TravelCenters of America LLC Announces First Quarter 2019 Financial Results

TravelCenters of America LLC (Nasdaq: TA) today announced financial
results for the three months ended March 31, 2019:

Andrew J. Rebholz, TA’s CEO, made the following statement regarding the
2019 first quarter results:

“We believe our operating results for the first quarter of 2019
demonstrated that the business initiatives and plans we outlined earlier
this year are continuing to succeed. During the 2019 first quarter both
fuel sales volume and nonfuel revenues showed solid growth, improving by
3.0% and 4.0%, respectively, in total and by 2.0% and 2.7%,
respectively, on a same site basis as compared to the prior year
quarter. These improvements were aided by our introduction of our
revamped UltraONE 2.0 loyalty program that customers are embracing.
Designed to incentivize and reward customers for their loyalty while
providing the TA full service array of redemption offers to suit
customers’ varying needs, this program attracted approximately 30,000
new and reactivated members in the first quarter. In addition, we kept
our site level operating expense in line with our nonfuel revenue
increases, experiencing only a slight 20 basis point increase in the
ratio of those expenses to nonfuel revenues that is due in part to
increased staffing in advance of increased business in our truck service
programs.

“While we sustained a net loss for the quarter of $12.7 million that is
$2.7 million more than the prior year quarter, the net loss for the 2019
first quarter is less than it was in the first quarter of 2018 after
removing the effects of the one time items included in each period’s
GAAP results. Adjusted EBITDA for 2019 of $11.4 million is an
improvement of $14.3 million over the 2018 first quarter. It is worth
noting that a net loss is not unusual for our first quarter because the
first quarter typically generates our weakest financial results given
the seasonality in our business.

“Our efforts to reduce leverage following the December 2018 sale of our
standalone convenience stores business culminated in the January 2019
transactions with Hospitality Properties Trust that reduced our annual
minimum rent payable to HPT by $43.1 million and contributed to our
improved adjusted loss from continuing operations and adjusted EBITDA,
as well as to a $10.0 million increase over the 2018 first quarter in
our cash provided by operations.

“Additionally, our network expansion program is underway. Thus far in
2019, we have signed franchise agreements for four sites and have a
robust pipeline of potential additional franchisees. This success to
date buoys our confidence that our network expansion can be a largely
asset-light growth area, although we do also have a pipeline of site
acquisition opportunities being pursued. I believe the momentum of the
first quarter’s results combined with the strength of our business plans
will translate to increased EBITDA and cash flow this year.”

Financial Results Commentary

Fuel: The following table presents details for TA’s fuel sales
during the quarter.

Fuel sales volume for the 2019 first quarter increased by 13.7
million gallons, or 3.0%, as compared to the 2018 first quarter due to
the following factors:

• a same site fuel sales volume increase of 9.0 million gallons,
  or 2.0%, which primarily resulted from improved market conditions and
  the success of TA’s marketing initiatives; and
• a net increase of 4.7 million gallons at sites opened or closed since
  the beginning of the 2018 first quarter.

Fuel revenues decreased by $3.2 million, or 0.3%, in the 2019
first quarter as compared to the 2018 first quarter, primarily due to
the following factors:

• a decrease in market prices for fuel during the 2019 first quarter; and
• the increase in fuel sales volume, which partially offset the decrease
  in market prices for fuel.

Fuel gross margin for the 2019 first quarter decreased by $8.2 million,
or 9.8%, as compared to the 2018 first quarter, primarily due to the
following factors:

• the $23.3 million benefit recognized in the first quarter of 2018 in
  connection with the February 2018 reinstatement for 2017 of the
  federal biodiesel blenders’ tax credit that did not recur in the first
  quarter of 2019; and
• the 13.7 million gallon increase in fuel sales volume and a more
  favorable fuel purchasing environment in the 2019 first quarter.

Although, the U.S. government has not yet retroactively reinstated the
federal biodiesel blenders’ tax credit for 2018 or 2019, TA believes the
U.S. government may do so by the third quarter of 2019. If the federal
biodiesel blenders’ tax credit is reinstated for 2018 and 2019, TA
expects to recognize reductions in fuel cost of goods sold of
approximately $35.0 million relating to 2018 and $5.9 million relating
to the 2019 first quarter in the period the U.S. government enacts the
tax credit reinstatement. Although TA believes reinstatement of this
credit is possible, TA cannot be certain that the U.S. government will
choose to do so.

Nonfuel: The following table presents details for TA’s nonfuel
revenues during the quarter.

Nonfuel revenues increased by $17.0 million, or 4.0%, in the 2019
first quarter as compared to the 2018 first quarter, due to the
following factors:

• an $11.5 million same site increase primarily due to the positive
  impact of certain of TA’s marketing initiatives in store and retail
  services and growth in TA’s truck service program; and
• a $5.5 million net increase attributable to sites opened and closed
  since the beginning of the 2018 first quarter.

