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PATRIOT TRANSPORTATION HOLDING, INC./NEWS
Contact: John D. Milton, Jr.
Chief Financial Officer 904/858-9100
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PATRIOT TRANSPORTATION HOLDING, INC. ANNOUNCES RESULTS FOR THE THIRD QUARTER
ENDED JUNE 30, 2015
Jacksonville, Florida; July 29, 2015 -
Third Quarter Operating Results.
Patriot Transportation Holding, Inc. (NASDAQ-PATI) reported a net income of
$1,003,000 or $.31 per diluted share in the third quarter of fiscal 2015, a
decrease of $407,000 or $.12 per diluted share compared to net income of
$1,410,000 or $.43 per diluted share in the same period last year.
Transportation revenue increased $485,000 or 1.7% on 302,000 (-2.7%) fewer
miles but fuel surcharge revenues were down versus the comparable quarter
last year $515,000 more than the decline in fuel costs. Our number of
drivers available declined 4.8% from the year ago quarter despite a 1.4%
increase in driving pay on the fewer miles. Our actuarial experience in our
self-insured medical coverage also worsened by $284,000 over last year's
third quarter. The significant customer loss experienced last quarter for
which we took an impairment charge of $2,074,000 ($1,265,000 after tax) was
largely overcome with revenue from other customers with better rates than
offered by the impairment customer. The availability of fewer drivers year
over year hindered management's ability to achieve revenue miles equivalent
to last year's third quarter performance. Corporate expenses allocated to
the Company were also up $254,000 quarter over comparable quarter.
Nine Month Operating Results.
Net income for the first nine months of fiscal 2015 was $1,754,000 or $.54
per share, a decrease of $674,000 or $.21 per diluted share compared to net
income of $2,428,000 or $.75 per diluted share in the same period last year.
The Company recorded an intangible asset impairment charge of $2,074,000,
with an after tax impact to net income of $1,265,000, in its consolidated and
combined financial statements for the quarter ended March 31, 2015, relating
to the Pipeline Transportation acquisition in November 2013. The Company's
conclusion that an impairment charge was necessary is the result of (i) the
loss of a significant Pipeline customer over the course of the first six
months of calendar 2014, and then (ii) the notification from another customer
during the second quarter that the Company would not be able to retain a
sizeable piece of the business the Company acquired from Pipeline at the
rates the Company quoted them during a competitive bid process. In both
cases, management was not willing to lower our rates to retain the business
and chose instead to use our assets and manpower to find and service new
business.
The following discussion includes certain non-GAAP financial measures
("adjusted") within the meaning of Regulation G promulgated by the Securities
and Exchange Commission ("Regulation G") to supplement the financial results
as reported in accordance with GAAP. The non-GAAP financial measures
discussed below include adjusted net income, adjusted operating profit and
adjusted operating ratio. These non-GAAP financial measures exclude
the intangible asset impairment charge incurred in the quarter. Patriot uses
these metrics to analyze its continuing operations and to monitor, assess,
and identify meaningful trends in its operating and financial performance.
These measures are not, and should not be viewed as, substitutes for GAAP
financial measures. Refer to "Non-GAAP Financial Measures" below in this press
release for a more detailed discussion, including reconciliations of these
non-GAAP financial measures to their most directly comparable GAAP financial
measures.
The Company's adjusted net income for the first nine months of fiscal 2015 was
$3,019,000, or $.92 per diluted share, an improvement of $591,000 or $.17 per
diluted share as compared to net income of $2,428,000, or $.75 per diluted
share, in the same period last year. Our adjusted operating profit for the
period was up $960,000 over the same period last year and our adjusted
operating ratio improved from 95.8% to 94.6%.
For the nine months our transportation revenue was up $1,580,000, a 2%
improvement over the same period last year and the fuel cost savings for the
period were greater than the decrease in fuel surcharge revenue by $417,000
adding to the positive improvement. On the expense side the Company improved
by $827,000 over the first nine months of last year in reducing out-of-town
driver costs, toll charges and rigging expenses. The nine month performance
improvement was still lessened by $327,000 of one-time spin-off costs, a
$551,000 increase in insurance and losses, a $606,000 increase in driver
compensation and benefits as driver turnover worsened, a $231,000 increase in
depreciation and a $434,000 increase in corporate expenses (most of which
occurred in this third quarter).
Summary and Outlook.
Management's strategy of letting lower rated business go and replacing it
with better rated business resulted in an increase of $1,580,000 in
transportation revenue for our first nine months this year versus the same
period last year on 577,000 fewer revenue miles. While Management is pleased
with the positive trends in our transportation revenue we are still
challenged to produce better improvement in bottom line results.. Headwinds
to our improvement are the continuing high costs associated with hiring and
training drivers in this very tight driver market in addition to historically
higher medical and risk claims costs. Management is continuing to work with
two national firms on reducing the high costs associated with driver turnover
and to create a more targeted approach to adding company drivers in markets
where it believes that both (i) solid new business opportunities are available
and (ii) a good driver applicant pool appears to exist. Management continues
to monitor our position with respect to the levels of self-insurance we will
carry on medical claims going forward as the national trend of higher medical
costs continues to worsen.
Conference Call.
