TravelCenters of America Inc. Announces Fourth Quarter and Full Year 2020 Financial Results

Rhea-AI Summary

TravelCenters of America (Nasdaq: TA) reported its financial results for Q4 2020, showing a reduced adjusted net loss of $2.1 million, alongside a 36.1% increase in adjusted EBITDA to $7.2 million. Diesel fuel sales volume rose by 16.2%, but adjusted fuel gross margin fell by 8.8% due to reduced gasoline sales. Nonfuel revenues declined by 1% mainly from full-service restaurants being closed. However, excluding these, nonfuel revenues improved by 7.1%. The company outlines ambitious capital expenditure plans and a focus on alternative energy initiatives for 2021.

Positive

• Adjusted EBITDA increased by 36.1% to $7.2 million.
• Diesel fuel sales volume rose 16.2% compared to the previous year.
• Nonfuel revenues improved by 7.1% excluding full-service restaurant impacts.
• Cash and cash equivalents totaled $483.2 million, providing strong liquidity.

Negative

• Adjusted fuel gross margin decreased by 8.8% due to lower gasoline sales volume.
• Total nonfuel revenues fell by 1.0% primarily due to closed restaurants.

TravelCenters of America Inc. (Nasdaq: TA) today announced financial results for the three months and year ended December 31, 2020.

Jonathan M. Pertchik, TA's CEO, made the following statement regarding the 2020 fourth quarter results:

"The COVID-19 pandemic continues to have an extensive impact on demand and our operations; however, through our mission to 'Return every traveler to the road better than they came', the early effectiveness of our Transformation Plan and our discipline around managing expenses, we were able to deliver improved operating results in the fourth quarter. We reduced our adjusted net loss by $2.1 million and posted a $7.2 million, or 36.1%, improvement in adjusted EBITDA and a $7.9 million, or 9.6%, improvement in adjusted EBITDAR over the prior year fourth quarter.

"Our continued focus on our fleet customers drove a 16.2% increase in diesel fuel sales volume over the prior year fourth quarter, although our adjusted fuel gross margin, which excludes the federal biodiesel blenders' tax credit recognized during 2020 and December 2019, was down 8.8% due to lower gasoline sales volume as a result of reduced four wheel traffic and low volatility in the diesel fuel wholesale market, which unfavorably impacted fuel gross margin per gallon. Additionally, the 2020 fourth quarter was impacted by diesel fuel gross margin market volatility and headwinds which also impacted the quarter results, and may continue to create challenges going forward. Nonetheless, our enhanced leadership has demonstrated its ability to effectively execute through challenging times caused by COVID-19 pandemic.

"Total nonfuel revenues decreased 1.0% over the prior year period driven almost entirely by a decline in revenues at our full service restaurants, many of which remain closed due to governmental mandates and our own precautions taken in response to the COVID-19 pandemic. Excluding full service restaurants, total nonfuel revenues improved 7.1% over the prior year due to solid improvements in our store and retail services and truck service departments, as well as a significant improvement in revenues from diesel exhaust fluid. Our sound discipline in managing expenses, resulted in decreases of 8.7% and 4.5% in site level operating expense and selling, general and administrative expense, respectively, were primary factors in delivering improved quarter over quarter results.

"Looking ahead, while fuel gross margin headwinds may persist, we are extremely excited about our 2021 capital expenditures plans that focus on both remediation and growth on top of the operational improvements we have implemented. We expect to target a 15% to 20% cash on cash return for those capital expenditures related to growth initiatives. Equally as exciting are our burgeoning plans in the area of alternative energy, where we are moving toward onboarding dedicated leadership and finalizing a clear strategy going forward that we expect may include meaningful collaborations and ventures. This is a challenging, yet exciting and opportune time at TA."

Reconciliations to GAAP:

Adjusted net loss, adjusted net loss per share of common stock attributable to common stockholders, adjusted fuel gross margin, adjusted fuel gross margin per gallon, adjusted fuel gross margin and nonfuel revenues, EBITDA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITDAR margin 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.

Fourth Quarter 2020 Highlights:

• Cash and cash equivalents of $483.2 million and availability under TA's revolving credit facility of $70.0 million for total liquidity of $553.2 million as of December 31, 2020.
• The followi

FAQ

What were TravelCenters of America's financial results for Q4 2020?

TravelCenters reported a reduced adjusted net loss of $2.1 million and a 36.1% increase in adjusted EBITDA to $7.2 million.

How did diesel fuel sales perform in Q4 2020 for TA?

Diesel fuel sales volume increased by 16.2% compared to Q4 2019.

What is the outlook for TravelCenters of America in 2021?

TA plans significant capital expenditures with a target cash on cash return of 15% to 20%, focusing on remediation and growth.

What challenges did TA face in Q4 2020?

TA experienced reduced nonfuel revenues mainly due to the closure of full-service restaurants due to COVID-19.