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Jax Daily Record Tuesday, Feb. 16, 201612:00 PM EST

Fidelity National Financial invests in gun maker Colt

by: Mark Basch Contributing Writer

Fidelity National Financial Inc., known for making a wide variety of investments outside of its main title insurance subsidiary, is now in the gun business.

Through its Fidelity National Financial Ventures (FNFV) unit, Fidelity made a $22 million investment in Colt Defense LLC as the historic gun manufacturer emerged from Chapter 11 bankruptcy last month.

Fidelity revealed the investment during FNFV’s quarterly conference call with analysts Thursday.

“It’s an iconic company. It’s one of the best brand names in that type of industry in the world and the world is a dangerous place right now,” said Fidelity Executive Vice President Brent Bickett.

He said the Colt deal is similar to other investments Fidelity has made in distressed companies, which became profitable as the businesses turned around.

He said Fidelity partnered with Newport Global Advisors, a firm it has teamed with in the past, to invest in debt securities issued by Colt.

“We feel pretty good about the investment, but it’s just a typical value investment that we like to pursue,” Bickett said.

He did not say how much of an interest Fidelity will have in Colt. The company’s Chapter 11 reorganization plan stated the Fidelity-Newport partnership, along with Colt’s previous owner, Sciens Capital Management, will have voting control of Colt.

FNFV, which was created as a tracking stock for Fidelity’s non-real estate investments, also owns interests in a number of restaurants, including a majority stake in a company that owns the Ninety Nine, Village Inn, Baker’s Square and O’Charley’s chains. That company sold off a chain called Max & Erma’s last month, as Fidelity explores options to spin off or sell those businesses.

Meanwhile, Fidelity has been buying up shares since late last year of another restaurant company, Del Frisco’s Restaurant Group Inc.

In the conference call, Chairman Bill Foley said Fidelity has built up a 12.4 percent stake in Del Frisco’s.

“We view it as a very attractive investment. We feel like we’re not novices in the restaurant business and that we have the ability to help restaurant companies improve their performance,” he said.

However, Foley said Fidelity officials have not yet had any contact with Del Frisco’s management.

Fidelity rises after earnings report

Fidelity’s adjusted earnings of 55 cents a share for the fourth quarter were 5 cents higher than last year and 3 cents higher than the average forecast of analysts, according to Thomson Financial.

In the company’s conference call last week, Fidelity officials expressed optimism about its main title insurance business for 2016.

“The commercial market remains very strong with record fourth quarter and full year 2015 revenue. The purchase market showed continued growth, as our open and closed purchase orders grew by approximately 8 percent for the fourth quarter and full year 2015,” said CEO Raymond Quirk.

“Refinance activity declined somewhat during the fourth quarter, although with the recent market volatility and decline in rates, refinance volumes have the potential to be more stable than most would have expected as we head into 2016,” he said.

In an overall down day for the market, Fidelity’s stock rose 93 cents to $30.72 Thursday after the earnings report.

Steady growth at Black Knight

Black Knight Financial Services Inc., which was spun off from Fidelity last year, reported adjusted earnings from continuing operations rose 10 percent in the fourth quarter to $40.4 million, or 26 cents a share.

Adjusted revenue rose 8 percent to $240 million.

“These growth figures are a direct reflection of our powerful business model and our ability to execute on the growth strategies we laid out during the IPO,” CEO Tom Sanzone said during Black Knight’s conference call.

The company provides technology services for mortgage lenders and is the dominant company in its field.

“Black Knight’s business model is predicated on providing solutions to our clients that reduce risk and increase the profitability,” Sanzone said.

“By entering into long-term agreements with high reoccurring revenue that is protected by minimum volume commitments and price escalators, Black Knight is a business built to grow in any market condition,” he said.

Black Knight projected revenue to continue growing at 6 percent to 8 percent this year, with earnings growth of 8 percent to 10 percent.

Fidelity retained a majority interest in Black Knight after its initial public offering in May 2015. In Fidelity’s conference call, Foley said the company’s interest is worth $8 a share to Fidelity.

