TA Sees Double-digit Jump In Diesel Fuel Pumped During 3Q

Truck stop operator Travel Centers of America TA pumped a double-digit increase in diesel volumes in the third quarter compared to both the corresponding quarter of last year and the second quarter during the heart of the pandemic.

In an indicator of freight and trucking demand, and because TA is the only publicly traded company of its kind, the quarterly figures on diesel volume are a good indicator of where freight demand was in the prior quarter. 

For the quarter, TA sold 485.4 million gallons of diesel fuel. That was up 12.6% from the third quarter of last year and 14.7% from the second quarter, when its gasoline sales were down close to 30% but the need for restocking shelves kept diesel demand relatively healthy.

TA's margin on selling fuel was down for the quarter. Its gross margin dropped to 14.4 cents per gallon, down from 15.5 cents in the third quarter of 2019, while its adjusted gross margin was 12.7 cents, also down from 15.5 cents. In the second quarter, that margin was more than 19 cents, as retail levels stayed well above wholesale levels. (The chart below shows the FUELS.USA data series in SONAR, which measures that wholesale-retail margin.)

Many TA sites still have closed restaurants, the company said in its prepared statement accompanying the earnings. That could be seen in the revenue for restaurants, which at $77.6 million was down significantly from $109.1 million in the third quarter of last year. That accounted for a large portion of the drop in total nonfuel revenues to $474 million from $492 million.

Truck service revenues rose to $189.6 million from $186.4 million.

Overall, the company's bottom line of non-GAAP earnings per share of 65 cents per share was well over Wall Street consensus of 27 cents per share, according to SeekingAlpha. Revenue figures of $1.27 billion were short of consensus by $100 million. The total revenue figure was impacted by a decline in fuel revenues to $791 million, a decline of 26.3% from last year, helped largely by the decline in diesel prices. 

More importantly than just the comparison to Wall Street consensus, TA net income rose sharply to $8.6 million from $1.8 million in the third quarter of last year. The 3Q 2019 EPS figure was 23 cents per share, and the "beat" for this year was 27 cents, so just the amount of earnings exceeding consensus was more than last year's figure.

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