Travelcenters of America Inc (TA) 2019 Q4 法說會逐字稿

Good morning, and welcome to the TravelCenters of America, Inc. Fourth Quarter 2019 Financial Results Conference Call. (Operator Instructions)

Please note, this event is being recorded. I would now like to turn the conference over to Kristin Brown, Director of Investor Relations. Please go ahead.

Thank you. Good morning, everyone. We'll begin today's call with remarks from TA's Chief Executive Officer, Jon Pertchik; followed by Chief Operating Officer, Barry Richards; and Chief Financial Officer, Bill Myers. We'll also have time for questions from analysts. 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, February 25, 2020. 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 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 EBITDA 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 and/or stated on today's call as well as any qualitative comments regarding performance should be assumed to be in regard to the fourth quarter of 2019 as compared to the fourth quarter of 2018, unless otherwise noted.

Finally, I would like to remind you that the recording and transmission of today's conference call is prohibited without the prior written consent of TA. And with that, Jon, I'll turn the call over to you.

Thanks, Kristin. Good morning, everyone, and thank you for joining us and for your interest in TA. I'll start by briefly touching on our operating results for the fourth quarter as we ended 2019 with some positive news. Net income was $43.1 million compared to a net loss of $5.9 million last year, boosted by the reinstatement of the federal biodiesel blenders tax credit for 2018 and '19.

The fourth quarter's adjusted EBITDA of $19.9 million was down modestly from $20.6 million in the 2018 fourth quarter, with lower adjusted fuel gross margin and an increase in site level operating expense, partially offset by an increase in nonfuel gross margin and lower real estate rent expense during the 2019 fourth quarter. Fuel sales volume increased by 5.3% in total and on a same-site basis. Nonfuel revenues improved by 1.1% in total and by 70 basis points on a same-site basis.

Although truck service revenues decreased by 1.8% versus an unusually strong comparable quarter last year, store and retail services revenue grew 1.7%, led by growing demand for Diesel Exhaust Fluid, and restaurant revenues grew 4.1%, driven by solid demand for our quick service options. Barry and Bill will have additional color on the quarter's results in a moment. Since joining the company in late December, I have met and spoken with various stakeholders across the company as well as many of TA's customers, partners and vendors and even TA's Founder.

I've had the opportunity to visit sites and meet with hundreds of employees from all over the country at varying levels. From these conversations, I believe, TA has the appropriate full-service business model to build and retain a loyal customer base among trucking fleets and professional drivers as well as an opportunity to become more attractive to nonprofessional drivers and 4-wheel traffic. Our large well-located sites provide the ability to capitalize on the unmet demand for 18-wheel parking as well as provide flexibility to evolve and change as the industry changes.

Our repair business, particularly for offering relatively more involved services, is the best in the industry. Finally, our employee base is unusually dedicated and experienced. However, TA, today, also has some significant challenges, including expense growth that has outsized revenue growth; no centralized procurement function; aging full-service restaurant concepts; inconsistent retail and merchandising experiences; and a lack of singular mission, vision and values, with a real opportunity for enhanced internal corporate communications and a return to a financially centric culture.

Also, our hallmark truck service business has underperformed lately, and our competitors have been adding dots to the map at a rate that has created a near-term disadvantage. I believe my background and lessons learned over the past 2 decades in leading several companies from varying industries through dynamic change before, during and after the great recession, will provide the ability to drive operational and financial performance of the benefit of TA.

I'll start with strategic opportunities to grow the business. At the top of this list is expanding our network of travel centers in the most capital-efficient way possible, which is through franchising. We opened 4 franchised TA Express travel centers in 2019 and 2 so far in the first quarter of 2020. We continue to attract new and potential franchisees and have received extensive interest from current franchisees in adding new TA locations, both full-size truck stops and TA Express locations.

There is also interest from independent operators to convert to TA franchises. By expanding our network, we will grow revenue, be more competitive in capturing market share from the largest fleets and otherwise encourage and increase loyalty from professional drivers. We also see opportunity to increase already high satisfaction levels of current franchisees by better integrating them into the organization. In addition to adding more locations to our network, we can also increase the loyalty of professional drivers by improving and enhancing the truck services we offer. This includes improving on-site space use of truck stop amenities, implementing strategies to improve the process of truck repair staging, reduce dispatch and roll times through reorganization and improve retention of highly qualified repair techs through better training and support.

