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TRAVELCENTERS OF AMER ICAQ2 2018
Refuel. Replenish. Refresh.
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WA R N I N G C O N C E R N I N G F O RWA R D L O O K I N G S TAT E M E N T S
THIS PRESENTATION CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. WHENEVER TA USES WORDS SUCH AS "BELIEVE," "EXPECT," "ANTICIPATE," "INTEND," "PLAN," "ESTIMATE," "WILL," "MAY" AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, TA IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON TA'S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY TA'S FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS. EXCEPT AS REQUIRED BY LAW, TA DOES NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENT AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
THIS PRESENTATION CONTAINS NON‐GAAP FINANCIAL METRICS INCLUDING “ADJUSTED EBITDA” AND EBITDA IN THE EXHIBITS SECTION. RECONCILIATION FOR THOSE METRICS TO THE CLOSEST U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) ARE INCLUDED HERE TO.
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INVESTMENT HIGHLIGHTST R A V E L C E N T E R S O F A M E R I C A Q 2 2 0 1 8
Barriers to Entry
One of only three nationwide
operators of travel centers in the
United States.
Powerful Model
TA ‘s strategy has resulted
in increased nonfuel revenues
and site level operating leverage.
Right Strategy
Our full service approach is a
competitive advantage that
allows us to better address fleet
company and professional driver
challenges.
Improvement Plan
TA is focused on controlling costs
and managing capital expenditures
in 2018.
Commercial Opportunity
Trucking trends present an
opportunity for truck stop
companies with a full service
strategy. TA is positioned to help a
broader truck market.
Retail Opportunity
TA has identified operating
initiatives designed to ramp up
standalone convenience stores.
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ONE OF ONLY THREE NATIONWIDE OPERATORS OF TRAVEL CENTERS
IN THE UNITED STATES.
T R A V E L C E N T E R S O F A M E R I C A Q 2 2 0 1 8
TA’s business includes 257 full service travel centers, 230 standalone convenience stores and 46 standalone restaurants.
TA’s non‐fuel revenue comes from truck repair and maintenance, convenience and travel stores, casual dining restaurants, quick
service restaurants and a broad array of other amenities and services designed to appeal to the professional driver and other
highway travelers.
TA sells over‐the‐road diesel fuel, principally to long‐haul truckers at TA’s truck stops (under the “TA” and “Petro Stopping Centers” brands) and
gasoline at both truck stops and convenience stores. TA’s convenience stores sell branded gasoline and the stores themselves are primarily operated
under TA’s “Minit Mart” brand name.
22%
78%
LTM Fuel Gross Margin
LTM Nonfuel Gross Margin
$507,428
$39,878
$8,537
Travel Center
Convenience Store
Corporate & Other
Unless otherwise noted, data reflected in this presentation is as of 6/30/18(1) Reflects Consolidated Site level gross margin in excess of operating expenses
(2) The federal biodiesel tax credit of $23.3 million was not added in the fuel gross margin calculation
LTM SEGMENT MARGIN MIX (1) FUEL AND NONFUEL GROSS MARGIN MIX (2)
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THE TA FOOTPRINTT R A V E L C E N T E R S O F A M E R I C A Q 2 2 0 1 8
TA has the geographic footprint in place to support professional drivers and highway motorists.
More than 50% of TA’s travel centers are located in the 13 states with the highest concentration
of truck traffic.
(1) In addition to the 230 standalone Minit Mart locations, TA operates 256 convenience stores within the TravelCenters of America and Petro Stopping Centers travel center locations. 74 of these 256 convenience stores carry the “Minit Mart” brand name.
(2) Source: Bureau of Transportation Statistics 2012 Commodity Flows Survey. Freight activity is ranked by dollar value of total shipment.
More than 50% of TA’s travel centers are located in the 13 states with the highest concentration
of truck traffic.
State (2)
Texas 1 23California 2 13Illinois 3 11Ohio 4 15Pennsylvania 5 11NY, NJ, FL, MI, GA, IN, NC, LA 6-13 59
Total 132
U.S. Freight Activity Rank
# of TA / Petro Sites
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LARGE SITES
‐A typical site includes ~200 truck parking spaces on ~26 acres that provides more parking, showers, laundry, business center services, fitness and entertainment options than primary competitors.
STORE
‐Fresh Food Offerings.‐Premium Coffee.‐Tobacco.‐Lottery.‐Driver & Cab Retail Items.‐Scales.
TRUCK SERVICE
‐Nationwide Truck Maintenance & Repair.‐Roadsquad: Roadside Emergency Service & Call Center Services.‐OnSITE: TA Truck Service on site.‐Commercial Tire Network: Independent Tire Dealer.
