TravelCenters of America LLC (TA)
Q2 2010 Earnings Call Transcript
August 9, 2010 10:00 am ET
Carlynn Finn – Manager, IR
Tom O'Brien – Managing Director, President and CEO
Andy Rebholz – EVP and CFO
Ben Brownlow – Morgan Keegan
Smedes Rose – KBW
Good day and welcome to the TravelCenters of America second quarter 2010 financial results conference call. This call is being recorded.
Previous Statements by TA
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At this time, for opening remarks and introductions, I would like to turn the call over to the TA Manager of Investor Relations, Carlynn Finn. Please go ahead.
Thank you. Good morning and welcome, everyone. Our agenda today includes remarks by Tom O'Brien, our Chief Executive Officer; and Andy Rebholz, our Chief Financial Officer. After the presentation, there will be a question-and-answer session.
Today’s conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Federal Securities Laws. These forward-looking statements are based on TA’s present beliefs and expectations as of today, August 9th, 2010. TA undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made today other than as required by law.
Actual results may differ materially from those implied or included in these forward-looking statements. Additional information concerning factors that could our forward-looking statements not to occur is contained in our filings with the Securities and Exchange Commission. Investors are cautioned not to place undue reliance upon any forward-looking statement.
The recording and retransmission of today’s conference call is strictly prohibited without the prior written consent of TA.
Now, I will turn the call over to Tom O'Brien.
Good morning, everybody and thank you for joining our call today. I’m here to report our financial results for the 2010 second quarter. For that quarter, we generated net income of $1.2 million, a $16 million improvement over the 2009 second quarter bottom line. EBITDA for this period was $75.8 million, which was a $19 million increase over 2009 second quarter EBITDA.
Fuel gross margin per gallon was a significant contributing factor to the variations in results between years for the second quarter. A higher level of fuel gross margin per gallon during the current quarter combined with a 6.4% increase in fuel gallons sold generated $15.5 million more fuel gross margin in the 2010 second quarter than in the previous year.
While fuel margin was a big part of the story in the second quarter as it has tended to be recently, it was not the full story. Not only has the U.S. economy slowly improved, so too have the businesses of many of our trucking company customers. A significant contributing factor to TA's results this second quarter was the continuing impact of our internal efforts to increase revenue and EBITDA.
On a same-site basis, fuel sales volume was up 7.1% for the quarter and non-fuel revenues were up 6.5%, each over the 2009 second quarter while the non-fuel margin percentage increased and site-level operating expenses were held in check. Site-level operating expenses, as a percentage of non-fuel revenues on a same-site basis, was 52.2% in the 2010 second quarter, 30 basis points better than in the 2009 second quarter.
Our second quarter 2010 results are encouraging in the current economic environment. We have continued to focus on our customer. There really is no one else in this industry that is doing the things TA is doing to make the customer experience first grade. A few examples of this are – on July 26, we rolled out a blockbuster change to our brand's loyalty program to combine the separate Petro and TA programs under a single new umbrella called UltraOne. The new card provides drivers with the ability to earn and use points at all 229 of our locations.
TA has trained its truck service personnel on the changes that drivers and fleets are facing with CSA 2010. CSA 2010 is a comprehensive safety analysis conducted by the Federal Motor Carrier Safety Administration. CSA 2010 will have a profound impact on the way drivers and fleets will conduct their maintenance activities and how drivers and fleets will interact with one another. TA is of course leading the way in the travel center business because of our extensive nationwide maintenance facilities.
We have adapted our full service restaurant menus to meet changing customer tastes. There is now a salad bar at every TA restaurant. Our "All You Can Eat" program and our newest low-calorie options are both, believe it or not, the result of direct customer interaction we solicited through our Driver Council program.
TA's new national shower standards, points promotion, and substantial customer service employee training commitment are leading the way to show drivers and customers the advantages of a full service travel center, both from the standpoint of driver satisfaction and comfort and from that of customer business optimization. These are just a few examples.
Maybe the TA's plans are different than those of our competition, because TA is dominant by many measures of size versus the new Pilot Flying J. However, we intend to continue to focus on advantages of the TA and Petro full service offering that will provide us with some of the keys to successfully operate in the future, despite the new and admittedly challenging landscape of our industry.
I will now turn the call over to Andy Rebholz, our Chief Financial Officer, who will review our second quarter results in detail. And after Andy's comments, we will come back to answer questions.