Quarterly Report (10-q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 10-Q

_________________

(Mark One)

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2016.

[_]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_________ to _________

Commission File Number: 001-36605

_____________________

PATRIOT TRANSPORTATION HOLDING, INC.

(Exact name of registrant as specified in its charter)

_____________________

Florida		47-2482414
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

200 W. Forsyth St., 7th Floor, Jacksonville, FL		32202
(Address of principal executive offices)		(Zip Code)

904-396-5733

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [_]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [x] No [_]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [_]		Accelerated filer [_]

Non-accelerated filer [x]		Smaller reporting company [_]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [_] No [x]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

	Class				Outstanding at December 31, 2016
	Common Stock				3,289,353

PATRIOT TRANSPORTATION HOLDING, INC.

FORM 10-Q

QUARTER ENDED DECEMBER 31, 2016

CONTENTS

Page No.

Preliminary Note Regarding Forward-Looking Statements		3

	Part I. Financial Information

Item 1.	Financial Statements
	Consolidated Balance Sheets	4
	Consolidated Statements of Income	5
	Consolidated Statements of Cash Flows	6
	Condensed Notes to consolidated financial statements	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures about Market Risks	19

Item 4.	Controls and Procedures	19

	Part II. Other Information

Item 1A.	Risk Factors	20

Item 2.	Purchase of Equity Securities by the Issuer	20

Item 6.	Exhibits	20

Signatures		21

Exhibit 31	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	23

Exhibit 32	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	26

Preliminary Note Regarding Forward-Looking Statements.

Certain matters discussed in this report contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those indicated by such forward-looking statements.

These forward-looking statements relate to, among other things, capital expenditures, liquidity, capital resources and competition and may be indicated by words or phrases such as ”anticipate”, ”estimate”, ”plans”, ”projects”, ”continuing”, ”ongoing”, ”expects”, ”management believes”, ”the Company believes”, ”the Company intends” and similar words or phrases. The following factors and others discussed in the Company’s periodic reports and filings with the Securities and Exchange Commission are among the principal factors that could cause actual results to differ materially from the forward-looking statements: freight demand for petroleum products including recessionary and terrorist impacts on travel in the Company’s markets; fuel costs and the Company’s ability to recover fuel surcharges; accident severity and frequency; risk insurance markets; driver availability and cost; the impact of future regulations regarding the transportation industry; availability and terms of financing; competition in our markets; interest rates, and inflation and general economic conditions. However, this list is not a complete statement of all potential risks or uncertainties.

These forward-looking statements are made as of the date hereof based on management’s current expectations, and the Company does not undertake an obligation to update such statements, whether as a result of new information, future events or otherwise. Additional information regarding these and other risk factors may be found in the Company’s other filings made from time to time with the Securities and Exchange Commission.

PART I. FINANCIAL INFORMATION, ITEM 1. FINANCIAL STATEMENTS

PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

		December 31,	September 30,
Assets		2016		2016
Current assets:
Cash and cash equivalents	$	4,677		6,005
Accounts receivable (net of allowance for
doubtful accounts of $161 and $153, respectively)		6,825		7,043
Federal and states taxes receivable		134		261
Inventory of parts and supplies		853		811
Prepaid tires on equipment		1,969		2,052
Prepaid taxes and licenses		463		681
Prepaid insurance		662		820
Prepaid expenses, other		31		64
Total current assets		15,614		17,737

Property and equipment, at cost		102,765		102,783
Less accumulated depreciation		60,231		59,080
Net property and equipment		42,534		43,703

Goodwill		3,431		3,431
Intangible assets, net		1,152		1,214
Other assets, net		213		214
Total assets	$	62,944		66,299

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	1,887		4,896
Accrued payroll and benefits		3,608		4,608
Accrued insurance		376		700
Accrued liabilities, other		188		369
Total current liabilities		6,059		10,573

Long-term debt		—		—
Deferred income taxes		10,631		10,479
Accrued insurance		180		184
Other liabilities		1,098		1,117
Total liabilities		17,968		22,353
Commitments and contingencies (Note 8)
Shareholders’ Equity:
Preferred stock, 5,000,000 shares authorized,
of which 250,000 shares are designated Series A
Junior Participating Preferred Stock; $0.01 par
value; none issued and outstanding		—		—
Common stock, $.10 par value; (25,000,000 shares
authorized; 3,289,353 and 3,289,353 shares issued
and outstanding, respectively)		329		329
Capital in excess of par value		36,037		35,919
Retained earnings		8,436		7,524
Accumulated other comprehensive income, net		174		174
Total shareholders’ equity		44,976		43,946
Total liabilities and shareholders’ equity	$	62,944		66,299

See notes to consolidated financial statements.

PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands)

(Unaudited)

	THREE MONTHS ENDED
	DECEMBER 31,
	2016			2015
Revenues:
Transportation revenues	$	27,259			28,009
Fuel surcharges		1,499			1,362
Total revenues		28,758			29,371

Cost of operations:
Compensation and benefits		12,084			12,572
Fuel expenses		3,904			3,825
Repairs & tires		1,638			1,809
Other operating		1,034			1,090
Insurance and losses		2,705			3,018
Depreciation expense		2,462			2,148
Rents, tags & utilities		863			949
Sales, general & administrative		2,311			2,399
Corporate expenses		617			958
(Gain) Loss on equipment sales		(108	)		4
Total cost of operations		27,510			28,772

Total operating profit		1,248			599

BP claim settlement		—			1,687
Interest income and other		2			3
Interest expense		(32	)		(35	)

Income before income taxes		1,218			2,254
Provision for income taxes		306			879

Net income	$	912			1,375

Comprehensive Income	$	912			1,375

Earnings per common share:
Net Income-
Basic		0.28			0.42
Diluted		0.28			0.42

Number of shares (in thousands)used in computing:
-basic earnings per common share		3,290			3,273
-diluted earnings per common share		3,294			3,277

See notes to consolidated financial statements.

PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED DECEMBER 31, 2016 AND 2015

(In thousands)

(Unaudited)

	Three months ended December 31,
		2016		2015
Cash flows from operating activities:
Net income	$	912		1,375
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		2,651		2,403
Deferred income taxes		152		661
Gain on asset dispositions		(117	)	(36	)
Stock-based compensation		118		136
Net changes in operating assets and liabilities:
Accounts receivable		218		890
BP claim settlement receivable		—		(1,687	)
Inventory of parts and supplies		(42	)	7
Prepaid expenses		492		573
Other assets		2		4
Accounts payable and accrued liabilities		(4,514	)	(4,165	)
Income taxes payable and receivable		127		(63	)
Long-term insurance liabilities and other long-term
Liabilities		(23	)	(14	)
Net cash (used in) provided by operating activities		(24	)	84

Cash flows from investing activities:
Purchase of property and equipment		(1,525	)	(449	)
Proceeds from the sale of property, plant and equipment		221		66
Net cash used in investing activities		(1,304	)	(383	)

Cash flows from financing activities:
(Decrease) Increase in bank overdrafts		—		(449	)
Proceeds from borrowing on revolving credit facility		—		13,366
Payments on revolving credit facility		—		(12,888	)
Excess tax benefits from exercise of stock options		—		270
Net cash provided by financing activities		—		299

Net decrease in cash and cash equivalents		(1,328	)	—
Cash and cash equivalents at beginning of period		6,005		—
Cash and cash equivalents at end of the period	$	4,677		—

See notes to consolidated financial statements.

PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016

(Unaudited)

(1) Description of Business and Basis of Presentation.

Description of Business

Company’s Business. The business of the Company, conducted through our wholly owned subsidiary, Florida Rock & Tank Lines, Inc., is to transport petroleum and other liquids and dry bulk commodities. We do not own any of the products we haul, rather, we act as a third party carrier to deliver our customer’s products from point A to point B predominately using Company employees driving Company owned tractors and tank trailers. Approximately 82% of our business consists of hauling liquid petroleum products (mostly gas and diesel fuel) from large scale fuel storage facilities to our customers’ retail outlets (e.g. convenience stores, truck stops and fuel depots) where we off-load the product into our customer’s fuel storage tanks for ultimate sale to the retail consumer. The remaining 18% of our business consists of hauling our customer’s dry bulk commodities such as cement, lime and various industrial powder products and liquid chemicals. As of December 31, 2016, we employed 662 revenue-producing drivers who operated our fleet of 480 tractors and 560 trailers from our 21 terminals and 9 satellite locations in Florida, Georgia, Alabama, South Carolina, North Carolina and Tennessee.

Basis of Presentation

These statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (primarily consisting of normal recurring accruals) considered necessary for a fair statement of the results for the interim periods have been included. Operating results for the three months ended December 31, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2017. The accompanying consolidated financial statements and the information included under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with the audited financial statements and notes for the year ended September 30, 2016.

(2) Recently Issued Accounting Standards. In February 2016, the FASB issued ASU No. 2016-02, “Leases”, which requires lessees to recognize a right-to-use asset and a lease obligation for all leases. Lessees are permitted to make an accounting policy election to not recognize an asset and liability for leases with a term of twelve months or less. Additional qualitative and quantitative disclosures, including significant judgments made by management, will be required. The new standard will become effective for the Company beginning with the first quarter 2020 and requires a modified retrospective transition approach and includes a number of practical expedients. Early adoption of the standard is permitted. The Company is currently evaluating the impacts the adoption of this accounting guidance will have on the consolidated financial statements. The Company has relatively few leases extending over 12 months, the total gross contractual obligation for lease payments greater than 12 months at September 30, 2016 was $1,721,000.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. The ASU includes multiple

provisions intended to simplify various aspects of the accounting for share-based payments. Excess tax benefits for share-based payments are recorded as a reduction of income taxes and reflected in operating cash flows upon the adoption of this ASU. Excess tax benefits were recorded in equity and as financing activity prior to adoption of this ASU. In addition, the guidance allows for a policy election to account for forfeitures as they occur rather than on an estimated basis. This guidance is effective for annual and interim reporting periods of public entities beginning after December 15, 2016 with early adoption permitted. The Company adopted this guidance prospectively as of October 1, 2016. As a result of this adoption in the first quarter of fiscal 2017 we recorded a $169,000 reduction of income tax expense from windfall gains on stock option exercises.

(3) Related Party Agreements. The company is party to a Transition Services Agreement which resulted from our January 30, 2015 spin-off transaction from FRP Holdings, Inc. (FRP). The Transition Services Agreement sets forth the terms on which the Company will provide to FRP certain services that were shared prior to the Spin-off, including the services of certain shared executive officers. The boards of the respective companies amended and extended this agreement for one year effective August 1, 2016.

The consolidated statements of income reflect charges and/or allocation to FRP Holdings, Inc. for these services of $377,000 and $386,000 for the three months ended December 31, 2016 and 2015, respectively. Included in the charges above are amounts recognized for corporate executive stock-based compensation expense. These charges are reflected as a reduction to corporate expenses.

To determine these allocations between FRP and Patriot as set forth in the Transition Services Agreement, we generally employed the same methodology historically used by the Company pre Spin-off to allocate said expenses and thus we believe that the allocations to FRP are a reasonable approximation of the costs related to FRP’s operations but any such related-party transactions cannot be presumed to be carried out on an arm’s-length basis as the terms were negotiated while Patriot was still a subsidiary of FRP.

Patriot provides information technology services and previously subleased office space to Bluegrass Materials Company, LLC (“Bluegrass”). Mr. John Baker, brother of Edward L. Baker and uncle of Thompson S. Baker II, serves as Chairman of Bluegrass, and his son, Edward L. Baker II, serves as its Chief Executive Officer. Messrs. John Baker and Edward L. Baker II have a beneficial ownership interest in Bluegrass. Bluegrass paid $16,000 and $123,000 to the Company for the three months ended December 31, 2016 and 2015 respectively for such information technology services and office space. The services to Bluegrass ceased on December 31, 2016.

(4) Long-Term debt. The Company had no long-term debt outstanding at December 31, 2016 and September 30, 2016. The Company has two revolving lines of credit at December 31, 2016 as follows:

On January 30, 2015, the Company entered into a $25 million, five year, revolving credit agreement with Wells Fargo Bank, N.A. and assumed and refinanced $5.1 million then outstanding. As of December 31, 2016, we had no debt outstanding on this revolver, $2,386,000 outstanding under letters of credit and $22,614,000 available for additional borrowings.

The Company closed on a loan on May 13, 2015 from Branch Banking and Trust Company (BB&T) for up to $25 million under a two (2) year revolving facility to be secured by a portion of the

Company’s equipment. This facility contains a provision which automatically converts any draws under the revolver into five-year term loans with a seven year amortization. As of December 31, 2016, the Company had not taken any draws against this facility.

These credit agreements contain certain conditions, affirmative financial covenants and negative covenants including limitations on paying cash dividends. The Company was in compliance with all of its loan covenants as of December 31, 2016.

(5) Earnings per share. Basic earnings per common share are based on the weighted average number of common shares outstanding during the periods. Diluted earnings per common share are based on the weighted average number of common shares and potential dilution of securities that could share in earnings. The differences between basic and diluted shares used for the calculation are the effect of employee and director stock options.

The following details the computations of the basic and diluted earnings per common share (dollars and shares in thousands, except per share amounts):

	Three Months ended
	December 31,
	2016		2015
Weighted average common shares
outstanding during the period
- shares used for basic
earnings per common share		3,290		3,273

Common shares issuable under
share based payment plans
which are potentially dilutive		4		4

Common shares used for diluted
earnings per common share		3,294		3,277

Net income	$	912		1,375

Earnings per common share:
-basic	$	0.28		0.42
-diluted	$	0.28		0.42

For the three months ended December 31, 2016, 90,554 shares attributable to outstanding stock options were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. For the three months ended December 31, 2015, 64,047 shares attributable to outstanding stock options were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

(6) Stock-Based Compensation Plans.

Participation in FRP Plans

allocated to the Company (rather than FRP) and included in corporate expenses. Corporate expense also reflects an offsetting credit for the Transition Services Agreement allocation to FRP.

Patriot Incentive Stock Plan

In January, 2015 the Board of Directors of the Company adopted the Patriot Transportation Holding, Inc. Incentive Stock Plan. Grants were issued based upon all outstanding FRP options held by company directors, officers and key employees on January 30, 2015 with the same remaining terms. The number of common shares available for future issuance was 101,580 at December 31, 2016.

