The St. Joe Co.’s largest shareholder orchestrated a complete overhaul of the company’s management team last year, saying he was unhappy with the pace of development at St. Joe’s real estate properties.
The new management team, which has been largely silent over the past year, finally had a chance to speak up about its plans a couple of weeks ago at St. Joe’s annual shareholders meeting. But a lot of the new management’s strategy sounded like the old management’s strategy.
At the meeting at the WaterColor Inn in the Florida Panhandle, which was broadcast over the Internet, new CEO Park Brady talked about the opportunities for development at property St. Joe owns near the new airport in Panama City.
Brady said the property is “a jewel” but said “people are reticent because of this economy to pull a trigger” on committing to projects there.
“The question is how soon will that happen for Joe? In everything that we are doing, we are taking a conservative approach and saying it’s going to be a little longer than what we thought before,” he said.
That sounds like what the old management said about the airport property, which it also considered a jewel. Shortly before the airport opened two years ago, a St. Joe official told me the company was looking at the property as a 50-to-75-year project. So nobody expected rapid development.
Brady also talked about the development potential of St. Joe’s property in the Panhandle that is attractive because of its access to the Gulf of Mexico beaches.
He sees that as a lure for the “50 million people who are going to be retiring over the next 10 years” who want to move to Florida.
“We have a real opportunity going forward to explore that market,” he said.
That’s the kind of strategy we used to hear about from Peter Rummell, who ran St. Joe from 1997 to 2008 and began the company’s transformation from an industrial conglomerate to a real estate developer.
Brady did indicate that St. Joe wants to put more emphasis on the primary home market, rather than the second-home market. “We have a real opportunity going forward with the primary home business of making it happen for Joe,” he said.
The company seems to be making a renewed push to build out the RiverTown community in St. Johns County, which is its only project in Northeast Florida. Brady did not mention RiverTown during the meeting.
Brady also talked about a change in direction for property the company owns in Port St. Joe, which had been considered for residential development. Now the company wants to take advantage of commercial development opportunities surrounding the port there.
The bottom line for the new St. Joe is that the company is still not generating any profits as it waits for the real estate markets to turn around. That’s just like the old St. Joe, which moved its headquarters from Jacksonville to the Panhandle in 2010 to be closer to its land holdings.
“We’ve got a great team in place. We are ready to take advantage of what comes our way. If the economy turns and the wind’s at our back, that would be great. We are planning for that not happening. But we are also able to react to it if it does happen,” Brady said.
No first-quarter surprises at EverBank
EverBank Financial Corp. last week had its first earnings report and conference call after its initial public offering, which contained no surprises.
CEO Rob Clements said during the call that the results were pretty much outlined in EverBank’s Securities and Exchange Commission filings before the IPO.
EverBank reported adjusted first-quarter earnings of $27.3 million, up from $24.5 million in the first quarter of 2011. Total assets grew from $13 billion at the end of the year to $13.8 billion at the end of the first quarter.
“Our results highlight our ability to deliver strong asset growth and earnings while continuing to make investments in our business infrastructure to support future growth,” Clements said.
“We believe the results we delivered in the first quarter are consistent with performance standards we’ve established for our company and demonstrate our ability to execute on our strategy,” he said.
The expected results did not have a big impact on EverBank’s stock price. After going public at $10 a share, EverBank’s stock has traded mainly in a range of $10.50 to $11 in its first three weeks of trading. The stock rose 21 cents to $11.02 Thursday after the earnings report.
Vulcan proxy fight off for now
Vulcan Materials Co.’s annual shareholders meeting is scheduled for Friday, but it looks like the proxy fight with Martin Marietta Materials Inc. is off for now.
Martin Marietta, which launched a hostile $4.8 billion bid to buy Vulcan in December, also filed a proxy statement seeking to elect four of its own representatives to Vulcan’s 10-member board of directors at the annual meeting.
Earlier this month, a Delaware judge issued an order enjoining Martin Marietta from pursuing its bid for Vulcan for four months. As part of that order, Martin Marietta had to withdraw its nominees for election to the board.
Martin Marietta is appealing the ruling and the Delaware Supreme Court is scheduled to hear the appeal Thursday, according to Reuters news service. If the high court overturns the lower court ruling, that could wreak havoc on Friday’s meeting. It seems more likely that Martin Marietta will have to back off for now.
S&P has negative outlook on Washington Post
According to Standard & Poor’s Ratings Services, the Washington Post Co.’s newspaper and education divisions aren’t looking too good. At least the company’s broadcast division, which includes WJXT TV-4 in Jacksonville, continues to do well.
S&P last week revised its ratings outlook on Washington Post from “stable” to “negative,” citing trends in its newspaper and Kaplan Inc. education division.
“The outlook revision reflects our concern that operating performance and discretionary cash flow will remain depressed,” S&P credit analyst Hal Diamond said in a news release.
“A difficult regulatory structure is affecting the higher education division, and we expect continued sharp declines in newspaper advertising revenues will outweigh the company’s cost reduction measures,” he said.
Washington Post’s newspaper business had an 8 percent drop in revenue in the first quarter and an operating loss of $22.6 million. Revenue dropped 11 percent in the education division, which had an operating loss of $13.2 million.
Kaplan, which offers on-campus and online college courses and other educational services, used to be a source of financial strength for the company.
It has been affected over the past two years by new federal regulations regarding marketing practices and student loans, S&P said.
S&P also said the company’s “broadcasting and cable businesses offer an element of stability to profitability and cash flow that temper the unfavorable fundamentals of the education and newspaper businesses.”
WJXT and the company’s five other television stations increased revenue by 13 percent in the first quarter to $81.5 million and raised operating income by 58 percent to $31 million, due to improved advertising demand and cost control initiatives.
Overall, Washington Post reported adjusted first-quarter earnings from continuing operations of 83 cents a share, down from $4.33 in the first quarter of 2010.
Medtronic increases earnings
Medtronic Inc. last week reported adjusted earnings of 99 cents a share for the fourth quarter that ended April 27, up 9 cents from last year.
The Minneapolis-based company also reported strong sales growth for its surgical technologies business, which is headquartered in Jacksonville and includes a division in Jacksonville that manufactures surgical instruments for ear, nose and throat physicians.
The entire surgical technologies division grew revenue by 24 percent in the fourth quarter to $371 million and by 21 percent for the full fiscal year to $1.25 billion.
Medtronic’s total revenue for the fiscal year rose 4 percent to $16.2 billion.
Medtronic also projected total revenue growth of 2 percent to 4 percent for fiscal 2013 and predicted earnings will rise by 5 percent to 7 percent to $3.62 to $3.70 a share. The average forecast of analysts surveyed by Thomson Financial had been $3.66.
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