Q2 2020 Travelcenters of America Inc Earnings Call
Good morning, welcome to travel centers on America's second quarter, Twentytwenty financial results Conference call.
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I would now like to turn the conference over 2% Brown correct, you're up Investor Relations. Please go ahead.
Thank you. Good morning, everyone. We will begin today's call with remarks her kids Chief Executive Officer, John purchase followed by Chief Financial Officer, Peter Crage, and President Barry Retrench for analysts culinary.
Today's conference call contains forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 and Federal Securities Law.
These forward looking statements are based on today's present beliefs and expectations out there today August 2020.
Forward looking statements under implications are not guarantee to guarantee to occur and they may not occur.
Undertakes no obligation to provide are publicly where we use 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 that are available free of charge at the Fccs website or by referring to the Investor Relations section of today'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 EBITDA adjusted EBITDA adjusted net income and adjusted fuel gross margin. The reconciliation of these non-GAAP measures to the most comparable GAAP amounts are available in our press release that can be found on our website.
The financial and operating measures implied endorsed stated on today's call as well as any qualitative comments regarding performance should be it seemed to be in regard to the second quarter of 2020 as compared to the second quarter 2019, unless otherwise noted.
Finally, I would like to remind you that the recording a trick retransmission of today's conference call is prohibited without the prior written consent appear with that John I'll turn the call over to you.
Thanks, Chris them good morning, everyone and thank you for joining us for your interest in tier.
I'm pleased to report that our newly constitute a senior leadership team.
Combined with our broader organization generated 78.3% increase in net income.
24.2%, increasing EBITDA in the 2022nd quarter over the prior year second quarter.
Despite the dramatic adverse effects of cobot 19 on our topline performance as well as on the broader economy.
I'm proud to say our transformation plan is showing a very early aside the company wide improvement.
By the historical pandemic.
The improved year over year net income in EBIT outperformance was driven by increased discipline in managing expenses.
Our prompt response to cope with my team by implementing furloughs and executing on business management improvement throughout the organization.
Well. These results are positive and evidence of the changes we have begun to make we have a long way to go to show the true I call impact of our transformational plan some of which will not manifest for sometime.
I'll discuss our quarterly results further in a minute, but wanted to start off with the strategic progress we made during the second quarter.
Which I believe it's not the groundwork to drive operational improvements we plan to achieve moving forward.
First we implemented a strategic reorganization in late April with a focus on Rightsizing historical SGN, a growth, which had significantly outpaced revenue growth for many years.
As I talked about on previous calls to U.S.G. and they had been growing at an unsustainable compounded annual growth rate.
7% since 2012, grossly out pacing topline performance and a declining overall fuel cell volume environment.
But reorganization resulted in a head count reduction of approximately 130, and a corresponding annual reduction in corporate estimate of $13.1 million.
In addition in most significantly our strategic reorganization was designed around assembling the right team to drive change to create value.
To that end, we brought on several new senior Vice President and the key areas of corporate development hospitality procurement and fuel as well as a new chief information officer.
These new leaders breakfast with century of combined subject matter experience as well it can do attitude and fresh outside perspective.
There are beginning to serve as change agents.
By enhancing our overall leadership team with new key leaders and attacking operational efficiencies.
We're on our way to creating a better running organization with improved visibility and accountability as well as improve fashion performance.
Our mission vision and values work is nearly complete and our transformation playbook includes nearly 50 distinct initiatives many of which have begun to formally many of which we have begun to formally pursue.
Well this backdrop, we decided to raise equity to position the company to successfully carry out these initiatives and to create a foundation for allowing these initiatives to fully take hold.
In early July we raised approximately $80 million, an equity offering intended primarily to create liquidity cushion and to fund deferred maintenance another catch up capital expenditures necessary to update property condition.
Deferred I T systems, as well as for general corporate purposes.
Well the company was sensitive to the diluted effect of such a raise it was an important part of positioning the company for long term success and to create long term shareholder value.
Q2, 2020 with an important quarter.
During the quarter, we've been able to put.
In place the plan the team and the capital necessary for the company to focus on execution and improving operational and financial efficiency.
The company has provided important neuro improvements over Q2, 2019, and net income of 78.3% and EBITDA was 24.2% despite a global pandemic.
And going forward, we are focused on execution.
Many initiatives will not realized material results for some time. However, Q2 2020 has shown we're beginning down the right.
Okay.
