Va.’s Largest Companies: Emergency landing

As the U.S. economy showed signs of unexpected strength and inflation slowed throughout 2023, most of Virginia’s largest publicly traded companies held their own, with some riding high. Reston-based General Dynamics saw its highest-ever quarterly revenue, while Performance Food Group, headquartered in Goochland County, made the Fortune 100 for the first time.

Arlington County-based Fortune 500 aerospace and defense company Boeing, however, has had the kind of past year that every company dreads. The company entered crisis mode in early 2024 when a 4-foot door plug blew out of a Boeing 737 Max 9 in mid-air on a January Alaska Airlines flight, exposing passengers to open air. It was just the latest in a long-running saga of quality control issues that has besieged the company. The beginning of 2023 was marked by pauses in deliveries due to supplier quality issues. A three-month hiatus in deliveries of the company’s 767 freighter starting in January 2023 was followed by another two pauses on 737 Max jets in April and again in August.

After the January 2024 incident, the Federal Aviation Administration grounded all Boeing 737 Max 9 aircraft and Southwest Airlines removed Boeing 737 Max 7s from its 2024 fleet. Alaska Airlines requested that Boeing reimburse its $150 million loss from the Max 9 grounding, and congressional lawmakers threatened investigations.

Some have called for Boeing CEO Dave Calhoun and other company leaders to step down, while others have called that counterproductive. Michel Merluzeau, director of aerospace and defense market analysis for AIR Intelligence & Research, sees the need to implement urgent quality control measures as more pressing.

“For Boeing commercial, the strategy is unclear. There are a lot of things that need to be amended on the floor, among the ground troops in the factory,” he says. “To reshuffle the leadership right now would be destabilizing, in my opinion. But I think eventually it will happen, and that leadership will be the one that is best suited to new strategy, new direction and new programs.”

What that new direction might look like is an open question. Whichever way Boeing moves to repair the frayed fabric of its operations and reputation, the only certainty is that the company is in for a rough patch before its fortunes might improve.

“It’s going to be a challenging year for Boeing, for sure,” Merluzeau says. “Well, more than the next year. The next two to three years will be make-or-break in some areas.”

Here’s more on how Virginia’s 10 most profitable publicly traded companies have fared over the past year:

Freddie Mac
(Federal Home Loan Mortgage Corp.)

McLean

2022 revenue: $86.7 billion

Employees: 7,799

As mortgage interest rates continued to inch up throughout most of 2023, peaking in October, Freddie Mac saw ongoing slowdowns in new business. The government-sponsored mortgage enterprise reported a 10% year-over-year increase in net revenues in the third quarter of 2023, due in part to higher net interest income. However, during the same period, new business activity was down 30% in its single-family segment and 7% in its multifamily segment.

Nevertheless, Freddie Mac proceeded to implement elements of its Equitable Housing Finance Plan, blowing past its 2023 goals for advancing affordable housing. Senior Vice President Stephen Johnson called it “an exceptional year” on that front. Freddie Mac’s $49 billion in multifamily business in 2023 included $13 billion supporting more than 423,000 affordable rental units, and it completed $883 million in Low-Income Housing Tax Credit equity investments.

The year ahead will see a major leadership shift at Freddie Mac, as CEO Michael
J. DeVito plans to retire during the first quarter. A mortgage industry veteran, DeVito took over at Freddie Mac in June 2021 after 23 years at Wells Fargo, where he headed up home lending. A permanent successor to DeVito has not been named.

Boeing

Arlington County

2023 revenue: $77.8 billion

Employees: 140,000+

Boeing continued to struggle with quality control issues surrounding its 737 MAX commercial aircraft in 2023, foreshadowing the crisis that began with the Alaska  Airlines door plug blowout in January.

These issues contributed to the aerospace and defense contractor’s $2.2 billion in losses in 2023, which represented an improvement from recent years, especially from the $5.1 billion loss it took in 2022. Meanwhile, annual revenue rose from $66.8 billion in 2022 to $77.8 billion in 2023 as a result of a 10% bump in delivery of commercial airplanes.

Boeing’s ongoing woes resulting from the Alaska Airlines event have put the company on uncertain footing, causing its CEO to contend that the company can’t set financial goals for the coming year amid quality improvement efforts, intense public scrutiny and increased FAA oversight.

In 2023, Boeing saw strong interest in its wide-body aircraft. Notably, in March, Saudi Arabian flag carrier Saudia and new carrier Riyadh Air each ordered 39 of Boeing’s 787 Dreamliner planes. And in November, state-owned flagship Dubai carrier Emirates ordered 95 Boeing wide-body aircraft for a total of $52 billion.

