Insituform Technologies, Inc. announces steps to respond to stagnant U.S. sewer pipeline rehabilitation market
Apr 16, 2007
Insituform Technologies, Inc. discussed the continuing stagnation of spending levels in the U.S. sewer pipeline rehabilitation market, outlining its plans to address the impact of market stagnation on Insituform and providing direction for 2007.
"At the beginning of 2006, industry analysts projected overall spending growth in the U.S. sewer pipeline rehabilitation market in the range of 8 to 10 percent year-over-year. We agreed with that estimate, which should have produced solid revenue growth for our company. However, for reasons I must admit we still do not fully understand, the projected spending growth never materialized. In fact, we now see that overall spending in this market actually declined slightly year-over-year. Current projections for 2007 call for spending growth in this market of between negative 3% and positive 1% - essentially, another no-growth year. Since Insituform's continued earnings growth depends in part on maintaining and increasing our share of a growing sewer pipeline rehabilitation market, this flat market will impact growth and earnings for the immediate future," Rooney said.
Rooney said that Insituform now projects 2007 earnings will be somewhat below that of 2006 due to the issue discussed above. This earnings level is not reflective of the anticipated non-recurring charges from the closure of the tunneling operations.
"For this year and possibly next we have no choice but to accept the reality of a no-growth market in the U.S. sewer pipeline rehabilitation segment. We do believe that in light of the massive water and sewer infrastructure renewal challenge our society faces in the next quarter century - which Booz Allen Hamilton recently forecast will involve more than $3.5 trillion worth of work in North America alone - it is inevitable that this market will rebound. But we will not sit idly by and wait for the market to correct itself. We will instead redouble our efforts in other critical areas and take action to restore overall revenue and earnings growth," Rooney said.
Rooney noted that the company today announced the closure of its tunneling business, which will allow the Company to devote more time and resources to potentially more profitable and growth oriented business segments. He said that other restorative actions would include the following:
Accelerate expansion of sewer pipeline rehabilitation work outside of the U.S. Spending on sewer pipeline rehabilitation continues to grow at reasonable rates in Europe and other countries outside of the United States. In Canada, for example, revenues increased 65 percent in 2006 vs. 2005. Although Insituform currently generates approximately 25 percent of its sewer pipeline rehabilitation revenue outside of the U.S., it is well-positioned for accelerated international growth with a business presence in more than 30 countries.
Accelerate the growth of Insituform Blue(TM), the Company's water pipeline rehabilitation business. Spending in the U.S. water pipeline rehabilitation market grew by more than 7 percent in 2006 and is projected to grow by as much as 25 percent in 2007. In 2006, Insituform launched a new division, Insituform Blue(TM), to focus exclusively on the drinking water pipeline business. Insituform Blue(TM) has its own powerful lineup of exclusive products, such as PolyFlex(TM) and PolyFold(TM) polyethylene pipe liners, both introduced in 2006. In 2007 Insituform Blue(TM) will accelerate its plans to build its own crews and sales force as it pursues opportunities throughout the world. Rooney stated that he has directed the Company's marketing and technology group to develop plans to as much as triple the Company's planned investment in Insituform Blue(TM) in 2007.
Slightly reduce the level of crew-based operations in the U.S. sewer pipeline rehabilitation market. The Company will seek even greater productivity to maximize profitability in a flat market and will slightly reduce the amount of crew resources dedicated to this market to better reflect demand. This will enable us to redirect some resources to international operations, Insituform Blue(TM) and other potential growth segments.
Challenge the complacency among infrastructure policy-makers. Rooney noted the recent Booz Allen Hamilton research report projecting a world-wide need for $41 trillion worth of urban infrastructure modernization and expansion world-wide in the next 23 years, with almost $23 trillion of that amount to be spent on sewer and water infrastructure.
"Beneath many of our major cities the pipes are crumbling - that is an indisputable fact. It is a fact that brought suffering to London last summer during a water crisis brought on by the worst drought in the city's history - as millions of liters of water leaked from the city's ancient water pipes every day. It is a fact that brought suffering to Hawaii one year ago, when a massive sewer pipe failure dumped 48 million gallons of raw sewage into the ocean and contaminated Waikiki Beach. It is a fact that very recently brought suffering to Bayou D'Inde near Lake Charles, Louisiana, when a ruptured sewer pipe discharged 12 to 16 million gallons of sewage, closing two major oyster-growing areas. The canaries in the coal mines are starting to die, and yet too many states and municipalities continue to sit idly by and wait for tragedy to strike before they will raise the dollars they must spend on fixing our aging and too-often decrepit sewer and water systems," Rooney said.
"As an industry leader, we have during the last few months taken up the challenge of sounding the alarm on these issues to the public, the press and the policy makers. We were right to do so and we will intensify these efforts going forward. By focusing public attention on this looming crisis we feel we will be doing the greatest good both for our shareholders and for our society," he concluded.
Insituform Technologies, Inc.
David A. Martin (Vice President and Controller)
702 Spirit 40 Park Drive
Chesterfield, MO 63005
Phone: +1 636-530-8000
Fax: +1 636-519-8010
More News and Articles
Sep 20, 2023
Aquatech is the leading water technology show in the world, with over 800 exhibitors and expecting over 22,000 visitors from over 140+ countries.
Sep 18, 2023
Designed to reduce pollution in Lake Erie by four billion gallons per year, Project Clean Lake is a 25-year plan being overseen by Cleveland's Northeast Ohio Regional Sewer District (NEORSD). When construction crews complete the $3 billion undertaking in 2036, …
Sep 13, 2023
Mullane once again proved why the company is an industry leader in pipeline solutions with a relining project on the mid north coast of New South Wales.
Sep 11, 2023
Pezzimenti Trenchless continues to showcase its position as a leading trenchless specialist by completing works on two Victorian projects.
Sep 08, 2023
Silvertown Tunnel under Thames - Newham to Greenwich near O2 Arena: See two massive boreholes in east London
The second of two boreholes beneath the Thames – which will together form London’s new Silvertown Tunnel – is now complete.
Sep 04, 2023
Report highlights American Water’s sustainable impact on communities across the U.S.
Aug 31, 2023
Anaergia Selected to Design, Build and Operate Organic Waste-to-Renewable Energy Project in San Diego County
System to provide renewable power, reduce wastewater utility costs, and cut greenhouse gas emissions for East County Advanced Water Purification facility.
Aug 28, 2023
Spiral wound lining is a sustainable method of pipe maintenance, allowing water authorities and councils to renew their critical infrastructure. Interflow is an expert in this field and has been pioneering new techniques for decades.
Aug 25, 2023
Loader tells Trenchless Australasia that it can be hard to identify minor issues, meaning that sometimes faults are only seen when there is a system failure. “There’s a range of things that will contribute to damaging the sewer network,” says …
Aug 23, 2023
Aqua Metro has been awarded a position on the Yarra Valley Water Pipes and Facilities Program of works.
Aug 21, 2023
European Commission Regulation restricting lead in PVC supports circular aims of PVC pipe manufacturers
TEPPFA welcomes the new European Commission regulation restricting lead usage in PVC products, setting a new standard in environmental responsibility and public health protection. This regulation supports the ongoing efforts of PVC pipe manufacturers to create a more sustainable circular …
Aug 18, 2023
Inflow of stormwater and infiltration of groundwater into sewers is a constant operational challenge, but a water utility in Norway is gaining better understanding of its network with an innovative digital approach, says Marco Westergren, chief analytics officer at InfoTiles.