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 THIRD QUARTER OF FISCAL YEAR 2019
Patriot Transportation Holding, Inc. (NASDAQ-PATI) Jacksonville, Florida;
July 31, 2019
Third Quarter Operating Results
The Company reported net income of $396,000, or $.12 per share, compared to
$1,086,000, or $.33 per share, in the same quarter last year. Income before
income taxes was $531,000 versus $1,407,000 in the same period last year.
Total revenues for the quarter were $27,526,000, down $1,878,000 from the
same quarter last year. Transportation revenues (excludes fuel surcharges)
were $24,907,000, down $1,538,000. The decrease in transportation revenues
is primarily due to the decrease of 865,000 miles over the same quarter last
year as we have continually been running with ~30 less average drivers this
year versus last year. Transportation revenue per mile was up $.08 due to
increased freight rates which has helped to offset the negative impact of
fewer miles. Fuel surcharge revenue was $2,619,000, down $340,000 from the
same quarter last year.
Compensation and benefits decreased $147,000 mainly due to lower company
miles partially offset by higher driver training pay and more owner operators.
Fuel expenses decreased $635,000 due to lower company miles and lower cost per
gallon. Repair and tire expense increased $84,000 due to several high dollar
repairs. Insurance and losses decreased $403,000 primarily due to lower health
and workers' compensation claims. The lower health claims are partly
attributable to the new Specialty Drug program we implemented January 1, 2019
which has resulted in ~$25,000 of monthly savings since implementation.
Depreciation expense was down $161,000 as a result of downsizing our fleet.
Loss on disposition of assets was ($115,000) this quarter versus a gain of
$175,000 in the same quarter last year due primarily to a loss from a single
vehicle rollover accident during the quarter and lower equipment sales
activity. During the month of May, we closed our Charlotte terminal. Charlotte
has been a very tough driver market as well as a low freight rate environment
for the past several years. As a result, Management determined it was in the
Company's best financial interest to exit the market. In the quarter, the
Charlotte terminal generated an operating loss before overhead allocation of
($121,000) versus ($7,000) last quarter and ($20,000) in the same quarter last
year primarily due to the added expense associated with the closure (e.g.
severance, relocating equipment, etc.).
As a result, operating profit this quarter was $423,000 compared to $1,353,000
in the same quarter last year. Operating ratio was 98.5 this quarter versus
95.4 in the same quarter last year.
First Nine Months Operating Results for Fiscal year 2019.
The Company reported net income of $1,569,000, or $.47 per share, compared to
net income of $4,490,000, or $1.35 per share in the same period last year.
Income before income taxes was $2,128,000 versus $1,873,000 in the same period
last year. The first nine months of 2019 income included $634,000, or $.19 per
share, from gains on real estate sales. The first nine 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.
Total revenues for the first nine months were $82,588,000, down $2,696,000
from the same period last year. Transportation revenues (excludes fuel
surcharges) were $74,424,000, down $2,967,000. Miles declined by 1,219,000 to
27,199,000 versus 28,418,000 in the same period last year.
Net fuel expense (i.e. gross fuel expenses less fuel surcharges) decreased by
$1,052,000 due to fewer miles driven and higher fuel surcharges in the early
part of the period. Repair and tire expense increased $497,000 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 $157,000 due to increased tolls, driver hiring and
driver travel expense. Insurance and losses were down $1,344,000 due mainly
to lower auto liability ($1,117,000) and lower health ($223,000) claims.
Depreciation expense was down $768,000 as we sold excess equipment to right
size our fleet. Sales, general & administrative costs increased $279,000 due
mainly to increased driver recruiting efforts and higher IT expense (on-going
system upgrades). Gain on disposition of assets increased $767,000 due
primarily to a gain of $866,000 on the sale of a prior terminal site in Ocoee,
Florida and a gain of $231,000 on the insurance settlement for hurricane
damages and losses sustained at our Panama City, Florida location.
As a result, operating profit was $1,823,000 compared to $1,805,000 in the
same period last year. Operating ratio was 97.8 versus 97.9 last year.
