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February 26, 2021 3:00 PM, EST

TravelCenters of America Reports Q4 Net Loss, Eyes Alt Fuels

TravelCenters of America headquarters signTA's fuel gross margin dropped 46.3% to $79.3 million in the fourth quarter compared with $147.6 million a year earlier. (TravelCenters of America)

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TravelCenters of America Inc. reported a fourth-quarter loss and a decline in revenue as diesel gross margins plunged and pandemic-related restrictions remained in place at some of its restaurants.

The company also noted it is preparing for the alternative energy market.

For the period ended Dec. 31, the company reported a net loss of $7.2 million, or a loss of 42 cents per share, compared with net profit of $43.1 million, $5.29, a year earlier.

Revenue fell to $840 million compared with $1 billion in the 2019 period at the Westlake, Ohio-based company.

Its fuel gross margin dropped 46.3% to $79.3 million compared with $147.6 million a year earlier. Experts point out the higher the gross margin — net sales minus costs — on a product, the more capital a company retains on each dollar of sales that it can use to pay down debt or cover costs.

The company noted a volatile diesel fuel gross margin market and related headwinds may continue to create challenges going forward.

Jonathan Pertchik

Pertchik

“Nonetheless, our enhanced leadership has demonstrated its ability to effectively execute through challenging times caused by the COVID-19 pandemic,” Jonathan Pertchik, CEO of TA, said in a release.

Total nonfuel revenues decreased 1% in the quarter to $442 million compared with a year ago, thanks almost entirely to a decline in revenue at its full-service restaurants — many of which remain closed due to government mandates and the company’s own precautions taken in response to the pandemic, it noted.

Excluding full-service restaurants, total nonfuel revenues improved 7.1% over the prior year, citing solid improvements in its store and retail services, and truck service departments, as well as a significant improvement in revenue from diesel exhaust fluid. TA cited discipline in managing expenses that resulted in decreases of 8.7% and 4.5% in site level operating expense and selling, general and administrative expense, respectively. These were primary factors in delivering improved quarter-over-quarter results in the segment.

Truck service revenue rose 8.6% to $166.2 million compared with $153.1 in the 2019 period. TA’s stand-alone truck service facilities operate under the TA Truck Service brand name.

TA service station in Cartersville, Ga.

Travel Centers of America service center in Cartersville, Ga. (Peggy Smith./Transport Topics)

Sales of DEF jumped 21% to $29.9 million compared with $24.7 million a year earlier.

Store and retail services rose to $171.3 million. A year earlier, it was $161.2 million.

Looking ahead, while fuel gross margin headwinds may persist, Pertchik said, “We are extremely excited about our 2021 capital expenditures plans that focus on both remediation and growth on top of the operational improvements we have implemented.”

TA noted it expects to target a 15-20% annual return for those capital expenditures related to growth initiatives.

“Equally as exciting are our burgeoning plans in the area of alternative energy, where we are moving toward onboarding dedicated leadership and finalizing a clear strategy going forward that we expect may include meaningful collaborations and ventures,” he said. “This is a challenging, yet exciting and opportune time at TA.”

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Meanwhile, for the full year, the company had a net loss of $14.9 million, or a loss of $1.23, compared with a net profit of $33.4 million, $4.12, in the previous 12-month period.

Revenue fell to $3 billion compared with $4.2 billion.

TA’s nationwide business includes travel centers located in 44 U.S. states and Canada, stand-alone truck service facilities in three states and stand-alone restaurants in 12 states. TA’s travel centers operate under the TravelCenters of America, TA, TA Express, Petro Stopping Centers and Petro brand names. Its offerings include diesel fuel and gasoline, restaurants, truck repair services and travel/convenience stores.

TA’s stand-alone truck service facilities operate under the “TA Truck Service” brand name. TA’s stand-alone restaurants operate principally under the “Quaker Steak & Lube,” or QSL, brand name.

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