Familiar path to growth for GEE


  • By Mark Basch
  • | 12:00 p.m. April 10, 2017
  • | 5 Free Articles Remaining!
Officials of the GEE Group ring the bell to close the New York Stock Exchange on April 3.
Officials of the GEE Group ring the bell to close the New York Stock Exchange on April 3.
  • Columnists
  • Share

Staffing company CEO mirroring moves made at MPS

Two years after Derek Dewan took over as chief executive of GEE Enterprises Inc., the staffing company continues to be headquartered outside of Chicago but is looking more and more like Dewan’s former Jacksonville-based company, MPS Group Inc.

GEE, which changed its name last year from General Employment Enterprises, announced a major acquisition last week which more than doubles the company’s size, just like Dewan grew MPS into a major company through acquisitions.

Also last week, GEE named a former top MPS executive, George Bajalia, as its president. Bajalia ran MPS’ professional services division from 1998 to 2001.

MPS was a staffing and consulting firm that was bought out by Adecco Group Inc. for $1.3 billion in 2009.

Besides hiring Bajalia as its No. 2 executive, GEE last week also announced the acquisition of staffing firm SNI Companies.

SNI had revenue of $113.5 million last year and brings GEE’s total annual revenue to $197 million, the company said.

Besides significantly growing revenue, the addition of SNI also expands the company’s geographic reach.

SNI had 34 offices in 14 states and Washington, D.C., and establishes GEE in new markets in Iowa, Louisiana, Minnesota, New Jersey and Pennsylvania.

GEE paid $86 million to buy SNI, including $44.7 million in cash and the remainder in preferred stock and subordinated notes.

“Management has communicated its strategy to acquire scale through acquisitions of solid professional staffing companies and we believe SNI is a solid fit,” Maxim Group analyst Brian Kinstlinger said in a research note.

Kinstlinger, who maintains a “buy” rating on the stock, increased his price target from $9 to $10 after the acquisition, with the stock trading at $6.20 at the time.

“We had expected GEE to make several small acquisitions that necessitated a long time to build scale.

We therefore argue the SNI acquisition speeds up our investment thesis,” he said.

“With the increased scale, we expect this seasoned management team will be able to create more shareholder value.”

Dewan became CEO in April 2015 after GEE acquired Jacksonville-based Scribe Solutions Inc., which was run by Dewan at the time.

GEE’s headquarters are in Naperville, Ill., but Dewan’s home base remains Jacksonville. His employment contract includes a clause that Dewan can terminate it if the company requires him to move from Jacksonville.

Besides naming Dewan as CEO, GEE’s ties to MPS include the addition of Bajalia and three other former MPS directors to GEE’s board: William Isaac, Arthur Laffer and Peter Tanous.

Bajalia actually joined the board in January 2015, after the agreement with Scribe Solutions was announced but before it was completed.

“George's knowledge of our industry and business operations and the added benefit of his experience with mergers and acquisitions will allow us to move swiftly and diligently as we execute both our internal and external growth strategy,” Dewan said in the news release announcing his appointment as president.

BE Industries CEO leaves

BE Industries Inc. had something in common with GEE. The company is headquartered in Houston but its CEO was entrenched in Jacksonville.

However, the company said in a Securities and Exchange Commission filing that CEO Vincent Genovese resigned.

That filing came days after the company changed its name from NAC Global Technologies Inc. to BE Industries.

NAC, which produced harmonic gearing technology, moved its headquarters out of Jacksonville last year after acquiring Swiss Heights Engineering S.A., which had interests in services for the energy, chemical and petrochemical markets.

“Mr. Genovese’s decision to resign was primarily driven by change of the company’s operational focus to oil and gas and related services,” the SEC filing said.

Genovese will remain on the company's board of directors.

Antonio Monesi, who had been BE Industries president, is succeeding Genovese as CEO.

Fanatics acquires Majestic

Jacksonville-based Fanatics Inc. continued its expansion last week with an agreement to buy the licensed sports group from V.F. Corp., including the Majestic brand.

V.F. is a publicly traded company that owns a number of well-known apparel brands including Vans, The North Face, Timberland, Wrangler and Lee.

However, terms of the deal with privately owned Fanatics were not disclosed.

