In a difficult year, private construction companies are growing

The construction industry tends to dominate private firms largely because barriers to entry are relatively low. A contractor with personal connections to help land contracts can start a construction business with modest amounts of capital and equipment.

“If you’ve got a van and you’re willing to work hard, you can do it,” said Patrick Jankowski, an economist at the Greater Houston Partnership, a business-funded economic development firm. “It takes a lot more to start an oil and gas company. “

The pandemic only seemed to amplify the trend, as home builders, general contractors and construction equipment rental companies topped the Chronicle 100 list of the region’s largest private companies. Stuck at home for work, school, and play, many people have developed the itch to move out of small apartments in cities or swap for more space in the suburbs – with the added incentive of mortgage rates. very low.

Single-family home sales jumped in the metro Houston area last year to a record high of 96,151, easily surpassing the previous high of 86,205 in 2019, according to the Houston Association of Realtors. Home builders, meanwhile, have been rushing to meet demand.

David Weekley Homes and Perry Homes, for example, will add 152 homes to the Katy’s Cane Island subdivision which will offer three, four and five bedroom homes.

The two home builders ranked among the top 10 private companies in the region. David Weekley Homes’ revenues jumped about 14% to $ 2.5 billion in 2020 from $ 2.3 billion the year before, propelling it to No.4 on the list from No.8 l ‘last year. The company employs more than 1,500 people.

Perry Homes went from # 14 to # 9. The company, which employs approximately 1,000 people, generated approximately $ 1.4 billion in revenue in 2020, up 17% from $ 1.2 billion in 2019.

General contractor David E. Harvey Builders also entered the top 10 for largest private companies, dropping from 11th to 7th place on last year’s list. Harvey, who employs around 800 people, had revenue of $ 1.7 billion in 2020, up more than 20% from $ 1.4 billion in 2019.

To move on

The top 10 openings were created by two of the largest companies on last year’s list that went public. Retailer Academy Sports and Outdoors, the third-largest privately-held company on last year’s list, successfully launched an IPO on the Nasdaq in October.

Academy, headquartered in Katy, reported a profit of $ 91.5 million in the quarter ended Jan. 30, up from $ 17.7 million in the same period last year. Its share price has more than doubled since the IPO.

Last year, the fourth private company, restaurant chain Landry’s, followed Academy in public markets through a merger with a specialist acquisition company, also known as the Blank Check Company. The deal is valued at $ 6.6 billion, including debt. The closing date of the transaction has not yet been revealed.

For Landry’s, the move came after a devastating year for the restaurant, hospitality and entertainment industries. Dining rooms have been closed, live events closed, and conferences canceled.

In March 2020, when state governments ordered the closure of restaurants and other businesses to slow the spread of the coronavirus, Landry’s lost more than $ 2 million a day, according to its chief executive, Tilman Fertitta.

Fertitta, who built his empire with timely acquisitions, also saw an opportunity to expand. By selling shares to the public, Fertitta said he would raise capital to expand his holdings in the gambling industry, which includes Golden Nugget casinos.

“We are looking to do some substantial (mergers and acquisitions) in the game,” Fertitta said in February. “We want to be aggressive in the world of mergers and acquisitions. “

Stable as she goes

The largest private company in the region, however, has gone the other way. Merchant energy company Calpine, after years as a public company, went private in 2018 by selling to a group run by a New Jersey private equity firm. The sale followed a period of weak earnings and declining stock prices for Calpine and other merchant power companies.

Calpine employs approximately 2,300 people, including 900 in Houston. Last summer, as COVID-19 cases skyrocketed in Houston, Andrew Novotny, executive vice president of Calpine, said the company had a target in the face of the pandemic: “Stable performance despite all these headwinds. “

Calpine generated $ 8.8 billion in revenue in 2020, up from around $ 10 billion in 2019.

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