These 24 Largest Maryland Corps generated Total Pretax Earnings in 2011 which were up a very robust 46% over such amount two years ago in 2009. And when I exclude the Giant US Defense Contractor Lockheed Martin, the remaining 23 Largest Maryland Corps had their total earnings increased by an off-the-charts 141% in the most two recent years.
Now I wanted to see if these extremely strong Maryland Large Corp earnings growth also applied to the even smaller Maryland Corps, which file with the SEC.
Thus, I found 26 Maryland headquartered Smaller Corps filing with the SEC, which had Pretax Income or Pretax Loss of $20 mil or more in any of the most recent three years, and which weren't included in the 24 Largest Maryland Corps. Thus, these 26 Smaller Maryland 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 $20 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.
How did they do? Well, these 26 Smaller Maryland Corps generated total earnings growth in the most recent two years of an even more substantially off-the-charts 214%, or 4.65 times the 46% total earnings growth in the most recent two years of the 24 Largest Maryland Corps.
Clearly, Maryland citizens should be very proud of their many superb Maryland companies.
And yeah, the Obama Administration created a very robust US economic environment, which permitted Maryland companies of all sizes to do just great on the earnings front in the most recent two years.
But a second story here is the earnings results by year.
The 24 Largest Maryland Corps generated Total Pretax Income growth of 14% in 2011 over 2010, and of a more robust 28% in 2010 over 2009.
The 26 Smaller Maryland Corps generated a Total Pretax Income growth of a very robust 49% in 2011 versus 2010, and of an off-the-charts growth of 111% in 2010 over 2009.
Further, the 24 Largest Maryland Corps had their earnings growth in the 1Q 2012 stop to a walk.
So why is it that these Maryland Corps did so much better in 2010 than they did in both 2011 and in the 1Q 2012? 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 Very Conservative 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 nationally from Moderate Democratic control in 2010 to Very Conservative Republican control in 2011.
How could this change in political control make such a huge difference in Maryland State 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 Moderate 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 US Government 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 Very Conservative 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 Very Conservative Republican control with the 2010 election, coupled with the US Senate Democratic majority rule being significantly reduced, and with many US States switching from Moderate Democratic Control to Very Conservative 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 four 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 Very Conservative 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 Very Conservative 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 Moderate Democrat and the US House is in Democratic control, economic initiatives move forward, and they clearly did very robustly in 2009 and 2010.
Another Case in point is how the Republicans in the US House have stopped the desperately needed US Transportation bill, which the US Senate passed overwhelmingly on a bipartisan basis more than a month ago. This US Senate-passed Transportation bill contains wise, and very substantial, US infrastructure investments, which are needed to spur the dormant US economy, and generate a good dose of US job creation.
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 I have seen so many large Restructuring Charges, where significant job cuts always result, made by Corporations in their 1Q 2012 Earnings Statements, and 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.
First let me show below here the Pretax Income (PTI) or Pretax Loss of each of these 24 Largest Maryland Corporations for each of the most recent three years, along with the related percentage changes in earnings.
| US House | US House | |||||
| Republican | Democratic | Obama | ||||
| Control | Control | Bump | ||||
| PTI(L) | PTI(L) | Two Year | ||||
| % | % | % | ||||
| Change | Change | Change | ||||
| 2011 | 2010 | 2011 | ||||
| PTI(L) | PTI(L) | PTI(L) | vs | vs | vs | |
| 2011 | 2010 | 2009 | 2010 | 2009 | 2009 | |
| mils $s | mils $s | mils $s | ||||
| Maryland | ||||||
| The Dominant US Defense Contractor | ||||||
| Lockheed Martin | 3,631 | 3,778 | 4,182 | -4% | -10% | -13% |
| The Rest | ||||||
| T Rowe Price | 1,251 | 1,070 | 689 | 17% | 55% | 82% |
| American Capital Agency | 777 | 289 | 119 | 169% | 143% | 553% |
| Coventry Health Care | 699 | 965 | 505 | -28% | 91% | 38% |
| Marriott | 680 | 551 | 334 | 23% | 65% | 104% |
| McCormick | 491 | 463 | 417 | 6% | 11% | 18% |
| WR Grace | 384 | 240 | 59 | 60% | 307% | 551% |
| Legg Mason | 303 | 365 | 330 | -17% | 11% | -8% |
| United Therapeutics | 299 | 155 | 19 | 93% | 716% | 1474% |
| Cinemark Holdings | 219 | 208 | 174 | 5% | 20% | 26% |
| MICROS Systems | 210 | 168 | 147 | 25% | 14% | 43% |
| Magellan Health Services | 195 | 222 | 164 | -12% | 35% | 19% |
| Joseph A Bank | 159 | 142 | 117 | 12% | 21% | 36% |
| Choice Hotels | 158 | 158 | 151 | 0% | 5% | 5% |
| Under Armour | 157 | 109 | 82 | 44% | 33% | 91% |
| FTI Consulting | 153 | 138 | 222 | 11% | -38% | -31% |
| Federal Realty Trust | 132 | 126 | 117 | 5% | 8% | 13% |
| Sinclair Broadcast | 121 | 116 | 62 | 4% | 87% | 95% |
| Catalyst Health Solutions | 107 | 130 | 105 | -18% | 24% | 2% |
| CapitalSource | 104 | (161) | (734) | 165% | 78% | 114% |
| Host Hotels & Resorts | (13) | (159) | (236) | 92% | 33% | 94% |
| Municipal Mortgage & Equity LLC | (24) | (70) | (145) | 66% | 52% | 83% |
| USEC | (112) | (17) | 23 | -559% | -174% | -587% |
| Ciena | (188) | (332) | (126) | 43% | -163% | -49% |
| Total all 23 Rest | 6,262 | 4,876 | 2,595 | 28% | 88% | 141% |
| Grand Total all 24 | 9,893 | 8,654 | 6,777 | 14% | 28% | 46% |
Now let me show each of the 26 Smaller Maryland Corps, and where they are Headquartered.
