A strong economy in the U.S. and other key global markets pushed the ENR 2019 Top 200 Environmental Firms to revenue levels not seen for some years. Even with some exceptions, public and private owners committed to bigger project investment and new compliance steps to address both legacy and emerging environmental challenges.

As a result, Top 200 firms also invested, adding staff or buying new capability to handle growing client and project diversity in the environmental marketplace. The Top 200 environmental services revenue, based on what firms reported in 2018, totaled $57.24 billion—up 7.3% from the previous year’s amount.

Domestic revenue showed a 6% boost from last year’s total, with activity in global markets up a particularly strong 13.3%. Both figures had declined in last year’s market assessment over 2017.

The buoyed market lifted revenue for a number of firms and moved them up the Top 200 list. “Weston Solutions had its best top and bottom line performance in its 61-year history in 2018 due to our combined environmental and infrastructure businesses,” says President & CEO Alan J. Solow, noting that its environmental gross revenue grew by almost $19 million from 2017 to 2018. More of that revenue “came from projects where delivery covered the life-cycle of the services and not from one specific part,” he adds.

Design firm Garver, which debuted on the 2019 list at No. 178, says its environmental services work “took a significant leap in 2018 with an expanded team and added expertise in biological analysis, noise and air quality analysis and geographic information systems.” The Arkansas firm adds that heading west to service water sector clients in Texas, Arizona and Colorado was a “key driver for our revenue growth.”

Water and wastewater contractor Garney Holding kept its No. 15 spot, even though revenue rose some $80 million.

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No. 2 ranked Jacobs has committed to environmental services as it builds on its 2017 purchase of former Top 200 perennial leader CH2M and transitions to a services-centered business approach, with the soon-to-finish sale of its energy, chemicals and mining unit to WorleyParsons.

Investment “in the Jacobs environmental business and brand globally created a positive impact in 2018,” says Chairman Steve Demetriou, driven by client needs in disaster and emerging contaminant response, nuclear waste decommissioning and remediation stemming from both urban redevelopment and site reuse.

“Weston Solutions had its best top and bottom line performance in its 61-year history in 2018 due to our combined environmental and infrastructure businesses.”

– Alan J. Solow, President & CEO, Weston Solutions

Consolidation continues among environmental services firms, with serial acquirer NV5 rising to No. 89 on the 2019 list from No. 117 last year. The consulting firm says that its “environmental vertical” has grown 60% since 2017 and represents “a significant portion” of the company’s overall growth.

Related to market drivers, Top 200 firms see mixed signals, however, in federal regulation as the Trump Administration hits the halfway point, with key regulatory agencies such as the U.S. Environmental Protection Agency and U.S. Interior Dept. now run by former industry lobbyists in unconfirmed, acting capacities.

Firms also note some slowdowns in funding for state and local environmental infrastructure upgrades. “Our core business is regulatory driven, and we see no new substantial environmental-related regulations being enacted in the near future,” says Lynn Eich, president of Environmental Quality Management (No. 117), now set to be acquired by Top 200 newcomer ASRC Industrial Services (No. 85), in a deal announced ton July 1. HDR also noted some revenue drag due to uncertainties over implementing new streamlined federal environmental permitting under a new Trump executive order.

For the first time, however, billions in federal funding for climate change resilience on transportation projects was included in a highway bill unanimously approved July 30 by the Senate Environment and Public Works Committee. Funds would also allow states to lower highway-related carbon emissions.

The still-erratic global oil and gas market both helped and hurt Top 200 firms working in that sector. Firms pointed to the impact of tariffs and scheduled-to-end federal tax credits for renewable energy projects.

The Top Firms by Type of Client

Workforce gaps remain a key growth deterrent for the Top 200. “The continued skilled labor shortage is constricting our ability to put more work in place,” says Robert Chisholm, president of South Carolina-based water and wastewater facility builder M.B. Kahn Construction Co. “There are significant opportunities in our market, but we continue to be selective in the amount of work we take."

For Top 200 firms able to export staff or services, markets beyond the U.S. have been compelling. “Domestic markets will remain unchanged but international prospects look better as additional countries increase their investments in climate change and other environmental issues,” says Ian Kline, president of consultant the Cadmus Group.

Steve Nalefski, environmental services vice president and general manager at Burns & McDonnell says the firm is “exploring” operations in India to offer air quality permitting, and in the Pacific Rim "down the road to support green investments.”

