Garney Holding
Garney Holding Co. (No. 23) crew pumps concrete for a water reservoir project in Centennial, Colo. for Denver Water. The project, designed by Brown & Caldwell (No. 36), is set to finish in 2015.

Spurred by the accelerating need for environmental services in the oil-and-gas boom and growth overseas, the Top 200 Environmental Firms, as a whole, managed to hike their revenue nearly 4%, to $53.7 billion, in 2013 and reverse last year's down trend.

With the energy sector a key catalyst, a more confident private sector boosted its status as the go-to client for many environmental services firms. Work for private clients made up more than 47% of last year's revenue total, helping to ease the pain of an uncertain public-sector marketplace. Non-governmental revenue for Top 200 firms has risen more than 42% since 2009.

While sector consolidation pushed a number of Top 200 firms up the list as they sought to meet client demand for size and scope of services, listed companies also aimed for organic growth—with technology an important differentiator. But, as always, talent availability remained a challenge.

The improving U.S. economy nudged Top 200 domestic revenue growth up 2.2% after last year's 9% falloff. Firms fared better across borders in their revenue quest, elevating the international total by 6.6%, with double-digit increases in Latin America and Australia.

While not all firms reported upticks, the market was "continuing to accelerate in a positive direction," says Gary Oates, CEO of consultant Environmental Science Associates. "Several large projects that were stalled are coming on line. We continue to see increasing opportunities in restoration, water quality and new emerging markets. Even some of our traditional markets in community planning and development are steadily improving." Barr Engineering reported 2013 as "strong" and expects similar results this year.


While the Top 10 firms maintained market dominance and CH2M Hill held the lead, most of their revenue was flat or down as federal work stalled. The exception was private-sector-focused waste management firm Clean Harbors Inc., which rose to the No. 6 slo from tenth-place.

A big factor was its late 2012 purchase of waste recycling firm Safety Kleen, which CEO Alan McKim termed a "transformative acquisition." But oil-and-gas project delays this year took a slight toll on Clean Harbors' second-quarter revenue, executives said earlier this month.

Also impacting Top 200 totals are changes in the roster of companies that reported revenue for 2013. With strategic changes made, Weston Solutions and Louis Berger reappeared on the list, while Weeks Marine is a significant new participant based on the firm's work in coastline restoration.

But absent in 2014 are Battelle, which declined to file, and Lakeshore TolTest Corp., which dissolved in May in a Chapter 7 bankruptcy filing. Among other issues, the firm's troubles forced, this month, the city of Detroit to have to rebid two multi-year water and wastewater inspection and repair contracts, worth a total of $60 million, that were awarded to the company just days before its bankruptcy filing.

Client need to push construction projects forward generated growth for firms in handling site cleanup needs, tougher permitting and compliance standards. Chris Dod, CEO of remediation contractor Clean Earth Inc., points to "a lot more courage in digging holes" for both local infrastructure and commercial construction projects for his firm's jump to No. 58 on the list from No. 82.

"Businesses are under increased scrutiny, and this is driving some to go beyond regulatory requirements," says William C. Siegel, CEO of Kleinfelder, which rose 17 spots on the Top 200 list. "We are bullish about the outlook in both the short and long term."

North America's energy resurgence propelled growth for a number of Top 200 firms in production hubs. "We do business with Exxon, Kinder Morgan and Chevron, which all have large legacy sites that they are trying to get off the books," says Russell Herrscher, vice president of USA Environment LP, Houston. "They have money now, and they want to clear them up. EPA enforcement is a big driver."

Aegion Corp. has been a major player in water and wastewater pipeline construction and repair, but Ruben Mella, vice president of investor relations, notes "tremendous opportunities" for its technologies and services to rehabilitate and maintain energy pipelines, particularly as environmental safety becomes a bigger industry, government and political issue.

Budget cuts, delays in passing transportation and water bills and last fall's shutdown added to federal market woes for Top 200 firms in 2013, with the sector off by a third over the past three years. Stalled and curtailed work was tough for Perma-Fix Environmental Consultants, which dropped nearly 30 spots on the list. The firm has won several cleanup contracts this year but is still pursuing a market diversification strategy, says a company spokesperson.

Oneida Tribal Integrated Enterprises sees "a modest upswing in federal spending to address pent-up demand" following last year's interruptions, especially in military munitions cleanup.

Michael Graham, general manager of Bechtel's global environmental business line, says that while federal work will not be a growth market due to fiscal constraints, the firm expects to make gains by winning more of the available contracts, such as core cleanup work for the U.S. Energy Dept.

Graham says Bechtel could gain from the next wave of DOE nuclear-waste cleanup contracts on the horizon, even though they will be fiscally restrained and more prioritized. "We're back up to a period of contract re-competes that we think we're well positioned for," he says. Bechtel also is carefully monitoring an emerging market of nuclear powerplant decommissioning, for which the firm now is "evaluating alliances," he says.

Going Wider on Water and Wastewater

Driven by larger local needs and federal mandates, water and wastewater infrastructure revenue segments of the Top 200 stayed healthy, growing to 20% and 18%, respectively, of the total.

Pepper Construction points to more work in drought-plagued Texas, following the 2012 passage of $2 billion in state funding for new projects.

Other firms note larger and more far-flung projects generating revenue spikes for them in 2013. "Initially, our water and wastewater works division was confined to Arizona, but we made a conscious effort to expand our geographical footprint and grow our business," says Frank Scopetti, senior vice president and business unit leader for water and wastewater at McCarthy Cos. He cites the firm's revenue growth last year as an "anomaly," expecting a more usual rate in 2014. "Our biggest challenge is a human-resources shortfall, from craft-workers to management executives," says Scopetti.

Similarly, Ulliman Schutte Construction ventured into more design-build projects, with new partners to help absorb added risk. "Public owners are calling for greater pricing transparency in a post-recession contracting environment," says firm controller Brad Frost. "It helps shield them against an audit, especially when federal dollars are involved."

He says that while the Ohio firm ventured as far as North Dakota and North Carolina on projects, it is being more selective about future procurements. It is now partnered with Clark Construction to build a $100-million, CH2M Hill- designed nutrient management facility in Alexandria, Va., that will treat 13 billion gallons of wastewater annually when completed in 2015.

"We expect to see future growth in water treatment as well as in private water development," adds Greg Harris, vice president of Kansas City-based Garney Holdings.