Investor Essentials Daily

Revamping America’s aging water infrastructure

June 4, 2024

America’s water infrastructure is aging, with many pipes over 50 years old and treatment plants needing repairs. 

The 2021 Bipartisan Infrastructure Law allocated $50 billion to improve drinking water, wastewater, and stormwater systems. 

Mueller Water Products (MWA), a leading supplier of water infrastructure products, is well-positioned to benefit from this funding. 

Their portfolio includes pipes, valves, hydrants, and advanced leak detection technologies. 

Despite past manufacturing issues, Mueller is now prepared to meet increased demand and capture significant market share.

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A large portion of America’s two million miles of water pipes are over 50 years old. Many treatment plants also need repairs or complete overhauls.

Without significant investments, Americans will face increased risks of contamination in their drinking water and more frequent sewer overflows.

EPA’s 7th Drinking Water Infrastructure Needs Survey and Assessment (DWINSA) which assesses the nation’s public water systems’ infrastructure needs over the next 20 years, determined that drinking water systems will need $625 billion for pipe replacement, treatment plant upgrades, storage tanks, and other key assets to ensure the public health.

Recognizing this massive funding gap, the 2021 Bipartisan Infrastructure Law allocated $50 billion toward improving America’s drinking water, wastewater, and stormwater systems.

Mueller Water Products (MWA) is a leading manufacturer and supplier of water infrastructure products and solutions in the U.S.

Some of its core product lines that are widely used by municipalities include ductile iron pipes, fire hydrants, iron gate valves, service brass, and water meters.

As water utilities undertake the planned infrastructure upgrades and replacements over the next decade utilizing funds from the Bipartisan Infrastructure Law and other sources, Mueller’s portfolio of #1-selling products is poised to capture significant market share.

In addition to traditional pipe, valve, and hydrant products, Mueller offers an end-to-end suite of solutions for condition assessment, leak detection, and rehabilitation of aging water distribution systems.

This includes its Echologics leak detection technology, which helps utilities proactively manage pipe networks and optimize maintenance spending.

As water main breaks continue to plague aging systems, Mueller’s infrastructure rehabilitation products and services will see rising demand.

While manufacturing issues weighed on Uniform return on assets ‘‘ROA’’ in recent years, Mueller’s management claims these problems have now been resolved through process improvements and supply chain management.

With its production capacity and supplier relationships restored, Mueller is well-equipped to handle the surge in order volumes over the coming decade while driving Uniform ROA and asset growth expansion.

Given its leadership position in the market, breadth of product and solution offerings directly addressing the needs of water infrastructure renewal, and ability to scale manufacturing, Mueller appears uniquely positioned to capture outsized growth as government funding catalyzes long-overdue upgrades across the U.S.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Strategist &
Director of Research
at Valens Research

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