TravelCenters of America (TA) Q4 2021 Earnings Call Transcript

TravelCenters of America (TA)
Q4 2021 Earnings Call
Feb 23, 2022, 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the TravelCenters of America's fourth quarter 2021 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.

Kristin Brown -- Director of Investor Relations

Thank you. Good morning, everyone. We will begin today's call with remarks from TA's chief executive officer, Jon Pertchik; followed by Chief Financial Officer Peter Crage and President Barry Richards for our analyst Q&A. Today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and federal securities laws.

These forward-looking statements are based on TA's present beliefs and expectations as of today, February 23, 2022. Forward-looking statements and their implications are not guaranteed to occur and 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, or SEC, that are available free of charge on the SEC's website or by referring to the Investor Relations section of TA's website. Investors are cautioned not to place undue reliance upon any forward-looking statements. During this call, we will be discussing non-GAAP financial measures, including adjusted net income, EBITDA, EBITDAR, adjusted EBITDA, and adjusted EBITDAR. These reconciliations of non-GAAP measures to the most comparable GAAP amounts are available in our press release and on a schedule of our non-GAAP financial measures that can be found in the Investors section of 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 2021 as compared to the fourth quarter of 2020, unless otherwise stated. Finally, I would like to remind you that recording and retransmission 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.

Jon Pertchik -- Chief Executive Officer

Thanks, Kristin. Good morning, everyone, and thank you for your continuing interest in TA. Our strong, consistent and durable performance continued in the fourth quarter and further demonstrates the fundamental quality and resilience of TA's business model, as well as our ability to drive growth while enhancing profitability. We achieved these results despite ongoing COVID-related labor challenges and inflationary pressures due to our focus on operational improvements, as well as pricing and labor efficiency opportunities.

We believe we have positioned the company well as we enter into our 50th anniversary year with all businesses contributing to our bottom-line financial improvement and reflecting the quality of the multiple revenue streams, the strength of improved leadership, and the consistency of execution through two years of the most extraordinary and challenging external economic circumstances. Now to the results. For the fourth quarter 2021 compared to the prior-year quarter, we produced the following: adjusted net income of $13.2 million, an improvement of over 800%; adjusted EBITDA of $52.9 million, a 48% improvement; and adjusted EBITDAR of $117.1 million, which is an 18% improvement. 2021 fourth quarter results also represent notable improvement relative to the pre-COVID 2019 fourth quarter, with adjusted EBITDA up by $24 million or 83% over that pre-COVID 2019 fourth quarter.

Additionally, I would note that we recorded strong fuel margin results this quarter, and I am particularly proud of the improvement in our nonfuel gross margin, which increased 8% versus the prior-year quarter and 7% over the 2019 quarter and for the full year 2021 was up 11% and 4% versus 2020 and 2019 respectively. What excites me the most is that we have continued to see the component parts of the business contributing in varying degrees to our overall financial improvement, producing full year 2021 adjusted EBITDA of nearly $220 million, the highest in the company's history. I say this with enthusiasm, despite the continuing effects of the pandemic, including the impact of inflation on input costs, labor pressures, and supply chain disruption, as well as the fact that our robust capital plan had barely begun to have been deployed. We have much to look forward to in terms of the continued harvesting of operational improvement opportunities, as well as the impact of the growth capex that is underway, as our transformation plan shifts gears from organizational discipline to investing in top-line growth.

TA was successful in the fourth quarter at monitoring inflationary forces and carefully passing through cost increases, efficiently managing labor pressures and gaps in operating hours, sourcing products to ensure shelves remain full, and beginning to invest in growth through IT improvements, a comprehensive site refresh program, ramping up franchising pace and developing a strong and growing pipeline of travel center acquisition opportunities. These same priorities remain as we enter 2022. I want to talk a little bit about investing in growth. First, our capital plan deployment is beginning to accelerate, which is important as we continue to maintain substantial liquidity that we understand comes at a cost.

To that end, we currently have a purchase agreement in place to acquire two existing franchise locations for approximately $45 million, which we expect to close in late March subject to customary closing conditions. This acquisition is important to TA as it adds a flagship location to our company-owned sites as this is an iconic location and will be the largest travel center in the United States based on a number of truck parking spaces once current construction is completed. Financially, we are confident this transaction and these sites will exceed our minimum return thresholds. We also have a purchase agreement in place to acquire a small truck service facility, which is expected to close in late March.

