WATER TREATMENT | Q&A interview with Kevin Loiselle, President and Chief Executive Officer of Clearford Water Systems
For the uninitiated, please give a brief description of Clearford Water Systems and the services it provides.
Clearford has developed and refined a new approach to domestic sewage collection and treatment. The traditional model of floating raw sewage to a large central treatment plant has become too costly outside of densely population urban zones. Clearford One™ is built on the concept of treatment at source. Two thirds of the treatment of the wastewater is done in patented biodigesters at the sewage source, the liquid fraction is moved though a small diameter pipe for final treatment at a significantly reduce treatment plant that releases effluent compliant with regulated requirements, including the strictest standards in the world.
What are the key differentiators that set Clearford Water Systems apart from other firms providing water management solutions?
ClearDigest™ receives all sewage and performs primary and most secondary treatment at source; ClearConvey transports liquid sewage to a central location; ClearDigest performs final treatment using Best Available Technology to meet the community need: MBR where needed but Structured Wetland where preferred.
Digestion of bio-solids by ClearDigest™ eliminates 80% of sludge handling at the central treatment plant and extends period before pumpout of ClearDigest to 25 years.
Only liquid flows through the collection system, permitting the use of small HDPE pipes at ¼ the slope of traditional pipes with reduced depths that eliminates groundwater infiltration, ultimately reducing by about 1/3 the flow to the final treatment plant. ClearDigest modulates flow into the collection network substantially eliminating peaks. Zero infiltration eliminates peaks from storm water. Capacity requirements for the treatment plant are reduced by more than 50%.
The total Clearford One™ system has 40% lower capital cost than conventional systems and 20% lower operating costs. Clearford One™ operates fully with any flow of water generated by the source. No minimum flow is required. Clearford One™ is ideal for hot, dry climates where conventional systems clog with solids and for regions where periodic heavy rains or high water table tend to fill conventional collection systems with groundwater and overwhelm treatment facilities.
How was the Clearford One™ technology born and how does the system work?
The Province of Ontario Ministry of Environment sponsored a program 25 years ago to search for a system to serve towns and villages in Ontario that were (and continue to be) served by septic tanks. Concern for ground water contamination and resulting risk to potable water supply was the trigger for this program. A rudimentary system using septic tanks and a small bore sewer leading to a settlement pond was installed in the village of Field Ontario by Innovative Water and Sewer Systems Inc.(IWSSI). That system operates effectively today. IWSSI is now Clearford Water Systems Inc. and the rudimentary system is now Clearford One™, announced in March 2013. Seven communities in Ontario are today served by the evolving system and all are quality reference sites for Clearford. The system captures all solids and digests the bio-degradable portion in ClearDigest™. More than 90% of all solids entering a sewage system in normal use are bio-degradable. A patented device with no moving parts uses the hydraulic energy of inflow from the sewage source to gently agitate the solids, maintaining contact between bacteria and solids on which it feeds and encouraging accelerated and extended digestion. A patented device attached to the outflow allows the digester chamber to fill to a limited level and drain into the collection system with limited variation in flow.
The constant flow of liquid effluent is transported by ClearConvey™ to final treatment. Liquid sewage flows with slight slope, resulting in pipe depth about ¼ the requirement for conventional sewers, with minimum depth reflecting local frost conditions, if any. The sealed system allows no infiltration of groundwater and requires no man holes. Access points are installed about every 180 meters to provide an ability to introduce a small CCTV camera for pipe inspection. Absence of any solids avoids clogging, so repair of the pipe is required only where some external event has occurred. Pumping stations are much less frequent, reducing capital cost and only water is pumped, reducing operating and maintenance cost.
The final treatment plant receives only a consistent flow of predictable liquid sewage. This allows efficient operation of the plant to deliver only the final stage of treatment as that may be stipulated by the host community of region. In rural India this will typically be a Structured Wetland. In Ontario this will usually be the Membrane Bio-Reactor(MBR). Treatment to the highest standard is efficiently done and sludge management, and transport and disposal is reduce by about 75%.
What markets does Clearford Water Systems intend to focus on and why?
A fund of $100 million has been committed by Signina Capital AG of Zurich to fund 100% of capital cost and contract for up to 30 years operating and maintenance of Clearford One™ installed in Ontario Municipalities with A credit rating. This will channel the efforts of Clearford first to serve Ontario Municipalities under the Pay for Performance (P4P™) delivery model. Municipalities will have no debt and no risk, and will pay a single fixed amount annually, escalated only by inflation. At the end of the contract period (usually 30 years) the system will be transferred to the municipality without charge and in condition stated in the Service Contract.
