- Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to TravelCenters of America Third Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the call over to Stephen Colbert, Director of Investor Relations. Please go ahead.

Stephen Colbert

you. Thank everyone. morning, Good

Today’s the today’s Pertchik, meaning remarks Officer, followed X, Barry analyst These of expectations laws. Securities and Litigation begin statements forward-looking Executive Peter TA’s as beliefs Officer, XXXX. and are based of statements XXXX of President, Q&A. our Reform federal for November and Jon by Richards call within call will Private contains the from with present today, Chief securities Crage, conference forward-looking We Chief Act on Financial TA’s

results Forward-looking occur to statements implied those revise occur. no guaranteed made by and their in may included revision statements. implications or Actual than to forward-looking the are TA differ forward-looking and not to other materially or obligation any required today not from they release these statements publicly may as undertakes law.

cause information charge of by Securities with forward-looking the section our TAs statements that statements. not place Exchange filings Investor are not undue forward-looking referring are website. and free to factors Commission that Additional upon occur our reliance website cautioned the Relations or contained the SEC SEC’s any available concerning in could to is Investors to at or of

XXXX third otherwise. qualitative the financial call, XXXX, earnings press stated these today’s EBITDA. assumed release regarding compared that measures, be our During quarter discussing as section on are performance be and financial any and the quarter our the in news the in amounts measures third available as measures be adjusted stated website. The be we most EBITDA, this comments of regarding to of The net income, will non-GAAP to to call, and/or including of unless non-GAAP adjusted reconciliations comparable operating found GAAP well can as implied on should

to to turn the like you. the recording would over that Jon, the TA. written remind is I’ll without consent prior retransmission prohibited of With conference that, call today’s you call I of and Finally,

Jon Pertchik

in the operational Thanks, Stephen. TravelCenters in you once and of hallmarks my Resilience, during continued a and for uncertain results results Good evidence sustainable remains quarter everyone, that demonstrated reported challenging that America performance of consistency environment strong third the XX,XXX attributes like yesterday. that these at TA’s durability these what continuing and provides thank believe forward. your excellence, and I repeatable outstanding morning to further again interest are have we TA. and solid moving teammates are

to at and New we displayed As team the or we Event bright City, see are our just Investor hit York beginning a TA stride Day our with in future for growth Graduation innovation.

quarter’s EBITDA. now to improvement creation important broke adjusted performance, uncertainty and to of For as QX million $XXX.X yet further XX% a EBITDA that a and prior XX-month After adjusted XXXX, million. the EBITDA $XXX refocused XXXX new period results are operational adjusted sustained demonstrate comparative period. results increasingly of income delivering challenging TA excellence remain high which acknowledge mark performance and in XX significant even compared solid our improvement TA improvements income dynamic COVID impressive the proud flow. the multi-year XXXX operational that quarter, was saw significant, $XX.X improvement TA’s $XXX have financial results operating pandemic. drive the generated million and that we TA’s XXXX million, impacts this the we team comparisons our we EBITDA. top-line In report pre-transformation the and and of the increases thus to In I’m trailing impressive resilient. and $XXX and improvement excellent in XX% QX It of increase EBITDA These difficult of that $XXX basis with current to on growth confident resiliency XX-month over in plans $XX multi-year as value cash negative adjusted I that A face, will makes million reporting growth Once remember our third from adjusted quarters EBITDA to resulted both TA’s produced emphasize a want $XXX more In to team of clearly continue again, excellence we with leadership And net and generated consistent against is ongoing now million innovation the over far. period. quarter the we through significant milestones a in time. adjusted trailing XXXX, despite XX% following. versus XXXX, is year a to to last period in prior net million year million, healthy the

capitalizing and delivered thereby team opportunities quarter, market within that identify marketplace margins. Importantly, significant while It team quarter’s meaningfully costs component adequate robust again, results, continues and team innovation during strength volatile opportunities to Within a to CPG are ensure continue our favorable fuel dynamic a diesel to forces supply frankly environment. striving in overcoming to inflationary our improve found margin of load, our be lower in of the due in In while to fuel the strong improve only not supply to the business, each continued economy. management third product marketplace, broad processes affecting ever but increasing the on conditions important fuel can to broader constrained fuel remained throughout solid margin. results continue capitalize this a that on were our to has short, that on TA’s to and did buying margin, drive process leverage part underscore is fuel

exhaust part this liquids, saw we for or diesel from become fuel on to we year. nationwide ongoing strength Island DEF demand dispensers Petros on an by the of end beyond Moving fluid staying the This remain all but has diesel of death. and product business fuel, on at TA’s have track important TA

offset drove from footprint business, driver more which duty service important were maintenance to expansion for growth by TA. new substantial coming and truck from designed This division. involves Turning heavy commercial unique service expansion, largely vehicles as of repair, repair efficiency, mobile the ongoing With yards to trailer growth. We new technology margin large within the large future fleet as retention an Truck technicians top-line pressures working than ranging improving all inflationary or harness strength differentiator revenues the growth see this business. and our differentiated our initiatives and customers. robust of and and tech with

fortunate as the labor ongoing fourth into while remain new likely pressures persist to in increases pressures. operating cost quarter. move continue Moving to increase expenses and we a hospitality, we seen prices into operating The offset but Those not inflationary headwind to to thoughtfully are persistent, TA yet harvested economy. combined position and through for TA much fruit to both business perform hospitality model levels. to should that remaining and at the resilient excellent intrinsically it’s of XXXX continue high be hanging execution to that’s and with broader is low much

