Patriot Transportation Holding (PATI) 10-Q 1 Feb 19 2019 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	3 Months Ended
	Dec. 31, 2018shares
Document And Entity Information
Entity Registrant Name	PATRIOT TRANSPORTATION HOLDING, INC.
Entity Central Index Key	1,616,741
Document Type	10-Q
Document Period End Date	Dec. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business Filer	true
Emerging Growth Company	false
Entity Common Stock, Shares Outstanding	3,328,466
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,019

Consolidated and Combined Balan

Consolidated and Combined Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2018	Sep. 30, 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
Current liabilities:
Accounts payable	3,589	3,271
Bank overdraft	0	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 (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	0	0
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 liabilties and shareholders' equity	$ 70,695	$ 69,817

Consolidated and Combined Bal_2

Consolidated and Combined Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2018	Sep. 30, 2018
Statement of Financial Position [Abstract]
Accounts receivable allowance for doubtful accounts	$ 151	$ 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	3,328,466	3,328,466

Consolidated and Combined State

Consolidated and Combined Statements of Income - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Revenues:
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	0
Tax reform gain on retiree health	0	32
Comprehensive Income	$ 886	$ 3,624
Earnings per common share:
Net income - basic	$ 0.27	$ 1.09
Net income - 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
Transportation [Member]
Revenues:
Revenues	$ 24,980	$ 25,570
Fuel Surcharges [Member]
Revenues:
Revenues	$ 3,074	$ 2,331

Consolidated and Combined Sta_2

Consolidated and Combined Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities:
Net income	$ 884	$ 3,592
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,117	2,509
Deferred income taxes	0	(3,021)
Gain on asset dispositions	(923)	(164)
Stock-based compensation	56	55
Net changes in operating assets and liabilities:
Accounts receivable	182	893
Inventory of parts and supplies	5	(54)
Prepaid expenses	631	(312)
Other assets	(92)	34
Accounts payable and accrued liabilities	564	(2,123)
Income taxes payable and receivable	248	114
Long-term insurance liabilities and other long-term liabilities	(3)	3
Net cash provided by operating activities	3,669	1,526
Cash flows from investing activities:
Purchase of property and equipment	(1,661)	(1,122)
Purchase of Treasury bills	(5,371)	0
Maturities of Treasury bills	3,000	0
Proceeds from the sale of property, plant and equipment	1,432	307
Net cash used in investing activities	(2,600)	(815)
Cash flows from financing activities:
Decrease in bank overdrafts	(625)	0
Debt issue costs	(9)	0
Net cash used in financing activities	(634)	0
Net increase in cash and cash equivalents	435	711
Cash and cash equivalents at beginning of period	1	11,289
Cash and cash equivalents at end of the period	$ 436	$ 12,000

Description of Business and Bas

Description of Business and Basis of Presentation	3 Months Ended
	Dec. 31, 2018
Accounting Policies [Abstract]
Description of Business and Basis of Presentation	(1) Description of Business and Basis of Presentation Description of Business Company’s Business 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, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2019. 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, 2018.

Recently Issued Accounting Stan

Recently Issued Accounting Standards	3 Months Ended
	Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Recently Issued Accounting Standards	(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, primarily the corporate office and 30 leased tractors. The total gross contractual obligation for leases with commitments greater than 12 months at September 30, 2018 was $3,875,000.

Related Party Agreements

Related Party Agreements	3 Months Ended
	Dec. 31, 2018
Related Party Transactions [Abstract]
Related Party Agreements	(3) Related Party Agreements. The consolidated statements of income reflect charges and/or allocation to FRP Holdings, Inc. for these services of $422,000 and $352,000 for the three months ended December 31, 2018 and 2017, 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. We employ an allocation method 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.

Long-Term Debt

Long-Term Debt	3 Months Ended
	Dec. 31, 2018
Debt Disclosure [Abstract]
Long-Term Debt	(4) Long-Term debt.

