FRP Holdings, Inc. (NASDAQ: FRPH) Announces Results For The First Quarter Of Fiscal 2016

Feb 03, 2016, 09:25 ET from FRP Holdings, Inc.

JACKSONVILLE, Fla., Feb. 3, 2016 /PRNewswire/ --

Fiscal 2016 First Quarter Consolidated Results of Continuing Operations.

Income from continuing operations for the first quarter of fiscal 2016 was $7,473,000 or $.76 per share versus $1,131,000 or $.12 per share in the first quarter last year.  This first quarter of fiscal 2016 benefited from a gain on land sale of $6,286,000 plus income of $3,000,000 from the settlement of environmental claims resulting in a positive impact of $.57 per share of income from continuing operations.  Total revenues were up $521,000, or 6.3%, versus the same quarter last year.  Excluding the positive impact of the environmental settlement this quarter ($3 million) and the negative impact of corporate costs not allocated to discontinued operations in the first quarter last year ($919,000), consolidated total operating profit was up 10.3%.

First Quarter Segment Operating Results.

Mining Royalty Lands Segment:

Total revenues in this segment were $1,659,000, an increase of 23.4%, versus $1,344,000 in the same quarter last year as total tons mined at our locations increased by 29.0%.  Total operating profit in this segment was $1,470,000, an increase of 66.7%, versus $882,000 in the first quarter of last year.  Management periodically analyzes the amount of corporate and management company time spent on each segment and in the most recent analysis it was determined that less time was being spent on the mining segment versus prior years when management was working on mining related transactions, such as the Lake Louisa acquisition, and the spin-off, which benefited all segments of the business.  As a result, the allocation of corporate expense to this segment was reduced and reallocated to our other two segments resulting in $263,000 less corporate expense in this quarter versus the same quarter last year.

Land Development and Construction Segment:

The Land Development and Construction segment is responsible for managing and developing our non-income producing properties into income production.  In this quarter, this segment successfully closed on the sale of Phase II of the Windlass Run residential land (a non-income producing property) for $11,288,000.   Using $9,900,000 of the proceeds from that sale in a Section 1031 exchange, the Asset Management segment acquired the Port Capital building, a 91,218 square foot, 100% occupied, warehouse with first full year projected rental revenue of $594,000.  In addition, construction of the 80,000 square foot spec warehouse at Hollander Business park will be completed during the second quarter of this fiscal year and, upon receipt of a Certificate of Occupancy, will be transferred to the Asset Management segment for lease-up.  Lastly, management successfully completed negotiations and entered into a $3,000,000 settlement of environmental claims against our former tenant at the Riverfront on the Anacostia property and continues to pursue settlement negotiations with other potentially responsible parties.  Management anticipates committing to develop Phase II of the Riverfront on the Anacostia project during this fiscal year at which time we will likely book a liability for the estimated incremental cost of remediation similar to what we booked with regards to Phase I. 

Revenues for this segment were up $48,000 over last year's first quarter due to higher real estate tax reimbursement from the ground lease at our Square 664E property in D.C.  Costs of operating this segment (excluding the $3,000,000 positive benefit from the environmental settlement at Anacostia) were up $224,000 in the quarter driven primarily by higher property taxes at our Anacostia Phases II-IV property and the reallocation of corporate expenses from the Mining Royalty Lands segment. 

Asset Management Segment:

Total revenues in this segment were $6,915,000, up $158,000 or 2.3%, over the same quarter last year. The increase was due mainly to completion of the third build-to-suit in the middle of the same quarter last year and the acquisition of the Port Capital building in October offset by the lack of revenues ($138,000) from a building that was vacated in January 2015 as a result of the tenant outgrowing the space.  Cost of operations increased $234,000 due mainly to the reallocation of corporate expenses from the Mining Royalty Lands segment and an increase in operating expenses due primarily to transaction specific fees and costs (e.g. the 1031 exchange) partially offset by a reduction of $98,000 in property taxes due mainly to a successful appeal of taxes on the three build-to-suit buildings at our Patriot Business Park.  