This strategically located acquisition will allow us to better serve our key customers in one of our highest growth business segments, mobile maintenance. We are also developing two new ground-up travel centers on land TA had previously owned, which we expect will open by the end of 2022. And we have 15 to 20 potential acquisition sites totaling approximately $150 million moving through the later phases of consideration. Another area of investing in growth is through our franchise program.

TA signed 26 new franchise locations in 2021 and a total of 59 new franchise agreements since the beginning of 2019, and we have opened 19 new franchise locations during the same period. We anticipate 40 new franchises will open and begin operations by the second quarter of 2024 as we continue toward our sustained target of 30 per year. Investing in growth also includes our robust site refresh program, which was launched this past October with the reopening of Seymour, Indiana, the first of more than 100 plan refreshes to be completed no later than early next year. Seymour represents our top-level platinum refresh level and showcases many of the new design concepts that are being rolled out among many of the other 100 refreshes.

Updates include comfortable driver lounges, repaid parking lots, renovated restrooms and showers, new lighting fixtures, new flooring and paint, and self-checkout, along with improved signage and new store flow. We expect to complete the first 50 refreshes by the end of March. Finally, investing in growth also includes upgrades and key additions in talent and people, expanding our digital and traditional marketing and sales efforts, and investing in various operational initiatives, as well as IT and systems improvements. All of these investments and improvements are designed around improving our guest experience based on a more examined understanding of their needs and intended to drive efficiency and financial performance.

Overall, I remain confident in our robust capital plan and the positive impact it will have in our already established and resilient financial performance. In 2021, pace of our capital deployment was adversely impacted by supply chain disruption. TA has focused on choke points and is taking steps to assure capital can be deployed as planned in 2022 and thus far, the pace has increased. Peter will discuss some of last year's challenges in his remarks.

Turning now to our operational results for the quarter. Overall fuel sales volume increased 3.8% compared to the prior-year quarter and 16% versus the 2019 fourth quarter, driven by a 3.7% increase in diesel fuel sales volume as a result of increased trucking activity, the addition of new fleet customers, as well as higher volume from existing customers due to the early success of a variety of initiatives. Our fuel gross margin increased 37.4% versus the prior-year quarter, driven by a 32.2% increase in fuel margin CPG. We have dedicated tremendous energy and focus to driving stable and strong diesel margin, while positioning ourselves with purchasing optionality to take advantage of regional pricing dislocations.

In December, certain markets in the Southwest and parts of the Midwest experienced major spikes in local diesel markets due to supply shortages that cause dislocation between our purchasing and selling indices. Improved management allowed TA to capitalize on this opportunity and roughly 25 locations drove much of the upside in our diesel margin for Q4. Staying on diesel, we have begun the beta testing phase of using artificial intelligence and machine learning to support diesel pricing and supply decision-making. Also importantly, we are about to introduce a competitive small fleet offering by midyear, which should be particularly impactful.

Gasoline sales volume increased 4.6% versus the prior-year quarter, but still was about 10% below the 2019 pre-COVID fourth quarter and represents another area of additional potential upside. On the nonfuel side of the business, store and retail services revenues increased by over 9% for the quarter versus 2020 and over 16% versus 2019. Although our industry is experiencing a challenging purchasing and inflationary cost environment, we have focused on pricing to balance these forces, while our ability to drive a larger average basket is also evidence that our initiatives are working. Our customer segmentation work has provided a better understanding of who is visiting us and what their behaviors are, which in turn is allowing us to tailor our offerings to our customers' actual needs with new display areas and more meaningful product placements.

I'm also very excited that we expect by year end to offer a comprehensively revised loyalty program designed around our customer segmentation work. Truck service revenues showed a solid improvement with a 9.2% increase versus 2020 and an 18.6% increase versus 2019, driven in part by an increase in average work orders. Technicians staffing and retention remain important areas of focus with compensation and training central targets to driving continued improvement in tech efficiency and driver wait times and reducing turnover. While we have added technician hours to the schedule to ensure timely service, we've also seen labor costs and margin pressures.

