Attached files
FRP HOLDINGS, INC./NEWS
Contact: John D. Milton, Jr.
Chief Financial Officer 904/858-9100
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FRP HOLDINGS, INC. (NASDAQ: FRPH) ANNOUNCES RESULTS FOR THE THIRD QUARTER OF
FISCAL 2016.
FRP Holdings, Inc. (NASDAQ-FRPH) Jacksonville, Florida; August 2, 2016 -
Fiscal 2016 Third Quarter Consolidated Results of Operations.
Net income for the third quarter of fiscal 2016 was $774,000 or $.08 per share
versus $2,046,000 or $.21 per share in the third quarter last year. Total
revenues were $9,243,000, up $746,000, or 8.8%, versus the same quarter last
year. Total cost of operations increased $2,669,000, or 57.9%, as the Company
recorded an environmental remediation expense of $2.0 million for the
Company's estimated liability under the proposed agreement with our joint
venture partner, MRP, to develop Phase II of Riverfront on the Anacostia.
Consolidated total operating profit decreased by $1,923,000, or 49.4%, to
$1,966,000 this quarter.
Third Quarter Segment Operating Results.
During fiscal 2015, management analyzed the amount of corporate and management
company time likely to be spent on our segments going forward and, as a result,
the allocation of corporate expense to the Mining Royalty Lands segment was
reduced and reallocated to our other two segments (the "Reallocation").
Asset Management Segment:
------------------------
Total revenues in this segment were $6,927,000, up $418,000 or 6.4%, over the
same quarter last year. Net Operating Income in this segment for the 3rd
quarter was $5,485,000, compared to $5,273,000 in the 3rd quarter last year,
an increase of 4%. The increase was mainly due to the acquisition of the Port
Capital building in Baltimore in October of 2015. We ended this quarter with
total occupied square feet of 3,319,891 versus 3,256,405 at the end of the 3rd
quarter last year, an increase of 1.9% or 63,486 square feet.
Depreciation and amortization expense increased primarily due to $139,000 of
accelerated depreciation for tenant improvements removed during the quarter
for a new tenant and the Port Capital purchase. Corporate expense increased
due to the Reallocation and higher professional fees.
During the 2nd quarter, the Company identified an opportunity to buy the
Gilroy Road building located in Hunt Valley, MD, for a purchase price of
$8,331,000. The Company closed on this acquisition July 1, 2016. The building
is a 116,338 square foot Class "B" warehouse facility inclusive of 8,900
square feet of second floor mezzanine office space (107,438 sf footprint) on
7.0 acres in Hunt Valley, MD. The property is 100% leased. Rental revenue
(excluding reimbursements) is projected to be $755,000 in fiscal 2017.
Mining Royalty Lands Segment:
----------------------------
Total revenues in this segment were $2,059,000, an increase of 18.7%, versus
$1,735,000 in the same quarter last year due to an increase in tons sold at
locations over the minimum. Total operating profit in this segment was
$1,888,000, an increase of $535,000 (inclusive of a $171,000 benefit from the
Reallocation), versus $1,353,000 in the third quarter of last year.
Land Development and Construction Segment:
-----------------------------------------
The Land Development and Construction segment is responsible for (i) seeking
out and identifying opportunistic purchases of income producing warehouse/
office buildings, and (ii) developing our non-income producing properties
into income production. Construction of the 79,550 square foot spec
warehouse at Hollander Business park was completed during the third quarter of
this fiscal year and transferred to the Asset Management segment for lease-up.
Also in the third quarter of fiscal 2016 we started construction on a 103,653
square foot building in Patriot Business Center and pre-leased 51,727 square
feet. The Company executed a letter of intent with MRP Realty in May 2016 to
develop Phase II of the Riverfront on the Anacostia project and recorded an
estimated environmental remediation expense of $2.0 million for the Company's
estimated liability under the proposed agreement.
Operating expenses were higher than the same quarter last year primarily due
to professional fees pursuing settlement negotiations with other potentially
responsible parties for environmental contamination and an eminent domain
proceeding both at Riverfront on the Anacostia.
Fiscal 2016 First Nine Months Consolidated Results of Continuing Operations.
Income from continuing operations for the first nine months of fiscal 2016 was
$10,067,000 or $1.02 per share versus $4,022,000 or $.41 per share in the
first nine months last year. The first nine months of fiscal 2016 included
$.44 per share from a gain on land sale of $6,177,000 and income of $1,000,000
from the $3 million environmental claim cash settlement received offset by a
$2 million estimated liability for environmental remediation on Phase II.