Subsequent to Spin-off, the realized tax benefit pertaining to options exercised and the remaining compensation cost of options previously granted prior to the Spin-off will be recognized by FRP or Patriot based on the employment location of the related employee or director.

In December 2016, the Company approved and issued a retirement incentive to an officer in the form of stock appreciation rights. The Company granted 80,000 stock appreciation rights. The market price was $23.13 on the date of grant and the executive will get cash award at age 65 based upon the stock price at that date compared to the stock price at the date of grant but in no event will the award be less than $500,000. The Company plans to expense the fair value of the award over the 9.1 year vesting period to the officer’s attainment of age 65.

The Company recorded the following stock compensation expense for options in its consolidated statements of income (in thousands):

	Three Months ended
	December 31,
	2016		2015
Stock option grants	$	118		136
Annual director stock award		—		—
	$	118		136

A summary of Company stock options is presented below (in thousands, except share and per share amounts):

			Weighted	Weighted		Weighted
	Number		Average	Average		Average
	of		Exercise	Remaining		Grant Date
Options	Shares		Price	Term (yrs)		Fair Value

Outstanding at
October 1, 2016	110,811	$	22.52	6.2	$	999
Granted	40,780	$	21.25		$	272
Outstanding at
December 31, 2016	151,591	$	22.18	7.0	$	1,271
Exercisable at
December 31, 2016	95,901	$	21.83	5.8	$	758
Vested during
three months ended
December 31, 2016	27,852				$	210

The aggregate intrinsic value of exercisable Company options was $143,000 and the aggregate intrinsic value of all outstanding in-the-money options was $168,000 based on the Company’s

market closing price of $21.93 on December 30, 2016 less exercise prices.

The realized tax benefit from Patriot option exercises during the first three months of fiscal 2017 was $321,000 which pertained to FRP options exercised that were granted prior to the Spin-off to persons employed by Patriot. The unrecognized compensation expense of Patriot options granted as of December 31, 2016 was $801,000, which is expected to be recognized over a weighted-average period of 3.4 years.

(7) Fair Value Measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1 means the use of quoted prices in active markets for identical assets or liabilities. Level 2 means the use of values that are derived principally from or corroborated by observable market data. Level 3 means the use of inputs are those that are unobservable and significant to the overall fair value measurement.

As of December 31, 2016 the Company had no assets or liabilities measured at fair value on a recurring or non-recurring basis.

At December 31, 2016 and September 30, 2016, the carrying amount reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable and other financial instruments approximate their fair value based upon the short-term nature of these items. We believe the fair value of the allocated outstanding debt obligations approximate their carrying value as the related debt agreements reflect present market terms and as certain debt obligations contain certain interest rates that reset periodically based on current market indices.

(8) Contingent liabilities. The Company is involved in litigation on a number of matters and is subject to certain claims which arise in the normal course of business. The Company has retained certain self-insurance risks with respect to losses for third party liability and property damage. There is a reasonable possibility that the Company’s estimate of vehicle and workers’ compensation liability may be understated or overstated but the possible range cannot be estimated. The liability at any point in time depends upon the relative ages and amounts of the individual open claims. In the opinion of management none of these matters are expected to have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

(9) Concentrations.

Market: The Company primarily serves customers in the petroleum industry in the Southeastern U.S. Significant economic disruption or downturn in this geographic region or within these industries could have an adverse effect on our financial statements.

Customers: During the first three months of fiscal 2017, the Company’s ten largest customers accounted for approximately 61.2% of our revenue and one of these customers accounted for 22.4% of our revenue. Accounts receivable from the ten largest customers were $4,056,000 and $3,998,000 at December 31, 2016 and September 30, 2016 respectively. The loss of any one of these customers could have a material adverse effect on the Company’s revenues and income.

Deposits: The Company places its cash and cash equivalents with Wells Fargo Bank, N.A. At times, such amounts may exceed FDIC limits.

(10) Unusual or Infrequent Items Impacting Quarterly Results.

On October 20, 2015, the Company received notice from the Claims Administrator for the Deepwater Horizon Economic and Property Damages Settlement Program that the Company’s claim in the amount of $2,106,281 qualifies for payment under the terms of the Economic and Property Damages Settlement Agreement. On December 18, 2015 BP accepted the Company’s proposal of $2,047,651. The Company received payment of $1,687,085 on January 6, 2016 net of all contingency fees.

(11) Subsequent Event.

On January 18, 2017 the Company entered into a purchase and sale agreement to sell 25 acres of land located in South Tampa, FL for $10,000,000. The land has historically been used as our operating terminal. Should this sale transaction close, we plan to secure a new terminal facility. The agreement is subject to numerous contingencies and the Company would not expect the transaction to close for at least 14 months from the effective date.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the consolidated financial information and related notes that appear in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Overview

The business of the Company, conducted through our wholly owned subsidiary, Florida Rock & Tank Lines, Inc., is to transport petroleum and other liquids and dry bulk commodities. We do not own any of the products we haul, rather, we act as a third party carrier to deliver our customer’s products from point A to point B predominately using Company employees driving Company owned tractors and tank trailers. Approximately 82% of our business consists of hauling liquid petroleum products (mostly gas and diesel fuel) from large scale fuel storage facilities to our customers’ retail outlets (e.g. convenience stores, truck stops and fuel depots) where we off-load the product into our customer’s fuel storage tanks for ultimate sale to the retail consumer. The remaining 18% of our business consists of hauling our customer’s dry bulk commodities such as cement, lime and various industrial powder products and liquid chemicals. As of December 31, 2016, we employed 662 revenue-producing drivers who operated our fleet of 480 tractors and 560 trailers from our 21 terminals and 9 satellite locations in Florida, Georgia, Alabama, South Carolina, North Carolina and Tennessee. We experience increased seasonal demand in the spring and in most of our other locations during the summer months.

Our industry is characterized by such barriers to entry as the time and cost required to develop the capabilities necessary to handle hazardous material, the resources required to recruit, train and retain drivers, substantial industry regulatory and insurance requirements and the significant capital investments required to build a fleet of equipment,establish a network of terminals and, in recent years, the cost to build and maintain sufficient information technology resources to allow us to interface with and assist our customers in the day-to-day management of their product inventories.

Our ability to provide superior customer service at competitive rates and to operate safely and efficiently is important to our success in growing our revenues and increasing profitability. Our focus is to grow our profitability by executing on our key strategies of (i) increasing our business with existing and new customers, particularly hypermarket and large convenience store chains, that are willing to compensate us for our ability to provide superior, safe and reliable service which facilitates their ability to grow their market share and footprint with confidence, (ii) expanding our service offerings with respect to dry bulk and chemical products particularly in markets where we already operate terminals, (iii) earning the reputation as the preferred employer for tank truck drivers in all the markets in which we operate and (iv) pursuing strategic acquisitions. Our ability to execute this strategy depends on continuing our dedicated commitments to customer service and safety and continuing to recruit and retain qualified drivers.

