Utility System Construction

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 17,500 utility system construction firms in the US are specialty contractors that develop buildings, structures, and distribution networks associated with water, sewer, petroleum, gas, power, and communication systems. Firms provide new construction, reconstruction, rehabilitation, and repair services. Companies may specialize in a utility sector or offer services across multiple utilities.

Difficult Work Site Conditions

Utility construction projects can involve complex site conditions, including difficult to reach terrain and underground locations.

Seasonality and the Weather

Seasonal demand for utility system construction services creates uneven cash flow.

Industry size & Structure

The average utility construction firm employs 31 workers and generates over $9 million in annual revenue.

    • The average water and sewer line construction firm employs 14 workers and generates $4 million annually.
    • The average oil and gas pipeline construction firm employs 103 workers and generates about $27 million annually.
    • The average power and communication line construction firm employs 44 workers and generates about $12-13 million annually.
    • The utility system construction industry consists of about 17,500 companies that employ 543,700 workers and generate about $158 billion annually.
    • Water and sewer construction firms account for about 28% of industry revenue and 60% of firms. Oil and gas pipeline construction firms account for about 31% of industry revenue and 11% of firms. Power and communication line construction firms account for 41% of revenue and 29% of firms.
    • The utility system construction industry includes several large players with national to near-national scope, regional firms, and many small independent firms that often serve as subcontractors to larger firms and operate within a limited geographical market.
    • Large companies include MasTec, Dycom Industries, and Layne. Some large firms have international operations.
                      Industry Forecast
                      Utility System Construction Industry Growth
                      Source: Vertical IQ and Inforum

                      Coronavirus Update

                      May 12, 2022 - Utilities Spend to Upgrade Grids
                      • • US utility firms are on the cusp of one of the most significant upticks in spending in decades, according to The Wall Street Journal. Utilities are expected to spend about $140 billion in both 2022 and 2023, according to the trade group Edison Electric Institute. Utilities are spending to upgrade grids amid aging infrastructure that is increasingly prone to failure. Grids also need beefing up to accommodate renewable energy capacity expansions and support an anticipated uptick in electric cars on the road.
                      • • Shifting population patterns that were trending before the pandemic gained steam during the health crisis, which could affect future utility development trends. More than two-thirds of large urban counties saw their populations shrink in 2021, according to the analysis of US government data by the Economic Innovation Group (EIG). This change is thought to have in part been caused by the large increase in working from home and a decline in immigration. About 80% of exurban communities (populations under 50,000 with at least 25% of the population in a large or medium-sized suburb and within a large metro area of 500,000 or more) gained in population in 2021. While exurban and rural areas saw strong growth, the number of suburbs that grew in 2021 declined.
                      • • States are bolstering energy conservation programs and investments to aid in recovery from the coronavirus pandemic, according to a new report from the American Council for an Energy-Efficient Economy (ACEEE). Utility system construction firms may benefit from upgrades of or additions to utility systems. A dozen states passed new clean energy legislation in 2021. Legislation typically includes incentives for fuel switching and electrification, the report notes. Those efforts will get a boost from the $1 trillion infrastructure bill signed by President Joe Biden in November 2021, offering states "unprecedented levels of federal support." The pandemic has had "lingering disruptions" on the industry, according to ACEEE, and slowed the progress of energy savings programs.
                      • • The hyper-scale data center industry showed double-digit growth in 2021, according to Kevin Facinelli, Group President for Nortek Data Center Cooling, a division of HVAC equipment manufacturer Nortek. Nortek expects similar growth in 2022, but the amount of growth depends on resolving current supply chain commodity and material bottlenecks. Electrical contractors are likely to benefit from the construction of new facilities.
                      • • Energy executives and analysts warn that there are still too many pipeline companies in a North American industry that is now producing less crude within an overbuilt infrastructure environment, according to financial information and analytics firm S&P Global. After a race to build long-haul pipelines and gathering and processing systems in recent years, the coronavirus pandemic and a stricter regulatory administration have brought most new pipeline and terminal projects grinding to a halt in the last 18 months or so. Executives bemoan an excess of companies and pipelines, as well as a lack of big buyers and consolidators amid a newer mantra of fiscal discipline, according to S&P Global.
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