PATRIOT TRANSPORTATION HOLDING, INC.
ANNUAL REPORT
2016
A Transportation Company
Annual Report 2016
Patriot Transportation Holding, Inc.
CONSOLIDATED AND COMBINED FINANCIAL HIGHLIGHTS
Years ended September 30
(Amounts in thousands except per share amounts)
2016
2015
%
Change
Revenues ............................................................................................$ 120,172
7,790
Operating profit ....................................................................................$
9,353
Income before income taxes ................................................................$
5,705
Net income ..........................................................................................$
Per common share:
Basic ..............................................................................................$
Diluted ............................................................................................$
1.74
1.74
Total Assets ..........................................................................................$ 66,299
—
Total Debt ............................................................................................$
Shareholders’ Equity ............................................................................$ 43,946
3,289
Common Shares Outstanding ..............................................................
13.36
Book Value Per Common Share .......................................................... $
122,882
5,586
5,474
3,339
1.02
1.02
59,526
—
37,202
3,273
11.37
(2.2)
39.5
70.9
70.9
70.6
70.6
11.4
—
18.1
.5
17.5
BUSINESS. The business of the Company, conducted
through our wholly owned subsidiary, Florida Rock &
Tank Lines, Inc. (Tank Lines), which is a Southeastern
U.S. based tank truck company, is to transport petroleum
and other liquids and dry bulk commodities.
to
OBJECTIVES. The Company’s objectives are
continue building a substantial transportation company
providing sound long-term growth, cash generation and
asset appreciation.
GROWTH PLAN.
n Internal growth is accomplished by a dedicated and
competent work force emphasizing superior service
to customers in existing markets, developing new
transportation services for customers in current
market areas and expanding into new market areas.
n External growth
the
is designed
Company’s geographic market area and delivery
services by acquiring related businesses.
to broaden
1
To Our Shareholders
Patriot Transportation Holding, Inc.
Fiscal 2016 was a tough year, but one in which we made
significant progress. We worked with our customers to
create and implement a new fuel surcharge that
neutralizes the negative margin impacts we had been
experiencing in this lower priced diesel fuel environment.
As a result of better freight pricing in the market and more
efficient utilization of our equipment we were able to grow
our per mile transportation revenue by 4.7% over last
year. During the year, we received $1,687,000 as the
result of a settlement agreement with BP Exploration and
Production, Inc. for damages arising out of the
Deepwater Horizon event and sold an easement to the
state of Florida at our terminal facility in Tampa, Florida
for $1,330,000. We also purchased the equipment of two
different private fleets, one in Florida and the other in
North Carolina. The Florida acquisition included 8 trailers,
assuming the leases on 7 tractors and hiring 16 drivers
while contracting to haul 73 locally owned convenience
stores. In North Carolina we purchased 4 tractors and
hired 6 drivers as one of our largest customers acquired
a chain of C-stores and asked us to take on the seller’s
private fleet.
All of these factors contributed to the Company reporting
net income per share of $1.74 versus $1.02 last year.
We ended the year with no debt, a cash balance of
$6,005,000 and grew our shareholders’ equity by
$6,744,000, to $43,946,000, an 18% increase over
last year.
We continue to face challenges hiring and retaining
qualified drivers to safely perform a very difficult job for
our customers. As a result, our compensation and
benefits cost were up and our safety performance came
up short of our expectations as new hires tended to have
higher incident frequency rates. This year, we will be
exploring the roll out of additional programs to attract,
train and retain more quality drivers, including a driver
mentor program.
In 2017, our industry will be impacted by federally
mandated electronic log requirements for all drivers. Our
Company has been electronic log compliant for many
years and this new requirement will have no negative
impact on our drivers or how we run our business.
However, not all of our competitors can say the same and
these competitors may see significant negative impacts
as a result of these new regulations.
2
Our industry is also facing increasing costs associated
with risk insurance as some large insurance underwriters
have recently left the space completely. While this may
challenge us going forward, we believe that our size,
strong financial condition, and positive safety experience
provide us an opportunity to distinguish ourselves from
our competition.
Our company has an historical culture of “safety first”. I
want to take this opportunity to mention two bright spots
in the safety department, both senior drivers with the
Company, Mr. James “Orik” Daniels and Mr. William
“Butch” White. Orik Daniels was recognized earlier this
year by the National Tank Truck Carriers’ Association as
being one of the eight “champion” drivers for 2015 in the
tank truck industry and Butch White was recognized this
year by the Florida Trucking Association as its Driver of
the Year.
Customer service and satisfaction are the keys to
succeeding in this business. It takes a dedicated team in
the field to consistently deliver on our promise of “safely
delivering our customer’s products on-time and
accurately”, in particular, during times of crises. In the
latter part of the fourth quarter, many of our markets
experienced the impacts of the Colonial gas pipeline
rupture in Alabama. This event put a tremendous strain
on our customers and, in turn, on our employees. It
required significant flexibility in the field to service our
customers’ demands on a daily basis. Following our
performance during this crisis, we received several
acknowledgements from customers expressing their
appreciation for the efforts our employees put forth and
the successes we achieved together. It is moments like
these that we feel set us apart in the industry and keep
our customer partnerships strong over the course of
many years.
Our primary goal for our shareholders is to grow
profitably while maintaining a strong balance sheet and
double digit returns on capital employed and we achieved
this goal on all fronts. The major headwinds to our
improvement and growth are the rising cost of insurance
and the difficulty associated with hiring, training and
retaining drivers in today’s environment. Our strategy
going forward is to concentrate our growth efforts in the
markets where we have been successful finding and
retaining quality drivers. We will also focus our efforts on
improving our technology to enhance both our driver’s
To Our Shareholders Continued
Patriot Transportation Holding, Inc.
and our customer’s experience while also working to
lower our costs by streamlining and automating many of
our day-to-day processes. With these focuses in mind, we
are optimistic we will achieve our targeted levels of
revenue and bottom line results in fiscal 2017. As always,
we do not take your continuing investment in our
Company lightly and we want to thank you, our loyal
shareholders, for your continued interest and support.
Respectively yours,
Edward L. Baker
Chairman Emeritus
Thompson S. Baker II
Chairman, President & Chief Executive Officer
3
Our Business
Patriot Transportation Holding, Inc.
On January 30, 2015, FRP Holdings, Inc. ("FRP")
completed the tax-free spin-off (the “Spin-off") of Patriot
Transportation Holding, Inc., (the "Company" or "Patriot").
In the Spin-off, FRP distributed all of the outstanding
stock of the Company to FRP's shareholders as of the
record date of January 9, 2015. FRP’s shareholders
received one share of Patriot (stock symbol “PATI”) for
every three shares of FRP owned on the record date
resulting in 3,242,524 of Patriot shares outstanding on
the distribution date. Patriot now is an independent,
publicly traded company, and FRP retains no ownership
in Patriot.
Patriot was incorporated on August 5, 2014 in connection
with a corporate reorganization that preceded the Spin-
off. The business of the Company is conducted through
our wholly-owned subsidiary, Florida Rock & Tank Lines,
Inc. (“Tank Lines”), the same subsidiary through which
FRP operated the transportation business prior to the
Spin-off.
Our business consists of hauling petroleum related
products, dry bulk commodities and liquid chemicals. We
are one of the largest regional tank truck carriers in North
America. According to the Tank Truck Carrier 2015 Gross
Revenue Report issued by Bulk Transporter, we are the
15th largest bulk tank carrier in North America by
revenue. We operate terminals in Florida, Georgia,
Alabama, South Carolina, North Carolina and
Tennessee. We do not own any of the products we haul;
rather, we act as a third party carrier to deliver our
customers’ products from point A to point B, using
predominately Company employees and Company-
owned tractors and tank trailers. Approximately 82% of
our business consists of hauling liquid petroleum
products (mostly gas and diesel fuel) from large scale
fuel storage facilities to our customers’ retail outlets (e.g.
convenience stores, truck stops and fuel depots) where
we off-load the product into our customer’s fuel storage
tanks for ultimate sale to the retail consumer. The
remaining 18% of our business consists of hauling our
customers’ dry bulk commodities such as cement, lime
and various industrial powder products and liquid
chemicals. As of September 30, 2016, we employed 689
revenue-producing drivers who operated our fleet of 468
tractors and 561 trailers from our 21 terminals and 9
satellite locations.
retail locations such as hypermarkets, convenience
stores and truck stops. We also provide the last mile of
delivery service in the liquid chemical and dry bulk
business primarily
facilities or
manufacturing facilities to the end user. Cement and ash
are delivered to concrete plants, powdered lime to
industrial users and liquid chemicals primarily to the end
user at a manufacturing plant or water treatment or
storage facility.
from distribution
During fiscal 2016, the Company purchased 78 new
tractors and 24 trailers. Our fiscal 2017 capital budget
includes 67 new tractors plus we had 7 tractors ordered
in fiscal 2016 that were delivered shortly after September
30,2016. We anticipate this more modern fleet will result
in reduced maintenance expenses, improved operating
efficiencies and enhanced driver recruitment and
retention. At September 30, 2016 the Company operated
a fleet of 468 tractors and 561 tank trailers, 9 trucks that
were being prepared for sale and 23 trucks that were
being placed in service. The Company owns all of the
tank trailers and tractors used to conduct our business,
except for 4 tractors owned by owner-operators and 32
leased tractors that were acquired from Pipeline
Transportation, Inc. in November, 2013 and Petroleum
Transport Corporation acquired in April 2016.
Approximately 82% of our business consists of hauling
petroleum related products. Our petroleum clients include
major convenience store and hypermarket accounts, fuel
wholesalers and major oil companies. We strive to build
long-term relationships with major customers by
providing outstanding customer service. During fiscal
2016, the Company’s ten largest customers accounted
for approximately 58.9% of revenue. One of these
customers, Murphy USA, accounted for 22.0% of
revenue. The loss of any one of these customers could
have a material adverse effect on the Company’s
revenues and income. Our transportation services
agreements with our customers generally are terminable
upon 90-120 days’ notice, but nine of our top 10 accounts
have been customers for at least 10 years. Our dry bulk
and chemical customers
industrial
companies including cement and concrete accounts and
product distribution
customer
relationships are long-standing and have grown over time
as a result of consistently high safety and service levels.
companies. Our
include
large
We are an important link in our customers’ fuel supply
chain, transporting primarily from petroleum terminals to
Financial information about the company is presented in
the financial statements included in this Annual Report.
4
Five Year Summary - Years ended September 30
Patriot Transportation Holding, Inc.
(Amounts in thousands except per share amounts)
Summary of Operations:
Revenues ......................................................$
Operating profit ............................................$
Interest expense ..........................................$
Income from continuing operations ..............$
Per Common Share (a):
Basic ............................................................$
Diluted ..........................................................$
Discontinued
Operations, net ..........................................$
Net income ..................................................$
Per Common Share (a):
Basic ............................................................$
Diluted ..........................................................$
Financial Summary:
Current assets ..............................................$
Current liabilities ..........................................$
Property and equipment, net ........................$
Total assets ..................................................$
Long-term debt ............................................$
Shareholders’ equity/Net Investment ............$
Net Book Value Per common Share (a) ........$
Other Data:
Weighted average common shares - basic (a) ..
Weighted average common shares - diluted (a)
Number of employees ....................................
Shareholders of record ....................................
