Florida, unfortunately, has traditionally fared poorly at attracting and holding big public firms. The state ranks 10th in the U.S. in the number of Fortune 500 companies based here, with 15. And that number is misleading: Fortune magazine considers Lakeland-based Publix Super Markets a Florida public company, but Publix itself does not, because its stock is available only to employees. Food distributor ProSource, No. 6 last year on the Florida Trend list of top public companies, merged in May with AmeriServe Food Distribution, based in Dallas. In January, NationsBank Corp., based in Charlotte, N.C., acquired Barnett, formerly ranked No. 11. With the imminent loss of Knight-Ridder, No. 12 a year ago, it's fairer to say that Florida has only 11 Fortune 500 companies.
The pages that follow offer snapshots of ten of the most dynamic companies on the Florida Trend Top 250 Public Companies list. The rising tide didn't lift all boats; three of the companies profiled had a tough year. The others reflect the generally heady nature of state's economy, however. Two leaped into the top 60 in their first year on the list, while five more showed big gains.
Nice Place to Visit, but...
Florida is the fourth most populous state in the nation, behind California, Texas and New York, but as a headquarters for Fortune 500 companies, the state is definitely second tier.
Fortune 500 companies in other states:
New York 61
California 52
Illinois 41
Texas 36
Ohio 30
Pennsylvania 29
New Jersey 26
Virginia 19
Connecticut 18
Massachusetts 17
Florida 15
Minnesota 15
Missouri 15
Georgia 14
Michigan 13
Source: Fortune magazine, April 27, 1998.
12. AccuStaff: Confidence
Addressing his shareholders in May, AccuStaff Inc. Chairman, President and Chief Executive Officer Derek Dewan sounded a little like James "I'm King of the World" Cameron when he accepted an Oscar for directing the blockbuster film "Titanic": "We're in this thing to be the global dominant player in the areas we do business in, and we will," the ever-confident Dewan told investors. "I'll sit here again next year and show you we will be the global dominant player." We'll see. In the meantime, Dewan and his management team at the Jacksonville-based staffing services company are aggressively pushing their growth and acquisition strategy - all the while deftly avoiding the hidden dangers that can sink hyper-growth enterprises. Formed five years ago from the merger of four smaller regional temporary staffing firms, AccuStaff has since completed a staggering 100 acquisitions. The company has three primary business lines: information technology; professional, such as engineering and accounting; and commercial services, which includes staffing and outsourcing.
Last year, AccuStaff posted revenues of $2.4 billion, and company officials expect the number to reach $3.2 billion this year without any new mergers. AccuStaff's stated goal in recent years has been to expand revenues by 40% a year, half from acquisitions and half from internal growth. "They've been able to exceed the goal for the last three years," says Mercedes Sanchez, an analyst at Raymond James & Associates in St. Petersburg.
Any concerns about growing too fast? Not from Sanchez. She's confident Dewan has put together a strong management team. Her one big concern, however, is AccuStaff's ability to find qualified workers in today's tight labor market. "The growth rate of the company will be enhanced if the labor market loosens," she says. - John Finotti
6. Ryder System: Getting There
Ryder System would like to make one thing clear: It's not a trucking company anymore. The Miami company dumped its trademark yellow rental trucks in 1996. It still leases trucks, but only to corporations like Home Depot that sign long-term contracts. Ryder sees its real future in the business of logistics.
Logistics boils down to moving goods from place to place, but of course it's a lot more sophisticated than that. It means coordinating the Miami Herald's newspaper delivery and networking into retail chain Target's inventory management computers to ensure stores are stocked properly. For Saturn's Tennessee manufacturing plant, it means delivering parts 2,200 times a day - in five-minute increments - and then transporting finished cars to their next destination. Ryder's evolution from trucker to logistics provider continues. The company is now in talks to sell its United Kingdom trucking business, and it recently purchased a Brazilian logistics firm.
