Close

Form 10-Q PATRIOT TRANSPORTATION For: Jun 30

August 8, 2022 2:54 PM EDT

Get instant alerts when news breaks on your stocks. Claim your 1-week free trial to StreetInsider Premium here.
0001616741 false --09-30 2022 Q3 Non-accelerated filer P5Y P9Y1M3D P6Y5M30D P5Y5M30D P4Y7M5D P2Y7M6D 0001616741 2022-04-01 2022-06-30 0001616741 2022-08-04 0001616741 2022-06-30 0001616741 2021-09-30 0001616741 2021-04-01 2021-06-30 0001616741 2021-10-01 2022-06-30 0001616741 2020-10-01 2021-06-30 0001616741 2020-09-30 0001616741 2021-06-30 0001616741 us-gaap:CommonStockMember 2020-09-30 0001616741 us-gaap:AdditionalPaidInCapitalMember 2020-09-30 0001616741 us-gaap:RetainedEarningsMember 2020-09-30 0001616741 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-09-30 0001616741 us-gaap:CommonStockMember 2021-09-30 0001616741 us-gaap:AdditionalPaidInCapitalMember 2021-09-30 0001616741 us-gaap:RetainedEarningsMember 2021-09-30 0001616741 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-09-30 0001616741 us-gaap:CommonStockMember 2021-03-31 0001616741 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001616741 us-gaap:RetainedEarningsMember 2021-03-31 0001616741 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-03-31 0001616741 2021-03-31 0001616741 us-gaap:CommonStockMember 2022-03-31 0001616741 us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0001616741 us-gaap:RetainedEarningsMember 2022-03-31 0001616741 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-03-31 0001616741 2022-03-31 0001616741 us-gaap:CommonStockMember 2020-10-01 2021-06-30 0001616741 us-gaap:AdditionalPaidInCapitalMember 2020-10-01 2021-06-30 0001616741 us-gaap:RetainedEarningsMember 2020-10-01 2021-06-30 0001616741 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-10-01 2021-06-30 0001616741 us-gaap:CommonStockMember 2021-10-01 2022-06-30 0001616741 us-gaap:AdditionalPaidInCapitalMember 2021-10-01 2022-06-30 0001616741 us-gaap:RetainedEarningsMember 2021-10-01 2022-06-30 0001616741 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-10-01 2022-06-30 0001616741 us-gaap:CommonStockMember 2021-04-01 2021-06-30 0001616741 us-gaap:AdditionalPaidInCapitalMember 2021-04-01 2021-06-30 0001616741 us-gaap:RetainedEarningsMember 2021-04-01 2021-06-30 0001616741 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-04-01 2021-06-30 0001616741 us-gaap:CommonStockMember 2022-04-01 2022-06-30 0001616741 us-gaap:AdditionalPaidInCapitalMember 2022-04-01 2022-06-30 0001616741 us-gaap:RetainedEarningsMember 2022-04-01 2022-06-30 0001616741 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-04-01 2022-06-30 0001616741 us-gaap:CommonStockMember 2021-06-30 0001616741 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001616741 us-gaap:RetainedEarningsMember 2021-06-30 0001616741 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-30 0001616741 us-gaap:CommonStockMember 2022-06-30 0001616741 us-gaap:AdditionalPaidInCapitalMember 2022-06-30 0001616741 us-gaap:RetainedEarningsMember 2022-06-30 0001616741 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-06-30 0001616741 PATI:PetroleumProductsMember 2022-06-30 0001616741 PATI:OtherProductsMember 2022-06-30 0001616741 us-gaap:RevolvingCreditFacilityMember 2021-07-01 2021-07-31 0001616741 us-gaap:RevolvingCreditFacilityMember 2022-06-30 0001616741 us-gaap:RevolvingCreditFacilityMember 2021-10-01 2022-06-30 0001616741 us-gaap:DividendPaidMember 2021-10-01 2021-12-31 0001616741 us-gaap:DividendPaidMember 2020-10-01 2020-12-31 0001616741 us-gaap:StockAppreciationRightsSARSMember 2016-12-01 2016-12-31 0001616741 us-gaap:StockAppreciationRightsSARSMember 2022-06-30 0001616741 us-gaap:StockAppreciationRightsSARSMember 2016-12-31 0001616741 us-gaap:StockAppreciationRightsSARSMember 2021-06-30 0001616741 us-gaap:EmployeeStockOptionMember 2022-06-30 0001616741 us-gaap:EmployeeStockOptionMember 2021-10-01 2022-06-30 0001616741 us-gaap:EmployeeStockOptionMember 2022-04-01 2022-06-30 0001616741 us-gaap:EmployeeStockOptionMember 2021-04-01 2021-06-30 0001616741 us-gaap:EmployeeStockOptionMember 2020-10-01 2021-06-30 0001616741 PATI:DirectorStockAwardMember 2022-04-01 2022-06-30 0001616741 PATI:DirectorStockAwardMember 2021-04-01 2021-06-30 0001616741 PATI:DirectorStockAwardMember 2021-10-01 2022-06-30 0001616741 PATI:DirectorStockAwardMember 2020-10-01 2021-06-30 0001616741 us-gaap:EmployeeStockOptionMember 2021-09-30 0001616741 us-gaap:EmployeeStockOptionMember 2020-10-01 2021-09-30 0001616741 PATI:TopTenCustomersMember 2021-10-01 2022-06-30 0001616741 PATI:TopCustomersMember 2021-10-01 2022-06-30 0001616741 PATI:TopTenCustpmersMember 2022-06-30 0001616741 PATI:TopTenCustpmersMember 2021-09-30 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure PATI:Integer

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 10-Q

_________________

(Mark One)    

 

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended June 30, 2022

 

or

 

[_]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_________ to _________

 

 Commission File Number: 001-36605

 

_____________________

PATRIOT TRANSPORTATION HOLDING, INC.

