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Jax Daily Record Monday, Apr. 6, 201512:00 PM EST

APR Energy doubles in price, but analysts leery

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by: Mark Basch Contributing Writer

You probably wouldn’t be able to guess the top performing stock among Jacksonville-based companies in the first quarter, at least before you read the headline.

APR Energy PLC is headquartered in Jacksonville, but most of its business is done overseas and its shares trade on the London Stock Exchange. So it’s easy to miss the movements in its stock price.

While we were watching other stocks trading in the U.S., APR, which builds interim power plants on a fast-track basis, doubled in price during the first quarter this year to 380.75 pence.

That’s good for investors who bought the stock at the beginning of this year but for longer-term investors, it hasn’t been such a good ride. APR was one of the worst performers among Jacksonville companies in 2014, falling sharply from its highs above 1,000p in late 2013.

Despite the increase in the stock this year, analysts have a slightly negative overall outlook for the company with two rating it at the equivalent of “sell,” five at the equivalent of “hold” and one at “buy,” according to Thomson Financial.

APR in December announced it was suspending operations in Libya and last month, it said the loss of business in Libya would cause this year’s earnings to be “significantly below current market expectations.”

Libya accounted for about 35 percent of APR’s revenue, according to a report by J.P. Morgan analysts.

Jefferies & Co. analyst Will Kirkness, who lowered his rating on APR to “underperform” in January, said in a research note after last month’s announcement that he was concerned about the company’s debt-to-earnings ratio. APR may have troubled meeting certain covenants in its debt agreements, he said.

“In our view, an equity raise is required and given reduced underlying earnings and material dilution we stay at underperform,” Kirkness said.

However, APR last week announced a new agreement with its bankers that gives it “additional flexibility around certain covenants.” That will allow the company “to continue executing upon its business strategy as it positions for longer-term growth,” the company said.

The J.P. Morgan analysts said in a research note Thursday that the new agreement removes the need for APR to raise more capital, and they are maintaining a “neutral” rating on the stock.

“On the negative side, the Libyan situation is in flux and it could take time before APR can successfully demobilize and place the units with new customers. However, on the positive side, exiting Libya removes the main overhang on the shares,” they said.

Also on the positive side, “we believe that the structural potential of the temporary power market is considerable, caused by the imbalance between electricity supply and demand, especially in emerging market countries,” they said.

 

FRP, Stein Mart stocks also perform well

No other Jacksonville-based company — trading on U.S. exchanges — came close to APR in the first quarter, but the former Patriot Transportation Holding Inc. businesses did well after splitting into two public companies Feb. 2.

FRP Holdings Inc., the commercial real estate side of that business, rose 18 percent from Feb. 2 to the end of the first quarter. The new Patriot, consisting of the old Patriot’s trucking business, rose 8.6 percent after the split.

Stein Mart Inc. shareholders also did well in the first quarter, when you consider the special dividend they received.

Just looking at the fashion retailer’s stock price, you see a 14.8 percent decline in the quarter. However, as we previously pointed out, when you consider the impact of the special $5-a-share dividend it paid, the total return for Stein Mart shareholders in the quarter was actually a very strong 19.9 percent.

At the other end of the scale, the worst-performing Jacksonville-based company stock was Rayonier Advanced Materials Inc., which has suffered from disappointing earnings reports since it was spun off from Rayonier Inc. last summer.

Rayonier AM’s stock fell 33.2 percent in the first quarter.

 

Two Rayoniers have a scheduling conflict

Speaking of the Rayonier spin-off, the two Rayoniers created a scheduling conflict for shareholders of the two companies who might want to visit with management.

The two companies both scheduled their annual shareholders meetings in Downtown Jacksonville hotels for Thursday, May 14, at 4 p.m. Rayonier Inc. will be at the Hyatt Regency Jacksonville Riverfront Hotel and Rayonier AM will be at the Omni Jacksonville Hotel.

The two Rayoniers operate completely separately since the spinoff and representatives of both companies said it was just a coincidence that the two scheduled their meetings for the same time, based on history.