Earnings per share

Earnings per share	3 Months Ended
	Dec. 31, 2018
Earnings Per Share [Abstract]
Earnings per share	(5) 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, 2018 2017 Weighted average common shares outstanding during the period - shares used for basic earnings per common share 3,328 3,303 Common shares issuable under share based payment plans which are potentially dilutive 3 1 Common shares used for diluted earnings per common share 3,331 3,304 Net income $ 884 3,592 Earnings per common share: -basic $ 0.27 1.09 -diluted $ 0.27 1.09 For the three months ended December 31, 2018, 165,409 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, 2017, 178,519 shares attributable to outstanding stock options were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

Stock-Based Compensation Plans

Stock-Based Compensation Plans	3 Months Ended
	Dec. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
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. 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 8,587 at December 31, 2018. The realized tax benefit pertaining to options exercised and the remaining compensation cost of options previously granted are 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 long-term performance 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 a 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 in its consolidated statements of income (in thousands): Three Months ended December 31, 2018 2017 Stock option grants $ 56 55 Annual director stock award — — $ 56 55 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, 2018 175,551 $ 21.52 6.3 $ 1,419 Granted 29,920 20.10 240 Outstanding at December, 2018 205,471 $ 21.32 6.6 $ 1,659 Exercisable at December 31, 2018 120,540 $ 22.02 5.1 $ 983 Vested during three months ended December 31, 2018 19,724 $ 174 The aggregate intrinsic value of exercisable Company options was $54,000 and the aggregate intrinsic value of all outstanding in-the-money options was $85,000 based on the Company’s market closing price of $19.71 on December 31, 2018 less exercise prices. The realized tax benefit from option exercises during the first three months of fiscal 2019 was $28,000 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, 2018 was $653,000, which is expected to be recognized over a weighted-average period of 3.7 years.

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Dec. 31, 2018
Fair Value Disclosures [Abstract]
Fair Value Measurements	(7) Fair Value Measurements During the quarter ending December 31, 2018, the Company invested in treasury bills with maturities at time of purchase of 3 months to 1 year. The unrealized gains on these investments of $2,000 was recorded as part of comprehensive income and was based on the market value (Level 1). The amortized cost of the investments was $19,776,000 and the carrying amount and fair value was $19,766,000 as of December 31, 2018. At December 31, 2018 and September 30, 2018, 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.

Contingent liabilities

Contingent liabilities	3 Months Ended
	Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]
Contingent liabilities	(8) Contingent liabilities

Concentrations

Concentrations	3 Months Ended
	Dec. 31, 2018
Risks and Uncertainties [Abstract]
Concentrations	(9) Concentrations Market: Customers Deposits

Unusual or Infrequent Items Imp

Unusual or Infrequent Items Impacting Quarterly Results	3 Months Ended
	Dec. 31, 2018
Unusual or Infrequent Items, or Both [Abstract]
Unusual or Infrequent Items Impacting Quarterly Results	(10) Unusual or Infrequent Items Impacting Quarterly Results First quarter 2019 net income included $634,000, or $.19 per share, from gains on real estate sales. 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.

Earnings per share (Tables)

Earnings per share (Tables)	3 Months Ended
	Dec. 31, 2018
Earnings Per Share
Earnings per share (in thousands, except per share amounts)	Three Months ended December 31, 2018 2017 Weighted average common shares outstanding during the period - shares used for basic earnings per common share 3,328 3,303 Common shares issuable under share based payment plans which are potentially dilutive 3 1 Common shares used for diluted earnings per common share 3,331 3,304 Net income $ 884 3,592 Earnings per common share: -basic $ 0.27 1.09 -diluted $ 0.27 1.09

Stock-Based Compensation Plans

Stock-Based Compensation Plans (Tables)	3 Months Ended
	Dec. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock Compensation Expense (in thousands)	Three Months ended December 31, 2018 2017 Stock option grants $ 56 55 Annual director stock award — — $ 56 55
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, 2018 175,551 $ 21.52 6.3 $ 1,419 Granted 29,920 20.10 240 Outstanding at December, 2018 205,471 $ 21.32 6.6 $ 1,659 Exercisable at December 31, 2018 120,540 $ 22.02 5.1 $ 983 Vested during three months ended December 31, 2018 19,724 $ 174

Earnings per share - Earnings p

Earnings per share - Earnings per common share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Earnings Per Share [Abstract]
Weighted average common shares outstanding during the period - shares used for basic earnings per common share	3,328	3,303
Common shares issuable under share based payment plans which are potentially dilutive	3	1
Common shares used for diluted earnings per common share	3,331	3,304
Net income	$ 884	$ 3,592
Earnings per common share:
Earnings per share-basic	$ 0.27	$ 1.09
Earnings per share-diluted	$ 0.27	$ 1.09

