Water and Wastewater Market Trends August 2024
“The Industrial Distribution market remains attractive to buyers and investors,” according to Kevin Sargent, Managing Director and lead banker for the Industrial Distribution investment banking team at BGL. In its latest Industrials Insider, the team at BGL examines key demand drivers in current growth markets seeing an uptick in industrials M&A activity, including water and wastewater.
Water and Wastewater Market Trends and Update for 2024
The Water Supply market is forecasted to grow from $27 billion in 2023 to $33 billion by 2028, representing a CAGR of 3.5% over the period. The Infrastructure Investment and Jobs Act (IIJA) provides over $60 billion for water-related infrastructure. In its FQ1 2025 earnings call, Core & Main (NYSE) CEO Stephen LeClair noted that the company is beginning to see projects funded by the IIJA in certain parts of the country. LeClair also reported healthy end market demand, noting positive trends in backlog and bidding activity.
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Investment in critical water-related infrastructure—drinking water and wastewater systems—is not meeting current needs, reports the American Society of Civil Engineers (ASCE), which identified an $81 billion investment gap in its 2021 Report Card. Based on their analysis, if the water and wastewater sectors continue along the same path, the total gap will grow to more than $434 billion by 2029.
Core & Main (NYSE: CNM) has been actively consolidating the fragmented waterworks market, having deployed more than $600 million to close five acquisitions between February and May of 2024, including Dana Kepner Company (Kepner), which it acquired from private equity sponsor Littlejohn & Co. this March, marking its largest acquisition to date. At the transaction announcement, Core & Main gained 21 locations across 8 states. Kepner supplies a variety of waterworks products, including pipes, valves, and fittings, as well as meters and meter accessories. Other companies acquired include Geothermal Supply (closed May 2024), EGW Utilities (April), ACF West (April), and Eastern Supply (February).
“Our acquisition strategy continues to create tremendous value for Core & Main,” said LeClair. “We have a very active M&A pipeline and expect to continue adding value-creating businesses to the Core & Main family throughout 2024 and beyond.” In its 2024 Outlook, the company is forecasting net sales growth of +12% to +13% to reach $7.5 billion – $7.6 billion with a significant contribution from acquisitions.
For more information on demand drivers in the Industrials space, including power and electrical, industrial controls and automation, and aerospace and defense, we encourage you to download our full 22-page Insider here.
Contact Our Industrial Distribution Group
Led by Kevin H. Sargent and Andrew K. Petryk, BGL’s Industrial Distribution investment banking team leverages its industry knowledge and global relationships to execute highly effective and efficient transactions on behalf of our middle-market clients. Please reach out via our contact form below to learn more.