As Henry Gerkens winds down his tenure as CEO of Landstar System Inc., an analyst last week asked what one or two things he has left on his “to-do” list before he retires at the end of the year.
Gerkens, during Landstar’s quarterly conference call, had a tough time coming up with anything he still needs to do.
“I’ve got to tell you, I feel pretty comfortable at this point in time, in fact, very comfortable as far as the team that is in place here and the leadership team that is going to lead this company forward,” he said.
Landstar announced Oct. 1 that President and Chief Financial Officer James Gattoni will succeed Gerkens as CEO.
Gerkens said the Jacksonville-based trucking company is “well set” for the future.
“I’d like to change a few things I’ve done in the past,” he said, drawing laughs. “But other than that, I think we’re well-positioned, and I think the individuals in this room are capable to lead this company into the next horizon.”
Gerkens can’t really lament the past, because Landstar has been one of Jacksonville’s most profitable companies in his decade as CEO.
The company Thursday reported record profits and revenue for the third quarter. Earnings per share increased by 20 cents to 82 cents, and revenue rose 21 percent to $819 million.
“It was truly a remarkable quarter,” Gerkens said.
Landstar projected fourth-quarter earnings of 77 cents to 82 cents a share, compared with 55 cents in the fourth quarter of 2013.
The company also expects to reach its goal of $3 billion in revenue for the full year.
Little change seen at FIS
Another Jacksonville-based company changing CEOs is Fidelity National Information Services Inc., or FIS. Just like Landstar, FIS last week announced an orderly transition in which President Gary Norcross will succeed Frank Martire.
“We believe the CEO transition was largely expected and view Frank’s tenure as highly successful (both at Metavante and FIS), and expect a continuation of success under Gary’s leadership,” Robert W. Baird analyst David Koning said in a research note.
Martire was CEO of Metavante Technologies Inc. and became CEO of FIS after the two banking technology companies merged in 2009.
Koning said Martire, who will become executive chairman of FIS, “has achieved tremendous success during his CEO tenure at both Metavante and FIS.”
Metavante’s stock outperformed the Standard & Poor’s 500 index by more than 50 percent in the two years before it was acquired by FIS, Koning said. Since the merger, FIS has outperformed the S&P 500 by about 35 percent, he said.
Rail mergers still a hot topic
Canadian Pacific Railway Ltd. announced last Monday that its “exploratory conversations” with Jacksonville-based CSX Corp. about a possible merger had ended, but that didn’t actually end the discussion.
In fact, Canadian Pacific CEO Hunter Harrison continued to talk about it Tuesday. When the Canadian railroad announced its quarterly earnings, it not only held a conference call with analysts to discuss the results, it held a second call an hour later to discuss merger possibilities.
“Hunter confirmed that CP met with CSX three to four times recently, but that a formal offer was never extended,” Wolfe Research analyst Scott Group said in a report on Canadian Pacific.
“He believes that M&A in the rail industry would both create huge shareholder value and improve service for shippers, particularly in and around Chicago. However, Hunter said that CSX did not share the same views and was concerned about regulatory approval,” Group said.
Word of the talks between Canadian Pacific and CSX had leaked out the previous week, before CSX reported its quarterly earnings. However, CSX Chief Executive Michael Ward would not discuss the talks, which were initiated by Canadian Pacific.
Ward, and several analysts, did say that they don’t think regulators would be receptive to a merger of major North American railroads. Harrison, however, said a merger could gain regulatory approval “if CP opened up bottlenecks and allowed trackage rights, both of which he is willing to do,” Group said.
However, on Wednesday, another CEO of a major railroad, Norfolk Southern Corp.’s Wick Moorman, said regulators would be “not receptive” to a major merger.
“I will go ahead and say I have a very high regard and respect for the head of the CP, but this is just a place where I have a different opinion. I think that a major railroad merger is not a good idea,” Moorman said during his company’s quarterly conference call.
Although Canadian Pacific has ended talks with CSX, Group expects the speculation to continue.
“Our sense is that CP’s call was intended to drum up support from shareholders, shippers and regulators for a potential deal and we expect news on the M&A front to continue over the next year. We continue to believe a deal with CSX or NSC is possible but less than 50/50,” he said.
