Gabelli Research Analyst Jose Garza recaps the 2017 American Water Works Annual Conference in Philadelphia.
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This week we attended the American Water Works Annual Conference and Exposition, otherwise known as ACE, in Philadelphia. More than 450 companies exhibit their products, including pipes, valves, meters, hydrants, filtration systems, laboratory equipment, as well as services.
We spoke with several industry participants, including public and private companies that provide equipment and services, distributors, engineers, and representatives from municipalities across the country.
Most described the demand environment as stable, if not remarkable, with spending growth continuing in 2017 with no noticeable impact in the form of delays arising from the prospect of potential stimulus.
What underscores this is the need for investment in the water infrastructure in both the short and long term. Participants remain hopeful that water remains a priority of the new administration, with clear objectives and communication driving the potential.
The largest US water works distributor, HD Supply, is set to change ownership in 2017 after the recent announcement it would be sold to private equity for .5 billion. While the prospect of disruption exists, industry participants did not experience much leading up to the sale and expect relatively small changes going forward.
The connectivity and analytical capabilities of systems was often a topic, as the use of big data is accelerating across the water industry. However, it remains unclear what technologies and systems will win out. Many young companies are attempting to disrupt a slow-moving industry while established industry players introduce their own packages to allow customers and end users greater visibility and control of their water assets.
Among those in water metering, the shift to Advanced Metering Infrastructure is ongoing, with each company bringing to market what it believes is a differentiated product that provides the best combination of performance, reliability, and ease of use for customers. Utilities are concurrently increasing their demands for product-rich offerings such as customer analytics and leak detection, further segmenting the market.
Overall, the industry finds itself at a dynamic point in time yet continues to slowly grow as deteriorating assets are replaced.