TravelCenters of America Reports 4Q, Yearend 2008 Results
Experiences 15% decline in fuel volumes for year
WESTLAKE, Ohio -- TravelCenters of America LLC (TA) has announced financial results for the fourth quarter and year ended Dec. 31, 2008. During the three months and year ended Dec. 31, 2008, the significant slowing of the U.S. economy presented TA with numerous operating challenges. TA experienced, on a same-site basis, a 14% decline in fuel volumes for the 2008 fourth quarter as compared to the 2007 fourth quarter. For the year ended Dec. 31, 2008, on a same-site basis, TA experienced a 15% decline in fuel volumes as compared to the year ended Dec. 31, 2007. TA said it believes [image-nocss] that its fuel volume declines are in line with declines in trucking activity and diesel fuel consumption.
Despite these business conditions, TA believes it has made progress toward adjusting its business to these challenges. TA's net income, EBITDAR and adjusted EBITDAR for fourth-quarter 2008 improved over the same period of 2007 by $70.3 million, $56 million and $49.2 million, respectively. For the year ended Dec. 31, 2008, TA's net loss, EBITDAR and adjusted EBITDAR improved over the year ended Dec. 31, 2007, by $83.2 million, $164.5 million, and $86.6 million, respectively.
TA became a public company on Jan. 31, 2007. On May 30, 2007, TA acquired Petro Stopping Centers LP. Because of the significance of these transactions, TA's historical financial results in accordance with generally accepted accounting principles may have only limited relevance to investors. Consequently, in addition to the historical financial results in accordance with generally accepted accounting principles presented in this press release, TA is furnishing supplemental data that it believes may help investors better understand TA's business. Included in this supplemental data is same site operating data that includes results of sites for periods prior to TA's operation of those sites. Also included is a presentation of earnings before interest, taxes, depreciation, amortization and rent, or EBITDAR, and EBITDAR excluding the impact of certain noncash items and certain items that TA considers to be nonrecurring as a result of the changes experienced on January 31 and May 30, 2007, and other items described, or adjusted EBITDAR.
TA's business included 233 sites, 166 of which were operated under the TravelCenters of America or TA brand names and 67 that were operated under the Petro brand name.
TA said it believes that its operating initiatives have been significant contributors to these improved results; specifically, the staffing reorganization undertaken to realize Petro integration synergies, the personnel cost savings related to the workforce reduction announced in March 2008, the termination of a fuel marketing arrangement with a third party marketer and numerous cost reduction, fuel purchasing and pricing strategies which were designed to improve TA's operating margins.
For the year ended Dec. 31, 2008, TA invested $79.4 million in capital projects, received $77.4 million of cash from Hospitality Properties Trust from the sale of leasehold improvements, and made a $7 million capital investment in its joint venture that TA expects will undertake in 2009 to develop a new travel center on land that joint venture already owns. 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 approximately $16.8 million of qualifying improvements with no increase in its rent.
Pursuant to an arrangement with Hospitality Trust, TA deferred $30 million of cash rent payments during 2008. TA has the option to defer up to $5 million of monthly rent during 2009 and 2010. Amounts deferred are due in July 2011. TA deferred an additional $5 million of rent for each of January and February 2009.
At Dec. 31, 2008, TA had approximately $145.5 million in cash and cash equivalents. In addition, a portion of TA's $100 million bank credit facility remains unused.
Westlake, Ohio-based TA's travel centers 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.