UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2020~~2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-33274

TravelCenters of America Inc.

(Exact Name of Registrant as Specified in its Charter)

Maryland

20-5701514

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)


			24601 Center Ridge Road, Westlake, OH 44145-5639
			(Address and Zip Code of Principal Executive Offices)

			(440) 808-9100
			(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbols

Name of Each Exchange on Which Registered

Shares of Common Stock, $0.001 Par Value Per Share

The Nasdaq Stock Market LLC

8.25% Senior Notes due 2028

TANNI

The Nasdaq Stock Market LLC

8.00% Senior Notes due 2029

TANNL

The Nasdaq Stock Market LLC

8.00% Senior Notes due 2030

TANNZ

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No o☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

☐

Accelerated filer ☒

Non-accelerated filer o

☐

Smaller reporting company ☒

Emerging growth company o

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of the registrant's shares of common stock outstanding as of August ~~4, 2020: 14,397,597.~~2, 2021: 14,580,485.

Table of Contents

TABLE OF CONTENTS


		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Consolidated Balance Sheets as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020	1
	Consolidated Statements of Operations and Comprehensive Income ~~(Loss)~~(Loss ) for the Three and Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020	2
	Consolidated Statements of Cash Flows for the Six Months Ended June ~~30, 2020~~ 3 0 , 2021 and ~~2019~~2020	3
	Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30 ~~2020~~ , 2021 and ~~2019~~2020	4
	~~Consolidated Statements of Stockholders' Equity for the Six Months Ended June 30, 2020 and 2019~~	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1817
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3128
Item 4.	Controls and Procedures	3128
	Warning Concerning Forward-Looking Statements	3230
PART II — OTHER INFORMATION			3533
Item 1A.	Risk Factors	3533
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3833
Item 6.	Exhibits	3934
SIGNATURE		4136

As used herein, the terms "we," "us," "our" and "TA" include TravelCenters of America Inc. and its consolidated subsidiaries unless otherwise expressly stated or the context otherwise requires.

Table of Contents

Part I. Financial Information

Item 1. Financial Statements

TravelCenters of America Inc.

Consolidated Balance Sheets (Unaudited)

(in thousands, except par value amount)

June 30,
2020 December 31,
2019
Assets:
Current assets:
Cash and cash equivalents $ 142,786 $ 17,206
Accounts receivable (net of allowance for doubtful accounts of $1,405 and $1,083
   as of June 30, 2020 and December 31, 2019, respectively)
118,511 173,496
Inventory 162,710 196,611
Other current assets 26,915 32,456
Total current assets 450,922 419,769
Property and equipment, net 841,669 868,503
Operating lease assets 1,782,222 1,817,998
Goodwill 22,213 25,259
Intangible assets, net 19,321 20,707
Other noncurrent assets 84,210 78,659
Total assets $ 3,200,557 $ 3,230,895
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable $ 146,566 $ 147,440
Current operating lease liabilities 108,627 104,070
Other current liabilities 160,415 138,455
Total current liabilities 415,608 389,965
Long term debt, net 337,903 329,321
Noncurrent operating lease liabilities 1,827,113 1,880,188
Other noncurrent liabilities 61,648 58,885
Total liabilities 2,642,272 2,658,359
Stockholders' equity:
Common stock, $0.001 par value, 216,000 and 16,000 shares of common
   stock authorized as of June 30, 2020 and December 31, 2019, respectively,
   and 8,298 and 8,307 shares of common stock issued and outstanding as of
   June 30, 2020 and December 31, 2019, respectively
8 8
Additional paid-in capital 700,619 698,402
Accumulated other comprehensive loss (190) (172)
Accumulated deficit (143,622) (127,185)
Total TA stockholders' equity 556,815 571,053
Noncontrolling interest 1,470 1,483
Total stockholders' equity 558,285 572,536
Total liabilities and stockholders' equity $ 3,200,557 $ 3,230,895


	June 30, 2021		December 31, 2020
Assets:
Current assets:
Cash and cash equivalents	$	583,251	$	483,151
Accounts receivable (net of allowance for doubtful accounts of $1,314 and $1,016 as of June 30, 2021 and December 31, 2020, respectively)	142,835		94,429
Inventory	165,920		172,830
Other current assets	22,209		35,506
Total current assets	914,215		785,916

Property and equipment, net	785,052		801,789
Operating lease assets	1,693,350		1,734,883
Goodwill	22,213		22,213
Intangible assets, net	11,209		11,529
Other noncurrent assets	111,469		87,530
Total assets	$	3,537,508	$	3,443,860

Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable	$	229,207	$	158,075
Current operating lease liabilities	114,023		111,255
Other current liabilities	196,953		175,867
Total current liabilities	540,183		445,197

Long term debt, net	525,070		525,397
Noncurrent operating lease liabilities	1,706,020		1,763,166
Other noncurrent liabilities	100,853		69,121
Total liabilities	2,872,126		2,802,881

Stockholders' equity:
Common stock, $0.001 par value, 216,000 shares of common stock authorized as of June 30, 2021 and December 31, 2020, and 14,581 and 14,574 shares of common stock issued and outstanding as of June 30, 2021 and December 31, 2020, respectively	14		14
Additional paid-in capital	783,137		781,841
Accumulated other comprehensive loss	(222)		(205)
Accumulated deficit	(117,547)		(141,084)
Total TA stockholders' equity	665,382		640,566
Noncontrolling interest	0		413
Total stockholders' equity	665,382		640,979
Total liabilities and stockholders' equity	$	3,537,508	$	3,443,860

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

TravelCenters of America Inc.

Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)

(in thousands, except per share amounts)


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Revenues:	Revenues:									Revenues:
Fuel	Fuel	$	577,410	$	1,117,671	$	1,452,339	$	2,100,812	Fuel	$	1,328,631	$	577,410	$	2,405,889	$	1,452,339
Nonfuel	Nonfuel	405,570		476,082		830,577		916,956		Nonfuel	501,810		405,570		949,724		830,577
Rent and royalties from franchisees	Rent and royalties from franchisees	3,123		3,611		6,535		6,888		Rent and royalties from franchisees	3,839		3,123		7,763		6,535
Total revenues	Total revenues	986,103		1,597,364		2,289,451		3,024,656		Total revenues	1,834,280		986,103		3,363,376		2,289,451

Cost of goods sold (excluding depreciation):	Cost of goods sold (excluding depreciation):									Cost of goods sold (excluding depreciation):
Fuel	Fuel	485,510		1,040,849		1,278,484		1,949,243		Fuel	1,228,339		485,510		2,228,167		1,278,484
Nonfuel	Nonfuel	162,951		187,498		324,670		355,766		Nonfuel	198,708		162,951		370,930		324,670
Total cost of goods sold	Total cost of goods sold	648,461		1,228,347		1,603,154		2,305,009		Total cost of goods sold	1,427,047		648,461		2,599,097		1,603,154

Site level operating expense	Site level operating expense	197,522		234,645		434,086		467,365		Site level operating expense	233,996		197,522		461,226		434,086
Selling, general and administrative expense	Selling, general and administrative expense	37,976		39,562		75,204		76,672		Selling, general and administrative expense	36,590		37,976		72,520		75,204
Real estate rent expense	Real estate rent expense	63,079		63,770		126,667		130,183		Real estate rent expense	63,611		63,079		127,480		126,667
Depreciation and amortization expense	Depreciation and amortization expense	28,254		23,213		56,814		47,972		Depreciation and amortization expense	24,139		28,254		47,968		56,814
Other operating income, net										Other operating income, net	(872)		0		(872)		0

Income (loss) from operations	Income (loss) from operations	10,811		7,827		(6,474)		(2,545)		Income (loss) from operations	49,769		10,811		55,957		(6,474)

Interest expense, net	Interest expense, net	7,233		7,164		14,689		14,214		Interest expense, net	11,739		7,233		23,123		14,689
Other expense (income), net		335		(144)		876		430
Other expense, net										Other expense, net	1,304		335		2,701		876
Income (loss) before income taxes	Income (loss) before income taxes	3,243		807		(22,039)		(17,189)		Income (loss) before income taxes	36,726		3,243		30,133		(22,039)
(Provision) benefit for income taxes	(Provision) benefit for income taxes	(1,087)		402		5,654		5,669		(Provision) benefit for income taxes	(7,779)		(1,087)		(6,929)		5,654
Net income (loss)	Net income (loss)	2,156		1,209		(16,385)		(11,520)		Net income (loss)	28,947		2,156		23,204		(16,385)
Less: net income for noncontrolling interest		32		31		52		49
Less: net (income) loss for noncontrolling interest										Less: net (income) loss for noncontrolling interest	(409)		32		(333)		52
Net income (loss) attributable to common stockholders	Net income (loss) attributable to common stockholders	$	2,124	$	1,178	$	(16,437)	$	(11,569)	Net income (loss) attributable to common stockholders	$	29,356	$	2,124	$	23,537	$	(16,437)

Other comprehensive income (loss), net of taxes:
Foreign currency gain (loss), net of taxes of $47, $26, $(60) and $51, respectively		$	2	$	15	$	(18)	$	46
Interest in equity investee's unrealized gains on investments		—		71		—		137
Other comprehensive income (loss) attributable to common stockholders		2		86		(18)		183
Other comprehensive (loss) income, net of taxes:										Other comprehensive (loss) income, net of taxes:
Foreign currency income (loss), net of taxes of $19, $47, $35 and $(60) respectively										Foreign currency income (loss), net of taxes of $19, $47, $35 and $(60) respectively	$	(9)	$	2	$	(17)	$	(18)
Other comprehensive (loss) income attributable to common stockholders										Other comprehensive (loss) income attributable to common stockholders	(9)		2		(17)		(18)

Comprehensive income (loss) attributable to common stockholders	Comprehensive income (loss) attributable to common stockholders	$	2,126	$	1,264	$	(16,455)	$	(11,386)	Comprehensive income (loss) attributable to common stockholders	$	29,347	$	2,126	$	23,520	$	(16,455)

Net income (loss) per share of common stock attributable to common stockholders:	Net income (loss) per share of common stock attributable to common stockholders:									Net income (loss) per share of common stock attributable to common stockholders:
Basic and diluted	Basic and diluted	$	0.26	$	0.15	$	(1.98)	$	(1.43)	Basic and diluted	$	2.02	$	0.26	$	1.62	$	(1.98)

The accompanying notes are an integral part of these consolidated financial statements.

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TravelCenters of America Inc.

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)


		Six Months Ended June 30,							Six Months Ended June 30,
		2020		2019			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net loss		$	(16,385)	$	(11,520)
Adjustments to reconcile net loss to net cash provided by operating activities:
Net income (loss)						Net income (loss)	$	23,204	$	(16,385)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:						Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Noncash rent credits, net	Noncash rent credits, net	(12,068)		(8,487)		Noncash rent credits, net	(11,634)		(12,068)
Depreciation and amortization expense	Depreciation and amortization expense	56,814		47,972		Depreciation and amortization expense	47,968		56,814
Deferred income tax benefit		(5,357)		(5,134)
Deferred income tax benefit (provision)						Deferred income tax benefit (provision)	6,748		(5,357)
Gain on sale of assets, net						Gain on sale of assets, net	(872)		0
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	54,415		(49,968)		Accounts receivable	(48,712)		54,415
Inventory	Inventory	33,878		(2,975)		Inventory	6,922		33,878
Other assets	Other assets	5,698		7,468		Other assets	8,622		5,698
Accounts payable and other liabilities	Accounts payable and other liabilities	24,145		80,282		Accounts payable and other liabilities	85,761		24,145
Other, net	Other, net	4,293		1,275		Other, net	6,067		4,293
Net cash provided by operating activities	Net cash provided by operating activities	145,433		58,913		Net cash provided by operating activities	124,074		145,433

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Acquisitions of travel centers from SVC		—		(309,637)
Capital expenditures	Capital expenditures	(27,552)		(37,189)		Capital expenditures	(27,409)		(27,552)
Proceeds from asset sales		734		890
Other, net		(914)		(1,500)
Proceeds from other asset sales						Proceeds from other asset sales	7,416		734
Investment in equity investee						Investment in equity investee	(1,350)		0
Other						Other	148		(914)
Net cash used in investing activities	Net cash used in investing activities	(27,732)		(347,436)		Net cash used in investing activities	(21,195)		(27,732)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
West Greenwich Loan borrowings	West Greenwich Loan borrowings	16,600		—		West Greenwich Loan borrowings	0		16,600
Payments on Credit Facility		(7,900)		—
Payments on Revolving Credit Facility						Payments on Revolving Credit Facility	0		(7,900)
Payments on Term Loan Facility						Payments on Term Loan Facility	(1,000)		0
Distributions to noncontrolling interest	Distributions to noncontrolling interest	(65)		(105)		Distributions to noncontrolling interest	(80)		(65)
Other		(840)		(55)
Net cash provided by (used in) financing activities		7,795		(160)
Acquisition of stock from employees						Acquisition of stock from employees	(87)		0
Other, net						Other, net	(1,674)		(840)
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(2,841)		7,795

Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	84		81		Effect of exchange rate changes on cash	62		84
Net increase (decrease) in cash and cash equivalents		125,580		(288,602)
Net increase in cash and cash equivalents						Net increase in cash and cash equivalents	100,100		125,580
Cash and cash equivalents at the beginning of the period	Cash and cash equivalents at the beginning of the period	17,206		314,387		Cash and cash equivalents at the beginning of the period	483,151		17,206
Cash and cash equivalents at the end of the period	Cash and cash equivalents at the end of the period	$	142,786	$	25,785	Cash and cash equivalents at the end of the period	$	583,251	$	142,786

Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Lease modification (operating to finance lease)						Lease modification (operating to finance lease)	$	28,201	$	0
Interest paid, net of capitalized interest	Interest paid, net of capitalized interest	$	14,294	$	13,783	Interest paid, net of capitalized interest	21,840		14,294
Income taxes refunded	Income taxes refunded	464		106		Income taxes refunded	27		464

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

TravelCenters of America Inc.

Consolidated Statements of Stockholders' Equity (Unaudited)

(in thousands)

Number of
Shares of
Common Stock Common
Stock Additional
Paid-In
Capital Accumulated
Other
Comprehensive
(Loss) Income Accumulated
Deficit Treasury
Stock Total TA
Stockholders'
Equity Noncontrolling
Interest Total
Stockholders'
Equity
March 31, 2020 8,319 $ 8 $ 699,491 $ (192) $ (145,746) $ — $ 553,561 $ 1,471 $ 555,032
Grants under share
   award plan and
   stock based
   compensation, net
(21) — 1,128 — — — 1,128 — 1,128
Distributions to
   noncontrolling
   interest
— — — — — — — (33) (33)
Other comprehensive
   income, net of taxes
— — — 2 — — 2 — 2
Net income — — — — 2,124 — 2,124 32 2,156
June 30, 2020 8,298 $ 8 $ 700,619 $ (190) $ (143,622) $ — $ 556,815 $ 1,470 $ 558,285
March 31, 2019 8,080 $ 8 $ 696,009 $ 452 $ (173,277) $ — $ 523,192 $ 1,484 $ 524,676
Grants under share
   award plan and
   stock based
   compensation, net
7 — 869 — — (2) 867 — 867
Retirement of
treasury stock
— — — — — 2 2 — 2
Distributions to
   noncontrolling
   interest
— — — — — — — (76) (76)
Other comprehensive
   income, net of taxes
— — — 86 — — 86 — 86
Net income — — — — 1,178 — 1,178 31 1,209
June 30, 2019 8,087 $ 8 $ 696,878 $ 538 $ (172,099) $ — $ 525,325 $ 1,439 $ 526,764


	Number of Shares of Common Stock	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total TA Stockholders' Equity		Noncontrolling Interest		Total Stockholders' Equity
March 31, 2021	14,564	$	14	$	782,524	$	(213)	$	(146,903)	$	635,422	$	409	$	635,831
Grants under share award plan and stock based compensation, net	17	0		1,213		—		—		1,213		—		1,213
Disposal of noncontrolling interest in QSL	—	—		(600)		—		—		(600)		—		(600)
Other comprehensive loss, net of taxes	—	—		—		(9)		—		(9)		—		(9)
Net income (loss)	—	—		—		—		29,356		29,356		(409)		28,947
June 30, 2021	14,581	$	14	$	783,137	$	(222)	$	(117,547)	$	665,382	$	0	$	665,382

March 31, 2020	8,319	$	8	$	699,491	$	(192)	$	(145,746)	$	553,561	$	1,471	$	555,032
Grants under share award plan and stock based compensation, net	(21)	0		1,128		—		—		1,128		—		1,128
Distribution to noncontrolling interest	—	—		—		—		—		—		(33)		(33)
Other comprehensive income, net of taxes	—	—		—		2		—		2		—		2
Net income	—	—		—		—		2,124		2,124		32		2,156
June 30, 2020	8,298	$	8	$	700,619	$	(190)	$	(143,622)	$	556,815	$	1,470	$	558,285

The accompanying notes are an integral part of these consolidated financial statements.

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TravelCenters of America Inc.

Consolidated Statements of Stockholders' Equity (Unaudited)

(in thousands)

Number of
Shares of
Common Stock Common
Stock Additional
Paid-In
Capital Accumulated
Other
Comprehensive
(Loss) Income Accumulated
Deficit Treasury
Stock Total TA
Stockholders'
Equity Noncontrolling
Interest Total
Stockholders'
Equity
December 31, 2019 8,307 $ 8 $ 698,402 $ (172) $ (127,185) $ — $ 571,053 $ 1,483 $ 572,536
Grants under share
   award plan and
   stock based
   compensation, net
(9) — 2,217 — — — 2,217 — 2,217
Distributions to
   noncontrolling
   interest
— — — — — — — (65) (65)
Other comprehensive
   loss, net of taxes
— — — (18) — — (18) — (18)
Net (loss) income — — — — (16,437) — (16,437) 52 (16,385)
June 30, 2020 8,298 $ 8 $ 700,619 $ (190) $ (143,622) $ — $ 556,815 $ 1,470 $ 558,285
December 31, 2018 8,080 $ 8 $ 695,307 $ 355 $ (246,773) $ — $ 448,897 $ 1,495 $ 450,392
Grants under share
   award plan and
   stock based
   compensation, net
7 — 1,571 — — (2) 1,569 — 1,569
Retirement of
treasury stock
— — — — — 2 2 — 2
Distributions to
   noncontrolling
   interest
— — — — — — — (105) (105)
Other comprehensive
   income, net of taxes
— — — 183 — — 183 — 183
Cumulative effect of
   adoption of ASC
   842, net of taxes
— — — — 86,243 — 86,243 — 86,243
Net (loss) income — — — — (11,569) — (11,569) 49 (11,520)
June 30, 2019 8,087 $ 8 $ 696,878 $ 538 $ (172,099) $ — $ 525,325 $ 1,439 $ 526,764


	Number of Shares of Common Stock	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total TA Stockholders' Equity		Noncontrolling Interest		Total Stockholders' Equity
December 31, 2020	14,574	$	14	$	781,841	$	(205)	$	(141,084)	$	640,566	$	413	$	640,979
Grants under share award plan and stock based compensation, net	7	—		1,896		—		—		1,896		—		1,896
Distribution to noncontrolling interest	—	—		—		—		—		—		(80)		(80)
Disposal of noncontrolling interest in QSL	—	—		(600)		—		—		(600)		—		(600)
Other comprehensive loss, net of taxes	—	—		—		(17)		—		(17)		—		(17)
Net income (loss)	—	—		—		—		23,537		23,537		(333)		23,204
June 30, 2021	14,581	14		783,137		(222)		(117,547)		665,382		0		665,382

December 31, 2019	8,307	$	8	$	698,402	$	(172)	$	(127,185)	$	571,053	$	1,483	$	572,536
Grants under share award plan and stock based compensation, net	(9)	—		2,217		—		—		2,217		—		2,217
Distribution to noncontrolling interest	—	—		—		—		—		—		(65)		(65)
Other comprehensive loss, net of taxes	—	—		—		(18)		—		(18)		—		(18)
Net (loss) income	—	—		—		—		(16,437)		(16,437)		52		(16,385)
June 30, 2020	8,298	8		700,619		(190)		(143,622)		556,815		1,470		558,285

The accompanying notes are an integral part of these consolidated financial statements.

