The market opportunity for water infrastructure repair and replacement is significant and growing, according to Evan L. Hart, the Senior Vice President and Chief Financial Officer, Mueller Water Products, Inc. (MWA). He was speaking at Baird’s 2014 Industrial Conference, held at the Four Seasons Hotel in Chicago, Illinois.
Mueller’s portfolio includes fire hydrants, valves, metering systems, piping component systems, leak detection and pipe condition assessment. Its business is 20% residential construction, 5% energy, and 75% repair and replacement of municipal water distribution and treatment systems, with its residential construction driven primarily by new community development.
As municipalities continue to recover from the recession, Mueller is anticipating “consistent revenue growth between 5% to 10% per year” in its base organic growth, assuming normalized end market conditions, Hart said. Its metering and leak detection products and services are targeted for 20% long-term growth, Hart said.
“We navigated a fairly significant challenge,” Hart said of the recession. “Over the last year or so, we began to see increased demand for our products driven by residential construction in several regions.”
Demand will be driven by population growth, Hart said. “But we see the greatest demand to repair and replace existing infrastructure. We’re in a period of accelerating demand.”
New growth opportunities for Mueller include smart metering and leak detection, Hart said. The metering business is 14% of revenues, Hart said, and are “well–positioned for growth.” Mueller expects 20% compound growth rates in metering over the next several years, with leak detection a $1 billion market globally, Hart added.
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