As CSX Corp. made several top-level management changes last week, its board of directors asked CEO Michael Ward to stay in place for “a few more years,” Executive Vice President Fredrik Eliasson said at an investor conference.
Eliasson was speaking at a previously scheduled conference Wednesday morning, just 16 hours after CSX President Oscar Munoz left the company to become CEO of United Continental Holdings Inc.
Munoz had been considered by many to be Ward’s heir apparent as CSX chief executive.
Munoz’s departure prompted a reconstruction of the company’s executive suite, including elevating Eliasson from chief financial officer to chief sales and marketing officer, replacing Munoz in that position.
“Obviously this was a surprise,” Eliasson said at the conference in Boston held by Cowen and Co., which was broadcast over the Internet. However, he said CSX’s board has a “robust” succession-planning process that sprang into action after Munoz left.
“What we did here is essentially accelerate some of the moves that I understand the board had planned to do over the next few years anyway,” Eliasson said.
“Within that context they asked Michael to stay on for a few more years,” he said.
Another move was the promotion of Executive Vice President Clarence Gooden to president to succeed Munoz. But Gooden is only a year younger than the 64-year-old Ward, so he seems less likely to be his successor. Munoz is eight years younger than Ward.
CSX also promoted Executive Vice President Cindy Sanborn to chief operating officer, filling another role that had been held by Munoz.
Sanborn and Eliasson are both executives who could be in line to eventually succeed Ward as CEO of the Jacksonville-based railroad company.
Despite all the management shifts, Eliasson said nothing is really changing in the operation of CSX.
“This is the same leadership team, a little bit elevated perhaps for myself and some other folks,” he said.
“We’re pretty excited about where we’re heading and we wish Oscar nothing but the best in his new opportunity,” he said.
CSX earnings outlook cautious
In addition to discussing the management changes, Eliasson also talked about CSX’s recent financial results and expressed caution on the outlook.
He said the volume of freight transported on the railroad has been “probably slightly below what we expected going into the quarter,” including a continued drop in the company’s biggest business segment, coal shipments.
“We still feel we have a good shot at attaining our original guidance which was to be flat earnings per share year over year in the third quarter,” he said. “But it probably got a little more challenging because of this volume picture.”
Eliasson slightly downgraded CSX’s earnings projection for the full year. The company had been forecasting mid- to high single-digit percentage growth in earnings per share, but now it is projecting just mid-single digit growth.
“While we clearly have more work to do, we are excited about our future and we’re confident that we’ll be able to drive superior shareholder value,” he said.
Latitude 360 CEO on leave
Latitude 360 Inc. said in a Securities and Exchange Commission filing last week that CEO Brent Brown is taking a medical leave of absence to recover from injuries from an automobile accident.
The filing gave no details of his injuries but said Brown is expected to be on leave for four to six weeks.
The Jacksonville-based operator of dining and entertainment venues said Brown’s duties will be assumed by the chief financial officer, president and treasurer of the company during his absence.
The announcement came just a week after Brown told the Daily Record that he is not deterred by the losses reported by Latitude 360 since it went public last year. He said the losses are to be expected for a startup company and he is optimistic about the company’s growth potential.
Fidelity promotes executives
Jacksonville-based Fidelity National Financial Inc. last week announced two high-level promotions, as Mike Nolan and Roger Jewkes were appointed as co-chief operating officers.
Fidelity said Nolan will continue to serve as president of Eastern operations for the company’s main subsidiary, Fidelity National Title Group, and Jewkes will continue as president of Western operations.
Both executives have been with the title insurance company for more than 30 years.
J. Alexander’s spinoff due next week
Fidelity also said in an SEC filing last week that it plans to complete the spinoff of restaurant subsidiary J. Alexander’s Holdings Inc. next week.
Fidelity owns 87.44 percent of the restaurant company, which operates the J. Alexander’s, Redlands Grill and Stoney River Steakhouse and Grill chains.
Those shares will be distributed to Fidelity stockholders, who will receive 0.17229 shares of J. Alexander’s for every Fidelity share they own as of Sept. 22.
