TravelCenters of America Inc.

Good morning, and welcome to Travel Centers of America's first quarter 2022 financial results. This call is being recorded. At this time, for opening remarks and introductions, I would like to introduce Travel Centers of America's Director of Investor Relations, Ms. Kristen Brown. Please go ahead.

Thank you. Good morning, everyone. We will begin today's call with remarks from TA's Chief Executive Officer, John Perchick, followed by Chief Financial Officer, Peter Crage, and President Barry Richards for our analyst Q&A. Today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and federal securities laws. These forward-looking statements are based on TA's present beliefs and expectations as of today, May 3, 2022. Forward-looking statements and their implications are not guaranteed to occur and they may not occur. TAA undertakes no obligation to revise or publicly release any revision to the forward-looking statements made today other than as required by law. Actual results may differ materially from those implied or included in these forward-looking statements. Additional information concerning factors that could cause our forward-looking statements not to occur is contained in our filings with the Securities and Exchange Commission, or SEC, that are available free of charge at the SEC's website or by referring to the investor relations section of TA's website. Investors are cautioned not to place undue reliance upon any forward-looking statements. During this call, we will be discussing non-GAAP financial measures, including adjusted net income EBITDA and adjusted EBITDA. The reconciliation of these non-GAAP measures to the most comparable GAAP amounts are available in our press release. The financial and operating measures implied and or stated on today's call, as well as any qualitative comments regarding the performance, should be assumed to be in regard to the first quarter of 2022 as compared to the first quarter of 2021 unless otherwise stated. Finally, I would like to remind you that the recording and retransmission of today's conference call is prohibited without the prior written consent of TA. And with that, John, I'll turn the call over to you.

