UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 or

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 ☐

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'sregistrant’s shares of common stock outstanding as of May 2, 2022: 14,836,676.April 20, 2023: 15,099,648.

PART I.  FINANCIAL INFORMATION

TravelCenters of America Inc.

Consolidated Balance Sheets (Unaudited)

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

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

TravelCenters of America Inc. is a Maryland corporation. As of March 31, 2022,2023, we operated or franchised 281286 travel centers, three standalone truck service facilities and aone standalone 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 March 31, 2022,2023, our business included 276286 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“TravelCenters of America," "TA," "TA” “TA,” “TA Express," "Petro” “Petro Stopping Centers"Centers” and "Petro"“Petro” brand names. Of these travel centers, we owned 51,56, we leased 181, we operated 2two for a joint venture and 4247 were owned or leased from others by our franchisees. We operated 232239 of our travel centers and franchisees operated 4447 travel centers, including 2 we leased to franchisees.centers. 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.

We manage our business as 1one 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. On March 2, 2022, we entered an agreement to sell our Canadian travel center for C$26,000 (approximately US$20,000), excluding costs to sell and certain closing adjustments. See Note 3 of this Quarterly Report for more information about the potential sale of this travel center.

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, 2021,2022, 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 current economic conditions have, and may in the future, significantly alter the seasonal aspects of our business. 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.

As a result of the Merger, at the effective time of the Merger, or the Effective Time, each share of our common stock outstanding immediately prior year amountsto the Effective Time (other than shares of our common stock (i) owned by BP or Merger Subsidiary immediately prior to the Effective Time, or (ii) held by any subsidiary of ours or BP (other than Merger Subsidiary) immediately prior to the Effective Time), will be converted into the right to receive $86.00 in cash, without interest, or the Merger Consideration.

We have been reclassifiedmade customary representations and warranties in the Merger Agreement and have agreed to customary covenants regarding the operation of our business prior to the Effective Time.

The Merger Agreement contains certain termination rights for us and BP. Upon termination of the Merger Agreement in accordance with its terms, under certain specified circumstances, we will be required to pay BP a termination fee in an amount equal to $51,900, including if the Merger Agreement is terminated due to our consolidated financial statements.acceptance of an unsolicited superior proposal or due to our board of directors changing its recommendation to our stockholders to vote to approve the Merger Agreement. The Merger Agreement further provides that BP will be required to pay us a termination fee in an amount equal to $90,900 in the event the Merger Agreement is terminated under certain specified circumstances and receipt of antitrust approval has not been obtained by such time. Subject to certain exceptions and limitations, either party may terminate the Merger Agreement if the Merger is not consummated by November 15, 2023, subject to (x) an automatic 90-day extension and (y) an additional 90-day extension under certain circumstances.

Fair Value Measurement

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 2 input), the aggregate fair value of our Senior Notes on March 31, 2022,2023, was $337,592.$333,996.

Recently Issued Accounting Pronouncement and Other Accounting Matters

The following table summarizes recent accounting standard updates, or ASUs, issued by the Financial Accounting Standards Board, or FASB, that could have an impact on our consolidated financial statements.

We recognize revenues based on the consideration specified in the contract with the customer, excluding anyless estimates for variable consideration (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 retailtravel center locations. Revenues consist of fuel revenues, nonfuel revenues and rents and royalties from franchisees.

Disaggregation of Revenues

As of the travel center in AprilDecember 31, 2022, weour contract liability balances (for customer loyalty programs, deferred franchise fees and gift cards) totaled $32,132, of which $27,807 was recognized $300 of expense for employee termination benefits for theas revenue during three months ended March 31, 2022. These expenses were included2023. As of March 31, 2023, our contract liabilities totaled $31,889 and are presented in site level operating expense in our consolidated statements of operations and comprehensive income (loss). We expect to recognize an additional $75 of exit costs, primarily employee termination benefits, related to these actions in the second quarter of 2022. We expect to pay these employee termination benefits by the end of the second quarter of 2022.

As a Lessee

We have lease agreements covering many of our properties, as well as various equipment, with the most significant leases being our 5five 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.

