TA: Best Nonfuel Sales Ever

More consumers shopping stores, as customers buy more

Steve Holtz, Editor in Chief, CSP Daily News

WESTLAKE, Ohio -- With its nonfuel sales growing 10.2% during the third quarter of 2011, TravelCenters of America reported nonfuel sales during the last 12 months at $1.24 billion, "higher than they've ever been at any point in the company's history," said CEO Thomas O'Brien.

O'Brien, speaking on an earnings conference call yesterday credited to double-digit growth to luring new consumers and selling more to customers already shopping in the company's TA and Petro store.

"One of the items that is affecting our nonfuel gross volume percentage was the changes we made in cigarette pricing," drawing new customers, he said.

(See related story in this issue of CSP Daily News.)

Meanwhile the return of more shipping by truck following a decline during the recession, has added up as well, especially as drivers find increased utilization of their truck space.

"Those companies had enjoyed really high, on-time delivery percentages when their utilization rates were lower," O'Brien said. "When you're at a higher utilization rate, it makes you want to take advantage of our facilities more often for things that in the past you might have [done] at your own operating centers, such as tire repairs or maintenance.

"So there's evidence that suggests that it's both the same customers who were stopping at your sites all along just buying more from you during that stop, and some new customers as either our marketing efforts are taking hold or as there's been an increase in trucks on the road as trucking has begun to grow."

TA's net income of $20.7 million for the third quarter, which ended September 30, reflected an increase of $16.2 million as compared to the 2010 third quarter, according to the company. Net income increased primarily due to the increases in fuel and nonfuel sales and margin levels, and from a reduction in rent and interest expenses as a result of the January 2011 lease amendment with Hospitality Properties Trust, or HPT.

TA's results also reflected improvement in EBITDAR, which increased by $3.3 million in the 2011 third quarter over the 2010 third quarter. TA's fuel sales volume and fuel gross margin per gallon increased by 4.8% and 4.2%, respectively, in the 2011 third quarter as compared to the 2010 third quarter, resulting in total fuel gross margin that was $6.7 million higher in the 2011 third quarter than the 2010 third quarter.

During the nine months ended September 30, TA spent $104.9 million on capital expenditures and acquisitions of new locations, $35.1 million of which was incurred during the third quarter.

TA also entered into four new franchise agreements with operators of travel centers, including one in Alabama and one in Virginia during the third quarter. TA currently expects that these two franchisee-owned and -operated sites will begin to operate under the Petro Stopping Centers and TA brands during December 2011.

Westlake, Ohio-based TA's travel centers operate under the TravelCenters of America, TA and Petro brand names and offer diesel and gasoline fueling services, restaurants, truck repair facilities, stores and other services. TA's nationwide business includes 235 travel centers located in 41 U.S. states and in Canada.

Steve Holtz, CSP/Winsight By Steve Holtz, Editor in Chief, CSP Daily News
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