CSX Corp.’s year-to-date jobs cuts are up to 2,700, Chief Financial Officer Frank Lonegro said at an investor conference last week.
Beyond the 2,700, the company also cut 1,000 contractors and consultants, Lonegro said at the conference in Boston sponsored by Cowen and Co. The presentation was broadcast over the internet.
CSX’s latest monthly employment report filed with the U.S. Surface Transportation Board showed the company cut 2,150 jobs through July, reducing total employment in its system to 22,313.
Lonegro’s data indicates the company eliminated more than 500 additional jobs in August.
Jacksonville-based CSX’s rail operations cover much of the eastern U.S. The company previously said it cut 951 management-level positions this year, mainly at its Jacksonville headquarters. It has not specified other job losses in its system.
“Cost control is a major element of Precision Scheduled Railroading,” Lonegro said.
Precision Scheduled Railroading is the company’s new operating system under CEO Hunter Harrison, who joined the company in March.
CSX had begun cutting jobs before Harrison came in, but the continued cuts are a key part of Harrison’s strategy to improve operations.
Lonegro said CSX had an industry-leading operating ratio (operating expenses divided by revenue) several years ago, but the company has fallen behind as a sharp drop in coal shipments has reduced annual revenue.
“The industry has made great progress” in reducing operating ratios, he said. “But we did not make meaningful progress when others did.”
CSX’s operating ratio was 69.4 percent last year, and the company was targeting a mid-60s percentage for 2017.
However, the company revised its forecast last week to “the high end of the mid-60s” for this year.
CSX also downgraded its earnings per share growth forecast from 25 percent to a range of 20 percent to 25 percent.
The company said in a news release its revised forecast came “in light of various operating challenges in July and August.”
CSX has been under fire for the last two months with complaints from customers as it implements its new operating system.
Lonegro said operations are improving, and Harrison echoed his comments in the news release issued the same day as the Cowen conference.
“The railroad is now returning to a normal operating rhythm, and our performance metrics are improving,” Harrison said.
CSX is scheduled to address customer complaints head on Tuesday at a public “listening session” set by the STB because of the concerns about the railroad’s poor performance this summer.
The Securities and Exchange Commission filed a lawsuit against St. Augustine-based Creative Learning Corp. and three of its former officers, alleging “multiple violations of the federal securities laws.”
The officers named in the suit are former CEO Brian Pappas, former Chief Operating Officer Daniel O’Donnell and Michelle Cote, who created the company’s “business concept,” it said.
Creative Learning offers educational and enrichment programs for children through franchisees.
The company, and O’Donnell and Cote, agreed to settlements of the case the day after it was filed Aug. 21 in U.S. District Court for the Middle District of Florida in Jacksonville.
“Beginning in 2011 and continuing into early 2015, Pappas and CLCN (through Pappas’s conduct) engaged in a fraudulent scheme to build market confidence in CLCN and its management by making numerous materially false and misleading statements and omissions, including misrepresentations and omissions regarding Pappas’s prior business experience, Pappas’s personal financial history, his evaluation of the company’s disclosure and financial reporting controls and CLCN’s payments to related persons,” the SEC alleges in the lawsuit.
“O’Donnell and Cote participated in the market manipulation, and also joined Pappas in improperly arranging personal loans to company officers,” it said.
“Pappas demonstrated a sweeping disregard for his responsibilities as the leader of a public company,” it said.
Pappas was removed as CEO in July 2015, but he launched a proxy fight against the company earlier this year, seeking to replace Creative Learning’s four-member board of directors with three nominees of his own. That effort failed in February.
The lawsuit alleges Pappas violated securities laws again during the proxy fight because he “failed to file soliciting materials with SEC.”
Pappas did not immediately file a response to the lawsuit and court documents do not list an attorney representing him.
The filings say he is a 66-year-old resident of St. Augustine, but there is no phone number listed for him.
Creative Learning disclosed the lawsuit in a filing with the SEC on Sept. 1.
“Without admitting or denying the allegations, the company agreed to the entry of a final judgment that permanently enjoins it from violating the sections of the federal securities laws listed in the civil complaint. The order, when entered, will resolve all allegations pertaining to the company,” it said in the filing.
The company was not assessed a financial penalty.
Cote became president of Creative Learning when Pappas was removed two years ago. She remained in that position until resigning in May, but she remains with the company as “creative director,” according to SEC filings.
Cote’s settlement with the SEC calls for her to pay back $3,000 in profits plus a $25,000 civil penalty.
O’Donnell resigned his position with the company in May 2016. His settlement calls for paying back $3,000 in profits plus a $40,000 civil penalty.
Creative Learning’s management remains in flux. Chief Operating Officer Karla Kretsch was promoted to president when Cote resigned, but Kretsch left the company in August, according to SEC filings. No replacement has been named.
Creative Learning reported a net loss of $1.01 million, or 8 cents a share, for the nine-month period ended June 30. Revenue fell 23 percent to $1.87 million.
Fidelity National Financial Inc. said Thursday it will complete the distribution of its majority stake in Black Knight Financial Services Inc. on Sept. 29.
Following the distribution, Black Knight will be a fully independent company officially renamed Black Knight Inc.
Black Knight’s stock will begin trading on the New York Stock Exchange on Oct. 2 under the ticker symbol “BKI.” It currently trades under “BKFS.”
Title insurance company Fidelity and mortgage technology company Black Knight both are headquartered at the same office complex on Riverside Avenue in Jacksonville.
Black Knight basically grew out of another company formerly owned by Fidelity called Lender Processing Services Inc.
LPS became a separate public company in 2006, but Fidelity bought it back in January 2014.
In May 2015, Fidelity launched an initial public offering of the business, renamed Black Knight. However, Fidelity retained its majority stake in the company at that time.
The upcoming spinoff calls for Fidelity stockholders to receive about a 0.3 share of Black Knight for every Fidelity share they own as of Sept. 20.
As Fidelity works to complete the spinoff of its investment subsidiary as a separate public company, the investment unit is not sitting still.
Fidelity last week announced the unit, which will be named Cannae Holdings Inc., agreed to buy T-System Holdings for $200 million in cash.
T-System is a Dallas-based company that provides clinical documentation and coding solutions for medical facilities.
Cannae, which will be headquartered in Las Vegas, is a company created by Jacksonville-based Fidelity to hold investments not related to its main title insurance business.
In a news release, Fidelity Chairman Bill Foley, who also will be Cannae chairman, said T-System operates in a fragmented industry.
“We believe that the documentation business is at an inflection point with a significant near-term organic growth opportunity. We are also confident that we can assist T-System in making multiple acquisitions that can accelerate future growth and further expand the product and services that the company offers to its customers,” Foley said.
Like its Black Knight spinoff, Fidelity has been targeting the end of this month to complete the spinoff of Cannae.
However, it has still not scheduled a special meeting of its shareholders to vote on the proposal.