Just like its former partner Rayonier Inc., Rayonier Advanced Materials Inc. says the trade war between the U.S. and China is having an impact on the company.
During its quarterly conference call last week, Rayonier AM Chief Executive Paul Boynton said the threat of tariffs on the company’s high-purity cellulose sales to China seems to be impacting its stock.
“Over the past month or so, we’ve seen our stock price decline by approximately 40 percent despite no public announcements from the company,” Boynton said.
“As such, we believe the drift in share prices is seemingly driven by a combination of external factors, including our potential exposure to retaliatory tariffs or other adverse trade policy on our exports to China from the U.S. and the rapid decline in lumber prices.”
Rayonier AM said China has imposed a 5 percent tariff on imports of high-purity cellulose products from the U.S. However, that isn’t having a major impact on the company’s finances.
“We are currently absorbing the 5 percent tariff, equating to about $2 million per quarter, and while we supply these products from our U.S. operations, we’re working with our customers to reposition production of these products outside the U.S. if necessary,” Boynton said.
High purity cellulose is Rayonier AM’s biggest business, accounting for $308 million of its $544 million in third-quarter revenue.
Real estate development and timber company Rayonier Inc. said in its quarterly report two weeks ago that tariffs could impact shipments of logs to China from the company’s timberlands in the Northwest U.S. and New Zealand.
Rayonier AM and Rayonier Inc. split into separate companies in 2014. Rayonier AM had not been in the lumber business since but it picked up seven sawmills in Canada as part of its acquisition of Montreal-based Tembec Inc. last year.
Forest products accounted for $86 million in third-quarter revenue for Rayonier AM. Although the decline in lumber prices may be hurting the stock as Boynton said, Rayonier AM said it expects prices to rebound.
Rayonier AM’s adjusted third-quarter earnings tripled to 54 cents a share because of the addition of Tembec.
However, the results were below analysts’ forecasts, which ranged from 55 cents to 75 cents, according to Yahoo Finance.
Besides increasing earnings, the Tembec deal is expanding Rayonier AM’s headquarters. The company received approval in August for city and state incentives totaling $474,000 to expand its office in the Riverplace Tower on the Southbank and add 79 jobs to its existing 80 headquarters jobs.
FRP Holdings Inc. last week reported third-quarter earnings of $2.2 million, or 22 cents a share, in its first full quarter since selling off most of its operating properties.
The Jacksonville-based real estate developer sold its portfolio of 41 industrial warehouses, mainly in the Baltimore-Washington, D.C., area for $358.9 million in May.
After the sale, FRP has few operating properties remaining but is holding $260 million in cash on its balance sheet that it is looking to invest.
“No longer will we build and hold buildings. Our business plan going forward is to play to our strength, which is taking raw land and converting it into developed land or developed projects which have vastly increased value,” CEO John Baker said during FRP’s quarterly conference call.
“We are not an NOI (net operating income) play today. We are a value creation play that opportunistically monetizes our assets,” he said.
Baker said FRP is investing the cash in bonds as it waits on investment opportunities.
“This enables us to generate income while preserving liquidity. The next part of our transformation is the redeployment of our cash in projects that we are confident will yield higher returns than our old buy and hold strategy,” he said.
Monetizing investments also is the strategy of Cannae Holdings Inc., the investment company spun off last year from title insurance company Fidelity National Financial Inc.
The strategy makes Cannae’s earnings difficult to decipher but the company did explain the state of its major investments during its quarterly report last week.
Cannae restructured its investment in several restaurant chains but retains a majority stake in two companies which operate the O’Charley’s, Ninety Nine Restaurants, Village Inn and Bakers Square chains.
It will continue to own about 24 percent of human resources technology company Ceridian HCM Holding Inc. after Ceridian’s initial public offering in April and an upcoming secondary stock sale.
Cannae also said last week it expects to end up with a 25 percent stake in Dun & Bradstreet. Cannae in August announced it was partnering with other investors to buy the business data firm for $6.9 billion. That deal is expected to close in the first quarter of 2019.
Cannae is headquartered in Las Vegas but is run by executives of Jacksonville-based Fidelity.
ARC Group Inc., owner of the Dick’s Wings & Grill chain, announced financial terms last week for its deal to buy the Tilted Kilt Pub and Eatery.
Jacksonville-based ARC Group will pay just $10 to buy the assets of Tilted Kilt, which operates 34 restaurants. However, it will assume about $1.8 million in debt and future payment obligations of $1.5 million. ARC Group also will issue about 1.4 million shares of its stock.
The total value of the deal is about $5 million.
ARC Group, which owns or franchises 23 Dick’s Wings locations, agreed in June to buy Tilted Kilt but was working on the finances of the deal at the time and did not announce terms.
Jacksonville-based mortgage technology company Black Knight Inc. said last week it acquired Ernst Publishing Co., a provider of technology and closing cost data for the real estate and home finance industries.
Terms of the deal were not announced.
Ernst is a 29-year-old company based in Albany, New York.
Stock car racing governing body NASCAR is a private company controlled by the family of NASCAR founder Bill France.
International Speedway Corp. is a publicly traded company operating the Daytona International Speedway and 12 other racetracks and while it is separate from NASCAR, it also is controlled by the France family.
That can be puzzling but the confusion could be ending because NASCAR last week made an offer to buy the shares of International Speedway not owned by the France family.
The family has voting control of 74 percent of International Speedway’s stock, according to its most recent proxy statement.
NASCAR CEO James France, son of Bill, is chairman of Daytona Beach-based International Speedway. His niece, Lesa France Kennedy, is CEO of International Speedway and president of Daytona Beach-based NASCAR.
Because of those ties, International Speedway said a committee of four independent directors will evaluate the proposal.
NASCAR is offering $42 a share, which it said is a 14 percent premium to International Speedway’s 30-day average price of $36.91 before the offer was announced.
“We believe the industry would benefit from structural change in order to best position the sport on a going forward basis,” France and Kennedy said in a letter addressed to International Speedway’s board.
Goldman Sachs analyst Matt Reustle last week downgraded Jacksonville-based trucking company Landstar System Inc. from “buy” to “neutral,” saying pressure on truck rates limits the potential “upside” in its shares.
“Landstar’s operating model is the most susceptible (in our coverage) to movements in trucking spot rates which we expect will gradually decline in 2019,” Reustle said in his research note.