Investor Essentials Daily

This company will be protecting assets while the U.S. ramps up the infrastructure investments

March 29, 2024

The U.S. has underinvested in its infrastructure, leading to widespread deterioration, including structurally deficient bridges and frequent water main breaks.

Corporate assets are also aging, reaching their oldest levels in over two decades, necessitating over $500 billion to restore asset values to 2001 levels.

The pandemic showed the consequences of outdated infrastructure, leading to a push for substantial investments in modernization, particularly in response to geopolitical tensions and supply chain vulnerabilities.

The $1.2 trillion Bipartisan Infrastructure Law of 2021 signifies a major commitment to this upgrade, expected to spur demand in construction, engineering, and telecommunications, among others.

Mistras Group (MG), specializing in technology-enabled asset protection solutions, is well-positioned to benefit from these trends by offering services that enhance the safety and efficiency of industrial facilities through predictive maintenance and asset management.

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The U.S. infrastructure, both public and private, has seen minimal investment over the past two decades. As a result, infrastructure across the country has slowly deteriorated or disappeared completely.

More than 7% of bridges are considered structurally deficient, and there is a water main break every two minutes, resulting in billions of gallons of treated water lost daily.

Corporate assets are also aging, with the average age of assets at their oldest level in over 20 years. After focusing on investment internationally over the last 15 years, corporate infrastructure in the U.S. is now historically old.

The ratio of net to gross property, plant, and equipment (PP&E) has declined from nearly 59% in 2001 to currently 54%. It will take over $500 billion to bring asset values back to 2001 levels.

This lack of investment caught up to companies during the pandemic as outdated and inefficient infrastructure struggled to meet surging demand as the economy reopened. It was a wake-up call for businesses to invest to be more resilient and responsive.

With geopolitical tensions highlighting supply chain vulnerabilities, the U.S. is poised for a major infrastructure investment cycle encompassing both repairs and upgrades using new smart and electric technologies.

This modernization process will be expensive but critical for the country’s infrastructure.

For example, the $1.2 trillion Bipartisan Infrastructure Law passed in 2021 aims to rebuild aging infrastructure across the United States.

This unprecedented level of investment is expected to generate sustained demand for industries involved in building next-generation infrastructure over the next decade.

Areas like construction, engineering, electric grid components, transportation manufacturing, and telecommunications are poised to benefit.

Mistras Group (MG) is a company that can capitalize on these tailwinds.

The company is a leading “one source” multinational provider of integrated technology-enabled asset protection solutions, helping to maximize the availability and performance of critical assets in challenging industrial environments.

These solutions are crucial for any manufacturing facilities that operate heavy equipment.

Through Mitras’ non-destructive testing, predictive maintenance, and mechanical integrity software like PCMS, owners and operators of manufacturing facilities can predict potential damages and failures in their critical equipment before they happen.

This enables facilities to schedule maintenance during planned shutdowns rather than emergency shutdowns, maximizing equipment uptime and minimizing unplanned downtime.

By implementing Mitras’ integrated asset protection programs, facility owners can avoid unexpected equipment breakdowns that would require immediate replacement.

This saves the owners a significant amount of money that would otherwise have to be spent on emergency equipment repairs or replacements. It also improves workplace safety by identifying and addressing issues before resulting in accidents.

With the ongoing supply chain supercycle driving continued investment and expansion of domestic manufacturing capacity in the U.S., the demand for Mitras’ solutions is expected to increase as more facilities look to protect their critical assets and maximize asset utilization through proactive maintenance programs.

Best regards,

Joel Litman & Rob Spivey

Chief Investment Strategist &
Director of Research
at Valens Research

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