GCIDrip by drip: 6 companies helping to protect the world’s water
Water scarcity is an increasing global challenge, with over 2.2 billion people lacking access to clean drinking water. This challenge is heightened by increasing freshwater consumption, which has more than tripled in the past 70 years. The agriculture sector is the largest consumer of freshwater, comprising 70% of total usage, followed by industry at 19%, and domestic consumption at 11%. Projections indicate that annual consumption could escalate from 4,600 cubic kilometers to 6,000 cubic kilometers by 2050 due to population growth and climate change.
Water resources are inextricably tied to agricultural production and food security, given the scale of the agricultural sector's freshwater consumption. Growing populations coupled with increasing living standards will create further demand for solutions that can help water efficiency in agricultural production.
Water is used for a range of industrial applications, including dilution, steam generation, washing, and cooling of manufacturing equipment, to name a few. Water is also key to cooling processes in energy generation in fossil fuel and nuclear power plants. The oil and gas industry relies heavily on freshwater throughout its operations, used in drilling wells, refining and processing oil and gas, and even producing electricity for some operations.
Domestic consumption accounts for 11% of global water use. In the UK, the average person uses 145 litres per day. Across the globe, the rate of urbanisation is a huge factor influencing domestic water use. As more people move to urban areas, there is often a higher demand for water due to increased access to amenities like indoor plumbing.
Since water lies at the heart of so many crucial systems, and is a scarce resource, water wastage - through leaks, contamination, or other means - is a huge problem. Surprisingly, a tiny 3mm hole in a metal pipe under a certain amount of pressure can leak a staggering 8,450 liters of water in just 24 hours. A pinhead-sized leak can result in a whopping 1,363,750 liters of water wastage in a year - enough to fill about 12,000 bathtubs.
Water bodies are being increasingly contaminated as chemical treatments involving solvents or acids are leading to hazardous releases into the environment, with potential risks to ecosystems and human health. ‘Forever chemicals’, such as PFAS, have been found at high levels in numerous UK and European sites, further heightening concerns.
Avoiding water wastage is crucial in light of global water scarcity, and infrastructure projects related to water treatment, storage, and distribution are on the rise globally as a result. Governments and private companies are increasingly recognising the need to upgrade and expand water infrastructure to meet growing demands and address aging systems.
This is mainly being seen in the US and EU, which are both committed to spending tens of billions annually to address problems of aging water and wastewater infrastructure. In the US, the Infrastructure Investment and Jobs Act, signed in November 2022, approves $55 billion for water initiatives over the next five years.
Meanwhile, the European Union is projected to require an estimated €290 billion in additional spending within the next decade to meet water and sanitation requirements outlined in Directives for Drinking Water and Urban Waste Water Treatment, according to the OECD.
In the UK, Ofwat announced in June that a £2.2 billion investment would be brought forward to speed up vital water infrastructure projects. Under the plans, companies are set to spend around £1.7 billion to stop sewage discharges and reduce the number of spills. £400 million will go towards water resilience schemes, including the installation of 462,000 smart meters.
This comes as a result of more extreme weather conditions in the UK, facing dry summers and more intense rainfall. The UK has limited methods for water storage, despite large amounts of rainfall, meaning that there is a relatively small volume of water available per person in the UK. What’s more, the South East of England has less water available per person than the desert states of Syria and Sudan.
The global water crisis is real, and it's not going away. As climate change intensifies and population pressures increase, the need for innovative solutions to manage and conserve water becomes more urgent. Companies involved in water technology and conservation efforts are positioned for long-term growth. Here, we look at 6 small/mid-cap companies that are leading the way in addressing global water scarcity.
Water Intelligence
() , provides leak detection and repair solutions, mainly operating in the US, UK Australia and Canada. Water Intelligence operates through two wholly-owned subsidiaries, American Leak Detection and Water Intelligence International.
In July, Water Intelligence announced the successful reacquisition of its franchise in West Covina, California, for $1.5m, with the development under the umbrella of the company's American Leak Detection subsidiary. The deal reinforces the group's strategy of establishing regional corporate hubs in the US that fuel growth in adjacent corporate and franchise locations. Shortly before, in February, Water Intelligence also announced it had reacquired its Nashville, Tennessee franchise.