Quarterly Results (unaudited)
(Dollars in thousands except per share amounts)
2016
2015
2014
2013
2012
120,172
7,790
130
5,705
122,882
5,586
112
3,339
129,162
5,343
109
3,197
112,120
8,570
19
5,216
103,476
6,736
27
4,092
1.74
1.74
—
5,705
1.74
1.74
17,737
10,573
43,703
66,299
—
43,946
13.36
3,283
3,285
959
423
1.02
1.02
—
3,339
1.02
1.02
11,796
12,103
42,620
59,526
—
37,202
11.37
3,268
3,275
979
440
.99
.99
—
3,197
.99
.99
11,685
9,950
42,174
61,134
7,282
32,722
10.09
3,243
3,243
942
—
1.61
1.61
—
5,216
1.61
1.61
11,011
10,838
38,902
51,107
—
29,530
9.11
3,243
3,243
871
—
1.26
1.26
97
4,189
1.29
1.29
15,944
10,437
31,386
48,477
—
27,843
8.59
3,243
3,243
812
—
First
Second
Third
Fourth
2016
2015
2016
2015
2016
2015
2016
2015
Revenues .................................................... $ 29,371
Operating profit (loss) ..................................$
599
Income (loss) before income taxes ..............$ 2,254
Net income (loss) ........................................$ 1,375
31,717
1,833
1,807
1,102
29,048
1,447
1,415
863
29,737
(553)
(576)
(351)
31,362
2,290
2,260
1,379
31,099
1,673
1,644
1,003
30,391
3,454
3,424
2,088
30,329
2,633
2,599
1,585
Earnings (loss) per common share (a):
Net Income (loss)-
Basic ....................................................$
Diluted ..................................................$
.42
.42
.34
.34
.26
.26
(.11)
(.11)
.42
.42
.31
.31
.63
.63
.48
.48
Market price per common share (b):
High ......................................................$ 24.86
Low ...................................................... $ 21.70
—
—
22.98
19.50
26.34
21.89
21.10
18.08
26.26
24.10
22.27
19.40
24.70
21.27
(a) Earnings per share of common stock is computed independently for each quarter presented. The sum of the quarterly net
earnings per share of common stock for a year may not equal the total for the year due to rounding differences. For comparative
purposes, for the years ended September 30, 2012 through September 30, 2014 and for the first quarter 2015, the number of
common shares outstanding utilized for the calculation is based on the 3,242,524 shares of our common stock that was distributed
to the shareholders of FRP in connection with the Spin-off and distribution on January 30, 2015.
(b) All prices represent Nasdaq reported high and low daily closing prices.
5
Management Analysis
Patriot Transportation Holding, Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Executive Overview. The business of the Company, conducted
through our wholly owned subsidiary, Florida Rock & Tank Lines,
Inc., is to transport petroleum and other liquids and dry bulk
commodities. We do not own any of the products we haul, rather,
we act as a third party carrier to deliver our customer’s products
from point A to point B predominately using Company employees
driving Company owned tractors and tank trailers. Approximately
82% of our business consists of hauling liquid petroleum products
(mostly gas and diesel fuel) from large scale fuel storage facilities
to our customers’ retail outlets (e.g. convenience stores, truck
stops and fuel depots) where we off-load the product into our
customer’s fuel storage tanks for ultimate sale to the retail
consumer. The remaining 18% of our business consists of hauling
our customer’s dry bulk commodities such as cement, lime and
various industrial powder products and liquid chemicals. As of
September 30, 2016, we employed 689 revenue-producing drivers
who operated our fleet of 468 tractors and 561 trailers from our
21 terminals and 9 satellite locations in Florida, Georgia,
Alabama, South Carolina, North Carolina and Tennessee.
We experience increased seasonal demand in Florida during
the spring and in most of our other locations during the
summer months.
Our industry is characterized by such barriers to entry as the time
and cost required to develop the capabilities necessary to handle
hazardous material, the resources required to recruit, train and
retain drivers, substantial industry regulatory and insurance
requirements and the significant capital investments required to
build a fleet of equipment,establish a network of terminals and, in
recent years, the cost to build and maintain sufficient information
technology resources to allow us to interface with and assist
their
in
our customers
product inventories.
the day-to-day management of
Our ability to provide superior customer service at competitive
rates and to operate safely and efficiently is important to our
success in growing our revenues and increasing profitability. Our
focus is to grow our profitability by executing on our key strategies
of (i) increasing our business with existing and new customers,
particularly hypermarket and large convenience store chains, that
are willing to compensate us for our ability to provide superior,
safe and reliable service which facilitates their ability to grow their
market share and footprint with confidence, (ii) expanding our
service offerings with respect to dry bulk and chemical products
particularly in markets where we already operate terminals, (iii)
earning the reputation as the preferred employer for tank truck
drivers in all the markets in which we operate and (iv) pursuing
strategic acquisitions. Our ability to execute this strategy depends
on continuing our dedicated commitments to customer service
and safety and continuing to recruit and retain qualified drivers.
Our industry is experiencing a severe driver shortage. As the need
to hire drivers has risen across our industry the trend we are
seeing is that more and more of the applicants are drivers with
little to no experience in the tank truck business. Our management
team is keenly focused on continuing to grow our driver count in
markets where there are opportunities for us to grow our business
and to retain all of our drivers at the levels we have historically
achieved while balancing the aforementioned trends and
associated risks of the “new to the industry” driver applicant pool.
Through the implementation of a new software program, we have
6
enhanced our ability to quickly identify, communicate with and
ultimately hire qualified drivers. We have also implemented
programs to help us determine which new driver applicants
are less likely to turnover early on in their careers with us thus
adding new and valuable information into our hiring decision
making process.
There are several opportunities available today in our markets that
will allow us to execute on our growth strategy so long as we can
find, hire and retain qualified drivers to meet the demands of these
opportunities. We believe the tighter driver market has and will
continue to provide us with opportunities to capture new business
and continue to improve upon our rate structure across the
customer base. As these opportunities arise, we are willing to let
certain lower priced business go in this environment to grow our
business with customers willing to pay for our reliability and
superior customer service.
We generate both transportation based revenue as well as fuel
surcharge revenue. Our transportation revenue consists of base
revenue for each delivery which is generally calculated by
multiplying a negotiated mileage-based rate by the quantity of
product delivered plus any fees for extra stops to load or unload,
powered product unloading and toll cost reimbursements. These
for
negotiated
transporting
loading and
unloading time.
transportation rates compensate us both
the products as well as
for
While our base rates include a fixed amount to cover our cost of
fuel using an assumed price for diesel, we have fuel surcharges
in place with our customers that allow us to obtain additional
compensation for fuel expense incurred when the price of diesel
rises above that assumed price. Likewise, for some customers,
the fuel surcharge system allows the customer to receive a lower
cost from us when the price of diesel drops below that assumed
price. There is a time lag between fuel price fluctuations and
changes to fuel surcharges to our customers. In a rapidly rising
price environment this time lag can negatively impact the
Company’s financial results as we must pay the higher fuel cost
immediately but in most cases aren’t able to adjust fuel
surcharges to our customers until the end of the month.
The main factors that affect our total revenue are the number of
revenue miles driven, rates per mile, quantity of products hauled
and the amount of fuel surcharges.
Our operating costs primarily consist of the following:
• Compensation and Benefits - Wages and employee benefits for
our drivers and terminal support personnel is the largest
component of our operating costs. These costs are impacted by
such factors as miles driven, driver pay increases, driver turnover
and training costs and additional driver pay due to temporary out-
of-town deployments to serve new business;
• Fuel Expenses - Our fuel expenses will vary depending on
miles driven as well as such factors as fuel prices (which can
be highly volatile), the fuel efficiency of our fleet and the average
haul length;
• Repairs and Tires – This category consists of vehicle
maintenance and repairs (excluding shop personnel) and tire
expense (including amortization of tire cost and road repairs).
These expenses will vary based on such factors as miles driven,
the age of our fleet, and tire prices;
Management Analysis Continued
Patriot Transportation Holding, Inc.
• Other Operating Expenses – This category consists of tolls,
hiring costs, out-of-town driver travel cost, terminal facility
maintenance and other operating expenses. These expenses will
vary based on such factors as, driver availability and out-of-town
driver travel requirements, business growth and inflation
among others;
• Insurance and Losses - This includes costs associated with
insurance premiums, and the self-insured portion of liability,
worker’s compensation, health insurance and cargo claims and
wreck repairs. We work very hard to manage these expenses
through our safety and wellness programs, but these expenses
will vary depending on the frequency and severity of accident and
health claims, insurance markets and deductible levels;
• Depreciation Expense – Depreciation expense consists of the
depreciation of the cost of fixed assets such as tractors and
trailers over the life assigned to those assets. The amount of
depreciation expense is impacted by equipment prices and the
timing of new equipment purchases. We expect the cost of new
tractors and trailers to continue to increase, impacting our future
depreciation expense;
• Rents, Tags and Utilities Expenses – This category consists of
rents payable on leased facilities and leased equipment, federal
highway use taxes, vehicle registrations, license and permit fees
and personal property taxes assessed against our equipment,
communications, utilities and real estate taxes;
• Sales, General and Administrative Expenses – This category
consists of the wages, bonus accruals, benefits, travel, vehicle
and office costs for our administrative personnel as well as
professional fees and amortization charges for intangible assets
purchased in acquisitions of other businesses;
• Corporate Expenses - Corporate expenses consist of wages,
bonus accruals, insurance and other benefits, travel, vehicle and
office costs for corporate executives, director fees, stock option
expense and aircraft expense;
• Gains/Loss on Equipment - Our financial results for any period
may be impacted by any gain or loss that we realize on the sale
of used equipment and losses on wrecked equipment. We
periodically sell used equipment as we replace older tractors and
trailers. Gains or losses on equipment sales can vary significantly
from period to period depending on the timing of our equipment
replacement cycle, market prices for used equipment and losses
on wrecked equipment.
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 $1,277,000 gain on easement sale
included in the fourth quarter 2016 and the $2,074,000 intangible
asset impairment charge incurred in second quarter 2015. 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 annual report for
a more detailed discussion, including reconciliations of these non-
GAAP financial measures to their most directly comparable GAAP
financial measures.
Management believes these adjusted measures better reflect our
operating performance during the periods discussed and reflect
how management evaluates our operational results. These
measures are not, and should not be viewed as, substitutes for
GAAP reporting measures.
To measure our performance, management focuses primarily on
transportation revenue growth, revenue miles, our preventable
accident frequency rate (“PAFR”), our operating ratio (defined as
our operating expenses as a percentage of our operating
revenue), turnover rate and average driver count (defined as
average number of revenue producing drivers under employment
over the specified time period) as compared to the same period
in the prior year.
ITEM
Total Revenue
Transportation Revenue
Revenue Miles
Fuel net of surcharges
PAFR
Adjusted Operating Ratio
Driver Turnover Rate
Average Number of Drivers Up 3.8%
FY 2016 vs. FY 2015
Down 2.2%
Up 3.9%
Down by 0.8%
Up 21.5%
Up 22.9%
Down by 0.8%
Down by 13%
The Company’s operations are influenced by a number of external
and internal factors. External factors include levels of economic
and industrial activity in the United States and the Southeast,
driver availability and cost, government regulations regarding
driver qualifications and limitations on the hours drivers can work,
petroleum product demand in the Southeast which is driven in part
by tourism and commercial aviation, and fuel costs. Internal
factors include revenue mix, equipment utilization, Company
imposed restrictions on hiring drivers under the age of 25 or
drivers without at least two years of driving experience, auto and
workers’ compensation accident frequencies and severity,
administrative costs, and group health claims experience.
Highlights of Fiscal 2016
• Transportation revenue increased $4,298,000, or 3.9%.
• Annualized driver turnover rate declined from 75% last year to
62% this year.
• Fuel cost net of surcharges increased $1,870,000.
• The Company successfully completed negotiations and entered
into a settlement agreement with BP Exploration and Production,
Inc. resulting in other income of $1,687,000 as compensation for
damages arising out of the Deepwater Horizon event that
occurred in 2010.
• The Company received $1,330,000 for an easement granted to
the state of Florida over the Company's 25.2 acre terminal facility
in Tampa, Florida resulting in a $1,277,000 gain. The easement
prohibits residential development on the site and prohibits hotel
development on a portion of the site.
• The Company reported net income of $5,705,000, or $1.74 per
7
Management Analysis Continued
Patriot Transportation Holding, Inc.
share compared to net income of $3,339,000 of $1.02 per share,
in 2015. The current year income includes (i) $779,000, or $.24
per share, of net income from the $1,277,000 gain on the sale of
the Tampa easement and (ii) $1,029,000, or $0.31 per share, of
net income from the settlement of a claim with BP for $1,687,000
in connection with the 2010 Deepwater Horizon event. The prior
year included a $2,074,000 intangible asset impairment charge
with an after tax negative impact to net income of $1,265,000 or
$0.39 per share, related to the Pipeline Transportation acquisition.
