After consistently disappointing investors throughout the second half of 2014, Web.com Group Inc. started 2015 with earnings that exceeded expectations.
Jacksonville-based Web.com reported adjusted first-quarter earnings of 56 cents a share, which was lower than 2014 first-quarter earnings of 61 cents but higher than the company’s forecast of 53 cents to 55 cents.
Adjusted revenue of $137.7 million also exceeded the company’s forecast of $134.5 million to $136.5 million.
“As expected, during the first quarter we successfully stabilized our revenue and returned to growth as the initiatives we have outlined on recent calls are positively impacting our results,” CEO David Brown said in a conference call with analysts.
“I am confident the improvements we have made and will continue to make position us well to generate sequential revenue growth each quarter in 2015 and to deliver mid-single-digit year-over-year revenue growth in the first quarter of 2016,” he said.
Web.com, which provides website development services for businesses, exceeded forecasts in part because of “do-it-yourself” products that sold better than the company expected, Brown said.
The company also worked on reducing customer “churn,” or customers leaving the company, he said. The churn rate was 1 percent in the first quarter.
Web.com’s total net subscribers grew by about 19,000 during the quarter to 3.295 million.
Web.com’s stock dropped sharply in the second half of 2014 and had been trading at about half its spring 2014 high of $36.50 recently.
However, the stock jumped Friday morning after the late Thursday earnings report. The stock reached as high as $22.80 Friday, its highest level in nine months, and closed at $21.06, up $2.69 on the day.
Rayonier AM earnings below forecasts again
Another Jacksonville-based company that disappointed investors in the second half of 2014 reported first-quarter earnings that were again below forecasts.
Rayonier Advanced Materials Inc. reported earnings of 25 cents a share, 3 cents lower than the average forecast of analysts surveyed by Thomson Financial.
Rayonier AM, a performance fibers company that was spun off from Rayonier Inc. in mid-2014, has been hurt since the spinoff by low prices in the cellulose specialties market.
The company said first-quarter revenue fell by $22 million to $221 million, with the decline attributed to lower cellulose specialties sales prices and volume.
“Although cellulose specialties volumes were lower in the first quarter as expected, we are off to a good start in 2015 driven by our cost reduction and continuous improvement initiatives,” CEO Paul Boynton said in a news release.
Based on its performance so far, the company increased its forecast for earnings before interest, taxes, depreciation and amortization for all of 2015 from $210 million to $225 million.
Rayonier AM’s stock traded above $40 in July 2014, shortly after the spinoff, but it fell sharply after its disappointing earnings performance in the last half of the year.
After reporting its earnings before the market opened Friday, the stock opened $1.47 higher at $18.18. It closed Friday at $19.12.
EverBank earnings increase
EverBank Financial Corp. reported higher-than-expected first-quarter earnings last week and announced a deal that it says will improve earnings in future quarters.
The Jacksonville-based banking company reported adjusted earnings of 31 cents a share, 9 cents higher than the first quarter of 2014 and 2 cents higher than the average analysts’ forecast, according to Thomson.
EverBank also announced the sale of its remaining “non-core” mortgage servicing rights, following a sale of some of that business last year to Green Tree Servicing LLC. EverBank is selling servicing rights to another $5.7 billion in mortgages to Green Tree, and also selling servicing rights to $6.7 billion in loans to Nationstar Mortgage LLC.
“We believe these strategic actions will be accretive to earnings, meaningfully enhance our capital position, continue to improve our operational efficiency and reduce regulatory cost and risk,” CEO Rob Clements said in the company’s conference call with analysts Wednesday.
Clements also said the deal completes a three-year process of realigning the bank’s business.
“We believe the non-core portfolio dispositions we announced today represent the culmination of this plan and position EverBank for continued strong financial performance over the long term,” he said.
Clements said the company’s realignment has simplified operations with “our goal to improve efficiency and strategically align our franchise around our core consumer and commercial clients.”
Wells Fargo Securities analyst Jared Shaw said in a research note that the first-quarter results show EverBank is already succeeding in growing its commercial banking business.
“Pace of commercial (loan) originations continues to be very impressive, and management is now having greater success in attracting commercial deposits, which we view as the next waypoint along the strategic road map,” said Shaw, who maintains an “outperform” rating on EverBank’s stock.
Raymond James analyst Michael Rose maintained his “strong buy” rating after the earnings report.
“All in, we continue to view risk-reward positively and see both value and growth investors gravitating towards EverBank shares if it executes upon growth/profitability targets, which should drive increased investor attention,” Rose said in his report.
Atlantic Coast Financial earnings rise
Atlantic Coast Financial Corp. last week reported first-quarter earnings rose 92 percent to $396,000, or 3 cents a share.
The Jacksonville-based parent company of Atlantic Coast Bank also said that with the U.S. Office of the Comptroller of the Currency lifting its consent order against the bank in March, the company is poised to expand into new lines of business.
“Overall, we believe Atlantic Coast is on track with its turnaround as evidenced by continued asset mix shifting, loan growth, stable credit quality, and hiring of additional staff,” FBR Capital Markets analyst Scott Valentin said in a research note.
Valentin, the only analyst covering Atlantic Coast Financial, reiterated his “outperform” rating on the company’s stock.
Deutsche Bank plans to shrink globally
Deutsche Bank, the German banking company that has been expanding its presence in Jacksonville, announced a major strategic shift last week that will shrink jobs in its global operations, but it is not revealing specific details yet.
In a news release, Deutsche Bank said it intends to “refocus its global footprint” between now and 2020, “reducing the number of countries or local presences by 10-15 percent and actively investing in markets and urban centers which are most relevant to international and multinational clients, play to the bank’s existing strengths, and offer the most attractive growth prospects for the bank’s core businesses.”
The bank said it will provide further details within 90 days and, according to a Bloomberg News story, even senior bankers with the company “were left in the dark over possible job cuts following a call with managing directors on Monday afternoon.”
Deutsche Bank already has at least 1,400 employees in Jacksonville and has said it planned to have 1,600 to 1,800 by 2016.
Strong dollar cuts FIS earnings
Fidelity National Information Services Inc., or FIS, reported lower first-quarter earnings last week as the strong dollar hurt its profits from international operations.
FIS, which provides technology services for banks worldwide, said its adjusted earnings for the quarter were 65 cents a share, down from 68 cents in the first quarter of 2014.
Three weeks earlier, FIS had downgraded its forecast for the quarter from a range of 67 cents to 72 cents a share to a range of 64 cents to 66 cents, largely because of currency impacts. The strong U.S. dollar is reducing the value of foreign sales for a lot of U.S. companies.
FIS said its revenue rose 2 percent to $1.55 billion but on a constant currency basis, revenue would have risen by 5 percent.
“Q1 was clearly a more challenging quarter than expected for FIS. We continued to grow revenue and return cash to shareholders, demonstrating the consistency of our business model, but we did not achieve the results we had expected,” CEO Gary Norcross said in the company’s conference call.
FIS is projecting second-quarter earnings of 67 cents to 73 cents a share, as the currency impact and some project delays continue to impact earnings. However, the company forecasts earnings to pick up in the second half of the year.
“We are confident that our business model, proven execution and deep client relationships will continue to enable us to drive profitable growth, maintain the strength of our balance sheet and return value to our shareholders,” Norcross said.
Robert W. Baird analyst David Koning, who has a “neutral” rating on FIS, said in a research note that he expects the stock to “continue to lag a bit” after the earnings report.
“First-quarter results were ok (no surprise after preannouncement a few weeks ago), but second-quarter EPS guidance was well below consensus, and now full-year guidance requires a big second-half EPS ramp,” Koning said.
Dollar hurts Coach sales
Coach Inc.’s quarterly earnings were also affected by the strong dollar.
The handbag and accessories company, which has its North American distribution center in Jacksonville, said total sales for its third quarter ended March 28 dropped 15 percent to $929 million. However, sales would have increased by 3 percent if not for the currency impact.
Coach still reported weakness in its North American sales, which have been a continuing problem. Total North American sales dropped 24 percent to $493 million.
Coach reported adjusted net income for the quarter of 36 cents a share, down from 68 cents the previous year.
Interline operating earnings rise
Interline Brands Inc. on Friday reported operating earnings in the first quarter rose 44 percent to $13.1 million.
After interest payments and other debt expense, the privately owned company had a net loss of $3.8 million for the quarter.
Interline, which distributes maintenance, repair and operations products, said sales in the quarter rose 4.9 percent to $411.7 million.
Latitude 360 increases sales
Latitude 360 Inc. said in a news release last week that preliminary first-quarter results show that gross sales rose 19 percent in the first quarter to $6.4 million. However, the company did not give any data on its profit or loss.
The Jacksonville-based company, which operates entertainment and dining venues, reported a $23 million loss from operations in 2014.
Latitude 360 operates venues in Jacksonville, Pittsburgh and Indianapolis and has plans to open three more this year.
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