Patriot Transportation Holding, Inc. Announces Results for the Third Quarter and YTD Fiscal Year 2021
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Patriot Transportation Holding, Inc. Announces Results for the Third Quarter and YTD Fiscal Year 2021

Wednesday, July 28, 2021 12:25 PM
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Patriot Transportation Holding, Inc.

JACKSONVILLE, FL / ACCESSWIRE / July 28, 2021 / Patriot Transportation Holding, Inc. (NASDAQ:PATI)

Third Quarter Operating Results

The Company reported net income of $323,000, or $.09 per share for the quarter ended June 30, 2021, compared to $573,000, or $.17 per share, in the same quarter last year. This quarter's net income included $133,000, or $.04 per share, from gains on real estate sales net of income taxes.

Total revenues for the quarter were $20,855,000, up $1,844,000 from the same quarter last year. Last year's quarter was negatively impacted by COVID-19 (~$3.5M) while this year's quarter was negatively impacted by the reduction of one customer account starting February, 2021 (~$2.3M per quarter) and the continued reduction in driver count due to turnover and the driver shortage (down ~100 drivers from the 3rd quarter of last year). Transportation revenues (excluding fuel surcharges) were $18,746,000, up $714,000 or 4%. Revenue miles were down 303,000, or 5%, over the same quarter last year. Transportation revenue per mile was up $.27, or 9.2%, due to an improved business mix and rate increases. Fuel surcharge revenue was $2,109,000, up $1,130,000 from the same quarter last year.

Compensation and benefits increased $625,000, mainly due to our increased driver compensation package (approximately 15% effective April 29, 2021) which was offset by a $233,000 reduction in support wages. Gross fuel expense increased $830,000 as a result of higher cost per gallon. Insurance and losses increased $346,000, primarily from higher health care claims (claims were very low due to COVID-19 in last year's quarter). Depreciation expense was down $153,000 in the quarter as we continue to reduce our fleet size to meet our business levels. SG&A expense was higher by $445,000 resulting from increased travel $98,000, a $150,000 one time gain related to the Danfair acquisition included in last year's quarter and $125,000 of 401k match expense compared to $0 in the same quarter last year when we used forfeitures to pay the match. This fiscal year we used the 401k forfeitures to pay the match in the 2nd quarter and will continue to do that going forward as long as we have the forfeitures available. Corporate expense was higher by $64,000 due to several smaller items. Gain on sale of terminal sites was $183,000 due to the sale and partial leaseback of our terminal located in Chattanooga, TN. Gain on disposition of assets was $46,000 versus $224,000 in the same quarter last year

As a result, operating profit this quarter was $452,000 compared to $794,000 in the same quarter last year. Operating ratio was 97.8 this quarter versus 95.8 the same quarter last year.

First Nine Months Operating Results for Fiscal year 2021

The Company reported net income of $585,000, or $.17 per share, compared to a net loss of ($292,000), or ($.09) per share, in the same period last year. The first nine months' net income included $1,170,000, or $.34 per share, from gains on real estate sales net of income taxes.

Total revenues for the period were $60,811,000, down $6,536,000 from the same period last year, of which $4,308,000 resulted from the downsizing of one customer account beginning February, 2021 and the remainder of the revenue variance was primarily attributable to the declining driver count. The driver shortage is an industry wide event that saw driver counts decline during COVID-19 and, now that demand has returned, there are not enough viable applicants to fill the void. Transportation revenues (excluding fuel surcharges) were $56,187,000, down $6,004,000 or 10%. Revenue miles were down 3,230,000 miles, or 15%, over the same period last year. Transportation revenue per mile was up $.18, or 6.2%, due to an improved business mix and rate increases. Fuel surcharge revenue was $4,624,000, down $532,000 from the same period last year.

