Fidelity National Information Services Inc., or FIS, sold off a majority stake in its Worldpay merchant payments system business in early 2024 after several years of disappointing results.
With 2024 nearing the end, Chief Financial Officer James Kehoe thought it was a good time to assess the state of Jacksonville-based FIS after its decision to shed Worldpay.
“The company had become too complex and execution had suffered,” Kehoe said in a Dec. 4 presentation at a UBS Global Technology and AI Conference.
The sale allowed FIS to focus on its core business of providing technology to the banking industry, as well as capital markets technology.
“This is an execution story. Are we executing well in the core markets that we operate in?” Kehoe said, and he indicated that the company is performing better in those markets now.
“The products are better and the customers are more satisfied, and that’s what it all comes down to,” he said.
FIS acquired Worldpay for $43 billion in 2019 but the company produced weak results after the deal, and it announced in early 2023 it would spin off Worldpay as a separate public company.
Instead, FIS agreed in July 2023 to sell a 55% stake in the business to private equity firm GTCR for $11.7 billion.
The deal was completed in January 2024 with FIS retaining a 45% interest in Worldpay.
The sale has helped FIS cut costs, which will help the company over the long term, Kehoe said. But the company is incurring one-time costs this year, including severance payments related to the deal.
“When I worked in different industries, we used to have a rule of thumb: $100 of (permanent) cost, it’s probably going to cost you roughly $100 of one-time costs to implement,” said Kehoe, who left as CFO of pharmacy giant Walgreens Boots Alliance Inc. to join FIS in August 2023.
“The paybacks are attractive. It’s just that nothing in life is free,” he said.
“So the problem with Worldpay is, it was the right strategic transaction but it’s forced the company to spend a lot of money to resize the structure to the realities of a much smaller company.”
The deal has been good for FIS shareholders, with the company’s stock price up about 60% since it announced the deal with GTCR in mid-2023.
FIS has reduced its quarterly dividend payments from 52 cents in 2023 to 36 cents this year, but the company has maintained its dividend payout ratio of 35% of adjusted net earnings.
“We still managed to pay the best dividend in the sector,” Kehoe said.
FIS also repurchased $3 billion in shares in the first three quarters of 2024, which helps stockholders by reducing the number of shares outstanding, making the remaining shares more valuable.
“The company is still prodigious in generation of cash,” Kehoe said.
“Our stated goal is to return capital to shareholders.”
While Kehoe was speaking at a UBS conference in Phoenix, CSX Corp. Chief Financial Officer Sean Pelkey was speaking at a separate UBS conference about the continued impact of two major hurricanes on the Jacksonville-based railroad company.
“We had Hurricane Helene that came in Q3, knocked out a big part of our Blue Ridge subdivision,” Pelkey said at the Dec. 4 UBS Global Industrials and Transportation Conference in Palm Beach.
“We’re still working to rebuild that. We’re rerouting all the traffic around that. So that’s going well,” he said.
“But it’s going to take at least into likely the first half of next year to get all that done,” he said.
“Then we had Hurricane Milton that impacted Tampa and the Florida area at the beginning of Q4,” Pelkey said.
The two hurricanes cost Jacksonville-based CSX an estimated $30 million in revenue and $50 million in total costs, Pelkey said.
“When you’re looking at our volume numbers for the (fourth) quarter, you’ve got to remember, at least (in) October, we were very heavily impacted by those storms,” he said.
However, the company’s freight volume has recovered from the storms.
“If you look at quarter-to-date volumes, we’re about flat. Still think we’ll be up on a full quarter basis and if you look at the last couple of weeks, we’re up about 2%,” Pelkey said.
Aside from the hurricane impact, Pelkey said freight shipments in the agricultural and food sector have been lower than expected but coal shipments have been the most disappointing.
“We’ve had some outages - production issues, some outages at some of the mines that we serve, so that’s been a little bit of a challenge. There’s been some other things that have hampered us a little bit there,” he said.