Wood PLC sees growth in European and U.K. resilience initiatives and in master plan support for resilient environmental infrastructure in its Middle East markets. But pipeline installation firm Aegion Corp. is closing much of its non-North American contracting operations due to “competitive pressures and lack of growth,” it says.

“There will be continued strength in this market sector … as public awareness increases.”

– Steve Nalefski, Vice President, Burns & McDonnell

Among non-U.S. based Top 200 firms, Germany's Bauer Resources reports losses in the Middle East last year, but spokesman Dennis Alexandersen says its core environmental technology business “has a record number” of orders in hand. “Although the oil price has dropped further, our oil and gas clients still seek water related solutions to reduce their environmental impact and costs,” he says.

France-based design firm Artelia, another Top 200 newcomer ranked at No. 88, says it expects a 10% to 15% hike in 2019 environmental services revenue, with risk manager Dominque Combe reporting this work “as a real added value to projects and not only a mandatory exercise to be compliant with laws.”

She says “design is now driven by low-carbon emission and accurate life-cycle analysis.” 

Economic Advantage

The Top 200 firms’ private sector market revenue rose slightly from last year and remains the list’s largest client sector at $24.6 billion, but the 2019 total returns to its 2016 level. “Regulatory uncertainty is causing some private clients to delay projects, but the outlook is good overall,” says Douglas J. McKeown, CEO of design firm Woodard & Curran.

Other firms credit the still-hot commercial and industrial real estate markets spurring property related environmental services and growing corporate social responsibility.

“Customers are focused on environmental issues even with rollback of regulations,” says Burns & McDonnell’s Nalefski. “The challenge for them is the direction to go in. If they are involved in a program they keep it going. A lot of them are progressive and are reducing their carbon footprint. It’s an economic advantage.”

The federal market slid about 5.3% in Top 200 revenue since the 2017 ranking. Jan Walstrom, Jacobs’ senior vice president and general manager of global environmental solutions, notes funding declines for traditional U.S Defense Dept. environmental projects.

But Top 200 firms in the nuclear waste sector, in particular, are watching when and how the U.S. Energy Dept. awards billions worth of new and expanded nuclear and hazardous waste cleanup and management contract awards at former federal weapons sites over the next two years. Others such as SNC-Lavalin Group are taking bigger roles as more closed commercial nuclear power sites are remediated and decommissioned.

With AECOM set to sell its government services arm and other deals eyed among key players, “consolidation among federal contractors will pose a concern for [the agency],” says industry publication Weapons Complex Monitor. “Restructuring could create questions about management stability in affected joint ventures in charge of nuclear remediation.”

The Top 30 All-Environmental Firms

Public and private sector cleanup of legacy waste and new contaminants such as PFAS chemicals kept hazardous waste the largest Top 200 market on the 2019 list, up 16% in total revenue. A new advocacy group and university research report that identified 610 contaminated sites across 43 states is “just scratching the surface,” says Jacobs’ Walstrom.

California regulators have issued investigative orders for PFAS sampling at 200 landfills and 31 airports. “Our revenue was positively affected by the increase in PFAS/PFOS compliance, treatment and assessments in Michigan,” says Lansing-based PM Environmental.

Close to Home

Despite some Top 200 firms’ concerns about slow moving projects, most list participants saw good momentum in state and local markets. That client sector is up nearly 21% in the last two years.

“A positive impact is California’s water crisis,” says Lyles Construction. Water and wastewater infrastructure design and construction is a key generator of that push, with the former up 10.4% in Top 200 revenue and the latter rising 10.3%.

A Black & Veatch/Brown and Caldwell design team has been selected to develop a water sustainability blueprint for Winter Haven, Fla. “The planned, integrated master plan will adopt a ‘One Water’ approach championed by advocacy groups,” says Melanie Holmer, Brown and Caldwell water reuse leader.

“Even if funding is delayed, small city and county treatment systems are in need of improvement," says contractor J. Cumby. "If the economy were to slow down, margins will likely decrease but we do not see a slowdown in these sectors.”

Adds David Wise, president of Harper General Contractors: “We saw an increase in both design-bid-build and alternative delivery projects, which seems to indicate multiple revenue streams for environmental services work. We feel positively about the outlook for the next 12 months.”

Burns & McDonnell’s Nalefski says his firm “continues to invest” in its environmental services business. “There will be continued strength in this market sector … as public awareness increases,” he says.

With data support by Gary J. Tulacz and Hillary Swantek