(Exact name of registrant as specified in its charter)

_____________________

 

Florida   47-2482414

(State or other jurisdiction of

incorporation or organization)

  (I.R.S. Employer Identification No.)
     

200 W. Forsyth St., 7th Floor,

Jacksonville, florida

  32202
(Address of principal executive offices)   (Zip Code)

904-396-5733

(Registrant’s telephone number, including area code)

 

Title of each class   Trading Symbol   Name of each exchange on which registered
Common Stock, $.10 par value   PATI   NASDAQ  

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  [x]    No  [_]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  [x]    No  [_]Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]   Accelerated  filer [ ]
     
Non-accelerated filer [ ]   Smaller reporting company [x]
     
Emerging growth company [ ]    

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [_] 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  [_]    No  [x]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 

  Class       August 4, 2022  
  Common Stock       3,484,004  
 

 

             

 

 

 

PATRIOT TRANSPORTATION HOLDING, INC.

FORM 10-Q

QUARTER ENDED JUNE 30, 2022

 

 

 

CONTENTS

Page No.

 

Preliminary Note Regarding Forward-Looking Statements     3
           
    Part I.  Financial Information      
           
Item 1.   Financial Statements      
    Consolidated Balance Sheets     4
    Consolidated Statements of Income & Comprehensive Income     5
    Consolidated Statements of Cash Flows     6
    Consolidated Statements of Shareholders’ Equity     7
    Condensed Notes to Consolidated Financial Statements     8
           
Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations     13
           
Item 3.   Quantitative and Qualitative Disclosures about Market Risks     20
           
Item 4.   Controls and Procedures     20
           
    Part II.  Other Information      
           
Item 1A.   Risk Factors     21
           
Item 2.   Purchase of Equity Securities by the Issuer     21
           
Item 6.   Exhibits     21
           
Signatures         22
           
Exhibit 31   Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002     24
           
Exhibit 32   Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002     27

 

 

 

 

Preliminary Note Regarding 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.

 

These 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”, “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 the impact of the COVID-19 pandemic and “stay home” orders, as well as increased vehicle fuel efficiency, other impacts on the COVID-19 pandemic on our operations and financial results; the increased popularity of electric vehicles; 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, including regulations regarding the transportation industry and regulations intended to reduce greenhouse gas emissions; cyber-attacks; 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.

 

 

 

 

 

PART I. FINANCIAL INFORMATION, ITEM 1. FINANCIAL STATEMENTS

PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

      June 30,     September 30,
Assets     2022       2021  
Current assets:                
  Cash and cash equivalents   $ 9,949       10,899  

  Accounts receivable (net of allowance for

doubtful accounts of $66 and $86, respectively)

    5,504       4,930  
  Inventory of parts and supplies     1,228       871  
  Prepaid tires on equipment     1,400       1,317  
  Prepaid taxes and licenses     111       448  
  Prepaid insurance     3,100       4,614  
  Prepaid expenses, other     202       299  
    Total current assets     21,494       23,378  
                 
Property and equipment, at cost     73,602       77,181  
Less accumulated depreciation     53,968       54,497  
Net property and equipment     19,634       22,684  
                 
Operating lease right-of-use assets     2,660       1,949  
Goodwill     3,637       3,637  
Intangible assets, net     606       756  
Other assets, net     146       156  
Total assets   $ 48,177       52,560  
                 
Liabilities and Shareholders’ Equity                
Current liabilities:                
  Accounts payable   $ 2,539       1,858  
  Federal and state taxes payable     1,675       263  
  Accrued payroll and benefits     2,878       2,939  
  Accrued insurance     1,198       1,105  
  Accrued liabilities, other     980       1,742  
  Operating lease liabilities, current portion     928       928  
    Total current liabilities     10,198       8,835  
                 
Operating lease liabilities, less current portion     1,928       1,131  
Deferred income taxes     2,976       4,062  
Accrued insurance     1,537       1,537  
Other liabilities     862       879  
    Total liabilities     17,501       16,444  
Commitments and contingencies            
Shareholders’ Equity:                

Preferred stock, 5,000,000 shares authorized, of which

250,000 shares are designated Series A Junior

Participating Preferred Stock; $0.01 par value;

None issued and outstanding

                 

Common stock, $.10 par value; (25,000,000 shares

authorized; 3,484,004 and 3,415,643 shares issued

and outstanding, respectively)

    348       342  
  Capital in excess of par value     39,906       39,257  
  Accumulated deficit     (9,660 )     (3,572 )
  Accumulated other comprehensive income, net     82       89  
    Total shareholders’ equity     30,676       36,116  
Total liabilities and shareholders’ equity   $ 48,177       52,560  

 

See notes to consolidated financial statements.

 

 

 

PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

 

                                 
    THREE MONTHS ENDED   NINE MONTHS ENDED
    JUNE 30,   JUNE 30,
    2022   2021   2022   2021
                 
Operating revenues   23,501       20,855       65,000       60,811  
                                 
Cost of operations:                                
  Compensation and benefits     9,774       9,200       27,820       26,938  
  Fuel expenses     3,965       2,568       9,843       7,130  
  Repairs & tires     1,502       1,316       4,163       4,033  
  Other operating     739       734       2,193       2,302  
  Insurance and losses     1,918       1,789       6,302       5,840  
  Depreciation expense     1,363       1,662       4,246       5,078  
  Rents, tags & utilities     651       653       2,032       2,052  
  Sales, general & administrative     2,328       2,284       6,945       6,561  
  Corporate expenses     511       426       1,613       1,516  
  Gain on sale of terminal sites              (183 )     (8,330 )     (1,614 )
  (Gain) loss on disposition of PP&E     (163     (46     (642     153  
Total cost of operations     22,588       20,403       56,185       59,989  
                                 
Total operating profit     913       452       8,815       822  
                                 
Interest income and other     13       1       17       4  
Interest expense     (4     (8     (13     (23
                                 
Income before income taxes     922       445       8,819       803  
Provision for income taxes     151       122       2,099       218  
                                 
Net income   $ 771       323     6,720       585  
                                 
Unrealized investment losses, net     (4              (7         
                                 
Comprehensive income   $ 767       323     6,713       585  
                                 
Earnings per common share:                                
  Net income -                                
    Basic   0.22       0.09       1.95       0.17  
    Diluted   0.22       0.09       1.85       0.17  
                                 
Number of shares (in thousands) used in computing:        
-basic earnings per common share     3,483       3,402       3,453       3,391  
-diluted earnings per common share     3,504       3,420       3,628       3,401  

 

 

 

 

 

 

 

 

 

 

See notes to consolidated financial statements.