Post Spin-off we are reporting any net gain/(loss) from the transportation
business as "discontinued operations" and we currently have no other
discontinued operations being reported. For the nine months ended June 30,
2016 we received no benefit to after tax net income versus a $2,179,000
benefit in the same period last year. Additionally, GAAP accounting rules do
not allow corporate overhead expense to be allocated to a discontinued
operation of the Company which resulted in the first nine months of fiscal
2015 including $1,081,000 of corporate overhead expense to the Company that
was associated with the discontinued transportation operations.
Total revenues were up $1,934,000, or 7.5%, versus the same period last year.
Consolidated adjusted total operating profit in the first nine months of the
year (excluding the positive impacts of the environmental settlement/expense
(net) in this period and the negative impact of corporate expense not
allocable to discontinued operations in the prior year) was up 16.9% over the
same period last year (see table "Non-GAAP Financial Measures).
First Nine Months Segment Operating Results.
Asset Management Segment:
------------------------
Total revenues in this segment were $21,416,000, up $820,000 or 4.0%, over the
same period last year. Net operating income in this segment for the period was
$16,317,000, compared to $15,726,000 in the 3rd quarter last year, an increase
of 3.8%. The increase was due mainly to completion of the third build-to-suit
in the middle of the 2nd quarter last year and the acquisition of the Port
Capital building in October of 2015.
Depreciation and amortization expense increased primarily due to $139,000 of
accelerated depreciation for tenant improvements removed during the current
quarter for a new tenant and the Port Capital purchase. Corporate expense
increased due to the reallocation and higher professional fees.
Mining Royalty Lands Segment:
----------------------------
Total revenues in this segment were $5,496,000, an increase of 24.5%, versus
$4,414,000 in the same period last year due to an increase in tons sold. Total
operating profit in this segment was $4,932,000, an increase of $2,032,000
(inclusive of a $885,000 benefit from the Reallocation), versus $2,900,000 in
the first nine months of last year.
Land Development and Construction Segment:
-----------------------------------------
In addition to the items occurring in the 3rd quarter as outlined above,
during the first nine months of fiscal 2016 this segment successfully closed
on the sale of Phase II of the Windlass Run residential land (a non-income
producing property) for $11,288,000. Using $9,900,000 of the proceeds from that
sale in a Section 1031 exchange, the Asset Management segment acquired the Port
Capital building, a 91,218 square foot, 100% occupied warehouse with first full
year projected rental revenue of $594,000. Management successfully completed
negotiations and entered into a $3,000,000 settlement of environmental claims
against our former tenant at the Riverfront on the Anacostia property and
continues to pursue settlement negotiations with other potentially responsible
parties. This recovery was mostly offset by the recordation of environmental
remediation expense of $2.0 million for Phase II.
Summary and Outlook. We are focused on building shareholder value through our
real estate holdings - mainly by growing our portfolio through the
opportunistic purchase of income producing warehouse/office buildings, and the
conversion of our non-income producing assets into income production through a
two pronged approach that includes (i) selling land that is not conducive to
warehouse/office development (e.g. Windlass Run Residential Phase 2 land) and
using the proceeds to acquire existing income producing warehouse/office
buildings typically in a Section 1031 exchange (e.g. the Port Capital building
purchase) and (ii) the construction of new warehouse/office buildings on
existing pad sites in our developed business parks (e.g. new spec building at
Hollander Business Park). Over the past five years, we have converted 172
acres of non-income producing land into 766,216 square feet of income
producing properties (excluding the recently completed spec building) with
estimated FY 2016 rental revenues of $5,587,000.
We saw another quarter of real improvement in mining royalties due mainly to
increased volumes at most of our locations.
During the remainder of fiscal 2016, we expect to continue construction on a
new 104,000 sq.ft. spec building at Patriot Business Park, reconstruct the
bulk head at the Square 664E property in anticipation of future high-rise
development, and continue management of construction and lease up of Phase I
(Dock 79) of RiverFront on the Anacostia and pre-development activities for
Phase II. Phase I pre-leasing activity for the 305 residential units commenced
in late May of 2016 and as of July 18th the residential units were 18.8%
pre-leased with occupancy not expected until August 2016.
Conference Call.
