Patriot Transportation Holding, Inc. (NASDAQ:PATI)
Second Quarter Operating
Results.
The Company reported a net loss of $188,000, or
($.06) per share, compared to net income of $260,000, or $.08 per
share, in the same quarter last year.
Total revenues for the quarter were $27,979,000,
up $586,000 from the same quarter last year. Transportation
revenues (excluding fuel surcharges) were $25,376,000, down
$317,000 or 1.2%. Miles increased by 20,000 to 9,354,000
versus 9,334,000 in the same quarter last year. During the
second and third quarters of last fiscal year we lost sizeable
pieces of business with two large customers. Since that time,
we have secured some replacement business, including the recent
integration of a large piece of new business in this second quarter
that will be flowing through during the last two quarters of the
fiscal year.
Compensation and benefits increased $588,000, or
$.06 per mile, as a result of the recent driver pay increase and
higher training costs. Insurance and losses were up $273,000
due mainly to (i) two costly environmental spills during the first
half of this fiscal year, neither of which involved any third party
vehicles, resulting in an actuarial loss adjustment of $335,000 to
risk insurance, and (ii) some high dollar health insurance claims
resulting in a loss adjustment this quarter of $323,000 to health
insurance. SG&A was up $161,000 due to the reversal of $123,000
in bonus accurals in the second quarter last year and $36,000 from
severance expensed during this quarter as we reduced management
personnel.
Net fuel expense (i.e. gross fuel expenses less
fuel surcharges) decreased by $383,000 due to higher fuel
surcharges. Depreciation expense was down $174,000 as
we continued our efforts to right size our fleet. Corporate
expenses were down by $208,000 due mainly to the corporate
management changes that occurred during fiscal 2017. Gain on
sale of assets increased $131,000 as we sold excess equipment to
right size our tractor fleet. The company records all of the
director’s stock compensation expense in the second quarter of the
fiscal year and in this year’s second quarter that expense totaled
$368,000.
As a result, operating loss this quarter was
$292,000 compared to operating profit of $325,000 in the same
quarter last year. Operating ratio was 101.0 this quarter
versus a 98.8 in the same quarter last year.
First Six Months Operating Results for
Fiscal year 2018.
The Company reported net income of $3,404,000,
or $1.03 per share, compared to net income of $1,172,000, or $.35
per share in the same period last year. This year’s
first six months’ 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.
Total revenues for the first six months were
$55,880,000, down $271,000 from the same period last year.
Transportation revenues (excluding fuel surcharges) were
$50,946,000, down $2,006,000 or 3.8%. Miles declined by
579,000, or 3%, to 18,606,000 versus 19,185,000 in the same period
last year.
Compensation and benefits increased $377,000 as
a result of the recent driver pay increase and higher training
costs. Insurance and losses were up $284,000 due to higher
claims. SG&A was up $172,000 due mainly to severance
expense as we downsized some positions, excess costs associated
with reorganizing our IT department and higher advertising costs
related to hiring drivers.
Net fuel expense (i.e. gross fuel expenses less
fuel surcharges) decreased by $997,000 due to fewer miles driven
and higher fuel surcharges due to higher average diesel prices.
Depreciation expense was down $306,000 as we sold
excess equipment in our efforts to right size our fleet.
Corporate expenses were down $338,000 due mainly to the corporate
management changes that occurred during fiscal 2017.
As a result, operating profit was $452,000
compared to $1,573,000 in the same period last year.
Operating ratio was 99.2 versus a 97.2 last year.
Summary and Outlook.
This second quarter our team was heavily focused
on the integration of the recently awarded new business which began
February 1st and was substantially integrateded by March
31st. In addition, we took on some smaller pieces of new
dedicated business with a handful of customers. In this
quarter, we did experience some additional business loss in a
particular market as a customer continued its transition to its
private fleet. We also closed down our Birmingham terminal
due to our inability to hire and retain drivers and make a suitable
return on our investment in that market.
Driver hiring and retention is still very
difficult. We were successful at adding drivers in a few
markets this quarter, in particular in a couple of the markets
where we were adding the recently awarded new business.
However, other terminals experienced declines in driver count, in
particular in the market where our customer converted to its
private fleet. As a result, our overall company driver count
remained flat this quarter. Our turnover rate during
this quarter was 59.9% versus 70.2% in the same quarter last
year. We did experience a positive trend in driver
productivity as we saw our average transportation revenue per
company driver climb by 5.7% this quarter versus the same quarter
last year.
In the past six to eight weeks, capacity in the
market has become very tight and there are an abundance of good
business opportunities arising. Our task is to provide our
drivers to those customers willing to compensate us, not only for
our superior customer service, but also for the rising costs of
driver pay, retention and insurance expense.
