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TravelCenters Of America's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: TA

For the 2012 second quarter, we realized same-site growth in nonfuel revenues of 4%, and in nonfuel gross margin of 2.2%, despite our modest fuel volume change. While nonfuel margin as a percentage of nonfuel revenue declined by about a 100 basis points, our site level operating expense as a percentage of nonfuel revenues was managed downward by 180 basis points on a same-site basis during the 2012 quarter.

Our fuel sales volume on a same-site basis was down 2.2% versus the prior year quarter, and we believe this is at least partially the result of dispensers that were out of service at times during the quarter, as we continued to install new high-speed diesel and Diesel Exhaust Fluid or DEF equipment throughout our network.

On a weighted average basis about 3% of our diesel fuel dispensers were out of service for replacement and installation of DEF during the second quarter. We expect that by year-end, our new dispenser and DEF projects will be largely complete nationwide. We continue to expect to post net income for the full year of 2012 that will exceed the net income, we generated for 2011.

Besides the very positive earnings report for the second quarter, there are other reasons that I'm excited about TA's prospects for the future. We have made or are making several investments in our business that we expect to contribute to our earnings growth. Some examples include, first, we continue to opportunistically take advantage of distressed market conditions affecting specialized real estate. We bought three travel centers for about $13 million during the second quarter and another five for about $22 million during July.

In April, we invested $81 million to purchase one travel center off Interstate 81 in Scranton, Pennsylvania that had been previously operated as Petro Stopping Center by a former franchisee. In June, we invested $5 million to acquire two travel centers in Michigan, one in Battle Creek off I-94 and one in Tekonsha off I-69 both of which have been branded TA.

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