Welcome to The Closing Bell. This is your last stop for biz scoops and big news before the weekend — a roundup of stories that can’t wait till Monday.
Manufacturing startup expands distribution and operations, receives local grant
FreshFry is ramping up for growth.
What started with a single table and grandma’s sewing machine has morphed into a business that takes up thousands of square feet at 110 Central Ave., a warehouse space that it shares with Louisville-based dental supplies and lab equipment maker Whip Mix. There FreshFry makes its pods, which restaurants can use to keep the oil in their fryers clean and free of impurities.
“It’s getting everything out of there to make your food shine,” said Jeremiah Chapman, co-founder and CEO of FreshFry.
The Louisville manufacturing startup just started distributing its product through Louisville-based food wholesaler Creation Gardens, and the company is testing its product in various places around the United States and in Europe, including restaurants whose parent companies record billions in revenue annually, according to FreshFry.
This year, FreshFry has expanded its production capacity 25,000 percent (that is not a typo). Although it doesn’t run at full capacity, “we are talking to people who can fill that up in a snap,” Chapman said.
Mostly local places, including the KFC Yum! Center, Molly Malone’s Irish Pub and Restaurant, The Hub and Papa John’s Cardinal Stadium, use FreshFry. The new partnership with Creation Gardens has given it access to more Louisville kitchens and allows the company to slowly scale up its product.
“Every time you go to a restaurant that you really like, you just look in the back, and there is a Creation Gardens truck back there,” Chapman said. “We were realizing that restaurants that really resonated with our product, Creation Gardens was showing up too, so there must be something tied to that.”
Chapman and Jacob Huff, FreshFry’s co-founder and chief operating officer, both come from engineering backgrounds, so they are constantly working to improve their product and their processes, they said. Just this spring, the company altered what is in the FreshFry pouch to make it all natural.
The change fits with FreshFry’s mission of sustainability and with national food trends, said Brian Scantland, FreshFry’s executive vice president and chief strategy officer. Look at national pizza chain Papa John’s International, which has been actively promoting its gradual elimination of unnatural ingredients such as MSG and artificial flavoring.
FreshFry will have the opportunity to innovate even more thanks to a grant from the University of Louisville Foundation. The grant will give FreshFry access to office and laboratory space in the university’s Nucleus building downtown. Currently, Chapman experiments on a table at the company’s warehouse, while Huff and Scantland work at a collapsible table nearby.
While the pod is FreshFry’s sole product, Huff said they also sell their knowledge of frying oil — something most restaurants don’t focus much on — and offer insight into other ways eateries can improve the oil and thereby their food.
“We want to be the one-stop shop for all things oil,” he said.
Compared to technology startups, competition in FreshFry’s section of the market is scarce, which gives the company an advantage.
“Oil is not the sexy thing to work on,” Scantland said. “There is a white space there.”
However, manufacturing requires more investment on the front end, because manufacturers needs more space and more expensive equipment. A few years in, the company isn’t turning a profit yet.
Kentucky Derby Museum records its most successful year
Need proof that there’s more to the track than fast horses and big hats? More than 218,220 visitors stepped through the doors of the Kentucky Derby Museum this year, making it the museum’s most successful year in its 31 years. That attendance number is up 12.6 percent over the prior year.
And here are some more good-news numbers: Total revenue was up 22 percent, admissions revenue was up 18.3 percent, and special events and rentals increased 10.1 percent, while retail jumped up 3 percent.
“With an outstanding team leading the way, the museum continues to grow and flourish,” said Kentucky Derby Museum president Patrick Armstrong in a press release. “We’ve seen great success with new and expanded tours in partnership with Churchill Downs Racetrack, an increased, targeted marketing and advertising campaign, exciting special events and museum upgrades. We believe this is just the start of what is possible here at the museum.”
One of the top draws of the year was the updated “The Greatest Race” exhibition and 360-degree immersive experience, which the museum received a $750,000 grant for from the James Graham Brown Foundation. The museum invested $2.9 million to upgrade the exhibit as well. —Sara Havens
PharMerica shares tumble for a second time in a week
PharMerica shares plunged 15.5 percent Thursday, the second double-digit decline in a week. Shares had fallen 12.4 percent last Friday.
The company’s market capitalization in the last week has fallen by $200 million, to about $615 million.
