PATRIOT TRANSPORTATION HOLDING, INC./NEWS
Contact: John D. Milton, Jr.
Chief Financial Officer 904/858-9100
------------------------------------------------------------------------------
PATRIOT TRANSPORTATION HOLDING, INC. ANNOUNCES
RESULTS FOR THE SECOND QUARTER OF FISCAL 2016
Patriot Transportation Holding, Inc. (NASDAQ-PATI) Jacksonville, Florida;
April 27, 2016 -
Second Quarter Results for Fiscal Year 2016.
The Company reported net income of $863,000, or $.26 per share, compared to a
net loss of $351,000, or ($.11) per share, in the same quarter of fiscal 2015.
The loss in the 2nd quarter of last year was primarily the result of a
$2,074,000 intangible asset impairment charge resulting in a negative impact
to net income of $1,265,000, or ($.39) per share, in that quarter.
Total revenues for the quarter were $29,048,000, down $689,000 from
$29,737,000 in the same quarter last year. Fuel surcharge revenues were lower
by $2,110,000 as the average price of diesel fuel was significantly lower
($.74 per gallon) this quarter versus the same quarter last year.
Transportation revenues (excluding fuel surcharges) were up $1,421,000 (or
5.2%) to $28,514,000 on 117,000 more revenue miles, an increase of 4.1%
revenue per mile versus the same quarter last year. As of February 2016, we
have fully replaced the volumes we elected to discontinue in the 2nd quarter
of last year.
Compensation and benefits costs were up $979,000 (or 9.1 cents per mile)
versus the second quarter of fiscal 2015. Given the severe shortage of
qualified drivers and the difficulty and time associated with hiring, training
and retaining them, during the second quarter we strategically invested in
growing our driver count to levels in excess of then current demands to
position ourselves for opportunities we felt would arise during the seasonally
busier spring and summer months. During the 2nd quarter, we started to see
demand increase as we added some new business opportunities and we are
optimistic we will see continued volume growth as we enter the busy summer
months ahead.
The Company's gross cost of fuel was down $1,391,000 over the same quarter
last year which was not enough to off-set the $2,110,000 decline in fuel
surcharge revenues resulting in a negative margin impact of $719,000 (or 6.7
cents per mile) this quarter. Fuel surcharge tables are customer specific
and can vary considerably from customer to customer. The typical fuel
surcharge table provides some margin contribution at higher diesel fuel prices
but also results in some margin erosion at the lower diesel fuel prices we
have been experiencing the past several quarters. We have been working with
several customers to adjust their fuel surcharge tables in an effort to
eliminate some of this margin erosion and, in this quarter, we had success
with a few larger customers which should have a positive impact on our margins
as we move forward.
Insurance and losses were lower by $560,000 due mainly to lower medical claims
and favorable resolutions to some prior year liability claims compared to the
actuarial reserve estimates.
Corporate expense was $304,000 lower compared to the same quarter last year
due mainly to the gain on sale of a 75% interest in the corporate airplane
during this quarter.
Gains on equipment sales this quarter were $75,000 versus gains of $614,000
in the same quarter last year.
Operating profit this quarter was $1,447,000 versus a loss of $553,000 in
the same quarter last year. The loss in the 2nd quarter of last year was
primarily the result of a $2,074,000 intangible asset impairment charge.
In order to compare the operating performance for the same quarter last year
excluding the impairment charge, we are required to make the following
disclosure regarding 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. "The non-GAAP financial measures discussed below
include adjusted net income and adjusted operating profit. These non-GAAP
financial measures exclude the intangible asset impairment charge incurred
in the second quarter of fiscal 2015. Management believes these adjusted
measures better reflect our operating performance during the periods
discussed and reflect how management evaluates our operational results.
These measures are not, and should not be viewed as, substitutes for GAAP
reporting measures. Refer to "Non-GAAP Financial Measures" below 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."
The Company's net income in the 2nd quarter was $863,000, or $.26 per share,
versus adjusted net income of $914,000, or $.28 per share, in the 2nd quarter
of fiscal 2015. Operating profit in this quarter was $1,447,000 versus
adjusted operating profit of $1,521,000 in the 2nd quarter of fiscal 2015.
