Refuel. Replenish. Refresh. T R AV E L C E N T E RS O F A M E R I C A Q

Transcription

1 Refuel. Replenish. Refresh. T R AV E L C E N T E RS O F A M E R I C A Q

2 W A R N I N G C O N C E R N I N G F O R W A R D L O O K I N G S T A T E M E N T S THIS PRESENTATION 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. 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. THIS PRESENTATION INCLUDES EBITDA AMOUNTS FOR TA. TA CALCULATES EBITDA AS EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION. EBITDA IS NOT A MEASURE PRESCRIBED BY ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES, OR U.S. GAAP, AND THIS INFORMATION SHOULD NOT BE CONSIDERED AS AN ALTERNATIVE TO NET INCOME, INCOME FROM CONTINUING OPERATIONS, OPERATING PROFIT, CASH FLOW FROM OPERATIONS OR ANY OTHER OPERATING OR LIQUIDITY PERFORMANCE MEASURE PRESCRIBED BY U.S. GAAP. 2

3 T R A V E L C E N T E R S O F A M E R I C A Q INVESTMENT HIGHLIGHTS Barriers to Entry One of only three nationwide operators of travel centers in the United States. Right Strategy Our full service approach is a competitive advantage that allows us to better address fleet company and professional driver challenges. Commercial Opportunity Trucking trends present an opportunity for truck stop companies with a full service strategy. TA is positioned to help a broader truck market. Retail Opportunity TA has identified operating initiatives designed to ramp up standalone convenience stores. Powerful Model TA s strategy has resulted in increased nonfuel revenues and site level operating leverage. Improvement Plan TA is focused on controlling costs and managing capital expenditures in

4 T R A V E L C E N T E R S O F A M E R I C A Q ONE OF ONLY THREE NATIONWIDE OPERATORS OF TRAVEL CENTERS IN THE UNITED STATES. TA s business includes 256 full service travel centers, 231 standalone convenience stores and 48 standalone restaurants. TA sells over-the-road diesel fuel, principally to long-haul truckers at TA s truck stops (under the TA and Petro Stopping Centers brands) and gasoline at both truck stops and convenience stores. TA s convenience stores sell branded gasoline and the stores themselves are primarily operated under TA s Minit Mart brand name. TA s non-fuel revenue comes from truck repair and maintenance, convenience and travel stores, casual dining restaurants, quick service restaurants and a broad array of other amenities and services designed to appeal to the professional driver and other highway travelers. SEGMENT MARGIN MIX (1) FUEL AND NONFUEL GROSS MARGIN MIX $496,289 74% Travel Center Convenience Store Corporate & Other LTM Fuel Gross Margin LTM Nonfuel Gross Margin $40,102 26% $9,314 Unless otherwise noted, data reflected in this presentation is as of 3/31/18 (1) Reflects Consolidated Site level gross margin in excess of operating expenses. 4

5 T R A V E L C E N T E R S O F A M E R I C A Q THE TA FOOTPRINT TA has the geographic footprint in place to support professional drivers and highway motorists. More than 50% of TA s travel centers are located More in the than 1350% states of with TA s travel the highest centers concentration are located in the 13 states with of truck the highest traffic. concentration of truck traffic. State U.S. Freight Activity Rank (2) # of TA / Petro Sites Texas 1 23 California 2 13 Illinois 3 11 Ohio 4 15 Pennsylvania 5 11 NY, NJ, FL, MI, GA, IN, NC, LA Total 132 (1) In addition to the 231 standalone Minit Mart locations, TA operates 256 convenience stores within the TravelCenters of America and Petro Stopping Centers travel center locations. 74 of these 256 convenience stores carry the Minit Mart brand name. (2) Source: Bureau of Transportation Statistics 2012 Commodity Flows Survey. Freight activity is ranked by dollar value of total shipment. 5