The Company will host a conference call on Tuesday, August 2, 2016 at 1:00
p.m. (EDT). Analysts, stockholders and other interested parties may access the
teleconference live by calling 1-800-351-6804 (pass code 34997) within the
United States. International callers may dial 334-323-7224 (pass code 34997).
Computer audio live streaming is available via the Internet through the
Company's website at www.frpholdings.com. You may also click on this link for
the live streaming http://stream.conferenceamerica.com/FRP080216. For the
archived audio via the internet, click on the following link
http://archive.conferenceamerica.com/archivestream/FRP080216.mp3. 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 49097905. 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.
FRP HOLDINGS, INC. AND SUBSIDIARIES
-----------------------------------
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
2016 2015 2016 2015
---- ---- ---- ----
Revenues:
Rental revenue $ 6,082 5,784 18,198 17,531
Royalty and rents 2,033 1,714 5,427 4,349
Revenue - reimbursements 1,128 999 4,056 3,867
------ ------ ------ ------
Total Revenues 9,243 8,497 27,681 25,747
Cost of operations:
Depreciation, depletion
and amortization 2,066 1,805 5,891 5,566
Operating expenses 974 818 3,478 3,487
Environmental
remediation expense 2,000 - (1,000) -
Property taxes 1,128 994 3,388 3,323
Management company indirect 425 434 1,425 1,228
Corporate expenses 684 557 2,424 3,750
------ ------ ------ ------
Total cost of operations 7,277 4,608 15,606 17,354
Total operating profit 1,966 3,889 12,075 8,393
Interest income - - 2 -
Interest expense (392) (459) (1,288) (1,524)
Equity in loss of
joint ventures (186) (75) (326) (255)
Gain (Loss) on
investment land sold (109) - 6,177 (20)
------ ------ ------ ------
Income from continuing
operations before income
taxes 1,279 3,355 16,640 6,594
Provision for income taxes 505 1,309 6,573 2,572
------ ------ ------ ------
Income from continuing
operations 774 2,046 10,067 4,022
Gain from discontinued
transportation operations,
net of taxes - - - 2,179
------ ------ ------ ------
Net income $ 774 2,046 10,067 6,201
====== ====== ====== ======
Comprehensive net income $ 774 2,046 10,067 6,201
====== ====== ====== ======
Earnings per common share:
Income from continuing
operations-
Basic $ 0.08 0.21 1.02 0.41
Diluted $ 0.08 0.21 1.02 0.41
Discontinued operations-
Basic $ - - - 0.23
Diluted $ - - - 0.22
Net Income-
Basic $ 0.08 0.21 1.02 0.64
Diluted $ 0.08 0.21 1.02 0.63
Number of shares (in
thousands) used in computing:
-basic earnings per
common share 9,864 9,777 9,839 9,745
-diluted earnings per
common share 9,907 9,839 9,884 9,822
Asset Management Segment:
------------------------
Three months ended June 30
---------------------------------------
(dollars in thousands) 2016 % 2015 % Change %
-------- ------- -------- ------- -------- -------
Rental revenue $ 5,952 85.9% 5,684 87.3% 268 4.7%
Revenue-reimbursements 975 14.1% 825 12.7% 150 18.2%
-------- ------- -------- ------- -------- -------
Total revenue 6,927 100.0% 6,509 100.0% 418 6.4%
Depreciation, depletion and amortization 1,985 28.7% 1,694 26.0% 291 17.2%
Operating expenses 774 11.2% 730 11.2% 44 6.0%
Property taxes 668 9.6% 551 8.5% 117 21.2%
Management company indirect 182 2.6% 245 3.8% (63) -25.7%
Corporate expense 354 5.1% 210 3.2% 144 68.6%
-------- ------- -------- ------- -------- -------
Cost of operations 3,963 57.2% 3,430 52.7% 533 15.5%
-------- ------- -------- ------- -------- -------
Operating profit $ 2,964 42.8% 3,079 47.3% (115) -3.7%
======== ======= ======== ======= ======== =======
Mining Royalty Lands Segment:
----------------------------
Three months ended June 30
---------------------------------------
(dollars in thousands) 2016 % 2015 %
-------- ------- -------- -------
Royalty and rents $ 2,035 98.8% 1,714 98.8%
Revenue-reimbursements 24 1.2% 21 1.2%
-------- ------- -------- -------
Total revenue 2,059 100.0% 1,735 100.0%
Depreciation, depletion and amortization 15 0.7% 39 2.2%
Operating expenses 45 2.2% 66 3.8%
Property taxes 59 2.9% 54 3.1%
