TravelCenters of America Inc. Announces Fourth Quarter and Full Year 2022 Financial Results

Rhea-AI Summary

TravelCenters of America announced strong financial results for Q4 2022, reporting net income of $46.8 million, a 266% increase year-over-year. Adjusted EBITDA reached $99.2 million, up 87.5%, alongside a robust cash position of $416 million. Despite a 2.2% decline in total fuel sales volume, fuel gross margin surged 53.9% to $167.9 million, reflecting improved margins per gallon. Additionally, TA entered a merger agreement with BP for $86.00 per share, anticipated to close mid-2023, pending approvals.

Positive

• Net income rose to $46.8 million, up 266% year-over-year.
• Adjusted EBITDA increased to $99.2 million, a growth of 87.5%.
• Fuel gross margin improved by 53.9% to $167.9 million.
• Cash and equivalents totaled $416 million, with total liquidity at $582 million.
• Nonfuel revenues grew by 6.6%, reaching $517.8 million.

Negative

• Total fuel sales volume decreased by 2.2%.
• Diesel fuel sales volume down by 1.8%, gasoline down by 5.8%.

WESTLAKE, Ohio--(BUSINESS WIRE)-- TravelCenters of America Inc. (Nasdaq: TA) today announced financial results for the three months and year ended December 31, 2022.

Fourth Quarter 2022 Highlights:

• Net income of $46.8 million increased by $34.0 million, or 266.0%, and adjusted net income of $44.6 million improved by $31.4 million, or 238.1%, as compared to the prior year period.
• Adjusted EBITDA of $99.2 million increased by $46.3 million, or 87.5%, as compared to the prior year period.
• Adjusted EBITDAR was $164.2 million.
• Cash and cash equivalents of $416.0 million and availability under TA’s revolving credit facility of $166.0 million for total liquidity of $582.0 million as of December 31, 2022.
• The following table presents detailed results for TA’s fuel sales for the 2022 and 2021 fourth quarters.

(in thousands, except per gallon amounts)	Three Months Ended December 31,
		2022			2021		Change
Fuel sales volume (gallons):
Diesel fuel		501,831			510,777		(1.8	)%
Gasoline		62,286			66,135		(5.8	)%
Total fuel sales volume		564,117			576,912		(2.2	)%
Fuel gross margin	$	167,862		$	109,060		53.9	%
Fuel gross margin per gallon	$	0.298		$	0.189		57.7	%

• The following table presents detailed results for TA’s nonfuel revenues for the 2022 and 2021 fourth quarters.

(in thousands)	Three Months Ended December 31,
		2022				2021			Change
Nonfuel revenues:
Store and retail services	$	191,031			$	187,043			2.1	%
Truck service		195,949				181,559			7.9	%
Restaurant		83,050				77,061			7.8	%
Diesel exhaust fluid		47,808				40,282			18.7	%
Total nonfuel revenues	$	517,838			$	485,945			6.6	%
Nonfuel gross margin	$	314,742			$	291,848			7.8	%
Nonfuel gross margin percentage		60.8	%			60.1	%		70 pts

Merger Agreement:

On February 16, 2023, TA announced that it has entered into a merger agreement with BP Products North America Inc., or BP, a subsidiary of BP p.l.c. (NYSE: BP), pursuant to which BP will acquire all of the outstanding shares of TA common stock for $86.00 per share in cash. The transaction is expected to close by mid-year 2023, subject to customary closing conditions, including shareholder and regulatory approval.

Fourth Quarter 2022 Conference Call:

As a result of the merger agreement announcement, TA will not hold a conference call for its results for the fourth quarter and full year 2022.

Reconciliations to GAAP:

Adjusted net income, adjusted net income per share of common stock attributable to common stockholders, EBITDA, adjusted EBITDA, and adjusted EBITDAR are non-GAAP financial measures. The U.S. generally accepted accounting principles, or GAAP, financial measures that are most directly comparable to the non-GAAP measures disclosed herein are included in the supplemental tables below.

About TravelCenters of America Inc.

