TravelCenters of America LLC (TA)
Q3 2012 Earnings Call
November 06, 2012 10:00 am ET
Timothy A. Bonang - Manager of Investor Relations
Thomas M. O'Brien - Chief Executive Officer, President, Managing Director, Member of the Office of the Chairman and Director
Andrew J. Rebholz - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer
Pamela Kaufman - UBS Investment Bank, Research Division
Benjamin Brownlow - Raymond James & Associates, Inc., Research Division
Timoty Fronda - Sidoti & Company, LLC
Previous Statements by TA
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Timothy A. Bonang
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, November 6, 2012. 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 any forward-looking statements.
Additional information concerning factors that could cause 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 statements. I would note, the recording and retransmission of today’s conference call is strictly prohibited without prior written consent of TA.
Now, I will turn the call over to Tom.
Thomas M. O'Brien
Good morning, and thank you for joining our call today. Our results for the 2012 third quarter continued our string of year-over-year EBITDAR improvements. This is the 11th consecutive quarter in which our EBITDAR exceeded that of the prior year. We generated net income of $19 million, or $0.66 per share for the third quarter of 2012, a decrease of $1.8 million or $0.08 a share from the third quarter of 2011. Our 2012 third quarter EBITDAR was $83.6 million, an increase of $600,000 or 1% of the 2011 third quarter.
For the first 9 months of 2012, we generated net income of $35 million or $1.20 a share, an improvement of about $9 million or 33% of the net income we generated in the first 9 months of 2011. We generated EBITDAR of $227 million for the first 9 months of 2012, an increase of about $17 million or 8% over the first 9 months of 2011.
I attribute our 2012 improvements to the capital investments we've made in existing properties during those 2 years, favorable fuel margins, particularly during the 2012 second quarter and our ongoing improvements in customer service delivery, as well as our continued program to acquire travel centers.
These results have been achieved despite only modest trucking business improvements reported by many of our customers in the U.S. economy that may be best described as uncertain, and certainly not exhibiting strong growth. Our results in the third quarter also has been achieved despite the fact that fuel prices advanced steadily upward during the quarter. NIMEX diesel fuel price increased about 15% during that quarter.
As I've said on many previous calls, our fuel margins tend to be pressured when fuel prices rise. Our fuel sales volume on a same-site basis was down 6.8% versus the prior year quarter. We believe that the 2012 third quarter was difficult for most of our trucking industry customers. But little increase in trucking activity there was in the third quarter did not result in the increased fuel sales volumes because of the combined effects of continued improvements in truck engine efficiency and fuel conservation efforts, our continued avoidance of certain lower margin sales opportunities and the fact that a significant number of our fuel dispensers were out of service at time during the quarter as we continued to install new high-speed diesel and diesel exhaust fluids, or DEF equipment, throughout our network.
On a weighted average basis, about 7% of our diesel fuel dispensers were out of service for replacement and installation of DEF during the third quarter of this year as compared to only 1.4% in the 2011 third quarter. We expect that our new dispenser and DEF improvements projects will be substantially complete nationwide by year end.
For the 2012 third quarter, we realized same-site growth in nonfuel revenue of 1.8%, with the same-site nonfuel gross margin declined by about 0.5%. The margin percentage decline from prior year quarter was largely due to a shift in sales mix towards lower margin items into lower margins in tires.
While nonfuel margin as a percentage of nonfuel revenue declined by about 130 basis points, our site level operating expenses as a percentage of nonfuel revenue was managed downward by about 60 basis points on a same-site basis. We continue to actively monitor and adjust our operating cost to sales volumes and customer traffic.
We expect -- we continue to expect to post net income for the full year of 2012 that will exceed the net income we generated for 2011, and I continue to be excited about these prospects for the future.