The Feb. 10 engine room fire on the Carnival Triumph didn’t injure anyone. But the slow-mo PR disaster that unfolded on the four-day slog back to Mobile, Ala., knocked $2 billion off Carnival’s market cap. The real stock retreat came in the ensuing weeks and months: Investors looked at the costs — lost time at sea, equipment failure, bad publicity — and Carnival’s loss of pricing power as it discounted to woo the public back. By spring, $4 billion in market cap was gone.
Carnival, and its chairman, billionaire Micky Arison, have been there before. In January 2012, its subsidiary’s Costa Concordia wound up on its side while skirting an Italian island. That accident killed 32. It also clobbered Carnival’s finances and stock, but the company’s share price rebounded within a year. It helps that Carnival dominates the industry with its 10 brands, 100 ships, more than 200,000 berths and a global reach. There are alternatives — No. 2 cruise company Royal Caribbean (No. 10 on our list ), for instance — but it’s hard for the cruising public to abandon Carnival without abandoning cruising.
— Mike Vogel
When Bain Capital and Catterton Partners offered to purchase OSI Restaurant Partners for $3.2 billion seven years ago, the Tampa-based restaurant operator looked like a good bet. Best known for its Australian-themed Outback Steakhouse chain, the company’s margins had been declining for several years, but sales growth was strong — the company turned a $100-million profit in 2006. And with more than 1,400 locations, the company owned lots of real estate. By 2009, however, sales had stopped growing.
Turnaround firm AlixPartners helped the new owners identify cost savings and recommended the appointment of former Avon executive Liz Smith as CEO. Smith implemented productivity and cost management initiatives that have saved the restaurant operator more than $200 million and helped refresh the company’s five brands. By 2011, the Tampa-based restaurant chain, now called Bloomin’ Brands, was back in the black, with a $100-million profit. Smith also developed a plan to renew growth that includes revamped menus and updated décor at the Outback and Carrabba’s restaurants. Bloomin’ Brands also has moved a number of its Outback restaurants to more prime locations, boosting average sales by about 40% at some spots.
— Amy Keller
“Work is no longer a place,” Citrix President and CEO Mark Templeton told analysts earlier this year. That’s good news for Citrix, the cloud-based software company whose strong suit is allowing people to remotely tap into their employers’ networks and applications, enabling employees to log into Microsoft Word or Excel without having to install or upgrade software on individual computers. The movement to cloud computing suits it fine.
Citrix products include XenDesktop, NetScaler, GoToMeeting and GoToMyPC, the last of which lets people access their desktop computer remotely from a browser, Android or Apple device. Analyst firm IDC has rated GoToMyPC best in remote access for five years running. “While freemium products continue to exhibit growth, holistic packages such as GoToMyPC ultimately remain more attractive to the end user,” IDC analyst Ben Hoffman said.
With so many employees using so many forms of mobile devices, Citrix offers corporations an alternative to deploying tons of different answers to get them all to connect — “any app, any device, anywhere,” as the mantra goes. Citrix foresees a $16-billion market by 2015.
Citrix is still at the mercy of companies’ individual IT budgets. It missed expectations in the first quarter and lowered profit forecasts for the year. Even so, it grew its workforce 19% last year and is expecting to do the same this year. “Consistently, CIOs everywhere tell me they are challenged by the transformation, consumerization and fragmentation taking place in computing. These forces are creating even more interest in mobility and cloud services,” Templeton says.
— Mike Vogel
The GEO Group’s recent conversion to a real estate investment trust already appears to be paying off. While the private prison operator’s revenue increased 5% in the first quarter of 2013 over the previous year, profit was up 56% thanks in large part to reduced taxes. The company’s provision for income taxes was $881,000 during the first quarter of 2013, compared to $8.5 million a year earlier. While GEO Group had to sell off health care subsidiary GEO Care in the restructuring — REITs are restricted from operating and managing health care facilities — the company says its new structure will create opportunities for growth and allow the company to contain costs while maximizing shareholder value. Meanwhile, the for-profit prison operator has also been dealing with a number of publicity headaches this year, the most high-profile case stemming from the company’s offer to pay $6 million for naming rights to Florida Atlantic University’s football stadium. While school officials initially welcomed the deal, students protested the arrangement, saying they didn’t want the FAU Owls to play in a stadium named after a company that has been the target of numerous lawsuits and allegations of prisoner abuse. The GEO Group eventually withdrew its $6-million donation to the school, but protesters have continued to target the company, most recently picketing an annual shareholders meeting at the Breakers resort.
— Amy Keller
Jacksonville-based Web.com skyrocketed 20 notches this year after doubling its revenue in 2012 to $407.6 million. The company, which acquired Register.com and Network Solutions in 2010 and 2011, provides website and online marketing services to small and medium-sized companies.
While those deals helped push Web.com past the 3 million subscriber milestone last year, the company’s strategy is to grow its average revenue per user of $13.89 by offering additional services like online marketing and e-commerce.
To increase its visibility, the company last year took over as the title sponsor of the PGA’s developmental tour, previously known as the Nationwide Tour. “We’ve been a very quiet company up to this point,” CEO David L. Brown has said. “But we believe that mass adoption of the internet by small businesses is happening now; we think it’s the time to strike.”
