Patriot Transportation Holding, Inc. (NASDAQ:PATI) –
First Quarter Operating
Results
The Company reported net income of $3,592,000,
or $1.09 per share, compared to net income of $912,000, or $.28 per
share, in the same quarter last year.
First quarter 2018 net income included
$3,041,000, or $.92 per share, due to a deferred tax benefit
resulting from revaluing the company’s net deferred tax liabilities
per the Tax Cuts and Jobs Act of 2017. The company’s net
deferred tax liability was reduced as a result of the lower
corporate income tax rates applicable to the Company going
forward. As the Company has a September 30 fiscal year-end,
the lower corporate income tax rate will be phased in, resulting in
a U.S. statutory federal rate of approximately 24.28% for our
fiscal year ending September 30, 2018, and 21% for subsequent
fiscal years. The effective tax rate including the effect of
state income taxes, but not including excess tax benefits from
stock option exercises, is projected to decrease from 39.5% to
30.5% for fiscal 2018 and 27.5% for subsequent years.
Total revenues for the quarter were $27,901,000,
down $857,000 from the same quarter last year. Transportation
revenues (excluding fuel surcharges) were $25,570,000, down
$1,689,000. Miles declined by 599,000, or 6%, to 9,252,000
versus 9,851,000 in the same quarter last year.
The lower revenues in the quarter resulted from
the impact of the business lost during the second quarter of fiscal
2017. We have been successful at replacing some of this lost
business by expanding business with existing customers and are
focused on continuing to add business in markets where we can hire
drivers.
Compensation and benefits decreased $211,000 due
to fewer miles driven but were 5.7 cents per mile higher as a
result of the recent driver pay increase and higher training
costs. Insurance and losses were only up $11,000 but were 1.9
cents per mile higher as last year’s costs were reduced by a
favorable settlement of $152,000 of older insurance claims in the
first quarter last year. SG&A was also only up $11,000
but was 1.6 cents higher on a per mile basis.
Net fuel expense (i.e. gross fuel expenses less
fuel surcharges) decreased by $614,000, or 5.1 cents per mile, due
to fewer miles driven and higher fuel surcharges due to higher
average diesel prices. Depreciation expense was down
$132,000 as we sold excess equipment in our efforts to right size
our fleet. Corporate expenses were down by $130,000 due
mainly to the corporate management changes that occurred during
fiscal 2017.
As a result, operating profit this quarter was
$744,000 compared to $1,248,000 in the same quarter last
year. Operating ratio was 97.3 this quarter versus a 95.7 in
the same quarter last year.
Summary and Outlook
We continue to focus on adding business to
replace the loss of business that occurred last year. We
recently entered into a new, three year agreement with one of our
top five largest accounts that will significantly increase our
business levels with this customer. This increased business
is starting in February and should be fully integrated in our
results beginning in the third quarter.
The driver market remains very tight. We
implemented several hiring and retention enhancements during fiscal
2017, including a pay increase in June 2017. In the first
quarter, the driver turnover rate was 62.0% versus 55.8% in the
same quarter last year and 67.1% in the 4th quarter of fiscal
2017. This quarter, our 3rd party insurance broker will be
performing a Safety and Culture perception survey throughout our
organization in an effort to improve in these areas and positively
impact our bottom line results.
Our management team is committed to running the
business efficiently, measuring ourselves on equipment utilization
and driver productivity, while still maintaining a high level of
safety and customer satisfaction. We have made significant
reductions to overhead costs this fiscal year and are continuing
the process of selling excess equipment to right-size the company
for our current business levels. We expect to have fully
accomplished this objective by the end of the 2nd
quarter.
Management is committed to investing in our
technology in order to set ourselves apart from our competition and
improve efficiencies. To date, we are roughly 90% complete on
installing our new in-cab PeopleNet delivery system as well as our
company-wide IT network upgrades. This quarter we will be
focused on implementation of our new automated billing software and
conversion of our servers and systems to a 3rd party cloud services
provider. These are being done with the focus of enhancing
the employee experience, improving customer satisfaction and
ultimately reducing expenses and improving our bottom line
results.
We operate in many of the best markets in the
country and are known as a top rated carrier in both safety and
customer satisfaction. We are committed to focusing on
safety, revenue growth, driver retention, equipment utilization and
customer satisfaction. We 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 get to our
operating ratio in the low to mid nineties.
Conference Call
The Company will host a conference call on
January 31, 2017 at 3:00 PM (EST). Analysts, shareholders and other
interested parties may access the teleconference live by calling
1-800-311-9408 domestic or international at 1-334-323-7224 then
enter pass code 2365. 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/pth013118 or
http://stream.conferenceamerica.com/pth013118.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 39897760. An
audio archive can be accessed via the internet at
http://archive.conferenceamerica.com/archivestream/pth013118.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 |
|
|
DECEMBER 31, |
|
|
2017 |
|
2016 |
Revenues: |
|
|
|
|
|
|
|
|
Transportation revenues |
|
$ |
25,570 |
|
|
|
27,259 |
|
Fuel
surcharges |
|
|
2,331 |
|
|
|
1,499 |
|
Total revenues |
|
|
27,901 |
|
|
|
28,758 |
|
|
|
|
|
|
|
|
|
|
Cost of
operations: |
|
|
|
|
|
|
|
|
Compensation and benefits |
|
|
11,873 |
|
|
|
12,084 |
|
Fuel
expenses |
|
|
4,122 |
|
|
|
3,904 |
|
Repairs
& tires |
|
|
1,573 |
|
|
|
1,638 |
|
Other
operating |
|
|
1,043 |
|
|
|
1,034 |
|
Insurance
and losses |
|
|
2,716 |
|
|
|
2,705 |
|
Depreciation expense |
|
|
2,330 |
|
|
|
2,462 |
|
Rents,
tags & utilities |
|
|
855 |
|
|
|
863 |
|
Sales,
general & administrative |
|
|
2,322 |
|
|
|
2,311 |
|
Corporate
expenses |
|
|
487 |
|
|
|
617 |
|
Gain on
equipment sales |
|
|
(164 |
) |
|
|
(108 |
) |
Total cost of
operations |
|
|
27,157 |
|
|
|
27,510 |
|
|
|
|
|
|
|
|
|
|
Total operating
profit |
|
|
744 |
|
|
|
1,248 |
|
|
|
|
|
|
|
|
|
|
Interest income and
other |
|
|
2 |
|
|
|
2 |
|
Interest expense |
|
|
(10 |
) |
|
|
(32 |
) |
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
736 |
|
|
|
1,218 |
|
Provision for income
taxes |
|
|
(2,856 |
) |
|
|
306 |
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
3,592 |
|
|
|
912 |
|
|
|
|
|
|
|
|
|
|
Tax reform gain on
retiree health |
|
|
32 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Comprehensive
Income |
|
$ |
3,624 |
|
|
|
912 |
|
|
|
|
|
|
|
|
|
|
Earnings per
common share: |
|
|
|
|
|
|
|
|
Net
Income- |
|
|
|
|
|
|
|
|
Basic |
|
|
1.09 |
|
|
|
0.28 |
|
Diluted |
|
|
1.09 |
|
|
|
0.28 |
|
|
|
|
|
|
|
|
|
|
Number of
shares (in thousands) used in computing: |
|
|
|
|
|
|
|
|
-basic earnings
per common share |
|
|
3,303 |
|
|
|
3,290 |
|
-diluted earnings
per common share |
|
|
3,304 |
|
|
|
3,294 |
|
|
|
|
|
|
|
|
|
|
Contact: Matt McNultyChief Financial Officer 904/858-9100
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