FOOD SERVICE
‐247 Casual Dining Restaurant.‐689 Quick Service Restaurant(s) "QSR“.‐Grab N Go options.‐Two proprietary casual dining brands Iron Skillet & Country Pride, fast casual offerings like Bob Evans and Fuddruckers.‐49 QSR Brands.
ABOVE THE COMPETITIONT R A V E L C E N T E R S O F A M E R I C A Q 2 2 0 1 8
For 45 years, TA has been focused on full service due to the value it brings customers and TA. Our two competitors recognize this and they are trying to catch up.
SMALLER SITESA typical site includes ~80 truck parking spaces on ~9‐13 acres with fewer services and food service choices.
C OM P E T I TO R S I T E S
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SOLID LONG TERM INDUSTRY OUTLOOKT R A V E L C E N T E R S O F A M E R I C A Q 2 2 0 1 8
In absolute terms, while trucks' share of total tonnage is projected to decline, its total volume transported is projected to increase substantially more than any other transportation mode.
TA’s primary focus has been to provide fuel and nonfuel products and services to long haul truck drivers.
3.6MIL ARE CLASS 8 TRUCKS
Of which
~ 1 MIL ARE LONG HAUL TRUCKS
31 MIL COMMERCIAL TRUCKS
Of which
TRUCKLOAD (“TL”) VOLUME (1)TRUCKS’ SHARE OF TOTAL TONNAGE (1)
Truckload tonnage growth reflects the anticipated performance of key commodities and freight‐market
segments.
70.7%
67.9%67.1%
2017 2023 2028
TRUCKS SHARE OF TOTAL FREIGHT REVENUE (1)
EstimatedAverage Annual Expansion.
(1) American Trucking Associations: The U.S. Freight Transportation Forecast.
American Trucking Associations & TA estimates.
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In many cases, fleets are looking for solutions like TA to help them maximize driver retention.
T R A V E L C E N T E R S O F A M E R I C A Q 2 2 0 1 8
DRIVER SHORTAGE
2011 2016 2017
Overall Best Truck Stop Experience 3 to 1 5 to 1 6 to 1Most Comprehensive Driver Services 4 to 1 5 to 1 7 to 1
Parking Lots Largest 3 to 1 7 to 1 8 to 1Easiest to Maneuver 3 to 1 6 to 1 7 to 1
Restaurants Best Overall Experience - 5 to 1 8 to 1Best Overall Food 4 to 1 6 to 1 7 to 1
Truck Repair & Best Overall Maintenance Shops 4 to 1 4 to 1 4 to 1Maintenance Most Complete Services 5 to 1 7 to 1 8 to 1
Best Roadside Assistance ‐ 4 to 1 4 to 1Most Skilled and Best Equipped for New Truck Technologies ‐ 6 to 1 7 to 1
Driver Preference for TA and Petro vs. Next Closest Truck Stop Brand
Area Category
(1) American Trucking Associations:.
There is a driver shortage in the for‐hire truckload industry(1). Increasing federal regulation and restrictions are contributing to the shortage and affecting driver/fleet profitability:
DRIVER HOURS OF SERVICE
ELECTRONIC LOGGING DEVICES
PENALTIES FOR PARKING ILLEGALLY+ +
= Fleets Are Looking For Solutions To Increase Driver Satisfaction + Driver EfficiencyWhich Can Help Retain Drivers.
SAFETY REGULATION ENFORCEMENT +
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Average Annual Expansion.
LESS‐THAN‐TRUCKLOAD‐VOLUME (“LTL”)
THE CHANGING LANDSCAPET R A V E L C E N T E R S O F A M E R I C A Q 2 2 0 1 8
The maturation of online spending continues and this is contributing to how goods are trucked. It is expected there will be more trucks delivering more packages via shorter hauls. These deliveries are occurring through LTL, TL with LTL capabilities and private truck companies at the expense of certain
long hauls. (1) But TL carriers are expected to remain significant.
GROWTH IN LESS‐THAN‐TRUCKLOAD (“LTL”) TONNAGE (2)
2018 2023 2028
153.4million
179.1million
206.9million
50% 50% 50%
49% 49% 48%
1% 1% 2%
0%
20%
40%
60%
80%
100%
120%
2018 2023 2028
TRUCKLOAD TONNAGE (2)
Less‐than‐Truckload
Truckload
Private Truck
(1) Stifel Nicolaus(2) American Trucking Associations: The U.S. Freight Transportation Forecast.
