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Jay Stein
Jax Daily Record Monday, May 25, 201512:00 PM EST

Stein Mart earnings lower than expected

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by: Mark Basch Contributing Writer

Stein Mart Inc. last week reported lower-than-expected first-quarter earnings, in part because of interest expenses related to a special dividend paid to shareholders in February.

The Jacksonville-based fashion retailer reported adjusted earnings of 31 cents a share for the first quarter ended May 2, a penny lower than last year’s first quarter and 3 cents lower than the average forecast of analysts surveyed by Thomson Financial.

Stein Mart said earnings were lowered by a penny a share because of $600,000 in additional interest costs from borrowings used to help pay the special $5-a-share dividend in February.

Earnings also were lowered by the timing of certain events which reduced its profit rate in the first quarter, but will have a positive impact in the remaining three quarters of the year, it said.

Stein Mart had previously announced that total sales for the first quarter rose 7.5 percent to $353.5 million and comparable-store-sales (sales at stores opened for more than one year) rose 4.8 percent.

“Our customers are truly responding well to our merchandise this spring,” CEO Jay Stein said in a conference call with analysts.

Chief Financial Officer Gregory Kleffner said sales were helped by Stein Mart’s fledgling e-commerce business. Online sales doubled and contributed 0.8 percentage points to the comparable-store sales gain in the first quarter, he said.

Stein Mart, which operated 270 stores at the end of the quarter, said it altered its store opening plans for the year as one planned opening in California was moved from the fall to the first quarter next year. That means the company intends to open 10 new stores this year, instead of its previously announced plan for 11, while closing three.

Stein Mart’s stock fell to a two-year low of $10.72 Thursday after the earnings report before closing Thursday at $11.16, down 43 cents on the day.

Latitude 360 reports quarterly loss

Latitude 360 Inc. last week reported a first-quarter operating loss of $3.5 million and a net loss, after debt-related costs, of $9.1 million, or 7 cents a share, according to its quarterly report filed with the Securities and Exchange Commission.

While the Jacksonville-based restaurant and entertainment venue operator continues to lose money, it also continues with expansion plans. Last week, it announced a partnership with Atlanta Falcons wide receiver Julio Jones to develop new Latitude 360 venues in Alabama and Georgia.

Latitude 360 currently operates three venues in Jacksonville, Pittsburgh and Indianapolis, and has said it intends to open venues in several other cities this year.

Landstar appoints new chairman

Landstar System Inc. announced Friday that long-time board member Diana Murphy was appointed non-executive chairman of the board.

Murphy, 58, is a managing director of private equity firm Rocksolid Holdings LLC, according to Landstar’s proxy statement. She previously held management positions in the publishing industry.

Murphy has been a member of Jacksonville-based Landstar’s board of directors since 1998. She also serves on the board of another public company, CTS Corp., and is a vice president and member of the executive committee of the United States Golf Association.

Scribe makes General Employment profitable

The acquisition of Jacksonville-based Scribe Solutions Inc. made General Employment Enterprises Inc. profitable in its second quarter ended March 31, on a pro forma basis.

The staffing company reported a net loss of $45,000 for the quarter, before it acquired Scribe on April 1. However, if Scribe’s profit of $193,000 is added in, General Employment shows pro forma net income of $148,000 for the quarter.

Pro forma revenue, including $955,000 from Scribe, totaled $10.8 million in the quarter, up 2 percent from the previous year.

General Employment’s headquarters still is officially in Naperville, Ill., but Scribe CEO Derek Dewan became chief executive of the staffing services company when the merger was completed.

“The quarterly results show that the company has much improved its financial position and continues to do so,” Dewan said in a news release last week.

Dewan said the company has seen increased revenue in April and May, and is also looking to grow through acquisitions.

“We have identified several select companies that are in our pipeline that will help us to continue our momentum toward moving into higher margin businesses and expand geographically,” he said.

Dick’s Wings parent increases revenue

ARC Group Inc., the franchisor of the Dick’s Wings restaurant chain, reported a big increase in revenue for the first quarter.

