While we learned today that the Keystone XL Pipeline, the controversial proposal to transport synthetic crude oil and diluted bitumen from Northern Alberta to various parts of the United States is, at least temporarily, on hold, North American pipeline construction is actually undergoing a period of unprecedented growth.
This is fortunate timing for Calgary’s Pure Technologies (TSX:PUR), which suffered through some unfortunate timing last year. In 2011, Pure met its first real headwinds in a run that has seen the company grow its revenue from just $14.75 million in 2007 to more than $48 million in fiscal 2010.
For Pure, 2011 can be summed up with a single word: Libya. For a decade, the company had been charged with monitoring the Great Man-Made River Project there. The massive undertaking, which began in 1991, supplies water from the Sahara Desert to the coast of Libya, where the vast majority of the population resides. The civil war that began in February and ended with the death of dictator Muammar Gaddafi in October, meant the company evacuated all its employees from the country, which had placed a a ban on financial transactions with the government of Libya.
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Pure Technologies develops and sells monitoring and surveillance technologies for critical physical infrastructure such as bridges, buildings, parking structures, oil and gas pipelines and, especially, the water and wastewater industry. The company’s SmartBall, for instance, is a leak detection technology that consists of a free-swimming foam ball with an instrumented aluminum core that can detect minute acoustic events in pipelines. The SmartBall is inserted into a pipeline and travels with the water flow collecting information about leaks.
In mid-November Pure reported its third quarter results. The numbers revealed two stories; first, overall revenue was predictably impacted by the loss of all revenue from Libya. Nine-months revenue was $28.5 million, down from $31.8 for the same period a year earlier. But inspection services revenue was way up, to $17.1 million from $6.5 million.
Most of this new revenue is coming from pipeline growth in North America where the company has made long-term agreements with large municipalities. Yesterday, Pure announced it had been awarded a contract worth up to $17.2 million with the Washington Suburban Sanitary Commission to inspect and monitor its 350 miles of prestressed concrete pipelines.
With the company now reporting that “The situation in Libya has improved significantly” Pure appears set to resume its growth in 2012.
According to Boston-based firm Lux Research in a recent report called “Plugging the Leaks: The Business of Water Infrastructure Repair,” water infrastructure inspection and repair is a nearly $20 billion market that is expected to grow at 10% per year.
Shares of Pure Technologies closed up 6.6% to $3.55 today.