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NEW SOLUTIONS. NEW CUSTOMERS.T R A V E L C E N T E R S O F A M E R I C A Q 2 2 0 1 8
TA is investing in truck service to (1) meet the expanding needs of TA’s traditional customers as they participate in long haul and LTL deliveries and
(2) to expand the universe of customers TA is able to serve.
TRADITIONAL CUSTOMERS: SOLUTIONS FOR CLASS 8 TRUCKS AT TERMINALS AND TRAILER
YARDS.
TRADITIONAL CUSTOMERS: EXPAND CUSTOMER COVERAGE TO INCLUDE CLASS 4‐7 TRUCKS.
NONTRADITIONAL CUSTOMERS: PRIVATE, FOR‐HIRE FLEETS AND SMALL‐TO‐MEDIUM BUSINESSES
WITH CLASS 4‐7 TRUCKS.
TA Truck Service, Commercial Tire Network, OnSITE and RoadSquad provide traditional and nontraditional
customers with a single source, nationwide solution for tires, quality parts, maintenance and repair services without
limitation to where or when the service is performed.
Commercial Strategy: Diesel Fuel and Truck Service
These initiatives as well as TA’s retail and restaurant initiatives should lead to higher growth rates for 2018 versus 2017 for our consolidated nonfuel revenues and our site level gross margin in
excess of operating expenses in the travel center segment.
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ServiceOnSit e
TRUCK SERVICE: ONSITE T R A V E L C E N T E R S O F A M E R I C A Q 2 2 0 1 8
Extend maintenance, repair and inspection solutions beyond TA’s truck bays with TA vehicles going to the customer.
Commercial Strategy: Diesel Fuel and Truck Service
Service Locations
Truck & Trailer Maintenance, ELD Installations, Trailer Rebranding, Trailer Repairs,
GPS Installation, DOT inspection, Certifications.
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ServiceCommercial Tire Net workOnSit e
TRUCK SERVICE: COMMERCIAL TIRE NETWORKT R A V E L C E N T E R S O F A M E R I C A Q 2 2 0 1 8
Provide brands and capabilities of a tire dealer at customer locations.
Commercial Strategy: Diesel Fuel and Truck Service
Service Locations
Independent Tire Dealer, Multiple Tire and Retread Brands, Location Deliveries, Casing Program Management.
Truck & Trailer Maintenance, ELD Installations, Trailer Rebranding, Trailer Repairs,
GPS Installation, DOT inspection, Certifications.
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ServiceCommercial Tire Net workOnSit eRoadSquad
TRUCK SERVICE: ROADSQUADT R A V E L C E N T E R S O F A M E R I C A Q 2 2 0 1 8
Provide emergency service call center support and tire and roadside truck repair service 24/7/365.
Commercial Strategy: Diesel Fuel and Truck Service
Independent Tire Dealer, Multiple Tire and Retread Brands, Location Deliveries, Casing Program Management.
Service Locations
Truck & Trailer Maintenance, ELD Installations, Trailer Rebranding, Trailer Repairs,
GPS Installation, DOT inspection, Certifications.
RoadSide Assistance, Call Center, Tire & Repair, Shift Support, Maintenance Centralization
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PROFILET R A V E L C E N T E R S O F A M E R I C A Q 2 2 0 1 8
3.6MIL ARE CLASS 8 TRUCKS
Of which
~ 1 MIL ARE LONG HAUL TRUCKS
31 MIL COMMERCIAL TRUCKS
Of which
A company responsible for thousands of utility trucks utilize terminals across the country to service their boom and lift equipment. They are pleased to meet a coast to coast provider that can perform traditional chassis work. Altec also needs help
debranding and inspecting vehicles being turned in from leasing programs.
Combining services like fuel, roadside emergency repair and call center support so a fleet can devote resources to its
core business.
C U S T O M E R
C U S T O M E R
Commercial Strategy: Diesel, Fuel and Truck Service
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R E S E R V E I T
Expand Reserve It! Parking at truck stops.
E X P E R I E N C EOptimizing Store Layouts.
RETAIL OPERATIONST R A V E L C E N T E R S O F A M E R I C A Q 2 2 0 1 8
Roll out Minit Mart Rewards program 1H 2018.
These initiatives as well as TA’s restaurant and truck service initiatives should lead to higher growth rates for 2018 versus 2017 for our consolidated nonfuel revenues and our site level gross margin in excess of operating expenses in the travel center segment.
L O YA LT Y M E R C H A N D I S E
Match Products to Market by Volume and Demographic.
Retail Strategy: Gas, Retail Operations and Restaurants
In addition to the things we do every day to manage retail operations at our travel centers and standalone convenience stores, TA is focused on a
number of initiatives to drive growth and improvement in 2018.