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TravelCenters of America Inc.

Notes to Consolidated Financial Statements (Unaudited)

(dollars and shares in thousands, except per share amounts)

1.Business Description and Basis of Presentation

TravelCenters of America Inc. is a Maryland corporation. ~~As of June 30, 2020, we operated~~We operate or ~~franchised 311~~franchise 278 travel centers, standalone truck service facilities and a standalone ~~restaurants.~~restaurant. Our customers include trucking fleets and their drivers, independent truck drivers, highway and local motorists and casual diners. We also collect rents, royalties and other fees from our tenants and franchisees.

As of June 30, ~~2020,~~2021, our business included ~~268~~274 travel centers in 44 states in the United States and the province of Ontario, Canada, primarily along the U.S. interstate highway system, operated primarily under the "TravelCenters of America," "TA," "TA Express," "Petro Stopping Centers" and "Petro" brand names. Of ~~our 268~~these travel centers, ~~at June 30, 2020,~~ we owned 51, we leased 181, we operated 2 for a joint venture in which we owned a noncontrolling interest and 3440 were owned or leased from others by our franchisees. We operated 232 of our travel centers and franchisees operated 3642 travel centers, including 2 we leased to franchisees. Our travel centers offer a broad range of products and services, including diesel fuel and gasoline, as well as nonfuel products and services such as truck repair and maintenance services, diesel exhaust fluid, full service restaurants, quick service restaurants and various customer amenities.

As of June 30, ~~2020,~~2021, our business included 3 standalone truck service facilities operated under the "TA Truck Service" brand name. Of ~~our 3~~these standalone truck service facilities, ~~at June 30, 2020,~~ we leased 2 and owned 1. Our standalone truck service facilities offer extensive maintenance and emergency repair and roadside services to large trucks.

As of June 30, ~~2020,~~2021, our business included 401 standalone restaurants in 12 states in the United States operated primarily under the "Quaker Steak & Lube," or QSL, brand name. Of our 40 standalone restaurants at June 30, 2020, we operated 14 restaurants (4 we owned, 8 we leased, 1 we operated for 1 of our franchisees and 1restaurant that we operated for a joint venture in which we owned a noncontrolling ~~interest)~~interest.

On April 21, 2021, we completed the sale of our Quaker Steak & Lube, or QSL, business for $5,000, excluding costs to sell and ~~26 were owned or leased from others and operated by~~certain closing adjustments. See Note 3 for more information about the sale of our ~~franchisees.~~QSL business.

We manage our business as 1 segment. We make specific disclosures concerning fuel and nonfuel products and services because they facilitate our discussion of trends and operational initiatives within our business and industry. We have a single travel center located in a foreign country, Canada, that we do not consider material to our operations.

The accompanying interim consolidated financial statements are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, applicable for interim financial statements. The disclosures presented do not include all the information necessary for complete financial statements in accordance with GAAP. These unaudited interim financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019,~~2020, or our Annual Report. In the opinion of our management, the accompanying unaudited interim consolidated financial statements include all adjustments, including normal recurring adjustments, considered necessary for a fair presentation. All intercompany transactions and balances have been eliminated. While our revenues are modestly seasonal, the quarterly variations in our operating results may reflect greater seasonal differences because our rent expense and certain other costs do not vary seasonally. The COVID-19 pandemic has, and economic conditions occasionally in the past have, significantly altered the seasonal aspects of our business, and they may have similar impacts in the future. For this and other reasons, our operating results for interim periods are not necessarily indicative of the results that may be expected for a full year.

Fair Value Measurement

Senior Notes

We collectively refer to our $110,000 of 8.25% Senior Notes due 2028, our $120,000 of 8.00% Senior Notes due 2029 and our $100,000 of 8.00% Senior Notes due 2030 as our Senior Notes, which are our senior unsecured obligations. We estimate that, based on their trading prices (a Level 12 input), the aggregate fair value of our Senior Notes on June 30, ~~2020,~~2021, was ~~$321,624.~~$348,284.

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TravelCenters of America Inc.

Notes to Consolidated Financial Statements (Unaudited)

(dollars and shares in thousands, except per share amounts)

~~Intangible Assets and Definite Lived Assets Impairment~~

In March 2020, COVID-19 was declared a pandemic by the World Health Organization, and the U.S. Health and Human Services Secretary declared a public health emergency in the United States in response to the outbreak. As a result of the COVID-19 pandemic and its impact on our operations, we assessed our goodwill, indefinite and definite lived intangible assets and our definite lived assets for potential indicators of impairment as of June 30, 2020. For more information about our assessment of goodwill, please refer to Note 5 of this Quarterly Report on Form 10-Q, or this Quarterly Report.

Indefinite lived intangible assets were assessed using a qualitative analysis that was performed by assessing certain trends and factors, including actual sales, discount rates and other relevant qualitative factors. These trends and factors were compared to, and based on, the assumptions used in the most recent quantitative assessment.

Definite lived intangible assets were assessed using a qualitative analysis that was performed by assessing certain trends and factors, including actual sales, collection of royalties from franchisees, any changes in the manner in which the assets were used that could impact the values of the assets and whether a revision to the remaining period of amortization was required.

~~Definite lived assets were assessed using the same quantitative analysis approach that we historically followed for our definite lived asset impairment assessments.~~

Based on our analyses, we concluded that as of June 30, 2020, the fair value of our indefinite and definite lived intangible assets more likely than not exceeded the carrying value, and the carrying value of our definite lived assets are recoverable and the fair value exceeds the carrying value. However, we are unable to predict the duration and severity of the COVID-19 pandemic and as a result, we are unable to determine what the ultimate impact will be on our financial results and financial position. We will continue to closely monitor the impact of the COVID-19 pandemic on the fair value of our intangible assets and definite lived assets.

Recently Issued Accounting Pronouncement and Other Accounting Matters

In ~~August 2018,~~December 2019, the Financial Accounting Standards Board issued Accounting Standards Update ~~2018-15,~~2019-12, ~~Intangibles - Goodwill and Other - Internal-Use Software~~Income Taxes – Simplifying the Accounting for Income Taxes, which ~~aligns~~eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the accounting for implementation costs incurred to develop or obtain internal-use software. The capitalized implementation costs are to be amortized over the term of the contract.income taxes. We adopted this standard on January 1, ~~2020,~~2021, using the prospective transition method. The implementation of this update did not ~~cause~~have a material ~~change to~~impact on our consolidated financial statements.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, as a response to the economic uncertainty resulting from the COVID-19 pandemic, which, among other things, included several temporary changes to corporate income tax ~~provisions. The~~provisions such as modifications to limitations on deductibility of net operating losses and business interest, provisions relating to the deferral of the employer portion of social security taxes incurred through December 31, 2020, and employee retention tax credit, which is a refundable payroll credit for certain qualified wages and health benefits. As of June 30, 2021, we have deferred $23,340 of employer social security payments, and have included this amount in other current liabilities. On December 27, 2020 and March 11, 2021, the CARES Act ~~did not have an impact on our (provision) benefit~~was modified by the Consolidated Appropriations Act of 2021 and the American Rescue Plan Act of 2021, respectively, extending the employee retention tax credit through December 31, 2021. During the year ended December 31, 2020, we recognized $3,268 relating to the employee retention tax credit for ~~income taxes for the three and six months ended~~credits evaluated through June 30, 2020. We are in the process of evaluating the amount of any credits for which we may be eligible for the periods subsequent to March 11, 2020, and we are currently unable to estimate that amount, if any. We will continue to ~~assess~~evaluate the ~~effect, if any, the CARES Act will have~~impact of this legislation on our ~~income taxes.~~

operations and consolidated financial statements in future periods and to the extent additional guidance and regulations are issued.

~~Table of Contents~~

~~TravelCenters of America Inc.~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

~~(dollars and shares in thousands, except per share amounts)~~

2. Revenues

We recognize revenues based on the consideration specified in the contract with the customer, excluding any sales incentives (such as customer loyalty programs and customer rebates) and amounts collected on behalf of third parties (such as sales and excise taxes). The majority of our revenues are generated at the point of sale in our retail locations. Revenues consist of fuel revenues, nonfuel revenues and rents and royalties from franchisees.

Disaggregation of Revenues

We disaggregate our revenues based on the type of good or service provided to the customer, or by fuel revenues and nonfuel revenues, in our consolidated statements of operations and comprehensive income (loss). Nonfuel revenues disaggregated by type of good or service for the three and six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Nonfuel revenues:
Store and retail services	$	194,440	$	158,240	$	366,212	$	310,058
Truck service	194,197		160,987		365,328		314,954
Restaurant	79,938		61,492		153,807		155,704
Diesel exhaust fluid	33,235		24,851		64,377		49,861
Total nonfuel revenues	$	501,810	$	405,570	$	949,724	$	830,577

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Nonfuel revenues:
Truck service $ 160,987 $ 173,431 $ 314,954 $ 334,626
Store and retail services 158,240 170,056 310,058 327,797
Restaurant 61,492 108,756 155,704 208,010
Diesel exhaust fluid 24,851 23,839 49,861 46,523
Total nonfuel revenues $ 405,570 $ 476,082 $ 830,577 $ 916,956

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TravelCenters of America Inc.

Notes to Consolidated Financial Statements (Unaudited)

(dollars and shares in thousands, except per share amounts)

Contract Liabilities

Our contract liabilities, which are presented in our consolidated balance sheets in other current and other noncurrent liabilities, primarily include deferred revenues related to our customer loyalty programs, gift cards, rebates payable to customers and other deferred revenues. The following table shows the changes in our contract liabilities between periods.

Customer
Loyalty
Programs Other Total
December 31, 2018 $ 15,490 $ 3,470 $ 18,960
Increases due to unsatisfied performance obligations
arising during the period
103,228 12,982 116,210
Revenues recognized from satisfied performance
obligations during the period
(90,462) (10,519) (100,981)
Other (10,263) (1,111) (11,374)
December 31, 2019 17,993 4,822 22,815
Increases due to unsatisfied performance obligations
arising during the period
52,840 7,156 59,996
Revenues recognized from satisfied performance
obligations during the period
(45,059) (6,040) (51,099)
Other (5,518) (317) (5,835)
June 30, 2020 $ 20,256 $ 5,621 $ 25,877


	Customer Loyalty Programs		Other		Total
December 31, 2019	$	17,993	$	4,822	$	22,815
Increases due to unsatisfied performance obligations arising during the period	115,792		15,791		131,583
Revenues recognized from satisfied performance obligations during the period	(98,147)		(12,879)		(111,026)
Other	(12,817)		(589)		(13,406)
December 31, 2020	22,821		7,145		29,966
Increases due to unsatisfied performance obligations arising during the period	64,030		6,926		70,956
Revenues recognized from satisfied performance obligations during the period	(53,563)		(6,109)		(59,672)
Other	(7,791)		(1,496)		(9,287)
June 30, 2021	$	25,497	$	6,466	$	31,963

As of June 30, ~~2020,~~2021, we expect the unsatisfied performance obligations, relating to our customer loyalty programs and other contract liabilities, will generally be satisfied within 12 months.

3. Disposition Activity

~~Table~~On April 21, 2021, we completed the sale of ~~Contents~~

~~TravelCenters~~our QSL business for $5,000 excluding costs to sell and certain closing adjustments. We had classified our QSL business as held for sale as of ~~America Inc.~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

~~(dollars~~December 31, 2020. We did not treat the sale of QSL as a discontinued operation, as we concluded that its effect was not material and ~~shares~~did not represent a strategic shift in ~~thousands, except per share amounts)~~

~~3. Acquisitions~~

our business. As of the date of sale, our QSL business included 41 standalone restaurants in 11 states in the United States operated primarily under the QSL brand name.

During the three months ended June 30, ~~2020,~~2021, we ~~had entered into an agreement~~recognized a $606 loss on the sale of QSL, which was included in other income from operations, net in our consolidated statement of operations and comprehensive income (loss). During the first quarter of 2021, we recorded impairment charges of $650, primarily resulting from the change in fair value of underlying assets sold, which were included in depreciation and amortization expense in our consolidated statement of operations and comprehensive income (loss). Impairment charges relating to ~~acquire 1 parcel of land for $1,358,~~our QSL net asset disposal group cumulatively totaled $14,365, which ~~we expect to account for as an asset acquisition. We expect to complete this acquisition by~~includes the ~~end of 2020, but this purchase is subject to conditions and may not occur, may be delayed or~~$13,715 impairment charge recognized during the ~~terms may change.~~year ended December 31, 2020.

4. Stockholders' Equity

~~On June 22, 2020, we amended our Articles of Incorporation to increase our authorized shares of common stock from 16,000 to 216,000.~~

~~Underwritten Public Equity Offering~~

On July 6, 2020, we received net proceeds of $80,056, after $220 of offering costs and $5,124 of underwriting discounts and commissions, from the sale and issuance of 6,100 shares of common stock in an underwritten public equity offering. We intend to use the net proceeds from this offering to fund deferred maintenance and other capital expenditures necessary to enhance property conditions and implement growth initiatives, for working capital and for general corporate purposes.

~~Net Income (Loss) Per Share of Common Stock Attributable to Common Stockholders~~

The following table presents a reconciliation of net income (loss) attributable to common stockholders to net income (loss) available to common stockholders and the related earnings per share of common stock for the three and six months ended June 30, ~~2020~~2021 and ~~2019.~~2020.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net income (loss) attributable to common stockholders	$	29,356	$	2,124	$	23,537	$	(16,437)
Less: net (income) loss attributable to participating securities	667		97		545		(778)
Net income (loss) available to common stockholders	$	28,689	$	2,027	$	22,992	$	(15,659)

Weighted average shares of common stock(1)	14,236		7,944		14,232		7,924

Basic and diluted net income (loss) per share of common stock attributable to common stockholders	$	2.02	$	0.26	$	1.62	$	(1.98)

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Net income (loss) attributable to
   common stockholders
$ 2,124 $ 1,178 $ (16,437) $ (11,569)
Less: net income (loss) attributable to
   participating securities
97 46 (778) (450)
Net income (loss) available to
   common stockholders
$ 2,027 $ 1,132 $ (15,659) $ (11,119)
Weighted average shares of common stock⁽¹⁾
7,944 7,770 7,924 7,767
Basic and diluted net income (loss) per share of
common stock attributable to
common stockholders
$ 0.26 $ 0.15 $ (1.98) $ (1.43)

⁽¹⁾Excludes unvested shares of common stock awarded under our share award plans, in which shares of common stock are considered participating securities because they participate equally in earnings and losses with all of our other shares of common stock. The weighted average number of unvested shares of common stock outstanding for the three months ended June 30, 2021 and 2020, was 331 and ~~2019, was~~ 380, ~~and 313,~~ respectively. The weighted average number of unvested shares of common stock outstanding for the six months ended June 30, 2021 and 2020, was 337 and ~~2019, was~~ 394, ~~and 314,~~ respectively.

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TravelCenters of America Inc.

Notes to Consolidated Financial Statements (Unaudited)

(dollars and shares in thousands, except per share amounts)

5. ~~Goodwill~~

~~As of June 30, 2020 and December 31, 2019, our goodwill balance consisted of the following:~~

June 30,
2020 December 31,
2019
Travel centers business $ 22,213 $ 22,213
QSL business — 3,046
Total $ 22,213 $ 25,259

~~Goodwill Impairment~~

During the three months ended June 30, 2020, we evaluated our travel centers and QSL reporting units for impairment using a qualitative analysis, which included evaluating financial trends and industry and market conditions and assessing the reasonableness of the assumptions used in the most recent quantitative analysis. The impact of the COVID-19 pandemic on our operations was included in our analysis. However, we are unable to predict the duration and severity of the COVID-19 pandemic and as a result, we are unable to determine what the ultimate impact will be on their financial results and financial position. We will continue to closely monitor the impact of the COVID-19 pandemic on the fair value of our goodwill.

~~Based on our analyses, we concluded that as of June 30, 2020, the fair value of our travel centers reporting unit more likely than not exceeded the carrying value.~~

Based on our analyses, we determined that the decline in site level gross margin in excess of site level operating expense for our QSL business for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019, in conjunction with the impact of the COVID-19 pandemic, were indicators of impairment. Accordingly, we performed an impairment assessment of the goodwill in the QSL reporting unit as of May 31, 2020, using the same quantitative analysis approach that we historically followed for our goodwill impairment assessments. Based on the assessment performed, we recorded a goodwill impairment charge of $3,046, which was recognized in depreciation and amortization expense in our consolidated statements of operations and comprehensive income (loss). This analysis requires the exercise of significant judgments and estimates, including judgments regarding appropriate discount rates, perpetual growth rates and the timing of expected future cash flows, as well as revenue growth rates and operating cash flow margins, of the reporting unit. The fair value estimates are sensitive and applying different assumptions could lead to different results, possibly materially different.

6. Leasing Transactions

As a Lessee

We have lease agreements covering many of our properties, as well as various equipment, with the most significant leases being our 5 leases with Service Properties Trust, or SVC, which are further described below. Certain of our leases include renewal options, and certain leases include escalation clauses and purchase options. Renewal periods are included in calculating our operating lease assets and liabilities when they are reasonably certain. Leases with an initial term of 12 months or less are not recognized in our consolidated balance sheets.

As of June 30, ~~2020, all~~2021, most of our SVC Leases (as defined below), the leases covering our other properties and most of our equipment leases were classified as operating leases and certain of our other equipment leases and one SVC lease were classified as finance leases. As of June 30, 2021, our non-SVC finance lease assets and liabilities were immaterial to our consolidated financial statements. Finance lease assets were included in other noncurrent assets, with the corresponding current and noncurrent finance lease liabilities included in other current liabilities and other noncurrent liabilities, respectively, on our consolidated balance sheets.

Certain of our operating leases provide for variable lease costs, which primarily include percentage rent and our obligation for the estimated cost of removing underground storage tanks under the SVC ~~Leases (as defined below).~~Leases.

~~Table of Contents~~

~~TravelCenters of America Inc.~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

~~(dollars and shares in thousands, except per share amounts)~~

Our lease costs are included in various balances in our consolidated statements of operations and comprehensive income (loss), as shown in the following table. For the three and six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, our lease costs consisted of the following:

Classification in our Consolidated
Statements of Operations
and Comprehensive Income (Loss) Three Months Ended
June 30,
2020 2019
Operating lease costs: SVC Leases Real estate rent expense $ 59,498 $ 59,424
Operating lease costs: other Real estate rent expense 2,844 2,752
Variable lease costs: SVC Leases Real estate rent expense 605 1,465
Variable lease costs: other Real estate rent expense 132 129
Total real estate rent expense 63,079 63,770
Operating lease costs: equipment
   and other
Site level operating expense and selling, general
   and administrative expense
950 647
Short-term lease costs
Site level operating expense and selling, general
   and administrative expense
411 732
Sublease income Nonfuel revenues (527) (591)
Net lease costs $ 63,913 $ 64,558


	Classification in our Consolidated Statements of Operations and Comprehensive Income (Loss)	Three Months Ended June 30,
		2021		2020
Operating lease costs: SVC Leases	Real estate rent expense	$	58,952	$	59,498
Operating lease costs: other	Real estate rent expense	2,398		2,844
Variable lease costs: SVC Leases	Real estate rent expense	2,105		605
Variable lease costs: other	Real estate rent expense	156		132
Total real estate rent expense		63,611		63,079
Operating lease costs: equipment and other	Site level operating expense and selling, general and administrative expense	776		950
Financing lease costs: equipment and other	Site level operating expense	77		0
Short-term lease costs	Site level operating expense and selling, general and administrative expense	175		411
Amortization of finance lease assets: SVC Leases	Depreciation and amortization expense	553		0
Amortization of finance lease assets: other	Depreciation and amortization expense	409		0
Interest on finance lease liabilities: SVC Leases	Interest expense, net	308		0
Interest on finance lease liabilities: other	Interest expense, net	108		0
Sublease income	Nonfuel revenues	(517)		(527)
Net lease costs		$	65,500	$	63,913

Classification in our Consolidated
Statements of Operations
and Comprehensive Income (Loss) Six Months Ended
June 30,
2020 2019
Operating lease costs: SVC Leases Real estate rent expense $ 118,999 $ 121,544
Operating lease costs: other Real estate rent expense 5,677 5,476
Variable lease costs: SVC Leases Real estate rent expense 1,701 2,886
Variable lease costs: other Real estate rent expense 290 277
Total real estate rent expense 126,667 130,183
Operating lease costs: equipment
   and other
Site level operating expense and selling, general
   and administrative expense
1,916 1,217
Short-term lease costs
Site level operating expense and selling, general
   and administrative expense
950 1,545
Sublease income Nonfuel revenues (1,023) (1,155)
Net lease costs $ 128,510 $ 131,790

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TravelCenters of America Inc.