Thanks, Kristen. Good morning, everyone, and thank you for your continuing interest in TA. I'm extremely proud of TA's broader team as we report once again a very strong first quarter. And while some market conditions supported these results, other market conditions created significant challenges, and so across the board, our team maximized opportunities in both positive and challenging market circumstances to create overall excellent financial results for the quarter. In other words, our people continue to prove, as we have for over two years, of the most extraordinarily dynamic times that whatever comes our way, we can execute with great effect. In addition to our people, this quarter also continues to demonstrate the fundamental durability and resilience of TA's business model, as well as our ability to drive growth while enhancing profitability. In short, as we work our way through our 50th anniversary year, TA's great people, reliable business model, and overarching focus on investing and growth overcame accelerating inflationary pressures and ongoing labor and supply chain challenges, albeit buoyed by favorable fuel margin conditions. Now to the results. For the 2022 first quarter, compared to the prior year quarter, we produced the following. Adjusted net income of $15.2 million, which is an improvement of over 380%. Adjusted EBITDA of $55.4 million, a 94% improvement. and adjusted EBITDA of $247 million for the trailing 12-month period, a 53% increase versus the prior year period. Also, I want to remind everyone that these results are on top of the prior year 2021 growth over 2020 growth. That was very significant. So once again, TA is demonstrating multi-year improvements that are extraordinary. Component parts of the overall business contributed in varying degrees to this financial improvement for the quarter. However, the biggest contributor was strong fuel margins, while we also increased non-fuel gross margin by 7.1% versus the prior year quarter, and by 11.2% versus the comparable trailing 12 period ended March 31, 2021. The first quarter required intensive focus on monitoring inflationary forces and carefully passing through cost increases. managing labor pressures and gaps in operating hours, and sourcing products to ensure shelves remain full, while continuing to carry out our broad-based transformational initiatives across all parts of the business and ramping up execution on our capital plan. With CPI breaching 8% in March versus prior year and PPI breaching 11% for the same period, these challenges were very real, and some relative margin compression was experienced. However, the impact was within expected levels. Also, some cost increases were realized during the quarter as planned, resulting from our commitment to investing in growth. In the first instance, this includes investing in programs and people to grow top line. For example, TA has invested in launching a robust small fleet program, which includes the program development itself, as well as adding numerous salespeople and increasing marketing spend in advance of generating the first new sales or benefiting from new revenue. Another example during the first quarter, TA invested significantly in developing a comprehensive new customer loyalty program and separately in machine learning and artificial intelligence to support diesel fuel pricing decisions. These are illustrative examples of a much larger list of investments in growth that TA is making today that will impact top-line growth in the future quarters. Excuse me. More generally, TA continues to invest in upgrades in talent and people, as well as in training and excellence. The good news here is that recent investments will bear future fruit, which we expect will continue to create a tailwind as we go forward. In addition, TA's investing and growth includes capital deployment into site refreshes, acquiring existing travel centers, engaging in greenfield development, and growing our franchise footprint, leading to an overall capital plan execution that is accelerating. To that end, we closed on acquisitions in April, totaling in excess of $50 million for two high-performing travel centers and a strategically located truck service facility. We are currently evaluating additional acquisitions in our pipeline, which stands at approximately $130 million, with more announcements to come in the near future. While network expansion is a key pillar of investing and growth, we are disposing of TA's only non-US site located in Canada, given its underperformance and lack of strategic fit in our otherwise all-US network at very favorable economics. We are also developing two new ground-up travel centers on TA-owned land, which we expect will open by the end of 2022, as well as looking for potential opportunities to acquire excellent sites along great active corridors where our network currently has gaps. We not only remain focused on expanding our network through acquisitions, but also through our blossoming franchise program. Since the beginning of 2020, TA has entered into franchise agreements covering 49 travel centers, five of which began operations during 2022 and two during 2021, with the balance expected to open by the second quarter of 2024 as we continue to as we continue toward our sustained target of 30 per year. Another key pillar of investing in growth is our site refresh program, which was launched last fall. With a broad spectrum of updates designed to improve the guest experience, we have completed half of the approximately 100 planned refreshes and expect to complete the remainder by early 2023. Overall, I remain confident in our robust capital and growth plans, and the positive impact they will have on our already established and resilient financial performance. TA is focused on choke points caused by supply chain disruptions that adversely impacted our pace of capital deployment in 2021 to assure capital can be deployed as planned in 2022. And thus far, we are on pace with our planned $175 million to $200 million target for 2022 CapEx spend. Now turning to our operational results for the quarter. Overall fuel sales volume increased 2.1% compared to the prior year quarter, driven by a 2.7% increase in diesel fuel sales volume, and offset by a 3.2% decline in gas sales volume. This decrease was partially driven by higher retail prices, particularly in March, during a period of the year when both fuel and non-fuel volumes are typically at relatively lower levels. Our fuel gross margin increased 45.8% versus the prior year quarter, driven mostly by increases in fuel margin CPG. The fuel team continues to improve its processes and execution, and during this period of unusual volatility, have executed with excellence in utilizing purchasing optionality to take advantage of regional pricing dislocations and market conditions that cause prices to rise and fall quickly. These conditions and this execution led to unusually strong fuel gross margins. While market conditions have remained volatile in April, volatility has somewhat abated from the extraordinary March levels, and we continue to experience very solid fuel gross margins. Despite these results, we are maintaining our guidance for stable state CPG of 15 to 17 cents for blended fuel gross margin per gallon, and