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Earnings Watch: TravelCenters Posts Near $10 Million Loss

Lower fuel prices propelled truckstop operator TravelCenters of America from a profit to a loss in the first quarter of the year, but that’s not keeping it from going ahead with expansion plans.

Evan Lockridge
Evan LockridgeFormer Business Contributing Editor
May 9, 2016
Earnings Watch: TravelCenters Posts Near $10 Million Loss

 

3 min to read


Lower fuel prices propelled truckstop operator TravelCenters of America LLC (NYSE: TA) from a profit to a loss in the first quarter of the year, but that’s not keeping it from going ahead with expansion plans.

The parent to TA truckstops, Petro Stopping Centers and Minit Mart convenience stores recorded a net loss of $9.9 million, or 26 cents per share, 2 cents more than a consensus expectation from Zachs Investment Research. This compares to a profit of $15.7 million or 41 cents per share a year earlier.

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This happened as revenue dropped by about 17% to $1.16 billion for the Ohio-based operation.

Fuel sales volume was 8.1% higher in the 2016 first quarter than the 2015 first quarter, with a 48.6-million gallon increase from sites acquired since the beginning of 2015 – but it was offset by an 8.2-million gallon decrease in same-site volume, according to the company.

Fuel revenue declined by $293.6 million, or 29.3%, due to significantly lower market prices for fuel compared to the 2015 first quarter. Gross fuel margin also fell 55.5 cents in the most recent quarter to 17 cents per gallon, which TravelCenters said led to its net loss.

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"During the first quarter of 2016, we continued progress in the integration of our new sites, principally the 148 convenience stores we acquired during the last half of 2015 and the first quarter of 2016. Ramp up of newly acquired locations is proceeding largely as expected,” said CEO Thomas M. O'Brien. "In addition to lower fuel gross margin per gallon in 2016 as compared to the first quarter of 2015, we also experienced some negative impact on fuel volumes at certain locations due to reduced demand from customers involved in the energy sector.”

Revenue from TA's travel center segment for the 2016 first quarter decreased by $337.3 million, or 24.9%, compared to the 2015 first quarter.

In contrast, revenues from TA's convenience store segment for the 2016 first quarter increased by $92 million, or 217.8%, from a year earlier, due to increases in fuel sales volume from sites acquired since the beginning of 2015.

TA's 2016 first quarter activities included the acquisition of 24 standalone convenience stores for $35.1 million, plus nearly $5 million in improvements for these and other locations.

Since its acquisition program began in 2011, TA has acquired 37 travel centers and 224 standalone convenience stores through the first quarter of this year. The cost for the purchases and improvements has totaled $315.6 million and $424.2 million, respectively.

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At the end of the quarter TA said it had completed construction of two more travel centers, had begun construction of two other travel centers and had plans to develop an additional travel center. It also has agreements to purchase five other convenience stories in Illinois and 51 Quaker Steak & Lube restaurants. Since the end of March TA has also secured an agreement to purchase 11 convenience stories in Wisconsin.

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