TA’s, full which announced a Cleveland and with improve on will improve to broaden our driver detail hospitality correspondingly new service have great to merchandising and food and and partnership Importantly, such for program, see options restaurants areas the as provide we in many expect grow. a benefit of designate our to loyalty customer we this operations, improving customer reduce more do and wellness, Clinic, To we technology initiatives few friction, experience margins. healthy opportunity efficiency meal focus, relationship leveraging the

to a We too. for of upgrading bringing a continue on of offerings ways restaurants, couple These to consumer to some brands separately and service just various are our by are both key to operate are on which line lease and full differentiator improve are results known impacts working top as us behavior. inflation bottom we carefully us for our

same resiliency TA’s have I speak discussed a business model headwind to in other think that important that conditions a areas certain the cause TA unique the areas individual strength the before, of overall we itself, is Beyond from of businesses, benefit business. in has to it as the

our and while deliver example, have slowing segment margins. motorists to created example spending seeing just consumer c-stores, is CPG are model. balanced resilient environment of TA these that allows at discretionary fuel the team For macroeconomic we favorable same by business higher impacted a one the uncertainties market also the This inflation,

resilience remain expect ongoing such unlikely and as well war the least in the of inflation at constraints, Drivers concerns through XXXX. cut, recent chain OpEx end Ukraine, are near XXXX the and we On perhaps to TA’s times, in macroeconomic uncertain the volatility supply subject term. into stubborn to the persistent of through supply resolve other

impact pumping behaviors consumer likely TA’s impact Of gas store in and SG&A. the like at inflation elements continue to course, adversely to are the

CPG target we’ve diesel $X.XX. said, at to provided continue favorable our we anticipate of conditions of our our to to we $X.XX also excellent much margin changed guidance Investor year That which Day, we long-term the throughout an not updated $X.XX fuel seen of have baseline September while that fuel will team within deliver. $X.XX range However,

importantly, as rest enhanced to enter However, Despite strong are XXXX fuel positive this backdrop, optimistic than persist margins remainder remain likely throughout possibly are on as typical we the content fourth the and quarter performance we beyond. that noted, we of not to higher for market CPG.

time. fleet/private support diesel development retail are the fuel initiatives We and program, new to non-fuel have platform to and TA’s of activities label beginning relative drive to are fuel, believe transformational card hospitality to including street contribute We over sales implementing artificial actively the small expanding an in and intelligence these performance pricing. potential

initiatives of during truck to expansion locations growth the centers our of service acquisition first two in network nine completed XXXX. the Moving travel have we plans, and five months

to sites the along during geographic with Our the acquisition additional robust evaluation under coverage. remains pipeline which to more us opportunities active add serious quarter, TA fourth network’s carters position several strengthen

I these on report return our target corporate acquisitions am to pro discussed, have forma first mid-teen April we our investment. significantly And outperforming a two EBITDA As the we expectations. underwrites are minimum close with midterm in – acquisitions happy that team return development

financial operations and see this team in to the strong performance. team seen delivered excited are have We as and such the field excellence dedication that

deploy As described move acquisitions year to financial expect year incremental annually five million rate long-term at million we run Investor we and as provide to $XX our to three $XXX Day substantial targets. EBITDA towards will

and since XXXX, quarter we’ve of Turning beginning of centers. agreements during XXXX. second Five travel the sites XXXX, to franchise entered covering these of during one into operations franchises, XXXX, the began two during XX

of as XX XXXX will the up of the to XXXX quarter an incremental the expect EBITDA We mostly TA’s in very with anticipate expectation centers to target. begin and financial opening meaningful We balance of by our enter franchise annually these open contribute we long-term ground fourth XX expansion travel beyond.

and enter capital in expansion experience, customer technology overall the on further including quarter, XXXX $XXX and our spend to infrastructure. growth travel centers, continue are we and projects TA’s upgrades offerings, improving $XXX million. significant enhancing to fourth be the restaurants million focused we These and between and non-acquisition forecast As opportunities food of that systems

up, NASDAQ Graduation investors of Before event remind would begin growth to targets financial to at we I strategy presented in Day wrap at that the our like and everyone to our York New City. we long-term

First, our all areas plan in we ongoing near along improvement tailwinds with inflationary economy. expect operational new and initiative business, within strong to the an drive headwinds intelligent growth capital organic term continued of current counterbalancing broader

Second, acquisitions growth our component network core expanded of a strategy. are

acquisitions million cash are deepen designed solid tuck-in We of on providing footprint returns. targeting cash and geographic strengthen relationships, $XXX to customer our $XX million while to annually

greater scale reaching Third, targeting XX fleet franchisees This that of far have thus annually. TA the and power, quite far for the through openings are benefited from has franchises program focus operators recognition. and are XX been deals, TA become key we higher independent volume a brand where successful purchasing TA, to

