Patriot Transportation Holding, Inc. (NASDAQ:PATI)
Fourth Quarter Results for Fiscal Year
2016.
The Company reported net income of $2,088,000,
or $.63 per share, compared to net income of $1,585,000, or $.48
per share, in the same quarter last year. This fourth quarter’s net
income was benefitted by $.24 per share as the result of a gain on
the sale of an easement.
Total revenues for the quarter were $30,391,000,
up $62,000 from $30,329,000 in the same quarter last year.
Transportation revenues (excluding fuel surcharges) were up
$582,000 to $28,882,000 and fuel surcharge revenues were down
$520,000 to $1,509,000. As a result of improved pricing and
better utilization of equipment, our transportation revenue per
mile increased by 4.2% over the same quarter last year.
The Company’s gross cost of fuel was down
$503,000 over the same quarter last year which was not quite enough
to off-set the $520,000 decline in fuel surcharge revenues.
Insurance and losses were $435,000 higher than
the same quarter last year primarily due to higher self insured
health claims.
Corporate expense was $288,000 higher than the
same quarter last year due mainly to increased bonus and contingent
stock compensation accruals required in the fourth
quarter.
On September 30, 2016, the Company received
$1,340,000 for an easement granted to the state of Florida over the
Company's 25.2 acre terminal facility in Tampa, Florida resulting
in a $1,277,000 gain. The easement prohibits residential
development on the site and limits hotel development to a portion
of the site. Gains from equipment sales were $177,000 lower than
the same quarter last year.
Including the gain from easement sale, operating
profit this quarter was $3,454,000 compared to $2,633,000 in the
same quarter last year.
Adjusted operating profit this quarter was
$2,177,000, down $456,000 or 17% compared to $2,633,000 in the same
quarter last year due mainly to the increased insurance and losses
and higher corporate expense this quarter versus the same quarter
last year. Our adjusted operating ratio was 92.8% compared to
91.3% in the same quarter last year. These non-GAAP financial
measures exclude gain from easement sale realized in the fourth
quarter of fiscal 2016. Management believes these adjusted
measures better reflect our operating performance during the
periods discussed and reflect how management evaluates our
operational results. 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.
Fiscal Year 2016 Operating
Results.
The Company reported net income of $5,705,000,
or $1.74 per share compared to net income of $3,339,000 or $1.02
per share, in 2015. The current year net income includes (i)
$779,000, or $.24 per share, of net income from the $1,277,000 gain
on the sale of the Tampa easement and (ii) $1,029,000, or $0.31 per
share, of net income from the settlement of a claim with BP for
$1,687,000 in connection with the 2010 Deepwater Horizon
event. The prior year included a $2,074,000 intangible asset
impairment charge with an after tax negative impact to net income
of $1,265,000, or $0.39 per share, related to the Pipeline
Transportation acquisition.
Total revenues were $120,172,000, down
$2,710,000 from $122,882,000 last year. Transportation
revenues (excluding fuel surcharges) were up $4,298,000 to
$115,592,000 and fuel surcharge revenues were down $7,008,000 to
$4,580,000. Our transportation revenue per mile increased by
4.7% over last year.
Compensation and benefits costs were up
$2,019,000 (or $.05 per mile) versus last year due mainly to driver
pay enhancements as we continue to invest in hiring and retaining
our driver force.
The Company’s gross cost of fuel was down
$5,138,000 over last year which was not enough to off-set the
$7,008,000 reduction in fuel surcharge revenues resulting in a
negative margin impact of $1,870,000 (or $.04 per mile) this year
versus last year. The Company’s gross price of diesel fuel
remained low and in a fairly tight range throughout the fiscal year
with the second quarter having the lowest average cost per mile at
$.31 and the fourth quarter having the highest average cost per
mile at $.35. Since the price of diesel began declining in
late 2014, the Company has experienced margin erosion as the
decline in fuel surcharge revenue outpaced the decline in diesel
fuel cost. During the first half of this year we were able to
implement positive adjustments to the fuel surcharge tables with
many of our customers and those adjustments contributed
significantly to a positive trend of less margin erosion resulting
from the lower diesel fuel price (negative margin impact: Q1 -
$883,000 (or $.09 per mile), Q2 - $719,000 (or $.07 per mile), Q3 -
$251,000 (or $.02 per mile), Q4 - $17,000 (or $.002)).
SG&A was up $438,000 as we have hired more
management personnel to focus on the issues of driver hiring and
turnover and to support our safety performance.