Expand and improve gaming operations in states in which we
operate gaming terminals.
V I D E O G AM I N GPartner with Community
and increase online sales (pizza programs etc).
O N L I N E
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RESTAURANTST R A V E L C E N T E R S O F A M E R I C A Q 2 2 0 1 8
F U L L S E R V I C E R E S TAU R A N T S
Replace Casual Dining Restaurant Brand with better known Consumer Brand.
Optimize Operating Hours and Labor Costs.
P R O C E S S I M P ROV EM E N T
Add QSR restaurants at Travel Centers.
Replace QSR brand at Convenience Stores.
Q U I C K S E R V I C E R E S TAU R A N T S
Retail Strategy: Gas, Retail Operations and Restaurants
TA ‘s Restaurant Group is focused on attracting more consumers and managing costs.
Utilize new technology to better manage food and labor costs.
These initiatives as well as TA’s truck service and retail initiatives should lead to higher growth rates for 2018 versus 2017 for our consolidated nonfuel revenues and our site level gross margin in excess of operating expenses in the travel center.
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POWERFUL MODELT R A V E L C E N T E R S O F A M E R I C A Q 2 2 0 1 8
Focused on Expanding TA’s Full Service Strategy
Consolidated Same Site Nonfuel Revenue As Reported
55.5%55.0%
55.6%55.3%
56.4%56.4%
55.9%55.5%
55.0%
55.6%55.3%
56.4%
55.9%
58.1%
52.0%
54.0%
56.0%
58.0%
60.0%
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
(Millions)
Consolidated Same Site Nonfuel Revenue As Reported Consolidated Same Site Nonfuel Margin As Reported
$1,698‐0.1%
‐ ‐
$1679+5%
$1,354+3% $1,289
+3%
$1482+4%
$1,836‐‐%
$1,002+3%
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22.0
26.0
30.0
34.0
38.0
42.0
46.0
50.0
54.0
Nonfuel Gross Margin Cents per Gallon ("NF CPG") (1) (Cents)
POWERFUL MODELT R A V E L C E N T E R S O F A M E R I C A Q 2 2 0 1 8
TA’s growth programs and sales strategies have helped nonfuel gross margin per gallon profitability increase over time.
54.9
36.3
CAGR4.0%
(1) Reflects As Reported Nonfuel Gross Margins.
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OPERATING LEVERAGET R A V E L C E N T E R S O F A M E R I C A Q 2 2 0 1 8
Growing Core Full Service Business Faster than We’re Spending.
51.8%
51.4%
50.1%50.0% 50.4%
48.6%
47.3%
$400
$800
$1,200
$1,600
$2,000
$2,400
2013 2014 2015 2016 2017 Q22017
Q22018
Consolidated Nonfuel Revenue (Same Site) Consolidated Site Level Operating Expenses as a Percentage of Nonfuel Revenue (Same Site)
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IMPROVEMENT PLANT R A V E L C E N T E R S O F A M E R I C A Q 2 2 0 1 8
C O N T RO L C O S T S2 0 1 8
Site Level Operating Expense:‐ Ctuit implementation
‐ IT/Automation ‐Site level labor efficiencies
Depreciation and Amortization Expense:‐ Project & capital expenditure completions
M A N AG E S P E N D I N G2 0 1 8
Opportunistic Travel Center Acquisitions.
Estimate Sustaining Capital Amounts of ~$55 million.
Expect improvement sales at leased HPT sites of ~$50 million.
Maintain net Capital Expenditure amounts (Sustaining Capital + Internal Growth Capital – HPT improvement sales) similar to
2017.
As programs to drive nonfuel revenues and control costs progress, TA believes site level operating expenses as a percentage of nonfuel revenues may decrease.
While TA positions itself to compete in a broader market, the company is focused on managing costs and expenditures.
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Exhibits
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EXHIBIT A
(1) See Exhibit B for a reconciliation of EBITDA to net income.
