Rayonier spinoff will have familiar name

By: 
Apr. 7, 2014

As Rayonier Inc. moves forward with plans to spin off its performance fibers business as a separate public company, it has chosen a familiar name for that business.

According to a Securities and Exchange Commission filing last week, the new company will be called Rayonier Advanced Materials Inc.

That means there will be two publicly traded companies headquartered in Jacksonville with the Rayonier name. The plan calls for the company’s other businesses, timberland and real estate, to remain under the Rayonier Inc. name and continue to trade under the company’s current “RYN” ticker symbol.

Rayonier Advanced Materials will trade under the ticker “RYAM.”

Rayonier announced the plan to split up the two businesses in January, saying it will create value for shareholders by allowing investors to focus on the specific businesses of the two separate companies.

Rayonier Advanced Materials produces specialty cellulose fibers at plants in Fernandina Beach and Jesup, Ga.

The business produced revenue of $1.047 billion last year and has increased its earnings before interest, taxes, depreciation and amortization by 13 percent a year from $226 million in 2009 to $363 million in 2013, according to the information statement for shareholders filed with the SEC last week.

The company completed an expansion of the much larger Jesup facility last year that brings its total annual capacity to about 675,000 metric tons of cellulose specialties, “nearly double the sales of its next largest competitor,” according to the SEC filing.

The filing also touts Rayonier Advanced Materials’ 80 years of experience in the business.

“When this process knowledge is combined with its manufacturing flexibility and knowledge of customers’ applications and specifications, it allows SpinCo (the spinoff company) to have the most extensive capability set to modify cellulose fibers in the industry,” it said.

Rayonier Inc.’s timber business produced revenue of $382 million and operating income of $81 million last year, while the real estate business had revenue of $149 million and $56 million in operating income.

Current Rayonier Chairman, President and CEO Paul Boynton will take on those three positions at Rayonier Advanced Materials and have no role with Rayonier Inc. A replacement for Boynton at Rayonier Inc. has not been named.

Rayonier Inc.’s proxy statement for its annual shareholders meeting, filed last week, includes a shareholder resolution asking stockholders to vote on separating the chairman and CEO positions. It asks the company to adopt a policy that the chairman would be an independent director on the company’s board.

Rayonier Inc.’s board said in the proxy that it opposes the resolution and while it “does not believe it is appropriate to have a policy requiring the separation of chairman and CEO roles, neither does the company have a policy of inevitably combining them.”

The shareholders’ meeting is scheduled for May 15. The company has not set a date for when the spinoff of Rayonier Advanced Materials will take place.

Rayonier near top of first-quarter stocks

The spinoff plan, designed to improve shareholder value, seems to be already having an impact, as Rayonier Inc.’s stock turned in one of the best performances among Jacksonville-based companies in a generally lackluster first-quarter market.

Rayonier’s stock price rose 9 percent in the quarter, third-best among Jacksonville stocks and slightly below second-best Regency Centers Corp., which rose 10 percent.

International Baler Corp. actually had the best gain with a 53 percent jump, but that was just a 70-cent increase from its 2013 closing price of $1.31.

Not surprisingly, the biggest loser in the first quarter was Body Central Corp., which plunged even further as additional losses raised questions about its future.

Body Central fell 73 percent in the quarter and has been trading near $1 for the last two weeks.

The broader market produced a mixed bag of results in the first quarter. The Standard & Poor’s 500 index rose 1.3 percent but the Dow Jones industrial average fell by 0.7 percent and the Nasdaq Composite index dropped 2.5 percent.

Dick’s Wings owner increases revenue

American Restaurant Concepts Inc., the franchisor of the Dick’s Wings & Grill restaurant chain, last week reported 2013 revenue rose 9 percent to $489,816. However, the company’s net loss nearly doubled from the previous year to $658,038.

“Our net loss increased this year as a result of greatly increased operating expenses. However, these expenditures were necessary to complete the turnaround of our franchisees’ operations and position the company for future expansion and acquisition efforts. We are well positioned financially for 2014,” CEO Richard Akam said in a news release.

American Restaurant Concepts is officially headquartered in Louisiana but its corporate offices are in Jacksonville and 15 of the 16 Dick’s Wings restaurants in operation are in the Jacksonville area.

