Orange County’s 75 largest public companies posted another round of sales and profit gains in 2006, though their surge tempered from the peak of the prior two years.
The companies, a broad mix of technology, healthcare, real estate, apparel and other businesses, saw sales rise 12% to $96.3 billion last year, according to this week’s Business Journal list. Net income grew 8% to $3.1 billion.
The list ranks companies by sales. Figures for most companies are for 2006.
Last year’s gains were healthy but down from the 19% sales and 160% profit growth seen by the county’s largest public companies in 2005.
In 2004, the largest public companies here posted a 15% rise in sales and a 148% jump in net income.
The moderating results aren’t surprising. Starting in 2003, the growing economy and restructuring during the recession early in the decade drove big gains in sales and profits. The public companies turnaround peaked in 2004 and 2005.
The housing slowdown, which started in earnest last year, also played a part, holding back or zapping growth at several companies on the list.
The profit growth slowdown follows a national trend. In the fourth quarter, U.S. corporate profits fell 0.3% from the third quarter, prompting some economists to call an end to the big profit rally of the past few years.
Slower economic growth and rising costs are factors.
Smaller Group
This year’s group also checks in smaller by revenue. The companies on last year’s list had $104 billion in sales, 9% more than this year’s group.
Two sizable departures made up the bulk of the difference. 2006’s No. 2 Fluor Corp. moved from Aliso Viejo to Texas last year, taking $13 billion in sales off the list. Newport Beach-based William Lyon Homes Inc., last year’s No. 12, went private, taking away $2 billion in sales.
This year’s group includes several newcomers, though none near the size of Fluor and William Lyon. The biggest debut, No. 13 Foothill Ranch-based Kaiser Aluminum Corp., had 2006 sales of $1.4 billion.
The top 10 companies on this year’s list counted $67 billion in sales, or 70% of the list’s total. They made up 66% of the profits at $2 billion.
The top 10 saw some shifts.
No. 2 Santa Ana-based title insurer and business data company First American Corp. took Fluor’s old spot with $8.5 billion in 2006 sales, up 5% from a year earlier.
No. 3 Lake Forest-based Western Digital Corp. also moved up a spot with $4.9 billion in 2006 sales, up 26%.
Western Digital was helped by No. 5 Irvine-based Standard Pacific Corp.’s fall from No. 3 last year as the housing slowdown took hold. The homebuilder saw 2006 sales fall 1% to $3.96 billion.
No. 4 Irvine-based Gateway Inc. also moved up a spot from last year on Standard’s slip with $3.98 billion in sales.
Allergan Inc., the Irvine drug and medical cosmetics company, made a jump from No. 9 last year to No. 7 on the heels of a big acquisition. In early 2006, Allergan paid $3.2 billion for Santa Barbara’s Inamed Corp., maker of a wrinkle smoother, breast implants and an obesity treatment.
The deal helped push Allergan’s 2006 sales up 32% to $3 billion.
No. 9 Fullerton-based Beckman Coulter Inc. couldn’t keep pace, falling from No. 7 last year.
The maker of medical diagnostic and research instruments and supplies saw 2006 sales grow 3% to $2.5 billion, a slower rate of growth that was expected.
In 2005, Beckman changed the way it accounts for leases of its instruments, recognizing revenue over the life of a lease instead of booking a lump sum at the start of the deal.
While the move crimped revenue growth, it and other restructuring boosted profits 24% to $187 million.
In between Allergan and Beckman is the top 10’s special case: No. 8 Irvine-based New Century Financial Corp.
Last week, the subprime mortgage lender filed for bankruptcy reorganization after a swift and steep meltdown.
In February, what was the country’s second largest lender to borrowers with imperfect credit said it needed to restate some 2006 results to fix accounting errors. That started a dramatic spiral that wiped away nearly $1.6 billion in market value in about six weeks.
The company hopes to regroup and has sales of some of its businesses in the works.
We kept New Century on our list since it held a dominant place among the largest public companies here last year, even though the company’s revenue and profit figures on the list for the 12 months through September are set to be restated.
Rounding out the top 10 is No. 10 Huntington Beach-based Quiksilver Inc., which saw a 20% rise to $2.4 billion in sales for the 12 months through January. The 2005 buy of France’s Skis Rossignol SA for $320 million helped drive the gain.
As for jobs, all of the companies continued a running trend, growing jobs elsewhere while either holding steady or contracting locally.
The 75 companies on this year’s list employ 38,770 people in OC, flat from a year ago. Globally, they employ 296,736 people, up 8% from a year earlier.
Quiksilver had one of the bigger global gains, growing 17% to 9,200 workers on the heels of the Rossignol buy.
Departures, Newcomers
Besides Fluor and William Lyon, several other companies from a year ago are gone.
They include Irvine’s Westcorp Inc., last year’s No. 16, and subsidiary WFS Financial Inc. of Irvine, last year’s No. 17. Wachovia Corp. bought both in early 2006.
Other companies that were acquired: Newport Beach’s Sybron Dental Specialties Inc., last year’s No. 27; Aliso Viejo’s RemedyTemp Inc., No. 32 last year; Newport Beach’s Water Pik Technologies Inc., last year’s No. 42; and Commercial Capital Bancorp of Irvine, No. 46 last year.
This year’s list includes five newcomers, along with others that moved up from our second list of 75 public companies based here. This year’s list of the second 75 public companies is set to appear on April 23.
Besides Kaiser Aluminum, the other newcomers are: No. 50 Fuel Systems Solutions Inc., which moved from Cerritos to Santa Ana in October; No. 53 Newport Beach-based Jazz Technologies Inc., formerly Acquicor Technology Inc., which went public last year and bought chipmaker Jazz Semiconductor earlier this year; No. 59 Irvine-based Netlist Inc., which went public last year; and No. 73 Anaheim-based Willdan Group Inc., which also went public last year.