TravelCenters of America Inc. (Nasdaq: TA) is the nation’s largest publicly traded full-service travel center network. Founded in 1972 and headquartered in Westlake, Ohio, its more than 18,000 team members serve guests in 281 locations in 44 states, principally under the TA®, Petro Stopping Centers® and TA Express® brands. Offerings include diesel and gasoline fuel, truck maintenance and repair, full-service and quick-service restaurants, travel stores, car and truck parking and other services dedicated to providing great experiences for its guests. TA is committed to sustainability, with its specialized business division, eTA, focused on sustainable energy options for professional drivers and motorists, while leveraging alternative energy to support its own operations. TA operates over 600 full-service and quick-service restaurants and nine proprietary brands, including Iron Skillet® and Country Pride®. For more information, visit www.ta-petro.com.

TRAVELCENTERS OF AMERICA INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (dollars in thousands, except per share amounts)
	Three Months Ended December 31,								Year Ended December 31,
		2022				2021				2022				2021
Revenues:
Fuel	$	2,136,591			$	1,543,809			$	8,707,282			$	5,374,695
Nonfuel		517,838				485,945				2,123,223				1,946,732
Rent and royalties from franchisees		3,362				3,768				14,485				15,417
Total revenues		2,657,791				2,033,522				10,844,990				7,336,844
Costs and expenses:
Fuel product cost		1,968,729				1,434,749				8,137,469				4,981,903
Nonfuel product cost		203,096				194,097				841,845				771,292
Site level operating expense		268,507				247,287				1,057,371				955,385
Selling, general and administrative expense		55,855				43,273				190,061				155,355
Real estate rent expense		64,960				64,249				259,713				255,627
Depreciation and amortization expense		29,438				24,263				109,698				96,507
Other operating income, net		(2,261	)			(1,633	)			(4,056	)			(2,275	)
Income from operations		69,467				27,237				252,889				123,050
Interest expense, net		9,277				11,820				41,780				46,786
Other (income) expense, net		(1,348	)			(857	)			(4,560	)			810
Income before income taxes		61,538				16,274				215,669				75,454
Provision for income taxes		(14,737	)			(3,488	)			(51,609	)			(17,263	)
Net income		46,801				12,786				164,060				58,191
Less: net loss for noncontrolling interest		—				—				—				(333	)
Net income attributable to common stockholders	$	46,801			$	12,786			$	164,060			$	58,524
Net income per share of common stock attributable to common stockholders:
Basic and diluted	$	3.14			$	0.87			$	11.04			$	4.01
Weighted average vested shares of common shares		14,440				14,290				14,397				14,252
Weighted average unvested shares of common shares		467				343				463				336

These financial statements should be read in conjunction with TA’s Annual Report on Form 10-K for the year ended December 31, 2022, to be filed with the U.S. Securities and Exchange Commission.

TRAVELCENTERS OF AMERICA INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND OTHER DATA

(dollars in thousands, except for amounts listed in the footnotes to the tables below or unless indicated otherwise)

TA believes the non-GAAP financial measures presented in the tables below are meaningful supplemental disclosures. Management uses these measures in developing internal budgets and forecasts and analyzing TA’s performance and believes that they may help investors gain a better understanding of changes in TA’s operating results and its ability to pay rent or service debt when due, make capital expenditures and expand its business. These non-GAAP financial measures also may help investors to make comparisons between TA and other companies and to make comparisons of TA’s financial and operating results between periods.

The non-GAAP financial measures TA presents should not be considered as alternatives to net income attributable to common stockholders, net income, income from operations, or net income per share of common stock attributable to common stockholders as an indicator of TA’s operating performance or as a measure of TA’s liquidity. Also, the non-GAAP financial measures TA presents may not be comparable to similarly titled amounts calculated by other companies.