We are also evaluating limited CapEx approaches for growing the footprint of our repair business to better serve our evolving customer needs. We also need to earn as much as possible from each of our existing sites. To that end, we are focused on upgrading both our quick service and full-service restaurant offerings and improving customers' retail experience in our C-stores. As announced in November, up to 94 of our full-service restaurants at our travel centers will be converted to IHOPs over the next 5 years. We have opportunities on the QSR side to convert and upgrade underperforming brands and they are in the process of evaluating the best approach to all of our restaurants on a site-by-site basis. We are also evaluating opportunities relative to the QSL brand going forward. On a store-by-store basis, c-store performance has been inconsistent. We are focused on the customer experience and creating improvements in the merchandising process. The objective is to drive better performance through increased focus on data and analytics as well as to enhance consistent delivery of an improved experience that optimizes inventory, pricing and efficiency. Finally, as we get through 2020, the company plans on updating its arcane system of loyalty program redemption, which will significantly enhance the professional driver experience and reduce friction at the point of sale.

In addition to TA's strategic growth opportunities, the company is also highly focused on increasing operating efficiency through a greater emphasis and cultural focus on financial performance and cost control. These disciplines will allow the company to get more leverage out of its size and scale that will provide better visibility and accountability, and they will provide opportunities to improve the bottom line.

Since 2012, TA's SG&A has grown at an unsustainable annual growth rate of 7%. While nonfuel sales have grown at a 4.6% CAGR, and overall fuel volume has declined by 2.8%. The company is evaluating ways to reverse this historical trend. The process of affecting change is focusing on creating an efficient and adaptable operation and then designing the organization around that operation. By focusing on process and operational efficiency, we intend to create a better running organization with improved visibility and accountability as well as improved financial performance. The company is also creating a broad cultural focus on managing to budget at all levels along with better visibility and accountability.

KPIs, by department, are being created to define what metrics each respective department should be held accountable to, to best serve the broader organization. The goal of this process is to streamline reporting and increase focus on the things that matter, all tied to the mission, vision and values worth the company has undertaken. Our related priority is on supporting leadership development through improved evaluation, training and communications with greater reliance on data and financial performance. Creating a centralized procurement function will drive economies of scale in pricing, provide more leverage in professional vendor negotiation, increase consistency, save time for operators and functional leaders to carry out their primary functions. And ultimately, to substantial purchase -- purchasing savings and a streamlined operation. Capital spending will be managed carefully and judiciously with an initial focus on investment and the highest return in each capital-intensive areas of the business, including areas of opportunity within the IT department and more efficient inventory management.

Low-cost, high-impact site improvements to key customer-facing areas like removing outdated loyalty program and redemption kiosks, reprogramming the professional driver TV rooms and improving the retail experience through better merchandising and pricing as well as more efficient lighting will also be priorities in 2020. Truck repair growth and the continuation of the IHOP conversions are also priorities. Nonperforming assets by site and by unit are being evaluated to determine nonstrategic or unprofitable areas to potentially exit. To conclude, I believe that by continuing to pursue the growth initiatives that are underway, increasing efficiency and accountability in the overall organization, creating a financially centric and focused culture and implementing stringent cost controls, that we will be able to increase the profitability of the company as we move through 2020.

With that, I'll turn the call over to Barry for his comments.

Thanks, Jon, and good morning, everyone. We saw continued momentum from our travel center operations in the fourth quarter, with nonfuel revenues trending positively year-over-year despite an unusually strong trucking -- truck freight environment in the comparable quarter last year. Overall fuel sales volume increased by 25 million gallons or 5.3%, primarily due to a same-site volume increase of 24.6 million gallons or 5.3%. We believe these increases are driven in part by our UltraONE customer loyalty program, which was introduced in February as well as business won from fleets by our commercial sales team. Within truck service, tire unit sales were up 4.8% versus same quarter last year and 2.9% for the full year 2019, despite U.S. tire Manufacturers Association, reporting a 13.1% decline in 2019. Retreads and imported tires have become a larger share of our tire sales mix. RoadSquad sales increased by 4% versus same quarter last year, and our mobile maintenance service continued to show strong growth, producing a 73.8% increase in sales.