COMPARATIVE RESULTS OF OPERATIONS
(dollars in
thousands)
Revenue miles
(in thousands)
Revenues:
Transportation
revenue
Fuel
surcharges
Fiscal Years ended September 30
2016
%
2015
%
2014
%
42,884
43,220
43,865
$115,592
96.2% 111,294
90.6% 108,424 83.9%
4,580
3.8%
11,588
9.4%
20,738 16.1%
Total Revenues
120,172 100.0% 122,882 100.0% 129,162 100.0%
Cost of operations:
Compensation
and benefits
51,069
42.5%
49,050
39.9%
47,431 36.7%
Fuel
expenses
Repairs
and tires
Other
operating
Insurance
and losses
Depreciation
expense
Rents, tags
and utilities
Sales, General
& Admin
Corporate
expenses
Intangible asset
impairment
Gain on
property sale
Gain on
equipment sales
Total cost of
operations
Total
operating profit
8
15,157
12.6%
20,295
16.5%
29,281 22.7%
7,777
6.5%
7,876
6.4%
7,831
6.0%
4,719
3.9%
4,520
3.7%
5,251
4.1%
10,358
8.6%
10,249
8.3%
10,729
8.3%
8,870
7.4%
8,486
6.9%
8,210
6.4%
3,834
3.2%
3,892
3.2%
3,706
2.9%
9,626
8.0%
9,188
7.5%
9,273
7.2%
2,946
2.4%
3,203
2.6%
2,685
2.1%
—
0.0%
2,074
1.7%
— 0.0%
(1,277)
(1.1%)
—
0.0%
— 0.0%
(697)
(.5%)
(1,537)
(1.2%)
(578)
(.5%)
112,382
93.5% 117,296
95.5% 123,819 95.9%
$ 7,790
6.5%
5,586
4.5%
5,343
4.1%
Fiscal Year 2016 versus 2015 – Total revenues were
$120,172,000 down $2,710,000 from $122,882,000 last year.
Transportation revenues (excluding fuel surcharges) were up
$4,298,000 to $115,592,000 and fuel surcharge revenues were
down $7,008,000 to $4,580,000. Our transportation revenue per
mile increased by 4.7% over last year.
Compensation and benefits costs were up $2,019,000 (or $.05
per mile) versus last year due mainly to driver pay enhancements
as we continue to invest in hiring and retaining our driver force.
The Company’s gross cost of fuel was down $5,138,000 over last
year which was not enough to off-set the $7,008,000 reduction in
fuel surcharge revenues resulting in a negative margin impact of
$1,870,000 (or $.04 per mile) this year versus last year. The
Company’s gross price of diesel fuel remained low and in a fairly
tight range throughout the fiscal year with the second quarter
having the lowest average cost per mile at $.31 and the fourth
quarter having the highest average cost per mile at $.35. Since
the price of diesel began declining in late 2014, the Company has
experienced margin erosion as the decline in fuel surcharge
revenue outpaced the decline in diesel fuel cost. During the first
half of this year we were able to implement positive adjustments
to the fuel surcharge tables with many of our customers and those
adjustments contributed significantly to a positive trend of less
margin erosion resulting from the lower diesel fuel price (negative
margin impact: Q1 - $883,000 (or $.09 per mile), Q2 - $719,000
(or $.07 per mile), Q3 - $251,000 (or $.02 per mile), Q4 - $17,000
(or $.002)).
SG&A was up $438,000 as we have hired more management
personnel to focus on the issues of driver hiring and turnover and
to support our safety performance.
Corporate expense was lower by $257,000 compared to last year
due mainly to the sale of a 75% interest in the corporate airplane
during the second quarter of fiscal 2016.
Gain on equipment sales were $840,000 lower compared to last
year primarily to fewer trailers sold and lower average value of
tractors sold. Gain on property sales were $1,277,000 higher as
a result of the sale of the easement in the fourth quarter.
Operating profit this year was $7,790,000 versus an operating
profit of $5,586,000 last year. This year’s operating profit
benefitted from the gain on easement sale of $1,277,000 while
the prior year was negatively impacted by the $2,074,000
intangible asset impairment charge.
Adjusted operating profit this year was $6,513,000 versus an
adjusted operating profit of $7,660,000 last year. Our adjusted
operating ratio was 94.6% compared to an adjusted operating
ratio of 93.8% last year. The lower results were mainly due to the
higher net fuel cost of $1,870,000 which mostly occurred in the
first half of this fiscal year prior to the positive adjustments we
made to the fuel surcharge tables. These non-GAAP financial
measures exclude gain from easement sale realized in the fourth
quarter of fiscal 2016 and the intangible asset impairment charge
incurred in the second quarter of fiscal 2015. Management
believes these adjusted measures better reflect our operating
performance during the periods discussed and reflect how
management evaluates our operational results. 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”.
Fiscal Year 2015 versus 2014 – Net income for fiscal 2015 was
$3,339,000 or $1.02 per share, an increase of $142,000 or $.03
per share compared to net income of $3,197,000 or $.99 per
Management Analysis Continued
Patriot Transportation Holding, Inc.
share in fiscal 2014. During the second quarter of 2015, as part
of a competitive bid, we elected not to pursue a significant piece
of business acquired in the Pipeline transaction (closed in early
fiscal 2014). The absence of this business required us to take an
impairment charge of $2,074,000 against the intangible asset
“customer relationships”. The $2,074,000 intangible asset
impairment charge had an after tax negative impact to net income
of $1,265,000, or $.39 per share, related to the Pipeline
Transportation acquisition. Rather than lower our quoted rates to
retain that business, management determined it was in our best
interest to employ our capital and resources to find new business
at better rates. During the latter half of fiscal 2015, our sales team
did an excellent job replacing those lost revenue miles. In the end,
we were able to haul almost as many miles in fiscal 2015
(43,220,000) as we did in fiscal 2014 (43,865,000) while
increasing our transportation revenue by $2,870,000. The
Company’s 2015 adjusted operating profit increased 43% to
$7,660,000 and 2015 adjusted operating ratio improved to 93.8%
versus last year’s 95.9%, more in line with our goals.
For fiscal 2015, total revenue was down $6,280,000 due mainly
to significantly lower fuel surcharges. Total revenue is made up of
transportation revenue (up $2,870,000, a 2.6% improvement over
fiscal 2014) and fuel surcharge revenue (down $9,150,000 due to
the dramatic decrease in fuel prices experienced over the past 12
months). Comparing
revenue
lower
($9,150,000) to the lower fuel cost ($8,986,000) resulted in a
$164,000 negative impact to the Company from the lower price of
diesel in 2015 versus 2014.
fuel surcharge
the
Compensation and benefits expense was up significantly for a
series of reasons including, an increase in pay for all of our
drivers, higher driver training pay and an increase in support
wages as we continue to hire people in the field to enhance our
ability to hire and retain drivers to meet our customers’ growing
demands. The demand for drivers continues to increase with the
expansion of the US economy while the pool of qualified drivers
so far has not grown at a sufficient pace to meet that demand;
thus, finding and retaining qualified drivers to grow our business
is an ever increasing challenge. Management believes that in
order to be successful going forward we need to be a leader in
our industry at attracting, hiring and retaining drivers and we
will continue to focus more and more of our resources on meeting
this goal..
Operating expenses improved by $731,000 over 2014 due in large
part to lower out-of-town driver costs (as we improved on
managing our customer’s business demands with more local
drivers in fiscal 2015 versus 2014) and lower rigging, tolls, and
operating supplies expense. Gains on equipment sales were up
significantly in 2015 ($959,000) due in large part to the sale of 50
trailers during fiscal 2015 versus no trailer sales in fiscal 2014.
Insurance and loss expense improved by $480,000 due in large
part to lower workers’ comp expense. Depreciation expense
increased $276,000 due to the increased cost of new tractors year
over year. Corporate overhead saw an increase of $518,000 due
mainly to higher medical claims, a significant repair to the
corporate aircraft (management is in the process of selling a
significant stake in the corporate aircraft to reduce the Company’s
on-going expenses related thereto), higher management incentive
compensation expense and the additional costs of operating as a
stand-alone public company.
LIQUIDITY AND CAPITAL RESOURCES
The Company maintains its operating accounts with Wells Fargo
Bank, N.A. and these accounts directly sweep overnight against
the Wells Fargo revolver. As of September 30, 2016, we had no
debt outstanding on this revolver, $2,436,000 outstanding under
letters of credit and $22,564,000 available for additional
borrowings. During fiscal 2015, the Company closed on a two (2)
—
—
year revolving credit facility, to be secured by a portion of the
Company’s equipment at the time of draw, from Branch Banking
and Trust Company (BB&T) for up to $25 million. This facility
contains a provision which automatically converts any draws
under the revolver into five-year term loans with a seven year
amortization. As of September 30, 2016, the Company had not
taken any draws against this facility. The Company expects our
fiscal year 2017 cash generation to cover the cost of our
operations and all of our budgeted capital expenditures.
Cash Flows – The following table summarizes our cash flows
from operating, investing and financing activities for each of the
periods presented (in thousands of dollars):
Years Ended September 30
Total cash provided by
(used for):
Operating activities
Investing activities
Financing activities
Increase in cash
2016
2015
2014
$ 14,955
(8,348)
(602)
$ 15,052 $ 10,820
(18,218)
7,398
(8,042)
(7,010)
and cash equivalents
$
6,005
$
— $
Outstanding debt at the
beginning of the period
Outstanding debt at the
end of the period
$
$
— $ 7,282 $
— $
— $
7,282
Operating Activities – Net cash provided by operating activities
(as set forth in the cash flow statement) was $14,955,000 for the
year ended September 30, 2016, $15,052,000 in 2015 and
$10,820,000 in 2014. The total of net income plus depreciation
and amortization less gains on asset dispositions increased
$1,946,000 versus the same period last year. These changes are
described above under “Comparative Results of Operations”.
Accounts payable and accrued liabilities decreased $2,926,000
due to the timing of payments on the purchase of tractors and
trailers in 2016 and lower bonus compensation accruals in the
same period last year. These changes comprise the majority of
the increase in net cash provided by operating activities. The
$2,074,000 impairment charge and the related $809,000 of
deferred income taxes are added back to net income in fiscal 2015
as these are non-cash items.
Investing Activities – Investing activities include the purchase of
property and equipment, any business acquisitions and proceeds
from sales of these assets upon retirement. For the year ended
September 30, 2016, we spent $8,348,000 on equipment net of
proceeds from retirements. The Company received $1,330,000 for
an easement granted to the state of Florida over the Company's
25.2 acre terminal facility in Tampa, Florida resulting in a
$1,277,000 gain during 2016. For the year ended September 30,
2015 we spent $8,042,000 on equipment net of retirements.
In 2015, cash required by investing activities was $8,042,000
compared to $18,218,000 in 2014. The lower investing cash use
of $10,176,000 was primarily due to the acquisition of Pipeline
Transportation, Inc. in fiscal 2014.
Financing Activities – Financing activities primarily include net
changes to our outstanding revolving debt. For the year ended
September 30, 2016 we used $602,000 of cash to pay down debt.
The Company had no outstanding long-term debt on September
30, 2016 or September 30, 2015.
Cash used by financing activities in the year ended September
30, 2015, was $7,010,000 compared to cash provided of
9
Management Analysis Continued
Patriot Transportation Holding, Inc.
$7,398,000 in 2014. This decrease in cash provided was due to
borrowing to finance the acquisition of the assets of Pipeline
Transportation in 2014.
Credit Facilities – In connection with the Spin-off, on January 30,
2015, the Company entered into a five-year credit agreement with
Wells Fargo Bank N.A. which provides a $25 million revolving line
of credit with a $10 million sublimit for stand-by letters of credit. In
connection with the Spin-off, the Company assumed and
refinanced onto this new revolving credit line approximately $5.1
million of indebtedness from FRP. The amounts outstanding under
the credit agreement bear interest at a rate of 1.0% over LIBOR,
which may change quarterly based on the Company’s ratio of
consolidated total debt to consolidated total capital. A commitment
fee of 0.15% per annum is payable quarterly on the unused
portion of the commitment, which fee may change quarterly based
on our ratio of consolidated total debt to consolidated total capital.
The credit agreement contains certain conditions and financial
covenants, including a minimum $25 million tangible net worth. As
of September 30, 2016, the tangible net worth covenant would
have limited our ability to pay dividends or repurchase stock with
borrowed funds to a maximum of $11.3 million combined.