The Company will also host a conference call on Thursday morning, July 30,
2015 at 10:00 a.m. (EDT). Analysts, stockholders and other interested parties
may access the teleconference live by calling 1-800-290-9461 (pass code 42841)
within the United States. International callers may dial 1-334-323-7224 (pass
code 42841). Computer audio live streaming is available via the Internet
through Conference America, Inc.'s website at
http://stream.conferenceamerica.com/pth073015 or via the Company's website at
www.patriottrans.com. You may also click on this link for the live streaming
http://stream.conferenceamerica.com/live. For the archived audio via the
internet, click on the following link
http://archive.conferenceamerica.com/archivestream/pth073015.wma. If using
the Company's website, click on the Investor Relations tab, then select the
earnings conference stream. An audio replay will be available for sixty days
following the conference call. To listen to the audio replay, dial toll free
877-919-4059, international callers dial 334-323-0140. The passcode of the
audio replay is 77454746. Replay options: "1" begins playback, "4" rewind 30
seconds, "5" pause, "6" fast forward 30 seconds, "0" instructions, and "9"
exits recording. There may be a 30-40 minute delay until the archive is
available following the conclusion of the conference call.
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 concentrating in
the hauling by motor carrier of liquid and dry bulk commodities.
Continued
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
2015 2014 2015 2014
---- ---- ---- ----
Revenues:
Transportation revenues $ 28,609 28,124 $ 82,994 81,414
Fuel surcharges 2,490 5,445 9,559 15,646
------ ------ ------ ------
Total revenues 31,099 33,569 92,553 97,060
Cost of operations:
Compensation and benefits 12,552 12,290 36,308 35,702
Fuel expenses 5,095 7,535 15,961 22,465
Repairs & tires 2,019 1,929 5,739 5,806
Other operating 1,090 1,316 3,215 4,042
Insurance and losses 2,681 2,709 8,298 7,747
Depreciation expense 2,098 2,068 6,330 6,099
Rents, tags & utilities 987 973 2,882 2,750
Sales, general &
administrative 2,143 2,095 6,779 6,614
Corporate expenses 782 528 2,833 2,072
Intangible asset impairment - - 2,074 -
Gain on equipment sales (21) (213) (819) (304)
------ ------ ------ ------
Total cost of operations 29,426 31,230 89,600 92,993
------ ------ ------ ------
Total operating profit 1,673 2,339 2,953 4,067
Interest expense (29) (28) (78) (86)
------ ------ ------ ------
Income before income taxes 1,644 2,311 2,875 3,981
Provision for income taxes 641 901 1,121 1,553
------ ------ ------ ------
Net income $ 1,003 1,410 $ 1,754 2,428
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Comprehensive Income $ 1,003 1,410 $ 1,754 2,428
====== ====== ====== ======
Earnings per common share:
Net Income-
Basic 0.31 0.43 0.54 0.75
Diluted 0.31 0.43 0.54 0.75
Number of shares
(in thousands) used in computing:
-basic earnings
per common share 3,268 3,243 3,265 3,243
-diluted earnings
per common share 3,276 3,243 3,273 3,243
Non-GAAP Financial Measures.
To supplement the financial results presented in accordance with GAAP,
Patriot presents certain non-GAAP financial measures within the meaning of
Regulation G promulgated by the Securities and Exchange Commission. The
non-GAAP financial measures included in this press release are adjusted
net income, adjusted operating profit and adjusted operating ratio. Patriot
uses these non-GAAP financial measures to analyze its continuing operations
and to monitor, assess, and identify meaningful trends in its operating and
financial performance. These measures are not, and should not be viewed as,
substitutes for GAAP financial measures.
Adjusted Net Income
Adjusted net income excludes the impact of the intangible asset impairment
charge. Adjusted net income is presented to provide additional perspective
on underlying trends in Patriot's core operating results. A reconciliation
between net income and adjusted net income is as follows:
Three months ended Nine months ended
June 30, 2015 June 30, 2015
------------------ ------------------
Net Income $ 1,003 1,754
Adjustments:
Intangible asset impairment charge - 1,265
------------------ ------------------
Adjusted net income $ 1,003 3,019
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Adjusted Operating Ratio
Adjusted operating ratio excludes the impact of the intangible asset
impairment charge. Adjusted operating ratio is presented to provide
additional perspective on underlying trends in Patriot's core operating
results. A reconciliation between operating ratio and adjusted operating
ratio is as follows:
Three months ended Nine months ended
June 30, 2015 June 30, 2015
------------------ ------------------
Operating ratio 94.6% 96.8%
Adjustments:
Intangible asset impairment charge 0.0% (2.2%)
------------------ ------------------
Adjusted operating ratio 94.6% 94.6%
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Adjusted Operating Profit
Adjusted operating profit excludes the impact of the intangible asset
impairment charge. Adjusted operating profit is presented to provide
additional perspective on underlying trends in Patriot's core operating
results. A reconciliation between operating profit and adjusted operating
profit is as follows:
Three months ended Nine months ended
June 30, 2015 June 30, 2015
------------------ ------------------
Operating profit $ 1,673 2,953
Adjustments:
Intangible asset impairment charge - 2,074
------------------ ------------------
Adjusted operating profit $ 1,673 5,027
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