Let me first address the 39 Largest Ones, which had Pretax Income or Pretax Loss of $100 mil or more in any of the most recent three years.
These 39 Largest Missouri Corps generated Total Pretax Income of $19.2 bil in 2011, which was up by a very robust 61% over that of two years ago in 2009. You showed me, Missouri!
Now I want to focus on the Smaller Missouri Corps, filing with the SEC, and with Pretax Income or Loss of at least $10 mil, but less than $100 mil.
How did they do? Well, these 33 Smaller Missouri Corps generated total earnings growth in the most recent two years of an off-the-charts 403%. You showed me again, Missouri!
Clearly, all Missouri citizens should be very proud of their many superb Missouri companies, of all sizes. And particularly, all employees, the extended families of all employees, and the stockholders of these fine Missouri companies should be feeling very good about what happened with their companies during the most recent two years.
And yeah, the Obama Administration created a very robust US economic environment, which permitted these outstanding Missouri companies of all sizes to do just fantastically on the earnings front in the most recent two years.
And did Moderate Democratic Senator Claire McCaskill also ever show me and everyone else. She did an absolutely great job in helping these Missouri Corps, of all sizes, to improve their earnings after the Economic Stimulus first started kicking in in the 4Q 2009.
But a second story here are the earnings results by year.
The 33 Smaller Missouri Corps generated 2010 over 2009 earnings growth of an absolutely off-the-charts 270%, when the US House was under Moderate Democratic Control, and when there were more Democratic Moderates in the US Senate.
But these same 33 Smaller Missouri Corps generated 2011 over 2010 earnings growth of a much lower 36%, when the US Senate had fewer Moderate Democrats, and when the US House was under Uncompromising, Very Conservative Republican Control, with people like Eric Cantor, Paul Ryan and Missouri's Todd Akin being three of the leaders of this Uncompromising, Very Conservative Republican movement, where nearly all Republicans refused to ever work across the aisle.
Yeah, the earnings growth of these 33 Smaller Missouri Corps was 7.5 times higher in 2010 over 2009 than it was in 2011 over 2010.
And the same thing happened with the 39 Largest Missouri Corps, where the earnings growth in 2010 over 2009 of 34% was much higher than the 21% earnings growth of 2011 over 2010.
So why is it that these Missouri 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 Uncompromising, 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 Missouri 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, much needed targeted individual income tax cuts, very targeted 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, 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 Uncompromising, 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 about six 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? Pretty much nothing of substance. I'm not kidding. On the other hand, if the US House were 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 Uncompromising, Very Conservative Republicans in the US House, led by people like Paul Ryan, Eric Cantor and Missouri's Todd Akin, 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 roughly a trillion dollars over the next decade, and creates almost no US jobs. This continual off-focus approach to governing by the Uncompromising, 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.....and did US businesses ever profit from this. And so did the US stock market, which has doubled in the most recent three and a half years. Corporate earnings drive stock prices.
So, just who are the losers from this lack of action on drastically needed US economic initiatives by these Republicans in the US House? Well, it's not just the unemployed, the underemployed, the dwindling middle class, and the people trying to get into the middle class. US Businesses were also big losers, by having their earnings growth substantially decelerate in 2011, and even more dramatically so in the first half of 2012.
So, how does the country get out of this horrible economic pickle?
Well, in Missouri, the key is to not just reelect Barack Obama as President, but also to reelect very effective, hard-working, and very-willing-to-work-across-the-aisle Moderate Democratic US Senator Claire McCaskill, and to also remove from office several of these far right-wing Missouri members in the US House, who have consistently shown no interest in President Obama and Claire McCaskill initiatives to strengthen the much improved, but still struggling US economy. These Uncompromising, Very Conservative members in the US House and US Senate are well meaning, but they have really hurt the US economy, and in particular have stymied the creation of lasting, higher wage US jobs.
With a Moderate Democratic President, and with both a US House and a US Senate under Moderate Democratic control, and with these Democrats like McCaskill going out of their way to work across the aisle, I think you will see both wisely-designed business income tax reform and wisely-designed US Government investments in much needed infrastructure, as well as wisely-designed US Government investments in basic research in the key areas including energy, technology, medicine, and advanced manufacturing.
And a good chunk of this much-needed bold legislation will pass very quickly. The rest should pass in a reasonable amount of time.
But this time, I think the tax stimulus and investment stimulus legislation will be designed so that its economic benefits are more fairly shared among all of the country, not just the very wealthy and the largest and somewhat large businesses.
Due to the economic crater of a near depression in 2008 and in early 2009, the US economy is still so very fragile, even after much improvement of the past three years. Thus, I think the key to making the US economy great again is to give extremely robust tax incentives that entice US businesses of all sizes to grow the US middle class out by creating a substantial number of good-paying US full-time jobs, which will be lasting ones.
You won't grow the US middle class out by doing what Mitt Romney plans to do.....(1) lower the top income tax rate for the very wealthy and for the largest corporations, and to do so with no US job creation strings attached, (2) institute a territorial tax system, and (3) allow the largest US multinational corps to repatriate their foreign earnings tax free. These initiatives will substantially increase the US Debt Load, will create many jobs overseas, but do nothing to create US jobs.