6 T R A V E L C E N T E R S O F A M E R I C A Q ABOVE THE COMPETITION For 45 years, TA has been focused on full service due to the value it brings customers and TA. Our two competitors recognize this and they are trying to catch up. TRUCK SERVICE -Nationwide Truck Maintenance & Repair. -Roadsquad: Roadside Emergency Service & Call Center Services. -OnSITE: TA Truck Service on site. -Commercial Tire Network: Independent Tire Dealer. STORE -Fresh Food Offerings. -Premium Coffee. -Tobacco. -Lottery. -Driver & Cab Retail Items. -Scales. LARGE SITES -A typical site includes ~200 truck parking spaces on ~26 acres that provides more parking, showers, laundry, business center services, fitness and entertainment options than primary competitors. FOOD SERVICE -247 Casual Dining Restaurant Quick Service Restaurant(s) "QSR. -Grab N Go options. -Two proprietary casual dining brands Iron Skillet & Country Pride, fast casual offerings like Bob Evans and Fuddruckers. -49 QSR Brands. C O M P E T I T O R S I T E S SMALLER SITES A typical site includes ~80 truck parking spaces on ~9-13 acres with fewer services and food service choices. 6

7 T R A V E L C E N T E R S O F A M E R I C A Q SOLID LONG TERM INDUSTRY OUTLOOK In absolute terms, while trucks' share of total tonnage is projected to decline, its total volume transported is projected to increase substantially more than any other transportation mode. TRUCKS SHARE OF TOTAL TONNAGE (1) TRUCKLOAD ( TL ) VOLUME (1) Average Annual Expansion. TRUCKS SHARE OF TOTAL FREIGHT REVENUE (1) Estimated 70.7% 67.9% 67.1% Truckload tonnage growth reflects the anticipated performance of key commodities and freight-market segments. (1) American Trucking Associations: The U.S. Freight Transportation Forecast. TA s primary focus has been to provide fuel and nonfuel products and services to long haul truck drivers. 31 MIL COMMERCIAL TRUCKS Of which 3.6MIL ARE CLASS 8 TRUCKS Of which ~ 1 MIL ARE LONG HAUL TRUCKS American Trucking Associations & TA estimates. 7

8 T R A V E L C E N T E R S O F A M E R I C A Q DRIVER SHORTAGE In many cases, fleets are looking for solutions like TA to help them maximize driver retention. There is a driver shortage in the for-hire truckload industry (1). Increasing federal regulation and restrictions are contributing to the shortage and affecting driver/fleet profitability: SAFETY REGULATION ENFORCEMENT + DRIVER HOURS OF SERVICE + ELECTRONIC LOGGING + DEVICES PENALTIES FOR PARKING ILLEGALLY = Fleets Are Looking For Solutions To Increase Driver Satisfaction + Driver Efficiency Which Can Help Retain Drivers Area Category Driver Preference for TA and Petro vs. Next Closest Truck Stop Brand Overall Best Truck Stop Experience 3 to 1 5 to 1 6 to 1 Most Comprehensive Driver Services 4 to 1 5 to 1 7 to 1 Parking Lots Largest 3 to 1 7 to 1 8 to 1 Easiest to Maneuver 3 to 1 6 to 1 7 to 1 Restaurants Best Overall Experience - 5 to 1 8 to 1 Best Overall Food 4 to 1 6 to 1 7 to 1 Truck Repair & Best Overall Maintenance Shops 4 to 1 4 to 1 4 to 1 Maintenance Most Complete Services 5 to 1 7 to 1 8 to 1 Best Roadside Assistance - 4 to 1 4 to 1 Most Skilled and Best Equipped for New Truck Technologies - 6 to 1 7 to 1 (1) American Trucking Associations:. 8