We are actively addressing these through pricing actions, not inconsistent with competitors and market expectations. On the full-service restaurant side, we have worked to rationalize reopen locations through disciplined leadership and strategic changes to how we measure performance, as well as to our operating model through fewer, more desirable menu offerings and tighter labor controls to balance rising wages. We have opened three of the five IHOP conversions that are underway, expect to open the other two by the end of this quarter, and continue to make plans toward opening a total of 20 IHOPs. In addition, we are deep into the work of developing other concepts designed around scrutinizing understanding of our customers' needs and look forward to further announcements in the coming months.

With full-service restaurant top line having been so adversely affected by the pandemic, down as low as 90% of times in 2020, and the recognition that this business is an important differentiator, this remains one of our highest areas of opportunity for improved financial performance. Nonfuel revenues also continue to benefit from strong demand for diesel exhaust fluid, or DEF, which is required by newer trucks. Debt volume increased by 5% versus the 2020 fourth quarter and 23.9% versus the 2019 fourth quarter. As pre-2011 trucks are retired each year, we expect that the demand for DEF will continue to grow.

As part of the capital plan, we are now offering DEF from dispensers on the diesel fueling island at approximately 265 of our travel centers and expect to have them available in all lanes at all TA Petros nationwide by the end of 2022. Lastly, we continue to double down on our commitment to sustainability and alternative energy with the dedicated business division formed last year, ETA. In addition to installing new EV passenger vehicle charging stations at several West Coast locations, we are very carefully preparing more comprehensive rollout plan for passenger duty EV across the country, particularly where federal and state financial incentives are being made available. The recent announcement of the Infrastructure Act passed in November has earmarked $7.5 billion of federal funds specifically targeted for installation of EV fast chargers, which will provide as much as 80% of the project cost per site.

On the commercial duty and truck side of ETA, we continue to develop collaborative relationships to deliver various forms of sustainable energy as we stay close to our fleet customers' plans, as well as government incentives. We've been awarded grants for multiple programs and are actively pursuing more. In addition, we are currently evaluating and expanding our sustainability programs across the organization where we see gaps as part of the development of an ESG reporting framework. We also expect to issue our first-ever Sustainability Report later this year, outlining achievements to date, planned an ongoing investments, and longer-term goals.

To conclude, I am proud of the strong positive results our team generated in the fourth quarter and for the year. On behalf of the entire TA family, we have proven that this 50-year-old American institution is strong, resilient, and consistent as we now report on our 24th month of transformative and demonstrably stable continuing improvement. Through thick and thin, we have proven to ourselves that we can unlock and release the inherent value of this great company. The transformation plan has worked and is working, and as the plan shifts gears toward 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 improve and execute despite ongoing supply chain inflationary and labor challenges.

As we celebrate our half-century of history, the team not only recognizes its obligation to shareholders to create long-term value. In addition, we sense an obligation to continually improve on behalf of all those who came before us at TA. In closing, I offer gratitude to our teammates and colleagues around the country for their hard work and dedication, as well as professional drivers and fleet managers, for allowing TA serve you. I also offer gratitude to our guests, our franchisees, and stockholders for continuing to support TA.

I am pleased with the exceptional value and progress that our team has delivered over the past 24 months and as we transition into a new phase of our overall transformation plan of investing in growth, I am most excited that we are still only in the early innings of our transformation. And with that, I will hand the call over to Peter to discuss the quarter's financial results in detail. Peter? 

Peter Crage -- Chief Financial Officer

Thank you, Jon. And good morning, everyone. As Jon mentioned, we are very pleased with our results in the fourth quarter, which we believe continue to demonstrate the ability of this business to produce strong and improving operating results and generate strong free cash flow, an important long-term objective. In my remarks that follow, I will be referring to the 2021 fourth quarter as compared to the 2020 fourth quarter, unless otherwise noted.

For the fourth quarter, we improved net income by $20 million to $12.8 million or $0.87 per share, compared to a net loss of $7.2 million or $0.42 per share. Excluding some one-time items in both quarters, as detailed in our earnings release, we generated an improvement of over 800% in adjusted net income. EBITDA of $52.4 million represents an increase of $14.4 million or 38%, while adjusted EBITDA, which reflects some one-time items in both quarters, increased $17.1 million or 48%. The increase in EBITDA was primarily due to the strong results we generated in both fuel and nonfuel gross margin, partially offset by increased input, labor, and operating costs affecting us, as well as the broader economy.