We recognized total real estate rent expense under the SVC Leases of $63,907$63,601 and $61,003$63,907 for the three months ended March 31, 20222023 and 2021,2022, respectively. Included in these rent expense amounts are percentage rent payable of $2,499$2,385 and $1,386$2,499 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 for each of the three months ended March 31, 2022 and 2021, andnet adjustments to record minimum annual rent on a straight line basis over the terms of the leases, andthe estimated future payments by us for the cost of removing underground storage tanks on a straight line basis and the benefit of $444 and $480 for the three months ended March 31, 2022 and 2021, respectively.other lease incentives. As of March 31, 2022,2023, the present value of the estimated future payments related to these underground storage tanks were $25,943$27,775 and are recorded in other noncurrent liabilities on our consolidated balance sheets. TheAs of December 31, 2022, the remaining balance of our deferred rent obligations was $17,615 as of March 31, 2022$4,404 and is scheduled to be fullywe paid bythat amount in January 31, 2023.

As of March 31, 2022,2023, our aggregate annual minimum rent payable to SVC under the SVC Leases was $243,914. 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 not sell to SVC any improvements we made to properties leased from SVC for the three months ended March 31, 20222023 and 2021.2022.

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 $423$576 and $487$423 for the three months ended March 31, 20222023 and 2021,2022, respectively.

Lease Costs

Our lease costs are included in various balances in our consolidated statements of operations and comprehensive (loss) income, (loss), as shown in the following table. For the three months ended March 31, 20222023 and 2021,2022, our lease costs consisted of the following:

The weighted average remaining lease term for our operating leases as of March 31, 2022,2023, was approximately 1110 years. Our weighted average discount rate for our operating leases as of March 31, 2022,2023, was approximately 9.1%.

During the three months ended March 31, 20222023 and 2021,2022, we paid $70,371real estate rent payments of $70,693 and $70,161,$70,371, respectively, for amounts that had been included in the measurement of our operating lease liabilities.

The weighted average remaining lease term for our finance leases as of March 31, 2022,2023, was approximately 108 years. Our weighted average discount rate for our finance leases as of March 31, 2022,2023, was approximately 4.3%.

During the three months ended March 31, 20222023 and 2021,2022, we paid $1,035$1,818 and $396,$1,035, respectively, for amounts that had been included in the measurement of our finance lease liabilities.

We leased 2During 2022, we acquired the operating assets related to two travel centers we previously leased to franchisees as of March 31, 2022 and 2021.franchisees. Rent revenues from these operating leases totaled $595 and $584 for the three months ended March 31, 2022 and 2021, respectively. Future minimum lease payments due to us for the 2 leased sites under these operating leases as of March 31, 2022, were $595 for the remainder of 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. We also lease portions of owned properties to third parties to operate other retail operations.

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 of $3,639$3,544 and $2,935$3,639 for the three months ended March 31, 2023 and 2022, and 2021, respectively, which included reimbursements for our share of RMR's costs for providing internal audit services.respectively. These amounts are included in selling, general and administrative expense in our consolidated statements of operations and comprehensive income (loss). income. For more information about our relationship with RMR, see Note 76 of this Quarterly Report and our Annual Report.

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 1one of our Managing Directors, Adam D. Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of The RMR Group Inc., the chair of the board of directors, 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'sSVC’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 board and as a managing director or managing trustee of these public companies, including SVC. Other officers of RMR, including certain of our officers, serve as managing trustees managing directors or officers of certain of these companies.

As of March 31, 2022,2023, Mr. Portnoy beneficially owned 659662 shares of our common stock (including indirectly through RMR), representing approximately 4.4% of our outstanding shares of common stock.

Relationship with SVC

We are SVC'sSVC’s largest tenant and SVC is our principal landlord and second largest stockholder.a significant stockholder of ours. As of March 31, 2022,2023, SVC owned 1,185 shares of our common stock, representing approximately 8.0%7.8% of our outstanding shares of common stock. As of March 31, 2022,2023, we leased from SVC a total of 179177 travel center properties under the SVC Leases. See Note 54 of this Quarterly Report for more information about our lease agreements with SVC.

Our Manager, RMR

RMR provides certain services we require to operate our business. We have a business management agreement with RMR to provide management services to us, which relates to various aspects of our business generally. See Note 65 of this Quarterly Report for more information about our business management agreement with RMR.

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

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. Investigation and remediation of both surface spills and subsurface releases is handled by contracted third party consultants and managed by TA's Environmental Department. 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.

As of March 31, 2022,2023, we had an accrueda current liability of $3,090$2,572 and a noncurrent liability of $1,068 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 $749, resulting in an estimated net amount of $2,341 that we expect to fund in the future.$578. 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 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. Our current insurance policy expires in June 2024 and we can provide no assurance that we will be able to maintain similar environmental insurance coverage in the future on acceptable terms.

