Fourth Quarter Operating Results.
Patriot Transportation Holding, Inc.
(NASDAQ:PATI) reported net income of $1,585,000 or $.48 per diluted
share in the fourth quarter of fiscal 2015, an increase of $816,000
or $.24 per diluted share compared to net income of $769,000 or
$.24 per diluted share in the same period last year. Transportation
revenues were up $1,290,000, or 4.8%, on just 68,000 fewer miles as
management was successful at replacing the business we let go in
the second quarter. Operating profit was $2,633,000, an
improvement of $1,357,000 or 106% versus $1,276,000 in the same
quarter last year and operating ratio was 91.3% versus 96.0% in the
same quarter last year. These results were positively
impacted by a $1,031,000 improvement in insurance and losses as we
experienced lower self-insured medical, workers’ compensation and
liability claims, a $444,000 gain on equipment sales, a $250,000
improvement in SG&A due to a one-time expense incurred in the
fourth quarter of 2014 and a $243,000 improvement in corporate
overhead due mainly to no spin-off costs in this quarter offset by
higher compensation and benefits costs ($1,013,000) as we continue
to experience cost increases associated with hiring and retaining
drivers in this tight driver market.
Fiscal Year 2015 Operating
Results.
The following discussion includes certain
non-GAAP financial measures (“adjusted”) within the meaning of
Regulation G promulgated by the Securities and Exchange Commission
(“Regulation G”) to supplement the financial results as reported in
accordance with GAAP. The non-GAAP financial measures discussed
below include adjusted net income, adjusted operating profit and
adjusted operating ratio. These non-GAAP financial measures exclude
the intangible asset impairment charge incurred in the second
quarter. Patriot uses these metrics to analyze its continuing
operations and to monitor, assess, and identify meaningful trends
in its operating and financial performance. These measures are not,
and should not be viewed as, substitutes for GAAP financial
measures. Refer to “Non-GAAP Financial Measures” below in this
press release for a more detailed discussion, including
reconciliations of these non-GAAP financial measures to their most
directly comparable GAAP financial measures.
Net income for fiscal 2015 was $3,339,000 or
$1.02 per share, an increase of $142,000 or $.03 per share compared
to net income of $3,197,000 or $.99 per share in the same period
last year. During the second quarter, as part of a
competitive bid, we elected not to pursue a significant piece of
business acquired in the Pipeline transaction (closed in early
fiscal 2014). The absence of this business required us to take an
impairment charge of $2,074,000 against the intangible asset
“customer relationships”. Rather than lower our quoted rates
to retain that business, management determined it was in our best
interest to employ our capital and resources to find new business
at better rates. During the latter half of the year, our
sales team did an excellent job replacing those lost revenue miles.
In the end, we were able to haul almost as many miles in fiscal
2015 (43,220,000) as we did in fiscal 2014 (43,865,000) while
increasing our transportation revenue by $2,870,000. The
Company’s adjusted net income for fiscal 2015 was $4,604,000, or
$1.41 per share, an improvement of $1,407,000 or $.42 per share as
compared to net income of $3,197,000, or $.99 per share, last
fiscal year. FY 2015 adjusted operating profit increased 43% to
$7,660,000 and 2015 adjusted operating ratio improved to 93.8%
versus last year’s 95.9%, more in line with our goals.
For fiscal 2015, total revenue was down
$6,280,000 due mainly to significantly lower fuel surcharges.
Total revenue is made up of transportation revenue (up $2,870,000,
a 2.6% improvement over the same period last year) and fuel
surcharge revenue (down $9,150,000 due to the dramatic decrease in
fuel prices experienced over the past 12 months). Comparing
the lower fuel surcharge revenue ($9,150,000) to the lower fuel
cost ($8,986,000) resulted in a $164,000 negative impact to the
Company from the lower price of diesel in 2015 versus 2014.
Compensation and benefits expense was up
significantly for a series of reasons including, an increase
in pay for all of our drivers, higher driver training pay and an
increase in support wages as we continue to hire people in the
field to enhance our ability to hire and retain drivers to meet our
customers’ growing demands. The demand for drivers continues
to increase with the expansion of the US economy while the pool of
qualified drivers so far has not grown at a sufficient pace to meet
that demand; thus, finding and retaining qualified drivers to grow
our business is an ever increasing challenge. Management
believes that we need to be a leader in our industry at attracting,
hiring and retaining drivers. We will continue to focus more
of our resources on meeting this goal.