Overall, truck service revenues were down 1.8% due to relatively strong freight environment in the same quarter last year as well as a large number of new trucks on the road, which translated into decreased demand for oil changes and related parts. The benefit to us of newer trucks on the road is the strong demand generated for Diesel Exhaust Fluid or DEF, which drove the increase in our store division revenue. We expect the demand for DEF to continue growing as more pre-2011 model year trucks are retired each year. Our restaurant business remains healthy, showing total revenue increases of 4.1% or $4.3 million, primarily driven by strong fast food sales.

Revenues from our full-service restaurants were impacted by a handful of locations that were closed for rebranding during the quarter as well as business hour adjustments for 39 locations that have previously been operated overnight. We believe rebranding a number of these restaurants to stronger, nationally recognized concepts like IHOP and rationalizing hours of operation will ultimately boost restaurant margins over time.

Looking ahead, we continue to see the great growth potential and opportunities for our truck service programs, especially the mobile maintenance program that we have branded as TechOn-SITE. We've earned the confidence of a number of large customers who enjoy the improved reliability and uptime from their equipment being properly maintained. This increased confidence has led to the addition of services. Our national call center, which supports our fleet of RoadSquad emergency repair vehicles continues to attract fleet customers that retain us to handle the breakdown calls and allows them to focus on deliveries. The fourth quarter saw us add agreements with 3 new dedicated call center customers, bringing our total to 103 fleets for which we handle their calls, either for nights, weekends, and in most cases, 24/7.

Finally, in terms of our network expansion. We signed 2 new franchise agreements in the fourth quarter, bringing the total for 2019 to 12. Four of these franchise travel centers begin operations during 2019. Two begin operations in the first quarter of '20, and we anticipate the remaining 6 to open by the end of 2020. In addition, we currently are negotiating franchise agreements for an additional 11 travel centers and are engaged in late stages of discussions and negotiations with operators of another 5 sites. There are approximately 130 other sites in various phases of application and diligence process. In 2019, we also entered into franchise agreements covering 6 stand-alone restaurants to be operated under our Quaker Steak & Lube brand name. Three of these franchise restaurants began operations in 2019, and we anticipate the remaining 3 restaurants will be added to our network by the end of the second quarter.

Note that overall rent and royalties from franchisees were down versus prior year quarter, primarily as a result of the purchase of one travel center and one stand-alone restaurant from former franchisees during 2019. This decrease was partially offset by 4 franchise travel centers and 3 franchise standalone restaurants that began operations in 2019.

Royalties from franchise operations are now trending positively. We continue to be excited about our progress, to date, in these areas and even more excited about the potential they hold as we look to create increased operational efficiency at all levels of the company. And with that, I'll hand the call over to Bill.

Thank you, Barry, and good morning, everyone. For the 2019 fourth quarter, we reported net income of $43.1 million or $5.29 per share. Excluding the $70.2 million benefit from the reinstatement of the biodiesel blenders tax credit, we reported an adjusted loss from continuing operations of $7.2 million compared to an adjusted loss from continuing operations of $6.7 million in the 2018 fourth quarter. We reported adjusted EBITDA of $19.9 million for the 2019 fourth quarter, a decline of approximately $800,000 versus the 2018 fourth quarter. The modest decrease in adjusted EBITDA was primarily due to the decrease in adjusted fuel gross margin, partially offset by lower real estate rent expense and higher nonfuel gross margin.

Fuel gross margin increased by $61.8 million or 71.9% as compared to the 2018 fourth quarter. Excluding the benefit from the reinstatement of the federal biodiesel blenders tax credit, fuel gross margin decreased by $8.4 million or 9.8% as compared to the 2018 fourth quarter. The decline in adjusted fuel gross margin was due to a higher cost associated with our customer loyalty program and an unusually strong trucking freight environment in the 2018 fourth quarter. This decline was partially offset by a 5.3% increase in fuel sales volume and a more favorable fuel purchasing environment in the 2019 fourth quarter. Adjusted diesel fuel gross margin declined due to a 12.4% decline in the margin per gallon due to the higher costs associated with the increased rewards under TA's customer loyalty program and a lower market price for diesel fuel, partially offset by a 5.9% increase in diesel gallons sold. Nonfuel revenues increased by $4.6 million or 1.1%, primarily as a result of a $3.2 million increase on a same-site basis and sales at new sites.

