PATRIOT TRANSPORTATION HOLDING, INC./NEWS
Contact: John D. Milton, Jr.
Chief Financial Officer 904/858-9100
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PATRIOT TRANSPORTATION HOLDING, INC. ANNOUNCES
RESULTS FOR THE SECOND QUARTER OF FISCAL 2017
Patriot Transportation Holding, Inc. (NASDAQ-PATI) Jacksonville, Florida;
April 26, 2017 -
Second Quarter Operating Results for Fiscal year 2017.
The Company reported net income of $260,000, or $.08 per share (inclusive of
$81,000, or $.02 per share, due to a reduced tax expense in accordance with
newly adopted accounting guidance on stock option exercises), compared to net
income of $863,000, or $.26 per share, in the same quarter last year.
During most of the quarter, U.S. average weekly demand for gasoline was down
roughly 3-5% versus the same period a year ago. In addition, a large customer
bid several of our markets which resulted in the Company losing volume with
that customer in some of our locations. As a result, our revenue miles this
quarter declined by 1,371,000, or 12.8%, to 9,334,000 versus the same quarter
last year. Total revenues for the quarter were $27,393,000, down $1,655,000
from $29,048,000 in the same quarter last year. Transportation revenues
(excluding fuel surcharges) were down $2,821,000 to $25,693,000 as a result
of the lower revenue miles. However, as a result of improved pricing and
effective utilization of our equipment, our transportation revenue per mile
increased by 3.3% over the same quarter last year. Fuel surcharge revenues
were up $1,166,000 to $1,700,000 due to higher diesel prices and the positive
benefits of renegotiating fuel surcharge tables with several key customers
last year.
Compensation and benefits decreased $1,297,000 due to fewer miles driven and
lower driver training pay as we struggled to find qualified drivers to hire
and train. Net fuel expense (i.e. gross fuel expenses less fuel surcharges)
decreased by $852,000 due to fewer miles driven and higher fuel surcharges.
Insurance and losses were up by $678,000 versus the same quarter last year
due mainly to increased self insured workers' compensation and health claims.
Depreciation increased $272,000 but was mostly offset by lower repair and
equipment leasing costs as we continue to eliminate leased tractors from
prior acquisitions and replace with Company owned equipment. Corporate
expense was higher by $170,000 mainly due to a gain on sale of a 75% interest
in the corporate aircraft in last year's second quarter.
As a result, operating profit this quarter was down $1,122,000 to $325,000
compared to $1,447,000 in the same quarter last year. Operating ratio was
98.8 this quarter versus 95.0 in the same quarter last year.
During this second quarter, our driver turnover increased and our applicant
flow for new qualified drivers declined compared to last year. We face
intense competition for qualified
drivers both from our direct competitors as well as other industries seeking
laborers from the same group that serves the Company. As a result, we
experienced a reduction of our average driver force down to 645 from 724 in
the same quarter last year. Hiring, training and retaining qualified drivers
remains our number one challenge and priority and we are exploring several
options related to improving (i) our hiring process, (ii) our compensation
structure and (iii) the working environment for our Company drivers.
Similar to recent history, our strategy continues to be that we are not
willing to reduce our rates to match unacceptably low bidders and instead
will focus on replacing with new business at acceptable rates. We have
already seen some success in the markets where we lost business this quarter
and are continuing to focus our efforts on completely regaining the prior
business levels.
During the quarter our CEO, Thompson S. Baker, II, announced his resignation
as CEO of the Company to accept an executive VP position at Vulcan Materials
Company. Mr. Baker will continue to serve as the Chairman of the Company's
Board of Directors. We want to take this opportunity to thank Mr. Baker for
his excellent leadership over the past several years and wish him the best in
his new endeavors. Robert E. Sandlin, long time President of our operating
subsidiary, Florida Rock & Tank Lines, Inc., was named to replace Mr. Baker as
CEO of the Company. Mr. Sandlin has spent his entire 30 plus year career with
the Company and we are very excited to have him lead our Company.
First Six Months Results for Fiscal year 2017.
The Company reported net income of $1,172,000, or $.35 per share (inclusive of
$250,000, or $.08 per share, due to a reduced tax expense in accordance with
newly adopted accounting guidance on stock option exercises), compared to net
income of $2,238,000, or $.68 per share, in the same period last year. The
prior year included $1,029,000, or $0.31 per share, of net income from the
settlement of a claim with BP in connection with the 2010 Deepwater Horizon
event.
Our revenue miles declined by 1,956,000, or 9.3%, to 19,185,000 versus the
same period last year due to the lower demand for gasoline and the loss of
business in a few of our markets. Total revenues were $56,151,000, down
$2,268,000 from $58,419,000 last year. Transportation revenues (excluding
fuel surcharges) were down $3,571,000 to $52,952,000 as a result of the lower
revenue miles. However, as a result of improved pricing and effective
utilization of our equipment, our transportation revenue per mile increased
by 3.2% over the same period last year. Fuel surcharge revenues were up
$1,303,000 to $3,199,000 due to higher diesel prices and the positive
benefits of renegotiating fuel surcharge tables with several key customers
last year.
