TravelCenters of America saw its profits fall by nearly $2 million in the third quarter over last year, thanks largely to lower fuel sales.
The company said it continued to have strong per-gallon diesel margins, despite generally increasing fuel prices and reduced volumes during the quarter.
"Reduced fuel volumes reflect a combination of factors, including a slowing economy, continued conservation efforts in the trucking industry and TA's CapEx initiative to update its diesel fuel dispensers, which caused about 7% of its fuel lanes to be out of service this quarter," said John G. Murray, principal executive officer of Hospitality Properties Trust, during an investor conference call. Nonfuel sales and gross margin were essentially flat quarter-over-quarter.
Fuel volumes for the third quarter declined 8.9% from the prior year, but per gallon fuel margin increased resulting in a 2.3% increase in fuel gross margin compared to the 2011 quarter.
Net income of $19 million for the third quarter of 2012 decreased by $1.8 million as compared to the net income in the 2011 third quarter. Nonfuel revenues increased $14.6 million, or 4.2%, above the 2011 third quarter.
The improvements in nonfuel revenues and gross margin in the third quarter of 2012 resulted, in large part, from the travel centers acquired or opened since July 1, 2011, increased fuel gross margin per gallon and increased customer spending for nonfuel products and services in TA's travel centers.
During the first nine months of 2012, TA made capital investments of $94.2 million for improvements to existing travel centers and $17.4 million to improve existing travel centers TA acquired during 2011 and 2012.
During that time, TA spent $41.2 million to buy nine travel centers and acquired the business of a sublease tenant franchisee.
As of Sept. 30, TA's business included 242 sites, 171 of which were operated under the "TravelCenters of America" or "TA" brand names and 71 of which were operated under the "Petro Stopping Centers" or "Petro" brand name.