Today we are sitting down with Mr. Chris Hazelton, the Chief Executive Officer of Universal PropTech Inc (TSX-V: UPI) to discuss what UPI is all about, and hopefully answer some of your questions as well! 

Hi Chris, tell us a bit about yourself and your history with UPI.

Our underlying business has been in operation for over 40 years and has acted primarily as a vendor and distributor of smart building controls and maintenance for commercial, industrial and institutional properties. Through our operating subsidiary VCI Controls Inc. we service clients by offering them a turnkey solutions, heating, ventilation and air conditioning (HVAC) systems and controls of their properties. We often work through major property managers, like JLL, to make manage comfort and energy costs for their clients.

What differentiates UPI from other players out there?

So, just in North America, UPI operates in large markets: HVAC is a $20 billion market and building automation is another $75 billion market. There are some major players in those markets like Johnson Controls that offer vertical integration and solutions, but we have the advantage of being nimble and truly act as their Trusted Advisor. We deliver products and services of various brands that make sense for each customer. 

What UPI has done over the last 40 years is create a closed ecosystem whereby we sell a variety of brands, products and solutions that are tailored to a client’s needs and we can easily adapt and invest into new PropTech that hit the market. So given that we have not favored a given product over the clients best interests, we have been able to provide the best service and implement the optimal solution for clients. 

We have also developed and deployed our own, proprietary backend integrations that tie all the independent pieces of building management and automation together. In turn, this has allowed us to build long term relationships with clients as our solutions are so deeply entrenched in their daily operations - it would be very complex and extremely expensive for clients to “unbox” our solutions. A parallel to this model is what Apple has built with its ecosystem, it’s a Hotel California kind of situation.

Our clients are extremely sticky and that has resulted in a very stable sales profile over the years.

Quite simply, you’re not going to find a better platform with the ability to invest, integrate, scale and repeat new PropTech, as we can, and in Canada.

Who are some of your clients?

We do a lot of work with long term care facilities, schools and notably Canadian Government facilities.

Although we have a presence in Ontario, Quebec and the Maritimes, the majority of our sales are in Ontario. 

There is a lot of work out there for us!

Tell us a bit more about the new corporate direction and your plan to capitalize on the client list UPI currently has.

Right, so the way I see it, UPI is a turnaround story with a fantastic base that is just getting underway.

I am a CPA by training and I have been involved in the capital markets for the majority of my career. So, when I took over in the late summer of 2020 the first thing I did was cut costs by about $1.3 million and lean out operations. Secondly, we looked at all strategic directions for the company and determined that there was a great business case and opportunity to build on what we already have especially with COVID and our current client list. We knew it was probably going to take about 12 months to complete the turnaround and that there were a few things to do.

Operationally, our primary goal is to upsell and cross sell our current customers on new offerings, expand on the size and length of our service contracts and be able to offer our own products and technologies, not just distribute branded solutions thereby increasing margins. Secondarily we want to build out a far more aggressive sales team because there is so much business out there to capture.

To accomplish this we needed to recapitalize and reinvest. Since the summer we have raised about $1.9 million dollars and signed a deal for the Delta-X Technology. Although we do not own the exclusive right to distribute Delta-X, we think that it is a great way to stay relevant with our clients and offer them one of the solutions that exist in the marketplace to mitigate the COVID risk in properties.

Financially we are very solid. We have roughly $2 million in the bank and are cash flow positive so we will not grind on that capital for operational purposes. That $2 million is for sales and marketing of both our actual business but also the financial product that is UPI the equity. 

Can you tell us more about the angle UPI is playing on COVID?

We believe that COVID, well at least the impact from COVID on spending by property owners will last quite some time. As far as we can tell, most property owners, including the Government, have not deployed their “COVID Budgets” yet, for a variety of reasons. So we do have a product to offer clients with the Delta-X Technology but really we are working on 2-3 other relevant partnerships or acquisitions in that space as well. 

The transactions we are looking at, assuming we close them, would be transformational for UPI and have longevity beyond the current pandemic. I believe that we could be in a position to improve our topline by orders of magnitude. Like I said earlier, we are determined to execute on the turnaround story here and we are at the cusp right now.

That sounds pretty bullish! What’s the bear case?

I am not here for the bear case. I am not putting in the long hours and foregoing sleep for the status quo. However, the bear case is exactly that, the status quo.

If parts of or the entire bull case work out, I think investors will be extremely happy in 2021.

We are in extraordinary times, so we need some context. I would offer that you don’t compare us to the almighty; you compare us to the alternatives… we’re very comfortable with that.

That sounds like you are leading us on…

We are pushing hard on all fronts and we are confident we will build shareholder growth.

Is there anything else you would like to tell our readers?

We have spent the past 6 months putting ourselves in a position to be able to capitalize on the massive spending increases that are going to be coming down the pipeline for our clients and target clients. Real Estate and Energy are changing at rapid speed, and our approach is to invest, integrate, scale and repeat. By diligently following this strategy, we have no doubt that UPI can be a leader in this industry transformation. We firmly believe that 2021 will be a year of massive growth for UPI across multiple business units. We are excited to tell that story and hope investors will come along for the ride.

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