Nonfuel gross margin increased by $10.1 million, or 3.9%, in the 2019
first quarter as compared to the 2018 first quarter, due to the
following factors:

• the $17.0 million increase in nonfuel revenues; and
• a slight decline in the nonfuel gross margin percentage that primarily
  resulted from a change in mix of products and services sold, which
  partially offset the increase in nonfuel revenues.

Loss from continuing operations and adjusted loss from continuing
operations: Loss from continuing operations for the 2019
first quarter was $12.7 million, as compared to $6.0 million for the
2018 first quarter. The larger loss in the 2019 period is due to the
$23.3 million benefit related to the federal biodiesel blenders’ tax
credit recognized in the 2018 period not recurring in 2019. Adjusted
loss from continuing operations for the 2019 first quarter was $14.6
million, as compared to $22.1 million for the 2018 first quarter. The
improvement in adjusted loss from continuing operations is primarily due
to an improvement in site level gross margin in excess of site level
operating expense, after excluding the federal biodiesel blenders’ tax
credit recognized in the 2018 first quarter.

Net loss and adjusted EBITDA: Net loss for the 2019 first quarter
decreased by $2.7 million, as compared to the 2018 first quarter and
adjusted EBITDA for the 2019 first quarter increased by $14.3 million,
as compared to the 2018 first quarter.

Lease Amendments and Travel Center Purchases

In January 2019, TA acquired from Hospitality Properties Trust, or HPT,
20 travel centers it previously leased from HPT for $309.6 million,
including $1.4 million of transaction related costs, and amended its
leases with HPT such that: (i) the 20 purchased travel centers were
removed from the HPT leases and TA’s annual minimum rent was reduced by
$43.1 million; (ii) the term of each of the five leases was extended by
three years; (iii) the amount of the deferred rent obligation to be paid
to HPT was reduced to $70.5 million and TA agreed to pay that amount in
16 equal quarterly installments beginning April 1, 2019; and (iv)
commencing with the year ended December 31, 2020, TA will be obligated
to pay to HPT an additional amount of percentage rent equal to one-half
percent (0.5%) of the excess of the annual nonfuel revenues at leased
sites over the nonfuel revenues for each respective site for the year
ending December 31, 2019.

Growth Strategies

Thus far in 2019, TA has signed four franchise agreements with a
franchisee under the TA Express brand name. TA anticipates these four TA
Express branded travel centers will be added to its network by the 2020
first quarter. In addition, TA has signed agreements with this
franchisee pursuant to which TA expects to add two additional TA Express
branded travel centers to its network, one within five years and one
within ten years.

Adoption of New Lease Accounting Standard

In February 2016, the Financial Accounting Standards Board, or the FASB,
issued Accounting Standards Update 2016-02, Leases, or ASU
2016-02, and in August 2018, the FASB issued Accounting Standards Update
2018-11, Targeted Improvements to ASC 842, or ASU 2018-11, collectively
referred to as ASC 842, which established a comprehensive lease
standard under GAAP for virtually all industries. TA adopted ASC 842 on
January 1, 2019, using the modified retrospective transition method, and
elected to not restate prior year comparative periods. As a result of
adopting ASC 842 on January 1, 2019, TA recognized operating lease
assets of $1.8 billion, operating lease liabilities of $2.0 billion and
an adjustment to its beginning accumulated deficit of $86.2 million.

Conference Call

On Tuesday, May 7, 2019, 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, 2019. 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 10130290.