| Maryland Smaller Corps | Maryland HQs |
| Arbitron | Columbia |
| Broadsoft | Gaithersburg |
| Colfac Corp | Fulton |
| Corporate Office Properties Trust | Columbia |
| Diamond Rock Hospitality | Bethesda |
| Eagle Bancorp | Bethesda |
| Emergent BioSolutions | Rockville |
| First United Corp | Oakland |
| GP Strategies | Elkridge |
| GXS Worldwide | Gaithersburg |
| LaSalle Hotel Properties | Bethesda |
| Medifast | Owings Mills |
| Omega Healthcare Investors | Hunt Valley |
| Osiris Therapeutics | Columbia |
| Radio One | Lanham |
| RLJ Lodging Trust | Bethesda |
| Sandy Spring Bancorp | Olney |
| Saul Centers | Bethesda |
| Severn Bancorp | Annapolis |
| Sucampo Pharmaceutics | Bethesda |
| Synutra Intl | Rockville |
| Telecommunications Systems | Annapolis |
| Tessco Technologies | Hunt Valley |
| US Silica Holdings | Frederick |
| Vanda Pharmaceutics | Rockville |
| Walker & Dunlop | Bethesda |
And below here is the Pretax Income (PTI) or Pretax Loss of each of these 26 Smaller Maryland Corporations for each of the most recent three years, along with the related percentage changes in earnings.
| US House | US House | |||||
| 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 | ||||
| Maryland Smaller Corps | ||||||
| Arbitron | 88 | 72 | 61 | 22% | 18% | 44% |
| Omega Healthcare Investors | 79 | 58 | 76 | 36% | -24% | 4% |
| Colfac Corp | 74 | 49 | 42 | 51% | 17% | 76% |
| Walker & Dunlop | 57 | 40 | 29 | 43% | 38% | 97% |
| LaSalle Hotel Properties | 50 | 16 | 10 | 213% | 60% | 400% |
| Sandy Spring Bancorp | 50 | 33 | (31) | 52% | 206% | 261% |
| US Silica Holdings | 43 | 24 | 2 | 79% | 1100% | 2050% |
| Eagle Bancorp | 38 | 26 | 16 | 46% | 63% | 138% |
| Corporate Office Properties Trust | 37 | 35 | 56 | 6% | -38% | -34% |
| Saul Centers | 34 | 44 | 45 | -23% | -2% | -24% |
| Emergent BioSolutions | 32 | 73 | 42 | -56% | 74% | -24% |
| Synutra Intl | 31 | (50) | (26) | 162% | -92% | 219% |
| GP Strategies | 28 | 21 | 23 | 33% | -9% | 22% |
| Medifast | 28 | 32 | 18 | -13% | 78% | 56% |
| Tessco Technologies | 27 | 16 | 15 | 69% | 7% | 80% |
| Broadsoft | 24 | 9 | (7) | 167% | 229% | 443% |
| Osiris Therapeutics | 15 | 13 | (26) | 15% | 150% | 158% |
| Telecommunications Systems | 12 | 24 | 31 | -50% | -23% | -61% |
| GXS Worldwide | 6 | (11) | (24) | 155% | 54% | 125% |
| First United Corp | 3 | (18) | (20) | 117% | 10% | 115% |
| RLJ Lodging Trust | 2 | (41) | (62) | 105% | 34% | 103% |
| Severn Bancorp | 2 | 2 | (25) | 0% | -108% | 108% |
| Diamond Rock Hospitality | (4) | (9) | (30) | 56% | 70% | 87% |
| Vanda Pharmaceutics | (10) | (9) | (36) | -11% | 75% | 72% |
| Sucampo Pharmaceutics | (33) | (3) | 10 | -1000% | -130% | -430% |
| Radio One | (37) | 7 | 26 | -629% | -73% | -242% |
| Total all 26 | 676 | 453 | 215 | 49% | 111% | 214% |