On April 1, 2016, the Company acquired 7 tractors and 16 drivers from a
private fleet in central Florida together with the contractual right to
service 73 locally owned convenience stores controlled by the seller. We are
integrating this acquisition into our everyday business and are thus far
pleased with the results. Other small acquisition opportunities of this type
could well become available in the near term as insurance markets tighten and
electronic log requirements become effective.
First Six Months' Results for Fiscal Year 2016.
The Company reported net income of $2,238,000, or $.68 per share (which
included $1,029,000, or $0.31 per share, of net income from the settlement of
a claim in connection with the 2010
Deepwater Horizon event) compared to adjusted (fn1) net income of $2,016,000
or $.62 per share, in the same period last year.
Total revenues were $58,419,000 down $3,035,000 from $61,454,000 last year as
a result of $5,173,000 lower fuel surcharges. Fuel surcharge revenues were
down as the average price of diesel fuel was significantly lower this period
($.90 per gallon) versus the same period last year, plus, the first few months
of fiscal 2015 benefited greatly from the time lag involved in reducing fuel
surcharges during a rapidly declining diesel fuel price environment.
Transportation revenues (excluding fuel surcharges) were up $2,138,000 to
$56,523,000 on 251,000 fewer revenue miles, an increase of 5.1% revenue per
mile versus the same period last year.
The Company's gross cost of fuel was down $3,571,000 over the same period
last year which was not enough to off-set the $5,173,000 reduction in fuel
surcharge revenues resulting in a negative margin impact of $1,602,000 (or
7.6 cents per mile) this period versus the same period last year.
Compensation and benefits costs were up $1,568,000 (or 7.4 cents per mile)
versus the first six months of fiscal 2015 due mainly to the difficulty and
time associated with hiring, training and retaining drivers in this severe
driver shortage.
Insurance and losses were lower by $381,000 due mostly to lower medical
claims and favorable resolutions to some prior year liability claims compared
to the actuarial reserve estimates.
Corporate expense was lower by $265,000 compared to the same period last year
due mainly to the gain on sale of a 75% interest in the corporate airplane.
We had $727,000 less in gains on equipment sales this period versus the same
period last year.
As a result, operating profit this period was $2,046,000 versus an
adjusted (fn1) operating profit of $3,354,000 in the same period last year.
Summary and Outlook.
We have been successful the past several quarters in growing our per mile
transportation revenue while adding revenue miles through new business
opportunities. Given the severe shortage of qualified drivers and the
difficulty and time associated with hiring, training and retaining them,
during the second quarter of this year we strategically invested in growing
our driver count to levels in excess of then current demands to position
ourselves for opportunities we felt would arise during the seasonally busier
spring and summer months. Our driver turnover rate in this 2nd quarter was
down to 60.7%, compared to 66.9% in the same quarter last year, and our
ending driver count was 728 versus 696 in the same quarter last year. This
is a front-loaded strategy that
----------
(fn1) Refer to definition of "adjusted" on page 2 above and see GAAP
reconciliations on page 6 below.
has driven our compensation and benefits cost significantly higher and it will
take us an extended period of time to realize the benefits of this investment.
During the 2nd quarter, we were successful in adding some new business
opportunities, obtaining commitments on others and closing on an acquisition
effective April 1, 2016 that provides the Company 73 additional locations to
service. All of these confirm that there are opportunities out there and
that the company is well positioned to take advantage of these opportunities.
We continue to work closely with several of our larger customers in an effort
to neutralize the negative margin effects of lower fuel surcharges but this
will also take some time to resolve as it is an industry wide issue.
We operate in many of the best markets in the country and are known in those
markets, and beyond, as a top rated carrier for both safety and customer
satisfaction. We are committed to continuing our focus on safety and customer
satisfaction and are confident that execution of that focus will enable us to
continue our growth in our excellent markets. We plan to maintain a strong
balance sheet as we work to achieve our targeted operating ratio in the low
nineties and double digit returns on capital employed after tax.
Conference Call.