Summary and Outlook.  We are focused on building shareholder value through our real estate holdings - mainly by growing our portfolio through the conversion of our non-income producing assets into income production.  This strategy is two pronged in that we (i) sell land that is not conducive to warehouse/office development and use the proceeds to acquire existing income producing warehouse/office buildings (typically in a Section 1031 exchange) and (ii) construct new warehouse/office buildings on existing pad sites in our developed business parks.  Over the past five years, we have converted 172 acres of non-income producing land into 766,216 square feet of income producing properties with estimated FY 2016 rental revenues of $5,115,000.  We saw another quarter of real improvement in mining royalties due mainly to increased volumes at most of our locations and, barring another major economic downturn in the US, we are confident that trend will continue for the foreseeable future. 

During the remainder of fiscal 2016, we expect to spend approximately $4 million on the construction of a new bulk head at the Square 664E property in anticipation of future high-rise development and continue working with our JV partner, MRP, to complete the construction of Phase I of Riverfront on the Anacostia (now named Dock 79) and to continue planning for the commencement of Phase II.

Conference Call.  

The Company will host a conference call on Wednesday, February 3, 2016 at 1:00 p.m. (EST).  Analysts, stockholders and other interested parties may access the teleconference live by calling 1-800-973-1544 (pass code 68134) within the United States.  International callers may dial 334-323-7224 (pass code 68134).  Computer audio live streaming is available via the Internet through the Company's website at www.frpholdings.com. You may also click on this link for the live streaming http://stream.conferenceamerica.com/frp020316. For the archived audio via the internet, click on the following link http://archive.conferenceamerica.com/archivestream/frp020316.mp3. If using the Company's website, click on the Investor Relations tab, then select the earnings conference stream.  An audio replay will be available for sixty days following the conference call. To listen to the audio replay, dial toll free 877-919-4059, international callers dial 334-323-0140.  The passcode of the audio replay is 51125827.  Replay options: "1" begins playback, "4" rewind 30 seconds, "5" pause, "6" fast forward 30 seconds, "0" instructions, and "9" exits recording.  There may be a 30-40 minute delay until the archive is available following the conclusion of the conference call.


 

 

FRP HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)







THREE MONTHS ENDED




DECEMBER 31,




2015


2014


Revenues:










     Rental revenue


$

6,027




5,868



     Royalty and rents



1,638




1,320



     Revenue – reimbursements



1,158




1,114



 Total Revenues



8,823




8,302













Cost of operations:










     Depreciation, depletion and amortization



1,896




1,883



     Operating expenses



973




914



     Environmental remediation recovery



(3,000)






     Property taxes



1,118




1,095



     Management company indirect



504




352



     Corporate expenses



732




1,713



Total cost of operations



2,223




5,957













Total operating profit



6,600




2,345













Interest income



1






Interest expense



(481)




(445)



Equity in loss of joint ventures



(54)




(30)



Gain (Loss) on investment land sold



6,286




(17)













Income from continuing operations before income taxes



12,352




1,853



Provision for income taxes



4,879




722



Income from continuing operations



7,473




1,131













Gain from discontinued transportation operations, net of taxes






1,663













Net income


$

7,473




2,794













Comprehensive net income


$

7,473




2,794













Earnings per common share:










  Income from continuing operations-










    Basic


$

0.76




0.12



    Diluted


$

0.76




0.12



  Discontinued operations-










    Basic


$

0.00




0.17



    Diluted


$

0.00




0.17



  Net Income-










    Basic


$

0.76




0.29



    Diluted


$

0.76




0.29













Number of shares (in thousands) used in computing:










    -basic earnings per common share



9,802




9,711



    -diluted earnings per common share



9,853




9,771



 

 

Asset Management Segment Results

 



Three months ended December 31





(dollars in thousands)


2015


%


2014


%


Change


%














Rental revenue


$

5,908




85.4

%



5,744




85.0

%



164




2.9

%

Revenue-reimbursements



1,007




14.6

%



1,013




15.0

%



(6)




-0.6

%


























Total revenue



6,915




100.0

%



6,757




100.0

%



158




2.3

%


























Depreciation, depletion and amortization



1,798




26.0

%



1,786




26.4

%



12




0.7

%

Operating expenses



839




12.1

%



675




10.0

%



164




24.3

%

Property taxes



659




9.5

%



757




11.2

%



(98)




-12.9

%

Management company indirect



231




3.4

%



153




2.3

%



78




51.0

%

Corporate expense



378




5.5

%



300




4.4

%



78




26.0

%


























Cost of operations



3,905




56.5

%



3,671




54.3

%



234




6.4

%


























Operating profit


$

3,010




43.5

%



3,086




45.7

%



(76)