Stock-Based Compensation Plan_2

Stock-Based Compensation Plans - Summary of Stock Options (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Dec. 31, 2018USD ($)yr$ / sharesshares	Sep. 30, 2018USD ($)yr$ / sharesshares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Options outstanding | shares	205,471	175,551
Options granted | shares	29,920
Options outstanding weighted average exercise price | $ / shares	$ 21.32	$ 21.52
Options outstanding weighted average exercise price - Granted | $ / shares	$ 20.10
Options outstanding weighted average remaining term | yr	6.6	6.3
Options outstanding weighted average grant date fair value | $	$ 1,659	$ 1,419
Options granted weighted average grant date fair value | $ / shares	$ 240
Options exercisable | shares	120,540
Options exerciseable weighted average exercise price | $ / shares	$ 22.02
Options exerciseable weighted average remaining term | yr	5.1
Options exerciseable weighted average grant date fair value | $	$ 983
Options vested | shares	19,724
Options vested weighted average grant date fair value | $	$ 174

Stock-Based Compensation Plan_3

Stock-Based Compensation Plans - Stock Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock option grants	$ 56	$ 55
Annual director stock award	0	0
Stock based compensation expense	$ 56	$ 55

Description of Business and B_2

Description of Business and Basis of Presentation (Details Narrative)	Dec. 31, 2018
Revenue Producing Drivers	541
Fleet of Tractors	380
Tractors being placed in service	10
Tractors being prepared for sale	3
owner operators	20
Fleet of Trailers	532
Terminal locations	20
Satellite locations	6
Petroleum Products
Percentage of Business	86.00%
Dry Bulk Commodities
Percentage of Business	14.00%

Recently Issued Accounting St_2

Recently Issued Accounting Standards (Details Narrative) $ in Thousands	Sep. 30, 2018USD ($)
Recently Issued Accounting Standards Details Narrative Abstract
Contractual obligation for lease payments greater than 12 months	$ 3,875

Related Party Agreements (Detai

Related Party Agreements (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
FRP
Charges/allocations	$ 422	$ 352

Long-Term Debt (Details Narrati

Long-Term Debt (Details Narrative) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2018	Dec. 14, 2018	Sep. 30, 2018
Wells Fargo
Revolving Credit facility			$ 35,000
Credit facility increase maximum			$ 50,000
Borrowed under the revolver	$ 0	$ 0
Commitments under letters of credit	3,043	3,043
Amount available for additional borrowings	$ 31,957	$ 31,957
Credt agreement term	5 years
Compliance with loan covenants		All
Letter of credit fee		1.00%
Interest rate	3.522%	3.522%
Long-term debt	$ 0	$ 0		$ 0
Level I
Interest rate over LIBOR		1.50%
Commitment fee		0.144%
Level II
Interest rate over LIBOR		1.25%
Commitment fee		0.1145%
Level III
Interest rate over LIBOR		1.00%
Commitment fee		0.086%

Earnings per share (Details Nar

Earnings per share (Details Narrative) - shares	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Earnings Per Share [Abstract]
Anti-dilutive shares	165,409	178,519

Stock-Based Compensation Plan_4

Stock-Based Compensation Plans (Details Narrative) $ / shares in Units, $ in Thousands	3 Months Ended
	Dec. 31, 2018USD ($)yr$ / sharesshares	Dec. 21, 2016USD ($)yr$ / sharesshares
Shares available for future issuance | shares	8,587
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	$ 54
Aggregate intrinsic value of outstanding in-the-money options	$ 85
Market close price | $ / shares	$ 19.71	$ 23.13
Total unrecognized compensation cost of options granted	$ 653
Weighted average period for compensation to be recognized | yr	3.7
FRP
Realized tax benefit from options exercised	$ 28

Fair Value Measurements (Detail

Fair Value Measurements (Details Narrative) $ in Thousands	3 Months Ended
	Dec. 31, 2018USD ($)
Fair Value Disclosures [Abstract]
Unlrealized gains on treasury bills	$ 2
Amortized cost of investments in treasury bills	19,776
Carrying amount of investments in treasury bills	19,766
Fair value of investments in treasury bills	$ 19,766

Concentrations (Details Narrati

Concentrations (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2018	Sep. 30, 2018
Top Ten Customers
Customer revenue concentration	62.00%
Accounts receivable concentration	$ 4,485	$ 4,875
Top Customer
Customer revenue concentration	18.80%

Unusual or Infrequent Items I_2

Unusual or Infrequent Items Impacting Quarterly Results (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Deferred tax benefit		$ 3,041
Deferred tax benefit per share		$ 0.92
Effective tax rate					39.50%
Gains on real estate sales, net	$ 634
Gain on real estate sales per share, net	$ 0.19
Forecast [Member]
US statutory federal rate			21.00%	24.28%
Effective tax rate			27.50%	30.50%