we'll continue to evaluate and reevaluate over time. Lastly, staying on fuel, we are particularly excited about the future impact that artificial intelligence and machine learning will have on diesel pricing, as well as our brand new small fleet program and its potential impact on both volume and fuel margin as we approach the back half of 2022. Beta testing and early results have been very encouraging. We expect these tailwinds to help mitigate any adverse impact that macroeconomic forces like inflation, and supply chain disruption may present in 2022. On the non-fuel side of the business, store and retail services revenues increased by over 4.5% for the quarter versus 2021. Although our industry is experiencing a challenging purchasing and inflationary cost environment, we have focused on pricing to balance these forces. Our customer segmentation work has provided a better understanding of who is visiting us and what their behaviors are. which in turn is allowing us to tailor our offering to our customers' actual needs. We also expect to offer a comprehensively revised loyalty program designed around our customer segmentation work by year end. A combination of inflationary forces, wage pressures, and intentional investing in growth have offset top line increases on the non-fuel side. And while we do not see inflationary forces going away, nor our continuing investing in growth, we are excited that transformational initiatives will continue to germinate and manifest increasing value and otherwise provide TA the opportunity to relatively benefit versus others. Truck service revenue showed a solid improvement with a 10.1% increase versus 2021, driven in part by price adjustments and higher value work orders. Technician staffing remains an important area of focus, with compensation and training targeted to improve tech efficiency and retention. While we have added technician hours to the schedule to ensure timely service, we have also seen labor costs and margin pressures. We are actively addressing these through pricing actions, not inconsistent with competitor and market expectations. Restaurant revenues increased 60 basis points versus prior year, as revenues at our full-service restaurants were boosted by inflation-driven price increases and the reopening of more locations with approximately 19 more FSRs open versus prior year. The revenue increase at our FSRs was offset by a small decrease in quick service restaurant revenues due to persistent staffing shortages that negatively impacted QSR operating capacity. Staffing shortages continue to be a unique challenge across the food side of the business which we are mitigating through streamlining menus and competitive compensation programs. Our full-service restaurants remain an important differentiator, as well as another area of significant opportunity for improved financial performance. We have opened three of the five IHOP conversions underway and expect to open the other two by the end of this quarter, with a target of 20 IHOPs in total. We are also close to formally introducing a new proprietary restaurant concept designed around a studied understanding of our customers' needs and look forward to further announcements in the coming months. Non-fuel revenues also continue to benefit from strong demand for diesel exhaust fluid, or DEF, which is required by newer trucks. DEF volume increased by 6.5% versus the 2021 first quarter, boosted by increased availability across our network. As part of the capital plan, we are now offering DEF from dispensers on the diesel-fueling islands at almost all of our locations and expect to have them available in all lanes and all TA Petros nationwide by the end of 2022. As pre-2011 trucks are retired each year, we expect that the demand for DEF will continue to grow. Shifting, we continue to build on our commitment to sustainability and alternative energy with the dedicated business division formed last year at ETA. In addition to installing new EV passenger vehicle charging stations at several West Coast locations, we are very carefully preparing more comprehensive rollout plans for passenger-duty EV eventually across the country, particularly where federal and state financial incentives are being made available. We are also developing the most powerful publicly accessible microgrid in the United States at an existing travel center in California, with an offsetting California Energy Commission grant. The Infrastructure Act passed in November earmarked $7.5 billion of federal funds specifically targeted for installation of EV fast chargers to be distributed through the states and for which we are making plans to access to the fullest extent possible to defray and subsidize total capital costs. Finally, TA is well on its way to developing a robust environmental, social, governance, or ESG framework and policy. We are pleased to be recognized for our sustainability efforts recently with a 2022 Leadership in Greener Purchasing Award from Office Depot based on TA's high levels of green spend when purchasing office supplies compared to others in the industry. Also, we remain proud of our continuing leadership in supporting both Truckers Against Trafficking and St. Christopher's Driver Relief Fund, as well as our recent support and developing partnership with SOTF, or Special Operators Transition Foundation, a group that helps retiring Special Forces vets prepare to transfer their skills to the private sector. Finally, we expect to issue our first-ever sustainability report later this year, outlining achievements to date, planned and ongoing initiatives, and longer-term goals. We are excited to share this report during the back half of this year. I also wanted to mention that we are planning to host our first Analyst and Investor Day in September which will allow market participants to get to know the broader TA team, and we'll have more details on that to share in the coming months. So to conclude, from porters cleaning showers to administrative teammates supporting executives and everyone in between, our 18,000-plus colleagues have once again proven TA Petro's ability to optimize and operate within highly dynamic circumstances to create significant shareholder value. This is what binds us, and I'm proud of the strong, positive results our team has generated in the first quarter. The transformation plan has delivered improving results, and as we focus on investing in top-line growth through acquisition, development, franchise, site refresh, IT improvements, and in our people, we remain confident in our ability to continue to generate shareholder value despite a challenging supply chain, inflationary, and labor environment. In closing, I offer gratitude to our teammates and colleagues around the country for their hard work and dedication, as well as to professional drivers and fleet managers for allowing TA to serve you. I also offer gratitude to our guests, franchisees, and dedicated stockholders for continuing to support TA. I'm pleased with the exceptional progress that our team has made and excited about the opportunities to improve and drive long-term shareholder value that are still in front of us. And with that, I'll hand the call over to Peter to discuss the quarter's financial results in detail. Peter?