One area of optimism for CSX is industrial development, with companies investing in new plants and expanding operations, Pelkey said.
“We really think it can be a big contributor to merchandise growth over the next couple of years,” he said.
Speaking a month after the elections, Pelkey said “there’s a lot of chatter” about the impact on CSX and its freight customers.
“I think the fact that there is more than likely certainty that tax rates are not going up and we likely will have a slightly more favorable regulatory environment is all very positive for our customers. So I would say there’s definitely optimism and hope in terms of what that means for their ability to invest and grow, what it means for the consumer as well,” he said.
“Does that translate into increased investments? I think that’s one where everybody is sort of waiting a little bit, let’s see how things play out and let’s get into next year,” he said.
“But certainly, there’s a lot of positive sentiment out there and there’s a lot of speculation. But in terms of firm plans, I think it’s a little bit premature.”
Two weeks after winning a proxy battle with one major shareholder, Cracker Barrel Old Country Store Inc. reported higher earnings for its first quarter ended Nov. 1.
Adjusted earnings rose 5 cents a share to 45 cents, Cracker Barrel said Dec. 4 after previously reporting revenue rose 2.6% to $845.1 million.
The company operated 658 Cracker Barrel and 69 Maple Street Biscuit Co. locations at the end of the quarter. It does not report separate financial data for Maple Street, the chain founded in Jacksonville that Cracker Barrel acquired in 2019.
The company opened three new Maple Street restaurants in the first quarter but did not add any Cracker Barrel stores, which combine a restaurant with a retail store.
At Cracker Barrel’s annual meeting Nov. 21, investor Sardar Biglari and an associate were defeated in their attempt to win seats on the company’s 10-member board of directors.
Biglari, who controls 9.3% of the company’s stock, ran on a platform that included calls for Cracker Barrel to divest Maple Street. He said the smaller chain is a distraction from the company’s attempt to revive the Cracker Barrel brand.
CEO Julie Felss Masino said in a Dec. 4 conference call she is pleased with the company’s turnaround plan, which includes new menu items and pricing, and remodeling stores.
“I want to remind you all that this is really the first quarter of executing the new plan after months of evaluation and planning,” she said.
“Given that fact, we are excited about the quarters and years ahead, and I want to assure you that we are intensely focused on profitable growth and long-term value creation.”
Cracker Barrel officials did not say anything in the conference call about Maple Street, other than the chain’s new store openings.
Safe & Green Holdings Corp., which makes modular structures, reported a net loss of $11.5 million in the first nine months of this year, with revenue dropping 73% to $3.9 million.
Safe & Green’s business includes converting shipping containers for use as buildings.
The company was headquartered in Jacksonville for a year, after moving from Brooklyn, New York, in January 2022.
However, the company announced in January 2023 it was moving its headquarters again to Miami.
Chairman Paul Galvin said in a Nov. 27 news release that the company has made progress despite the drop in revenue. Steps included a warrant transaction that produced $2.4 million in capital and refinancing a facility in Oklahoma.
“Our recent warrant inducement transaction and successful refinancing reflect a solid foundation from which we can accelerate our growth,” Galvin said.
He also said the company reduced operating expenses by more than $4 million in the nine-month period.
Before the company left Jacksonville, it announced a plan to spin off its real estate development subsidiary as a separate public company. The spinoff of Safe and Green Development Corp. was completed in September 2023.
Safe and Green Development reported revenue of $173,188 and a net loss of $7.4 million in the first nine months of 2024.
The development company also reported Nov. 20 that it completed the sale of its property in St. Marys, Georgia, to Pigmental Studios for $1.4 million.
“The sale of St Mary’s is a milestone that exemplifies the value of our real estate holdings,” CEO David Villarreal said in a news release.
“We are happy to sell and capitalize on the increase in the value on this parcel which will allow us to move forward on other real estate properties and various projects that we are developing,” he said.