9 T R A V E L C E N T E R S O F A M E R I C A Q THE CHANGING LANDSCAPE The maturation of online spending continues and this is contributing to how goods are trucked. It is expected there will be more trucks delivering more packages via shorter hauls. These deliveries are occurring through LTL, TL with LTL capabilities and private truck companies at the expense of certain long hauls. (1) But TL carriers are expected to remain significant. GROWTH IN LESS-THAN-TRUCKLOAD ( LTL ) TONNAGE (2) 120% TRUCKLOAD TONNAGE (2) million million million 100% 80% 60% 1% 1% 2% 49% 49% 48% Less-than-Truckload Truckload 40% Private Truck 20% 50% 50% 50% (1) Stifel Nicolaus (2) American Trucking Associations: The U.S. Freight Transportation Forecast % LESS-THAN-TRUCKLOAD-VOLUME ( LTL ) Average Annual Expansion. 9

10 Commercial Strategy: Diesel Fuel and Truck Service T R A V E L C E N T E R S O F A M E R I C A Q NEW SOLUTIONS. NEW CUSTOMERS. TA is investing in truck service to (1) meet the expanding needs of TA s traditional customers as they participate in long haul and LTL deliveries and (2) to expand the universe of customers TA is able to serve. TRADITIONAL CUSTOMERS: SOLUTIONS FOR CLASS 8 TRUCKS AT TERMINALS AND TRAILER YARDS. TRADITIONAL CUSTOMERS: EXPAND CUSTOMER COVERAGE TO INCLUDE CLASS 4-7 TRUCKS. NONTRADITIONAL CUSTOMERS: PRIVATE, FOR- HIRE FLEETS AND SMALL-TO-MEDIUM BUSINESSES WITH CLASS 4-7 TRUCKS. TA Truck Service, Commercial Tire Network, OnSITE and RoadSquad provide traditional and nontraditional customers with a single source, nationwide solution for tires, quality parts, maintenance and repair services without limitation to where or when the service is performed. These initiatives as well as TA s retail and restaurant initiatives should lead to higher growth rates for 2018 versus 2017 for our consolidated nonfuel revenues and our site level gross margin in excess of operating expenses in the travel center segment and the convenience store segment than the growth rates experienced in 2017 compared to

11 Commercial Strategy: Diesel Fuel and Truck Service T R A V E L C E N T E R S O F A M E R I C A Q TRUCK SERVICE: ONSITE Locat ion Inf ormat ion Services by Address Extend maintenance, repair and inspection solutions beyond TA s truck bays with TA vehicles going to the customer. Service Service Locations OnSit e Truck & Trailer Maintenance, ELD Installations, Trailer Rebranding, Trailer Repairs, GPS Installation, DOT inspection, Certifications. 11

12 Commercial Strategy: Diesel Fuel and Truck Service T R A V E L C E N T E R S O F A M E R I C A Q TRUCK SERVICE: COMMERCIAL TIRE NETWORK Locat ion Inf ormat ion Services by Address Provide brands and capabilities of a tire dealer at customer locations. Service Locations Service Commercial Tire Net work OnSit e Truck & Trailer Maintenance, ELD Installations, Trailer Rebranding, Trailer Repairs, GPS Installation, DOT inspection, Certifications. Independent Tire Dealer, Multiple Tire and Retread Brands, Location Deliveries, Casing Program Management. 12

13 Commercial Strategy: Diesel Fuel and Truck Service T R A V E L C E N T E R S O F A M E R I C A Q TRUCK SERVICE: ROADSQUAD Locat ion Inf ormat ion Services by Address Provide emergency service call center support and tire and roadside truck repair service 24/7/365. Service Service Locations Commercial Tire Net work OnSit e RoadSquad Truck & Trailer Maintenance, ELD Installations, Trailer Rebranding, Trailer Repairs, GPS Installation, DOT inspection, Certifications. Independent Tire Dealer, Multiple Tire and Retread Brands, Location Deliveries, Casing Program Management. RoadSide Assistance, Call Center, Tire & Repair, Shift Support, Maintenance Centralization 13

