Patriot Transportation Holding, Inc.

Good afternoon and welcome to the Patriot Transportation Holdings Incorporated earnings call for the first quarter of 2023. 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, Mr. Rob Sandlin, President and CEO of Patriot Transportation. Sir, the floor is yours.

Thank you. 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 that 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 first quarter results. Today the company reported a net income of $485,000, or 14 cents per share, for the quarter ended December 31, 2022, compared to net income of $6,439,000 or $1.74 per share in the same quarter last year, which included $6,281,000 or $1.70 per share from after-tax gain on real estate. Operating revenues for the quarter were $22,850,000, up $2,279,000 from the same quarter last year due to rate increases, higher fuel surcharges, and improved business mix. Miles this quarter were down $299,000, partially due to the closing of our Nashville location and a lower driver count. Operating revenue per mile was up 66 cents or 17.5%. Compensation and benefits increased $1,121,000, mainly due to the increased driver compensation package, mostly offset by lower driver count and a reduction in support staff. Depreciation expense was down $203,000 in the quarter, and gains on sales of assets was $66,000 compared to $360,000 gain in last year's quarter. The operating profit for this quarter was $620,000 compared to $8,541,000 in last year's first quarter. The summary and outlook. Looking back at our 2022 year, we focused on adding business with new and existing customers that meets our stated goal of adding quality business that provides for an acceptable return on investment. As we began our 2023 year, we added business with new and existing customers throughout the quarter and have new business opportunities booked going forward into the second quarter. We had $7,800,000 of cash at the end of the first quarter with no outstanding debt. Interest rates continue to rise in the calendar to 2022, which will put more pressure on those in the industry with large outstanding debt. We will add 73 tractors during our year and received nine during the quarter. 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 our cash. We will only add a small number of trailers during 2023 in hopes that inflation declines going forward and replacement price surcharges also decline, allowing us to replace more trailers down the road at a lower price. We will continue to focus on our driver hiring and retention. During the quarter, we raised pay on our drivers in most of the markets where pay was not adjusted late in our 2022 year. The results among our drivers with a year or more of seniority has been very positive, resulting in low turnover among this group of dedicated professionals. New driver acquisitions, while slightly improved, continues to result in higher high turnover, but with slightly better results than this time last year. As general freight spot rates have declined, we have experienced the ability to put on more owner-operators in several markets and will continue to monitor and balance this with company drivers. In closing, we are on target with our safety goals for the first quarter of the year and will continue to focus to keep preventable incidents and costs in check. Generally, the petroleum and construction industry business increases during our second quarter, and we believe we are positioned well to take additional advantage of seasonal volume increases along with committed new business. Thank you again for your interest in our company, and we will be happy to entertain any questions.

Thank you. Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments at this time, please press star 1 on your phone. We ask that while posing your question, you please pick up your handset, if listening on speakerphone, to provide optimum sound quality. Please hold while we poll for questions. Thank you. Our first question is coming from Christian Oleson with Oleson Value Fund. Please go ahead.