Patriot Transportation Holding, Inc. Announces Results for the Fourth Quarter and Fiscal Year 2019

JACKSONVILLE, FL / ACCESSWIRE / December 4, 2019 / Patriot Transportation Holding, Inc. (NASDAQ:PATI)

Fourth Quarter Operating Results

The Company reported net income of $194,000, or $.06 per share, compared to net income of $629,000, or $.19 per share, in the same quarter last year. Net income in the fourth quarter of 2018 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 $26,128,000, down $2,653,000 from the same quarter last year. Transportation revenues (excluding fuel surcharges) were $23,855,000, down $1,885,000 or 7.3%. The decrease in transportation revenues is primarily due to the decrease of 1,039,000 miles, or 10.9%, over the same quarter last year as we had 18 less average drivers. Transportation revenue per mile was up $.11 due to increased freight rates which has helped to offset the negative impact of fewer miles. Fuel surcharge revenue was $2,273,000, down $768,000 from the same quarter last year.

Compensation and benefits decreased $288,000 mainly due to lower company miles partially offset by higher driver training pay and more owner operators. Fuel expenses decreased $848,000 due to lower company miles and lower cost per gallon. Repair and tire expense decreased $318,000 due to lower company miles. Insurance and losses decreased $959,000 primarily due to lower health and liability claims and higher wreck expense in the same quarter last year. Depreciation expense was down $121,000 as a result of downsizing our fleet. Gain on disposition of assets was $216,000 this quarter versus $356,000 in the same quarter last year. Sales, general & administrative costs decreased $130,000.

As a result, operating profit this quarter was $156,000 compared to operating profit of $241,000 in the same quarter last year. Operating ratio was 99.4 this quarter versus 99.2 the same quarter last year.

Operating Results for Fiscal year 2019.

The Company reported net income of $1,763,000, or $.53 per share, compared to net income of $5,119,000, or $1.54 per share in the same period last year. This year’s net income included $634,000, or $.19 per share, from gains on real estate sales. Net income last year included $3,444,000, or $1.04 per share, due to a deferred tax benefit resulting from the Tax Cuts and Jobs Act of 2017. Income before income taxes was $2,393,000 this period versus $2,197,000 in the same period last year.

Total revenues for the year were $108,716,000, down $5,349,000 from the prior year. Transportation revenues (excluding fuel surcharges) were $98,279,000, down $4,852,000. Miles declined by 2,258,000 to 35,666,000 versus 37,924,000 last year. The decline in miles and revenues was primarily due to the decline in our average number of drivers from 580 in fiscal year 2018 to 538 in fiscal year 2019 and the closure of our Charlotte terminal in May 2019.

Fuel expenses decreased by $1,629,000 due to fewer miles driven. Repair and tire expense increased $179,000 due to more high-dollar repairs this fiscal year versus last fiscal year. Other operating expenses were up $132,000 due to increased tolls (most of which is billed to the customer), driver hiring and out of town driver expense. Insurance and losses were down $2,303,000 due mainly to lower auto liability expense ($1,355,000) resulting from the favorable settlement of several prior years’ claims and lower health expense ($657,000) due in large part to the recent changes to our wellness and specialty drug plans. Depreciation expense was down $889,000 as we sold excess equipment to right size our fleet. Sales, general & administrative costs increased $149,000 due mainly to increased driver recruiting efforts and higher IT expense (on now completed system upgrades). Gain on disposition of assets increased $627,000 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 $1,979,000 compared to $2,046,000 in the prior fiscal year Operating ratio was 98.2 versus a 98.2 last year.

Summary and Outlook

Our balance sheet remains solid with $21 million of cash and investments and no outstanding debt. We have grown our shareholder equity by $2.4 million this fiscal year. Management is optimistic about the rate environment in light of an increase of $.11 per mile, or 4.0%, on transportation revenue this quarter versus the same quarter last year.

This year’s revenue was negatively impacted mainly by the lower driver count but also by Hurricanes Michael and Dorian. In the beginning of fiscal 2019, we implemented a new driver “productivity/minimum” pay program designed to attract and retain new drivers. As the year progressed, we did see a meaningful increase in new hires, however, the desired positive impact on new driver retention did not materialize resulting in significant added costs in both driver training expense as well as driver minimum pay (>$1,000,000). As a result, we eliminated that program at the beginning of October, 2019 and implemented a completely new driver pay package that includes seniority raises, weekly productivity bonuses, a PTO buyback program and several other features we hope will encourage retention as well as attract new drivers.

Auto liability insurance premiums across the transportation industry continue to rise mainly as a result of an increase in nuclear verdicts. As a result, the Company did experience a significant increase in premiums on our excess layers upon renewal this year. On a positive insurance note, we recently renegotiated our pharmacy and health plan agreements and are optimistic about additional recurring savings throughout fiscal 2020.

In early November, 2019 the company closed on the acquisition of the assets of Danfair Transport out of Americus, GA which had total revenues of ~$2,300,000 in 2018. We are very excited about this acquisition as it fits nicely into one of the most stable market areas in our network and provides an opportunity to grow with some new customers in other markets we serve.

