France's Veolia Environnement SA (NYSE:VE) is still in a completely boring set of businesses, and that suits me just fine. With demand for fresh water and waste management inextricably heading higher around the world, there should continue to be fertile grounds for profitable growth.

While we didn't get a complete look at Veolia's financials, the business nevertheless appears to be coming along solidly. Total revenue was up more than 15%, with internal growth of 11%. And as this is in large part a story about margins, the better-than-17% improvement in operating income (15% on a constant-currency basis) was a welcome sight, as was the positive free cash flow.

All four of the company's units posted positive internal revenue growth. Energy services and waste management led the way, with nearly 21% and 11% growth, respectively, while water came in at close to 7% and transport was up a bit more than 4%. Unfortunately, there was no information about segment-by-segment profits in the company's release.

Since there really isn't much more in the way of financials to talk about, let's talk strategy. The basic principle to understand with Veolia is that it's a cap-ex growth and margin expansion story. It'll be very, very difficult for the company to grow the top line in a big way without ongoing investments into capital expenditure, and that'll require more debt.

Once the infrastructure is in place, the story shifts to margin improvement -- essentially squeezing more profits out of the existing business and therein boosting the return on assets and invested capital. As a result, this is a company that has to carefully monitor its costs and make sure to source enough contracts to leverage that infrastructure. And that's the good news/bad news about the debt -- if the company can deliver those improvements, that will create powerful leverage. If it doesn't deliver . well . things will get ugly.

Seemingly every company these days has a China story, and Veolia is no different. In Veolia's case, though, there's real money to be made here (maybe as much as over a billion dollars a year in revenue) in time, as China continues to demand more water and deal with its pollution problems.

In some respects, this story is similar to the much smaller American company Aqua America (NYSE:WTR) -- invest in assets, bring those assets up to snuff, and then drive better margins and returns on those assets. And while Veolia has already enjoyed a pretty good run, I wouldn't pour this one down the drain just yet.

For more Foolishness that's never watered down:

Check out our suite of investing newsletters with a 30-day free trial to the newsletter service of your choice.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).