Landstar System Inc. last week reported lower-than-expected second-quarter earnings because of costs associated with a “severe accident,” CEO Jim Gattoni said.
The Jacksonville-based trucking company didn’t give any details on the accident but said it occurred at the end of the quarter and increased estimated insurance and claims costs.
Landstar reported earnings of 76 cents a share, below the company’s forecast range of 80 cents to 85 cents. But even without the accident costs, Landstar’s earnings were well below the 92 cents earned in the second quarter of 2015.
“Industry fundamentals during the 2016 second quarter remained similar to those experienced in the 2016 first quarter with soft demand and more readily available truck capacity.” Gattoni said in Landstar’s conference call with analysts.
“Those freight conditions, along with the lower diesel fuel prices, continued to put downward pressure on revenue per load on loads hauled via truck. Considering the softness in demand, we executed relatively well during the quarter,” he said.
When asked by an analyst if Landstar could do anything more to improve safety in its trucking network, Gattoni said accidents are sometimes “unavoidable” and the company has a “rather large safety department” that works with drivers.
“We do everything we can to be safe,” he said. “We are constantly working on programs to avoid the situations that we get into but, again, they’re unpredictable.”
Looking beyond the accident that impacted second-quarter results, Stifel Nicolaus analyst John Larkin said in a research note that Landstar will continue to face a difficult freight market. However, he praised the company’s management in this environment.
“We believe that Jim Gattoni continues to exceed expectations during his relatively brief stint as CEO,” Larkin said.
Gattoni said third-quarter earnings should be similar to the second quarter, projected at 79 cents to 84 cents a share.
“The first half of 2016 experienced a soft operating environment. With that said, however, the model performed well in the current low-growth environment. We continue to add agents and capacity to the network and are well-positioned when the market improves,” he said.
Fidelity’s title earnings rise
Fidelity National Financial Inc.’s earnings rose in the second quarter as its main business, title insurance, performed well.
Fidelity’s adjusted earnings of 74 cents a share were 9 cents higher than last year and 8 cents higher than the average forecast of analysts, according to Thomson Financial.
“This quarter clearly highlights the earnings power of our title insurance business,” Chairman Bill Foley said in Fidelity’s conference call.
He said the third quarter is also off to a good start, as a decline in interest rates has increased mortgage refinance activity in the first three weeks of July, which leads to higher demand for title insurance.
Foley said Fidelity continues to expand its title insurance business, spending $37 million in the second quarter to make seven small acquisitions of title companies.
“We continue to use our significant free cash flow to both return value to our shareholders and invest in the future of our title business,” he said.
FNFV restaurant sales drop in second quarter
Fidelity’s investment unit, Fidelity National Financial Ventures, reported lower second-quarter earnings, including a drop in results from its restaurant business.
FNFV was formed by Fidelity as a tracking stock to represent its investments in non-title businesses, which include a 55 percent stake in American Blue Ribbon Holdings, operator of four restaurant chains.
American Blue Ribbon’s same-store sales (sales at restaurants open for more than one year) fell by 2.6 percent in the quarter, as an increase at the Ninety Nine chain was offset by declines at the other three chains: O’Charley’s, Village Inn and Baker’s Square.
“As you may have read, the casual and family dining segments have been impacted by a weaker consumer market in Q2 and the family dining segment in particular has felt the impact from the emphasis of all-day breakfast from some industry players,” Fidelity Executive Vice President Brent Bickett said in FNFV’s conference call.
Fidelity has been exploring options to monetize its investment in the restaurant business, which could include a sale or an initial public offering. Fidelity last year spun off another restaurant business, J. Alexander’s Holdings Inc., as a separate public company.
Bickett indicated nothing is imminent with American Blue Ribbon.
“We’ve got to focus down and in and get them operating stronger to help open up those monetization efforts. Clearly that’s something that would be top of mind,” he said.
FNFV did complete monetization of some other investments in the second quarter, including a sale of its 15 percent stake in Stillwater Insurance Group that produced a pretax gain of $15 million for the company.
However, FNFV reported adjusted earnings of 6 cents a share for the quarter, down from 18 cents the previous year.
FNFV continues to look for investment opportunities but Bickett said, “We don’t see anything, really, in Q3 on a monetization effort.”
Black Knight beats forecasts
Black Knight Financial Services Inc. reported earnings slightly higher than analysts’ forecasts in the second quarter and solidified its position as the dominant company in its field, providing processing services for mortgage lenders.
Jacksonville-based Black Knight, which was spun off from Fidelity last year, said adjusted earnings from continuing operations rose 21 percent to $44.7 million, or 29 cents a share, a penny higher than the average analysts’ forecast, according to Thomson.
The company also increased its forecast range for full-year earnings to $1.11 to $1.15 a share, compared with its previous forecast of $1.09 to $1.13.
During Black Knight’s conference call Wednesday, company officials touted recent contract wins that increased its market share, including an agreement with Bank of America to provide processing services for the bank’s first and second mortgage loans.
Black Knight did not say what its market share will be once it fully implements the Bank of America contract, but it should mean that close to two-thirds of all U.S. first mortgage loans are processed through Black Knight’s system.
“Since becoming a publicly traded company in May 2015, we have and continue to successfully execute on our growth strategies and make great advancements that move the needle for our company and our clients,” CEO Thomas Sanzone said in the conference call.
Johnson & Johnson contact lens sales rise
Johnson & Johnson last week reported sales in its Jacksonville-based contact lens business rose 6 percent in the second quarter to $685 million.
International sales at Johnson & Johnson Vision Care Inc. jumped 8.4 percent but domestic sales rose just 2.1 percent.
During the company’s conference call with analysts, Johnson & Johnson officials said its new customer reward program impacted U.S. sales growth.
The company introduced the program in the spring that it says encourages contact lens wearers to visit eye care professionals more often.
Overall, Johnson & Johnson reported adjusted earnings of $1.74 a share in the second quarter, 3 cents higher than last year and 6 cents above average analysts’ forecasts, according to Thomson.
The medical products giant also increased its earnings forecast for the full year to $6.63 to $6.73 a share, up from its previous forecast range of $6.53 to $6.68.
Johnson & Johnson’s stock rose to record highs Tuesday after the earnings release, closing up $2.11 at $125.25.
FirstAtlantic earnings rise
FirstAtlantic Financial Holdings Inc. last week reported second-quarter earnings of 17 cents a share, 3 cents higher than the second quarter of 2015.
The Jacksonville-based banking company reported strong trends in its asset quality.
The ratio of non-performing assets (mainly loans that are overdue or not being repaid at all) fell from 0.99 percent a year earlier to 0.32 percent at the end of this year’s second quarter.
Paul’s death leaves Patriot board vacancy
Patriot Transportation Holding Inc. said in a Securities and Exchange Commission filing last week that one of its five board members, Robert Paul, died recently.
He was chairman of real estate investment firm Southeast Capital LLC and former chairman of Southeast Atlantic Beverage Corp.
Paul was one of three independent directors on Jacksonville-based Patriot’s board and because of his passing, the company is not in compliance with Nasdaq regulations requiring the boards of listed companies to have a majority of independent directors, the filing said.
Patriot expects to appoint a new independent director to fill the vacancy at its next board meeting.
TapImmune names Bonfiglio president
TapImmune Inc. last week said John Bonfiglio was appointed president and chief operating officer of the Jacksonville-based company, which is developing technologies to treat cancer.
Bonfiglio has been a member of TapImmune’s board of directors and a strategic adviser to the company since 2015 and has experience and expertise in biotech and immunotherapy, CEO Glynn Wilson said in a news release.