The company in January announced the acquisition of a 50 percent stake in a Salt Lake City restaurant chain called Wing Nutz, which has 10 restaurants in Utah and one in Idaho, plus eight other restaurants in the pipeline.

That’s part of a company strategy to acquire interests in other restaurant brands, as well as expanding the Dick’s Wings chain.

“Importantly, as we grow, we are improving operational efficiencies and formalizing best practices throughout our franchise. This will help us achieve our long-term goal of transforming American Restaurant Concepts into a holding company comprised of a diversified portfolio of profitable businesses that are all strong contributors to our bottom line,” Akam said.

Main Street America earnings rise

The Main Street American Group last week reported its 2013 net income rose 0.7 percent to $57.1 million.

Its net written premium, or total sales, rose 2.3 percent to $1.001 billion.

Jacksonville-based Main Street America provides property and casualty insurance for more than 600,000 policyholders in 36 states through nine insurance carriers.

Chairman and CEO Tom Van Berkel said in a news release that the company has a strong capital position that will enable it to invest in new products and enhanced technology.

“We will also continue to actively seek growth opportunities throughout 2014 in existing states and new states – via acquisitions, affiliations, partnerships and strategic agency appointments – enabling us to further spread our organization’s risk and increase scale,” he said.

Coal outlook prompts CSX downgrade

Barclays Capital analyst Brandon Oglenski last week downgraded his rating on Jacksonville-based CSX Corp. from “overweight” to “equal weight” because of the outlook for, of course, coal.

Coal is always a hot topic when it comes to the railroad company because it is the biggest part of CSX’s business, accounting for about one-fourth of its total revenue. However, before coal demand started dropping over the last couple of years, coal accounted for closer to one-third of CSX’s revenue.

CSX’s annual coal revenue has been reduced by about $800 million in the last two years, Oglenski said in his report, and he estimates it could lose another $380 million to $500 million in coal revenue in the coming years.

“While the harsh winter early in 2014 spells some relief for domestic coal, we are concerned it could be a short-lived positive in a structurally challenged market,” he said.

“Not all is negative, however; we still view CSX’s non-coal businesses favorably, with the company achieving revenue growth of nearly $1 billion, or 12 percent, since 2011,” Oglenski said.

“Growth has been driven by double-digit expansion in automotive, intermodal and chemicals markets.

Continued favorable dynamics in North American industrial and energy activity supports a robust outlook. Intermodal also represents a long-term opportunity for CSX, as the carrier captures greater share of the higher cost over-the-road trucking market,” he said.

“However, even with non-coal annual compound growth assumptions of over 6 percent the next couple of years, we expect the continued profit headwinds from coal losses will drive only limited earnings expansion in the next couple of years, driving our downgrade of CSX shares to equal weight,” he said.

Analyst says Green Tree deal helps EverBank’s earnings

EverBank Financial Corp. last week closed on its previously announced sale of servicing rights on $10.3 billion in mortgage loans to Green Tree Servicing LLC.

As part of the deal, 500 EverBank workers are joining Green Tree and Green Tree is taking over three floors of the bank’s space at the Downtown EverBank Center.

In a research note last week, Sterne, Agee & Leach analyst Peyton Green estimated the deal will add 10 cents to 13 cents a share to EverBank’s earnings, in part because of reduced expenses as the bank downsizes its mortgage servicing division.

Green is projecting EverBank to earn $1.18 a share this year.

Mattamy completes RiverTown purchase from St. Joe

Mattamy Homes last week closed on its acquisition of the 4,057-acre RiverTown community in St. Johns County from The St. Joe Co.

RiverTown was St. Joe’s last remaining tie to Northeast Florida. The company started by the estate of Alfred I. duPont in 1936 moved its headquarters from Jacksonville to WaterSound in the Florida Panhandle in 2010, where the company has focused its real estate development efforts.

Canada-based Mattamy said RiverTown is currently home to about 150 families and is approved for up to 4,950 homes. It said it hopes to begin sales and construction of new homes in the fall and it expects the project to last up to 15 years.

Steve Parker, president of Mattamy’s U.S. group, also said in a news release that the company is planning a new “commuter-friendly” entrance to the community south of Bartram Trail High School.

“When we began to investigate purchasing the property, we saw that while the orientation of RiverTown toward the St. Johns River was logical, it was an impediment to its ongoing success, because the entrance to the community is not a short commute,” he said.

mbasch@baileypub.com

(904) 356-2466