These 7 Largest Iowa Corps generated Total Pretax Earnings which were up a very robust 53% over such amount two years ago in 2009.
Now I wanted to see if these superb earnings also applied to smaller Iowa Corps, which file with the SEC.
Thus, I found 17 Iowa headquartered Smaller Corps filing with the SEC, which had Pretax Income or Pretax Loss of $10 mil or more in any of the most recent three years, and which weren't included in the 7 Largest Iowa Corps. Thus, these 17 Smaller Iowa Corps also did not have Pretax Income or Pretax Loss of more than $100 mil in any of the most recent three years. I used a lower $10 mil Pretax Income and Pretax Loss threshold in order to make sure the number of companies here are of sufficient size to be able to reach a valid conclusion.
These 17 Smaller Iowa Corps more than quadrupled the very robust 53% earnings growth in the most recent two years of the 7 Largest Iowa Corps. The Total Pretax Income in 2011 of these 17 Smaller Iowa Corps was an off-the-charts 227% higher than such amount two years earlier in 2009.
Iowa citizens should be very proud of their outstanding Iowa companies.
And yeah, the Obama Administration created a very robust US economic environment, which permitted Iowa companies of all sizes to do just fantastically on the earnings front in the most recent two years.
But a second story here is the earnings results by year.
The 7 Largest Iowa Corps generated Pretax Income growth of 18% in 2011 over 2010, and of a much higher 30% in 2010 over 2009.
The 17 Smaller Iowa Corps generated Pretax Income growth of 13% in 2011 over 2010, and of an incredibly off-the-charts 189% in 2010 over 2009.
So why is it that these Iowa Corps did so much better in 2010 than they did in 2011? I think you need to look at the political situation.
In both years, the President was the same.....a Moderate Democrat.
However, the US House was under Republican control in 2011, but under Democratic control in 2010.
Also, the US Senate had a lower Democratic majority in 2011 than it did in 2010.
And the State Governors and State Legislatures, all across the country, were clearly more Very Conservative Republican in 2011 than they were in 2010.
So clearly, there was a substantial shift from Democratic control in 2010 to Republican control in 2011.
How could this change in political control make such a huge difference in Iowa company earnings?
It is pretty clear to me that in 2010, a Moderate Democratic President, coupled most importantly with a US House in Democratic hands, but also having a US Senate in Democratic hands, and further with having more State Governors and State Legislatures in Democratic hands, did wonders for corporate earnings growth in 2010. With this political structure, economic stimulus, both much needed business income tax stimulus and wise, carefully-vetted investment spending, can occur on a robust scale. And this very strong economic stimulus was in full throttle starting in the 4Q 2009, and did Corporations ever reap the benefit of this by generating exceptionally strong profits.
The worse thing that can happen after a financial meltdown, and near depression, is a US government that just waits for the free markets to correct themselves.....a laissez-faire approach, so favored by so many Republicans. Fortunately for the country, the exact opposite to that wisely happened in 2009 and 2010.
But then in 2011 and the first half of 2012, the US government was unfortunately forced into a laissez-faire economic approach, due to an uncompromising US Congress stopping nearly every economic initiative of the Obama Administration. The focus of the US Congress was almost singularly on austerity, when the improving, but still clearly struggling, US economy was shouting out for more economic stimulus, wisely designed.
Thus, things stopped to a walk on the US economic front when the US House switched to Republican control with the 2010 election, coupled with the US Senate Democratic majority rule being significantly reduced, and with many US States switching from Democratic Control to Republican Control.
Case in point is Business Income Tax Reform, which the Obama Administration strongly supports, and which nearly all Republicans say they are behind. If the President's Framework for Business Income Tax Reform, presented more than three months ago, is strengthened by the US Congress and passed, I am pretty certain that all of the US economic problems, including US real GDP growth, US unemployment, US underemployment, and the US Deficit....would all be substantially improved, and on an ongoing sustainable basis over the long run.
