WESTLAKE, Ohio — TravelCenters of America Inc. (TA) kicked off its 50th anniversary year with a strong first quarter as the travel center operator focuses on business transformation and invests in growth initiatives.
The company's capital plan includes site refreshes, technology improvements and network expansion, CEO Jonathan Pertchik explained during TA's first-quarter 2022 earnings call, held earlier this month.
"The addition of company-owned sites to our network is one of our priorities for capital deployment this year," Pertchik said. "We acquired two locations in April and continue to evaluate additional opportunities."
TA is also investing in its existing sites to deliver a better customer experience. Half of its approximately 100 planned site refreshes are complete, with the remaining refreshes expected to be finished by the end of 2022.
The refreshes "will provide an upgraded experience to our existing customers and likely attract new customers and guests to TA," Pertchik noted.
These site refreshes kicked off in fall 2021 when TA reopened a Seymour, Ind., travel center. The refreshes include a new travel center design and the addition of a fast-casual foodservice concept known as The Kitchen.
TA is going full steam ahead with further upgrades as its capital expenditures plan for 2022 will range from $175 million to $200 million and include projects such as significant travel center upgrades, the expansion of its restaurant and foodservice offerings, and improvements to the company's technology systems infrastructure.
On the network expansion front, TA acquired two previously franchised travel centers and one standalone truck service facility in April 2022.
The company is also expanding via franchised sites. Since the start of 2020, TA has entered into 49 franchise agreements for locations that will operate under its travel center brand names. Five of these franchised locations opened their doors in 2020; two began operations in 2021; and the remaining 42 are expected to open by the second quarter of 2024.
The company is currently evaluating additional acquisitions in its pipeline and expects to make more announcements in the near future.
Pertchik noted that TA will dispose of its only non-U.S. site, located in Canada, due to its underperformance and lack of strategic fit in an otherwise all U.S. network.
TA's net income for the first quarter of 2022 was $16.3 million, up $22 million from a net loss of $5.7 million during Q1 2021. Adjusted EBITDA increased by $26.8 million to $55.4 million from the prior-year period. Results were partially offset by increased labor and operating costs induced by inflation, but boosted by favorable fuel-margin conditions.
"I want to remind everyone that these results are on top of the prior year 2021 growth over 2020 growth that was very significant," Pertchik reported. "Once again, TA is demonstrating multiyear improvements that are extraordinary."
The CEO noted that TA's fuel team successfully managed through a period of "unprecedented volatility and uncertainty in the fuel supply markets" to generate a 45.8 percent increase in fuel gross margin, while nonfuel gross margin also rose 7.1 percent. The company's non-fuel results benefited from a strong performance in truck services and an increased number of reopened full-service restaurants, according to Pertchik.
"In addition, we have been making thoughtful pricing decisions to help largely offset rising costs caused from inflationary pressures in the market," he added.
Looking ahead, TA plans to utilize artificial intelligence and machine learning to assist with diesel pricing. The retailer will also install new electric vehicle (EV) charging stations at several West Coast locations and is preparing more comprehensive rollout plans for EV charging across the country.
"We're also developing the most powerful publicly accessible microgrid in the United States at an existing travel center in California with an offsetting California Energy Commission grant," Pertchik said.
The company expects to issue its first-ever sustainability report later in 2022. The report will outline its achievements to date along with planned and ongoing initiatives, and longer-term goals.
Westlake-based TravelCenters of America Inc. has more than 18,000 team members at 276-plus locations in 44 states and Canada, principally under the TA, Petro Stopping Centers and TA Express brands. TA operates over 600 full-service and quick-service restaurants and nine proprietary brands, including Iron Skillet and Country Pride. Its specialized business unit, eTA, focuses on sustainable energy options for professional drivers and motorists, while leveraging alternative energy to support its own operations.