TravelCenters of America (TCA) is in the fuel, food, and relaxation business for the long haul. The company's network of more than 235 interstate highway travel centers in some 40 US states and Ontario, Canada is one of the largest in North America. Its TCA and Petro locations provide fuel, fast-food and sit-down restaurants (Country Pride, Buckhorn Family), convenience stores, and lodging. With professional truck drivers as its main customers, some outlets also offer "trucker-only" services, such as laundry and shower facilities, TV rooms, and truck repair. TCA leases 185 of its 235 locations from Hospitality Properties Trust (HPT), its largest shareholder.
The company operates and franchises travel centers under two brands: TravelCenters of America with more than 165 locations; and Petro Stopping Centers (acquired in 2007) with about 70 locations, about 50 of which company operated. TCA also operates "RoadSquad," the largest nationwide emergency roadside service network, with more than 400 heavy-duty emergency vehicles.
After losing money every year since it was acquired by HPT in 2007, TravelCenters of America (TCA) finally turned a profit in 2011. Net income exceeded $23 million in 2011 compared with a loss of more than $65 million the prior year. Sales increased by about 32% in 2011 vs. 2010, driven by a 38% jump in fuel sales vs. a nearly 10% gain in nonfuel sales. The strong performance in 2011 followed a healthy 2010, when TCA's sales rose nearly 27%, again buoyed by a hefty rise in fuel sales.
The company is building its cross-country network of travel centers through acquisitions by opportunistically buying up smaller competitors struggling as a result of the recent recession. To that end it acquired eight travel centers for an aggregate price of $37 million in 2011 and in 2012 agreed to purchase eight more for about $32 million. With fuel accounting for such a large portion of its total sales (84% in 2011 vs. 80% in 2010), TCA is vulnerable to wild swings in prices. (About 90% of TCA's historical fuel sales are diesel, while 10% are gasoline. The company is looking into expanding into natural gas as a motor fuel.) Another wildcard for the company is the 2010 merger of its two largest rivals: Pilot Travel Centers and Flying J to form Pilot Flying J, an operator of more than 550 travel centers across North America. The merger created a more formidable competitor and could hinder TCA's sales and new-found profitability.
The real estate investment firm Hospitality Properties Trust owns nearly 10% of TCA's shares.
▲ Show Less▼ Show Full Description