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 SECOND QUARTER
OF FISCAL 2016.
Jacksonville, Florida; May 4, 2016 -
Fiscal 2016 Second Quarter Consolidated Results of Continuing Operations.
Income from continuing operations for the second quarter of fiscal 2016 was
$1,820,000 or $.18 per share versus $845,000 or $.09 per share in the second
quarter last year. Total revenues were up $667,000, or 7.5%, versus the same
quarter last year with total cost of operations down $683,000, or 10.1%.
Consolidated total operating profit increased by $1,350,000, or 62.5%, to
$3,509,000 this quarter.
The Company enjoyed another successful quarter in both of our income
producing segments. Compared to last year's 2nd quarter, our Mining Royalty
Lands segment grew operating profit (excluding the benefit from the
Reallocation (fn1) by 68.9% while our Asset Management segment grew operating
profit by 7.9%.
Second Quarter Segment Operating Results.
Asset Management Segment:
------------------------
Total revenues in this segment were $7,574,000, up $244,000 or 3.3%, over the
same quarter last year. Net Operating Income in this segment for the 2nd
quarter was $5,442,000, compared to $5,095,000 in the 2nd quarter last year,
an increase of 6.8%. The increase was mainly due to the completion of the
third build-to-suit at Patriot Business Park in the middle of the 2nd quarter
last year and the acquisition of the Port Capital building in Baltimore in
October of 2015. We ended this quarter with total occupied square feet of
3,348,112 versus 3,198,200 at the end of the 2nd quarter last year, an
increase of 4.7% or 149,912 square feet.
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(fn1) During fiscal 2015, management analyzed the amount of corporate and
management company time likely to be spent on our segments going forward
and, as a result, the allocation of corporate expense to the Mining
Royalty Lands segment was reduced and reallocated to our other two
segments (the "Reallocation").
During the quarter, the Company identified an opportunistic purchase
opportunity and entered into a purchase agreement to buy the Gilroy Road
building located in Hunt Valley, MD, for a purchase price of $8,850,000.
The Gilroy Road building is a 113,386 sq.ft. warehouse that is currently
100% occupied. The contract is in the feasibility study phase and is subject
to multiple contingencies before the parties are obligated to close.
Mining Royalty Lands Segment:
----------------------------
Total revenues in this segment were $1,778,000, an increase of 33.2%, versus
$1,335,000 in the same quarter last year due to an increase in tons shipped.
Total operating profit in this segment was $1,574,000, an increase of $909,000
(inclusive of a $451,000 benefit from the Reallocation), versus $665,000 in
the second quarter of last year.
Land Development and Construction Segment:
-----------------------------------------
The Land Development and Construction segment is responsible for (i) seeking
out and identifying opportunistic purchases of income producing warehouse/
office buildings, and (ii) developing our non-income producing properties into
income production. Construction of the 79,550 square foot spec warehouse at
Hollander Business park will be completed during the third quarter of this
fiscal year and, upon receipt of a Certificate of Occupancy, will be
transferred to the Asset Management segment for lease-up.
During the 2nd quarter, we entered into an agreement with a substantial
Baltimore development company (St. John Properties, Inc.) to jointly develop
the remaining lands of our Windlass Run Business Park. The 50/50 partnership
initially calls for FRP to combine its 25 acres (valued at $7,500,000) with
St. John Properties' adjacent 10 acres fronting on a major state highway
(valued at $3,239,536) resulting in an initial cash distribution of $2,130,232
to FRP on or about May, 2016. Thereafter, the venture will jointly develop
the combined properties into a multi-building business park to consist of
approximately 329,000 square feet of single story office space.
Fiscal 2016 First Six Months Consolidated Results of Continuing Operations.
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. For the six months ended March 31,
2016 we received no benefit to after tax net income versus a $2,179,000
benefit in the same period last year. Additionally, GAAP accounting rules do
not allow corporate overhead expense to be allocated to a discontinued
operation of the Company which resulted in the first six months of fiscal 2015
including $1,081,000 of corporate overhead expense to the Company that was
associated with the discontinued transportation operations.