Turning to our result in the second quarter, we were pleased with what we're able to achieve despite the challenges presented by Carbonite team and a corresponding shutdown a major portions of the U.S. economy, which impacted different areas of our business to varying degrees.
Our overall fuel sales volume decreased 5.2%.
Due to a decrease in trucking activity and consumer travel as a result of the pandemic primarily during April and May.
Despite these volume reductions our trend line revealed diesel volumes improving to levels that post Q2 July or better than same period prior year and in fact, our diesel volumes.
I have remained significantly added reported national averages and anecdotal evidence from our private competitors throughout the pandemic.
You'll gross margin for the quarter increased by 19.6% versus prior year, driven partly by favorable fuel purchasing environment the biodiesel tax credit.
As well as changes to our approach to pricing and purchasing.
On the Nonfuel side of the business. That's cool full service restaurants were impacted the most significantly by the pandemic leading to the difficult but necessary decision in mid April to temporarily shot most of our full service restaurants.
And for a lower approximately 4000 employees.
These difficult decisions contributed significantly to our favorable EBITDA and net income result.
Sharp declines in revenue for the full service restaurants more than offset positive year over year results from our quick service restaurant.
Well, then truck service year over year performance with below prior year due to a decline in work orders and oil change counts as a result independently.
The company has responded by creating a new VP role that performs compliance reviews on a site by site basis to ensure established processes are being followed.
It's bottoms up approach is beginning to show early positive result.
Through the second quarter. The first two months shortfall and truck service gross margin relatively improved during the third month of the quarter June.
So that the EBITDA shortfall run rate to prior year reduce significantly.
Post Q2 sales for trucks services have been better than prior year same period.
Truck service remains a top focus for the company.
And in early improvement trends, maybe revealing itself.
Our store division continues to benefit and strong demand for diesel exhaust fluid or death, and we expect the demand for deaf to continue growing as more pre 2011 model. Your trucks are retired each year.
Overall, the sharpest impact to our business with an April and May with a market improvement in June as government mandated closures and stay in place orders started to lift.
Through August 30, a is cautiously reopen 129 of our full service restaurants, and the and have also taking the opportunity to streamline menu offerings in order to focus on more popular at a higher margin items.
Reducing inventory requirements and carefully controlling labor costs.
Also retail revenue in June 2020 was better than prior year Joe.
Finally award on our first steps toward aggressive network expansion, which remains an important priority going forward.
We have signed 21, new franchise agreements since the beginning of 2019.
Or began operations during 2000 1990 of opened year to date and we anticipate the additionally locations will open by the end of 2021.
In addition, we currently are negotiating franchise agreements for an additional 14 travel centers and are engaged in later stages of discussion and negotiation with operators of another two locations with approximately 62 other sites and various phases of the application and diligence process.
So to conclude I'm very proud of the broader company and the positive impact they have shown through the quarter. We have our team our mission vision values, our plan and capital in place and can now focus on carrying out our range a transformational initiatives to generate long term stockholder value.
I would also like to thank the many heroes in our ranked our employees and our franchisees for their hard work and dedication as well as all the professional drivers and fleet customers are allowing us to serve you as we continue to navigate through this unprecedented an uncertain time together.
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're very pleased with our results in the second quarter a.
Particularly given the challenges in the last several months abroad.
But the second quarter, we generated net income of $2.2 million or 26 cents per share compared to $1.2 million or 15 cents per share last year.
Excluding several onetime items, we generated adjusted net income of $5 million compared to adjusted net income of $1.2 million in the second quarter last year.
Adjusted EBITDA was $38.1 million for the quarter, an increase of approximately $6.9 million or 22.9% compared to the prior year.
The increase in adjusted EBITDA was primarily due to increased fuel gross margin.
Reductions in site level operating expense and selling and selling general and administrative expense.
Partially offset by a decline in non fuel gross margin.
Fuel gross margin increased by $15.1 million or 19.6% as compared to the prior year.
Excluding a 7.7 million dollar benefit from the federal biodiesel blenders tax credit in the corner fuel gross margin increased by $7.4 million or 9.6% as compared to the prior year.
Due to a more favorable fuel purchasing environment, primarily in April and May.
While fuel sales volume declined 5.2% and fuel revenues declined over 48% during the quarter fuel gross margin per gallon increased 26.1% inclusive of the federal biodiesel blenders tax credit and 15.7%, excluding the credit when compared to last.