$XXX these between EBITDA of range mid legs of million. long-term the $XXX the all stool lead to Finally, three- five-year our and target three million to

leveraged to journey we I when culture vision XX moment turn and company over embarked began We I many would re-imagination journey, began to a journey their business promotions or this key innovation. XX,XXX the the results implement were We that a we new of the not review to over stage Peter, and on on within quarters. to thoughtful the the potential. and clear this plan future. had talented Before to our for had no things take and transformational statement, a teammates like vast the With to hires a simply mission focus people for being past growth – utilized set that from accountability,

new the to closing $XXX EBITDA this operational growth deliver a culminated long-term define – million. we we in and and in Graduation financial and strength, driven Over along the investor new The the transformation the XX-month results transformation prior for bell million bell, where year, targets. seen NASDAQ the of the the positive event of plan TA, year delivered rang framework $XXX delivered innovation resiliency, at excellence where Day following our TA new with that have we breached and our excess trailing past a

ever steps highlights Additionally, during the far the the first of thus our that groundwork company mobility. quarter, generation report at for the that inclusion, have in while third foster future laying we sustainability TA’s we to ESG delivered taken the community important next and

a stage XXXX targets we as Investor and am Now, we long-term the five-year our that in growth to longer I team forward towards to three- outlined the best assembled beyond. possible through goals and we’ve move Day, that confident innovation term, at achieve

Peter I analysts, your always, will our Finally, an with like continuing guests, would as I the Crage, you commitment TA. call to teammates, hand to shareholders. expression all end to to and Peter? our that, gratitude And for customers, to of over with CFO. and Thank

Peter Crage

good and everyone. you, Thank Jon morning

this the yet Jon highlighted, quarter excellent As company. another was for

more our as strong past review deliver long it’s we performance uncertainty, challenging of quarters improved noting when to results in durable business we detail, I flow, demonstrated operating resilient for cash consider worth you during and I lap and our XX even this the think model over performance ability increasingly Before periods have significantly that the of comparisons.

our results. on moving to Now

million non-fuel in the the in $XX.X and XXXX. of investing excludes to share This impacts quarter truck comp For income that labor or our strength And was costs. which partly the seen third share, $X.XX which by diesel per item by prior of EBITDA, $XX.X one quarter, inflation offset service growth due strong million CPG a gross in versus strong $XX to margin, this against XX% XX% million, very particularly $X.XX and per margin operating in by we to improvement reported translates income and year. improved in net primarily what a in was TA’s increased higher the business. Adjusted or

under XXX diesel million sales Our an over lapping – fuel gasoline or several gallons sales shows just X%, roughly XX% comp strong million sales to and higher segment as cents The XX.X% a volume prices declined pump. volume. and XX% very X.X% softening tightens $XXX.X gallon the increased combined the reflects margin motorists an likely $X.XXX just up consumer volume growth. sales to million decrease slightly year-over-year following the at of with year. $XX.X margin by improved difficult Fuel per of inflation to That X.X compared budgets years along million, or mix gross up prior improvement up to in gallons $X.XXX diesel

was the conditions As expect the we add while by in will remained XXXX. performance Jon above improved the operational market team. fuel continued somewhat or market volatility the mentioned, to that levels October, TravelCenters’s rationalize result saw of and fuel in I In third the excellence quarter. favorable at we the

this historical is described And $X.XX York, gallon, target as we margin above Jon least mentioned, announced As important of event transform gross the team concerns supply new for due blended our the fuel elevated to uncertainty, our New strides and designed while per has that economic believe of initiatives at at which volatility a fuel made will term year shorter with long-term in to to through the we process. investor purchasing we remain have entirety broader guidance. $X.XX

Non-fuel by $XX.X will total of in or $XX.X us economic revenues throughout non-fuel we or to improvements that that million intelligence we label million give gross XXXX. increased expect program results overall margin our and see as TA’s confidence diesel potentially any yet help another XX.X%. strong to in volatility these increased have The segment stabilize in maintain fleet/private artificial We from begin this offer by initiatives durability resilience card example will fuel cycle. pricing developed small XX.X%

and to area full XX business to cost X.X% pressures. operating input Importantly, percent service restaurant, profitability. service non-fuel both in pricing improved well labor basis proactive by this and Sales points service remain margin from to approach by inflationary ongoing our XX.X% gross increase by margin service increased due Revenues was respectively. include higher increased counteract to offset growth increasing Variable and and X.X% costs truck costs. the and increased in resulting solid truck store controlled relative higher quick revenue which in to

to along lessen relating adjustments We as these to near implementing are and we manage support discussed as customer and the longer we plus loyalty, at have quarter expense help came fuel pressures their making necessary gross to been with working non-fuel mitigate efficiency and Jon total to continue improvements the impacts, costs margin such, X.X% hard growth our operations and term, and term administrative technology. of Selling, for revenue general the initiatives. in

for this range costs our established the in on to and annual in of XXXX. growth our X.XX% have to benchmark third to we SG&A non-fuel move below now relative believe plus in achieving going revenue. growth to the a expect expect reminder, higher X.XX% a the were in quarter, are be investments our of of forward business a to We fuel yet margin support We As range important basis that targets. gross growth these long-term initiatives in to range

in to credit million million million for and a of and million thus Turning $XXX year under million, balance On capital moment. of the far. for cash invested for quarter total equivalence September debt $XXX $XXX of $XXX outstanding. we cash the liquidity $XXX sheet the our We of and expenditures long-term XX, facility revolving our availability during $XX.X had million and

