In the brutal year for oil, other industries shine in Chron 100



Amid a global pandemic that crippled large parts of the world economy, 2020 was a difficult year to do business.

So tough that only 56 companies qualified for the Chronicle 100, which uses criteria for profit and stock market performance and growth.

For the second straight year, the energy companies that dominate the region’s economy were largely absent from the Houston Chronicle’s Top Performing Companies list. When oil demand and prices collapsed, they struggled to make a profit. Instead, the Chronicle 100 has been spearheaded by construction and engineering firms that build and maintain buildings, power grids, and other critical infrastructure.

At the top of the list was home builder LGI Homes from Woodlands, which increased its income by 29 percent and brought in a whopping 219 percent for its investors – better than any other company but four. Third place went to IES Holdings, an electrical company which increased its sales 11 percent to $ 1.2 billion. And Orion Group Holdings, another construction company, took seventh place with earnings per share up nearly 500 percent.

“Our customers are looking beyond the short term for investments that will propel this economy for the next decade,” said Jayshree Desai, chief corporate development officer at Houston-based Quanta Services, a utility and oil and gas company that entered No. 6 in the ranking. “It was a good industry last year.”

The Chronicle 100 annual rankings are calculated by S&P Global Market Intelligence to measure how Houston companies compare in terms of financial and stock performance. To be considered, a company must be traded on a major stock exchange and have made a profit. And when oil prices – which are having an overwhelming impact on the local economy – averaged less than $ 40 a barrel last year, only 56 companies qualified.

The rankings are based on four metrics: total sales; Sales growth; Earnings per share growth; and shareholder return, favoring companies that have improved over the previous year either because they had a particularly good year or because the previous year was particularly bad.

This enables lesser-known companies to compete with the major players in the region. Pipeline company Altus Midstream, for example, had sales of just $ 148 million but ranked 9th on the list by generating a 329 percent return on investment for its investors, more than any other company but one in the world Ranking.

To survive, let alone thrive, companies had to adjust to the conditions of a century and a deep recession over the past year, caused not by higher interest rates or financial bubbles, but by government orders that paralyzed the economy and kept activity on the spread of COVID-19 slow down. Greater Houston lost more than 360,000 jobs during the factory closings in March and April last year.

“Fundamental restructuring”

The companies that did well had to find their way in an environment where people stayed at home but had important business activities left to do, said Jorge Barro, an economist at Rice University’s Baker Institute of Public Policy.

“There has been a major restructuring of the US economy,” he said. “The companies that did well were the ones that could handle the change in personnel dynamics.”

One such company was Comfort Systems USA, which provides plumbing, electrical, and other building services nationwide and ranks # 2 on the Chronicle 100. The company grew sales 9 percent as it sought new customers in growth industries like pharmaceuticals and technology, executives said in a report to investors earlier this year.

Likewise, LGI Homes, which ranks # 1 and operates more than 100 shared apartments across the country, reported nearly 10,000 home sales last year, a record for the company as it attracted home buyers looking to capitalize on historic lows in interest rates .

2020 was a grim year for the oil and gas sector. The US benchmark West Texas Intermediate averaged less than $ 40 a barrel last year, a 30 percent decrease from 2019.

Large exploration and production companies like ConocoPhillips and EOG Resources were missing from the Chronicle 100 ranking, but pipeline companies did better as fuel demand picked up again in the second half of 2020.

Kinder Morgan, with $ 11.7 billion in sales and a 22 percent return for investors, came in 48th. Shell Midstream and Hess Midstream were 44th and 18th, respectively.

“With the economy recovering and demand for oil and gas products increasing, we are optimistic about the opportunities for the coming year,” said Clay Bretches, CEO of Altus Midstream, to investors in February.

100 year event

Of course, 2020 was the story of COVID-19, a previously unknown virus. The consequences of its creation are still understood.

In March, the Centers for Disease Control released preliminary data showing the US death rate rose 16 percent over the past year – the largest increase since the 1918 Spanish flu.

That morbid data point was reflected in the No. 12 ranking by Houston-based Service Corporation International, a funeral home that spans the United States and Canada. The company posted sales of $ 3.5 billion last year, up 9 percent from 2019.

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