Weeks away from listing on the TSX, H2O Innovation is reporting strong revenue growth, benefiting from interest spurred by global water scarcity, population growth and tightening environmental standards.
“It reflects what we observe in the industry. Internationally, there is strong demand for new water infrastructure. Also, the desalination market [d’eaux de mer] is growing strongly in the Arab Emirates” where the company is present, said in an interview with Duty Frédéric Dugré, CEO of the company.
In its second quarter results released Monday, H2O Innovation reported a 20.1% increase in revenue — which reached $42 million — compared to the same period last year. This performance is similar to that recorded annually for the past five years (19.9%).
Created in 2000, H2O Innovation offers water treatment technologies such as filtration and nanofiltration membranes as well as seawater desalination systems.
Like its competitors, H2O Innovation benefits from a market boosted by population growth, the regulatory tightening of several governments and the increase in the number of droughts in recent years.
The UN estimates that four billion people worldwide experience severe water scarcity for at least one month a year; 2.3 billion people live in water-stressed countries.
Added to these factors is the increase in chemical components in the precious liquid that must be treated, notes Mr. Dugré: “There are more and more microplastics in the water, but also hormones and PFAS” which are toxic industrial substances.
The growing interest in these environmental technologies has prompted H2O Innovation to step up its presence in the United States. In December, it acquired two American companies specializing in water treatment in New York State: JCO and Environmental Consultants.
With these acquisitions, the amounts of which have not been disclosed, “we are adding 200 industrial and municipal customers in a very populous state where the framework is stricter,” he indicates.
The TSX for World Water Day
In the coming weeks, H2O Innovation will take a new step by leaving the Toronto Venture Exchange (TSXV) to make the jump to the TSX, the largest stock exchange in Canada. To mark the occasion, the company plans to trade its first shares there on World Water Day, March 22.
In recent years, companies operating in the water sector have benefited from the interest of stock market investors. The funds that follow them, such as First Trust Water and Lyxor World Water, have respectively recorded growth of 40% and 57% in three years. Over the same period, the OMX US Water Index increased by 71%.
“The issue is global. I don’t think companies that are serious are just opportunists. It took me 21 years to build the company and, believe me, it’s difficult because you have to find credibility. Someone who simply wants to take advantage of the trend, he will have to build his reputation,” concludes Frédéric Dugré.