Pilot Flying J CFO Clarifies Company's Financial State

8/9/2013

KNOXVILLE, Tenn. -- Pilot Flying J has traveled a rough road over the past four months. Even so, the company's Chief Financial Officer Mitch Steenrod said the truck stop operator is holding up "pretty well" financially.

"Pilot Flying J may be losing a very small amount of volume to competition, but not much," Steenrod explained. "Our second quarter held up pretty well despite the situation we are managing. We were down approximately 0.5 percent in diesel volume in the second quarter vs. our budgeted diesel volume. Part of the volume decline is definitely due to a weaker-than-anticipated economic environment. In fact, [TravelCenters of America] just released its second-quarter earnings that reflected its second quarter same-store sales volumes were down 3.6 percent."

Steenrod addressed Pilot Flying J's financial state in a question-and-answer posting on the company's rebate education website, rebateeducation.pilotflyingj.com.

In response to a question concerning the amount of money the Knoxville-based company is repaying trucking companies affected by discrepancies in their fuel rebate contracts, the CFO said Pilot Flying J has enough cash available to meet its obligations and continues to grow through its capital spending program.

In addition, the business is generating operating cash similar to the months before the federal investigation into allegations of fraud in its fuel rebate program, the executive added.

Steenrod also said Pilot Flying J's debt is "substantially less" than what's been reported by various media outlets.

"Our debt level is well within the comfort zone. In fact, when you look at the market value of Pilot Flying J, the debt position is approximately about 40 percent of the value of the company," he explained. "Generally, businesses target a debt level of about 50 percent of the value of the enterprise. Pilot Flying J is well under the 50-percent debt to market value of capital level. The really important measure of a company is its cash flow to debt ratio and Pilot Flying J's numbers are well within the comfort zone."

Pilot Flying J is a family-owned business that operates more than 650 retail locations and is the largest operator of travel centers and travel plazas in North America.