TravelCenters of America (NASDAQ: TA) lost money in the first quarter of the year but still showed signs of improvement by many measures as it continues to go through restructuring.
The net loss of $5.7 million was less than the $18.5 million net loss in the first quarter of 2020. But more to the point of how the company is doing on an operating basis. Adjusted earnings before interest, taxes, depreciation and amortization was up 106.9% compared to last year, while adjusted EBITDAR — which includes restructuring costs — was up 19.5%.
TA also outperformed expectations, according to SeekingAlpha. The GAAP earnings per share of negative 40 cents improved upon expectations by 40 cents. Revenue of $1.53 billion was $100 million more than forecasts, SeekingAlpha said.
If TA diesel sales are a barometer for the strength of the trucking market, it shows that the market had a slight drop in the first quarter compared to the fourth quarter. Total diesel sales at TA in the quarter were 487.21 million gallons, down from the 492.67 million gallons sequentially from the fourth quarter. The figure was well above the first quarter of last year, when the company sold just 429 million gallons, though that figure presumably was impacted by the first stirrings of the pandemic.
In the first quarter of 2019, which might be thought of as a better comparison since it was pandemic-free, TA sold 408.4 million gallons of diesel.
A large retailer like TA benefits from volatility in the fuel market, because there can be times when as wholesale prices drop and acquisition prices for the company decline as well, the price at the pump doesn’t fall as fast. That lack of volatility can be seen in the FUELS.USA data stream in SONAR, which up until the past days of the quarter was remarkably stable.
Diesel prices during the quarter were on an almost steady upward trend, with the weekly DOE/EIA average retail wholesale diesel price rising every week for the quarter except the final full week, as part of a record-breaking 20-week increase in prices.
“While diesel fuel sales volume increased 13.6% over the prior year first quarter, overall fuel gross margin decreased 5.5% because of low volatility in the diesel fuel market that began during the fourth quarter and persisted into early March of 2021,” Jonathan M. Pertchik, TAs CEO, said in the prepared statement that accompanied the earnings. The overall fuel gross margin also declined because of less gasoline traffic, though gasoline sales at TA are a fraction of the diesel sales.
The gross margin per gallon for all fuels declined to 14.2 cents in the first quarter compared to 16.8 cents last year.
As the country continues to come out of the pandemic, other financial activity at TA is increasing. Store and retail services revenue rose 13.1% to $171.8 million. Truck service was up 11.1% to $171.1 millon. But with restaurants not fully operating, and with the comparison to the first quarter of last year when most restaurants were open for the full three months, restaurant revenue dropped to $73.9 million from $94.2 million, a 21.6% decline.
Pertchik said many of the full-service restaurants at TA “remain closed due to governmental mandates and our own precautions and decisions.”
Armed with a larger credit line agreed upon in the fourth quarter of last year, TA’s balance sheet closed the quarter with cash and equivalents of $520 million. A year ago, that figure was $280.4 million. But the company’s long-term debt was stable at about $525 million, unchanged from the end of 2020.