FRP HOLDINGS, INC./NEWS
Contact: John D. Milton, Jr.
Chief Financial Officer 904/858-9100
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FRP HOLDINGS, INC. (NASDAQ: FRPH) ANNOUNCES RESULTS FOR THE FOURTH QUARTER AND
FISCAL YEAR ENDED SEPTEMBER 30, 2015.
Jacksonville, Florida; December 2, 2015 -
Fiscal 2015 Fourth Quarter Results of Continuing Operations.
Income from continuing operations for the fourth quarter of fiscal 2015 was
$2,071,000 or $.21 per share, an increase of $724,000 or 53.8%, versus
$1,347,000 or $.14 per share in the fourth quarter last year. Net operating
income in the Asset Management Segment, management's chosen metric for
measuring shareholder value creation in that segment, grew 7.2% to $5,317,000.
Fiscal 2015 fourth quarter mining royalty revenues grew 15.1% to $1,680,000.
Fourth Quarter Segment Operating Results.
Asset Management Segment:
------------------------
Total revenues in this segment were $6,974,000, up $571,000 or 8.9%, over the
same quarter last year due to the completion and occupancy of the third build
to suit at Patriot Business Park plus an increase in square feet occupied in
this segment. Cost of operations increased $484,000 due mainly to higher
depreciation expense and higher property taxes on the newest build-to-suit and
increased corporate expense due primarily to no corporate level bonuses being
paid in fiscal 2014. Occupied square feet increased by 152,633 square feet
(4.9%) over last year's fourth quarter and occupancy was 90.6% on September
30th versus 89.6% last September.
Mining Royalty Lands Segment:
----------------------------
Total revenues in this segment were $1,680,000, up $220,000, due mainly to an
increase in tons mined this quarter versus the same quarter last year.
Land Development and Construction Segment:
-----------------------------------------
The Land Development and Construction segment is responsible for seeking
opportunities to acquire existing income producing properties and managing and
developing our non-income producing properties into income production; thus,
this segment receives minimal revenues but incurs significant costs to
accomplish this objective. Revenues were $245,000, up $45,000 over last
year's fourth quarter, due to higher real estate tax reimbursement from the
ground lease at our Square 664E property in D.C. Costs of operating this
segment were $877,000 in the quarter, an increase of $178,000, driven
primarily by higher property taxes of $131,000 due to the increase in assessed
value of our future Phases 2-4
at our Anacostia property in DC. We spent $2,023,000 in this segment on
capital improvements in the fourth quarter primarily on construction of the
new spec building at our Hollander Business Park ($1,770,000) and the
replacement of the bulkhead at Square 664E ($140,000) plus some additional
land development work on the Windlass Run Phase 2 residential site.
Adjusted Fourth Quarter Consolidated Results. The following discussion
includes certain non-GAAP financial measures ("adjusted") within the meaning
of Regulation G promulgated by the Securities and Exchange Commission
("Regulation G") to supplement the financial results as reported in accordance
with GAAP. Post Spin-off we are reporting any net gain/(loss) from the
transportation business as "discontinued operations" and we currently have no
other discontinued operations being reported. GAAP accounting rules do not
allow corporate overhead expenses to be allocated to a discontinued operation
of the Company; thus, those corporate expenses attributable to the
transportation business prior to the spin-off are charged to the Company as
part of continuing operations. The non-GAAP financial measures discussed
below are adjusted income from continuing operations and adjusted consolidated
operating profit. These non-GAAP financial measures exclude the corporate
management fees attributable to the transportation business prior to the
spin-off that are not allocable to the transportation business due to it being
a discontinued operation. The Company uses these metrics to analyze its
continuing operations and to monitor, assess, and identify meaningful trends
in its operating and financial performance. These measures are not, and should
not be viewed as, substitutes for GAAP financial measures. Refer to "Non-GAAP
Financial Measures" in this press release for a more detailed discussion,
including reconciliations of these non-GAAP financial measures to their most
directly comparable GAAP financial measures.