Our fuel sales volume increased by 21 million gallons or 3.8% to just shy of 577 million gallons, with diesel sales volume improving by 3.7%, driven by increased trucking activity and new customers. Gasoline sales volume improved by 4.6% as four-wheel traffic returns to the roads as we continue to emerge from the depths of the pandemic. Fuel gross margin increased to $29.7 million to $109 million or 37.4% and margin cents per gallon improved $0.046 or 32.2% versus the prior-year quarter. As Jon discussed, we have positioned ourselves to temper volatility in CPG and to take advantage of pricing anomalies in the market when they occur as we saw in December.

However, we would note that these types of anomalies are not a given in every quarter and, therefore, we continue to expect our normalized range of $0.15 to $0.17 for our blended CPG fuel margin for the foreseeable future. Nonfuel revenues increased by $43.2 million or 9.8%. And total nonfuel gross margin increased by $21.7 million or 8%. Importantly, when compared to the 2019 fourth quarter, nonfuel revenues and gross margin improved by roughly 9% and 7% respectively.

Against 2020, relative strength in truck service, store, diesel exhaust fluid, and full-service restaurants as many locations reopened during the current quarter were offset partially by softness in quick-service restaurants, which have seen COVID-related intermittent closures and labor shortages reducing operating hours. While we are laser-focused on continued aggregate top-line growth, we are cognizant about input and operating cost pressures that are part of the broader economic backdrop. Nonfuel cost of goods sold and site level operating expenses increased by 21.5 and $32.9 million respectively. While these primarily reflect revenue growth and continued improved business activity, labor rate and input cost pressures continue.

While we have been successful thus far in counteracting these pressures, for example, we improved nonfuel gross margin 50 basis points on a sequential quarter-over-quarter basis. We remain keenly focused on measuring not only the impact of cost pressures to support appropriate pricing actions, but also ensuring demand is not significantly impacted as a result. And of course, we remain vigilant in identifying operating efficiencies to bolster profitability. Selling, general and administrative expense for the quarter increased by $6.4 million or 17.3%.

In addition to the expansion of our business, the increase was driven in part by short-term consultant fees to assist with identifying and implementing efficiency and other opportunities, as well as increased incentive and stock-based compensation and our adoption of more efficient cloud-based technology solutions. As we move forward into 2022 and beyond and deploy our capital expenditure plan, plus a host of other important initiatives to further grow the company as Jon detailed in his remarks, we will likely see elevated one-time and, in some cases, run rate SG&A. Internally, we are establishing a benchmark of costs on a relative basis to the growth in the business and expect SG&A to be in the range of 6.75% to 7.25% of fuel gross margin plus nonfuel revenue for the foreseeable future. Of course, this may be impacted up or down slightly as we toggle on and off unique or one-time costs.

But in those cases, we will incur costs that promise outsized returns. Depreciation and amortization expense decreased by $14.4 million, primarily due to a $13.7 million impairment charge recognized in the prior-year quarter related to the Quaker Steak & Lube restaurants we ultimately sold in April of 2021. Turning to our balance sheet for a moment. At December 31, 2021, we had cash and cash equivalents of $536 million and availability under our revolving credit facility of $91 million for a total liquidity of $627 million and no near-term debt maturities.

As of December 31, 2021, we continue to own 50 travel centers and one stand-alone truck service facility that were unencumbered by debt. We invested $58.1 million in capital expenditures during the fourth quarter and $104.9 million for the full year 2021. As Jon mentioned, we, along with the US as a whole, continued to experience significant labor and supply chain challenges either directly or indirectly through our vendor partners that are slowing the progress and, in certain cases, the start of some of our capital projects. While we are cautiously optimistic that supply chain challenges will abate somewhat in 2022, we are aggressively pursuing our capital plan with an eye to making up some lost ground from 2021.