In addition to the unsecured revolving facility provided by Wells
Fargo, Management determined the Company needed an
additional financing source to provide capital for potential growth
opportunities. As a result, the Company closed on a loan from
Branch Banking and Trust Company (BB&T) for up to $25 million
under a two (2) year revolving facility to be secured by a portion
of the Company’s equipment. This facility contains a provision
which automatically converts any draws under the revolver into
five-year term loans with a seven year amortization. Each draw
requires the payment of a bank fee equal to .25% of the amount
drawn. Any amounts outstanding under this facility bear interest
at a rate of 1.5% over LIBOR, which may change quarterly based
on the Company’s leverage ratio. A commitment fee of 0.15% per
annum is payable quarterly on the unused portion of the
commitment. The credit agreement contains certain conditions
and financial covenants, including limitations on the payment of
cash dividends that are based on the Company’s consolidated
retained earnings. As of September 30 2016, the Company had
not taken any draws against this facility.
Cash Requirements – The Company currently expects its fiscal
2017 capital expenditures to be approximately $9,823,000 for
expansion and replacement equipment which we expect to be fully
funded by our cash generated from our operations. The Company
does not currently pay any cash dividends on common stock.
While the Company is affected by environmental regulations, such
regulations are not expected to have a major effect on the
Company’s capital expenditures or operating results.
The Company expects that cash flows from operating activities,
cash on hand and the funds available under its revolving credit
agreement will be adequate to finance these capital expenditures
and its working capital needs for the next 12 months and the
foreseeable future.
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. 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.
10
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
September 30, 2016
Three months ended
September 30, 2015
Operating profit
Adjustments:
$
Gain on property sale
Adjusted operating profit $
3,454
(1,277)
2,177
2,633
2,633
Twelve months ended
September 30, 2016
Twelve months ended
September 30, 2015
Operating profit
Adjustments:
$
Gain on property sale
Intangible asset
impairment charge
Adjusted operating profit $
Adjusted Operating Ratio
7,790
(1,277)
—
6,513
5,586
—
2,074
7,660
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
September 30, 2016
Three months ended
September 30, 2015
Operating profit
Adjustments:
Gain on property sale
Adjusted operating ratio
88.6%
4.2%
92.8%
91.3%
—
91.3%
Twelve months ended
September 30, 2016
Twelve months ended
September 30, 2015
Operating profit
Adjustments:
Gain on property sale
Intangible asset
impairment charge
Adjusted operating ratio
93.5%
1.1%
—
94.6%
95.5%
—
(1.7%)
93.8%
OFF-BALANCE SHEET ARRANGEMENTS
Except for the letters of credit described above under “Liquidity
and Capital Resources,” the Company does not have any
off balance sheet arrangements that either have, or are
reasonably likely to have, a current or future material effect on its
financial condition.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in accordance with
accounting principles generally accepted in the United States
requires us to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
Management Analysis Continued
Patriot Transportation Holding, Inc.
contingent assets and liabilities as of the date of the consolidated
and combined financial statements and the reported amounts of
revenues and expenses during the respective reporting periods.
Accounting estimates are considered to be critical if (1) the nature
of the estimates and assumptions is material due to the levels of
subjectivity and judgment necessary to account for highly
uncertain matters or the susceptibility of such matters to change;
and (2) the impact of the estimates and assumptions on financial
condition or operating performance is material. Actual results
could differ
the estimates and assumptions used.
Management of the Company considers the following accounting
policies critical to the reported operations of the Company:
from
Accounts Receivable Valuation. The Company is subject to
customer credit risk that could affect the collection of outstanding
accounts receivable. To mitigate these risks, the Company
performs credit reviews on all new customers and periodic credit
reviews on existing customers. A detailed analysis of late and slow
pay customers is prepared monthly and reviewed by senior
management. The overall collectability of outstanding receivables
is evaluated and allowances are recorded as appropriate.
Significant changes in customer credit could require increased
allowances and affect cash flows.
Property and Equipment and Impairment of Assets. Property
and equipment is recorded at cost less accumulated depreciation.
Provision for depreciation of property and equipment is computed
using the straight-line method based on the following estimated
useful lives:
Buildings and improvements
Revenue equipment
Other equipment
Years
7-39
7-10
3-10
The Company periodically reviews property and equipment for
potential impairment whenever events or circumstances indicate
the carrying amount of a long-lived asset may not be recoverable.
The analysis consists of a review of future anticipated results
considering business prospects and asset utilization. If the sum
of these future cash flows (undiscounted and without interest
charges) is less than the carrying amount of the assets, the
Company would record an impairment loss based on the fair value
of the assets with the fair value of the assets generally based upon
an estimate of the discounted future cash flows expected with
regards to the assets and their eventual disposition as the
measure of fair value. The Company performs an annual
impairment test on goodwill and other intangible assets. Changes
in estimates or assumptions could have an impact on the
Company’s financials.
Insurance Accruals. The nature of
the
Claims and
transportation business subjects the Company to risks arising
from workers’ compensation, automobile liability, and general
liability claims. The Company retains the exposure on certain
claims of $250,000 ($500,000 for automobile liability and general
liability claims prior to fiscal 2011 and for worker’s compensation
claims prior to fiscal 2013) and has third party coverage for
amounts exceeding the retention up to the amount of the policy
limits. The Company expenses during the year an estimate of risk
insurance losses based upon independent actuarial analysis,
insurance company estimates, and our monthly review of claims
reserve changes. In making claim reserve changes we rely upon
estimates of our
insurance company adjusters, attorney
evaluations, and judgment of our management. Our estimates
require judgment concerning the nature, severity, comparative
liability, jurisdiction, legal and investigative costs of each claim.
Claims involving serious injury have greater uncertainty of the
eventual cost. In the past, our estimate of the amount of individual
claims has increased from insignificant amounts to the full
deductible as we learn more information about the claim in
subsequent periods. We obtain an independent actuarial analysis
at least twice annually to assist in estimating the total loss
reserves expected on claims including claim development and
incurred but not reported claims. We also retain exposure on
employee health benefits up to $250,000 per covered participant
each calendar year plus a $77,000 aggregate deductible for any
claims exceeding $250,000. We estimate claim liability using
historical payment trends and specific knowledge of larger claims.
Health claims are expensed as the health services are rendered
so there is only a two month lag in payments on average. We are
usually aware of the larger claims before closing each accounting
period reducing the amount of uncertainty of the estimate. Our
accrued insurance liabilities for retiree benefits are recorded by
actuarial calculation. Our accrued insurance liabilities for claims
as of September 30, 2016, 2015, and 2014 amounted to $.9
million, $2.1 million and $2.6 million, respectively. Payments made
under a captive agreement for each year’s loss fund are
scheduled in advance using actuarial methodology. The captive
agreement provides that we will share in the underwriting results,
good or bad, within a $250,000 per occurrence layer of loss
through retrospective premium adjustments. Including the
potential exposure in the captive we have $4.6 million of estimated
insurance liabilities. In the event that actual costs for these claims
are different than estimates we will have adjustments in future
periods. It is likely that we will experience either gains or losses of
5-10% of prior year estimated insurance liabilities in any year.
Income Taxes. The Company accounts for income taxes under
the asset-and-liability method. Deferred tax assets and liabilities
represent items that will result in taxable income or a tax deduction
in future years for which the related tax expense or benefit has
already been recorded in our statement of earnings. Deferred tax
accounts arise as a result of timing differences between when
items are recognized in the consolidated and combined financial
statements compared with when they are recognized in the tax
returns. The Company assesses the likelihood that deferred tax
assets will be recovered from future taxable income. To the extent
recovery is not probable, a valuation allowance is established and
included as an expense as part of our income tax provision. No
valuation allowance was recorded at September 30, 2016, as all
deferred tax assets are considered more likely than not to be
realized. Significant judgment is required in determining and
assessing the impact of complex tax laws and certain tax-related
contingencies on the provision for income taxes. As part of the
calculation of the provision for income taxes, we assess whether
the benefits of our tax positions are at least more likely than not
of being sustained upon audit based on the technical merits of the
tax position. For tax positions that are more likely than not of being
sustained upon audit, we accrue the largest amount of the benefit
that is more likely than not of being sustained in our financial
statements. Such accruals require estimates and judgments,
whereby actual results could vary materially from these estimates.
Further, a number of years may elapse before a particular
matter, for which an established accrual was made, is audited
and resolved.
11
Management Analysis Continued
Patriot Transportation Holding, Inc.
”projects”, ”continuing”, ”ongoing”, ”expects”, ”management
believes”, ”the Company believes”, ”the Company intends” and
similar words or phrases. The following factors and others
discussed in the Company’s periodic reports and filings with the
Securities and Exchange Commission are among the principal
factors that could cause actual results to differ materially from the
forward-looking statements: freight demand for petroleum
products including recessionary and terrorist impacts on travel in
the Company’s markets; fuel costs and the Company’s ability to
recover fuel surcharges; accident severity and frequency; risk
insurance markets; driver availability and cost; the impact of future
regulations regarding the transportation industry; availability and
terms of financing; competition in our markets; interest rates, and
inflation and general economic conditions. However, this list is not
a complete statement of all potential risks or uncertainties.
These forward-looking statements are made as of the date hereof
based on management’s current expectations, and the Company
does not undertake an obligation to update such statements,
whether as a result of new information, future events or otherwise.
Additional information regarding these and other risk factors may
be found in the Company’s other filings made from time to time
with the Securities and Exchange Commission.
CONTRACTUAL OBLIGATIONS
The following table summarizes our contractual obligations as of
September 30, 2016:
Payments due by period
Contractual Obligations
(thousands of dollars)
Less
than
1 year
1-3
years
More
than
years 5 years
3-5
Total
Operating
Leases
2,179
458
602
618
501
Purchase
Commitments 1,055
1,055
-
-
-
Other
Long-Term
Liabilities
Total
obligations
1,141
72
150
154
765
$ 4,375
1,585
752
772
1,266
INFLATION
Most of the Company’s operating expenses are inflation-sensitive,
with inflation generally producing increased costs of operations.
During the past three years, inflation has been fairly modest with
its impacts mostly related to equipment prices, tire prices and the
compensation paid to drivers. Tractor prices have increased over
40% since 2007 due in part to EPA mandated new engine
emission requirements on tractor engines. Customer rate
increases received have significantly lagged the increased prices
paid for new equipment over the same period.
In addition to inflation, fluctuations in fuel prices can affect
profitability. Most of the Company’s contracts with customers
contain fuel surcharge provisions. Although the Company
historically has been able to pass through most long-term
increases in fuel prices and operating taxes to customers in the
form of surcharges and higher rates, there is no guarantee that
this will be possible in the future. See “Risk Factors—We may be
adversely impacted by fluctuations in the price and availability
of fuel.”
SEASONALITY
Our business is subject to seasonal trends common in the refined
petroleum products delivery industry. We typically face reduced
demand for refined petroleum products delivery services during
the winter months and increased demand during the spring and
summer months. Further, operating costs and earnings are
generally adversely affected by inclement weather conditions.
These factors generally result in lower operating results during the
first and fourth calendar quarters of the year and cause our
operating results to fluctuate from quarter to quarter. Our
operating expenses also have been somewhat higher in the winter
months, due primarily to decreased fuel efficiency and increased
maintenance costs for tractors and trailers in colder months.
FORWARD LOOKING STATEMENTS
Certain matters discussed in this report contain forward-looking
statements that are subject to risks and uncertainties that could
cause actual results to differ materially from those indicated by
such
forward-looking
statements relate to, among other things, capital expenditures,
liquidity, capital resources and competition and may be indicated
by words or phrases such as ”anticipate”, ”estimate”, ”plans”,
forward-looking statements. These
12
Consolidated and Combined Statements of Income -Years ended September 30
Patriot Transportation Holding, Inc.
(In thousands, except per share amounts)
Revenues:
2016
2015
2014
Transportation revenues ....................................................................................$ 115,592
4,580
Fuel surcharges ..................................................................................................
Total revenues ............................................................................................................ 120,172
111,294
11,588
122,882
Cost of operations:
Compensation and benefits ................................................................................ 51,069
Fuel expenses ...................................................................................................... 15,157
7,777
Repairs and tires ..................................................................................................
4,719
Other operating ....................................................................................................
Insurance and losses .......................................................................................... 10,358
8,870
Depreciation expense ..........................................................................................