in million We continue and projects anticipate XXXX. cash a million between to $XXX on spend CapEx $XXX of

to and at in completing our exist, levels time near original on successful projects budgets. chain largely year we and inflationary this or at continue supply pressures Although been have

million $XXX.X as two of total Jon In truck service and spend, XX. acquire highlighted, travel consideration September five addition cash year-to-date centers invested CapEx to facilities we to as

and year, fourth next plan for in commentary for in on our have expectations February. the our are during call XXXX capital to quarter earnings We planning phase for

to you to thoughts Lastly, allocation. refresh with on current our capital respect

be XXXX, the being Given prudent capital regarding coming the expectation are that we may that a recession deploy. in we

next have deploy We focused modest of without disposal are able further remind capital rates of the significant at to on long and and areas we capital hurdle stabilization will more the executed periods projects remain that year to recessionary or forces likely to if past. that multiple everyone on our well. returns willing for some develop, successfully levers the which and above year we from remainder at preserve as into generate of in We have our these

strong that to allow confident growth execution necessary innovation our That position, deliver financial prepared are will We financial to our now questions. our the flexible ready targets. take to concludes us and we long-term are Operator, remarks. achieve

Operator

the begin Our Maher question B. now question-and-answer Securities. [Operator will go first We ahead. session. from Instructions] Riley Please Bryan is with

Bryan Maher

the Good would it morning any diesel us for where questions in northeast I but would and comments. there to Jonathan of can this? parts related running the general, out sure to of Couple me. a sure as give impact you for mean, news lot and to all devastating what to country, those the out related comments be you impacts in specifically of Peter. out the noise what it it There’s of Thanks or you’re hearing country make how really the guys. seeing there fuel, not of that I’m to

Jon Pertchik

pretty the staying you of job close, because of with were is it very out wide contact little lived think area in or way, time, be it similar one we’re believe have this if last in very of on I that turn thanks, dry and we’ve louder meaningfully, there we noise and confidence with bragging not before the of measurably and our there maybe infrequent key there, we they’re will areas, the harping is that protracted, to call, around short that by but morning. Sure, have environment hand. doing it a to affect think one sort could who our are, often back of this recall, focused if because it’s, now a that ranging I earnings keep our high such certain lot other it the the fuel and and great one There I was good we concerns we’re on certain long broad, hand them focused don’t Bryan, think team, making, concerns And a we was seen enough the on surgically out and of close we a volumes fuel affect in anywhere it. we but and specific really, so it’s resilience truly about go team course, focused, very do in sort and same this sort of connect degree

margins We higher expect to relatively during this have period.

it sort if So, I thoughts. time. both The we ranging, us our net-net again, I what lot we There those two, very long-term, short and of really happen. limited be out wide anyway, but think fuel, go will further think it, a and that going into gives of to our two areas I for of way in insight be hopefully protection. the and I’ll are But okay contracts is maybe a do whole give and think protracted margin. dollar not focused in dry, media’s onto And they’ll happen, some we’re what grabbed there just purchase level things, so we just periods they think and we outages expect, where short repeat very relatively

Bryan Maher

about you already up it it mean, Can thanks place, may you it IT? actually signage? pipeline who a light slowness switch I we a doesn’t but Is been it board? for in Is be bit we deep ramp relationships this. prepared why as lot seem couple on do up related like And about, of are and have, there talk existing really for that might your pipeline that faster? they’re how turning being the to talking a that I and about development comments ground on the of as operators years know little for that. to open Is business that is, And think mentioned fast we’ve I in the couple now, franchise would’ve Okay, growing, actually like quarters, then thought. maybe the

Jon Pertchik

great that’s No, years Sure. a hat ago. been two from putting on surprised I’ve going question. back, my

two, really is were a two part would’ve taken, from materials and And how one, taken two say stuff ago. that two labor is ground longer. surprised have and looking product a ahead both years yes meaning getting then. that and half we’re supply Let’s I started long half, I’ve it pushing been back this then. on things, just And of expected other challenges, chain would’ve more that surprise the franchisees was far up than back is, we

And so the materials, weighted ground just its combination process number ultimately and two chain on heavily labor development affect of longer. much, a up, lot supply entire effects much both number which toward has and taken one, and the

to good growth. during very is EBITDA. a of of during good this and this taken good the of bad, is than incremental see by the is of a opening greater us. in year, franchise, on course, resource more of next news resource, news which We’ve had the that front XXXX, us, the much again, longer in general, front about, of good for those effect example reasons. you further lot franchise Again, I news in and some and value some is We’re investing again It has The so it. think anticipated in support increases news right SG&A, I focused will lumpier added of of part much a what, that’s adding the that’s

Bryan Maher

service those, identified reopen service to had business that hit, vast closed, full within COVID I EBITDA you of in on lot and the the those. a us know slow to in on were full that, what’s I that there me going when been right mean, XXXX bulk Can for the losers last XQ restaurant just update and bunch give restaurants, as TA? then swiftly of and then, an and meaningfully Okay,

