Editor’s Note: Corrects Shopping to Stopping Centers in 5th paragraph
Travel Centers of America Inc, (NASDAQ: TA) reported stronger profits and sales for the third quarter as it added locations and sold more fuel at higher prices.
Net income of $1.9 million, or $0.23 per share, was a $72.4 million improvement over the prior year third quarter loss of $70.4 million, or $0.20 per share. The 2018 third quarter included a $72.1 million loss from discontinued operations.
Income from continuing operations increased 17.8% from the July-September period a year ago. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 1.7% over the year-ago quarter.
“We believe our strategy is working, although freight market headwinds somewhat tempered the growth in our business,” said Andrew J. Rebholz, TA CEO.
The nation’s largest operator of full-service travel centers branded as TA and Petro Stopping Centers reported higher total and same site fuel sales volume and non-fuel revenues.
TA added three new travel centers during the quarter, bringing to 10 the number of new outlets this year. One travel store acquisition and one development parcel of land are planned in the coming months.
“The strategy we adopted in May 2018 to refocus our efforts on our core travel center operations, to grow that business and reduce our financial leverage has been successful to date and we expect to continue to pursue this strategy,” Rebholz said. “We have a number of additional potential franchise locations in the pipeline,”
Behind the numbers
TA paid more for diesel fuel and gasoline in the quarter but offset the increase by selling higher volumes through loyalty incentives to fleets and truckers to increase their fuel purchases.
Fuel sales volume and gross margin fuel sales volume for the 2019 third quarter increased by 21.2 million gallons, or 4.3%, compared with the year-ago quarter because of marketing initiatives and an increase of 2.5 million gallons at sites opened since the beginning of the 2018 third quarter.
A slightly lower diesel fuel gross margin per gallon was largely offset by a 5.6% increase in diesel fuel sales volume. The gross margin per gallon declined because of marketing costs.
TA is still waiting to see whether the federal government will reinstate the biodiesel blenders’ tax credit for 2018 or 2019. That could happen before the end of the year, which would allow TA to reduce the fuel cost of goods sold by about $35.0 million for 2018 and $28.9 million for the first nine months of 2019.
Procuring pancakes
TCA is continuing a restaurant rebranding plan with a franchise development agreement with International House of Pancakes to convert up to 94 travel center restaurants over the next five years.
TA is obligated to convert 15 Iron Skillet and Country Pride restaurants to full-service IHOP restaurants in 2020 with others to follow through 2024. As part of the agreement, TA can borrow up to $10 million from IHOP to makeover the restaurants.
“I believe the introduction of this brand to our travel centers will earn a 20% return on our investment,” because it will bring in additional customers who will also buy more fuel, Rebholz said.
Eli
Mind numbing numbers, important I know but the highlight of the article was the end. As a former driver it sure would of been nice to visit an IHOP now and then rather than Iron Skillet or Country Pride. Nice to see something like this is happening which will give drivers a little change.
Noble1
If truck drivers were to unite and create their own: ie; “Truck Driver Alliance Co-Op” which would draw in all other association members to join such as the OOIDA members since they are drivers too , and collectively structure yourselves to prosper beyond simply truck driving you would own TRUCK stops !
All that profit truck drivers are giving away to businesses that cater to THEIR needs is mind boggling . I guess that’s what occurs when you’re divided and focusing on fighting for pennies rather than structuring to generate dollars .
And that’s just in regards to truck stops . We haven’t covered “road service” which is a huge business that caters to truck driver needs as well . And rather than depending on carriers , why not structure yourselves to own your own “Carrier(s)” .That way you own the “carrier” and you drive for your own carrier(s) which EMPLOYS YOU the owners.
All these businesses should belong to a truck driver Alliance . However , it seems truck drivers can’t be bothered with these type of profit generating ideas, they’re to busy stressing over things like AB-5 rather than thinking of ways to use it at their advantage .
What has this “independent” philosophy of yours been costing you ? Everyone is using you to cater to their needs while you’re getting the short end of the stick . You the truck drivers are a great resource and you move the world , however, you keep on positioning yourselves at the bottom of the food chain while you should be at the top !
All the “Big Boys” are aligned in some fashion , weather that be at the extreme being associated to the Bilderberg GROUP , and or through a trucking carrier “ASSOCIATION” , but somehow truck “drivers” manage to stubbornly remain divided . Not only is that frustrating , it’s melancholic .
In my humble opinion ……….