Sounds nifty, but Ryder has yet to convince Wall Street analysts, who remain disgruntled after years of stagnation and a $41 million loss in 1996 - partly the result of a $15 million restructuring charge. "They're saying, "show us it's really going to work,'" says Ryder spokesman Art Stone. Since an April analysts meeting held at the Saturn plant, Ryder's stock price has fallen 25%. - Lisa Gibbs
22. Budget Group: A Giant in Daytona
"Anytime you go from being a David to a Goliath, people take notice," says Jackson Spear, analyst for ABN AMRO in Chicago. David, in this case, was a small investment group led by Sandy Miller, who in 1980 opened a single Budget Rent-A-Car franchise in Daytona Beach.
During the remainder of that decade, Miller and partners Jeff Congdon and John P. Kennedy set out to buy Budget franchises around the U.S. In 1994, they took Team Rental public and raised $30 million to buy more franchises. By 1997, they owned 192 locations in nine states, and their timing was good: Big car manufacturers were leaving the car-rental business. In 1997, Ford Motor Co. put Budget up for sale, and Team Rental bought Budget's entire operation.
Miller was suddenly the CEO of the world's third largest car and truck rental enterprise, an enterprise with $1 billion in revenues, business in 125 countries - and also some problems. "That Budget was undermanaged by Ford is putting it nicely," says Spear. "In 1994, Budget had 14% of the market share; last year it slipped to about 10%."
Budget Group, as the company is now called, has edged up to a 13% share. Meg Saegenbarth, an analyst for Goldman Sachs, in New York City, notes, "They've revived a brand name and turned the company around." Budget Group reported first quarter 1998 revenues of $456 million, up from $116 million for the same period last year. Acquisitions and increased car-rental demand have helped. So too has Miller's strategy of marketing his company's diversity. Budget rents everything from Jaguars, motorcycles, RVs and minivans to economy cars and trucks. But the surprise hit is an urban cowboy favorite. "Since September of 1997, we've had $18 million in revenues for our Ford Ranger pickup in just the U.S. alone," says company spokesperson Kim Mulcahy.
Budget Group still has acquisition fever. Recently, it added Premier Car Rental, Cruise America and Ryder TRS to its transportation empire. And it continues to pick up franchises all over the globe. - John M. Dunn
62. Sykes Enterprises: Answering the Call
Profiting from the rising fortunes of computer giants such as IBM and Compaq, Sykes Enterprises posted record revenues and profits in 1997. Sykes, which operates nine domestic and 11 international call centers, provides technical customer service support for companies such as Apple, NationsBank and Hewlett Packard as well as IBM and Compaq. Sales last year were $313.2 million, up 43% from 1996, while net income rose 126% to $22.2 million.
Since going public in 1996, the company has pumped revenues both through internal growth and acquisitions, including its $1.8 million purchase of Scotland's McQueen International Ltd. last fall. McQueen expanded Sykes customer services by adding a fulfillment operation and call centers in Scotland and Ireland. Another tactic has been adding new types of customer services. In December, for example, Sykes teamed up with Tampa's HealthPlan Services to form Sykes HealthPlan Services, a joint venture that provides outsourced healthcare management and employee benefits administration. The venture recently filed for an initial public offering; as part of the IPO, Sykes plans to sell part of its stake in the company, a move that should give Sykes additional capital in 1998. "The company has attempted to augment its call center business with other acquisitions to provide a more complete list of services," says John Mahoney, an equity analyst with Raymond James, adding, "That plays well in the current market." - Barbara Miracle
114. Citrix Systems: Problem Solving
Citrix Systems makes "thin" client/server software. Translation: Citrix software enables all kinds of computers to run Windows applications off a central server, allowing corporations with farflung operations and motley computer systems to be on the same page, um, screen. Apparently enough people understand Citrix's products to keep sales soaring, up 178% in 1997 and 129% this year compared with 1997's first quarter. "It's just been a matter of people recognizing that there was indeed a problem, and we solved it," says Citrix CFO Jim Felcyn.