Our industry is experiencing a severe driver shortage. As the need to hire drivers has risen across our industry the trend we are seeing is that more and more of the applicants are drivers with little to no experience in the tank truck business. Our management team is keenly focused on continuing to grow our driver count in markets where there are opportunities for us to grow our business and to retain all of our drivers at the levels we have historically achieved while balancing the aforementioned trends and associated risks of the “new to the industry” driver applicant pool. Through the implementation of a new software program, we have enhanced our ability to quickly identify, communicate with and ultimately hire qualified drivers. We have also implemented programs to help us determine which new driver applicants are less likely to turnover early on in their careers with us thus adding new and valuable information into our hiring decision making process.

There are several opportunities available today in our markets that will allow us to execute on our growth strategy so long as we can find, hire and retain qualified drivers to meet the demands of these opportunities. We believe the tighter driver market has and will continue to provide us with opportunities to capture new business. As these opportunities arise, we are willing to let certain lower priced business go in this environment to grow our business with customers willing to pay for our reliability and superior customer service.

We generate both transportation based revenue as well as fuel surcharge revenue. Our transportation revenue consists of base revenue for each delivery which is generally calculated by multiplying a negotiated mileage-based rate by the quantity of product delivered plus any fees for extra stops to load or unload, powered product unloading and toll cost reimbursements. These negotiated transportation rates compensate us both for transporting the products as well as for loading and unloading time.

While our base rates include a fixed amount to cover our cost of fuel using an assumed price for diesel, we have fuel surcharges in place with our customers that allow us to obtain additional compensation for fuel expense incurred when the price of diesel rises above that assumed price. Likewise, for some customers, the fuel surcharge system allows the customer to receive a lower cost from us when the price of diesel drops below that assumed price. There is a time lag between fuel price fluctuations and changes to fuel surcharges to our customers. In a rapidly rising price environment this time lag can negatively impact the Company’s financial results as we must pay the higher fuel cost immediately but in most cases aren’t able to adjust fuel surcharges to our customers until the end of the month.

The main factors that affect our total revenue are the number of revenue miles driven, rates per mile, quantity of products hauled and the amount of fuel surcharges.

Our operating costs primarily consist of the following:

Compensation and Benefits - Wages and employee benefits for our drivers and terminal support personnel is the largest component of our operating costs. These costs are impacted by such factors as miles driven, driver pay increases, driver turnover and training costs and additional driver pay due to temporary out-of-town deployments to serve new business;

Fuel Expenses - Our fuel expenses will vary depending on miles driven as well as such factors as fuel prices (which can be highly volatile), the fuel efficiency of our fleet and the average haul length;

Repairs and Tires – This category consists of vehicle maintenance and repairs (excluding shop personnel) and tire expense (including amortization of tire cost and road repairs). These expenses will vary based on such factors as miles driven, the age of our fleet, and tire prices.

Other Operating Expenses – This category consists of tolls, hiring costs, out-of-town driver travel cost, terminal facility maintenance and other operating expenses. These expenses will vary based on such factors as, driver availability and out-of-town driver travel requirements, business growth and inflation among others;

Insurance and Losses – This category includes costs associated with insurance premiums, and the self-insured portion of liability, worker’s compensation, health insurance and cargo claims and wreck repairs. We work very hard to manage these expenses through our safety and wellness programs, but these expenses will vary depending on the frequency and severity of accident and health claims, insurance markets and deductible levels;

Depreciation Expense – Depreciation expense consists of the depreciation of the cost of fixed assets such as tractors and trailers over the life assigned to those assets. The amount of depreciation expense is impacted by equipment prices and the timing of new equipment purchases. We expect the cost of new tractors and trailers to continue to increase, impacting our future depreciation expense;

Rents, Tags and Utilities Expenses – This category consists of rents payable on leased facilities and leased equipment, federal highway use taxes, vehicle registrations, license and permit fees and personal property taxes assessed against our equipment, communications, utilities and real estate taxes;

Sales, General and Administrative Expenses - This category consists of the wages, bonus accruals, benefits, travel, vehicle and office costs for our administrative personnel as well as professional fees and amortization charges for intangible assets purchased in acquisitions of other businesses;

Corporate Expenses – Corporate expenses consist of wages, bonus accruals, insurance and other benefits, travel, vehicle and office costs for corporate executives, director fees, stock option expense and aircraft expense;

Gains/Loss on Equipment - Our financial results for any period may be impacted by any gain or loss that we realize on the sale of used equipment and losses on wrecked equipment. We periodically sell used equipment as we replace older tractors and trailers. Gains or losses on equipment sales can vary significantly from period to period depending on the timing of our equipment replacement cycle, market prices for used equipment and losses on wrecked equipment.

To measure our performance, management focuses primarily on transportation revenue growth, revenue miles, our preventable accident frequency rate (“PAFR”), our operating ratio (defined as our operating expenses as a percentage of our operating revenue), turnover rate and average driver count (defined as average number of revenue producing drivers under employment over the specified time period) as compared to the same period in the prior year.

ITEM	Q1 2017 vs. Q1 2016
Total Revenue	Down 2.1%
Transportation Revenue	Down 2.7%
Revenue Miles	Down by 5.6%
Fuel net of surcharges	Down by 2.4%
PAFR	Up by 32.3%
Operating Ratio	2.3% improved
Driver Turnover Rate	Down by 7 percentage points
Average Number of Drivers	Down 4.3%

The Company’s operations are influenced by a number of external and internal factors. External factors include levels of economic and industrial activity in the United States and the Southeast, driver availability and cost, government regulations regarding driver qualifications and limitations on the hours drivers can work, petroleum product demand in the Southeast which is driven in part by tourism and commercial aviation, and fuel costs. Internal factors include revenue mix, equipment utilization, Company imposed restrictions on hiring drivers under the age of 25 or drivers without at least two years of driving experience, auto and workers’ compensation accident frequencies and severity, administrative costs, and group health claims experience. The financial results of the Company for any individual quarter are not necessarily indicative of results to be expected for the year.

Highlights of the First quarter of Fiscal 2017

Transportation revenue decreased $750,000, or 2.7%.

Annualized driver turnover rate improved from 65% in the first quarter of last year to 58% this quarter.

The Company reported net income of $912,000, or $.28 per share, (inclusive of $169,000, or $.05 per share, due to a reduced tax expense in accordance with newly adopted accounting guidance on stock option exercises), compared to net income of $1,375,000, or $.42 per share, in the same quarter last year. The prior year included $1,029,000, or $0.31 per share, of net income from the settlement of a claim with BP in connection with the 2010 Deepwater Horizon event.

Comparative Results of Operations for the Three months ended December 31, 2016 and 2015

	Three months ended December 31
(dollars in thousands)	2016			%			2015			%

Revenue miles (in thousands)		9,851						10,436

Revenues:
Transportation revenue	$	27,259			94.8	%		28,009	95.4		%
Fuel surcharges		1,499			5.2	%		1,362	4.6		%
Total Revenues		28,758			100.0	%		29,371	100.0		%

Cost of operations:
Compensation and benefits		12,084			42.0	%		12,572	42.8		%
Fuel expenses		3,904			13.6	%		3,825	13.0		%
Repairs & tires		1,638			5.7	%		1,809	6.2		%
Other operating		1,034			3.6	%		1,090	3.7		%
Insurance and losses		2,705			9.4	%		3,018	10.3		%
Depreciation expense		2,462			8.6	%		2,148	7.3		%
Rents, tags & utilities		863			3.0	%		949	3.2		%
Sales, general & administrative		2,311			8.0	%		2,399	8.2		%
Corporate expenses		617			2.2	%		958	3.3		%
(Gain) loss on equipment		(108	)		-0.4	%		4	0.0		%
Total cost of operations		27,510			95.7	%		28,772	98.0		%

Total operating profit	$	1,248			4.3	%		599	2.0		%

During this first quarter, the overall driver turnover rate improved as compared to our experience over the past two years. However, we also saw a decrease in the flow of qualified applicants causing a reduction of our average driver force down to 670 from 700 in the same quarter last year. As a result, our revenue miles decreased by 585,000 to 9,851,000 this quarter versus the same quarter last year.

