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, the company stated.
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 [image-nocss] 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.
TA's results for the second quarter of 2010 compared to the second quarter of 2009 reflected favorable changes in net income (loss), which improved by $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.
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 United States 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.
The trucking industry is the primary customer for TA's goods and services. Freight and trucking demand in the U.S. generally reflects the level of commercial activity in the U.S. economy. During the first half of 2010, although the U.S. economy showed increased activity, the generally difficult economic conditions in the U.S. continued to present TA with significant operating challenges.
While TA's fuel sales volumes and nonfuel revenues in the second quarter and first half of 2010 both increased on a same site basis over the comparable periods of the prior year, these levels of activity continue to be well below those experienced before the recession from which the U.S. economy now may be recovering; however, the strength and sustainability of any such recovery is uncertain, including the risk that a possible "double dip" recession may occur, according to the company.
Westlake, Ohio-based TravelCenters of America operates 229 sites, 166 of which are branded TravelCenters of America or TA, and 63 of which operate under the Petro brand name.
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