Water Is An Increasingly Scarce Strategic Asset
Severe droughts, demand from data centres, ageing pipes, higher utility bills and spiralling insurance claims mean that simply waiting for leaks is an expensive way to manage buildings and infrastructure. A far smarter solution is to monitor systems continuously, spot problems early and fix them before they become big.
Step forward , a “one-stop shop” for leak detection, repair, smart monitoring and preventative maintenance across the US & overseas. Today’s positive H1’26 numbers were in line with expectations with revenue rising 7% to $48.2m, adjusted EBITDA up 6% to $9.8m and EPS 7% higher at 25.5 cents. Driven by standout performances from International (re Irish acqn) up 40% to $9.5m and franchise-related sales (re B2B insurance & remote/IoT monitoring) jumping 15% to $5.4m.
But the really interesting bit is what comes next.
#WATR has spent the last couple of years transforming American Leak Detection (ALD) from a largely reactive services business into a Technology Enabled Services platform. Using StreamLabs & Bluebot IoT devices, Salesforce CRM, real-time alerts, proprietary acoustic detection and its nationwide network of engineers, the group can now install, monitor, diagnose, dispatch, repair and provide ongoing aftercare under one roof. Better still, paid Q3 pilots have demonstrated attractive customer returns and management now plans to rapidly scale these in Q4 & beyond.
Here ALD works with 23 of Americas largest insurers, with its B2B channel capable of processing more than 100,000 assignments annually. Meaning successful pilots can be quickly rolled out via an established national network, rather than having to be built from scratch.
Sure short-term EBITDA margins was fell slightly to 20% (vs 21% LY) due to higher materials/fuel costs and upfront spending on training, legal work and the new monitoring infrastructure. Yet equally, these are still attractive and should recover in due course as annual client contracts come up for renegotiation. The balance sheet remains solid too, with net debt/adjusted EBITDA of 1.3x, leaving sufficient capacity to fund organic expansion and selective franchise &/or plumbing acquisitions.
Exec chair Patrick DeSouza commenting: “We look forward to attacking the growing market opportunity in front of us. We will continue providing tech-based, minimally invasive leak detection and repair solutions across the US and internationally and further developing additional B2B channels beyond insurance.”
Finally wrt the numbers, Canaccord forecasts FY’26 revenues of $99.6m, adjusted EBITDA of $18.2m, and EPS of 43 cents - equating to circa 6.3x EV/EBITDA and 10.8x PER fully diluted, vs materially higher multiples for technology-enabled service companies. Indeed my SOTP fair value is 519p/share with Canaccord at 515p.
Discl: I own shares in who is also a Vox Markets client.
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