WESTLAKE, Ohio -- While TravelCenters of America (TA) saw increases in fuel demand and significant parking revenue growth at its travel centers in the first quarter, the chain's stand-alone convenience stores have not fared as well.
“Our biggest area of opportunity for improvement remains our stand-alone convenience-stores. Site-level gross margin for our convenience-store segment decreased this quarter by 8.4%, largely due to the effects of increased competition,” CEO Andrew Rebholz said during TA’s Q1 2018 earnings call May 7.
Here's a breakdown of how the chain’s first quarter played out …
The big picture
The retailer's financial results included a net loss of $10.1 million, or $0.25 per share, and EBITDA of $20.4 million compared to a net loss of $29.4 million, or $0.74 per share, and EBITDA of negative $9.5 million for the first quarter last year, Rebholz said during the call. Despite the decline in adjusted EBITDA, Rebholz pointed out operational wins that he saw as indicators of TA’s success.
- “First, the same-site fuel-sales volume change this quarter showed improvement compared to the trend seen over the last two years due to a stronger freight environment that we believe led to increased demand for fuel, as well as our fuel pricing efforts and marketing strategies that we believe have affected our share of the total demand,” said Rebholz.
- The CEO also pointed to Reserve-It parking revenue growth of 33.5% from the 2017 fourth quarter. Reserve-It is a mobile tool TA added to its mobile app to save truckers time searching for a parking space.
- Finally, he said TA saved about $500,000 compared to the same period last year as the result of a multiyear project to install a new restaurant management software. The software has allowed managers to better forecast sales and staff accordingly.
For its travel centers, fuel sales volume increased by 1.5 million gallons, or 0.3%, for first-quarter 2018 as compared to first-quarter 2017 due to newly acquired and developed locations. Same-site fuel sales volume decreased by 2.8 million gallons, or 0.6%, due to the continued effects of fuel-efficiency gains and increased competition, the company said.
Fuel gross margin increased by $20.5 million, or 33.2%, to $82.4 million, primarily as a result of the $23.3 million benefit recognized in first-quarter 2018 in connection with the February 2018 retroactive reinstatement for 2017 of the federal biodiesel tax credit and from an increase from newly acquired and developed locations.
Nonfuel revenues increased by $20.2 million, or 5.1%, in first-quarter 2018 as compared to first-quarter 2017 primarily due to a $15.3 million, or 3.9%, increase on a same-site basis primarily as a result of TA's truck service and parking programs.
In the c-store division, fuel sales volume decreased by 1 million gallons, or 1.8%, for first-quarter 2018 as compared to first-quarter 2017. This decrease was primarily due to the continued effects of competition, the company said. Fuel revenues increased by $11.3 million, or 10.9%, in first-quarter 2018 vs. first-quarter 2017, primarily due to higher market prices for fuel. Fuel gross margin decreased by about $100,000, or 0.9%, to $11.1 million as a result of a decrease in fuel sales volume.
Nonfuel revenues decreased by $2.3 million, or 3.8%, in first-quarter 2018 as compared to first-quarter 2017, primarily due to increased competition. Nonfuel gross margin remained flat in first-quarter 2018 vs. first-quarter 2017. Nonfuel gross margin percentage was 36.1% in first-quarter 2018 as compared to 34.8% in first-quarter 2017. The increase in nonfuel gross margin percentage was primarily the result of changes in the mix of products sold.
Site-level gross margin in excess of operating expenses decreased in first-quarter 2018 by $500,000 million, or 8.4%, as compared to first-quarter 2017 due to an increase in site-level operating expenses and a decrease in fuel gross margin.