14 Commercial Strategy: Diesel, Fuel and Truck Service T R A V E L C E N T E R S O F A M E R I C A Q PROFILE C U S T O M E R 31 MIL COMMERCIAL TRUCKS A company responsible for thousands of utility trucks utilize terminals across the country to service their boom and lift equipment. They are pleased to meet a coast to coast provider that can perform traditional chassis work. Altec also needs help debranding and inspecting vehicles being turned in from leasing programs. Of which C U S T O M E R 3.6MIL ARE CLASS 8 TRUCKS Servicing fleet trailers at distribution centers of largest online retailer to ensure they are road ready for Amazon freight hauls where on time deliveries are essential. Of which C U S T O M E R ~ 1 MIL ARE LONG HAUL TRUCKS Combining services like fuel, roadside emergency repair and call center support so a fleet can devote resources to its core business. 14

15 Retail Strategy: Gas, Retail Operations and Restaurants T R A V E L C E N T E R S O F A M E R I C A Q RETAIL OPERATIONS In addition to the things we do every day to manage retail operations at our travel centers and standalone convenience stores, TA is focused on a number of initiatives to drive growth and improvement in L O YA LT Y Roll out Minit Mart Rewards program 1H M E R C H A N D I S E Match Products to Market by Volume and Demographic. E X P E R I E N C E Optimizing Store Layouts. O N L I N E Partner with Community and increase online sales (pizza programs etc). R E S E R V E I T Expand Reserve It! Parking at truck stops. V I D E O G A M I N G Expand and improve gaming operations in states in which we operate gaming terminals. These initiatives as well as TA s restaurant and truck service initiatives should lead to higher growth rates for 2018 versus 2017 for our consolidated nonfuel revenues and our site level gross margin in excess of operating expenses in the travel center segment and the convenience store segment than the growth rates experienced in 2017 compared to

16 Retail Strategy: Gas, Retail Operations and Restaurants T R A V E L C E N T E R S O F A M E R I C A Q RESTAURANTS TA s Restaurant Group is focused on attracting more consumers and managing costs. F U L L S E R V I C E R E S TA U R A N T S Replace Casual Dining Restaurant Brand with better known Consumer Brand. Optimize Operating Hours and Labor Costs. Q U I C K S E R V I C E R E S TA U R A N T S Add QSR restaurants at Travel Centers. Replace QSR brand at Convenience Stores. P R O C E S S I M P R O V E M E N T Utilize new technology to better manage food and labor costs. These initiatives as well as TA s truck service and retail initiatives should lead to higher growth rates for 2018 versus 2017 for our consolidated nonfuel revenues and our site level gross margin in excess of operating expenses in the travel center segment and the convenience store segment than the growth rates experienced in 2017 compared to

17 Retail Strategy: Gas, Retail Operations and Restaurants T R A V E L C E N T E R S O F A M E R I C A Q STRATEGY IN ACTION E F F I C I E N C Y H E A D W I N D S C O M P E T I T I O N Case Study: Travel Centers Attract more local motorists. Petro Travel Center Bucksville, AL By June 2016 Refaced exterior to better highlight quick service brands. Rebranded Foodmart to Minit Mart. Last Twelve Months ended Q vs Last Twelve Months Ended Q2 2016: Gasoline sales volume increased ~14% Site Gross Margin in Excess of Site Level Operating Expenses increased ~13% Case Study: Standalone Convenience Stores Match products to market. Standardize Stores. 59 Minit Marts Kansas City, MO By August 2017 Added "Kick Back" loyalty program. By November 2017 Adjusted sales to space by volume and demographic. Created consistent shopping experience across locations. Quarter Ending December 31, 2017 vs Quarter Ending December 31, 2016: Nonfuel Gross Margin increased 6.1% Site Gross Margin in Excess of Site Level Operating Expenses Increased 29.5% 17