J. Alexander’s shares will be traded on the New York Stock Exchange under the ticker symbol “JAX.” The shares are expected to begin trading Friday on a “when-issued” basis, before the shares are distributed.
J. Alexander’s operates 41 restaurants in 14 states and reported revenue of $109.3 million in the first half of this year.
Fidelity later this year expects to spin off its shares of another restaurant company, American Blue Ribbon Holdings.
Fidelity owns a 55 percent stake in American Blue Ribbon, which owns the O’Charley’s, Village Inn, Baker’s Square, Max & Erma’s and Ninety Nine restaurant chains.
SEC charges former General Employment officials
The SEC filed charges last week against three former officials of General Employment Enterprises Inc. and the company’s former accounting firm over the company’s fiscal 2009 and 2010 audits.
General Employment issued a news release saying the company has not received any notice from the SEC about these charges and that the executives involved are long gone from the company.
Jacksonville executive Derek Dewan became CEO of the Illinois-based staffing company in April.
The SEC said it filed fraud charges against former General Employment Chairman Stephen Pence, who resigned from that position in 2010.
The agency also filed charges against two former General Employment CEOs: Ronald Heineman, who left in 2009, and his successor, Salvatore Zizza, who left in 2012.
The SEC also brought charges against accounting firm BDO USA. General Employment said it dismissed BDO as its auditor in 2012.
The SEC said the two former CEOs agreed to pay fines without admitting or denying guilt, and BDO also agreed to fines after admitting wrongdoing.
The agency brought charges against Pence in a federal court, alleging that he “misled auditors and investors while acting as a front man for a convicted felon who was actively scheming to misuse company funds,” the SEC said in a news release.
Analyst upgrades Rayonier AM
After the company’s stock collapsed again last month on news of a contract dispute with its biggest customer, RBC Capital Markets analyst Paul Quinn upgraded Rayonier Advanced Materials Inc. from “sector perform” to “outperform.”
Rayonier AM’s stock has been falling for more than a year amid disappointing earnings reports after the performance fibers business was spun off from Rayonier Inc.
Jacksonville-based Rayonier AM traded in the $40s in July 2014 after the spinoff but has been trading below $7 recently.
The latest drop in the stock last month came after Rayonier AM revealed it was going to court to resolve a dispute with Eastman Chemical Co., which accounted for 31 percent of its 2014 revenue. The dispute involves the contract that covers sales of cellulose specialties products to Eastman.
“Given the recent collapse in Rayonier AM’s share price, we now see limited downside to Rayonier AM’s current share price and would not be surprised by a favorable stock bounce on the near-term outcome of the contract litigation with Eastman,” Quinn said in his research note.
Quinn has a $10 price target for the stock.
International Baler sales drop
International Baler Corp. last week reported sales for the third quarter ended July 31 dropped 39.7 percent to $3.65 million.
The Jacksonville-based manufacturer of baling equipment used for waste disposal and recycling said in its quarterly SEC filing that sales dropped because it did not ship any synthetic rubber balers in the third quarter this year.
With the drop in sales, International Baler produced minimal net income of $1,647 in the quarter, compared with earnings of $541,366 in the third quarter of fiscal 2014.
Calavo formally announced Clay County center
As it announced quarterly earnings last week, Calavo Growers Inc. formally announced plans for its 208,000-square-foot distribution center in Green Cove Springs.
The distribution center that is expected to employ 262 people was announced last month by the Clay County Economic Development Corp.
Calavo expects to open its facility in a former Food Lion distribution center in December.
“This will be the first fully shared operation between all the major divisions of Calavo — Fresh, Calavo Foods and RFG — and will provide us the base for greater business penetration into Southeastern U.S. markets,” CEO Lee Cole said in a news release.
“Through this facility, we will be able to fully leverage synergies between Calavo business units and expect it to contribute revenue and profit growth over time,” he said.
California-based Calavo is known for fresh avocados, but it also sells other types of produce.
Calavo Foods distributes products including guacamole, salsa and tortilla chips and Renaissance Food Group distributes what it calls “healthy high-quality lifestyle products.”
Calavo reported revenue of $232.5 million and net income of $8.6 million for the third quarter ended July 31.