Summary and Outlook
Our balance sheet remains solid with $20,000,000 of cash and investments and
zero debt. We have grown our shareholder equity by $2,100,000 thus far this
fiscal year. This quarter was negatively impacted by the lower driver count
resulting in lower revenue miles. Although we continue to see a higher number
of drivers in training our turnover rate has not improved resulting in a
flattening of our driver count this year versus the decline we saw throughout
last year. Management believes the biggest challenge we face today is driver
retention and we are keenly focused on continuing to develop our strategy
around improving retention. There is plenty of business available in many of
our markets that we believe we can add if we can grow the driver count in
those markets. Management is pleased with the efforts this year to improve
freight rates which resulted in an increase of $.08 per mile on
transportation revenue quarter over quarter. The cost of hiring and retaining
drivers continues to rise as do insurance premiums across the transportation
industry. As a result, we are optimistic that freight rates will continue in
a positive direction for the foreseeable future.
The decrease in equipment is producing significant recurring savings as are
the recent changes we made to our specialty drug and wellness plans. We are
in the early stages of renegotiating our pharmacy and health plan agreements
and thus far we are optimistic about potential recurring savings moving into
fiscal 2020. 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.
Conference Call
The Company will host a conference call on July 31, 2019 at 3:00 PM (EDT).
Analysts, shareholders and other interested parties may access the
teleconference live by calling 1-844-369-8770 domestic or international at
1-862-298-0840. Computer audio live streaming is available via the Internet
through the Company's website at www.patriottrans.com at the Investor
Relations tab or https://www.investornetwork.com/event/presentation/51799.
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 51799. 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 NINE MONTHS ENDED
JUNE 30, JUNE 30,
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2019 2018 2019 2018
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Revenues:
Transportation revenues $ 24,907 26,445 $ 74,424 77,391
Fuel surcharges 2,619 2,959 8,164 7,893
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Total revenues 27,526 29,404 82,588 85,284
Cost of operations:
Compensation and benefits 11,985 12,132 35,875 36,048
Fuel expenses 3,988 4,623 12,268 13,049
Repairs & tires 1,901 1,817 5,572 5,075
Other operating 1,189 1,247 3,510 3,353
Insurance and losses 2,211 2,614 7,155 8,499
Depreciation expense 1,976 2,137 5,922 6,690
Rents, tags & utilities 833 792 2,571 2,534
Sales, general & administrative 2,479 2,465 7,508 7,229
Corporate expenses 426 399 1,825 1,676
Loss (gain) on disposition
of PP&E 115 (175) (1,441) (674)
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Total cost of operations 27,103 28,051 80,765 83,479
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Total operating profit 423 1,353 1,823 1,805
Interest income and other 116 64 330 97
Interest expense (8) (10) (25) (29)
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Income before income taxes 531 1,407 2,128 1,873
Provision for (benefit from)
income taxes 135 321 559 (2,617)
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Net income $ 396 1,086 $ 1,569 4,490
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Unrealized investment gains, net 7 - 19 -
Tax reform gain on retiree health - - - 32
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Comprehensive income $ 403 1,086 $ 1,588 4,522
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Earnings per common share:
Net Income -
Basic $ 0.12 0.33 .47 1.35
Diluted $ 0.12 0.33 .47 1.35
Number of shares (in thousands)
used in computing:
-basic earnings per
common share 3,347 3,324 3,339 3,315
-diluted earnings per
common share 3,348 3,328 3,340 3,316
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited)
June 30, September 30,
2019 2018
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Assets
Current assets:
Cash and cash equivalents $ 6,020 1
Treasury bills available for sale 14,430 17,298
Accounts receivable (net of allowance
for doubtful accounts of $165 and $153,
respectively) 7,472 7,866
Federal and state taxes receivable 117 547
Inventory of parts and supplies 944 895
Prepaid tires on equipment 1,666 1,746
Prepaid taxes and licenses 196 609
Prepaid insurance 1,994 2,348
Prepaid expenses, other 373 134
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Total current assets 33,212 31,444
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Property and equipment, at cost 93,729 94,710
Less accumulated depreciation 59,678 60,799
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Net property and equipment 34,051 33,911
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Goodwill 3,431 3,431
Intangible assets, net 740 855
Other assets, net 171 176
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Total assets $ 71,605 69,817
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 3,221 3,271
Bank overdraft - 625
Accrued payroll and benefits 3,892 3,963
Accrued insurance 2,339 1,896
Accrued liabilities, other 310 408
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Total current liabilities 9,762 10,163
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Deferred income taxes 6,017 5,940
Accrued insurance 204 204
Other liabilities 1,096 1,104
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Total liabilities 17,079 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 37,966 37,436
Retained earnings 16,041 14,472
Accumulated other comprehensive income, net 184 165
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Total shareholders' equity 54,526 52,406
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Total liabilities and shareholders' equity $ 71,605 69,817
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