18 (Millions) T R A V E L C E N T E R S O F A M E R I C A Q POWERFUL MODEL Focused on Expanding TA s Full Service Strategy Consolidated Same Site Nonfuel Revenue As Reported $2,000 $1,800 $1,600 $1,400 $1,289 +3% $1,354 +3% $1,482 +4% $1,679 +5% 56.4% $1,698 (0.1%) 56.4% $1,836 - % 60.0% 58.0% $1,200 $1, % 55.0% 55.6% 55.3% 55.9% 56.0% $ % $600 $ % Consolidated Same Site Nonfuel Revenue As Reported Consolidated Same Site Nonfuel Margin As Reported 18

19 T R A V E L C E N T E R S O F A M E R I C A Q POWERFUL MODEL TA s growth programs and sales strategies have helped nonfuel gross margin per gallon profitability increase over time. (Cents) Nonfuel Gross Margin Cents per Gallon ("NF CPG") CAGR 3.6%

20 T R A V E L C E N T E R S O F A M E R I C A Q OPERATING LEVERAGE Growing Core Full Service Business Faster than We re Spending. $2, % $2, % 50.0% 50.1% 50.4% $1,600 $1,200 $ % 51.8% $ Q Q Consolidated Nonfuel Revenue (Same Site) Consolidated Site Level Operating Expenses as a Percentage of Nonfuel Revenue (Same Site) 20

21 T R A V E L C E N T E R S O F A M E R I C A Q IMPROVEMENT PLAN While TA positions itself to compete in a broader market, the company is focused on managing costs and expenditures. C O N T R O L C O S T S 2018 Site Level Operating Expense: - Ctuit implementation - IT/Automation -Site level labor efficiencies Depreciation and Amortization Expense: - Project & capital expenditure completions M A N A G E S P E N D I N G 2018 Opportunistic Travel Center Acquisitions. Estimate Sustaining Capital Amounts of ~$55 million. Expect improvement sales at leased HPT sites of ~$50 million. Maintain net Capital Expenditure amounts (Sustaining Capital + Internal Growth Capital HPT improvement sales) similar to As programs to drive nonfuel revenues and control costs progress, TA believes site level operating expenses as a percentage of nonfuel revenues may decrease. 21

22 Exhibits 22

23 EXHIBIT A Three Months Ended March 31, ($ in thousands) Revenues: Fuel $ 1,100,127 $ 922,874 Non fuel 480, ,168 Rent and royalties 4,163 4,630 Total revenues 1,584,687 1,391,672 Gross margin: Fuel 93,559 73,163 Non fuel 282, ,797 Rent and royalties 4,163 4,630 Total gross margin 380, ,590 Site level operating expense 249, ,915 Selling, general & administrative 38,035 41,303 Rent expense 70,812 67,999 Loss (Income) from equity investees 1,285 (278) Acquisition costs EBITDA (1) $ 20,432 $ (9,489) Net income (loss) attributable to common $ (10,112) $ (29,398) shareholders Consolidated Statements of Operations Net income (loss) per share $ (0.25) $ (0.74) (1) See Exhibit B for a reconciliation of EBITDA to net income. 23

