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Tuesday, May 24, 2022

Public Companies’ Fastest Growers Soar 33%

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Orange County has again demonstrated the ability to spur fast-growing publicly traded companies.

The Business Journal’s annual list includes 34 companies growing revenue at a combined $27 billion for the year ended June 30, with sales up an average 33% from the same period two years prior. That compares to 36% growth to $22.5 billion in last year’s list.

The fast-growing companies—a minimum 15% growth in revenue was required for the two-year period to qualify—are a diverse lot, selling everything from boots and eye stents to heart valves and burritos.

The health sector led with eight companies, followed by six banks and five tech firms. (See Special Report, starting on page 21).

They are a profitable lot, generating a total of $1.8 billion in net income. Wall Street generally likes them, valuing the combined companies at $105.3 billion. About two-thirds of that is due to Edwards Lifesciences Corp., which sported a $47.2 billion market cap, and Chipotle Mexican Grill Inc., with a $24 billion value at press time. Both made the list this year.

The companies generally grew their employee count elsewhere. Their OC employment climbed 2.7% to 9,611 while their firmwide count increased 14% to 157,323.

Small Companies Rule

The rule of large numbers certainly demonstrated itself again as the category of the smallest companies, those with revenue under $100 million, grew 87% on average, followed by midsize companies, with 44%, and the biggest companies, with revenue over $500 million, topping 31%.

Irvine is far and away the favorite headquarters for the firms, totaling 17 companies followed by Newport Beach and Anaheim, each with three companies on the list.

Sixteen companies preferred a listing on Nasdaq while 12 opted for the New York Stock Exchange. Another six chose over-the-counter; of the latter, only two firms with revenue topping $100 million chose OTC.

The 34 companies on the list showed a rebound from last year, when 31 made the cutoff of at least 15% growth. In 2016, 47 companies made the list while 43 were on it in 2017.

These are the key takeaways from this week’s Business Journal Special Report, which details publicly held businesses with headquarters in Orange County, ranking them by two-year revenue growth.

Boots, Burritos, Big Shows, Burgers

Here are explanations on why these companies quickly grew:

• Speed to market took on a whole new meaning with Irvine-based western and workwear retailer Boot Barn Holdings Inc. (NYSE: BOOT) the past two years.

The company notched a 26% gain in revenue over the two-year period ended June 30 to $800.6 million through acquisitions and new store openings that expanded the company’s national footprint, while endeavors into more fashionable styles helped it delve into a new consumer base.

The efforts pushed Boot Barn up two spaces to No. 6 on this year’s Business Journal list of the fastest-growing large public companies with $500 million or more in sales.

“In the wild, the big don’t eat the small. The fast eat the slow,” Chief Executive James Conroy told the Business Journal earlier this year.

Last year alone saw the acquisition of Drysdales Inc. bring two Tulsa, Okla. stores into the Boot Barn fold, along with the launch of the vintage-inspired Idyllwind brand created in partnership with country singer-songwriter Miranda Lambert. The year prior Boot Barn acquired the four-store Wood’s Boots Inc., with locations in Midland and Odessa, Texas.

• Chipotle Mexican Grill Inc. (NYSE: CMG) fired on all cylinders for its turnaround story.

The Newport Beach-based company, battered by bad press from a wave of food safety issues, tapped former Taco Bell Corp. CEO Brian Niccol to right the ship last year. Niccol has since pulled on several levers, ranging from marketing, menu innovation, digital improvements and store growth. The tactics have helped Chipotle’s stock lift about 160% since Niccol’s arrival.

Last week, the company capped its seventh straight quarter of same-store sales growth, ending the September quarter with comparable sales up 11%, which Niccol told analysts “highlights that running great restaurants with a purpose of cultivating a better world is a compelling proposition.”

Chipotle’s 21% jump in revenue to $5.2 billion for the 24 months ended June 30 places the company at No. 12 on this week’s Business Journal list of large public companies with sales of $500 million or more.

