For oil and gas explorers, it was the return of black gold.
For homebuilders and their suppliers, it was an eye-popping first half of the year before rising interest rates and economic worries slowed construction in the back half.
And across the North Texas region, out-of-state relocations and public trading debuts brought nine new companies to an already diverse corporate community — more than offsetting the four firms that left because of private acquisition or bankruptcy.
Those are among the key takeaways from The Dallas Morning News’ annual ranking of the 150 largest publicly traded companies in Dallas-Fort Worth, based on revenue for fiscal year 2022. The ranking is the most complete in the market, making it an important gauge for rivals, a recruiting tool in a tight labor market and a guide for job-seekers looking for their next gig.
Topping the ranking for the final time is Exxon Mobil Corp., with revenue over $413 billion and profits exceeding $55 billion. Exxon held the top spot in all but one year since moving its corporate headquarters from New York City to Irving in 1989.
The oil giant just recently changed its corporate address to Spring, marking its official relocation to the Houston area and the passing of the reins locally to Irving-based pharmaceutical distributor McKesson Corp. McKesson, which recorded sales of just under $264 billion for its 2022 fiscal year, briefly claimed the crown from Exxon in 2020 during one of the oil industry’s boom-and-bust cycles.
McKesson’s fiscal year ending March 31 means it’s already posted the number to beat this year — $276.7 billion, a 5% increase over 2022.
AT&T Inc. continues to be Dallas’ biggest corporate citizen, placing third overall with revenue of $120.7 billion. Its revenue sank 10% from a year earlier as the company shed entertainment-related businesses to return to its roots as a phone and internet provider.
Dallas-headquartered companies dominate the rankings, with the metro area’s largest city accounting for 70 of the 150 firms. Nearly half of those companies posted at least $1 billion in annual revenue, including Pittsburgh transplant ATI Inc.
Irving’s 19 companies in the ranking helped reinforce that city’s self-ascribed nickname as the headquarters of headquarters. Its big win last year was the relocation of Caterpillar Inc.’s corporate headquarters from the Chicago area.
In total, 24 North Texas communities were represented in the rankings. The region also placed two dozen companies on this year’s Fortune 500 list.
Besides Caterpillar and ATI, other newcomers this year were oil and gas companies ProFrac and TXO Energy Partners, private equity firm TPG Inc., California-transplant Landsea Homes and newly public Southland Holdings Inc., Enhabit Home Health and Hospice and NexPoint Diversified Real Estate Trust.
Dropping off the list is Plano-based Loyalty Ventures Inc., which filed for bankruptcy in March. Forterra Inc., CyrusOne Inc. and Elevate Credit Inc. also depart after being acquired and taken private.
Despite a few withdrawals, Business Facilities recently ranked Texas as the top destination for businesses looking to relocate and expand. The state also topped Site Selection’s ranking for business investment for the11th straight year.
‘Flat tunes’
Energy-related companies dominated this year’s rankings as the biggest revenue winners based on year-over-year percentage change. Dallas-based Permian Basin Royalty Trust saw its revenue shoot up 361%, the highest of any company this year. The trust holds mineral rights on properties in Crane County.
Fort Worth-based HighPeak Energy, which went public in 2020, wasn’t far behind with a 243% revenue increase. That followed a meteoric 794% spike in 2021. Willow Park oilfield firm ProFrac, which went public in May 2022, saw its revenue rise 216% last year.
Oil and gas companies are still posting profitable numbers, but experts say the market has hit a wall.
“Torpor is the proper term to describe what’s happened in the oil market the last few months,” said Tom Kloza, global head of energy analysis for the Oil Price Information Service. “You can make the statistics dance to whatever tune you want. Right now, they’re dancing to a tune that is very flat.”
Lower oil and gas prices and higher costs will mean smaller profits this year for energy companies, said Patrick De Haan, head of petroleum for GasBuddy.
“Last year, oil prices were through the roof. There were a lot of green lights the administration was giving the oil companies,” De Haan said. “Now, the administration is looking to diversify sources of energy in oil and gas and moving away from some of these traditional fossil fuels and hydrocarbon.”
Russia and Ukraine’s ongoing war continues to be one of the biggest influencers on oil and gas markets.
“There’s generally been the mantra of being conservative,” Kloza said. “But, at any moment, if we were to go to 13 and a half million barrels a day and OPEC+ was to lose cohesion because it’s pretty tough to manage Saudi Arabia and Russia, prices could drop very, very quickly.”
De Haan said the biggest threat to oil and gas companies lies beyond Texas’ borders.
“The broader U.S. economy, the pace of slowdown, how much we see the economy slow down, what the policy is in terms of monetary policy, all of those are, are going to be really critical to the outlook for the oil and gas sector,” De Haan said. “The Federal Reserve raising interest rates is absolutely huge.”