2018 2017($ in thousands)Revenues: Fuel 1,297,721$ 976,219$ Non fuel 538,863 518,768 Rent and royalties 4,101 4,772 Total revenues 1,840,685 1,499,759
Gross margin: Fuel 88,792 91,764 Non fuel 310,829 294,175 Rent and royalties 4,101 4,772 Total gross margin 403,722 390,711
Site level operating expense 256,284 252,946 Selling, general & administrative 29,959 38,299 Rent expense 71,257 69,144 Depreciation and amortization 29,198 28,649 Impairment of goodwill 51,500 - EBITDA (1) 45,314$ 31,184$
Net income (loss) attributable to common (33,978)$ (2,986)$ shareholdersNet income (loss) per share (0.85)$ (0.08)$
Consolidated Statements of Operations
Three Months Ended June 30,
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EXHIBIT B
1) Incremental share based compensation expense. As part of TA's retirement agreements with certain former officers, TA agreed to accelerate the vesting of previously granted share awards. Thisacceleration resulted in incremental share based compensation expense of $1.0 million and $2.1 million for the three and six months ended June 30, 2018, respectively, and $0.1 million and $0.3 million forthe three and six months ended June 30, 2017, respectively, as compared to what TA would have expensed in the absence of these retirement agreements.2) Comdata legal expenses. During the three and six months ended June 30, 2018, TA incurred $37 thousand and $0.1 million, respectively, of legal fees in its litigation with Comdata. During the three andsix months ended June 30, 2017, TA incurred $2.5 million, and $8.9 million, respectively, of legal fees in its litigation with Comdata. TA's attorneys' fees and costs related to this matter totaled $10.6 millionthrough June 30, 2018. On April 9, 2018, the Court of Chancery of the State of Delaware, or the Court, entered its final order and judgment, or the Order. Pursuant to the Order, Comdata was required to,among other things, reimburse TA for attorneys' fees and costs, together with interest, in the amount of $10.7 million, which TA collected in May 2018. As a result, TA recognized a $10.1 million reduction inselling, general and administrative expenses and $0.6 million of interest income for the three and six months ended June 30, 2018.3) Comdata excess transaction fees. From February 1, 2017, until mid‐September 2017, Comdata unilaterally withheld increased fees from transaction settlement payments due to TA under an agreementbetween TA and Comdata under which TA agreed to accept Comdata issued fuel cards through January 2, 2022, for certain purchases by TA's customers in exchange for fees payable by TA to Comdata, orthe Merchant Agreement. During the three and six months ended June 30, 2017, TA incurred $2.8 million and $4.6 million, respectively, of excess transaction fees. On September 11, 2017, the Court issuedits post‐trial Memorandum Opinion. The Court found that TA was entitled to, among other things, an order requiring Comdata to specifically perform under the Merchant Agreement, and awardeddamages to TA and against Comdata for the difference between the higher transaction fees paid to Comdata since February 1, 2017, and what TA would have paid during this period under the fee structurein the Merchant Agreement. In November 2017, TA recovered $6.9 million for the amount of excess transaction fees.4) Federal biodiesel tax credit. On February 8, 2018, legislation was passed that retroactively reinstated the 2017 federal biodiesel tax credit. The federal biodiesel tax credit for 2017 was $23.3 million andwas recognized in the six months ended June 30, 2018.
($ in thousands) 2018 2017
Net Loss $ (33,924) (2,939) Less: Benefit for income taxes (9,040) (2,364) Add: Depreciation and amortization 29,918 28,649 Add: Interest expense, net 6,860 7,838 Add: Impairment of goodwill 51,500 —
EBITDA $ 45,314 $ 31,184 Add: Incremental share based compensation 1,039 113 expense(1) - - (Less) add: Comdata legal expenses(2) (10,045) 2,527 Add: Comdata excess transaction fees(3) - 2,798 Less: Federal biodiesel tax credit(4) - —
Adjusted EBITDA $ 36,308 $ 36,622
Calculation of EBITDA:
Consolidated Calculation of EBITDA
Three Months Ended June 30,
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EXHIBIT C
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EXHIBIT D
($ in thousands)AssetsCash and Cash equivalents 78,189$ 36,082$ Accounts receivable, net 162,588 125,501 Inventory 216,063 209,640 Other current assets 26,446 27,295 Total current assets 483,286 398,518
Property and equipment, net 980,894 1,001,090 Goodwill 43,099 93,859 Other noncurrent assets 101,688 90,282 Total assets 1,640,913$ 1,618,132$
Liabilities and Shareholders' EquityAccounts payable 193,232$ 155,581$ Current HPT Leases liabilities 41,693 41,389 Other current liabilities 162,388 130,328 Total current liabilities 397,313 327,298
Long term debt, net 320,077 319,634 Noncurrent HPT Leases liabilities 361,413 368,782 Other noncurrent liabilities 35,743 35,923 Total liabilities 1,114,546 1,051,637
Shareholders' equity (39,771 and 39,984 common shares outstanding 526,367 566,495 at June 30, 2018 and December 31, 2017, respectively)Total liabilities and shareholders' equity 1,640,913$ 1,618,132$
June 30, 2018
June 30, 2017
Consolidated Balance Sheet