Here.
Nonfuel revenues for the quarter decreased by $70.5 million for 14.8% as compared to last year.
The decrease was primarily due to the temporary closure or limitation of services.
Both our Standalone and travel center restaurants, as well as a decrease in our truck service and store and retail services businesses, primarily in April and May.
These declines were due to a decrease in trucking activity and consumer travel as a result of the pandemic and were partially offset by 4.2% increase in diesel exhaust fluid revenue.
As governments began to lift stay in place orders, we began reopening our full service restaurants in June and we saw signs of improvement in our truck service in store and retail services revenues as compared to June of last year.
Nonfuel gross margin decreased $46 million more 15.9%, primarily due to the decrease in non fuel revenue was previously mentioned.
Rents and royalties from franchisees in the corner decreased by about half a million dollars for 13.5% as compared to the prior here as a result of the permanent closure for franchise Standalone restaurants, as well as the temporary closure is a certain franchise. The standalone restaurants, that's the reason.
After the pandemic.
The impact from these closures was partially offset by the 10 franchise travel center and five franchise Standalone restaurants that began operations after the second quarter of last year.
[noise] site level operating expense decreased by $37.1 million or 15.8%.
As we made the difficult but necessary decision to furlough approximately 4000 field employees in response to the decline in business brought on by the pandemic.
Additionally, we reduced non labor costs, such as maintenance certain utilities and supplies.
These reductions were partially offset by cash bonuses paid to field employees continue to work our travel centers during the pandemic to ensure adequate staffing.
SGN a expense for the quarter decreased by $1.6 million, a 4% compared to last year.
The decrease was primarily due to the elimination of approximately 130 positions as part of the late April reorganization plan and to the Furloughing of approximately 120 corporate employees in response to the pandemic and the reduction in travel related and a reduction in travel related in marketing expenses.
These reductions were largely offset by $3.9 million of nonrecurring costs associated with the reorganization plan.
Real estate rent expense for the quarter decreased by approximately $700000 or 1.1% that's compared to last year.
The decrease was primarily the result at the decrease in the percentage rent as a result of a decrease in nonfuel revenues in the quarter.
Given our current leasing arrangements, we continue to expect our real estate rent expense to run at a quarterly rate approximately $64 million.
Depreciation and amortization expense increased by $5 million or 21.7%.
Primarily due to a $3 billion goodwill impairment charge recognized.
Our Quaker steak and loop or Qs cell business.
During the second quarter, we evaluated the goodwill associated with Qs sell for impairment and determined that the decline in flight level gross margin in excess of site level operating expenses in conjunction with the impact the pandemic were indicators of impairment for that business.
Accordingly, we performed an impairment impairment assessment of the goodwill of Qs sell.
Turning to our balance sheet for a moment.
At June Thirtyth, our cash balance was $142.8 million, we have no amounts outstanding on our 200 million dollar credit facility as of July 31st.
Twentytwenty and we have no near term debt maturities.
We have collected $68.4 million of the $70.2 million in cash refunds related to the federal biodiesel blenders tax credit during the second quarter well ahead of our expectations.
Approximately only $1.8 million remaining to be collected.
As of June Thirtyth 2020, we owned 50 travel centers for Standalone restaurants in a standalone truck service facility that well I'm encumbered by debt.
We successfully finance one on location in West Greenwich in February of this year and an attractive rate.
And continue to evaluate opportunities for additional financings on locations.
Lastly, we invested $10.9 million in capital expenditures during the quarter, bringing the year to date total to $27.6 million.
We have also revised our 2020 capital investment plan to be approximately $68 million as we have deferred all non essential projects to 2021 in order to preserve capital and maintain our financial flexibility. However, now that we have closed on our equity raise we're carefully considering the projects to improve facility.
He is and art I T systems infrastructure consistent with our planned use of these funds, including those that could potentially be deployed in the latter part of this year.
That concludes our prepared remarks, operator, and we're now ready to take questions.
We will now begin question and answer session.
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This time, we'll pause momentarily to assemble our roster.
The first question comes from Brian Mayor of the Raleigh FBR. Please go ahead.
Good morning, guys. A couple of questions on my end, let's start with the June numbers to clarify the truck service store in retail services for June were all up year over year over last year's June is that correct.
Peter do you Abba.
I would I would not say up over last year, we saw a say as a sequential improvement.
Particularly in the restaurants as they opened up but for example in their restaurants now we still had a number of restaurants closed.
