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Jax Daily Record Monday, May 22, 201712:00 PM EST

Fidelity spinoff will have Vegas HQ

by: Mark Basch Contributing Writer

When Fidelity National Financial Inc. spun off Fidelity National Information Services Inc. and Black Knight Financial Services Inc., both of those public companies set up their headquarters at Fidelity’s Riverside Avenue office complex.

However, when Fidelity spins off investment subsidiary Fidelity National Financial Ventures into a new public company called Cannae Holdings Inc., Cannae will set up shop in Las Vegas, according to a proxy statement filed for the spinoff.

FNFV is a subsidiary of title insurance company Fidelity that holds non-real estate-related investments, controlling several businesses that produced $1.3 billion in total revenue last year, according to the proxy.

FNFV currently trades by itself as a tracking stock on the New York Stock Exchange. Once the spinoff is complete, Cannae will be a separate public company trading on the New York exchange.

It’s not surprising to see Cannae headquartered in Las Vegas because Fidelity Chairman Bill Foley has relocated to the desert city after becoming the owner of a National Hockey League expansion team that will begin play there in the fall.

Fidelity has not named a management team for Cannae. The proxy says current Fidelity executives will serve as Cannae’s initial executive officers, which means Foley will continue as chairman.

Cannae basically will be a deal-making company, an area in which Foley has excelled, so it makes sense for the headquarters to be located in his home city.

Fidelity and the two other spin offs have much larger operations that have been kept intact at the Jacksonville offices.

Cannae’s proxy says the company’s corporate operations have 132 employees.

The address for Cannae in the proxy is the same address as another deal-making company run by Foley called CF Corp.

CF was formed last year as a “blank check” company by Foley and former Blackstone Group dealmaker Chinh Chu. CF raised $600 million in an initial public offering to go after acquisition targets, but it has not yet made any deals.

Fidelity filed the proxy statement for a special shareholders meeting to vote on the spinoff of Cannae. The meeting date has not been set.

Fidelity has said it hopes to complete the spinoff in the third quarter this year.

Stein Mart sales and earnings drop

Stein Mart Inc. continued to struggle in the first quarter, reporting a sharp drop in sales and earnings as it decided to suspend quarterly dividend payments.

The Jacksonville-based fashion retailer had earnings of 8 cents a share for the quarter ended April 29, down from 29 cents the previous year.

Total sales fell 5.2 percent to $337.3 million and comparable-store sales (sales at stores open for more than one year) dropped 7.6 percent.

Stein Mart, which usually doesn’t make earnings forecasts, also said it expects a second-quarter loss of 20 cents to 25 cents a share.

In the company’s conference call with analysts, CEO Hunt Hawkins said consumer traffic into its 292 stores is the weakest it’s been since the 2008-09 recession.

“Some of this is the lingering effect of last year’s missteps, but we also know there have been dramatic changes in consumer shopping behavior, particularly in the apparel area,” Hawkins said.

“Recognizing this challenging retail apparel sales environment, we are being conservative with our spending and cash flows,” he said.

The company is saving money by stopping its quarterly 7.5 cent-a-share cash dividend and reducing cash expenditures.

Stein Mart now plans to open 10 new stores this year and close seven, after previously planning to open 11 and close five.

Hawkins said the company is examining results of consumer market research into its stores and looking at revised strategies based on the surveys.

“Not surprisingly, we are viewed as a hybrid between the department stores and off-price retailers. Because of that, customers are a bit uncertain of what to expect from us. This tells us that we need to provide better clarity of our offer in our marketing and how we present our merchandise in our stores,” he said.

Stein Mart’s already faltering stock fell 57 cents to $1.13 Thursday after the earnings report.

Stein Mart’s stock has been steadily declining from a 52-week high of $9.23 last summer before the sudden resignation of CEO Dawn Robertson after only six months on the job.

Hawkins was named interim CEO in September to replace Robertson and became permanent CEO in January.

Johnson Rice & Co. analyst David Mann said in a research note that he expects Stein Mart’s weak results to continue as he maintains a “hold” rating on the stock.

“The company is at a critical crossroads and needs to pivot quickly as it is losing market share (and time) amidst an intensely competitive environment. We are concerned about the time and difficulty that it will take to regain lost customers (if possible at all),” he said.

