Clearford hopes for a noteworthy 2016

After rebranding its proprietary product, Ottawa-based water management and sanitation system company Clearford Water Systems Inc. is on track to significant market growth in 2016.

Clearford’s revenue increased steadily in its last quarter, which ended on Sept. 30, to $766,938, compared to just $32,469 the same time a year ago, and despite reporting a net loss of $1.8 million in its latest quarter, president and CEO Kevin Loiselle says he is “extremely optimistic about the future of the company”.

Last year, the company revamped its main product into a more complete end-to-end sanitation system, branding it Clearford One and packaging it into three trademarked components: ClearConvey, ClearRecover and ClearDigest.

Clearford One removes solids at the source before releasing sewage discharge through a network of small bore sewer pipes that carry the liquids to a facility for final treatment. It then recovers the clean water, which is used for non-ingestion services like toilet water.

The price advantage

Loiselle says the competitive advantage of Clearford One compared to traditional sewage systems is its price. “Our system is about 40 per cent cheaper to build and up to 50 per cent cheaper to operate,” he says.

Clearford also recently established a new financing option with Swiss investors in Ontario called Pay-for-Performance, which allows municipalities to establish sewage collection and treatment infrastructure without incurring capital costs, or construction and operating risks. Instead, they pay a fixed monthly service fee.

“Introducing our Pay-for-Performance model is a remarkable way of addressing what has been a very serious problem in Ontario and that is how to finance these very expensive systems. The answer from Clearford is, we’ve got a system that doesn’t cost as much and we’ve got a way for you to fund it,” he says.

The Pay-for-Performance model is currently only available in Ontario, but Loiselle says, with the proper financing partners, Clearford hopes to launch the model abroad in the coming year.

Ontario has been a key market for Clearford since it initially took on a commissioned provincial government project in 1989 to find cost-effective sanitation solutions when facing geotechnical constraints in the town of Field, Ont.

Originally called Innovative Water and Sewage Systems Inc., it created a sanitation system for the town based on a reduced pipe size.

In 1999, Clearford began its first full-scale commercial operation in Wardsville, Ont. and now has six installed sites in Ontario and two in South America.

Growth through acquisition

In November 2014, the company also acquired for $2.6 million, 90.7 per cent of UV Pure Technologies Inc., a water purification system that uses ultraviolet light to purify water.

Product sales from UV Pure continue to generate considerable revenue for Clearford as a corporate subsidiary. UV Pure generated $695,980 in sales in Clearford’s last quarter.

Currently, Clearford is scheduled to complete construction of its first repackaged Clearford One model at Fetherston Mobile Home Park in Kemptville, Ont. by the end of 2015.

The company has also shifted marketing energy to India and is currently constructing a site in the village of Jambudiyapura. Loiselle says he expects this project to unlock a series of opportunities in India because Clearford will be able to showcase a fully operational reference site.

Khurram Malik, co-head of research at Jacob Securities Inc. in Toronto who specializes in water technology, says Clearford should continue its pursuit of global markets where there is a greater global need for innovative sanitation solutions.

“The real upside is outside of Canada and North America because that’s where most of the money is being spent in terms of large infrastructure dollars to build new cities, new towns and to support an emerging middle class that wasn’t a middle class a generation ago,” he says.

Loiselle says Clearford’s product is easier to install and its pipe network design allows it to be installed in difficult locations. That is particularly beneficial in countries that are retrofitting systems for the first time.

Replacing aging systems

This is different in North America where it’s competing with traditional systems. Loiselle says there is a need to replace aging systems but it’s difficult to convince municipalities to move away from the traditional systems they use.

Accordingly, Clearford is more focused on targeting smaller pockets in need of more cost-effective servicing in place of current centralized systems.

Loiselle says Clearford One is a far more economical way of servicing small communities than traditional systems that put in giant sewers and try to stretch them out as far as possible.

Banu Ormeci, Carleton University engineering professor and Canada’s Research Chair in Wastewater and Public Health Engineering, agrees with Clearford’s strategy. “Each treatment process or treatment plant is different,” she says. “We need to change how we look at the problem and design case-specific solutions.”

Loiselle says with a newly packaged system, better approach to educating potential clients and new reference sites, Clearford is now better positioned to meet the demands and challenges of the current market both at home and abroad.

“We are feeling pretty good with how we are positioning the company,” he says.