TravelCenters of America Lifts Results With Operating Improvements
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TravelCenters of America Inc. reported gains in net income and revenue in the second quarter as a result of operating improvements across nearly all business lines.
Net income for the period ended June 30 climbed to $28.9 million, or $2.02 per diluted share, compared with $2.15 million, 26 cents, a year earlier.
Revenue soared to $1.83 billion compared with $986 million a year earlier.
Pertchik
Fuel revenue in the quarter jumped to $1.3 billion compared with $577.4 million in the 2020 period. Nonfuel revenue rose to $501.8 million compared with $405.5 million a year earlier. Rent and royalties from franchisees increased to $3.8 million compared with $3.1 million a year earlier.
“The improvements were driven primarily by a $60.5 million increase in nonfuel gross margin, which was the result of operating improvements across nearly all business lines,” Jonathan Pertchik, CEO of TA, said in a release.
Business includes travel centers in 44 U.S. states and in Canada, and stand-alone truck service facilities in three states. TA’s travel centers operate under the TravelCenters of America, TA, TA Express, Petro Stopping Centers and Petro brand names.
“We believe that the many transformation initiatives we put in place are driving better financial results throughout the organization,” Pertchik said. “Our discipline in managing expenses also continues to be an important factor in delivering improved results, helping to drive a 90-basis-point improvement in adjusted earnings before interest, taxes, depreciation, amortization and restructuring margin versus the prior-year second quarter.”
So What's New?
According to CEO Jonathan Pertchik, TA's transformation plan has been underway for 15 months. These are among the changes:
•Focusing on areas of liquidity.
• Expanding TA’s franchise base.
• Increasing diesel fuel and gasoline gross margin and fuel sales volume.
• Increasing market share in the truck service business.
• Improving merchandising and increasing gross margin in store and retail services.
• Improving operating effectiveness in TA’s food service offerings.
• Improving information technology systems while focusing on opportunities to rationalize and control costs.
The company said two new franchises began operation in the quarter, bringing the total to 17 since 2019. Twenty-nine others are expected to open by the third quarter of 2023.
In the earnings release, TA noted its capital expenditures plan for 2021 now contemplates aggregate cash investments in the range of $130 million to $150 million targeted toward improving and growing TA’s core travel center business. It also includes significant site-level upgrades at TA’s travel centers and advanced technology systems infrastructure.
Also, TA announced in April a new business division, eTA, that will seek to deliver sustainable and alternative energy to the marketplace and focus on partnering with the public sector, private companies and customers to facilitate industry transformation. This business division will extend TA’s commitment to providing the widest range of nonfuel offerings across its sites. Recent accomplishments include continued expansion of TA’s biodiesel blending capabilities, availability of DEF at the pump and placement of electric vehicle charging stations.
The company noted it believes its large, well-located sites and its focus as a pure supplier may provide it with the opportunity to make fossil and, eventually, nonfossil fuels available and to potentially balance or adjust its product and service offerings.
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