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TravelCenters of America LLC Announces First Quarter 2018 Financial Results

May 7, 2018

WESTLAKE, Ohio--(BUSINESS WIRE)--May 7, 2018--TravelCenters of America LLC (Nasdaq: TA) today announced financial results for the three months ended March 31, 2018:

Andrew J. Rebholz, TA’s CEO, made the following statement regarding the 2018 first quarter results:

“During the first quarter of 2018, we continued to gain traction in our business initiatives. Our efforts continued to make progress against the combined headwinds of increased fuel efficiency and competition we have been experiencing and we continued to grow our nonfuel businesses. For same sites in our travel centers segment, nonfuel revenues were up 3.9% over the prior year quarter and nonfuel gross margin was up 5.2%, driven largely by our truck service programs and other retail services, such as parking and showers. We also continued to see success with our cost control initiatives. On a same site basis, site level operating expenses as a percentage of nonfuel revenues improved by 90 basis points and by 150 basis points in our travel centers segment. The operating results we saw during the first quarter of this year leave me optimistic that we will further grow our business and improve our profitability as we continue through 2018.”

Business Commentary

Fuel sales volume increased modestly and same site fuel sales volume decreased by 3.6 million gallons, or 0.7%, for the 2018 first quarter as compared to the 2017 first quarter. TA believes the slight fuel sales volume decrease on a same site basis experienced during the 2018 first quarter primarily resulted from the continued effects of fuel efficiency gains and increased competition. Fuel revenues increased by $177.3 million, or 19.2%, in the 2018 first quarter as compared to the 2017 first quarter primarily due to higher market prices for fuel during the 2018 first quarter and newly acquired and developed locations. Fuel gross margin increased by $20.4 million, or 27.9%, as compared to the 2017 first quarter primarily as a result of the $23.3 million benefit recognized in the 2018 first quarter in connection with the February 2018 retroactive reinstatement for 2017 of the federal biodiesel tax credit. Without this discrete item, fuel gross margin declined by $2.9 million.

Nonfuel revenues increased by $16.2 million, or 3.5%, in the 2018 first quarter as compared to the 2017 first quarter, including a $12.2 million same site increase and a $4.0 million increase attributable to new sites. The increase on a same site basis was primarily due to an increase in truck service and parking programs. Nonfuel gross margin increased by $14.6 million, or 5.5%, in the 2018 first quarter as compared to the 2017 first quarter, including a $12.0 million same site increase and a $2.6 million increase attributable to new sites. The increase in nonfuel gross margin was primarily due to the increase in nonfuel revenues and an increase in the nonfuel gross margin percentage. The nonfuel gross margin percentage was 58.8% for the 2018 first quarter as compared to 57.7% for the 2017 first quarter; the increase in the nonfuel gross margin percentage was primarily due to a change in the mix of products and services sold.

Site level operating expenses increased by $3.6 million, or 1.5%, in the 2018 first quarter as compared to the 2017 first quarter due to a $2.0 million same site increase and a $1.6 million increase from sites acquired and developed since the beginning of the 2017 first quarter. The increase on a same site basis was primarily due to increased labor costs related to the increase in nonfuel sales. Site level operating expenses as a percentage of nonfuel revenues was 51.9% for the 2018 first quarter as compared to 53.0% for the 2017 first quarter. The improvement in site level operating expenses as a percentage of nonfuel revenues was primarily the result of excess transaction fees of $1.8 million charged by Comdata, Inc., or Comdata, in the 2017 first quarter and the realization of certain cost saving initiatives in the 2018 first quarter.

Selling, general and administrative expenses for the 2018 first quarter decreased by $3.3 million, or 7.9%, as compared to the 2017 first quarter, primarily attributable to litigation costs related to TA’s litigation with Comdata expensed during the 2017 first quarter.

Real estate rent expense increased by $2.8 million, or 4.1%, in the 2018 first quarter as compared to the 2017 first quarter, primarily from TA’s sale to, and lease back from, Hospitality Properties Trust, or HPT, of a travel center and improvements at leased sites since the beginning of 2017.

Depreciation and amortization expense decreased by $4.3 million, or 13.4%, in the 2018 first quarter as compared to the 2017 first quarter primarily resulting from the write offs of certain assets during the 2017 first quarter.

Net loss for the 2018 first quarter was $10.1 million as compared to $29.4 million for the 2017 first quarter. Adjusted net loss for the 2018 first quarter was $26.8 million as compared to $21.0 million for the 2017 first quarter. The increase in adjusted net loss was primarily due to the decrease in fuel gross margin, an increase in real estate rent expense and an increase in selling, general and administrative expenses.

Net loss attributable to common shareholders for the 2018 first quarter was $0.25 per common share as compared to $0.74 per common share for the 2017 first quarter. Adjusted net loss attributable to common shareholders for the 2018 first quarter was $0.67 per common share as compared to $0.53 per common share for the 2017 first quarter.

Adjusted EBITDA for the 2018 first quarter decreased by $0.6 million as compared to the 2017 first quarter, primarily due to the decrease in fuel gross margin, an increase in real estate rent expense and an increase in selling, general and administrative expenses.