Regency-AmREIT merger speculation reheating
Merger speculation could be reheating this week regarding Jacksonville-based Regency Centers Corp. and AmREIT Inc.
The Financial Times reported last week that bids will be due this week to possibly buy Am-
REIT, with several shopping center developers joining Regency as potential suitors.
Houston-based AmREIT has been in play since Regency made an unsolicited offer to buy it in July, after AmREIT officials rebuffed attempts to negotiate a merger. After rejecting the offer, AmREIT said in late July that it would “explore strategic alternatives,” but hasn’t said anything since.
Regency offered $22 a share in July and the Financial Times, citing “people familiar with the matter,” said bids this week are expected to range between $25 and $26 a share. That would represent a 35 percent premium over AmREIT’s stock price before Regency’s original offer was made public, the newspaper said.
It said other potential bidders include another Houston-based shopping center operator, Weingarten Realty Investors, and Boston-based Edens.
AmREIT, with 33 properties, is much smaller than Regency, which operates 328 retail properties across the country. However, AmREIT is attractive because its shopping centers are located in high-growth markets in Texas and Atlanta.
Jacksonville Bancorp cuts eight more jobs
For the second time in five months, Jacksonville Bancorp Inc. cut its staff.
The parent company of The Jacksonville Bank said in a Securities and Exchange Commission filing last week that it eliminated 14 positions, affecting eight employees, or about 10 percent of its workforce.
This followed an announcement in May that the bank cut 16 jobs.
Jacksonville Bancorp said in the filing that the cuts are part of a restructuring plan intended “to better align the company’s and the bank’s processes and procedures with the best industry practices and standards.”
ParkerVision drags down stock index
According to a report in Bloomberg Businessweek, ParkerVision Inc. has been one of the worst performing stocks in the Russell Microcap Index this year
While the overall stock market has been volatile recently, the Russell Microcap Index, consisting of more than 1,600 companies with smaller market capitalization, has been weak for months, losing 15 percent of its value from its peak in March through mid-October, the magazine said.
The drop has been led by technology companies, it said, including three stocks that have dropped by at least 74 percent: ParkerVision, Spherix Inc. and Millennial Media Inc.
Jacksonville-based ParkerVision fell sharply in June after a federal judge overturned a jury’s decision to award ParkerVision $173 million in damages in its patent infringement lawsuit against Qualcomm Inc.
ParkerVision is appealing that decision but its stock, which was trading near $5 at the beginning of this year, has been stuck trading slightly above $1 recently.
Vulcan Materials restructures operations
After naming a new CEO three months ago, Vulcan Materials Co. announced a restructuring of its four operating divisions into seven regional divisions, including a Southeast division consisting of Florida, Georgia and South Carolina.
The Birmingham, Ala.-based company will continue to maintain a regional headquarters office in Jacksonville, where it has 51 employees, Vulcan said.
Vulcan in July named J. Thomas Hill as president and CEO. Hill had previously been senior vice president of the South region, which was headquartered in Jacksonville.
Political ads help Gannett earnings
As annoying as those political ads are, you won’t hear WTLV TV-12 and WJXX TV-25 complaining.
The Jacksonville stations’ parent company, Gannett Co. Inc., last week reported higher third-quarter earnings, helped in part by additional political ad revenue at its group of 46 television stations.
The stations were also helped by an increase in retransmission revenue, which is the fee stations get from cable and satellite television providers.
Gannett’s broadcast division grew revenue, after adjustments for acquisitions, by 19 percent to $416.5 million in the quarter. The company’s adjusted earnings in the quarter grew by 16 cents a share to 59 cents.
Gannett in August announced a plan to split into two publicly traded companies, one consisting of its broadcasting and digital businesses and the other holding its publishing businesses.
Northrop Grumman raises forecast
For the second straight quarter, Northrop Grumman Corp. raised its earnings forecasts for the full year as it reported its quarterly results.
The defense and aerospace company, which is expanding its St. Augustine facility, last week reported third-quarter earnings of $2.26 a share, up from $2.14 the previous year.
For the full year, Northrop Grumman raised its earnings forecast to $9.40 to $9.50 a share, after it had increased the forecast to a range of $9.15 to $9.35 at the end of the second quarter.
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