Fourth quarter revenues for the Company were up 10.4% to $8,899,000. For the
fourth quarter of fiscal 2015, adjusted income from continuing operations was
$2,071,000, an increase of $350,000 or 20.3% compared to $1,721,000 in the
same quarter last year. Fourth quarter adjusted consolidated operating profit
was $3,788,000, an increase of $296,000 or 8.5% compared to $3,492,000 in the
same quarter last year.
The improvement in fourth quarter results is mostly attributable to the
completion and occupancy of the third build-to-suit building at Patriot
Business Park during the first quarter of fiscal 2015, improved volumes at
several of our mining locations and improved occupancy levels somewhat offset
by increases in (i) depreciation expense, (ii) non-reimbursed property taxes
(at our Anacostia property), and (iii) higher overhead expenses.
Fiscal Year 2015 Consolidated Results of Continuing Operations.
Income from continuing operations was $6,093,000 or $.62 per share in fiscal
2015, an increase of $909,000 or 17.5%, compared to fiscal 2014. For fiscal
2015, net operating income in the Asset Management Segment, management's
chosen metric for measuring shareholder value creation in that segment, grew
12.4% to $21,043,000. Fiscal 2015 mining royalty revenues grew 14.1% to
$5,999,000.
Fiscal Year 2015 Segment Operating Results.
Asset Management Segment:
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We continue to add square feet to this segment's portfolio (129,850 in fiscal
2015) through construction and acquisition as we convert our non-income
producing properties into income production. Rental revenues in this segment
were $22,946,000, up $2,109,000 or 10.1%, due to increases in rental rates,
occupancy and total occupied square feet in this segment as we have continued
to add new buildings to the portfolio over the past four fiscal years. Cost
of operations increased $1,393,000 due mainly to higher depreciation and higher
property taxes as a result of the addition of new assets to the portfolio and
higher corporate expenses. Operating profit this year was $12,473,000, up
$1,352,000 or 12.2%. Average annual occupancy was 90.8% during fiscal 2015
versus 89.8% during fiscal 2014. Rent growth for leases renewed during the
fiscal year showed a 6.95% increase over the prior lease term. Over half of
those renewals were from leases that had terms beginning in late 2009 and
early 2010 when rental rates were far more in favor of the tenant.
Mining Royalty Lands Segment:
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Mining sales volumes at several of our locations increased in fiscal 2015
resulting in an overall increase of 1,161,652 tons sold, up 23.4% over fiscal
2014. As a result, royalty revenues were $5,999,000, up $743,000 or 14.1% in
fiscal 2015. Our operating profit was $4,615,000, up $497,000 or 12.1% versus
fiscal 2014. We believe that volumes will continue to increase at our
locations as construction activity in Florida and Georgia improves, and Vulcan
(i) continues the recent commencement of mining on our property at Astatula,
(ii) shifts most of their production to our property at Manassas for the
foreseeable future and (iii) is successful at obtaining final permit approval
for our Ft. Myers location.
Land Development and Construction Segment:
-----------------------------------------
During fiscal 2015, Management primarily focused its time in this segment on
(i) working with our joint venture partner on the management of the on-going
construction of Phase I at Riverfront on the Anacostia (n/k/a "Dock 79"),
(ii) completion of the third build to suit at Patriot Business Park (iii)
commencement of construction of a new 80,000 square foot spec warehouse/office
building at our Hollander Business Park (iv) the sale of Windlass Run
Residential Phase 2 and the evaluation of suitable Section 1031 replacement
properties and (v) the evaluation of a proposed joint venture for the
development and construction of a single story office park on the remainder of
our undeveloped lands in the Windlass Run Business Park. In fiscal 2015, we
invested over $4,085,000 with respect to the capital projects reported in this
segment. Revenues were $982,000, up $178,000, over last year due mainly to
higher real estate tax reimbursement from the ground lease at our Square 664E
property in D.C. Costs of operating this segment were $3,660,000 in fiscal
2015 which was an increase of $1,039,000 driven primarily by higher property
taxes ($479,000) due to the increase in assessed values of our 664E property
and our Phases II-IV land at our Anacostia property and higher operating
expenses ($181,000) as we undertook work to begin the reconstruction of the
bulkhead at our Square 664E property in anticipation of future high rise
development.