The increase on a same-site basis was primarily due to an increase in DEF revenue as a result of a higher number of newer trucks on the road compared to the prior year as well as the positive impact of our pricing and marketing initiatives and solid performance from our quick service restaurants. Nonfuel gross margin increased by $3.9 million or 1.4% due to a $4.6 million increase in nonfuel revenues and a 20 basis points increase in the nonfuel gross margin percentage to 61.3%. Site level operating expense increased by $5.2 million or 2.3%, of which $0.1 million was due to new sites opened during 2019. The balance of the increase was driven by higher labor cost to support our growth in nonfuel revenues. Site level operating expense as a percentage of nonfuel revenues on a same-site basis was 52.4% as compared to 51.6% for the 2018 fourth quarter.

The increase in the percentage primarily reflects higher labor costs as a result of new positions created from the realignment of TA's regional and field management structure during the 2019 fourth quarter.

However, the ratio of nonlabor cost to nonfuel revenues on a same-site basis was consistent between the 2019 and 2018 fourth quarters. As noted on our previous call in November, we estimate that site level operating expense would increase by approximately $5 million on an annual basis. And that site level operating expense as a percentage of nonfuel revenue will increase proportionately, a result of this -- realignment of our management structure. However, we believe this new structure, in addition to an immediate SG&A savings will, over time, boost our overall profitability.

SG&A expense for the 2019 fourth quarter was $38.6 million, roughly flat with the 2018 fourth quarter and in line with our expectations. We estimate that the operations management restructuring I just mentioned will reduce SG&A expense by approximately $7 million on an annual basis. Real estate rent expense decreased by $7.8 million or 10.9% in the 2019 fourth quarter, primarily due to purchasing 20 travel centers from SVC in January of 2019.

As previously discussed, this reduced the annual minimum rent we paid to SVC by $43.1 million. Given our current leasing arrangements, we continue to expect our real estate rent expense to run at a quarterly rate of approximately $64 million.

Depreciation and amortization expense increased by $7 million or 33.4%, primarily due to the purchase of the 20 travel centers from SVC in January of 2019. Finally, we recorded an impairment charge of $2.9 million in the 2019 fourth quarter based on our evaluation of certain low-performing owned and leased stand-alone restaurants.

Turning to our liquidity and investment matters. At December 31, our cash balance was $17.2 million, and we had $84.9 million of availability on our credit facility. We also expect to collect the cash refunds related to the federal biodiesel blenders tax credit over the next 6 to 8 months and to collect the full amount by the 2020 fourth quarter. These cash refunds will be used to fund 2020 initiatives that would have otherwise been financed with the credit facility.

In addition, as part of our agreements with IHOP, we may also borrow from IHOP up to $10 million in connection with the cost to convert our restaurants to IHOP. As of December 31, we owned 51 travel centers, 6 stand-alone restaurants and a stand-alone truck service facility that were unencumbered by debt. Earlier this month, we closed on a $16.6 million secured financing of a TA travel center located in West Greenwich, Rhode Island. This represented a 66% loan-to-value based on an appraised value of $25 million. The loan has a 10-year term with fixed rate of 3.85% for 5 years and will then reset for the final 5 years based on the 5-year Federal Home Loan Bank rate plus 198 basis points.

During the quarter, we invested $20.8 million in capital expenditures bringing the full year total to $84 million. We did not sell any improvements to SVC during 2019. We expect our total capital investment plan to be approximately $118.9 million, excluding any acquisitions and including approximately $35 million for capital expenditures on projects that were deferred from 2019 as well as approximately $15 million for IHOP conversions.

That concludes our prepared remarks. Operator, we are now ready to take questions.

(Operator Instructions)

The first question comes from Bryan Maher of B. Riley FBR.

I have a few questions, and then I'll stop and go to the back of the queue to see if there's other questions pending. But Jon, can you talk a little bit more about the site level operating expenses? And where is the opportunity there really to hold that number either steady or to drive it down?

