New owner Cracker Barrel says “the Maple Street team will be relocating to Nashville.”
In her first public comments since the acquisition of Maple Street Biscuit Company, Cracker Barrel Old Country Store Inc. CEO Sandy Cochran said “we’re committed to preserving the integrity of the Maple Street brand.”
However, during the company’s quarterly conference call Nov. 26, Cochran also said “the Maple Street team will be relocating to Nashville.”
Cochran didn’t say more and Cracker Barrel and Maple Street representatives did not respond to phone messages about the future of Maple Street’s home office in Orange Park.
Cracker Barrel, headquartered outside of Nashville, acquired the chain of 33 Maple Street restaurants in October for $36 million.
The company said Maple Street will remain separate from the Cracker Barrel restaurants and hadn’t previously said anything about moving the subsidiary’s offices.
The companies did not give financial data for Maple Street when the deal was announced. However, Cracker Barrel’s report for the quarter ended Nov. 1 showed revenue of $749 million, and the company said its revenue would have been $752.9 million if it owned Maple Street for the full quarter.
That means Maple Street produced about $3.9 million in revenue in the quarter.
“We believe Maple Street will serve as a growth vehicle that complements Cracker Barrel by accelerating our penetration in this segment (breakfast and lunch fast-casual dining) by providing increased exposure to urban and suburban markets and to the millennial and Gen Z” markets, Cochran said.
Arizona holding company acquires Drone Aviation
An Arizona-based company last week acquired Jacksonville-based Drone Aviation Holding Corp., which produces tethered aerial monitoring and communications platforms
ComSovereign Corp., a holding company for businesses involved in telecommunications, silicon photonics and power systems, bought publicly traded Drone Aviation and said the name of the merged company is ComSovereign Holding Corp.
The companies did not say where the company will be headquartered, but ComSovereign’s address is listed in Tucson, Arizona, in the merger agreement filed with the Securities and Exchange Commission.
ComSovereign CEO Dan Hodges was named chief executive of the company and Drone Aviation CEO Dan Erdberg resigned with the merger.
Drone Aviation listed 22 full-time and three part-time employees in a recent SEC filing.
A Drone Aviation spokesman did not respond to email and voicemail messages asking about the Jacksonville office after the merger.
Privately held ComSovereign’s stockholders received 95 million new shares of Drone Aviation under the merger agreement, giving them 69% of all outstanding shares, according to the SEC filing.
Drone Aviation’s stock was trading at 82 cents when the deal was announced, which would put the total value of the issued shares at about $78 million.
ComSovereign will be publicly traded. The SEC filing said the company expects the Financial Industry Regulatory Authority to issue a new trading symbol for the stock.
Drone Aviation’s shares continue to trade in the OTC market under its “DRNE” symbol for now.
Drone Aviation reported revenue of $4.1 million and a net loss of $475,064 in the first nine months of this year.
“This merger represents a significant milestone in our strategic plan for Drone Aviation as we expand into the 5G wireless communications market, creating valuable new opportunities to leverage our patented tethered drone and aerostat technologies to create flying cellular towers for government and commercial customers around the world,” Erdberg said in a news release.
Analyst expresses Landstar concerns
Landstar System Inc. has been a successful trucking company for three decades with its business model of not owning trucks but contracting with drivers who own their own vehicles to haul freight.
However, one analyst cautioned last week that new state laws could change the relationship between Landstar and some of its drivers.
Goldman Sachs analyst Jordan Alliger said in a report that a California law taking effect in January “could potentially limit who can be deemed an independent contractor.”
Alliger said Landstar contracts with about 400 drivers in California and the new law could limit the amount of business it does in the state.
He said investors should monitor if other states pass similar laws.
“While we do not take a view on the potential for similar laws to pass across the U.S., contractor laws remain an exogenous risk — both operationally and from a headline perspective,” he said.
Alliger rated Landstar at “sell,” in part because of the risk but more because of pricing concerns in the trucking market.
“We like Landstar’s long-term fundamentals, given it has a very solid asset-light business model with high returns and a proven track record, but where we currently sit in the macro cycle/brokerage market, we see better risk/reward elsewhere,” he said.
Dividend for Patriot Transportation
Jacksonville’s other publicly traded trucking company, Patriot Transportation Holding Inc., reported lower earnings for its fourth quarter ended Sept. 30.
However, the company also last week declared its first cash dividends on its common stock.
Patriot not only declared a quarterly dividend of 15 cents a share, but it also said it will pay a one-time special dividend of $3 per share.
Patriot reported earnings of 6 cents a share for the fourth quarter, down from 19 cents a year ago. However, last year’s earnings were helped by a 12-cent tax benefit.
Revenue fell 9%, impacted by driver shortages and by hurricanes along its network in the quarter.
Patriot said it will spend $10 million to pay the special dividend, but it had $21 million in cash and no outstanding debt at the end of the fiscal year.
In a conference call, CEO Robert Sandlin said he is hopeful for earnings improvement in the new fiscal year.
“The company’s bottom line operating results were not up to our expectations in fiscal 2019, but we do see some positive momentum in some areas,” he said.
Analyst asks about CSX succession plan
In 2015, Oscar Munoz was promoted to president of CSX Corp. and looked like the eventual successor to CEO Michael Ward.
Instead, Munoz left the Jacksonville-based railroad to become chief executive of United Airlines Holdings Corp.
But the Chicago-based airline announced last week that Munoz will retire as CEO in May 2020 after more than four years on the job and become executive chairman of the board.
Since Munoz left CSX, the company’s executive suite has been completely overhauled and Jim Foote, who was promoted to CEO in December 2017, indicated last week there is no succession plan in place these days.
Foote was speaking at an investor conference when analyst Allison Landry of host firm Credit Suisse asked if the 65-year-old had an update on succession plans.
“You. You ready?” Foote asked Landry.
“I’m ready,” Landry replied, and that was the end of it.
On a more serious note, Foote said the same trends which have had CSX projecting slightly lower revenue this year remain heading into 2020.
“We just don’t see anything right now that gives me reason to believe there’s a lot of change out there,” he said.
Cannae raises $236M in stock sale
Cannae Holdings Inc., the investment company spun off from Fidelity National Financial Inc., raised an additional $236 million in a public stock sale last week.
The company said the proceeds from the sale could be used for future acquisitions, but it did not say anything about specific deals.
Cannae’s investments include stakes in several restaurant chains and business data firm Dun & Bradstreet Corp.
Cannae is headquartered in Las Vegas but is run by executives connected to Jacksonville-based Fidelity.