Shares on Thursday closed at $20.20, after falling to a 52-week low $19.20. The 52-week high is $35.81.
On Thursday, about 1.4 million shares changed hands. That’s about quadruple the daily average of the last three months.
The Louisville-based pharmacy services provider is scheduled to report earnings on Wednesday. Reuters reported in August that the company is considering a sale. Shares jumped nearly 14 percent on the report.
However, an analyst at seekingalpha.com wrote about month ago that he expects the merger/acquisition process to fail and the stock to fall.
PharMerica, which employs about 6,000, provides services including consulting and on-site medication cabinets, primarily to long-term care facilities, nursing homes and hospitals. Headquartered about a 20-minute drive east of downtown Louisville, the company operates nearly 120 pharmacies and last year dispensed 34 million prescriptions reported revenue of about $2 billion.
“Fundamentally, PMC is a structurally disadvantaged, sub-scale distribution business,” the analyst wrote. The company has too few pharmacies across the United States to easily deliver pharmaceuticals on a timely basis or to respond to emergencies or correct errors. That’s unlike its main rival Omnicare, which was sold to CVS last year.
CVS cannot buy PharMerica, because Omnicare wanted to buy PharMerica in 2012, but the Federal Trade Commission intervened because of antitrust concerns. Given that the Reuters report hinted at an acquisition by private equity, it appears that CVS rivals looked at buying PharMerica but declined, the analyst said.
“It’s been a year-and-a-half since (Omnicare) was acquired, and if a deal was going to happen, it would have been done by now,” the analyst said of PharMerica.
Some reasons that may steer potential buyers away from PharMerica, the analyst said, include that the company for years has lost customers, and that sales and earnings have not improved even though the company has spent more than $600 million in acquisitions in the last 10 years.
CEO Greg Weishar had said in late May that demographic trends, including a projected rise in the number of older Americans and cancer patients, would present great opportunities for the company. —Boris Ladwig
Germantown Mill Lofts, young Louisvillian win state preservation awards
Louisville resident Savannah Darr and the local apartment complex Germantown Mill Lofts were both recognized for their contributions to preservation in the commonwealth of Kentucky.
Each year, Preservation Kentucky recognizes projects and individuals for excellence in preservation.
“These successes are inspirational, encouraging reminders of how historic preservation strengthens communities, serves as a significant tool for economic development, and helps maintain and create jobs,” Preservation Kentucky executive director Betsy Hatfield said in an announcement about the awards.
In the announcement, Darr was described as “the most active and committed young preservationist in Kentucky.” She has two master’s of arts degrees, one in public history and the other in history. Both degrees had a focus in historic preservation, and her master thesis looked at the challenge of preserving rural family cemeteries.
Louisville developer Underhill Associates, which renovated a former mill into Germantown Mill Lofts apartments, received the David L. Morgan Excellence in Kentucky Historic Preservation Tax Credit Award for commercial development.
Underhill Associates principal “Jeff Underhill is an award-winning redeveloper who has built his career on transforming troubled properties into vibrant ones for more than 40 years,” the announcement said. “Spanning three generations, Underhill Associates has a long track record of success and is known for tackling challenging projects.”
The company’s portfolio includes renovated homes in Old Louisville, the redevelopment of Crescent Hill’s George Rogers Clark Elementary School into condominiums and the renovation of Americana Apartments.
Prior to its redevelopment, the mill was the largest property in Louisville on the National Register of Historic Places that hadn’t been renovated. “The development is already being credited with a renaissance of the neighborhood as surrounding shot-gun houses, boarded up homes and underperforming buildings are being renovated, breathing new life into the historic area,” the announcement stated. —Caitlin Bowling
Street in southeast Louisville is a mini hot spot for multifamily residential development
A single street in the Highview neighborhood has become a popular place for apartment development.
Two separate developers have filed plans for multifamily apartment buildings within 0.3-miles of each other on Applegate Lane, which sits between Smyrna Parkway and Vaughn Mill Road.
Businessman Kendall Cogan submitted plans to the city for a 72-unit apartment complex at 6806 Applegate Lane called Pleasant Valley Apartments. He bought the 5.3-acre property in 2005 from family for $1.
“There is currently a high demand for apartment units in this area,” Christopher Crumpton, a principal with BlueStone Engineers, wrote in a letter about the development. Louisville-based BlueStone Engineers is working the development of the apartments.
