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Paul Boynton

Rayonier AM’s first earnings disappointing

By Mark Basch, Contributing Writer

Wall Street can be a very impatient and unforgiving place for companies that don’t meet expectations.

Just a month after its spinoff into a separate public company, Rayonier Advanced Materials Inc.’s stock dropped sharply last week after its first quarterly earnings report disappointed investors.

Jacksonville-based Rayonier AM, the former performance fibers business of Rayonier Inc., reported second-quarter pro forma earnings (after adjustments for the spinoff) of 59 cents a share, down from $1.21 the previous year.

The company also said its earnings before interest, taxes, depreciation and amortization for the full year will be 25 percent lower than last year, or 10 percentage points below its previous guidance.

“Although we are obviously disappointed by the lower full-year expectations, we are excited about the long-term growth opportunities for this business,” CEO Paul Boynton told investors in the company’s conference call with analysts.

However, investors tend to look at the short-term and they registered immediate disappointment.

Rayonier AM’s stock fell $3.76 to $33.36 Wednesday after the earnings report and fell as low as $31.06 on Thursday.

Rayonier AM said sales in the quarter fell 16 percent to $212.5 million, due to lower prices for its cellulose specialties products and the timing of sales orders. The company also said higher wood, energy and depreciation costs and expenses related to equipment issues at its Jesup, Ga., plant affected earnings.

Rayonier Inc. also reports lower earnings

Rayonier Inc.’s stock also fell last week after reporting lower second-quarter earnings.

The company, which operates timber and real estate development businesses after spinning off the performance fibers business, reported pro forma earnings of 8 cents a share, down from 17 cents the previous year.

Rayonier Inc. said it expects full-year operating income to be “comparable” to last year in its real estate division and about 20 percent higher in its forest resources business, but lower than it had previously forecast.

Rayonier Inc.’s stock fell $1.30 to $34.15 Tuesday after the earnings report, but CEO David Nunes is also looking at the long-term picture.

“With the spinoff now complete, Rayonier’s well positioned as an international pure-play timber and land-resources company poised for growth,” Nunes said in the company’s conference call.

Web.com sinks on disappointing revenue

Web.com Group Inc. also saw the stock market’s unforgiving nature last week after missing its revenue target.

The Jacksonville-based company, which provides website development services for businesses, reported adjusted second-quarter earnings of 62 cents a share, up 11 cents from last year and in line with company’s guidance of 61 cents to 62 cents.

However, its adjusted revenue of $144.7 million, while 10 percent higher than last year, was below its guidance of $146 million to $147.5 million.

Web.com’s stock opened $7 lower Friday morning at $19.55 after the late Thursday report. The stock closed Friday at $20.12, down $6.43 on the day.

Web.com CEO David Brown told analysts in the company’s conference call that the revenue miss was disappointing.

“Timing issues and lower-than-projected levels of improvement, and underlying drivers such as staff headcount and conversion rates, prevented us from reaching our higher-level goals for the quarter, and this impacts our view for the year as well,” he said.

Web.com Chief Financial Officer Kevin Carney said the company is projecting earnings for the full year of $2.44 to $2.48 a share, which is lower than the average analysts’ forecast of $2.54, according to Thomson Financial.

The company’s projected revenue of $576 million to $579 million for the full year is lower than the average analysts’ forecast of $597 million.

Web.com also announced an acquisition of a company called Scoot, an online directory of small businesses in the United Kingdom.

“This strategic acquisition will serve as an initial platform for our international expansion,” Brown said.

“It’s very early, but we are excited about the international growth opportunity.”

Two conference calls with Fidelity

Rayonier had a nice clean split of its businesses into two separate companies. Fidelity National Financial Inc.’s split into two separate stocks, while remaining as one company, is more complicated, and it showed in its earnings report last week.

Fidelity issued one earnings report for the entire company but held two separate conference calls for the two stocks.

The first call was for FNF Group, which consists of its “core” operations: title insurance and services for mortgage lenders. The second call an hour later was for FNFV Group, which consists of Fidelity’s investments in a range of other businesses, including restaurants and auto parts company Remy International.

FNF’s earnings report was somewhat typical for a public company, with data such as revenue and net income.

However, the company doesn’t report full financial data for FNFV, even though the stock trades on the New York Stock Exchange just like FNF.

FNFV reported adjusted earnings before interest, taxes, depreciation and amortization of $59 million for the second quarter, up from $44 million last year. There were no earnings per share figures.

Revenue for FNFV rose 5.5 percent to $686 million.

During the FNFV conference call, Fidelity President Brent Bickett ran down the finances of each of the individual investments in the portfolio but didn’t discuss the consolidated finances.