Jon Pertchik

that something few to hit were down you really and go a mid-year restaurants business there essential. XXXX mid-year Sure, COVID back in starting things. not like XX% the of when that by one not, said, they restaurants the part March One, because were as you was if were

shut point, strategic, your the responded, reactive, it of wasn’t to but we and time, was at down So it reacted, them. right it we most the thing was

someone door of place I a but terms like them did we Some magnitude, where right the at right now, I’ll to we’re rethink, reopened I We’ve delivery, Now, the number. think the you others speaking, of come again IHOPs. order almost of really There kind may of feel in couple in very executing, very just it of specifically still terms we’re limited. of roughly do takeout, within tell sort generally we’re the be some they’d and could and added but right, XX% roughly – We’ve how the number few a well in first. was we’re

We’re actually some of which them. negotiating a than of possibility, probability be and will It’ll be addressing possibility. more the a leasing

from those nice and the we’re and stable, cash So sort landlord predictable locations some, model, traditional a create we our risk. mitigate in flow like now operator, others will the be will of and that

create do where only excellent probably do to are established places able they’ll on that, some I better some we in operators certainty who be so And focus frankly, markets, think there and than general. in they’ll just

operating, next more quarter announcements get some where been of Again, see year. some of into brands that you’ll time see as on working were us, we’re So, a and and some we other some you’ll then and through now couple again, this we’ve in locations, IHOP for of some leasing, and comment least couple not we’re improvement. least, is And focused last a just one broader corner, we’ll how to a pretty this and not sort the skip company continue over, continuous then that the be of about locations. process to around of on of proprietary at but finally, announcing

that, improve technology improve operation, schedule the time service just to management So, our disposal tools or ways efficiency, whether to to traditional over to have will we’re find continue efficiency the that think and I at of effectiveness continuing that leveraging try restaurant. stuff we full like

there. the story So that’s much pretty

Bryan Maher

Jonathan. a Thanks lot, Okay,

Jon Pertchik

Thanks Brian as always.

Operator

Ari [Operator BMO. with next is Instructions] Please Klein go from question ahead. The

Ari Klein

noise Thanks. morning. through positive, increasing? clearly the with October XQ trajectory the margins that Few maybe during like, you have you shortages diesel And the and significant decline that, Can what of mentioned about good quarter. looked been talk margin did a though it especially

Jon Pertchik

Sure.

So, quarters department but old corrected we’ve quarter great as Peter favorable say this execution, time mean in I or had maybe, improve and now, back, stories execution up we’ve atypically would lead in well Yes, the that multiple under I by market emphasized. I as could on a otherwise, quarters through elevated as to there’s three, is now. conditions as going be continuing four and the person high that margin who’s been been now, a over

last feel some we would take I October, can point we’re an we the environment than this gave keeping have credit more visibility. that we the it And get positive conditions the margin at I we October have and fourth same now. outlook quarter last XXXX, that farther quarter broadly, to every a be year harder in Peter is have the as for persist, positive thing. very reasonably will same through the it’s third level fuel out, and mentioned through And it, higher obviously on But the and least future. of have most in farther little creating thing through like that and market. means mind we we have reason think think outlook a a likely we’re next confidence the we’ll visible and to some I have level so third And his said, into that been at the then one quarter And think for in to typical. and to the part strong my comfortable the just also remarks same even as fuel quarter, anything, repeating it we we the repeating that persisted. you outlook least historically was margin great And we’re think had quarter higher in that for said the be saying the we of really would reporting be, that, but

things area we to it’s tend next end fuel the change too affect and they’re that hear abruptly a said, to I end we’ve war to And word our about those have think headwinds to been the But going come confidence where in and and certain beyond areas. conditions lot last business this in now here, this beginning then at past, and back see a same all at all within this we’ve call, that we of the we whether in as just, of but favorable in in least had, intrinsic feel resilience there, of same this an this times come year. more earnings We in Peter and the I an and at used things least of other the shortfalls it confident. tailwinds the area – of upside the it’s it’s, no at comment I as create know since really between uncertainties in on much environment I have reason those we time and supply, time model. I I year, to or that, about think least at really to that Ukraine, other resilience believe

that boy, it’s we’ve year. have world other things seen knows then looking everything into this before confident the the well like it three two the breaking supply been a means, well whether still a EBITDAs XX, COVID with it in feel last trailing that folks trailing that XX whatever years been see, was year and and will to we’ve here here the the But long XXXs. low outperform whatever half I time team will was chain like, and what in XXXs supply the And and into our bring. that who was with about and really XXXs fuel This the who years, and and folks new continue really we blended tight time so

matter is along comes like say. no just couple next, feel execute let’s to the of quarters, I this what team in going So,

Ari Klein

goes And you $X.XX, are is that to then, can in exit to the headed to near $X.XX XXXX the comment reconcile longer that versus I suppose you volatility, $X.XX baseline where $X.XX it guess over term think, $X.XX to once longer term? in term before kind of I increasing sometime the the we margins the $X.XX