At this time, we believe we will incur a cash spend between 175 and $200 million on capex projects in 2022 as some of the expenditures we planned for 2021 have fallen into the early part of this year. This excludes any tuck-in acquisition activity. Lastly, in addition to capex, we continue to preserve significant liquidity as we evaluate a growing pipeline of potential accretive acquisitions and ground-up travel center development opportunities. We believe the preservation of this liquidity is important to the timely execution of our growth strategy.

And secondarily, as we progress through the year, we will also consider opportunities to be constructive on our balance sheet and capital structure. That concludes our prepared remarks. Operator, we are now ready to take questions.

Questions & Answers:

Operator

[Operator instructions] Our first question will come from Bryan Maher with B. Riley Securities. You may go ahead.

Bryan Maher -- B. Riley Financial Inc. -- Analyst

Good morning, and congratulations on really a great year, Jonathan and Peter, and that comes from somebody who has been critical in the past. So, really, really well done. Question on fuel margins. This is the third quarter in a row where they've been fairly elevated.

And I did hear your commentary on the Midwest diesel anomaly and your thoughts on -- I think you said $0.15 to $0.17 expectations going forward. But when we think about the elevated fuel prices nominally, isn't it a little bit easier to kind of tuck-in an extra $0.01 or $0.02 with the higher prices in $3.50 to $4 a gallon versus a year or two ago when it was kind of $2.50 to $3?

Jon Pertchik -- Chief Executive Officer

Hey, Bryan, it's Jon. Thank you for the question and for your kind remarks as well, and we are very proud of the year. So, talking about fuel margin, and we've signaled the 15% to 17% is what we're comfortable with. And then, your sort of the ultimate question is, with some of the high pricing, can we find a penny or can we find something.

We're doing -- I'm confident we're doing a much better job of managing and we find opportunities through movement from market volatility. In those times of movement, we are doing a better job of optimizing how we manage that and finding some additional margin. That said, counting on maybe in a year or two from now or a year from now, some more runway behind us. If we continue the way we've been going, I might have a different answer for you than and now.

But I'm just not comfortable signaling much more than the 15 to 17 blended fuel CPG really without more runway ahead. We've made so many changes through thick and thin and crazy times and COVID and next phase of COVID and supply chain and secondary issues to COVID through just really volatile general times and business times. We've proven we can manage this business and that this business fundamentally has a resilience between fuel and nonfuel and, even to some extent, gas to diesel. But with that said, we're just not at the point where we would signal anything more than the 15% to 17%.

That's really our comfort zone, our comfort level. And maybe we get to a place in the future that we will signal something differently. But for now, while we remain in a window of continuing to store -- to restore and build confidence in the marketplace, we want to really make sure we are getting it right. And so, we're sort of holding our guns at 15 to 17.

Hopefully that makes sense.

Bryan Maher -- B. Riley Financial Inc. -- Analyst

And then, kind of moving on to SG&A, and that was helpful, the 6.75% to 7.25%. And just to be clear, those percentages of the combination of fuel gross margins and nonfuel revenues on a quarterly basis. So, given it's kind of a seasonal business, should we expect SG&A to kind of be seasonal as well to a degree?

Jon Pertchik -- Chief Executive Officer

Peter -- why don't you take that, Peter?

Peter Crage -- Chief Financial Officer

Yeah, I was commenting on an annual basis to give at least a gauge what our annual SG&A would be. But on a quarterly basis, we may see some seasonality. In a down quarter, we may be investing and incurring some costs on SG&A that's going to help the business over the longer term. I was really trying to provide some guidance on it on what we might expect on an annual basis, given we're starting to see top-line growth.

And we thought that was an appropriate way to measure this and provide that info.

Bryan Maher -- B. Riley Financial Inc. -- Analyst

And then, lastly for me, the commentary on the acquisitions was helpful. I think you said there was likely two properties for $45 million with one of them being upon completion or whatever, the largest travel center in the US. Can you give us a little bit more color on where that is? And if you don't want to share specifically maybe regionally? And what kind of a multiple of EBITDA would you be paying for those types of properties, if you could share that?

Jon Pertchik -- Chief Executive Officer

Sure. So, I guess, we're -- so first of all, with knowledge, you did hear correctly, it's two locations, two packs, so to speak. We did mention separately a small truck service acquisition, which, again, was a separate point from the 45%. I would say we'll say it's in the Southeast US.