TA believes that adjusted net income, adjusted net income per share of common stock attributable to common stockholders, EBITDA and adjusted EBITDA are meaningful disclosures that may help investors to better understand TA’s financial performance by providing financial information that represents the operating results of TA’s operations without the effects of items that do not result directly from TA’s normal recurring operations and may allow investors to better compare TA’s performance between periods and to the performance of other companies. TA calculates EBITDA as net income before interest, income taxes and depreciation and amortization expense, as shown below. TA calculates adjusted EBITDA by excluding items that it considers not to be normal, recurring, cash operating expenses or gains or losses.

In addition, TA believes that, because it leases a majority of its travel centers, presenting adjusted EBITDAR may help investors compare the value of TA against companies that own and finance ownership of their properties with debt financing, since this measure eliminates the effects of variability in leasing methods and capital structures. This measure may also help investors evaluate TA’s valuation if it owned its leased properties and financed that ownership with debt, in which case the interest expense TA incurred for that debt financing would be added back when calculating EBITDA. Adjusted EBITDAR is presented solely as a valuation measure and should not be viewed as a measure of overall operating performance or considered in isolation or as an alternative to net income because it excludes the real estate rent expense associated with TA’s leases and it is presented for the limited purposes referenced herein. TA calculates EBITDAR as net income before interest, income taxes, real estate rent expense and depreciation and amortization expense and adjusted EBITDAR by excluding items that it considers not to be normal, recurring, cash operating expenses or gains or losses.

TA believes that net income is the most directly comparable GAAP financial measure to adjusted net income, EBITDA, adjusted EBITDA and adjusted EBITDAR, and that net income per share of common stock attributable to common stockholders is the most directly comparable GAAP financial measure to adjusted net income per share of common stock attributable to common stockholders.

The following tables present the reconciliations of the non-GAAP financial measures to the respective most directly comparable GAAP financial measures for the three months and years ended December 31, 2022 and 2021.

Calculation of adjusted net income:		Three Months Ended December 31,								Year Ended December 31,
			2022				2021				2022				2021
Net income		$	46,801			$	12,786			$	164,060			$	58,191
Add: QSL impairment(1)			—				—				—				650
Add: Costs related to the exit of TA’s Canadian travel center(2)			—				—				1,005				—
Add: Costs related to acquisitions(3)			—				—				826				—
Add: Equity investment ownership dilution(4)			802				—				802				1,826
Add: Employee retention tax credit(5)			—				1,644				—				1,644
Less: Gain on sale of assets, net (6)			—				—				—				(897	)
Less: Net gain on insurance settlement and recoveries(7)			(1,860	)			(1,109	)			(3,844	)			(1,109	)
Less: Tax impact of adjusting items(8)			(1,165	)			(135	)			(1,127	)			(533	)
Adjusted net income		$	44,578			$	13,186			$	161,722			$	59,772

TRAVELCENTERS OF AMERICA INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND OTHER DATA (dollars in thousands, except for amounts listed in the footnotes to the tables below or unless indicated otherwise)
Calculation of adjusted net income per share of common stock attributable to common stockholders (basic and diluted):		Three Months Ended December 31,								Year Ended December 31,
			2022				2021				2022				2021
Net income per share of common stock attributable to common stockholders (basic and diluted)		$	3.14			$	0.87			$	11.04			$	4.01
Add: QSL impairment(1)			—				—				—				0.04
Add: Costs related to the exit of TA’s Canadian travel center(2)			—				—				0.07				—
Add: Costs related to acquisitions(3)			—				—				0.06				—
Add: Equity investment ownership dilution(4)			0.05				—				0.05				0.13
Add: Employee retention tax credit(5)			—				0.11				—				0.11
Less: Gain on sale of assets, net(6)			—				—				—				(0.06	)
Less: Net gain on insurance settlement and recoveries(7)			(0.12	)			(0.08	)			(0.26	)			(0.08	)
Less: Tax impact of adjusting items(8)			(0.08	)			(0.01	)			(0.08	)			(0.04	)
Adjusted net income per share of common stock attributable to common stockholders (basic and diluted)		$	2.99			$	0.89			$	10.88			$	4.11