Thank you, John, and good morning, everyone. As John mentioned, we are very pleased with our results in the first quarter, which we believe continues to demonstrate the ability of this business to produce resilience and improving operating results, and importantly, generate strong free cash flow. In my remarks that follow, I will be referring to the 2022 first quarter as compared to the 2021 first quarter, unless otherwise noted. For the first quarter, net income of $16.3 million, or $1.10 per share, improved $22 million as compared to a net loss of $5.7 million, or 40 cents per share. Excluding certain one-time items in both quarters, as detailed in our earnings release, we generated an improvement of over 380% in adjusted net income. Adjusted EBITDA, which excludes two one-time items in the current quarter, increased $26.8 million, or 94%, primarily due to the strong results we generated in both fuel and non-fuel gross margin, those partially offset by inflation-induced labor, increased labor, and operating costs affecting us, as well as the broader economy. Our fuel sales volume increased by 11.5%, million gallons, or 2.1%, to just over 555 million gallons, with diesel sales volume improving by 2.7%, driven by increased trucking activity and additional new customers. Gasoline sales volume was down by 3.2%, which we believe has been impacted by increases in retail gas prices. Fuel gross margin increased. $35.5 million to $112.9 million or 45.8%. And blended margin cents per gallon or CPG improved 6.1 cents or 43% to 20.3 cents versus the prior year quarter. As John discussed, we have positioned ourselves to temper volatility in CPG and to take advantage of volatility and pricing anomalies in the market when they occur. However, We would note that the first quarter of 2022 saw unprecedented volatility in the fuel markets, primarily concentrated in the month of March. This volatility has largely abated in April, and although CPG remains very healthy, it has declined from first quarter levels. As a result of this unprecedented volatility, we do not believe the CPG results in the first quarter are indicative of mid or longer-term expectations. And accordingly, we continue to expect a range of 15 to 17 cents for our blended CPG fuel margin for the foreseeable future. Non-fuel revenues increased by $39.2 million, or 8.7 percent, and total non-fuel gross margin increased by $19.6 million, or 7.1 percent. Against 2021, strength in truck service up 10%, DEF up 44%, primarily pricing driven, with an average price per gallon up 35%, and store up 5%, and to a lesser extent, full service restaurants, as many full service locations reopened at the quarter. Those increases were all offset partially by softness and quick service restaurants, to which we continue to experience intermittent closures and reduced operating hours. stemming from labor shortages. On the cost side of non-fuel, cost of goods sold and site-level operating expenses increased by $19.6 and $24.8 million, respectively. While these increases are driven primarily by revenue growth from continued improved top-line business activity, labor rate and input cost pressures continue. We have been successful thus far in largely counteracting these pressures. For example, We improved non-fuel gross margin by 50 basis points on a sequential quarter-over-quarter basis through thoughtful pricing actions and a keen focus on opportunities for purchasing efficiency. And as John mentioned, labor and operating costs continue to pose a challenge to which we are deploying scheduling and compensation program changes in an effort to combat. Lastly, on the cost side, While on a year-over-year basis, non-fuel gross margin percentage declined 100 basis points, this is almost entirely the result of lower reported percentage margin on diesel exhaust fluid as retail pricing and cost have accelerated year-over-year. On a pure dollar margin basis, we are preserving or in some cases increasing the dollars that flow to earnings from DEF. Selling general and administrative expense for the quarter remained essentially flat at 6.9% of total fuel gross margin plus non-fuel revenue. As we continue to expand the business, identify and implement efficiency and other opportunities, and pursue important initiatives, for example, the adoption of more efficient cloud-based technology solutions, we will likely see elevated run rate, and in some cases, one-time costs flow through our results. relative to previous years on an absolute dollar basis. Internally, we have established a benchmark of costs on a relative basis to the growth in business and expect annual SG&A to be in the range of six and three quarters to seven and a quarter percent of fuel gross margin plus non-fuel revenue for the foreseeable future. Turning to our balance sheet for a moment, At March 31st, 2022, we had cash and cash equivalents of $544 million and availability under our revolving credit facility of $185.1 million for total liquidity of $729.3 million and no near-term debt maturities. We invested $50 million in capital expenditures during the quarter. And while we are cautiously optimistic that supply chain challenges will abate somewhat in 2022, we are aggressively pursuing our capital plan with an eye to making up some lost ground in late 2021. At this time, having deployed over $50 million in the first quarter alone, we continue to anticipate cash spend between $175 and $200 million on CapEx projects in 2022. I would note this excludes any tuck-in acquisition activity. Lastly, in addition to CapEx, We continue to preserve significant liquidity as we evaluate a growing pipeline of potential accretive acquisitions and ground up travel center development opportunities. As John mentioned, we deployed over $50 million in cash on hand to close on two important acquisitions in April, in addition to $50 million in CapEx. And we are hopeful that we will acquire additional sites in future months. We continue to believe that preservation of this liquidity is important the timely execution of our growth strategy. And secondarily, as we progress through the back half of 2022, we will also consider opportunities to be constructive on our balance sheet and capital structure as we become more comfortable with liquidity needs in 2023 and beyond. That concludes our prepared remarks operator. We are now ready to take questions.

