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    Natural Gas Falls Short of Expectations at TA

    Still, the fuel will soon be offered at more locations.

    By Brian Berk, Convenience Store News

    WESTLAKE, Ohio — Despite being touted as one of the most viable alternative fuels for the future, liquefied natural gas (LNG) sales to fleets at TravelCenters of America LLC (TA) have not been as good as hoped for, CEO Thomas O'Brien acknowledged during Tuesday's 2014 fiscal second-quarter earnings call.

    "Takeup of natural gas is a little less than expected at this point," he said. "But there is still a lot of interest."

    O'Brien added that some truck fleets have not converted from traditional petroleum to natural gas as quickly as expected. But this does not mean TA will change its course. The retailer currently sells natural gas at one of its travel centers and will add the offering to four or five more locations by the end of the year.

    "Our agreement with Shell [to sell natural gas] is alive and well," the chief executive said. "We are moving forward with our plans."


    Overall, TA had a quiet 2014 second quarter, according to O'Brien. The company acquired only one travel center in its latest quarter, which ended June 30, and announced the acquisition of another — located near Interstate 25, exit 254, in Johnston, Colo.

    "It was a pretty boring quarter," the CEO acknowledged during Tuesday's earnings call.

    Westlake-based TA now operates 251 travel centers in 43 states and Canada under the TravelCenters of America, TA and Petro Stopping Center brands, as well as 34 convenience stores with gas, primarily under the Minit Mart banner.

    One thing that was different in the second quarter year over year was net earnings. For its 2014 second quarter, TA achieved a net profit of $13.6 million, a $2.5-million decline compared to the same quarter one year prior. Differences in income tax structure was cited as the main culprit for the earnings decrease.

    Also on a downturn were total fuel sales. TA sold 517 million gallons of fuel in its latest quarter, a decrease of 4 million gallons. According to O'Brien, the decline was due to conservation efforts on the part of professional drivers and TA's decision to avoid selling fuels that bring in lower margins.

    He added that as vehicles become more fuel efficient, fuel volumes could drop as much as 2 percent to 3 percent annually industrywide.

    While total fuel sales were down, margins were up. TA earned $99 million in fuel gross margins, a healthy $10-million jump year over year. Profit margin per gallon was a strong 19.2 cents.

    Total non-fuel sales also rose, reaching $414.8 million, an improvement of $34 million year over year. However, non-fuel gross margin percentage dipped 1.1 percent to 53.7 percent.

    "I'm pleased with the solid results in our latest quarter," concluded O'Brien. "I have never been more excited about our leadership role in this industry."

    By Brian Berk, Convenience Store News
    • About Brian Berk Brian Berk is managing editor of Stagnito Business Information's Convenience Store News and Convenience Store News for the Single Store Owner, where he specializes in covering motor fuels, technology and financial news. He has served the magazine industry for 14 years and has also worked in the radio and newspaper fields. Berk holds a bachelor's degree in communications from the State University of New York at Cortland and a master's degree in journalism from Quinnipiac University in Hamden, Conn.

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