— Amy Keller
FriendFinder Networks, the parent company of Penthouse magazine and operator of a number of sexually oriented social networks and dating sites, is at risk of being delisted from Nasdaq after it shares fell to less than $1 a share. The Boca Raton company, which went public in 2011 at $10 a share, reported a net loss of $49 million last year and noted in its SEC filings that it has a “history of significant net losses.” The company earned 28.9% of its revenue last year from interactive video websites, like Cams.com, which describes itself as a “100% XXX live porn site with thousands of different cam models.”
FriendFinder Networks reported that it paid $27.9 million in compensation to its models last year.
— Amy Keller
Lawmakers’ attempts to shrink state-run Citizens Property Insurance has been a boon for Homeowners Choice Property & Casualty, one of several companies that have been taking policies from the state’s last-resort insurer. Founded in 2007, the Tampa company now has more than 150,000 polices, about 2.5% of the Florida market, with about $340 million in annualized gross premiums.
That growth, combined with several quiet hurricane seasons — the company dealt with about 900 claims related to Tropical Storm Debby and Hurricane Isaac in 2012 — saw the company triple its profit to $30 million in 2012. It moves up 18 spots this year with $163 million in revenue.
The company has also been making moves outside the property insurance arena — purchasing waterfront property (including two marinas and a restaurant in Pinellas County), acquiring a software development firm in India and launching an IT division called Exzeo that plans to market software designed for its own insurance business to other companies. To reflect its diversification, Homeowners Choice rolled out a new name last April and is now doing business as the HCI Group.
Weiss Ratings has given Homeowners Choice a “D” rating because it has grown too fast and hasn’t yet been tested by a major storm, says Gavin Magor, a senior financial analyst at Weiss. Magor says HCI’s moves outside the insurance arena are unusual for a small property insurance company. “It isn’t normal for insurers to diversify into other areas of business. They tend to be more successful when they focus on their primary goal and vision of being insurers.”
— Amy Keller
LED lighting company Lighting Science Group had quite the first half of the year. In January, a new CEO, Jeremy Cage, came in. In April, it figured prominently in an article in the New York Times on the future of lighting. That same month, it showed off new products at the Lightfair International Show in Philadelphia.
Now if only it could unleash profits. Lighting Science makes LED bulbs that can be put in light fixtures designed for incandescent bulbs, selling 6 million in 2012, which it says makes it one of the largest in the world. It also does fixtures and custom work. But Lighting Science has never generated positive cash flow and has lived off issuing stock and borrowing. In March, it voluntarily recalled LED bulbs sold in Canada that posed a fire hazard. Its stock has traded at less than $1 a share all year. One stockholder has a suit pending to rescind a $25-million investment.
Lighting Science relies heavily on sales of its bulbs to Home Depot (48% of net sales) and Osram Sylvania (21%), but Sylvania cut purchases way back, and the company doesn’t expect it to be a significant customer this year. While revenue was up 17% in 2012, the cost of goods — not including sales and marketing, research and overhead — was more than revenue.
— Mike Vogel
In 2007, before the economy went off the cliff, Jeffrey H. Fisher, CEO of Innkeepers USA, sold the 74-hotel real estate investment trust he had founded to an institutional investor for $1.5 billion. Three years later, as the economy clawed its way back, Fisher returned to the industry, taking public Chatham Lodging Trust. It now owns 75 hotels acquired for approximately $1.5 billion and has a 10% stake in a joint venture that bought 64 hotels from his former business — Innkeepers — out of bankruptcy for $1.02 billion.
Chatham has been posting industry-beating numbers thanks in part to properties booked up with emergency personnel and displaced residents from Tropical Storm Sandy. Its properties are concentrated on the coasts and the New York, D.C. and southern California metros. It has just five properties in Florida from Fort Walton Beach to Fort Lauderdale.
Fisher has said a key for Chatham is aggressive asset management. As a REIT, Chatham can’t operate its own hotels, but it can “proactively manage our third-party hotel managers.” Fisher owns 90% of one of those managers, Island Hospitality Management, which as of April ran 18 of the REIT’s hotels and 54 of the joint venture’s hotels. It got $2.3 million in management fees last year from Chatham.
With an expanding economy and a low supply of new hotels coming on the market, Fisher says, “We are very bullish on the lodging industry in 2012 and beyond.”
— Mike Vogel
Looking Ahead to 2014 ...
Hertz’s recent decision to relocate its headquarters from Park Ridge, N.J., to southwest Florida will shake up next year’s roster of top public companies. With nearly $8.3 billion
in revenue in 2012, the car rental giant becomes Florida’s 17th Fortune 500 company and would have displaced Orlando-based Darden Restaurants as the state’s ninth-biggest public company had it been on this year’s list.
Southwest Florida’s workforce, prospects for growth, the state’s dominant tourism industry and quality of life all factored heavily into Hertz’s decision to move to Estero, just south of Fort Myers in Lee County. The company is in expansion mode after buying Tulsa, Okla.-based Dollar Thrifty Automotive Group last year, and plans to move 700 jobs here over two years.
Hertz plans to build a $50.5-million, 300,000-sq.-ft. headquarters.
— Amy Keller