 

 

 

 

PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED JUNE 30, 2022 AND 2021

(In thousands)

(Unaudited)

 

               
  Nine months ended June 30,  
    2022       2021  
Cash flows from operating activities:              
 Net income $ 6,720       585  

 Adjustments to reconcile net income to net cash

provided by operating activities:

             
   Depreciation and amortization   5,390       6,259  
   Non-cash gain of acquisition-related contingent consideration            (16 )
   Deferred income taxes   (1,086 )     (1,483 )
   Gain on asset dispositions   (9,033 )     (1,476 )
   Stock-based compensation   340       404  
   Net changes in operating assets and liabilities:              
     Accounts receivable   (574 )     (303 )
     Inventory of parts and supplies   (357 )     10  
     Prepaid expenses   1,865       1,000  
     Other assets   2       41  
     Accounts payable and accrued liabilities   (49 )     (1,064 )
     Income taxes payable and receivable   1,412       425  
     Operating lease assets and liabilities, net   (638 )     (820 )

     Long-term insurance liabilities and other long-term

liabilities

  (17     (15
Net cash provided by operating activities   3,975       3,547  
               
Cash flows from investing activities:              
 Purchase of property and equipment   (2,859 )     (739 )
 Proceeds from the sale of property, plant and equipment   10,427       2,529  
 Cash held in escrow            (581 )
Net cash provided by investing activities   7,568       1,209  
               
Cash flows from financing activities:              
 Dividends paid   (12,808 )     (10,132 )
 Proceeds from exercised stock options   315           
Net cash used in financing activities   (12,493 )     (10,132 )
               
Net decrease in cash and cash equivalents   (950     (5,376 )
Cash and cash equivalents at beginning of period   10,899       15,962  
Cash and cash equivalents at end of the period $ 9,949       10,586  
               
Supplemental disclosures of cash flow information:              
Cash paid during the period for:              
   Interest $ 12       21  
   Income taxes   1,770       1,276  
 Non-cash investing and financing activities:              
   Right-of-use assets obtained in exchange for operating lease liabilities   1,453           
               

 

 

 

See notes to consolidated financial statements.

 

 

 

 

 

 

 

 

PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

THREE AND NINE MONTHS ENDED JUNE 30, 2022 AND 2021

(In thousands)

(Unaudited)

 

 

 

                                   
                (Accum.      Accumulated    
            Capital in   Deficit)      Other   Total
      Common Stock     Excess of   Retained     Comprehensive   Shareholders'
      Shares       Amount     Par Value   Earnings     Income, net   Equity
                                   
Balance as of October 1, 2020     3,377,279     $ 338     $ 38,670     $ 5,935       $ 105     $ 45,048  
                                                   
Stock-based compensation                 185                     185  
Exercise of stock options                                                
Director grant     24,867       2       217                     219  
Cash dividends paid ($3.00 per share)                       (10,132 )             (10,132 )
Net income                       585               585  
Unrealized investment loss, net                                        
Balance as of June 30, 2021     3,402,146     $ 340     $ 39,072     $ (3,612     $ 105     $ 35,905  
                                                   
Balance as of October 1, 2021     3,415,643     $ 342     $ 39,257     $ (3,572     $ 89     $ 36,116  
                                                   
Stock-based compensation                 160                     160  
Exercise of stock options     46,377       4       311                     315  
Director grant     21,984       2       178                     180  
Cash dividends paid ($3.75 per share)                       (12,808 )             (12,808 )
Net income                       6,720               6,720  
Unrealized investment losses, net                               (7 )     (7 )
Balance as of June 30, 2022     3,484,004     $ 348     $ 39,906     $ (9,660     $ 82     $ 30,676  
                                                   
Balance as of April 1, 2021     3,402,146     $ 340     $ 39,009     $ (3,935     $ 105     $ 35,519  
                                                   
Stock-based compensation                 63                     63  
Exercise of stock options                                        
Director grant                                                  
Cash dividends                                                  
Net income                       323               323  
Unrealized investment loss, net                                                  
Balance as of June 30, 2021     3,402,146     $ 340     $ 39,072     $ (3,612     $ 105     $ 35,905  
                                                   
Balance as of April 1, 2022     3,480,920     $ 348     $ 39,831     $ (10,431     $ 86     $ 29,834  
                                                   
Stock-based compensation                 51                     51  
Exercise of stock options                                                  
Director grant     3,084             24                     24  
Cash dividends                                                  
Net income                       771               771  
Unrealized investment losses, net                               (4 )     (4 )
Balance as of June 30, 2022     3,484,004     $ 348     $ 39,906     $ (9,660     $ 82     $ 30,676  
                                                   

 

 

 

 

 

 

 

PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(Unaudited)

 

(1) Description of Business and Basis of Presentation.

 

Description of Business

 

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 customers’ products from point A to point B, using predominantly Company employees driving Company owned tractors and tank trailers. Approximately 85% 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 customers’ fuel storage tanks for ultimate sale to the retail consumer. The remaining 15% of our business consists of hauling dry bulk commodities such as cement, lime and various industrial powder products, water and liquid chemicals. In June 2022, we employed 316 revenue-producing drivers who operated our fleet of 270 Company tractors (excluding 3 being placed in service), 32 owner operators and 410 trailers from our 17 terminals and 6 satellite locations in Florida, Georgia, Alabama, and Tennessee.

