Q1 2022 Travelcenters of America Inc Earnings Call
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.
Director of Investor Relations Ms. Kristin Brown. Please go ahead.
Thank you. Good morning, everyone. We will begin today's call with remarks from Ta's, Chief Executive Officer, John Pertschuk, well by Chief Financial Officer, Peter Krage, and President Barry Richards for 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 today's present beliefs and expectations as of today may 3rd 2022 2022.
Forward looking statements and their implications are not guaranteed to occur and they may not occur Ta 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, whereas you see that are available free of charge at the SEC's website or by referring to the Investor Relations section of Tas 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 <unk> stated on today's call as well as any qualitative comments regarding the performance.
It should be assumed to be in regard to the first quarter of 2022 as compared to the first quarter of 2020, one unless otherwise stated.
Finally, I would like to remind you that the recording and retransmission of today's conference calls prohibited without the prior written consent of Ta and with that Don I'll turn the call over to you.
Thanks, Chris and good morning, everyone and thank you for your continuing interest in Ta.
Yeah.
I'm extremely proud of Tas 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 maximize the opportunities.
And both positive and challenging market circumstances to create overall excellent financial results for the quarter.
In other words, our people continue to improve.
As we have for over two years. So the most extraordinarily dynamic times 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 <unk> 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.
An overarching focus on investing in 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 was $55 $4 million and 94% improvement.
And adjusted EBITDA of $247 million for the trailing 12 months period is 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.
Once again, tas demonstrating multi year improvements that are extraordinary.
Component parts of the overall business contributed in varying degrees of this financial improvement for the quarter. However, the biggest contributor with strong fuel margins. While we also increased non fuel gross margin by seven 1% versus the prior year quarter.
And by 11, 2% versus the comparable trailing 12 month period ended March 31st 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 at 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 of reaching 8% in March versus prior year, and PPI, reaching 11% for the same period. These challenges, we're 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, G. H T. A is investing and 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 are benefiting from new revenue.
Another example, during the first quarter G. A invested significantly in developing a comprehensive new customer loyalty program separately 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 future quarters.
Excuse me.
More generally ta continues to invest in upgrades and talent and people as well as in training and excellence.
The good news here is that recent investments will bear fruit will bear future fruit, which we expect will continue to create a tailwind as we go forward.
In addition, T as investing in growth includes capital deployment into slight refreshes acquiring existing travel centers engaging in greenfield development and growing our franchise footprint, leading to an overall capital plan and execution that is accelerating.
Yes.
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 in growth. We are disposing of Ta's only non U S site located in Canada, given its underperformance in lack of strategic fit and our other rock in our otherwise all U S network at very favorable economics.
We're also developing two new ground up travel centers on Ta on land, which we expect will open by the end of 2022.
As well as looking for potential opportunities to acquire Exelon sites, along great active Carter's or network currently has gap.
We're not only remained focus on expanding our network through acquisitions, but also through our blossoming franchise program.
Since the beginning of 2020 G. A 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 as 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 plan 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.
<unk> 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 then.
Now turning to our operational results for the quarter overall fuel sales volume increased two 1%.
Compared to the prior year quarter, driven by a two 7% increase in diesel fuel sales volume.
And offset by a three 2% decline in gas sales volumes.
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 margins CPG.
Fuel team continues to improve its processes and execution and during this period of unusual volatility have executed with excellence and utilizing purchasing optionality.
<unk> advantage of regional pricing dislocations and market conditions that caused prices to rise and I'll quickly.
These conditions and this execution led to unusually strong fuel gross margins while market conditions have remained volatile and April volatility 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.
Or blended fuel gross margin per gallon and will continue to evaluate and reevaluate overtime.
[noise] lastly, staying on fuel we are particularly excited about the future impact of 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 early results have been very encouraging we expect these talents 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 four 5% for the quarter versus 2021.
Although our industry is experiencing a challenging purchasing an inflationary cost environment.
We are focused on pricing to balance these forces our customer.