Corporate expense 52 2.5% 223 12.9%
-------- ------- -------- -------
Cost of operations 171 8.3% 382 22.0%
Operating profit $ 1,888 91.7% 1,353 78.0%
======== ======= ======== =======
Land Development and Construction Segment:
-----------------------------------------
Three months ended June 30
--------------------------------------
(dollars in thousands) 2016 2015 Change
-------- -------- --------
Rental revenue $ 130 100 30
Royalty and rents (2) - (2)
Revenue-reimbursements 129 153 (24)
-------- -------- --------
Total revenue 257 253 4
Depreciation, depletion and amortization 66 72 (6)
Operating expenses 155 22 133
Environmental remediation expense 2,000 - 2,000
Property taxes 401 389 12
Management company indirect 243 189 54
Corporate expense 278 124 154
-------- -------- --------
Cost of operations 3,143 796 2,347
-------- -------- --------
Operating loss $ (2,886) (543) (2,343)
======== ======== ========
Asset Management Segment:
------------------------
Nine months ended June 30
---------------------------------------
(dollars in thousands) 2016 % 2015 % Change %
-------- ------- -------- ------- -------- -------
Rental revenue $ 17,818 83.2% 17,183 83.4% 635 3.7%
Revenue-reimbursements 3,598 16.8% 3,413 16.6% 185 5.4%
-------- ------- -------- ------- -------- -------
Total revenue 21,416 100.0% 20,596 100.0% 820 4.0%
Depreciation, depletion and amortization 5,618 26.2% 5,256 25.5% 362 6.9%
Operating expenses 3,043 14.2% 2,931 14.2% 112 3.8%
Property taxes 1,989 9.3% 2,003 9.7% (14) -0.7%
Management company indirect 637 3.0% 544 2.7% 93 17.1%
Corporate expense 1,252 5.8% 1,007 4.9% 245 24.3%
-------- ------- -------- ------- -------- -------
Cost of operations 12,539 58.5% 11,741 57.0% 798 6.8%
-------- ------- -------- ------- -------- -------
Operating profit $ 8,877 41.5% 8,855 43.0% 22 0.2%
======== ======= ======== ======= ======== =======
Mining Royalty Lands Segment:
----------------------------
Nine months ended June 30
---------------------------------------
(dollars in thousands) 2016 % 2015 %
-------- ------- -------- -------
Royalty and rents $ 5,429 98.8% 4,349 98.5%
Revenue-reimbursements 67 1.2% 65 1.5%
-------- ------- -------- -------
Total revenue 5,496 100.0% 4,414 100.0%
Depreciation, depletion and amortization 80 1.5% 100 2.3%
Operating expenses 125 2.3% 180 4.1%
Property taxes 177 3.2% 167 3.8%
Corporate expense 182 3.3% 1,067 24.1%
-------- ------- -------- -------
Cost of operations 564 10.3% 1,514 34.3%
-------- ------- -------- -------
Operating profit $ 4,932 89.7% 2,900 65.7%
======== ======= ======== =======
Land Development and Construction Segment:
-----------------------------------------
Nine months ended June 30
--------------------------------------
(dollars in thousands) 2016 2015 Change
-------- -------- --------
Rental revenue $ 380 348 32
Royalty and rents (2) - (2)
Revenue-reimbursements 391 389 2
-------- -------- --------
Total revenue 769 737 32
Depreciation, depletion and amortization 193 210 (17)
Operating expenses 310 376 (66)
Environmental remediation recovery (1,000) - (1,000)
Property taxes 1,222 1,153 69
Management company indirect 788 684 104
Corporate expense 990 595 395
-------- -------- --------
Cost of operations 2,503 3,018 (515)
-------- -------- --------
Operating loss $ (1,734) (2,281) 547
======== ======== ========
Non-GAAP Financial Measures.
To supplement the financial results presented in accordance with GAAP, FRP
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 quarterly report are adjusted operating
profit and net operating income (NOI). FRP 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.
Post Spin-off we are reporting any net gain/(loss) from the transportation
business as "discontinued operations" and we currently have no other
discontinued operations being reported. GAAP accounting rules do not allow
corporate overhead expenses to be allocated to a discontinued operation of the
Company; thus, those corporate expenses attributable to the transportation
business prior to the spin-off are charged to the Company as part of continuing
operations.