3,834
Rents, tags and utilities ........................................................................................
9,626
Sales, general and administrative ........................................................................
2,946
Corporate expenses ............................................................................................
-
Intangible asset impairment ................................................................................
(1,277)
Gain on property sale ..........................................................................................
(697)
Gain on equipment sales ....................................................................................
49,050
20,295
7,876
4,520
10,249
8,486
3,892
9,188
3,203
2,074
-
(1,537)
Total cost of operations .............................................................................................. 112,382
117,296
Total operating profit ..................................................................................................
7,790
5,586
BP claim settlement ....................................................................................................
Interest income and other ..........................................................................................
Interest expense ........................................................................................................
Income before income taxes ......................................................................................
Provision for income taxes ..........................................................................................
1,687
6
(130)
9,353
3,648
Net income ..............................................................................................................$
5,705
Earnings per common share:
Net Income-
Basic .................................................................................................................. $
Diluted ................................................................................................................$
1.74
1.74
Number of shares (in thousands) used in computing:
- basic earnings per common share ....................................................................
- diluted earnings per common share ..................................................................
3,283
3,285
-
-
(112)
5,474
2,135
3,339
1.02
1.02
3,268
3,275
Consolidated and Combined Statements of Comprehensive Income -Years ended September 30
(In thousands)
Net income ..............................................................................................................$
Other comp. income (loss)net of tax:
Actuarial gain (loss) retiree health ..........................................................................
Minimum pension liability ........................................................................................
Comprehensive income ............................................................................................$
See notes to consolidated and combined financial statements
2016
5,705
123
-
5,828
2015
3,339
4
(6)
3,337
108,424
20,738
129,162
47,431
29,281
7,831
5,251
10,729
8,210
3,706
9,273
2,685
-
-
(578)
123,819
5,343
-
7
(109)
5,241
2,044
3,197
.99
.99
3,243
3,243
2014
3,197
(3)
(2)
3,192
13
Consolidated and Combined Balance Sheets -As of September 30
Patriot Transportation Holding, Inc.
(In thousands, except share data)
Assets
Current assets:
Cash and cash equivalents ..............................................................................................$
Accounts receivable (net of allowance for doubtful
accounts of $153 and $144, respectively) ......................................................................
Federal and state taxes receivable ....................................................................................
Inventory of parts and supplies ..........................................................................................
Prepaid tires on equipment ................................................................................................
Prepaid taxes and licenses ................................................................................................
Prepaid insurance ..............................................................................................................
Prepaid expenses, other ....................................................................................................
Total current assets ..................................................................................................
Property, plant and equipment, at cost:
Land ..................................................................................................................................
Buildings ............................................................................................................................
Equipment ..........................................................................................................................
Less accumulated depreciation ............................................................................................
2016
6,005
7,043
261
811
2,052
681
820
64
17,737
2,626
5,494
94,663
102,783
59,080
43,703
Goodwill ................................................................................................................................
Intangible assets, net ............................................................................................................
Other assets, net ....................................................................................................................
Total assets .......................................................................................................................... $
3,431
1,214
214
66,299
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable ..............................................................................................................$
Bank overdraft ....................................................................................................................
Accrued payroll and benefits ..............................................................................................
Accrued insurance ..............................................................................................................
Accrued liabilities, other ......................................................................................................
Total current liabilities ................................................................................................
Deferred income taxes ..........................................................................................................
Accrued insurance ................................................................................................................
Other liabilities ......................................................................................................................
Commitments and contingencies (Notes 11)
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, $.10 par value; (25,000,000 shares
authorized; 3,289,353 and 3,272,804 shares issued
respectively ......................................................................................................................
Capital in excess of par value ............................................................................................
Retained earnings ..............................................................................................................
Accumulated other comprehensive income, net ................................................................
Total shareholders’ equity ..........................................................................................
Total liabilities and shareholders’ equity ............................................................................$
4,896
-
4,608
700
369
10,573
10,479
184
1,117
-
329
35,919
7,524
174
43,946
66,299
See notes to consolidated and combined financial statements
2015
-
7,382
115
780
2,019
694
748
58
11,796
2,679
5,507
91,800
99,986
57,366
42,620
3,431
1,384
295
59,526
4,163
773
5,363
1,102
393
11,794
8,334
1,026
1,170
-
327
35,005
1,819
51
37,202
59,526
14
Consolidated and Combined Statements of Cash Flows -Years ended September 30
Patriot Transportation Holding, Inc.
(In thousands)
Cash flows from operating activities:
Net income ....................................................................................................$
Adjustments to reconcile net income to
net cash provided by continuing operating activities:
Depreciation and amortization ........................................................................
Intangible asset impairment ............................................................................
Deferred income taxes ....................................................................................
Gain on asset dispositions ..............................................................................
Stock-based compensation ............................................................................
Net changes in operating assets and liabilities:
Accounts receivable ....................................................................................
Inventory of parts and supplies ....................................................................
Prepaid expenses ........................................................................................
Other assets..................................................................................................
Accounts payable and accrued liabilities ....................................................
Income taxes payable and receivable ..........................................................
Long-term insurance liabilities and other
long-term liabilities ....................................................................................
Net cash provided by operating activities ....................................................
Cash flows from investing activities:
Purchase of property and equipment ..............................................................
Business acquisition ........................................................................................
Proceed from the sale of property, plant and equipment ................................
Net cash used in investing activities ................................................................
Cash flows from financing activities:
(Decrease) Increase in bank overdrafts ..........................................................
Proceeds from borrowing on revolving credit facility ......................................
Payments on revolving credit facility ................................................................
Debt issue costs ..............................................................................................
Excess tax benefits from exercise of stock options ........................................
Proceeds from exercised stock options............................................................
Net distributions to FRP prior to spin-off ........................................................
Net cash (used in) provided by financing activities ........................................
Net increase in cash and cash equivalents ..................................................
Cash and cash equivalents at beginning of year ................................................
Cash and cash equivalents at end of year ......................................................$
Supplemental disclosures of cash flow information:
Cash paid during the year for:
2016
5,705
9,729
-
2,145
(2,222)
745
339
(31)
(98)
132
(448)
(146)
(895)
14,955
(11,503)
-
3,155
(8,348)
(773)
13,536
(13,536)
-
171
-
-
(602)
6,005
-
6,005
2015
3,339
9,485
2,074
(590)
(1,558)
617
(263)
115
152
(148)
2,478
(244)
(405)
15,052
(9,905)
-
1,863
(8,042)
(160)
43,793
(51,075)
(94)
425
202
(101)
(7,010)
-
-
-
2014
3,197
9,294
-
(461)
(578)
569
(235)
(14)
(149)
-
(1,487)
(44)
728
10,820
(9,631)
(10,023)
1,436
(18,218)
685
23,528
(16,246)
-
-
-
(569)
7,398
-
-
-
Interest ......................................................................................................$
Income taxes ..............................................................................................$
74
1,909
175
2,840
109
2,548
The Company recorded non-cash transactions for vacation liability of the Pipeline business acquisition of $132 in fiscal 2014.
The Company recorded a non-cash, impairment charge related to the customer relationship intangible asset recorded resulting
from the Pipeline acquisition of $2,074 during the second quarter of fiscal 2015.
See notes to consolidated and combined financial statements.
15
Consolidated and Combined Statements of Shareholder’s Equity/Net Investment -Years ended September 30
Patriot Transportation Holding, Inc.
(In thousands, except share amounts)
Balance at October 1, 2013 ........................................
– $
– $
–
$
– $
Capital in
Common Stock
Excess of Retained
Shares Amount Par Value Earnings
Accumulated
Other
Comprehensive
Income, net
58
$
Total
Stockholders’
Equity/Net
Investment
29,530
$
Net
Investment
29,472
Net income....................................................................
Minimum pension liability, net of tax ............................
Actuarial (loss) gain, net ..............................................
3,197
(2)
(3)
3,197
(2)
(3)
Balance as of September 30, 2014 ............................
– $
– $
–
$
– $
32,669
$
53
$
32,722
Issuance of common stock at spinoff .......................... 3,242,524
Exercise of stock options..............................................
16,000
Excess tax benefits from exercise of stock options ....
Stock-based compensation ........................................
Shares granted to Directors ........................................
Net income....................................................................
Minimum pension liability, net of tax ............................
Actuarial (loss) gain, net ..............................................
Reclassification of net investment to capital in
14,280
324
2
1
201
425
174
341
3,339
excess of par value ..................................................
33,864
(1,520)
(32,669)
324
203
425
174
342
3,339
(6)
4
(325)
(6)
4
Balance as of September 30, 2015 ............................ 3,272,804 $
327 $ 35,005
$ 1,819 $
–
$
51
$
37,202
Excess tax benefits from exercise of stock options ....
Stock-based compensation ........................................
Shares granted to Directors ........................................
Net income....................................................................
Actuarial (loss) gain, net ..............................................
16,549
2
171
384
359
5,705
171
384
361
5,705
123
123
Balance as of September 30, 2016 ............................ 3,289,353 $
329 $ 35,919
$ 7,524 $
–
$
174
$
43,946
16
Notes to Consolidated and Combined Financial Statements
Patriot Transportation Holding, Inc.
1. Accounting Policies.
DESCRIPTION OF BUSINESS
SPIN-OFF TRANSACTION - On January 30, 2015, FRP
Holdings, Inc. ("FRP") completed the tax-free spin-off (the
“Spin-off") of Patriot Transportation Holding, Inc., (the
"Company" or "Patriot"). In the Spin-off, FRP distributed all of
the outstanding stock of the Company to FRP's shareholders
as of the record date of January 9, 2015. FRP’s shareholders
received one share of Patriot (stock symbol “PATI”) for every
three shares of FRP owned on the record date resulting in
3,242,524 of Patriot shares outstanding on the distribution
date. Patriot now is an independent, publicly traded company,
and FRP retains no ownership in Patriot.
COMPANY’S BUSINESS - The business of the Company,
conducted through our wholly owned subsidiary, Florida Rock
& Tank Lines, Inc., is to transport petroleum and other liquids
and dry bulk commodities. We do not own any of the products
we haul, rather, we act as a third party carrier to deliver our
customer’s products from point A to point B predominately
using Company employees driving Company owned tractors
and tank trailers. Approximately 82% of our business consists
of hauling liquid petroleum products (mostly gas and diesel
fuel) from large scale fuel storage facilities to our customers’
retail outlets (e.g. convenience stores, truck stops and fuel
depots) where we off-load the product into our customer’s fuel
storage tanks for ultimate sale to the retail consumer. The
remaining 18% of our business consists of hauling our
customer’s dry bulk commodities such as cement, lime and
various industrial powder products and liquid chemicals.
PRINCIPLES OF CONSOLIDATION AND COMBINATION -
The consolidated and combined financial statements were
prepared in accordance with U.S. generally accepted
accounting principles (“GAAP”) and include the accounts,
certain assets, liabilities, and expenses of Patriot and its wholly
owned subsidiaries that comprise the Company. All significant
intercompany transactions within the consolidated and
combined entity have been eliminated.
CASH AND CASH EQUIVALENTS - The Company considers
all highly liquid debt instruments with maturities of three
months or less at time of purchase to be cash equivalents.
Bank overdrafts consist of outstanding checks not yet
presented to a bank for settlement, net of cash held in
accounts with right of offset.
INVENTORY - Inventory of parts and supplies is valued at the
lower of cost (first-in, first-out) or market.
TIRES ON EQUIPMENT - The value of tires on tractors and
trailers is accounted for as a prepaid expense and amortized
over the life of the tires as a function of miles driven.
REVENUE AND EXPENSE RECOGNITION - Transportation
revenue, including fuel surcharges, is recognized when the
services have been rendered to customers or delivery has
occurred, the pricing is fixed or determinable and collectibility
reasonably assured. Transportation expenses are
is
recognized as incurred.
ACCOUNTS RECEIVABLE - Accounts receivable are
recorded net of discounts and provisions for estimated
allowances. We estimate allowances on an ongoing basis by
considering historical and current trends. We record estimated
bad debts expense as a selling, general and administrative
expense. We estimate the net collectibility of our accounts
receivable and establish an allowance for doubtful accounts
based upon this assessment. Specifically, we analyze the
aging of accounts receivable balances, historical bad debts,
customer concentrations, customer credit-worthiness, current
economic trends and changes in customer payment terms. Any
trade accounts receivable balances written off are charged
against the allowance for doubtful accounts. The Company has
not experienced any significant credit-related losses in the past
three years.
