Due to reduced levels of U.S. trucking activity and increased emphasis by truck owners on conserving fuel, TA experienced, on a same-site basis, moderating declines in fuel sales volumes during [image-nocss] the first three quarters of 2009, as compared to the same periods of 2008, and a modest increase during the fourth quarter of 2009, compared to the fourth quarter of 2008.
"The single biggest factor contributing to declines in results for 2009 versus 2008 is lower fuel gross margins per gallon," Tom O'Brien, managing director, president and CEO, said during the Westlake, Ohio-based company's earnings call yesterday. "Fuel gross margin in 2008 averaged $0.132 per gallon, including a $0.18.4 per gallon average in the fourth quarter that year. These high per-gallon fuel gross margins principally resulted from the rapid decline in fuel prices, which occurred in the last five months of 2008."
"Declining fuel prices tend to expand fuel gross margins," he added. "We did not experience such a decline in 2009 or in any substantial portion in 2009, and our cents-per-gallon fuel gross margins where as a result less than in the prior year. We also continued with fuel sales volume declines overall in 2009, and fuel sales volumes declined 7.4% for the year. Moreover, lower fuel sales volumes contributed to lower non-fuel sales."
He added, "One very important item to note is that our fuel sales volume in the fourth quarter of 2009 increased by 2.4% over 2008. This increase, while modest, may be significant in the future because it is the first quarterly increase in fuel sales volumes since 2006. Our fourth-quarter fuel sales volume is encouraging and appears to be evidence that our marketing, sales and customer service efforts are working. I do not yet see evidence of increased fuel demand industry wide."
O'Brien said that he believes "growing revenues begins with increasing the attractiveness of TA's services to customers," and they are beginning to see the results of their efforts to improve the appearance and quality of TA customer service offerings.
The company decreased its site-level operating expenses by more than $4 million in the fourth quarter and by more than $41 million for the full year of 2009 as compared to the comparable 2008 periods.
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 travel centers located in 41 U.S. states and in Canada. At December 31, 2009, TA's business included 233 sites, 166 of which were operated under the TravelCenters of America or TA brand names and 67 that were operated under the Petro brand name.
Click herefor a full transcript of the earnings call, courtesy of SeekingAlpha.com.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.