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
May 30, 2023
Trenchless contractor puts maintenance hole relining system through its paces
Civil and trenchless specialists M Tucker & Sons showcases its expertise through a UV lining project.
May 26, 2023
City of Toronto launches tunnel boring machine for stormwater tunnel and largest basement flooding prevention project
Today, the City of Toronto marked a major milestone for the Fairbank Silverthorn Storm Trunk Sewer System project, launching a tunnel boring machine that will work to construct a new storm sewer that will collect, store and move stormwater from …
May 24, 2023
Global Water and Wastewater Utilities Take Aim at Climate Change
New Survey of 100 Utilities Tracks Net-Zero Progress: 75% of Respondents to Reduce Greenhouse Gas Emissions by 2040
May 22, 2023
Regional San’s monumental wastewater treatment plant expansion project delivered ON schedule and UNDER budget
The EchoWater Project, one of the largest public works projects in the Sacramento region’s history, takes wastewater treatment to a whole new level
May 19, 2023
Haliotis 2: Wastewater recovery and treatment complex
In April the future, next-generation wastewater recovery and treatment complex for the Métropole Nice Côte d’Azur “Haliotis 2” was presented. Christian Estrosi, Mayor of Nice, President of the Métropole Nice Côte d’Azur and Deputy President of the Région Provence-Alpes-Côte d’Azur …
May 17, 2023
Wrapping up the challenges in SA
In December 2022, Denso Australia completed the supply of a project involving the protection of 400 lineal metres of DN250 mild steel pipeline in Bolivar, South Australia.
May 15, 2023
New South Wales university receives network upgrade using SAERTEX-LINER® MULTI Type S+
Australian Pipeline Management (APM) has successfully relined three separate pipelines running under a university in Sydney with UV cured-in-place technology from SAERTEX multiCom® GmbH.
May 12, 2023
IMPREG continues to invest in Australian and NZ market
With increasing demand of IMPREG’s unique UV pipe solution, the German company continues to invest in the Australian and New Zealand market.
May 10, 2023
Yonge Street Project Combines Trenchless Rehab and New Install Practices
In the fall 2020, the Regional Municipality of York initiated a project to rehabilitate a 127 m long concrete box culvert under Yonge Street. The Region retained Jacobs Engineering to provide design and construction support services.
May 08, 2023
Climate adaption solutions for the water sector in the German-Danish border area
More than 60 participants met in Kolding, Denmark, from March 23 to 24 for the final conference of the INTERREG-Project NEPTUN. In the frame of this project, more than 40 partners elaborated 15 specific climate adaption solutions for the water …
May 05, 2023
Primus Line® flies the flag for trenchless solutions in sensitive locations
Primus Line has illustrated the benefits of trenchless technology for pipeline rehabilitation in culturally sensitive areas during two installations for one of the world’s leading mining companies.
May 03, 2023
Optimising chemical dosing in a challenging operating climate
Rising operating costs and tightening regulations are presenting major challenges for wastewater treatment plant operators, but better optimisation of chemical dosing can drive efficiencies, says Adeel Hassan, product manager at Watson-Marlow Fluid Technology Solutions.