TravelCenters of America Announces Strategic Reorganization
TravelCenters of America Inc. (Nasdaq: TA) today announced that it has commenced a company-wide reorganization, which is a key step in the Company’s strategic, long-term plan to improve its operational efficiency and profitability.
The reorganization plan includes significant leadership changes with the addition of new Senior Vice Presidents for a newly created hospitality department, under which the areas of restaurants, gaming and convenience stores will be consolidated, as well as in information technology.
TA has also appointed a new Senior Vice President of corporate development, a new department initially tasked with delivering on the Company’s reorganizational initiatives. Key among these initiatives is the creation of a centralized procurement group to drive economies of scale in pricing, provide increased leverage in vendor negotiations, and ultimately lead to substantial purchasing savings and a streamlined operation. Other key initiatives are focused in areas of opportunity for realizing both costs savings and increased revenues, including merchandising in the convenience stores, over-the-road delivery, truck repair training and staffing and IT systems.
These new leaders bring decades of valuable experience as well as initiative, critical skills and new visions and approaches to these critical, but underperforming, areas of TA’s business. In addition, as part of its reorganization plan, TA is reducing its corporate headcount by a total of approximately 130 and eliminating certain positions. These changes are expected to generate net annual savings of approximately $13.1 million in selling, general and administrative, or SG&A, expense.
“Since joining TA in December, I, together with TA’s senior level management, and under the oversight and direction of TA’s Board of Directors, have been focused on developing a plan to cost-effectively optimize the strengths of our organization in order to transform the Company,” said Jon Pertchik, Chief Executive Officer of TA. “By reorganizing and enhancing our leadership team, we have taken the first formal steps in executing TA’s turnaround by repositioning management, redefining management roles and operating focus, and strategically adding new management who bring new and valuable experiences, skills and outlooks to TA, while also focusing on right-sizing historical SG&A growth, which has significantly outpaced revenue growth over the past decade. I am confident that the team that we now have in place is the one to take TA forward.”
“We have worked hard on planning and developing the reorganization and transition plan announced today. I believe that this plan will result in major changes in efficiencies and improvements to TA’s business and position it well for future success.” added Mr. Pertchik.
Senior Leaders Joining TA
Kevin Kelly – Senior Vice President, Hospitality (Retail, Restaurant, Gaming).
Mr. Kelly is joining TA from Delaware North, a global food service and hospitality company, where he held progressive leadership roles over the past 22 years. His most recent role was as President of Travel Hospitality, in which he led a subsidiary consisting of over 250 food service and retail locations in 19 airports and oversaw the construction of 120 locations.
Dennis King – Senior Vice President, Corporate Development.
An experienced commercial and strategy leader with a proven record of building high performing teams and executing transformative change, Mr. King was most recently an Associate Partner at McKinsey & Company. Mr. King has over 15 years of experience leading transformations in retail and consumer companies, with a deep expertise in advanced analytics, strategic evaluation, and cost and revenue synergy realization.
Sandy Rapp – Chief Information Officer / Senior Vice President, Information Technology.
Ms. Rapp is an information systems and business executive with over 30 years of experience in software development, consumer products, IT consulting, financial and manufacturing industries. Most recently serving as Chief Information Officer at the Timken Company, Ms. Rapp has been recognized in her prior roles for solving large, complex enterprise-wide business challenges with innovative solutions and improving business productivity.
The one-time cost associated with executing the reorganization plan are expected to be approximately $4.2 million, which will be recognized as selling, general and administrative expense. The costs comprised primarily of severance, outplacement services, stock-based compensation expense associated with the accelerated vesting of previously granted stock awards for certain employees and fees for recruitment of certain executive positions. During the 2020 first quarter, TA recognized $0.4 million of executive recruitment fees and expects to recognize the remainder of the costs during the 2020 second quarter.
About TravelCenters of AmericaTravelCenters of America Inc. (Nasdaq: TA) is the nation's largest publicly traded full-service travel center network. Founded in 1972 and headquartered in Westlake, Ohio, its more than 21,000 employees serve customers in over 260 locations in 44 states and Canada, principally under the TA®, Petro Stopping Centers® and TA Express® brands. Offerings include diesel and gasoline fuel, truck maintenance and repair, full-service and quick-service restaurants, car and truck parking and other services and amenities dedicated to providing great experiences for professional drivers and the general motoring public. TravelCenters of America operates nearly 650 full-service and quick-service restaurants and 10 proprietary brands, including Quaker Steak and Lube®, Iron Skillet® and Country Pride®. For more information, visit www.ta-petro.com.
Warning Concerning Forward-Looking StatementsThis press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever TA uses words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, "will", “may” and negatives or derivatives of these or similar expressions, TA is making forward-looking statements. These forward-looking statements are based upon TA’s present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Actual results may differ materially from those contained in or implied by TA’s forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond TA’s control. For example:
This press release indicates several benefits that TA and its Chief Executive Officer, Jon Pertchik, expect TA to realize as a result of the reorganization plan announced today. However, there can be no assurance that TA will realize these benefits, including TA may not realize the annual cost savings it expects, its new management and changes in TA’s operating focus may not produce the results TA expects, and the costs for implementing and executing the reorganization plan may be more than TA expects. Further, TA may not realize improved operating results despite its reorganization plan due to various factors and risks applicable to TA’s business, many of which are outside its control.
The information contained in TA’s filings with the Securities and Exchange Commission, or SEC, including under “Risk Factors” in TA’s periodic reports, or incorporated therein, identifies other important factors that could cause TA’s actual results to differ materially from those stated in or implied by TA’s forward-looking statements. TA’s filings with the SEC are available on the SEC’s website at www.sec.gov.
You should not place undue reliance upon forward-looking statements.
Except as required by law, TA does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.