We completed the transition of our critical operating systems to a 3rd party cloud service provider during fiscal 2019 and are seeing the benefits both in improved operating efficiencies as well as reduced expense in our IT department. During the remainder of fiscal year 2020, we will be piloting on-board tractor camera systems to assist us in managing insurance claims as well as improving driving behaviors.

We are focusing on strategies to diversify our product mix (e.g. chemicals) and customer base if we determine we can achieve revenue growth as well as margin improvement through those strategies. We will be implementing a new automated dispatch module which management believes will bring significant efficiencies to our operations and our customers. A great deal of our success in fiscal 2020 is dependent upon our ability to push freight rates higher, improve our driver retention and continue to focus on managing our liability and health insurance programs. If we are successful in meeting these goals, we are confident fiscal 2020 will see improved operating results.

Conference Call

The Company will host a conference call on December 4, 2019 at 3:00 PM (EST). 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 https://www.investornetwork.com/event/presentation/56836. 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 56836. 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/56836.

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     TWELVE MONTHS ENDED
 
  SEPTEMBER 30,     SEPTEMBER 30,
 
  2019     2018     2019     2018
Revenues:
                       
Transportation revenues
  $ 23,855       25,740     $ 98,279       103,131  
Fuel surcharges
    2,273       3,041       10,437       10,934  
Total revenues
    26,128       28,781       108,716       114,065  
 
                               
Cost of operations:
                               
Compensation and benefits
    11,674       11,962       47,549       48,010  
Fuel expenses
    3,537       4,385       15,805       17,434  
Repairs & tires
    1,801       2,119       7,373       7,194  
Other operating
    1,301       1,326       4,811       4,679  
Insurance and losses
    2,271       3,230       9,426       11,729  
Depreciation expense
    1,948       2,069       7,870       8,759  
Rents, tags & utilities
    835       851       3,406       3,385  
Sales, general & administrative
    2,376       2,506       9,884       9,735  
Corporate expenses
    445       448       2,270       2,124  
Gain on dispositions of PP&E
    (216 )     (356 )     (1,657 )     (1,030 )
Total cost of operations
    25,972       28,540       106,737       112,019  
 
                               
Total operating profit
    156       241       1,979       2,046  
 
                               
Interest income and other
    116       93       446       190  
Interest expense
    (7 )     (10 )     (32 )     (39 )
 
                               
Income before income taxes
    265       324       2,393       2,197  
Provision for (benefit from) income taxes
    71       (305 )     630       (2,922 )
 
                               
Net income
  $ 194       629     $ 1,763       5,119  
 
                               
Unrealized investment gains (loss), net
    (5 )     (9 )     14       (9 )
Loss on retiree health, net
    (51 )     (32 )     (51 )     (32 )
Tax reform gain on retiree health
                      32  
 
                               
Comprehensive income
  $ 138       588     $ 1,726       5,110  
 
                               
Earnings per common share:
                               
Net Income –
                               
Basic
  $ 0.06       0.19       0.53       1.54  
Diluted
  $ 0.06       0.19       0.53       1.54  
 
                               
Number of shares (in thousands) used in computing:  
-basic earnings per common share
    3,349       3,328       3,342       3,318  
-diluted earnings per common share
    3,350       3,332       3,343       3,320  
                                 

PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited)

             
 
  September 30,     September 30,  
Assets
  2019     2018  
Current assets:
           
Cash and cash equivalents
  $ 15,233       1  
Treasury bills available for sale
    5,983       17,298  
Accounts receivable (net of allowance for
               
doubtful accounts of $133 and $153, respectively)
    6,588       7,866  
Federal and state taxes receivable
    290       547  
Inventory of parts and supplies
    949       895  
Prepaid tires on equipment
    1,616       1,746  
Prepaid taxes and licenses
    536       609  
Prepaid insurance
    2,895       2,348  
Prepaid expenses, other
    334       134  
Total current assets
    34,424       31,444  
 
               
Property and equipment, at cost
    91,332       94,710  
Less accumulated depreciation
    57,765       60,799  
Net property and equipment
    33,567       33,911  
 
               
Goodwill
    3,431       3,431  
Intangible assets, net
    701       855  
Other assets, net
    170       176  
Total assets
  $ 72,293       69,817  
 
               
Liabilities and Shareholders’ Equity
               
Current liabilities:
               
Accounts payable
  $ 3,184       3,271  
Bank overdraft
          625  
Accrued payroll and benefits
    3,906       3,963  
Accrued insurance
    1,339       1,896  
Accrued liabilities, other
    398       408  
Total current liabilities
    8,827       10,163  
 
               
Deferred income taxes
    6,237       5,940  
Accrued insurance
    1,339       204  
Other liabilities
    1,093       1,104  
Total liabilities
    17,496       17,411  
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; 3,351,329 and 3,328,466 shares issued
               
and outstanding, respectively)
    335       333  
Capital in excess of par value
    38,099       37,436  
Retained earnings
    16,235       14,472  
Accumulated other comprehensive income, net
    128       165  
Total shareholders’ equity
    54,797       52,406  
Total liabilities and shareholders’ equity
  $ 72,293       69,817  
                 

Contact:
Matt McNulty
Chief Financial Officer 904/858-9100

SOURCE: Patriot Transportation Holding, Inc.

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