Jon Pertchik

a ourselves. about from really in maybe to then $X.XX our skis two quarters quarter, ago been year under half I one So, wanted and two to a maybe end. upped three a we, now $X.XX And we here years $X.XX, to penny a back increased we’ve the quarters we by and think $X.XX, two get we on

going ahead is On to confidence to at up know have looking so of a level target, the okay, going, the meaning we’re we target the not book are $X.XX the the meaning higher we five, team move looking at within but end, executing forward $X.XX. to end, that other a three level, book we guidance, to this

higher? up, still So where ground coming to comfortable we in term middle of $X.XX, the only the the in giving put stake sort the but of give this a to near that’s the and $X.XX guidance We’re sort by outlook. do back sort of is but question

how I’ll behind guidance It’s the literally want those isn’t guidance is, same but of really, this to that, change have we levels before that this we but not this guidance”, as confusing, put enough call almost trying that’s we margin And we that saying the on quite atypically in at have this I “commitment it. psychologically make we we’re that sort to we’re higher think hopefully make to last have again, right? to really runway about guidance short commitment, me and call, expect So a term said high and time we of in nearer here but term. the very to have

ground of baseline to saying, on get giving, term and at some a stake for and in outlook we’re this point, farther on top And stuck place, ahead move that guidance, other sort the now, giving our going put we’re looking up. outlook, So, we’ll we’re we’re short of to that. some

the of but broader the point above there we’ll in sort I understand feel hopefully quite that along for to context enough expect. move of I and not baseline these some in assumptions yet, needle, at We’re to signaling target now. gives long-term some comfortable a a And make outlooks and

Ari Klein

volume macro anticipate and can or or then sales with pressures And doing something with that fleet see offset, fuel co-op might lowing you you headwinds it. any increasing just on side you would Got were is declining the there? or can you what

Jon Pertchik

private rate program, of about that AI I’m of attacks couple that which early growth and we, farther looking that, momentum some the great really mean, through, possible. excited month-over-month, well is street or volumes but of relatively see at down a head, get in of getting inflation inflation, that into recession, reported at, a terms really I some next tailwinds growth the feel may that said, stable in these we the protracts I’m forces, a the the up little of which and year it repeating, the near if sort we long do new forces volumes diesel, that now a know as some bit for I period we And think highest haven’t we tailwind, that, segmentation have recessionary we I X%, been getting last has we mean, months to program. reasonably X% go of We a then expect of label/small that fleet question. will, very yet the which there probably decline for place part That’s time. stay volumes. right I in rate Will will I XXX%. the getting very customer mid-term? confident That’s over

that is rapidly. growing So very

much will of forces will good they we new just very recessionary, it still it’ll and will we So how There’s negative. impossible mentioned, learning into other believe be expect business meaningful, in-house opportunities a of still just in How most an versus inflationary offset in really And AI us just is an of probably significant, companies, not that for be alluded And substantial, inside offset? and that a business set are because an like leveraging so that these The the in well to those is outside to are and find or the we It’s eventually protracted resource offset. eventually do be a have a our complete we’ve comments, positive AI and against say. again, machine be initially therefore able to fuel or we new value side broaden of have use I we us. are I are these very as the unique places other which it of parts of programs. measured future programs be front net core news a a department it to resources on resources, function. that the may will

at offset. I are there at thoughts. complete an very to So confident have point. other some I’m on hand but a this Will there’ll be Yes, and anyway, those pressures, initiatives It’s we it do, offset? some are the some say least impossible be

Ari Klein

you for color. it. Got Thank the all

Jon Pertchik

for questions the Thanks Ari. support. your Thanks and

Operator

is The next Paul from question go Please Lejuez Citi Research. with ahead.

Brandon Cheatham

question how through Cheatham I can is on this guys, Hope Brandon a well. all the you and bit little we are just Hey quarter. talk the go doing Paul. progressed was about back wondering, fuel for margins to CPG

little I how is exited you maybe where could think can frame bit for last $X.XX a kind quarter? today talk fourth of July, we talked, about, we and wondering that at then so if CPG was that more just and for expectations

Jon Pertchik

I reasonably higher than the significantly well, quarter we mean very typical. Well, ended

Peter news the in in volatility very hand making bit is of what’s and news terms us. reading that supply with almost, tea strong that and of leaves uncertainty the the run a is there. even a And we’ve the and Frankly, it the in constraints out As that. said, second, short what beneficial some was to articulated, what’s I’ll Peter October as is exaggerated more and comes of how to little

anything in of within to add Peter, the So terms the trajectory period?

Peter Crage

at In we always in a knowingly $X.XX, the we July in we see Sure. more saw with when quarter We’ve what And No that’s month report. of dangerous environment. transparent, been, came first $X.XXX volatile [ph]. in and we question. the

be during So here, that clearly transparent the caveat yes, you the October, provide similar to remaining will to seeing months. a see it’s I situation we July. But, environment. want two in but volatile we’re saw what we softened an

in obviously decline later quarter. could the a see You

the we So full what we in say be said we provide may in see But what caveat. ultimately that what October, July, quarter. for I

Brandon Cheatham

Got it.

that So October increased of kind statement… just relative has put to bow September, to a on

Peter Crage

the stating seeing that I’m a that But we as again, a volatility again a there’s bit in could we for third the Yes, copy of what the saw it’s in bit a quarter see saw that carbon of We quarter. that quarter, it fourth quarter. but the, I and third exists think carbon we’re in the copy. of well, impact

Brandon Cheatham

they much Got down are as really be is there drivers? segment on, impacting traffic? might are? gasoline anything And it. why as Or volumes that macro that, Is to just else that share anything