In September, Water Intelligence said it was gaining increasing traction with four of its newly commercialised products. Pulse, an acoustic tool for sewer line blockage detection, stands out by already hitting over $0.5 million in sales with UK water companies. LS1, an acoustic device for efficient urban water infrastructure surveys and IntelliDitch, which is a liner product that prevents water loss in concrete or earthen channels, have generated a combined $0.2 million in initial sales.
Finally, CreatorSuite 2.0, an AI video ecommerce tool developed by SEEEN plc was exclusively licensed to Water Intelligence for the water and wastewater sector, enhancing lead conversion with video ‘end-cards’
In H1 2023, revenue increased by 9% to $38.7 million. Franchise royalty income grew 2%, franchise-related sales grew 14%, and corporate store sales grew 9%. Despite battling a sharp rise in interest rates in the period, Water Intelligence saw sales figures, profits and margins all trending in the right direction, with profit before tax increasing 21% and pre-tax profit margins increasing to 11%.
Eneraqua
() , is a provider of both water and energy efficiency solutions. Regarding the former, Eneraqua can help drive down costs for clients by decreasing a buildings overall water consumption.
In recent news, Eneraqua announced in June that its Control Flow HL2024 technology - a device that controls the flow rate of water - has enabled the development of a large commercial site for a Local Authority client, expanding on their successful net water neutrality program for new housing. This addresses concerns delaying approvals for approximately 120,000 new homes in the UK due to water and nutrient neutrality in local catchment areas.
Eneraqua’s products also span into agriculture. Through its ClimateSmart Irrigation product, Eneraqua is helping farmers to conserve water, improve crop yield and prevent soil erosion. Last year, the water specialist secured a £0.9m contract with the Indian government to supply systems to 340 horticultural farms across the state, reducing carbon emissions and improving water efficiency.
Eneraqua’s agritech products are also undergoing trials in Spain to confirm their performance on EU irrigation systems.
Financially, H1 revenue is expected to be at least £26.0m, up from £24.3m, and the group returned to a net cash position of £0.5m. Eneraqua retains good revenue visibility, with the group's order book across Energy and Water standing at £146.3m, of which 48% is anticipated to be delivered through the remainder of FY24.
Ondo InsurTech
() , is a company operating in the insurance technology sector. Ondo's focus is on the global scale-up of LeakBot - a water leak detector that prevents water damage claims in houses.
After being installed in a home, LeakBot works by notifying the customer via the LeakBot mobile app if it detects a leak and provides access to a team of expert LeakBot engineers to 'find and fix' the problem. Its patented leak-detection capabilities are underpinned by measuring air and water temperatures, with a consistent drop in temperature associated with a leak.
LeakBot has been rapidly gaining momentum across the UK, US and Europe in 2023. In recent news, Ondo announced an agreement with Southern Water to drive water efficiency within their area. This marked the second water company to introduce LeakBot. Southern Water will carry out a pilot, and install LeakBot in 1000 customer homes. If LeakBot were rolled out to Southern Water customers 83 megalitres of water a day could be saved, the equivalent of 32 Olympic swimming pools.
Ondo has also been making strides with LeakBot in the US, announcing in August that it will partner with PURE insurance, piloting Ondo's LeakBot system to a portion of its membership in select states.
Shortly before, Ondo said it signed a new five-year contract with Länsförsäkringar Trygghetstjänstera division of Sweden's largest non-life insurer, Länsförsäkringar. This agreement expands LeakBot's deployment across the Länsförsäkringar Group, encompassing approximately 2 million home insurance customers vulnerable to water damage claims, supporting its expansion across Sweden.
Financially, Ondo reported revenues of revenue of £ 2.1m for the 12 months to 31 March 2023, an 182% increase from the previous period. LeakBot sales were 299% higher, standing at 54,206 units sold.
Strix
Though 's () main focus is on kettle safety controls, the company also looks at other components and devices involving water heating and temperature control, steam management and water filtration.
Strix helps to address water scarcity through its water filtration and purification products. Strix’s water filtration arm contains the brand HaloSource - acquired in 2019 - which provides a bromine based water treatment bead system called HaloPure. This is used in livestock farms, as well as hospitals and clinics, which stops long-distance water lines from being contaminated with bacteria, and therefore lessening water wasted.
Strix’s products also cover water filtration. Growth in this segment is being underpinned by increasingly health conscious consumers focused on the quality of water, along with the driver to reduce plastic waste by moving away from single use items. For example, Astrea, provides water bottles with changeable filters that remove lead from tap water. Lead removal is a major differentiator in the USA in particular, where a number of health scares have occurred due to lead levels in drinking water.
