Chicken Traders Thrive in Down Market

OK Industries Tops Area for Private Firms, Truman Arnold of Texarkana Leads State

Twin Rivers Group Inc. roared in 2000.

An integrated poultry trading, processing and marketing company in Fayetteville, Twin Rivers increased its gross revenue 27 percent, from $59.3 million in 1999 to $75.5 million last year.

That rapid growth jumped the firm five notches on the Northwest Arkansas Business Journal’s annual Top Private Companies list — more than any other company. Matt Duffy, Twin Rivers’ CEO, said expanding its processing facilities by 150,000 SF drove the business.

Twin Rivers was also unaffected by 2000’s tight poultry sector since most discounts and subsidies hit poultry producers, not second-market processors and traders.

“The Mad Cow scare in Europe helped out a lot, too,” Duffy said. “Trade barriers in Europe keep us from moving a lot of our product there. But because of Mad Cow we were able to fill a lot of other international orders, especially with dark meat, that could not be filled out of Europe.”

The Business Journal’s list includes only Northwest Arkansas-based, Northwest Arkansas-owned private companies. Banks, financial services and real estate firms were intentionally excluded because of the way in which their revenue is derived. Some firms, however, with diversified interests that may include some of those mentioned were eligible.

A database of the top 75 private companies statewide may be viewed at www.nwabusinessjournal.com.

For the fourth-straight year, O.K. Industries Inc. of Fort Smith is the largest private company in Northwest Arkansas. The firm does not, however, divulge its top-line financials, so a professional industry estimate was sought to derive its $560 million in revenue.

That figure is down 34 percent from last year’s estimate of $800 million, based in part on 2000’s weak meat market. (See list footnotes, Page 29).

Sparks Regional Medical Center in Fort Smith showed the strongest local revenue increase at 47 percent, from $153.1 million in 1999 to $224.9 million for 2000. That moved the hospital from No. 8 in Northwest Arkansas to No. 6. Washington Regional Medical Center in Fayetteville also had a great year. Its revenue leapt 22 percent, from $168 million to $205 million.

The Lindsey Co. in Fayetteville moved up three spots with 14 percent revenue growth, from $118 million in 1999 to $135 million in 2000. Several additional companies debuted because the list’s minimum revenue was lowered to $13 million.

Perhaps the most impressive growth statewide has been recorded by Fayetteville’s Athletic World Advertising, which debuts at No. 28. Since company President and CEO Gregg Ogden took over the business in 1996, the sports marketing firm has gone from 15 to 3,800 customers.

Duffy, Twin Rivers’ CEO, said although exports are only about 5 percent of his company’s business, that segment was strong in 2000. Orders to South Africa, Turkey, Macedonia and Russia were higher than in years past, he said. The company has shifted focus from international markets, which were 90 percent of its business in 1994 when it opened.

Now processing makes up more than 50 percent of Twin Rivers’ business. That prompted the firm to open three new processing facilities in 2000 including a 22,000-SF operation in Fort Smith and processing sites in Neosho, Mo., (90,000 SF) and Searcy (48,000 SF).

The firm — which has sales offices in Arkansas, Georgia, Mississippi and North Carolina — devotes the rest of its energy toward trading chicken. That practice, unlike brokering or simply putting buyers and sellers together, involves buying from a seller, financing title acquisition of products and later selling them to another buyer. It’s the same principle as arbitrageurs trading currency and bonds.

Maybe Next Year

Other firms that likely would have made the local list but declined to participate include Hanna’s Candle Co. in Fayetteville; Basic Block Group Inc., a major block manufacturer and masonry products supplier in Springdale; text book wholesaler BudgeText Corp. in Fayetteville; Perry Butcher & Associates architecture firm in Rogers and DMD Industries Inc. of Springdale, which manufactures and distributes crafts and paper products.