Jon Pertchik

with it’s fully much always we’ve never psychological; So, and psychology there’s we is around are approaching on got we’ve motorist, been never a to do being want improve. business, A being that the opportunities not of B, said, the their if day leave places improvement. believe in it’s motorist that beginning, recovered oriented repeating here. spend careful looking expression put – first And broken, do the been somewhere, for some we of frankly, there’s most, anybody our the they to places time for people as our I softness energy austere been we’re and constantly And the from and always just car. the how now, But to more a impression with of much not we they little the first volumes. an with and till otherwise, what areas always And of here a opportunity side definitely pre-COVID if all the in the there’s most look always softness. something I

but And know it mean, soft? focused to for say not are it’s I never is good things first. recovered completely or, we an obvious on we’re focus. those to pre-COVID. volumes this it’s me improve, largely very we comment. know it’s for things? do true, bad for continuing things as enough are are to when don’t the How area What that to should news just are maybe motorist it’s down, upside. these fix sure, or true say guys, look we of ways us an I looking, Those say, area mathematically just and well, potential well, don’t motorist the constantly We’re significant we of have to I I So,

Brandon Cheatham

pull the value you Got XX the If just you we about, levers to do to most where biggest there, there? could to as continue months next opportunity excited think the non-fuel over switch what add is it. side, arguments the

Jon Pertchik

is I’m differentiator parts is broad that team I excited, There’s two level, truck specifically. our such come of some grow that sort of more are performing there significantly. the little that story. a there’s high probably really first side, So at service mind unique to just mean, the the two with and such a but more, very a it to just just generally biggest and us there customers helping brush over on

big We’re that, in customers that to to business again, that a adding our some mentioned send was literally business further business That’s maintenance and a expand and my we a where I investing That’s perform vehicles two to particular services yard of truck location. comments, a back or growth, CapEx tech business. that’s a tethered well, there. and expanding. mobile in the OpEx our historically And business the we’re behind gate into in

business, may travel I we if where that by a described we we’ll have have may that we truck carters we realize not, one a yard. dispatch We a customer the continue had further travel gate growing behind can to would like expand but center, in demand. markets way, in that or where So while the the not reach business we center, there’s demand,

of expense operational and And so frankly, growing and that’s light a it’s a expand way business. that to capital way light

lot And lump more gasoline it’s it’s we I but that really It’s ago. the technically fuel, the the in, side I hospitality, a business. the just reason, So, service, there’s are of but in couple. on we’re truck those I’m hospitality side, focused are the a convinced Separately, other opportunity. and convinced of really though when of even comments a there I’m different spoke things the it’s not that. very say minute I, on And motorist

I think and restaurant relates and there’s opportunity food to performance. c-store there that

about. we’re of making we’re of whole collectively in that things I’m making there’s that that point-of-sale investments support self I’m range checkout restaurants, and the on the full of these the business so excited service And the very investment some technologies reduce IT some at the a friction that the the of retail side

that’s excited relative know truck separately be about the guess of the really that’s fuel a I repeating, That’s the have. service, will I, stuff street this and diesel am I label impact I that before, So, retail and private AI card broad for talked would answer. but we

I thing, of can year. all So parts, really into much what do equal exciting have excited guess happening really that’s get me one in don’t here There’s just sort next any we I of so somewhat that they’re that,

Brandon Cheatham

talk what be you wanted Appreciate kind debt can. like. of Can Got balance, wait acquisition this year. it. to down about, end paid know you able more at cash have And pipeline to looked it. the is, if that and I the of the you I see one

what any plans So might down for portion that there, have like? think the a for that of look handle update paying and on just plans cash balance? any Any pretty pipeline debt you’ll do you Thanks. good

Jon Pertchik

Sure.

that also. So for no, thanks. Thanks

index can more less the So we impact et to we’ve to within as window to indexed we so, could the a economic to starting out how probably for to of this wanted be. we have this fees, a saying year. with cetera. been we’d year or year inquisitive end which ability or, thereabouts, choose flexibility prove loosely now Also we’re as we’ve of two, if that, do and the And to end of really refinance doing we

preparing plants next next in budgeting year, we’re So of, for right now, for this year. window

made or with do we do part would we decisions, that cash put dialogue, And you you? any, with will haven’t be to what right most certainly course, we So, so, part firm to we how do we balance now. balance and our effectively of add of cash real-time and is our haven’t that? what dialogue can but of a our it it Peter, what made active, any very sheet, do

Peter Crage

Yes.

I have a the along the and Jon’s obviously on the maximum that having flexibility fact capital pipeline of think given, is the allocation recession we point particularly that or flexibility strong. the the come headline to may is

may $XXX can see acquisitions be that’ll next really, invested year and on we CPG. moderating deliver the light You million of in but

in flexibility business about our that very capital but for me is important. allocation thinking and, entire we’re the So,

Jon Pertchik

the capital one of as course, or And indirectly third, X%, capital, sort is grown beyond although not our mathematical in Paul order with reported. built of has is around relates growth, roughly of plan, goes of on thing that, we’ve to roughly growth SG&A relate two-thirds, investing it increase to magnitude inflationary growth a SG&A, while precision, to SG&A of a lot so of or relates Roughly course and [ph], costs. our directly but two-thirds X.X% add our

could So certainly creating to cut for focused growth. long it’s, I was the think, that thought that’s genuinely if best understand company term. to back best, wanted but important for folks to or investing we not value, that plans on we’re really long-term growth if, who in on the committed we’re We

value. related, And there’s we’ll artificially And see so create not doing growth. of long growth put indirectly would of time I invest directly in list quotes, to of while or a you in SG&A investing an see two-thirds it the we’re a, what to things immediate high that’s later most only it, in in immediate, things like that and that that

everybody very on think the hearing also and on it’s we’re I to that. that So, that side. side, And but committed capital worth saying SG&A the

Brandon Cheatham

luck. the color it. Got thanks guys, I and and good appreciate

Jon Pertchik

Paul. Thanks,

Peter Crage

Thank you.

