His company's assets are mainly buried deep underground, but Brett Hodson spends a lot of time in the air.
Since becoming CEO of Vancouver's Corix Group of Companies seven years ago, Hodson has spent as much as half a year on the road, crisscrossing North America searching and developing opportunities to grow the company. From a business that dealt primarily in water and waste-water systems, it now provides customized water, sewage and energy-related utility infrastructure systems, products and services for hundreds of small and medium-sized communities all over the continent.
"He certainly travels a lot more than most CEOs I know," said Peter Restler, a senior managing partner at CAI Funds. "Brett is someone who's prepared to get on a plane to go any place to look for a good opportunity for the company."
That effort and determination has paid off. By almost any metric, the company has grown substantially from its original standing as the smallest part of Terasen's operations. Since 2006, the company has:
•doubled the number of staff to roughly 2,200 throughout North America;
•increased revenues 200% to $586.5 million in 2012 from $195.7 million in 2006;
•increased its utility assets under management by 740% to $1.4 billion from $165.7 million; and
•expanded operations to include 680 utility systems throughout North America in 30 U.S. states and six Canadian provinces.
CAI's investors have benefited as one of the original investors in Corix with BC Investment Management Corp. (BCIMC) when Hodson organized a management buyout of Terasen Water and Utility Services from Kinder Morgan in 2006 for $125 million.
Last year, CAI sold its stake in Corix to BCIMC for an undisclosed sum. But if Restler had his way, he would have preferred to have remained invested in the company. "We were beyond our typical investment size, because we liked it so much. We had two of our funds invested in it, which is something that's not necessarily positively viewed in the private equity world, but this was such a compelling opportunity," he said. "Our investors supported the added investment in Corix and if we had a bigger fund, we'd still be there."
Dave Bustos, managing director at RBC Capital Markets, credits the company's significant growth to the company's entrepreneurial and team-based culture Hodson has fostered, which has been reflected in its dealings with all the major financial partners the company has worked with.
"He's created an organization that's forward-looking and works well together. And I think they have a lot of loyal banks behind them, because they're quite open and treat their financial partners as partners," he said. "A lot of companies make the mistake of getting the best deal with every deal with the banks, but if you grind, grind, grind, when the time comes when you need somebody to step up, it can be difficult."
Hodson has focused on creating value for all of the company's key stakeholders. He told Business in Vancouver, "A wise person once told me that there's an inextricable link between the customer, the shareholder and the employee. Over the long term, if you want to make things sustainable, one can't screw with the other. If you want to grow value, all three of them have to grow value."
Having local residents see the value of a "foreign" private-sector partner, however, has remained a key challenge to overcome with potential client communities. As innocuous as it may seem to have a Canadian firm own or operate a community's utility infrastructure, fears still remain over foreign ownership of a key community asset in the U.S. Ultimately, the company will only focus on potential markets where there is openness to a private-sector partner (foreign or domestic) and a need for improved utility infrastructure that can be done economically.
So far the company has had considerable success in growing its business by being open and transparent. But Hodson notes few projects come to fruition exactly as his team expects. Many proposals and projects that were considered "sure things" have fallen through, and the ones least likely to succeed have become some of the company's greatest growth vehicles.
The company's involvement in Alaska was one such example. More than a decade ago, the local gas utility in Fairbanks needed an expert technician to help with a problem in their system. After fixing the issue, the utility asked if they could have the technician permanently. "At the time, I remember thinking, 'Oh man, we're going to be sending one of our best guys up there. He's going to be living there; it's going to be tough. But I said we'd do it."
That initial $100,000 contract eventually turned into a $30 million investment in 2004 in Fairbanks Sewer and Water and a further $50 million investment in 2009 when Corix acquired the remaining 50% stake it didn't already own. It also led to partnership with Doyon Utilities in Alaska, which operates 12 utilities worth $600 million in assets on U.S. military bases.
Even Corix's acquisition of Utilities Inc. last year took time. It had been on Hodson's radar for more than six years, back when he was with Terasen. Utilities Inc. was one of the largest privately owned water and wastewater companies, servicing more than 290,000 customers across 15 states from Nevada in the west, Pennsylvania in the northeast and down to Florida in the south. The acquisition was a major coup and is likely to contribute significantly to the company's growth for years.
Hodson and his team continue to develop a long portfolio of potential opportunities. He's hopeful many will contribute to the company's goal of adding another billion in utility assets under the company's umbrella over the next five years. Half of that growth is hoped to come from new utility acquisitions. The other half will be from expansion of existing utilities it already owns and operates. Eventually, he hopes the company will operate in every state and province in North America, complementing the major utilities in each jurisdiction.
Hodson has come a long way since graduating from Simon Fraser University with a degree in psychology. With some training in statistical analysis, he started out in the utilities business on contract with BC Hydro and joined BC Gas in 1991 (which became Terasen in 2003 and was sold to FortisBC in 2007). After holding more than dozen positions in various aspects of the business, he became president of Terasen Water and Utility Services in 2001.
Knowing the various elements of the business and growing the business at a young age has been a factor in Hodson's success, according to Bustos. "He's detail-oriented, hands-on and willing to roll up his sleeves. He knows every part of that company. He's quite exceptional that way."
Hodson, notes, however, that a lot of the company's success comes with its growing team all over North America. While Corix's corporate head office is in Vancouver, the bulk of the company's staff work in the various communities it serves. Only certain head office functions like finance, human resources, IT and legal are centralized in Vancouver and in regional offices.
While he expects to travel a bit less for work, that's not stopping him from getting him on a plane. Over the past few years, he and his wife have gone to several exotic locals in the world like Kenya in 2011 and Bangalore, India, last year. "Next year, it's Antarctica, he said. "The first few years at Corix was a full-on sprint, so we're trying to make up for lost time. We're balancing it out."