Total revenues for the quarter were $28,758,000, down $613,000 from $29,371,000 in the same quarter last year. Transportation revenues (excluding fuel surcharges) were down $750,000 to $27,259,000 as a result of the lower revenue miles. However, as a result of improved pricing and effective utilization of our equipment, our transportation revenue per mile increased by 3.1% over the same quarter last year. Fuel surcharge revenues were up $137,000 to $1,499,000.

Compensation and benefits decreased $488,000 due to $291,000 lower driver training pay and less miles driven.

Insurance and losses were lower by $313,000 versus the same quarter last year due to the favorable final settlement with our insurance company of all fiscal 2013 liability and workers compensation claims combined with lower self insured health claims, accident repairs and product losses.

Depreciation increased $314,000 but was mostly offset by lower repair and equipment leasing costs as we continue to buy new tractors to replace leased tractors.

Corporate expense was $341,000 lower than the same quarter last year mainly due to a $254,000

reduction in professional fees.

As a result, operating profit this quarter was up $649,000 to $1,248,000 compared to $599,000 in the same quarter last year. Operating ratio was 95.7 this quarter versus 98.0 in the same quarter last year.

Liquidity and Capital Resources. The Company maintains its operating accounts with Wells Fargo Bank, N.A. and these accounts directly sweep overnight against the Wells Fargo revolver. As of December 31, 2016, we had no debt outstanding on this revolver, $2,386,000 letters of credit and $22,614,000 available for additional borrowings. The Company expects our fiscal year 2017 cash generation to cover the cost of our operations and all of our budgeted capital expenditures.

Cash Flows - The following table summarizes our cash flows from operating, investing and financing activities for each of the periods presented (in thousands of dollars):

		Three months Ended December 31,
		2016		2015
Total cash provided by (used for):
Operating activities	$	(24	)		84
Investing activities		(1,304	)		(383	)
Financing activities		—			299
Decrease in cash and cash equivalents	$	(1,328	)	$	—

Outstanding debt at the beginning of the period		—			—
Outstanding debt at the end of the period		—			478

Operating Activities - Net cash used in operating activities (as set forth in the cash flow statement) was $24,000 for the three months ended December 31, 2016, compared to $84,000 provided by operating activities in the same period last year. The total of net income plus depreciation and amortization and less gains on sales of property and equipment decreased $296,000 versus the same period last year. These changes are described above under "Comparative Results of Operations." Net cash flow provided by operating activities was impacted last year by the $1,687,000 BP claim settlement receivable which was collected in January 2016. Trade accounts receivable decreased $218,000 compared to $890,000 in the same period last year. These changes comprise the majority of the decrease in net cash provided by operating activities.

Investing Activities – Investing activities include the purchase of property and equipment, any business acquisitions and proceeds from sales of these assets upon retirement. For the first three months ended December 31, 2016, we spent $1,304,000 on equipment net of proceeds from retirements. For the first three months ended December 31, 2015 we spent $383,000 on equipment net of retirements.

Financing Activities – Financing activities primarily include net changes to our outstanding revolving debt. For the first three months ended December 31, 2016 we had no financing activities. During the three months ended December 31, 2015, cash provided by financing activities was $299,000. We had no outstanding long-term debt on December 31, 2016 compared to $478,000 at December 31, 2015.

Credit Facilities - In connection with the Spin-off, on January 30, 2015, the Company entered into a

five-year credit agreement with Wells Fargo Bank N.A. which provides a $25 million revolving line of credit with a $10 million sublimit for stand-by letters of credit. In connection with the Spin-off, the Company assumed and refinanced onto this new revolving credit line approximately $5.1 million of indebtedness from FRP. The amounts outstanding under the credit agreement bear interest at a rate of 1.0% over LIBOR, which may change quarterly based on the Company’s ratio of consolidated total debt to consolidated total capital. A commitment fee of 0.15% per annum is payable quarterly on the unused portion of the commitment, which fee may change quarterly based on our ratio of consolidated total debt to consolidated total capital. The credit agreement contains certain conditions and financial covenants, including a minimum $25 million tangible net worth. As of December 31, 2016, the tangible net worth covenant would have limited our ability to pay dividends or repurchase stock with borrowed funds to a maximum of $12.1 million combined.

In addition to the unsecured revolving facility provided by Wells Fargo, Management determined the Company needed an additional financing source to provide capital for potential growth opportunities. As a result, the Company closed on a loan from Branch Banking and Trust Company (BB&T) for up to $25 million under a two (2) year revolving facility to be secured by a portion of the Company’s equipment. This facility contains a provision which automatically converts any draws under the revolver into five-year term loans with a seven year amortization. Each draw requires the payment of a bank fee equal to .25% of the amount drawn. Any amounts outstanding under this facility bear interest at a rate of 1.5% over LIBOR, which may change quarterly based on the Company’s leverage ratio. A commitment fee of 0.15% per annum is payable quarterly on the unused portion of the commitment. The credit agreement contains certain conditions and financial covenants, including limitations on the payment of cash dividends that are based on the Company’s consolidated retained earnings. As of December 31, 2016, the Company had not taken any draws against this facility.

Cash Requirements - The Company currently expects its fiscal 2017 capital expenditures to be approximately $9,823,000 for expansion and replacement equipment which we expect to be fully funded by our cash generated from our operations. The Company does not currently pay any cash dividends on common stock.

Summary and Outlook. The shortage of qualified drivers is the biggest headwind we face today and is a concern as we head into the seasonally busier months ahead. We will remain focused on hiring qualified drivers and are hopeful the applicant flow will improve as we move past the holidays and into the new year. The Company is experiencing increased price competition in certain markets that may negatively impact revenues in future quarters. Rather than lower our prices significantly in these markets, Management is committed to aggressively seeking to replace any lost business with new business at better rates. We continue to see improvement in our per mile transportation revenue as well as our net fuel expense following the implementation of more neutral fuel surcharge tables last year. This year we are implementing several new technologies which we believe will enhance the driver experience, improve customer satisfaction and ultimately improve our bottom line results.

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 after tax returns on capital employed.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Interest Rate Risk - We are exposed to the impact of interest rate changes through our variable-rate borrowings under the credit agreements. Under the Wells Fargo and BB&T revolving credit lines of credit, the applicable spread for borrowings at December 31, 2016 were 1.0% and 1.5%, over libor respectively. The applicable margin for such borrowings will be reduced or increased in the event that our debt to capitalization ratio as calculated under the credit agreement exceeds target levels.