PROPERTY AND EQUIPMENT - Property and equipment is
recorded at cost less accumulated depreciation. Provision for
depreciation of property and equipment is computed using
the straight-line method based on the following estimated
useful lives:
Buildings and improvements
Revenue equipment
Other equipment
Years
7-39
7-10
3-10
The Company recorded depreciation expenses for 2016, 2015
and 2014 of $9,487,000, $9,154,000 and $8,898,000,
respectively.
IMPAIRMENT OF LONG-LIVED ASSETS - The Company
periodically reviews its long-lived assets, which include
property and equipment and purchased intangible assets
subject to amortization, for potential impairment whenever
events or circumstances indicate the carrying amount of a
long-lived asset may not be recoverable. The analysis consists
of a review of future anticipated results considering business
prospects and asset utilization. If the sum of these future cash
flows (undiscounted and without interest charges) is less than
the carrying amount of the assets, the Company would record
an impairment loss based on the fair value of the assets with
the fair value of the assets generally based upon an estimate
of the discounted future cash flows expected with regards to
the assets and their eventual disposition.
GOODWILL - Goodwill represents the excess of the purchase
price over the estimated fair value of the net assets acquired
in the acquisition of a business. Goodwill is not amortized, but
rather is tested for impairment annually and when events or
changes in circumstances indicate that the fair value of a
reporting unit with goodwill has been reduced below carrying
value. The impairment test requires allocating goodwill and
other assets and liabilities to reporting units. The fair value of
each reporting unit is determined and compared to the book
value of the reporting unit. If the fair value of the reporting unit
is less than the book value, including goodwill, then the
recorded goodwill is impaired to its implied fair value with a
17
Notes to Consolidated Financial Statements Continued
Patriot Transportation Holding, Inc.
charge to operating expense.
INSURANCE - The Company has a $250,000 to $500,000
self-insured retention per occurrence in connection with certain
of its workers’ compensation, automobile liability, and general
liability insurance programs (“risk insurance”). The Company
is also self-insured for its employee health insurance benefits
and carries stop loss coverage for losses over $250,000 per
covered participant per year plus a $77,000 aggregate. The
Company has established an accrued liability for the estimated
cost in connection with its portion of its risk and health
insurance losses incurred and reported. Claims paid by the
Company are charged against the liability. Additionally, the
Company maintains an accrued liability for incurred but not
reported claims based on historical analysis of such claims.
Payments made under a captive agreement for each year’s
loss
in advance using actuarial
methodology. The captive agreement provides that we will
share in the underwriting results, good or bad, within a
$250,000 per occurrence layer of loss through retrospective
premium adjustments. The method of calculating the accrual
liability is subject to inherent uncertainty. If actual results are
less favorable than the estimates used to calculate the
liabilities, the Company would have to record expenses in
excess of what has been accrued.
fund are scheduled
INCOME TAXES - Deferred tax assets and liabilities are
recognized based on differences between financial statement
and tax bases of assets and liabilities using presently enacted
tax rates. Deferred income taxes result from temporary
differences between pre-tax income reported in the financial
statements and taxable income. The Company recognizes
liabilities for uncertain tax positions based on a two-step
process. The first step is to evaluate the tax position for
recognition by determining if the weight of available evidence
indicates that it is more likely than not that the position will be
sustained on audit. The second step is to estimate and
measure the tax benefit as the largest amount that is more
than 50% likely to be realized upon ultimate settlement. It is
inherently difficult and subjective to estimate such amounts, as
the amounts rely upon the determination of the probability of
various possible outcomes. The Company reevaluates these
uncertain tax positions on a quarterly basis. This evaluation is
based on factors including, but not limited to, changes in facts
or circumstances, changes in tax law and expiration of statutes
of limitations, effectively settled issues under audit, and audit
activity. Such a change in recognition or measurement would
result in the recognition of a tax benefit or an additional charge
to the tax provision. It is the Company’s policy to recognize as
additional income tax expense the items of interest and
penalties directly related to income taxes.
STOCK BASED COMPENSATION – The Company accounts
for compensation related to share based plans by recognizing
the grant date fair value of stock options and other equity-
based compensation issued to Company employees in
Patriot’s income statement over the requisite employee service
period using the straight-line attribution model. In addition,
compensation expense must be recognized for the change in
18
fair value of any awards modified, repurchased or cancelled
after the grant date. The fair value of each grant is estimated
on the date of grant using the Black-Scholes option-pricing
model. The assumptions used in the model and related impact
are discussed in Footnote 6.
PENSION PLAN - The Company accounts for its pension plan
following
the requirements of FASB ASC Topic 715,
“Compensation – Retirement Benefits”, which requires an
employer to: (a) recognize in its statement of financial position
the funded status of a benefit plan; (b) measure defined benefit
plan assets and obligations as of the end of the employer’s
fiscal year (with limited exceptions); and (c) recognize as a
component of other comprehensive income, net of tax, the
gains or losses and prior service costs or credits that arise but
are not recognized as components of net periodic benefit costs
pursuant to prior existing guidance.
EARNINGS PER COMMON SHARE - Basic earnings per
common share are based on the weighted average number of
common shares outstanding during the periods. Diluted
earnings per common share are based on the weighted
average number of common shares and potential dilution of
securities that could share in earnings. The differences
between basic and diluted shares used for the calculation
are the effect of employee and director stock options and
restricted stock.
USE OF ESTIMATES - The preparation of financial statements
in conformity with accounting principles generally accepted in
the United States requires management to make estimates
and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Certain accounting policies and estimates are of more
significance in the financial statement preparation process than
others. The most critical accounting policies and estimates
include the economic useful lives and salvage values of our
vehicles and equipment, provisions for uncollectible accounts
receivable, estimates of exposures related to our insurance
claims plans, and estimates for taxes. To the extent that actual,
final outcomes are different than these estimates, or that
additional facts and circumstances result in a revision to
these estimates, earnings during that accounting period will
be affected.
ENVIRONMENTAL - Environmental expenditures that benefit
future periods are capitalized. Expenditures that relate to an
existing condition caused by past operations, and which do not
contribute to current or future revenue generation, are
expensed. Liabilities are recorded for the estimated amount of
expected environmental assessments and/or remedial efforts.
Estimation of such liabilities includes an assessment of
engineering estimates, continually evolving governmental laws
and standards, and potential involvement of other potentially
responsible parties.
Notes to Consolidated Financial Statements Continued
Patriot Transportation Holding, Inc.
COMPREHENSIVE INCOME – Comprehensive income
consists of net income and other comprehensive income
(loss). Other comprehensive income (loss) refers to expenses,
gains, and losses that are not included in net income,
but
in shareholder’s
recorded directly
equity/net investment.
rather are
NET INVESTMENT BY PARENT – The Net investment by
former Parent represents a net balance reflecting FRP’s initial
investment in the Company and subsequent adjustments
resulting from the operations of the Company and various
transactions between the Company and FRP.
RECENTLY ISSUED ACCOUNTING STANDARDS – In
November 2015, the FASB issued ASU 2015-17, “Balance
Sheet Classification of Deferred Taxes”. The guidance requires
that all deferred tax assets and liabilities, along with any related
valuation allowance, be classified as noncurrent on the
balance sheet. The guidance becomes effective for annual
reporting periods beginning after December 15, 2016 with
early adoption permitted. The Company adopted this guidance
retrospectively as of October 1, 2015 and reclassified
$309,000 of deferred tax liability as of September 30, 2015
from current to long term.
including significant
In February 2016, the FASB issued ASU No. 2016-02,
“Leases”, which requires lessees to recognize a right-to-use
asset and a lease obligation for all leases. Lessees are
permitted to make an accounting policy election to not
recognize an asset and liability for leases with a term of twelve
months or less. Additional qualitative and quantitative
disclosures,
judgments made by
management, will be required. The new standard will become
effective for the Company beginning with the first quarter 2020
and requires a modified retrospective transition approach and
includes a number of practical expedients. Early adoption of
the standard is permitted. The Company is currently evaluating
the impacts the adoption of this accounting guidance will have
on the consolidated financial statements. The Company has
relatively few leases extending over 12 months, the total gross
contractual obligation for lease payments greater than 12
months at September 30, 2016 was $1,722,000.
(Topic
In March 2016, the FASB issued ASU No. 2016-09,
718):
“Compensation—Stock Compensation
Improvements
to Employee Share-Based Payment
Accounting”. The ASU includes multiple provisions intended to
simplify various aspects of the accounting for share-based
payments. Excess tax benefits for share-based payments will
be recorded as a reduction of income taxes and reflected in
operating cash flows upon the adoption of this ASU. Excess
tax benefits are currently recorded in equity and disclosed on
the statement of cash flows as financing activity under the
current rules. In addition, the guidance allows for a policy
election to account for forfeitures as they occur rather than on
an estimated basis. This guidance is effective for annual and
interim reporting periods of public entities beginning after
December 15, 2016 with early adoption permitted. The
Company may early adopt this accounting guidance in fiscal
2017 or as required in fiscal 2018.
2. Related Party Agreements.
In order to effect the Spin-off and govern our relationship with
FRP Holdings, Inc. after the Spin-off, we entered into an
Employee Matters Agreement and a Transition Services
Agreement. The Employee Matters Agreement generally
allocates responsibilities to each company for liabilities relating
to each Company’s current and former employees and
allocated responsibilities under employee benefit plans. The
Transition Services Agreement sets forth the terms on which
the Company will provide to FRP certain services that were
shared prior to the Spin-off, including the services of certain
shared executive officers, for a period of 12 or more months
after the Spin-off. The boards of the respective companies
have since extended these agreements for an additional
twelve months.
The consolidated and combined statements of income reflect
charges and/or allocation to FRP Holdings, Inc. for these
services of $1,542,000, $2,211,000, and $2,539,000 for fiscal
2016, 2015 and 2014, respectively. Included in the charges
above are amounts recognized for corporate executive stock-
based compensation expense. These charges are reflected as
a reduction to corporate expenses.
To determine these allocations between FRP and Patriot as
set forth in the Transition Services Agreement, we generally
employed the same methodology historically used by the
Company pre Spin-off to allocate said expenses and thus we
believe that the allocations to FRP are a reasonable
approximation of the costs related to FRP’s operations but any
such related-party transactions cannot be presumed to be
carried out on an arm’s-length basis as the terms were
negotiated while Patriot was still a subsidiary of FRP.
information
technology services and
Patriot provides
previously subleased office space to Bluegrass Materials
Company, LLC (“Bluegrass”). Mr. John Baker, brother of
Edward L. Baker and uncle of Thompson S. Baker II, serves
as Chairman of Bluegrass, and his son, Edward L. Baker II,
serves as its Chief Executive Officer. Messrs. John Baker and
Edward L. Baker II have a beneficial ownership interest in
Bluegrass. Bluegrass paid $599,000, $490,000 and $359,000
to the Company for fiscal 2016, 2015 and 2014 respectively
for such information technology services and office space.
The services to Bluegrass are anticipated to cease by
December 31, 2016.
3. Debt.
The Company had no long-term debt outstanding at
September 30, 2016 and September 30, 2015. The Company
has two revolving lines of credit at September 30, 2016
as follows:
Prior to the Spin-off, the Company was permitted to borrow
under FRP's credit agreement with Wells Fargo Bank, N.A. (the
"FRP Credit Agreement"). On January 30, 2015, the Company
entered into a new $25 million, five year, revolving credit
agreement with Wells Fargo Bank, N.A. and assumed and
19
Notes to Consolidated Financial Statements Continued
Patriot Transportation Holding, Inc.
refinanced $5.1 million then outstanding on the FRP Credit
Agreement into this new revolver. As of September 30, 2016,
we had no outstanding debt borrowed on this revolver,
$2,436,000 outstanding under
letters of credit and
$22,564,000 available for additional borrowings.
