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    TravelCenters Reveals Chainwide C-store Rebranding

    All of its travel stores will carry the Minit Mart name.

    By Melissa Kress, Convenience Store News

    WESTLAKE, Ohio — TravelCenters of America LLC continues to expand the convenience store side of its business, even bringing its Minit Mart c-store banner to its truck stop properties.

    During the company's first-quarter 2015 earnings call Thursday morning, CEO Tom O'Brien said TravelCenters expects to begin rebranding its truck stop travel stores to the Minit Mart name. The move comes as TravelCenters is poised to more than triple its c-store footprint within the year.

    During the first quarter, TravelCenters acquired 26 convenience stores for $38.7 million and two travel centers, including one it previously operated under a management agreement, for $8.4 million. 

    Additionally, to date during the second quarter of 2015, the company has acquired 19 convenience stores, primarily in Kansas and Missouri, for $27 million. As of today, the chain has other purchase agreements in place for two transactions comprising two travel centers and 35 convenience stores for an aggregate of $82 million, O'Brien detailed.

    "Including the sites we currently have under contract, our standalone gas station/convenience store operations will have grown from 34 locations at the beginning of 2015 to 114, principally located in Kentucky and throughout the Midwest," he said. "We intend to brand all of the convenience stores as Minit Marts and to upgrade the gasoline, food and other customer offerings."

    TravelCenters has not forgotten about its truck stop operations, however. The chief executive foresees continued growth in that area of the business as well.  

    "While much of our recent acquisition activity has been in convenience stores, we remain committed to continued growth of our truck stop network and a number of opportunities are currently being evaluated," O'Brien explained. "As previously discussed, we also expect to undertake a limited amount of new-build truck stop development projects. To date, we've broken ground on one new full-service travel center in Texas and we expect to break ground on three others later in 2015 or early in 2016."

    Broad-Based Strength

    Overall, TravelCenters' first-quarter financial results reflected "significant growth over the prior-year quarter," according to O'Brien.  

    "The strength in these results is really in their broad-based nature. By that I mean, the positive contribution from both fuel and non-fuel activities, as well as [the positive contribution from] both sites we recently acquired — or the external portion of our growth initiatives — and from sites we've operated since before we began acquiring sites in 2011," the CEO explained.

    Chief Financial Officer Andrew Rebholz reported that EBITDAR for the latest quarter was $105.7 million, an increase of $30.9 million vs. its 2014 first quarter. EBITDA was $50.1 million, an increase of $29.5 million year over year; and net income was $15.7 million, an increase of $15.5 million vs. the year-ago quarter.

    These increases primarily were driven by a $20-million increase in fuel gross margin for the quarter, a $6-million increase in contribution from recently acquired sites, and a $4-million increase in core operating results that largely reflected the effects of marketing and other internal growth programs, the CFO stated. 

    On a same-site basis, the company's first-quarter fuel gross margin increased by $17.5 million vs. the comparable 2014 quarter. Per-gallon fuel gross margin increased by 19 percent on a same-site basis, offset somewhat by a slight decline in same-site fuel sales volume.

    "We continue to attribute the decline in same-site fuel sales volume to the negative effects to total fuel consumption of the fuel conservation initiatives by truckers, including the use of more energy-efficient truck engines; as well as our efforts to avoid lower-margin sales," Rebholz noted. "We believe our same-site fuel volume results indicate, in particular this quarter, that we are growing our fuel business before the effect of fuel conservation due in part to the success of our marketing and capital investment programs, as well as the continued improvement of the U.S. economy."

    Non-fuel revenue on a same-site basis also increased by $18.4 million year over year. TravelCenters believes the increase in non-fuel sales reflects the continued improvement in the results for sites it acquired in 2011 and 2012, as well as the impact of various customer service and product expansion initiatives. 

    Non-fuel gross margin on a same-site basis grew 6.5 percent vs. the 2014 first quarter. As a percentage of non-fuel sales, non-fuel gross margin increased by 80 basis points to 55.9 percent. 

    In addition, site-level operating expenses on a same-site basis increased by $2.9 million. This increase reflects the higher volume of sales in the 2015 first quarter. Although the dollar amount of operating expenses increased, the ratio of operating expenses to non-fuel revenues improved, declining by 170 basis points to 51.4 percent in the 2015 first quarter, Rebholz said. 

    By Melissa Kress, Convenience Store News
    • About Melissa Kress Melissa Kress joined EnsembleIQ's Convenience Store News and Convenience Store News for the Single Store Owner in November 2010. Her primary beats include alcoholic beverages and tobacco. Kress has been a professional journalist since 1995. A graduate of West Virginia University, she began her career in community journalism before moving to business-to-business publishing in 2000, covering commercial real estate.

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