 

Basis of Presentation

 

These statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (primarily consisting of normal recurring accruals) considered necessary for a fair statement of the results for the interim periods have been included. Operating results for the nine months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2022. The accompanying consolidated financial statements and the information included under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with the audited financial statements and notes for the year ended September 30, 2021.

 

Operating Revenues

 

Our revenues are primarily based on a set rate per volume of product hauled to arrive at a desired rate per mile traveled. The rate also incorporates the cost of fuel at an assumed price plus fuel surcharges to address the fluctuation in fuel prices. Over time, the fuel surcharge tables in the industry have become so numerous and varied, both by carriers and customers, that they have simply become a part of the overall rating structure to arrive at that desired price per mile by market. We consider fuel surcharge revenue to be revenue from services rather than other revenues. As a result, the Company determined there is no reason to report fuel surcharges as a separate revenue line item and fuel surcharges are reported as part of Operating revenues.

 

 

 

(2) Recently Issued Accounting Standards. None.

 

(3) Related Party Agreements. The Company provides FRP Holdings, Inc. (FRP) certain services including the services of certain shared executive officers. FRP may be considered a related party due to common significant shareholder ownership and shared common officers. A written agreement exists outlining the terms of such services and the boards of the respective companies amended and extended this agreement for one year effective April 1, 2022.

 

The consolidated statements of income reflect charges and/or allocation to FRP Holdings, Inc. for these services of $224,000 and $256,000 for the three months ended June 30, 2022 and 2021, and $700,000 and $947,000 for the nine months ended June 30, 2022 and 2021, respectively. These charges to FRP are reflected as a reduction to the Company’s corporate expenses.

 

We employ an allocation method 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.

 

(4) Long-Term debt. The Company had no long-term debt outstanding at June 30, 2022 and September 30, 2021. On July 6, 2021, Patriot Transportation Holding, Inc. (the “Company”) entered into the 2021 Amended and Restated Credit Agreement (the “The Amended and Restated Credit Agreement”) with Wells Fargo Bank, N.A. (“Wells Fargo”). The Amended and Restated Credit Agreement modifies the Company's prior Credit Agreement with Wells Fargo, dated January 30, 2015, as amended by that certain First Amendment dated December 28, 2018. The Amended and Restated Credit Agreement establishes a five-year revolving credit facility with a maximum facility amount of $15 million, with a separate sublimit for standby letters of credit. The credit facility limit may be increased to $25 million upon request by the Company, subject to the lender's discretion and the satisfaction of certain conditions. The interest rate under the Amended and Restated Credit Agreement is 1.10% over the Secured Overnight Financing Rate (“SOFR”). A commitment fee of 0.12% per annum is payable quarterly on the unused portion of the commitment. The Amended and Restated Credit Agreement contains certain conditions, affirmative financial covenants and negative covenants including a minimum tangible net worth of $25 million. As of June 30, 2022, we had no outstanding debt borrowed on this revolver, $1,461,000 in commitments under letters of credit and $13,539,000 available for additional borrowings. The letter of credit fee is 1% and the applicable interest rate for borrowings would have been 2.62% on June 30, 2022.

 

This credit agreement contains certain conditions, affirmative financial covenants and negative covenants including a minimum tangible net worth. The Company was in compliance with all of its loan covenants as of June 30, 2022. As of June 30, 2022, the tangible net worth covenant would have limited our ability to pay dividends or repurchase stock with borrowed funds to a maximum of $1,433,000 combined.

 

(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 options.

 

The following details the computations of the basic and diluted Earnings per common share (dollars and shares in thousands, except per share amounts):

 

 

                                 
    Three months ended   Nine months ended
    June 30,   June 30,
    2022   2021   2022   2021
Weighted average common shares outstanding during the period – shares used for basic earnings per common share     3,483       3,402       3,453       3,391  
                                 
Common shares issuable under share based payment plans which are potentially dilutive     21       18       175       10  
                                 
Common shares used for diluted earnings per common share     3,504       3,420       3,628       3,401  
                                 
Net income   $ 771       323       6,720       585  
                                 
Earnings per common share:                                
-basic   $ 0.22       0.09       1.95       0.17  
-diluted   $ 0.22       0.09       1.85       0.17  

 

 

For the three and nine months ended June 30, 2022, 529,213 and 27,082 shares attributable to outstanding stock options, respectively, were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. For the three and nine months ended June 30, 2021, 424,908 and 500,950 shares attributable to outstanding stock options, respectively, 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

Prior to the Company’s spin-off from FRP Holdings, Inc. (FRP) in January 2015, 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.

 

Post Spin-Off Patriot Incentive Stock Plan

As part of the spin-off transaction, the Board of Directors of the Company adopted the Patriot Transportation Holding, Inc. Incentive Stock Plan (“Patriot Plan”) in January, 2015. In exchange for all outstanding FRP options held on January 30, 2015, existing Company directors, officers and key employees holding option grants in the FRP Stock Option Plan(s) were issued new grants in the Patriot and FRP Plans based upon the relative value of Patriot and FRP immediately following the completion of the spin-off with the same remaining terms. All related compensation expense has been allocated to the Company (rather than FRP) and included in corporate expenses. The number of common shares available for future issuance in the Patriot Plan was 35,811 at June 30, 2022.

 

On November 15, 2021, the Company paid an extraordinary dividend of $3.75 per share to all shareholders of record. In accordance with Section 4.2 of the 2006 Stock Incentive Plan, Section 11

10 
 

of the 2014 Equity Incentive Plan, and Section 409A of the Internal Revenue Code, the Company has adjusted the terms of all stock option grants outstanding and the stock appreciation rights as of the close of business on November 15, 2021.