Notes to Consolidated Financial Statements (Unaudited)

(dollars and shares in thousands, except per share amounts)


	Classification in our Consolidated Statements of Operations and Comprehensive Income (Loss)	Six Months Ended June 30,
		2021		2020
Operating lease costs: SVC Leases	Real estate rent expense	$	118,089	$	118,999
Operating lease costs: other	Real estate rent expense	5,082		5,677
Variable lease costs: SVC Leases	Real estate rent expense	3,971		1,701
Variable lease costs: other	Real estate rent expense	338		290
Total real estate rent expense		127,480		126,667
Operating lease costs: equipment and other	Site level operating expense and selling, general and administrative expense	1,622		1,916
Financing lease costs: equipment and other	Site level operating expense	99		0
Short-term lease costs	Site level operating expense and selling, general and administrative expense	342		950
Amortization of finance lease assets: SVC Leases	Depreciation and amortization expense	737		0
Amortization of finance lease assets: other	Depreciation and amortization expense	659		0
Interest on finance lease liabilities: SVC Leases	Interest expense, net	411		0
Interest on finance lease liabilities: other	Interest expense, net	189		0
Sublease income	Nonfuel revenues	(1,003)		(1,023)
Net lease costs		$	130,536	$	128,510

Maturities of our operating lease liabilities that had remaining noncancelable lease terms in excess of one year as of June 30, ~~2020,~~2021, were as follows:


	SVC Leases(1)		Other		Total
Years ended December 31:
2021	$	134,643	$	2,371	$	137,014
2022	268,936		3,647		272,583
2023	255,343		1,757		257,100
2024	251,150		620		251,770
2025	250,667		490		251,157
Thereafter	1,783,837		2,288		1,786,125
Total operating lease payments	2,944,576		11,173		2,955,749
Less: present value discount(2)	(1,133,897)		(1,809)		(1,135,706)
Present value of operating lease liabilities	$	1,810,679	$	9,364	$	1,820,043

SVC Leases⁽¹⁾
Other Total
Years ended December 31:
2020 $ 135,725 $ 3,498 $ 139,223
2021 270,799 6,344 277,143
2022 268,936 5,086 274,022
2023 255,344 3,168 258,512
2024 251,150 1,873 253,023
Thereafter 2,034,504 7,724 2,042,228
Total operating lease payments 3,216,458 27,693 3,244,151
Less: present value discount⁽²⁾
(1,303,375) (5,036) (1,308,411)
Present value of operating lease liabilities $ 1,913,083 $ 22,657 $ 1,935,740

⁽¹⁾Includes rent for properties we sublease from SVC and pay directly to SVC's landlords.

⁽²⁾The discount rate used to derive the present value of unpaid lease payments is based on the rates implicit in the SVC Leases and our incremental borrowing rate for all other leases.

The weighted average remaining lease term for our operating leases as of June 30, ~~2020,~~2021, was approximately 1312 years. Our weighted average discount rate for our operating leases as of June 30, ~~2020,~~2021, was approximately 9.1%.

During the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, we paid ~~$138,735~~$139,113 and ~~$138,670,~~$138,735, respectively, for amounts that had been included in the measurement of our operating lease liabilities.

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TravelCenters of America Inc.

Notes to Consolidated Financial Statements (Unaudited)

(dollars and shares in thousands, except per share amounts)

As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, our operating lease assets and liabilities consisted of the following:


	June 30, 2021		December 31, 2020
Operating lease assets:
SVC Leases	$	1,684,580	$	1,724,428
Other	8,770		10,455
Total operating lease assets	$	1,693,350	$	1,734,883

Current operating lease liabilities:
SVC Leases	$	109,819	$	106,788
Other	4,204		4,467
Total current operating lease liabilities	$	114,023	$	111,255

Noncurrent operating lease liabilities:
SVC Leases	$	1,700,860	$	1,756,449
Other	5,160		6,717
Total noncurrent operating lease liabilities	$	1,706,020	$	1,763,166

June 30,
2020 December 31,
2019
Operating lease assets:
SVC Leases $ 1,761,507 $ 1,796,406
Other 20,715 21,592
Total operating lease assets $ 1,782,222 $ 1,817,998
Current operating lease liabilities:
SVC Leases $ 102,877 $ 98,574
Other 5,750 5,496
Total current operating lease liabilities $ 108,627 $ 104,070
Noncurrent operating lease liabilities:
SVC Leases $ 1,810,206 $ 1,862,060
Other 16,907 18,128
Total noncurrent operating lease liabilities $ 1,827,113 $ 1,880,188
On March 9, 2021, we and SVC amended 1 of the SVC Leases, pursuant to which, a third party ground lease at 1 of the 179 travel center properties that we lease from SVC, which was previously accounted for as an operating lease, is now accounted for as a finance lease. As a result of this lease modification, as of June 30, 2021, we recorded $27,648 in other noncurrent assets, $1,373 in other current liabilities and $26,698 in other noncurrent liabilities on our consolidated balance sheet.

Maturities of the financing lease liabilities related to the amended SVC lease noted above that had remaining noncancelable lease terms in excess of one year as of June 30, 2021, were as follows:


	SVC Finance Lease
Years ended December 31:
2021	$	1,187
2022	2,591
2023	2,656
2024	2,722
2025	2,790
Thereafter	24,986
Total financing lease payments	36,932
Less: present value discount(1)	(8,861)
Present value of financing lease liabilities	$	28,071

(1) The discount rate used to derive the present value of unpaid lease payments is based on the rate implicit in the SVC Lease.

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TravelCenters of America Inc.

Notes to Consolidated Financial Statements (Unaudited)

(dollars and shares in thousands, except per share amounts)

Leasing Agreements with SVC. As of June 30, ~~2020,~~2021, we leased from SVC a total of 179 properties under 5 leases ~~4 of which we~~that expire between 2029 and 2035, subject to our right to extend those leases. We refer to ~~as the TA Leases and 1 of which we refer to as the Petro Lease, and which we refer to~~these 5 leases collectively as the SVC Leases. ~~In January 2019, we entered into agreements, or the Transaction Agreements, with SVC pursuant to which:~~

•~~We purchased 20 travel center properties from SVC, which we previously leased from SVC, for a total acquisition cost of $309,637, including $1,437 of transaction related costs.~~

•~~Upon completing the Transaction Agreements, these travel centers were removed from the SVC Leases and our annual minimum rent due to SVC was reduced by $43,148.~~

•~~The term of each SVC Lease was extended by three years.~~

•Commencing on April 1, 2019, we began to pay SVC 16 quarterly installments of approximately $4,404 each (an aggregate of $70,458) to fully satisfy and discharge our $150,000 deferred rent obligation to SVC that otherwise would have become due in 5 installments between 2024 and 2030.

•Commencing on January 1, 2020, we are obligated to pay to SVC an additional amount of percentage rent equal to one-half percent (0.5%) of the excess of our annual nonfuel revenues at leased sites over the nonfuel revenues for each respective site for the year ending December 31, 2019.

•~~Certain of the 179 travel center properties that we continue to lease from SVC were reallocated among the SVC Leases.~~

As a result of the Transaction Agreements, our operating lease assets and liabilities each increased by $23,673. In addition, the purchase of the 20 travel center properties resulted in the derecognition of certain operating lease assets and liabilities.

In addition to the payment of annual minimum rent, the SVC Leases provide for payment to SVC of percentage rent, calculated at 3.5% (which includes the 0.5% that was added pursuant to the Transaction Agreements) of the increase in total nonfuel revenues at each property over base year levels. The percentage rent amounts due were $124 and $958 for the three months ended June 30, 2020 and 2019, respectively, and $849 and $2,027 for the six months ended June 30, 2020 and 2019, respectively.

We recognized total real estate rent expense under the SVC Leases of ~~$60,103~~$61,057 and ~~$60,889~~$60,103 for the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$120,700~~$122,060 and ~~$124,430~~$120,700 for the six months ended June 30, 2021 and 2020, respectively. Included in these rent expense amounts are percentage rent payable of $1,591 and ~~2019, respectively.~~$124 for the three months ended June 30, 2021 and 2020, respectively, and $2,977 and $849 for the six months ended June 30, 2021 and 2020, respectively, which are based on a percentage of the increases in total nonfuel revenues at each leased property over base year levels, deferred rent of $4,404 and $8,807 for the three and six month periods, respectively, and adjustments for future increases in minimum annual rent on a straight line basis and estimated future payments by us for the cost of removing underground storage tanks on a straight line basis. The remaining balance of our deferred rent obligations was $30,826 as of June 30, 2021.

Pursuant to the SVC Leases, we may request that SVC purchase qualifying capital improvements we make at the leased travel centers in return for increased annual minimum rent. We did 0t sell to SVC any improvements we made to properties leased from SVC for the three and six months ended June 30, ~~2020~~2021 and 2019. At June 30, 2020, our property and equipment balance included $46,511 of improvements of the type that qualify for sale to SVC for an increase in annual minimum rent; however, we may elect not to sell some of those improvements and SVC is not obligated to purchase these improvements.

We paid $4,404 of deferred rent to SVC for the three months ended June 30, 2020 and 2019, and $8,807 and $4,404 for the six months ended June 30, 2020 and 2019, respectively. The total amount of deferred rent outstanding as of June 30, 2020, was $48,440. Pursuant to our rent deferral agreement with SVC, deferred rent shall be accelerated and interest shall begin to accrue thereon at 1.0% per month on the deferred rent amounts if certain events occur, including: our default under the SVC Leases; a change of control of us, as defined in the deferral agreement; or our declaration or payment of a dividend or other distribution in respect of our common stock.2020.

As permitted by the SVC Leases, we sublease a portion of certain travel centers to third parties to operate other retail operations. These subleases are classified as operating leases. We recognized sublease rental income of ~~$527~~$517 and ~~$591~~$527 for the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$1,023~~$1,003 and ~~$1,155~~$1,023 for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

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Notes to Consolidated Financial Statements (Unaudited)

(dollars and shares in thousands, except per share amounts)

As a Lessor

We leased 2 travel centers to franchisees as of June 30, ~~2020~~2021 and 2019. These 2 lease agreements expire in June 2022. These leases include rent escalations that are contingent on future events, namely inflation or our investing in capital improvements at these travel centers.2020. Rent revenues from these operating leases totaled ~~$572~~$584 and ~~$599~~$572 for the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$1,144~~$1,168 and ~~$1,150~~$1,144 for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Future minimum lease payments due to us for the 2 leased sites under these operating leases as of June 30, ~~2020,~~2021, were ~~$1,168~~$1,190 for the remainder of ~~2020, $2,336 for the year~~ 2021 and ~~$1,168~~$1,190 for ~~the year~~ 2022. See above for information regarding certain travel centers that we lease from SVC in which we sublease a portion of the travel centers to third parties to operate other retail operations.

~~7. Long Term Debt~~

As of June 30, 2020, our long term debt, net, consisted of our Senior Notes, the West Greenwich Loan, as defined below, and other long term debt. In addition, we have a revolving credit facility that as of June 30, 2020, had 0 borrowings outstanding. For more information about our long term debt, please refer to Note 8 to the Consolidated Financial Statements in our Annual Report.

~~West Greenwich Loan~~

On February 7, 2020, we entered into a 10 year term loan for $16,600 with The Washington Trust Company, or the West Greenwich Loan. The West Greenwich Loan is secured by a mortgage encumbering 1 of our travel centers located in West Greenwich, Rhode Island. The interest rate is fixed at 3.85% for five years based on the 5 year Federal Home Loan Bank rate plus 198 basis points, and will reset thereafter. The West Greenwich Loan requires us to make principal and interest payments monthly. We may, at our option with 60 days prior written notice, repay the loan in full prior to the end of the 10 year term plus, if repaid prior to February 7, 2023, a nominal penalty. As a result of entering into the West Greenwich Loan, we capitalized $353 of deferred financing costs during the six months ended June 30, 2020, which was presented as a reduction of long term debt, net in our consolidated balance sheets.

8.6. Business Management Agreement with RMR

The RMR Group LLC, or RMR, provides us certain services that we require to operate our business, and which relate to various aspects of our business. RMR provides these services pursuant to a business management agreement. Pursuant to the business management agreement, we incurred aggregate fees and certain cost reimbursements payable to RMR ofof $3,661 and $3,040 ~~and $3,317~~ for the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$6,144~~$6,596 and ~~$6,411~~$6,144 for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, which included reimbursements for our share of RMR's costs for providing internal audit services. These amounts are included in selling, general and administrative expense in our consolidated statements of operations and comprehensive income (loss). For more information about our relationship with RMR, ~~please refer to~~see Note 97 of this Quarterly Report and ~~Notes 13 and 14 to the Consolidated Financial Statements in~~ our Annual Report.

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~~TravelCenters of America Inc.~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

~~(dollars and shares in thousands, except per share amounts)~~

9.7. Related Party Transactions

We have relationships and historical and continuing transactions with SVC, RMR and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have directors, trustees or officers who are also our Directors or officers. RMR is a majority owned subsidiary of The RMR Group Inc. The Chair of our Board of Directors and 1 of our Managing Directors, Adam D. Portnoy, asis the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of The RMR Group Inc. ~~and~~Mr. Portnoy is also a managing director and the president and chief executive officer of The RMR Group Inc. and an officer and employee of RMR. Jonathan M. Pertchik, our other Managing Director and Chief Executive Officer, also serves as an officer and employee of RMR. Certain of our other officers and SVC's officers also serve as officers and employees of RMR. Some of our Independent Directors also serve as independent trustees or independent directors of other public companies to which RMR or its subsidiaries provide management services. Mr. Portnoy serves as chair of the boards of trustees or boards of directors of several of these public companies and as a managing director or managing trustee of these public companies. Other officers of RMR, including certain of our officers, serve as managing trustees, managing directors or officers of certain of these companies.

As of June 30, ~~2020, RMR~~2021, Mr. Portnoy beneficially owned ~~299~~659 shares of our common stock (including indirectly through RMR), representing approximately 3.6% of our outstanding shares of common stock. In July 2020, RMR purchased 219 shares of our common stock in an underwritten public equity offering. RMR purchased these shares at the public offering price of $14 per share. As a result of this purchase, RMR maintained its approximately 3.6% ownership4.5% of our outstanding shares of common stock.

Relationship with SVC

We are SVC's largest tenant and SVC is our principal landlord and ~~1 of our~~second largest ~~stockholders.~~stockholder. As of June 30, ~~2020,~~2021, SVC owned ~~684~~1,185 shares of our common stock, representing approximately ~~8.2%~~8.1% of our outstanding shares of common stock. In July 2020, SVC purchased 501 shares of our common stock in an underwritten public equity offering. SVC purchased these shares at the public offering price of $14 per share. As a result of this purchase, SVC maintained its approximately 8.2% ownership of our outstanding shares of common stock.

As of June 30, ~~2020,~~2021, we leased from SVC a total of 179 travel center properties under the SVC Leases. ~~We have also engaged in other transactions with SVC, including in connection with the Transaction Agreements. Please refer to~~See Note 65 of this Quarterly Report for more information about our ~~relationship,~~lease agreements ~~and transactions~~ with SVC.

~~RMR provides management services to both us and SVC, and~~ Mr. Portnoy ~~also~~ serves as a managing trustee and chair of the board of trustees of SVC.

~~Relationship with AIC~~Our Manager, RMR

~~Until its dissolution on February 13, 2020, we, ABP Trust, SVC and 4 other companies to which~~ RMR provides certain services we require to operate our business. We have a business management agreement with RMR to provide management services ~~owned Affiliates Insurance Company, or AIC, an Indiana insurance company, in equal amounts.~~

We and the other AIC shareholders historically participated in a combined property insurance program arranged and insured or reinsured in part by AIC. The policies under that program expired on June 30, 2019, and we and the other AIC shareholders elected not to ~~renew the AIC property insurance program; we have instead purchased standalone property insurance coverage with unrelated third party insurance providers.~~

Asus, which relates to various aspects of ~~June 30, 2020 and December 31, 2019,~~ our ~~investment in AIC had a carrying value~~business generally. See Note 6 of $12 and $298, respectively. These amounts are included in other noncurrent assets in our consolidated balance sheets. In June 2020, we received approximately $286 in connection with AIC's dissolution. We recognized income of $130 and $534 related to our investment in AICthis Quarterly Report for the three and six months ended June 30, 2019, respectively, which was included in other expense (income), net in our consolidated statement of operations and comprehensive income (loss). Our other comprehensive income (loss) attributable to common stockholders for the three and six months ended June 30, 2019, included our proportionate share of unrealized gains on fixed income securities held for sale, which were owned by AIC, related to our investment in AIC.

~~For~~ more information about ~~these and other such relationships and certain other related party transactions, please refer to Notes 9, 13 and 14 to the Consolidated Financial Statements in~~ our ~~Annual Report.~~business management agreement with RMR.

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Notes to Consolidated Financial Statements (Unaudited)

(dollars and shares in thousands, except per share amounts)

Retirement and Separation Arrangements

In December 2019, we and RMR entered into a retirement agreement with ~~our former Managing Director and Chief Executive Officer,~~ Andrew J. Rebholz. Pursuant to his retirement agreement, Mr. Rebholz continued to serve, through June 30, 2020, as a non-executive employee in order to assist in transitioning his duties and responsibilities to his successor. Under Mr. ~~Rebholz’s~~Rebholz's retirement agreement, consistent with past practice, we paid Mr. Rebholz his current annual base salary of $300 until June 30, 2020, ~~and we paid Mr. Rebholz~~ a cash bonus ~~in respect of 2019~~ in the amount of $1,000 in December ~~2019. Pursuant to the retirement agreement, after his retirement on June 30, 2020, we made~~2019 and an additional cash payment ~~to Mr. Rebholz~~ in the amount of $1,000 in June 2020, and we fully accelerated the vesting of any unvested shares of our common stock previously awarded to Mr. Rebholz.

In February 2020, we and RMR entered into a separation agreement with our former Executive Vice President, Chief Financial Officer and Treasurer, William E. Myers. Pursuant to his separation agreement, in 2020, we paid Mr. Myers $300 and fully accelerated the vesting of any unvested shares of our common stock previously awarded to Mr. Myers.

Sale of Property

In May 2021, we sold a property located in Mesquite, Texas to Industrial Logistics Properties Trust, or ILPT, for a sales price of $2,200, excluding selling costs of $15. RMR provides management services to ILPT and Mr. Portnoy serves as the chair of our board of trustee and as a managing trustee of ILPT. The gain on sale of assets of $1,504 was included in other operating income, net for the three and six months ended June 30, 2021.

For more information about these and other such relationships and certain other related person transactions, see our Annual Report.

~~10.~~8. Contingencies

Environmental Contingencies

Extensive environmental laws regulate our operations and properties. These laws may require us to investigate and clean up hazardous substances, including petroleum or natural gas products, released at our owned and leased properties. Governmental entities or third parties may hold us liable for property damage and personal injuries, and for investigation, remediation and monitoring costs incurred in connection with any contamination and regulatory compliance at our locations. We use both underground storage tanks and above ground storage tanks to store petroleum products, natural gas and other hazardous substances at our locations. We must comply with environmental laws regarding tank construction, integrity testing, leak detection and monitoring, overfill and spill control, release reporting and financial assurance for corrective action in the event of a release. At some locations we must also comply with environmental laws relative to vapor recovery or discharges to water. Under the terms of the SVC Leases, we generally have agreed to indemnify SVC for any environmental liabilities related to properties that we lease from SVC and we are required to pay all environmental related expenses incurred in the operation of the leased properties. We have entered into certain other arrangements in which we have agreed to indemnify third parties for environmental liabilities and expenses resulting from our operations.

