TA Reports Mixed Q4, Full-Year Results
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TravelCenters of America reported fourth-quarter net income with a significant increase in fuel gross margin, but revenue dipped. It posted similar full-year results.
For the quarter ended Dec. 31, net income climbed to $43.1 million, or $5.29 per share, on revenue of $1.52 billion. That compares with a net loss of $5.92 million, or a loss of 74 cents, on revenue of $1.53 billion in the same period in 2018.
The Westlake, Ohio-based company reported fuel gross margin for the fourth quarter increased by $61.8 million, or 71.9%, as compared with the 2018 fourth quarter primarily due to the $70.2 million benefit from the federal biodiesel blenders’ tax credit that was retroactively reinstated for 2018 and 2019 and recognized in December 2019. Also, there was a 5.3% increase in fuel sales volume and a more favorable fuel purchasing environment in the 2019 fourth quarter as compared to the 2018 fourth quarter.
TA Express in Salina, Utah. (TravelCenters of America)
The increase was partially offset by the higher cost associated with increased rewards under TA’s customer loyalty program to incentivize drivers to purchase higher fuel volume.
Sales of diesel in the quarter climbed to 423.9 million gallons compared with 400.5 million a year earlier. Gasoline sales climbed to 73.2 million gallons compared with 71.6 million in the 2018 period.
CEO Jon Pertchik joined the company in December. Since then, he said he has met with stakeholders, customers, partners and vendors, and even TA’s founder. He visited sites and met with hundreds of employees from all over the country at varying levels.
“From these conversations, I believe TA has the appropriate full-service business model to build and retain a loyal customer base among trucking fleets and professional drivers, as well as an opportunity to become more attractive to nonprofessional drivers and four-wheel traffic,” Pertchik said.
“Our large well-located sites provide the ability to capitalize on the unmet demand for 18-wheel parking, as well as provide flexibility to evolve and change as the industry changes. Our repair business particularly for offering relatively more involved services is the best in the industry,” he added.
At the same time, he said the company’s “significant challenges” included: expense growth that has outsized revenue growth, no centralized procurement function, aging full-service restaurant concepts, inconsistent retail and merchandising experiences, and a lack of singular mission, vision and values.
“Also, our hallmark truck service businesses underperformed lately,” he said, “and our competitors have been adding dots to the map at a rate that has created a near-term disadvantage.”
Host Seth Clevenger went to CES 2020 in Las Vegas and met with Rich Mohr of Ryder Fleet Management Solutions and Stephan Olsen of the Paccar Innovation Center to discuss how high-tech the industry has become. Listen to a snippet above, and to hear the full episode, go to RoadSigns.TTNews.com.
But his 20 years of experience in leading companies “through dynamic change” bodes well for TA, he said.
For the year, net income was $33.3 million, or $4.12, compared with a net loss of $120.4 million, or $15.09, in the 2018 period.
Revenue slipped to $4.24 billion compared with $4.39 billion a year earlier.
TA’s nationwide business includes travel centers in 44 U.S. states and in Canada, and stand-alone truck service facilities in two states.
TA’s travel centers operate under the TravelCenters of America, TA, TA Express, Petro Stopping Centers and Petro brand names and offer diesel fuel and gasoline, restaurants, truck repair services, travel/convenience stores and other services for professional drivers and other motorists. TA’s stand-alone truck service facilities operate under the TA Truck Service brand name.
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