We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Brian Mayer with B. Reilly.

Please go ahead. Good morning, Jonathan and Peter, and thanks for all those comments. A couple questions for me. First, on the CPG, I think you used the phrase, you guys took advantage of regional market dislocations, I guess, in pricing. Can you elaborate on that at all, or is that something you don't want to share for competitive reasons?

So, again, thanks for the question, Brian, and good to connect this morning. I mean, I can expand a little bit on that, I think. You know, the way we buy, and without going too much detail to give away the deep, dark secrets of our great company, you know, we buy sort of in a sense there's 17 variables that contribute to CPG for us, approximately 17 primary variables. But the simple, the essence of it is we're buying at wholesale, we're selling at retail. That's where it starts, or discounted retail. Within that, we're able to cancel loads. We can buy from certain places and not others and there's a whole lot of variables that go into those I don't want to say exploiting but but taking advantage of finding advantage in in those regional differences as well as differences that change over time within a few days and so The market gave us this opportunity of movement and that's where we tend to do best not necessarily the highest or the lowest times but where there's movement and in particular the more movement whether through time over a few days or or amongst regions, and the team has gotten better and better at understanding those opportunities and optimizing them. And hopefully that gives you something to go on.

Yeah, that's helpful. And then the two TAs that you mentioned that are under development on TA-owned land, can you share with us the cost of those developments, maybe what you think you're going to be getting on a stabilized EBITDA, multiple, you know, once all is said and done? And is the cost of that embedded in the 175 to 200 million or is that in addition to it?

Peter, you want to take that to begin with?

With regard to the two locations, you think in terms of sort of mid to high teens, millions for the development under 20 million, 17, 18 million in that range, excluding land. We own the land. On return, again, we focus on an EBITDA earning to achieve or exceed our cost of capital. These will likely be in the mid to high teens on a total return basis over the life of the property and the operation.

And within the 175 to 200?

Yes, those are in the 175.

So the acquisitions are outside of that, Brian, but the budgeted dollar amounts for these developments are inside. Okay, that's helpful.

And then last for me, on the inflationary pressures, can you kind of give us an order of magnitude as to what are the biggest headwinds you're facing and your thoughts on the ability to kind of overcome those as we look out over the next kind of 12 to 18 months? Sure.