FIS says SunGard ahead of schedule

Fidelity National Information Services Inc., or FIS, last week reported fourth-quarter adjusted earnings rose by 6 cents a share to 93 cents. That beat the average analysts’ forecast by a penny, according to Thomson.

However, while FIS projected 2016 earnings to grow by 15 to 18 percent to $3.70 to $3.80 a share, that is lower than the average forecast of $3.82.

The big news at FIS in the fourth quarter was its acquisition of SunGard Data Systems Inc. at the end of November.

In the company’s conference call, CEO Gary Norcross said FIS is ahead of schedule with its plan to cut $100 million in combined costs from the merged company this year.

The companies merged as SunGard was independently working on an expansion of its Jacksonville offices in the Prudential Building on the Downtown Southbank.

FIS, which is headquartered on the Northbank along Riverside Avenue, has not said what it will do with SunGard’s offices.

Norcross said the two financial technology companies are blending together well so far.

“As we look at the December results for SunGard, we are pleased with the momentum the sales organization maintained throughout the month, and are also pleased with the health of the overall pipeline that we acquired,” he said.

“While still early, we are also excited about how the sales teams are collaborating and building further opportunities within our robust client set which further substantiates the strategy and why we put these two companies together.”

FIS was spun off from Fidelity National Financial in 2006 and while the two companies are headquartered at the same office complex on Riverside Avenue, Fidelity is only a minor shareholder of FIS.

Latitude 360 executive resigns

Troubled Latitude 360 Inc. said in a Securities and Exchange Commission filing Thursday that its second-ranking executive resigned from the company.

Gregory Garson resigned as president and as a director. The filing said Garson’s resignation from the board, along with fellow director John Alexon, was not the result of any disagreement with the company. It said Garson has offered to continue to serve the company as a consultant.

CEO Brent Brown remains in charge of the company.

Jacksonville-based Latitude 360 closed its entertainment and dining venues in Jacksonville and Indianapolis last month, leaving it with just one venue in operation in Pittsburgh.

Latitude 360 appointed two directors to replace Garson and Alexon. The SEC filing said “the reconstituted board intends to embark on a restructuring plan for the company, to seek to substantially reduce the company’s overhead costs to be more in line with the company’s projected revenues.”

Rayonier’s Nassau  project is Wildlight

During its quarterly conference call last week, Rayonier Inc. announced the name of its mixed-use community development project in Nassau County near the intersection of Interstate 95 and Florida A1A is Wildlight.

That includes a new school in the community that will be called Wildlight Elementary School.

“We are now actively marketing select commercial and residential parcels and are encouraged by the interest we are receiving,” said Christopher Corr, senior vice president for real estate.

“We currently expect our first sales in Wildlight toward the end of 2016,” he said.

Rayonier reported fourth-quarter adjusted earnings of 9 cents a share, even with the previous year but higher than analysts’ forecasts of 2 cents to 8 cents, according to Thomson.

Like Fidelity, Rayonier beat the rest of a down market Thursday with its better-than-expected earnings. Its stock rose 96 cents to $20.03.

The Jacksonville-based timber and real estate company forecast 2016 earnings before interest, taxes, depreciation and amortization (EBITDA) of $185 million to $210 million, which would be flat to lower than its 2015 EBITDA of $208 million.

Regency Centers beats forecasts

Regency Centers Corp. last week reported its core funds from operations in the fourth quarter were 79 cents a share, 8 cents higher than last year and 6 cents higher than the average analysts’ forecast, according to Thomson.

Funds from operations are basically earnings excluding depreciation and amortization expenses and are considered the key earnings metric for real estate investment trusts like Regency.

Jacksonville-based Regency’s portfolio of 318 retail properties across the country was 95.6 percent leased at year-end.

In Regency’s conference call, CEO Hap Stein said he is watching the “fragile” economy and financial markets with some concern, but he feels good about the company’s prospects.

“Given the quality of our portfolio, our disciplined development program, rock-solid balance sheet and the focus and talent of our team, we are well-poised to build on our positive momentum and expect to thrive in good times, while weathering and possibly profiting in difficult times,” he said.

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