From time to time we have received, and in the future likely will receive, notices of alleged violations of environmental laws or otherwise have become or will become aware of the need to undertake corrective actions to comply with environmental laws at our locations. Investigatory and remedial actions were, and regularly are, undertaken with respect to releases of hazardous substances at our locations. In some cases we have received, and may receive in the future, contributions to partially offset our environmental costs from insurers, from state funds established for environmental clean up associated with the sale of petroleum products or from indemnitors who agreed to fund certain environmental related costs at locations purchased from those indemnitors. To the extent we incur material amounts for environmental matters for which we do not receive or expect to receive insurance or other third party reimbursement and for which we have not previously recorded a liability, our operating results may be materially adversely affected. In addition, to the extent we fail to comply with environmental laws and regulations, or we become subject to costs and requirements not similarly experienced by our competitors, our competitive position may be harmed.

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TravelCenters of America Inc.

Notes to Consolidated Financial Statements (Unaudited)

(dollars and shares in thousands, except per share amounts)

As of June 30, ~~2020,~~2021, we ~~had an~~ accrued a current liability of ~~$2,676~~$2,144 and a noncurrent liability of $1,155 for environmental matters as well as a receivable, which is recorded in noncurrent assets in our consolidated balance sheets, for expected recoveries of certain of these estimated future expenditures of ~~$714,~~$913, resulting in an estimated net amount of ~~$1,962~~$2,386 that we expect to fund in the future. We cannot precisely know the ultimate costs we may incur in connection with currently known environmental related violations, corrective actions, investigation and remediation; however, we do not expect the costs for such matters to be material, individually or in the aggregate, to our financial position or results of operations.

We currently have primary insurance of up to $20,000 per incident and up to $20,000 in the aggregate for certain environmental liabilities, subject, in each case, to certain limitations and ~~deductibles, which~~deductibles. Our current insurance policy expires in June ~~2021. However,~~2024 and we can provide no assurance that we will be able to maintain similar environmental insurance coverage in the future on acceptable terms.

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~~TravelCenters of America Inc.~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

~~(dollars and shares in thousands, except per share amounts)~~

We cannot predict the ultimate effect of changing circumstances and changing environmental laws may have on us in the future or the ultimate outcome of matters currently pending. We cannot be certain that contamination presently unknown to us does not exist at our sites, or that a material liability will not be imposed on us in the future. If we discover additional environmental issues, or if government agencies impose additional environmental requirements, increased environmental compliance or remediation expenditures may be required, which could have a material adverse effect on us.

Legal Proceedings

We are routinely involved in various legal and administrative proceedings incidental to the ordinary course of business, including commercial disputes, employment related claims, wage and hour claims, premises liability claims and tax audits among others. We do not expect that any litigation or administrative proceedings in which we are presently involved, or of which we are aware, will have a material adverse effect on our business, financial condition, results of operations or cash flows.

~~11.~~9. Inventory

Inventory as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, consisted of the following:

June 30,
2020 December 31,
2019
Nonfuel products $ 141,021 $ 161,560
Fuel products 21,689 35,051
Total inventory $ 162,710 $ 196,611


	June 30, 2021		December 31, 2020
Nonfuel products	$	132,841	$	143,440
Fuel products	33,079		29,390
Total inventory	$	165,920	$	172,830

~~12. Reorganization Costs~~10. Equity Investments

On April 30, ~~2020, we committed to and initiated a reorganization plan, or the Reorganization Plan, to improve the efficiency of our operations. As part of the Reorganization Plan,~~2021, we reduced our ~~headcount and eliminated certain positions. On April 30, 2020, the Reorganization Plan~~ownership in Epona, LLC, owner of QuikQ LLC, an independent full-service fuel payment solutions provider, from 50% to less than 50%, for which a pre-tax loss of $1.8 million was ~~communicated to those employees impacted. The costs of the Reorganization Plan were $4,288, which are comprised primarily of severance, outplacement services, stock based compensation~~included in other expense, associated with the accelerated vesting of previously granted stock awards for certain employees and fees for recruitment of certain executive positions. During the three and six months ended June 30, 2020, we recognized $3,884 and $4,288, respectively, of costs associated with the Reorganization Plan as selling, general and administrative expensenet in our consolidated statements of operations and comprehensive income (loss)~~. As of~~ for the three months ended June 30, ~~2020, we had a liability recognized relating~~2021. This investment will continue to be accounted for under the ~~Reorganization Plan of $223, which was included in other current liabilities in our consolidated balance sheets.~~equity method.

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Notes to Consolidated Financial Statements (Unaudited)

(dollars and shares in thousands, except per share amounts)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, or this Quarterly Report, and with our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019,~~2020, or our Annual Report. ~~Amounts~~Unless indicated otherwise, amounts are in thousands of dollars, or gallons and shares of common stock, as applicable, ~~unless indicated otherwise.~~other than percentage amounts.

Company Overview

As of June 30, ~~2020,~~2021, we operated or franchised ~~268~~274 travel centers, three standalone truck service facilities and 40one standalone ~~restaurants.~~restaurant. Our customers include trucking fleets and their drivers, independent truck drivers, highway and local motorists and casual diners. We also collect rents, royalties and other fees from our tenants and franchisees.

We manage our business as one segment. We make specific disclosures concerning fuel and nonfuel products and services because they facilitate our discussion of trends and operational initiatives within our business and industry. We have a single travel center located in a foreign country, Canada, that we do not consider material to our operations.

COVID-19 Pandemic

In March 2020, ~~COVID-19 was declared a pandemic by~~ the World Health Organization, or WHO, declared the outbreak of COVID-19 a pandemic, and, in response to the outbreak, the U.S. Health and Human Services Secretary and many states and municipalities declared a public health ~~emergency in the United States in response to the outbreak. The COVID-19 pandemic and various~~emergencies. Various governmental ~~and market~~ responses ~~in an attempt~~attempting to contain and mitigate the spread of the virus ~~and its detrimental public health impact~~ have ~~had,~~negatively impacted, and continue to ~~have, a severe negative~~negatively impact, on the global economy, including the U.S. economy. As a result, most market observers believe the global economy is in the midst of a recession. Our business is focused on travel centers and related trucking and driver services, products and amenities. Our business benefited from being recognized as a business that provides services to essential businesses by various governmental authorities, which allowed us to continue operating our travel centers. Further, we also benefited from increased initial demand by businesses and households to stock up on certain products in response to the COVID-19 pandemic, which resulted in increased trucking activity to transport those goods across the United States. We experienced increased diesel fuel sales volume during the three months ended March 31, 2020, as compared to the three months ended March 31, 2019, due to an initial increase in demand for certain products as businesses and households stocked up on those products as the implications of the COVID-19 pandemic began to be more widely understood. The initial increase in demand began to decline during April 2020, resulting in a decrease in diesel fuel sales volume during the three months ended June 30, 2020, as compared to the three months ended June 30, 2019. In addition, during the three and six months ended June 30, 2020, we experienced an increase in fuel gross margin as compared to the three and six months ended June 30, 2019, as both diesel fuel and gasoline costs declined as a result of a more favorable fuel purchasing environment due to a reduction in demand and disagreements among certain major oil producing countries and cartels that resulted in delays in reducing, or failures to adequately reduce, oil supplies in response to the sharp drop in demand, as well as the benefit recognized in connection with the federal biodiesel blenders' tax credit. Due to governmental stay in place orders, social distancing and other reductions in activity, demand for gasoline volume during the second half of March 2020 through June 30, 2020, declined sharply, resulting in reduced gasoline sales volume sold by us during the three and six months ended June 30, 2020, as compared to the three and six months ended June 30, 2019, and demand for certain of our nonfuel products and services have declined. As a result, in March 2020 we temporarily closed most of our full service restaurants and limited our product offerings at some of our restaurants and travel centers. As a result, we experienced a decrease in nonfuel revenues for the three and six months ended June 30, 2020, as compared to the three and six months ended June 30, 2019. As governments began to lift stay in place orders, we recognized increases in our truck service and store and retail services revenues in June 2020 as compared to June 2019. Although we began reopening some of our restaurants beginning in May 2020 as certain states began allowing restaurants to reopen, the recent increase in COVID-19 infections in several states has resulted in closing or re-closing certain of our restaurants.

States and municipalities across the United States have been re-opening their economies and easing certain restrictions they had previously implemented in response to the COVID-19 pandemic, often in stages that are phased in over time. Recently, economic data has indicated that the U.S. economy has improved since the lowest periods experienced in March and April 2020. However, certain areas of the United States have experienced increased numbers of COVID-19 infections following the re-openings of their economies and easing of restrictions and, in some cases, certain states have required closings of certain business activity and imposed other restrictions in response. It is unclear whether the increases in the number of infections will continue and amplify or whether any so-called “second waves” of COVID-19 infections will be experienced in the United States or elsewhere and, if so, what the impact of that would be on human health and safety, the economy and our business.

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We believe that our travel centers and the truck drivers that we serve are critical to sustaining a resilient supply chain to support essential services and daily consumption across the United States. Our business has benefited from an increased demand for e-commerce and from being recognized by various governmental authorities as a provider of services essential to businesses, which allowed us to continue operating our travel centers through the COVID-19 pandemic. Further, we also benefited from increased initial demand by businesses and households to stock up on certain products in response to the pandemic, which resulted in increased trucking activity to transport those goods across the United States. However, ~~as the~~if there is another economic downturn ~~continues,~~as a result of the continued impact of the pandemic, demand for the transporting of products across the United States by trucks may decline, possibly significantly. If that occurs, our business, results of operations and financial position may become increasingly ~~significantly~~ negatively impacted. ~~Further, these economic conditions may result in trucking companies being unable to continue as going concerns.~~

~~We have taken several actions in an attempt to address the operating and financial impact from the COVID-19 pandemic, including:~~

•~~we significantly reduced our planned capital expenditures for 2020 to conserve cash and liquidity;~~

•we have rationalized our hours of operation and employment levels, including furloughing approximately 4,300 field employees, as well as approximately 120 corporate employees. Some of these employees returned to work during May and June 2020 as we began to reopen some of our full service restaurants;

•~~we temporarily closed most of our full service restaurants;~~

•~~we have implemented enhanced sanitizing and cleaning procedures at our travel centers in accordance with the U.S. Centers for Disease Control and Prevention, or the CDC, guidance; and~~

•~~we have been actively engaging with government authorities, our customers, suppliers and other vendors to try to best execute our business during the pandemic.~~

~~We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including:~~

•~~our trucking customers and their ability to withstand the current economic conditions;~~

•~~our operations, liquidity and capital needs and resources;~~

•~~conducting financial modeling and sensitivity analyses;~~

•actively communicating with our customers, vendors and other key constituents and stakeholders in order to help assess market conditions, opportunities, best practices and mitigate risks and potential adverse impacts; and

•monitoring, with the assistance of counsel and other specialists, possible government relief funding sources and other programs that may be available to us, our franchisees or our tenants to enable us and them to operate through the current economic conditions and enhance our franchisees' ability to pay us royalties and our tenants’ ability to pay us rent.

We believe that our current financial resources and our expectations as to the future performance of the trucking industry and our operations will enable us to withstand the COVID-19 pandemic and its aftermath. As of August 4, 2020, we had:

•~~approximately $210,200 of cash and cash equivalents, $80,056 of which was raised through an underwritten public equity offering of our common stock that we completed in July 2020;~~

•~~$84,304 of availability under our revolving credit facility, or our Credit Facility;~~

•~~no debt maturities until 2024 when our Credit Facility is scheduled to expire;~~

•our ability to request that Service Properties Trust, or SVC, purchase from us qualified capital improvements we make to the travel centers we lease from SVC in return for increased rent, although SVC is not obligated to agree to make those purchases; and

•~~unencumbered properties, which had a net book value of $509,126 as of June 30, 2020, that may be a source for financing.~~

We have taken various ~~measures~~actions in response to the pandemic to address its operating and financial impact and to protect the health and safety of our customers, employees and other persons who visit our travel centers and restaurants. ~~These measures include, among others:~~

•In addition, we ~~have supplied masks and gloves~~are continuing to closely monitor the impact of the pandemic on all aspects of our ~~employees;~~business. See our Annual Report for further information regarding these actions and monitoring activities.

•~~we are mandating masks at all of our sites and at our headquarters;~~

•weThe U.S. economy has been growing as COVID-19 pandemic conditions have ~~temporarily closed all self service food service stations~~significantly improved in the ~~convenience stores~~United States from their low points. Commercial activities in ~~most~~the United States have been increasingly returning to pre-pandemic practices and operations and as a result of recent and expected future government spending on pandemic relief, infrastructure and other matters. This recent economic growth may have had some impact on our ~~travel centers;~~

•~~we have~~second quarter of 2021 as diesel fuel sales volume increased 21.2% and total nonfuel revenues increased 23.7%, as compared to the ~~frequency of our routine cleaning and sanitizing schedule,~~prior year quarter. However, there remains uncertainty as ~~well as implemented enhanced sanitizing and cleaning procedures at our travel centers and at~~to the ~~fuel pumps and pin pads;~~

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•~~we are following state and local health department regulations in all of our sites;~~

•~~we are encouraging customers and employees to follow CDC recommendations of practicing social distancing;~~

•we have advised our employees to take care of themselves and to be aware of best practices for preventive safety measures, including frequent hand washing, wearing masks, practicing social distancing when possible and staying home when feeling ill; and

•~~we have temporarily closed all gyms and lounge areas within our travel centers.~~

~~There are extensive uncertainties surrounding the COVID-19 pandemic and its aftermath. These uncertainties include, among others:~~

•~~the~~ultimate duration and severity of the ~~current economic downturn;~~

•pandemic on commercial activities, supply chain constraints and labor availability, including risks that may arise from variants (such as the ~~strength and sustainability~~Delta variant), mutations or related strains of ~~any economic recovery;~~

•the ~~timing and process for how~~virus, the ~~government and other market participants may oversee and conduct~~ability to successfully administer vaccinations to a sufficient number of persons or attain immunity to the return of economic activity when the COVID-19 pandemic abates, such as what continuing restrictions and protective measures may remain in place or be added and what restrictions and protective measures may be lifted or reduced in order to foster a return of increased economic activity in the United States; and

•~~whether, following a recommencing of a more normal level of economic activities, the United States~~virus by natural or other ~~countries experience “second waves” of COVID-19 infection outbreaks and, if so, the responses of governments, businesses~~means to achieve herd immunity and the ~~general public~~impact on the U.S. economy that may result from the inability of other countries to ~~those events.~~

~~We have also implemented enhanced cleaning protocols and social distancing guidelines at our corporate headquarters, as well as business continuity plans~~administer vaccinations to ~~help our employees remain healthy and able~~their citizens or their citizens’ ability to support us remotely, including providing appropriate information technology such as notebook computers, smart phones, computer applications, information technology security applications and technology support.otherwise achieve immunity to the virus.

As a result of these uncertainties, we are unable to determine what the ultimate impact will be on our and our ~~customers’~~customers', ~~vendors’~~vendors' and other ~~stakeholders’~~stakeholders' businesses, operations, financial results and financial position. For further information on the impact the pandemic has had on our business and risks relating to the ~~COVID-19~~ pandemic and its aftermath on us and our business, ~~please refer to Part II,~~see Item 1A. "Risk Factors" in ~~this Quarterly~~our Annual Report.

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Executive Summary of Financial Results

During the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, we generated income before income taxes of ~~$3,243~~$36,726 and ~~$807,~~$3,243, respectively. The ~~$2,436~~$33,483 increase in income before income taxes was primarily due to the following factors:

•site level gross margin in excess of site level operating expense increased ~~$5,748,~~$33,117, which primarily resulted from ~~an increase~~the incremental margin associated with increases in nonfuel and fuel ~~gross margin due to a more favorable fuel purchasing environment and the $7,715 benefit recognized in connection with the federal biodiesel blenders' tax credit in~~revenues when comparing the three months ended June 30, ~~2020,~~2021 and ~~a decrease in site level operating expense,~~2020, partially offset by ~~a decrease~~increased general labor costs from truck services and field employees that returned to work for restaurant re-openings in ~~nonfuel gross margin as a result~~the second quarter of ~~the impact of the COVID-19 pandemic;~~

•~~selling, general~~2021 and administrative expense decreased by $1,586, which primarily resulted from the elimination of approximately 130 positions as part of the Reorganization Plan, as defined below, and approximately 120 corporate employees furloughed in response to the COVID-19 pandemic, as well as a reduction in travel related and marketing expenses. These decreases were partially offset by $3,884 of non-recurring restructuring costs associated with the Reorganization Plan; and

•~~real estate rent expense decreased $691, which primarily resulted from a decrease in percentage rent due to SVC as a result of the decrease in our nonfuel revenues during~~other operating expenses for the three months ended June 30, ~~2020, as compared to the three months ended June 30, 2019.~~2021;

~~The above factors were partially offset by an increase in~~ •depreciation and amortization expense ~~of $5,041,~~decreased $4,115, which primarily ~~as a result of~~resulted from a $3,046 goodwill impairment charge recognized ~~during~~in the ~~three months ended June 30,~~second quarter of 2020 with respect to our ~~Quaker Steak & Lube, or~~ QSL business, ~~the~~a $834 write off of intangible assets associated with three franchised standalone restaurants that closed during the three months ended June 30, 2020, and ~~the $539~~a $538 write off of certain assets related to truck service programs that were ~~canceled.~~

~~Table~~canceled in the second quarter of ~~Contents~~2020; and

•selling, general and administrative expense decreased by $1,386, which primarily resulted from the impact of open positions during the three months ended June 30, 2021 and expenses related to executive officer retirement and separation agreements recognized in the three months ended June 30, 2020, partially offset by increases in consultant fees to assist with identifying and implementing cost reduction and other opportunities, as well as increases related to key leadership positions and implementation and other costs related to our incremental adoption of cloud-based technology solutions.

The above factors were partially offset by a $4,506 increase in interest expense, net, which primarily resulted from the Term Loan Facility that we entered into in December 2020.

During the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, we generated aincome and loss before income taxes of ~~$22,039~~$30,133 and ~~$17,189,~~$22,039, respectively. The ~~$4,850~~$52,172 change ~~in our~~from a loss to income before income taxes was primarily due to the following factors:

•~~depreciation and amortization~~site level gross margin in excess of site level operating expense increased ~~$8,842,~~$50,842, which primarily resulted from the ~~$5,701~~incremental margin associated with increases in nonfuel and fuel revenues when comparing the six months ended June 30, 2021 and 2020, partially offset by increased general labor costs from truck services and field employees that returned to work for restaurant re-openings in the second quarter of 2021 and other operating expenses for the six months ended June 30, 2021;

•depreciation and amortization expense decreased $8,846, which primarily resulted from a $5,700 write off of certain assets related to truck service programs that were canceled during the six months ended June 30, 2020, a $3,046 goodwill impairment charge recognized during the six months ended June 30, 2020, with respect to our QSL business and ~~the~~a $834 write off of intangible assets associated with three franchised standalone restaurants that closed during the six months ended June 30, ~~2020; and~~

•~~site level gross margin in excess of site level operating expense declined $71, which primarily resulted from a decrease in nonfuel gross margin as a result of the impact of the COVID-19 pandemic,~~2020, partially offset by a ~~decrease in site level operating expense and an increase in fuel gross margin primarily as a result of a more favorable fuel purchasing environment and~~$650 impairment charge related to the ~~$11,230 benefit recognized in connection with the federal biodiesel blenders' tax credit~~QSL sale during the six months ended June 30, ~~2020.~~

~~The above factors were partially offset by the following:~~

•real estate rent expense decreased $3,516, which was primarily the result of our acquisition in January 2019 of 20 travel centers from SVC that we previously leased from SVC which reduced our annual minimum rent and a decrease in percentage rent due to SVC as a result of the decrease in our nonfuel revenues during the six months ended June 30, 2020, as compared to the six months ended June 30, 2019;2021; and

•selling, general and administrative expense decreased ~~$1,468,~~by $2,684, which primarily resulted from the ~~elimination~~impact of ~~approximately 130~~open positions ~~as part of~~during the ~~Reorganization Plan~~six months ended June 30, 2021 and ~~approximately 120 corporate employees furloughed~~expenses related to executive officer retirement and separation agreements recognized in ~~response~~the six months ended June 30, 2020, partially offset by increases in consultant fees to ~~the COVID-19 pandemic,~~assist with identifying and implementing cost reduction and other opportunities, as well as ~~a reduction in travel~~increases related ~~expenses~~to key leadership positions and ~~marketing expenses,~~implementation and other costs related to our incremental adoption of cloud-based technology solutions.