Sure. Thanks, Bryan, and nice to talk to you this morning. We're looking -- I'm looking at both site level SG&A as well as corporate SG&A with a lot of focus. I've been here 2 -- 60 days now, I guess a little over 60 days. So the plans are starting to come into view. But as I mentioned earlier in my opening remarks, I'm not looking at SG&A as how do we cut this out? Or how do we carve that out? I'm really looking at it as how do we need to function as a company? What are we delivering to our customers? And then how do we build an organization around that? And so I -- it's impossible for me to tell you where we're going to go with that right now. But I'm really confident we're going to find opportunities. I mean we're already starting to see some of them and we still have some more work to do. And I'm answering not just your site level question, but also at the corporate level, really top to bottom. I'm really trying to understand how this company could best work and then building a plan and an organization around that.

Okay. And then, maybe, this is a question for Barry, but Jon, I'll let you decide. You talked on the call, and I think Barry said specifically new trucks on the road and maybe that impacting truck revenue service -- truck service revenues. That kind of runs counter to the fact that you guys have staffed up over the past year in that area, anticipating those revenues to increase. I mean, at some point, if you don't see some material increase in truck service revenues, do you need to halt or reverse that hiring trend?

Yes.

Let me just start, Brian, and then I'll hand it to Barry to maybe backfill. One of the areas that -- the area, not one of the areas, that this company is most famous for, historically, I think, is the repair business. And I'm spending a lot of time. And what's great is we have people on the team who have many, many, many years of experience and combining that with, maybe, outside perspective that hopefully I can bring along here. We're very focused on some key areas.

Our tech -- our repair tech attrition is one. We've undertaken a field reorganization that was part of last year's plan that we spoke to. As we're getting our people trained and our site managers better support in training, I think that's going to help with the attrition issue we've had, which, in turn, I think, is going to -- that's really our choke point in terms of growing the performance of that part of our business. But with that, Barry, go ahead, maybe you can backfill even further.

Yes, I think to answer your question, we certainly can pull back if we see the need. But part of the measurement is, we have a time waiting metric that we focus on. And the fact is we still have trucks waiting for repair on average across the country. And until I get that down to near 0, I think there's still opportunity to take in more revenue. So even though new trucks coming on the road slow us down a little bit, like tires on those trucks can last 300,000 miles. The oil changes have much longer intervals, things like that.

We still have opportunities out there, and I still believe having the right technicians on duty at the right time, we can still increase revenue.

I'm going to add one other thing, Brian, it's Jon, again. We have 3 parts to our business. We have OnSITE, we have RoadSquad and we have In-Bay. On the RoadSquad side, for example, we're beta testing in 2 places right now. A strategy where we reduced our dispatch times from 108 minutes on average across the company to 52 and 55 minutes. It comes with a cost. But right now, we're probably going to broaden that beta test. And I'm hopeful and somewhat optimistic, we're going to get some real net-net benefit from that. And that's just one example. We're looking at the broader repair business in its 3 very different parts that I just mentioned a moment ago and looking for opportunities to improve performance.

Okay. Shifting gears to the franchising business. I think you guys mentioned that in addition to, kind of, the near-term stuff that you have in the HOP, there's a 130 potential sites in various stages of application and diligence. That being said, can you give us some idea of what you think might be added in 2020? Is it 5 units, 10 units, 15 units?

And then the second part to that question. Are the franchises kind of boxed out of a certain mile zone of either a TA or SVC-owned assets?

Again, it's Jon, Brian. Thanks for the question. I'd rather not yet give the number to you. I really would want to, but we're still -- we've really put a lot of energy into this. It started the level of energy toward the end of last year since I've been here really, really focused on this. And I've spent time with our Head of Franchise Ops, meeting with some folks, and there's a very large number of independent operators who are high-quality operators that see great value in accessing fleet business.

And they can't do it in independence. And so just turning the spigot on converting those to TA's has created a very large number, it's 130 and counting. It's impossible to say right now. It's too early to say how many of those are going to come down to pass-through sort of a QAP and qualifications evaluation by us. But I can tell you the number this year is going to be, I believe, more significant than last year.

And my sites really -- because it gives us time to really wrap this up around 20 -- the next year, 2021. And we have a pretty lofty sort of informal forming goals right now for 2021. We're also looking even in franchising the truck repair business as independent separate from full truck stops and TA Expresses as another way to grow the business, as another way to support our existing fleet customers by having more dots on the map to serve them not just on the full truck stop side or TA Express side, but also to support them in terms of repair and service.

And if I may, it's Barry again. We do negotiate mileage territories for different franchisees, really depends on what part of the country they're in, because Montana can be a whole lot different than Pennsylvania. So...