Commodity Price Risk - The price and availability of diesel fuel are subject to fluctuations due to changes in the level of global oil production, seasonality, weather, global politics and other market factors. Historically, we have been able to recover a significant portion of fuel price increases from our customers in the form of fuel surcharges. The typical fuel surcharge table provides some margin contribution at higher diesel fuel prices but also results in some margin erosion at the lower diesel fuel prices we have been experiencing the past several quarters. The price and availability of diesel fuel can be unpredictable as well as the extent to which fuel surcharges can be collected to offset such increases.

ITEM 4. CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

The Company also maintains a system of internal accounting controls over financial reporting that are designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements.

All control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving the desired control objectives.

As of December 31, 2016, the Company, under the supervision and with the participation of the Company's management, including the CEO, CFO and CAO, carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on this evaluation, the Company’s CEO, CFO and CAO concluded that the Company's disclosure controls and procedures are effective in alerting them in a timely manner to material information required to be included in periodic SEC filings.

There have been no changes in the Company’s internal controls over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1A.

RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended September 30, 2016, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2. PURCHASES OF EQUITY SECURITIES BY THE ISSUER

(c)

Total

Number of

(d)

Purchased

Approximate

(a)

As Part of

Dollar Value of

Total

(b)

Publicly

Shares that May

Number of

Average

Announced

Yet Be Purchased

Price Paid

Plans or

Under the Plans

Period

Purchased

per Share

Programs

or Programs (1)

October 1

Through

October 31

—

5,000,000

November 1

Through

November 30

—

5,000,000

December 1

Through

December 31

—

5,000,000

Total

—

(1) On February 4, 2015, the Board of Directors authorized management to expend up to $5,000,000 to repurchase shares of the Company’s common stock from time to time as opportunities arise. To date, the Company has not repurchased any common stock of the Company.

Item 6. EXHIBITS

(a)

Exhibits. The response to this item is submitted as a separate Section entitled "Exhibit Index", on page 22.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

		PATRIOT TRANSPORTATION HOLDING, INC.


Date: February 13, 2017	By	THOMPSON S. BAKER II
		Thompson S. Baker II
		Chairman, President and Chief Executive Officer
		(Principal Executive Officer)


	By	JOHN D. MILTON, JR.
		John D. Milton, Jr.
		Executive Vice President, Treasurer,
		Secretary and Chief Financial Officer
		(Principal Financial Officer)


	By	JOHN D. KLOPFENSTEIN
		John D. Klopfenstein
		Controller and Chief Accounting
		Officer (Principal Accounting Officer)

PATRIOT TRANSPORTATION HOLDING, INC.

FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2016

EXHIBIT INDEX

(14)

Financial Code of Ethical Conduct between the Company, Chief Executive Officers, and Financial Managers, as adopted on May 6, 2015, which is available on the Company’s website at www.patriottrans.com.

(31)(a)

Certification of Thompson S. Baker II.

(31)(b)

Certification of John D. Milton, Jr.

(31)(c)

Certification of John D. Klopfenstein.

(32)

Certification of Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer under Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	XBRL Instance Document
101.XSD	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

CERTIFICATIONS Exhibit 31(a)

I, Thompson S. Baker II, certify that:

I have reviewed this report on Form 10-Q of Patriot Transportation Holding, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

designed such disclosure controls and procedures, or caused such disclosure controls to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosures controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial report; and

The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 13, 2017 /s/Thompson S. Baker II

Chairman, President and Chief

Executive Officer

CERTIFICATIONS Exhibit 31(b)

I, John D. Milton, Jr., certify that:

I have reviewed this report on Form 10-Q of Patriot Transportation Holding, Inc.;

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 13, 2017 /s/John D. Milton, Jr.

Executive Vice President, Treasurer,

Secretary and Chief Financial Officer

CERTIFICATIONS Exhibit 31(c)

I, John D. Klopfenstein, certify that:

I have reviewed this report on Form 10-Q of Patriot Transportation Holding, Inc.;

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 13, 2017 /s/John D. Klopfenstein

Controller and Chief Accounting Officer

Exhibit 32

CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned certifies that this periodic report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of Patriot Transportation Holding, Inc.

		PATRIOT TRANSPORTATION HOLDING, INC.


Date: February 13, 2017	By	/s/THOMPSON S. BAKER II
		Thompson S. Baker II
		Chairman, President and Chief Executive Officer



	By	/s/JOHN D. MILTON, JR.
		John D. Milton, Jr.
		Executive Vice President, Treasurer,
		Secretary and Chief Financial Officer



	By	/s/JOHN D. KLOPFENSTEIN
		John D. Klopfenstein
		Controller and Chief Accounting Officer

A signed original of this written statement required by Section 906 has been provided to Patriot Transportation Holding, Inc. and will be retained by Patriot Transportation Holding, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification accompanies the issuer’s Quarterly report on Form 10-Q and is not filed as provided in SEC Release Nos. 33-8212, 34-4751 and IC-25967, dated June 30, 2003.

Document and Entity Information	3 Months Ended
Document and Entity Information	Dec. 31, 2016 shares
Document And Entity Information
Entity Registrant Name	PATRIOT TRANSPORTATION HOLDING, INC.
Entity Central Index Key	0001616741
Document Type	10-Q
Document Period End Date	Dec. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	No
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding	3,289,353
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2017

Consolidated and Combined Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2016	Sep. 30, 2016
Current assets:
Cash and cash equivalents	$ 4,677	$ 6,005
Accounts receivable, net of allowance for doubtful accounts of $161 and $153, respectively	6,825	7,043
Federal and state taxes receivable	134	261
Inventory of parts and supplies	853	811
Prepaid tires on equipment	1,969	2,052
Prepaid taxes and licenses	463	681
Prepaid insurance	662	820
Prepaid expenses, other	31	64
Total current assets	15,614	17,737
Property and equipment, at cost	102,765	102,783
Less accumulated depreciation	60,231	59,080
Net property and equipment	42,534	43,703
Goodwill	3,431	3,431
Intangible assets, net	1,152	1,214
Other assets, net	213	214
Total assets	62,944	66,299
Current liabilities:
Accounts payable	1,887	4,896
Accrued payroll and benefits	3,608	4,608
Accrued insurance	376	700
Accrued liabilities, other	188	369
Total current liabilities	6,059	10,573
Long-term debt	0	0
Deferred income taxes	10,631	10,479
Accrued insurance	180	184
Other liabilities	1,098	1,117
Total liabilities	17,968	22,353
Commitments and contingencies (Note 8)
Shareholders' Equity/Net investment:
Preferred stock, 5,000,000 shares authorized, of which 250,000 shares are disignated Series A Junior Participating Preferred Stock; $0.01 par value; none issued and outstanding	0	0
Common stock, $.10 par value; (25,000,000 shares authorized; 3,289,353 and 3,289,353 shares issued and outstanding, respectively)	329	329
Capital in excess of par value	36,037	35,919
Retained earnings	8,436	7,524
Accumulated other comprehensive income, net	174	174
Total shareholders' equity	44,976	43,946
Total liabilties and shareholders' equity	$ 62,944	$ 66,299

Consolidated and Combined Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2016	Sep. 30, 2016
Statement of Financial Position [Abstract]
Accounts receivable allowance for doubtful accounts	$ 161	$ 153
Preferred stock, par value	$ .01	$ .01
Preferred stock, shares authorized	5,000,000	5,000,000
Series A Junior Participating Preferred Stock	250,000	250,000
Preferred stock, shares issued	0	0
Common stock, par value	$ .10	$ .10
Common stock, shares authorized	25,000,000	25,000,000
Common stock, shares issued	3,289,353	3,289,353

