Regional firms surge in strong markets

14 out of 17 area companies see gains in 2013

1/19/2014

The economy continued to gain steam steadily in 2013, and as the nation’s engine hummed along, so did the the 17 publicly traded companies in northwest Ohio and southeast Michigan.

Combined, the companies boasted an average share price increase of 36.1 percent. Not quite the lofty 41.5 percent they averaged in 2012, but solid just the same.

In all, 14 of the 17 companies experienced share price gains, based on total returns including dividends, and five had gains of 50 percent or better.

However, in 2012, 15 companies had gains, and six had gains of at least 50 percent.

2013’s biggest winner was Monroe-based La-Z-Boy Inc., which parlayed spectacular gains in its second fiscal quarter into a total return of 108 percent.

The other four companies with share increases of 50 percent or better were The Andersons Inc., up 104 percent; Monroe Bank & Trust, up 81 percent; Owens-Illinois Inc., up 64 percent, and Cedar Fair LP, up 50 percent.

An investor who purchased one share of each company on Jan. 1, 2013, would have spent $416.86, but that investor would have realized a 35 percent profit and pocketed an extra $144.18.

That would have included $10.14 in dividends.

Eleven of the 17 companies paid dividends this year, with Toledo’s Health Care REIT Inc. paying out a hefty $3.06 per share. Other big dividends included Cedar Fair at $2.58 —$2.575 — and Marathon Petroleum Corp. at $1.54.

The 36.1 percent average share price gain in 2013 for the 17 Toledo-area companies was larger than that of the Dow Jones Industrial Average, which rose 23.6 percent over the year, the Standard & Poor’s 500 Index, which rose 26.4 percent, and the Nasdaq index, which rose 34.2 percent.

The three companies whose share prices were down at the end of the year were Findlay-based tire manufacturer Cooper Tire & Rubber Co., down 7 percent; Toledo-based real estate investment trust Health Care REIT, down 7 percent, and Toledo-based wastewater treatment technology firm N-Viro International Corp., which was down 20 percent and was at the bottom of the list for the third consecutive year.

Key factors

Matt Faltys, vice president and director of portfolio management for Fifth Third Bank, said a number of factors contributed to a strong performance by the stock markets in 2013.

“You had the the excess liquidity that put money into the marketplace, you had people throwing money at stocks, and an economy that was plodding along.

“But the effects of the sequestration and the Affordable Care Act never really manifested themselves and there were no real geopolitical concerns, or if there were, the markets ignored them,” Mr. Faltys said.

“So that’s really about it. We had a great performing market [globally] but I think the top performers were Bulgaria and Argentina. By and large, I really view the last few years a as gift for stock investors,” the portfolio manager said.

“For at the beginning of the year I don’t recall any analysts forecasting double-digit returns and certainly not a 30 percent return average,” Mr. Faltys said.

“The last couple of years, no credible strategist was looking for those kinds of returns on an economy growing at a mere 2 percent. But the key is you stay with quality and don’t let the market get too frothy,” he said.

Also, several local stocks started 2013 in poor positions, which allowed them to rebound, Mr. Faltys said.

“O-I started from a low base and low expectations. A lot of them were under a cloud — certainly not The Andersons, but Monroe Bank & Trust, La-Z-Boy, and O-I all had low expectations. But their execution has improved and investors are liking that,” Mr. Faltys said.

Big year

La-Z-Boy had a big year in 2013.

It reported strong profits, especially in its fiscal second quarter (August through October), when the maker of the iconic La-Z-Boy recliner chair and other furniture saw its revenues rise 13.7 percent to $366.4 million and easily beat Wall Street estimates.

The company paid out an 18-cent dividend in 2013, but probably its most exciting moment came in June when it broke ground on a new $57 million headquarters project that is ahead of schedule and could be completed by year’s end.

Kurt Darrow, La-Z-Boy chairman, president and chief executive officer, the company success in 2013 hinged on both internal and external factors.

“Obviously the economy is getting better ... it’s probably not growing as fast as some of us would like to see but it is getting better. The housing industry is improving but it also has a ways to go to get better,” Mr. Darrow said.

“I think, for our company, for the last couple of years we’ve been growing faster than the industry. We’ve achieved profitability in our retail division, and we have a very strong balance sheet. So I think those three factors had a lot to do with our valuation change year over year,” Mr. Darrow said.

The CEO added that the marketing La-Z-Boy has done the last three years really paid off in 2013.

“Our campaign, ‘Live life comfortably,’ with our spokesman Brooke Shields, has changed the image of what La-Z-Boy is and that is resonating with the consumer,” Mr. Darrow said.

The Andersons likewise had a big year.

The Maumee agribusiness posted solid profits in each quarter and paid out a 48-cent dividend.

In May, The Andersons had grown big enough to make the prestigious Fortune 500 list, clocking in at No. 472.

During 2013 it also made several acquisitions, buying a soil nutrient and fertilizer manufacturer, a rail car cleaning and repair service, and a Canadian grain and bean handler.

By December, the company decided to put more liquidity into its shares and declared a split of its common stock, rewarding shareholders with an extra share for every two they now hold.

The stock split will take place Feb. 18.

Monroe Bank & Trust had struggled for years with the effects of the 2007 housing crash, having invested heavily in mortgages to fuel residential growth in the Monroe area.

In 2013 the bank continued to reduce its loan portfolio and its provisions for loan losses and also showed some financial strength.

It posted a profit of nearly $24 million, or $1.34 a share over the first nine months of 2013. That compared with just $2.8 million, or 16 cents a share, for the same period in 2012.

The bank also took an aggressive, proactive step in October by announcing it would conduct a stock offering totaling $20 million to infuse the bank with new capital.

In late December, MBT announced it had boosted its capital by $14 million by selling 3.2 million shares of common stock, at $4.25 per share, to institutional investors Castle Creek Capital Partners IV, LP and Patriot Financial Partners II, LP. In addition, the bank said it was taking steps to offer existing shareholders another $6 million worth of common stock at $4.25 per share.

Doug Chaffin, Monroe Bank & Trust president and CEO, said the two moves "improve our capital position and ... provide additional capital for our bank subsidiary. We are very pleased that Castle Creek and Patriot, two very well respected institutional investors in community banks, have chosen to make a significant investment in MBT Financial Corp.”

MBT’s share price climbed steadily in the first part of the year, remained steady in the fall, then began another upward climb in early December following news of the impending stock sale, and peaked at $4.26 on Dec. 31.

Since the Dec. 23 announcement of the stock sale to Patriot and Castle Creek, the bank’s share price has gone up another $1.04.

A bump in the road

Cooper Tire & Rubber Co., after being a big gainer in 2012 with an 81 percent rise in share price, turned south in 2013, finishing with a total return that was down 7 percent despite handing out a 42-cent dividend.

But the Findlay manufacturer of aftermarket tires was hardly to blame for the roller coaster ride investors got.

On June 12, Cooper announced it was selling itself to Apollo Tyres Ltd., of India, in a $2.5 billion blockbuster deal that would create the world’s seventh-largest tire manufacturer.

But the deal was troubled nearly from the start, and Cooper canceled the deal on Dec. 30, stating that it was clear the merger would never happen and the financing to back the deal had melted away.

Cooper’s share price, which began 2013 at $26.22, soared to $34.66 shortly after the June 12 announcement.

The firm’s share price hovered about $31 a share until October when Cooper filed suit in Delaware asking that Apollo be forced to complete the merger.

At that point, the share price steadily declined, sinking to a low of $21.62 on Dec. 16.

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.