Patriot Transportation Holding, Inc. (NASDAQ:PATI) –
Third Quarter Operating Results for
Fiscal year 2017.
The Company reported net income of $456,000, or
$.14 per share (inclusive of $139,000, or $.04 per share, due to a
reduced tax expense in accordance with newly adopted accounting
guidance on stock option exercises), compared to net income of
$1,379,000, or $.42 per share, in the same quarter last year.
Our revenue miles declined by 1,685,000, or 15%,
to 9,524,000 versus the same quarter last year. Total
revenues for the quarter were $28,104,000, down $3,258,000 from the
same quarter last year. Transportation revenues (excluding
fuel surcharges) were $26,275,000, down $3,912,000. Our
transportation revenue per mile increased by 2.4% over the same
quarter last year. Fuel surcharge revenues were up $654,000
to $1,829,000 due to higher diesel prices and the positive benefits
of renegotiating fuel surcharge tables with several key customers
last year.
Our lower revenues in the quarter resulted from
a net reduction of business levels across our existing customer
base mainly stemming from rates in competitive bid processes and
the move of a particular customer to a privately owned fleet.
Additionally, the lower driver count and difficulty hiring are
hindering us from adding back potential new business in certain
markets where business is available.
We managed to keep our overall variable costs
in-line with the declines in miles and revenues. Compensation
and benefits decreased $760,000 due to fewer miles driven but was
negatively impacted by a one-time accrual of $264,000 resulting
from the award of two additional vacation days for our
drivers. Net fuel expense (i.e. gross fuel expenses less fuel
surcharges) decreased by $1,063,000 due to fewer miles driven and
higher fuel surcharges.
Insurance and losses were down by $169,000
versus the same quarter last year due mainly to favorable
adjustments to risk partially offset by higher health claims.
SG&A was flat as we remain staffed to grow our revenues and
driver count.
As a result, operating profit this quarter was
down $1,756,000 to $534,000 (negatively impacted by the one-time
$264,000 vacation accrual) compared to $2,290,000 in the same
quarter last year. Operating ratio was 98.1 this quarter
versus 92.7 in the same quarter last year.
First Nine Months Results for Fiscal
year 2017.
The Company reported net income of $1,628,000,
or $.49 per share (inclusive of $389,000, or $.12 per share, due to
a reduced tax expense in accordance with newly adopted accounting
guidance on stock option exercises), compared to net income of
$3,617,000, or $1.10 per share, in the same period 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.
Our revenue miles declined by 3,640,000, or
11.3%, to 28,709,000 versus the same period last year due to an
overall net loss of business due to (i) rates, (ii) privatization
of a customer fleet and (iii) the lower demand for gasoline in the
earlier part of the fiscal year which was not fully offset by the
addition of new business with other customers. Total revenues
were $84,255,000, down $5,526,000 from last year.
Transportation revenues (excluding fuel surcharges) were down
$7,483,000 to $79,227,000 as a result of the lower revenue miles.
However, our transportation revenue per mile increased by
3.0% over the same period last year. Fuel surcharge revenues
were up $1,957,000 to $5,028,000 due to higher diesel prices and
the positive benefits of renegotiating fuel surcharge tables with
several key customers last year.
Our variable costs were in-line with the
decrease in miles and revenues. Compensation and benefits
decreased $2,545,000 due to fewer miles driven. Net fuel
expense (i.e. gross fuel expenses less fuel surcharges) decreased
by $1,973,000 due to fewer miles driven and higher fuel
surcharges.
Insurance and losses were up $196,000 versus the
same period last year due mainly to increased health claims.
Depreciation increased $690,000 but was mostly offset by lower
repair and equipment leasing costs as we have continued to replace
leased equipment from a prior acquisition with new equipment.
SG&A was flat as we remain staffed to grow our revenues and
driver count. Corporate expense was $82,000 lower than last
year mainly due to a $169,000 reduction in legal fees.
As a result, operating profit was down
$2,229,000 to $2,107,000 compared to $4,336,000 last year.
Operating ratio was 97.5 versus 95.2 last year.
Summary and Outlook.
The full impacts of the lost business from some
large customer bids were substantially realized this quarter and in
the first nine months of this fiscal year. Additionally,
following a recent merger, another large customer took significant
steps to move some of its carrier requirements into the merged
entity’s private fleet resulting in lost business for us in certain
markets. It typically takes some time to fully replace
business losses of this nature. We have added several significant
pieces of business throughout the fiscal year but not nearly enough
to offset the losses.
We have seen volumes picking up during the
seasonally busier summer months and a return to more normalized
gasoline demand during the 3rd quarter. We continued 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.
The driver hiring market remains very
tight. During the quarter we experienced a reduction of our
average driver force down to 613 versus 744 in the prior year
quarter, a 17.6% decline. We took several steps during this
quarter to drive future growth in our driver count. In June,
we announced a driver pay increase effective June 30, 2017,
increasing base pay by 2.5% and awarding 2 additional vacation
days. We have also begun targeting owner operators in our
marketing efforts. In the month of June we saw a significant
improvement in our driver turnover rate which improved thirteen
percentage points versus the average over the past four
months. Additionally, our average number of drivers in
training increased by 39.4% this quarter versus the prior quarter
and 24.3% versus the same quarter last year. We are focused
on maintaining these trends as we work to grow our driver count and
revenues.
We are currently very focused on improving our
technology. Management believes that investing in our
technology gives us an opportunity to set ourselves apart from our
competition both with our employees and our customers. During
this calendar year we are planning to upgrade our entire network
infrastructure to provide more speed and reliability to the field
and our customers. We are also implementing several new
software upgrades which we believe will enhance the employee
experience, improve customer satisfaction and ultimately allow us
to reduce expenses and improve our bottom line results.