FNF did report adjusted net income of 47 cents a share, down from 67 cents in the second quarter of 2013.

FNF’s earnings have been affected by lower volume in its main title insurance business, which accounted for about $1.47 billion of FNF’s total revenue of $1.67 billion in the quarter.

While title revenue was 9 percent lower than last year, FNF said the pre-tax profit margin in the title business rose by more than 9 percentage points from the first quarter to 14.6 percent.

“We are encouraged to generate this level of margins in what is still a slow recovering residential purchase market and a very soft refinance environment,” Fidelity CEO Raymond Quirk said in FNF’s conference call.

Investors seemed to be happy with what they saw from FNF. Its stock rose 52 cents to $27.11 Thursday after the earnings report on a day when the Dow Jones industrial average dropped more than 300 points.

FNFV’s stock fell 11 cents to $16.36 Thursday.

FIS beats forecasts

The other Jacksonville-based Fidelity company, Fidelity National Information Services Inc., reported second-quarter earnings that were slightly higher than expectations.

The company that calls itself FIS reported adjusted earnings of 75 cents a share, 4 cents higher than the second quarter of 2013 and a penny higher than the average forecast of analysts, according to Thomson.

“Once again we delivered profitable organic growth, continuing our record of consistent performance in line with expectations,” CEO Frank Martire said in FIS’ conference call.

FIS reiterated its full-year outlook of organic revenue growth – revenue excluding acquisitions – of 4.5 percent to 6.5 percent and earnings per share from continuing operations growth of 8 percent to 12 percent.

EverBank meets expectations

EverBank Financial Corp.’s second-quarter earnings of 26 cents a share were 9 cents lower than last year, but equal to the average analysts’ forecast, according to Thomson.

During the quarter, EverBank completed the sale of its default mortgage servicing business (servicing of loans with a higher delinquency rate) to Green Tree Servicing LLC.

“The May default servicing platform transfer completed essentially all of the repositioning initiatives we have undertaken to simplify the business and improve efficiency and position the franchise for continued core consumer and commercial loan and deposit growth in the future,” CEO Rob Clements said in EverBank’s conference call last week.

Before releasing its earnings report, EverBank’s board of directors approved a 1-cent increase in its quarterly cash dividend to 4 cents a share.

The company has been raising the dividend by a penny per year. After going public in May 2012, EverBank declared its first quarterly dividend of 2 cents a share in July 2012 and increased the dividend to 3 cents in July 2013.

Atlantic Coast Financial records second straight profit

Atlantic Coast Financial Corp. last week reported its second straight profitable quarter, with earnings of 2 cents a share in the second quarter.

The Jacksonville-based parent company of Atlantic Coast Bank had first-quarter earnings of 1 cent a share, marking its first quarterly profit from operations since 2007.

CEO John Stephens said in a news release that the second-quarter results show the company continues to make progress on its long-term goals.

“While we still face challenges, our plan is working and our core business continues to grow stronger. I believe the prospects for Atlantic Coast are clear and bright,” he said.

APR triples revenue

APR Energy PLC last week said its second quarter revenue reached $134 million, tripling its results from the second quarter of 2013.

APR, which builds interim power plants around the world on a fast-track basis, is headquartered in Jacksonville but its stock trades on the London Stock Exchange.

Analyst upgrades Landstar

Landstar Systems Inc.’s stock reached a record high after a strong earnings report last month, but BB&T Capital Markets analyst Thomas Albrecht thinks it’s going even higher.

He upgraded his rating on the Jacksonville-based trucking company from “hold” to “buy” last week and set a price target of $85, with the stock trading at $66.68 at the time.

“Landstar is a unique and perhaps misunderstood way to invest in tight truckload capacity,” Albrecht said in his research note.

“While Landstar has less operating leverage than asset-based carriers, that characterization oversimplifies its business. Within its internal trucking network, its driver turnover is less than 30 percent compared to an industry-wide average of nearly 100 percent; it has fewer wage and cost pressures, especially related to equipment; and its model has the capability to experience more rapid revenue growth than asset carriers,” he said.

Landstar doesn’t own trucks but contracts with drivers who own their own trucks to haul freight around the country.

New name for WJXT’s ownership group

I’ve been waiting for this for almost a year, since The Washington Post Co. agreed to sell off its flagship newspaper.

The company since renamed Graham Holdings Co. last week changed the name of its group of five television stations, including WJXT TV-4 in Jacksonville, to Graham Media Group.

The television group had been called Post-Newsweek Stations, but the company no longer owns The Washington Post newspaper or Newsweek magazine, so the name no longer made sense.

Graham Holdings changed its name from The Washington Post Co. last November, after completing the sale of the newspaper.

mbasch@baileypub.com

(904) 356-2466

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