Patriot Transportation Holding, Inc. (NASDAQ-PATI)
First Quarter Operating
Results
The Company reported net income of $884,000, or
$.27 per share, compared to net income of $3,592,000, or $1.09 per
share, in the same quarter last year. First quarter 2018 net
income included $3,041,000, or $.92 per share, due to revaluing the
company’s net deferred tax liabilities per the Tax Cuts and Jobs
Act of 2017. First quarter 2019 net income included $634,000,
or $.19 per share, from gains on real estate sales.
Total revenues for the quarter were $28,054,000,
up $153,000 from the same quarter last year. Transportation
revenues (excluding fuel surcharges) were $24,980,000, down
$590,000 mainly due to a $.07 per mile decrease on a higher average
haul length. Miles increased by 25,000 to 9,277,000 over the
same quarter last year partially offsetting the impact of the lower
revenue per mile ($67,000). Fuel surcharge revenue was
$3,074,000, up $743,000 from the same quarter last year due to
higher diesel prices. Several locations were impacted during
the quarter by Hurricane Michael, and in particular our Panama City
location experienced severe damage and an extended shutdown period
in which we lost significant revenue that negatively impacted our
operating profit (~$50,000).
Compensation and benefits increased $165,000, or
2 cents per mile, mainly due to increased driver training pay
($135,000) as average drivers in training increased from 29 in the
first quarter last year to 38 in this year’s first quarter.
Owner operator count increased from 13 to 20 this quarter versus
the same quarter last year which increased our compensation and
benefits cost. We pay owner operators a higher percentage of
the revenues they generate offset by lower variable costs (e.g.
fuel, maintenance) paid directly by the owner operator. Fuel
expenses increased $154,000, or 1 cent per mile, on higher average
diesel prices offset by improved fuel economy due to our longer
average haul length and more owner operators paying directly for
their fuel. Repair and tire expense increased $92,000 due to
several high dollar repairs. Other operating expenses were up
$89,000 due to increased tolls, increased driver hiring and travel
expense and some site maintenance at a few of our terminal
offices. Insurance and losses increased $226,000 primarily
due to one very high dollar health claim ($334,000 in this quarter)
partially offset by reduced wreck repair expense ($119,000).
Depreciation expense was down $360,000 as a result of down sizing
our fleet and placing twenty three full service lease trucks in
certain markets where we do not have maintenance shops.
However, during the quarter we carried some excess equipment that
we are currently in the process of selling and that negatively
impacted the quarter’s results (~$100,000). Sales, general
& administrative costs increased $146,000 due mainly to
accruals for bonus compensation ($99,000) and higher IT and Payroll
expense to support the changes we are making to our systems and the
way we compensate drivers. Corporate expenses were up due
mainly to non-recurring legal fees in connection with becoming a
“smaller reporting company” under new SEC guidelines. Gain on
sale of assets increased $759,000 due primarily to a gain of
$866,000 on the sale of a prior terminal site in Ocoee, Florida
that was relocated to Orlando, FL.
As a result, operating profit this quarter was
$1,107,000 (which includes the $866,000 gain from land sales and a
$303,000 loss on health insurance) compared to operating profit of
$744,000 in the same quarter last year. Operating ratio was
96.1 this quarter versus 97.3 in the same quarter last year.
Summary and Outlook
We sold an excess parcel of land in Ocoee, FL
for $1,268,000 which benefitted operating profit this quarter,
increased our cash and reduced our capital employed in the
transportation business. This quarter was negatively impacted
by the large loss we experienced on health claims. We have
implemented some recent changes, in particular to our pharmacy and
wellness plans, and expect to see meaningful savings from those
changes. The driver shortage and high driver turnover remains
a problem for the industry. With our number of drivers in
training improving over the prior several quarters, we are hopeful
that our initiatives are having their desired impact on attracting
new drivers. Demand for our services is still very high and
we are continuing to allocate our available resources to fulfill
the needs of those customers who are willing to partner with us on
both pricing and efficiently managing the day to day operation of
our business.
