Energy Efficiency Services

October 2017

Sectorwatch

Itron's $830m deal to acquire Silver Spring Networks represents a major transaction within the energy efficiency services space, bringing Silver Spring's Internet of Things ("IoT") solutions within the utility sector to Itron's existing hardware and software solutions in water and utilities management.  Other companies within the energy services space are likely to look to integrated solutions to bring value through a combination of software and hardware to their customers, whether through M&A or strategic partnerships.  Moreover, companies that can add high margin SaaS and software solutions to their existing portfolio are likely to see increased valuations, as a result.

Industry Trends:

  • Current revenue growth rate is less than the average of the last 3 years, indicating that the market may be flattening or declining
  • Current gross profit margin exceeds the average of the last 3 years gross profit margin, indicating supplier pricing power
  • Current EBITDA margin exceeds the average of the last 3 years EBITDA margin, a condition that may attract new entrants