However, Boeing’s attempts to shore up its defense operations last year after the unit absorbed $4.4 billion in losses in 2022 bore little fruit. The division was bogged down by several fixed-price contracts that may preclude profitability until 2025 to 2026. However, in November, Canada named Boeing’s P-8A Poseidon as its multi-mission aircraft, with the first delivery expected in 2026.

RTX (formerly Raytheon Technologies)

Arlington County

2023 revenue: $68.9 billion

Employees: 182,000+

Raytheon Technologies rebranded as RTX in June 2023 as part of a business reorganization. It was just the latest big change for the company, which was formed in 2020 by the merger of Raytheon and United Technologies and relocated to Arlington from Massachusetts in 2022.

Last year’s reorganization saw RTX consolidate into three business units: aerospace and defense technology supplier Collins Aerospace, headquartered in Charlotte, North Carolina; aerospace manufacturer Pratt & Whitney, headquartered in East Hartford, Connecticut; and Raytheon. Based in Arlington, Raytheon includes the company’s former Raytheon Intelligence & Space and Raytheon Missiles & Defense segments.

In December 2023, Raytheon received a three-year, $31.3 million contract from the Naval Surface Warfare Center Dahlgren Division to build defensive microwave antenna systems for the U.S. military. That same month, the U.S. Missile Defense Agency and the U.S. Northern Command deployed Raytheon’s Exoatmospheric Kill Vehicle (EKV) kinetic-force weapon in a successful test on an intermediate-range ballistic missile. The test was part of the Ground-based Midcourse Defense System, which targets incoming ballistic missiles while they’re still in space.

Performance Food Group

Goochland County

2023 revenue: $57.3 billion

Employees: 30,000+

Food services and distribution company Performance Food Group (PFG) reached the top 100 of the Fortune 500 list for the first time in 2023, climbing to No. 91. PFG is composed of three operating segments: the Performance Foodservice distribution service; snack, candy and beverage distributor Vistar; and Core-Mark, which provides foods for the convenience store industry.

The company has made several acquisitions since 2016, when it debuted on the Fortune 500 at No. 185. In July 2023, PFG acquired OLM Food Solutions, a distributor to the convenience market, and in October, it bought Green Rabbit, a distributor of temperature-sensitive and perishable food.

PFG revamped its customer-facing technology last year, building out a new B2B online purchasing experience that operates across its market segments.

In December 2023, PFG’s board of directors approved the promotion of Scott McPherson to executive vice president and chief field operations officer.

General Dynamics

Reston

2023 revenue: $42.3 billion

Employees: 100,000+

Defense contractor General Dynamics capped off 2023 with the highest quarterly earnings per share and revenue in company history, clocking a 7.3% increase in annual revenue from 2022. And its $93.6 billion backlog represented the company’s biggest year-end backlog ever.

The second half of the year brought several big contracts. In October 2023, the Centers for Medicare and Medicaid Services awarded subsidiary General Dynamics Information Technology a $450 million contract to work on its Healthcare Integrated General Ledger Accounting System. And in November, the Indian Health Service awarded GDIT a $2.5 billion contract to modernize its electronic health record system. And in December, Canada awarded General Dynamics Mission Systems–Canada four contracts with a total value of $1.3 billion to provide systems support to the Canadian Army.

In January, General Dynamics announced that General Dynamics Land Systems President Danny Deep will succeed retiring Executive Vice President of Combat Systems Mark Roualet, effective April 15.

Capital One Financial

McLean

2023 revenue: $36.8 billion

Employees: 51,000+

The ninth largest bank in the U.S. based on assets, credit card banking giant Capital One delivered “solid results with strong top line growth” in 2023, said CEO Richard Fairbank. Capital One reported $36.8 billion in revenue for the year, up from $34.3 billion in 2022 and $32 billion in 2021.

Nevertheless, amid more consumers defaulting on credit card debt, Capital One saw its fourth-quarter profits for 2023 drop by 43%, compared with the same period in 2022. The bank increased its credit loss provisions to $2.86 billion last year, up from $2.42 billion the previous year. Additionally, Capital One recorded a $289 million charge in the fourth quarter toward restoring the Federal Deposit Insurance Corp.’s deposit insurance fund.

