TravelCenters of America Narrows Net Loss

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TravelCenters of America Narrows Net Loss

WESTLAKE, Ohio -- The nationwide drop in trucking activity and diesel fuel consumption caused by the current recession contributed to a 14 percent fourth-quarter decline in same-site fuel volume at Travel Centers of America (TA), operators of 233 company-owned and franchised travel centers in 41 states. For the year ended Dec. 31, 2008, the Ohio-based travel center specialist reported a 15-percent drop in fuel volume compared to the comparable period a year ago.

For the year ended Dec. 31, TA reported same-site net income up 23.8 percent as total fuel gross margin gains were 36.3 percent and its nonfuel gross margin declined 2.5 percent. Although fuel volume for the year was down, fuel revenue was up 13.2 percent, likely driven by the run-up in gas prices last summer.

However, nonfuel same-site revenue was down 4.1 percent for the year.

Despite the difficult business conditions, TA executives said they believe they made progress toward adjusting its business to the challenges. TA’s net income, EBITDAR (earnings before interest, depreciation, amortization and rent) and adjusted EBITDAR for the fourth quarter of 2008 improved over the same period a year ago by $70.3 million, $56.0 million and $49.2 million, respectively. For the year, TA’s net loss was narrowed by $83.2 million, to $40.2 million, compared to a loss of $123.3 million the year before.

TA attributes the improvements to a reorganization over the past year to integrate its acquisition of the Petro Stopping Centers, personnel cost savings related to the workforce reduction announced last March, the termination of a fuel marketing arrangement with a third party marketer and numerous cost reduction, fuel purchasing and pricing strategies designed to improve operating margins.

TA became a public company Jan. 31, 2007. On May 30, 2007, it acquired Petro Stopping Centers. In March 2008, the company reduced the workforce at its headquarters and other locations by approximately 190, or about 8 percent of its managerial personnel. Similar reductions were made to its hourly workforce.

Last year, TA invested $79.4 million in capital projects, received $77.4 million from Hospitality Properties Trust from the sale of leasehold improvements, and made a $7 million capital investment in a joint venture that TA expects to undertake in 2009 to develop a new travel center on land already owned by the joint venture. The current capital plan for 2009 anticipates expenditures of approximately $60 million, some of which may be sold to Hospitality Trust under the lease agreements TA already entered into with the company, including approximately $16.8 million of qualifying improvements with no increase in its rent.

As of Dec. 31, 2008, TA’s business included a total of 233 sites, 166 of which were operated under the TravelCenters of America or TA brand names and 67 that were operated under the Petro brand name.