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 and our directors are also involved in litigation related to the Merger and certain of our disclosures about the Merger. 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.

The following discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere in Part I, Item 1 of 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, 2021,2022, or our Annual Report. Unless indicated otherwise, amounts are in thousands of dollars, shares of common stock or gallons, as applicable, unless indicated otherwise.applicable.

TravelCenters of America Inc. is a Maryland corporation,corporation. As of March 31, 2022,2023, we operated or franchised 276286 travel centers, fourthree standalone truck service facilities and one standalone 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 havemade customary representations and warranties in the Merger Agreement and agreed to customary covenants regarding the operation of our business and the business of our subsidiaries prior to the Effective Time.

The Merger Agreement also includes a single travel center locatedcovenant requiring us not to solicit any acquisition proposal, and, subject to certain exceptions, not to enter into or participate or engage in any discussions or negotiations with, related to an acquisition proposal or enter into any letter of intent, acquisition agreement or other similar agreement relating to an acquisition proposal. Further, our Board of Directors will not withhold, withdraw, amend or modify, or publicly propose to do any of the foregoing, its recommendation in a foreign country, Canada, that we do not consider materialmanner adverse to BP, adopt, approve or recommend to our operations. On March 2, 2022,stockholders an acquisition proposal, fail to reaffirm its recommendation within ten business days following BP’s written request, fail to recommend against acceptance of a tender or exchange offer for shares of our common stock within ten business days after the commencement thereof, nor fail to include its recommendation in the proxy statement that will be prepared in connection with the company stockholder meeting,

Subject to the Consolidated Financial Statements includedsatisfaction of the remaining conditions to the closing of the Merger, we expect the closing of the transactions contemplated by the Merger Agreement to occur by May 15, 2023.

The foregoing description of the Merger Agreement does not purport to be complete and is qualified in Item 1. of this Quarterlyits entirety by reference to the Merger Agreement, which was filed as Exhibit 2.1 to a Current Report for more information abouton Form 8-K we filed with the potential sale of this travel center.Securities and Exchange Commission, or SEC, on February 16, 2023.

Economic Conditions

The United States economy has experienced high inflation duringsince the first quarterbeginning of 2022 and there are market expectations that inflation may remain at elevated levels for a sustained period. In addition, global supply chain challenges that were experienced during the second half of 2021 have continued in 2022. Also, laborLabor availability has continued to be constrained and market labor costs have continued to increase and may further increase. The U.S. Federal Reserve Board also increased interest rates multiple times since early 2022, with the most recent increase occurring in March 2023. Recent developments in the financial markets has also added another element of uncertainty. These factorsconditions may give rise to an economic slowdown, including as the U.S. Federal Reserve Board increases interest rates, which it has announced an intention to do. These conditions have increasedand perhaps a recession, and could further increase our costs. However, these conditions and other factors, as further noted below, have increased the price of and created a volatile market for oil, diesel fuel and gasoline, which has increasedcosts and/or impact our fuel revenues and also increased fuel margins during the first quarter of 2022.revenues. It is unclear whether the current economic conditions and government responses to these conditions, including inflation, increasing or sustained high interest rates, the continuing war between Russia and Ukraine and high fuel prices, will result in an economic slowdown or recession in the United States. If that occurs, demand for the transporting of products across the United States by trucks may decline, possibly significantly. If that occurs,which may significantly adversely impact our business, results of operations and financial position may be adversely impacted.position.

During the three months ended March 31, 2022 and 2021, weWe generated incomea loss before income taxes of $21,153 and a loss of $6,593, respectively. The $27,746 change in income before income taxes was primarily due to site level gross margin in excess of site level operating expense increasing by $30,233, which primarily resulted from incremental margin due to increases in fuel revenues driven by favorable market conditions and nonfuel revenues primarily due to higher value work orders in Truck Services and the re-opening of more full service restaurants, partially offset by higher labor costs driven by wage increases and compensation programs and higher operating costs.

Effects of Fuel Prices and Supply and Demand Factors

Our fuel revenues and fuel gross margin 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 and perceived and/or real impacts on supply 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, as well as other actions by governments regarding trade policies, may impact fuel wholesale and retail prices. Further, there have been reports of reduced investment in oil exploration and production as a result of concerns about

decreased demand for oil in response to market and governmental factors, including increased demand for alternative energy sources in response to global climate change. These and other factors, particularlyfor example the ongoing Russia-Ukraine war between Russia and Ukraine and various country's economiccountries’ actions in response to that war, are believed to have contributed to recent fears of supply constraint and, as a result, increases in the cost of oil and other fossil energy sources. While the unprecedented fuel price volatility we experienced throughout 2022 has begun to stabilize, albeit not to typical historic levels, the lower volatility during the three months ended March 31, 2023 has put downward pressure on our fuel margins.