Adjusted Fiscal Year 2015 Consolidated Results.
Fiscal 2015 total revenues for the Company were up 11.8% to $34,646,000.
Adjusted income from continuing operations was $6,752,000 versus $6,822,000 in
fiscal 2014. The decrease in adjusted income from continuing operations was
due primarily to a (i) $648,000 increase in interest expense and
(ii) $476,000 gain on investment land sold in fiscal 2014 versus a loss of
$34,000 on investment land sold in fiscal 2015. Interest expense was greater
primarily as a result of $722,000 more in capitalized interest in fiscal 2014
and $116,000 in prepayment penalties in fiscal 2015 as the Company prepaid the
$1,314,000 remaining principal balance on 8.55% and 7.95% mortgages in January.
Adjusted operating profit improved to $13,262,000, a 6.7% increase over fiscal
2014.
Summary and Outlook. With the successful completion of the spin-off behind us,
we are focused on building shareholder value through our real estate holdings -
mainly by growing our portfolio and converting non-income producing assets into
income production. We are very pleased with the results we achieved in fiscal
2015 as the Company saw our revenue grow by $3,668,000 (an 11.8% increase) over
FY 2014 and our adjusted operating profit increase by $837,000 (up 6.7%).
During 2016, we expect the Asset Management Segment to add at least two
additional income producing buildings to our portfolio. Riverfront on the
Anacostia continues to keep our focus as we begin planning and negotiating on
Phase 2. As of now, Phase I looks poised to have a successful impact on the
Company in the near future. Fiscal 2015 provided us the first real improvement
in mining royalties since the Great Recession and, barring another major
economic downturn in the US, we are confident that trend will continue for the
foreseeable future.
Subsequent Events.
On October 30, 2015 the Company closed on the sale of the Windlass Run
Residential Phase 2 property for a total purchase price of $11,287,754
(inclusive of all extension fees) and the proceeds were used in a tax
deferred reverse Section 1031 exchange to acquire the Port Capital property
which closed on October 19, 2015 for a total purchase price of $9,900,000.
The Port Capital property is a 91,218 square foot warehouse/office building
located in Howard County, MD. The building was 100% occupied by a single
tenant at the time of closing with a lease expiration of September 30, 2025 at
an average annual gross rental rate of $641,519. Additionally, following the
close of fiscal 2015, the Company reached agreement with the former tenant on
the Anacostia property to pay $3 million towards environmental remediation
costs and also entered into statute of limitations tolling agreements with
three other potentially responsible parties as a preface to settlement
negotiations with those parties.
Conference Call.
The Company will host a conference call on Wednesday, December 2, 2015 at
2:00 p.m. (EST). Analysts, stockholders and other interested parties may
access the teleconference live by calling 1-800-853-3898 (pass code 47423)
within the United States. International callers may dial 334-323-7224 (pass
code 47423). Computer audio live streaming is available via the Internet
through the Company's website at www.frpholdings.com. You may also click on
this link for the live streaming http://stream.conferenceamerica.com/frp120215.
For the archived audio via the internet, click on the following link
http://archive.conferenceamerica.com/archivestream/frp120215.wma. If using
the Company's website, click on the Investor Relations tab, then select the
earnings conference stream. 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 75999554. 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.
FRP HOLDINGS, INC.