Revenue rose by $95,258 to $223,016 in the quarter, according to a report filed with the SEC. That was partly due to increased franchise fees from the opening of a new restaurant, but also do to higher royalties from sales at existing restaurants.

ARC Group reported a net loss of $24,364 for the quarter.

The company currently has 17 Dick’s Wings restaurants operating in North Florida and South Georgia.

Drone Aviation revenue drops

Drone Aviation Holding Corp. reported revenue of just $15,206 for the first quarter, 93 percent lower than the previous year, according to an SEC filing.

The Jacksonville-based company, which develops specialized lighter-than-air aerostats and tethered drones, said in its report that revenue came mainly from small aerostat products and accessories while it focused on development of a new product line.

The new line launched in March, called WATT, consists of “commercial-grade electric tethered drones designed to provide secure and reliable aerial monitoring for extended durations while being tethered to the ground via a high strength armored tether,” the company said in a news release.

Drone Aviation reported a net loss of $934,151, or 2 cents a share, for the first quarter.

NAC Global expects losses all year

NAC Global Technologies Inc. reported a net loss of $144,732, or 1 cent a share, on revenue of $123,081, according to its first-quarter report filed with the SEC.

“We do not anticipate generating profits for at least the next twelve months, as we plan to increase engineering and manufacturing investments. We believe profitability is achievable within 18 to 24 months without hindering our growth curve potential,” the report said.

NAC makes harmonic gearing technology, which is used in the automation, robotics and defense industries. Its corporate office is in Jacksonville, but most of its activities take place in Port Jervis, N.Y.

Shoe Carnival earnings up

Shoe Carnival Inc. last week reported earnings of 52 cents a share for the first quarter ended May 2, up 7 cents over last year.

Net sales for the footwear chain controlled by former Jacksonville Jaguars owner Wayne Weaver rose 7.2 percent to $252.8 million, while comparable-store sales rose 3 percent.

“While the quarter started off very challenging due to adverse weather, with over 400 days of store closures, the consumer responded favorably to our family footwear assortment, which resulted in a comparable store sales increase across all footwear departments and in each of our geographic regions,” CEO Cliff Sifford said in a news release.

New name for RockTenn and MeadWestvaco

After announcing plans to merge in January, RockTenn Co. and MeadWestvaco Corp. last week announced that the merged company will be known as WestRock Co.

“WestRock draws on the strongest elements from each of our legacy names,” said MeadWestvaco CEO Steve Voorhees, who will be chief executive of the merged company, in a news release.

WestRock will be a paper and packaging solutions company employing about 42,000 people in 300 facilities worldwide.

Its facilities include a RockTenn containerboard mill in Fernandina Beach that is the largest industrial employer in Nassau County, as well as two plants in Jacksonville.

The companies said the deal has already received federal antitrust clearance and is awaiting further regulatory and shareholder approvals, which they expect to get in June.

One interesting nugget in the proxy statement for the merger filed by the companies last week: The CEOs of the two companies had a meeting in Jacksonville in July 2014 during their negotiations. That was just one of a series of meetings in a merger process that started in May 2014 and finally came to fruition in January.

Medtronic increases revenue after merger

In its first quarter after merging with Ireland-based Covidien, Medtronic plc last week reported revenue rose 7 percent to $7.302 billion in the fourth quarter ended April 24, after adjusting for the merger and a negative foreign currency impact.

Medtronic’s Surgical Technologies division, which is headquartered in Jacksonville, grew revenue by an adjusted 9 percent to $461 million.

The company is scheduled to report final results for the quarter next week.

Black Knight’s IPO a success

Black Knight Financial Services Inc.’s initial public offering last week was a big success for Fidelity National Financial Inc., which retains majority control of the mortgage technology and analytics company after the IPO.

First of all, the IPO was priced at $24.50 a share, near the high range of Black Knight’s hoped-for price range of $22 to $25. Secondly, there was enough demand that it increased the planned sale from 17 million shares to 18 million.

Finally, shares jumped higher in the first day of trading Wednesday on the New York Stock Exchange. The stock opened at $26.25 and closed Wednesday at $27.11, up $2.61 on the day.

Jacksonville-based Black Knight trades under the ticker symbol “BKFS.”

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