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WESTLAKE, Ohio -- During a recent earnings results announcement, TravelCenters of America LLC (TA) also disclosed it was implementing a staff reorganization relating to the company's acquisition of Petro Stopping Centers on May 30.
The company has implemented plans to reorganize its management and field staff through two key components, the company stated. First, the company will reduce corporate office staffing primarily at Petro Stopping's El Paso, Texas, headquarters, between now and June 2008. TA expects to eliminate approximately 60 redundant positions through the process.
Secondly, TA's field management functions and corporate office, marketing and operations personnel will be realigned to eliminate management layers. As a result, TA expects to terminate approximately 100 positions during September 2007.
The company's reorganized staff will be able to react more quickly to both opportunities and challenges in the marketplace, the company stated. In addition, the company expects its restructured organization will create a system of field management that promotes creativity and entrepreneurial activity, while maintaining control over our business, the company stated.
The company expects costs for the reorganization to total between $2 and $3 million, related to severance payments and relocation benefits.
The company also began a $125 to $150 million project during the quarter to upgrade the quality of TA locations and make them more attractive to our customers. Called Operation Refresh, the company will accelerate the program and now is expected to spend approximately $40 million in 2007 and $70 million in 2008 on the project, the company stated.
During the quarter, the company also completed development of a TA location in Laredo, Texas. The facility, which opened on July 9, cost $14 million plus the cost of land. The site includes 30 acres of land and includes parking for 349 trucks and 139 cars, eight diesel fueling lanes, 12 gasoline fueling positions, a five-bay repair shop, 5,400 square feet of retail space, a 165-seat Country Pride restaurant, three quick-service restaurants, and a driver's lounge, the company stated.
The company also completed redevelopment of a travel center in Brunswick, Ga., which it reopened on Aug. 1. The 28-acre site's redevelopment cost $5.5 million and now includes a six-bay repair shop and a separate 9,553-square-foot facility housing a convenience store and three QSRs. The fuel offering at the location includes 16 gasoline fueling positions.
In addition, the company also purchased a 29-acre site near Columbia, S.C., on Aug. 3. It expects to begin development of the vacant site to a full-service travel center before the end of this year. The company also has three properties under contract for purchase for a cost of $21 million, with expected improvements to total approximately $15 million. These acquisitions are expected to close during the fourth quarter of 2007, the company stated.
Due to the company's change to a public company at the end of January 2007, and the acquisition of Petro Stopping in May, the company advised its historical earnings would have limited relevance to the current results. At the quarter end, the company operated 233 sites, 164 of which under the TA brand and 69 under the Petro Stopping brand name, the company stated.
TA revenues for the quarter were $1.5 billion, compared to revenues of $1.3 billion for the comparable 2006 periods. During the three months ended June 30, the company saw net losses of $8.4 million, and earnings before taxes, depreciation and amortization totaled $44.8 million, a declined of $2.1 million compared to the year-ago quarter, the company stated.
TA's varying results were attributed to its acquisition of Petro Stopping, the company stated. Changes include an increase in fuel sales volume of 14 percent, fuel gross margin reaching 18 percent, nonfuel gross margin totaling 15.2 percent and a total gross margin of 15.9 percent.
During the quarter, TA sites saw a decline in fuel sales volumes on a same site basis of 0.5 percent and slight decline in average margin per gallon of $0.004 per gallon, or 3.7 percent, the company stated. The company attributed this to a modest decline in trucking activity, which was credited to a decline in manufactured goods orders and new home building during the current period versus the year-ago period.
Petro Stopping sites saw fuel volumes decline in the second quarter of 2007 by 2.3 percent over the comparable period, the company stated. Meanwhile, fuel gross margin declined by 23.5 percent, while non fuel gross margin declined by 3.2 percent compared to the year-ago period.