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 and standalone restaurants in 14 states. TA’s
travel centers operate under the “TravelCenters of America,” “TA,” “TA
Express,” “Petro Stopping Centers” and “Petro” brand names and offer
diesel and gasoline fueling, restaurants, truck repair services,
travel/convenience stores and other services designed to provide
attractive and efficient travel experiences to professional drivers and
other motorists. 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.
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 improved operating results and increased nonfuel
  gross margins may imply that TA’s business may be profitable in the
  future. However, certain of those improvements resulted from unique
  items that may not occur in the future. In addition, since TA became
  publicly traded in 2007, TA’s operations have generated losses and
  only occasionally generated profits. TA may be unable to produce
  future profits and TA’s losses may increase;
• Statements that TA’s purchase of 20 travel centers from HPT reduced
  TA’s annual minimum rent payable to HPT by $43.1 million. TA’s travel
  centers are open for business 24 hours per day, 365 days per year. Due
  to the nature and intensity of the uses of TA’s locations, they
  require regular and substantial expenditures for maintenance and
  capital investments to remain functional and attractive to customers.
  The reduction in annual minimum rent TA achieved by purchasing travel
  centers from HPT may be temporary and subsequently offset by increases
  to the annual minimum rent payable to HPT as a result of HPT’s
  purchase of qualifying improvements TA makes to its leased travel
  centers or other transactions;
• Statements about TA’s belief that the U.S. government may
  retroactively reinstate the federal biodiesel blenders’ tax credit for
  2018 and 2019 by the third quarter of 2019 and the amounts by which
  that credit may reduce TA’s fuel cost of goods sold in the period the
  U.S. government enacts the tax credit reinstatement. However, the U.S.
  government may not retroactively reinstate this tax credit at the
  level TA expects or at all and TA may not realize the reductions in
  its fuel cost of goods sold that it expects;
• Statements about the improvements experienced as a result of TA’s
  revamped UltraONE 2.0 customer loyalty program may imply that TA’s
  operating results will improve and that its business may be profitable
  in the future. However, the increased interest in the UltraONE 2.0
  customer loyalty program may be temporary and may not continue in
  future periods, and may not result in improved operating results;
• Statements about experiencing increased site level operating expense
  due to staffing in advance of increased business in TA’s truck service
  programs may imply that TA will in fact realize increased business in
  its truck service programs and that its operating results will improve
  as a result. However, TA’s ability to realize increased business will
  depend on, among other things, customer demand, TA’s ability to offer
  competitive services and TA’s ability to procure customer orders and
  purchases of those services. TA may not succeed in increasing business
  in its truck service business and TA may not realize profits from any
  such increased business;
• Statements about the seasonality of TA’s business and that it is not
  unusual for TA to realize a net loss for the first quarter of the year
  in light of that seasonality may imply that TA’s business will be
  profitable in future quarters and that TA will experience net income
  in those quarters. However, TA’s business is subject to various risks
  and uncertainties. As a result, TA may fail to realize net income in
  future quarters;
• Statements about the franchise agreements TA entered with a franchisee
  pursuant to which TA expects to add up to six TA Express branded
  travel centers to its network, as well as, the pipeline of site
  acquisition opportunities being pursued. These franchise agreements
  are subject to conditions and these franchise arrangements may not
  occur or may be delayed, and the terms of the arrangements may change.
  In addition, acquisition opportunities may not occur or may subject TA
  to greater risks than anticipated. These opportunities may not result
  in the increased EBITDA and cash flows as expected; and
• Statements about TA’s belief that the momentum of TA’s 2019 first
  quarter results combined with the strength of TA’s business plans will
  translate to increased EBITDA and cash flow in 2019 may imply that TA
  will in fact realize these increases in EBITDA and cash flow. However,
  TA’s business is subject to various risks and uncertainties, the
  positive momentum that TA believes exists may not exist or could stop
  or reverse, and TA’s business plan may prove to not be successful. As
  a result, TA may not experience increased EBITDA and cash flow in 2019
  and its EBITDA and cash flow could decline in 2019 and future periods.

The information contained in TA’s periodic reports, including TA’s
Annual Report on Form 10-K for the year ended December 31, 2018, 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,
2019, 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.

TRAVELCENTERS OF AMERICA LLC
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in thousands, except per share amounts unless
indicated otherwise)

TA believes the non-GAAP financial measures presented in the tables
below are meaningful supplemental disclosures because 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.

TA believes that adjusted loss from continuing operations, adjusted loss
per common share from continuing operations attributable to common
shareholders, EBITDA, adjusted EBITDA, adjusted fuel gross margin and
adjusted fuel gross margin per gallon 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 continuing 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. Management uses these measures in
developing internal budgets and forecasts and analyzing TA’s
performance. TA calculates EBITDA as net loss before interest, taxes,
and depreciation and amortization, 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.

The non-GAAP financial measures TA presents should not be considered as
alternatives to net loss attributable to common shareholders, net loss,
loss from continuing operations, loss from operations or loss per common
share from continuing operations attributable to common shareholders 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 loss from continuing operations is the most directly
comparable GAAP financial measure to adjusted loss from continuing
operations; loss per common share from continuing operations
attributable to common shareholders is the most directly comparable GAAP
financial measure to adjusted loss per common share from continuing
operations attributable to common shareholders; net loss is the most
directly comparable GAAP financial measure to EBITDA and adjusted
EBITDA; and that fuel gross margin and fuel gross margin per gallon are
the most directly comparable GAAP financial measures to adjusted fuel
gross margin and adjusted fuel gross margin per gallon, respectively.
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 ended March 31, 2019 and 2018.

TRAVELCENTERS OF AMERICA LLC
SUPPLEMENTAL SAME SITE OPERATING DATA
(dollars
and gallons in thousands, except per gallon amounts unless indicated
otherwise)

The following table presents operating data for the periods noted for
all of the locations in operation on March 31, 2019, that were operated
by TA continuously since the beginning of the earliest period presented,
with the exception of three locations TA operates that are owned by an
unconsolidated joint venture in which TA owns a noncontrolling interest.
This data excludes revenues and expenses at locations TA does not
operate, such as rents and royalties from franchisees, the results of
TA’s discontinued operations and corporate level selling, general and
administrative expense. TA does not exclude locations from the same site
comparisons as a result of capital improvements to the site or changes
in the services offered.

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