The Company will host a conference call on Wednesday, April 27, 2016 at 2:00
p.m. (EDT). Analysts, stockholders and other interested parties may access the
teleconference live by calling 1-800-533-3898 (pass code 54368) for domestic
or 1-334-323-7224 (pass code 54368) for international. Computer audio live
streaming is available via the Internet through the Company's website at
www.patriottrans.com at the Investor Relations tab. You may click on this link
for the live streaming http://stream.conferenceamerica.com/pth042716. Click on
the following link
http://archive.conferenceamerica.com/archivestream/pth042716.mp3 to access the
archived internet audio replay. A telephonic audio replay will be available
for sixty days following the conference call and is accessible by dialing toll
free 877-919-4059 domestic or 334-323-0140 international. The passcode of the
audio replay is 15127984. 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 short 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; 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 concentrating in
the hauling by motor carrier of liquid and dry bulk commodities.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
--------------------- ---------------------
2016 2015 2016 2015
---------- ---------- ---------- ----------
Revenues:
Transportation revenues $ 28,514 27,093 $ 56,523 54,385
Fuel surcharges 534 2,644 1,896 7,069
------ ------ ------ ------
Total revenues 29,048 29,737 58,419 61,454
Cost of operations:
Compensation and benefits 12,752 11,773 25,324 23,756
Fuel expenses 3,470 4,861 7,295 10,866
Repairs & tires 1,936 1,906 3,745 3,720
Other operating 1,179 988 2,269 2,125
Insurance and losses 2,218 2,778 5,236 5,617
Depreciation expense 2,125 2,124 4,273 4,232
Rents, tags & utilities 955 954 1,904 1,895
Sales, general & administrative 2,213 2,314 4,612 4,636
Corporate expenses 828 1,132 1,786 2,051
Intangible asset impairment - 2,074 - 2,074
Gain on equipment sales (75) (614) (71) (798)
------ ------ ------ ------
Total cost of operations 27,601 30,290 56,373 60,174
------ ------ ------ ------
Total operating profit (loss) 1,447 (553) 2,046 1,280
BP claim settlement - - 1,687 -
Interest income and other - - 3 -
Interest expense (32) (23) (67) (49)
------ ------ ------ ------
Income before income taxes 1,415 (576) 3,669 1,231
Provision for income taxes 552 (225) 1,431 480
------ ------ ------ ------
Net income (loss) $ 863 (351) $ 2,238 751
====== ====== ====== ======
Comprehensive income (loss) $ 863 (351) $ 2,238 751
====== ====== ====== ======
Earnings per common share:
Net Income (loss)-
Basic 0.26 (0.11) 0.68 0.23
Diluted 0.26 (0.11) 0.68 0.23
Number of shares (in thousands)
used in computing:
-basic earnings
per common share 3,283 3,261 3,278 3,261
-diluted earnings
per common share 3,286 3,261 3,282 3,269
Non-GAAP Financial Measures
To supplement the financial results presented in accordance with GAAP, Patriot
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 net income, adjusted
operating profit and adjusted operating ratio. Patriot 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.
Adjusted Net Income (Loss)
Adjusted net income (loss) profit excludes the impact of the intangible asset
impairment charge. Adjusted net income (loss) profit is presented to provide
additional perspective on underlying trends in Patriot's core operating
results. A reconciliation between net income (loss) profit and adjusted net
income (loss) is as follows:
Three months ended Six months ended
March 31, 2015 March 31, 2015
------------------ ------------------
Net Income (loss) $ (351) 751
Adjustments:
Intangible asset impairment charge 1,265 1,265
------------------ ------------------
Adjusted net income $ 914 2,016
================== ==================
Adjusted Operating Ratio
Adjusted operating ratio excludes the impact of the intangible asset impairment
charge. Adjusted operating ratio is presented to provide additional perspective
on underlying trends in Patriot's core operating results. A reconciliation
between operating ratio and adjusted operating ratio is as follows:
Three months ended Six months ended
March 31, 2015 March 31, 2015
------------------ ------------------
Operating ratio 101.9% 97.9%
Adjustments:
Intangible asset impairment charge (7.0%) (3.4%)
------------------ ------------------
Adjusted operating ratio 94.9% 94.5%
================== ==================
Adjusted Operating (Loss) Profit
Adjusted operating (loss) profit excludes the impact of the intangible asset
impairment charge. Adjusted operating (loss) profit is presented to provide
additional perspective on underlying trends in Patriot's core operating
results. A reconciliation between operating (loss) profit and adjusted
operating (loss) profit is as follows:
Three months ended Six months ended
March 31, 2015 March 31, 2015
------------------ ------------------
Operating (loss) profit $ (553) 1,280
Adjustments:
Intangible asset impairment charge 2,074 2,074
------------------ ------------------
Adjusted operating profit $ 1,521 3,354
================== ==================