Consolidated and Combined Statements of Income - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Revenues:
Transportation revenues	$ 27,259	$ 28,009
Fuel surcharges	1,499	1,362
Total revenues	28,758	29,371
Cost of operations:
Compensation and benefits	12,084	12,572
Fuel expenses	3,904	3,825
Repairs & tires	1,638	1,809
Other operating	1,034	1,090
Insurance and losses	2,705	3,018
Depreciation expense	2,462	2,148
Rents, tags & utilities	863	949
Sales, general & administrative	2,311	2,399
Corporate expenses	617	958
(Gain) loss on equipment sales	(108)	4
Total cost of operations	27,510	28,772
Total operating profit	1,248	599
BP claim Settlement	0	1,687
Interest income and other	2	3
Interest expense	(32)	(35)
Income before income taxes	1,218	2,254
Provision for income taxes	306	879
Net income	912	1,375
Comprehensive Income	$ 912	$ 1,375
Earnings per common share:
Net income - basic	$ 0.28	$ 0.42
Net income - diluted	$ 0.28	$ 0.42
Number of shares (in thousands) used in computing:
-basic earnings per common share	3,290	3,273
-diluted earnings per common share	3,294	3,277

Consolidated and Combined Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities:
Net income	$ 912	$ 1,375
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,651	2,403
Deferred income taxes	152	661
Gain on asset dispositions	(117)	(36)
Stock-based compensation	118	136
Net changes in operating assets and liabilities:
Accounts receivable	218	890
BP claim settlement receivable	0	(1,687)
Inventory of parts and supplies	(42)	7
Prepaid expenses	492	573
Other assets	2	4
Accounts payable and accrued liabilities	(4,514)	(4,165)
Income taxes payable and receivable	127	(63)
Long-term insurance liabilities and other long-term liabilities	(23)	(14)
Net cash (used in) provided by operating activities	(24)	84
Cash flows from investing activities:
Purchase of property and equipment	(1,525)	(449)
Proceeds from the sale of property, plant and equipment	221	66
Net cash used in investing activities	(1,304)	(383)
Cash flows from financing activities:
(Decrease) increase in bank overdrafts	0	(449)
Proceeds from borrowing on revolving credit facility	0	13,366
Payments on revolving credit facility	0	(12,888)
Excess tax benefits from exercise of stock options	0	270
Net cash provided by financing activities	0	299
Net decrease in cash and cash equivalents	(1,328)	0
Cash and cash equivalents at beginning of period	6,005	0
Cash and cash equivalents at end of the period	$ 4,677	$ 0

Description of Business and Basis of Presentation

3 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Description of Business and Basis of Presentation

(1) Description of Business and Basis of Presentation.

Description of Business

Basis of Presentation

Recently Issued Accounting Standards

3 Months Ended

Dec. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Recently Issued Accounting Standards

In March 2016, the FASB issued ASU No. 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. Excess tax benefits for share-based payments are recorded as a reduction of income taxes and reflected in operating cash flows upon the adoption of this ASU. Excess tax benefits were recorded in equity and as financing activity prior to adoption of this ASU. In addition, the guidance allows for a policy election to account for forfeitures as they occur rather than on an estimated basis. This guidance is effective for annual and interim reporting periods of public entities beginning after December 15, 2016 with early adoption permitted. The Company adopted this guidance prospectively as of October 1, 2016. As a result of this adoption in the first quarter of fiscal 2017 we recorded a $169,000 reduction of income tax expense from windfall gains on stock option exercises.

Related Party Agreements

3 Months Ended

Dec. 31, 2016

Related Party Agreements

Long-Term Debt

3 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Long-Term Debt

(4) Long-Term debt. The Company had no long-term debt outstanding at December 31, 2016 and September 30, 2016. The Company has two revolving lines of credit at December 31, 2016 as follows:

The Company closed on a loan on May 13, 2015 from Branch Banking and Trust Company (BB&T) for up to $25 million under a two (2) year revolving facility to be secured by a portion of the Company’s equipment. This facility contains a provision which automatically converts any draws under the revolver into five-year term loans with a seven year amortization. As of December 31, 2016, the Company had not taken any draws against this facility.

Earnings per share

3 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

Earnings per share

The following details the computations of the basic and diluted earnings per common share (dollars and shares in thousands, except per share amounts):

	Three Months ended
	December 31,
	2016		2015
Weighted average common shares
outstanding during the period
- shares used for basic
earnings per common share		3,290		3,273

Common shares issuable under
share based payment plans
which are potentially dilutive		4		4

Common shares used for diluted
earnings per common share		3,294		3,277

Net income	$	912		1,375

Earnings per common share:
-basic	$	0.28		0.42
-diluted	$	0.28		0.42

Stock-Based Compensation Plans

3 Months Ended

Dec. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation Plans

(6) Stock-Based Compensation Plans.

Participation in FRP Plans

The Company's directors, officers and key employees are eligible to participate in FRP's 2000 Stock Option Plan and the 2006 Stock Option Plan under which options for shares of common stock were granted to directors, officers and key employees. All related compensation expense has been fully allocated to the Company (rather than FRP) and included in corporate expenses. Corporate expense also reflects an offsetting credit for the Transition Services Agreement allocation to FRP.

Patriot Incentive Stock Plan

The Company recorded the following stock compensation expense for options in its consolidated statements of income (in thousands):

	Three Months ended
	December 31,
	2016		2015
Stock option grants	$	118		136
Annual director stock award		—		—
	$	118		136

A summary of Company stock options is presented below (in thousands, except share and per share amounts):

			Weighted	Weighted		Weighted
	Number		Average	Average		Average
	of		Exercise	Remaining		Grant Date
Options	Shares		Price	Term (yrs)		Fair Value

Outstanding at
October 1, 2016	110,811	$	22.52	6.2	$	999
Granted	40,780	$	21.25		$	272
Outstanding at
December 31, 2016	151,591	$	22.18	7.0	$	1,271
Exercisable at
December 31, 2016	95,901	$	21.83	5.8	$	758
Vested during
three months ended
December 31, 2016	27,852				$	210

The aggregate intrinsic value of exercisable Company options was $143,000 and the aggregate intrinsic value of all outstanding in-the-money options was $168,000 based on the Company’s market closing price of $21.93 on December 30, 2016 less exercise prices.

Fair Value Measurements

3 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

As of December 31, 2016 the Company had no assets or liabilities measured at fair value on a recurring or non-recurring basis.

Contingent liabilities

3 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Contingent liabilities

Concentrations

3 Months Ended

Dec. 31, 2016

Risks and Uncertainties [Abstract]

Concentrations

(9) Concentrations.

Deposits: The Company places its cash and cash equivalents with Wells Fargo Bank, N.A. At times, such amounts may exceed FDIC limits.

Unusual or Infrequent Items Impacting Quarterly Results

3 Months Ended

Dec. 31, 2016

Unusual or Infrequent Items, or Both [Abstract]

Unusual or Infrequent Items Impacting Quarterly Results

(10) Unusual or Infrequent Items Impacting Quarterly Results.

