The acquisition of two environmental remediation companies in the US last year helped the Australian consultant engineering firm to improve its bottom line by 56%. It wants to double its water revenues over the next five years.
Last year’s acquisition of two US environmental clean-up companies helped Australian engineering consultancy Cardno to generate a net profit of A$58.8 million (US$59.7 million) for the year ended 30 June 2011 – up 56% from the same period last year. The company announced its annual results on 16 August, posting revenues of A$831.2 million (US$844.1 million) – up 74.2% from the 2009/10 financial year.
Last June’s A$123 million (US$102 million) acquisition of Environmental Resolutions, Inc. and Entrix looks to have been impeccably timed – Entrix specialises in cleaning up contaminated water, and the residual work on the Gulf of Mexico oil spill provided the newly acquired subsidiary with substantial new business.
“Sometimes you make acquisitions at just the right time. Business at both ERI and Entrix simply exploded just after we acquired them,” Cardno managing director Andrew Buckley explained to GWI. “While we attribute this in part to good luck, it also reflects our careful research and planning.”
ERI, which specialises in groundwater and soil decontamination associated with oil and gas processing and distribution, should also open up opportunities in the shale gas markets in the US. The acquisition included a US$8 million earn-out based on ERI achieving certain EBITDA targets during the period 1st June 2010 to 31 May 2011, which were “comfortably exceeded”, according to Trevor Johnson, Cardno’s Executive Director.
“Water represents about 20% of our total revenues, which is in excess of A$100 million in today’s terms. We expect to more than double this over the next five years,” Johnson told GWI. “Half of our water business is currently overseas, and we would expect this to increase to 70% over the 5-year period.” Further acquisitions are planned, targetting specialist water engineering and environmental companies, particularly in the area of water resources and water supply, according to Johnson.