Leaps and Bounds July/August 2007, HISPANIC BUSINESS Magazine Derek Reveron

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1 Leaps and Bounds July/August 2007, HISPANIC BUSINESS Magazine Derek Reveron Liberty Power CEO David Hernandez has powered up revenues from his energy trading business at a compounded rate of almost 250 percent a year since >> Download the 2007 Fastest-Growing 100 List The Hispanic Business 100 Fastest-Growing Companies are spread across a wide range of industries. Businesses on the list market practically every type of product and service, from air cargo transportation, human resources consulting, and concierge services to architecture, packaging, and health care. Liberty Power Corp., a Fort Lauderdale, Florida-based independent supplier of retail electricity, ranks No. 1 on the list. Sales increased from $806,215 in 2002 to $ million in 2006 as the company's workforce grew from six to 60 people. "We expect to be a billion-dollar company over the next few years or so," CEO David Hernandez says. Two companies that earn significant revenues from federal contracts rank second and third on the list. Force 3 Inc., a Crofton, Maryland-based network infrastructure developer, increased five-year revenue from $2 million to $253 million. The No. 2-ranked company posted a five-year compound annual growth rate of percent while continuing to garner business from hundreds of government agencies and companies. "Our revenue for 2007 will be in the $310 million range," President and CEO Rocky Cintron says. J2 Engineering Inc., which ranks third, increased revenues from $26,000 to $20.10 million. The Tampa, Florida-based environmental and construction service company's workforce grew from 5 to 50 employees. The rapid growth rate continues this year. So far in 2007, the company has secured about 10 contracts worth more than $150 million, compared to four contracts totaling about $15 million by the same time last year, says President and CEO Jose Morales. Military contracts account for about 80 percent of the company's revenues. Mr. Morales credits part of their growth to the company's bonus program. J2 has two bonus pools one for all employees based on how the company performs, and a discretionary pool for those who are key contributors to growth. "Employees have learned that they will be rewarded for working hard to help the company grow and buying into its culture. Our goal is to eventually become an employee-owned company and they are working hard toward that," says Mr. Morales, who owns about 78 percent of J2. Collectively, the Hispanic Business 100 Fastest-Growing Companies posted five-year revenue growth of percent from 2002 to 2006, down from 334 percent from 2001 to Smaller revenue growth accompanied a 16.4 percent drop in productivity compared to the

2 period. That reflects an increase in the average number of employees, which rose from 266 in 2005 to 309 in That pace is tough to maintain year after year, especially as companies become larger and growth that's big in absolute terms is smaller on a percentage basis. LatiNode, a Miami-based supplier of voice-over-internet-protocol service, did stay at No. 1 in 2004 and 2005; it's at No. 15 this year. Last year's No. 1, San Antonio-based TerraHealth Inc., dropped to No. 4 this year. The medical and IT services company increased five-year revenue from $497,503 to $24.49 million while its workforce grew from 25 to 402 employees. TerraHealth posted a five-year compound annual growth rate of percent for 2002 to 2006, down from percent from 2001 to The company's growth rate started decelerating to about 60 percent during 2006 due to Congress's delayed approval of defense appropriations bills, says TerraHealth Chairman and CEO Ted Terrazas. The delay had a significant impact because contracts with the Department of Defense account for about 80 percent of TerraHealth's business. "We look forward to eventually resuming double-digit growth," he adds. TerraHealth has taken several steps to boost revenues in the highly competitive and fragmented health care industry. The company is diversifying beyond government contracts by opening a commercial services division and an international division within the next few months. "We want to do contingency planning and first-response training in Latin America, and we have bids in El Salvador, Argentina, and other countries," Mr. Terrazas says. His company is among 24 of the Hispanic Business 100 Fastest-Growing Companies based in Texas, home to more on the list than any other state. Florida topped the list last year but ranks second this time around (22). California (15) is third and Virginia (six) is fourth. Among the four states, Virginia posted the highest employment growth (213.7 percent) while Florida has the lowest (86.4 percent). Florida finished with the highest revenue growth (333.7 percent) followed by Texas (311.9 percent). S ome companies sit high on this list but finish lower on the Hispanic Business 500, which does rankings according to the latest annual revenues. For example, No. 1 Liberty Power is No. 63 on the Hispanic Business 500 and No. 4 TerraHealth is No Wholesale continues to dominate our fastest-growing list, although the sector accounts for only 13 businesses, up from 11 last year. Wholesale's overall revenues increased $3.69 million from 2002 to The sector accounts for 42.3 percent of all Hispanic Business 100 Fastest-Growing Companies list revenues. By contrast, the service sector has the most companies on the list with 43 and had a five-year revenue gain of $3.03 million. Service businesses accounted for 36.8 percent of the list's collective revenues. The number of companies in the construction sector increased from 22 to 24. However, the construction industry's percent of total fastest-growing list's revenues dropped from 37.9 percent to 9.6 percent. The number of companies in the finance sector declined to from six to two while manufacturing dropped from 10 to eight. As the only independent supplier of retail electricity on the list, Liberty Power is a Hispanic-owned trailblazer in an evolving industry. Earlier this year, Liberty Power issued a "report card" comparing its prices with industry competitors. "We want to position ourselves as a thought leader in the industry that happens to