Income from continuing operations for the first six months of fiscal 2016 was
$9,293,000 or $.94 per share versus $1,976,000 or $.20 per share in the first
six months last year. The first six months of fiscal 2016 included $.57 per
share from a gain on land sale of $6,286,000 and income of $3,000,000 from the
settlement of environmental claims. The first six months of 2015 was
negatively impacted by $.07 per share as a result of $1,081,000 of corporate
costs not allocable to discontinued operations.
Total revenues were up $1,188,000, or 6.9%, versus the same period last year.
Consolidated adjusted total operating profit in the first six months of the
year (excluding the positive impacts of the environmental settlement and the
corporate expense not allocable to discontinued operations in the prior year)
was up 27.3% over the same period last year (see table "Non-GAAP Financial
Measures).
First Six Months Segment Operating Results.
Asset Management Segment:
------------------------
Total revenues in this segment were $14,489,000, up $402,000 or 2.9%, over the
same period last year. Net operating income in this segment for the period was
$10,832,000, compared to $10,453,000 in the 2nd quarter last year, an increase
of 3.6%. The increase was due mainly to completion of the third build-to-suit
in the middle of the 2nd quarter last year and the acquisition of the Port
Capital building in October of 2015.
Mining Royalty Lands Segment:
----------------------------
Total revenues in this segment were $3,437,000, an increase of 28.3%, versus
$2,679,000 in the same period last year due to an increase in tons shipped.
Total operating profit in this segment was $3,044,000, an increase of
$1,497,000 (inclusive of a $714,000 benefit from the Reallocation), versus
$1,547,000 in the first six months of last year.
Land Development and Construction Segment:
-----------------------------------------
In addition to the items occurring in the 2nd quarter outlined above, during
the first six months of fiscal 2016 this segment successfully closed on the
sale of Phase II of the Windlass Run residential land (a non-income producing
property) for $11,288,000. Using $9,900,000 of the proceeds from that sale
in a Section 1031 exchange, the Asset Management segment acquired the Port
Capital building, a 91,218 square foot, 100% occupied warehouse with first
full year projected rental revenue of $594,000. Management successfully
completed negotiations and entered into a $3,000,000 settlement of
environmental claims against our former tenant at the Riverfront on the
Anacostia property and continues to pursue settlement negotiations with other
potentially responsible parties.
Summary and Outlook. We are focused on building shareholder value through our
real estate holdings - mainly by growing our portfolio through the
opportunistic purchase of income producing warehouse/office buildings, and the
conversion of our non-income producing assets into income production through a
two pronged approach that includes (i) selling land that is not conducive to
warehouse/office development (e.g. Windlass Run Residential Phase 2 land) and
using the proceeds to acquire existing income producing warehouse/office
buildings typically in a Section 1031 exchange (e.g. the Port Capital building
purchase) and (ii) the construction of new warehouse/office buildings on
existing pad sites in our developed business parks (e.g. new spec building at
Hollander Business Park). Over the past five years, we have converted 172
acres of non-income producing land into 766,216 square feet of income
producing properties with estimated FY 2016 rental revenues of $5,133,000.
We saw another quarter of real improvement in mining royalties due mainly to
increased volumes at most of our locations.
During the quarter, we began the process of designing and permitting for the
construction of a 104,000 sq.ft. spec building at our Patriot Business Park.
Subject to further market analysis and Board approval, we anticipate
construction commencing in the 3rd quarter of this year with completion in
the 4th quarter of next fiscal year. We anticipate commencing the capital
improvement work on the bulkhead at Square 664E in southeast Washington, D.C.
during the 3rd quarter of this fiscal year with an estimated total cost to
complete of $4,200,000 of which $397,000 has already been incurred to date.
In the event the Company commits to develop Phase II of the Riverfront on the
Anacostia project during this fiscal year we will likely book a liability for
the estimated incremental cost of remediation similar to what we booked with
regards to Phase I.
The construction of Dock 79 at Riverfront on the Anacostia is on budget and
nearing completion on schedule. As a result, through our property management
agent (Kettler Management, Inc.) we commenced leasing activities on the
residential and retail units. The initial activity has been positive
and we anticipate our first residential occupancies to begin in August of
this year. For more detail on the units and rental rates at Dock 79 please
visit www.dock79.com.