The above factors were partially offset by ~~$4,288 of non-recurring restructuring costs associated with~~a $8,434 increase in interest expense, net, which primarily resulted from the ~~Reorganization Plan.~~Term Loan Facility that we entered into in December 2020.

Effects of Fuel Prices and Supply and Demand Factors

Our revenues and income are subject to fluctuations, sometimes material, as a result of market prices and the availability of, and demand for, diesel fuel and gasoline. These factors are subject to the worldwide petroleum products supply chain, which historically has experienced price and supply volatility as a result of, among other things, severe weather, terrorism, political crises, military actions and variations in demand that are often the result of changes in the macroeconomic environment. Also, concerted efforts by major oil producing countries and cartels to influence oil supply, ~~may impact prices~~ as well as other actions by governments regarding trade policies, may impact fuel prices.

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Although there are several components that comprise and impact our fuel costs of goods sold, including the cost of fuel, freight and mix, the cost of fuel is the primary driver. Over the past several years there have been significant changes in the cost of fuel. During the three and six months ended June 30, 2021, fuel prices trended upward, increasing 15.2% and 41.4%, respectively, as compared to the beginning of the period. During the three months ended June 30, 2020, fuel prices trended upward, ~~increasing~~ending at a 22.3% ~~as compared to~~higher price than at the beginning of the period. The increase in fuel prices for the three months ended June 30, 2020, primarily resulted from a 15.9% increase in June 2020 as a result of the increased demand and reduced production as prices began to rebound from the economic downturn. During the six months ended June 30, 2020, fuel prices trended downward, ~~declining~~ending at a 43.8% ~~as compared to~~lower price than at the beginning of the period. The decrease in fuel prices for the six months ended June 30, 2020, primarily resulted from comparing pre-pandemic fuel demand to a ~~52.7% decrease in March and April 2020 as a result~~demand that was just beginning to recover from the shutdown of the ~~sharp decrease in demand resulting from~~economy after the WHO declared the outbreak of COVID-19, ~~pandemic and the related economic downturn.~~a pandemic. The average fuel price during the three and six months ended June 30, ~~2020,~~2021, was ~~52.7%~~95.8% and ~~36.8%, respectively, lower~~41.4% higher than the average fuel price during the three and six months ended June 30, ~~2019.~~2020, respectively. We generally are able to pass changes in our cost for fuel products to our customers, but typically with a delay, such that during periods of rising fuel commodity prices, fuel gross margin per gallon tends to be lower than it otherwise may have been and during periods of falling fuel commodity prices, fuel gross margin per gallon tends to be higher than it otherwise may have been. Increases in the prices we pay for fuel can have negative effects on our sales and profitability and increase our working capital requirements.

Due to the volatility of our fuel costs and our methods of pricing fuel to our customers, we believe that fuel revenues are not a reliable metric for analyzing our results of operations from period to period. As a result solely of changes in fuel prices, our fuel revenues may materially increase or decrease, in both absolute amounts and on a percentage basis, without a comparable change in fuel sales volume or in fuel gross margin, as evidenced by the three and six months ended June 30, ~~2020.~~2021. We therefore consider fuel sales volume and fuel gross margin to be better measures of our performance.

We believe that demand for fuel by trucking companies and motorists for a constant level of miles driven will continue to decline over time because of technological innovations that improve fuel efficiency of motor vehicle engines, other fuel conservation practices and alternative fuels and technologies. WeAlthough we believe these factors, combined with competitive pressures, impact the level of fuel sales volume we ~~realize. During~~realize, fuel sales volume increased during the three and six months ended June 30, ~~2020, fuel sales volumes declined~~2021, as compared to the three and six months ended June 30, ~~2019.~~2020. These ~~decreases~~increases primarily resulted from improved market conditions within the freight industry, traffic increases associated with the ongoing pandemic recovery and the success of our marketing initiatives. In addition, we have created a ~~decrease in trucking activity~~new business division focused on non-fossil fuels, and ~~consumer travel~~we have hired a senior leader and have begun to onboard additional dedicated internal resources, as ~~a result of~~well as create relationships within the ~~COVID-19 pandemic, primarily during April~~supply, storage and ~~May 2020.~~

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distribution chain, with respect to this initiative.

Factors Affecting Comparability

~~Growth Strategies~~COVID-19 Pandemic

~~On October 28, 2019, we entered into a multi unit franchise agreement with IHOP Franchisor LLC a subsidiary of IHOP~~^®~~, or IHOP, in which we agreed to rebrand and convert up to 94 of~~See our ~~full service restaurants to IHOP restaurants over five years, or the IHOP Agreement. Due to~~discussion regarding the COVID-19 pandemic and its impact on us and our business above.

Growth and Cost Control Strategies

During the 2020 second quarter, we commenced a strategic transformation, or our Transformation Plan, consisting of numerous initiatives across our organization for the purpose of expanding our travel center network, improving and ~~IHOP have agreed~~enhancing operational efficiencies and profitability, strengthening our financial position and in support of our core mission to ~~delay~~return every traveler to the ~~rebranding schedule by one year. Of~~road better than they came. Among these initiatives was a corporate restructuring that resulted in immediate selling, general and administrative expense savings and included significant leadership appointments of qualified candidates who bring new and valuable experiences as well as initiative, critical skills and new visions and approaches to our business. We also created a centralized procurement group to drive economies of scale in pricing, increased leverage in vendor negotiations which we believe will ultimately lead to substantial purchasing savings and a streamlined operation. Other key initiatives are focused in areas of liquidity, expanding our franchise base, increasing diesel fuel and gasoline gross margin and fuel sales volume, increasing market share in the ~~94, we are obligated~~truck service business, improving merchandising and increasing gross margin in store and retail services, improving operating effectiveness in our food service offerings and improving information technology systems, while focusing on opportunities to convert the initial 20 full service restaurants to IHOP restaurants, with the remaining conversions at our discretion. We currently operate these full service restaurants under our Iron Skillet or Country Pride brand names. The average investment per site to rebrand these restaurants is expected to be approximately $1,100.rationalize and control costs.

Since the beginning of 2019, we have entered into franchise agreements ~~for 21~~covering 46 travel centers to be operated under our travel center brand names; four of these franchised travel centers began operations during 2019, 10 began operations during 2020, one began operations during the first quarter of 2021 and two began operations during the ~~2020 first quarter, five began operations in the 2020~~ second quarter ~~two began operations in the 2020 third quarter to date and we anticipate~~of 2021. We expect the remaining ~~eight franchised travel centers will be added~~29 to ~~our network~~open by the end of 2021. In addition, we have entered into an agreement with one of these franchisees pursuant to which we expect to add two additional franchised travel centers to our network, one within five years and the other within 10 years.

~~Lease Amendments and Travel Center Purchases~~

In January 2019, we acquired from SVC 20 travel centers we previously leased from SVC for $309,637, which includes $1,437 of transaction related costs, and we and SVC amended our five leases such that: (i) the 20 purchased travel centers were removed from the applicable leases and our annual minimum rent was reduced by $43,148; (ii) the term of each of the leases was extended by three years; (iii) the amount of the deferred rent obligation to be paid to SVC was reduced from $150,000 to $70,458 and we began to pay that amount in 16 equal quarterly installments commencing on April 1, 2019; and (iv) commencing on January 1, 2020, we began to pay to SVC 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. These lease amendments are further described in Note 6 to the Consolidated Financial Statements included in Item 1 of this Quarterly Report.

~~Federal Biodiesel Blenders' Tax Credit~~

In December 2019, the U.S. government retroactively reinstated the federal biodiesel blenders' tax credit for 2018 and 2019, and approved the federal biodiesel blenders' tax credit through 2022. During the three and six months ended June 30, 2020, we recognized $7,715 and $11,230, respectively, as a reduction to our fuel cost of goods sold relating to the federal biodiesel blenders' tax credit. For the remainder of 2020 through 2022, the benefit of the federal biodiesel blenders' tax credit will be included in the price we pay for biodiesel.

2023 third quarter.

2218

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~~Reorganization Plan~~As a result of some external labor and supply chain constraints, our capital expenditures plan for 2021 now contemplates aggregate cash investments in the range of $130,000 to $150,000 targeted towards improving and growing our core travel center business. The 2021 capital expenditures plan includes projects to enhance the guest experience through significant site level upgrades atour travel centers and advanced technology systems infrastructure. Approximately half of our capital expenditure plan for 2021 is focused on growth initiatives that we expect will meet or exceed our 15% to 20% cash on cash return hurdle.

~~On April 30, 2020,~~

Importantly, we are committed to embracing environmentally friendly sources of energy and ~~initiated~~have formed a ~~reorganization plan, or~~new business division, eTA, that will seek to deliver sustainable and alternative energy to the ~~Reorganization Plan,~~marketplace and focus on partnering with the public sector, private companies and customers to ~~improve~~facilitate industry transformation. This business division will extend our commitment to providing the ~~efficiency~~widest range of ~~its operations. As part~~nonfuel offerings across our sites. Recent accomplishments include continued expansion of our biodiesel blending capabilities, availability of DEF at the ~~Reorganization Plan, we reduced our headcount~~pump and ~~eliminated certain positions, which we expect to result in approximately $13,100~~placement of ~~net annual savings in selling, general and administrative expense. In addition,~~electrical vehicle charging stations. Moreover, we have ~~also made certain changes in~~hired a senior leader to lead eTA and have begun to onboard additional dedicated internal resources, as well as create relationships within the supply, storage and distribution chain, with respect to our ~~leadership~~alternative energy initiative. We believe our large, well-located sites and ~~their roles and created both~~our focus as a ~~corporate development and a procurement team.~~ On April 30, 2020, the Reorganization Plan was communicated to those employees impacted. The costs of the Reorganization Plan were $4,288, which are comprised primarily of severance, outplacement services, stock based compensation expense associatedpure supplier may provide us with the ~~accelerated vesting of previously granted stock awards for certain employees~~opportunity to make both fossil and, ~~fees for recruitment of certain executive positions. During the three~~eventually, non-fossil fuels available and ~~six months ended June 30, 2020,~~to potentially balance or adjust our product and service offerings as we ~~recognized $3,884~~may determine and $4,288, respectively, of costs associated with the Reorganization Plan as selling, general and administrative expense in our consolidated statements of operations and comprehensive income (loss). See Note 12subject to ~~the Consolidated Financial Statements included in Item 1 of this Quarterly Report for more information about our Reorganization Plan.~~availability.

Seasonality

Our sales volumes are generally lower in the first and fourth quarters than the second and third quarters of each year. In the first quarter, the movement of freight by professional truck drivers as well as motorist travel are usually at their lowest levels of the calendar year. In the fourth quarter, freight movement is typically lower due to the holiday season. While our revenues are modestly seasonal, quarterly variations in our operating results may reflect greater seasonal differences as our rent expense and certain other costs do not vary seasonally. The COVID-19 pandemic has, and ~~current~~ economic conditions ~~have, and may~~occasionally in the ~~future,~~past have, significantly ~~alter~~altered the seasonal aspects of our business, ~~including that we did not,~~ and they may ~~not, realize in 2020 the increased business we typically experience~~have similar impacts in the ~~second and third quarters.~~future.

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Results of Operations

All of our company operated locations are same site locations with the exception of one standalone ~~restaurant.~~truck service facility. As a result, same site operating results are not presented as part of this discussion and analysis as they would not provide materially different information from our consolidated results.

Consolidated Financial Results

The following table presents changes in our operating results for the three and six months ended June 30, ~~2020,~~2021, as compared to the three and six months ended June 30, ~~2019.~~

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 Change 2020 2019 Change
Revenues:
Fuel $ 577,410 $ 1,117,671 (48.3) % $ 1,452,339 $ 2,100,812 (30.9) %
Nonfuel 405,570 476,082 (14.8) % 830,577 916,956 (9.4) %
Rent and royalties from franchisees 3,123 3,611 (13.5) % 6,535 6,888 (5.1) %
Total revenues 986,103 1,597,364 (38.3) % 2,289,451 3,024,656 (24.3) %
Gross margin:
Fuel 91,900 76,822 19.6 % 173,855 151,569 14.7 %
Nonfuel 242,619 288,584 (15.9) % 505,907 561,190 (9.9) %
Rent and royalties from franchisees 3,123 3,611 (13.5) % 6,535 6,888 (5.1) %
Total gross margin 337,642 369,017 (8.5) % 686,297 719,647 (4.6) %
Site level operating expense 197,522 234,645 (15.8) % 434,086 467,365 (7.1) %
Selling, general and administrative expense 37,976 39,562 (4.0) % 75,204 76,672 (1.9) %
Real estate rent expense 63,079 63,770 (1.1) % 126,667 130,183 (2.7) %
Depreciation and amortization expense 28,254 23,213 21.7 % 56,814 47,972 18.4 %
Income (loss) from operations 10,811 7,827 38.1 % (6,474) (2,545) (154.4) %
Interest expense, net 7,233 7,164 1.0 % 14,689 14,214 3.3 %
Other expense (income), net 335 (144) 332.6 % 876 430 103.7 %
Income (loss) before income taxes 3,243 807 301.9 % (22,039) (17,189) (28.2) %
(Provision) benefit for income taxes (1,087) 402 (370.4) % 5,654 5,669 (0.3) %
Net income (loss) 2,156 1,209 78.3 % (16,385) (11,520) (42.2) %
Less: net income for
noncontrolling interest
32 31 3.2 % 52 49 6.1 %
Net income (loss) attributable to
common stockholders
$ 2,124 $ 1,178 80.3 % $ (16,437) $ (11,569) (42.1) %

2020.


	Three Months Ended June 30,
	2021		2020		$ Change		% Change
Revenues:
Fuel	$	1,328,631	$	577,410	$	751,221	130.1	%
Nonfuel	501,810		405,570		96,240		23.7	%
Rent and royalties from franchisees	3,839		3,123		716		22.9	%
Total revenues	1,834,280		986,103		848,177		86.0	%

Gross margin:
Fuel	100,292		91,900		8,392		9.1	%
Nonfuel	303,102		242,619		60,483		24.9	%
Rent and royalties from franchisees	3,839		3,123		716		22.9	%
Total gross margin	407,233		337,642		69,591		20.6	%

Site level operating expense	233,996		197,522		36,474		18.5	%
Selling, general and administrative expense	36,590		37,976		(1,386)		(3.6)	%
Real estate rent expense	63,611		63,079		532		0.8	%
Depreciation and amortization expense	24,139		28,254		(4,115)		(14.6)	%
Other operating income, net	(872)		—		(872)		—	%

Income from operations	49,769		10,811		38,958		360.4	%

Interest expense, net	11,739		7,233		4,506		62.3	%
Other expense, net	1,304		335		969		289.3	%
Income before income taxes	36,726		3,243		33,483		NM
Provision for income taxes	(7,779)		(1,087)		(6,692)		(615.6)	%
Net income	28,947		2,156		26,791		NM
Less: net (income) loss for noncontrolling interest	(409)		32		(441)		NM
Net income attributable to common stockholders	$	29,356	$	2,124	$	27,232	NM

2420

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	Six Months Ended June 30,
	2021		2020		$ Change		% Change
Revenues:
Fuel	$	2,405,889	$	1,452,339	$	953,550	65.7	%
Nonfuel	949,724		830,577		119,147		14.3	%
Rent and royalties from franchisees	7,763		6,535		1,228		18.8	%
Total revenues	3,363,376		2,289,451		1,073,925		46.9	%

Gross margin:
Fuel	177,722		173,855		3,867		2.2	%
Nonfuel	578,794		505,907		72,887		14.4	%
Rent and royalties from franchisees	7,763		6,535		1,228		18.8	%
Total gross margin	764,279		686,297		77,982		11.4	%

Site level operating expense	461,226		434,086		27,140		6.3	%
Selling, general and administrative expense	72,520		75,204		(2,684)		(3.6)	%
Real estate rent expense	127,480		126,667		813		0.6	%
Depreciation and amortization expense	47,968		56,814		(8,846)		(15.6)	%
Other operating income, net	(872)		—		(872)		—	%

Income (loss) from operations	55,957		(6,474)		62,431		964.3	%

Interest expense, net	23,123		14,689		8,434		57.4	%
Other expense, net	2,701		876		1,825		208.3	%
Income (loss) before income taxes	30,133		(22,039)		52,172		236.7	%
(Provision) benefit for income taxes	(6,929)		5,654		(12,583)		(222.6)	%
Net income (loss)	23,204		(16,385)		39,589		241.6	%
Less: net (income) loss for noncontrolling interest	(333)		52		(385)		(740.4)	%
Net income (loss) attributable to common stockholders	$	23,537	$	(16,437)	$	39,974	243.2	%

Three Months Ended June 30, ~~2020,~~2021, as Compared to Three Months Ended June 30, ~~2019~~2020

Fuel Revenues. Fuel revenues for the three months ended June 30, ~~2020, decreased~~2021, increased by ~~$540,261,~~$751,221, or ~~48.3%~~130.1%, as compared to the three months ended June 30, ~~2019. The decrease~~2020, primarily as a result of an increase in fuel ~~revenues was primarily due~~sales volume in addition to ~~a decrease~~an increase in market prices for ~~fuel and a decrease in fuel sales volume.~~fuel. The table below presents the factors causing the changes in total fuel sales volume and revenues between periods. See "Effects of Fuel Prices and Supply and Demand Factors" for more information regarding the impact market prices for fuel has on our financial results.


	Gallons Sold	Fuel Revenues
Results for the three months ended June 30, 2020	476,216	$	577,410
Increase due to petroleum products price changes		510,632
Increase due to volume changes	102,667	234,138
Increase in wholesale fuel sales volume	4,747	6,451
Net change from prior year period	107,414	751,221
Results for the three months ended June 30, 2021	583,630	1,328,631

Gallons Sold Fuel Revenues
Results for the three months ended June 30, 2019 502,346 $ 1,117,671
Decrease due to petroleum products price changes (500,330)
Decrease due to same site volume changes (24,260) (34,900)
Decrease in wholesale fuel sales volume (1,870) (5,031)
Net change from prior year period (26,130) (540,261)
Results for the three months ended June 30, 2020 476,216 $ 577,410

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Nonfuel Revenues. Nonfuel revenues for the three months ended June 30, ~~2020, decreased~~2021, increased by ~~$70,512,~~$96,240, or ~~14.8%~~23.7%, as compared to the three months ended June 30, ~~2019, primarily~~2020, as a result of ~~a decrease~~significant increases in ~~revenues at both~~ our ~~standalone restaurants and the restaurants in our travel centers due to the temporary closure or limitation of services at those locations, as well as a decrease in our truck service and~~ store and retail services, businesses in April and May 2020 due to a decrease in trucking activity and consumer travel, all of which were primarily the result of the COVID-19 pandemic. As governments began to lift stay in place orders, we started to reopen our fulltruck service, restaurants and indiesel exhaust fluid revenues. These increases were primarily due to the impact the COVID-19 pandemic had on nonfuel revenues for the three months ended June 30, 2020, ~~we recognized increases in our truck service and store and retail services revenues~~including the additional sales from certain travel center restaurants that have now reopened or are operating with expanded hours as compared to ~~June 2019.~~the pandemic conditions experienced in the prior year, and the progress of our Transformation Plan.

Rent and Royalties from Franchisees. Rent and royalties from franchisees for the three months ended June 30, ~~2020, decreased~~2021, increased by ~~$488,~~$716, or ~~13.5%~~22.9%, as compared to the three months ended June 30, ~~2019,~~2020, primarily as a result of the closure of four franchised standalone restaurants, our purchase of one standalone restaurant from a former franchisee since June 30, 2019, and the temporary closures of certain franchised standalone restaurants as a result of the COVID-19 pandemic, partially offset by the 10six franchised travel centers and ~~five~~two franchised ~~standalone~~QSL restaurants that began operations after June 30, ~~2019.~~2020, partially offset by the sale of 28 franchised standalone restaurants in the sale of our QSL business in April 2021.