Subsequent Event

3 Months Ended

Dec. 31, 2016

Subsequent Events [Abstract]

Subsequent Event

(11) Subsequent Event.

Earnings per share (Tables)

3 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

Earnings per common share (dollars and shares in thousands, except per share amounts)

	Three Months ended
	December 31,
	2016		2015
Weighted average common shares
outstanding during the period
- shares used for basic
earnings per common share		3,290		3,273

Common shares issuable under
share based payment plans
which are potentially dilutive		4		4

Common shares used for diluted
earnings per common share		3,294		3,277

Net income	$	912		1,375

Earnings per common share:
-basic	$	0.28		0.42
-diluted	$	0.28		0.42

Stock-Based Compensation Plans (Tables)

3 Months Ended

Dec. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Compensation Expense (in thousands)

	Three Months ended
	December 31,
	2016		2015
Stock option grants	$	118		136
Annual director stock award		—		—
	$	118		136

Summary of Stock Options (in thousands, except share and per share amounts)

			Weighted	Weighted		Weighted
	Number		Average	Average		Average
	of		Exercise	Remaining		Grant Date
Options	Shares		Price	Term (yrs)		Fair Value

Outstanding at
October 1, 2016	110,811	$	22.52	6.2	$	999
Granted	40,780	$	21.25		$	272
Outstanding at
December 31, 2016	151,591	$	22.18	7.0	$	1,271
Exercisable at
December 31, 2016	95,901	$	21.83	5.8	$	758
Vested during
three months ended
December 31, 2016	27,852				$	210

Earnings per share - Earnings per common share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Earnings Per Share [Abstract]
Weighted average common shares outstanding during the period - shares used for basic earnings per common share	3,290	3,273
Common shares issuable under share based payment plans which are potentially dilutive	4	4
Common shares used for diluted earnings per common share	3,294	3,277
Net income	$ 912	$ 1,375
Earnings per common share:
Earnings per share-basic	$ 0.28	$ 0.42
Earnings per share-diluted	$ 0.28	$ 0.42

Stock-Based Compensation Plans - Stock Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock option grants	$ 118	$ 136
Annual director stock award	0	0
Stock based compensation	$ 118	$ 136

Stock-Based Compensation Plans - Summary of Stock Options (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Dec. 31, 2016 USD ($) yr $ / shares shares	Sep. 30, 2016 USD ($) yr $ / shares shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Options outstanding \| shares	151,591	110,811
Options granted \| shares	40,780
Options outstanding weighted average exercise price \| $ / shares	$ 22.18	$ 22.52
Options outstanding weighted average exercise price - Granted \| $ / shares	$ 21.25
Options outstanding weighted average remaining term \| yr	7.0	6.2
Options outstanding weighted average grant date fair value \| $	$ 1,271	$ 999
Options granted weighted average grant date fair value \| $ / shares	$ 272
Options exercisable at December 31, 2016 \| shares	95,901
Options exerciseable weighted average exercise price \| $ / shares	$ 21.83
Options exerciseable weighted average remaining term \| yr	5.8
Options exerciseable weighted average grant date fair value \| $	$ 758
Options vested during three months ended December 31, 2016 \| shares	27,852
Options vested weighted average grant date fair value \| $	$ 210

Description of Business and Basis of Presentation (Details Narrative)	Dec. 31, 2016
Revenue Producting Drivers	662
Fleet of Tractors	480
Fleet of Trailers	560
Terminal locations	21
Satellite locations	9
Petroleum Products
Percentage of Business	82.00%
Dry Bulk Commodities
Percentage of Business	18.00%

Recently Issued Accounting Standards (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Sep. 30, 2016
Recently Issued Accounting Standards Details Narrative
Contractual obligation for lease payments greater than 12 months		$ 1,721
Reduction of income tax expense from windfall gains on stock option exercises	$ 169

Related Party Agreements (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
FRP
Charges/allocations	$ 377	$ 386
Bluegrass
Charges/allocations	$ 16	$ 123

Long-Term Debt (Details Narrative) $ in Thousands	3 Months Ended
Long-Term Debt (Details Narrative) $ in Thousands	Dec. 31, 2016 USD ($) yr	May 13, 2015 USD ($) yr	Jan. 30, 2015 USD ($) yr
Revolving Credit facility			$ 25,000
Borrowed under the revolver			$ 5,100
Credit Agreement term years \| yr			5
Wells Fargo
Borrowed under the revolver	$ 0
Letters of credit issued	2,386
Amount availbe for additional borrowings	$ 22,614
Compliance with loan covenants	All
BBT
Revolving Credit facility		$ 25,000
Borrowed under the revolver	$ 0
Credit Agreement term years \| yr	2	2
Compliance with loan covenants	All
Conversion description	This facility contains a provision which automatically converts any draws under the revolver into five-year term loans with a seven year amortization.

Earnings per share (Details Narrative) - shares	3 Months Ended
Earnings per share (Details Narrative) - shares	Dec. 31, 2016	Dec. 31, 2015
Earnings Per Share [Abstract]
Anti-dilutive shares	90,554	64,047

Stock-Based Compensation Plans (Details Narrative) $ / shares in Units, $ in Thousands	3 Months Ended
	Dec. 31, 2016 USD ($) yr shares	Dec. 30, 2016 $ / shares	Dec. 21, 2016 USD ($) yr $ / shares shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Shares available for future issuance \| shares	101,580
Stock appreciation rights issued \| shares			80,000
Minimum award for stock appreciation rights			$ 500
Stock appreciation rights vesting period \| yr			9.1
Aggregate intrinsic value of exercisable options	$ 143
Aggregate intrinsic value of outstanding in-the-money options	168
Market close price \| $ / shares		$ 21.93	$ 23.13
Realized tax benefit pertaining to FRP options	321
Total unrecognized compensation cost of options granted	$ 801
Weighted average period for compensation to be recognized \| yr	3.4

Fair Value Measurements (Details Narrative) $ in Thousands	Dec. 31, 2016 USD ($)
Fair Value Disclosures [Abstract]
Assets measured at fair value on a recurring basis	$ 0
Liabilities measured at fair value on a recurring basis	0
Assets measured at fair value on a non-recurring basis	0
Liabilities measured at fair value on a non-recurring basis	$ 0

Concentrations (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
Concentrations (Details Narrative) - USD ($) $ in Thousands	Dec. 31, 2016	Sep. 30, 2016
Top Ten Customers
Customer revenue concentration	61.20%
Accounts receivable concentration	$ 4,056	$ 3,998
Top Customer
Customer revenue concentration	22.40%

Unusual or Infrequent Items Impacting Quarterly Results (Details Narrative) - USD ($) $ in Thousands	1 Months Ended
	Jan. 31, 2016	Dec. 18, 2015	Oct. 20, 2015
Unusual or Infrequent Items, or Both [Abstract]
BP Claim Settlement		$ 2,048	$ 2,106
BP Claim payment	$ 1,687

Subsequent Event (Details Narrative) - Tampa terminal $ in Thousands	Jan. 18, 2017 USD ($) a Months
Acres in Tampa entered into purchase and sale agreement \| a	25
Purchase and sale agreement \| $	$ 10,000
Expected transaction close minimum number of months \| Months	14