Travel Centers Segment

Fuel sales volume increased by 1.5 million gallons, or 0.3%, for the 2018 first quarter as compared to the 2017 first quarter due to newly acquired and developed locations. Same site fuel sales volume decreased by 2.8 million gallons, or 0.6%, due to the continued effects of fuel efficiency gains and increased competition. Fuel revenues increased by $164.3 million, or 20.5%, in the 2018 first quarter as compared to the 2017 first quarter primarily due to higher market prices for fuel and from sites acquired and developed since the beginning of the 2017 first quarter. Fuel gross margin increased by $20.5 million, or 33.2%, to $82.4 million primarily as a result of the $23.3 million benefit recognized in the 2018 first quarter in connection with the February 2018 retroactive reinstatement for 2017 of the federal biodiesel tax credit and from an increase from newly acquired and developed locations.

Nonfuel revenues increased by $20.2 million, or 5.1%, in the 2018 first quarter as compared to the 2017 first quarter primarily due to a $15.3 million, or 3.9%, increase on a same site basis primarily as a result of TA’s truck service and parking programs. Nonfuel gross margin increased by $15.4 million, or 6.4%, in the 2018 first quarter as compared to the 2017 first quarter due to an increase in nonfuel revenues and an increase in the nonfuel gross margin percentage. Nonfuel gross margin percentage was 61.8% in the 2018 first quarter as compared to 61.0% in the 2017 first quarter; the increased nonfuel gross margin percentage was primarily the result of changes in the mix of products and services sold.

Site level gross margin in excess of site level operating expenses increased by $31.5 million, or 34.1%, in the 2018 first quarter as compared to the 2017 first quarter primarily due to an increase at same sites.

On a same site basis, (223 locations) site level gross margin in excess of site level operating expenses increased in the 2018 first quarter by $29.2 million, or 32.5%, as compared to the 2017 first quarter, primarily due to a $19.0 million increase in fuel gross margin that resulted primarily as a result of a one time reduction in TA’s fuel costs of goods sold related to the retroactive reinstatement for 2017 of the federal biodiesel tax credit and an increase in nonfuel gross margin due to the increase in both nonfuel revenues and nonfuel gross margin percentage.

Convenience Stores Segment

Fuel sales volume decreased by 1.0 million gallons, or 1.8%, for the 2018 first quarter as compared to the 2017 first quarter. This decrease was primarily due to the continued effects of competition. Fuel revenues increased by $11.3 million, or 10.9%, in the 2018 first quarter as compared to the 2017 first quarter primarily due to higher market prices for fuel. Fuel gross margin decreased by $0.1 million, or 0.9%, to $11.1 million as a result of a decrease in fuel sales volume.

Nonfuel revenues decreased by $2.3 million, or 3.8%, in the 2018 first quarter as compared to the 2017 first quarter primarily due to increased competition. Nonfuel gross margin remained flat in the 2018 first quarter as compared to the 2017 first quarter. Nonfuel gross margin percentage was 36.1% in the 2018 first quarter as compared to 34.8% in the 2017 first quarter. The increase in nonfuel gross margin percentage was primarily the result of changes in the mix of products sold.

Site level gross margin in excess of site level operating expenses decreased in the 2018 first quarter by $0.5 million, or 8.4%, as compared to the 2017 first quarter due to an increase in site level operating expenses and a decrease in fuel gross margin.

Conference Call:

On Monday, May 7, 2018, at 10:00 a.m. Eastern time, TA will host a conference call to discuss its financial results and other activities for the three months ended March 31, 2018. Following management’s remarks, there will be a question and answer period.

The conference call telephone number is 877-329-4614. Participants calling from outside the United States and Canada should dial 412-317-5437. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available for about a week after the call. To hear the replay, dial 412-317-0088. The replay pass code is 10118585.

A live audio webcast of the conference call will also be available in a listen only mode on TA’s website at www.ta-petro.com. To access the webcast, participants should visit TA’s website about five minutes before the call. The archived webcast will be available for replay on TA’s website for about one week after the call. The transcription, recording and retransmission in any way of TA’s first quarter conference call is strictly prohibited without the prior written consent of TA. The Company’s website is not incorporated as part of this press release.

About TravelCenters of America LLC:

TA’s nationwide business includes travel centers located in 43 U.S. states and in Canada, standalone convenience stores in 11 states and standalone restaurants in 13 states. TA’s travel centers operate under the “TravelCenters of America,” “TA,” “Petro Stopping Centers” and “Petro” brand names and offer diesel and gasoline fueling, restaurants, truck repair services, travel/convenience stores and other services which are designed to provide attractive and efficient travel experiences to professional drivers and other motorists. TA’s convenience stores operate principally under the “Minit Mart” brand name and offer gasoline fueling as well as nonfuel products and services such as coffee, groceries, some fresh foods and other convenience items. TA’s standalone restaurants operate principally under the “Quaker Steak & Lube” brand name.

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 AS A RESULT OF VARIOUS FACTORS. AMONG OTHERS, THE FORWARD LOOKING STATEMENTS WHICH APPEAR IN THIS PRESS RELEASE THAT MAY NOT OCCUR INCLUDE:

THE INFORMATION CONTAINED IN TA’S PERIODIC REPORTS, INCLUDING TA’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2017, WHICH HAS BEEN FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION, OR SEC, AND TA’S QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2018, WHICH HAS BEEN OR WILL BE FILED WITH THE SEC, UNDER THE CAPTION “RISK FACTORS,” OR ELSEWHERE IN THOSE REPORTS, 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.

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