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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