Good morning. And welcome to the TravelCenters of America First Quarter 2018 Financial Results Conference Call. All participants will be in a listen-only mode [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Katie Strohacker, Senior Director of Investor Relations. Please go ahead.

Good morning, thanks for joining us today. We will begin today’s call with remarks from TA’s Chief Executive Officer, Andy Rebholz, followed by Chief Operating Officer, Barry Richards; and Chief Financial Officer Bill Myers. We’ll also have time for analyst questions. Today’s conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and federal securities laws. These forward-looking statements are based on TA’s present beliefs and expectations as of today, May 7, 2018. Forward-looking statements and their implications are not guaranteed to occur and they may not occur. TA undertakes no obligation to revise or publicly release any revision to the forward-looking statements made today other than as required by law. Actual results may differ materially from those implied or included in these forward-looking statements. Additional information concerning factors that could cause our forward-looking statements not to occur is contained in our filings with the Securities and Exchange Commission that are available free of charge at the SEC’s Web site, www.sec.gov, or by referring to the Investor Relations section of TA’s Web site at www.ta-petro.com. Investors are cautioned not to place undue reliance upon any forward-looking statements. I’d like to remind you that the recording and retransmission of today’s conference call is prohibited without the prior written consent of TA. And finally, we will be discussing non-GAAP financial metrics during this call today, including EBITDA, adjusted EBITDA and adjusted net loss, a reconciliation of these non-GAAP figures to net loss are available in our press release. And with that, I’ll turn the call over to you, Andy.

Thanks, Katie. Good morning, everybody and thank you for joining us today. Earlier this morning, we reported our financial results for the first quarter of 2018, which included a net loss of $10.1 million or $0.25 per share and EBITDA of $20.4 million compared to a net loss of $29.4 million or $0.74 per share, and EBITDA of negative $9.5 million for the first quarter last year. You may have seen from our press release that we enhanced our disclosures this quarter by adding certain additional non-GAAP financial measures that we believe will allow readers to more easily understand and compare our performance without the effects of items that do not result directly from TA’s normal recurring operations. We plan to continue reporting these additional non-GAAP measures in future quarters. These non-GAAP measures included adjusted net loss, which was $26.8 million or $0.67 per share in the first quarter 2018 compared to an adjusted net loss of $21 million or $0.53 per share in the prior year and also adjusted EBITDA, which was negative $1.7 million during the first quarter compared to adjusted EBITDA of negative $1.1 million for the first quarter of 2017. One of the unusual items we adjusted out in those measures was the $23.3 million reduction to fuel cost of goods sold that related to the 2017 federal biodiesel tax credit that was retroactively reinstated in February 2018, and which positively affected reported fuel gross margin per gallon by for $0.045. The other unusual items resulted from our litigation with Comdata, Inc. and retirement agreements with former executive officers. Bill will provide more detail about the new unusual items as well as the impact from this quarter's accounting change in a moment. Despite the slight decline in adjusted EBITDA, we continued to see positive signs in…

Thanks, Andy and good morning, everybody. We continue to see positive signs from our TravelCenters operations this quarter, strong freight trends compared to the same period last year and our ability to manage fuel sales profitability by balancing volume and pricing, resulted in overall fuel sales volumes that was slightly positive and same site level fuel volumes were only slightly negative, down 0.6% compared to the first quarter last year. Our efforts to further our fuel marketing program and sell combined services are proving successful. Fuel sales volume for top 10 accounts was up nearly 2% and truck service sales for our top 10 accounts were really strong, increasing by 11% versus the prior year quarter. Travel center volumes trended upward in January and February but were down on March compared to the same month last year. Significant winter storms and the timing of the Easter holiday this year contributed to the March decline. We catch up on the surfeit in April fuel sales volume looked to be up by about 1% over the prior year April. We're making progress with our efforts to combat fuel efficiency headwinds in the travel center segment through expanding universe of customers to whom we market and to market more deeply to existing customers. Regarding our efforts to market a broader array of our products and services to our existing customers, we gained traction during the quarter. Looking at TA's on-site truck service program, as Andy just mentioned, our work orders are up 44% versus first quarter of 2017. Some highlights from this area are, March was the first month we began operating the standalone facility in Indianapolis to meet demand for mobile maintenance services from existing and new customers in the area. Work orders almost doubled in March from February each week in…

