PATRIOT TRANSPORTATION HOLDING, INC./NEWS
Contact: John D. Milton, Jr.
Chief Financial Officer 904/396-5733
PATRIOT TRANSPORTATION HOLDING, INC. ANNOUNCES RESULTS FOR THE SECOND
QUARTER AND FIRST SIX MONTHS OF FISCAL YEAR 2014
Jacksonville, Florida; May 7, 2014 - Patriot Transportation Holding, Inc.
(NASDAQ-PATR) reported net income of $1,703,000 or $.18 per diluted share
in the second quarter of fiscal 2014, a decrease of $568,000 or 25.0%
compared to net income of $2,271,000 or $.24 per diluted share in the
same period last year. Net income for the first six months of fiscal
2014 was $4,044,000 or $.42 per diluted share, a decrease of $1,350,000
or 25.0% compared to net income of $5,394,000 or $.56 per diluted share
for the same period last year. The first quarter of fiscal 2013 included
a gain of $681,000 after income taxes on the sale of investment land.
Second Quarter Operating Results. For the second quarter of fiscal 2014,
consolidated revenues were $39,907,000, an increase of $6,039,000 or
17.8% over the same quarter last year.
Transportation segment revenues were $31,900,000 in the second quarter of
2014, an increase of $4,724,000 over the same quarter last year. Revenue
miles increased 19.7% compared to the second quarter of fiscal 2013 due
to the Pipeline acquisition on November 7, 2013, additional business
growth and a longer average haul length. Revenue per mile decreased 2.0%
over the same quarter last year due to a longer average haul length, a
change in the mix of business and lower rates on the business acquired in
the Pipeline acquisition.
Mining royalty land segment revenues for the second quarter of fiscal
2014 were $1,226,000, a decrease of $18,000 or 1.4% over the same
quarter last year due to a shift in production at one location
decreasing the share of mining on property owned by the Company.
Developed property rentals segment revenues for the second quarter
of fiscal 2014 were $6,781,000, an increase of $1,333,000 or 24.5%
due to higher occupancy, snow removal reimbursements, revenue on the
125,550 square foot build to suit building completed and occupied
during the quarter and revenue on the 5 buildings added June 2013
related to the purchase of Transit Business Park. Occupancy at
March 31, 2014 was 89.8% as compared to 88.5% at March 31, 2013.
The second quarter of Fiscal 2014 contains an additional
232,000 square feet of rentable space at Transit Business Park
and another 125,550 square feet of Patriot Business Park which
expanded our total leasable space by roughly 10% while still
increasing total occupancy to 89.8%.
Continued
Consolidated operating profit was $3,146,000 in the second quarter
of fiscal 2014, a decrease of $1,162,000 or 27.0% compared to
$4,308,000 in the same period last year. Despite a 17% increase
in revenues, operating profit in the transportation group for
the 2nd quarter decreased $1,024,000 or 53%. This decrease in
margin was driven by several inter-related items: (i) after the
acquisition of Pipeline in the first quarter, we had significant
driver attrition. Simultaneously, we won several new accounts
throughout our system with great long-term prospects. In order
to service both shortfalls we hired drivers in every available
market and temporarily moved them to locations with driver
shortages. While this enabled us to service our customers, we
did so at increased expense. Out-of-town driver pay and per diem
costs were $303,000 for the quarter and driver training expense
increased $128,000; (ii) though not directly related to the driver
turnover, wreck expense increased $120,000; and (iii) because of
equipment demand from the new accounts, we delayed normal equipment
trade-ins which lowered equipment sales by $225,000 vs. the second
quarter of last year. As we hire drivers in the appropriate
markets, these expenses will abate, and while we have made
progress, we are not yet at equilibrium. During January, the
number of out-of-town drivers reached its peak of 35 and as
of March 31 had been reduced to 17. Operating profit in the
mining royalty land segment decreased $47,000 or 5.1% primarily
due to a shift in production at one location decreasing share of
mining on property owned by the Company. Operating profit in
the Developed property rentals segment increased $64,000 or
3.0% due to higher occupancy, the 125,550 square foot build to
suit building completed and occupied during the second quarter
2014, and the addition of Transit Business Park offset by higher
property taxes and professional fees. Consolidated operating
profit includes corporate expenses not allocated to any segment
in the amount of $824,000 in the second quarter of fiscal 2014,
an increase of $155,000 compared to the same period last year
primarily due to the higher market value associated with the
annual director stock grant.