24 EXHIBIT B Consolidated Calculation of EBITDA Three Months Ended March 31, ($ in thousands) Calculation of EBITDA: Net Loss $ (10,078) $ (29,375) Add: (Benefit) for income taxes (4,626) (19,298) Add: Depreciation and amortization 27,548 31,800 Add: Interest expense, net 7,588 7,384 EBITDA $ 20,432 $ (9,489) Add: Federal biodiesel tax credit (1) (23,251) - Add: Comdata legal expenses (2) 78 6,372 Add: Comdata excess transaction fee (3) - 1,813 Add: Incremental share based compensation expense (4) 1, EBITDA net of discreet items $ (1,714) $ (1,131) (1) Federal biodiesel tax credit. On February 8, 2018, legislation was passed that retroactively reinstated the 2017 federal biodiesel tax credit. The federal biodiesel tax credit for 2017 was $23.3 million and was recognized in the three months ended March 31, (2) Comdata legal expenses. During the three months ended March 31, 2018 and 2017, TA incurred $0.1 million and $6.4 million, respectively, of legal fees in its litigation with Comdata. TA's attorneys' fees and costs related to this matter totaled $10.6 million through March 31, On April 9, 2018, the Court of Chancery of the State of Delaware, or the Court, entered its final order and judgment, or the Order. Pursuant to the Order, Comdata is required to, among other things, reimburse TA for attorneys' fees and costs, together with interest, in the amount of $10.7 million, which TA collected in April Comdata has 30 days from the date of the Order to file a notice of appeal. If Comdata does not appeal, TA believes legal fees that it may incur for this matter during the remainder of 2018 will not be material. (3) Comdata excess transaction fees. From February 1, 2017, until mid-september 2017, Comdata unilaterally withheld increased fees from the transaction settlement payments due to TA under an agreement between TA and Comdata under which TA agreed to accept Comdata issued fuel cards through January 2, 2022, for certain purchases by TA's customers in exchange for fees payable by TA to Comdata, or the Merchant Agreement. During the three months ended March 31, 2017, TA incurred $1.8 million of excess transaction fees. On September 11, 2017, the Court issued its post-trial Memorandum Opinion. The Court found that TA was entitled to, among other things, an order requiring Comdata to specifically perform under the Merchant Agreement, and awarded damages to TA and against Comdata for the difference between the higher transaction fees paid to Comdata since February 1, 2017, and what TA would have paid during this period under the fee structure in the Merchant Agreement. In November 2017, TA recovered $6.9 million for the amount of excess transaction fees. (4) Incremental share based compensation expense. As part of TA's retirement agreements with certain former officers, TA agreed to accelerate the vesting of previously granted share awards. For the three months ended March 31, 2018 and 2017, this acceleration resulted in $1.0 million and $0.2 million, respectively, of incremental share based compensation expense as compared to what TA would have expensed in the absence of these retirement agreements. 24

25 EXHIBIT C Segment Operating Statements: First Quarter 2018 Travel Centers Business Segment Convenience Stores Business Segment Change from Change from Q Q Q Q ($ in thousands) $ % $ % Revenues: Fuel $ 966,026 20% $ 115,002 11% Non fuel 414,376 5% 58,412 (4%) Rent and royalties 3,128 (8%) 53 (2%) Gross margin: $ 341,579 12% $ 32,271 (0%) Site level operating expenses $ 217,560 2% $ 27,360 1% Site level gross margin in excess of site level operating expenses $ 124,019 34% $ 4,911 (8%) 25

26 EXHIBIT D Consolidated Balance Sheet March 31, 2018 ($ in thousands) Assets Cash and Cash equivalents 52,139 December 31, 2017 $ $ 36,082 Accounts receivable, net 153, ,501 Inventory 207, ,640 Other current assets 24,652 27,295 Total current assets 437, ,518 Property and equipment, net 984,396 1,001,090 Goodwill & other intangible assets, net 127, ,242 Other noncurrent assets 93,468 90,004 Total assets $ 1,643,365 $ 1,617,854 Liabilities and Shareholders' Equity Accounts payable $ 166,886 $ 155,581 Current HPT Leases liabilities 41,706 41,389 Other curent liabilities 155, ,140 Total current liabilities 364, ,110 Long Term debt 319, ,634 Noncurrent HPT Leases liabilities 365, ,782 Other noncurrent liabilities 35,861 35,029 Total liabilities 1,085,085 1,050,555 Shareholders' equity (40,000 and 39,984 common shares outstanding at Marchr 31, 2018 and Decemeber 31, 2017, respectively) 558, ,299 Total liabilities and shareholders' equity $ 1,643,365 $ 1,617,854 26