So maybe, Peter, I'll give you the first part of that in a moment. Sure. We're doing a really good job of, we have done a really good job of continuing to pass through some of those increases to us and pass them along. And the market generally, in certain areas more than others, has borne that, and that's kind of ultimately where we are. And I think the industry is there. It's hard to know when you see, you know, 8.5% CPI and 11-plus percent PPI and how long that will persist, how long we can continue to pass all some of that along. It's just impossible to know. What I do know is everybody's facing that same challenge. When I say everybody, not just our competitors, more broadly the country, our broader economy. And so what I take solace in is, A, we've got a really great team managing things, and, B, we have these tailwinds. We cited some of them, and there are a number of others as we've spoken over several quarters now. are still going to bear fruit in front of us. And so it's hard to answer that, Brian, in just complete candor. But I do feel really confident in the team's ability to continue to optimize within the realm that is possible. And two, we're going to continue to benefit from these tailwinds that, from sprinklings both of CapEx and other changes and initiatives we've been making, that are yet to be borne, that fruit's yet to be borne or harvested.

Okay, thanks. And I think I can speak for myself and my competitors that we're okay with you continuing to embarrass us with these blowout quarters.

Well, nothing personal, Brian, but we're going to try our darndest to continue to.

Sounds good.

So thank you for that.

Our next question comes from Paul LeJouet with Citi. Please go ahead.

Hey, everyone. This is Brandon Cheatham on for Paul. Thanks for taking the question. I wanted to circle back to the fuel margin piece because as the quarter kind of progressed, it seemed like WTI was shooting straight up, which I think historically is negative for margins. I was just kind of curious what you were able to do to offset that. And then you mentioned that it sounds like April is less volatile. How does that compare to the first quarter or your guidance range of 15 to 17 cents?

So I understood the first question with the volatility going in an upward direction on the cost side. I think there was a misunderstanding. When I got to the company, I had heard that one direction is when we tend to do well. And what I've come to realize through this business is it's really resilient. and our team continues to do a better and better job of managing and finding these opportunities, again, over time to say order loads and cancel loads because there's an anticipation that pricing will benefit us or costing, and then separately to order or cancel loads and potentially reorder from another location or area. So that's the essence of it. There's a lot more to it. The team has just gotten really good at managing that, and so I think that's, That's a big part of it, really the biggest part of it. So whether up or down, so long as there's movement, we can take advantage of those opportunities. And, you know, we're not really comfortable giving more specific guidance just yet. And I know this is something I'm really tempted. We've been tempted along the way because fuel margins are such a big part of our business. I still, you know, we've been here at this as a relatively newly comprised team a couple and a half years, let's say. And we have a lot of new things underway, again, machine learning, AI machine learning in the fuel area, small fleet program. We may very well get to a place where we decide to change our view on the guidance we give, but we're still comfortable where we are. You know, and again, over time, we'll not only continue to get used to the process, we'll continue to get better and better at executing. I think we'll continue to get better and tighter at giving guidance. And I really do think as we go forward, as we get a little further along, get our skis a little faster, under us even more, we'll probably be giving a little bit more guidance in other areas potentially, too. Again, not a commitment, but a directional sort of thought process.

Yeah, but you're not going to share, you know, how April's fuel margins compared to 15, 17 cents or the first quarter?

Yeah, we're not. Yeah, Paul, it's Peter. We're not providing specific guidance. Think of it. What we've tried to do here is in part given the continued volatility, and volatility may happen later in April. We never know what – or later in May. We never know what the world – what's going to happen in the world in the second quarter. What we tried to do here is continue to guide at the 15 to 17 cautiously and build that credibility in this volatile environment, but also point out that March and this 20-cent CPG margin in the first quarter was abating and that that level would be unlikely in the second quarter.

I mean, just a last remark on that just quickly is, you know, we do, and you see it, we all read about it, we are still going through a period of volatility. And you can read into that however you like, but we're sticking to the 15 to 17 cents for now.

Yeah, I kind of want to talk about the fleet credit card offering you recently launched. You know, do you have a sense for what kind of penetration your competitors have in that specific kind of professional driver segment, and then, you know, whatever you can share on, you know, how the margins of this offering would compare to some of your other customers.

So in terms of penetration, you know, I don't have numbers and things. We all know they're private companies, our two primary competitors. But what I do know as a practical matter is the amount of resource both of them and effort and energy they put into this business is part of this segment of the business that it's tremendous, and as it should be. It's the most significant from a margin standpoint opportunity. That small fleet and street, which we keep separate, although they're somewhat related, and those are areas, frankly, we haven't put the amount of energy into, like they have, but we haven't put the amount of energy into that we have into the large fleet, more heavily discounted business. Look, all parts of the CPG, all segments are important to us, But we haven't been firing on all cylinders. I think we've done an amazing job. Our fleet sales team has done an excellent job, and the commercial team more broadly, in penetrating and pursuing a large fleet business. And we've seen that in our results throughout the last couple of years. And now, for the first time, we will have a legitimately competitive offering. that provides a lot of things that the smaller fleets want and need. Number one, so we have the program, and it's about to be rolled out. And number two, we've now resourced around, as I noted in some of my remarks, from putting more people behind it and the right kind of people and putting some system in place to support them. So I'm really excited about that. In terms of margin, I mean, this segment can easily be, just this segment itself, which has been a very small percent, of our whole dollar margin. I'll get from about two Decembers ago, and I just happened, I need to get a fresher time period that I know the facts, but a couple of Decembers ago for that one period, and I think it's representative, about 9.5% of our volume, which was both street, street meaning pay at the pump, the price, and small fleet, so that was less than 10% of our volume during that period, contributed almost 50%, 40 plus percent of our whole dollar CPG margin, fuel margin. So it's very significant. And when you put together the AI and machine learning, which focuses on street and supports our street decisions, street pricing decisions, and you put that with our small fleet program, that is what we are attacking. That is what we are pursuing. That is what we are resourcing. And so while I can't give you sort of a numerical number there, I think that reference point to that December is very, very significant. And that's something we're very excited about. And look, down the pike, depending on what happens over this next half year, we may be having this conversation in several quarters and saying, you know what, now we've proven again, this is in the future based on what we have yet to experience. We may very well at some point come back, and it may be significant enough that we raise our guidance on CPG, but we're just getting, we're not even in the first, maybe we're in the first inning of these two, the AI machine learning and the small fleet program. but something we're very, very excited about.

Got it. And last one from me, you know, the four-wheel traffic sounds like it was down. You just attribute this to less people taking longer road trips, which would kind of benefit where your locations are. And is there anything, you know, you're kind of thinking about to try and tackle that, or should we expect that to be kind of pressured as gas prices are so high?

Yeah, I mean, I think you summarized it pretty well, I would add. You know, there's a lot of things we're doing just sort of to elevate our game that I think will benefit all segments for us. I mean, our site refreshes. You make a nicer site. You know, you elevate the quality, the experience. And it takes some time. You do proper marketing, et cetera. People over time come back and come back more. So that's more subtle, and it takes a little more time to really germinate and bear, you know, harvest. But I think we'll see some benefit there, and we'll probably see it across the businesses. The loyalty program we're developing, we're thinking hard about what we can do, and our app and improving that over time. Really, the loyalty program and improvements to our app really are things that will only be completed as we really wrap up this year. They're things that take time. Those are just a couple of illustrations. But, I mean, broadly, as we improve our food offering, as we improve the footprint through the site refreshes and programs and apps and things like that, All of that contributes in ways that we couldn't necessarily create mathematical certainty, but they all contribute to making a more desirable experience. And I think over time, we'll see that directly or indirectly in things like gas volumes.

Appreciate the time, guys. Good luck.

Thanks so much, Brandon.

Thank you.

This concludes our question and answer session. I would like to turn the conference back over to the Chief Executive Officer, Jonathan Perchick, for any closing remarks.

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

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.