Compensation and benefits decreased $3,016,000, mainly due to lower company miles, as well as the elimination of minimum driver pay expense and reductions in non-driver support positions. Gross fuel expense decreased $1,017,000 as a result of lower company miles. Repairs and tire expense decreased $471,000 due to lower miles this quarter. Insurance and losses decreased $927,000, primarily from lower health care claims somewhat offset by the single tractor rollover accident last quarter. Depreciation expense was down $526,000 as we continue to reduce our fleet size to meet our business levels. SG&A expense was lower by $368,000 resulting primarily from permanent cost reductions. Corporate expenses were down $197,000 due mainly to lower compensation expense, legal and audit fees. Gain on sale of land was $1,614,000 due to the sale of our former terminal location in Pensacola, FL and the sale and partial leaseback of our terminal in Chattanooga, TN. Loss on disposition of assets was $153,000 primarily due to the write off of the equipment involved in the single tractor rollover accident versus a gain of $674,000 in the same period last year.

As a result, operating profit was $822,000 compared to an operating loss of ($518,000) in the same period last year. Excluding the gain on sale of terminal sites and the negative impacts of the rollover accident, operating loss for the nine months was ($325,500). Operating ratio was 98.6 in the first nine months versus 100.8 the same period last year.

Summary and Outlook

Heading into the 3rd quarter we determined that the driver shortage and high turnover was unsustainable and that a driver pay increase was imperative if we were going to reverse the tide. On April 29th, we implemented a significant driver pay increase (15%+). We went to all of our customers and proposed a rate increase to completely offset the impacts of the pay increase and all but one very small account accepted the rate increase. Many other customers who were due for a rate increase also accepted an added increase on top of that required to cover the driver pay. Most of these increases were implemented during the month of May with some starting in June and will be fully flowing through in the 4th quarter. We still have rate increase negotiations on-going with some additional customers, including our largest account, most of which will be implemented across the fourth quarter. We fully expect to continue pushing prices in the coming year in order to improve operating profit.

The impact of the driver pay increase has been beneficial, specifically on retention where we have seen an ~50% reduction in voluntary turnover following the announcement. While we have seen an uptick on the application and hiring side it has not yet been as significant as the retention piece but we continue to press forward through targeted advertisements and using our drivers to promote the compensation package with referral bonuses. Overall, the net result thus far is that we are maintaining our driver count fairly level since April, versus losing ~10-12 drivers per month previously, and we hope to see driver growth as the hiring side picks up and we get drivers trained and producing revenue.

Our balance sheet remains solid with $10.6 million of cash and cash equivalents as of June 30, 2021, and no outstanding debt. We do not anticipate replacing any equipment until the first quarter of fiscal year 2022 putting our current planned capital expenditures at ~$1,000,000 for fiscal year 2021 and then returning to a more normalized capex spend (~$6M) in FY 2022. The Tampa property remains under contract with an outside closing date of September 19, 2021 at a sales price of $9,500,000.

Impact of the COVID-19 Pandemic

The COVID-19 pandemic continues to have some impact on demand for oil and petroleum products in certain markets but, mainly due to the rollout of the vaccine, that impact was far less in this quarter than had been experienced since the beginning of the pandemic. As an essential business, we have continued to operate throughout the pandemic in accordance with CDC guidance and orders issued by state and local authorities.

Conference Call

The Company will host a conference call on July 28, 2021 at 3:00 PM (EDT). Analysts, shareholders and other interested parties may access the teleconference live by calling 1-877-407-0778 domestic or international at 1-201-689-8565. 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.webcaster4.com/Webcast/Page/2058/41910. 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 41910. An audio archive can be accessed through the Company's website at www.patriottrans.com on the Investor Relations tab or at https://www.webcaster4.com/Webcast/Page/2058/41910.

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 the impact of the COVID-19 pandemic on our revenues, operations and financial condition; 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.