Plans call for workers to construct 9 two-story buildings, each 9,617 square feet. The development also will feature 138 parking spaces and 41,234 square feet of open space.
Just down the road, at 6407 and 6409 Applegate Lane, Craig Mayer, founder of Louisville-based Mayer Realtors, plans to erect a smaller multifamily development called Austin Gardens. The most recent plans submitted to the city include 27 single-story units, with attached garages and driveways, spread across 10 buildings. It will feature 80,622 square feet of open space.
Mayer bought the two lots, which together are roughly 4 acres, for $135,000 in late 2014. He has hired locally owned engineering firm Mindel, Scott & Associates to lead the development. —Caitlin Bowling
Switcher Studio partners with streaming platform BoxCast
Louisville’s Switcher Studio has partnered with Cleveland’s BoxCast, a video streaming platform that specializes in event streaming, with a special focus on the church market. Switcher, led by CEO Nick Mattingly, allows users to create broadcast-quality live broadcasting from multiple iOS devices with one device serving as the production platform.
“It’s no secret that live streaming is exploding among consumers and social media enthusiasts,” said Mattingly in a news release. “Periscope, Facebook Live and YouTube Live have made it easier than ever for the average person with a smartphone to go live from anywhere. Organizations large and small are watching from the sidelines unsure of how to jump in on the game with the quality of content and production value they need for their audiences. This partnership effectively solves this problem by bringing together Switcher Studio’s wireless multicamera creation tools for iOS and BoxCast’s premium delivery platform.”
Zachs downgrades Brown-Forman shares to ‘sell’
Zachs Investment Research has downgraded Brown-Forman shares from “hold” to “sell,” because of what it sees as the company’s continuing struggles related to the strong dollar and instability in emerging markets.
The Louisville-based distiller has said all year that the strong dollar has depressed its revenue. First-quarter sales, reported in August, fell 7 percent, in part because of the impact from unfavorable currency exchange rates and the sale of the Southern Comfort and Tuaca brands. Fourth-quarter sales, reported in June, fell 1 percent, again in part because of the strong dollar.
In the last six months, the price of the dollar has increased 3.2 percent against the euro and 18.6 percent against the Brexit-ravaged British pound. Brown-Forman generates about a third of its sales in Europe, with the United Kingdom, Germany and France being among its largest foreign markets.
“Brown-Forman has been battling currency headwinds for a while now, along with tough economic conditions in emerging markets and soft travel retail network,” Zachs wrote in a recent research report, according to The Cerbat Gem.
Despite strong demand for its American whiskey, which includes Jack Daniel’s, the company is facing “stiff competition” and will remain exposed to “unstable emerging market conditions (and the) uncertain global economic and geopolitical environment.”
Bank of America Merrill Lynch had downgraded Brown-Forman in July, from “neutral” to “underperform.”
In the last six months, the distiller’s shares have fallen about 4 percent, while the S.&P. 500 has gained about 2 percent.
Mayor’s Healthy Hometown mini grants support mission-driven nonprofits
The mayor’s office announced that Mayor’s Healthy Hometown mini grants totaling $33,000 had been granted to four organizations: Academy of Music Production, Education and Development (AMPED); Girls on the Run of Louisville; the Metropolitan Housing Corp.; and 2NOT1 Fatherhood and Families Inc.
AMPED was granted $10,000 to support its new MENAISSANCE program, which engages young men with challenging novels and then follows up the book reading with creative projects of their own.
Girls on the Run earned a grant of $6,650 to support their efforts to combine education surrounding topics such as peer pressure, bullying, positive body image, nutrition/hydration, and stress management with physical education and running for young girls.
Metro Housing Corp. got $6,630 to support its “Get the Lead Out” program that educates citizens on the danger of lead in housing and how to abate it.
Finally, 2NOT1 earned a grant of $10,000 to provide families working with Child Protective Services with a volunteer advocate who helps them navigate the system and increases their chances of being reunited with children in foster care.
“Each of these grass-roots organizations are providing compassionate care and services to improve the health and quality of life of the people they serve,” said Mayor Greg Fischer in a news release.
Nineteen organizations applied. These four were chosen by a panel of representatives from the community and members of Louisville Metro Public Health and Wellness. —Melissa Chipman