Thank you, Barry. Good morning. Before I discuss our results, I’d first wanted to remind you that in the 2018 first quarter, we adopted a new revenue recognition standard, which, among other things, required us to reclassify the discounts related to certain loyalty program awards from non-fuel revenue to fuel revenue. In our financial statements for the first quarter of 2017, we reclassified $12.4 million from non-fuel revenue to fuel revenue, which decreased our fuel gross margin by $0.024 per gallon, but increased our non-fuel gross margin by 110 basis points. As you may have seen in our press release we filed earlier this morning, to be helpful we included a supplemental schedule that identifies the impact the implementation of this new accounting standard has in our fuel and non-fuel revenues, as well as fuel gross margin cents per gallon and non-fuel gross margin percentage for the years ended 2017 and 2016, as well as by quarter for those years. As a reminder, adopting this new standard affected fuel and non-fuel gross margins, but not the total. Now, I will take you through the results of our two segments. In our travel center segment, fuel sales volume increased by 1.5 million gallons or 0.3% and same site fuel volumes decreased $2.8 million or 6%, primarily due to a decline in diesel demand due to the continued effects of fuel efficiency gains and increased competition, as well as the result of the inclement weather that occurred during the quarter in certain regions of the United States. Fuel gross margin increased by $20.5 million, primarily due to 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. The increase also resulted from newly acquired and developed…

Thank you. We will now begin the question-and-answer session [Operator Instructions]. And the first question comes from Bryan Maher from B. Riley FBR. Please go ahead.

Bryan, I guess one of the reasons that we didn’t say much there is that right now we don't have any solid plans with board approval and parties on the other side of the plan, if you will. The management team here, we've been focused since taking over shop around here, on growth exactly what you said and are considering all those avenues of growth; acquiring new travel centers, franchising travel centers and potentially also developing new build travel centers. We've been continuing those plans and getting ourselves ready to hit the ground on the implementation of those plans. But right now have no specific plan or targets or acquisition targets those things. And I'm hopeful that we're having the same call in the next quarter. We will have more to tell the world about implementation of those plans.

And then next on the labor costs, it seems like if you read between the lines of the press release and maybe even not so much reading between the lines, that is a factor your on-site level operating expense. Can you tell us how impactful it is and what really you're doing to address that?

I think that while it's true that there is some -- I mean you can't have lot of things going on in different states with the increases in minimum wage, rates and the continuing costs of things like medical insurance and things like that that all add up from a labor perspective, that's been part of our lives forever. And we try to manage to be as efficient as we possibly can. I think one of the things we need to keep in mind is the site level operating expenses don't really, and maybe this is different than other retailers that the other folks follow or watch or whatever. But there's a higher degree of maybe direct variability between our level of non-fuel sales, and the level of site level operating expenses. For example, if we increase sales in our, say truck service department, by $10 million just to pick a number. We're going to see an increase in labor costs, because somebody's got to be turning the wrenches to replace both tires and oil and make those on-site runs and all that stuff. And in a similar situation in the food service certainly more so in the whole service restaurants than in the quick service restaurants. But you have sort of a high degree of variability, not direct, not a 100%, because you've got one manager no matter how much you sell. And for that reason is why we see as we’re growing non-fuel sales, we'll see an improvement in that ratio is that we refer to internally and talk about in our comments. The ratio of the of site level operating expenses as a percentage of the non-fuel sales, it’s a measure we use internally for that thing. And there is seasonality in our business. So it's hard to know exactly maybe what to expect for that percentage. But I think if you look at the prior years, you can get a sense of how that percentage rises and falls seasonally. And hopefully, what we’ll see going forward is to the extent that say in the first quarter, we had an improvement of 90 basis points, that we’ll have a similar improvement over the prior year percentage share for the second quarter, even though that percentage might look very different quarter-to-quarter because of the seasonality. So somewhere in there was the answer to your question.

I will go back and look at the transcript for that, thanks. Just lastly on the C-Store business, I would have to characterize at least from restate the results for the first quarter is being underwhelming. And I know you're making some inroads there, but the numbers are the numbers. What do you have to see in the next couple of quarters to make you decide you want to stick with this versus possibly divest it?

I think that -- I don't have a bright line in my mind. We know that there are a number of things going on out there is just competitively, things that we're doing internally like the loyalty program we’ve talked about a bit, other improvements that we've made in those sites where we’re seeing some of the fruit from that, like the -- Barry talked about with the carwashes and some of the prepared food offerings at sites that hadn’t had them before. So you have difference there. So we expect to see from all those different investments, if you will, that we've made improvement. And I think we need to see what that is, get a take on how well those things are going and then move forward from there. Taking into account all the other factors that go into play about is competition in the areas where we’re operating, continuing to become more fierce, is it leveling off, how are we faring and what's otherwise going on in the in the C-Store Market. So I think that during the second quarter here, we’ll get another update, if you will, on that improvement. Unfortunately, the way that timing goes probably when we have this next call for the second quarter, we will have just had the biggest new tool, the loyalty program in place for maybe a month or something like that. So we may have some sense but may not yet be conclusive as to what way that that's directing us. But if that works then fantastic and if it doesn't work the way we feel it needs to then we’ll consider the other options.

