Factual report on de.mem's Decentralized Water Treatment Business
de.mem is a company that specializes in decentralized water and wastewater treatment solutions.
The company has developed innovative membrane technology and provides a comprehensive one-stop-shop service to its industrial customers, primarily in Australia.
de.mem's strategy focuses on organic growth driven by its unique technology and the acquisition of small, established companies to expand its customer base and product/service offerings.
The company has successfully transformed its business model from a predominantly project-based approach to a recurring revenue-driven model, with a focus on profitability.
de.mem's recent acquisitions, such as Auswater Systems and Border Pump Works, are expected to further enhance its profitability and bring it closer to achieving sustainable operating cash flow break-even.
Key Insights and Concepts:
Decentralized Water Treatment Solutions:
de.mem's core business is providing decentralized, flexible, and containerized water and wastewater treatment solutions to industrial customers.
The decentralized water treatment market is highly fragmented, presenting opportunities for de.mem to consolidate the industry through strategic acquisitions.
Innovative Membrane Technology and Service-Oriented Approach:
de.mem's unique membrane technology allows it to offer customized solutions to its industrial customers.
The company has shifted its focus from a project-based model to a service-oriented approach, providing recurring revenue streams through service contracts and leasing arrangements.
Acquisition Strategy and Profitability:
de.mem has successfully implemented a strategy of acquiring small, established companies to expand its customer base and product/service offerings.
The acquisitions have been accretive to de.mem's profitability, with the company's adjusted EBITDA improving from a loss of $3 million in 2021 to a loss of $750,000 in 2023.
The recent acquisitions of Auswater Systems and Border Pump Works are expected to further enhance de.mem's profitability and bring it closer to achieving sustainable operating cash flow break-even.
Fragmented Market and Consolidation Opportunities:
The decentralized water treatment market is highly fragmented, with many smaller, family-owned businesses or regionally focused companies.
de.mem's platform, technology, and customer base position it well to become a leading consolidator in this rapidly consolidating industry.
The highly fragmented nature of the decentralized water treatment market presents significant opportunities for de.mem to continue its consolidation efforts and solidify its position as a leader in this rapidly growing industry.
CEO Andreas Kroll believes that de.mem's strategy of organic growth and strategic acquisitions will enable the company to become one of the largest players in the decentralized water treatment space, which aligns with the CEO's vision for the company's future.
Andreas Kroll - CEO de.mem
Andreas Kroll said in a recent video :
"With de.mem , I think we've built such a great platform with the technology that we have on the one hand, the established service business, the customer base that we have on the other, to really become a leader in this trend, to become a consolidator, to become one of the largest companies within decentralized water treatment, and that's what keeps me excited being the CEO of de.mem"
On the recent acquisition of Auswater :
"The Auswater acquisition is actually very important to us..
From a financial perspective, Auswater is extremely attractive to us because it's one of the most profitable and most lucrative businesses that we've seen in terms of margin profile.
It's clearly accretive to De.mem's gross margins of 36%. Auswater has been generating approximately 60% in gross margins over the past few years and will certainly help De.mem limited on its way towards achieving sustainable operating cash flow break even."
ASX Code: DEM
Link to videos :
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The questions were derived by Chris Titley from Sub11 with a view to educate and understand the business more - as is the purpose of the article. It is not intended to be financial advice as per disclosure above.