Adjusted Operating Profit
Adjusted operating profit excludes the impact of the corporate expense not
allocated to discontinued operations and the environmental remediation
recovery. Adjusted operating profit is presented to provide additional
perspective on underlying trends in FRP's core operating results. A
reconciliation between operating profit and adjusted operating profit is as
follows:
Adjusted Operating Profit
Nine months ended
June 30,
2016 2015 Change %
-------- -------- -------- -------
Operating profit $ 12,075 8,393 3,682 43.9%
Adjustments:
Environmental remediation recovery (1,000) -
Corporate costs not allocated
to discontinued operations - 1,081
-------- -------- -------- -------
Adjusted Operating profit $ 11,075 9,474 1,601 16.9%
Net Operating Income Reconciliation
Three months ending 06/30/16 (in thousands)
Asset Land Mining Unallocated FRP
Management Development Royalties Corporate Holdings
Segment Segment Segment Expenses Totals
---------- ---------- ---------- ---------- ----------
Income from continuing operations $ 1,556 (1,927) 1,145 - 774
Income Tax Allocation 1,016 (1,259) 748 - 505
---------- ---------- ---------- ---------- ----------
Inc. from continuing operations
before income taxes 2,572 (3,186) 1,893 - 1,279
Less:
Lease intangible rents 5 -
Plus:
Unrealized rents 5 -
Equity in loss of Joint Venture - 176
Loss on investment land sold - 124
Interest Expense 392 -
Depreciation/Amortization 1,985 66
Management Co. Indirect 182 243
Allocated Corporate Expenses 354 278
---------- ----------
Net Operating Income (loss) $ 5,485 (2,299)
Net Operating Income Reconciliation
Nine months ending 06/30/16 (in thousands)
Asset Land Mining Unallocated FRP
Management Development Royalties Corporate Holdings
Segment Segment Segment Expenses Totals
---------- ---------- ---------- ---------- ----------
Income from continuing operations $ 4,596 2,496 2,975 - 10,067
Income Tax Allocation 3,002 1,629 1,942 - 6,573
---------- ---------- ---------- ---------- ----------
Inc. from continuing operations
before income taxes 7,598 4,125 4,917 - 16,640
Less:
Gains on investment land sold 9 6,153
Other income - 2
Unrealized rents 44 -
Lease intangible rents 23 -
Plus:
Equity in loss of Joint Venture - 296
Interest Expense 1,288 -
Depreciation/Amortization 5,618 193
Management Co. Indirect 637 788
Allocated Corporate Expenses 1,252 990
---------- ----------
Net Operating Income $ 16,317 237
Net Operating Income Reconciliation
Three months ending 06/30/15 (in thousands)
Asset Land Mining Unallocated FRP
Management Development Royalties Corporate Holdings
Segment Segment Segment Expenses Totals
---------- ---------- ---------- ---------- ----------
Income from continuing operations $ 1,611 (383) 818 - 2,046
Income Tax Allocation 1,030 (244) 523 - 1,309
---------- ---------- ---------- ---------- ----------
Inc. from continuing operations
before income taxes 2,641 (627) 1,341 - 3,355
Less:
Gains on investment land sold 20 -
Lease intangible rents 14 -
Plus:
Loss on investment land sold - 20
Unrealized rents 59 -
Equity in loss of Joint Venture - 64
Interest Expense 458 -
Depreciation/Amortization 1,694 72
Management Co. Indirect 245 189
Allocated Corporate Expenses 210 124
---------- ----------
Net Operating Income (loss) $ 5,273 (158)
Net Operating Income Reconciliation
Nine months ending 06/30/15 (in thousands)
Asset Land Mining Unallocated FRP
Management Development Royalties Corporate Holdings
Segment Segment Segment Expenses Totals
---------- ---------- ---------- ---------- ----------
Income from continuing operations $ 4,503 (1,541) 1,720 (660) 4,022
Income Tax Allocation 2,879 (986) 1,100 (421) 2,572
---------- ---------- ---------- ---------- ----------
Inc. from continuing operations
before income taxes 7,382 (2,527) 2,820 (1,081) 6,594
Less:
Lease intangible rents 39 -
Plus:
Loss on investment land sold - 20
Unrealized rents 103 -
Equity in loss of Joint Venture - 226
Interest Expense 1,473 -
Depreciation/Amortization 5,256 210
Management Co. Indirect 544 684
Allocated Corporate Expenses 1,007 595
---------- ----------
Net Operating Income $ 15,726 (792)