Segmentation work has provided a better understanding of who was visiting us and what their behaviors are which in turn is allowing us to tailor our offerings to our customers actual needs. We also expect to offer a comprehensive we 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 topline 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 T. A the opportunity is to relatively benefit versus others.
Truck service revenues 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 <unk> efficiency and retention.
While we have added technician hours to the schedule to ensure timely service. We've also seen labor cost 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 F S ours opened versus prior year.
The revenue increase [noise].
Pardon me the revenue increase at our Ssrs was offset by a small decrease in quick service restaurant revenues.
Due to persistent staffing shortages that negatively impacted our 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 remained 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 IHOP and toll.
We are also close to formally introducing our new proprietary restaurant concepts 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.
Jeff volume increased by six 5% versus the 2021 first quarter boosted by increased availability across our network.
As part of the capital plan, we are now offering death from dispensers on the diesel fueling island.
Almost all of our locations.
To have them available all lanes and all Ta petros nationwide by the end of 2022.
As pre 2012 as pre 2011 trucks are retired each year, we expect that 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 a dedicated business division formed last year E T. A.
In addition to installing new EV passenger vehicle charging stations at several west coast locations, we're very carefully preparing more comprehensive rollout plans for passenger duty EV eventually across the country, particularly worth federal and state financial incentives are being made available.
We are also developing the most powerfully most powerful publicly accessible micro grid in the United States at an existing travel center in California, with an offsetting California Energy Commission Grant.
The infrastructure Act passed in November Earmark, seven $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.
[noise] finally T. A 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 Tas high levels of Green spend what 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 in developing partnership with S. O T F or special operators transition Foundation, a group that helps retiring special forces best prepare to transfer their skills to the private sector.
<unk>.
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 were planning to host our first analyst and Investor day in September which will allow market participants to get to another broader ta team and we'll have more details on that to share in the coming months.
So to conclude from quarters cleaning showers to administrative teammates supporting executives and everyone in between our 18000 plus colleagues have once again proven ta petros ability to optimize and operate with a 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.
Transformation plan has delivered improving results 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 labor environment.
In closing I offer gratitude to our teammates and colleagues around the country for their hard work and dedication as well as the professional drivers and fleet managers for allowing <unk> to serve.
I'd also offer gratitude to our guests franchisees and dedicated stockholders for continuing to support Ta.
I am pleased with the exceptional progress that our team has made and excited about the opportunities to prove 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 <unk> 40 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 EBIDTA, which excludes two onetime 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 that was partially offset by inflation induced labor increase.
Labor and operating costs affecting us as well as the broader economy.
Our fuel sales volume increased by $11 5 million gallons or two 1% to just over 555 million gallons with diesel sales volume improving by two 7% driven by increased trucking activity and additional new customers.
Gasoline sales volume was down three 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, one a 43% to 23.
As the prior year quarter.
As John discussed, we have positioned ourselves to temporary volatility in CPG and to take advantage of volatility in 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.
Yeah.
This volatility has largely abated in April and although CPG remains very healthy.
As 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 a mid or longer term expectations and accordingly, we continue to expect a range of 15 to 17.
Our blended CPG fuel margin for the foreseeable future.
Non fuel revenues increased by $39 $2 million or eight 7% and total non fuel gross margin increased by $19 $6 million or seven 1%.
Against 2021 strength in truck service up 10%.
D E F 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, we opened the quarter that.
Those increases were offset partially by softness in 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, six and 24 $28 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 and largely contracting 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 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 and 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 D. E F.
Selling general and administrative expense for the quarter remained essentially flat at six 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.
<unk> and.
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 7.25% of fuel gross margin plus non fuel revenue for the foreseeable future.
Turning to our balance sheet for a moment at March 31, 2022, we had cash and cash equivalents of $544 million and availability under our revolving credit facility of $185 $1 million or total liquidity.
$729 $3 million and no near term debt maturities.
We invested $50 million in capital expenditures during the quarter.