Fuel Gross Margin. Fuel gross margin for the three months ended June 30, ~~2020,~~2021, increased by ~~$15,078,~~$8,392, or ~~19.6%~~9.1%, as compared to the three months ended June 30, ~~2019,~~2020, primarily as a result of an increase in fuel sales volume, partially offset by a ~~more~~less favorable ~~fuel~~ purchasing environment ~~and the $7,715 benefit recognized in connection with the federal biodiesel blenders' tax credit in~~during the three months ended June 30, ~~2020, partially offset by a decrease in fuel sales volume, primarily during April and May of 2020.~~2021.

Nonfuel Gross Margin. Nonfuel gross margin for the three months ended June 30, ~~2020, decreased~~2021, increased by ~~$45,965,~~$60,483, or ~~15.9%~~24.9%, as compared to the three months ended June 30, ~~2019, primarily~~2020, due to the ~~decrease~~increase in total nonfuel ~~revenues as a result of the COVID-19 pandemic.~~revenues. Nonfuel gross margin percentage for the three months ended June 30, ~~2020, declined~~2021, remained primarily flat as compared to ~~59.8% from 60.6% for~~ the three months ended June 30, ~~2019, primarily due to a change in the mix of products and services sold and certain pricing and marketing initiatives.~~2020.

Site Level Operating Expense. Site level operating expense for the three months ended June 30, ~~2020, decreased~~2021, increased by ~~$37,123,~~$36,474, or ~~15.8%~~18.5%, as compared to the three months ended June 30, ~~2019,~~2020, primarily due to ~~the furloughing of approximately 4,300~~increased general labor expense for truck services and field employees that returned to work in the second quarter of 2021 to support our restaurant re-openings as compared to furloughs and lower staffing levels in 2020 in response to the COVID-19 pandemic and ~~a decrease in nonlabor costs such as maintenance, certain utilities and supplies,~~increased other operating expenses for three months ended June 30, 2021. This $36,474 increase was partially offset by ~~increased labor costs as a result~~$2,381 of ~~an increase in technician count in our truck service department~~bonuses paid to support ~~an anticipated increase in sales and cash bonuses we paid to certain employees~~those who continued to work at our locations during the COVID-19 ~~pandemic.~~pandemic in 2020. Site level operating expense as a percentage of nonfuel revenues improved to 46.6% for the three months ended June 30, 2021, from 48.7% for the three months ended June 30, 2020, ~~from 49.3%~~primarily due to the increase in nonfuel revenues and cost management for the three months ended June 30, ~~2019, primarily due to a decrease in nonlabor costs such as maintenance, certain utilities and supplies.~~2021.

Selling, General and Administrative Expense. Selling, general and administrative expense for the three months ended June 30, ~~2020,~~2021, decreased by ~~$1,586,~~$1,386, or ~~4.0%~~3.6%, as compared to the three months ended June 30, ~~2019. The decrease was~~2020, primarily ~~attributable to~~as a result of the ~~elimination~~impact of ~~approximately 130~~open positions during the three months ended June 30, 2021 and expenses related to executive officer retirement and separation agreements recognized in the three months ended June 30, 2020, as part of the Reorganization Plan, the furloughing of approximately 120 corporate employees in response to the COVID-19 pandemic and a reduction in travel related expenses and marketing expenses. These decreases were largelypartially offset by ~~$3,884~~increases in consultant fees to assist with identifying and implementing cost reduction and other opportunities, as well as increases related to key leadership positions and implementation and other costs related to our incremental adoption of ~~non-recurring costs associated with the Reorganization Plan.~~cloud-based technology solutions.

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Real Estate Rent Expense. Real estate rent expense for the three months ended June 30, ~~2020, decreased~~2021, increased by ~~$691,~~$532, or ~~1.1%~~0.8%, as compared to the three months ended June 30, ~~2019. The decrease was~~2020, primarily ~~the~~as a result of ~~a decrease~~an increase in percentage rent due to SVC as a result of the ~~decrease~~increase in ~~our~~total nonfuel revenues during the three months ended June 30, ~~2020, as compared to the three months ended June 30, 2019.~~2021.

Depreciation and Amortization Expense. Depreciation and amortization expense for the three months ended June 30, ~~2020, increased~~2021, decreased by ~~$5,041,~~$4,115, or ~~21.7%~~14.6%, as compared to the three months ended June 30, ~~2019. The increase was~~2020, primarily ~~the~~as a result of a $3,046 goodwill impairment charge recognized with respect to our QSL business during the three months ended June 30, 2020, a $834 write off of intangible assets associated with three franchised standalone restaurants that closed during the three months ended June 30, 2020, and ~~the $539~~a $538 write off of certain assets related to truck service programs that were ~~canceled.~~canceled during the three months ended June 30, 2020.

Interest Expense, Net. Interest expense, net for thethree months ended June 30, 2021, increased by $4,506, or 62.3%, as compared to the three months ended June 30, 2020, primarily as a result of the Term Loan Facility that we entered into in December 2020.

(Provision)Benefit for Income Taxes. We had aan income tax provision ~~for income taxes~~ of $7,779 and $1,087 for the three months ended June 30, 2021 and 2020, ~~as compared to a benefit for income taxes of $402 for the three months ended June 30, 2019.~~respectively. The ~~change~~increase in the ~~(provision) benefit for~~ income ~~taxes~~tax provision is primarily due to ~~larger~~higher pretax income recognized in the three months ended June 30, ~~2020,~~2021, as compared to the three months ended June 30, ~~2019.~~2020.

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Six Months Ended June 30, ~~2020,~~2021, as Compared to Six Months Ended June 30, ~~2019~~2020

Fuel Revenues. Fuel revenues for the six months ended June 30, ~~2020, decreased~~2021, increased by ~~$648,473,~~$953,550, or ~~30.9%~~65.7%, as compared to the six months ended June 30, ~~2019. The decrease~~2020, primarily as a result of an increase in fuel ~~revenues was primarily due~~sales volume in addition to ~~a decrease~~an increase in market prices for ~~fuel and a decrease in fuel sales volume.~~fuel. The table below presents the factors causing the changes in total fuel sales volume and revenues between periods. See "Effects of Fuel Prices and Supply and Demand Factors" for more information regarding the impact market prices for fuel has on our financial results.

Gallons Sold Fuel Revenues
Results for the six months ended June 30, 2019 974,248 $ 2,100,812
Decrease due to petroleum products price changes (626,736)
Decrease due to same site volume changes (7,113) (16,380)
Decrease in wholesale fuel sales volume (2,133) (5,357)
Net change from prior year period (9,246) (648,473)
Results for the six months ended June 30, 2020 965,002 $ 1,452,339


	Gallons Sold	Fuel Revenues
Results for the six months ended June 30, 2020	965,002	$	1,452,339
Increase due to petroleum products price changes		611,967
Increase due to volume changes	156,944	332,408
Increase in wholesale fuel sales volume	5,456	9,175
Net change from prior year period	162,400	953,550
Results for the six months ended June 30, 2021	1,127,402	2,405,889

Nonfuel Revenues. Nonfuel revenues for the six months ended June 30, ~~2020, decreased~~2021, increased by ~~$86,379,~~$119,147, or ~~9.4%~~14.3%, as compared to the six months ended June 30, ~~2019,~~2020, primarily as a result of ~~a decrease~~increases in ~~revenues at both~~ our ~~standalone restaurants and the restaurants in our travel centers due to the temporary closure or limitation of services, as well as a decrease in our truck service and~~ store and retail services, ~~businesses~~truck service, restaurants and diesel exhaust fluid revenues. These increases were primarily due to ~~a reduction in trucking activity and consumer travel, all of which were a result of~~the impact the COVID-19 ~~pandemic. In addition,~~pandemic had on nonfuel revenues for the six months ended June 30, ~~2019, benefited~~2020, including the additional sales from a particularly strong financial performance in truck service and store and retail services as a result of the extreme cold weather experienced in some parts of the United States during the beginning of 2019,certain travel center restaurants that have now reopened or are operating with expanded hours as compared to ~~unseasonably mild weather~~the pandemic conditions experienced ~~during~~in the ~~beginning of 2020. These decreases were partially offset by an increase in diesel exhaust fluid, or DEF, sales as a result of an increase in newer trucks on the road that require DEF~~prior year, and the ~~positive impact of certain~~progress of our ~~marketing initiatives in our quick service restaurants.~~Transformation Plan.

Rent and Royalties from Franchisees. Rent and royalties from franchisees for the six months ended June 30, ~~2020, decreased~~2021, increased by ~~$353,~~$1,228, or ~~5.1%~~18.8%, as compared to the six months ended June 30, ~~2019,~~2020, primarily as a result of the closure of five franchised standalone restaurants, our purchase of one standalone restaurant from a former franchisee since the beginning of 2019, and the temporary closures of certain franchised standalone restaurants as a result of the COVID-19 pandemic, partially offset by 1113 franchised travel centers and ~~five~~four franchised standalone QSL restaurants that began operations since the beginning of ~~2019.~~2020, partially offset by the sale of 28 franchised standalone restaurants in the sale of our QSL business in April 2021 and the closure of three franchised standalone QSL restaurants since the beginning of 2020.

Fuel Gross Margin. Fuel gross margin for the six months ended June 30, ~~2020,~~2021, increased by ~~$22,286,~~$3,867, or ~~14.7%~~2.2%, as compared to the six months ended June 30, ~~2019,~~2020, primarily as a result of ~~a more favorable~~an increase in fuel ~~purchasing environment and the $11,230 benefit recognized in connection with the federal biodiesel blenders' tax credit in the six months ended June 30, 2020,~~sales volume, partially offset by a decrease in fuel sales volume and $2,840 of a one time benefit due to the reversal of loyalty award accruals recognized in connection with introducing a revised customer loyalty program during the six months ended June 30, 2019.less favorable purchasing environment.

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Nonfuel Gross Margin. Nonfuel gross margin for the six months ended June 30, ~~2020, decreased~~2021, increased by ~~$55,283,~~$72,887, or ~~9.9%~~14.4%, as compared to the six months ended June 30, ~~2019,~~2020, primarily ~~due to the decrease in nonfuel revenues~~ as a result of the ~~COVID-19 pandemic.~~increase in total nonfuel revenues. Nonfuel gross margin percentage for the six months ended June 30, ~~2020, declined~~2021, remained flat at 60.9% as compared to ~~60.9% from 61.2% for~~ the six months ended June 30, ~~2019, primarily due to a change in the mix of products and services sold and certain pricing and marketing initiatives.~~2020.

Site Level Operating Expense. Site level operating expense for the six months ended June 30, ~~2020, decreased~~2021, increased by ~~$33,279,~~$27,140, or ~~7.1%~~6.3%, as compared to the six months ended June 30, ~~2019,~~2020, primarily due to ~~the furloughing of approximately 4,300~~increased general labor expense for truck services and field employees that returned to work in the second quarter of 2021 to support our restaurant re-openings as compared to furloughs and lower staffing levels in 2020 in response to the COVID-19 pandemic and ~~a decrease in nonlabor costs such as maintenance, certain utilities and supplies,~~increased other operating expenses for the six months ended June 30, 2021. This $27,140 increase was partially offset by ~~increased labor costs as a result~~$3,769 of ~~an increase in technician count in our truck service department~~bonuses paid to support ~~an anticipated increase in sales, cash bonuses we paid to certain employees~~those who continued to work at our locations during the COVID-19 pandemic ~~and an increase in medical and workers compensation claims expense.~~during the six months ended June 30, 2020. Site level operating expense as a percentage of nonfuel revenues ~~declined~~improved to 48.6% for the six months ended June 30, 2021, from 52.3% for the six months ended June 30, 2020, ~~from 51.0% for the six months ended June 30, 2019,~~primarily due to the ~~increased labor costs and a decrease~~increase in nonfuel ~~revenues.~~revenues and cost management.

Selling, General and Administrative Expense. Selling, general and administrative expense for the six months ended June 30, ~~2020,~~2021, decreased by ~~$1,468,~~$2,684, or ~~1.9%~~3.6%, as compared to the six months ended June 30, ~~2019. The decrease was~~2020, primarily ~~due to~~as a result of the ~~elimination~~impact of ~~approximately 130~~open positions during the six months ended June 30, 2021 and expenses related to executive officer retirement and separation agreements recognized in the six months ended June 30, 2020, as part of the Reorganization Plan, the furloughing of approximately 120 corporate employees in response to the COVID-19 pandemic and a reduction in travel related expenses and marketing expenses. These decreases were largelypartially offset by ~~$4,288~~increases in consultant fees to assist with identifying and implementing cost reduction and other opportunities, as well as increases related to key leadership positions and implementation and other costs related to our incremental adoption of ~~non-recurring costs associated with the Reorganization Plan.~~cloud-based technology solutions.

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Real Estate Rent Expense. Real estate rent expense for the six months ended June 30, ~~2020, decreased~~2021, increased by ~~$3,516,~~$813, or ~~2.7%~~0.6%, as compared to the six months ended June 30, ~~2019. The decrease was~~2020, primarily ~~the~~as a result of ~~our purchase of 20 travel centers we previously leased from SVC in January 2019, which reduced our annual minimum rent due to SVC by $43,148, and a decrease~~an increase in percentage rent due to SVC ~~as a result of~~driven by the ~~decrease~~increase in ~~our~~total nonfuel revenues during the six months ended June 30, ~~2020, as compared to the six months ended June 30, 2019.~~2021.

Depreciation and Amortization Expense. Depreciation and amortization expense for the six months ended June 30, ~~2020, increased~~2021, decreased by ~~$8,842,~~$8,846, or ~~18.4%~~15.6%, as compared to the six months ended June 30, ~~2019. The increase~~2020, primarily ~~resulted from the $5,701~~as a result of a $5,700 write off of certain assets related to truck service programs that were canceled during the six months ended June 30, 2020, a $3,046 goodwill impairment charge recognized during the six months ended June 30, 2020, with respect to our QSL business and ~~the~~a $834 write off of intangible assets associated with three franchised standalone restaurants that closed during the six months ended June 30, ~~2020.~~

~~Benefit for Income Taxes. We had~~2020, partially offset by a ~~benefit for income taxes of $5,654 and $5,669 for~~$650 impairment charge related to the QSL sale during the six months ended June 30, ~~2020 and 2019, respectively. The decrease in the benefit for income taxes is primarily due a reduction in certain income tax credits~~2021.

Interest Expense, Net. Interest expense, net for thesix months ended June 30, ~~2020,~~2021, increased by $8,434, or 57.4%, as compared to the six months ended June 30, ~~2019. This decrease was partially offset by~~2020, primarily as a ~~larger~~result of the Term Loan Facility that we entered into in December 2020.

(Provision) Benefit for Income Taxes. We had an income tax provision of $6,929 and an income tax benefit of $5,654 for the six months ended June 30, 2021 and 2020, respectively. The increase in the income tax provision is primarily due to pretax ~~loss~~income recognized in the six months ended June 30, ~~2020,~~2021, as compared to a pretax loss in the six months ended June 30, ~~2019.~~2020.

Liquidity and Capital Resources

Our principal liquidity requirements are to meet our operating and financing costs and to fund our capital expenditures, acquisitions and working capital requirements. Our principal sources of liquidity to meet these requirements are our:

•cash balance;

•operating cash flow;

•our Credit Facility with a current maximum availability of $200,000 subject to limits based on our qualified collateral;

•potential sales to SVC of improvements we make to the sites we lease from SVC;

•potential issuances of new debt and equity securities; and

•potential financing or selling of unencumbered real estate that we own.

We believe that the primary risks we currently face with respect to our operating cash flow are:

•the potential continuing negative impacts from the COVID-19 pandemic, including if the United States experiences a prolonged and significant decline in economic activity that reduces demand for our products and services;

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•continuing decreased demand for our fuel products resulting from regulatory and market efforts for improved engine fuel efficiency, fuel conservation and alternative fuels and technologies;

•decreased demand for our products and services that we may experience as a result of competition or otherwise;

•the fixed nature of a significant portion of our expenses, which may restrict our ability to realize a sufficient reduction in our expenses to offset a reduction in our revenues;

•the costs and funding that may be required to execute our growth initiatives;

•the possible inability of acquired or developed properties to generate the stabilized financial results we expected at the time of acquisition or development;

•increasing labor ~~cost;~~costs;

•increased cost of fleet card fees;

•increased costs for nonfuel products that we may not be able to pass through to our customers;

•increases in our cost of capital ~~that may result if there is a return~~due to increasing market interest rates;

•increased costs we may need to incur to operate our business in response to the COVID-19 pandemic, including enhancing sanitation and other preventative measures; and

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•the negative impacts on our gross margins and working capital requirements if there were a return to the higher level of prices for petroleum products we experienced in prior years or due to increases in the cost of our fuel or nonfuel products resulting from inflation generally.

Our business requires substantial amounts of working capital, including cash liquidity, and our working capital requirements can be especially large because of the volatility of fuel prices. Selectively acquiring additional properties and businesses and developing new sites requires us to expend substantial capital for any such properties, businesses or developments. In addition, our properties are high traffic sites with many customers and large trucks entering and exiting our properties daily, requiring us to expend capital to maintain, repair and improve our properties. Although we had a cash balance of ~~$142,786~~$583,251 at June 30, ~~2020,~~2021, and net cash provided by operating activities of ~~$145,433~~$124,074 for the six months ended June 30, ~~2020,~~2021, we cannot be sure that we will maintain sufficient amounts of cash, that we will generate future profits or positive cash flows or that we will be able to obtain additional financing, if and when it becomes necessary or desirable to pursue business opportunities. We believe we have sufficient financial resources to fund operations and required capital expenditures for ~~the foreseeable future.~~greater than 12 months.

~~Lease Amendments~~Our Investment and ~~Travel Center Purchases~~

~~In January 2019, we acquired from SVC 20 travel centers we previously leased from SVC for $309,637, which includes $1,437 of transaction related costs,~~Financing Liquidity and we and SVC amended our five leases, which provided for, among other things, a $43,148 reduction in our annual minimum rent payments and payment by us in 16 equal quarterly installments, which began on April 1, 2019, of deferred rent that aggregate to $70,458 to fully satisfy and discharge our previous deferred rent obligation. See Note 6 to the Consolidated Financial Statements included in Item 1 of this Quarterly Report for more information about these lease amendments.Resources

Revolving Credit Facility

We have a Credit Facility with a group of commercial banks that matures on July 19, 2024. Under the Credit Facility, a maximum of $200,000 may be drawn, repaid and redrawn until maturity. The availability of this maximum amount is subject to limits based on qualified collateral. Subject to available collateral and lender participation, the maximum amount of this Credit Facility may be increased to $300,000. The Credit Facility may be used for general business purposes and allows for the issuance of letters of credit. Generally, no principal payments are due until maturity. Under the terms of the Credit Facility, interest is payable on outstanding borrowings at a rate based on, at our option, LIBOR or a base rate, plus a premium (which premium is subject to adjustment based upon facility availability, utilization and other matters). At June 30, ~~2020,~~2021, based on our qualified collateral, a total of ~~$102,446~~$115,157 was available to us for loans and letters of credit under the Credit Facility. At June 30, ~~2020,~~2021, there were no borrowings outstanding under the Credit Facility but we had outstanding ~~$18,142~~$16,757 of letters of credit issued under that facility, which reduced the amount available for borrowing under the Credit Facility, leaving ~~$84,304~~$98,400 available for our use as of that date. At June 30, ~~2020,~~2021, we were in compliance with all covenants of the Credit Facility. As of August ~~4, 2020,~~2, 2021, there were no borrowings outstanding under the Credit Facility and ~~$84,304~~approximately $98,400 available under the Credit Facility for our use as of that date.

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~~IHOP Secured Advance Note~~

Concurrent with entering into the IHOP Agreement, we entered into a Secured Advance Note with IHOP, or the IHOP Note, pursuant to which we can borrow up to $10,000 in connection with the costs to convert our full service restaurants to IHOP restaurants. As of June 30, 2020, there were no loans outstanding under the IHOP Note.

