....................... Public companies overview
Chemicals, recruiting, food services and trash?
Where once the Chronicle’s annual list of top-performing companies would be dominated by the oil and gas businesses around which Houston’s economy has long revolved, a new crop of companies has emerged.
Coming up on three years after crude prices began their dramatic decline, the top-performing company on the Chronicle 100 this year is Kraton Corp., a chemical and plastics manufacturer with operations across four continents, which grew its revenue by a whopping 69 percent.
Rounding out the top 10, there was food services giant Sysco, which recorded more than $53 billion in revenue. The national electric and telecommunications contractor IES Holdings grew its earnings per share ratio by more than 500 percent. And engineering and construction mainstay Quanta Services earned its investors a princely 72 percent return.
For the executives of these companies, who spent the early part of the decade watching their counterparts in the oil and gas industry get rich, their recent success if proof that Houston is more than just an oil town.
“It still appears to me the Houston economy is more resilient than people expected,” IES Holdings CEO Robert Lewey said. “We do a lot of work outside Houston and talk to people around the country, and I have to tell people the impact here is not as bad as people perceived.”
But there’s no doubt the downturn in oil prices has taken its toll.
The annual Chronicle 100 rankings are calculated by S&P Global Market Intelligence to gauge how companies are rising and falling against each other in terms of financial and stock performance. The rankings for 2016 are based on four metrics: total revenue, revenue growth, earnings per share growth and shareholder return.
But the Chronicle 100 is actually a Chronicle 69 this year, because that’s all the companies that can meet the basic criteria to be included. It must be traded
on a major stock exchange and have turned a profit the previous year. This year only 69 companies fit the bill, the second year in a row there were not 100 companies eligible.
Absent again are most of Houston’s biggest corporate names: ConocoPhillips, Baker Hughes, Apache Corp. and Halliburton.
In Houston, even as housing prices hold steady and the worst of the layoffs have stopped, job growth was virtually flat last year, a sea change for a city that added roughly 700,000 jobs during the hydraulic fracturing boom, said Robert Gilmer, an economist at the University of Houston.
Those companies that have thrived are largely those outside the oil and gas space, with a national or international operation for which the ups and downs of the Texas economy are not as critical.
“Houston has slowed down a lot. A lot of these diversification calculations don’t take into account how much the oil industry in Houston outsources,” he said. “It’s been a big plus for Houston being able to rely on continued U.S. growth. The companies doing well are the ones that have big national footprints.”
Not that it was all bad news for the oil sector. Pipeline giant Kinder Morgan cracked the Chronicle 100 top 10, up from No. 68 on the list last year.
Unlike their counterparts in the exploration and production companies, pipeline executives at-large fared fairly well last year. Within the top 30 were Western Gas Partners, TC Pipelines, and Plains All American Pipeline.
That’s a turnaround from recent years, when following Wall Street’s rush to invest in pipeline companies many executives found themselves overleveraged.
At Boardwalk Pipeline, ranked No. 20 on this year’s list, they’ve just finished construction on 1.4 billion cubic feet a day of gas pipeline capacity and have another 1.7 billion cubic feet in the works, CEO Stan Horton said.
“If you look at what’s going on, you have some of these LNG export facilities being constructed. That’s about 10 billion cubic feet a day of gas pipeline needed there,” he said. “Add in some electric generation load and industrial load. Natural gas demand is beginning to grow.”
While power generation companies like Calpine, NRG Energy and Dynegy failed to make this year’s list, in what has been a tough time for the power industry, transmission and distribution company CenterPoint and power retailer Spark Energy both made the top 10.
And service companies, like Waste Management and Insperity, ranked 9 and 4 respectively, took advantage of steady growth in the U.S. economy.
How will Houston companies fare in 2017?
Six months into the year, oil prices are holding around $50 a barrel. And most economists are expecting another slow year for jobs growth, compounded by the loss of construction jobs once new petrochemical projects on the city’s east side wrap up, Gilmer said.
“What happens in the oil recovery, your guess is as good as mine,” he said. “But $50 oil is much better than where we were this time last year.”