While we are cautiously optimistic that supply chain challenges will abate somewhat in 'twenty to 'twenty. Two we are aggressively pursuing our capital plan with an item, 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 significantly significant liquidity.
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 the preservation of this liquidity is important.
The execution of our growth strategy and secondarily as we progressed 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.
<unk>.
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 one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Yes.
Our first question comes from Bryan Mayer with B Riley. Please go ahead.
Good morning, Jonathan and Peter and Thanks for all those comments a couple of questions for me.
First on the E. P. G. I think you used the phrase you guys took advantage of regional market dislocations I guess in pricing.
Ah.
Right on that at all or is that something you don't want to share for competitive reasons.
So again, thanks for the question Brian Good to connect this morning.
I can expand a little bit on that I think you know the way, we buy and without going too much detail to give out weighted the deep dark secrets of our great company.
We buy or 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.
In 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.
Wanna say, exploiting but but taking advantage of finding advantage in in those regional differences as well as differences that changeover 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 when there's movement and in particular, the more movement, whether through time over a few days or amongst regions and the team has gotten better and better at understanding those opportunities and optimizing them and hopefully that gives you some.
To go on.
Yeah. That's helpful and then the two tas that you're announcing that are underdeveloped.
Under development on Ta owned land.
Can you share with us the cost of those developed than maybe what you think youre going to be getting on it on a stabilized EBITDA multiple you know once all is said and done.
Cost of that embedded in the 175 to 200 million or is that in addition to it.
Peter do you want to take that to begin with you know with.
With regard to the two locations that you think in terms of sort of mid to high teens millions.
For the development under $20 million and 17 $18 million in that range.
Excluding land we own the land on return again, we focus on.
<unk>.
EBIT EBIT and 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 it yeah.
I forget us operation and within the 175 to 200.
Yes that was all in the one so the acquisitions are outside of that Brian , but the yeah. The budgeted dollar amounts for for these developments are inside.
Okay. That's helpful. And then last for me on the inflationary pressures.
Can you kind of give us a you know 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 it Peter I'll give you the first part of that in a moment, but sure you know.
We're doing a really good job of and we have done a really good job of continuing to pass through.
Some of those those increases to the to us and pass them, along and the market generally and in certain areas more than others is.
We're not in 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 eight 5% CPI in 11 plus percent PPI and how long that will persist what that how long we can continue to pass some 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 ours.
More broadly the country are on the broader economy, and so what I take solace and today, we've got a really great team managing things and B. We have these tell ones that you know we decided some of them and then there are a number of others as we've spoken over the several quarters now.
But are still going to bear fruit in front of us and so it's hard to answer that Brian and just complete candor, but I do feel really confident in the team's ability to continue to optimize within the realm as possible and two we're going to continue to benefit from these tailwind from sprinkling as both a capex and other changes and initiatives we have been making.
That are yet to be born fruit yet to be born are harvested.
Okay. Thanks, and I think I can speak for myself and my competitors that we're okay with you continue to embarrass us with the blowout quarter.
Well nothing personal Brian , but we're gonna try our darnedest to continue too.
Sounds good thank you for that.
Our next question comes from Paul Lajoie with Citi. Please go ahead.
Hey, everyone. This Brandon Cheatham on for Paul Thanks for taking the question I wanted to circle back to the fuel margin piece, you know because you know us.
This quarter kind of progressed it seemed like W. T. I was shooting straight up which I think historically is negative four for margins I was just kind of curious what where you were able to do to offset that and then you know.
You mentioned that you know it sounds like April is less volatile.
How does that compare to the first quarter or.
Your guidance range of 15 to 17 songs.
So you know if I understood. The first question was you know.
The volatility going in an upward direction on the cost side I think there was a misunderstood when I got to the company I had heard that you don't fall.
One direction is when we tend to do well and what I've come to realize through this company's businesses really resilient and our team does a 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 are costing.
And then separately to order, our caseloads 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 it really the biggest part of it so whether up or down so long as there is movement, we can take advantage of those opportunities.
