INSURANCE, INFRASTRUCTURE, POWER LEAD PUBLIC COMPANIES.
Companies outside Houston’s oil and gas industry posted the best performances in 2019 as lackluster oil prices, shrinking access to capital and other challenges buffeted the companies that typically dominate the local economy and the Houston Chronicle’s list of top performing companies.
This year’s Chronicle 100 is led by companies in industries that tend to follow the trends of the national economy, such as Quanta Services, which provides installation and maintenance services for cellphone and internet companies; the electrical contractor IES Holdings; the utility CenterPoint Energy, and the merchant power company NRG Energy.
At the top of the Chronicle 100 was the insurance provider American National, which nearly quadrupled its earning per share in 2019 while increasing revenues 22 percent to $4.1 billion.
Of course, with the nation in the grip of the coronavirus pandemic, the economic picture in 2020 is far more challenging that what it was in 2019, the period used to determine period this year’s rankings. Executives are just hoping that the disastrous start to 2020 begins to improve soon — which ultimately will depend on the nation’s success in bringing the COVID-19 pandemic into check.
“We are bullish that the economy will come back strong as the vaccine and therapeutics are discovered and the COVID virus is held in check,” said Gary Matthews, CEO of IES Holdings.
The annual Chronicle 100 rankings are calculated by S&P Global Market Intelligence to gauge how Houston companies compare in terms of financial and stock performance.
Outsized impact
To be considered, a company must be traded on a major stock exchange and have turned a profit. And with oil prices — which have an outsized impact on the local economy — falling 12 percent to an average $57 a barrel last year last year, only 92 companies qualified.
The rankings are based on four metrics: total revenue, revenue growth, earnings per share growth and shareholder return, favoring companies that have improved their fortunes from the previous year, either because they had a particularly good year, or the previous year was especially bad.
That allows lesserknown firms to compete with the region’s major players. For example, the medical waste collection firm Sharps Compliance Corp. had revenues of just $50 million last year but
“Early on, we thought this would be a V-curve, with a steep return to normal. … We are going to have to come up with a new normal.” John W. Allen, president of G&A Partners
earned the No. 10 spot by earning its investors a 79 percent return, more than any other company in the rankings.
Even in a down year for the oil and gas sector, some companies were able to expand enough to cover up their struggles in the stock market. Despite giving investors a negative return, the liquefied natural gas exporter Cheniere Energy earned the No. 6 spot by growing its revenue 32 percent to $9.7 billion.
But by and large oil and gas companies struggled in this year’s rankings.
ConocoPhillips, which earned the top spot in last year’s rankings, fell to number 32 this year when its return on investment fell to negative 32 percent. Likewise, Occidental Petroleum, which ranked sixth last year, fell off the list entirely after failing to turn a profit for 2019.
“Energy had really begun to slide, even before COVID-19 arrived,” said Bill Gilmer, an economics professor at the University of Houston. “We lost 25 percent of the rig count in the fourth quarter. The fracking industry hadn’t produced on profits or equity and had completely lost the confidence of Wall Street.”
With the coronavirus outbreak, the energy recession has only deepened, and a downturn has spread across the wider economy. It is expected to hit Houston companies across the board.
The employment outsourcing firm G&A Partners — which reported $2.9 billion in revenue last year, enough to earn the fifth spot on the list of largest private companies — had initially hoped the pandemic’s impact to its business would be shortlived. Now the company worries the effects of one of the steepest declines in economic activity in history will last longer, said John W. Allen, president of the firm.
“Early on, we thought this would be a V-curve, with a steep return to normal,” said Allen, referring to economist shorthand for a recession that comes and goes quickly. “Now, we’re not so sure. Really, we are going to have to come up with a new normal.”
Since March, Houston has lost 250,000 jobs, Gilmer said. The question facing economists is how long it will take to regain these jobs as states begin to reopen businesses. The reopenings, however, recently sustained a setback with a new surge in coronavirus cases.
“It doesn’t look particularly good,” Gilmer said. “Some of these job losses are due to stay-at-home orders that might go away in the near term and some are social distancing trends that are likely here to stay as long as the virus lingers.”