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Patriot Transportation Is A Forgotten, Undervalued Spin-Off

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Patriot Transportation (NASDAQ:PATI) is a top-tier regional tank truck hauler servicing the southeastern United States. FRP Holdings spun off Patriot Transportation during January 2015 and it began trading under the symbol PATI. However, it began as a premier bulk tank carrier in 1962 under the name Florida Rock and Tank Lines. Florida Rock and Tank Lines continues its growth as an industry leader in the southeastern United States, transporting petroleum and other liquid and dry bulk commodities in tank trucks.

PATI operates under its one subsidiary, Florida Rock and Tank Line. The company specializes in hauling petroleum (82% of revenue), dry bulk and other liquid commodities(18% of revenue).

The tank lines transportation business is highly fragmented. This attribute offers PATI exciting growth opportunities with its strong balance sheet, free cash flow, clean capital structure and committed bank financing to benefit from industry consolidation. It is ranked #12 in US by revenue per the 2013 Bulk Transporter's Gross Revenue Report. Number one of the top 3 tank truck haulers in the markets, they generate 66% of the company's revenues.

Current Valuation

Patriot Transportation is a value outlier based on asset reproduction and earnings power. It has 21 terminals, 9 satellite locations, 488 tractors and 563 trailers located in Florida, Georgia, North Carolina, South Carolina, Alabama, and Tennessee. The terminals owned are in Florida (Jacksonville, Panama City, Pensacola, Tampa, White Springs), Georgia (Albany, Augusta, Bainbridge, Columbus, Doraville, Macon), and Tennessee (Chattanooga, Knoxville). Additionally, the company owns 468 tractors and 561 tank trailers. During fiscal 2016, Patriot Transportation purchased 78 new tractors and 24 trailers. Further, its current financial position reports $6.87 million cash and $6.44 million current account receivables, for a total current asset value of $17.95 million. It has Gross PPE of $102.19 million or net value of $41.38 million. The company's total equity value is 45.82 million, or $13.89 per share, with no debt.

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