Business momentum begets share price momentum. The trick for smart investors is to spot those companies, who possess the former but haven’t yet benefitted from the latter.
To me Water Intelligence falls squarely into this camp – being a ‘one stop shop’ for all things leak detection, repair & preventative maintenance, operating in the US (2/3rds franchised), UK, Ireland, Canada and Australia.
Today it reported strong H1’25 figures and ‘in line’ guidance, with adjusted EBITDA jumping 16% to $9.2m on revenues up 8% to $45m. Underpinned too by an impressive acceleration in sequential growth with Q2’25 sales & EBITDA jumping 12% & 24% respectively (22.8% margin vs 18% Q1’25) vs 4% & 8% for Q1, despite the heightened geopolitical uncertainty caused by Trump’s trade tariffs.
Here results is being driven by value accretive acquisitions, new services (preventative maintenance) & products (StreamLabs), cross-fertilisation of best practice (re rollout of Dallas template) and robust international demand up 64% to $6.8m (eg UK sewer blockage detection systems).
Elsewhere, H1’25 adjusted PBT, EPS and net debt came in at $5.7m (+8%), 22.4 cents (+8%) and $14.1m (1.24x net bank debt / EBITDA) - even after investing heavily in service engineer training, new technology and strategic partnerships.
Better still going forward, I believe hashtag#WATR is primed to deliver double digit top & bottom line growth, driven by its best-in-class tech solutions that save water, minimize sewage spills, cut the cost of insurance bills and reduce regulatory fines. Augmented by mopping up smaller rivals and franchisees, who may lack critical mass, expertise, resources and national coverage. Not to mention either the broader secular tailwinds of global warming, aging infrastructure, more expensive water & climate change.
Executive Chairman, Patrick DeSouza commenting: “We are now the only nation-wide company in the US that can provide an end-to-end set of preventive maintenance solutions directly. During H1 we have trained our technicians in StreamLabs products, set-up proprietary workflow routines in our Salesforce operating system and sold StreamLabs units in pilot cities. Customer feedback has been outstanding.”
"We have momentum from a strong Q2 and results are in-line with market expectations. Plus corporate store operating margins are expected to rise from 2024’s yield of 18% to a target level of 22% during 2026 - which if successful, should unlock at least $2m in profits.”
Finally Canaccord Genuity - Global Capital Markets is forecasting FY25 turnover, EBITDA, PBT & EPS to come in at $94.0m (+13%), $16.5m (+15.4%), $10.2m (+21%) and 39 cents (+10%) with a 500p/share Price Target. In turn putting the stock on modest PE, PEG and EBITDA multiples of 9.3x, 0.9x and 5.1x – that offers outstanding value for an economically resilient, tech-enabled platform stock.
Disclosure: I own shares in Water Intelligence, who are also a Vox Markets client.