3 be Hispanic-owned," Mr. Hernandez says. It does business in 14 of the 20 states with laws that allow such small independent companies to supply electricity. "The market regulations and rules in the other six states don't make sense for us right now," Mr. Hernandez says. New Jersey, Connecticut, Pennsylvania, and Massachusetts are key states for the company because they have large Hispanic populations and Fortune 500 companies that value supplier diversity, Mr. Hernandez says. During the second half of this year, the company will launch an advertising campaign targeting Hispanic companies and residences, largely in the Northeast. The campaign will include Spanish- language and English-language advertisements on television and radio, and in magazines. Mr. Hernandez says the advertisements will attempt to "position ourselves as the electricity company of choice for Hispanic [companies] and residential customers nationwide. And show that we are the only electricity provider in the country that can actually speak to Hispanic electricity customers in their own language." Liberty Power raised about $150 million in capital last year to help finance growth. Compasa LLC, a McAllen, Texas-based wholesale exporter of meat, grain, canned food, and produce, is the only food-related company (No. 9) ranked in the top 20 of the Hispanic Business fastest-growing list. Compasa's five-year revenue grew from $1.26 million to $15.98 million as its workforce climbed from 4 to 15. The company continues to increase its number of suppliers and customers abroad, and is lining up increasing amounts of credit, says General Director Emeterio Salinas. "This will be a really good year for revenue but 2008 will be even better due to all of the moves we are making now, " he says. Compasa is hiring more employees to open additional sales offices to increase exports to its current markets and add new ones. The company set up an office in Wilmington, North Carolina earlier this year to target Russia, China, and Africa. Last month, Compasa opened an office in China and plans to set up one in Miami over the next few months to target Latin America and the Caribbean. The company already has six offices in Mexico, which accounts for more than 70 percent of the company's revenue. The Ventura Group Inc. (No. 61) is one of the few management consulting and professional services firms on the Hispanic Business fastest-growing list. The Ashburn, Virginia-based company's five-year revenue increased from $4.04 million to $13.40 million as its workforce increased from 60 to 113 people. Phoenix-based Apodaca Wall Systems (No. 7), which provides framing, drywall, and stucco services mainly for commercial construction projects, is one of six companies among the top 10 on the list that offer at least some construction or construction-related services. Apodaca's fiveyear revenue increased from $750,000 to $16.50 million as its workforce grew from 30 to 460 people. After a slow first quarter due to the construction industry's overall downturn, Apodaca is back on track to hit its revenue growth goals for 2007, says President Arnold Apodaca, although he declined to specify the goals. This year the company will be wrapping up construction of its largest contract ever a $2.5 million project in connection with the Biltmore condominiums in Phoenix.

