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May 5, 2022 9:38 AM, EDT

TravelCenters Reports Higher Q1 Net Income, Revenue

Company Expands Loyalty Programs
TA ExpressA TA Express in Kansas. (TravelCenters of America)

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TravelCenters of America Inc. reported first-quarter net income and revenue rose along with gross fuel margins.

Net income for the period, ended March 31, climbed to $16.3 million, or $1.10 per diluted share, compared with a net loss of $5.7 million, a 40 cent loss, a year earlier.

Revenue reached $2.3 billion compared with $1.5 billion a year earlier. Fuel revenue accounted for $1.8 billion compared with $1 billion a year earlier. Non-fuel revenue was $487 million compared with $448 million in the 2021 period.

“In addition to our people, this quarter also continues to demonstrate the fundamental durability and resilience of TA’s business model, as well as our ability to drive growth while enhancing profitability,” CEO Jon Pertchik said during the earnings call. “In short, as we work our way through our 50th anniversary year, TA’s great people, reliable business model, an overarching focus on investing in growth, overcame accelerating inflationary pressures, and ongoing labor and supply chain challenges, albeit buoyed by favorable fuel margin conditions.”

Jonathan Pertchik, CEO of TravelCenters of America Inc.

Pertchik

Pertchik said the first quarter required intense focus on monitoring inflationary forces and carefully passing through cost increases. “And managing labor pressures and gaps in operating hours, and sourcing products to ensure shelves remain full while continuing to carry out our broad-based transformational initiatives across all parts of the business and ramping up execution on our capital plan.”

Costs rose on certain new activities:

  • TA invested in a small fleet program, which included the program development, as well as adding numerous salespeople and increasing marketing spend in advance of generating the first new sales or benefiting from new revenue.
  • TA invested significantly in developing a comprehensive, new customer loyalty program, and separately, machine learning and artificial intelligence to support diesel fuel pricing decisions, the Westlake, Ohio-based company noted.

Fuel sales increased 2.1% compared with a year earlier driven by a 2.7% increase in diesel fuel sales volume, and offset by a 3.2% decline in gas sales volume. The company noted the decrease was partially driven by higher retail prices, particularly in March, during a period of the year when both fuel and non-fuel volumes are typically at relatively lower levels. Fuel gross margin increased 45.8% versus the prior year quarter, driven mostly by increases in fuel margins.

“Truck service revenue showed a solid improvement with a 10.1% increase versus 2021, driven in part by price adjustments and higher value work orders,” Pertchik said. “Technician staffing remains an important area of focus, with compensation and training targeted to improve tech efficiency and retention.”

Truck service revenue rose to $188.3 million compared with $171.1 million in the 2021 period.

Non-fuel revenue also continue to benefit from strong demand for diesel exhaust, fluid or DEF, which is required by newer trucks. DEF volume increased by 6.5% compared with the 2021 first quarter, boosted by increased availability across the network. As part of the capital plan, TA is now offering DEF from dispensers on the diesel fueling island and — almost all of its locations, and expect to have them available on all lanes and all TA Petros nationwide by the end of 2022. “As pre-2011 trucks are retiring each year, we expect that the demand for DEF will continue to grow,” Pertchik said.

DEF revenue was $44.8 million compared with $31.1 a year earlier.

TravelCenters of America Inc. operated or franchised 281 travel centers, standalone truck service facilities and a standalone restaurant in the first quarter. Its customers include trucking fleets and their drivers, independent truck drivers, highway and local motorists and casual diners.

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