But frankly, you also can't grow the US middle class out by just giving tax breaks to the US middle class and to the ones trying to get into the middle class. You have to focus on not just where the tax benefits first go, but where this money eventually ends up. Just like the payroll tax holiday and the original Obama Economic Stimulus, much of that money eventually ended up as additional profits of large and somewhat large businesses, and mostly stuck on corporate balance sheets, where it does the US economy absolutely no good. Or large Corps use this money to buy back their own common stock, to pump up their reported EPS, which helps corporate stock prices and corporate executive compensation and financial wealth, but which again does the US economy absolutely no good.
In a capitalistic system, to truly grow out the US middle class effectively in the long run, US businesses must be highly incentivized to do so. But wisely-designed legislation would make it imperative that when businesses are given these lucrative tax incentives, these businesses must be held accountable for growing the US middle class out. And if they don't do it sufficiently, like unfortunately what happened in the most recent three years, they should get their lucrative tax benefits recaptured. That is only fair. That is also prudent, wisely-designed legislation on the front end.
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In deriving Ongoing, Core 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 also am excluding from Pretax Income or Loss Express Scripts’ Acquisition Transaction Costs and Financing Fees on Bridge Loans related to its Acquisitions, MEMC Electronic Materials’ Restructuring Charges, and Patriot Coal’s Sales Contract Liability Accretion Gains related to an Acquisition.
And since Monsanto is so large and has an August fiscal year end, my Pretax Income numbers below for it are for the Trailing 12 Months ended May, thereby making its annual earnings numbers more highly relevant and more real time.
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 without significant enough Total Revenues.
Below here is the Ongoing, Core Pretax Income (PTI) and Pretax Loss (PTL) of these 39 Largest and 33 Smaller Missouri Corps for each of the most recent three years, along with the related percentage changes.
| Move to | |||||||
| More | |||||||
| Very | More | ||||||
| Conservative | Moderate | Obama | |||||
| Republican | Democratic | Bump | |||||
| Control | Control | Two | |||||
| PTI(L) | PTI(L) | Year | |||||
| % | % | % | |||||
| Change | Change | Change | |||||
| PTI(L) | PTI(L) | PTI(L) | 2011 | 2010 | 2011 | ||
| HQs | 2011 | 2010 | 2009 | vs | vs | vs | |
| mils $s | mils $s | mils $s | 2010 | 2009 | 2009 | ||
| Missouri Largest Corps | |||||||
| Emerson Electric | St Louis | 3,631 | 2,879 | 2,450 | 26% | 18% | 48% |
| Monsanto (Trailing 12 Mos Ended May) | St Louis | 3,184 | 2,187 | 1,469 | 46% | 49% | 117% |
| Express Scripts | St Louis | 2,192 | 1,909 | 1,437 | 15% | 33% | 53% |
| Peabody Energy | St Louis | 1,374 | 1,142 | 629 | 20% | 82% | 118% |
| O'Reilly Automotive | Springfield | 842 | 699 | 497 | 20% | 41% | 69% |
| Reinsurance Group | Chesterfield | 834 | 864 | 592 | -3% | 46% | 41% |
| Sigma Aldrich | St Louis | 640 | 544 | 490 | 18% | 11% | 31% |
| H&R Block | Kansas City | 583 | 650 | 723 | -10% | -10% | -19% |
| Energizer Holdings | St Louis | 505 | 557 | 445 | -9% | 25% | 13% |
| Jones Financial Cos | St Louis | 482 | 393 | 269 | 23% | 46% | 79% |
| Cerner | Kansas City | 470 | 362 | 293 | 30% | 24% | 60% |
| Kansas City Southern | Kansas City | 455 | 358 | 102 | 27% | 251% | 346% |
| Commerce Bancshares | Kansas City | 399 | 330 | 242 | 21% | 36% | 65% |
| Ralcorp | St Louis | 399 | 354 | 349 | 13% | 1% | 14% |
| Amdocs Ltd | Chesterfield | 396 | 409 | 366 | -3% | 12% | 8% |
| AMC Entertainment (Adjusted EBITDA per Co) | Kansas City | 326 | 364 | 313 | -10% | 16% | 4% |
| Solutia | St Louis | 297 | 211 | 121 | 41% | 74% | 145% |