Although there are several components that comprise and impact our fuel product costs, of goods sold, including the cost of fuel, freight and mix, the cost of fuel is the primary factor. Over the past several years there have been significant changes in the cost of fuel. During the three months ended March 31, 2022,2023, average fuel prices trended upward, increasing 58.0%downward, decreasing 17.7% as compared to the beginning of the period.period, though still higher than typical historic levels. The average fuel price during the three months ended March 31, 2022,2023, was 84.1% higher7.6% lower than the average fuel price during the three months ended March 31, 2021.2022. These increasesdecreases in fuel prices were primarily due to milder weather conditions and softer demand during the first quarter 2022 and year over year were primarily dueof 2023, which contributed to higher inventory levels in the recent uncertaintyindustry. Uncertainty in fuel supply markets, impacted, at leaststill exists, however, in part, bylight of the continuing war between Russia and Ukraine and the various economic sanctions and other punitive measures the United States and many other companiescountries have taken against Russia in response, including with respect to Russian oil exports. This uncertainty also contributed to higher-than-normal fuel price volatilityexports and further cuts in the United States in the first quarter of 2022; however, favorable market conditions for certain purchasing arrangementsRussia's oil production and the significant index correlation of our fuel purchasing and sales contracts mitigated the potential downside risk of this volatility on our per gallon fuel margin this quarter.other factors. In the aggregate, we generally are able to pass changes in our cost for fuel products to our customers, but typically with timing differences associated with on-hand inventory, such that during periods of volatile and rising fuel commodity prices, fuel gross margin per gallon tends to be higher than it otherwise may have been and during periods of static and falling fuel commodity prices, fuel gross margin per gallon tends to be lower than it otherwise may have been. For example, steadily rising fuel prices typically improve short-term fuel margins due to the sell-through of lower cost inventory at current market prices. Increases in the prices we pay for fuel can increase our working capital requirements, however.

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 months ended March 31, 2022.margin. We therefore consider fuel sales volume and fuel gross margin to be better measures of our performance.

We experienced slightly lower fuel sales volumes during the three months ended March 31, 2023, as compared to the three months ended March 31, 2022. These decreases primarily resulted from a decline in market conditions within the freight industry in addition to the initial stabilization of the unprecedented fuel price volatility we experienced throughout 2022. Despite experiencing that decline in fuel sales volume, we believe that future demand for fuel by trucking companies and motorists for a constant level of miles driven will remain relatively unchanged in the near-term, subject to a possible economic recession or substantial economic downturn, but could continue to decline over time because of changes in trucking industry trends or consumer behavior due to inflationary pressures, technological innovations that improve fuel efficiency of motor vehicle engines, other fuel conservation practices and alternative fuels and technologies.  Although wetechnologies as well as possible further government regulation.  We believe these factors, combined with competitive pressures, impact the level of fuel sales volume we realize, fuel sales volume increased during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021. These 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 to increase our market share.

Growth Strategies

Our strategic transformationWe continue to prioritize and turnaround plan, or our Transformation Plan consists of numerousfocus on key initiatives across our organization forincluding top-line growth through high return capital investments, bottom-line growth through process improvement and cost discipline, continued introduction of efficient technology and systems and defining the purposefuture of expanding our travel center network, improving and enhancing operational profitability and efficiency, and strengthening our financial positionon-highway mobility through a commitment to energy alternatives, all in support of our core mission to return every traveler to the road better than they came. The growth strategies and plans discussed in this section are subject to change if the Merger is completed.

Our capital expenditures plan for 20222023 contemplates aggregate investments in the range of $175,000$135,000 to $200,000$150,000 and includes projects to enhance the guest experience through significant upgrades at our travel centers, the expansion of restaurants and food offerings and improvements to our technology systems infrastructure. Approximately 75%40% of our capital expenditures in 20222023 are focused on growth initiatives that we expect to meet or exceed our 15% to 20% cash on cash return hurdle.

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 and economic conditions have significantly altered the seasonal aspects of our business, and they may have similar impacts in the future.

Consolidated Financial Results