Operating expenses improved by $731,000 over
last year due in large part to lower out-of-town driver costs (as
we improved on managing our customer’s business demands with more
local drivers in fiscal 2015 versus 2014) and lower rigging, tolls,
and operating supplies expense. Gains on equipment sales were
up significantly in 2015 ($959,000) due in large part to the sale
of 47 trailers during fiscal 2015 versus no trailer sales in fiscal
2014. Insurance and loss expense improved by $480,000 due in
large part to lower workers’ comp expense. Depreciation
expense increased $276,000 due to the increased cost of new
tractors year over year. Corporate overhead saw an increase of
$518,000 due mainly to higher medical claims, a significant repair
to the corporate aircraft (management is in the process of selling
a significant stake in the corporate aircraft to reduce the
Company’s on-going expenses related thereto), higher management
incentive compensation expense and the additional costs of
operating as a stand-alone public company.
Summary and Outlook.
Fiscal 2015 was highlighted by the completion of
the spin-off of our business from FRP Holdings, Inc. in the second
quarter and the beginning of the Company’s future as a stand-alone
public trucking company. Throughout the year our managers and
employees focused on our core goals of (i) safety first, (ii)
customer service and satisfaction, and (iii) instilling a culture
where our drivers feel appreciated for the hard work and many
sacrifices required of them to perform a very difficult job.
Our primary goal for our shareholders is to grow profitably while
maintaining a strong balance sheet and solid returns on capital
employed. The major headwind to our improvement and growth is
the continuing high costs associated with hiring, training and
retaining drivers. Our objective remains to grow our driver
count to meet a strong customer demand. Due to the tight
driver market, and our proven history of safe business practices
and high customer satisfaction, we are optimistic we will improve
our transportation revenues and bottom line results in fiscal
2016.
Conference Call.
The Company will also host a conference call on Wednesday
afternoon, November 18, 2015 at 4:00 p.m. (EST). Analysts,
stockholders and other interested parties may access the
teleconference live by calling 1-800-311-9404 (pass code 86912)
within the United States. International callers may dial
1-334-323-7224 (pass code 86912). Computer audio live streaming is
available via the Internet through the Company’s website at
www.patriottrans.com. You may also click on this link for the live
streaming http://stream.conferenceamerica.com/pth111815. For the
archived audio via the internet, click on the following link
http://archive.conferenceamerica.com/archivestream/pth111815.wma.
If using the Company’s website, click on the Investor Relations
tab, then select the earnings conference stream. An audio replay
will be available for sixty days following the conference call. To
listen to the audio replay, dial toll free 877-919-4059,
international callers dial 334-323-0140. The passcode of the audio
replay is 79105435. Replay options: “1” begins playback, “4” rewind
30 seconds, “5” pause, “6” fast forward 30 seconds, “0”
instructions, and “9” exits recording. There may be a 30-40 minute
delay until the archive is available following the conclusion of
the conference call.
Investors are cautioned that any statements in
this press release which relate to the future are, by their nature,
subject to risks and uncertainties that could cause actual results
and events to differ materially from those indicated in such
forward-looking statements. These include general economic
conditions; competitive factors; political, economic,
regulatory and climatic conditions; driver availability and cost;
the impact of future regulations regarding the transportation
industry; freight demand for petroleum product and levels of
construction activity in the Company's markets; fuel costs; risk
insurance markets; pricing; energy costs and technological
changes. Additional information regarding these and other
risk factors and uncertainties may be found in the Company’s
filings with the Securities and Exchange Commission.
Patriot Transportation Holding, Inc. is engaged
in the transportation business. The Company’s transportation
business is conducted through Florida Rock & Tank Lines, Inc.
which is a Southeastern transportation company concentrating in the
hauling by motor carrier of liquid and dry bulk commodities.