| DST Systems | Kansas City | 274 | 356 | 355 | -23% | 0% | -23% |
| US Premium Beef LLC | Kansas City | 249 | 239 | 167 | 4% | 43% | 49% |
| Arch Coal | St Louis | 239 | 135 | 25 | 77% | 440% | 856% |
| Jack Henry | Monett | 232 | 208 | 181 | 12% | 15% | 28% |
| Leggett & Platt | Carthage | 230 | 244 | 198 | -6% | 23% | 16% |
| Panera Bread | St Louis | 220 | 180 | 140 | 22% | 29% | 57% |
| Olin | Clayton | 198 | 77 | 210 | 157% | -63% | -6% |
| Centene | St Louis | 183 | 154 | 138 | 19% | 12% | 33% |
| UMB Financial | Kansas City | 154 | 127 | 120 | 21% | 6% | 28% |
| Post Holdings | St Louis | 149 | 161 | 157 | -7% | 3% | -5% |
| Belden | St Louis | 140 | 99 | 39 | 41% | 154% | 259% |
| Stifel Financial | St Louis | 139 | 0 | 120 | NM | -100% | 16% |
| Entertainment Properties Trust | Kansas City | 133 | 126 | 34 | 6% | 271% | 291% |
| Graybar Electric | St Louis | 133 | 69 | 63 | 93% | 10% | 111% |
| Charter Communications | St Louis | 73 | 143 | 78 | -49% | 83% | -6% |
| Inergy LP | Kansas City | 50 | 58 | 107 | -14% | -46% | -53% |
| Novation Companies | Kansas City | 5 | (9) | (182) | 156% | 95% | 103% |
| Furniture Brands Intl | St Louis | (38) | (48) | (137) | 21% | 65% | 72% |
| First Banks | St Louis | (43) | (191) | (299) | 77% | 36% | 86% |
| MEMC Electronic Materials | St Peters | (128) | (13) | (47) | -885% | 72% | -172% |
| KV Pharmaceuticals | St Louis | (145) | (108) | (137) | -34% | 21% | -6% |
| Patriot Coal | St Louis | (210) | (264) | (166) | 20% | -59% | -27% |
| Total all 39 Largest Corps | 19,246 | 15,955 | 11,951 | 21% | 34% | 61% | |
| Missouri Smaller Corps | |||||||
| Foresight Energy | St Louis | 82 | 50 | 14 | 64% | 257% | 486% |
| Esco Technologies | St Louis | 69 | 70 | 63 | -1% | 11% | 10% |
| Great Southern Bancorp | Springfield | 57 | 43 | 6 | 33% | 617% | 850% |
| FutureFuel Corp | Clayton | 53 | 34 | 25 | 56% | 36% | 112% |
| Aegion Corp | Chesterfield | 45 | 78 | 51 | -42% | 53% | -12% |
| Kansas City Life Insurance | Kansas City | 40 | 35 | 16 | 14% | 119% | 150% |
| Viasystems Group | St Louis | 40 | 33 | (43) | 21% | 177% | 193% |
| Enterprise Financial | Clayton | 37 | 6 | 3 | 517% | 100% | 1133% |
| Brown Shoe | St Louis | 36 | 53 | 12 | -32% | 342% | 200% |
| Cass Information Systems | Bridgeton | 32 | 28 | 22 | 14% | 27% | 45% |
| Pioneer Financial Services | Kansas City | 29 | 26 | 21 | 12% | 24% | 38% |
| Isle of Capri Casinos | St Louis | 28 | 11 | (8) | 155% | 238% | 450% |
| Young Innovations | Earth City | 25 | 23 | 21 | 9% | 10% | 19% |
| LMI Aerospace | St Charles | 24 | 18 | 19 | 33% | -5% | 26% |
| Perficient | St Louis | 21 | 13 | 3 | 62% | 333% | 600% |
| Southern Missouri Bancorp | Poplar Bluff | 15 | 10 | 6 | 50% | 67% | 150% |
| Thermadyne Holdings | Chesterfield | 15 | 1 | (2) | 1400% | 150% | 850% |
| Pulaski Financial | St Louis | 11 | 4 | 7 | 175% | -43% | 57% |
| American Railcar Industries | St Charles | 8 | (42) | 1 | 119% | -4300% | 700% |
| Spartech | Clayton | 8 | (3) | 13 | 367% | -123% | -38% |
| Armstrong Energy | St Louis | (3) | 8 | (10) | -138% | 180% | 70% |
| Build a Bear Workshop | St Louis | (3) | (2) | (14) | -50% | 86% | 79% |
| Zoltek Companies | St Louis | (4) | (10) | (2) | 60% | -400% | -100% |
| Pretium Packaging | Chesterfield | (7) | (11) | (4) | 36% | -175% | -75% |
| Katy Industries | Bridgeton | (9) | (11) | (7) | 18% | -57% | -29% |
| Centrue Financial | St Louis | (12) | (33) | (51) | 64% | 35% | 76% |
| CPI Corp | St Louis | (13) | 17 | 20 | -176% | -15% | -165% |
| Huttig Building Products | St Louis | (13) | (20) | (23) | 35% | 13% | 43% |
| Bakers Footwear Group | St Louis | (13) | (8) | (6) | -63% | -33% | -117% |
| Reliance Bancshares | Frontenac | (25) | (37) | (46) | 32% | 20% | 46% |
| NASB Financial | Grandview | (26) | 9 | 30 | -389% | -70% | -187% |
| Sterotaxis | St Louis | (32) | (20) | (27) | -60% | 26% | -19% |
| Smith Electric Vehicles | Kansas City | (47) | (29) | (17) | -62% | -71% | -176% |
| Total all 33 Smaller Corps | 468 | 344 | 93 | 36% | 270% | 403% |
