Patriot Transportation Holding, Inc. (NASDAQ-PATI) –
Fourth Quarter Operating
Results
The Company reported net income of $629,000, or
$.19 per share, compared to net income of $201,000, or $.06 per
share, in the same quarter last year. This quarter’s net
income included $403,000, or $.12 per share, due to a deferred tax
benefit resulting from finalizing the revaluation of the company’s
net deferred tax liabilities per the Tax Cuts and Jobs Act of
2017.
Total revenues for the quarter were $28,781,000,
up $871,000 from the same quarter last year. Transportation
revenues (excluding fuel surcharges) were $25,740,000, down
$367,000 or 1.4%. Hurricane Florence had an estimated impact
of $126,000 in lost revenue during the quarter. Miles
increased by 215,000, or 2.3%, to 9,506,000 versus 9,291,000 in the
same quarter last year. During the second and third quarters
of last fiscal year we lost sizeable pieces of business with two
large customers most of which was shorter run, higher revenue per
mile business. Since that time, we replaced a
meaningful portion of the lost business with longer run,
lower revenue per mile business. As a result, our average
haul length increased by 6.8% while our transportation revenue per
mile has decreased by 3.6%, or $0.10 per mile.
Compensation and benefits decreased $334,000, or
6 cents per mile, mainly due to (i) reducing personnel costs as our
driver count declined, (ii) lower driving pay per mile due to a
longer average haul length, and (iii) lower driver training
pay. Due to higher diesel prices, gross fuel expense was up
$704,000 while fuel surcharges were up $1,238,000. Other
operating expenses were up $52,000 inclusive of one-time
environmental accruals for required remediations at two locations
($88,000). Insurance and losses increased $670,000 primarily
due to higher health claims and some large wreck repairs.
Depreciation expense was down $265,000 as a result of right
sizing our fleet during the year. Sales, general &
administrative costs increased $140,000 primarily due to higher
health claims and increased HR/Payroll, driver recruiting and IT
spending to support the business. Corporate expenses were
down by $57,000 due mainly to lower legal fees and corporate
management changes that occurred at the beginning of fiscal
2018. Gain on sale of assets increased $192,000 as we sold
excess equipment, including excess trailers.
As a result, operating profit this quarter was
$241,000 compared to operating profit of $265,000 in the same
quarter last year. Operating ratio was 99.2 this quarter
versus 99.1 the same quarter last year.
Operating Results for Fiscal year
2018.
The Company reported net income of $5,119,000,
or $1.54 per share, compared to net income of $1,829,000, or $.55
per share in the same period last year. This year’s net
income included $3,444,000, or $1.04 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 year were $114,065,000,
up $1,900,000 from the prior year. Transportation revenues
(excluding fuel surcharges) were $103,131,000, down $2,203,000 or
2.1% mainly due to the business losses in the second and third
quarters of last year partially offset by the replacement of a
meaningful portion of that business starting in the second quarter
of this year. Miles declined by 76,000 to 37,924,000 versus
38,000,000 last year.
Compensation and benefits decreased $99,000 as a
result of reducing personnel costs ($439,000) and lower driver pay
and benefits expense ($1,155,000) mostly offset by higher owner
operator pay ($1,495,000) as we added owner operators during the
fiscal year. Net fuel expense (i.e. gross fuel expenses less
fuel surcharges) decreased by $1,660,000 due to higher fuel
surcharges on higher average diesel prices. Other operating
expenses increased $261,000 due mainly to increased tolls (in most
cases we bill our customers for toll expenses), environmental
accruals and site maintenance and repairs at some of our terminal
offices. Insurance and losses were up $1,001,000 due mainly
to higher liability ($708,000) and medical ($575,000) claims
partially offset by lower workers’ compensation expense.
Depreciation expense was down $783,000 as a result of right sizing
our fleet. SG&A was up $331,000 due mainly to severance
expense, reorganizing our IT department, upgrading our IT
infrastructure and higher advertising costs related to hiring
drivers. Corporate expenses were down $587,000 due mainly to
a decrease in legal and consulting fees and corporate management
changes that occurred at the beginning of fiscal 2018. Gain on sale
of assets increased $459,000 as we sold excess equipment, including
excess trailers.
As a result, operating profit was $2,046,000
compared to $2,372,000 in the prior fiscal year. Operating
ratio was 98.2 versus 97.9 last year.
Summary and Outlook
The big takeaways from FY 2018 are a continued
decline in quantity and quality of driver applicants in the market
and increased difficulty in hiring and retaining drivers at a pace
that exceeds our turnover rate. During the latter half of the
fiscal year, we implemented several changes focused on expediting
the interview and job offer to available drivers and retaining them
once they come on board, including a significant change in the way
we pay our drivers. The programs are still in their early
days but we are encouraged by the results thus far as we have seen
a recent uptrend in the number of drivers we have in training each
week. Customer demand continues to challenge the tanker
industry’s capacity in most markets in which we operate. We
continue to allocate our resources on a daily basis to fulfill the
needs of those customers who are willing to partner with us on both
pricing and efficiently managing the day to day operation of our
business. We continue to experience positive trends in our
average transportation revenue per company driver (increased by
9.4%) and our average total revenue per tractor (increased by
11.5%). We made significant progress on our IT and
operational systems overhaul and expect most of these upgrades to
go live during the first quarter of fiscal 2019. We
anticipate these changes will greatly enhance the capabilities of
our field personnel and our back office staff to provide improved
customer service. We remain debt free and increased cash from
$11 million to $17 million during fiscal year 2018.
