Patriot Transportation Holding, Inc. (NASDAQ:PATI) Q2 2023 Earnings Call Transcript May 13, 2023
Operator: Good day, everyone, and welcome to the Patriot Transportation Holdings, Inc. earnings call for the second quarter. At this time all participants are placed on a listen-only mode and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Rob Sandlin, CEO and President of Patriot Transportation Holdings. Sir, the floor is yours.
Rob Sandlin: Good afternoon and thank you all for being on the call today and for your interest in Patriot Transportation. I am Rob Sandlin, CEO of Patriot Transportation. And with me today are Matt McNulty, our Chief Financial Officer and Chief Operating Officer; and John Klopfenstein, our Chief Accounting Officer. Before we get into our results, let me caution you that any statements made during this call that relate to the future are, by their nature, subject to risks and uncertainties that could cause actual results and events to differ materially from those indicated by such forward-looking statements. Additional information regarding these and other risk factors and uncertainties may be found in the Company’s filings with the Securities and Exchange Commission.
Now for our second quarter results. Today, the Company reported a net income of $475,000 or $0.13 per share for the quarter ended March 31, 2023 compared to a net loss of $490,000 in the same quarter last year. Operating revenues for the quarter were $23,465,000, up $2,537,000 from the second quarter last year due to rate increases, higher fuel surcharges, increased miles and an improved business mix. Miles this quarter increased 97,000 miles over last year’s quarter, mainly due to an improving driver count. Operating revenue per mile was up $0.40 or 10.2% versus last year’s quarter. Compensation and benefits increased $2,081,000, mainly due to increased driver compensation to the increased driver compensation package, including an increase in driver training pay of $211,000 versus the same quarter last year and an increase in owner-operators.
Depreciation expense was down $107,000 in the quarter and gains on sale of equipment was $275,000 compared to $119,000 gain in last year’s quarter. The operating profit this quarter was $584,000, compared to an operating loss of $639,000 in last year’s second quarter. Now for the six-month results. The Company reported net income of $960,000 or $0.27 per share compared to $5,949,000 in the same period last year, which included $6,281,000 from gains on real estate net of income taxes. Operating revenue for the period were $46,315,000, an increase of $4,816,000 due to rate increases, higher fuel surcharges and an improved business mix. Operating revenue per mile was up $0.53 or 13.8%. Miles for the period were down 202,000 miles versus last year’s period, mainly due to closing of our Nashville terminal last year.
Compensation and benefits increased $3,202,000 due to the increases in driver compensation, including a $296,000 increase in driver training pay versus last year’s period and increases in owner-operators. Fuel expense increased $440,000 for the period. Insurance and losses decreased $756,000, due to lower health and risk claims and depreciation expense was $310,000 lower versus the same period. Gains on equipment sales was $341,000 compared to $479,000 in the same period last year. SG&A increased during the period $406,000 due mainly to bonus accrual, increased travel and higher 401(k) match. Operating profit was $1,204,000 compared to $7,902,000 for last year’s six months. Prior year gain on real estate was $8,330,000 due to the sale of our Tampa terminal and land.
Now for the summary and outlook. In the first half of our fiscal 2023, we added business with new and existing customers on the back of a higher driver count and increased our miles quarter-over-quarter over prior year quarter for the first time in several years. We also have new business opportunities booked going forward into the third quarter, and we’ll continue to focus our growth with new and existing customers that meet our stated goal of adding business that will improve our return on investment. We had $6,941,000 of cash at the end of the first quarter — at the end of this period with no outstanding debt. We will add 73 new tractors during our year, 44 of the tractors will replace our existing company fleet and 29 will replace leased tractors with company-owned tractors.
We believe replacing the 29 leased tractors with company units will provide a better financial result and is a good use of cash. We continue to focus on our driver hiring and retention while the driver hiring market is still very challenging, our driver count increased during the second quarter, which allowed us to add miles throughout the period. This comes at a cost, as shown earlier, with $296,000 of added driver training cost compared to the prior year. However, the added capacity is encouraging for our plans to grow miles and revenue due to the previous driver pay increases, turnover results have been lower among our drivers with a year or more of seniority. New driver acquisition, while improved, continues to result in high turnover, but with better results than this time last year.
The trend of general freight spot rates declining has allowed us to add more owner-operators in several markets, and we will continue to monitor and balance with company drivers. In closing, our safety goals are on target for the year with the exception of product mixes, and we will continue our efforts to keep preventable incidents and related expenses in check while also staying focused on quality customer service. We believe we are positioned well to take advantage of the seasonal volume increases along with committed new business that I mentioned earlier. Thank you again for your interest in our company, and we will be happy to entertain any questions.
Q&A Session
Follow Patriot Transportation Holding Inc. (NASDAQ:PATI)
Follow Patriot Transportation Holding Inc. (NASDAQ:PATI)
Operator: [Operator Instructions] Your first question is coming from [Martin Lorenzen].
Operator: Your next question is coming from Christian Olesen from Olesen Value Fund.
Operator: Your next question is coming from [Steven Dennis].
Operator: Your next question is coming from [Steve Rudd] from Blackwell.
Operator: Your next question is coming from John Koller from Oppenheimer + Close.
Operator: Your next question is coming from John Deysher.
Operator: [Operator Instructions] Your next question is coming from [Bruce Oliphant] from Oppenheimer.
Operator: That concludes our Q&A session. I will now hand the conference back to our host for closing remarks. Please go ahead.
Rob Sandlin: Thank you all. We appreciate your interest in Patriot Transportation, and we look forward to talking with you next quarter. Have a great day.
Operator: Thank you, everyone. This concludes today’s event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.