TravelCenters of America LLC (TA)
Q4 2011 Earnings Call
March 15, 2012 10:00 am ET
Carlynn Finn -
Thomas M. O'Brien - Chief Executive Officer, President, Managing Director, Member of the Office of the Chairman and Director
Andrew J. Rebholz - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer
Benjamin Brownlow - Morgan Keegan & Company, Inc., Research Division
Susan Anderson - Citigroup Inc, Research Division
Previous Statements by TA
» TravelCenters of America LLC's CEO Discusses Q3 2011 Results - Earnings Call Transcript
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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, March 15, 2012. 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 within 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. Thank you for joining our call. 2011 was indeed a banner year for TA's financial results. Full year 2011 results included net income of $0.98 a share or $23.6 million, a $90-million improvement over 2010. EBITDAR for the 2011 fourth quarter was $62 million, an increase of $13 million or 28% over the 2010 quarter. For the 2011 full year, our EBITDAR was $272 million, an increase of $35 million or 15% over 2010. Rent and interest expense declined by $59 million. A closer look at our results shows how broad-based our success in 2011 has been. While Andy will run down the results in more detail in a moment, a few highlights include: One, the continued steadiness in fuel gross margin per gallon which settled in for the year and for the fourth quarter at about $0.15 per gallon; two, healthy top line nonfuel growth of 7.5% for the fourth quarter and 8.4% for the full year; three, nonfuel gross margin percentages declined 80 and 90 basis points on the same site basis for the fourth quarter and the full year, however, this is largely due as reported in prior quarters to our decision to trade some margin percentage for volume and margin dollars. All told on a same-site basis, margin dollars increased about $45 million for the full year, outpacing growth in operating expenses in both dollars and on a percentage basis. And four, operations excluded from the same-site analysis largely sites acquired in 2011 contributed about $16.5 million of gross margin over operating expenses, the measure which I take is validation of our acquisition activities.
During 2011, we acquired 8 operating sites for about $37 million and invested $12 million during the year in improvements at those sites. I'm particularly encouraged by these results, because they represent only a partial year and not all of our planned improvements were completed in 2011. We ended the year with over $100 million in cash and an undrawn $200 million line of credit. 15 operating sites as of year-end that we owned outright and debt free may serve as an additional longer term source of liquidity. I believe these sources will enable us to continue to capitalize on acquisition and internal growth opportunities and to provide a cushion for the working capital risks of possible rising fuel costs.
We continue to believe that the attention we've shown to customer service, improving our facilities and controlling our operating costs allowed us to turn profitable in a slowly improving economy in 2011 and has positioned TA for continued profitability in 2012. Our focus for 2012 includes: One, the continuation of prudent, selective acquisition of additional operating travel centers. Indeed, last week, we acquired a travel center on I-85 in Georgia for $5 million. Two, the continuation of internal growth capital investment. For example during 2011 at the travel centers we operated all year, we added 8 quick service restaurants, rebranded dozens of gasoline stations and installed both diesel exhaust fluid dispensers at 42 travel centers. And three, continued improvement in operating metrics and customer service delivery. I believe that the TA and Petro brands have clearly lead the industry in delivery of service, efficiency and convenience for drivers. And now, Andy Rebholz, our Chief Financial Officer, will review our fourth quarter and full year results in more detail. And after Andy's comments, I'll make some closing remarks and then we'll try to answer questions.
Andrew J. Rebholz
Thanks, Tom. Good morning, everybody. I'll discuss some of our key financial results for the 2011 fourth quarter and full year. In this discussion, I will refer to same-site results, which are the results that only those sites that we have continuously operated since January 1, 2010. First, I'll cover our fourth quarter results. In the fourth quarter of 2011, TA generated a net loss of $2.5 million or $0.09 per share, a $27.5-million improvement over the prior year quarter when we had posted a net loss of $30 million. Approximately $15 million of this improvement related to lower rent and interest expense that largely resulted from the amendment agreement we entered with HPT effective January 2011. As a reminder, I want to point out that TA's business is impacted by seasonal changes. The first and fourth quarters of each calendar year generally produce our weakest financial results. And the second and third calendar quarters generally produce our best financial results.