Hanna’s, which provides candles to Wal-Mart Stores Inc., told the Business Journal in 1999 that its gross revenue then exceeded $38 million. Burt Hanna, the firm’s owner, estimated Hanna’s sales would pass $200 million by 2009.

Basic Block was founded in 2000 by CEO Gary Combs, and prominent Fayetteville businessman Jim Hawkins joined the firm last year as its president. BudgeText is owned by Sterling Anders and sells text books on a national scale.

Butcher said his firm has increased its revenue 383 percent over the last five years.

DMD, owned by Randy and Christine Meyer, is about five years old.

Three local hospitals, St. Mary’s in Rogers, St. Edward’s in Fort Smith and Northwest Medical Center in Springdale would have all easily made the list. But although St. Mary’s and St. Edwards are operated individually through Arkansas 501(c)(3) filings and have local boards, both firms are still owned by Sisters of Mercy Health System in St. Louis, Mo.

St. Mary’s had $133.5 million in 2000 revenue. St. Edwards did $295.9 million.

Northwest Medical Center, operated individually as Northwest Health System Inc, had $133 million in 2000 revenue. It’s owned by publicly traded Triad Health Partners Inc. of Dallas, Texas.

Two firms that made the list in previous years no longer exist. Trans-States Lines Inc. of Fort Smith, a trucking firm once part of the Hembree family fortune, was purchased March 6 by Burlington Motor Carriers of Daleville, Ind. TSL reported $67 million in 1998 revenue, the last year its numbers were available.

Terms of the recent sale were not disclosed, but the assets acquired by BMC included 250 tractors and 475 trailers.

Northwest Arkansas Paper Co., which has never reported its annual revenue but was estimated to be one of the best sellers in the area, has gone out of business. NAPCO, owned by William Gray, made paper bags, industrial and personal service paper and poultry equipment.

Industry Makeup

The Top 5, and eight of the Top 20, private firms in Northwest Arkansas are in the food and poultry industries or have direct ties to it like poultry equipment and construction supplier Latco Inc. of Lincoln. Its revenue is estimated at $80 million.

But no single type of industry dominates the list of Arkansas’ 75 largest private companies, although seven are hospitals and seven more are related to poultry.

A third of the Top 75 companies are located in Little Rock, with six more located elsewhere in Pulaski County (four in North Little Rock and two in Jacksonville). Only nine other cities (including the Texas side of Texarkana) boast more than one of the largest enterprises.

But the size of the town has little to do with the size of the company. Siloam Springs, with fewer than 10,000 residents, is home to both Simmons Foods Inc., No. 2 in Northwest Arkansas with revenue estimated at $430 million and 4,400 employees, and Allen Canning Co., No. 5 with $300 million and 1,100 employees.

Statewide Leader

The largest privately owned company statewide isn’t even technically in Arkansas. That’s the hazard of treating stateline-straddling Texarkana as a single Arkansas city.

No. 1 on the list of Arkansas’ 75 largest private companies is Truman Arnold Cos., which zoomed up from from No. 8 last year with a 130 percent increase in revenue, the criterion used for this ranking.

With sales of $1.3 billion in 2000, the wholesaler of refined petroleum products and provider of aviation services is the state’s only private firm whose revenue is known in the 10-digit range.

Falling Fortunes

Thirteen of the 75 companies on the statewide list confirmed that revenue during 2000 was lower than in 1999, and the same may be true of some companies that didn’t disclose revenue information.

Besides O.K. Industries’ drop, the only other revenue dip reported in Northwest Arkansas came from Carco Transportation Systems Inc. of Fort Smith. It’s 3 percent decline, from $68 million to $65.9 million is a product of the continued divestiture of its subsidiary — CCC Express. Carco sold CCC Express in November 1999 to publicly traded USA Truck Inc. of Van Buren. That division had generated some $60 million in annual revenue, so Carco previously did about $128.1 million of business.

The Business Journal had already adjusted Carco’s listing last year, so it only dropped three places locally from No. 20 to No. 23.