Our team did an outstanding job throughout
Hurricane Michael and its aftermath and we are especially grateful
for their dedication and perseverance. We are in the process
of repairing the damages to the Panama City terminal and working
with our insurance company to determine the insured value
applicable to the losses. At this point, we do not anticipate
a material negative financial impact from the damages we
sustained.
We are not pleased with the bottom line
operating results for this first quarter but we do see several
positive trends. Our balance sheet improved during the
quarter as we increased our cash and investments since September
30, 2018 by $2,903,000, increased shareholder equity by $942,000
and remained debt free. We have seen a sustained improvement
in the number of drivers in training and are hopeful that will lead
to an increase in our driver count. There has been positive
improvement in the market on pricing and there are plenty of
opportunities today to increase our business levels at better rates
if we can obtain additional driver capacity. We are in the
process of selling excess equipment which will reduce our
depreciation, maintenance, tire and tag expense. The recent
changes we made to our pharmacy and wellness plans are expected to
generate material recurring savings on our health expense.
Management expects all of our IT system related upgrades to be
fully implemented during the second quarter of fiscal 2019 and
anticipate these changes will greatly enhance the capabilities of
our field personnel and our back office staff to provide improved
customer service. We are optimistic that the strategic plan
we have in place will lead to the improved operating profit we
targeted for this fiscal year.
The Company will host a conference call on
January 30, 2019 at 3:00 PM (EST). Analysts, shareholders and other
interested parties may access the teleconference live by calling
1-800-311-9409 domestic or international at 1-334-323-7224 then
enter pass code 83270. 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/pth013019 or
http://stream.conferenceamerica.com/pth013019.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 26726183. An audio archive can
be accessed via the internet at
http://archive.conferenceamerica.com/archivestream/pth013019.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
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
INCOME(In thousands)(Unaudited)
|
THREE MONTHS ENDED |
|
DECEMBER 31, |
|
2018 |
|
2017 |
Revenues: |
|
|
|
|
|
|
|
Transportation revenues |
$ |
24,980 |
|
|
|
25,570 |
|
Fuel
surcharges |
|
3,074 |
|
|
|
2,331 |
|
Total revenues |
|
28,054 |
|
|
|
27,901 |
|
|
|
|
|
|
|
|
|
Cost of
operations: |
|
|
|
|
|
|
|
Compensation and benefits |
|
12,038 |
|
|
|
11,873 |
|
Fuel
expenses |
|
4,276 |
|
|
|
4,122 |
|
Repairs
& tires |
|
1,665 |
|
|
|
1,573 |
|
Other
operating |
|
1,132 |
|
|
|
1,043 |
|
Insurance
and losses |
|
2,942 |
|
|
|
2,716 |
|
Depreciation expense |
|
1,970 |
|
|
|
2,330 |
|
Rents,
tags & utilities |
|
847 |
|
|
|
855 |
|
Sales,
general & administrative |
|
2,468 |
|
|
|
2,322 |
|
Corporate
expenses |
|
532 |
|
|
|
487 |
|
Gain on
disposition of PP&E |
|
(923 |
) |
|
|
(164 |
) |
Total cost of
operations |
|
26,947 |
|
|
|
27,157 |
|
|
|
|
|
|
|
|
|
Total operating
profit |
|
1,107 |
|
|
|
744 |
|
|
|
|
|
|
|
|
|
Interest income and