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CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
THREE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30
2015 2014 2015 2014
---- ---- ---- ----
Revenues:
Rental revenue $ 5,879 5,518 23,410 21,327
Royalty and rents 1,650 1,437 5,999 5,256
Revenue - reimbursements 1,370 1,108 5,237 4,395
------ ------ ------ ------
Total Revenues 8,899 8,063 34,646 30,978
Cost of operations:
Depreciation, depletion
and amortization 1,812 1,712 7,378 6,705
Operating expenses 1,122 1,159 4,609 4,391
Property taxes 1,120 901 4,443 3,494
Management company indirect 419 282 1,647 1,424
Corporate expenses 638 1,130 4,388 5,224
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Total cost of operations 5,111 5,184 22,465 21,238
Total operating profit 3,788 2,879 12,181 9,740
Interest income - 21 - 23
Interest expense (490) (357) (2,014) (1,366)
Equity in gain (loss) of
joint ventures 110 (36) (145) (128)
Gain (loss) on investment
land sold (14) (52) (34) 476
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Income from continuing
operations before income taxes 3,394 2,455 9,988 8,745
Provision for income taxes 1,323 1,108 3,895 3,561
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Income from continuing
operations 2,071 1,347 6,093 5,184
Gain from discontinued
transportation operations,
net of taxes - 1,143 2,179 4,835
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Net income $ 2,071 2,490 8,272 10,019
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Earnings per common share:
Income from continuing operations-
Basic 0.21 0.14 0.62 0.54
Diluted 0.21 0.14 0.62 0.53
Discontinued operations-
Basic 0.00 0.12 0.23 0.50
Diluted 0.00 0.12 0.22 0.50
Net Income-
Basic 0.21 0.26 0.85 1.04
Diluted 0.21 0.26 0.84 1.03
Number of shares (in thousands)
used in computing:
-basic earnings
per common share 9,789 9,678 9,756 9,629
-diluted earnings
per common share 9,839 9,740 9,827 9,710
Non-GAAP Financial Measures.
To supplement the financial results presented in accordance with GAAP, FRP
presents certain non-GAAP financial measures within the meaning of Regulation
G promulgated by the Securities and Exchange Commission. The non-GAAP financial
measures included in this press release are adjusted income from continuing
operations, adjusted operating profit, and net operating income (NOI). FRP uses
these non-GAAP financial measures to analyze its continuing operations and to
monitor, assess, and identify meaningful trends in its operating and financial
performance. These measures are not, and should not be viewed as, substitutes
for GAAP financial measures.
Post Spin-off we are reporting any net gain/(loss) from the transportation
business as "discontinued operations" and we currently have no other
discontinued operations being reported. GAAP accounting rules do not allow
corporate overhead expenses to be allocated to a discontinued operation of the
Company; thus, those corporate expenses attributable to the transportation
business prior to the spin-off are charged to the Company as part of continuing
operations.
Adjusted income from continuing operations
Adjusted income from continuing operations excludes the impact of the corporate
expense not allocated to discontinued operations. Adjusted net income is
presented to provide additional perspective on underlying trends in FRP's core
operating results. A reconciliation between income from continuing operations
and adjusted income from continuing operations is as follows:
THREE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30
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2015 2014 2015 2014
-------- -------- -------- --------
Income from continuing
operations $ 2,071 1,347 $ 6,093 5,184
Adjustments:
Corporate management fee not
Allocated to discontinued
operations - 613 1,081 2,685
Income tax allocation - (239) (422) (1,047)
-------- -------- -------- --------
Adjusted income from
continuing operations 2,071 1,721 6,752 6,822
Adjusted operating profit
Adjusted operating profit excludes the impact of the corporate expense not
allocated to discontinued operations. Adjusted operating profit is presented
to provide additional perspective on underlying trends in FRP's core operating
results. A reconciliation between operating profit and adjusted operating
profit is as follows:
THREE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30
------------------ -------------------
2015 2014 2015 2014
-------- -------- -------- --------
Operating profit $ 3,788 2,879 $ 12,181 9,740
Adjustments:
Corporate management fee not
Allocated to discontinued
operations - 613 1,081 2,685
-------- -------- -------- --------
Adjusted operating profit 3,788 3,492 13,262 12,425
Net Operating Income Reconciliation
Quarter Ended 9/30/15 (in thousands)
Asset Land Mining Unallocated FRP
Management Development Royalties Corporate Holdings
Segment Segment Segment Expenses Totals
---------- ----------- ---------- ---------- ----------
Income from continuing operations 1,692 (320) 784 (85) 2,071
Income Tax Allocation 1,081 (205) 502 (55) 1,323
---------- ----------- ---------- ---------- ----------
Inc. from continuing operations
before income taxes 2,773 (525) 1,286 (140) 3,394
Less:
Lease intangible rents 14 -
Equity in gain of Joint Venture - 121
Plus:
Loss on investment land sold - 14
Unrealized rents 7 -
Interest Expense 449 -
Depreciation/Amortization 1,707 72
Management Co. Indirect 191 228
Allocated Corporate Expenses 204 121
---------- -----------
Net Operating Income (loss) 5,317 (211)
Net Operating Income Reconciliation
Quarter ended 9/30/14 (in thousands)
Asset Land Mining Unallocated FRP
Management Development Royalties Corporate Holdings
Segment Segment Segment Expenses Totals
---------- ----------- ---------- ---------- ----------
Income from continuing operations 1,552 (325) 716 (596) 1,347
Income Tax Allocation 1,269 (248) 571 (484) 1,108
---------- ----------- ---------- ---------- ----------
Inc. from continuing operations
before income taxes 2,821 (573) 1,287 (1,080) 2,455
Less:
Other income 23 -
Lease intangible rents 12 -
Plus:
Loss on investment land sold - 52
Unrealized rents 54 -
Equity in loss of Joint Venture - 22
Interest Expense 337 -
Depreciation/Amortization 1,621 59
Management Co. Indirect 114 168
Allocated Corporate Expenses 48 28
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Net Operating Income (loss) 4,960 (244)
Net Operating Income Reconciliation
Year ended 9/30/15 (in thousands)
Asset Land Mining Unallocated FRP
Management Development Royalties Corporate Holdings
Segment Segment Segment Expenses Totals
---------- ----------- ---------- ---------- ----------
Income from continuing operations 6,487 (1,718) 2,760 (1,436) 6,093
Income Tax Allocation 4,147 (1,099) 1,765 (918) 3,895
---------- ----------- ---------- ---------- ----------
Inc. from continuing operations
before income taxes 10,634 (2,817) 4,525 (2,354) 9,988
Less:
Lease intangible rents 53 -
Plus:
Loss on investment land sold - 34
Unrealized rents 110 -
Equity in loss of Joint Venture - 105
Interest Expense 1,839 -
Depreciation/Amortization 6,963 282
Management Co. Indirect 735 912
Allocated Corporate Expenses 815 481
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Net Operating Income (loss) 21,043 (1,003)
Net Operating Income Reconciliation
Year ended 9/30/14 (in thousands)
Asset Land Mining Unallocated FRP
Management Development Royalties Corporate Holdings
Segment Segment Segment Expenses Totals
---------- ----------- ---------- ---------- ----------
Income from continuing operations 5,822 (848) 2,393 (2,183) 5,184
Income Tax Allocation 3,999 (582) 1,643 (1,499) 3,561
---------- ----------- ---------- ---------- ----------
Inc. from continuing operations
before income taxes 9,821 (1,430) 4,036 (3,682) 8,745
Less:
Gains on investment land sold - 476
Other income 23 -
Lease intangible rents 81 -
Plus:
Unrealized rents 40 -
Equity in loss of Joint Venture - 89
Interest Expense 1,323 -
Depreciation/Amortization 6,384 197
Management Co. Indirect 668 756
Allocated Corporate Expenses 582 343
---------- -----------
Net Operating Income (loss) 18,714 (521)
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;
levels of construction
activity in the Company's 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.
FRP Holdings, Inc. (FRP) is engaged in the real estate business through its
subsidiaries FRP Development Corp. and Florida Rock Properties, Inc. FRP
acquires, constructs, leases, operates and manages land and buildings to
generate both current cash flows and long-term capital appreciation. FRP also
owns real estate which is leased under mining royalty agreements or held for
investment.