-2.5

%

 

 

Mining Royalty Land Results

 



Three months ended December 31

(dollars in thousands)


2015


%


2014


%










Royalty and rents


$

1,638




98.7

%



1,320




98.2

%

Revenue-reimbursements



21




1.3

%



24




1.8

%


















Total revenue



1,659




100.0

%



1,344




100.0

%


















Depreciation, depletion and amortization



34




2.0

%



31




2.3

%

Operating expenses



41




2.5

%



55




4.1

%

Property taxes



59




3.6

%



58




4.3

%

Corporate expense



55




3.3

%



318




23.7

%


















Cost of operations



189




11.4

%



462




34.4

%


















Operating profit


$

1,470




88.6

%


$

882




65.6

%

 

 

Land Development and Construction Segment Results

 



Three months ended December 31


(dollars in thousands)


2015


2014


Change










Rental revenue


$

119




124




(5)



Revenue-reimbursements



130




77




53

















Total revenue



249




201




48

















Depreciation, depletion and amortization



64




66




(2)



Operating expenses



93




184




(91)



Environmental remediation recovery



(3,000)







(3,000)



Property taxes



400




280




120



Management company indirect



273




199




74



Corporate expense



299




176




123

















Cost of operations



(1,871)




905




(2,776)

















Operating loss


$

2,120




(704)




2,824



 

 

Non-GAAP Financial Measures.

To supplement the financial results presented in accordance with GAAP, FRP presents certain non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The non-GAAP financial measures included in this press release are adjusted operating profit and net operating income (NOI). FRP 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.

Post Spin-off we are reporting any net gain/(loss) from the transportation business as "discontinued operations" and we currently have no other discontinued operations being reported.  GAAP accounting rules do not allow corporate overhead expenses to be allocated to a discontinued operation of the Company; thus, those corporate expenses attributable to the transportation business prior to the spin-off are charged to the Company as part of continuing operations.

Adjusted Operating Profit

Adjusted operating profit excludes the impact of the corporate expense not allocated to discontinued operations and the environmental remediation recovery. Adjusted operating profit is presented to provide additional perspective on underlying trends in FRP's core operating results. A reconciliation between operating profit and adjusted operating profit is as follows:

 

 

 Adjusted Operating Profit


Three months ended







December 31,







2015


2014


Change


%

Operating profit


$

6,600




2,345




4,255




181.4

%

Adjustments:

















  Environmental remediation recovery



(3,000)













  Corporate costs not allocated

   to discontinued operations






919










Adjusted Operating profit


$

3,600




3,264




336




10.3

%

 

 

Net Operating Income Reconciliation

Year Ended 12/31/15 (in thousands)


















Asset



Land



Mining



Unallocated



FRP




Management



Development



Royalties



Corporate



Holdings




Segment



Segment



Segment



Expenses



Totals



















Income from continuing operations

$  1,535



5,054



884





7,473



Income Tax Allocation

1,003



3,298



578





4,879



Inc. from continuing operations  before income taxes

2,538



8,352



1,462





12,352



















Less:
















 Gains on investment land sold

9



6,277












 Other income



1












 Unrealized rents

13














 Lease intangible rents

14














Plus:
















 Equity in loss of Joint Venture



45












 Interest Expense

481














 Depreciation/Amortization

1,798



64












 Management Co. Indirect

231



273












 Allocated Corporate Expenses

378



299




























Net Operating Income (loss)

$  5,390



2,755












 

 

Net Operating Income Reconciliation

Year ended 12/31/14 (in thousands)


















Asset



Land



Mining



Unallocated



FRP




Management



Development



Royalties



Corporate



Holdings




Segment



Segment



Segment



Expenses



Totals



















Income from continuing operations

$  1,635



(452)



509



(561)



1,131



Income Tax Allocation

1,046



(291)



325



(358)



722



Inc. from continuing operations  before income taxes

2,681



(743)



834



(919)



1,853



















Less:
















 Lease intangible rents

12














Plus:
















 Loss on investment land sold



17












 Unrealized rents

45














 Equity in loss of Joint Venture



22












 Interest Expense

405














 Depreciation/Amortization

1,786



66












 Management Co. Indirect

153



199












 Allocated Corporate Expenses

300



176




























Net Operating Income (loss)

$  5,358



(263)












 

SOURCE FRP Holdings, Inc.



RELATED LINKS

http://www.frpholdings.com