~~West Greenwich~~Term Loan Facility

On ~~February 7,~~December 14, 2020, we entered into a ~~10 year term loan for $16,600 with The Washington Trust Company, or the West Greenwich Loan. The West Greenwich~~$200,000 Term Loan Facility which is secured by a ~~mortgage encumbering one~~pledge of all the equity interests of substantially all of our ~~travel centers located~~wholly owned subsidiaries, a pledge, subject to the prior interest of the lenders under our Credit Facility, of substantially all of our other assets and the assets of such wholly owned subsidiaries and mortgages on certain of our fee owned real properties. We expect to use the $190,062 in ~~West Greenwich, Rhode Island. The interest rate is fixed~~net proceeds from our Term Loan Facility for general business purposes, including the funding of deferred capital expenditures, updates to key information technology infrastructure and growth initiatives consistent with our Transformation Plan. Interest on amounts outstanding under the Term Loan Facility are calculated at ~~3.85% for five years based on the five year Federal Home Loan Bank rate~~LIBOR, with a LIBOR floor of 100 basis points, plus ~~198~~600 basis points, and ~~will reset thereafter. The West Greenwich~~the Term Loan Facility matures on December 14, 2027. Our Term Loan Facility requires ~~us to make principal and~~monthly interest payments ~~monthly. The proceeds from the West Greenwich Loan were used for general business purposes. We may, at our option with 60 days prior written notice, repay the loan in full prior to the end~~and quarterly principal payments of $500, or 1.0% of the ~~10 year term plus, if repaid prior to February 7, 2023, a nominal penalty. See Note 7 to~~original principal amount annually. Remaining principal amounts outstanding under the ~~Consolidated Financial Statements included in Item 1 of this Quarterly Report for more information about the West Greenwich Loan.~~Term Loan Facility may be prepaid beginning on December 14, 2022.

Underwritten Public Equity Offering

On July 6, 2020, we received net proceeds of ~~$80,056,~~$79,980, after ~~$220~~$296 of offering costs and $5,124 of underwriting discounts and commissions, from the sale and issuance of 6,100 shares of common stock in an underwritten public equity offering. We intend to use the net proceeds from this offering to fund deferred maintenance and other capital expenditures necessary to enhance property conditions and implement growth initiatives, for working capital and for general corporate purposes. ~~See Note 4~~

West Greenwich Loan

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monthly. The proceeds from the West Greenwich Loan were used for general business purposes. We may, at our option with 60 days prior written notice, repay the loan in full prior to the ~~Consolidated Financial Statements included~~end of the 10 year term plus, if repaid prior to February 7, 2023, a nominal penalty.

IHOP Secured Advance Note

On October 28, 2019, we entered into a multi unit franchise agreement with IHOP Franchisor LLC, or IHOP, in ~~Item 1~~which we agreed to rebrand and convert up to 94 of ~~this Quarterly Report for more information about~~our full service restaurants to IHOP restaurants over the ~~underwritten public equity offering.~~next five years, or the IHOP Agreement. Concurrent with entering into the IHOP Agreement, we entered into a Secured Advance Note with IHOP, or the IHOP Note, pursuant to which we can borrow up to $10,000 in connection with the costs to convert our full service restaurants to IHOP restaurants. As of June 30, 2021, there were no loans outstanding under the IHOP Note.

Sources and Uses of Cash

The following is a summary of our sources and uses of cash for the six months ended June 30, 2021 and 2020, as reflected in our consolidated statements of cash flows:


	Six Months Ended June 30,
(in thousands)	2021		2020		$ Change
Cash and cash equivalents at the beginning of the period	$	483,151	$	17,206	$	465,945
Net cash provided by (used in):
Operating activities	124,074		145,433		(21,359)
Investing activities	(21,195)		(27,732)		6,537
Financing activities	(2,841)		7,795		(10,636)
Effect of exchange rate changes on cash	62		84		(22)
Cash and cash equivalents at the end of the period	$	583,251	$	142,786	$	440,465

Cash Flows from Operating Activities. During the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, we had net cash inflows from operating activities of ~~$145,433~~$124,074 and ~~$58,913,~~$145,433, respectively. The ~~$86,520 increase~~$21,359 change was primarily due to ~~the collection of $68,446 of the federal biodiesel blenders' tax credit recognized during 2019 and an increase~~a decrease in cash generated from working capital and a decrease in operating cash flow during the six months ended June 30, ~~2020,~~2021, as compared to the six months ended June 30, ~~2019.~~2020.

Cash Flows from Investing Activities. During the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, we had net cash outflows from investing activities of ~~$27,732~~$21,195 and ~~$347,436,~~$27,732, respectively. The ~~$319,704 decrease~~$6,537 change primarily resulted from ~~our purchase for $309,637 of 20 travel centers we previously leased from SVC during the six months ended June 30, 2019, and~~ a ~~reduction~~decrease in capital expenditures during the six months ended June 30, ~~2020,~~2021, as compared to the six months ended June 30, ~~2019. See Note 6 to the Consolidated Financial Statements included in Item 1 of this Quarterly Report for more information about our transactions with SVC.~~2020.

~~In response to the COVID-19 pandemic and the current economic conditions, we reduced our capital expenditure plan for 2020 in order to preserve our liquidity~~Cash Flows from ~~the previous budget of $118,905 to approximately $68,000. As revised, our current budget for 2020 capital expenditures is largely focused on maintenance and essential items.~~

Financing Activities. During the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, we had net cash ~~inflows~~outflows and ~~outflows~~inflows from financing activities of ~~$7,795~~$2,841 and ~~$160,~~$7,795, respectively. The ~~$7,955~~$10,636 change primarily resulted from ~~the~~ $16,600 proceeds received under the West Greenwich Loan during the six months ended June 30, 2020, partially offset by a $1,000 repayment of our Term Loan Facility during the six months ended June 30, 2021 and a $7,900 repayment of our borrowings under our Credit Facility during the six months ended June 30, 2020.

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Related Party Transactions

We have relationships and historical and continuing transactions with SVC, The RMR Group LLC, or RMR, and others related to them. For example: SVC is our former parent company, our principal landlord and one of our largest stockholders; RMR provides management services to both us and to SVC; Adam. D. Portnoy, the Chair of our Board of Directors and one of our Managing Directors, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of The RMR Group Inc., a managing director, president and chief executive officer of The RMR Group Inc. and an officer and employee of RMR; and, as of June 30, 2020, SVC and RMR owned approximately 8.2% and 3.6%, respectively, of our outstanding shares of common stock. Our other Managing Director and Chief Executive Officer, Jonathan M. Pertchik, and certain of our other officers and SVC’s managing trustees and officers are also officers and employees of RMR. We also have relationships and historical and continuing transactions with other companies to which RMR or its subsidiaries provide management services and some of which may have directors, trustees and officers who are also directors, trustees or officers of us, SVC or RMR and some of our Directors and officers serve as trustees, directors or officers of these companies.

~~For~~ further information about these and other such relationships and related party transactions, see Notes 5, 6 8 and 97 to the Consolidated Financial Statements included in Item 11. of this Quarterly Report, our Annual Report, our definitive Proxy Statement for our ~~2020~~2021 Annual Meeting of Stockholders and our other filings with the Securities and Exchange ~~Commission, or SEC.~~Commission. In addition, ~~please~~ see ~~the section captioned~~Item 1A. "Risk Factors" ofin our Annual Report for a description of risks that may arise as a result of these and other related party transactions and relationships. Our filings with the SEC and copies of certain of our agreements with these related parties, including our business management agreement with RMR and our various agreements with SVC are available as exhibits to our filings with the SEC and accessible at the SEC's website, ~~www.sec.gov~~. We may engage in additional transactions with related parties, including businesses to which RMR or its subsidiaries provide management services.

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Environmental and Climate Change Matters

Legislation and regulation regarding climate change, including greenhouse gas emissions, and other environmental matters and market reaction to any such legislation or regulation or to climate change concerns, may decrease the demand for our fuel products, may require us to expend significant amounts and may otherwise negatively impact our business. For instance, federal and state governmental requirements addressing emissions from trucks and other motor vehicles, such as the U.S. ~~Environmental~~Environment Protection Agency's, or EPA's, gasoline and diesel sulfur control requirements that limit the concentration of sulfur in motor fuel, as well as new fuel efficiency standards for medium and heavy duty commercial trucks, have caused us to add certain services and provide certain products to our customers at a cost to us that we may be unable to pass through to our customers. Also, various private initiatives and government regulations to promote fuel efficiency and control air pollutant emissions from the trucking industry may raise the cost of trucking as compared to other types of freight transport, as a result decreasing the demand for our fuel products and negatively impacting our business.

For example, in August 2016 the EPA and the National Highway Traffic Safety Administration established final regulations ~~that will~~intended to phase in more stringent greenhouse gas emission and fuel efficiency standards for medium and heavy duty trucks beginning in model year 2021 (model year 2018 for certain trailers) through model year 2027, and these regulations are estimated to reduce fuel usage between 9% and 25% (depending on vehicle category) by model year 2027.trucks. Under the ~~current Presidential~~Trump Administration, the EPA and the U.S. Department of Transportation ~~have publicly announced that they will review and reconsider~~rolled back various rules relating to greenhouse gas emissions and fuel efficiency standards for trucks and other motor vehicles, including portions of the rule discussed ~~above, and have proposed, for example, changes~~above. President Biden has signed executive orders requiring federal agencies to review certain actions taken by the ~~rule's application~~Trump Administration with respect to ~~certain types of vehicles. It~~fuel efficiency standards, but it is difficult to predict what, if any, changes to existing rules will occur under the ~~existing rule will ultimately occur~~Biden Administration or as a result of ~~the Presidential Administration's review~~federal legislative action or ~~as a result of~~due to related legal challenges and, if changes occur, what impact those changes would have on our industry, us or our business. In addition, the California Air Resources Board, or CARB, routinely considers rulemaking activity the purpose of which is to make heavy duty truck fleets operating in the state more fuel efficient and less polluting. The Trump Administration challenged CARB's ability to take such actions, and legal challenges remain to the enforceability of CARB's rulemaking. Because of the size of the California market and economy, fleet rules adopted by CARB frequently have influence throughout the United States. We may not be able to completely offset the loss of business we may suffer as a result of increasing engine efficiency and other fuel conservation and pollution reduction efforts under federal or state rules or as a result of other existing or future regulation or changes in customer demand.

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Some observers believe severe weather activities in different parts of the country over the last few years are evidence of global climate change. Such severe weather ~~that may result from climate change~~ may have an adverse effect on individual properties we own, lease or operate, or the volume of business at our locations. We mitigate these risks by owning, leasing and operating a diversified portfolio of properties, by procuring insurance coverage we believe adequately protects us from material damages and losses and by attempting to monitor and be prepared for such events. However, we cannot be ~~sure~~certain that our mitigation efforts will be sufficient or that future storms, rising sea levels or other changes that may occur due to future climate change or otherwise could not have a material adverse effect on our business.

For further information about these and other environmental and climate change matters, and the related risks that may arise, see the disclosure under the heading "Environmental Contingencies" in Note 108 to the Consolidated Financial Statements included in Item 11. of this Quarterly Report, which disclosure is incorporated herein by reference.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective at June 30, ~~2020.~~2021.

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Changes in Internal Control over Financial Reporting

During the three months ended June 30, ~~2020,~~2021, there were no changes to our internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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Warning Concerning Forward-Looking Statements

This Quarterly Report contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Whenever we use words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "will," "may" and negatives and derivatives of these or similar expressions, we are making forward-looking statements. These forward-looking statements are based upon our 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 our forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond our control. Among others, the forward-looking statements that appear in this Quarterly Report ~~that may not occur~~ include statements that:

•Our expectations about our and the trucking industry's ability to operate through the COVID-19 ~~pandemic and current economic conditions;~~pandemic;

•The duration and severity of ~~the~~any adverse economic ~~downturn resulting~~impact that might result from the COVID-19 pandemic ~~and its impact~~ on us and our customers, suppliers and other stakeholders;

•Our operating results for the three and six months ended June 30, ~~2020,~~2021, reflect certain improvements ~~such as increases in fuel gross margin,~~ as compared to the three and six months ended June 30, ~~2019.~~2020. This may imply that we will increase or maintain these improvements and that we will be profitable in the future. However, certain of these improvements resulted from unique items that may not occur in the future. In addition, customer demand and competitive conditions, among other factors, may significantly impact our fuel ~~sales volume~~and nonfuel revenues and the costs of our fuel and nonfuel products may increase in the future because of inflation or other reasons. If fuel gross margin per gallon, or fuel or nonfuel sales volume, decline, if we are not able to pass increases in fuel or nonfuel costs to our customers or if our nonfuel sales mix changes in a manner that negatively impacts our nonfuel gross margin, our nonfuel revenues or our fuel and nonfuel gross margin may decline. In fact, since we became a public company in 2007, we have been able to produce only occasional profits and we have accumulated significant losses. We may be unable to produce future profits and our losses may increase;

•WeOur travel centers have been recognized as a ~~business that provides~~provider of services to essential businesses by many public authorities, which has allowed us to continue operating most of our businesses during the COVID-19 pandemic. This may imply that we will continue to be designated anas a provider of services to essential ~~service;~~businesses; however, we could lose that designation, which could result in our having to close or reduce operations at certain or all of our travel centers for an indefinite ~~period;~~period if the COVID-19 pandemic conditions worsen in the United States;

•We ~~recognized increases~~are executing our Transformation Plan, which includes numerous initiatives that we believe will improve and enhance our operational efficiencies and profitability, increase diesel fuel and gasoline gross margin and fuel sales volume, increase market share in ~~our~~the truck service industry, improve merchandising and gross margin in store and retail services, ~~revenues~~improve operating effectiveness in ~~June 2020. This~~our full service restaurants and expand our franchise base. However, we may ~~imply~~not be able to recognize the improvements to our operating results that we will increase or maintain these improvements and that we will be profitable in the future. However, customer demand and competitive conditions, among other factors, may significantly impact our nonfuel sales.anticipate. In addition, ~~many parts of~~ the ~~United States have experienced increased numbers of COVID-19 infections since June 2020 and that development~~costs incurred to complete the initiatives may ~~result in adverse economic consequences that may adversely affect us, our customers and our business. If nonfuel sales volume declines, if~~cost more than we are not able to pass increases in nonfuel costs to our customers or if our nonfuel sales mix changes in a manner that negatively impacts our nonfuel gross margin, our nonfuel revenues or our nonfuel gross margin may decline;anticipate;

•We have incurred costs to support our anticipated business growth. This statement may imply that these costs will result in increased revenues and us receiving the expected return on our investments in growing our business. However, these costs may exceed any increased revenue we may receive from this growth or the returns on these investments may be less than expected;

•We expect to ~~recognize annual cost savings of approximately $13.1 million~~invest capital into relationships with companies that supply, distribute or store electric, hydrogen or other non-fossil fuel, alternative energy resources. We may decide not to invest capital into these relationships and ~~incur costs of approximately $4.3 million as a result of the Reorganization Plan. However,~~these relationships may not materialize or become beneficial, and if we do further pursue this business or make these investments, we may not realize the returns or ~~maintain~~other benefits we may expect and we could realize losses;

•Our belief that our sites are large and well-located may prove otherwise and, if so, we may not realize the ~~cost savings~~benefits we expect ~~and~~based on the ~~costs we incur to implement and execute the Reorganization Plan may be greater than we expect;~~characteristics of our sites;

•We may make acquisitions and develop new locations in the future including adding sites through franchising. Managing and integrating acquired, developed or franchised locations can be difficult, time consuming and/or more expensive than anticipated and involve risks of financial losses. We may not operate our acquired or developed locations as profitably as we may expect. In addition, acquisitions or property development may subject us to greater risks than our continuing operations, including the assumption of unknown liabilities;

•Our belief that, as of the date of this Quarterly Report, we had sufficient financial resources to fund operations for the foreseeable future. ~~The COVID-19 pandemic has significantly negatively impacted the U.S. economy; if the current~~However our business is subject to risks, including risks beyond our control. If economic

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conditions ~~continue~~decline for ~~a sustained~~an extended period or ~~worsen,~~if we fail to operate our business and compete successfully, our business, results of operations and financial condition may be materially adversely impacted, which may result in our not having sufficient financial resources to fund operations for the foreseeable future;

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•We expect to expand our network by entering into new franchise agreements. However, we may not succeed in entering these ~~franchise~~ agreements ~~are subject to conditions~~ and ~~these franchise agreements~~the commencement and stabilization of any new franchises may not occur or may be delayed, and ~~the terms of the agreements may change;~~

•~~We have entered into an agreement to purchase a parcel of land. However, this agreement is subject to conditions; as a result, this acquisition~~these franchises may not ~~occur, may~~ be ~~delayed~~successful or ~~its terms may change;~~generate the royalties for us that we expect;

•We have a Credit Facility with a current maximum availability of $200.0 million. The availability of this maximum amount is subject to limits based on our qualified collateral, including our eligible cash, accounts receivable, inventory, equipment and intangible assets that varies in amount from time to time. Accordingly, our borrowing and letter of credit availability at any time may be less than $200.0 million. At June 30, ~~2020,~~2021, based on our eligible collateral at that date, our borrowing and letter of credit availability was ~~$102.4~~$115.2 million, of which we had used ~~$18.1~~$16.8 million for outstanding letters of credit. The maximum amount available under the Credit Facility may be increased to $300.0 million, the availability of which is subject to limits based on our available collateral and lender participation. However, if we do not have sufficient collateral or if we are unable to identify lenders willing to increase their commitments or join our Credit Facility, we may not be able to increase the size of our Credit Facility or the availability of borrowings when we may want or need to do so;

•We have reduced our capital expenditure budget for 2020 to approximately $68.0 million, largely focused on maintenance and essential items. However, unexpected capital expenditure needs may arise. Further, the capital expenditures we plan to make may cost more than expected. As a result, our 2020 capital expenditures may exceed budget. In addition, to the extent we defer capital expenditures, the scope and cost for those expenditures may be greater in the future;

•We entered into a multi unit franchise agreement with IHOP to rebrand and convert up to 94 of our full service restaurants to IHOP restaurants. However, we are only obligated to convert the 20 full service restaurants to IHOP with the remaining conversions at our discretion. We may fail to convert those 20 restaurants and may determine not to convert some or all of the remaining 74 restaurants. The costs for these conversions may exceed our expectations and we may fail to complete these conversions in accordance with the schedule, or at all. In addition, we may not realize the return on investment we are anticipating and we may incur losses with respect to these conversions; and

•We may ~~finance or sell unencumbered real estate~~not spend the $130.0 million to $150.0 million of capital expenditures in 2021 that we ~~own. However,~~currently expect to spend, and we ~~do not know the extent to which we can monetize our existing unencumbered real estate~~may spend more or ~~what the terms of any such financing or sale would be.~~less than these amounts.

