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Since the Company appointed Jon Pertchik as the new CEO in December 2019, the Company has undergone a truly dramatic transformation. Jon has restructured the entire business and implemented strategic pillars to guide that change. The TA Transformation launched in May 2020 and has resulted in dramatic growth, with the stock increasing as much as tenfold. The market cap of the Company rose above $800M in 2021, a huge increase from $70M before Jon arrived. The stock has risen from around $8-9 to approximately $40 per share (at time of application). In 2021, TA produced full year adjusted EBITDA of nearly $220 million, the highest in the company’s history. The multi-pronged transformation included improving guest experience, growing TA’s network and investing in alternative energy and sustainability.
TA has made significant progress to enhance guest experience through several initiatives including remodeling its travel centers nationwide, expanding food options and restaurant concepts, upgrading digital technology and enhancing its loyalty program. TA plans to upgrade over 100 sites by the end of 2022, with enhancements that include renovated restrooms, upgraded showers, more comfortable driver lounges, repaved parking lots, improved signage, new store flow and new lighting fixtures, paint and flooring. In October 2021 TA opened the first of more than 100 site refreshes planned over the next 12-18 months. TA will focus on food variety and restaurant options in 2022, with plans to open several new full-service and quick-service restaurants, and over 20 “The Kitchen” concepts, providing freshly prepared food, packaged meals and snacks. In addition, TA will implement digital enhancements, including mobile payment options, self-checkout and developments to its TruckSmart mobile app.
Network growth is a key component of TA’s transformation. TA is focused on franchising to rapidly expand its network of travel centers nationwide. Since the beginning of 2020, TA has signed 40 new franchise agreements and opened 14 new franchise locations. The retailer anticipates 34 more franchise locations will begin operations by the third quarter of 2023, as it moves toward a target of more than 30 annually.
Lastly, the new business unit, eTA, was launched on Earth Day 2021. Through launching eTA, TA cemented its commitment to sustainability, by adding sustainable energy options for professional drivers and motorists, while leveraging alternative energy to support its own operations. In 2022, TA expects to expand diesel exhaust fluid (DEF) availability to all diesel lanes across its network, install additional biodiesel blending infrastructure and offer more EV charging stations. TA also plans to launch an innovative test project with the California Energy Commission, which includes designing, developing and deploying a distributed energy resource to power energy storage and EV charging solutions.
TA’s financial results and stock price reaction are indicative of the outperformance the Company has driven over the last two years. TA operates in a highly fragmented industry, with the largest players being privately or family-owned. During the early stages of the pandemic, TA shut down 169 full-service restaurants, which helped boost net income by 490%. Additionally, the Company transitioned from buying fuel in 30-million-gallon increments, to placing bulk orders of 750 million at a discount. Differentiated cost-saving practices were further bolstered by competitively bidding the uniforms for TA’s truck mechanics and converting to LED lighting. Jon Pertchik’s exceptional leadership has catalyzed TA’s impressive transformation.
TA has achieved incredible success in an environment that has seen a major trucking/logistics boost, coupled with ongoing labor and supply-chain shortages. TA’s strong performance amidst these compounding factors demonstrates the resilience of their business model. Transportation was a pivotal issue throughout infrastructure bill negotiations, situating TA and the travel industry more broadly, at the center of the national dialogue. TA also touches on a number of trends that are central topics right now, including the extraordinary surge in the demand for goods. At a time when the stakes were high and all eyes were on the industry, Jon's leadership drove operational excellence and the successful implementation of their transformation plan.
