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Basch Report
Jax Daily Record Thursday, Nov. 8, 201805:20 AM EST

The Basch Report: Jabbour stressing urgency at Black Knight

Mortgage processing company’s third-quarter earnings top analysts’ forecasts.
by: Mark Basch Contributing Writer

Black Knight Inc. dominates its main business, providing processing services for mortgage lenders.

However, new CEO Anthony Jabbour doesn’t want to be complacent. Since his appointment in April, he has stressed the need for Jacksonville-based Black Knight to be “urgent,” a theme he repeated last week in a talk to budding entrepreneurs at a conference presented by Jacksonville venture capital firm PS27.

“The world is moving so quickly,” Jabbour said.

“If it worked in the past, that doesn’t mean it’s going to work in the future.”

It’s been working for a long time at Black Knight, which traces its roots to a Jacksonville company formed more than 50 years ago. It controls 62 percent of the processing market for first mortgage loans in the U.S.

“We’re not going to rest on our laurels,” Jabbour said after his talk last Thursday.

He said Black Knight needs to remain urgent to keep ahead of advances in technology.

“Our clients are always looking for ways to be more effective,” he said.

“We’ve got a great opportunity to transform the industry because of our market share.”

Jabbour’s talk came two days after Black Knight reported third-quarter adjusted earnings of 48 cents a share, 12 cents higher than last year and above analysts’ forecasts which ranged from 44 cents to 47 cents, according to Yahoo Finance.

In the company’s conference call with analysts, Jabbour said it was a “solid, straightforward quarter for us and is a testament to the strength and predictability of our business model.”

Black Knight’s stock jumped $4.35 to $47.78 on Oct. 30 after the earnings report.

FIS earnings rise 4 percent in 3Q

Jabbour joined Black Knight from bank technology firm Fidelity National Information Services Inc., or FIS. Black Knight’s business once was part of FIS before it was spun off as a separate company.

FIS last week reported adjusted third-quarter earnings of $1.33 a share, 16 cents higher than last year.

The company’s total revenue decreased 0.6 percent to $2.08 billion after divestitures of some businesses but its organic revenue grew 4 percent in the quarter.

“Our sales pipeline and revenue backlog are strong and continue to grow. These are positive signals that our clients are continuing to invest for the future,” CEO Gary Norcross said in FIS’ conference call with analysts.

Rayonier impacted by China trade war

Of all companies headquartered in Northeast Florida, Rayonier Inc. may be the one most impacted by a U.S. trade war with China.

The real estate development and timber company owns or operates large timberlands in the Northwest U.S. and New Zealand that ship logs to China, as well as timber operations in the Southeast U.S.

“We’re in the midst of some challenging and uncertain market conditions,” CEO David Nunes said in Rayonier’s quarterly conference call, according to a transcript posted by the company.

“Rising interest rates and declining housing affordability have impeded the pace of the housing recovery. In addition, tariffs on log exports into China have reduced market optionality, and labor availability continues to impact our business in a variety of ways,” he said.

Rayonier said lower prices, because of the China trade war, impacted third-quarter earnings.

“Notwithstanding these headwinds, we believe that Rayonier is very well positioned based on the strength of our balance sheet and the construction of our portfolio, which is concentrated in high-quality markets,” Nunes said.

Rayonier reported third-quarter earnings of 18 cents a share, a penny lower than the previous year but well above analysts’ forecasts which ranged from 5 cents to 7 cents, according to Yahoo.

However, the earnings included 10 cents in gains from a large timberland sale in New Zealand.

Rayonier is headquartered in Wildlight, the new community the company is developing in Nassau County.

Advanced Disposal earnings inch up

Advanced Disposal Services Inc. last week reported adjusted third-quarter earnings of 17 cents a share, one cent higher than last year.

Revenue for the Ponte Vedra-based waste services company rose 4.2 percent to $400.6 million.

In Advanced Disposal’s conference call, CEO Richard Burke said the growing economy is creating challenges for the company and the industry.

“Like others in our industry, we’re experiencing labor cost pressures, both from our drivers and mechanics as well as outside subcontracting costs. Hiring and retaining the best possible talent is always important to success, and we believe that it is even more critical today in an environment with unemployment below 4 percent,” Burke said, according to a transcript of the call posted by the company.

“This simple truth is there are more driver and mechanic job openings available than there are qualified candidates. So, if you’re not investing in your people, you’re not going to retain your best talent,” he said.

Advanced Disposal’s labor costs rose 4.7 percent to $84 million in the third quarter.

St. Joe looks to accelerate Panhandle projects

The St. Joe Co. last week reported third-quarter earnings of 9 cents a share, a penny higher than last year.

The real estate development company formerly based in Jacksonville now is headquartered in WaterSound in the Florida Panhandle, an area hit hard last month by Hurricane Michael.

“With Hurricane Michael, the world knows much more about Northwest Florida,” CEO Jorge Gonzalez said in St. Joe’s earnings release.

“Joe was fortunate that most of our assets received minimal to no damage. Except for our marinas, we were back, fully open for business, after a couple of days. However, many were not as fortunate, he said.

“Hurricane Michael has forced a reprioritization and acceleration of projects for homes, apartment rentals, hotels, offices, retail, and manufacturing spaces - especially in Bay County and Gulf County. Northwest Florida is our home and we have the people, capital and first-hand knowledge of local areas to immediately start accelerating the implementation of our pipeline.”

McKesson CEO Hammergren to retire in March

McKesson Corp. last week announced Chairman and CEO John Hammergren will retire March 31.

Hammergren’s tenure as CEO, which began in 2001, included a $2.1 billion acquisition of Jacksonville-based medical supply distributor PSS World Medical Inc. in 2013.

McKesson, a San Francisco-based distributor of health care products and provider of health care technology, said Hammergren quadrupled the company’s annual revenue in the past 17 years to $208 billion. The company ranks sixth on Fortune magazine’s list of largest U.S. corporations.

Brian Tyler, president and chief operating officer, will succeed Hammergren as CEO. Tyler, 51, has been at McKesson for 21 years.

Political ads help Graham stations

As expected, television stations operated by Graham Holdings Co. benefited from political advertising in the third quarter. Graham’s group of seven stations includes Jacksonville independent station WJXT TV-4 and CW network affiliate WCWJ TV-17.

The company’s broadcast division revenue jumped 28 percent to $130 million in the third quarter and operating income for its broadcasting group rose 66 percent to $55.5 million.

Kraft Heinz drops on earnings miss

Kraft Heinz Co. dropped to a record low Friday after the maker of consumer packaged foods reported lower-than-expected third-quarter earnings.

Adjusted earnings of 78 cents a share were 5 cents lower than last year and 3 cents below the consensus forecast of analysts, according to Zacks Investment Research.

That sent its stock down as much as $5.79 to $50.41 Friday, its lowest level since the company was formed by the 2015 merger of Kraft Foods Group Inc. and H.J. Heinz Co.

Kraft’s wide range of products includes Maxwell House coffee roasted in Downtown Jacksonville.

The company did not report any figures for coffee sales in the quarter.

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