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    TravelCenters Faces Challenging Start to 2017

    Litigation costs, lower fuel demand contribute to Q1 net loss.

    By Angela Hanson, Convenience Store News

    WESTLAKE, Ohio — TravelCenters of America LLC (TA) pointed to positive results from its convenience stores and travel centers segments, along with confidence in its growth plans, as reasons to be optimistic about the future despite a discouraging first quarter of 2017.

    The company saw a net loss of $29.4 million for the quarter, compared to a net loss of $9.9 million during the same quarter a year ago.

    During the company's May 9 earnings call, CEO Thomas O'Brien listed multiple major contributors to the net loss, including TA's costs for litigation against FleetCor Technologies Inc. and its subsidiary Comdata Inc.; non-cash writeoffs related to programs it decided to end in connection with cost-saving initiatives; a decline in fuel demand; and other factors.

    O'Brien provided an update on the litigation. TA previously accused FleetCor of trying to change the terms of an existing agreement that allows truckers to use FleetCor's fuel cards at TravelCenters locations, unilaterally increasing its fees. The company is currently preparing post-trial briefs and final legal arguments for June, and is hoping for a court decision before second-quarter results are announced. Along with a refund of all excess fees, TA is seeking to recover legal fees and penalty damages.

    In its travel centers segment, both fuel and nonfuel revenues increased during the first quarter for a total revenue increase of $190.7 million, or 18.9 percent, compared to one year ago. This was primarily driven by increases in market prices for fuel and from development properties opened in 2016 and 2017. Site-level gross margin in excess of site-level operating expenses decreased by $9.5 million, or 9.4 percent, on a same-site basis.

    The convenience stores segment likewise saw improvements. Fuel and nonfuel revenues increased for a total revenue increase of $37.6 million, or 29.6 percent, year over year. This was due to increases in market prices for fuel and the impact of the acquisition of 29 locations during the past year. Site-level gross margin in excess of site-level operating expenses increased in the first quarter by $1 million, or 22.7 percent. TA attributed this to improvements at same sites, and locations acquired within the last year.

    Company officials also discussed how TA will move away from its historical reliance on billboard advertising, as consumers increasingly rely on highway signage and other forms of advertising.

    It will continue to support its commercial truck tire business and mobile maintenance initiative, both of which are producing encouraging results.

    O'Brien noted that while it is not the company's goal to produce "not as bad as they could have been" results, positive results seen in different areas of the company are reason to be optimistic about the future.

    "The negatives may be short lived while the positives are longer term," he said.

    TravelCenters of America operates in 43 states and Canada.

    By Angela Hanson, Convenience Store News
    • About Angela Hanson Angela Hanson is associate editor for EnsembleIQ's Convenience Store News, where she is responsible for primary coverage of the candy, snacks and packaged beverages categories. Since joining CSNews as assistant editor in early 2011, she has played a key role in helping CSNews.com maintain its position as the No. 1 news source for the convenience store industry. Prior to joining CSNews, Hanson served as junior editor at Creative Homeowner book press and as managing editor of Anime Insider magazine. She has degrees in creative writing and visual communication technology from Bowling Green State University.

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