Conference Call.
The Company will host a conference call on Wednesday, May 4, 2016 at 1:00
p.m. (EDT). Analysts, stockholders and other interested parties may access
the teleconference live by calling 1-888-207-9997 (pass code 97341) within
the United States. International callers may dial 334-323-7224 (pass code
97341). 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/FRP050416. For the
archived audio via the internet, click on the following link
http://archive.conferenceamerica.com/archivestream/FRP050416.mp3. 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 28893867.
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. AND SUBSIDIARIES
-----------------------------------
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
2016 2015 2016 2015
---- ---- ---- ----
Revenues:
Rental revenue $ 6,089 5,879 12,116 11,747
Royalty and rents 1,756 1,315 3,394 2,635
Revenue - reimbursements 1,770 1,754 2,928 2,868
------ ------ ------ ------
Total Revenues 9,615 8,948 18,438 17,250
Cost of operations:
Depreciation, depletion
and amortization 1,929 1,878 3,825 3,761
Operating expenses 1,531 1,755 2,504 2,669
Environmental
remediation recovery - - (3,000) -
Property taxes 1,142 1,234 2,260 2,329
Management company indirect 496 442 1,000 794
Corporate expenses
(Note 4 Related Party) 1,008 1,480 1,740 3,193
------ ------ ------ ------
Total cost of operations 6,106 6,789 8,329 12,746
Total operating profit 3,509 2,159 10,109 4,504
Interest income 1 - 2 -
Interest expense (415) (620) (896) (1,065)
Equity in loss
of joint ventures (86) (150) (140) (180)
Gain (Loss) on
investment land sold - (3) 6,286 (20)
------ ------ ------ ------
Income from continuing
operations before
income taxes 3,009 1,386 15,361 3,239
Provision for income taxes 1,189 541 6,068 1,263
------ ------ ------ ------
Income from continuing
operations 1,820 845 9,293 1,976
Gain from discontinued
transportation operations,
net of taxes - 516 - 2,179
------ ------ ------ ------
Net income $ 1,820 1,361 9,293 4,155
====== ====== ====== ======
Comprehensive net income $ 1,820 1,361 9,293 4,155
====== ====== ====== ======
Earnings per common share:
Income from continuing
operations-
Basic $ 0.18 0.09 0.95 0.20
Diluted $ 0.18 0.09 0.94 0.20
Discontinued operations-
Basic $ - 0.05 - 0.23
Diluted $ - 0.05 - 0.22
Net Income-
Basic $ 0.18 0.14 0.95 0.43
Diluted $ 0.18 0.14 0.94 0.42
Number of shares (in
thousands) used in computing:
-basic earnings
per common share 9,853 9,749 9,828 9,730
-diluted earnings
per common share 9,893 9,818 9,873 9,813
Asset Management Segment:
------------------------
Three months ended March 31
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(dollars in thousands) 2016 % 2015 % Change %
-------- ------- -------- ------- -------- -------
Rental revenue $ 5,958 78.7% 5,755 78.5% 203 3.5%
Revenue-reimbursements 1,616 21.3% 1,575 21.5% 41 2.6%
-------- ------- -------- ------- -------- -------
Total revenue 7,574 100.0% 7,330 100.0% 244 3.3%
Depreciation, depletion and amortization 1,835 24.2% 1,776 24.2% 59 3.3%
Operating expenses 1,430 18.9% 1,526 20.8% (96) -6.3%
Property taxes 662 8.7% 696 9.5% (34) -4.9%
Management company indirect 224 3.0% 145 2.0% 79 54.4%
Corporate expense 520 6.9% 497 6.8% 23 4.6%
-------- ------- -------- ------- -------- -------
Cost of operations 4,671 61.7% 4,640 63.3% 31 0.7%
-------- ------- -------- ------- -------- -------
Operating profit $ 2,903 38.3% 2,690 36.7% 213 7.9%
======== ======= ======== ======= ======== =======
Mining Royalty Lands Segment:
----------------------------
Three months ended March 31
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(dollars in thousands) 2016 % 2015 %
-------- ------- -------- -------
Royalty and rents $ 1,756 98.8% 1,315 98.5%
