TravelCenters of America Is Not 'Grave Dancing' on Pilot Flying J
WESTLAKE, Ohio -- Addressing investors during its 2013 first-quarter earnings call today, TravelCenters of America LLC (TA) CEO Thomas M. O'Brien said the company has not experienced any increase in sales volume following the FBI raid on its major competitor Pilot Flying J.
O'Brien emphasized that TA is a public company with a "robust" compliance and control environment, and remains "supremely confident" that it honors all of its pricing commitments. The chain is not taking a different approach than it has in the past in terms of acquiring new customers.
"[Customers are] looking at things, and there's not a lot of knee-jerk reaction to anything. I would say that while we're in tune to the potential for fallout and dustups associated with [the Pilot Flying J] matters, we're not running around grave dancing either because I don't think that's in our interest for the short term or long term," O'Brien explained.
Turning his attention to the company’s earnings, the chief executive said overall, he is pleased with TA’s fiscal results for the first quarter, which is historically the company's slowest quarter annually. Although it saw a net loss of $12.1 million for the quarter ended March 31, this was a $2-million improvement over the first quarter of 2012.
In addition, EBITDAR (earnings before interest, taxes, depreciation, amortization and rent) increased by $7.3 million, or 14.6 percent, over the 2012 first quarter to $57 million. During the call, O'Brien confirmed this is a new company record.
"I continue to believe that the attention we have devoted to customer service, to selectively buying new sites, and to improving our facilities and controlling our operating costs have allowed us to improve our bottom line in a slowly improving economy so far in 2013 and positioned us for profitability for the full year 2013," he added.
O'Brien pointed to the fact that many sites have been owned for only a short time and have not yet seen completion of TA's planned improvements. Offering quality truck repair services and improving customer service continue to be top priorities for the company. Since the end of the 2013 first quarter, TA opened two new truck repair facilities at sites acquired in 2011 and another two are expected to open this month.
TA also continues to take advantage of a distressed market for specialized real estate such as truck stops. During its 2013 first quarter, TA purchased two travel centers, one of which was previously a TA franchisee-operated site, for an aggregate of $9.4 million and made capital investments of $32.5 million, including $7.5 million to improve travel centers that TA purchased during 2011 through this year.
TA currently has an agreement to acquire an additional travel center for $4 million and expects to complete this purchase during the second quarter. However, the acquisition is subject to conditions and may not occur.
As of March 31, the Westlake, Ohio-based company's business included 244 TA and Petro Stopping Center travel centers in 41 states and Canada.
O'Brien also provided more detail about TA's natural gas fueling network agreement with Shell Oil Products US.
As CSNews Online previously reported, the pact calls for Shell to build at least two natural gas fueling lanes for large over-the-road trucks and related storage capacity at up to 100 TA and Petro Stopping Center locations, at Shell's cost, within several years.
O'Brien expects the first sites to open in early 2014, approximately one year from now. He does not anticipate the customer demand for liquid natural gas (LNG) to occur overnight, noting it is a “replacement product” for TA. "That is to say, I didn't enter the agreement in order to make less money on the product I'm replacing," he said.