With Exxon departing North Texas, Waco economist Ray Perryman said he still sees a positive outlook for D-FW’s energy companies.
“Even without ExxonMobil, for example, companies in energy-related segments would comprise about 20% of the total revenues,” Perryman said. “The numbers will likely be a bit weaker next year, as prices of oil and natural gas were elevated in 2022 as compared to now, but production continues to expand.”
A mixed bag
For consumer-oriented businesses, 2022 was a bit of a mixed bag. Plano-based movie theater chain Cinemark Holdings Inc. and Fort Worth-based pawn shop operator FirstCash Inc. posted healthy double-digit revenue increases of 63% and 61%, respectively.
Kimberly-Clark Corp., the Irving-based maker of everything from Huggies diapers and Kleenex facial tissues to Cottonelle toilet paper, recorded a smaller revenue increase of 4%. Its sales topped $20 billion.
Struggling video game retailer GameStop Corp. managed to rack up sales totaling nearly $6 billion, only 1% off the Grapevine-based company’s 2021 revenue.
Two of D-FW’s most well-known companies, Fort Worth-based American Airlines and Dallas-based Southwest Airlines, continued post-pandemic recoveries driven by pent-up travel demand. American’s revenue grew 64% in 2022 over the previous year, while Southwest’s rose 51%. They’re in the middle of what is expected to be one of the busiest travel summers ever.
A soft landing from the devastating pandemic is something consumer businesses are still trying to figure out, said Ed Fox, a marketing professor at Southern Methodist University in Dallas.
“There was a novelty around returning to normal. But we’ve really only adapted to things,” Fox said. “Delivery is much more pervasive than it used to be and the department store business is struggling. Companies need robust supply chains, flexibility and engagement with consumers in digital spaces.”
Fox said companies like JCPenney, which filed for bankruptcy in 2020 before emerging with mall owners as its savior, is an example of the importance of successfully switching to online shopping. The department store chain posted a profit of $219 million in its 2022 fiscal year on revenue of $7.96 billion, compared with a profit of $345 million on sales of $8.24 billion the prior year, according to regulatory filings.
JCPenney wasn’t “as effective in serving customers online as they were serving customers in-store,” Fox said. “But that has become the name of the game.”
Restaurant chains like WingStop, which posted a revenue increase of 27%, benefited from switching aspects of their businesses online during the pandemic. The return of the consumer once the pandemic began to wane then helped Dallas-based Dave and Busters Entertainment Inc. record a 51% revenue jump last year.
“Dave and Busters was part of a set of retailers who relied on the customer experience,” Fox said.
Inflation and economic shocks will set the tone for how the rest of the year goes for consumer businesses.
“I think we’re going to see costs and inflation go down. The government has done a lot regarding interest rates and money supply to make that happen,” Fox said. “The demand for labor is still strong, even though interest rates have more than doubled. Companies need to be adaptable to these changing conditions.”
The region’s least profitable company in 2022 was AT&T, which recorded a $7 billion loss as it exited previous deals that sought to remake the telecommunications company into a media empire.
‘A prosperous region’
Nearly every manufacturing company in this year’s ranking saw revenue rise last year — regardless of whether it was metals and chemicals or heating and air conditioning and industrial products. Companies connected to real estate, such as home builders and their suppliers, also turned in solid years.
“Real estate was robust, which I think is reflective of growing home prices and residential real estate prices,” Fox said. “But commercial real estate is going the other way.”
With worries of a recession and soaring interest rates, commercial real estate in North Texas is another mixed bag. In the office building sector, vacancy rates are surging as fewer leases are made. But Dallas-Fort Worth’s shopping centers are enjoying almost record low vacancy rates with a lack of construction creating a tight market.
While tighter lending has slowed construction starts so far in 2023, D-FW still leads the country in construction employment growth with over 11,000 jobs added in the last year.
Comerica Inc. economist Bill Adams said he thinks D-FW’s real estate fundamentals will remain strong.
“We have a rapidly growing economy, there’s lots of available space for development, and people are attracted to this area by the good quality of life and cost of living,” he said. “It’s one of the fastest-growing markets in the U.S. housing industry generally. But that doesn’t mean it’s going to be immune from the effect of higher interest rates, which are a headwind for residential sales.”
The region’s diverse business base also tends to provide a buffer in uncertain economic times. When one sector is down, others are often up.
“[D-FW] is, in essence, the commercial, trade, transportation and financial center of one of the most prosperous regions in the country,” said Perryman, who’s been tracking the local economy for over 40 years. “I think the greater D-FW area will remain a key growth leader in the country for the foreseeable future.”