Gain on investment land sold for the second quarter of fiscal
2014 included $22,000 of deferred profits on prior year land
sales.
Interest expense decreased $234,000 over the same quarter last
year due to a declining mortgage principal balance and higher
capitalized interest. The amount of interest capitalized on
real estate projects under development was $60,000 higher than
the same quarter in fiscal 2013.
Income tax expense decreased $363,000 over the same quarter last
year due to lower earnings compared to the same quarter last year.
Six Months Operating Results. For the first six months of fiscal
2014, consolidated revenues were $78,727,000, an increase of
$11,802,000 or 17.6% over the same period last year.
Transportation segment revenues were $63,491,000 in the first six
months of 2014, an increase of $9,676,000 over the same period
last year. Revenue miles in the first six months of fiscal 2014
were up 21.0% compared to the first six months of fiscal 2013 due
to the Pipeline acquisition on November 7, 2013, business growth
and a longer average haul length. Revenue per mile decreased 2.7%
over the same period last year due to a longer average haul length
and lower rates on the business acquired in the Pipeline acquisition.
Mining royalty land segment revenues for the first six months of
fiscal 2014 were $2,494,000, a decrease of $81,000 or 3.1% over
the same period last year due to a shift in production at one
location decreasing the share of mining on property owned by the
Company.
Developed property rentals segment revenues for the first six
months of fiscal 2014 were $12,742,000, an increase of $2,207,000
or 20.9% due to higher occupancy, snow removal reimbursements,
revenue on the 117,600 square foot build to suit building completed
and occupied during the quarter ended March 2013, revenue on the 5
buildings added June 2013 related to the purchase of Transit
Business Park and revenue on the 125,550 square foot build to suit
building completed and occupied during the quarter ended March 2014.
Occupancy at March 31, 2014 was 89.8% as compared to 88.5% at March
31, 2013.
Consolidated operating profit was $7,270,000 in the first six months
of fiscal 2014, a decrease of $1,446,000 or 16.6% compared to
$8,716,000 in the same period last year. Despite an 18% increase in
revenues, operating profit in the transportation group for the six
months decreased $1,365,000 or 36.7%. This decrease in margin
was driven by the same inter-related items detailed in our discussion
of second quarter operating results above. As we hire drivers in the
appropriate markets, we expect expenses to abate, and while we have
made progress, we are not yet at equilibrium. As of March 31, the
number of out-of-town drivers had been reduced to 17.
Operating profit in the mining royalty land segment decreased
$131,000 or 6.7% primarily due a shift in production at one location
decreasing share of mining on property owned by the Company.
Operating profit in the Developed property rentals segment increased
$296,000 or 7.4% due to higher occupancy, the 117,600 square foot
build to suit building completed and occupied during the second
quarter 2013, the addition of Transit Business Park and
the 125,550 square foot build to suit building completed and
occupied during the second quarter 2014 offset by higher property
taxes and professional fees. Consolidated operating profit includes
corporate expenses not allocated to any segment in the amount of
$1,178,000 in the first six months of fiscal 2014, an increase of
$246,000 compared to the same period last year primarily due to the
higher market value associated with the annual director stock grant.
Gain on investment land sold for the first six months of fiscal
2014 included $78,000 of deferred profits on prior year land sales.
Gain on investment land sold for the first six months of fiscal 2013
included a gain on the sale of the developed property rentals
Commonwealth property of $1,116,000 before income taxes. The book
value of the property was $723,000.
Interest expense decreased $351,000 over the same period last year
due to a declining mortgage principal balance offset by lower
capitalized interest. The amount of interest capitalized on real
estate projects under development was $15,000 lower than the same
period in fiscal 2013.
Income tax expense decreased $863,000 over the same period last
year due to lower earnings compared to the same period last year.
Summary and Outlook. Transportation revenues for the first six
months of fiscal 2014 increased $9,676,000 or 18.0% over the
first six months of 2013. The bottom line contribution of these
additional revenues was not achieved as duplicate expense of
temporarily transferred drivers and extra driving and
training pay nullified any return on the added revenues. The
company has been adding approximately five net new drivers a
month, exclusive of the Pipeline acquisition, for the last nine
months and anticipates continuing a similar addition of drivers.
As permanent drivers are added to our employment rolls the company
expects that the added revenues will become contributory to our
profitability.
Developed property rentals occupancy has increased from 88.5% to
89.8% over March 31, 2013 as the market for new tenants has
improved and traffic for vacant space has increased. Occupancy
at March 31, 2014 and 2013 included 8,200 square feet or .2% and
25,660 square feet or .9% respectively for temporary leases under
a less than full market lease rate. In November 2013 the Company
signed an agreement to sell 4.4 acres at Patriot Business Park for
$2,000,000. The book value of the property at March 31, 2014 was
$1,319,000. The sale closed on April 21, 2014.
The Company anticipates commencement of construction of the first
phase of the four phase Anacostia development in mid 2014 with
lease up scheduled between late 2015 and all of 2016.
Conference Call. The Company will also host a conference call
on Wednesday afternoon, May 7, 2014 at 1:00 p.m. (EDT). Analysts,
stockholders and other interested parties may access the
teleconference live by calling 1-800-351-6803 (pass code 36584)
within the United States. International callers may dial
1-334-323-7224 (pass code 36584). Computer audio is available
via the Internet through the Conference America, Inc. website
at http://64.202.98.81/conferenceamerica or via the Company's
website at http://www.patriottrans.com. If using the Company's
website, click on the Investor Relations tab, then select
Patriot Transportation Holding, Inc. Conference Stream, next
select the appropriate link for the current conference. An audio
replay will be available for sixty days following the conference
call. To listen to the audio replay, dial toll free 877-919-4059,
international callers dial 334-323-0140. The passcode of the
audio replay is 71336533. Replay options: "1" begins playback,
"4" rewind 30 seconds, "5" pause, "6" fast forward 30 seconds,
"0" instructions, and "9" exits recording. There may be a 30-40
minute delay until the archive is available following the
conclusion of the conference call.
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; demand for flexible warehouse/office facilities;
ability to obtain zoning and entitlements necessary for
property development; interest rates; levels of mining
activity; 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 and real estate businesses. The Company's
transportation business is conducted through Florida Rock &
Tank Lines, Inc. which is a Southeastern transportation
company concentrating in the hauling by motor carrier of
liquid and dry bulk commodities. The Company's real estate
group, comprised of FRP Development Corp. and Florida Rock
Properties, Inc., acquires, constructs, leases, operates and
manages land and buildings to generate both current cash
flows and long-term capital appreciation. The real estate
group also owns real estate which is leased under mining
royalty agreements or held for investment.
Continued
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31,
MARCH 31,
2014
2014 2013
2014
2013
---- ---- ---- ----
Revenues:
Transportation
$
31,900
27,176
63,491
53,815
Mining royalty land
1,226
1,244
2,494
2,575
Developed property rentals
6,781
5,448
12,742
10,535
------- ------ ------ ------
Total revenues
39,907
33,868
78,727
66,925
Cost of operations:
Transportation
31,003
25,255
61,138
50,097
Mining royalty land
347
318
676
626
Developed property rentals
4,587
3,318
8,465
6,554
Unallocated corporate
824
669
1,178
932
------ ------ ------ -----
Total cost of operations
36,761
29,560
71,457
58,209
Operating profit:
Transportation
897
1,921
2,353
3,718
Mining royalty land
879
926
1,818
1,949
Developed property rentals
2,194
2,130
4,277
3,981
Unallocated corporate
(824
)
(669
)
(1,178
)
(932
)
------- ------ ------- ------
Total operating profit
3,146
4,308
7,270
8,716
Gain on investment land sold
22
-
78
1,116
Interest income and other
-
5
1
37
Equity in loss of joint ventures
(31
)
(11
)
(63
)
(19
)
Interest expense
(346
)
(580
)
(657
)
(1,008)
------ ------ ------ -------
Income before income taxes
2,791
3,722
6,629
8,842
Provision for income taxes
(1,088
)
(1,451
)
(2,585
)
(3,448
)
------- ------ ------- -------
Net income
$
1,703
2,271
4,044
5,394
======= ====== ====== ======
Comprehensive Income
$
1,703
2,271
4,044
5,394
======= ====== ====== ======
Earnings per common share:
Basic
0.18
0.24
0.42
0.57
Diluted
0.18
0.24
0.42
0.56
Number of shares (in thousands)
used in computing:
-basic earnings per common
share
9,619
9,527
9,593
9,481
-diluted earnings per common
share
9,707
9,599
9,690
9,565