That is true. It is an existing travel center that just has some expanding parking and some other work. So that's what we're referring to when we say completion of that active construction, it will become, at that point, the largest based on truck parking. In terms of multiple, four to five times in that realm plus or minus is what we're looking at.

Anything to add to that, Peter?

Peter Crage -- Chief Financial Officer

Yes. I think, if you look at that on a synergy-adjusted basis, four to five times on a non-synergy maybe closer to 6%.

Bryan Maher -- B. Riley Financial Inc. -- Analyst

OK. Thank you. That's all for me. I'll jump back in the queue.

Jon Pertchik -- Chief Executive Officer

Thanks again, Bryan. Appreciate it, and appreciate the kind remarks as well. Take care. 

Operator

Our next question is coming from Paul Lejuez with Citibank. You may now go ahead.

Paul Lejuez -- Citi -- Analyst

Hey, thanks. guys. Curious if you can give a little bit more info on the lift that you expect from the site refreshes once each is complete. And then, second, curious what sort of volume revenue increase you've seen in the 26 new franchise locations you took on in F '21?

Jon Pertchik -- Chief Executive Officer

You want to take the latter part of that first, Peter, and then I'll talk about the refreshing line on the franchise.

Peter Crage -- Chief Financial Officer

The lift we're seeing on franchise, traditionally I don't have exact numbers for each franchise. But franchises once they enter our system can achieve 30% to 40% improvement in revenue. Now, granted that doesn't automatically equate to bottom line, because quite a bit of that is fuel. But we've seen improvements in those franchises sort of in that range.

Jon Pertchik -- Chief Executive Officer

And so -- and just to reemphasize that last point, and then I'll talk about the site refreshes. When a franchise joins our network, and actually these are real numbers we measure that 30% to 40% lift when an independent truck stop joins the network. The fact of joining the network gives them now access to these large fleet volumes that are at some discounting with these large fleets that we offer. And while we see -- they see, the franchisee sees a 30% to 40% lift, it's a little less than that in terms of lift on EBITDA just because those are discounted, but nonetheless it's still very significant.

And that's one of the reasons why that program, I think, is accelerating because it's very obvious to understand the upside to an independent truck stop. On the lift, we expect and the way we think about it on the site refreshes, which again, we're working our way through now and we expect by the end of March to have about 50 completed, really excited for that. In fact, I'm going on a little roadshow to visit some of these over the next several months to really touch and see them. On the dollars invested, which range from the low of maybe $300,000 to $400,000 on the silver to a -- these are levels that we disclaim, silver, gold and platinum, the gold that could be 1 million even a hair more, we expect a 15% to 20% threshold return on that.

So you can -- and we don't discern yet between fuel and nonfuel. It's just sort of a punchline and some locations will get there in some -- by one path that may be a little bit different than another. But we're pretty confident in our ability to achieve those results.

Paul Lejuez -- Citi -- Analyst

Got it. Thank you. Good luck, guys.

Operator

Our next question comes from Aryeh Klein with BMO. You may now go ahead.

Aryeh Klein -- BMO Capital Markets -- Analyst

Thank you, and good morning. Jonathan, you spent some time talking about investing for growth. Can you give us a sense on how you expect that to manifest in the model? Maybe you can talk to the longer-term expectations for EBITDA?

Jon Pertchik -- Chief Executive Officer

Yeah. We've been debating really heavily, at what point are we ready to signal something longer-term. And I guess, an ongoing healthy debate within the organization. And I do still fall back, while we've had eight quarters, 24 -- many months or two years of sequential performance, I want to get a little further along.

I'm optimistic we're not far away from signaling something a little bit longer-term than we have to date because we really haven't signaled much of anything in terms of EBITDA and where we can take the company. I know, pre-COVID, we've gone from the low 100s to now north of almost $20 million in EBITDA. We're facing -- and we have a lot of momentum from that and the capital plan is key to our success this coming year, the year we're actually we're in. On the other hand, we have these inflationary forces supply chain.

And we talk about words like supply chain. What does that mean? It means that our procurement people and our hospitality people are fighting and scratching to find something to fill our shelves because we can't get our hands on one item. So we're scratching and kicking and fighting to fill with the other. And so, these really are very sort of concrete challenges we face every day.