During the quarter, we terminated the Pensacola,
FL sales contract entered into last quarter and immediately went
under contract with a new buyer at the same $1.5M sales
price. The contract is subject to numerous
contingencies. We made significant progress on the sale of
our Tampa terminal facility ($10M sales price) and are in the
process of granting an extension to allow the developer the time it
needs to get all plans and approvals finalized with the City of
Tampa.
We operate in many of the best markets in the
country and are known in those markets, and beyond, as a top rated
carrier in both safety and customer satisfaction. We are
committed to continuing our focus on safety, driver retention and
customer satisfaction and are confident that execution of that
focus will enable us to improve our profitability. We will
benefit from and 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
Wednesday afternoon, July 26, 2017 at 2:00 PM (EDT). Analysts,
shareholders and other interested parties may access the
teleconference live by calling 1-800-311-9404 domestic or
international at 1-334-323-7224 then enter pass code 6549. Computer
audio live streaming is available via the Internet through the
Company’s website at www.patriottrans.com at the Investor Relations
tab or at one of the following links (whichever is most compatible
with your device or player)
http://stream.conferenceamerica.com/pth072617 or
http://stream.conferenceamerica.com/pth072617.m3u. An audio replay
will be available for sixty (60) days following the conference call
by dialing toll free 1-877-919-4059 domestic or international
1-334-323-0140 then enter pass code 41229572. An audio archive can
be accessed via the internet at
http://archive.conferenceamerica.com/archivestream/pth072617.mp3.
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 engaged in the
hauling of liquid and dry bulk commodities.
PATRIOT TRANSPORTATION HOLDING, INC. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF
INCOME |
(In thousands) |
(Unaudited) |
|
|
|
THREE MONTHS ENDED |
|
NINE MONTHS ENDED |
|
|
JUNE 30, |
|
JUNE 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation revenues |
|
$ |
26,275 |
|
|
|
30,187 |
|
|
$ |
79,227 |
|
|
|
86,710 |
|
Fuel
surcharges |
|
|
1,829 |
|
|
|
1,175 |
|
|
|
5,028 |
|
|
|
3,071 |
|
Total revenues |
|
|
28,104 |
|
|
|
31,362 |
|
|
|
84,255 |
|
|
|
89,781 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
|
12,274 |
|
|
|
13,034 |
|
|
|
35,813 |
|
|
|
38,358 |
|
Fuel
expenses |
|
|
3,622 |
|
|
|
4,031 |
|
|
|
11,310 |
|
|
|
11,326 |
|
Repairs
& tires |
|
|
1,862 |
|
|
|
2,061 |
|
|
|
5,125 |
|
|
|
5,806 |
|
Other
operating |
|
|
1,134 |
|
|
|
1,195 |
|
|
|
3,144 |
|
|
|
3,464 |
|
Insurance
and losses |
|
|
2,567 |
|
|
|
2,736 |
|
|
|
8,168 |
|
|
|
7,972 |
|
Depreciation expense |
|
|
2,349 |
|
|
|
2,245 |
|
|
|
7,208 |
|
|
|
6,518 |
|
Rents,
tags & utilities |
|
|
820 |
|
|
|
949 |
|
|
|
2,543 |
|
|
|
2,853 |
|
Sales,
general & administrative |
|
|
2,446 |
|
|
|
2,404 |
|
|
|
7,038 |
|
|
|
7,016 |
|
Corporate
expenses |
|
|
591 |
|
|
|
502 |
|
|
|
2,206 |
|
|
|
2,288 |
|
Gain on
equipment sales |
|
|
(95 |
) |
|
|
(85 |
) |
|
|
(407 |
) |
|
|
(156 |
) |
Total cost of
operations |
|
|
27,570 |
|
|
|
29,072 |
|
|
|
82,148 |
|
|
|
85,445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
profit |
|
|
534 |
|
|
|
2,290 |
|
|
|
2,107 |
|
|
|
4,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BP claim
settlement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,687 |
|
Interest income and
other |
|
|
1 |
|
|
|
1 |
|
|
|
4 |
|
|
|
4 |
|
Interest expense |
|
|
(15 |
) |
|
|
(31 |
) |
|
|
(79 |
) |
|
|
(98 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
520 |
|
|
|
2,260 |
|
|
|
2,032 |
|
|
|
5,929 |
|
Provision for income
taxes |
|
|
64 |
|
|
|
881 |
|
|
|
404 |
|
|
|
2,312 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
456 |
|
|
|
1,379 |
|
|
$ |
1,628 |
|
|
|
3,617 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income |
|
$ |
456 |
|
|
|
1,379 |
|
|
$ |
1,628 |
|
|
|
3,617 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.14 |
|
|
|
0.42 |
|
|
|
0.49 |
|
|
|
1.10 |
|
Diluted |
|
$ |
0.14 |
|
|
|
0.42 |
|
|
|
0.49 |
|
|
|
1.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares (in thousands) used in
computing: |
|
|
|
|
-basic
earnings per common share |
|
|
3,304 |
|
|
|
3,287 |
|
|
|
3,298 |
|
|
|
3,281 |
|
-diluted
earnings per common share |
|
|
3,305 |
|
|
|
3,289 |
|
|
|
3,301 |
|
|
|
3,284 |
|
Contact:
John D. Milton, Jr.
Chief Financial Officer
904/858-9100
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