Brian Hollywood describes himself as a “shoot-from-the-hip kind of guy,” and in the past that has placed the president and CEO of St. Thomas Holdings Inc. squarely in the sites of City Scope.
“I’m passionate about what I do,” Hollywood stressed halfway through a frank conversation with this corner a week ago.
“After 40 years in the business I don’t have to be here. But we’re creating something here.”
Hollywood agreed to an invitation to sit across the table in his office to candidly discuss his tenure at the utility, his vision for the future and the strategic plan that has led to a couple of key acquisitions, including the most recent, Tal Trees Inc. in Belleville, Ont.
He is keenly aware of frustration in the past when questions from the T-J have gone unanswered.
“I have to tell you, there are things I will not share with you,” affirmed Hollywood as the interview approached the 45-minute mark. “But this is a good story. It’s an evolving story that’s yet to finish.”
In this case, he provided insight into every aspect of probing undertaken by City Scope and his four pillars that shoulder the foundation for future success at St. Thomas Energy are an intriguing and positive story.
He set the backdrop that led to discussions almost four years ago that established the road map for an ambitious expansion strategy.
“We said we’re really having trouble making the bottom line work, and at that point we cut our staff by about 25 per cent, although you probably never heard about it,” Hollywood advised.
“At that point across the province there were a lot of municipalities that were selling their utilities and there were a lot of mergers going on. The board’s position was if we’re going to be competitive and if we’re going to give an adequate return, we have to do that.”
He didn’t mince his words as he painted a grim reality of life at the utility in 2005.
“The regulatory burden just became more cumbersome. What can we do to grow? Our 17,000 customers in St. Thomas is a fairly small operation and the economies of scale are harder to find. We had a fairly aggressive approach to reducing our costs. So you’re almost in a business death spiral.”
That led to endorsing a philosophy of growing the customer base and revenue stream through partnerships and acquisitions in the public and private sector.
“The sense was we really want to continue control of our own destiny. We don’t want to be a minority shareholder. The community really values this business.”
A question we have posed in the past – is the community on the hook financially in order to assure this status – was answered in some detail by Hollywood.
“We were creating business lines within the service company in that we were bringing revenue into the community from outside the community. So, we’re not taking money out of our customer’s pockets we’re taking money out of other customer’s pockets outside the community and bringing it back.”
What specifically are these outside endeavours?
“That takes into play some engineering services we were providing, some line construction services and traffic signal technology. We’ve got three highly skilled technicians in that technical aspect of traffic signals. And that’s really marketable.
“At the same time, we built a fibre-optic business in town that brought different customers to the table than our electricity customers. And specifically, we made sure we became a Magna supplier. We generate revenue and return that into our service company from those other businesses. And we said we will take that money and re-invest it in other businesses. That’s the acquisitions. And that shores up the value of the company.”
That resulted in a trip down Highway 3 to Tillsonburg and the purchase in Nov. 2007 of Tiltran and Lizco, both privately run energy companies. And the timing couldn’t have been more astute with the unveiling this year of the sweeping Green Energy Act.
“Our strength in the renewable sector through Tiltran/Lizco really has positioned us well. Maybe not this year, but in the coming years. Wind, solar and biomass, they’ve done it all. Their core element is right in that ballpark.”
The firms were players in the recently-energized Wolfe Island wind farm project (near Kingston, Ont.), the largest wind farm project in Canada.
“And we’re currently involved with 20 wind turbines in Chatham-Kent,” he added. We’ve got a good reputation in that business. And under the Green Energy Act, that’s going to explode.”
And that’s where Tal Trees strategically fits into the picture.
“The Tal Trees acquisition is another piece of the puzzle. Currently when Tiltran bids on these wind turbine jobs, one of the things they don’t have access to is overhead line construction, other than our own forces here. To get our forces to work in eastern Ontario or up in the Soo is cost prohibitive. So what we’ve done with the Tal Trees acquisition is acquired a company whose strength is in that area.”
Being as it’s a dog-eat-dog atmosphere in the utility marketplace, Hollywood chose his words carefully when looking further down the road.
“We continue to look at other acquisitions to fill in the remainder of what we see as the skeleton, if you want to call it that. The next generation of what St. Thomas Energy is going to look like.
“I think you’ll see we’re going to be in a position where we’ll be able to go across the market, which right now is Ontario, but we’re doing some work in Manitoba. And we’re bidding on some work in Nova Scotia as well, through Tiltran.”
Buoyed by Hollywood’s honesty, we broached the thorny issue of what some feel is an outstanding financial debt of approximately $7.8 million owed to the city.
“It’s a promissory note,” he explained. “There was no money exchanged, the value was within the company. There is interest due at 7.5 per cent, which we pay to the city. The concept was to build a return so we would work towards paying a dividend to the city. It didn’t happen right away, which isn’t surprising.
“We continue to give the city $1.3 million a year and we don’t take a penny from them. I think we’re performing well. And at the same time we’re significantly impacting the value of the organization. We actually went back and paid all the back interest to the municipality, so we’re current with all our interest payments.”
Although we have been frustrated by the utility’s lack of transparency in the past, we do embrace Hollywood’s parting thought.
“It’s a good news story. We’ve identified where we want to go. I think we’re well positioned. And at the same time, we’re going to grow the business. We’re not done with acquisitions. The approach we’re taking is to focus on our competencies. Don’t try to be something we’re not.”
City Scope appears every Saturday in the Times-Journal. Questions and comments may be e-mailed to: email@example.com.