Okay. And then working off the assumption that there's not somebody behind me in the queue and maybe, Kristin, you can let me know if that's not the case, and I'll stop. Maybe a question for Bill would be: Should we expect more of these property level refinancings where you can get much better rates on the debt than you might -- whether it's issuing a baby bond or selling something back to SVC? And then also, Bill, how should we think about 2020 and -- to 2022, fuel margins per gallon in light of the biodiesel fuel credits? Should we be going back to something in our models from kind of the 2013, '14, '15 period of time? Or do you want to provide some input there?

Well, first -- the first thing I'll say is for your first question regarding sources of financing. We certainly are open to exploring opportunities with financing that is lower cost. And so we do continue to look at that. As you know, we didn't have any sales to SVC in 2019, and we don't anticipate to have that in 2020. Thankfully, the biodiesel certainly helped along with our cash for 2020. But we certainly will continue to look at financing options, similar to what we just closed in February related to Washington Trust going forward.

As far as fuel margins go, I mean, what I'll say is, as you know, the biodiesel blenders tax credit for 2020 through '22, it's baked into the purchase of the biodiesel. So we're certainly going to get a benefit for that. But since it's been announced and the market's adjusted for a bit. So we don't expect it to be nearly what it was in 2019 or 2018.

Okay. And then a big-picture question and maybe it's for Jon and Barry. Your fuel sales were up and maybe, this is kind of a 3-part question. So fuel sales were up, and I think in your prepared comments, you discussed that you thought it had something to do with the loyalty program that kind of ramped up last year. But then, I also hear -- heard that you have cost -- a couple of times, you talked about the costs associated with that loyalty program. How should we think about that?

And then on the tail end of your answer, if you could talk about your thoughts on the coronavirus impacting international shipping. And then what happens to U.S. truck shipping once that -- the international ports business slows down, if in fact, that happens? So I know that there's a lot in that question, so you kind of sort out how you want to answer that.

Barry, maybe you want to start on the loyalty program, and I can give my thoughts on coronavirus?

Yes. I think we're pretty well stabilized on the loyalty program. So I think what we saw in the fourth quarter is indicative of where I expect us to be. I don't see those costs really ramping up. And I mean, that program has brought to us exactly what we wanted. It's a distinction with our competitors being able to provide rewards that just aren't out in the open marketplace today. Going...

But how much of that 5% increase in fuel volume would you -- and I know it's just a guess. But how much would you attribute to the loyalty program. And I guess that begs the question then, how should we be thinking about fuel volume sales going forward, if, in fact, the loyalty program really is pushing that number higher?

Well, we're still looking for growth despite the fact there's a lot of headwinds out there for achieving that, but I think we're going to get there. I'm sure if I went back and had somebody look it up, I could tell you exactly how much of this was loyalty or at least I could get close to it, but it's so mixed in, with the results from our commercial sales team that they're told when they make calls that, that's something that's appreciated by the fleets and their drivers. So it all helps, and it's all it's all kind of combined. So really difficult to break that out.

I'm going to add, Brian, too. It's Jon, again. We're looking really hard. I'm kind of a bit of a process person. And we're looking really hard at everything from how we price, in terms of demand, to drive sales, how we price at TheStreet. I think we have a tremendous opportunity on that side.

And I think we really, really underperform. We're looking hard at the process by which we procure, how we price on the fleet side, looking at every one of these areas because a statement of the obvious with such overall velocity and volume in a company like this, just pennies really matter. So every one of the processes that relate to and lead to demand, we're looking really, really hard at right now.

On the -- and on the coronavirus, this will be a bit of a punch just because I think we're probably all in equal position, you, we, to guess at what's going to happen. I mean, clearly, as the coronavirus appeared in Italy and Western Europe, the market has now responded. How much it's going to spread, how quickly it will get contained are impossible to anticipate. I know we're taking some basic precautions within the company in terms of international travel. We're discussing what to communicate to our field teams to see whatever precautions might be appropriate. So we're doing the responsible thing that we can control.

Beyond that, it's really hard to anticipate how this is going to spread and what impact, if any, it will have on us and our company.

There are no other questions at this time. This concludes our question-and-answer session. I would like to turn the conference back over to Jon Pertchik for closing remarks.

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

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