We have made reductions to overhead costs this
fiscal year, much of it during the second quarter, causing us to
incur some severance expense. We completed our initiative to
sell excess equipment during the 2nd quarter and the full impact of
both the overhead and equipment reductions should be fully realized
beginning in the 3rd quarter.
The driver shortage remains a significant
headwind and we will remain focused on driver retention as we move
forward. The combination of recently increased business levels, the
increase in driver and equipment productivity and the headcount
reductions we’ve made should benefit the second half of this fiscal
year.
Conference Call.
The Company will host a conference call on April
25, 2018 at 3:00 PM (EDT). Analysts, shareholders and other
interested parties may access the teleconference live by calling
1-800-311-9406 domestic or international at 1-334-323-7224 then
enter pass code 34732. 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/pth042518 or
http://stream.conferenceamerica.com/pth042518.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/pth042518.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.
Contact:
Matt McNultyChief Financial
Officer
904/858-9100
PATRIOT TRANSPORTATION HOLDING, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
INCOME(In thousands)(Unaudited)
|
|
THREE MONTHS ENDED |
|
SIX MONTHS ENDED |
|
|
MARCH 31, |
|
MARCH 31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation revenues |
|
$ |
25,376 |
|
|
|
25,693 |
|
|
$ |
50,946 |
|
|
|
52,952 |
|
Fuel
surcharges |
|
|
2,603 |
|
|
|
1,700 |
|
|
|
4,934 |
|
|
|
3,199 |
|
Total revenues |
|
|
27,979 |
|
|
|
27,393 |
|
|
|
55,880 |
|
|
|
56,151 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
|
12,043 |
|
|
|
11,455 |
|
|
|
23,916 |
|
|
|
23,539 |
|
Fuel
expenses |
|
|
4,304 |
|
|
|
3,784 |
|
|
|
8,426 |
|
|
|
7,688 |
|
Repairs
& tires |
|
|
1,685 |
|
|
|
1,625 |
|
|
|
3,258 |
|
|
|
3,263 |
|
Other
operating |
|
|
1,072 |
|
|
|
976 |
|
|
|
2,115 |
|
|
|
2,010 |
|
Insurance
and losses |
|
|
3,169 |
|
|
|
2,896 |
|
|
|
5,885 |
|
|
|
5,601 |
|
Depreciation expense |
|
|
2,223 |
|
|
|
2,397 |
|
|
|
4,553 |
|
|
|
4,859 |
|
Rents,
tags & utilities |
|
|
887 |
|
|
|
860 |
|
|
|
1,742 |
|
|
|
1,723 |
|
Sales,
general & administrative |
|
|
2,442 |
|
|
|
2,281 |
|
|
|
4,764 |
|
|
|
4,592 |
|
Corporate
expenses |
|
|
790 |
|
|
|
998 |
|
|
|
1,277 |
|
|
|
1,615 |
|
Gain on
equipment sales |
|
|
(335) |
|
|
|
(204) |
|
|
|
(499) |
|
|
|
(312) |
|
Total cost of
operations |
|
|
28,280 |
|
|
|
27,068 |
|
|
|
55,437 |
|
|
|
54,578 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating (loss)
profit |
|
|
(301) |
|
|
|
325 |
|
|
|
443 |
|
|
|
1,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income and
other |
|
|
31 |
|
|
|
1 |
|
|
|
33 |
|
|
|
3 |
|
Interest expense |
|
|
(9) |
|
|
|
(32) |
|
|
|
(19) |
|
|
|
(64) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
|
(279) |
|
|
|
294 |
|
|
|
457 |
|
|
|
1,512 |
|
Provision for (benefit
from) income taxes |
|
|
(85) |
|
|
|
34 |
|
|
|
(2,941) |
|
|
|
340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
(194) |
|
|
|
260 |
|
|
$ |
3,398 |
|
|
|
1,172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax reform gain on
retiree health |
|
|
— |
|
|
|
— |
|
|
|
32 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income |
|
$ |
(194) |
|
|
|
260 |
|
|
$ |
3,430 |
|
|
|
1,172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income (Loss) - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.06) |
|
|
|
0.08 |
|
|
|
1.03 |
|
|
|
0.36 |
|
Diluted |
|
$ |
(0.06) |
|
|
|
0.08 |
|
|
|
1.03 |
|
|
|
0.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares (in thousands) used in
computing: |
|
|
|
|
-basic
earnings per common share |
|
|
3,316 |
|
|
|
3,300 |
|
|
|
3,310 |
|
|
|
3,295 |
|
-diluted
earnings per common share |
|
|
3,316 |
|
|
|
3,309 |
|
|
|
3,311 |
|
|
|
3,303 |
|
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