Fuel Volumes Down 10%
Economy puts pressure on TA's 2nd-quarter results
WESTLAKE, Ohio -- During the three months and six months ended June 30, 2009, the continued slowing of the U.S. economy presented TravelCenters of America (TA) with significant operating challenges, according to the company's second-quarter 2009 results released yesterday.
TA experienced, on a same site basis, a 10.7% decline in fuel volumes for the 2009 second quarter as compared to the 2008 second quarter and a 13.6% decline in fuel volumes for the 2009 first half as compared to the 2008 first half. TA said it believes that its fuel-volume declines are consistent with [image-nocss] declines in trucking activity and diesel fuel consumption generally.
During the six months ended June 30, 2009, TA invested $13.0 million in capital projects and received $4.8 million of cash from parent company Hospitality Properties Trust from the sale of qualifying leasehold improvements with no corresponding increase in rent.
TA's current capital plan for 2009 anticipates expenditures of approximately $60 million, some of which may be sold to Hospitality Trust under the lease agreements TA has entered with Hospitality Trust, including up to approximately $11.3 million (on an undiscounted basis) of qualifying improvements that may be sold to Hospitality Trust with no increase in its rent. The amounts TA receives from such sales may be discounted if the timing for the sales of the applicable improvements is accelerated.
Pursuant to an arrangement with Hospitality Trust, TA has the option to defer up to $5 million of rent for each month during 2009 and 2010. Amounts deferred are due no later than July 2011. TA has taken advantage of all deferrals available to it thus far, including $30 million during the six months ended June 30, 2009, and $30 million during 2008.
As of June 30, 2009, TA had approximately $182.0 million in cash and cash equivalents. Meanwhile, $33.5 million of TA's $100 million bank credit facility was unused and available for borrowing. This credit facility is collateralized by certain of TA's cash accounts, accounts receivable and inventory.
As of June 30, 2009, the cash accounts pledged as collateral for this credit facility had a balance of $63.3 million and this credit facility was overcollateralized by $33.7 million, resulting in $29.6 million of the pledged cash accounts being available to us for use without reducing the maximum amount available for borrowing under the facility.
TA operates 233 travel centers under the TravelCenters of America, TA and Petro brand names. They offer diesel and gasoline fueling services, restaurants, truck repair facilities, stores and other services. TA's nationwide business includes travel centers located in 41 U.S. states and in Canada.