However, the US House Ways and Means Committee must initiate the legislation on this critically needed Business Income Tax Reform. And what have they done so far? Absolutely nothing. I'm not kidding. On the other hand, if the US House was under Democratic control, I am pretty certain that this Business Income Tax Reform would have gotten out of the US House Ways and Means Committee by now and been placed on the US House Floor.
Instead, the Republicans in the US House are focused on attempting to pass an extension of the much lower Bush income tax rates on the wealthy, which increases the US Deficit by more than a trillion dollars over the next decade, and creates almost no US jobs. This continual off-focus approach to governing by the Republicans in the US House shows that they are clearly unfit to be reelected, due to either their gross incompetence on US economic issues, or to their only be interested in governing for the top 1% of the country.
On the other hand, when the President is a Democrat and the US House is in Democratic control, economic initiatives move forward, and they clearly did very robustly in 2009 and 2010.
While substantial US job creation doesn't necessarily result from substantially higher corporate earnings, I can clearly tell you one thing.....lower corporate earnings will undoubtedly result in a significant loss of US jobs. When corporate earnings absolutely tanked in late 2008 and in 2009, corporations were very quick to dramatically cut US full-time employees. And to give a recent illustration, when Hewlett Packard recently announced down earnings, it also announced it will be cutting 27,000 jobs, or 8% of its workforce. And Ohio-based Procter & Gamble, just recently taking a $452 mil Restructuring Charge, has to mean a significant loss of US jobs. And Michigan's Dow Chemical did likewise. And I have seen so many large Restructuring Charges made by Corporations in their 1Q 2012 Earnings Statements, made in the same quarter where their earnings growth has fallen off the cliff.
In deriving Pretax Income, I start with Pretax Income under Generally Accepted Accounting Principles (GAAP), and then exclude several clearly unusual very large items relative to Pretax Income, such as Asset Impairments, and Gains and Losses on both Debt Retirements and Asset Dispositions.
I use Pretax Income rather than After-tax Net Income, since so much of the change in effective income tax rates just happens due to financial engineering.
I excluded Corps in the Development Stage, and ones generating losses for many years.
Let me first show each of the 7 Largest Iowa Corps. Below here is the Headquarters location and the Sector of each of these companies.
| Iowa Largest Corps | Iowa HQs | Sector |
| American Equity Investment Life | West Des Moines | Life Insurance |
| Caseys General Stores | Ankeny | Retail |
| FBL Financial Group | West Des Moines | Life Insurance |
| Meredith | Des Moines | Publishing |
| Principal Financial | Des Moines | Retirement Savings, Investments, and Insurance |
| Rockwell Collins | Cedar Rapids | Aircraft Parts and Equipment: US Defense Contractor |
| Sauer Danfoss | Ames | Manufacturing: Mobile Hydraulics |
And below here is the Pretax Income (PTI) or Pretax Loss of each of these 7 Largest Iowa Corporations for each of the most recent three years, along with the related percentage changes in earnings.
| Move to | ||||||
| More | More | |||||
| Republican | Democratic | Obama | ||||
| Control | Control | Bump | ||||
| PTI(L) | PTI(L) | Two Year | ||||
| % | % | % | ||||
| Change | Change | Change | ||||
| Total | Total | Total | 2011 | 2010 | 2011 | |
| PTI(L) | PTI(L) | PTI(L) | vs | vs | vs | |
| 2011 | 2010 | 2009 | 2010 | 2009 | 2009 | |
| mils $s | mils $s | mils $s | ||||
| Iowa Largest Corps | ||||||
| Principal Financial | 988 | 841 | 746 | 17% | 13% | 32% |
| Rockwell Collins | 855 | 796 | 858 | 7% | -7% | 0% |
| Sauer Danfoss | 339 | 195 | (220) | 74% | 189% | 254% |
| Meredith | 212 | 167 | 143 | 27% | 17% | 48% |
| Caseys General Stores | 151 | 182 | 139 | -17% | 31% | 9% |
| American Equity Investment Life | 133 | 65 | 86 | 105% | -24% | 55% |
| FBL Financial Group | 108 | 122 | 74 | -11% | 65% | 46% |
| Total all 7 | 2,786 | 2,368 | 1,826 | 18% | 30% | 53% |
Now let me show each of the 17 Smaller Iowa Corps. Below here is the Headquarters location and the SEC Standard Industrial Classification of each of these companies.
