Nothing can be more certain in today?s economic environment: companies will continue to adjust in order to survive and prosper. Hemisphere GPS has come a long way since its humble beginnings in 1990 in Calgary, Alberta, through to a recent decision to focus on its agriculture business and move its headquarters to Hiawatha, Kansas.
I?ve always had a soft spot for Hemisphere GPS ? it grew up alongside NovAtel in Calgary, the company I worked for over many years. I knew a lot of the Hemisphere GPS people and I watched the company wax and wane over the years as it brought other companies into the fold, struggled and often succeeded with integration, with new product development and introduction, and eventually settled into its position as a leader in the GNSS ag business. The company?s recent announcement to sell off its Precision Products and Core GNSS group almost brought a tear to my eye ? but it?s really just another step in their ongoing evolution.
Selective Availability. CSI came into the GNSS game back in 1990 when GPS still had to struggle with the inaccuracies of Selective Availability (SA), and it was an initial approach of overcoming SA with differential GPS that got it started. Steven Verhoeff and Michael McCullough got the original company off the ground with the Data Trakdifferential HF unit that was sold into the offshore oil and gas industry, improving 100 meters SA measurements to an accuracy of 5-10 meters. As the U.S. Coast Guard beacon service came online through 1991-1993, CSI jumped on-board with the MBX-1 beacon receiver and business began to take off in early 1994, with significant sales in marine and the newly developing precision agriculture industry.
In order to maintain the rapid growth that CSI had initially experienced, there followed a series of private placements and public offerings that provided the necessary capital needed to sustain growth. The first private placement in Calgary was followed by an IPO on the Toronto Stock Exchange. These funds allowed CSI to not only invest in further beacon receiver development, but also gave it the capability to look at alternative approaches to growth through a series of acquisitions over the next seven years that would change CSI forever.
While the beacon receiver business sustained CSI through many years, by 1999 the talk was that SA would soon be switched off by the U.S. government, putting the need for differential beacon receivers in question. This motivated CSI?s diversification strategy, which saw them acquire Satloc in Arizona. The acquisition added a highly skilled engineering team that had developed the first GPS products for crop duster planes used in the safe and efficient application of chemicals, owning 75 percent of this market. Satloc had also deployed these products into ground-based precision agriculture applications for guidance of tractors, sprayers and other ag equipment.
SBX-4 Hemisphere?s current OEM radiobeacon receiver.
CSI Wireless. CSI became CSI Wireless in July 2000, following the acquisition of Wireless link Corporation in California, which brought on not only CSI?s entry into the wireless communication market, but also into fleet and asset management, fixed and mobile telemetry, and automotive and consumer telematics markets. To handle this diversity of products and markets, CSI Wireless quickly organized itself into two business units, one for the GPS sector and another handling wireless.
The wireless business went well at first, with revenues of around $200 million between 2000 and 2006, mostly in fixed-base wireless phones sold through Motorola in developing countries without wired communications infrastructures. However, margins fell as completion increased, and the wireless and telematics businesses were to be eventually sold off later in 2006. In contrast during this period, the GPS business thrived.
Outback-S.
Outback. Linking up with RHS out of Hiawatha, Kansas, CSI Wireless brought out the Outback-S light-bar guidance systems for retrofit in ground ag. Outback-S quickly became an after-market leader with more than 25,000 units sold. A series of ag guidance derivative products quickly followed as CSI and RHS, operating as a highly successful team, pioneered GPS-based precision agriculture techniques for the mainstream family farm during 2001-2004. e-Dif and COAST? ? proprietary software technologies ? were added to enhance GPS accuracy and reliability without third-party differential corrections and during periods of GPS signal outage.
During the same period, CSI also introduced the Vectorline of GPS heading sensor (compass) products, which re-established a position in the marine market providing heading corrections for seafaring vessels using a technology that was far less expensive and much simpler than competing gyro-compasses ? consistent with the performance/value theme established in the family farm market.
Vector V101 Series GPS Compass.
CSI also introduced a variety of new GPS and DGPS receivers, including the?PowerMAX Bluetooth-enabled DGPS receiver, the?Seres integrated DGPS/SBAS smart-antenna system and the DGPS MAX, a high-accuracy GPS receiver integrating GPS, SBAS, WAAS and beacon DGPS.
Hemisphere GPS. Building on the successes that CSI and RHS had enjoyed, in April 2005 CSI announced that the marketing and distribution assets of the Outback Business were to be combined with CSI?s GPS Business Unit to create Hemisphere GPS, with three business units: Ground Agriculture, Air Agriculture and Precision Products. With the addition of the RHS business, the agriculture business unit was suddenly the largest in terms of revenues and set up the goal ?to be the global leader in after-market GPS guidance products.? Shortly thereafter, Hemisphere announced that a strategic partnership had been established with CLAAS ? one of the world?s top agriculture OEMs ? providing it with guidance and auto-steering technology and products for integration with its equipment, all based on the newly developed Crescent receiver. Later in that year, the next-generation?Outback S2 guidance product was announced incorporating Crescent technology.