And the next question comes from Alvin Concepcion from Citigroup.

It’s Garrett on for Alvin, thanks for taking the question. Just wondering if you could touch on the competitive environment you’re seeing across those segments and maybe if that’s picked-up in 1Q relative to what you saw in 4Q?

I think that’s the competitive environment, and Barry can add some comments here if I don’t touch on everything he might otherwise tell you. Really not a significant change from the fourth quarter, both in the travel center segment and in the C-store segment, I think we're continuing to see the same sorts of trends that we saw in the fourth quarter. Having said that, those trends that we have been seeing in the fourth quarter, included the continual increase in the number of entrants into those two businesses the continued consolidation, particularly on the C-store side with, that one. But in the travel center segment from a, say fuel pricing with both retail and with the fleets, we haven't seen significant change in how each of the competitors are positioning themselves. And we continue to see that same level of competition, if you will, or increased competition with regard to what our travel center competitors are doing. In the truck repair and maintenance side of things, where they've got their offers for repair and roadside assistance and things like that, that they continue to rollout and implement. And we continue to do things that we believe keep them a few steps -- keep us a few steps ahead of them, so no new significant changes in the competitive landscape.

And then lastly just wondering if you can walk us through the cadence of fuel gross margin during 1Q and that maybe also add what you're seeing and in April so far, relative to 1Q and also on a year-over-year basis?

I think that -- I mean there is -- the general concepts remain the same in times of declining, I'll refer to them as wholesale fuel prices. Our opportunity to make a better margin per gallon increases. And in times of increasing wholesale fuel prices, the opposite is true. We have a little more pressure on the ability to make the margin per gallon. And in Bill's comments, he referred to a better environment last year than this year, and that was exactly that. Last year was more of a downward trend for more parts of the quarter than was the case this year when it was more flat or a little -- maybe a slightly bit up, but better environment last year and that has some effect. Exactly how much effect is always hard to nail down but some effect, and so that's going to remain the case. The other thing that's going to have some effect on our fuel margin per gallon, results from this -- Bill talked about in his comments, the adoption of the new revenue recognition standard and how that affected where in our income statement these discounts related to the loyalty program fall, and how it affected the prior year amounts, we’ve previously reported and now have restated. And I think that was about -- and the information is in the press release, but maybe a $0.0207 per gallon adjustment to what we had previously said, our first quarter 2017 fuel margin per gallon was. Well that same number in the first quarter this year, although we hadn’t previously reported this year’s numbers. It was -- those discounts had $0.405 per gallon roughly affect. And I think that the point to be made is we are going to see a little bit of volatility,…

And the next question comes from Ben Brownlow from Raymond James. Please go ahead.

Good morning. And thanks for all the additional financial disclosure, I think that’s helpful. On the loyalty program roll-outs in June, can you just talk about the anticipated ramp, the timing around customer awareness of that program, just some insight there please?

I am not sure how long it’s going to take to make everybody aware of this. We know it's been a missing component because we’ve been relying on the gas brands loyalty program to sustain us, while we get this done. But we do believe it’s going to be well received. We do have a marketing campaign out to get this going. I would certainly like to think -- I don’t know within a quarter, we would certainly have made everybody aware of this and see this thing ramping significantly at that time. And give customers a chance to decide do they want to come off the gas brand and go to the Minit Mart loyalty program, which I think they’re going to.

And you touched on the cadence for the quarter around the same store sales trends. And sounds like March mid-quarter was impacted by the winter storms. Can you go back over what the same store sales trends were in April?

I don't think we're seeing anything real different in April from what we saw for the quarter in our non-fuel sales. On the fuel side, I think Barry mentioned maybe in the call, we saw April looking like it was up about a percent.

In fuel, and in the travel center side, that's correct. I think the Easter effect probably gives a little more benefit to the C-stores. When the holiday occurs, there's a lot more highway travel so they might not see the same lift in April that the travel center segment is but they washed each other out, the months.

And this concludes our question-and-answer session. I would like to turn the conference back to Mr. Andy Rebholz for any closing remarks. Thanks Cory. And again, I want to thank everyone for joining us today and for your interest in TA. Thanks.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.