 

On December 30, 2020, the Company paid an extraordinary dividend of $3.00 per share to all shareholders of record. In accordance with Section 4.2 of the 2006 Stock Incentive Plan, Section 11 of the 2014 Equity Incentive Plan, and Section 409A of the Internal Revenue Code, the Company has adjusted the terms of all stock option grants outstanding and the stock appreciation rights as of the close of business on December 30, 2020.

 

In December 2016, the Company approved and issued a long-term performance incentive to an officer in the form of stock appreciation rights. As adjusted for the extraordinary dividend the Company granted 257,009 stock appreciation rights. The adjusted market price of the grant was $8.66, and the executive will get a cash award at age 65 based upon the stock price at that date compared to the adjusted market price of $8.66 but in no event will the award be less than $500,000. The Company is expensing the fair value of the award over the 9.1 year vesting period to the officer’s attainment of age 65, with periodic adjustments to the liability estimate based upon changes in the assumptions used to calculate the liability. The accrued liability under this plan as of June 30, 2022 and 2021 was $394,000 and $365,000, respectively.

 

The Company recorded the following Stock compensation expense in its consolidated statements of income (in thousands):

 

                 
    Three Months ended   Nine months ended
    June 30,   June 30,
    2022   2021   2022   2021
Stock option grants   $ 51       63       160       185  
Annual director stock award     24                180       219  
Stock based compensation    $ 75       63       340       404  

 

A summary of Company stock options is presented below (in thousands, except share and per share amounts):

            Weighted       Weighted       Weighted  
    Number       Average       Average       Average  
    of       Exercise       Remaining       Grant Date  
Options   Shares       Price       Term (yrs)       Fair Value  
                               
Outstanding at October 1, 2021   604,005     $ 10.80       6.5     $ 1,931  
  Forfeited   (67,975 )     6.19               (112 )
  Exercised   (46,377 )     6.81               (88 )
  Dividend Adjustment   288,099                          
Outstanding at June 30, 2022 (a)   777,752     $ 7.44       5.5     $ 1,731  
                               
Exercisable at June 30, 2022   534,529     $ 7.95       4.6     $ 1,314  
                               
Vested during nine months ended June 30, 2022   132,331                     $ 251  

 

(a)The Company stock option intrinsic values were adjusted as of November 15, 2021, the date of the extraordinary dividend. Stock option activity, including the weighted average exercise price, was not retroactively adjusted.

 

11 
 

 

The aggregate intrinsic value of exercisable Company options was $279,000 and the aggregate intrinsic value of all outstanding in-the-money options was $556,000 based on the Company’s market closing price of $7.44 on June 30, 2022 less exercise prices.

 

The realized tax benefit from option exercises during the nine months ended June 30, 2022 was $18,000. The unrecognized compensation expense of Patriot options granted as of June 30, 2022 was $407,000, which is expected to be recognized over a weighted-average period of 2.6 years.

 

 

(7) 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 of those that are unobservable and significant to the overall fair value measurement.

 

At June 30, 2022 and September 30, 2021, the carrying amount reported in the consolidated 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.

 

 

(8) 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.

 

(9) 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 the industry could have an adverse effect on our financial statements.

 

Customers: During the first nine months of fiscal 2022, the Company’s ten largest customers accounted for approximately 58.4% of our revenue and one of these customers accounted for 18.3% of our revenue. Accounts receivable from the ten largest customers was $3,350,000 and $2,843,000 at June 30, 2022 and September 30, 2021 respectively. The loss of any one of these customers could have a material adverse effect on the Company’s revenues and income.

 

Deposits: Cash and cash equivalents are comprised of cash and an FDIC insured investment account at Wells Fargo Bank, N.A. and U.S. Treasury bills. The balance in the cash account may exceed FDIC limits.

 

 

12 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

 

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes in Item 1 and with the audited consolidated financial statements and the related notes included in our annual report on Form 10-K. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including the risks and uncertainties described in “Forward-Looking Statements” below and “Risk Factors” on page 7 of our annual report on Form 10-K. Our actual results may differ materially from those contained in or implied by any forward-looking statements. We assume no obligation to revise or publicly release any revision to any forward-looking statements contained in this quarterly report on Form 10-Q, unless required by law.

 

 

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 customers’ products from point A to point B predominately using Company employees driving Company owned tractors and tank trailers. Approximately 85% 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 customers’ fuel storage tanks for ultimate sale to the retail consumer. The remaining 15% of our business consists of hauling dry bulk commodities such as cement, lime and various industrial powder products, water and liquid chemicals. In June 2022, we employed 316 revenue-producing drivers who operated our fleet of 270 Company tractors (excluding 3 being placed in service), 32 owner operators and 410 trailers from our 17 terminals and 6 satellite locations in Florida, Georgia, Alabama, and Tennessee. We experience increased seasonal demand in Florida in the spring and in most of our other locations during the summer months.

13 
 

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 our customers in the day-to-day management of their product inventories.

Our industry is experiencing a severe shortage of qualified professional drivers with a tenured safe driving career. 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, short driving careers in other lines of trucking, poor safety records and a pattern of job instability in their work history. As a result, in many markets we serve it is difficult to grow the driver count and, in some cases, to even maintain our historical or desired driver counts.

 

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 21 or drivers without at least one year of driving experience, auto and workers’ compensation accident frequencies and severity, administrative costs, and group health claims experience.

 

To measure our performance, management focuses primarily on revenue growth, revenue miles, operating revenue per mile, our preventable accident frequency rate (“PAFR”), our operating ratio (defined as our operating expenses as a percentage of our operating revenue), turnover rate (excluding drivers related to terminal closures) and average driver count (defined as average number of revenue producing drivers including owner operators under employment over the specified time period) as compared to the same period in the prior year.

