Recession's Effects on Arkansas' Public Companies Prove Mixed

(To see the reports from Arkansas' top public companies, click here. Spreadsheets of the reports as well as the publicly traded financial institutions are also available.)

The recession that began in the last quarter of 2007 began to affect Arkansas’ publicly traded companies in 2008, though other factors played their part in both earnings and losses.

The economic downturn has proven beneficial to Wal-Mart Stores Inc., for example, as wallet-watching shoppers headed to the stores known for their everyday low prices. Income for the world’s largest retailer rose to $13.4 billion compared with $12.7 billion during its previous fiscal year.

And a spike in oil and gasoline prices last summer helped Murphy Oil Corp. more than double its earnings, to $1.7 billion compared with $766 million in 2007.

The state’s transportation companies, however, felt the effect of the slowing demand for goods. J.B. Hunt Transport Services Inc., Arkansas Best Corp. and P.A.M. Transportation Services Inc. all saw declines. Only USA Truck Inc. managed a gain, turning a profit of $3.1 million compared with earnings of only $100,000 the year before. P.A.M. posted a loss of $18.8 million.

Taking the hardest blow last year was upscale retailer Dillard’s Inc. It lost $241 million in 2008 compared with a profit of $54 million in 2007. Others reporting in the red last year were Acxiom Corp., which lost $7.8 million, and Advanced Environmental Recycling Technologies Inc., which lost $35.9 million.

But last year’s developments weren’t all about profits and losses. The state’s two largest public companies, based on last year’s revenue — Wal-Mart and Murphy Oil — saw changes in their top leadership, though those changes actually took place at the beginning of their new fiscal years.

Michael T. Duke is the new president and CEO of Wal-Mart after the retirement of Lee Scott. From 2005 to February 2009, Duke served as vice chairman of the company, leading Wal-Mart International. He joined the company in 1995.  

At Murphy, longtime leader Claiborne Deming retired and was replaced by David M. Wood on Jan. 1. He had served as the president of Murphy Exploration & Production Co. and as the company’s executive vice president of worldwide exploration and production operations for two years. He has been with the company since 1994.

Arkansas’ third-largest public company, Tyson Foods Inc., which saw higher grain prices cut into its profit, also got new leadership by calling on a previous chief, Leland E. Tollett. Tollett is serving as interim president and CEO after the ouster of Richard Bond. Tollett, 71, will serve until a successor is found. He was chairman and CEO from 1995 to 1998 and was president and CEO from 1991 to 1995. He is also a director of J.B. Hunt.

Banks, particularly the nation’s biggest banks, have received a great deal of publicity during the past year after risky transactions leading to major losses resulted in a financial bailout by the federal government. Regulators have closed a number of banks.

Arkansas’ publicly traded bank holding companies, however, performed well, though only Bank of the Ozarks Inc. managed a gain in income, to $38 million from $35.6 million in 2007. Simmons First National Corp. was down slightly, to $26.9 million from $27.4 million. But Home BancShares Inc. saw its income fall by half, to $10.1 million from $20.4 million in 2007. That decline was attributable primarily to the company’s increase in its provision for loan losses associated with the unfavorable economic conditions, particularly in the Florida market, combined with write-downs on other real estate owned and merger expenses.

Two of the state’s public companies — Equity Media Holdings Corp. and ThermoEnergy Corp. — haven’t yet filed annual reports with the Securities & Exchange Commission. ThermoEnergy hasn’t reported a profit in its 20 years of existence, and Equity is in bankruptcy proceedings and is selling off stations.

Two recent start-ups, both listed on the OTC Bulletin Board, started trading publicly in 2008: WellQuest Medical & Wellness Corp. of Bentonville and Kelyniam Global Inc. of Little Rock. WellQuest offers medical and preventive care and wellness services. Kelyniam is an engineering and management consulting company primarily serving large-scale manufacturing industries.

WellQuest reported a loss last year of $732,098 on revenue of $3.3 million. Kelyniam hasn’t filed its annual report yet.