Continued
PATRIOT TRANSPORTATION HOLDING, INC. AND
SUBSIDIARIES |
CONSOLIDATED AND COMBINED STATEMENTS OF
INCOME |
(In thousands) |
(Unaudited) |
|
|
THREE MONTHS ENDED |
|
TWELVE MONTHS ENDED |
SEPTEMBER 30, |
SEPTEMBER 30, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation revenues |
$ |
28,300 |
|
|
|
27,010 |
|
|
$ |
111,294 |
|
|
|
108,424 |
|
Fuel surcharges |
|
2,029 |
|
|
|
5,092 |
|
|
|
11,588 |
|
|
|
20,738 |
|
Total revenues |
|
30,329 |
|
|
|
32,102 |
|
|
|
122,882 |
|
|
|
129,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
12,742 |
|
|
|
11,729 |
|
|
|
49,050 |
|
|
|
47,431 |
|
Fuel expenses |
|
4,334 |
|
|
|
6,816 |
|
|
|
20,295 |
|
|
|
29,281 |
|
Repairs & tires |
|
2,137 |
|
|
|
2,025 |
|
|
|
7,876 |
|
|
|
7,831 |
|
Other operating |
|
1,305 |
|
|
|
1,209 |
|
|
|
4,520 |
|
|
|
5,251 |
|
Insurance and losses |
|
1,951 |
|
|
|
2,982 |
|
|
|
10,249 |
|
|
|
10,729 |
|
Depreciation expense |
|
2,156 |
|
|
|
2,111 |
|
|
|
8,486 |
|
|
|
8,210 |
|
Rents, tags & utilities |
|
1,010 |
|
|
|
956 |
|
|
|
3,892 |
|
|
|
3,706 |
|
Sales, general &
administrative |
|
2,409 |
|
|
|
2,659 |
|
|
|
9,188 |
|
|
|
9,273 |
|
Corporate expenses |
|
370 |
|
|
|
613 |
|
|
|
3,203 |
|
|
|
2,685 |
|
Intangible asset impairment |
|
— |
|
|
|
— |
|
|
|
2,074 |
|
|
|
— |
|
Gain on equipment sales |
|
(718 |
) |
|
(274 |
) |
|
|
(1,537 |
) |
|
(578 |
) |
Total cost of
operations |
|
27,696 |
|
|
|
30,826 |
|
|
|
117,296 |
|
|
|
123,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
profit |
|
2,633 |
|
|
1,276 |
|
|
|
5,586 |
|
|
|
5,343 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income and
other |
|
— |
|
|
— |
|
|
|
— |
|
|
7 |
|
Interest expense |
|
(34 |
) |
|
(16 |
) |
|
|
(112 |
) |
|
(109 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
2,599 |
|
|
1,260 |
|
|
|
5,474 |
|
|
|
5,241 |
|
Provision for income
taxes |
|
1,014 |
|
|
|
491 |
|
|
|
2,135 |
|
|
|
2,044 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
$ |
1,585 |
|
|
769 |
|
|
$ |
3,339 |
|
|
|
3,197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
0.48 |
|
|
0.24 |
|
|
|
1.02 |
|
|
|
0.99 |
|
Diluted |
|
0.48 |
|
|
0.24 |
|
|
|
1.02 |
|
|
|
0.99 |
|
|
|
|
|
|
|
|
Number of shares (in thousands)used in
computing: |
|
|
|
|
|
|
-basic earnings per
common share |
|
3,272 |
|
|
3,243 |
|
|
|
3,268 |
|
|
|
3,243 |
|
-diluted earnings per
common share |
|
3,276 |
|
|
3,243 |
|
|
|
3,275 |
|
|
|
3,243 |
|
Non-GAAP Financial
Measures.
To supplement the financial results presented in
accordance with GAAP, Patriot presents certain non-GAAP financial
measures within the meaning of Regulation G promulgated by the
Securities and Exchange Commission. The non-GAAP financial measures
included in this press release are adjusted net income, adjusted
operating profit and adjusted operating ratio. Patriot uses these
non-GAAP financial measures to analyze its continuing operations
and to monitor, assess, and identify meaningful trends in its
operating and financial performance. These measures are not, and
should not be viewed as, substitutes for GAAP financial
measures.
Adjusted Net Income
Adjusted net income excludes the impact of the
intangible asset impairment charge. Adjusted net income is
presented to provide additional perspective on underlying trends in
Patriot’s core operating results. A reconciliation between net
income and adjusted net income is as follows:
|
|
Year ended |
|
|
|
|
September 30, 2015 |
|
|
Net Income |
|
$ |
3,339 |
|
|
Adjustments: |
|
|
|
|
|
Intangible asset
impairment charge |
|
|
1,265 |
|
|
Adjusted net
income |
|
$ |
4,604 |
|
|
Adjusted Operating Ratio
Adjusted operating ratio excludes the impact of
the intangible asset impairment charge. Adjusted operating ratio is
presented to provide additional perspective on underlying trends in
Patriot’s core operating results. A reconciliation between
operating ratio and adjusted operating ratio is as follows:
|
|
Year ended |
|
|
|
|
September 30, 2015 |
|
|
Operating ratio |
|
$ |
|
95.5 |
% |
|
|
Adjustments: |
|
|
|
|
|
Intangible asset
impairment charge |
|
|
|
(1.7 |
%) |
|
|
Adjusted operating
ratio |
|
$ |
|
93.8 |
% |
|
|
Adjusted Operating Profit
Adjusted operating profit excludes the impact of
the intangible asset impairment charge. Adjusted operating profit
is presented to provide additional perspective on underlying trends
in Patriot’s core operating results. A reconciliation between
operating profit and adjusted operating profit is as follows:
|
|
Year ended |
|
|
|
|
September 30, 2015 |
|
|
Operating profit |
|
$ |
5,586 |
|
|
Adjustments: |
|
|
|
|
|
Intangible asset
impairment charge |
|
|
2,074 |
|
|
Adjusted operating
profit |
|
$ |
7,660 |
|
|
Contact: John D. Milton, Jr.
Chief Financial Officer
904/858-9100
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