Patriot Transportation Holding, Inc. reported net income of $2,341,000 or $.24 per diluted share in the first quarter of fiscal 2014, a decrease of $782,000 or 25.0 percent compared to net income of $3,123,000 or $.33 per diluted share in the same period last year.
In a release on Feb. 3, the Company said that the first quarter of fiscal 2013 included a gain of $681,000 after income taxes on the sale of investment land.
First Quarter Operating Results. For the first quarter of fiscal 2014, consolidated revenues were $38,820,000, an increase of $5,763,000 or 17.4 percent over the same quarter last year.
Transportation segment revenues were $31,591,000 in the first quarter of 2014, an increase of $4,952,000 over the same quarter last year. Revenue miles in the current quarter were up 22.4 percent compared to the first quarter of fiscal 2013 due to business growth and a longer average haul length. The Pipeline Transportation, Inc. business acquisition on Nov. 7, 2013 comprised less than half of that growth. Revenue per mile decreased 3.3 percent over the same quarter last year due to a longer average haul length. Fuel surcharge revenue increased $453,000 due to the increase in miles offset by the lower cost of fuel. The average price paid per gallon of diesel fuel decreased by $.14 over the same quarter in fiscal 2013. There is a time lag between changes in fuel prices and surcharges and often fuel costs change more rapidly than the market indexes used to determine fuel surcharges. Excluding fuel surcharges, revenue per mile decreased 1.6 percent over the same quarter last year.
Mining royalty land segment revenues for the first quarter of fiscal 2014 were $1,268,000, a decrease of $63,000 or 4.7 percent over the same quarter last year due to a shift in production at one location decreasing the share of mining on property owned by the Company.
Developed property rentals segment revenues for the first quarter of fiscal 2014 were $5,961,000, an increase of $874,000 or 17.2 percent due to higher occupancy and revenue on the 117,600 square foot build to suit building completed and occupied during the quarter ending March 2013 and revenue on the 5 new buildings added June 2013 related to the purchase of Transit Business Park. Occupancy at Dec. 31, 2013 was 89.2 percent as compared to 86.2 percent at Dec. 31, 2012.
Consolidated operating profit was $4,124,000 in the first quarter of fiscal 2014, a decrease of $284,000 or 6.4 percent compared to $4,408,000 in the same period last year. Operating profit in the transportation segment decreased $341,000 or 19.0 percent due to higher health and risk insurance costs, acquisition and organic growth related expenses, and lower gains on sales of equipment and losses on wrecked equipment. The Company incurred increased costs related to the acquisition and organic growth. These growth related costs include one-time equipment costs, professional fees and the cost of sending drivers from their home based terminals to other terminals to help capture growth opportunities which will continue to some extent until the growth is fully stabilized. Operating profit in the mining royalty land segment decreased $84,000 or 8.2 percent primarily due a shift in production at one location decreasing share of mining on property owned by the Company.
Operating profit in the Developed property rentals segment increased $232,000 or 12.5 percent due to higher occupancy, the 117,600 square foot build to suit building completed and occupied during the second quarter 2013, the addition of Transit Business Park partially offset by higher property taxes and professional fees. Consolidated operating profit includes corporate expenses not allocated to any segment in the amount of $354,000 in the first quarter of fiscal 2014, an increase of $91,000 compared to the same period last year.
Gain on investment land sold for the first quarter of fiscal 2014 included $56,000 of deferred profits on prior year land sales. Gain on investment land sold for the first quarter of fiscal 2013 included a gain on the sale of the developed property rentals Commonwealth property of $1,116,000 before income taxes. The book value of the property was $723,000.
Interest expense decreased $117,000 over the same quarter last year due to a declining mortgage principal balance offset by lower capitalized interest. The amount of interest capitalized on real estate projects under development was $75,000 lower than the same quarter in fiscal 2013.
Income tax expense decreased $500,000 over the same quarter last year due to lower earnings compared to the same quarter last year.
Summary and Outlook. Transportation revenues for the first quarter of fiscal 2014 increased $4,952,000 or 18.6 percent over the first quarter of 2013. The bottom line contribution of these additional revenues was not achieved as duplicate expense of temporarily transferred drivers and extra driving and training pay nullified any return on the added revenues. The company has been adding approximately five net new drivers a month, exclusive of the Pipeline acquisition, for the last nine months and anticipates continuing a similar addition of drivers. As permanent drivers are added to our employment rolls the company expects that the added revenues will become contributory to our profitability.
Developed property rentals occupancy has increased from 86.2 percent to 89.2 percent over Dec. 31, 2012 as the market for new tenants has improved and traffic for vacant space has increased. Occupancy at Dec. 31, 2013 and 2012 included 13,450 square feet or .4 percent and 25,660 square feet or .9 percent respectively for temporary leases under a less than full market lease rate. The Company's second build to suit lease at Patriot Business Park for a 125,500 square foot building was completed in January 2014. In November 2013 the Company signed an agreement to sell 4.4 acres at Patriot Business Park for $2,000,000. The book value of the property at Dec. 31, 2013 was $1,316,000. The sale is expected to close in the second half of calendar 2014.
The Company anticipates commencement of construction of the first phase of the four phase Anacostia development in mid 2014 with lease up scheduled between late 2015 and all of 2016.
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