In and truck service as John mentioned, yet, we saw improvement and adding that June and the June timeframe.
So hopefully that answers your question.
Right and Brian <unk>, They Brian just add its John the trend line for sure between April and May into June we saw improvements putting aside the full service restaurants in gaming, which appears in other for us the other non fuel areas, where we're improving through the end of the quarter and early results in July we've seen that that improvement to continue.
Okay, and then moving onto the full service restaurants, I think you said that there were 129 of reopened now how many are still close.
Yeah, that's roughly gets us through 50% are opened 50% or close and they are ones that are open our opendata on it as we pointed out just to give a little more color are opened on you know very much more limited menu items.
Which gives us insurance some benefits and in terms of labor costs limited hours in most places.
So we're running the more efficiently, but approximately half half are opening have close and we monitor that very carefully as changes in both demand.
And then also stay treatment of our ability to open or not but both demand and the ability to open we look at.
Obviously, very very regularly and we're making changes accordingly.
Okay and given the experience that you had with closing all these restaurants and reopening or are there full service restaurants in the portfolio that were just such a clear money losers that they may open in a different way or not reopen it all or have a dramatic change in them.
Menus and what are your thoughts on the I hopped conversions speeding them up or not based upon the experience you had with the first one that opened [noise].
Well, it's a great question, Brian you know Weve.
As a transformation or turn around Guy you don't often get the opportunity and I say this you know I'm sort of carefully but are cautiously, but you don't not given the opportunity to turn something like that off and see what happens encoded while it's been horrible for the country and in every other respect it gave us the opportunity to learn and we're very much focused on using the.
This opportunity to learn and so.
Hi, it's it's premature to say well, we close any restaurants, I'm I'm not sure about that but what I know for sure.
[noise] is we need to operate very differently, we need to operate with a lot more discipline with a lot more focus and rigor around measuring things not just what we think are right things.
Looking at a variety of potential brands and others areas, where we can improving obviously, including continuing down the path of IOP. We're looking very carefully now reengaging I say I'd say in looking very carefully at the timing and pace of.
Continuing that that that plan with respect to IOP, we make no sort a formal choices yet right now we're still watching the effects of this pandemic as it seems to bounce around and get better maybe get worse in some areas. So we're obviously watching that very carefully as we were sort continuing to learn from where we are and so we haven't made any final form.
All decisions, but but I can tell you generally speaking, we will operate our restaurants significantly differently and with a lot more discipline and again discipline I have a feeling going forward, we won't have quite as many menu items as we've had in the past there's a lot more labor, there's a lot more waste theres a lot more inventory to manage when you have many more.
Four items, particularly ones that aren't selling very well. So we will be operating very differently going forward out a minimum on the full service restaurants side.
Okay and that kind of leads me into my next question on the 4000, plus furloughed employees I guess, if youve reopened about half year restaurant is it safe to say you brought back.
30, or 40 or 45% of those furloughed employees I mean, what's the thought there with respect the site and timing of bringing those employees back and is there do you think some sustainably lower level that you ultimately end up with when everything is reopened.
Sure you know again, it's hard to get to a real fundamental punch line of what we operate with less people all that it's just it's too early to say anything like that but right now I believe we still have about 2600 people on furlough I think that's the approximate number right now and again wallets half and half opened not all.
Ben.
We are open with fewer hours against your menu items. So that's why the number is there's you know we brought back less than the not that it's a little it's slightly disproportionate the number of restaurants open versus the number of people that have been brought back.
Okay, and then moving onto the DNA I I just wanted to clarify so so we all know the 130 position eliminations and then I guess there was another 120 corporate furloughs, how are those getting layered back on I'm, assuming some or have already started to come back on.
Yes, and so starting where we began with if we.
Identified people and made those choices with respect to the hundred 20 based on demand and demand, mostly not exclusively but mostly related to the full service restaurants and gaming and so as we've seen some demand come back in some places that demand then dictates who we bring back in when.
I don't have the number sitting in front of me on how many of the 120 a come back I know some number have come back and I wouldn't venture a guess it off the top makes I don't know when Peter Barry. If you know we've commented behind me, but I just don't know what I don't want to give a number without that I don't have competency.
Yeah, No I don't know an exact number if there are still though some still on for a longer being up obviously up we're being careful.