And you know, we're not really comfortable giving more specific guidance just yet.
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 it as a relatively newly comprise team a couple of and a half years, let's say.
And we have a lot of new things underway again machine learning AI and machine learning in the fuel area small fleet program, we may very well get to a place where we decided to change our view on the guidance, we gave but we're still comfortable where we are and again overtime will not only continue to get us the process will 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.
We get a little further along and get our skews a little under us even more we'll probably be giving a little bit more guidance and in other areas potentially to again, not a commitment, but a directional sort of thought process.
But you're not doing a share how april's fuel margins compare to.
15, some concerns for the first quarter.
No we're not.
Yes, Paul it's Peter we're not yeah, we're not providing specific guidance.
We've tried to do here is in part given the continued volatility and volatility may happen later in April we never know what 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 going to continue to guide at the 15 to 17 cautiously and build that credibility in this volatile environment, but also point out that in March and this 20.
CPG margin in the first quarter and was abating and at that level.
It would be unlikely in the second quarter.
I mean, just the last remark on that just quickly as you know, we do and you see it we all read about it we are still going through a period of a period of volatility.
Reading to that however, you like but we're sticking to the 15% to 17 cents for now.
Got it.
I call. It talks 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 whatever you can share on how the margins of this offering would compare to some of your other customers.
So in terms of penetration are you know I don't have numbers in things as we all know they're private companies, our two primary competitors, but what I do know as <unk>.
<unk> will matter is the amount of resource both of them and effort and energy they put into this business as part of this segment of the business.
Its tremendous and as it should be it's you know it's the most significant from a margin standpoint opportunity that small fleet and street, which we keep separate although they're they're somewhat related.
And those are areas frankly, we havent put the amount of energy into like they have but we haven't put the amount of energy into that we have into the <unk>.
Large fleet more heavily discounted business and they are both good luck all parts of the CPG all parts all segments are important to us, but we havent been firing on all cylinders I think we've done an amazing job. Our sales team has done an excellent job on the commercial G more broadly and penetrating in pursuing a large fleet business and we've seen that in our result.
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 or need number once we have the program and it's about to be rolled out and number two we've now resource 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.
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 of our of RMR a whole dollar margin I'll I'll get from about one or two decembers ago, and I just have a I need to get a fresher pressure.
Time periods that I know the facts, but a couple of December should go for that one period and I think it's representative about 95% of our volume which is both St.
At St meaning pay at the pump price and.
And small fleets, 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.
Machine learning, which focuses on street and supports our street decision 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 a I won't sort.
Sort of a numerical number there I think that that reference point to that December is very very significant.
It'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 several quarters and saying you know what now we've proven again. This is 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 on CPG, but we're you know we're just getting we're not even in the first maybe were in the first inning.
These two these two the AI machine learning and the small fleet.
Graham, but something we're very very excited about.
Got it.
And last one for me you know the four wheel traffic sounds like it was down you just attribute that to less people taking longer road trips with food kind of benefit where their locations are and is there anything youre kind of thinking about to try and tackle that or should we expect that to be kind of pressured as a gas play.
Since were so high.
I mean, I think you summarized it pretty well I would add you know theres a lot of things. We're doing just started to elevate our game that I think will benefit all segments for us I mean, our site refreshes you make a nicer site.
The quality of the experience.
And it takes some time to do proper marketing et cetera people over time come back and come back more so that's more subtle in and it takes a little more time to really Germany, and Barrett harvest, but I think we will see some.
Benefit there and we'll probably see it across the businesses. The loyalty program are developing we're thinking hard about what we can do and in our app and improving that over time. It really the loyalty program and improvements are really are things that will only be completed as really wrap up this year or things that take time or those are just a couple of illustrations, but I mean broadly as we improve our.
Food offering as we improve our footprint in this 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.
Got it appreciate the time guys.
Sure. 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 per check for any closing remarks.
Well again, thank you for your interest in Ta and your attention. This morning have a great day bye everybody.
Yeah.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.