 

 

 

ITEM Nine months 2022 vs. 2021
Operating Revenues Up 6.9%
Revenue Miles Down 12.1%
Revenue Per Mile Up 21.7%
PAFR (incidents per 1M miles) goal of 2.0 1.61 vs. 1.68
Operating Ratio 86.4% vs. 98.6%
Driver Turnover Rate 77.0% vs. 100.4%
Avg. Driver Count incl. owner operators Down 10.0%

 

 

 

 

Third Quarter Highlights

 

·Operating revenue per mile was up $.86, or 24.2%, due to rate increases and an improved business mix.

 

14 
 

 

 

Comparative Results of Operations for the Three Months ended June 30, 2022 and 2021

 

  Three months ended June 30
(dollars in thousands)   2022       %       2021       %  
                               
Revenue miles (in thousands)   5,334               5,869          
                               
Operating revenues   23,501       100.0 %     20,855       100.0 %
                               
Cost of operations:                              
 Compensation and benefits   9,774       41.6 %     9,200       44.1 %
 Fuel expenses   3,965       16.9 %     2,568       12.3 %
 Repairs & tires   1,502       6.4 %     1,316       6.3 %
 Other operating   739       3.1 %     734       3.5 %
 Insurance and losses   1,918       8.1 %     1,789       8.6 %
 Depreciation expense   1,363       5.8 %     1,662       8.0 %
 Rents, tags & utilities   651       2.8 %     653       3.1 %
 Sales, general & administrative   2,328       9.9 %     2,284       11.0 %
 Corporate expenses   511       2.2 %     426       2.0 %
 Gain on sale of terminal sites   —         0.0 %     (183 )     -0.9 %
 Gain on disposition of PP&E   (163 )     -0.7 %     (46 )     -0.2 %
Total cost of operations   22,588       96.1 %     20,403       97.8 %
                               
Total operating profit $ 913       3.9 %     452       2.2 %

 

The Company reported net income of $771,000, or $.22 per share for the quarter ended June 30, 2022, compared to $323,000, or $.09 per share, in the same quarter last year. Net income in the prior year third quarter included $133,000, or $.04 per share, from gains on real estate sales net of income taxes.

 

Revenue miles were down 535,000, or 9%, over the same quarter last year due to a lower average driver count resulting primarily from the closure of our Nashville location and turnover (down ~25 drivers from the 3rd quarter of last year). Operating revenues for the quarter were $23,501,000, up $2,646,000 from the same quarter last year due to rate increases, higher fuel surcharges and an improved business mix. Operating revenue per mile was up $.86, or 24.2%.

 

Compensation and benefits increased $574,000, mainly due to the recent increases in driver compensation mostly offset by a lower driver count and non-driver personnel reductions. Gross fuel expense increased $1,397,000 due to higher diesel prices. Insurance and losses increased $129,000, primarily due to the negative development of a fiscal year 2020 auto liability claim. Depreciation expense was down $299,000 in the quarter. Gain on the sale of assets was $163,000 versus $46,000 in the same quarter last year.

 

As a result, operating profit this quarter was $913,000 compared to $452,000 in the same quarter last year. Excluding the gain on sale of land, the adjusted operating profit was $269,000 in last year’s third quarter.

 

 

15 
 

Comparative Results of Operations for the Nine Months ended June 30, 2022 and 2021

 

  Nine months ended June 30
(dollars in thousands)   2022       %       2021       %  
                               
Revenue miles (in thousands)   16,105               18,312          
                               
Operating revenues   65,000       100.0 %     60,811       100.0 %
                               
Cost of operations:                              
 Compensation and benefits   27,820       42.8 %     26,938       44.3 %
 Fuel expenses   9,843       15.1 %     7,130       11.7 %
 Repairs & tires   4,163       6.4 %     4,033       6.6 %
 Other operating   2,193       3.4 %     2,302       3.8 %
 Insurance and losses   6,302       9.7 %     5,840       9.6 %
 Depreciation expense   4,246       6.5 %     5,078       8.3 %
 Rents, tags & utilities   2,032       3.1 %     2,052       3.4 %
 Sales, general & administrative   6,945       10.7 %     6,561       10.8 %
 Corporate expenses   1,613       2.5 %     1,516       2.5 %
 Gain on sale of terminal sites   (8,330 )     -12.8 %     (1,614 )     -2.7 %
 Loss (gain) on disposition of PP&E   (642 )     -1.0 %     153       0.3 %
Total cost of operations   56,185       86.4 %     59,989       98.6 %
                               
Total operating profit $ 8,815       13.6 %     822       1.4 %

 

The Company reported net income of $6,720,000, or $1.85 per share, compared to $585,000, or $.17 per share, in the same period last year. The first nine months’ net income included $6,281,000, or $1.73 per share, from gains on real estate sales net of income taxes. Net income in the prior year nine months included $1,170,000, or $.34 per share, from gains on real estate sales net of income taxes.

 

Revenue miles were down 2,207,000, or 12%, over the same period last year due to a lower average driver count (down ~49 drivers from the first nine months of last year). Operating revenues for the period were $65,000,000, up $4,189,000 from the same period last year. Operating revenue per mile was up $.72, or 21.7% due to rate increases, higher fuel surcharges and an improved business mix.

 

Compensation and benefits increased $882,000, mainly due to the increased driver compensation package offset by a lower driver count and non-driver personnel reductions. Gross fuel expense increased $2,713,000 as a result of higher diesel prices. Insurance and losses increased $462,000, primarily as a result of a maximum limit COVID claim ($372,500) and the negative workers’ compensation adjustment from a prior year claim ($380,000). Depreciation expense was down $832,000 in the period. SG&A expense was higher by $384,000 mainly due to a one-time transaction bonus following the sale of the Tampa property for certain members of the management team ($312,000 in SG&A and $82,000 in Corporate for a total of $394,000) and higher legal fees. Gain on the sale of land was $8,330,000 due to the sale of our former terminal location in Tampa, FL compared to $1,614,000 in the same period last year due to the sale of our former terminal location in Pensacola, FL and the sale and partial leaseback of our terminal in Chattanooga, TN. Gain on the sale of assets was $642,000 versus a loss of ($153,000) in the same period last year.

