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Basch Report
Jax Daily Record Wednesday, Jan. 29, 202005:20 AM EST

NextEra Energy CEO ‘disappointed’ that JEA sale was halted

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Parent company of Florida Power & Light says the utility is seeking more acquisition opportunities.
by: Mark Basch Contributing Writer

As NextEra Energy Inc. reported its year-end earnings last week, CEO Jim Robo expressed disappointment that JEA is no longer for sale.

Juno Beach-based NextEra, the parent of Florida Power & Light Co., was one of nine companies that responded last year to JEA’s invitation to negotiate before the Jacksonville utility called off plans to pursue a sale.

“I would say we’re disappointed that the sale process has been terminated,” Robo said in NextEra’s quarterly conference call with analysts.

“We think we could have brought enormous value to the customers and the citizens of Jacksonville, and we think it’s unfortunate that it’s been terminated. But that is what it is,” he said.

FPL provides power for about 5 million customers covering most of the east coast of Florida outside of Jacksonville.

A year ago, it expanded by acquiring Gulf Power Co., which serves about 460,000 customers in eight counties in Northwest Florida.

Robo said NextEra is looking for more acquisition opportunities.

“I don’t think there’s a utility in the country that wouldn’t benefit from the application of our playbook,” he said. “We continue to be very interested in trying to do something.”

However, Robo said the company is only interested in deals that would increase earnings.

“M&A is always hard and there are a lot of hurdles to get over and we will, as always, be extraordinarily financially disciplined,” he said.

“You will never see us announce a deal that we say is strategic and has no accretion. So anything that we do will have significant accretion associated with it.”

NextEra reported 2019 adjusted earnings of $8.37 a share, up from $7.70 in 2018.

The company is projecting this year’s earnings to grow to between $8.70 and $9.20 a share, and 2022 earnings to reach $10 to $10.75.

FIS commits to Cincinnati

Almost three months after committing to build a new headquarters in Jacksonville, Fidelity National Information Services Inc. last week committed to maintaining a strong presence in Cincinnati.

The Jacksonville-based company known as FIS acquired Cincinnati-based Worldpay Inc. for $43 billion last year.

FIS said Worldpay’s former headquarters in Symmes Township, Ohio, will be the company’s Strategic Technology and Innovation Campus.

FIS also pledged to continue investing in an innovation hub at the University of Cincinnati.

“Our significant presence in the Cincinnati market and the state of Ohio is integral to our long-term growth plans and goals to deepen our global leadership in financial technology innovation,” FIS Chief Executive Gary Norcross said in a news release.

FIS on Nov. 1 announced it would build a 12-story, 300,000-square-foot headquarters building near its offices on Riverside Avenue in Jacksonville. As part of the $145 million expansion project, the company said it will add 500 jobs over the next decade to bring its Jacksonville workforce to about 1,800.

The company’s announcement about its commitment to Cincinnati did not say if it would add jobs there.

J&J contact lens sales increase

Johnson & Johnson last week said fourth-quarter sales at its Jacksonville-based eye care division grew 0.7% to $1.14 billion on the strength of its contact lens business.

Contact lens sales in the quarter rose 2.2% to $833 million.

Johnson & Johnson Vision Care was solely a contact lens company before expanding with the acquisition of eye care surgical products businesses three years ago.

However, the surgical side of its vision care business was weak in the U.S. “due to competitive pressures and lower market growth in refractive surgery,” Chris DelOrefice, vice president of investor relations, said in Johnson & Johnson’s quarterly conference call.

“Frankly, we’ve been disappointed in some of our surgical performance, particularly in the U.S. We’ve got plans in place to address that,” CEO Alex Gorsky said in the call.

Gorsky said the plans include new products that will expand the business.

“We’re confident that that’s going to lead to continued growth trends as we go through 2020 and certainly setting ourselves up for even continued growth beyond that as well,” he said.

But Gorsky is happy with the contact lens business, which Johnson & Johnson has operated since acquiring a Jacksonville company called Frontier Contact Lenses in 1981.

“I think what we see in vision care is fundamentally strong performance in contact lens,” he said.

“You saw about 3% growth overall in our contact lens business (for the year) but what’s important to note there is we had 9% growth in the United States. So, the transition lens, the astig lens, and daily disposables continue to go well,” he said.

Johnson & Johnson’s contact lenses are marketed as the Acuvue brand.

Contact lens sales reached $3.4 billion worldwide in 2019. Total vision care sales were $4.6 billion, up 1.6%.

Ameris focuses on organic growth

Ameris Bancorp expanded with several acquisitions in recent years, but CEO Palmer Proctor said last week it expects to grow this year without any more deals.

“Our focus remains for the execution of our organic growth strategy without distraction of M&A at this time,” Proctor told analysts in the company’s year-end conference call Friday.

Ameris reported adjusted earnings of $3.80 a share for the year, up from $3.38 in 2018.

“We went through a tremendous amount of change this year, including the largest conversion and integration in our company’s history and to execute on our plan and deliver these types of financial results while having the distraction of everything that happened this year is quite an accomplishment,” Proctor said.

Ameris acquired Fidelity Southern Corp. on July 1 and after completing the deal, it moved its executive offices from Jacksonville to Fidelity Southern’s headquarters in Atlanta.

Fidelity Southern is not related to Jacksonville-based Fidelity National Financial Inc. or FIS.

Ameris reported adjusted earnings of 96 cents a share for the fourth quarter, the same as the fourth quarter of 2018 and equal to the consensus forecast of analysts surveyed by Zacks Investment Research.

Although earnings met expectations, Ameris’ stock fell $1.24 to $41.59 Friday after the earnings report.

While Ameris doesn’t make earnings projections, several analysts lowered their profit estimates for 2020 after hearing from management in the conference call.

“Our estimate moves 8 cents lower for 2020 (to $4.10 a share) on a number of items including a lower run rate for mortgage fees and higher expenses, mostly offset by higher net interest income,” Piper Sandler analyst Casey Orr Whitman said in a research note.

Despite lowering her estimate, Whitman maintained an “overweight” rating on the stock and other analysts who lowered estimates also maintained their ratings.

“We believe 2020 will be a good year for Ameris as Fidelity Southern’s full EPS accretion begins (post cost saves), Ameris avoids M&A and focuses internally and as it takes market share from all the local disruption caused by M&A,” Keefe Bruyette & Woods analyst Brady Gailey said in his note.

Gailey has an “outperform” rating on the stock.

“Ultimately, we continue to believe the (Fidelity Southern) deal significantly enhances the Ameris franchise, and as operating leverage continues to be realized profitability should expand, ultimately driving multiple expansion toward premium levels it has historically enjoyed,” Raymond James analyst David Feaster said in his report.

“As such, we continue to view risk/reward positively,” he said, with an “outperform” rating.

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