When we say labor pressures, what that means is finding folks to work the full hours so that our quick-service restaurants can be open full hours. And COVID, when somebody gets sick or when somebody tests positive, we have to quarantine people who are around them. And now we've had -- and this is what we saw throughout all of last year, at least heavily in the second half of last year, and it persists or gaps in hours of our ability to stay open. So, because of those -- on the one hand, that momentum and this great exciting capital plan on the other, some of these headwinds that the world face is not unique to us.

We're not just not comfortable signaling anything yet on how these plans will manifest. And hopefully, where we've taken the company so far speaks volumes for itself, but on the other hand, tempered by some of these headwinds that the world is facing. Again, I gave you some examples in a very sort of visual concrete way you can appreciate what we have to do every day to fight these. And I think we've done a really -- not really -- I mean, really more the team, people out in the field, and people at corporate have done an amazing job, an amazing job, better than most of fighting through some of those challenges, and we'll continue that fight.

But I just am not comfortable yet signaling anything sort of numerical or specific. And hopefully, that's understood for now. At some point, I think we'll get to that place, but we're not quite there just yet.

Aryeh Klein -- BMO Capital Markets -- Analyst

And then, just on the inflation side, you mentioned some of the headwinds from a cost perspective. What about from a capex perspective? Some of the capex plans that you had were delayed from '21 to 2022. How have you seen that impact you on the cost side for capex?

Jon Pertchik -- Chief Executive Officer

Sure. Well, so first of all, just one point. If you -- I think Peter's remarks, he mentioned that we expect -- this is capex now, just specifically, we had spent, I think, $58 million in the fourth quarter of last year, $58 million against $104 million for the year. So, we spent more than 50% in one quarter.

What that should tell everybody is that when we say it's accelerating, that's mathematically making that point that it is accelerating our ability to do this is accelerating. It doesn't mean supply chain challenges have gotten any easier they haven't. We're just getting better at dealing with them. And the team, which was just constituted a year and a half ago or so is really starting to execute.

We do bake into all of our plans when we do pro forma, and we continue to update and all of that. We look at our performance and we look at cost increases and we look at performance increases in the context of those headwinds, and we continue to sort of revise our thinking on how we're going to achieve thresholds. And so far, we remain just as confident as before that we're going to continue to maintain our ability to execute at those threshold levels despite some of these increases. But you're right, it's a real challenge across the board, again, not unique to us to everybody, every company in this country and most probably around the globe, just focusing on this country are facing these increases.

And part of our opportunity is to -- and so far, it continues to be successful to some extent, is managing our input costs and then output pricing is a really, really -- it's as much science -- is art as it is science and we're very, very focused on that. And we've reorganized a little bit of how we sort of manage that with a special oversight committee that includes Peter and myself actively engage in those decisions and those discussions regularly to make sure we're really on top of that. That's a really important part of the success we've had to date. And I think the success, I'm optimistic, will continue to have. 

Aryeh Klein -- BMO Capital Markets -- Analyst

And then, just last one for me on the fuel volume side. We've seen a lot of growth in that piece for the last year or so, but the volume growth has moderated as comps have gone a bit tougher. How are you thinking about that moving forward in your expectations to continue to grow these volumes?

Jon Pertchik -- Chief Executive Officer

Well, first, I would say, it's mathematically impossible to have, say, very high double-digit -- or low but still really significant double-digit growth compounded over many, many years, right? Mathematically it becomes impossible. And so, we have still a few -- and so part of it is just a mathematical thing where you can continue to have CAGR-ing growth of anything and just a math question. So that's sort of point A. And point B, we still have some opportunities in front of us that are very significant.

The way -- there are two primary areas that we're focused on here. One is this AI and machine learning to support both fuel pricing and also supply management that is still ahead of us. That's sort of mid-year and beyond. We're in the beta testing mode there.

And then, separately, we've really retooled our organization around a small fleet business, and we've never really been focused on it in a very meaningful way. And so, now when we talk about investing in growth, we've added some salespeople to that area. We've developed and we're many -- just a few months away from releasing sort of, call it, midyear, a real program, a program that will provide discounting and it will provide the ability to extend credit on somebody else's balance sheet. And so, for the first time, we're going to have a meaningful program for small fleets, which is our highest margin part of our business.

