•Hilario Navarro of Bonanza Meat Co. raised smiles when he described a visit to a pork farm. His children wanted to close the car window to keep out the stink, but the CEO told them "that smells like money to me."
Bonanza sells about $19 million (2004 revenues) in meat to carnecerias and shops across California, but at one point had to turn down orders from the Albertson's supermarket chain, Mr. Navarro explains, because suppliers wouldn't extend him credit. "Suppliers demand payment in net seven, while our customers don't pay for seven to 14 days," he said. "That gap is what we're trying to fix."
• David Hernandez, CEO of Liberty Power and winner of the 2005 Hispanic Business EOY® (Entrepreneur of the Year) Award, presented his plan to garner a capital injection of $25 million to $50 million. Because Liberty a Florida-based independent power broker buys large quantities of electricity, the cost of capital has a direct impact on the price of its product.
Of all the CEOs, Mr. Hernandez had the clearest exit plan: grow revenues to the $1 billion to $2 billion range, and then "either go public or become an acquisition for a strategic player in the energy sector."
Mature Companies Pitch Acquisition Plans
The entrepreneurial parade continued with mature companies, defined as those with revenues above $30 million.
• Fred Flores, CEO of California-based Diverse Staffing Solutions, described a common problem for companies such as his: After years of fast growth, Diverse Staffing no longer competes with "mom and pop" agencies, but now must deal with industry giants.
The company has grown to its current size ($44 million in 2004 revenues) by acquisition, a strategy Mr. Flores plans to pursue in a broader geographical market with a new capital infusion.
• Florida-based KIRA, another mature company, competes against Raytheon, Lockheed, and other prime suppliers for federal contracts involving construction and related services.
CEO Carlos Garcia said that in the aftermath of Hurricane Katrina, the company booked reconstruction work at a rate of $100,000 per week. In outlining his plans, Mr. Garcia acknowledged that the federal markets defy the experience of most finance executives. "Private equity financiers perceive low margins, but they don't really understand the federal market," he said. Although government work lacks the high-return potential of software or pharmaceuticals, its lower level of risk many of KIRA's contracts will run for another nine to 14 years make it a solid investment, according to Mr. Garcia.
•The highest tech presentation came from Jorge Granados of LatiNode, a provider of VoIP (voice over Internet protocol) services to Latin America. The company has ranked first in the Hispanic Business Fastest-Growing 100® directory for the past two years, and recent acquisitions in Mexico and Germany point to future growth. LatiNode reported 2004 revenues of $42.6 million.
Mr. Granados predicted the VOIP industry will evolve along the lines of cellular telephony and Internet service providers to the point where basic service will be "almost free." The frontier lies in delivering content voice, data, images, and video in a format tailored to each customer. To survive the next round of industry consolidation, LatiNode needs size and services that will require capital investments.
Plain Old Success Stories
Not every CEO hoped to win over investors.
•Mario Molina presented Molina Healthcare, a managed-health plan provider serving Medicaid and low-income populations in six states, as an example of a Hispanic-owned company that went public. Mr. Molina offered a presentation long practiced before shareholders and analysts. Financially, the company has the public market plus a $180 million credit line, currently untouched. Mr. Molina joked that he sometimes thinks about taking his company private again, especially when the share price falls.
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