• It’s either eat or be eaten in the trade show business as consolidation remains a dominant theme.

San Juan Capistrano trade show operator Emerald Expositions Events Inc. (NYSE: EEX) has kept on its toes with an acquisition strategy that has it counting more than 55 trade shows and other events in its fold. This includes last year’s buy of hospitality design-related shows previously under Cincinnati-based ST Media Group International and Hospitality Media Group.

“It’s part of our growth thesis,” Chief Financial Officer Philip Evans told the Business Journal last year of the company’s strategy.

Wall Street seems to be taking a wait-and-see approach with the company’s stock off about 50% since it went public in 2017.

New blood could help with President and CEO Sally Shankland’s June arrival, where she noted at the time of her hiring Emerald “has some great assets that are extremely relevant in their markets and, I believe, have significant opportunity available to them.”

Even with the stock movement, the acquisitions have helped the business grow 24% during the 24 months ended June 30 to $400.5 million, according to this week’s Business Journal list of the largest midsize companies with revenue between $100 million and $500 million.

• Habit Restaurant Inc.’s (Nasdaq: HABT) been putting its best digital foot forward and the strategy’s paying off.

The Irvine-based burger chain’s two-year revenue growth for the period ended June 30 spiked 40.9% to $433.45 million, good for the No. 6 spot on this year’s Business Journal list of the fastest-growing midsize companies with revenue of $100 million to $500 million.

The company’s growth came from a continued push to open company-owned and franchised locations, in addition to beefing up its digital offerings through its app and web platform. It continues to plug away at those focus areas with the company this year announcing a 25-store franchise deal in Cambodia and naming Huntington Beach-based Innocean USA as its agency of record.

• Newport Beach-based American Vanguard Corp. (NYSE: AVD) climbed 43% to $455.9 million, taking fifth place on the list of midsized companies with revenue from $100 million to $500 million.

The agricultural products company attributed its growth to strong sales in international businesses, with Canada and Brazil leading the charge.

American Vanguard in January acquired two Brazilian companies, Agrovant and Defensive, both suppliers of crop protection products and micronutrients. It also acquired Quizalofop, a herbicide product line from Corteva Agriscience, an agricultural division of DowDuPoint (NYSE: DWDP).

“We expect consolidated sales to increase by about 6% year-over-year with mixed performance among our major markets. International sales should increase about 27% for the full year. However, our domestic sales will likely decrease by about 5% on a per annum basis, which we believe is consistent with industry-wide forecasts,” Eric Wintemute, chairman and CEO, said in an October statement about the company’s 2019 outlook.

Wintemute said that record-breaking dry and heat conditions, among other weather-related conditions, slowed growth industrywide. Due to these factors, American Vanguard’s forecast was adjusted downward to approximately $480 million this month. The company originally expected to exceed $500 million in revenue this year.

Despite conditions, its shares jumped 13% during the two-year period, and the company has a $405 million market cap.

• Pro-Dex Inc. (Nasdaq: PDEX) in Irvine saw a 24% growth over a two-year period to $27 million, earning 11th place on the list of small public companies.

The manufacturer, which has pivoted to the medical device industry in recent years, increased medical device sales and repair revenue while reducing operational costs. Of note, Pro-Dex inked a deal with one of its major medical device companies to supply its product through a private label last August.

Some of the company’s biggest clients include Boeing Co. (NYSE: BA), NASA and Medtronic PLC (NYSE: MDT).

“We are pleased with our third-quarter and year-to-date results, expanding upon our multi-year momentum. We continue to reinvest and focus our growth on our core medical device product and service revenue. Our product development roadmap continues to offer us exciting opportunities to build upon our existing product offerings,” Rick Van Kirk, president and CEO, said in a May statement.

Its shares more than doubled within the two-year period, and the company now sports a $56.9 million market cap.

Kari Hamanaka and Jessie Yount contributed to this article.

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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