TravelCenters of America Reports Net Loss of $3 Million in Second Quarter
TravelCenters of America and Commercial Vehicle Group Inc. reported second-quarter income plunged as revenues increased, albeit to varying degrees.
TravelCenters of America reported Aug. 8 a net loss of $3 million or 8 cents per share, for the period ended June 30, compared with a net income of $3.5 million, or 9 cents, a year earlier.
Revenue inched up to $1.5 billion compared with $1.4 billion a year earlier. Fuel accounted for $990 million of that total.
The year-over-year change in net income “was primarily due to $5.3 million of litigation costs and what we believe to be excess transaction fees we incurred related to our dispute with FleetCor Technologies Inc. and its subsidiary Comdata Inc., or FleetCor/Comdata, and increased real estate rent and depreciation and amortization expense,” TravelCenters CEO Thomas O’Brien said in a statement.
The case is awaiting a decision by the Court of Chancery of the state of Delaware, according to Westlake, Ohio-based TravelCenters.
Its fuel gross margin and fuel gross margin per gallon were higher in the quarter compared with a year earlier due to changes in fuel commodity prices during second-quarter 2017 and the impact of the company’s pricing and purchasing strategies,TravelCenters said.
Tire unit sales increased 9.2% during the quarter, and events logged by its OnSITE mobile maintenance business and RoadSquad emergency breakdown service increased almost 17% versus the second quarter of 2016, according to the company. O’Brien said TravelCenters remains focused on growth across its commercial truck tire business and also the two vehicle-based maintenance services.
The company’s fuel gross margin and fuel gross margin per gallon were higher in the second quarter versus a year earlier, primarily due to changes in fuel commodity prices during second-quarter 2017 and the impact of pricing and purchasing strategies, according to the company.
To reduce costs, the company is making a “significant cut” in its use of billboard advertising to 120 billboards from 500 since billboards as a marketing tool have “declined in importance,” O’Brien said. Also, it is shifting to buying biodiesel in bulk and blending it at locations where it is sold, shifting from separate deliveries from tank trucks.
Year-to-date, TravelCenters reported a net loss of $32.4 million, or 82 cents, compared with $6.4 million, or 17 cents, a year ago. Revenue was $2.9 billion, compared with $2.6 in the 2016 period.
TravelCenters as of June 30 operated and franchised 539 centers, stand-alone convenience stores and stand-alone restaurants — of which 256 are travel centers in 43 states and the province of Ontario.
Also for the period ended June 30, Commercial Vehicle Group Inc. — a commercial vehicle supplier of cab-related products and systems — reported Aug. 7 net income plummeted to $100,000, or zero cents, compared with $2.7 million, or 9 cents, a year earlier.
“Conversion of improving sales into operating income, or pull through, in the second quarter was well below our past experience. This is primarily attributable to a shortage of labor in our North American wire harness business and the associated cost to satisfy customer production demand,” CVGI Chief Financial Officer Tim Trenary said in a statement. “The burden on second-quarter results was on the order of $4 million, and there may be another $3 million to $6 million of cost coming in the last half of the year. Additionally, rising commodity prices and some production inefficiencies from the spike in North American truck build adversely impacted pull through in the second quarter.”
Revenues were $195 million, up 9.5% compared with $178 million in the 2016 period. The increase reflects higher heavy-duty truck production in North America and improvement in the global construction markets, the New Albany, Ohio-based company reported. Also, foreign currency translation adversely impacted second-quarter revenues by $2.1 million, or by 1.2%, compared with a year earlier.
Year-to-date, net income was $760,000, or 3 cents, compared with $5.3 million, or 18 cents, in the 2016 period. Revenue increased to $368 million compared with $358 million a year earlier.