Corporate expense was lower by $257,000 compared
to last year due mainly to the sale of a 75% interest in the
corporate airplane during the second quarter of fiscal
2016.
Gain on equipment sales were $840,000 lower
compared to last year primarily due to fewer trailers sold and
lower average value of tractors sold. Gain on property sales
were $1,277,000 higher as a result of the sale of the easement in
the fourth quarter.
Operating profit this year was $7,790,000 versus
an operating profit of $5,586,000 last year. This year’s
operating profit benefitted from the gain on easement sale of
$1,277,000 while the prior year was negatively impacted by the
$2,074,000 intangible asset impairment charge.
Adjusted operating profit this year was
$6,513,000 versus an adjusted operating profit of $7,660,000 last
year. The lower results were mainly due to the higher net
fuel cost of $1,870,000 which mostly occurred in the first half of
this fiscal year prior to the positive adjustments we made to the
fuel surcharge tables. Our adjusted operating ratio was 94.6%
compared to an adjusted operating ratio of 93.8% last year.
These non-GAAP financial measures exclude gain from easement
sale realized in the fourth quarter of fiscal 2016 and the
intangible asset impairment charge incurred in the second quarter
of fiscal 2015. Management believes these adjusted measures
better reflect our operating performance during the periods
discussed and reflect how management evaluates our operational
results. 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.
Summary and Outlook.
We were successful this year in growing our per
mile transportation revenue by 4.7% over last fiscal year.
The substantial improvement in net fuel expense the last two
quarters is a tribute, not only to our management team, but also to
our customers who worked very hard with us to neutralize the
impacts of the fluctuating price of diesel fuel. We continue
to focus on the difficult challenge of hiring and retaining
qualified drivers. Our strategy going forward is to
concentrate our growth efforts in the markets where we have been
successful finding those drivers. We will also focus our
efforts on improving our technology to enhance both our driver’s
and our customer’s experience while also working to lower our costs
by streamlining and automating many of our day-to-day
processes.
We operate in many of the best markets in the
country and are known in those markets, and beyond, as a top rated
carrier for both safety and customer satisfaction. We are
committed to continuing our focus on safety, retention and customer
satisfaction and are confident that execution of that focus will
enable us to improve our profitability. We plan to maintain a
strong balance sheet as we work to achieve our targeted operating
ratio in the low nineties and double digit returns on after tax
capital employed.
Conference Call.
The Company will host a conference call on
Thursday, November 17, 2016 at 10:00 a.m. (EST). Analysts,
stockholders and other interested parties may access the
teleconference live by calling 1-800-853-3894 (pass code 36412) for
domestic or 1-334-323-7224 (pass code 36412) for international.
Computer audio live streaming is available via the Internet through
the Company’s website at www.patriottrans.com at the Investor
Relations tab. You may click on this link for the live
streaming http://stream.conferenceamerica.com/pth111716. Click
on the following link
http://archive.conferenceamerica.com/archivestream/pth111716.mp3 to
access the archived internet audio replay. A telephonic audio
replay will be available for sixty days following the conference
call and is accessible by dialing toll free 877-919-4059 domestic
or 334-323-0140 international. The passcode of the audio replay is
10265241. 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 short 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.
