News Column

The Billion-Dollar Club

June 2004, HISPANIC BUSINESS Magazine

Joel Russell

One billion dollars is an oversized concept for many entrepreneurs. It's enough money to make 1,000 people millionaires; it's more than many CEOs earn in their lifetime, and in annual revenues it stands as a milestone for any company. This year, for the first time, three companies on the Hispanic Business 500 have passed that mark.

At first glance, the three companies have little in common. Denver-based Burt Automotive Network, the largest company on the Hispanic Business 500 with revenues of $1.63 billion, was started in 1939 and functions as a franchise group in the mature automotive industry. Second-place Brightstar Corp., with revenues of $1.28 billion, is less than eight years old and distributes cell phones to Latin America – a rapidly changing product category in a dynamic, risky market territory. The Related Group of Florida, No. 3, on the directory with revenues of $1.08 billion, develops condominiums and office projects in South Florida. CEO Jorge Perez follows a philosophy of "fill-in" development, and has positioned his company to tap Miami's population boom.

Conventional wisdom holds that growth becomes harder as an enterprise gets larger, but members of the Hispanic Business 500 billion-dollar club disagree. "As you develop a reputation as a dominant player, more opportunities are presented and it is easier to obtain the financing necessary to continue to grow," says Mr. Perez.

Lloyd Chavez Jr., CEO of Burt Automotive, shares similar views on growth. "As applied to individual dealerships, growth is difficult since they are generally mature operations. As applied to our entire business group, growth is actually pretty easy through new franchises in new locations or separate support entities for those dealerships."

In recent years Burt has tapped into a new growth opportunity in fleet sales. "We have expanded business with existing clients, such as Qwest, and added additional clients, such as Coors and Excel Energy," says Debi Garrity, director of marketing at Burt. Adds Mr. Chavez: "Our fleet sales should increase almost 50 percent the next two years, from $800 million last year."

BREAKING THE $1 BILLION BARRIER
(Annual revenues, in millions)
CEO Lloyd Chavez Jr. Marcelo Claure Jorge Perez Jorge Mas
The Burt Automotive Network
Englewood, CO
CEO Lloyd Chavez Jr.
1999: $837.5
2000: $1,003.5
2001: $1,233.7
2002: $1,493.8
2003: $1,477.9
2004: $1,629.6
BrightStar Corp.
Miami, FL
CEO Marcelo Claure
1999: –
2000: –
2001: $354.0
2002: $621.0
2003: $848.7
2004: $1,282.0
The Related Group of Florida
Miami, FL
CEO Jorge Perez
1999: $297.0
2000: $303.0
2001: $506.0
2002: $547.0
2003: $683.0
2004: $1,082.0
MasTec Inc.
Miami, FL
Chairman Jorge Mas
1999: $1,005.1
2000: $1,100.0
2001: $1,300.0
2002: $1,220.0
2003: $838.0
2004: $873.9


For Brightstar Corp., advances have come easier than the capital to finance them. The company's double-digit growth since its launch helped CEO Marcelo Claure win Hispanic Business Magazine's EOY (Entrepreneur of the Year) Award in 2003. On the financial side, the company in January announced it had landed $61.75 million from four venture capital funds in exchange for a 15 percent equity stake. According to media reports, Mr. Claure plans to take Brightstar public in the next few months. At press time, the company was in a media blackout period in preparation for an initial public offering. But after winning the EOY, Mr. Claure told Hispanic Business, "in the next three years, we expect to be the biggest telecom solutions provider in the world."

Likewise, other billion-dollar CEOs see accelerating growth. Mr. Chavez expects his company's sales to reach $3 billion during the next five years with a good U.S. economy. He expects to open two new dealerships this year and three next year, including development of 140 acres in fast-growing Parker, Colorado.

"We are seeking to acquire a broader range of auto franchises which would include luxury vehicles [to] even-out the ups and downs of the general economy and product cycles of various manufacturers," Mr. Chavez explains.

The Related Group's Mr. Perez predicts steady growth in South Florida's real estate market based on global demand. "As Miami is cemented as the 'Capital of the Americas,' we foresee continued expansion for our company. We are starting to tap into the European markets for our condominium products and, due in part to the strength of the euro, have been quite successful."

On the heels of this year's three billion-dollar companies come two other hard-charging firms. New York-based Palladium Equity Partners reports revenues of $844 million to rank fifth on the Hispanic Business 500. The other company poised to join the club was the first company in the history of the Hispanic Business 500 to reach the billion-dollar level. In 1999, MasTec reported revenues of just slightly more than $1 billion for the previous year. The specialty construction company reached a high of $1.3 billion in 2001, but two years of falling income took its revenues to $838 million. For 2003, the company had revenues of $873.9 million.

The emergence of three billion-dollar com-panies on the Hispanic Business 500 points toward a recovery for the larger U.S. Hispanic economy. "In our market there has not been slower growth – on the contrary, it has been fast and challenging," says Harold Gallo, marketing director at The Related Group.



Source: HISPANIC BUSINESS Magazine


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