In April, Walmart filed a federal lawsuit against Capital One, seeking to dissolve the companies’ credit card partnership. The retailer alleged Capital One didn’t comply with the contract, citing problems such as customers not promptly receiving replacement credit cards and not seeing transactions posted to their accounts in a timely manner. A Capital One spokesperson dismissed these as “immaterial servicing issues,” and alleged that Walmart was suing to receive more favorable terms.

Northrop Grumman

Falls Church

2023 revenue: $39.3 billion

Employees: 90,000+

While Northrop Grumman posted $39.3 billion in 2023 revenue, a nearly $3 billion increase from the prior year, the aerospace and defense contractor posted a $535 million loss for the fourth quarter. That was largely due to a $1.2 billion charge the company took on the B-21 Raider bombers it’s manufacturing for the Air Force, reflecting surging production costs since the contract was awarded in 2015. Northrop Grumman said it expects to take a loss on the first five batches of the aircraft, which was publicly unveiled in November.

Northrop Grumman is also the lead contractor working on the replacement of the nation’s aging stock of Minuteman missiles with the new ground-based Sentinel nuclear missiles. That program has also seen costs soar unexpectedly, including the unforeseen need to replace existing infrastructure such as underground silos.

Meanwhile, Northrop Grumman’s many other contracts include work for NASA’s Artemis lunar program, which is aiming to return astronauts to the moon. In September 2023, the contractor delivered twin solid rocket booster segments that will help power NASA’s Space Launch System (SLS) rocket for the Artemis II mission, a manned lunar orbital mission slated for September 2025. Also, in December 2023, the Defense Intelligence Agency (DIA) awarded Northrop Grumman a contract valued up to $700 million to provide digital intelligence solutions.

CarMax

Goochland County

2023 revenue: $29.7 billion

Employees: 30,000+

The nation’s largest used-car retailer celebrated 30 years in business in 2023, marking the occasion on Oct. 10, 2023, with President and CEO Bill Nash ringing the closing bell at the New York Stock Exchange. The Fortune 500 company has grown from a single store to more than 240 locations in 41 states, selling more than 18 million cars. It’s also now one of the largest providers of used vehicle financing.

CarMax continued to be affected by the struggles of the used-car market, which has been bogged down by high interest rates, inflation and supply chain problems. For FY 2023, CarMax’s net revenues were down 6.9% from the year before, and net earnings per diluted share declined 56.5%. To help boost business, in January 2023, the company launched a new prequalification capability that allows customers to shop for CarMax vehicles with personalized financing terms and no impact to their credit score.

Dollar Tree

Chesapeake

2022 revenue: $28.3 billion

Employees: 200,000+

Dollar Tree, which operates more than 16,200 dollar stores under the Dollar Tree and Family Dollar brands, felt the ongoing effects of inflation in 2023. In November, it lowered its full-year financial outlook in the wake of disappointing third-quarter returns for the Family Dollar brand. Dollar Tree’s third-quarter 2023 sales grew 5.4% year-over-year to $7.31 billion, but the Family Dollar segment’s sales only grew 2% during that period.

Following the January 2023 C-suite shakeup that brought in the company’s new CEO, Rick Dreiling, the discount retailer continued to see executive personnel changes last year. In June, Vice President of Investor Relations Randy Guiler retired from Dollar Tree after 10 years, to be succeeded by Robert LaFleur, who joined from Chewy. In August, Jonathan Leiken joined Dollar Tree as executive vice president, chief legal officer and secretary, and Diane Randolph, a former chief information officer for major retailers, joined the board of directors.

Altria Group

Henrico County

2023 revenue: $24.5 billion

Employees: 6,000+

As smoking continues to decline in the U.S., Altria Group is aggressively pursuing a strategy of promoting smokeless tobacco products. In June 2023, the company furthered that aim through the $2.75 billion acquisition of NJOY Holdings, a manufacturer and distributor of electronic cigarettes and vaping products.

The acquisition came as Altria extricated itself from a disastrous $12.8 billion investment in e-cigarette manufacturer Juul Labs that plummeted in value to $250 million by the end of 2022. Altria exchanged its 35% stake in Juul last year for a nonexclusive license to some of Juul’s heated tobacco intellectual property. In May 2023, Altria reached a $235 million agreement to resolve at least 6,000 state and federal lawsuits related to Juul Labs in the wake of its September 2022 decision to exercise its option to be released from a noncompete deal with Juul. And in October, Altria’s new NJOY division filed a lawsuit against 34 foreign and domestic companies that it accused of manufacturing and selling illicit disposable e-vapor products.