 

As a result, operating profit this period was $8,815,000 compared to $822,000 in the same period last year. Operating ratio was 86.4 in the first nine months versus 98.6 the same period last year. Excluding

16 
 

the gain on sale of terminal sites and the one-time transaction bonus, adjusted operating profit for the first nine months was $879,000 as compared to an adjusted operating loss of ($792,000) in the same period last year. The COVID medical claim and the prior year workers’ compensation claim resulted in a total charge of $752,500 in the first nine months of fiscal 2022.

 

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.

 

Adjusted Operating Profit

 

Adjusted operating profit excludes the impact of the gain on sale of terminal sites and the one-time transaction bonus related to the sale. Adjusted operating profit is presented to provide additional perspective on underlying trends in Patriot’s core operating results. A reconciliation between operating profit and adjusted operating profit is as follows:

 

    Three months ended   Nine months ended
    June 30, 2022   June 30, 2021   June 30, 2022   June 30, 2021
Operating profit   $ 913       452       8,815       822  
Adjustments:                                
  Gain on sale of terminal sites     —         (183     (8,330 )     (1,614
  One-time transaction bonus     —         —         394       —    
Adjusted operating profit (loss)   $ 913       269       879       (792 )

 

 

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 June 30, 2022, we had no debt outstanding on this revolver, $1,461,000 letters of credit and $13,539,000 available for additional borrowings. The Company expects our fiscal year 2022 cash generation to cover the cost of our operations and 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):

 

    Nine months
    Ended June 30,
    2022   2021
Total cash provided by (used for):                
Operating activities   $ 3,975       3,547  
Investing activities     7,568       1,209  
Financing activities     (12,493     (10,132
Decrease in cash and cash equivalents   $ (950 )     (5,376 )
                 
Outstanding debt at the beginning of the period     —         —    
Outstanding debt at the end of the period     —         —    
17 
 

 

Operating Activities - Net cash provided by operating activities (as set forth in the cash flow statement) was $3,975,000 for the nine months ended June 30, 2022, compared to $3,547,000 in the same period last year. The total of net income plus depreciation and amortization and less gains on sales of property and equipment decreased $2,291,000 versus the same period last year. These changes are described above under "Comparative Results of Operations." Fluctuations in prepaid expenses, accounts payable, and income taxes payable added $2,867,000 in cash provided by operating activities. These changes comprise the majority of the increase in net cash provided by operating activities.

 

Investing Activities – Investing activities include the purchase of property and equipment, any business acquisitions and proceeds from sales of property and equipment upon retirement. For the nine months ended June 30, 2022, cash provided by investing activities was $7,568,000 which included the proceeds from retirements net of the purchase of plant, property and equipment. For the nine months ended June 30, 2021, cash provided by investing activities was $1,209,000 which included the proceeds from retirements net of the purchase of plant, property and equipment.

 

Financing Activities – Financing activities primarily include net changes to our outstanding revolving debt, proceeds from the sale of shares of common stock through employee equity incentive plans, and dividends. For the nine months ended June 30, 2022, cash used in financing activities was $12,493,000 due to dividends paid offset by proceeds from exercised stock options. For the nine months ended June 30, 2021, cash used in financing activities was $10,132,000 primarily due to dividends paid. We had no outstanding long-term debt on June 30, 2022 or 2021.

 

 

Credit Facilities - The Company has a five-year credit agreement with Wells Fargo Bank N.A. which provides a $15 million revolving line of credit with a $10 million sublimit for stand-by letters of credit. The amounts outstanding under the credit agreement bear interest at a rate of 1.1% over the Secured Overnight Financing Rate (“SOFR”), which may change quarterly based on the Company’s ratio of consolidated total debt to consolidated total capital. A commitment fee of 0.12% per annum is payable quarterly on the unused portion of the commitment. The credit agreement contains certain conditions and financial covenants, including a minimum tangible net worth. As of June 30, 2022, the tangible net worth covenant would have limited our ability to pay dividends or repurchase stock with borrowed funds to a maximum of $1,433,000 combined.

 

 

Cash Requirements - The Company currently expects its fiscal 2022 capital expenditures to be approximately $6.0 million for replacement equipment which we expect to be fully funded by our cash generated from our operations. The amount of capital expenditures through June 30, 2022 were $2,859,000.

 

 

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

 

 

Summary and Outlook. Since announcing the first significant pay increase back in April of 2021,

18 
 

our driver count has stabilized and we have been holding steady at +/- 355 revenue producing drivers. During the first quarter of 2022 we announced additional driver pay increases in all of our markets, with the majority effective February 4, 2022. Driver turnover has fallen to 77% through the first nine months of this year versus 100% in last fiscal year. We continue to see steady activity on driver applications and the average number of drivers in training. In July, we announced additional driver pay increases effective August 5, 2022 in about half of our markets. These increases require drivers to meet certain criteria each month in order to qualify, including minimum average log hours worked and zero unexcused absences to help drive productivity.

 

We continue to successfully negotiate additional rate increases with our customers as we adjust driver pay. These additional rate increases will fully offset the additional driver pay. We continue to focus on diversifying our product mix with more water and dry bulk drivers.

 

Our balance sheet remained stable with $9.9 million of cash and cash equivalents as of June 30, 2022, with no outstanding debt. We replaced 10 tractors in the first half of this fiscal year with plans to buy an additional 20 replacement tractors and a handful of trailers in Q4 putting our current planned capital expenditures at ~$6,000,000 for fiscal year 2022.

 

19 
 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

 

Interest Rate Risk - We are exposed to the impact of interest rate changes through our variable-rate borrowings under the credit agreement. Under the Wells Fargo revolving credit line, the applicable spread for borrowings at June 30, 2022 was 1.1% over SOFR.