Rayonier Inc. has been holding its annual meeting on a Thursday in mid-May at 4 p.m. every year for at least the last decade. Michael Bell, director of economic development and public affairs, said the company’s meeting schedule was set through 2016 before the spinoff even occurred.

Russell Schweiss, director of corporate communications and community relations for Rayonier AM, said the new company carried over some of the corporate governance polices from Rayonier Inc. That likely explains why it picked that meeting day and time.

Rayonier Inc. shareholders were issued stock in Rayonier AM when the spinoff occurred, so there are likely a lot of stockholders who still own shares in both companies. But the reality is, shareholders probably weren’t planning to attend the annual meetings, so this shouldn’t be an issue.

 

New quarter brings two new public companies

The start of the second quarter brought two new Jacksonville-based public companies as previously announced mergers were completed. Actually, one company moved its corporate headquarters to Jacksonville, while the other is now run by executives in Jacksonville.

Information Systems Associates completed its merger with privately owned Duos Technologies Inc. of Jacksonville. As part of that deal, Duos CEO Gianni Arcaini became CEO of Information Systems Associates, and the technology company moved its headquarters from Coral Springs to Jacksonville.

The other deal completed last week was General Employment Enterprises Inc.’s acquisition of Jacksonville-based Scribe Solutions Inc.

The staffing company’s headquarters is still listed at General Employment’s offices in Naperville, Ill., but Scribe CEO Derek Dewan became CEO of General Employment and Scribe President Alex Stuckey is now president of the merged company.

 

Regulator lifts restrictions on Atlantic Coast Financial

Atlantic Coast Financial Corp. last year recorded its first profit in seven years and now its turnaround is apparently complete.

The parent company of Atlantic Coast Bank announced last week that the U.S. Office of the Comptroller of the Currency terminated a consent order against the bank, saying it is now a “well-capitalized” institution.

Atlantic Coast Bank had been under that consent order since August 2012, which put restrictions on the bank’s operations until it increased its capital.

“No longer subject to the business and other restrictions that come with a troubled-condition designation, the bank now has the liberty to explore additional avenues for expansion, including those related to our product offerings, additional lines of business and new markets,” CEO John Stephens said in a news release.

 

Dick’s Wings parent reports loss

The parent company of the Dick’s Wings restaurant chain increased revenue in 2014 but still recorded a net loss for the year, according to its annual report filed last week with the Securities and Exchange Commission.

ARC Group Inc. reported a net loss of $193,833, or 3 cents per share, for the year. Revenue rose by 20 percent to $588,856.

The company said its royalties increased due to higher sales by franchisees and operating improvements, plus the opening of three new restaurants last year.

The Dick’s Wings chain currently has 18 restaurants, mainly in the Jacksonville area.

ARC Group’s SEC filings list its address in Louisiana, but the annual report says its corporate headquarters office is in Jacksonville.

 

Drone Aviation records loss

Drone Aviation Holding Corp. also increased revenue but had a net loss for 2014, according to its annual report filed last week with the SEC.

The Jacksonville-based company said revenue rose by 1 percent to $858,054, but it had a net loss of $2.1 million, or 15 cents a share.

Jacksonville-based Drone Aviation produces specialized lighter-than-air aerostats and tethered drones. It became public last year by merging with an existing public company.

 

Black Knight files financial update

Black Knight Financial Services Inc. would have produced revenue of $855.8 million and earnings of $31.3 million in 2014 if it had been an independent public company, according to an updated registration statement for its proposed initial public offering.

Black Knight is the mortgage technology and analytics business that is majority owned by Jacksonville-based Fidelity National Financial Inc. Its operations were formerly part of Lender Processing Services Inc., which Fidelity reacquired in January 2014.

Last week’s updated filing still does not give details on the amount of stock that will be sold in the IPO, but Fidelity has said it will retain voting control of Black Knight after it goes public. Fidelity has also said that Thomas H. Lee Partners, which owns 32.9 percent of Black Knight, will sell some of its shares in the IPO.

Black Knight first filed its IPO plans in December, but the new filing gives no indication of when the stock sale might be completed.

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