| Iowa Smaller Corps | Iowa HQs | SEC Standard Industrial Classification |
| Ames National | Ames | National Commercial Banks |
| CPM Holdings | Waterloo | Special Industrial Machinery |
| EMC Insurance | Des Moines | Fire, Marine & Casualty Insurance |
| Flexsteel Industries | Dubuque | Household Furniture |
| Golden Grain Energy | Mason City | Industrial Organic Chemicals |
| Heartland Express | North Liberty | Trucking |
| Heartland Financial | Dubuque | State Commercial Banks |
| Hills Bancorporation | Hills | State Commercial Banks |
| HNI Corp | Muscatine | Office Furniture |
| Homeland Energy Solutions | Lawler | Industrial Organic Chemicals |
| Lee Enterprises | Davenport | Newpapers: Publishing |
| Meta Financial Group | Storm Lake | Savings Institutions |
| MidWest One Financial | Iowa City | State Commercial Banks |
| Renewable Energy Group | Ames | Industrial Organic Chemicals |
| United Fire Group | Cedar Rapids | Fire, Marine & Casualty Insurance |
| West Bancorporation | West Des Moines | State Commercial Banks |
| Winnebago Industries | Forest City | Motor Homes |
And below here is the Pretax Income (PTI) or Pretax Loss of each of these 17 Smaller Iowa Corporations for each of the most recent three years, along with the related percentage changes in earnings.
| Move to | ||||||
| More | More | |||||
| Republican | Democratic | Obama | ||||
| Control | Control | Bump | ||||
| PTI(L) | PTI(L) | Two Year | ||||
| % | % | % | ||||
| Change | Change | Change | ||||
| Total | Total | Total | 2011 | 2010 | 2011 | |
| PTI(L) | PTI(L) | PTI(L) | vs | vs | vs | |
| 2011 | 2010 | 2009 | 2010 | 2009 | 2009 | |
| mils $s | mils $s | mils $s | ||||
| Iowa Smaller Corps | ||||||
| Renewable Energy Group | 85 | (5) | (22) | 1800% | 77% | 486% |
| Heartland Express | 75 | 80 | 61 | -6% | 31% | 23% |
| HNI Corp | 70 | 55 | 23 | 27% | 139% | 204% |
| Lee Enterprises | 46 | 42 | 20 | 10% | 110% | 130% |
| Heartland Financial | 38 | 36 | 26 | 6% | 38% | 46% |
| Hills Bancorporation | 38 | 33 | 21 | 15% | 57% | 81% |
| CPM Holdings | 36 | 5 | 24 | 620% | -79% | 50% |
| Homeland Energy Solutions | 36 | 11 | 16 | 227% | -31% | 125% |
| Golden Grain Energy | 27 | 18 | 4 | 50% | 350% | 575% |
| West Bancorporation | 21 | 19 | 1 | 11% | 1800% | 2000% |
| Ames National | 18 | 17 | 11 | 6% | 55% | 64% |
| MidWest One Financial | 18 | 14 | 4 | 29% | 250% | 350% |
| Flexsteel Industries | 16 | 17 | (3) | -6% | 667% | 633% |
| Winnebago Industries | 12 | 1 | (58) | 1100% | 102% | 121% |
| Meta Financial Group | 10 | 20 | (2) | -50% | 1100% | 600% |
| EMC Insurance | (10) | 42 | 63 | -124% | -33% | -116% |
| United Fire Group | (13) | 58 | (29) | -122% | 300% | 55% |
| Total all 17 | 523 | 463 | 160 | 13% | 189% | 227% |