With all three businesses poised for growth, everything seemed set for great things to happen. But the agriculture markets didn?t cooperate and with the wireless group still to be divested; internal costs mounted as sales and margins declined. Before the ship could be righted there were casualties, and unfortunately one of them was the founder and CEO Steven Verhoeff, who left the company in May 2006. Chairman Mike Lang stepped in as interim CEO, and CFO Cameron Olson became interim president. While a CEO search got underway, the cleanup related to the divestment and wind-down of the wireless businesses was completed, and new products in each of the three businesses continued to be introduced. By September 2006, Steve Koleswas was installed as Hemisphere?s next president and CEO, closing a difficult chapter in the CSI story and beginning what everyone hoped would be a phase of recovery.
During 2007 in the Agriculture group, the Outback product family grew with the introduction of the Automate and S-Lite.? The Precision Products group also introduced a number of new products, including the LX-1 OmniSTAR-compatible DGPS receiver board and the XF100 receiver for handheld mapping applications.
Total Eclipse. One of the most significant steps forward for Hemisphere came about in 2007 with the release of?Eclipse dual-frequency GPS receiver technology. This dramatically extended high levels of precision and reliability into the company?s products. With Eclipse RTK technology, centimeter accuracies were now possible ? a dramatic improvement from CSI?s first products that enabled accuracies of around 10 meters.
Making a Beeline. With the return to strong revenues through 2007, Hemisphere felt confident enough to return to its acquisition strategy, and in December it brought Beeline in Brisbane, Australia, into the company fold ? adding intelligent high-end GPS guidance and auto-steering solutions for agriculture equipment and autonomous control solutions for other machine control applications. Leveraging highly accurate ?steer-by-wire? automatic vehicle steering, the acquisition accelerated the evolution of auto-steering products from hydraulic-based steering to electronic vehicle control, and brought many other talented and experienced engineering employees into the company.
Outback S3.
The agriculture markets were extremely robust in North America in 2008, but there was even stronger growth in offshore international markets for the Precision Products group. During 2009, Hemisphere?s AG group introduced the Outback S3, a touch-screen high-end precision guidance terminal that added important new features and enabling entry into new higher-end segments of the market. In the Air group, the Air IntelliFlow dual-rate system was also introduced for aerial applications and the R220 dual-frequency RTK GPS receiver was announced.
Taking a Hit. Then the economic crisis of 2009 hit, and the resultant global recession impacted Hemisphere?s annual revenues significantly ? the company experienced its first decline in annual revenues since it went public in 1997. Fortunately, an existing strong balance sheet helped them weather the storm. In late 2009, a ?lean forward? strategy and internal restructuring took place, reorganizing each business with its own dedicated Engineering and Marketing teams.? This accelerated new product introductions, and 2010 proved to be an all-time high for new product releases.
For the ground AG group, products like Outback eDriveX provided a new level of high-precision AG steering applications and opened up significant new market opportunities. The A220 and A221 dual-frequency smart antennas provided farmers and other machine control customers with RTK level receivers. At that time, the Air group introduced Intellistar and quickly followed with the Satloc Bantam next-generation aerial guidance systems, which were all quite successful. The Precision group also went on to introduce more than a dozen new products, including new Crescent L1-based Vector products under the Hemisphere GPS brand and other private label variants. During this period, the Core GNSS R&D group worked very closely with the Precision group on Vector, Eclipse 2 and the miniEclipse. New antennas were also developed for the new receiver designs, establishing Hemisphere?s Precision group as a significant antenna and board supplier in the OEM market.
With all systems firing, Hemisphere came through the recession of 2010 and 2011 relatively unscathed, and emerged in 2012 to continue with its acquisition strategy. In January, it bought Ag Junction in State College, Pennsylvania, to further its Ag business growth. While John Deere was introducing Farmsight as a soup-to-nuts service for farmers, Ag Junction offered Hemisphere the opportunity to grow alongside, with in-cab real-time crop yield analysis and prescription preparation that is becoming the way ahead for the future of farm automation.
However, despite ongoing revenue growth, Hemisphere continued to struggle with profitability. In a move to reposition itself, in September 2012 the Hemisphere Board decided that a pure play Agriculture focus was necessary for the public company to prosper. Rick Heiniger, a board member since the RHS acquisition in 2005, was appointed Hemisphere?s third third CEO.? Rick moved quickly to begin repositioning the public company and recently announced intentions to move the public company?s head office to its Hiawatha, Kansas, Ag distribution center and to divest the Precision and Core GNSS R&D activities.
Hemisphere?s company timeline (click to enlarge.)
The Precision/Core business unit remains intact and will continue to be based out of Calgary, Alberta, and Scottsdale, Arizona. It?s understood that new investment is being sought, and that product offerings will continue to be supported and expanded with specific focus on the traditional markets of Marine, OEM, Survey and Machine Control.
So the adventure will continue, but it?s expected to be somewhat different as 2013 rolls forward. As we learn more about the changes at Hemisphere, we?ll be sure to talk with them so we can continue their evolving story.
Tony Murfin
GNSS Aerospace
Source: http://www.gpsworld.com/hemisphere-gps-change-can-be-good/
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