In November 2022, Strix acquired tap systems company Billi, helping Strix to further transition into a new growth phase and further diversify away from its kettle controls business. Billi has a successful history of growth, with double digit revenue CAGR over the past 5 years, attractive margins and is highly cash generative, boding well for the future of Strix’s water category. Overall, the water category reported a growth in revenue of 12.8% to £24.1m in 2022.
Financially, despite revenues being down in 2022, success in M&A/integration of Billi, along with a positive outlook for global demand in FY23 and beyond, all suggest a positive longer-term outlook for Strix.
MyCelx Technologies
() is an environmental technology company specialising in water treatment solutions for industrial markets. The company is known for its patented MyCelx Polymer technology, a polymer that removes oil from water upon contact, preventing the reentry of oil into the water stream. This technology is particularly valuable in industries such as oil and gas, petrochemical, manufacturing and fabrication where water contamination is a concern and regulatory standards are tightening.
MyCelx's solutions are highly effective in achieving water purity standards and minimising environmental impact of industry. The company is strategically focused on three core markets, PFAS Remediation, Middle East downstream, and REGEN, which is advanced water treatment for Enhanced Oil Recovery Production. Each market is delivering high-revenue projects, but the PFAS remediation market is offering a big opportunity for long term growth, with increasing evidence of widespread groundwater and drinking water contamination, with industrial sites being discovered to be affected each day.
In April, MyCelx announced successful testing of its PFAS remediation media, in line with United States Environment Protection Agency's proposed drinking water regulations. Its PFAS treatment safely disposes of PFAS-contaminated compounds, preventing leaching into water systems. In 2023, MyCelx signed three pilot testing agreements for PFAS remediation in drinking water and landfill leachate sites.
In February, MyCelx secured a second REGEN sale to a Middle Eastern National Oil Company for water treatment during Enhanced Oil Recovery in the Middle East, meaning that the oil company is able to better extract additional oil with MyCelx's REGEN media.
Financially, MyCelx’s revenue increased 51% to $5.6 million in H1 2023 thanks to increased demand in the Middle East and growth in long-term legacy media sales. Gross profit increased by 79% to $2.5 million, while EBITDA loss came in at $900,000, compared to H1 2022’s $2.1 million. MyCelx had $1.4 million cash at period end.
Directa Plus
() , is a company that specialises in the development and production of advanced graphene-based materials and technologies.
Its disruptive material, G+® Graphene Plus, is added to standard materials - such as denim, paints, and even in batteries as a conductive additive - and brings about radically new properties as a result.
Not only does this additive mean that less standard material has to be used, but it is also obtained by purely physical treatments of natural graphite, which avoids chemical treatments with organic solvents or acids. The company uses water, temperature, and pressure to reduce the graphite thickness to the nanometric level in a safe and sustainable way.
In recent news, Directa Plus collaborated with Italian textile producer Candiani Denim to launch GRAPHITO, an eco-denim textile.
Denim is one of the most water-intensive materials to produce, and the focus of much criticism of the fashion industry. Directa's new denim material reduces water usage, energy consumption, and carbon emissions by up to 75% throughout the garment's wash lifecycle. Additionally, its antibacterial and antiviral properties enable up to 10 wears per lifecycle, while the thermoregulating properties make it suitable for all seasons.
This partnership presents a huge scalable opportunity for Directa Plus, given Candiani's strong relationships with global brands, alongside its production capacity being four times greater than Directa's graphene-based textiles production.
Among Directa Plus’s other product offerings is Grafysorber® - a super-expanded graphite able to absorb 100 times its own weight. This is used to remove oil from the surface of water and from the ground, in case of oil spills or to prevent oil spread.
Recently, the company launched a pilot for a new concept for produced water treatment using Grafysorber®. This project, presented at the Setcar Braila location in Romania by their subsidiary Setcar, addresses the disposal of water extracted alongside crude oil during production.
As industry regulations tighten, treating produced water is becoming increasingly important. This breakthrough not only expands Directa Plus' Environmental division but also aligns with the company's strategy to embrace technologies that promote decontamination and reduce the wastage of valuable resources like water.
On the financial front, Directa Plus saw its product sales and service revenue increase by 26% to €10.86m, slightly above consensus market expectations. The company remains well-funded, with cash of €5.73m at year-end.
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