While Fanatics doesn't release financial data, Executive Chairman Michael Rubin visited a Majestic plant in Easton, Pa., after the deal was announced and said Fanatics produced $1.4 billion in revenue last year, according to the Allentown Morning Call.

Rubin visited the plant to assure the 600 workers that Fanatics intends to keep the facility open.

Ruby Tuesday sees positive results

Sales at Ruby Tuesday Inc. are dropping, but a redesign of the company's Jacksonville restaurants is showing some positive results.

Ruby Tuesday on Thursday reported same-restaurant sales (sales at locations open for more than one year) dropped 4 percent in the third quarter ended Feb. 28, and the company recorded an adjusted net loss of $3.8 million, or 6 cents a share, for the quarter.

Also during the quarter, the company completed the remodel of six restaurants in Jacksonville and seven in Charlotte to reflect its “Fresh Start” initiative.

That initiative includes a revamped menu as well as restaurant remodels.

“While it is still early, collectively, we have seen a mid-single digit lift in same restaurant sales at affected locations. We expect this trend to improve over time as more guests experience the revitalized Ruby Tuesday brand, including all elements of the Fresh Start initiatives,” interim CEO Lane Cardwell said in the company's conference call.

Thursday was actually Cardwell's last day on the job. Ruby Tuesday that day brought in James Hyatt, former CEO of Church's Chicken, as its new CEO.

Although the early results from Jacksonville and Charlotte are promising, Cardwell said Ruby Tuesday will be cautious about its next step.

“Our remodeling program remains on a temporary hold, as we review strategic alternatives and assess the results of these two test markets,” he said.

Ruby Tuesday, which operates 607 restaurants in 41 states and foreign countries, said last month it is exploring strategic alternatives which could include a sale of the company.

Danone cleared for WhiteWave deal

French yogurt-maker Danone received U.S. Department of Justice approval to buy The WhiteWave Foods Co. last week by agreeing to divest one of Danone's U.S. dairy subsidiaries, Stonyfield.

Danone said the divestiture does not impact the strategic or financial benefits of its $12.5 billion acquisition of WhiteWave.

Denver-based WhiteWave produces plant-based foods and beverages.

It operates three plants in Europe and 11 in the U.S., including a Jacksonville manufacturing plant at 2198 W. Beaver St. that employs about 100 people.

Duos revenue up in fourth quarter

Duos Technologies Group Inc. said 2016 revenue fell 10 percent to $6.1 million, due to cancellation of a $2.4 million project caused by the withdrawal of government funding.

However, Jacksonville-based Duos, which provides intelligent security analytical technology, said fourth-quarter revenue rose 15 percent to $2.1 million.

“We finished the year strong as evident by the revenue growth in the fourth quarter,” CEO Gianni Arcaini said in a news release.

“Our team has been successful in refining and improving our security and analytical technologies to address much needed demand of such solutions in the marketplace. We are well positioned to enter the next phase of evolution as we prepare to uplist our common stock to a national exchange,” he said.

Duos' stock currently trades on the OTC Markets Group but the company is seeking a listing on the Nasdaq Capital Market.

Duos reported a net loss of $2.6 million, or 4 cents a share, for 2016.

International Speedway earnings rise

International Speedway Corp. last week reported higher earnings for the first quarter ended Feb. 28, as improvements to its signature Daytona International Speedway led to higher revenue surrounding the Daytona 500 NASCAR race.

Adjusted earnings of 47 cents a share were 3 cents higher than the first quarter of fiscal 2016, and revenue rose 3.8 percent to $148 million.

Daytona Beach-based International Speedway is spending $400 million to upgrade the raceway and is also working on a major mixed-use development across the street from the track called One Daytona.

One Daytona will have up to 1.4 million square feet of retail, dining and entertainment space, as well as a hotel, 1,350 residential units and more than 1 million square feet of office and commercial space.

In a news release, International Speedway CEO Lesa France Kennedy said the higher first-quarter results “demonstrate the sustained value generated by our investment in Daytona International Speedway.”

Besides the Daytona Beach facility, International Speedway owns or operates 12 other motorsports facilities across the U.S.

[email protected]

 

×

Special Offer: $5 for 2 Months!

Your free article limit has been reached this month.
Subscribe now for unlimited digital access to our award-winning business news.