 

Commodity Price Risk - The price and availability of diesel fuel are subject to fluctuations due to changes in the level of global oil production, seasonality, weather, global politics and other market factors. Historically, we have been able to recover a significant portion of fuel price increases from our customers in the form of fuel surcharges. The typical fuel surcharge table provides some margin contribution at higher diesel fuel prices but also results in some margin erosion at the lower diesel fuel prices. The price and availability of diesel fuel can be unpredictable as well as the extent to which fuel surcharges can be collected to offset such increases.

 

 

ITEM 4. CONTROLS AND PROCEDURES

 

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

 

The Company also maintains a system of internal accounting controls over financial reporting that are designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements.

 

All control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving the desired control objectives.

 

As of June 30, 2022, the Company, under the supervision and with the participation of the Company's management, including the CEO, CFO and CAO, carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on this evaluation, the Company’s CEO, CFO and CAO concluded that the Company's disclosure controls and procedures are effective in alerting them in a timely manner to material information required to be included in periodic SEC filings.

 

There have been no changes in the Company’s internal controls over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 

 

20 
 

 

PART II. OTHER INFORMATION

 

Item 1A.RISK FACTORS

 

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended September 30, 2021, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

 

 

Item 2. PURCHASES OF EQUITY SECURITIES BY THE ISSUER

 

            (c)    
            Total    
            Number of    
            Shares   (d)
            Purchased   Approximate
    (a)       As Part of   Dollar Value of
    Total   (b)   Publicly   Shares that May
    Number of   Average   Announced   Yet Be Purchased
    Shares   Price Paid   Plans or   Under the Plans
Period   Purchased   per Share   Programs   or Programs (1)
  April 1 through April 30       —       $ —         —       $ 5,000,000  
                                     
  May 1 through May 31       —       $ —         —       $ 5,000,000  
                                     
  June 1 through June 30       —       $ —         —       $ 5,000,000  
                                     
  Total       —       $  —         —            

 

 

(1)On February 4, 2015, the Board of Directors authorized management to expend up to $5,000,000 to repurchase shares of the Company’s common stock from time to time as opportunities arise. To date, the Company has not repurchased any common stock of the Company.

 

 

Item 6. EXHIBITS

 

(a)Exhibits. The response to this item is submitted as a separate Section entitled "Exhibit Index", on page 23.
21 
 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

      PATRIOT TRANSPORTATION HOLDING, INC.
         
         
Date:  August 8, 2022   By ROBERT E. SANDLIN  
      Robert E. Sandlin  
      President and Chief Executive Officer
      (Principal Executive Officer)
         
         
    By MATTHEW C. MCNULTY  
      Matthew C. McNulty  
      Vice President, Chief Operating Officer,  
      Chief Financial Officer and Secretary
      (Principal Financial Officer)
         
         
    By JOHN D. KLOPFENSTEIN  
      John D. Klopfenstein  
      Controller, Chief Accounting Officer and
      Treasurer
      (Principal Accounting Officer)

 

 

 

 

22 
 

PATRIOT TRANSPORTATION HOLDING, INC.

FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2022

EXHIBIT INDEX

 

 

(31)(a)Certification of Robert E. Sandlin
(31)(b)Certification of Matthew C. McNulty
(31)(c)Certification of John D. Klopfenstein

 

(32)Certification of Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer under Section 906 of the Sarbanes-Oxley Act of 2002.

 

101.XSD XBRL Taxonomy Extension Schema 
101.CAL XBRL Taxonomy Extension Calculation Linkbase
101.DEF XBRL Taxonomy Extension Definition Linkbase
101.LAB XBRL Taxonomy Extension Label Linkbase
101.PRE XBRL Taxonomy Extension Presentation Linkbase
104. Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
23 
 

 

CERTIFICATIONS                                                                                                                 Exhibit 31(a)

 

I, Robert E. Sandlin, certify that:

 

1.I have reviewed this report on Form 10-Q of Patriot Transportation Holding, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosures controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial report; and
5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

  

Date: August 8, 2022   /s/Robert E. Sandlin
    President and Chief
    Executive Officer

CERTIFICATIONS                                                                                                                 Exhibit 31(b)

 

I, Matthew C. McNulty, certify that:

 

1.I have reviewed this report on Form 10-Q of Patriot Transportation Holding, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosures controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial report; and
5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 8, 2022   /s/Matthew C. McNulty
    Vice President, Chief Operating Officer,
    Chief Financial Officer and Secretary

 

 

CERTIFICATIONS                                                                                                                Exhibit 31(c)

 

I, John D. Klopfenstein, certify that:

 

1.I have reviewed this report on Form 10-Q of Patriot Transportation Holding, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosures controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial report; and
5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 8, 2022   /s/John D. Klopfenstein
    Controller, Chief Accounting Officer and
    Treasurer

 

 

 

 

 

Exhibit 32

 

 

CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

 

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned certifies that this periodic report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of Patriot Transportation Holding, Inc.

 

      PATRIOT TRANSPORTATION HOLDING, INC.
         
         
Date:  August 8, 2022   By /s/ROBERT E. SANDLIN  
      Robert E. Sandlin  
      President and Chief Executive Officer
       
         
         
    By /s/MATTHEW C. MCNULTY  
      Matthew C. McNulty  
      Vice President, Chief Operating Officer, Chief
      Financial Officer Secretary
         
         
    By /s/JOHN D. KLOPFENSTEIN  
      John D. Klopfenstein  
      Controller, Chief Accounting Officer and Treasurer
       

 

 

 

A signed original of this written statement required by Section 906 has been provided to Patriot Transportation Holding, Inc. and will be retained by Patriot Transportation Holding, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

The foregoing certification accompanies the issuer’s Quarterly report on Form 10-Q and is not filed as provided in SEC Release Nos. 33-8212, 34-4751 and IC-25967, dated June 30, 2003.

 

 



Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings