Web.com Group Inc. Thursday reported higher-than-expected earnings for the second quarter, its first full quarter since acquiring digital marketing company Yodle in March.
The Jacksonville-based company’s adjusted second-quarter earnings of 62 cents a share were higher than its own forecast of 57 cents to 61 cents, and also higher than second-quarter 2015 earnings of 60 cents.
In a conference call with analysts, CEO David Brown said the results confirm the “strong strategic fit” of Yodle and explained how the deal has transformed Web.com, which has provided website development services for small and medium-sized businesses.
“Value-added digital marketing solutions continue to contribute to our top-line growth and now makes up a majority of our business. It is also the fastest-growing component of our revenue,” he said.
Web.com in June announced a realignment of its top management, which included putting three former Yodle executives in high-level positions.
Brown said in Thursday’s conference call the realignment was “focused on providing clear leadership in the areas of the business where we expect to drive faster growth over time as well as the parts of the business which we previously discussed are more mature and are under competitive pressure.”
He said the company is ahead of schedule with implementing cost cuts from the deal. He also said Web.com is expecting lower revenue growth than it originally thought but profit margins should be higher, so the company’s earnings forecasts remain on track.
“We believe that this short-term moderation in our growth outlook, while we take steps to improve efficiency and customer retention, is the right long-term decision and will enhance our growth profile and profitability going forward,” he said.
“Everything we have seen in the months since closing the Yodle acquisition supports our thesis for this transaction.”
Rayonier AM beats forecasts again
For the second quarter in a row, Rayonier Advanced Materials Inc. reported earnings that were significantly higher than analysts’ forecasts as the company tries to recover from two years of disappointing results.
The Jacksonville-based producer of cellulose specialties products reported earnings of 46 cents a share, well above analysts’ forecasts which ranged from 20 cents to 29 cents, according to Thomson Financial.
In Rayonier AM’s conference call with analysts, CEO Paul Boynton said the company continues to find ways to reduce costs and innovate its operations to contend with reduced demand for its products.
“We’ve made substantial progress on our transformation initiative which continues to deliver lower costs, higher productivity and enhanced profitability,” Boynton said.
Rayonier AM’s stock rose by 94 cents to $14.42 Tuesday after the earnings report, but D.A. Davidson analyst Steven Chercover saw enough in the results to raise his price target on the stock from $17.50 to $25 as he maintained a “buy” rating.
“Year to date, Rayonier AM has delivered $23 million of its $25-$40 million in targeted cost savings, and we believe it will approach the upper end of the range by year end,” Chercover said in a research note.
“The second quarter was the second ‘beat and raise’ quarter in succession, and we believe management is trying to keep a lid on expectations,” he said.
Rayonier AM’s stock still has a long way to go to catch up with its July 2014 peak of $44.18, shortly after it split up with Rayonier Inc.
“Rayonier AM has been a stand-alone company for just over two years now, and the ride has not been fun. It appears however, that risk is subsiding, as cellulose specialty markets are closer to balanced (at a substantial cost to Rayonier AM), financial leverage is reduced, and cost savings fall to the bottom line,” Chercover said.
However, RBC Capital Markets analyst Paul Quinn maintained an “underperform” rating on the stock after last week’s report despite seeing “commendable progress with its cost-cutting initiatives.”
Quinn said in his report the company is generating strong free cash flow but concerns about demand trends for its products “suggest that significant headwinds may lie on the horizon.”
Quinn raised his price target on the stock, but only from $9 to $10.
Rayonier Inc. also beats forecasts
Rayonier Inc. also beat analysts’ expectations with adjusted earnings of 7 cents a share, 4 cents higher than the average forecast, according to Thomson.
“While we continue to experience a slower than anticipated recovery in U.S. saw log prices, the high quality and diversity of our portfolio allowed us to achieve a solid quarter that puts us well on pace to achieve our prior full year adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) guidance,” CEO David Nunes said in the timber and real estate company’s conference call.
During the quarter, Rayonier recorded a large gain from a timberland sale that increased final net income to 89 cents a share.
Nunes said the company repositioned its Northwest U.S. timber holdings with sales and acquisitions, and also took steps to streamline operations.
“We’re pleased with the progress we’ve made to date in improving on-the-ground operational execution across our business units, and believe we’re starting to see some of this progress in our strong year-to-date performance,” he said.
Rayonier is currently headquartered in Downtown Jacksonville but will move next year to a new office under construction in the company’s Wildlight development in Nassau County.
Regency Centers earnings rise
Regency Centers Corp. last week reported core funds from operations of 82 cents a share for the second quarter, up from 75 cents last year and a penny higher than the average analysts’ forecast, according to Thomson.
Funds from operations are basically earnings excluding depreciation and amortization expenses and are considered the key earnings metric for real estate investment trusts like Regency.
The Jacksonville-based neighborhood shopping center developer’s portfolio of 311 properties across the country was 95.8 percent leased at midyear.
“The underlying fundamentals of Regency’s high-quality portfolio remain strong,” CEO Hap Stein said in the company’s conference call.
Last month, Regency sold $400 million in new stock, using some of the proceeds to pay off debt.
“Having a fortress balance sheet is integral to our strategy to provide the financial flexibility to efficiently capitalize on compelling investment opportunities and profitably weather future storms that may arise,” Stein said.
Regency’s stock fell by 90 cents to $83.19 Wednesday after the earnings report. Regency’s stock has been trading near its highest level in a decade recently and some analysts don’t see it going much higher.
“Regency continues to deliver solid and consistent results; however, we find the shares fairly valued, which explains our Neutral rating,” SunTrust Robinson Humphrey analyst Ki Bin Kim said in a research note.
Environmental costs hit FRP Holdings
FRP Holdings Inc. reported lower earnings for its third quarter ended June 30, due to environmental cleanup costs on a development project in Washington, D.C.
Jacksonville-based FRP’s revenue rose 8.8 percent to $9.2 million but after the $2 million environmental remediation expense, net income dropped 62 percent to $774,000, or 8 cents a share.
“With the exception of taking the hit for the environmental liability in Washington, we are very pleased with our third quarter performance,” CEO Tom Baker said in FRP’s conference call last week.
FRP is mainly a commercial real estate development company but for the second quarter in a row, its mining royalty division produced its strongest results. FRP was created out of operations that were once part of construction materials company Florida Rock Industries Inc. and it continues to own properties that are leased out and mined for construction materials.
President David deVilliers said revenue in the mining segment rose 18.7 percent and operating income jumped 39.6 percent.
“We believe that volume increases from our locations will be the norm for the foreseeable future as construction activity in Florida and Georgia continues to improve,” deVilliers said.
Publix earnings fall
Publix Super Markets Inc. last week said second-quarter earnings fell 0.9 percent to $482.7 million, or 62 cents a share.
Total sales for the Lakeland-based supermarket chain rose 2.1 percent to $8.1 billion and comparable-store sales rose 1.1 percent.
“Our results were impacted by weakening tourism in some market areas and the timing of Easter,” CEO Todd Jones said in a news release.
Publix said its stock price fell from $43.95 on May 1 to $41.90 as of Aug. 1.
Publix’s stock is not publicly-traded and is made available for sale only to employees, with its value determined by appraisals five times a year.
St. Joe records profit
The St. Joe Co. last week reported second-quarter earnings of $1.8 million, or 2 cents a share, reversing a loss in the second quarter of 2015.
The real estate development company’s revenue fell 22 percent to $29.5 million, but it cut operating expenses by 26 percent. The expense cuts were primarily employee-related costs, St. Joe said in a news release.
Drone Aviation sales jump
Drone Aviation Holding Corp. reported second-quarter revenue of $484,014, a big increase from the its $67,602 in revenue in the second quarter of 2015.
However, the fledgling company, which makes tethered drones and lighter-than-air aerostats, recorded a net loss of $2.1 million, or 33 cents a share in the quarter.
In a news release last week, Jacksonville-based Drone Aviation said it increased sales in the first half of this year mainly because of aerostat products sold to the U.S. military and other government customers.