By now, most of us have GPS in our car or, perhaps, a GPS app on our smartphone. Founded in 1997, Woodbridge Ontario’s BSM Technologies (TSXV:GPS) gives us a glimpse of the next-generation of GPS.
The company’s customized solutions allow for real gains in the business world, helping companies improve customer service, reduce costs, improve efficiency, enhance security and maintain compliance with safety, workplace and environmental regulations. BSM’s GPS technologies manage large fleets of trucks and other mobile assets, supply diagnostics, monitor fixed assets and enable automated vehicle security. The company now has mreo than 80 employees, with offices in Woodbridge, Ontario and Laval, Quebec.
Cantech Letter talked to BSM President and CEO Aly Rahemtulla.
Tell us a bit about your business. How do you make money?
We work with many customers in various industries to integrate their mobile and fixed assets with the information systems they use to run their business. These customers include leaders in rail transportation, construction, trucking and oil and gas services. For an investment of about $1.50 per day for each asset, we estimate that they can receive a ten times return on investment. The solutions we provide are built around a common hardware platform that can be adapted for use on all types of assets – from lawn mowers to tractor trailers and communicate over Wi-Fi, cellular or satellite networks.
Want the latest on the hottest Canadian tech stocks? Sign up for CANTECH BUZZ, our weekly newsletter. The simple sign up form is just to the right…
The products we offer for real-time fleet management and managing a mobile workforce are our Sentinel FM, Mobicom and Fleetpulse platforms. These connect to a vehicle through an industry-standard data bus or directly through the engine control unit, GPS receivers and auxiliary equipment. This allows our customers to record trip information and monitor for violations such as speeding, harsh or extreme acceleration and braking, track vehicle location and time spent in designated areas. Our services provide electronic dispatch, alarm notification, and both current and historical data in a variety of formats, including activity reports and maps. Customers can customize the data to meet their specific needs.
Our iTraX division enables the monitoring of fixed assets – such as geographically diverse gas storage tanks. The data from remote temperature and pressure sensors is sent wirelessly to notify logistics managers when a specific tank is reaching low levels. This enables them to plan bulk deliveries for replenishment that best suits their fleets and eliminates inefficient distribution schedules and manual inventory management.
Our SecTrack subsidiary provides hardware, communication links, and airtime for real-time tracking and management of vehicles, vessels and stationary facilities around the globe using ISATM2M and Inmarsat D+ satellite communications. We market Sectrack through a network of 60 value-added resellers in 40 countries. Typically, these resellers are local companies who have built monitoring and tracking services to serve many maritime and land-based sectors, including nuclear transport monitoring, mining, security tracking of trucks, trailers and other vehicles and tracking of airplanes and rescue helicopters.
We make money from the sales of hardware and software licenses and earn a stream of recurring revenue from monthly Application Service Provider fees, monthly alarm monitoring, and resale of cellular and satellite data.
Is your space growing? How are you positioned to benefit?
Our society is increasingly data driven. BSM’s solutions are crucial to enabling businesses gain control of all their processes by providing a stream of actionable real-time information. A recent survey by Frost and Sullivan projects that revenue for mobile workforce and fleet management applications will grow to $2.8 billion in the United States and $235 million in Canada by 2015. That’s a combined compound annual growth rate of twenty-five percent. We believe we have the best product offering in the space – the most adaptable to diverse businesses and with the highest security – such that we will benefit from this strong market growth.
What is the most common misconception about your company or its business?
Most people know GPS navigation units and assume that what we do is the same. In reality, what we provide is much more complex. Our model is based on convergence, we supply our customers with sophisticated hardware and software solutions that will support and streamline business processes and supply valuable information.
What’s your financial situation like?
We have had strong financial growth with revenue growing at a CAGR of 41 percent to $13.5 million in 2010 from $3.4 million in 2006. This has continued into this year – our second quarter revenue was $3.9 million – our highest-ever quarterly revenue and an 18 percent increase over Q2 2010. Net income in Q2 2011 was $107,991, compared to a loss of $1.1 million in Q2 2010. We are EBITDA positive – $166,233 in the second quarter of this year – and have been for the past four quarters. Sixty percent of our revenue is recurring and the gross profit on that recurring revenue just about covers all of our fixed overhead. That provides us with a very scalable profit model.
What is your key competitive advantage?
There are several reasons why we win contracts and have had strong growth. First is that we completely control our technology from end-to-end in our hardware and software. This means we can customize a solution that completely meets a customer’s needs. It also means that our applications are the most secure. Second, rather than simply providing location data, we focus on converging our technology with our clients’ business operations. This provides them the best return on their investment. An example of this is our fuel management solution. Managing fuel consumption has become a critical task for most businesses. We have developed advanced algorithms that combine location, engine diagnostics and historical data to match fuel purchases to a particular vehicle. This in itself is useful data for any business, but it is particularly valuable in detecting fuel card fraud. It’s been estimated that fuel card fraud costs companies in the United States about $9 billion every year. Our ability to address this has helped us secure a partnership with a major fuel card company in the United States and win some key mandates.
BSM also has the ability to work with diverse assets – our hardware and software is easily configurable to different vehicle and fixed assets types and communication networks. Finally, by focusing on key vertical markets, such as rail, construction, high security fleets and oil and gas, we have established sector expertise that makes us the natural choice for telematics solutions.