PATRIOT TRANSPORTATION HOLDING, INC./NEWS
Contact: Matt McNulty
Chief Financial Officer 904/858-9100
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PATRIOT TRANSPORTATION HOLDING, INC. ANNOUNCES
RESULTS FOR THE SECOND QUARTER OF FISCAL YEAR 2019
Patriot Transportation Holding, Inc. (NASDAQ-PATI) Jacksonville, Florida;
May 1, 2019
Second Quarter Operating Results
The Company reported net income of $289,000, or $.09 per share, compared to a
net loss of ($188,000), or ($.06) per share, in the same quarter last year.
Total revenues for the quarter were $27,008,000, down $971,000 from the same
quarter last year. Transportation revenues (excludes fuel surcharges) were
$24,537,000, down $839,000 due to a decrease of 379,000 miles over the same
quarter last year. The decrease in miles was due primarily to one of our
customers moving into one of our markets with their private fleet and the
closure of our Spartanburg satellite location. Despite an average longer haul
length, transportation revenue per mile was up $.02 due to increased freight
rates. Fuel surcharge revenue was $2,471,000, down $132,000 from the same
quarter last year.
Compensation and benefits decreased $191,000 mainly due to lower company
miles and lower payroll taxes partially offset by higher owner operator pay
(the average owner operator count increased by 6 versus the same quarter
last year). Fuel expenses decreased $300,000 due primarily to lower company
miles. Repair and tire expense increased $321,000 due to several high dollar
repairs and the expensing of prepaid tires as we purchased more tractors in
this quarter versus the same quarter last year. Other operating expenses were
up $126,000 due to increased tolls, driver hiring and driver travel expense.
Insurance and losses decreased $1,167,000 primarily due to settlement of
prior year liability claims for less than the actuarial estimates and lower
health claims. Depreciation expense was down $247,000 as a result of
downsizing our fleet and placing twenty three full service lease trucks in
certain markets where we do not have maintenance shops. Sales, general &
administrative costs increased $119,000 due mainly to increased driver
recruiting efforts, higher IT expense (on-going system upgrades) and higher
payroll expense (to support changes to driver pay). Gain on disposition of
assets increased $298,000 to $633,000 this quarter due primarily to a gain
of $247,000 on the insurance settlement for hurricane damages and losses
sustained at our Panama City, Florida location in this year's first quarter.
As a result, operating profit this quarter was $293,000 compared to an
operating loss of ($292,000) in the same quarter last year. Operating ratio
was 98.9 this quarter versus 101.0 in the same quarter last year.
First Six Months Operating Results for Fiscal year 2019.
The Company reported net income of $1,173,000, or $.35 per share, compared to
net income of $3,404,000, or $1.03 per share in the same period last year.
The first six months of 2018 net income included $3,041,000, or $.92 per
share, due to a deferred tax benefit resulting from revaluing the company's
net deferred tax liabilities per the Tax Cuts and Jobs Act of 2017. The first
six months of 2019 net income included $634,000, or $.19 per share, from
gains on real estate sales.
Total revenues for the first six months were $55,062,000, down $818,000 from
the same period last year. Transportation revenues (excludes fuel surcharges)
were $49,517,000, down $1,429,000. Miles declined by 354,000 to 18,252,000
versus 18,606,000 in the same period last year.
Net fuel expense (i.e. gross fuel expenses less fuel surcharges) decreased by
$757,000 due to fewer miles driven and higher fuel surcharges in the early
part of the period. Repair and tire expense increased $413,000 due to several
high dollar repairs and the expensing of prepaid tires as we purchased more
tractors and trailers in this period versus the same period last year. Other
operating expenses were up $215,000 due to increased tolls, driver hiring and
driver travel expense. Insurance and losses were down $941,000 due to lower
claims. Depreciation expense was down $607,000 as we sold excess equipment
to right size our fleet. Sales, general & administrative costs increased
$265,000 due mainly to increased driver recruiting efforts, higher IT expense
(on-going system upgrades) and higher payroll expense (to support changes to
driver pay). Gain on disposition of assets increased $1,057,000 due primarily
to a gain of $866,000 on the sale of a prior terminal site in Ocoee, Florida
and a gain of $247,000 on the insurance settlement for hurricane damages and
losses sustained at our Panama City, Florida location.
As a result, operating profit was $1,400,000 compared to $452,000 in the same
period last year. Operating ratio was 97.5 versus a 99.2 last year.
Summary and Outlook
Our balance sheet remains solid with $19,000,000 of cash and investments and
zero debt. This quarter was negatively impacted by the decrease in
transportation revenue on the lower revenue miles but we are having success
adding business in certain markets. One of our primary focuses, together with
driver retention, is improving our freight rates. The past few years, the rate
environment has been difficult but recently we have seen positive improvement
in the market as customers are finding it more difficult to get their freight
delivered. With improved numbers of drivers in training, the other key focus
today is retention. Our turnover year to date has increased slightly over
fiscal 2018. However, we did see a meaningful improvement to driver turnover
in the month of March. Our new driver advocate position is still in its
infancy but so far, the feedback has been very positive. The decrease in
equipment is producing significant recurring savings as are the recent changes
we made to our pharmacy and wellness plans. We will continue to pursue
relationships with those customers who are willing to properly compensate us
for the safe, reliable service we provide, particularly during this severe
driver shortage. We are optimistic that the strategic plan we have in place
will lead to improved operating profits.