In addition to the unsecured revolving facility provided by Wells
Fargo, Management determined the Company needed an
additional financing source to provide capital for potential
growth opportunities. The Company closed on a loan on May
13, 2015 from Branch Banking and Trust Company (BB&T) for
up to $25 million under a two (2) year revolving facility to be
secured by a portion of the Company’s equipment. This facility
contains a provision which automatically converts any draws
under the revolver into five-year term loans with a seven year
amortization. As of September 30 2016, the Company had not
taken any draws against this facility.
These credit agreements contain certain conditions, affirmative
including
financial covenants and negative covenants
limitations on paying cash dividends. The Company was
in compliance with all of
loan covenants as of
September 30, 2016.
its
4. Operating Leases.
The Company leases certain assets under operating leases,
which primarily consist of real estate leases for the corporate
office and some of our terminal locations. Certain operating
leases provide for renewal options, which can vary by lease
and are typically offered at their fair rental value. The Company
has not made any residual value guarantees related to its
operating leases; therefore, there is no corresponding liability
recorded on the Balance Sheets.
Future minimum annual lease payments for assets under
operating leases as of September 30, 2016 are as follows (in
thousands):
Fiscal Year
2017
2018
2019
2020
2021
Thereafter
Total minimum lease payments
Total
458
299
303
307
311
501
2,179
$
$
Aggregate expense under operating leases was $759,000,
$742,000 and $738,000 for 2016, 2015 and 2014, respectively.
Certain operating leases include rent escalation provisions,
which are recognized as expense on a straight-line basis.
5. Earnings Per Share.
Basic earnings per common share are based on the weighted
average number of common shares outstanding during the
periods. Diluted earnings per common share are based on the
weighted average number of common shares and potential
dilution of securities that could share in earnings. The
differences between basic and diluted shares used for the
calculation are the effect of employee and director stock
20
options.
On January 30, 2015, 3,242,524 shares of our common stock
were distributed to the shareholders of FRP in connection with
the Spin-off and distribution. For comparative purposes,
we have assumed this amount to be outstanding as of
the beginning of each period prior to the Spin-off and
distribution presented in the calculation of weighted average
shares outstanding.
The following details the computations of the basic and diluted
earnings per common share. (Shares in thousands, except per
share amounts.)
Years Ended September 30
2016
2015
2014
Common shares:
Weighted average common shares
outstanding during the period -
shares used for basic earnings
per common share
3,283
3,268
3,243
Common shares issuable under share
based payment plans which are
potentially dilutive
2
7
—
Common shares used for diluted
earnings per common share
Net income
Earnings per common share
3,285
$ 5,705
3,275
3,339
3,243
3,197
Basic
Diluted
$ 1.74
$ 1.74
1.02
1.02
.99
.99
For 2016 and 2015, 80,669 and 19,218 shares, respectively,
attributable to outstanding stock options were excluded from
the calculation of diluted earnings per share because their
inclusion would have been anti-dilutive.
6. Stock-Based Compensation Plans.
PARTICIPATION IN FRP PLANS – The Company's directors,
officers and key employees previously were eligible to
participate in FRP's 2000 Stock Option Plan and the 2006
Stock Option Plan under which options for shares of common
stock were granted to directors, officers and key employees.
All related compensation expense has been fully allocated to
the Company (rather than FRP) and included in corporate
expenses. Corporate expense also reflects an offsetting credit
for the Transition Services Agreement allocation to FRP. All
outstanding options held by company directors, officers and
key employees on January 30, 2015 were cancelled and
replaced by an equal number of FRP options at 75.14% of the
previous exercise price based upon the market value of FRP
less the when issued market value of the Company on that day.
PATRIOT INCENTIVE STOCK PLAN – In January 2015, the
Board of Directors of the Company adopted the Patriot
Transportation Holding, Inc. Incentive Stock Plan. Grants were
issued based upon all outstanding FRP options held by
company directors, officers and key employees on January 30,
Notes to Consolidated Financial Statements Continued
Patriot Transportation Holding, Inc.
2015 with the same remaining terms. The grants were based
upon the FRP options outstanding at 24.86% of the previous
exercise price based upon the when issued market value of
the Company compared to the market value of FRP on that
day. Simultaneously, the number of shares were divided by 3
and the exercise price multiplied by 3 to adjust for the Spin-off
distribution of 1 for 3 shares of FRP. The number of
common shares available for future issuance was 142,360 at
September 30, 2016.
the Black-Scholes valuation model
for
Patriot utilizes
estimating fair value of stock compensation for options
awarded to officers and employees. Each grant is evaluated
based upon assumptions at the time of grant. The assumptions
are no dividend yield, expected volatility between 37% and
41%, risk-free interest rate of .9 to 2.0% and expected life of
3.0 to 7.0 years.
The dividend yield of zero is based on the fact that Patriot does
not pay cash dividends and has no present intention to pay
cash dividends. Expected volatility is estimated based on
FRP’s historical experience over a period equivalent to the
expected life in years. The risk-free interest rate is based on
the U.S. Treasury constant maturity interest rate at the date of
grant with a term consistent with the expected life of the
options granted. The expected life calculation is based on the
observed and expected
to exercise options by
time
the employees.
Subsequent to Spin-off, the realized tax benefit pertaining to
options exercised and the remaining compensation cost of
options previously granted prior to the Spin-off will be
recognized by FRP or Patriot based on the employment
location of the related employee or director.
The Company recorded the following stock compensation
expense for FRP and Patriot options (including allocations in
periods prior to the Spin-off) in its consolidated and combined
statements of income (in thousands):
Years Ended September 30
Stock option grants
Annual Director stock award
2016
$ 384
361
$ 745
2015
274
343
617
2014
220
349
569
A summary of Company stock options is presented below (in
thousands, except share and per share amounts):
Weighted Weighted
Weighted
Average
Number Average Average Grant Date
Exercise Remaining Fair Value
Price
Term (yrs)
(000’s)
Of
Shares
91,315 $ 20.31
(16,000) $ 12.62
5.6
$ 761
(95)
$
75,315 $ 21.95
23.78
38,794
24.24
(3,298)
5.8
$ 666
362
(29)
Options
Grants substituted on
January 30, 2015
Exercised
Outstanding at
September 30, 2015
Granted
Forfeited
Outstanding at
September 30, 2016 110,811 $ 22.52
6.2
$ 999
Exercisable at
September 30, 2016
68,049 $ 21.43
4.8
$ 548
Vested during
twelve months ended
September 30, 2016
13,651
$ 110
The following table summarizes information concerning stock
options outstanding at September 30, 2016:
Range of Exercise
Prices per Share
Non-exercisable:
$16.50 - $20.63
$20.64 - $25.78
$25.79 - $32.23
Exercisable:
$16.50 - $20.63
$20.64 - $25.78
$25.79 - $32.23
Total
Shares
under
Option
4,874
28,276
9,612
42,762
35,188
23,255
9,606
68,049
110,811
Weighted
Average
Weighted
Average
Exercise Price Remaining Life
18.99
23.77
28.39
$24.27
18.49
22.78
28.91
$21.43
$22.52
6.0
9.1
7.8
8.5 years
4.3
4.4
7.7
4.8 years
6.2 years
The aggregate intrinsic value of exercisable Company options
was $79,000 and the aggregate intrinsic value of all
outstanding in-the-money options was $87,000 based on the
Company’s market closing price of $20.73 on September 30,
2016 less exercise prices.
The realized tax benefit from Patriot option exercises during
fiscal 2016 was $353,000 which pertained to FRP options
exercised that were granted prior to the Spin-off to persons
employed by Patriot. The unrecognized compensation expense
of Patriot options granted as of September 30, 2016 was
$647,000, which is expected to be recognized over a weighted-
average period of 3.0 years.
21
Notes to Consolidated Financial Statements Continued
Patriot Transportation Holding, Inc.
7. Income Taxes.
The provision for income taxes for continuing operations for
fiscal years ended September 30 consists of the following
(in thousands):
2016
2015
2014
Captive insurance assets available to us to settle risk
insurance liabilities are not reported on our balance sheet as
we do not control or consolidate the captive.
The accrued insurance liability at September 30 is summarized
as follows (in thousands):
Current:
Federal
State
Deferred
Total
$1,247
334
1,581
2,067
$3,648
2,315
408
2,723
(588)
2,135
2,081
424
2,505
(461)
2,044
Accrued insurance, current portion
Accrued insurance, non-current
Total accrued insurance
Captive agreement assets
Gross accrued insurance
$
2016
700
184
884
3,669
$ 4,553
$
2015
1,102
1,026
2,128
2,986
5,114
A reconciliation between the amount of tax shown above and
the amount computed at the statutory Federal income tax rate
follows (in thousands):
Amount computed at
statutory Federal rate
State income taxes (net of
Federal income tax benefit)
Other, net
2016
2015
2014
$3,180
1,862
1,804
440
28
257
16
233
7
Provision for income taxes
$3,648
2,135
2,044
In this reconciliation, the category “Other, net” consists of
changes in permanent tax differences related to non-
deductible expenses, special tax rates and tax credits, interest
and penalties, and adjustments to prior year estimates.
The types of temporary differences and their related tax effects
that give rise to deferred tax assets and deferred tax liabilities
at September 30, are presented below (in thousands):
2016
2015
Deferred tax liabilities:
Property and equipment
Prepaid expenses
Gross deferred tax liabilities
Deferred tax assets:
Insurance liabilities
Employee benefits and other
Gross deferred tax assets
Net deferred tax liability
$12,156
134
12,290
184
1,627
1,811
$ 10,479
10,684
-
10,684
656
1,694
2,350
8,334
The Company has no unrecognized tax benefits.
Patriot tax returns in the U.S. and various states that include
the Company are subject to audit by taxing authorities. As of
September 30, 2016, the earliest tax year that remains open
for audit in the Unites States is 2010.
8. Accrued Insurance.
The Company has established an accrued liability for the
estimated cost in connection with its portion of its risk and
health insurance losses incurred and reported. Payments
made under a captive agreement for each year’s risk loss fund
are scheduled in advance using actuarial methodology.
22
9. Employee Benefits.
The Company and certain subsidiaries have a savings/profit
sharing plan for the benefit of qualified employees. The savings
feature of the plan incorporates the provisions of Section
401(k) of the Internal Revenue Code under which an eligible
employee may elect to save a portion (within limits) of their
compensation on a tax deferred basis. Patriot contributes to a
participant’s account an amount equal to 50% (with certain
limits) of the participant’s contribution. Additionally, the
Company may make an annual discretionary contribution to
the plan as determined by the Board of Directors, with certain
limitations. The plan provides for deferred vesting with benefits
payable upon retirement or earlier termination of employment.
The Company’s allocated cost was $792,000 in 2016,
$718,000 in 2015 and $718,000 in 2014.
The Company has a Management Security Plan (MSP) for
certain key employees. The accruals for future benefits are
based upon the remaining years to retirement of the
participating employees and other actuarial assumptions. The
fourth quarter of fiscal 2014 included a $575,000 unfavorable
adjustment to the actuarially assumed expense due to the
death prior to retirement of one of the plan participants. The
expense allocated to the Company for fiscal 2016, 2015 and
2014 was $25,000, $28,000 and $614,000, respectively.
The accrued benefit related to the Company under this plan
as of September 30, 2016 and 2015 was $702,000 and
$744,000, respectively.
The Company provides certain health benefits for retired
employees. Employees may become eligible for those benefits
if they were employed by the Company prior to December 10,
1992, meet the service requirements and reach retirement age
while working for Patriot. The plan is contributory and
unfunded. The Company accrues its allocated estimated cost
of retiree health benefits over the years that the employees
render service. The accrued postretirement benefit obligation
for this plan related to the Company as of September 30, 2016
and 2015 was $180,000 and $387,000, respectively. The net
periodic postretirement benefit cost allocated to the Company
was $16,000, $12,000 and $12,000 for fiscal 2016, 2015 and
2014, respectively. The discount rate used in determining the
Net Periodic Postretirement Benefit Cost was 3.7% for 2016,
4.0% for 2015 and 4.0% for 2014. The discount rate used in
the Accumulated Postretirement Benefit
determining
Notes to Consolidated Financial Statements Continued
Patriot Transportation Holding, Inc.
Obligation (APBO) was 4.25% for 2016, 2015, and 2014. No
medical trend is applicable because the Company’s share of
the cost is frozen.
