WC&P International
Home  |  Archive  |  Links  |  Media Kit  |  About WCP  |  Contact WCP  |  Glossary  |  Videos


Current IssueMay 29, 2020
Registered users login here to see extended content.
September 2001: Volume 43, Number 9

Where Are All the `Water Bucks’? Part 2
by Steve Maxwell

Photographs, figures and/or graphics that may illustrate this article are visible in the printed version of the article only. To receive a copy, please make a request at info@wcponline.com. Be sure to include the article title, author(s) name(s), the issue, your name and your fax number or full address in the email.

As we discussed in this column in March, we're hearing a lot about the general size and significance of the water business-in the United States and worldwide. Scholarly studies and reviews abound, each citing the extent of our problem, the level of new expenditures required and nonchalantly throwing around figures of hundreds of billions of dollars. Water is described as the "oil" of the 21st century, the most likely source of future international conflict and so on. Recent studies, given big play in the U.S. press, project that the United States needs to spend over $300 billion in the course of the next 20 years just to maintain our infrastructure, let alone keep up with ongoing population and economic growth.

Under any circumstances, the needs and the business challenges are great and there's wide consensus that the water business will be one of the great investment opportunities of the coming decades. The size of the water industry is estimated today at between $80 billion and $100 billion just in the United States, and probably as much as four or five times larger worldwide. But, as we've pointed out, it can be difficult to identify that level of revenue by examining key players in the industry. In short, many observers are wondering where all these "water dollars" actually are.

In March, we discussed the fact that "pure" publicly traded water companies comprise a relatively small percentage of the estimated marketplace. The stock reports published in most trade magazines would be hard pressed to come up with more than about $15 billion in total annual revenues from this corps of public companies. We pointed out that many of the larger players in the water industry were acquired by French and English companies during a series of purchases between 1998-2000; a substantial portion of the world's water revenues now reside in two major French companies-Vivendi and Suez Lyonnaise. Finally, we briefly summarized an array of larger and more diversified companies, which dabble in the water business; companies that comprise a substantial, if largely hidden, portion of the revenues typically attributed to the industry. This includes conglomerates like General Electric, Procter & Gamble and ITT Industries.

Small, but relevant

In this article, we'll look briefly at the other end of the spectrum-the thousands of smaller and non-publicly traded companies that participate in the world water business and comprise the remainder of the revenue base attributed to the industry. No authoritative source has successfully attempted to identify and catalog all the smaller companies. In part, this is because there are so many such companies out there; in addition, given the difficulties of specifically and precisely defining the bounds of the water "industry," there's always disagreement about what companies should be in and which should be out. Nonetheless, it's clear that there are thousands of companies out there that comprise tens of billions of dollars of revenue.

Below is a brief summary of some of the more prominent players in this category. Since private companies typically don't release financial information, the relative size and profitability of these firms aren't known with precision; however, in terms of absolute revenue, they would range in size from a few million dollars to over $100 million a year.

Alamo Water

A leading wholesale distributor and manufacturer of water treatment systems and components, including a range of engineered softeners, filters, reverse osmosis (RO) systems and other water treatment system configurations. Like several other players listed below, it's owned by the major international privately held conglomerate, the Marmon Group. In 2000, member companies of the Marmon Group had collective sales of nearly $6.8 billion, a record high, and net earnings of $301 million. Alamo is based in San Antonio, and was acquired last year.


A privately held manufacturer of wastewater treatment systems, sequencing batch reactors and other large-scale integrated systems sold to municipal wastewater treatment authorities. The firm has revenues in the $40-to-50 million range and is based in Rockford, Ill.


A Midwest company (part of a larger international group, Halma Plc., based in the United Kingdom) it specializes in state-of-the-art ultraviolet technologies, an increasingly popular process used in water and wastewater disinfection and the removal of organic contaminants in water.


Another unit of the Marmon Group, Ecodyne is a Canadian-based provider of water treatment systems. The company primarily sells purification systems to the industrial and utility boiler marketplace including power generation, industrial process markets and municipal treatment plants.

EcoWater Systems

Yet another unit of the Marmon Group, this company is one of the largest manufacturers and distributors of water softening systems in the country, selling to both residential, commercial and industrial markets. Revenues are estimated at well over $100 million per year.

Hungerford & Terry

Based in New Jersey, it's an old and established leader in the water treatment industry that pioneered many of the current methods for removal of soluble iron and manganese from groundwater sources. Other capabilities include nitrate and arsenic removal, general water softening systems, degasifiers, RO and electrodeionization systems.


