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Patriot Transportation: Strong Q1 FY23 Results But I Remain On The Sidelines


  • The company’s revenues rose by 11.1% in Q1 FY23 despite a 5.5% decline in revenue miles.
  • The adjusted operating profit came in at $0.69 million and Q2 FY23 could be even stronger as more freight rate increases are planned.
  • However, CAPEX for FY23 is budgeted at $12 million and this is likely to deplete cash reserves and push up the enterprise value.
  • I don’t expect any property sales soon and the financial results of Patriot Transportation could be under pressure in H2 FY23 if the USA enters a recession.
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fuel delivery to the gas station. Fuel industry. Tanker gas truck delivering fuel at service station

Diy13/iStock via Getty Images


In December, I wrote an article on SA about U.S. premier bulk tank carrier Patriot Transportation (NASDAQ:PATI) in which I said that FY23 financial results would likely be underwhelming due to higher

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This article was written by

Gold Panda profile picture

Gold Panda has been working as an M&A analyst for over 11 years. He's been investing since 2007. Preferring value to growth, he tends to take a relatively conservative approach in his investing. His focus is on small and micro-cap stocks, which he believes is the area which offers the greatest opportunity to exploit market mis-pricings.

Gold Panda is part of the team that runs the investing group Microcap Review. He provides a real-time portfolio to the group. Microcap Review focuses on three areas of opportunity in the micro-cap space: arbitrage and special situations, net-nets and undervalued stocks. Learn more.

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Comments (9)

No free cash for a while. Need to sell this thing. Doesn’t need to be public
Gold Panda profile picture
@LLCapital With the sky-high driver turnover rate, trucking companies are excellent takeover targets. Employees wouldn't care about a change in ownership or asset sales
@Gold Panda yeah. Good point. They always need more drivers. Just a matter of how patient you can be with this
Gold Panda profile picture
@LLCapital there are good reasons why it's that high
Value Digger profile picture
Consolidation is ongoing in the trucking industry and the large players will continue to acquire smaller players.

On that front, there have been more than a dozen notable mergers and acquisitions over the last months.

For instance, TFII (TFII) recently acquired Axsun Group, PS Logistics acquired Phoenix Leasing of Tennessee, PS Logistics also acquired Noble LLC, Atlas Logistics acquired Progressive Transportation, Teal’s Express Ward Transport and Logistics acquired Quality Cartage, PAM purchased Metropolitan Trucking, Kam-Way Transportation acquired Produce Supply Express etc.

Patriot Transportation (PATI) is a debt-free company with a rock-solid balance sheet and very low key multiples.

PATI also is a takeover target given that insiders have skin in the game.
@Value Digger what’s the average multiple on takeouts you think?
Gold Panda profile picture
@Value Digger that's a good point, are there any indications that a major player might be interested in PATI? A quick google search shows that the companies mentioned seem to be focused on general freight and it makes sense that there is consolidation in that sector considering rates are falling. However, PATI said that its freight rates have increased dramatically in the past two years, and it doesn't see a reason for them to decline. Is there strong M&A activity in the bulk tank carrier sector is it quiet on that front at the moment?

I agree that PATI has a rock-solid balance sheet and those 17 terminals are probably worth several times more than the EV. However, there is just no obvious reason to sell them when the rates are strong.

Btw I know we don't always see eye to eye but I appreciate your analysis. It feels like we have this Gilfoyle and Dinesh dynamic. You certainly dig deeper than me and it seems we like the same type of companies - eg PATI and BKTI are on my watchlist. Would you mind taking a look and telling me what you think about these three?



Friedman Industries
Value Digger profile picture
@Gold Panda Thank you. I sent you a message in your SA inbox. I believe it's better to keep this thread with comments relevant to PATI.
Gold Panda profile picture
@Value Digger I would love to hear what you think
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