Cantech Letter interviews Steven Koles, President and CEO of Hemisphere GPS

Calgary’s Hemisphere GPS, is taking GPS to the next level. That level is the business world, where Hemisphere products help excavators, hydrographic surveyers, even snow grooming operators become more efficient.

But it’s in agriculture where the company is seeing the greatest impact. In November, Hemisphere GPS reported the best third quarter in its history. The $13.2-million top line was a 46% increase over the $9.1-million in the third quarter of 2009. Sales of Hemisphere GPS’s agriculture segment, which include both land and air based products, were up 54%, the gains were mainly made in South America, Australia and Asia, but the company says it is starting to see renewed strength in the US agriculture sector after the U.S. Department of Agriculture increased its projection for net farm income $77.1-billion, which would make it fourth highest year ever in the United States. Hemisphere’s agriculture products enable seed and chemicals to be applied more efficiently, and can actually increase crop yields. Cantech Letter recently talked to Hemisphere GPS President and CEO Steven Koles about what 2011 might hold for the innovative company.

Steven, for our readers who aren’t familiar with Hemisphere GPS, can you give us an overview of the company?

Hemisphere GPS designs and manufactures GPS (GNSS) technology for positioning, guidance and machine control applications. The Company has been operating for more than 20 years and sells into more than 35 countries globally. Hemisphere GPS products are used in a variety of applications including agriculture, construction, surveying, marine navigation and various original equipment manufacturer (OEM) markets. The Company is headquartered in Calgary, Alberta with major product development facilities in Scottsdale, Arizona; Hiawatha, Kansas; Winnipeg, Manitoba; and Brisbane, Australia. Hemisphere GPS holds numerous patents and a strong portfolio of intellectual property including Outback Guidance, a leading brand name in precision GPS agriculture. Hemisphere GPS is designated as a Cleantech company and trades on the TSX under the symbol “HEM.”

You are recording some of the better top line numbers in the company’s history, but you are still posting losses. When do you think Hemisphere GPS will be profitable?

The past two years of the global recession has been difficult on mid-sized companies, particularly those companies with exposure to the agriculture sector. Despite these conditions, we have been executing on a deliberate strategy to continue investing in R&D and innovation in order to come out of the economic and agriculture downturn with a portfolio that was much stronger than when it started. We can confidently state that we have done exactly that. While the investment did impact our financials, our improved portfolio now enables us to seize the recently stronger agriculture cycle and drive our revenue growth to achieve a return to profitability for Hemisphere GPS. Profitability is our priority goal for 2011.

You are showing strong growth internationally. Are there particular markets, geographically, you feel could be high growth areas for Hemisphere GPS?

Given a significant portion of our revenue stream has historically come from North America, growing internationally has been a key goal for us over the past number of years. We have made great progress into regions such as Western Europe and Australia. We are now generating further momentum into other emerging regions such as South America, China, India, and Eastern Europe / Russia.

Does Hemisphere GPS have a sweet spot in terms of size of customer you target? Your solutions would seem to be quite scalable…

Our portfolio is very scalable and can deliver solutions from lower-end segments to higher-end segments in vertical markets such as agriculture, marine, and earthworks. The strength of our value proposition resonates most in the mid-market for farmers, marine owners, and construction contractors where we can maximize value for performance with simple yet powerful products and solutions.

Hemisphere GPS seems to have developed a lot of interesting products that might not be generating a ton of revenue for you now, but have potential, such as your asset tracking system and your snow grooming software. Which of your lesser known ventures do you think has the potential to contribute the most to your bottom line?

One of our key strategies has been to diversify our business by repurposing the investment from our R&D into other niche opportunities. For example, the snowcat grooming system was developed with some very basic customization to the same systems we use for tractor guidance in agriculture. Services such as tracking are also offerings we can apply across all of our vertical markets. While our Earthworks business today is quite new and less known in the market, given the size of the potential global addressable market for products like excavator guidance, we are very excited about the growth prospects for Hemisphere GPS in the construction market.

___________________________________________________________________________________________________________

___________________________________________________________________________________________________________