One of the major manufacturers of membrane treatment systems, this firm is now part of the Japanese Nitto Denko Corp. Hydranautics' products are used in such diverse applications as potable water, boiler feed water, industrial process water, wastewater treatment, surface water treatment, desalination, agricultural irrigation and pharmaceutical ultrapure water treatment. Revenues of Nitto Denko's U.S. operations are in the range of $350 million.


A privately held Ohio-based manufacturer and distributor, Kinetico is one of the largest players in the water softening and treatment systems business. It sells to residential, commercial, industrial and municipal end markets. Kinetico recently joined forces with San Jose Water to form Crystal Choices Water Services, which direct markets home treatment and softening systems to the utility company's customer base in the Silicon Valley area of Northern California.

Koch Membranes

This is another major manufacturer of membrane-based industrial water and wastewater treatment systems. Koch is one of the leading producers of ultrafiltration technologies including spiral, hollow-fiber and tubular configurations. The company is a subsidiary of the large private group, Koch Industries, and sales of the unit are estimated at around $100 million.


A major manufacturer of water and wastewater treatment and liquid/solid separation systems, based in south Florida. Parkson is a well-known name in filter presses, aeration equipment and sludge treatment and drying systems. Early this year, Parkson acquired several of the businesses of financially troubled Waterlink (see Table 1) including screening, gravity settling, oil/water separation, dissolved air flotation and sludge removal processes.


A major producer of home water softening and treatment systems and a competitor of EcoWater Systems, Kinetico, Culligan and others. The firm is based in suburban Chicago, and has a network of over 300 dealers across the country. It's owned by Aquion Partners LLP, a private equity group that has made numerous water investments over the past few years-most notably its recent acquisition of Erie Controls.


A leader in the ion exchange business, this company out of West Berlin, N.J., manufactures a broad range of ion exchange resins for water and wastewater treatment, deionization, softening, metals removal, resource recovery and generalized pollution control.

Water & Power Technologies

A designer and provider of customized water treatment systems, this Utah-based company builds systems to specific water requirements. Systems include ion exchange, RO and other ultrafiltration technologies, and various types of softening systems. The company is privately held, and has revenues estimated in the $40 million range.

The above listing of companies is only a very brief and representative survey of some of the larger players within this group of privately owned firms. The reader should keep in mind that there are hundreds, if not thousands, of mostly smaller players in the domestic water industry.

A public glance

Now, back to a quick review of financial performance for those publicly traded water companies that we do regularly follow in this column. As can be seen in Table 1, equity valuations continue weakly across the industry-a reflection of the generally unimpressive profitability and financial performance that most of these companies have generated. The average water company trades at about one times its annual sales and somewhere between six and eight times trailing EBITDA. Multiples of book value range widely and don't appear to be decent indicators of value. Stronger performers, and more highly valued companies within the publicly traded sector, include Insituform (underground water and wastewater line rehabilitation), CUNO and Pall (diversified fluid filtration and separation). Other players show much weaker performance; Aqua Care's numbers continue to decline, and Waterlink's equity value has been almost completely wiped out.

As for stock values, Aqua Care is up in 2001 but down for the last quarter, Glacier may have stopped sliding from its 1999 peak at nearly a quarter the value it had, Waterlink is now a penny stock-but others are showing price resiliency for the most part. Waterpik and Ionics are nearly double year-end 2000 share prices, Osmonics has doubled in the last quarter, Calgon Carbon and Millipore are back (or nearly so) to two-year highs and CUNO and Pall are in the middle ground battling between highs and lows.


Many companies expected this year to be stronger than the past several. With a change in political administrations, however, and given the vague shadow of concern hanging over the general economic picture, most of these water companies are experiencing flat to slightly declining valuation trends so far this year.

About the author
Steve Maxwell is managing director of TechKNOWLEDGEy Strategic Group, a Boulder, Colo.-based management consultancy in mergers, acquisitions and strategic planning services to the water and environmental services business. Maxwell is also editor and publisher of The Environmental Benchmarker and Strategist, an industry newsletter covering competitive and financial developments in the broader environmental services industry. He can be reached at (303) 442-4800 or email: maxwell@tech-strategy.com

For earlier columns in this category, click on the link below or hit the 'List All' button.
The Water Industry -- Dawn of Phase Two
Where are All the `Water Bucks`?
Investing in the Water Industry: Consumer Awareness Leads to Profits
Water in the 21st Century-Opportunities and Challenges
New Players in the Business