While growth is strong, Fort Lauderdale-based Citrix can't afford to relax. Competition could spring up at any time, even from licensing partner Microsoft Corp. That's why Citrix this year is intensifying efforts to beef up its core products with new features and build international sales. Felcyn says Citrix has established a beachhead in Europe and will focus now on Latin America and the Pacific Rim. Citrix's biggest problem may be finding the technical talent it needs to keep up the pace. It grew from 163 to 305 employees in 1997, and hired another 121 in the first quarter alone. "It's always difficult to find good people," Felcyn says. - Lisa Gibbs
Newcomers:
17. Staff Leasing: Splashy Debut
Bradenton-based Staff Leasing, the largest professional employer organization (PEO) in the U.S., makes a splashy debut on Florida Trend's 1998 Top 250 Public Companies list. On the heels of its IPO in July 1997, Staff Leasing becomes the17th largest public company in the state, leapfrogging PEO rival Vincam (No. 24), based in Coral Gables. Staff Leasing offers a range of human resources services, including payroll and benefits administration, to businesses with five to 100 employees. The company has about 9,800 clients (8,000 in Florida), 116,000 worksite employees (91,600 in Florida) and 39 sales offices - in Florida, Texas, Georgia, Arizona, Minnesota and North Carolina.
After a shaky performance during 1996, which saw a net loss of $5.6 million, Staff Leasing took action on both sides of the ledger. To cut costs, it dumped a money-draining healthcare plan, says analyst Richard J. Wayman with The Ohio Co. To spur growth, he says, the company targeted the blue-collar segment of the industry; 28% of its employees in 1997 were construction workers. The combination brought results: Revenues increased 29.3% to $1.85 billion in 1997, while net income was $28.4 million. All the growth came internally rather than through acquisitions.
In 1998, Wayman predicts "more of the same" for the company. In the first quarter, revenues increased 34.1% to $539.6 million, up from $402.5 million for first quarter last year. Net income was $5.4 million. Company officials say their long-term goal is to dominate four regions: the Southwest, Southeast, upper Midwest and North Carolina/Tennessee. The company opened offices in Fort Walton Beach and Fort Worth, Texas, in March, in Charlotte, N.C., in June and will roll out five more by the end of the year. - Cynthia Barnett
59. PhyMatrix Corp.: A Better Way?
The road to profits in healthcare is paved with flawed business models. HMOs are not only bleeding money, they're combating a backlash from consumers and physicians. Companies that hoped to hit it big buying up physician practices proved not particularly profitable. PhyMatrix Corp. of West Palm Beach thinks it has a better way.
As President Robert Miller explains it, PhyMatrix takes the concept of health provider network to a new level. PhyMatrix integrates doctors, hospitals, pharmacies, clinical research and medical facilities within concentrated geographic areas, not just to contract with insurance companies but to develop ways to deliver the high quality healthcare the marketplace now demands. "Where people have been managing costs, the next generation is truly to manage care," Miller says. PhyMatrix took in nearly $347 million in fiscal 1998, a 67% increase over the year before.
Considering the brains behind PhyMatrix, that growth is understandable. The company's chairman and CEO is entrepreneur Abraham Gosman, who runs the country's largest healthcare real estate investment trust (REIT). PhyMatrix, like the REIT, is but one piece of Gosman's "continuum of care." (PhyMatrix used to be named Continuum Corp.) He also runs CareMatrix, a fast-growing builder of assisted living facilities. Bricks and mortar, in fact, make up 42% of PhyMatrix's business; the company is the largest builder of medical facilities in the U.S., constructing everything from cancer centers to physician offices. Gosman's acumen notwithstanding, PhyMatrix's stock price has been lackluster, and what the future holds is unclear: PhyMatrix announced in May it was seeking "strategic alternatives" - maybe a merger or management buy-back. - Lisa Gibbs
What's the Problem?