Calculation of EBITDA and adjusted EBITDA:		Three Months Ended December 31,								Year Ended December 31,
			2022				2021				2022				2021
Net income		$	46,801			$	12,786			$	164,060			$	58,191
Add: Provision for income taxes			14,737				3,488				51,609				17,263
Add: Depreciation and amortization expense			29,438				24,263				109,698				96,507
Add: Interest expense, net			9,277				11,820				41,780				46,786
EBITDA			100,253				52,357				367,147				218,747
Add: Costs related to the exit of TA’s Canadian travel center(2)			—				—				1,005				—
Add: Costs related to acquisitions(3)			—				—				826				—
Add: Equity investment ownership dilution(4)			802				—				802				1,826
Add: Employee retention tax credit(5)			—				1,644				—				1,644
Less: Gain on the sale of assets, net(6)			—				—				—				(897	)
Less: Net gain on insurance settlement and recoveries(7)			(1,860	)			(1,109	)			(3,844	)			(1,109	)
Adjusted EBITDA		$	99,195			$	52,892			$	365,936			$	220,211

Calculation of adjusted EBITDAR:	Three Months Ended December 31,			Year Ended December 31,
	2022			2022
Adjusted EBITDA	$	99,195		$	365,936
Add: Real estate rent expense		64,960			259,713
Adjusted EBITDAR	$	164,155		$	625,649

TRAVELCENTERS OF AMERICA INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND OTHER DATA (dollars in thousands, except for amounts listed in the footnotes to the tables below or unless indicated otherwise)
Total fuel gross margin and nonfuel revenues:		Three Months Ended December 31,						Year Ended December 31,
			2022			2021			2022			2021
Fuel gross margin		$	167,862		$	109,060		$	569,813		$	392,792
Non fuel revenues			517,838			485,945			2,123,223			1,946,732
Total fuel gross margin and nonfuel revenues		$	685,700		$	595,005		$	2,693,036		$	2,339,524

(1)		QSL Impairment. On April 21, 2021 TA completed the sale of its Quaker Steak & Lube, or QSL, business for $5.0 million, excluding costs to sell and certain closing adjustments. TA recorded a pre-sale impairment charge relating to its QSL business, which is included in depreciation and amortization expense in TA’s consolidated statement of operations and comprehensive income. Refer to note 6 below for more information on the sale of QSL.
(2)		Costs Related to the Exit of TA’s Canadian Travel Center. On April 26, 2022, TA ceased operations at its only travel center located in Woodstock, Canada, During 2022, TA recognized expense of $0.4 million for employee termination benefits and $0.6 million of environmental costs associated with the closure of its Woodstock travel center, which were included in site level operating expense in TA’s consolidated statements of operations and comprehensive income.
(3)		Costs Related to Acquisitions. TA incurred costs for success fees related to the completion of certain acquisitions, which were included in other operating expense (income), net in TA’s consolidated statements of operations and comprehensive income.
(4)		Equity Investment Ownership Dilution. During 2022, TA recognized a loss of $0.8 million related to its ownership withdrawal from Epona, LLC, owner of QuikQ LLC, an equity method investment. During 2021, the investment was reduced to less than 50%, for which a loss of $1.8 million was recorded. These losses were included in other (income) expense, net in TA’s consolidated statements of operations and comprehensive income.
(5)		Employee Retention Tax Credit. As a result of the Coronavirus Aid, Relief and Economic Security Act, enacted by the U.S. government on March 27, 2020, TA recognized expenses relating to refundable payroll tax credits in site level operating expense in TA’s consolidated statements of operations and comprehensive income.
(6)		Gain on Sale of Assets, Net. In May 2021, TA sold a property located in Mesquite, Texas for a sales price of $2.2 million, excluding selling costs. TA recognized a gain on the sale of $1.5 million. On April 21, 2021, TA completed the sale of its QSL business for $5.0 million, excluding costs to sell and certain closing adjustments. TA recognized a loss on the sale of $0.6 million. The gain and loss on the sale of assets were included in other operating income, net in TA’s consolidated statements of operations and comprehensive income.
(7)		Net Gain on Insurance Settlement and Recoveries. TA pursued the settlement of a claim and other recoveries under its property and business interruption insurance policies. During the fourth quarter of 2022, TA recognized a net gain of $1.9 million related to a claim settlement. During the first quarter of 2022 and fourth quarter of 2021, TA recognized a net gain of $2.0 million and $1.1 million, respectively, related to property and business interruption insurance other recoveries. These gains were included in other operating income, net in TA’s consolidated statements of operations and comprehensive income.
(8)		Tax Impact of Adjusting Items. TA calculated the income tax impact of the adjustments described above by using the expected tax accounting treatment and estimated statutory income tax rate for the jurisdiction of each adjusting item.