The P4P program was introduced in Ontario in February and the response has been immediate and positive. Clearford is now responding to a Request for Expression of Interest (RFEI) by an Ontario Municipality in which the terms of P4P™ for the basis of the RFEI. Response to the RFEI is required by July 3rd.
Clearford has been active in India for more than 4 years, with a team in India demonstrating the system and, since March 2014, developing opportunities for Clearford One™. The first contract for Clearford One™ is expected to be announced this week with a major Indian Infrastructure company. Here Clearford One™ will utilize the Structured Wetland developed by Earth Visioncare, an entity of Indian Institute of Technology, Mumbai. This contract will be a demonstration project to establish the Clearford One™ solution in India and to confirm the opportunity for our Indian partners and Clearford to work together to provide a cost effective solution to sanitation in Indian communities that do not now have effective sanitation systems.
What major milestones has Clearford Water Systems set in place for 2015?
The announcement of Clearford One™ in 2014 has provided the basis for key milestones in 2015. These include:
· $100 million project funding agreement with Signina Capital AG (January)
· Installation of Clearford One™ at Fetherston near Ottawa Ontario (August-November)
· Contract for Clearford One™ for village in India (June)
· Selection of Clearford One™ under P4P model (August)
· Contract under P4P™ for $20 million installation in Ontario (August-September)
· Selection of Clearford One™ for second Ontario community (October)
· Selection of Clearford One™ in second Indian community (November-December)
In December 2014 Clearford acquired 90.7% of UV Pure Technologies Inc.(UVP). UVP is based in Toronto and manufactures and sells ultraviolet systems for purification of water. The UVP systems are based on patented technologies integrated within the proprietary system Crossfire®. UVP has a six year record of positive EBITDA, including more than $500,000 EBITDA for calendar 2014.
During Q1 2015 UVP increased revenue by 22% and more than tripled EBITDA from the same period last year. During 2015 UVP is expected to enter into co-branding relationships with major international corporations in the water treatment sector, leading to significant growth in penetration of the UV purification market by Crossfire and significant growth in UVP during 2016 and beyond.
What attributes does the company’s executive team bring to the table in terms of industry knowledge and experience that will drive Clearford Water Systems forward toward its goals?
The CEO, Kevin Loiselle has a proven record of building growth and profitability in companies operating in highly competitive environments.
Wilf Stephan has deep experience in waste water treatment and in engineering systems and installations in international growth markets.
Mark McGuire has senior level experience in executive financial management and in regulatory reporting for public technology based companies based in Ottawa.
Rick Vansant CEO of UV Pure has led UVP to international success and top quality production of an industry leading product. Rick retained his ownership interest in UVP at his request when the company was acquired by Clearford .
The business model for Clearford and UV Pure allow exponential growth in revenues and profit with modest expansion in staff within each company.
The products of Clearford and UVP have gained international acceptance. The funding model now available to Clearford is industry leading and has already received strong response from communities that need sewage collection and treatment systems but lack both the capital to build them and the expertise to operate them.
Why is now a good time for investors to jump on board?
Contracts under the Clearford P4P™ delivery model are likely to be $90 million in revenue and more than $20 million in net income to Clearford over the next 30 months.
North America has many Provinces and States that can benefit from P4P™ as it is being introduced in Ontario.
India holds the potential for immediate adoption of Clearford One™ with Clear Recover™ delivered by Structured Wetland technology of Vision Earthcare (VEC), The technology of VEC is Soil Biotechnology (CAMUS SBT), developed at the India Institute of Technology Mumbai (IIT Mumbai). Demand and funding for sanitation in India is measured in $ billions, with the constraint being lack of effective and affordable systems. An operational reference site of Clearford One™ in India should allow Clearford to unlock the numerous pending opportunities that have been developed over the last four years.
What is Clearford Water Systems’ market potential and where do you see the company in the next five years?
The world market for the Clearford One™ is many $ billions per year. Clearford has a realistic opportunity, working with key partners, to capture a meaningful share of that market. Revenues of Clearford should be measured in $100’s of millions within 5 years, with much more growth beyond that time.
The world market for ultraviolet purification is already more than $1 billion and research firms estimate growth at 13%-15% per year. Crossfire® is a disruptively superior technology for delivery of UV purification. In cooperation with major international players in the water treatment and purification business UV Pure is expected to multiply its current revenue base of $3 million per year during the years 2015-2020.
FULL DISCLOSURE: Clearford Water Systems is a Stockhouse Publishing client.