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Strong earnings send Landstar’s stock to record high

By Mark Basch, Contributing Writer

Landstar System Inc.’s stock jumped to a record high last week after reporting second-quarter earnings that were even better than the company had forecast.

The Jacksonville-based trucking company’s earnings of 80 cents a share were 16 cents higher than last year and better than Landstar’s forecast range of 73 cents to 78 cents, which CEO Henry Gerkens had reiterated in early June.

Revenue of $814 million, up from $674 million, also was above the company’s forecast range of $750 million to $800 million.

After the report, Landstar’s stock soared by $8.92 to $73.95 at the opening of trading Wednesday morning before settling back to a more realistic $67.39 at the close Wednesday, up $2.36 on the day. That was still the highest closing price ever for the stock.

The stock rose another $1.03 to $68.42 Thursday.

“The 2014 second quarter results were truly exceptional, as Landstar achieved historical records in just about every metric,” Gerkens said in the company’s conference call with analysts.

He said earnings exceeded even his expectations because June results were better than he anticipated.

“But even more importantly, it sets the stage for what I believe will be a record final two quarters of 2014,” Gerkens said.

“The key to our success so far in 2014 has been execution and more execution. Our ability to attract and retain capacity and in turn provide shippers with needed capacity has allowed Landstar to expand its revenue base. Additionally, because capacity is extremely tight, the pricing environment remains very strong. I don’t see that environment changing anytime soon,” he said.

Separate Rayoniers announce dividends

Rayonier Inc. last week declared a third-quarter cash dividend of 30 cents per share. That’s down from the 49-cent dividend the company paid out in the second quarter, before it spun off its performance fibers division into a separate public company called Rayonier Advanced Materials Inc. on June 27.

Rayonier Inc. shareholders received one share of Rayonier Advanced Materials for every three Rayonier Inc. shares they owned.

Rayonier Inc. also declared a special one-time cash dividend of 50 cents a share, because of proceeds received from Rayonier Advanced Materials as part of the spinoff plan.

Meanwhile, Rayonier Advanced Materials declared its first regular quarterly dividend of 7 cents a share.

Fidelity also establishes dividend

Fidelity National Financial Inc. last week declared an 18-cent quarterly dividend for its FNF Group stock, the same dividend it was paying before it created a separate tracking stock for its non-real estate related businesses.

Fidelity on June 30 divided its common stock into two tracking stocks, FNF Group, consisting of its title insurance and mortgage processing services operations, and FNFV Group, consisting of the company’s investments in other businesses.

The company said in its proxy statement asking shareholders to approve the plan that it anticipated FNF Group would pay quarterly dividends and FNFV Group would not.

SunTrust Robinson Humphrey analyst Mark Hughes is optimistic about FNF’s performance, as he initiated coverage of the company last week with a “buy” rating.

“The company should be a main beneficiary of firming in the real estate market, both residentially and commercially,” Hughes said in his report.

Hughes said Fidelity’s acquisition of Lender Processing Services Inc. at the beginning of this year put FNF in a good position.

“Fidelity National now has a broader, more diversified mix of business – it is the leading title insurance, mortgage technology, and mortgage services provider – with a higher component of recurring revenue,” he said.

Hughes expects revenue growth from the title insurance business.

“The company has begun to see order trends improve even as the industry laps the sharp decline in refinancing activity in the second half of 2013. We look for title premiums to rise 8 percent in 2015 following a drop this year,” he said.

The former LPS operations “should also improve sequentially as synergies kick in,” he said.

Hughes also supported the separation of Fidelity’s non-real estate investments into a separate stock.

“This should provide greater visibility into the value of these investments, each of which is described as being on its own glide path to monetization,” he said.

Another new public company

Another Jacksonville-based public company has emerged through a merger with an existing public shell company.

NAC Drive Systems Inc. last month merged with a public company called Lipidviro Tech Inc., which had no operating business. Last week, the company’s name was changed to NAC Global Technologies Inc.

According to Securities and Exchange Commission filings, NAC manufactures and supplies harmonic gearing technology, which is used for precision motion control applications.