So, again, we have those opportunities in front of us. That will be really the back half of this year. Even our loyalty program will be comprehensively retooled toward the end of the year. I think directly or indirectly be helpful as well.

And on the other hand, there's again, supply chain disruption, driver shortage, I don't feel like I sound like a broken record, but these are very real challenges we face every day that temper some of the otherwise great enthusiasm we have. So, again, it's a balanced view where, A, we have a mathematical challenge of CAGR-ing at a certain high level; B, we continue to do, I think, the right thing putting one foot in front of the other, and we'll continue to grow, but at a more modest rate, and all within a context that has a lot of really unusual challenges, again, driver shortage and supply chain related.

Aryeh Klein -- BMO Capital Markets -- Analyst

Thank you for all the color. 

Jon Pertchik -- Chief Executive Officer

Thanks for the questions, Aryeh. 

Operator

Our next question comes from Bryan Maher with B. Riley Securities. You may now go ahead. 

Bryan Maher -- B. Riley Financial Inc. -- Analyst

Hi. Just a follow-up question on your kind of build-buy thoughts for this year. First of all, what do you anticipate ground of developing costing these days? I mean, I remember a time when it was kind of $15 million, $17 million, $18 million, and then kind of low to mid-$20 million. When you're contemplating buying new facilities versus building, how are you weighing that? How should we think about the total dollars allocated between those two ways to grow?

Jon Pertchik -- Chief Executive Officer

So, first, high-teens is still the target range, high, high teens. So, I think directionally that's about right. And one of the reasons we like -- I like acquiring existing truck stops as you get -- you're buying EBITDA and cash flow immediately. You're not waiting two to three years of outflows to get inflows and where we sit in our transformation.

If you think back, my first few months here, we are focused exclusively on franchise for growth because it's a way of effectively raising -- leveraging other people's balance sheets to grow. Once we started to strengthen ourselves, we said, well, geez, the next iteration of that is to buy existing truck stops because you buy them and the spigot is turned on, so to speak, not after a lag of two years of development. We're at the point of maturation in our evolution where the -- and the math still flushes where there are opportunities to both build and cherry-pick, either build in really, really great locations, while cherry-picking great sites to buy that are existing. In either case -- and well, one more point about buying existing truck stops, they come in all flavors and colors.

So long as they fit our basic parameters and criteria for financial performance and for our network, even the one we referred to one of the two in the transaction we mentioned, it's the largest in the US, so the EBITDA is extraordinary, not typical. A more typical site may have a couple of million dollars of EBITDA, $1.5 million to $2.5 million, maybe $3 million in that realm. And so, they come in different sizes and flavors, so to speak. In the end, we're going to be doing a little bit of both because the ground up machine, you need to start now to have it doing something in a few years.

And one of our competitors is doing 45 to 50 a year of ground up and they're doing a great job of that, and they have a machine going. And I'd like to see directionally down the pike filling in great corridors with a machine that eventually many years from now gets to a pace. Whether we'll get to that pace or not, I'm not really setting. We're not setting our sights there exactly, but we do need to get that machine going.

And so that's what it's about. In the end, we look at this as a -- the minimum threshold of 15% to 20% returns. And in any case, that's what we will expect, whether we're doing ground up and even with ground up maybe even a little bit higher than that just because you're undertaking some development and risk and cycle risk and all of that. So hopefully that's responsive, Bryan.

Bryan Maher -- B. Riley Financial Inc. -- Analyst

Yup. That's perfect. Thank you very much.

Jon Pertchik -- Chief Executive Officer

Thanks for the follow-up. 

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Jon Pertchik, CEO, for any closing remarks.

Jon Pertchik -- Chief Executive Officer

Again, thank you for your interest in TA and your attention this morning, and have a great day. Thanks, everybody. Bye-bye.

Operator

[Operator signoff]

Duration: 45 minutes

Call participants:

Kristin Brown -- Director of Investor Relations

Jon Pertchik -- Chief Executive Officer

Peter Crage -- Chief Financial Officer

Bryan Maher -- B. Riley Financial Inc. -- Analyst

Paul Lejuez -- Citi -- Analyst

Aryeh Klein -- BMO Capital Markets -- Analyst

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