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

PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands)
(Unaudited)


 
 THREE MONTHS ENDED  NINE MONTHS ENDED 

 
 JUNE 30,  JUNE 30, 

 
 2021  2020  2021  2020 
Revenues:
 
 
  
 
  
 
  
 
 
Transportation revenues
 18,746   18,032  56,187   62,191 
Fuel surcharges
  2,109   979   4,624   5,156 
Total revenues
  20,855   19,011   60,811   67,347 
                 
Cost of operations:
                
Compensation and benefits
  9,200   8,575   26,938   29,954 
Fuel expenses
  2,568   1,738   7,130   8,147 
Repairs & tires
  1,316   1,182   4,033   4,504 
Other operating
  734   768   2,302   2,699 
Insurance and losses
  1,789   1,443   5,840   6,767 
Depreciation expense
  1,662   1,815   5,078   5,604 
Rents, tags & utilities
  653   719   2,052   2,222 
Sales, general & administrative
  2,284   1,839   6,561   6,929 
Corporate expenses
  426   362   1,516   1,713 
Gain on sale of terminal sites
  (183)  -   (1,614)  - 
Loss (gain) on disposition of PP&E
  (46)  (224)  153   (674)
Total cost of operations
  20,403   18,217   59,989   67,865 
                 
Total operating profit (loss)
  452   794   822   (518)
                 
Interest income and other
  1   4   4   131 
Interest expense
  (8)  (8)  (23)  (23)
                 
Income (loss) before income taxes
  445   790   803   (410)
Provision for (benefit from) income taxes
  122   217   218   (118)
                 
Net income (loss)
 323   573  585   (292)
                 
Reclassification adjust for net investment gains realized in net income
  -   -   -   (5)
                 
Comprehensive income (loss)
 323   573  585   (297)
                 
Earnings per common share:
                
Net Income (loss) -
                
Basic
 0.09   0.17  0.17   (0.09)
Diluted
 0.09   0.17  0.17   (0.09)
                 
Number of shares (in thousands) used in computing:   
-basic earnings per common share
  3,402   3,377   3,391   3,366 
-diluted earnings per common share
  3,420   3,377   3,401   3,366 
                 

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

       

 
 June 30,  September 30, 
Assets
 2021  2020 
Current assets:
      
Cash and cash equivalents
 10,586   15,962 
Cash held in escrow
  581   - 
Accounts receivable (net of allowance for
doubtful accounts of $78 and $87, respectively)
  5,308   5,005 
Inventory of parts and supplies
  893   903 
Prepaid tires on equipment
  1,369   1,414 
Prepaid taxes and licenses
  120   522 
Prepaid insurance
  1,856   2,444 
Prepaid expenses, other
  326   291 
Total current assets
  21,039   26,541 
         
Property and equipment, at cost
  80,122   83,204 
Less accumulated depreciation
  55,388   52,805 
Net property and equipment
  24,734   30,399 
         
Operating lease right-of-use assets
  2,193   2,964 
Goodwill
  3,637   3,637 
Intangible assets, net
  806   957 
Other assets, net
  160   171 
Total assets
 52,569   64,669 
         
Liabilities and Shareholders' Equity
        
Current liabilities:
        
Accounts payable
 1,861   2,679 
Federal and state taxes payable
  709   284 
Accrued payroll and benefits
  2,764   3,156 
Accrued insurance
  958   1,210 
Accrued liabilities, other
  1,679   1,281 
Operating lease labilities, current portion
  1,065   1,065 
Total current liabilities
  9,036   9,675 
         
Operating lease liabilities, less current portion
  1,253   2,073 
Deferred income taxes
  3,604   5,087 
Accrued insurance
  1,886   1,886 
Other liabilities
  885   900 
Total liabilities
  16,664   19,621 
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; 3,402,146 and 3,377,279 shares issued
and outstanding, respectively)
  340   338 
Capital in excess of par value
  39,072   38,670 
(Accumulated deficit) Retained earnings
  (3,612)  5,935 
Accumulated other comprehensive income, net
  105   105 
Total shareholders' equity
  35,905   45,048 
Total liabilities and shareholders' equity
 52,569   64,669 
         

SOURCE: Patriot Transportation Holding, Inc.

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