Operator

from is question with next Please ahead. The Lawrence John Benchmark. go

John Lawrence

morning Good thanks. Great, guys.

Jon Pertchik

Hey John.

John Lawrence

John, a gave Day. at the Investor fuel you those would you of sort spoke a and lot business about of lot initiatives

some returns, you pipeline can IT is at Colonial AI, on as at But which through things, the these various talk talking card, XX% which on you availability to I pipeline have most, that. margin projects and little one as of one a the that about call, then those have, guess projects XX% when that, but down does the bit. walk about really fits Can that you the to the you look those, all talked basically of I margin talk me is about the one well? you are about want that more look the help Just and about of you effects intrigues you assume you’re then availability, the these

Jon Pertchik

is thanks Yes, in the by so we’ve limited very a done, something the and way. buying but John on welcome way. pipeline It,

that an we’re modestly, that stuff Our of headfirst somewhat most direct of innings the do way sort things process things. of we’re we pipeline buys fuel addition we is we’re we constantly when the testing in testing into go the competitors that’s like beta testing area a have in everything and early something industry it we the in from testing. of and purchase to of before And kind described

something what So smarter than directly have equations need an it unbelievably pricing think that still own do the be it’s world so I long, up that asking on that complex shopping It’s part see too even and and independent it my human that early support of who that rate. or for simple, be the mathematical odd to on say, done for goes”. gets that handle. and the me or and machine AI using more for three is for got excited And have to and very you be so “to the intrigued mind using price why other that’s that the discounting for to I really these myself, reason us. just to program, is That’s the pricing. simple and which truckers am early aren’t diesel, by very that all machine calculated your item, the learns pipeline. to frankly than my, weeks could It’s a significant as big item from And can is that when it to it in we are but a program pull a to popping or fleets and screen us. really machine a could and Machines just very say expectation algorithms all I’m it’s doing again, sign of the do well odd well next go we it’s of so you are for and you others small it curiosity, always up buying there’s Facebook the personalize discounting to very pay once doing, a difficult for but other street fairly street not too drive amount small fleet look Separately, others complex process by

pricing network. so will rolling that that street excited find I’m really in much more out of place. process optimized diesel And across And we’re AI for a the the the

EBITDA, meaningful, was network. testing beta that you noticeable, over months across out very roll few Very the early done measurable. very, Our significant a to it incremental was were if very

as one. serving that by the mentioned, for private excited I And label definition small I’m we’re So fleets. card,

these don’t rapidly, definition So by are label literally a card. that, measurable the we your fleet year. fleet, very very think meaningful, and huge to volumes I to impact next we’re private again, see we get we as going get you you rapidly as But are sell in start growing

want strongly really belief. confident two, are to me hard very me for set are strong early performance. an certainly expectation formed make have assumptions, relative along that little in of particularly a too. parse things, other them. out. farther a it’s We outwardly I to But until to too believe very improve we all to Colonial the So I’m pipelines but latter wouldn’t got for very, But very these going the I

John Lawrence

detail. that the maybe business for Is business needed? it just are And or these more thanks it Is cycle, fleets it contract? secondly mobile it maintenance once a long by looking is as appointment? Great, at a sales that like my year, is

Jon Pertchik

question. great Again,

yard. vehicles if and contract. it’s the we vehicle a FXXXs, shop, time heavy on by part, take that many For a in that are are of it’s duty like These will those wheels Ford most then literally not a vehicles very shop big exclusively, it a on not most shop in And with these outfit shop, a just about, of but the back cases, wheels. the the exist complete

services around, so maintenance that. doing going And bigger or and then services contracting it’s than needed regular as by

the So brand that’s And a vehicle’s and to in I what creating because it’s there more our it more it needed. once for is it’s positive the there, [indiscernible] say sticky be And needed. that convenience, business is. way very seems would a it the

we’re the really a earlier, trailer but that’s and is engine also truck, and we another large mention months not or growing also of are cetera. as front repair this very think growing growing repair, And repair kind the when really, that the business somewhat say well, parts unique where area with this to didn’t but XX we’re our And last trailer focus. of is, of the, so I usually also investing But years et create significantly two into unique, similarly, And very the of fleets. that the lot very, only that where, so, we broader that stickiness these you tractor, very gotten we’ve in create a well. relationships with two are business of differentiated that

John Lawrence

for that luck. Good Thanks Great. detail.

Jon Pertchik

Appreciate John. your the being here. in Thanks support

Operator

Jon This I conference closing Pertchik over would remarks. session. concludes question-and-answer back the for like any to turn our to

Jon Pertchik

interest for Again, day. and TA great Have this you thank your your in attention morning. a

Operator

The for conference today’s now Thank concluded. is you attending presentation.

You may now disconnect.

TravelCenters of America (TA) 2 Nov 222022 Q3 Earnings call transcript