Revenue-reimbursements 22 1.2% 20 1.5%
-------- ------- -------- -------
Total revenue 1,778 100.0% 1,335 100.0%
Depreciation, depletion and amortization 31 1.8% 30 2.3%
Operating expenses 39 2.2% 59 4.4%
Property taxes 59 3.3% 55 4.1%
Corporate expense 75 4.2% 526 39.4%
-------- ------- -------- -------
Cost of operations 204 11.5% 670 50.2%
-------- ------- -------- -------
Operating profit $ 1,574 88.5% 665 49.8%
======== ======= ======== =======
Land Development and Construction Segment:
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Three months ended March 31
--------------------------------------
(dollars in thousands) 2016 2015 Change
-------- -------- --------
Rental revenue $ 131 124 7
Revenue-reimbursements 132 159 (27)
-------- -------- --------
Total revenue 263 283 (20)
Depreciation, depletion and amortization 63 72 (9)
Operating expenses 62 170 (108)
Property taxes 421 484 (63)
Management company indirect 272 296 (24)
Corporate expense 413 295 118
-------- -------- --------
Cost of operations 1,231 1,317 (86)
-------- -------- --------
Operating loss $ (968) (1,034) 66
======== ======== ========
Asset Management Segment:
------------------------
Six months ended March 31
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(dollars in thousands) 2016 % 2015 % Change %
-------- ------- -------- ------- -------- -------
Rental revenue $ 11,866 81.9% 11,499 81.6% 367 3.2%
Revenue-reimbursements 2,623 18.1% 2,588 18.4% 35 1.4%
-------- ------- -------- ------- -------- -------
Total revenue 14,489 100.0% 14,087 100.0% 402 2.9%
Depreciation, depletion and amortization 3,633 25.1% 3,562 25.3% 71 2.0%
Operating expenses 2,269 15.7% 2,201 15.7% 68 3.1%
Property taxes 1,321 9.1% 1,452 10.3% (131) -9.0%
Management company indirect 455 3.1% 299 2.1% 156 52.2%
Corporate expense 898 6.2% 797 5.6% 101 12.7%
-------- ------- -------- ------- -------- -------
Cost of operations 8,576 59.2% 8,311 59.0% 265 3.2%
-------- ------- -------- ------- -------- -------
Operating profit $ 5,913 40.8% 5,776 41.0% 137 2.4%
Mining Royalty Lands Segment:
----------------------------
Six months ended March 31
---------------------------------------
(dollars in thousands) 2016 % 2015 %
-------- ------- -------- -------
Royalty and rents $ 3,394 98.7% 2,635 98.4%
Revenue-reimbursements 43 1.3% 44 1.6%
-------- ------- -------- -------
Total revenue 3,437 100.0% 2,679 100.0%
Depreciation, depletion and amortization 65 1.9% 61 2.3%
Operating expenses 80 2.3% 114 4.3%
Property taxes 118 3.4% 113 4.2%
Corporate expense 130 3.8% 844 31.5%
-------- ------- -------- -------
Cost of operations 393 11.4% 1,132 42.3%
-------- ------- -------- -------
Operating profit $ 3,044 88.6% 1,547 57.7%
======== ======= ======== =======
Land Development and Construction Segment:
-----------------------------------------
Six months ended March 31
--------------------------------------
(dollars in thousands) 2016 2015 Change
-------- -------- --------
Rental revenue $ 250 248 2
Revenue-reimbursements 262 236 26
-------- -------- --------
Total revenue 512 484 28
Depreciation, depletion and amortization 127 138 (11)
Operating expenses 155 354 (199)
Environmental remediation recovery (3,000) - (3,000)
Property taxes 821 764 57
Management company indirect 545 495 50
Corporate expense 712 471 241
-------- -------- --------
Cost of operations (640) 2,222 (2,862)
-------- -------- --------
Operating loss $ 1,152 (1,738) 2,890
======== ======== ========
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 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 Operating Profit
Adjusted operating profit excludes the impact of the corporate expense not
allocated to discontinued operations and the environmental remediation
recovery. 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:
Adjusted Operating Profit
Six months ended
March 31,
--------------------
2016 2015 Change %
-------- -------- -------- -------
Operating profit $ 10,109 4,504 5,605 124.4%
Adjustments:
Environmental remediation recovery (3,000) -
Corporate costs not allocated
to discontinued operations - 1,081
-------- -------- -------- -------
Adjusted Operating profit $ 7,109 5,585 1,524 27.3%
Net Operating Income Reconciliation
Three months ending 03/31/16 (in thousands)
Asset Land Mining Unallocated FRP
Management Development Royalties Corporate Holdings
Segment Segment Segment Expenses Totals
---------- ---------- ---------- ---------- ----------
Income from continuing operations $ 1,505 (631) 946 - 1,820
Income Tax Allocation 983 (410) 616 - 1,189
---------- ---------- ---------- ---------- ----------
Inc. from continuing operations
before income taxes 2,488 (1,041) 1,562 - 3,009
Less:
Gains on investment land sold - -
Other income - 1
Unrealized rents 36 -
Lease intangible rents 4 -
Plus:
Equity in loss of Joint Venture - 75
Interest Expense 415 -
Depreciation/Amortization 1,835 63
Management Co. Indirect 224 272
Allocated Corporate Expenses 520 413
---------- ----------
Net Operating Income (loss) $ 5,442 (219)
Net Operating Income Reconciliation
Six months ending 03/31/16 (in thousands)
Asset Land Mining Unallocated FRP
Management Development Royalties Corporate Holdings
Segment Segment Segment Expenses Totals
---------- ---------- ---------- ---------- ----------
Income from continuing operations $ 3,040 4,423 1,830 - 9,293
Income Tax Allocation 1,986 2,888 1,194 - 6,068
---------- ---------- ---------- ---------- ----------
Inc. from continuing operations
before income taxes 5,026 7,311 3,024 - 15,361
Less:
Gains on investment land sold 9 6,277
Other income - 2
Unrealized rents 49 -
Lease intangible rents 18 -
Plus:
Equity in loss of Joint Venture - 120
Interest Expense 896 -
Depreciation/Amortization 3,633 127
Management Co. Indirect 455 545
Allocated Corporate Expenses 898 712
---------- ----------
Net Operating Income $ 10,832 2,536
Net Operating Income Reconciliation
Three months ending 03/31/15 (in thousands)
Asset Land Mining Unallocated FRP
Management Development Royalties Corporate Holdings
Segment Segment Segment Expenses Totals
---------- ---------- ---------- ---------- ----------
Income from continuing operations $ 1,257 (706) 393 (99) 845
Income Tax Allocation 803 (451) 252 (63) 541
---------- ---------- ---------- ---------- ----------
Inc. from continuing operations
before income taxes 2,060 (1,157) 645 (162) 1,386
Less:
Gains on investment land sold - 17
Lease intangible rents 13 -
Unrealized rents - -
Plus:
Loss on investment land sold 20 -
Equity in loss of Joint Venture - 140
Interest Expense 610 -
Depreciation/Amortization 1,776 72
Management Co. Indirect 145 296
Allocated Corporate Expenses 497 295
---------- ----------
Net Operating Income (loss) $ 5,095 (371)
Net Operating Income Reconciliation
Six months ending 03/31/15 (in thousands)
Asset Land Mining Unallocated FRP
Management Development Royalties Corporate Holdings
Segment Segment Segment Expenses Totals
---------- ---------- ---------- ---------- ----------
Income from continuing operations $ 2,892 (1,158) 901 (659) 1,976
Income Tax Allocation 1,849 (742) 578 (422) 1,263
---------- ---------- ---------- ---------- ----------
Inc. from continuing operations
before income taxes 4,741 (1,900) 1,479 (1,081) 3,239
Less:
Lease intangible rents 25 -
Plus:
Loss on investment land sold 20 -
Unrealized rents 44 -
Equity in loss of Joint Venture - 162
Interest Expense 1,015 -
Depreciation/Amortization 3,562 138
Management Co. Indirect 299 495
Allocated Corporate Expenses 797 471
---------- ----------
Net Operating Income $ 10,453 (634)