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, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation revenues |
|
$ |
28,882 |
|
|
|
28,300 |
|
|
$ |
115,592 |
|
|
|
111,294 |
|
Fuel
surcharges |
|
|
1,509 |
|
|
|
2,029 |
|
|
|
4,580 |
|
|
|
11,588 |
|
Total revenues |
|
|
30,391 |
|
|
|
30,329 |
|
|
|
120,172 |
|
|
|
122,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
|
12,711 |
|
|
|
12,742 |
|
|
|
51,069 |
|
|
|
49,050 |
|
Fuel
expenses |
|
|
3,831 |
|
|
|
4,334 |
|
|
|
15,157 |
|
|
|
20,295 |
|
Repairs
& tires |
|
|
1,971 |
|
|
|
2,137 |
|
|
|
7,777 |
|
|
|
7,876 |
|
Other
operating |
|
|
1,255 |
|
|
|
1,305 |
|
|
|
4,719 |
|
|
|
4,520 |
|
Insurance
and losses |
|
|
2,386 |
|
|
|
1,951 |
|
|
|
10,358 |
|
|
|
10,249 |
|
Depreciation expense |
|
|
2,352 |
|
|
|
2,156 |
|
|
|
8,870 |
|
|
|
8,486 |
|
Rents,
tags & utilities |
|
|
981 |
|
|
|
1,010 |
|
|
|
3,834 |
|
|
|
3,892 |
|
Sales,
general & administrative |
|
|
2,610 |
|
|
|
2,409 |
|
|
|
9,626 |
|
|
|
9,188 |
|
Corporate
expenses |
|
|
658 |
|
|
|
370 |
|
|
|
2,946 |
|
|
|
3,203 |
|
Intangible asset impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,074 |
|
Gain on
property sale |
|
|
(1,277 |
) |
|
|
— |
|
|
|
(1,277 |
) |
|
|
— |
|
Gain on
equipment sales |
|
|
(541 |
) |
|
|
(718 |
) |
|
|
(697 |
) |
|
|
(1,537 |
) |
Total cost of
operations |
|
|
26,937 |
|
|
|
27,696 |
|
|
|
112,382 |
|
|
|
117,296 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
profit |
|
|
3,454 |
|
|
|
2,633 |
|
|
|
7,790 |
|
|
|
5,586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BP claim
settlement |
|
|
— |
|
|
|
— |
|
|
|
1,687 |
|
|
|
— |
|
Interest income and
other |
|
|
2 |
|
|
|
— |
|
|
|
6 |
|
|
|
— |
|
Interest expense |
|
|
(32 |
) |
|
|
(34 |
) |
|
|
(130 |
) |
|
|
(112 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
3,424 |
|
|
|
2,599 |
|
|
|
9,353 |
|
|
|
5,474 |
|
Provision for income
taxes |
|
|
1,336 |
|
|
|
1,014 |
|
|
|
3,648 |
|
|
|
2,135 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
2,088 |
|
|
|
1,585 |
|
|
$ |
5,705 |
|
|
|
3,339 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
0.63 |
|
|
|
0.48 |
|
|
|
1.74 |
|
|
|
1.02 |
|
Diluted |
|
|
0.63 |
|
|
|
0.48 |
|
|
|
1.74 |
|
|
|
1.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares (in thousands)used in
computing: |
|
|
|
|
-basic
earnings per common share |
|
|
3,289 |
|
|
|
3,272 |
|
|
|
3,283 |
|
|
|
3,268 |
|
-diluted
earnings per common share |
|
|
3,291 |
|
|
|
3,276 |
|
|
|
3,285 |
|
|
|
3,275 |
|
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. 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 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:
|
|
Three months ended |
|
Three months ended |
|
|
September 30, 2016 |
|
September 30, 2015 |
Operating profit |
|
|
$ |
3,454 |
|
|
|
2,633 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Gain on
property sale |
|
|
|
(1,277 |
) |
|
|
|
|
|
|
Adjusted operating
profit
|
|
|
$ |
2,177 |
|
|
|
2,633 |
|
|
|
Twelve months ended |
|
Twelve months ended |
|
|
September 30, 2016 |
|
September 30, 2015 |
Operating profit |
|
|
$ |
7,790 |
|
|
|
5,586 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Gain on
property sale |
|
|
|
(1,277 |
) |
|
|
— |
|
Intangible asset impairment charge |
|
|
|
— |
|
|
|
|
|
2,074 |
|
Adjusted operating
profit |
|
|
$ |
6,513 |
|
|
|
7,660 |
|
Adjusted Operating RatioAdjusted 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:
|
|
Three months ended |
|
|
Three months ended |
|
|
September 30, 2016 |
|
|
September 30, 2015 |
Operating ratio |
|
|
|
|
88.6 |
% |
|
|
|
|
91.3 |
% |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
Gain on property
sale |
|
|
|
|
4.2 |
% |
|
|
— |
|
|
Adjusted operating
ratio
|
|
|
|
|
92.8 |
% |
|
|
|
|
91.3 |
% |
|
|
|
|
Twelve months ended |
|
Twelve months ended |
|
|
September 30, 2016 |
|
September 30, 2015 |
Operating ratio |
|
|
|
93.5 |
% |
|
|
|
|
95.5 |
% |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Gain on property
sale |
|
|
|
1.1 |
% |
|
|
|
— |
|
Intangible asset
impairment charge |
|
|
|
— |
|
|
|
|
|
(1.7 |
%) |
Adjusted operating
ratio |
|
|
|
94.6 |
% |
|
|
|
|
93.8 |
% |
|
Contact:
John D. Milton, Jr.
Chief Financial Officer
904/858-9100
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