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Jax Daily Record Monday, Apr. 27, 201512:00 PM EST

Libya pullout results in big loss at APR Energy

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by: Mark Basch Contributing Writer

APR Energy PLC increased revenue by 58 percent last year, but the company’s withdrawal from its business in Libya resulted in a huge loss for 2014.

Jacksonville-based APR last week said it took a $717.4 million write-off related to its operations in Libya, resulting in an operating loss of $702.5 million for 2014. Its final net loss for the year was $750.6 million, or $7.96 a share.

APR said its adjusted net loss for the year, excluding the impact of the Libya write-off and other items, was $7.4 million, or 8 cents a share.

APR builds interim power plants on a fast-track basis mainly in overseas markets. The company in December said it was pulling out of Libya because of turmoil there, and in March it said that would cause 2014 earnings to be “significantly below current market expectations.”

In an analyst presentation Tuesday at the London Stock Exchange, where APR’s stock trades, CEO Laurence Anderson said the company still made progress last year.

“2014 was a significant as well as challenging year for APR Energy,” said Anderson in the presentation, which was broadcast over the Internet.

Revenue grew from $308.3 million in 2013 to $485.7 million in 2014, the company’s fourth straight year of double-digit percentage growth, he said. But he also said the company suffered from “short-term setbacks,” particularly the situation in Libya.

“We realize that for shareholders as well as management, this has been a painful outcome of what was once a very promising opportunity,” Anderson said.

“While there were many risks for which we were compensated, no one predicted the complete breakdown of the government and the country,” he said.

Anderson said the company intends to continue working on projects in “emerging and frontier markets” around the world.

“While these markets have a greater level of risk associated with them, they’re also where the greatest opportunities exist,” he said.

Anderson said APR takes security of its people in those markets very seriously. APR also recently announced a pullout of its operations in Yemen as problems mount in that country.

“We’ve learned from this experience (in Libya) and looking forward we will focus on diversifying our project portfolio to mitigate risk,” he said.

APR is projecting 2015 earnings to be “at or slightly below market expectations,” Anderson said, but he didn’t give any figures.

According to Thomson Financial, analysts are projecting APR’s 2015 results to be anywhere between a profit of 51 cents a share to a net loss of 50 cents.

APR’s stock moved little Tuesday after the financial report, with investors already anticipating losses from the Libya pullout. The stock has been trading at range between about 360 and 390 pence recently, but it’s down from highs above 1,000p in late 2013.

“Despite our challenges in the short term, we believe the long term fundamentals for market growth remain strong. We are confident in our business model and strategy, and the investments we’ve made in 2014 position us well for future growth as a global leader in fast-track turnkey power generation solutions,” Anderson said.

J.P. Morgan analyst Robert Plant said after a meeting with APR management on Tuesday, he is maintaining a “neutral” rating on the stock.

“On the negative side, there is still risk around pulling out of Libya and placing the units with new customers and the general market currently still faces challenges,” Plant said in a research note.

“On the positive side, APR has made progress on exiting Libya and the market fundamentals, long term, should be positive,” he said.

Landstar earningsĀ rise despite lawsuit

Landstar System Inc. last week reported record-high first-quarter earnings, despite the costs of a lawsuit related to a fatal accident involving a Landstar truck.

Landstar reported earnings of 67 cents a share, up from 61 cents the previous year. Revenue rose 11 percent to $762 million.

The trucking company had been projecting earnings of 71 cents to 76 cents a share, but the company disclosed last month that it would have to pay $4.5 million after an Arizona state court jury ruled against Landstar in the lawsuit. That reduced earnings by 6 cents a share.

“Overall, Landstar had a very good first quarter,” CEO Jim Gattoni said in a conference call with analysts.

“We continue to have strong demand for our services. I expect that strength to continue throughout the second quarter,” he said.

Landstar is projecting second-quarter earnings of 87 cents to 92 cents per share, compared with 80 cents in the second quarter of 2014. Analysts had been projecting earnings of 87 cents to 95 cents, according to Thomson.

ParkerVision getsĀ Nasdaq warning

With its stock trading below $1, ParkerVision Inc. last week said it received a letter indicating it could be delisted from the Nasdaq Capital Market if the stock price doesn’t improve.

Jacksonville-based ParkerVision said it received the letter from Nasdaq because the stock has traded below the $1 minimum price for 30 consecutive business days. However, the company has 180 days to regain compliance.

ParkerVision’s stock was trading near $5 a year ago, but the price dropped sharply in June after a federal judge overturned a jury’s decision to award ParkerVision $173 million in damages in its patent infringement lawsuit against Qualcomm Inc.

While that decision is being appealed, ParkerVision, which is developing wireless technology, has not been producing any other revenue.

Gannett’s TV company to be called ‘Tegna’

Gannett Co. Inc. last week announced that the new name of its broadcasting business, as it splits into two companies, will be “Tegna.”

Tegna will consist of Gannett’s portfolio of 46 television stations, including WTLV TV-12 and WJXX TV-25 in Jacksonville, and its digital business. Its publishing business, which includes USA Today and 81 daily U.S. newspapers, will retain the Gannett name.

The company didn’t explain how it came up with the name “Tegna,” but it appears to be a partial anagram of “Gannett.”

“Tegna is a nod to the more than 100-year-old history of Gannett. While always reminding us where we came from, the new name also shows our innovative spirit and commitment to being a forward-looking company that empowers people, businesses and communities to grow and thrive,” Gannett CEO Gracia Martore said in a news release.

Tegna will trade on the New York Stock Exchange under the ticker symbol “TGNA.” Gannett will continue to trade under its current ticker “GCI.”

Gannett expects to complete the spinoff at midyear.

Rayonier AM upgraded to ‘sector perform’

Rayonier Advanced Materials Inc. shareholders have received nothing but bad news since the performance fibers company was spun off from Rayonier Inc. last year.

“Since being spun-out from Rayonier in June 2014, Rayonier AM’s share price has fallen 62 percent compared to the 8 percent increase in the S&P 500 over the same period,” RBC Capital Markets analyst Paul Quinn said in a research note last week.

On the bright side, however, Quinn said it is “hard to see the share price dissolving much further.” So he upgraded his rating on the Jacksonville-based company from “underperform” to “sector perform.”

The spinoff last year coincided with oversupply issues in the cellulose specialty product market that have been impacting Rayonier AM’s results, causing earnings to be below expectations.

Quinn doesn’t see the cellulose specialty market rebounding just yet, but investors have already accounted for that.

“While we continue to expect CS prices to decline 3-4 percent year-over-year in 2016 (after falling 8 percent in 2014 and a further 7–8 percent this year), we believe the market is already pricing in further declines in realizations and we probably will not have a good read on 2016 pricing until late 2015,” he said.

Fortegra subsidiaries downgraded

After the company was acquired last year by Tiptree Financial Inc., insurance ratings agency A.M. Best said it downgraded some ratings of the insurance operating subsidiaries of Jacksonville-based Fortegra Financial Corp.

A.M. Best downgraded the financial strength ratings of the subsidiaries from A- (excellent) to B++ (good) and the issuer credit ratings from A- to BBB+, it said.

“The downgrade of the ratings for Fortegra’s insurance subsidiaries reflects the significant increase in Fortegra’s financial leverage measures as a result of the leveraged buy-out transaction under which Fortegra was acquired by Tiptree. Following the close of the transaction, Fortegra has approximately $110 million in bank debt related to the transaction,” A.M. Best said.

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