These and other unexpected results may be caused by various factors, some of which are beyond our control, including:

•Continued improved fuel efficiency of motor vehicle engines and other fuel conservation and alternative fuel practices and sources employed or used by our customers and alternative fuel technologies or other means of transportation that may be developed and widely adopted in the future may continue to reduce the demand for the fuel that we sell and may adversely affect our business;

•Competition within the travel center, truck repair and restaurant industries may adversely impact our financial results. Our business requires substantial amounts of working capital and our competitors may have greater financial and other resources than we do;

•Future increases in fuel prices may reduce the demand for the products and services that we sell;

•Future commodity fuel price increases, fuel price volatility or other factors may cause us to need more working capital to maintain our inventory and carry our accounts receivable at higher balances than we now expect and the general availability of, demand for and pricing of motor fuels may change in ways which lower the profitability associated with our selling motor fuels;

•Our suppliers may be unwilling or unable to maintain the current credit terms for our purchases. If we are unable to purchase goods on reasonable credit terms, our required working capital may increase and we may incur material losses. Also, in times of rising fuel and nonfuel prices, our suppliers may be unwilling or unable to increase the credit amounts they extend to us, which may increase our working capital requirements. The availability and the terms of any credit we may be able to obtain are uncertain;

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•Most of our trucking company customers transact business with us by use of fuel cards issued by third party fuel card companies. Fuel card companies facilitate payments to us and charge us fees for these services. The fuel card industry has only two significant participants. We believe almost all trucking companies use only a single fuel card provider and have become increasingly dependent upon services provided by their respective fuel card provider to manage their fleets. Continued lack of competition among fuel card companies may result in future increases in our transaction fee expenses or working capital requirements, or both;

•Our labor costs may continue to increase in response to business and market demands and conditions, business opportunities or pursuant to legal requirements;

•The costs we have incurred and expect to incur to support our planned and expected growth of our business may exceed any increased revenue we may receive from this growth or result in our returns on these investments being less than we ~~expect;~~expect and target;

•Fuel supply disruptions may occur, which may limit our ability to purchase fuel for resale;

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•We and our suppliers and customers are experiencing negative impacts from the current reduced market labor availability and related market pressures which may continue to present us with challenges and could negatively impact our business and operations if these conditions continue;

•If trucking companies are unable to satisfy market demands for transporting goods or if the use of other means of transporting goods increases, the trucking industry may experience reduced business, which would negatively affect our business, results of operations and liquidity;

•Trucking companies have incurred, and may incur additional, increased labor costs to retain and hire truck drivers, which may reduce the amount these companies are willing to pay for our services;

•Compliance with, and changes to, federal, state and local laws and regulations, including those related to tax, employment and environmental matters, accounting rules and financial reporting standards, payment card industry requirements, competition and similar matters may increase our operating costs and reduce or eliminate our profits;

•We are routinely involved in litigation. Discovery during litigation and court decisions often have unanticipated results. Litigation is usually expensive and can be distracting to management. We cannot be sure of the outcome of any of the litigation matters in which we are or may become involved;

•Acts of terrorism, geopolitical risks, wars, public health crises, such as the ongoing COVID-19 pandemic, or other man made or natural disasters beyond our control may adversely affect our financial results; and

•Although we believe that we benefit from our relationships with our related parties, including SVC, RMR and others affiliated with them, actual and potential conflicts of interest with related parties may present a contrary perception or result in litigation, and the benefits we believe we may realize from the relationships may not materialize.

Results that differ from those stated or implied by our forward-looking statements may also be caused by various changes in our business or market conditions as described more fully in our Annual Report, including under "Warning Concerning Forward-Looking ~~Statements,"~~Statements" and Item 1A. "Risk ~~Factors"~~Factors," and elsewhere in this Quarterly ~~Report and in the "Risk Factors" section of our Annual~~ Report.

You should not place undue reliance upon forward-looking statements. Except as required by law, we undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise.

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Part II. Other Information

Item 1A. Risk Factors

There have been no material changes during the period covered by this Quarterly Report on Form 10-Q to the risk factors previously disclosed under the "Risk Factors" section of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019, except for the additions below.~~

Our business, operations, financial results and liquidity have been materially adversely impacted by the COVID-19 pandemic, and it is not known what the duration of this pandemic will be or what its ultimate impact on us and our business will be, but we expect it will be substantial.

COVID-19 has been declared a pandemic by the World Health Organization, and the U.S. Health and Human Services Secretary has declared a public health emergency in the United States in response to the outbreak. COVID-19 has had a devastating impact on the global economy, including the U.S. economy, and has resulted in a global economic recession.

A variety of factors related to the COVID-19 pandemic have caused, and are expected to continue to cause, a decline in travel and demand for diesel fuel and gasoline, including but not limited to (i) restrictions on travel and public gatherings imposed by governmental entities and employers; (ii) a decline in the demand for products as a result of certain stay in place practices and reduced hours of operation for businesses, including restaurants and other retail stores; (iii) widespread work from home arrangements; (iv) closed or reduced factory operations; (v) the postponement or cancellation of industry conventions and conferences, music and arts festivals, sporting events and other large public gatherings and (vi) negative public perceptions of travel and public gatherings in light of the perceived risks associated with the COVID-19 pandemic. The reduced economic activity resulting from these and other factors has and will continue to negatively impact our fuel sales volume and nonfuel sales.

Since March 2020, the demand for diesel fuel declined as a result as fewer goods being transported across the United States and the resulting declines in truck driving mileage due to the COVID-19 pandemic. As a result, our diesel fuel volumes declined in April and May of 2020. In addition, due to the governmental stay in place orders and other reductions in activity, demand for gasoline has declined and is expected to remain at depressed levels during the duration of the current economic downturn. Additionally, due to social distancing and related measures, demand for our nonfuel products has declined, and we temporarily closed most of our restaurants and limited our product offerings at some of our restaurants and travel centers. Although we began reopening some of our restaurants beginning in May 2020 as certain states began allowing restaurants to reopen, the recent increase in COVID-19 infections in several states has resulted in closing or re-closing certain of our restaurants. In addition, quarantines, temporary closures of businesses, states of emergencies and other measures taken to curb the spread of COVID-19 will negatively impact the ability of our businesses to continue to obtain necessary goods and services or provide adequate staffing, which may also adversely affect our operating results. Further, if public authorities remove our “essential service” designation, we may be required to reduce our operations and, in which event, our business, results of operations and liquidity would be further adversely impacted as a result.

We cannot predict the extent and duration of the pandemic or the severity and duration of its economic impact. Potential consequences of the current unprecedented measures taken in response to the spread of COVID-19, and current market disruptions and volatility affecting us include, but are not limited to:

•~~sudden and/or severe declines in the market price of our common stock;~~

•~~our inability to comply with financial covenants that could result in our defaulting under our debt agreements;~~

•our failure to pay interest and principal when due under our outstanding debt, which may result in the acceleration of payment for our outstanding debt and our possible loss of our revolving credit facility;

•~~our inability to access debt and equity capital on attractive terms, or at all;~~

•~~increased risk of default or bankruptcy for us and our customers and suppliers;~~

•increased risk of our and our customers’ and suppliers’ inability to weather an extended cessation of normal economic activity and thereby impairing our or their ability to continue functioning as a going concern;

•~~our inability to operate our business if the health of our management personnel and other employees is affected, particularly if a significant number of individuals are impacted; and~~

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•reduced economic demand resulting from mass employee layoffs or furloughs in response to governmental action taken to slow the spread of COVID-19, which could impact our and our customers’ and suppliers’ continued viability and the demand for our products and services.

Further, the extent and strength of any economic recovery after the COVID-19 pandemic abates is uncertain and subject to various factors and conditions. Our business, operations and financial positions may continue to be negatively impacted after the COVID-19 pandemic abates and may remain at depressed levels compared to prior to the outbreak of the COVID-19 pandemic and those conditions may continue for an extended period.

We have taken several actions in an attempt to address the operating and financial impact from the COVID-19 pandemic, and we continue to assess and explore other actions, but those actions and plans may not be sufficient to avoid continued and potentially increased substantial harm to our business, operations and financial condition and some of those actions may delay our ability to quickly return to operating levels prior to the COVID-19 pandemic.

~~We have taken several actions in an attempt to address the operating and financial impact from the COVID-19 pandemic, including:~~

•~~we significantly reduced our planned capital expenditures for 2020 to conserve cash and liquidity;~~

•we have rationalized our hours of operation and employment levels, including furloughing approximately 4,300 field employees, as well as approximately 120 corporate employees, some of which have returned to work in May and June of 2020;

•~~we temporarily closed most of our full service restaurants;~~

•~~we have implemented enhanced sanitizing and cleaning procedures at our travel centers in accordance with the U.S. Centers for Disease Control and Prevention guidance; and~~

•~~we have been actively engaging with government authorities, our customers, suppliers and other vendors to try to best execute our business during the pandemic.~~

There can be no assurance that these actions or others that we may take will be successful or that they will enable us to maintain sufficient liquidity and withstand the current economic challenges. Further, certain actions we have taken may limit our ability to quickly return to operating at levels prior to the COVID-19 pandemic. For example, if we experience delays in certain actions, such as furloughed employees deciding not to return if and when we request that they do so.

~~We have significantly reduced our planned capital expenditures.~~

We have reduced our planned capital expenditures significantly in order to preserve our liquidity in the current economic environment. We reduced our budgeted capital expenditures for 2020 from the previous budget of $118.9 million to a revised budget of approximately $68.0 million. As revised, our current budget for 2020 capital expenditures is largely focused on maintenance and essential items. To the extent we defer capital expenditures, we may be required to make increased capital expenditures in later periods as a result and some of the expenditures may be greater in scope and amount than they may have been if made sooner. In addition, our travel centers may be harmed competitively if other travel centers in the markets where our travel centers are located are newer or undergoing enhanced capital improvements.

~~The recent sharp decline in and volatility of global oil market prices may negatively impact our fuel supplies.~~

Earlier this year, the global market prices for oil have recently experienced sharp declines and volatility, with prices most recently increasing from historic low levels. Factors that have caused these declines and volatility include sharp reductions in demand for, and oversupply of, fuel as a result of the COVID-19 pandemic and resulting global economic slowdown, as well as disagreements among major oil producing nations, such as Saudi Arabia and Russia. The current decreased demand for oil may result in oil producers reducing their production. In addition, if the price of oil becomes too low for a sustained period, major oil refineries in the United States may decrease their operations and capacities. If this were to occur, there may arise a shortage of, or longer lead time for us to obtain, fuel supplies. We typically maintain only up to a few days of fuel inventory at our travel centers. As a result, we could face fuel supply shortages. In addition, if oil production and refinery capacity are reduced, that may lead to increases in fuel prices. Increases in fuel prices may reduce our fuel margins and require us to fund increased amounts of working capital, which would adversely impact our results of operations and liquidity.

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~~Potential long-term changes in market, consumer and workplace practices in response to the COVID-19 pandemic could be detrimental to our business.~~

Temporary closures of businesses and governmental stay in place orders in response to the COVID-19 pandemic may result in long-term changed market, professional driver and consumer practices that could negatively impact us and our business. For example, consumer demands and preferences for goods may change in a way that results in less transporting of goods over long distances and, hence, reduce demand for long-haul trucking, which would reduce the demand for our diesel fuel. In addition, some changes in consumer practices, including as a result of less driving for commuting for work if workplaces adopt permanent or increased work from home practices that have been adopted in response to the COVID-19 pandemic, would result in decreased demand for gasoline for automobiles. Further, reductions in demand for diesel fuel and gasoline, and reductions of commercial activity generally, would result in less trucking and consumer driving, which, in turn, would lead to fewer customers visiting our travel centers and purchasing nonfuel goods and services at our travel centers, including truck repair services and reductions in our offsite truck repair and maintenance sales. These results would likely materially adversely impact our business, results of operations and financial position.

~~We may be unable to utilize our net operating loss and tax credit carryforwards.~~

Net operating losses and other carryforwards are subject to limitations under the U.S. Internal Revenue Code of 1986, as amended, or the Code. For instance, carryforwards of net operating losses arising in taxable years beginning after 2020 generally will be able to offset no more than 80% of taxable income for tax years beginning after 2020. Moreover, net operating losses arising in taxable years prior to 2018 and various tax credits may only be carried forward for a limited number of years. These and other limitations could delay our ability to utilize our existing net operating loss and tax credit carryforwards, and could even cause some of these tax attributes to expire before they are used.

If we experience an ownership change, our net operating loss and tax credit carryforwards, which currently are expected to be utilized to offset future taxable income, may be subject to limitations on usage or elimination. Our governing documents impose restrictions on the transfer and ownership of our shares of common stock that are intended to help us preserve the tax treatment of our net operating loss and tax credit carryforwards; however, we cannot be sure that these restrictions will be effective. See our Annual Report for a discussion of the risks related to our ownership limitations under the heading "Risks Arising from Certain of Our Relationships and Our Organization and Structure."

~~We may not realize the benefits we expect from our recently implemented workforce reduction plan.~~

On April 30, 2020, we implemented a workforce reduction, pursuant to which we eliminated approximately 130 positions and repositioned certain of our management staff. We expect to realize approximately $13.1 million of net annual savings as a result, not including the estimated separation costs of approximately $4.3 million contemplated by the plan. Although we believe these actions appropriately position our current work staff and organization, we cannot be sure they will. Our business may be harmed if it turns out that we eliminated too many positions. In addition, we may not be able to maintain our expected cost savings if we need to later adjust to add more staffing or outsourced personnel in response to changed business conditions or otherwise. In addition, we may incur costs in excess of our estimates regarding the plan, including if litigation in connection with the plan arises. As a result, we may not realize the benefits we expect from the workforce reduction plan.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information about our purchases of our equity securities during the quarter ended June 30, ~~2020.~~2021.


Calendar Month	Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
April 2021	—	$	—	—	$	—
May 2021	—	—		—	—
June 2021	450	29.54		—	—
Total	450	$	29.54	—	—

Calendar
Month
Number of
Shares
Purchased⁽¹⁾
Average Price
Paid per Share Total Number of Shares
Purchased as Part of Publicly
Announced Plans or
Programs Maximum Approximate
Dollar Value of Shares That
May Yet Be Purchased Under
the Plans or Programs
April 2020 — $ — — $ —
May 2020 12,047 9.73 — —
June 2020 33,908 15.42 — —
Total 45,955 $ 13.93 — $ —

⁽¹⁾During the quarter ended June 30, ~~2020,~~2021, all common stock purchases were made to satisfy share award recipients' tax withholding and payment obligations in connection with the vesting of awards of shares of common stock, which were repurchased by us based on their fair market value on the repurchase date.

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Item 6. Exhibits


~~Exhibit~~ 3.1		Plan of Conversion (Incorporated by reference to Exhibit 99.1 to our Current Report on Form 8-K filed July 30, 2019)

~~Exhibit 3.2~~	~~Certificate of Conversion of TravelCenters of America LLC (Incorporated by reference to Exhibit 99.2 to our Current Report on Form 8-K filed July 30, 2019)~~

~~Exhibit 3.3~~3.2		Articles of Conversion of TravelCenters of America LLC (Incorporated by reference to Exhibit 99.3 to our Current Report on Form 8-K filed July 30, 2019)

~~Exhibit 3.4~~3.3		Articles of Incorporation of TravelCenters of America Inc. (Incorporated by reference to Exhibit 99.4 to our Current Report on Form 8-K filed July 30, 2019)

~~Exhibit 3.5~~3.4		Articles of Amendment to the Articles of Incorporation of TravelCenters of America Inc. (Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed June 26, 2020)

~~Exhibit 3.6~~3.5		Amended and Restated Bylaws of TravelCenters of America Inc. (Incorporated by reference to Exhibit 99.5 to our Current Report on Form 8-K filed July 30, 2019)

~~Exhibit~~ 4.1		Form of Stock Certificate (Incorporated by reference to Exhibit 4.3 to our Post Effective Amendment to our Registration Statement on Form S-3 filed August 1, 2019)

~~Exhibit~~ 4.2		Indenture by and between TravelCenters of America LLC and U.S. Bank National Association, as trustee, dated as of January 15, 2013 (Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed January 15, 2013)

~~Exhibit~~ 4.3		First Supplemental Indenture by and between TravelCenters of America LLC and U.S. Bank National Association, as trustee, dated as of January 15, 2013 (Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed January 15, 2013)

~~Exhibit~~ 4.4		Second Supplemental Indenture by and between TravelCenters of America LLC and U.S. Bank National Association, as trustee, dated as of December 16, 2014 (Incorporated by reference to Exhibit 4.2 to our Registration Statement on Form 8-A (File No. 001-33274) filed December 16, 2014)

~~Exhibit~~ 4.5		Third Supplemental Indenture by and between TravelCenters of America LLC and U.S. Bank National Association, as trustee, dated as of October 5, 2015 (Incorporated by reference to Exhibit 4.1 to our Registration Statement on Form 8-A (File No. 001-33274) filed October 5, 2015)

~~Exhibit~~ 4.6		Fourth Supplemental Indenture by and between TravelCenters of America Inc. (as successor by statutory conversion to TravelCenters of America LLC) and U.S. Bank National Association, as trustee, dated as of August 1, 2019 (Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed August 1, 2019)

~~Exhibit~~ 4.7		Form of 8.25% Senior Notes due 2028 (included in Exhibit 4.3 above)

~~Exhibit~~ 4.8		Form of 8.00% Senior Notes due 2029 (included in Exhibit 4.4 above)

~~Exhibit~~ 4.9		Form of 8.00% Senior Notes due 2030 (included in Exhibit 4.5 above)

~~Exhibit~~ 10.1		TravelCenters of America Inc. Second Amended and Restated 2016 Equity Compensation Plan, as amended (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed ~~on May 22, 2020)~~June 11, 2021)

~~Exhibit~~ 10.2		~~Summary of~~ Director Compensation Arrangements (Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed ~~on May 22, 2020)~~June 11, 2021)

~~Exhibit 10.3~~	~~Purchase Agreement, dated as of June 28, 2020, by and between TravelCenters of America Inc. and Service Properties Trust (filed herewith)~~

~~Exhibit 10.4~~31.1	~~Purchase Agreement, dated as of June 28, 2020, by and between TravelCenters of America Inc. and The RMR Group LLC (filed herewith)~~

~~Exhibit 31.1~~	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith)

~~Exhibit~~ 31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (filed herewith)

~~Exhibit~~ 32.1		Section 1350 Certification of Chief Executive Officer and Chief Financial Officer (furnished herewith)

~~Table of Contents~~


~~Exhibit~~ 101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

~~Exhibit~~ 101.SCH						XBRL Taxonomy Extension Schema Document (filed herewith)

~~Exhibit~~ 101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)

~~Exhibit~~ 101.DEF						XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)

~~Exhibit~~ 101.LAB						XBRL Taxonomy Extension Label Linkbase Document (filed herewith)

~~Exhibit~~ 101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)

Table of Contents


~~Exhibit~~ 104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

4034

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

TravelCenters of America Inc.

By:

/s/ Peter J. Crage

Date:

August ~~5, 2020~~3, 2021

Name:

Peter J. Crage

Title:

Executive Vice President,
Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)

4135


	June 30, 2020		December 31, 2019
Assets:
Current assets:
Cash and cash equivalents	$	142,786	$	17,206
Accounts receivable (net of allowance for doubtful accounts of $1,405 and $1,083 as of June 30, 2020 and December 31, 2019, respectively)	118,511		173,496
Inventory	162,710		196,611
Other current assets	26,915		32,456
Total current assets	450,922		419,769

Property and equipment, net	841,669		868,503
Operating lease assets	1,782,222		1,817,998
Goodwill	22,213		25,259
Intangible assets, net	19,321		20,707
Other noncurrent assets	84,210		78,659
Total assets	$	3,200,557	$	3,230,895

Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable	$	146,566	$	147,440
Current operating lease liabilities	108,627		104,070
Other current liabilities	160,415		138,455
Total current liabilities	415,608		389,965

Long term debt, net	337,903		329,321
Noncurrent operating lease liabilities	1,827,113		1,880,188
Other noncurrent liabilities	61,648		58,885
Total liabilities	2,642,272		2,658,359

Stockholders' equity:
Common stock, $0.001 par value, 216,000 and 16,000 shares of common stock authorized as of June 30, 2020 and December 31, 2019, respectively, and 8,298 and 8,307 shares of common stock issued and outstanding as of June 30, 2020 and December 31, 2019, respectively	8		8
Additional paid-in capital	700,619		698,402
Accumulated other comprehensive loss	(190)		(172)
Accumulated deficit	(143,622)		(127,185)
Total TA stockholders' equity	556,815		571,053
Noncontrolling interest	1,470		1,483
Total stockholders' equity	558,285		572,536
Total liabilities and stockholders' equity	$	3,200,557	$	3,230,895


	June 30, 2020		December 31, 2019
Travel centers business	$	22,213	$	22,213
QSL business	—		3,046
Total	$	22,213	$	25,259


	SVC Leases⁽¹⁾		Other		Total
Years ended December 31:
2020	$	135,725	$	3,498	$	139,223
2021	270,799		6,344		277,143
2022	268,936		5,086		274,022
2023	255,344		3,168		258,512
2024	251,150		1,873		253,023
Thereafter	2,034,504		7,724		2,042,228
Total operating lease payments	3,216,458		27,693		3,244,151
Less: present value discount⁽²⁾	(1,303,375)		(5,036)		(1,308,411)
Present value of operating lease liabilities	$	1,913,083	$	22,657	$	1,935,740


Calendar Month	Number of Shares Purchased⁽¹⁾	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
April 2020	—	$	—	—	$	—
May 2020	12,047	9.73		—	—
June 2020	33,908	15.42		—	—
Total	45,955	$	13.93	—	$	—