4 Mr. Apodaca attributes part of the growth to his managers, of whom about 70 percent are relatives, including his father-in-law, brother-in-law, son, son-in-law, daughter, and daughter-in- one of the largest Hispanic contractors in law. "I release responsibility to them and I trust them," Mr. Apodaca says. "Our goal is to become Florida." Methodology Companies are ranked based on percentage revenue growth from 2002 to 2006, based on their IRS report on line 1c of the corporate/partnership tax return. Companies must have had minimum revenues of $200,000 for calendar year To be eligible for the list, businesses must show at least 51 percent ownership by Hispanic U.S. citizens, and must maintain headquarters in one of the 50 states or Washington, D.C. Nonprofit organizations, advertising and public relations agencies, and companies based in Puerto Rico were not eligible.

5 FASTEST-GROWING C O M P A N I E S Rank Company, Location Type of Business Liberty Power Corp., Fort Lauderdale, FL Independent supplier of retail electricity Force 3 Inc., Crofton, MD Network infrastructure development J2 Engineering Inc., Tampa, FL Environmental and construction services Terrahealth Inc., San Antonio, TX Medical and IT services Pointe Developers Inc., Miami, FL Real estate development Yerba Buena Engineering & Construction Inc., San Francisco, CA General engr. const. Apodaca Wall Systems, Phoenix, AZ Framing, drywall, stucco and paint Environmental, Safety & Health Inc., Knoxville, TN Const., environ. consulting, training Compasa LLC, McAllen, TX Meat, grain, canned food, produce distribution JASCO Construction Co. Inc., Miami, FL Const. mgmt., educational facilities Milagro Packaging, Dundee, MI Expendable and returnable packaging Total Engineering Inc., Landover, MD Excavation and Utilities Pinnacle Technical Resources, Dallas, TX Tech., staffing and network solutions Mobius Partners Enterprise Solutions, San Antonio, Texas Computer reseller LatiNode Inc., Miami, FL Global whsl. & retail telecom. svc. provider Urbieta Oil Inc., Medley, FL Wholesale distribution of petroleum products 7Search.com, Chicago, IL Internet search engine services USA Logistic Carriers LLC, McAllen, TX Trucking co. VisionIT, Detroit, MI IT staffing Fred Loya Insurance, El Paso, TX Auto insurance Bonanza Foods & Provisions Inc. 1, Vernon, CA Whsl. of beef, pork, poultry, seafood Argent Associates Inc., Edison, NJ Telecommunications network security Mora Engineering Contractors Inc., Coral Springs, FL Underground utilities, earth work Intuitive Research & Technology Corp., Huntsville, AL Engineering services TORIX General Contractors LLC, Colorado Springs, CO General contracting Sales Growth Percent Compound Gross Sales* ($M) Profit Range No. of Employees Increase Annual Rate Year Founded 14,749.02% % $0.806 $ F C ,506.60% % $2.01 $ DND D DND ,630.77% % $0.260 $20.10 C C ,824.38% % $0.498 $24.50 D D ,191.94% % $1.50 $49.38 C C DND ,756.26% % $0.523 $14.93 A B ,100.00% % $0.750 $16.50 F C ,955.77% % $0.584 $12.00 D D ,162.98% 88.52% $1.27 $15.99 D A ,118.97% 86.85% $4.32 $52.68 D C ,056.57% 84.41% $2.03 $23.43 F D DND % 80.01% $2.00 $21.00 B B % 80.01% $4.00 $42.00 C C % 70.75% $2.40 $20.40 C C % 69.80% $16.00 $ A B % 69.40% $51.00 $ C D % 68.54% $3.72 $30.00 D A % 62.53% $11.04 $77.02 C B % 59.74% $3.46 $22.50 D C % 58.17% $43.89 $ C B % 57.94% $4.50 $28.00 B C % 56.51% $1.50 $9.00 D C % 55.16% $2.42 $14.00 C D % 54.90% $2.48 $14.26 D D % 54.13% $14.00 $79.00 C F DND Profit range: A = 16% or more; B = 11% 15%; C = 6% 10%; D = 0 5%; F = Loss; DND = Did Not Disclose * Figures were rounded to the nearest $10,000. Revenue growth percentages were calculated using actual numbers. 1 dba Bonanza Meat Company Inc Hispanic Business Inc. Reprinting, copying, or transmitting all or part of this information requires written permission. 28 Hispanic Business july/august