TravelCenters of America (TA) lost money in the first quarter this year, though losses were much smaller compared to the same period in 2010, in part due to increased fuel margins.
TA lost $16.7 million on revenues of $1.78 billion in the first quarter, compared to losses of $41.2 million on revenues of $1.38 billion in the same period last year. Those reduced losses are due to higher gross margin per gallon of fuel, which were $10.6 million higher in the first quarter this year compared to the first quarter of 2010, even though total fuel sales were down 0.5% on a quarter-to-quarter comparison.
The chain added that its nonfuel sales for the first quarter increased over the same period last year largely due to increased customer spending in TA’s travel centers as the U.S. economy improves as well as from price increases. TA stressed that economic activity hasn’t yet returned to pre-recession levels, especially where the trucking industry is concerned.
“The trucking industry is the primary customer for TA’s goods and services, as freight and trucking demand in the U.S. generally reflects the level of commercial activity in the U.S. economy,” the company noted in its first quarter earnings report. “While the U.S. economy recently has shown signs of growing, recent economic activity is still below pre-recession levels and the strength and sustainability of any economic recovery is uncertain.”
TA added that it continues its expansion strategy, investing or already agreed to invest some $37.2 million this year related to the acquisition of eight travel centers, including:
- Spending $7.2 million to acquire and improve a new travel center in Texas that was purchased at a foreclosure auction this March – a property renovated as a Petro Stopping Center and opened for business on May 1.
- Purchasing a former Petro franchisee's travel center in Kansas for some $5.5 million in late March, which TA expects to re-open for operation during the second quarter of 2011.
- Acquiring six new travel centers (five in Indiana and one in Illinois) at a bankruptcy auction in April for $24.5 million; purchases are expected to be completed during the second quarter of 2011.