Water Supply and Sewage Treatment

Industry Profile Report

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

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

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

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

Industry Profile Excerpts

Industry Overview

The 3,900 water supply and irrigation system companies in the US store, pump, treat, and deliver water to customers. The 340 sewage treatment companies operate sewer systems or sewage treatment facilities that collect, treat, transport, and recycle wastewater. The sale of water accounts for the majority of industry revenue. Large firms may offer both water supply and sewage treatment services. Some firms also offer other types of utilities, such as electric power or gas.

Aging Infrastructure and Funding Gap

The water and wastewater infrastructure in the US is aging, and many systems are nearing the end of their useful life and in desperate need of modernization and replacement.

Water Consumption Falls

Conservation efforts and concern for the environment have succeeded in reducing water consumption in the US.

Industry size & Structure

The average water supply and sewage treatment company employs 11-18 workers and generates $4 million in annual revenue.

    • The water supply and irrigation system industry consists of about 3,600 firms that employ about 39,500 workers and generate about $12 billion annually. The sewage treatment industry consists of about 330 companies that employ about 5,800 workers and generate $1.5 billion annually.
    • The industries appear concentrated; the top 50 companies account for between 75% and 90% of industry revenue. However, government ownership (at the local level) skews the concentration percentage, and both the water supply and sewage treatment industries are more fragmented than Census numbers reveal.
    • The majority of community water systems and wastewater treatment systems are government-owned. Just over 15% of Americans receive water through investor-owned water supply utilities.
    • Large government-owned systems include the New York City and Washington DC systems. Large investor-owned firms include American Water, Aqua America, and United Water (Suez Environment).
    • According to the EPA, approximately 90% of the US population obtains its water from community water systems and 10% obtains water from private wells. The US has 52,000 community water systems, of which 91% serve less than 10,000 customers. The US has 16,000 wastewater facilities that serve 80% of the population.
                                  Industry Forecast
                                  Water Supply and Sewage Treatment Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  May 24, 2024 - Industry to Notch Slow, but Steady Growth
                                  • The water supply and sewage treatment industry is expected to experience flat but steady sales growth over the next several years. In 2024, industry sales growth is forecast to drop slightly to 4.5% compared to 6% in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. The water supply and sewage treatment industry will then post average annual sales growth of about 4.2% through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
                                  • In mid-May, the EPA issued an enforcement alert highlighting an uptick in cybersecurity threats and vulnerabilities to US drinking water systems. The alert came amid a rise in the frequency and severity of cyberattacks and cyber threats. During recent EPA water system inspections, over 70% failed to fully comply with security requirements outlined in the Safe Drinking Water Act. Inspections revealed several significant cybersecurity vulnerabilities, including default passwords that haven’t been updated and single logins that can easily be compromised. The EPA says it will step up its inspection regime to ensure US drinking water security.
                                  • In early May, the EPA announced $3 billion in funding to help all states and territories in their efforts to replace lead drinking water pipes. The funding comes from the Infrastructure Investment and Jobs Act (IIJA) and is available through the EPA’s Drinking Water State Revolving Fund (DWSRF). Since the passing of the IIJA, about $9 billion in lead pipe replacement funding has been announced. Overall, the IIJA includes $15 billion to identify and replace an estimated 1.7 million lead pipes nationwide.
                                  • Population growth, increased government infrastructure investments, and rising industrial production are expected to boost construction spending for water, wastewater, and sewage treatment projects over the next several years, according to construction consultancy and investment banking firm FMI’s second Quarter 2024 North American Engineering and Construction Industry Overview. The EPA estimates US drinking water infrastructure will require $650 billion in investment over the next two decades. About two-thirds of the investment will be for water transmission and distribution system repairs, followed by water treatment and storage. Spending for water supply projects is expected to rise 8% in 2024 compared to the year before, then grow by 4% in 2025 and 2% in 2026, 2027, and 2028. Construction spending for sewage and waste disposal projects is forecast to rise 10% in 2024 over 2023 levels, then moderate to 4% in 2025, 1% in 2026 and 2027, then rise 3% in 2028.
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