Conference Call
The Company will host a conference call on
November 29, 2018 at 10:00 AM (EST). Analysts, shareholders and
other interested parties may access the teleconference live by
calling 1-800-311-9409 domestic or international at 1-334-323-7224
then enter pass code 39873. 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 one of the
following links (whichever is most compatible with your device or
player) http://stream.conferenceamerica.com/pth112918 or
http://stream.conferenceamerica.com/pth112918.m3u. An audio replay
will be available for sixty (60) days following the conference call
by dialing toll free 1-877-919-4059 domestic or international
1-334-323-0140 then enter pass code 81091827. An audio archive can
be accessed via the internet at
http://archive.conferenceamerica.com/archivestream/pth112918.mp3
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
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
INCOME(In thousands)(Unaudited)
|
|
THREE MONTHS ENDED |
|
TWELVE MONTHS ENDED |
|
|
SEPTEMBER 30, |
|
SEPTEMBER 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation revenues |
|
$ |
25,740 |
|
|
|
26,107 |
|
|
$ |
103,131 |
|
|
|
105,334 |
|
Fuel
surcharges |
|
|
3,041 |
|
|
|
1,803 |
|
|
|
10,934 |
|
|
|
6,831 |
|
Total revenues |
|
|
28,781 |
|
|
|
27,910 |
|
|
|
114,065 |
|
|
|
112,165 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
|
11,962 |
|
|
|
12,296 |
|
|
|
48,010 |
|
|
|
48,109 |
|
Fuel
expenses |
|
|
4,385 |
|
|
|
3,681 |
|
|
|
17,434 |
|
|
|
14,991 |
|
Repairs
& tires |
|
|
2,119 |
|
|
|
1,952 |
|
|
|
7,194 |
|
|
|
7,077 |
|
Other
operating |
|
|
1,326 |
|
|
|
1,274 |
|
|
|
4,679 |
|
|
|
4,418 |
|
Insurance
and losses |
|
|
3,230 |
|
|
|
2,560 |
|
|
|
11,729 |
|
|
|
10,728 |
|
Depreciation expense |
|
|
2,069 |
|
|
|
2,334 |
|
|
|
8,759 |
|
|
|
9,542 |
|
Rents,
tags & utilities |
|
|
851 |
|
|
|
841 |
|
|
|
3,385 |
|
|
|
3,384 |
|
Sales,
general & administrative |
|
|
2,506 |
|
|
|
2,366 |
|
|
|
9,735 |
|
|
|
9,404 |
|
Corporate
expenses |
|
|
448 |
|
|
|
505 |
|
|
|
2,124 |
|
|
|
2,711 |
|
Gain on
equipment sales |
|
|
(356 |
) |
|
|
(164 |
) |
|
|
(1,030 |
) |
|
|
(571 |
) |
Total cost of
operations |
|
|
28,540 |
|
|
|
27,645 |
|
|
|
112,019 |
|
|
|
109,793 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
profit |
|
|
241 |
|
|
|
265 |
|
|
|
2,046 |
|
|
|
2,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income and
other |
|
|
93 |
|
|
|
2 |
|
|
|
190 |
|
|
|
6 |
|
Interest expense |
|
|
(10 |
) |
|
|
(1 |
) |
|
|
(39 |
) |
|
|
(80 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
324 |
|
|
|
266 |
|
|
|
2,197 |
|
|
|
2,298 |
|
Provision for income
taxes |
|
|
(305 |
) |
|
|
65 |
|
|
|
(2,922 |
) |
|
|
469 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
629 |
|
|
|
201 |
|
|
$ |
5,119 |
|
|
|
1,829 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on
investment, net |
|
|
(9 |
) |
|
|
— |
|
|
|
(9 |
) |
|
|
— |
|
Loss on retiree health,
net |
|
|
(32 |
) |
|
|
— |
|
|
|
(32 |
) |
|
|
— |
|
Tax reform gain on
retiree health |
|
|
— |
|
|
|
— |
|
|
|
32 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income |
|
$ |
588 |
|
|
|
201 |
|
|
$ |
5,110 |
|
|
|
1,829 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.19 |
|
|
|
0.06 |
|
|
|
1.54 |
|
|
|
0.55 |
|
Diluted |
|
$ |
0.19 |
|
|
|
0.06 |
|
|
|
1.54 |
|
|
|
0.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares (in thousands) used in
computing: |
|
|
|
|
-basic
earnings per common share |
|
|
3,328 |
|
|
|
3,304 |
|
|
|
3,318 |
|
|
|
3,299 |
|
-diluted
earnings per common share |
|
|
3,332 |
|
|
|
3,306 |
|
|
|
3,320 |
|
|
|
3,302 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact: |
Matt McNulty |
|
|
|
Chief
Financial Officer |
904/858-9100 |
|
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