10. Darden Restaurants: Reconstruction
It was a tough year for Darden Restaurants, the Orlando-based group of casual dining eateries that includes Red Lobster, Olive Garden and Bahama Breeze, a start-up chain that features Caribbean food. Darden, spun off from General Mills in 1995, posted a net loss of $91 million on sales of $3.17 billion in 1997, down sharply from the company's 1996 profit of $74.4 million on sales of $3.19 billion. The drag on Florida's 10th largest company has come as sales at company mainstay Red Lobster have fallen.
To stem the red ink, Red Lobster, which opened its first restaurant 30 years ago in Lakeland, has closed 45 locations since the beginning of fiscal 1997, taking a restructuring charge of $230 million, and is reinvigorating its remaining 684 restaurants with a new menu, decor, advertising campaign and lower prices. So far, the strategy appears to be working. In its most recent quarter, ended February 22, 1998, Darden reported net income of $29.8 million, almost double the $15.7 million for the same quarter in 1997. Red Lobster's same store sales for the quarter were up by 2.8%. "I do think that the worst is over," says Mitchell Speiser, an analyst with Lehman Brothers in New York City. "You can see that with their comparable store sales, which are finally running positive." - Barbara Miracle
45. Jumbo Sports: Too Many Markets
JumboSports is down, and the question now is whether the company can get up off the canvas and fight another round. For the past couple years, the signs have been ominous: JumboSports lost $30 million in 1996, but revenues were up as the Tampa-based sporting goods retailer continued to open new stores. Then, in 1997, JumboSports lost $111 million, with revenues falling 15% to $529 million. The company had to start closing stores - from 85 in 29 states to 59 in 23 states. Announcing the cutbacks, JumboSports Chairman, President and CEO Jack E. Bush admitted: "The company has struggled due to rapid expansion in too many markets."
JumboSports stock, trading near $8 a share in January 1997, sank to $1 this past January. That month, the company brought in a new chief operating officer and stabilized its cash flow through June 1999 with a $180 million credit facility, secured by JumboSports inventory and real estate. Tampa-based broker/dealer GunnAllen Financial issued a "speculative buy" rating in March and a year-end target price of $5, with the caveat: "Should only be undertaken by those investors who can afford to lose their entire investment." In early June, JumboSports shares trade at $1.13
For its first quarter, ended April 30, the company reported a loss of $6 million and a drop in same store sales of about 12.3%. Bush was forward-looking: "We have identified a number of opportunities that we believe will help support our efforts to return JumboSports to profitability." The problem is, he could run out of time. - Tim Meyer
158. Boca Research: Mis-Telecommunications
Boca Research CEO Tony Zalenski would rather not talk about 1997. "Are you trying to depress me?" he asks. Cutthroat price wars and weak sales lopped off 55% of the Boca Raton-based PC-modem maker's sales last year, and the company dropped 58 positions to No. 158 among Florida public companies. Zalenski explains that consumers put off buying Boca's new, superfast 56K modems until the industry resolved technical issues, which took longer than expected. Meanwhile, the company's older modems were rendered practically worthless.
Zalenski's response: Conserve cash until the storm passed and diversify the business to avoid a repeat disaster. That explains Boca Research's move into the Internet appliance industry. It's developing a line of inexpensive "boxes" that allow TVs to be used like computers; the first debuts this summer.
From concept to product launch in under a year? "It doesn't take you long to focus on something when you've been through a year like we have," Zalenski says. He hopes that by year-end 1999, Internet appliances - not modems - will be Boca Research's primary revenue driver. But he's also diversifying modem offerings with the $10 million purchase in May of the Macintosh-modem operations of California manufacturer Global Village Communications. That deal could help to replace about $65 million in lost sales.
(A complete listing of the Top 250 Public Companies is available. See "TopRank Florida" link from the main page.)