Compensation and benefits decreased $1,785,000 due to fewer miles driven and
lower driver training pay. Net fuel expense (i.e. gross fuel expenses less
fuel surcharges) decreased by $910,000 due to fewer miles driven and higher
fuel surcharges. Insurance and losses were up $365,000 versus the same period
last year due mainly to increased self insured workers compensation and health
claims. Depreciation increased $586,000 but was mostly offset by
lower repair and equipment leasing costs. Corporate expense was $171,000
lower than last year mainly due to a $226,000 reduction in legal fees.
As a result, operating profit was down $473,000 to $1,573,000 compared to
$2,046,000 last year. Operating ratio was 97.2 versus 96.5 last year.
Summary and Outlook.
While the demand for gasoline has been lower for most of the first half of our
fiscal year we have seen volumes picking up during the month of March as we
head into our typically busy season. We continued to see improvement in our
per mile transportation revenue as well as our net fuel expense following the
implementation of more neutral fuel surcharge tables last year. The shortage
of qualified drivers is the biggest headwind we face today and is a concern
as we head into the seasonally busier months ahead. We remain focused on
both retention and hiring qualified drivers and are continually discussing
various alternatives with respect to driver marketing, driver qualifications
and increasing the recruitment of owner-operators that we believe will
increase the available driver pool to accomplish these objectives. This year
we are implementing several new technologies which we believe will enhance
the driver experience, improve customer satisfaction and ultimately improve
our bottom line results. Our largest of these initiatives, the installation
of our new onboard computer system with improved workflow, will simplify the
driver's data entry during loading and unloading and also supply improved
delivery information and invoicing for our customer.
During the quarter, we entered into two separate purchase and sale agreements
to sell real property located in South Tampa, FL ($10M sales price) and
Pensacola, FL ($1.5M sales price). Both contracts are subject to numerous
contingencies as the properties are being acquired for commercial
redevelopment but we are optimistic that these transactions will close in
early FY '18 adding significant value for our shareholders.
We operate in many of the best markets in the country and are known in those
markets, and beyond, as a top rated carrier in both safety and customer
satisfaction. We are committed to continuing our focus on safety, retention
and customer satisfaction and are confident that execution of that focus will
enable us to improve our profitability. We will benefit from and 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 after tax capital
employed.
Conference Call.
The Company will host a conference call on Wednesday, April 26, 2017 at 2:00
p.m. (EDT). Analysts, shareholders and other interested parties may access the
teleconference live by calling 1-800-853-3895 (pass code 18776) for domestic
or 1-334-323-7224 (pass code 18776) 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/pth042617. Click on
the following link http://archive.conferenceamerica.com/archivestream/
pth042617.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 1-334-323-0140
international. The passcode of the audio replay is 31705046. 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
engaged in the hauling of liquid and dry bulk commodities.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands)
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
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2017 2016 2017 2016
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Revenues:
Transportation revenues $ 25,693 28,514 $ 52,952 56,523
Fuel surcharges 1,700 534 3,199 1,896
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Total revenues 27,393 29,048 56,151 58,419
Cost of operations:
Compensation and benefits 11,455 12,752 23,539 25,324
Fuel expenses 3,784 3,470 7,688 7,295
Repairs & tires 1,625 1,936 3,263 3,745
Other operating 976 1,179 2,010 2,269
Insurance and losses 2,896 2,218 5,601 5,236
Depreciation expense 2,397 2,125 4,859 4,273
Rents, tags & utilities 860 955 1,723 1,904
Sales, general & administrative 2,281 2,213 4,592 4,612
Corporate expenses 998 828 1,615 1,786
Gain on equipment sales (204) (75) (312) (71)
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Total cost of operations 27,068 27,601 54,578 56,373
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Total operating profit 325 1,447 1,573 2,046
BP claim settlement - - - 1,687
Interest income and other 1 - 3 3
Interest expense (32) (32) (64) (67)
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Income before income taxes 294 1,415 1,512 3,669
Provision for income taxes 34 552 340 1,431
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Net income $ 260 863 $ 1,172 2,238
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Comprehensive income $ 260 863 $ 1,172 2,238
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Earnings per common share:
Net Income -
Basic $ 0.08 0.26 0.36 0.68
Diluted $ 0.08 0.26 0.35 0.68
Number of shares (in thousands)
used in computing:
-basic earnings
per common share 3,300 3,283 3,295 3,278
-diluted earnings
per common share 3,309 3,286 3,303 3,281