TRAVELCENTERS OF AMERICA INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (dollars in thousands)
	December 31,
		2022			2021
Assets:
Current assets:
Cash and cash equivalents	$	416,012		$	536,002
Accounts receivable, net		206,622			111,392
Inventory		272,074			191,843
Other current assets		47,192			37,947
Total current assets		941,900			877,184
Property and equipment, net		999,404			831,427
Operating lease assets		1,576,538			1,659,526
Goodwill		37,110			22,213
Intangible assets, net		14,485			10,934
Other noncurrent assets		83,470			107,217
Total assets	$	3,652,907		$	3,508,501
Liabilities and Stockholders’ Equity:
Current liabilities:
Accounts payable	$	253,571		$	206,420
Current operating lease liabilities		113,940			118,005
Other current liabilities		216,138			194,853
Total current liabilities		583,649			519,278
Long term debt, net		524,206			524,781
Noncurrent operating lease liabilities		1,551,027			1,655,359
Other noncurrent liabilities		120,819			106,230
Total liabilities		2,779,701			2,805,648
Stockholders’ equity (15,105 and 14,839 shares of common stock outstanding as of December 31, 2022 and 2021, respectively)		873,206			702,853
Total liabilities and stockholders’ equity	$	3,652,907		$	3,508,501

These financial statements should be read in conjunction with TA’s Annual Report on Form 10-K for the year ended December 31, 2022, to be filed with the U.S. Securities and Exchange Commission.

Warning Concerning Forward-Looking Statements

This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Whenever TA uses words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “will,” “may” and negatives or derivatives of these or similar expressions, TA is making forward-looking statements. These forward-looking statements are based upon TA’s present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Actual results may differ materially from those contained in or implied by TA’s forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond TA’s control. Among others, the forward-looking statements which appear in this press release that may not occur include:

• Statements about the ability of TA and BP to consummate the proposed merger transaction on a timely basis or at all; and the satisfaction of the conditions precedent to consummation of the proposed transaction, including the ability to secure regulatory approvals on the terms expected, at all or in a timely manner.

The information contained in TA’s periodic reports, including TA’s Annual Report on Form 10-K for the year ended December 31, 2022, which has been or will be filed with the U.S. Securities and Exchange Commission, or SEC, under the captions “Warning Concerning Forward-Looking Statements” and “Risk Factors” and elsewhere in that report, or incorporated therein, identifies other important factors that could cause differences from TA’s forward-looking statements. TA’s filings with the SEC are available on the SEC’s website at www.sec.gov.

You should not place undue reliance upon forward-looking statements. Except as required by law, TA does not intend to update or change any forward-looking statement as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230228006201/en/

Stephen Colbert, Director of Investor Relations

(617) 796-8251

www.ta-petro.com

Source: TravelCenters - Financial

FAQ

What were TravelCenters of America's earnings for Q4 2022?

TravelCenters of America reported net income of $46.8 million for Q4 2022.

What is the adjusted EBITDA for TravelCenters of America in Q4 2022?

Adjusted EBITDA for Q4 2022 was $99.2 million.

What merger agreement did TravelCenters of America announce?

TravelCenters announced a merger agreement with BP for $86.00 per share.

When is the expected closing date for the merger with BP?

The merger is expected to close by mid-year 2023, pending approvals.

How much liquidity does TravelCenters of America have?

As of December 31, 2022, TravelCenters had total liquidity of $582 million.