Okay, and then last from me and I'm sure from Reading. Prior report you know that this has been a sore spot for me, but with site level operating expenses you have a 48.7 for QQ down from 49, three into Q of last year, but with annual numbers haven't consistently been running about 50%.
Prior to your joining the affirm do you get the said that as you kind of worked through 20, Twond and move into 2021 that we could see site level operating expenses sustainably it up below 50% level and can you give any thoughts on level of magnitude.
Sure I mean, let me start with this just repeating part of what you said, Brian Obviously, you know we've sort of attacked with a lot of focus and some rigor corporate s. DNA and that's not your question, but that's sort of check that box. We've done that we're enjoying the benefit of it now coursing through the system. We're now starting to put our attention to site level SGN, a you know as.
As you look at site level SGN, a you know it approaches a billion dollars. Yeah. I think is 948 million into computer can correct me if I'm wrong, there, but it's in that order of magnitude at least and the way those expenses have been tracked and managed historically.
We've had very little visibility over them and we're changing that now Peter steam is changing that now that's a big priority and we're thinking really hard about how fast not not only to create visibility around it would appear in l. for site level expenses that as you know granular enough and gives us the ability to see things without creating.
A massive burden on the site level organization to be able to track and see a visible PML. So that's something we're balancing and Peter steam is working on right. Now. We're also considering we're evaluating we're thinking about.
Possibly getting some outside help really dig into it because it's such a big number and I agree with you Brian It it's a little mini sore spot for me. The fact that we haven't had visibility is a frustration historically, but it also suggests to me with such a big number without the visibility we're going to find out we're going to make some really six significant.
Lighting, so wrapping that all together, we're very focused on a peters team is focused on creating the visibility and then separately, we're evaluating how and who potentially get some supplemental outside you know onetime helped to really dig into these things to help US you know kind of inform really good choices on how to maybe I'll put it was rightsize that that.
Site level SGN, a somewhat along the lines of what we did at corporate.
It's too early to say what sort of a new normal we're just not there yet, but we are focused on him we won't get there Peter or anything to add to that.
Yeah, I would just emphasize what John said on on identifying that that metric that percentage. That's that's appropriate. We obviously had this burning platform. We've made some decent inroads here and preserve profitability as we go through these next steps not only the the accountability and making individual business owners responsible but also.
Identifying those costs that we can keep out of the system.
Only only after that analysis, which will happen in network will happen over the next to several weeks to a few months, what we have a better feel for that and then we can report back on that.
Okay and being the only current official analysts covering the company, Okay I'll take the Liberty with one more question.
Hi, can you give us any thoughts on what you're seeing as it relates to judge July which just you know having ended year given what we saw in lodging, which was kind of a slowdown in the recovery in July with a pickup in the you know cases of co that what can you share with us on what you saw at T.A. in July.
If anything but yeah, that's great. So I shared earlier this trend line forget to probably you know just this within quarter first of all the set the stage answer your question about July within quarter pretty much across the Nonfuel Board, we saw improvements business by business. So from April to me then to June there was a trend uptick.
Pretty consistently across Nonfuel again, putting I'm I'm sort of excluded from that although there wasn't an uptick full service and gaming, which appears and other for us.
Moving into a July you know, there's sort of preliminary or early results you know business by business again, putting aside the FSRU full service restaurants, and gaming, which appears in other the other businesses actually or show at showing signs of improving not just that continuing that trend line, but actually on the says on this.
Sales level doing better than prior year July.
So the truck service the store QSR are showing low positives to prior year same period, beginning July so we've seen a nice upward trend line and.
I'm not going to suggest to anybody that that's necessarily going to sustain again I'm talking about topline sale.
Just because coal, but it's still uncertain. We're all seeing you know in certain places you know spikes and its so heavily politicized as well, but staying apolitical in that comment you know just not knowing what that will mean for demand. It's hard to say if that will continue but but the good news for this company right now is we're making choices within that context that our.
Allowing us to what we see a positive trend line.
Great. Thanks, that's all for me.
Great. Thanks, so much Brian.
The next question comes from Jim Sullivan of B T. G. Please go ahead.
Thank you and I apologize if you get of Scratchy signal here.
Only from new England, and the systems at fairly unreliable today.
I have a question on the fuel margin. So there was this 9.6% boost to them.
That was primarily due to the fuel purchasing.
Environments, but you also cited in the release the new approach to pricing, but I just wonder if you can help us understand how much of the increase in the margin was attributable to the new approach to pricing.
