TravelCenters of America Looks to Acquire More Truck Stops

WESTLAKE, Ohio -- TravelCenters of America LLC (TA) plans to acquire more travel centers in the near future, company CEO Thomas O'Brien said during today's analyst conference call.

"There are many travel center opportunities for us," he said. "We want to continue to fill in our nationwide network."

According to O'Brien, TA looks for certain criteria when acquiring travel centers. "First, we want to attempt to identify gaps [in our business]," the CEO noted. "Second, the valuation needs to be right and the travel center needs to be for sale."

More specifically, O'Brien said there are eight to 10 regions of the country where TA is looking to make acquisitions. He did not name any of the regions, but did say an example of such a purchase was TA's acquisition of a Deming, N.M., travel stop last month. He also mentioned that several hundred sites fit the model that it seeks for a potential acquisition.

O'Brien added that most future acquisitions would be in the $3 million to $5 million range and that the company is well equipped to make such purchases thanks to its $129 million cash position and $200 million line of credit.

TA was aggressive regarding truck stop purchases last month, as it bought five sites for about $21 million.

As for its 2012 fiscal second quarter that ended on June 30, TA earned a net profit of $29.85 million, compared to a profit of $21.82 million during the same time period last year.

Same-store fuel sales volume decreased by 2.2 percent in TA's latest quarter. However, the company cited capital projects to replace fuel dispensers and install diesel exhaust fluid (DEF) dispensers that required TA to take certain fuel dispensers out of service as a primary reason for the decline.

TA experienced healthy increases in total nonfuel revenues and gross margins though. Nonfuel revenues improved to $348.7 million, compared to $329.5 million in TA's 2011 fiscal second quarter. Nonfuel gross margins rose to $194 million vs. $187 million last year.

"We continue our string of year-over-year improvements," said O'Brien. "This was our 10th consecutive quarter of improved results. We expect net income to be good for the rest of the year."

The CEO also said that adding more Shell-branded gasoline to its truck stops padded the bottom line. Of its 203 travel centers, O'Brien noted that 182 have branded fuel.

However, the chief executive did admit there was one fly in the ointment during TA's latest quarter: nonfuel margin percentages declined.

"It's our one dim spot," noted O'Brien. "A main reason for that was tire demand was down due to new truck purchases, more used tires being bought and tire manufacturers still recovering from the recession."

TravelCenters of America operates under the TA, Petro, Petro Stopping Centers, and its eponymous brand names.