An ambitious acquisition program behind him, Millstreet Development Corporation president Lionel Kambeitz says it’s time to start making money.
The Regina-based agricultural company bought six equipment dealerships in Alberta, Saskatchewan and Manitoba in 1997. It also built a global positioning signal tower in each province.
Revenue was up nearly $10 million, but net income was $11,000, and share prices in the company dropped from 55 cents in 1996 to less than book value. They were trading on the Alberta Stock Exchange at 30 cents April 3.
“Your presentation is very beautiful but where is the money,” asked a shareholder at the annual meeting. “I bought mine at 50 cents a share.”
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Kambeitz said lower net earnings are a reflection of the acquisition program. He said the new Ag Depots were bought after their principal selling season, resulting in a significant increase in general and administrative expenses without a corresponding increase in revenue.
“We simply have to start earning” to boost share prices, he said in an interview.
First-quarter results for 1998 indicate improvement.
As of Feb. 28, sales had more than doubled over the same period last year, going to $12.9 million from $6 million. Net income was $191,000, compared with a $187,000 loss in 1997. The company projects sales of $52 million in 1998.
Chief financial officer Doug Mutschler said the healthy results are due to eight Ag Depot dealerships now operating in Grande Prairie, Red Deer and Calgary, Alta., Saskatoon and Regina, Sask., and St. Jean Baptiste, Neepawa and Brandon, Man. As well, Milltech Services LLC, an Iowa-based industrial services subsidiary, is fully operational.
Millstreet, which was formed in June 1994 and went public four months later, now employs about 240 people.
“We have laid a foundation in the last 36 months for a corporation that is ready to grow,” Kambeitz told the shareholders. “We will respect your capital and give you your returns.”
Future plans include additional Ag Depot locations, Kambeitz said.
“We also want to solidly diversify, perhaps into manufacturing,” he said.
He added there are also opportunities to expand in precision farming.