Thanks, Jim and high hopefully you're safe up there with the web storm I know hit pretty hard in new England, I don't know at I'm going to turn it to Peter and maybe Barry in a moment I'm not sure we're able to parse that out right now I know, we made changes in who was handling pricing and historically you know I learned early on as many months back that pricing was.
Led by and the decision day to day were made by the same person with heading an entire other part of our business and so we unbundled that just before the quarter began right. When cobot was getting started and gave it its do with a full time dedicated to you know attention and I, we know that and had an impact.
I'm not sure we're able to parse out what portion was related to that first is favorable market, but Peter or Barry chime in behind me. If you disagree or if there's more to tell you I know John It's Peter I, we are not able to do that going forward. Obviously, that's our hope is we.
Deploy some initiatives in the field area, but but no the volatility in the market it would be difficult to correlate studies, particularly decision.
Division one other quick sorry go ahead with quick point is you know one of the fundamental areas. We're very focused on is measuring stuff measuring results using data to make good decisions, we've never or not I should say never in a long time, we havent at least in a long time, we haven't done that as a company and it's going to take some time to get to a place where we have.
Data, that's sitting sort of in a repository that we can quickly and easily make sense of so were little bit hamstrung today that won't be the case forever.
As it is it fair to assume drilling however that the the positive impact of the of the fuel purchasing environment as.
The paid or change the spirit I suppose over there.
Yes that should that change started I think a it roughly two thirds of the way through the quarter. So like April and May if I'm not mistaken we were the we received the benefit of that and as we got into June is it really dissipated minutes and that.
Sort of bounced around a little bit ever since.
Okay.
Moving over to the Nonfuel barge and it declined slightly in the second quarter year over year and part of that was due to a pricing and marketing strategies.
So my question there should we expect the nonfuel gross margins to trend lower year over year.
Absolute blow to 60% going forward.
Peter you want to jumping on that sure sure. Jim you know given given that the dramatic decline in revenue you know we have great operating margin leverage on the way up in on the way down.
A dramatic decline of revenue can affect the the percentage, we were able to cut costs, but not at the rate that we needed to to maintain the margin just answered. The question is no I don't believe that we will see a declining margin our goal obviously through not only making these decisions on costs the new.
Management team focusing on on margin on margins and preserving margins net margins and then of course are are further work along on a as John mentioned with regard to to Opex are our goal is to get those margins or to increase over time. So that's that's.
Where we are.
Let me add like for Jim just another points to that you know we have an entirely new leadership in procurement, we didn't even have a procurement function a centralized consolidated procurement function. We do now we have an incredible leader Jamie harbored there we have a new leader Kevin Kelly. These are both from just a couple of months ago, who had hospitality which include C store Q.
Sars et cetera, I think their leadership alone. It's again, we'll take some time to making choices that will cause those areas of the business to really improve and that'll I think whatever other countervailing forces. There are I think we've got we're really equipped to lead through some of this stuff you know last but not least while your question was non fuel and margin I'll, just say with our new assay.
Fuel, we're really focused on optimizing yield and you know sort of that balance between driving volume, which is on the diesel side looking great for us year over year, as we get particularly into a through July.
Driving volume, while not sacrificing pricing sort of optimizing yield so we'll all that new leadership and obviously the more we drive diesel volume the more we fill our stores the more people purchase again I know your questions Nonfuel margin. That's that's more of a volume or sales point, but just to give full contact. So I think my long when a point is that.
Our new senior leadership team has just barely getting started most of them got here may 1st a couple like our head of procurement and fuel came about a month later. So we're really just getting started in terms of changing the how we make choices through that those new leaders.
Okay.
Hi, I'm, John and then also on the out of a issue they could.
It was noted in the release, the 3.9 billion of nonrecurring costs.
Were incurred in the quarter for the real play and and so my question is will there be any additional Scott.
In that respect.
So the <unk> are you done.
So those yet Peterman go God, Peter I mean, I'd go ahead, [laughter], yeah, very small amount maybe a couple hundred thousand dollars, but were so largely learning.
[music].
Okay very good I appreciate that thank you.
Thanks, Jim.
This concludes our question and answer session I would like to turn the conference back over to John purchase Chief Executive Officer for any closing remarks.
Okay. Thank you for your interest in T.A. on your attention. This morning have a great day bye bye.
Oh, France has now concluded. Thank you for attending today's presentation you may now disconnect.
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