other |
|
101 |
|
|
|
2 |
|
Interest expense |
|
(10 |
) |
|
|
(10 |
) |
|
|
|
|
|
|
|
|
Income before income
taxes |
|
1,198 |
|
|
|
736 |
|
Provision for (benefit
from) income taxes |
|
314 |
|
|
|
(2,856 |
) |
|
|
|
|
|
|
|
|
Net
income |
$ |
884 |
|
|
|
3,592 |
|
|
|
|
|
|
|
|
|
Unrealized investment
gains, net |
|
2 |
|
|
|
— |
|
Tax reform gain on
retiree health |
|
— |
|
|
|
32 |
|
|
|
|
|
|
|
|
|
Comprehensive
Income |
$ |
886 |
|
|
|
3,624 |
|
|
|
|
|
|
|
|
|
Earnings per
common share: |
|
|
|
|
|
|
|
Net
Income- |
|
|
|
|
|
|
|
Basic |
|
0.27 |
|
|
|
1.09 |
|
Diluted |
|
0.27 |
|
|
|
1.09 |
|
|
|
|
|
|
|
|
|
Number of
shares (in thousands) used in computing: |
|
|
|
|
|
|
|
-basic
earnings per common share |
|
3,328 |
|
|
|
3,303 |
|
-diluted
earnings per common share |
|
3,331 |
|
|
|
3,304 |
|
|
|
|
|
|
|
|
|
PATRIOT TRANSPORTATION HOLDING,
INC. AND SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(In thousands) (Unaudited)
|
|
December 31, |
|
|
September 30, |
Assets |
|
2018 |
|
|
2018 |
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
436 |
|
|
|
1 |
|
Treasury
bills available for sale |
|
|
19,766 |
|
|
|
17,298 |
|
Accounts
receivable (net of allowance for |
|
|
|
|
|
|
|
|
doubtful
accounts of $151 and $153, respectively) |
|
|
7,684 |
|
|
|
7,866 |
|
Federal
and state taxes receivable |
|
|
299 |
|
|
|
547 |
|
Inventory
of parts and supplies |
|
|
890 |
|
|
|
895 |
|
Prepaid
tires on equipment |
|
|
1,699 |
|
|
|
1,746 |
|
Prepaid
taxes and licenses |
|
|
397 |
|
|
|
609 |
|
Prepaid
insurance |
|
|
1,994 |
|
|
|
2,348 |
|
Prepaid
expenses, other |
|
|
116 |
|
|
|
134 |
|
Total
current assets |
|
|
33,281 |
|
|
|
31,444 |
|
|
|
|
|
|
|
|
|
|
Property and equipment,
at cost |
|
|
93,622 |
|
|
|
94,710 |
|
Less accumulated
depreciation |
|
|
60,636 |
|
|
|
60,799 |
|
Net property and
equipment |
|
|
32,986 |
|
|
|
33,911 |
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
3,431 |
|
|
|
3,431 |
|
Intangible assets,
net |
|
|
816 |
|
|
|
855 |
|
Other assets, net |
|
|
181 |
|
|
|
176 |
|
Total assets |
|
$ |
70,695 |
|
|
|
69,817 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders’ Equity |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
3,589 |
|
|
|
3,271 |
|
Bank
overdraft |
|
|
— |
|
|
|
625 |
|
Accrued
payroll and benefits |
|
|
3,918 |
|
|
|
3,963 |
|
Accrued
insurance |
|
|
2,358 |
|
|
|
1,896 |
|
Accrued
liabilities, other |
|
|
237 |
|
|
|
408 |
|
Total
current liabilities |
|
|
10,102 |
|
|
|
10,163 |
|
|
|
|
|
|
|
|
|
|
Deferred income
taxes |
|
|
5,941 |
|
|
|
5,940 |
|
Accrued insurance |
|
|
204 |
|
|
|
204 |
|
Other liabilities |
|
|
1,100 |
|
|
|
1,104 |
|
Total
liabilities |
|
|
17,347 |
|
|
|
17,411 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
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; 3,328,466 and 3,328,466 shares issued |
|
|
|
|
|
|
|
|
and
outstanding, respectively) |
|
|
333 |
|
|
|
333 |
|
Capital
in excess of par value |
|
|
37,492 |
|
|
|
37,436 |
|
Retained
earnings |
|
|
15,356 |
|
|
|
14,472 |
|
Accumulated other comprehensive income, net |
|
|
167 |
|
|
|
165 |
|
Total
shareholders’ equity |
|
|
53,348 |
|
|
|
52,406 |
|
Total liabilities and
shareholders’ equity |
|
$ |
70,695 |
|
|
|
69,817 |
|
|
|
|
|
|
|
|
|
|
Contact:Matt McNultyChief Financial Officer904/858-9100
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