Harrison’s health hits CSX stock

CSX Corp.’s stock fell Wednesday after a Wall Street Journal story raised questions about the health of new CEO Hunter Harrison.

The Journal story reported the 72-year-old Harrison does not spend many days at CSX’s Jacksonville headquarters and has needed to carry a portable oxygen system.

However, Harrison told the Journal needing the oxygen is not keeping him from working. The story said he also worked often from his home in West Palm Beach for his previous job as chief executive of Canadian Pacific Railway Ltd.

In response to the story, CSX on Friday issued a Securities and Exchange Commission filing saying “in the absence of performance questions, as a matter of policy we do not comment on health related matters of any CSX executive” and that Harrison “has been and continues to be actively and deeply involved on a daily basis.”

CSX’s stock fell $1.65 to $49.47 Wednesday but rebounded Thursday, rising 76 cents to $50.23.

CSX shareholders will be casting an advisory vote on a proposed $84 million payment for Harrison at the company’s June 5 annual meeting.

The payment is reimbursement for compensation Harrison forfeited when he left Canadian Pacific to pursue the CSX job.

ParkerVision sets product launch

ParkerVision Inc., which has been developing wireless technology for years but producing little revenue, is set to launch its latest product next month.

During the Jacksonville-based company’s quarterly conference call last week, CEO Jeff Parker said the company will begin a digital marketing campaign in early June for its new in-home Wi-Fi product, which ParkerVision says will enhance in-home Internet service for consumers.

ParkerVision also will ship “limited product quantities” shortly after the marketing program begins, he said.

“Our goal is to fine-tune our processes during this initial program so that we’re positioned to ramp up production to meet what we believe will be a strong demand for this product in the second half of the year and, particularly, taking advantage of the upcoming holiday season,” Parker said.

“By our projection, the capture of only a fraction of one percentage point of the total available North American market for this product enables us to move our company to profitability,” he said.

ParkerVision has been developing technology for more than two decades but has produced few products, and has lost money every year.

The company again recorded no revenue in the first quarter this year and reported a net loss of $4.8 million, or 32 cents a share.

ParkerVision has generated more attention for a series of lawsuits against major electronics manufacturers which the company alleges have infringed on ParkerVision’s patented wireless technology.

Parker said the company is continuing with those legal actions to protect its patents.

Highstar Capital reduces stake in Advanced Disposal

Following its initial public offering in October, Advanced Disposal Services Inc.’s largest stockholder is reducing its stake in the Ponte Vedra Beach-based waste services company.

Advanced Disposal announced a secondary sale of 15.8 million shares by certain large stockholders. According to a registration statement filed with the Securities and Exchange Commission, most of those shares are currently held by an investment group led by Highstar Capital, which controls 47.6 percent of the stock.

The secondary sale will reduce Highstar’s stake to 31.7 percent.

Advanced Disposal sold 19.25 million shares of new stock in its initial public offering in October.

GEE reports loss

GEE Group Inc. last week reported a net loss of $129,000, or 1 cent a share, for the second quarter ended March 31, with revenue basically unchanged from last year at $21.6 million.

The results do not include a major acquisition for the Illinois-based staffing company of SNI Companies, which closed on April 3 and will more than double GEE’s annual revenue.

CEO Derek Dewan, who runs GEE out of Jacksonville, said in a news release that the company is looking at additional acquisitions.

“We expect to realize additional economies of scale and cost synergies as we continue to integrate operations and streamline our business processes,” Dewan said.

“Our pipeline of great companies contemplating joining GEE through acquisition is stellar and continues to grow and we will accelerate our aggressive external growth from this outstanding list of staffing solutions providers.”

Creative Learning leadership changes

After surviving a proxy fight launched by its former CEO in February, St. Augustine-based Creative Learning Corp. announced changes in its leadership team.

Karla Kretsch, who had been chief operating officer, was promoted to the additional role of president.

The company also said Rod Whiton is stepping down as interim CEO, but no new CEO was named.

Former CEO Brian Pappas, who was terminated in October 2015, launched a proxy fight earlier this year to replace the four members of Creative Learning’s board of directors with three directors of his own, but his measure failed in February.

Creative Learning, which offers educational and enrichment programs for children through franchisees, also reported a net loss of $159,000 for the second quarter ended March 31.

The company said proxy fight-related costs of about $310,000 contributed to the net loss.

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