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Basch Report
Jax Daily Record Thursday, Jan. 7, 202105:10 AM EST

Jacksonville stocks underperform in 2020

Most companies are down as major indexes reach record highs.
by: Mark Basch Contributing Writer

In a year when major market indexes finished at record highs, Jacksonville stocks generally underperformed in 2020.

Out of 13 Jacksonville-based companies that were trading above $1 when the year began, only five finished with gains for the year.

At the top of the list was Rayonier Advanced Materials Inc., a stock that has been beaten down by a poor financial performance in recent years.

When the maker of cellulose specialties products reported its first profit in seven quarters in November, the stock jumped higher. 

It more than doubled in price to a high of $8.63 in early December and closed at $6.52 on Dec. 31, up 75% for the year.

Rayonier AM remains a long way from its high of $44.18 in July 2014, shortly after it split with Rayonier Inc. into separate public companies.

Among more consistent performers, mortgage technology company Black Knight Inc. led the way with a 37% gain.

That shouldn’t be surprising because 2020 was a big year for technology companies during the COVID-19 pandemic. The Nasdaq Composite Index, which features a large number of high-tech companies, soared by 43.6% last year. 

However, Jacksonville’s other big financial technology company, Fidelity National Information Services Inc., rose only 2%.

Fidelity National Information Services, or FIS, already was lagging other technology stocks. But FIS fell back a bit in late December after The Wall Street Journal reported the company called off negotiations for a potential $70 billion merger with Global Payments Inc.

Although news of that possible deal was kept under wraps until the Journal’s Dec. 20 report, the stock fell on investors’ disappointment when they learned a blockbuster deal didn’t happen.

The two other stocks that registered gains for 2020 were Jacksonville’s two major public freight transportation companies, CSX Corp. and Landstar System Inc.

Railroad company CSX rose 25% and trucking company Landstar rose 18%.

Although those stocks were well behind the Nasdaq index, they did beat the 16.3% gain in the S&P 500 and the 7.3% rise in the Dow Jones industrial average for 2020.

ARC Group sees year’s biggest loss

At the other end of the spectrum, the biggest losses came from ARC Group Inc., which dropped 75% from its $1.14 price at the beginning of the year to 29 cents.

ARC Group, operator of the Dick’s Wings & Grill restaurant chain, did not file any financial reports in 2020.

The company in a Securities and Exchange Commission filing said disruptions caused by the pandemic prevented it from preparing financial statements.

Among higher priced stocks, Patriot Transportation Holdings Inc. registered the biggest drop, falling 55% to $8.78.

The trucking company transports mainly petroleum products and a lower demand for gasoline in the pandemic caused earnings to drop in 2020.

GEE Group revenue tumbles by 20%

GEE Group Inc. last week reported a drop in revenue for the fourth quarter ended Sept. 30, as the Jacksonville-based staffing company continued to feel the impact of the COVID-19 pandemic.

Fourth-quarter revenue fell 20% to $31 million and the company had a net loss of $12.6 million, which included an $8.9 million noncash charge related to goodwill on its balance sheet.

GEE Group said the pandemic has caused decreases in demand for staffing in its finance, accounting and office support units. Its light industrial segment also was impacted.

Demand for information technology workers was stronger, as those jobs are more suited for the remote working environment used by many companies during the pandemic, it said.

In a news release, CEO Derek Dewan said trends are improving.

“GEE Group experienced a gradual yet steady increase in temporary workers placed on assignment as well as direct hire placements beginning in the third quarter,” Dewan said.

“We continued to experience increasing demand and a fairly robust hiring environment throughout the fourth quarter and expect that to continue into the first quarter of fiscal 2021,” he said.

GEE Group will focus on “organic growth, cross selling services within offices and geographically and continue to be opportunistic with potential strategic acquisitions and mergers,” he said.

Avocado oversupply hits Calavo Growers

Demand for avocados remained strong in 2020, said Calavo Growers Inc.

But while the California-based company increased sales of avocados, an oversupply led to price drops, which caused revenue to fall.

Calavo reported revenue fell 20% in its fourth quarter ended Oct. 31 to $234.4 million. While avocado sales volume rose 3%, prices dropped 22%.

Avocados accounted for slightly more than half of fiscal 2020 sales for California-based Calavo, which has a processing and distribution facility in Green Cove Springs.

“With strong crops out of both Mexico and California, supply in the fourth quarter was plentiful,” CEO James Gibson said in a Dec. 21 news release.

“Many foodservice outlets remained unavailable to absorb the crop size and quality dispersion, which has historically helped to maintain margins. As a result, revenue and gross margin declined year-over-year,” he said.

Calavo’s adjusted earnings fell by 11 cents a share in the fourth quarter to 34 cents.

Gibson said the trend is expected to continue into early 2021.

“The Mexican crop is expected to be larger than it was in 2020, which will continue to pressure selling prices. We expect foodservice outlets will remain unavailable to take sizes and quality of avocados that are not desired by our retail customers until the latter half of 2021,” he said.

Calavo leased a 208,000-square-foot distribution center in Green Cove Springs in 2015 that formerly was used by the Food Lion supermarket chain, with a promise to employ 262 people.

The facility primarily distributes fresh avocados and prepared guacamole, the company said in its annual report.

It also processes fresh-cut fruits and vegetables and prepared foods.

Anheuser-Busch selling plant stake

Anheuser-Busch InBev agreed to sell a 49.9% stake in its metal container plants for $3 billion.

The global brewer’s Metal Container Corp. subsidiary has been producing cans at a Westside plant for beers produced at Anheuser-Busch’s Jacksonville brewery since 1975.

The company completed a $170 million expansion of the plant at 1100 Ellis Road in 2017 to begin producing Budweiser and Bud Light aluminum bottles.

AB InBev will retain operational control of its plants after it completes the sale of a minority stake to a group of investors led by Apollo Global Management Inc.

The company’s Dec. 23 news release did not say how many container plants it currently has.

AB InBev said the sale will generate proceeds to repay debt.

The agreement gives AB InBev the option to reacquire the minority stake beginning on the fifth anniversary of the closing of the transaction. The closing is scheduled for Jan. 8.

TV-12 agreement with NBC extended

Tegna Inc. said Jan. 4 it reached a deal with NBC to extend its network affiliation agreements in 20 markets, including Jacksonville.

Tegna operates NBC affiliate WTLV TV-12 in Jacksonville. The company said in last year’s annual report that its affiliation agreement with NBC was scheduled to expire in early 2021.

The company also operates Jacksonville ABC affiliate WJXX TV-25. The annual report said it reached an agreement in 2019 to extend its agreements with ABC through 2023.

Virginia-based Tegna operates 64 television stations in 51 U.S. markets.

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