The company owns a 25-acre parcel of land in Tampa, Florida where we maintain
our terminal facility on approximately 5 acres of the property. The property
is not currently being used for its highest and best use and we intend to
sell the property and relocate our Tampa terminal to a more suitable
location. During the quarter, we filed all the required applications and
plans to the City of Tampa for approval of a commercial mixed-use master site
plan for the property. We anticipate obtaining all those approvals over the
next few months and being in a position to market a fully entitled site later
this year.
Subsequent Event. On Monday, April 22nd, 2019 the Company announced plans to
exit the Charlotte, NC petroleum hauling market. Our intentions are to
continue hauling petroleum products on a transitory basis for our current
customers through May 22, 2019. Charlotte has continually proven to be a very
difficult driver hiring and retention market coupled with a customer rate
structure that does not afford Patriot Transportation the opportunity to make
an acceptable return on our capital. We believe we will be able to retain
some of our Charlotte drivers to run a new dry bulk opportunity that will be
managed from another one of our terminals. Any excess equipment remaining
after the closure will be sold. The closure will result in the loss of
approximately $2.5 M of revenue (prior to the addition of the dry bulk
opportunity) and a slight improvement to the Company's operating profit.
Conference Call
The Company will host a conference call on May 1, 2019 at 3:00 PM (EDT).
Analysts, shareholders and other interested parties may access the
teleconference live by calling 1-844-602-0380 domestic or international at
1-862-298-0970. Computer audio live streaming is available via the Internet
through the Company's website at www.patriottrans.com at the Investor
Relations tab or at https://www.investornetwork.com/event/presentation/47589.
An audio replay will be available for sixty (60) days following the conference
call by dialing toll free 1-877-481-4010 domestic or international
1-919-882-2331 then enter pass code 47589. An audio archive can be accessed
through the Company's website at www.patriottrans.com on the Investor
Relations tab or at https://www.investornetwork.com/event/presentation/47589.
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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2019 2018 2019 2018
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Revenues:
Transportation revenues $ 24,537 25,376 $ 49,517 50,946
Fuel surcharges 2,471 2,603 5,545 4,934
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Total revenues 27,008 27,979 55,062 55,880
Cost of operations:
Compensation and benefits 11,852 12,043 23,890 23,916
Fuel expenses 4,004 4,304 8,280 8,426
Repairs & tires 2,006 1,685 3,671 3,258
Other operating 1,189 1,063 2,321 2,106
Insurance and losses 2,002 3,169 4,944 5,885
Depreciation expense 1,976 2,223 3,946 4,553
Rents, tags & utilities 891 887 1,738 1,742
Sales, general & administrative 2,561 2,442 5,029 4,764
Corporate expenses 867 790 1,399 1,277
Gain on disposition of PP&E (633) (335) (1,556) (499)
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Total cost of operations 26,715 28,271 53,662 55,428
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Total operating (loss) profit 293 (292) 1,400 452
Interest income and other 113 31 214 33
Interest expense (7) (9) (17) (19)
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Income (loss) before income taxes 399 (270) 1,597 466
Provision for (benefit from)
income taxes 110 (82) 424 (2,938)
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Net income (Loss) $ 289 (188) $ 1,173 3,404
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Unrealized investment gains, net 10 - 12 -
Tax reform gain on retiree health - - - 32
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Comprehensive income (loss) $ 299 (188) $ 1,185 3,436
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Earnings per common share:
Net Income (loss) -
Basic $ 0.09 (0.06) .35 1.03
Diluted $ 0.09 (0.06) .35 1.03
Number of shares (in thousands)
used in computing:
-basic earnings per
common share 3,342 3,316 3,335 3,310
-diluted earnings per
common share 3,343 3,316 3,336 3,311
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PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited)
March 31, September 30,
2019 2018
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Assets
Current assets:
Cash and cash equivalents $ 222 1
Treasury bills available for sale 18,863 17,298
Accounts receivable (net of allowance
for doubtful accounts of $154 and $153,
respectively) 8,390 7,866
Federal and state taxes receivable 163 547
Inventory of parts and supplies 907 895
Prepaid tires on equipment 1,666 1,746
Prepaid taxes and licenses 338 609
Prepaid insurance 2,115 2,348
Prepaid expenses, other 187 134
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Total current assets 32,851 31,444
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Property and equipment, at cost 93,044 94,710
Less accumulated depreciation 59,414 60,799
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Net property and equipment 33,630 33,911
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Goodwill 3,431 3,431
Intangible assets, net 778 855
Other assets, net 190 176
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Total assets $ 70,880 69,817
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 3,397 3,271
Bank overdraft - 625
Accrued payroll and benefits 3,764 3,963
Accrued insurance 2,169 1,896
Accrued liabilities, other 231 408
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Total current liabilities 9,561 10,163
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Deferred income taxes 5,950 5,940
Accrued insurance 204 204
Other liabilities 1,099 1,104
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Total liabilities 16,814 17,411
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Commitments and contingencies
Shareholders' Equity:
Preferred stock, 5,000,000 shares authorized,
of which 250,000 shares are designated
Series A Junior Participating Preferred
Stock; $0.01 par value; none issued and
outstanding - -
Common stock, $.10 par value; (25,000,000
shares authorized; 3,347,329 and 3,328,466
shares issued and outstanding,
respectively) 335 333
Capital in excess of par value 37,909 37,436
Retained earnings 15,645 14,472
Accumulated other comprehensive income, net 177 165
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Total shareholders' equity 54,066 52,406
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Total liabilities and shareholders' equity $ 70,880 69,817
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