4 Updates From TA’s Q2 2018 Earnings Call
By Jackson Lewis on Aug. 10, 2018WESTLAKE, Ohio -- TravelCenters of America is taking steps to stay competitive as the truckstop and convenience-retail businesses shift, executives said on the company's second-quarter 2018 earnings call.
CEO Andy Rebholz pointed to changing freight patterns due to the increase in online shopping and the potential rise of electric or autonomous trucking as reasons to move forward with the new small-format TA Express model.
Meanwhile, the recently launched GoGo Rewards loyalty program in select Minit Mart locations has brought a 5% lift in inside sales after three weeks of results.
Click through for more on these initiatives and other highlights from the recent TA earnings call …
TA Express
Rebholz described the launch of TA Express as a new strategy to insert the TA brand into new markets.
“Introduction of TA Express enables us to revisit those areas where we have portfolio gaps and attempt to fill those gaps through acquisitions, franchising or development," he said on the call. "We have done little in the franchising arena in the last several years, but we believe that our reenergized franchising program and our introduction of TA Express can be great avenues to grow site count, better serve our trucking customers and grow TA's EBITDA and free cash flow with a much smaller investment than is required for our typical large-format company-operated travel centers.”
Rebholz also said that TA has not decided how many TA Express sites it will add or which will be operated as franchises. It will also rebrand two Minit Mart units in Colorado as TA Express.
GoGo Rewards
TA introduced the GoGo Rewards loyalty program to 36 sites in Kentucky in early July. The program has only been implemented in 36 sites in Kentucky, but TA plans to complete the rollout into other markets during the third quarter.
“Our average transaction size for customers using the new rewards card is nearly twice the total of non-loyalty transactions,” Barry Richards, president and COO, said on the call.
Retread center
TA recently opened a retread center in Bowling Green, Ohio, where customer-owned casings can be retreaded with Goodyear treads.
“Retreading is a common component of tire dealer businesses and having this, we believe fills a gap in our commercial tire program and it opens up new customer segments,” said Richards.
Rebholz accepted the characterization of the retread effort as TA “dipping our toes into the water” to see how it performs.
Financials
TA's net loss for second-quarter 2018 was $33.9 million, compared $2.9 million for second-quarter 2017.
In the travel centers segment, fuel sales volume increased modestly for second-quarter 2018 as compared to second-quarter 2017 due to new locations.
Nonfuel revenues in the travel centers segment increased by $23.9 million, or 5.5%, in second-quarter 2018 as compared to second-quarter 2017, primarily due to an $18.8 million, or 4.3%, increase on a same-site basis as a result of growth in TA's truck-service program and the positive effect of TA's marketing initiatives, among other factors.
Site-level gross margin in excess of site-level operating expenses increased by $10.3 million, or 8.4%, in second-quarter 2018 as compared to the same period in 2017, primarily due to an increase at same sites.
In the c-store segment, fuel sales volume decreased by 1.2 million gallons, or 1.9%, for second-quarter 2018 as compared to second-quarter 2017. Nonfuel revenues decreased by $2.3 million, or 3.2%, in the quarter vs. last year's second quarter mainly due to a decrease in nonfuel revenues on a same-site basis because of increased competition.
Site-level gross margin in excess of site-level operating expenses decreased in second-quarter 2018 by $200,000, or 1.9%, vs. the 2017 quarter due to three locations that TA closed in 2018 and a decrease on a same-site basis.