomas O'Brien - Chief Executive Officer, President, Managing Director, Member of the Office of the Chairman and Director


Brandon Osten

Marc Cohen

Smedes Rose - Keefe, Bruyette, & Woods, Inc.

Dennis Wurst - vFinance Investments

Vadim Perelman

Andrew Gadlin

Benjamin Brownlow - Morgan, Keegan & Company, LLC

Philip Benedict

Brian Tran

Adam Wyden



Ladies and gentlemen, thank you for standing by. Welcome to the TravelCenters of America Fourth Quarter and Year End 2010 Financial Results Investors Conference Call. [Operator Instructions] I would now like to turn our conference over to Carlynn Finn, TA's Manager of Investor Relations. 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 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, February 18, 2011. 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 O'Brien

Good morning, and thank you for joining our call. I'm here to report our results for the 2010 fourth quarter and full year, both of which reflected significant improvement over 2009 periods.

Our 2010 fourth quarter net loss was $15 million better than the prior-year quarter. And our EBITDAR was $48 million, an increase of $16 million or 50% over the 2009 quarter. For the 2010 full year, our net loss improved by $24 million versus 2009. And our EBITDAR was $237 million, an increase of $35 million or 17% over 2009.

On February 1, 2011, we announced the terms of completed amendments to our leases with Hospitality Properties Trust, or HPT, our principal landlord. The principal financial effects of these amendments include a reduction in our future rental obligations by about $47 million annually, the elimination of interest on previously deferred rent, which would have amounted to an additional $18 million annually, and the extension of the payment date for that $150 million deferred rent obligation until 2022 and 2024. Andy will remind you of more of the details on these amendments in a moment.

On a pro forma basis, assuming the amendment agreement had been effective for 2010, instead of reporting a $66 million net loss for 2010, TA would have reported a net loss of $5 million. Further, TA's EBITDAR of $237 million compares favorably to pro forma cash rent obligations of $185 million.

As excited as I am to have been able to reach mutually acceptable resolution of these matters with HPT, I'm even more excited because our 2010 results continue to improve over the prior-year period, and excited further still that nearly all aspects of our business contributed to that improvement. Fuel sales volumes, fuel margin and non-fuel revenues, all were up over the prior year on a same-site basis. Non-fuel margin percentages on a same-site basis improved versus the 2009 periods. Operating expenses as a percentage of non-fuel revenues were improved over the prior year. Franchisee royalty revenues were up on a same-site basis, and the SG&A expenses were held in check at only 2.4% increase.

Our EBITDAR in 2010 outpaced 2009 EBITDAR by $35 million, as I said. 2010 did start out rough. Our first quarter 2010 EBITDAR had declined by $20 million versus the 2009 first quarter, but that decline was overwhelmed by improvements of $19 million, $20 million and $16 million in the second, third and fourth quarters of 2010, respectively.

Even more importantly, we continued to succeed in improving the experience of our customers at our sites. During 2010, we rolled out our industry-leading loyalty program, UltraONE. We invested nearly $60 million in capital items to improve our facilities, and we invested in new customer service training programs for all of our employees. We believe we have made TA and Petro a better choice for trucking fleets and truck drivers, and we believe our results in 2010 reflect a positive response by customers to the programs we've implemented and the investments we've made.

And now, Andy Rebholz, our Chief Financial Officer, will review our fourth quarter and full-year results in more details. After his comments, I'll make some closing remarks, and then we'll try to answer questions.

Andrew Rebholz

Thanks, Tom. And good morning, everybody. I will discuss some of our key financial results for the 2010 fourth quarter and the full year. In this discussion, I will refer to same-site results, which are the results at only those sites that we have continuously operated since January 1, 2009.

First, I will cover our fourth quarter results. In the fourth quarter of 2010, TA generated a net loss of $30 million or $1.71 per share. In the fourth quarter of 2009, TA had posted a net loss of $44.6 million or $2.65 per share. For the fourth quarter of 2010, TA also reported EBITDAR of $48.3 million, an increase of about $16 million versus the fourth quarter of 2009. EBITDAR in the fourth quarter of 2010 fell short of cash rent and interest by $5.1 million and fell short of GAAP rent and interest expense by $17 million. As Tom just noted, the improvement over the prior year results is attributable to improvements in nearly all areas of our business.

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