TravelCenters Wastes No Time in Minit Mart Rebranding
WESTLAKE, Ohio — TravelCenters of America LLC (TA) has nearly completed the conversion of all its acquired convenience stores to the Minit Mart brand.
As of March 31, 211 of the company’s 225 convenience stores had been converted, CEO Thomas O’Brien reported Monday during the company’s 2016 fiscal first-quarter earnings call. The remainder of the stores will be rebranded, both in-store and at the forecourt, by the end of June.
“This is really good progress,” O’Brien relayed. “We’ve added 193 c-stores since the beginning of last year.”
Fully integrating these stores, as well as its recent Quaker Steak & Lube quick-service restaurant acquisition, are the company’s top priorities, the CEO noted. “What we need to do is execute,” he said.
O’Brien revealed the Westlake-based company is currently on the sidelines regarding any new acquisitions. “Seller expectations of price exceeds our willingness to pay,” he said. “… In the c-store space, we generally target a price of six to eight times [EBITDA]. We are seeing many assets for sale well above the higher end of that range.”
If sales multiples remain this high, TA has “better things to do,” O’Brien continued “I don’t lose a lot of sleep or think too much about missing out on an opportunity. We struck when the iron was hot [for c-store acquisitions in the past]. We struck pretty hard.”
Q1 EARNINGS DECLINE
Companywide, TA posted a net loss of $9.9 million for the first quarter ended March 31, compared to a $15.7-million profit in 2015’s first quarter. Fuel gross margins, which declined by approximately $20 million in TA’s latest quarter to $91.7 million, was cited as the main cause for the earnings decrease. Fuel gross margins per gallon also took a hit, coming in at 16.95 cents per gallon, a drop of 5.5 cents per gallon year over year.
However, the company noted that 2015’s first quarter was one of the best for fuel margins in recent times.
Total nonfuel revenues saw a nice rise, increasing by $49.1 million, or 12.2 percent, year over to $450.6 million. Nonfuel gross margins improved by more than $21 million to $244.3 million. Sites acquired since the beginning of 2015 accounted for a majority of these gains, according to the company.
EBITDA was $11.7 million in TA’s latest quarter, vs. $50 million in the year-ago period.
When looking at just TA’s convenience store operations, revenues came in at $92 million, a 217.8-percent increase compared to 2015’s first quarter. Increases in fuel sales volume from sites acquired since the beginning of 2015 was again the main reason for this advancement, partially offset by decreases in market prices for fuel and a 2.3-percent decrease in same-store fuel sales volume. Revenues also increased as a result of increased nonfuel revenues primarily from sites acquired since the beginning of 2015.
O’Brien acknowledged year-over-year comparable results were “disappointing,” but said he is excited about the company’s future.