10. Fair Value Measurements.
Fair value is defined as the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair
value hierarchy prioritizes the inputs to valuation techniques
used to measure fair value into three broad levels. Level 1
means the use of quoted prices in active markets for identical
assets or liabilities. Level 2 means the use of values that are
derived principally from or corroborated by observable
market data. Level 3 means the use of inputs are those
that are unobservable and significant to the overall fair
value measurement.
As of September 30, 2016 the Company had no assets
or liabilities measured at fair value on a recurring or non-
recurring basis.
At September 30, 2016 and 2015, the carrying amount
reported in the consolidated and combined balance sheets for
cash and cash equivalents, accounts receivable, accounts
payable and other financial instruments approximate their fair
value based upon the short-term nature of these items. We
believe the fair value of the allocated outstanding debt
obligations approximate their carrying value as the related debt
agreements reflect present market terms and as certain debt
obligations contain certain interest rates that reset periodically
based on current market indices.
11. Contingent Liabilities.
The Company is involved in litigation on a number of matters
and is subject to certain claims which arise in the normal
course of business. The Company has retained certain self-
insurance risks with respect to losses for third party liability and
property damage. There is a reasonable possibility that the
Company’s estimate of vehicle and workers’ compensation
liability may be understated or overstated but the possible
range cannot be estimated. The liability at any point in time
depends upon the relative ages and amounts of the individual
open claims. In the opinion of management none of these
matters are expected to have a material adverse effect on
the Company’s financial condition, results of operations or
cash flows.
12. Concentrations.
MARKET – The Company primarily serves customers in the
petroleum industry in the Southeastern U.S. Significant
economic disruption or downturn in this geographic region or
within these industries could have an adverse effect on our
financial statements.
CUSTOMERS – During fiscal 2016, the Company’s ten largest
customers accounted for approximately 58.9% of our revenue
and one of these customers accounted for 22.0% of our
revenue. Accounts receivable from the ten largest customers
was $3,998,000 and $4,596,000 at September 30, 2016 and
September 30, 2015 respectively. The loss of any one of these
ten customers could have a material adverse effect on the
Company’s revenues and income.
DEPOSITS – The Company places its cash and cash
equivalents with high credit quality institutions. At times, such
amounts may exceed FDIC limits.
13. Unusual or Infrequent Items Impacting Quarterly
Results.
On September 30, 2016, the Company received $1,330,000
for an easement granted to the state of Florida over the
Company's 25.2 acre terminal facility in Tampa, Florida
resulting in a $1,277,000 gain. The easement prohibits
residential development on the site and prohibits hotel
development on a portion of the site.
On October 20, 2015, the Company received notice from the
Claims Administrator for the Deepwater Horizon Economic and
Property Damages Settlement Program that the Company’s
claim in the amount of $2,106,281 qualifies for payment under
the terms of the Economic and Property Damages Settlement
Agreement. On December 18, 2015 BP accepted the
Company’s proposal of $2,047,651. The Company received
payment of $1,687,085 on January 6, 2016 net of all
contingency fees. This amount is included in other income.
An impairment charge of $2,074,000 was recorded in second
quarter 2015 related to the recorded customer relationship
intangible asset fair value pertaining to the Pipeline acquisition
in November 2013.
Sales, general & administrative expense for the fourth quarter
of fiscal 2014 includes a $575,000 unfavorable adjustment to
the actuarially assumed expense due to the death prior
to
the Management Security
Plan participants.
retirement of one of
14. Pipeline Business Acquisition.
The operations acquired from Pipeline Transportation, Inc. on
November 7, 2013 for $10,023,000 are included in the
Company’s consolidated and combined operating results
subsequent to the acquisition date. The Company accounted
for this acquisition in accordance with the provisions of ASC
805, Business Combinations (ASC 805) and allocated the
purchase price of the business based upon the fair value of
the assets acquired and liabilities assumed, using a third party
valuation expert as follows (in thousands):
Consideration:
Fair value of consideration
transferred (cash paid)
Acquisition related costs expensed
Recognized amounts of identifiable
assets acquired and liabilities assumed:
Property and equipment
Prepaid tires and other prepaid assets
Customer relationships
Trade name
$
$
$
(10,023)
75
3,397
276
4,004
72
23
Notes to Consolidated Financial Statements Continued
Patriot Transportation Holding, Inc.
Non-compete agreement
Vacation liability assumed
Total identifiable net assets assumed
Goodwill
Total
62
(132)
7,679
2,344
10,023
$
$
The goodwill recorded resulting from the acquisition amounted
to $2,344,000 and is shown on the consolidated and combined
balance sheets under Goodwill, and is amortizable for tax
purposes. The other intangible assets acquired in the
transaction are reflected in the line Intangible assets, net on
the consolidated and combined balance sheets. In connection
with the Pipeline acquisition, the Company assumed certain
vehicle leases. As of September 30, 2016 these non-
cancellable operating leases will require minimum annualized
rental payments approximating $200,000 for the next 1.1
fiscal years.
15. Goodwill and Intangible Assets.
The changes in gross carrying amounts of goodwill are as
follows (in thousands):
October 1, 2013
Goodwill acquired
September 30, 2014
No activity
September 30, 2015
No activity
September 30, 2016
Goodwill
$
$
1,087
2,344
3,431
-
3,431
-
3,431
The Company assesses goodwill for impairment on an annual
basis in the fourth quarter, or more frequently if events or
changes in circumstances indicate that the asset might
be impaired.
trade name and non-compete agreements,
The Company reviews intangible assets, including customer
value,
for
impairment, whenever events or changes in circumstances
indicate that the carrying amount of such assets may not be
recoverable. Recoverability of long-lived assets is measured
by a comparison of the carrying amount of the asset group to
the future undiscounted net cash flows expected to be
generated by those assets. If such assets are considered to
be impaired, the impairment charge recognized is the amount
by which the carrying amounts of the assets exceeds the fair
value of the assets.
The gross amounts and accumulated amortization (including
impairment) of identifiable intangible assets are as follows
(in thousands):
Amortizable intangible
assets:
Customer value
(useful life 10.5 years)
Trade name
(useful life 3.5 years)
Non-compete
(useful life 5 years)
September 30, 2016
Gross
Accumulated Gross Accumulated
Amount Amortization Amount Amortization
September 30, 2015
4,004
2,844
4,004
2,691
72
60
72
62
4,138
$
$
36
2,940 $
62
4,138 $
39
24
2,754
The Company recorded an impairment charge related to the
recorded customer relationship intangible asset resulting from
the Pipeline acquisition 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. The
impairment charge was calculated utilizing the assistance of a
third party valuation expert. The Company's conclusion that an
impairment charge was necessary in second quarter 2015 was
a the result of (i) the loss of certain Pipeline customers over
the course of the first nine months of calendar 2014, and then
(ii) the notification from another customer during the second
quarter that we would not be able to retain a sizeable piece of
the business we acquired from Pipeline at the rates we quoted
them during a competitive bid process.
Amortization expense for intangible assets was $186,000 for 2016
and it is included in sales, general and administrative expense.
Estimated amortization expense for the five succeeding years follows
(in thousands):
2017
2018
2019
2020
2021
Total
16. Subsequent Events.
None.
Amount
177
166
154
153
153
803
$
$
24
Management’s Report on Internal Control Over Financial Reporting
Patriot Transportation Holding, Inc.
is
responsible
The management of Patriot
for
establishing and maintaining adequate internal control
over financial reporting. Patriot's internal control system
was designed to provide reasonable assurance to the
Company's management and Board of Directors
regarding the preparation and fair presentation of
published financial statements in accordance with U.S.
generally accepted accounting principles. All internal
control systems, no matter how well designed have
inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable
assurance with respect to financial statement preparation
and presentation. Patriot's management assessed the
effectiveness of the Company's internal control over
financial reporting as of September 30, 2016 based on
the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in
the Internal Control-Integrated Framework (2013). Based
on this assessment, management believes that, as of
September 30, 2016, the Company's internal control over
financial reporting is effective.
Report of Independent Registered Certified Public Accounting Firm
The Shareholders and Board of Directors
Patriot Transportation Holding, Inc.
We have audited the accompanying consolidated
and combined balance sheets of Patriot
Transportation Holding, Inc. as of September 30,
2016 and 2015, and the related consolidated and
combined statements of income, comprehensive
income, shareholder’s equity/net investment, and
cash flows for years ended September 30, 2016,
2015 and 2014. These consolidated and combined
financial statements are the responsibility of the
Company’s management. Our responsibility is to
express an opinion on these consolidated and
combined financial statements based on our audits.
We conducted our audits in accordance with the
standards of the Public Company Accounting
Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain
reasonable assurance about whether the financial
statements are free of material misstatement. The
Company is not required to have, nor were we
engaged to perform, an audit of its internal control
over
included
consideration of internal control over financial
reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the
financial reporting. Our audits
effectiveness of the Company’s internal control over
financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test
basis, evidence supporting the amounts and
disclosures in the financial statements, assessing
the accounting principles used and significant
estimates made by management, as well as
evaluating
statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
the overall
financial
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
consolidated and combined financial position of
Patriot Transportation Holding, Inc. as of September
30, 2016 and 2015, and the consolidated and
combined results of its operations and its cash flows
for the years ended September 30, 2016, 2015 and
2014 in conformity with accounting principles
generally accepted in the United States of America.
Hancock Askew & Co., LLP
Savannah, Georgia
December 2, 2016
25
Directors and Officers
Patriot Transportation Holding, Inc.
Directors
Officers
Thompson S. Baker II
President and Chief Executive Officer
John D. Milton, Jr.
Executive Vice President, Treasurer, Secretary
and Chief Financial Officer
John D. Klopfenstein
Controller and Chief Accounting Officer
Robert E. Sandlin
Vice President
President, Florida Rock & Tank Lines, Inc.
James N. Anderson IV
Vice President of Safety and Human Resources
Thompson S. Baker II (1)
Chairman, President and Chief Executive
Officer of the Company
Edward L. Baker (1)
Chairman Emeritus
John E. Anderson (2) (3) (4)
Former President and Chief Executive
Officer of Patriot Transportation Holding, Inc.
Luke E. Fichthorn III (2) (3) (4)
Private Investment Banker,
Twain Associates
Charles D. Hyman (2)(3)(4)
President/Founder
Charles D. Hyman & Company
________________
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
(4) Member of the Nominating Committee
26
Other Information
Patriot Transportation Holding, Inc.
Patriot Transportation Holding, Inc.
200 West Forsyth Street, 7th Floor
Jacksonville, Florida, 32202
Telephone: (904) 396-5733
Common Stock Listed
The Nasdaq Stock Market
(Symbol: PATI)
Annual Meeting
Shareholders are cordially invited to attend the Annual
Shareholders Meeting which will be held at 10 a.m. local
time, on Wednesday, January 25, 2017, at the River Club,
Ortega Room, on the 34th Floor of the Wells Fargo
Building, One Independent Drive, Jacksonville, Florida
32202.
Transfer Agent
American Stock Transfer & Trust Company
59 Maiden Lane
Plaza Level
New York, NY 10038
Telephone: 1-800-937-5449
General Counsel
Nelson Mullins Riley & Scarborough LLP
Jacksonville, Florida
Independent Registered Certified
Public Accounting Firm
Hancock Askew & Co., LLP
Savannah, Georgia
Form 10-K
Shareholders may receive without charge a copy of
Patriot Transportation Holding, Inc.’s annual report on
Form 10-K for the fiscal year ended September 30, 2016
as filed with the Securities and Exchange Commission
by writing to the Treasurer at 200 West Forsyth Street,
7th Floor, Jacksonville, Florida 32202. The most recent
certifications by our Chief Executive Officer, Chief
Financial Officer and Chief Accounting Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 are
filed as exhibits to our Form 10-K.
Company Website
The Company’s website may be accessed at
www.patriottrans.com. All of our filings with the Securities
and Exchange Commission can be accessed through
our website promptly after filing. This includes annual
reports on Form 10-K, proxy statements, quarterly
reports on Form 10-Q, current reports filed or furnished
on Form 8-K and all related amendments.
27
Patriot Transportation Holding, Inc.
28
Safely Delivering Our Customers’
NASDAQ: PATI
Products On Time and
Accurately
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PATRIOT TRANSPORTATION HOLDING, INC.
200 W. FORSYTH STREET, 7TH FLOOR
JACKSONVILLE, FLORIDA 32202
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