A golden era is dawning for many of B.C.’s fastest-growing companies.
Whether it’s in manufacturing, retail, services, technology or mining, many of B.C.’s fastest-growing companies are successfully tapping new opportunities to expand despite uncertain economic times.
The firms on this year’s list of the top 100 fastest-growing companies in B.C. posted impressive results over the past five previous fiscal years.
Combined, companies on the list posted average sales growth of 3,547%, tripling the average five-year sales growth of 1,097% on last year’s list.
Major mining growth
A significant portion of that growth has come from B.C.’s mining sector. The 25 fastest-growing mining companies on this year’s list posted an average 10,819% growth in revenue between 2006 and 2010. Many of these firms are gold producers who have gone into production in the past half decade and have benefited from the 25% increase in gold price to US$1,406 per ounce at the end of 2010.
Higher prices have helped boost profits for the vast majority of mining companies on this year’s list. In dollar terms, Goldcorp Inc. (TSX:G) posted the highest profit at $1.6 billion, with a profit margin of 41.2%. But Vancouver’s New Gold (TSX:NG) and Eldorado Gold (TSX:ELD) have also posted double-digit profit margins in 2010.
Those profits, however, are likely to go even higher in 2011 with gold’s price rising an additional 35% to nearly $1,900 in the past eight months of the year as fears of a global recession continue.
While gold gets much of the media attention as a haven against stock market volatility, silver is gaining even more investor attention. The price of silver rose 80% last year to more than $30.50 per ounce, and continued to rise another 38% in the past eight months. That upward trajectory in prices has helped boost the fortunes of many silver producers headquartered in B.C., including the nine companies on this year’s list.
Companies from Silver Standard Resources (TSX:SSO) to Silver Wheaton Corp. (TSX:SLW) posted even higher profit margins than the gold companies on the list.
This year’s top company also benefited from the rising tide of metal prices. Capstone Mining (TSX:CS), which produces copper from its two mines in Mexico and the Yukon, posted a 20% increase in sales despite a decline in the amount of copper produced and sold in 2010. Much of the company’s top-line revenue growth is the result of a 48% increase in the realized copper price of $3.42 per pound, up from $2.31 per pound in 2009.
B.C. tech dominates
While B.C.’s mining sector continues to benefit from global demand for resources, the province’s technology companies continue to dominate the fastest-growing list. While the number of tech companies on the list fell to 41 from 54 last year, the average level of growth inched upward to 235% from 231% for last year’s fastest-growing tech companies.
Even though emerging technology companies are thought to stay in the red for several years, just over half of the 41 tech firms on this year’s list said they were profitable in 2010.
Of the 21 firms that said they were profitable last year, 11 indicated they had stayed profitable over the past five years. The remaining 10 indicated they had gone from a net loss in 2006 to a net profit in 2010.
Among those that have grown to become profitable:
•PNI Digital Media (TSX-V:PN), which posted a net profit of $6.8 million in 2010 compared with a net loss of $2.4 million in 2006;
•Photon Control (TSX-V:PHO), which posted a net profit of $2.7 million from a net loss of $3.7 million; and
•Avigilon, this year’s third-fastest-growing company, posting a net profit of $2.4 million compared with a net loss of $2.6 million.
Tapping new markets key to growth
For TIO Networks Corp. (TSX-V:TNC), tapping a new, emerging market is one of the key opportunities it’s pursuing to further grow its business as a bill payment processing provider.
Over the past five years, the Vancouver-based company, which ranked 61 on this year’s list, has focused on expanding its network of kiosk and clerk-assisted point-of-sale locations, as well as the number of companies that use its payment processing system.
The focus has been to provide near-instant cash-based bill payment services for Americans who don’t have a bank account. Five years ago, the Center for Financial Services Innovation (CFSI) estimated that 20% of the population in the U.S. fell into this unbanked category. An updated CFSI report released last week suggested the number has increased to 26% of the U.S. population that prefer to use cash to make payments.
To date, the number of locations where TIO processes payments has grown to nearly 58,000 from less than a 1,000 in 2006. It now accepts payment for more than 10,000 different products and services from household energy bills to TV and phone bills across the U.S. and Canada.
The combination of increasing locations and the number of billers accepting payment through TIO has led to consistent increases in the number of transactions and ultimately revenue growth for the company in the past five years. In the third quarter of 2011, the company posted revenue of $9.5 million, compared with revenue of $2.3 million in the first quarter of 2006.
Over the past two years, however, TIO has been focusing on tapping the growing web and mobile-based payments market that has drawn a lot of attention in the payment processing world. The CFSI report noted that 96% of U.S. consumers who don’t have a bank use a mobile phone.
Steve Barha, TIO’s chief information officer, told Business in Vancouver that growing availability, affordability and acceptance of smartphones and even tablet devices are a key opportunity for the company to expand beyond its core unbanked consumer market.
“Growing to 58,000 locations is a fantastic feat for our walk-up payments market [where customers make payments at a specific location],” said Barha. “But to be able to service millions of customers through mobile and consumer websites and not worry about physical geography and the physical nature of the payment, that’s really what’s got us very excited in terms of growth and where we can go.”
So far, TIO’s payment system is used by the company’s billers such as Pacific Gas and Electric and DirectTV through several payment apps.
TIO’s move into mobile has not gone unnoticed. An analysts’ report by PI Financial’s Pardeep Sangha and Sharon Wang is forecasting continued double-digit percentage growth in revenue and earnings over the next year.
While Barha couldn’t provide specifics, he said the move into the mobile and web-payments space has made growing contributions to TIO’s increase in transaction volume in recent quarters. “It’s evident that the last 12 months, you’ve seen an acceleration, because you’re seeing that mobile and web direct-to-customer solution we’re able to offer,” said Barha.
“You always want to have a flywheel effect in a business model and be able to manifest all the different services across different channels. We’ve gone from being in a niche market to being a multi-channel company able to reach a larger population than the walk-up customer.” •
Fastest-growing tech firms
Company Rank
Avigilon 3
Day4 Energy Inc 10
Clevest Solutions Inc 11
QuickMobile Inc 12
DotNetNuke Corp 17
Global Relay Communications 19
PNI Digital Media Inc 21
iQmetrix 24
Elastic Path Software 25
Domain7 Solutions Inc 30
Fastest-growing mining firms
Company Rank
Capstone Mining Corp 1
China Gold International Resources 2
Rusoro Mining Ltd 4
Roca Mines Inc 5
New Gold Inc 6
Yukon-Nevada Gold Corp 7
Aurcana Corp 8
Aurizon Mines Ltd 9
First Majestic Silver Corp 14
Minefinders Corp Ltd 15
Fastest-growing service-based firms
Company Rank
Hub International Canada West Co 22
WesternOne Equity Income Fund 26
Ignite Technical Resources 32
Energold Drilling Corp 48
EJM Construction Management Ltd 49
Wolfgang Commercial Painters 52
First West Credit Union 54
Global Medical Services 63
The Cavalry Construction Group Ltd 64
Metro Testing Laboratories Ltd 66
