Water Intelligence reports 10% revenue growth for FY24, two acquisitions, and StreamLabs partnership
() , a 'one stop shop' for all things leak detection, repair and preventative maintenance (approx. 2/3rds franchised), is a classic case of the strong get stronger.
Indeed, it is already the biggest player in the US, and today posted FY24 revenues and EBITDA that were in line with expectations at $83.3m (+10% vs $76m LY) and $15m (+12% vs $13.4m LY) respectively.
This performance is driven by its best-in-class solutions that conserve water, minimise sewage spills, cut the cost of insurance costs, and reduce regulatory fines; as well as its strategic 'Buy & Build' approach to acquire smaller rivals and franchisees lacking the scale, expertise, and national presence to offer full end-to-end services.
And the outlook is even brighter, underpinned by the secular tailwinds of global warming, aging infrastructure, and climate change (eg water conservation and stormwater damage), on top of its broadening channel distribution and tight execution.
Indeed, this morning the company announced another major deal, this time with StreamLabs (owned by insurer Chubb) to resell and support its best-of-breed leak detectors, sensors and controllers, which will enhance 's preventive maintenance service for customers.
But that's not all. The Board has also just completed 2 more synergistic acquisitions - New York-based plumbing firm Effective Plumbing for $1.2m (4x EBITDA) and the Georgia & South Carolina franchisee for $3m (5.5x EBITDA). Both are immediately earnings enhancing, value accretive and highly complementary with the StreamLabs Water partnership.
Elsewhere, total Dec'24 net debt (including deferred consideration of approx. $11m) closed at 1.5x EBITDA, with house broker Dowgate Capital forecasting FY25 turnover, EBITDA, PBT and EPS to come in at $97.0m, $17.5, $11.2m and 44.3c. Thus putting the stock on modest PE and PEG ratios of 10.6x and <0.7x, which frankly appears far too cheap for an economically resilient growth platform. In comparison, Dowgate Capital and RBC Capital have price targets of 850p and 800p/share.
Executive Chairman Patrick DeSouza commenting: "We had a strong 2024 and during Q4 seriously developed our plan for market leadership in Preventive Maintenance for water loss because of aging residential and commercial infrastructure. We executed two more national insurance accounts preparing the way for our StreamLabs partnership signed recently. We are ready financially and operationally for our next phase of accelerated growth and we look forward to the rest of 2025"
Finally, the Board is also considering a separate dual listing in the US in order to allow interested American investors to more easily buy shares.
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