“Harmonics are critical drives to many industries including robotics, semi-conductor, aerospace, and defense. Additionally, harmonic technology is widely used in motion control applications where precision, long-life, compactness, and reliability are important features,” the company said in a filing last week.

NAC has a small office in Jacksonville that serves as its corporate headquarters and a manufacturing facility in Port Jervis, N.Y.

The company reported revenue of $691,286 and a net loss of $415,963 in 2013. In the first quarter this year, it had revenue of $155,217 and a net loss of $107,766.

NAC’s stock trades in the over-the-counter market under the ticker symbol “NACG.”

Latitude 360 announces fifth venue

Jacksonville-based Latitude 360 Inc. last week announced it will build its fifth restaurant and entertainment venue in a shopping complex in a suburb of Minneapolis.

The company currently operates Latitude 360 venues in Jacksonville, Pittsburgh and Indianapolis and plans to open a fourth in Albany, N.Y., in October. CEO Brent Brown told the Daily Record the company is hoping to have 12 venues operating by the end of 2016.

The Minneapolis-area Latitude 360 is scheduled to open in the first quarter of 2015.

Qualcomm records gain from ParkerVision ruling

Qualcomm Inc.’s recent court victory over Jacksonville-based ParkerVision Inc. is still subject to ParkerVision’s appeal to a higher court, but Qualcomm is already claiming a financial benefit.

Qualcomm’s earnings for the third quarter ended June 29 included a $184 million pre-tax gain “due to the reversal of accruals related to our litigation with ParkerVision,” the company said in a news release last week.

U.S. District Judge Roy B. Dalton Jr. last month overturned a federal jury’s $173 million award to ParkerVision in its patent infringement lawsuit against Qualcomm.

The money at stake is more significant to ParkerVision than Qualcomm. The gain recognized by Qualcomm is basically a drop in the bucket of its overall quarterly earnings of $2.24 billion.

Gannett reaches six-year high on strong earnings

Gannett Co. Inc.’s stock reached its highest level in more than six years last week after reporting better-than-expected second-quarter earnings.

The media company’s adjusted earnings of 67 cents a share were 9 cents higher than the second quarter of 2013 and 3 cents higher than the average analysts’ forecast, according to Thomson Financial.

The stock rose $1.53 to $33.25 Tuesday after the earnings report.

Gannett’s earnings were helped by increased revenue from its group of 42 television stations, which includes WTLV TV-12 and WJXX TV-25 in Jacksonville.

Total broadcast revenue grew 88 percent, because of acquisitions that nearly doubled Gannett’s portfolio of stations, but on a pro forma basis, broadcast revenue would have still grown by 13 percent if the company had owned the stations a year ago.

A big area of growth for the stations has been retransmission fees, which are the fees paid by cable and satellite providers to offer the stations on their systems. Those fees grew by 67 percent on a pro forma basis in the second quarter.

Local and national advertising revenue at the stations dropped by 2 percent on a pro forma basis, but Gannett is benefiting from political advertising, which grew about 500 percent in the quarter. Political ads are only going to get bigger for local stations as we get closer to November.

Northrop CEO praises St. Augustine facility

During its quarterly conference call last week, Northrop Grumman Corp. CEO Wes Bush had high praise for the company’s St. Augustine aerospace facility.

The company is expanding the St. Augustine facility, which will add about 400 jobs to the 1,000 people currently working there.

Northrop also is expanding its operations in Melbourne, and an analyst asked Bush how the company makes decisions on building new facilities.

“The ones in Florida in particular are locations where we not only have a great legacy of doing really good work, they are also increasingly centers where we’re able to pull our teams together and really focus the benefit of having co-located teams to come up with new ideas and propel the current programs that we have underway,” he said.

Northrop reported second-quarter earnings of $2.37 a share, up from $2.05 last year and 15 cents higher than the average analysts’ forecast.

The defense and aerospace company also raised its 2014 full-year forecast from a range of $8.90 to $9.15 a share to a range of $9.15 to $9.35. However, even before the announcement, the average analysts’ forecast was $9.24, according to Thomson.

mbasch@baileypub.com

(904) 356-2466

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