The fun is back for the Impact 50.
Higher sales lifted profits last year for most of the 50 public
companies that help shape the Rhode Island and Southeastern
Massachusetts economy.
The improved performance came after three difficult years during which
many in the group posted losses and sales barely increased.
For workers, the pickup translated into more jobs, with about
three-quarters of the Impact 50 companies adding workers.
For investors, the pickup meant strong stock gains after three down
years. The Bloomberg Impact 50 Index rose 29 percent last year,
outperforming the Dow Jones industrial and Standard & Poor's 500 indexes.
The question now: Can the Impact 50 keep its momentum going in 2004, or
will it will be knocked off track by inflation, high energy prices or
consumers who suddenly pull back on spending?
Albert W. Ondis, chief executive officer of Astro-Med Inc. of West
Warwick, acknowledged the uncertainty associated the Iraq war and high
oil prices, but he expressed confidence about economic prospects.
"I think the climate is very good for companies like ours, operating in
niche markets," said Ondis.
Astro-Med, which manufactures specialty printing systems, medical
instruments and test and measurement systems, was one of the top
performers in the Impact 50 in 2003.
This is the fifth year that the business staff of The Providence Journal
has examined the performance of the Impact 50, a group of companies
either based in this region or with significant operations here.
Good times rolled in 1999, the first year of the Impact 50 report, but
performance started slipping in 2000, as the tech bubble began to burst
on Wall Street. For three consecutive years -- 2000 through 2002 -- the
number of companies posting losses increased. That trend finally
reversed itself last year.
Twelve companies turned from losses in 2002 to profits in 2003. No one
did the reverse -- losing money after turning a profit the previous year
-- as all five companies lost that lost money in 2003 had also posted
losses for the previous year.
The Impact 50 members range from some of the largest corporations in the
country to small upstarts still looking to make their marks.
The membership changes from year to year as companies are bought, scale
back, open new operations or stop trading on the major stock exchanges.
Included in this year's Impact 50 are 13 Rhode Island-headquartered
companies and 9 from Massachusetts.
The Impact 50 does not include nonpublic companies, even though they are
some of the area's largest employers. Privately held Fidelity
Investments and foreign-owned Citizens Financial Group, a subsidiary of
the Royal Bank of Scotland Group, fall into this category.
The most notable change in the makeup of this year's Impact 50 list is
the removal of a stalwart of the Rhode Island economy, FleetBoston
Financial Corp.
The Providence-born bank was acquired by Bank of America Corp. of
Charlotte, N.C., last month. The Fleet signs remain at local branches,
but they will come down in the months ahead and be replaced by Bank of
America's red, white and blue logo.
Bank of America takes over Fleet's slot in the Impact 50 this year and
is one of three new members. The others are Webster Financial Corp. and
The Rouse Co., the new owner of Providence Place mall.
Webster, of Waterbury, Conn., last week completed its acquisition of
another Impact 50 banking company, FirstFed America Bancorp of Swansea.
Webster is now the largest independent bank holding company in southern
New England.
Baltimore-based Rouse replaces ON Semiconductor, a Phoenix-based company
that is scaling back its East Greenwich manufacturing operation and
moving it to Central Europe. It will keep some nonmanufacturing jobs in
East Greenwich.
The bottom-line measurement of any public company is profit -- how much
money the company earned.
Last year, 45 members of the Impact 50 posted profits, a significant
improvement over the three previous years.
The earnings range from a high of $10.8 billion for Bank of America to a
low of $110,000 for the Lynch Corp., a manufacturer of equipment for the
electronic display and consumer glass industries that has a small
headquarters in Providence.
Collectively, the Impact 50 last year earned more than 600 percent more
than the previous year. That figure, however, is skewed by huge losses
posted in 2002 by two Impact 50 companies, Tyco International Ltd. ($9.4
billion) and Clear Channel Communications ($16 billion). Both companies
returned to profitability last year.
As a group, the Impact 50 earned $41 billion last year. The new bank in
town, Bank of America, accounted for more than a quarter of that amount.
Net income rose among 35 of the 50 companies, although in four cases
that meant only that they lost less money than the previous year.
Even more encouraging, nearly two-thirds of the companies saw their
sales increase, with overall revenue for the group rising a healthy 11
percent, more than triple the previous year's meager growth.
The biggest revenue gainer was Amgen, the biopharmaceutical giant that
has added more than 500 jobs in the past year at its West Greenwich
plant, where it manufactures its popular rheumatoid arthritis drug,
Enbrel.
Amgen, based in Thousand Oaks, Calif., also ranked as the company with
the widest profit margin at 27 percent.
Others that can boast about wide profit margins include four banks:
Webster, Bank of America, Washington Trust Bancorp, of Westerly, and
Sovereign Bancorp. All four posted margins that exceeded 20 percent.
The number of companies posting losses for 2003 fell after climbing for
three consecutive years, peaking at 17 in 2002.
The five companies that posted losses last year all populate the
technology and telecommunications sectors: Cox Communications, LIN TV
Corp. of Providence, Helix Technology Corp. of Mansfield, Mass., Kopin
Corp. of Taunton, Mass., and KVH Industries of Middletown.
On an absolute basis, Bank of America made more money than any other
Impact 50 company by far, earning nearly $11 billion last year. And that
does not take into account the Fleet acquisition, which will show up in
this year's results.
Rounding out the earnings top five behind Bank of America are four other
national giants:
Home Depot, which employs some 1,900 people in Rhode Island.
Pfizer, the drugmaker with a major research-and-development facility in
New London, Conn.
Verizon Communications, even though its earnings fell 25 percent last
year.
Amgen, the biopharmaceutical giant that now employs some 1,300 people
in West Greenwich.
CVS Corp. of Woonsocket, now the nation's largest drugstore chain,
ranked as the top-earning Rhode Island company -- 14th overall -- with
$847 million in profits last year, an 18-percent gain over the previous
year.
Among Rhode Island companies, CVS is in a league by itself.
The company's earnings are more than three times greater than its next
closest neighbor, Textron, and its $26.6 billion in sales last year is
more than double Textron's.
That lead may lengthen this year as CVS expands its drugstore empire
with the recent $2.2-billion purchase of 1,260 Eckerd drugstores, three
distribution centers and a pharmacy benefits manager.
The other top-earning Rhode Island-based companies behind CVS and
Textron are GTECH, American Power Conversion and Hasbro, which are
grouped together.
At the smaller end of the scale, Astro-Med qualified as one of the
most-improved performers in the Impact 50. It went from a $1.9-million
loss in 2002 to a $3.2-million profit last year. The 271-percent
turnaround ranked it sixth in earnings improvement just behind its much
bigger Rhode Island neighbor, Textron.
Ondis attributed the Astro-Med turnaround to the introduction of new
products that had been in the works for a few years, the stronger
economy and a weaker U.S. dollar that helps companies like his that
export products.
"We do sell internationally. We sell all around the United States, so we
get a good look," said Ondis. "I would say things look pretty favorably."
Contact David McPherson at
dmcpherson [at] projo.com.
DIGITAL EXTRA: View the Impact 50 financial data and get live stock
quotes for the companies:
http://www.projo.com/business/impact50/
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