TravelCenters of America LLC has announced its financial results for the three and six months ended June 30, 2010.
As of June 30, 2010, TA’s business included 229 sites, 166 of which were operated under the “TravelCenters of America” or “TA” brand names and 63 of which were operated under the “Petro” brand name.
TA’s net income for the second quarter of 2010 was up $16.2 million, from a net loss of $15.0 million for the 2009 second quarter to net income of $1.2 million for the 2010 second quarter, and in EBITDAR, which increased by $18.9 million.
The fuel margin per gallon TA achieved in the 2010 second quarter was a key factor in this improvement. Although other factors have an effect, fuel gross margins per gallon tend to be lower during periods of rising fuel prices and higher during periods of falling fuel prices. Although they were at a higher level than in the 2009 second quarter, fuel commodity prices trended lower throughout the second quarter of 2010. As a result, TA’s fuel gross margin per gallon increased as compared to the prior year when fuel commodity prices were rising and, combined with an increase in fuel sales volumes, resulted in total fuel gross margin that was $15.5 million higher in the second quarter of 2010 than the second quarter of 2009.
Nonfuel sales for the 2010 second quarter and first half increased from the comparable periods of 2009 largely due to an increased number of customers in TA’s travel centers as a result of increased trucking activity. TA’s nonfuel gross margin as a percentage of nonfuel revenues on a same site basis for the second quarter of 2010 increased from the prior year quarter as a result of a shift in sales mix to relatively higher margin products and services, a reduced level of sales price discounting and lower purchase prices for certain nonfuel items. Additionally, operating expenses decreased as a percentage of nonfuel sales on a same site basis because certain of TA’s expenses are fixed in nature so increases in its revenues do not result in corresponding increases in its operating expenses.
During the second quarter of 2010, TA experienced an increase in same site fuel sales volume of 7.1%, compared with the second quarter of 2009. Similarly, during the first half of 2010 TA’s same site fuel volumes increased 8.1%, compared with the first half of 2009. These increases resulted from a combination of TA’s marketing and customer service initiatives and increased trucking activity attributable to increased economic activity in the U.S. during the second quarter and first half of 2010, compared to the same periods of the prior year. The second quarter same site fuel sales volume increase continued the positive trend that began in the fourth quarter of 2009 after the negative trend that had persisted since 2007 had moderated during the first three quarters of 2009.
On June 30, 2010, two of TA’s competitors, Pilot Travel Centers LLC and Flying J Inc., announced that they completed a merger, effective July 1, 2010, and that the new company would be called Pilot Flying J. That merger combined the first and second largest competitors in TA’s industry, based on diesel fuel sales volume. As a result of this combination, TA may see increased competitive pressure that could negatively impact its sales volumes and profitability.
On Aug. 9, 2010, at 10:00 a.m. EST, TA will host a conference call to discuss its financial results. A live audio webcast of the conference call will also be available in a listen only mode on TA’s Web site at www.tatravelcenters.com.
SOURCE: TravelCenters of America