TravelCenters Putting Larger Acquisitions on the Backburner

WESTLAKE, Ohio — Despite acquiring 170 convenience stores during its 2015 fiscal year, including 20 in the fourth quarter alone, TravelCenters of America LLC (TA) is “now on the sidelines” regarding large transactions because sales multiples are too high, CEO Thomas O’Brien stated Monday during the company’s 2015 fourth-quarter earnings call.

“We’ve looked at a lot of acquisitions in the c-store [segment]. Prices are higher than we want to pay,” he said.

In fact, he called the multiples sought by sellers “out of whack” in some instances. “I have better things to do than overpay,” O’Brien said in jest.

This does not mean TA will make no acquisitions, however. In fact, as of the end of its fourth quarter, the retailer had agreed to purchase 24 convenience stores for an aggregate of $32.8 million.

O’Brien assured that TA will continue to remain active in the merger and acquisition space, should good opportunities come along.

Meanwhile, the company will focus on ramping up the financial results of its newly acquired locations via rebranding to the Minit Mart banner and expanding brand awareness, the CEO revealed.

As of March 14, nearly all of the standalone convenience stores TA owned as of Dec. 31 (204 in total), as well as the travel stores at 25 of its travel centers, have been updated to include all brand-standard Minit Mart signage and the addition of its private-label coffee and other programs, reported O’Brien.

“We have also completed our review of gasoline branding at all of [our] standalone convenience stores and as of March 14, gasoline brand conversion at 83 of these sites and our updating of gasoline brand elements, such as new dispensers and signage designs, at 109 of these sites have been completed,” he further reported. 


Companywide, lower fuel margins at both TA's travel centers and standalone c-stores was clearly the major story during its 2015 fourth quarter, ended Dec. 31.

The company reported a $1.6-million net loss for the quarter, compared to a profit of $34.3 million in its 2014 fourth quarter.

Total fuel gross margins dropped by more than $35 million year over year to $103.27 million. Fuel margins per gallon also declined by approximately 8.8 cents per gallon year over year to 18.97 cents per gallon. O’Brien noted, however, that fuel margins were at record levels in 2014’s fourth quarter.

The chief executive also said fuel margins will remain challenged during 2016’s first quarter, expected to come in at 15 cents to 17 cents per gallon. “Tough fuel margin [comparables] will be around for a little bit longer,” he remarked.

TA did see strength in non-fuel revenues, though. This category increased by nearly $55 million year over year to $452 million. Non-fuel gross margin percentage took a small hit and came in at 53.2 percent.

Looking specifically at standalone c-store metrics, this division — now totaling approximately 450 stores in 11 states — saw revenues improve by $108.3 million, or 261.3 percent, vs. its 2014 fourth quarter. The company cited increases in fuel sales volume as a result of sites acquired during 2015, partially offset by decreases in market prices for fuel. Non-fuel revenues also provided a boost.

Westlake-based TravelCenters of America LLC operates under the TravelCenters of America, TA, Petro Stopping Centers and Petro brand names in 43 states, as well as the Minit Mart c-store brand name in 11 states. 

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