Why the Envirosuite (ASX:EVS) share price has rocketed up today

The Envirosuite Ltd (ASX: EVS) share price has surged following the release of its Q2 FY21 update. Let's take a look.

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The Envirosuite Ltd (ASX: EVS) share price has surged today following the release of its Q2 FY21 update.

The Envirosuite share price rocketed up 11.1% to 20 cents in earlier trade before dropping to 19 cents, up 5.56% at the time of writing. This compares to the All Ordinaries Index (ASX: XAO) which is down 0.1% at 6,130 points.

Let's take a look at how Envirosuite is tracking for the quarter.

Strong start to Q2

The global leader in environmental intelligence announced three contract sales of more than $1 million in the first week of Q2.

The new contracts include Envirosuite's first ever sale of its new Smart Water software product suit with GHD Group Australia. The software is designed to assist GHD engineers in the modelling, design, calibration and validation of water, wastewater treatment and desalination plants. Envirosuite advised of potential for further software licence sales to GHD customers.

Envirosuite said that its Water Designer suite was the first of several new software solutions being rolled out globally. It is estimated that there are around 25,000 water treatment sites that could benefit from Envirosuite's Smart Water products.

In addition, the company signed a new minimum 6-year odour management contract with Veolia France. The agreement is the sixth Veolia site to become an Envirosuite customer across 4 countries. The new deal will see Envirosuite's product be used by the plant's operators to help manage the detection and prediction of odour.

Lastly, Istanbul Airport committed to a 5-year arrangement for a noise management solution. Turkey's newest airport which accommodates more than 200 million passenger per year, stated that Envirosuite's best in class products was a deciding factor.

What did management say

Envirosuite CEO Peter White was excited about the new contracts. He said:

EVS's Water solutions have demonstrated they can make a positive environmental and cost impact in the global water sector, while the new contract with Istanbul Airport underscores the value of EVS's noise and vibration monitoring technology to airports as flight volumes begin to increase around the world.

Istanbul is a new airport customer in a new country for EVS. It has ambitions to become the biggest airport in the world. The initial term is for five years and we look forward to a long association.

Mr White said the company was also excited to have commercialised the first of its new Smart Water products with GHD Australia and to extend its global relationship with Veolia, adding:

These new contract wins so early in Q2 FY21 highlight both the attractiveness of Envirosuite's solutions to global operators in water and airports and also the strength of our sales pipeline across all the sectors in which we operate.

Envirosuite share price summary

The Envirosuite share price has made strong comeback since falling to a 52-week low of 7 cents in March. With a market capitalisation of $199 million, the positive start for Q2 FY21 may push the Envirosuite share price close to its multi-year high of 39 cents.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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