Third Quarter 2019 Financial Highlights:
- Consolidated revenues of $360.3 million, an increase of 5.2% over the prior year period
- Net income of $4.3 million compared to net income of $1.0 million in the prior year period
- Adjusted EBITDA of $60.6 million, up 4.5% from the prior year period
PITTSBURGH–(BUSINESS WIRE)–Evoqua Water Technologies Corp. (NYSE:AQUA), an industry leader in mission-critical water treatment solutions, today reported results for its third quarter of fiscal 2019.
Revenues for the third quarter of fiscal 2019 were $360.3 million, an increase of $17.8 million, or 5.2%, from $342.5 million in the prior year period. Revenue growth for the quarter was primarily attributable to an increase in service and aftermarket revenues from organic and recently acquired businesses, partially offset by lower capital revenues in the period and the negative impact of foreign currency exchange rates.
Net income for the third quarter of fiscal 2019 was $4.3 million, an increase of $3.3 million, from net income of $1.0 million in the prior year period, resulting in diluted earnings per share (“EPS”) of $0.03 compared to $0.01 in the prior year period. Net income for the quarter includes increased income tax expense of $6.5 million over the prior year period based on the projected effective tax rate for the fiscal year.
Adjusted EBITDA was $60.6 million in the third quarter of fiscal 2019, an increase of $2.6 million, or 4.5%, from $58.0 million in the prior year period. The increase in Adjusted EBITDA for the third quarter of fiscal 2019 as compared to the prior year period was driven by increased revenues, favorable price/cost and mix driven by higher service volumes.
“We are pleased to report results in-line with expectations driven by strong service and aftermarket sales growth,” said Ron Keating, Evoqua’s CEO. “Overall, third quarter sales were up 5.2% mostly due to service revenue growth of 14.5%. Integrated Solutions and Services sales grew 7.7% and Applied Product Technologies sales were up 1.3% for the quarter. Our order book continues to accelerate, growing faster than revenue, and we continue to see a robust pipeline of opportunities. The two-segment realignment benefits are materializing as expected resulting in enterprise selling of our broad portfolio of technologies and services. On a year-to-date basis, our order book is up low double digits.”
Mr. Keating continued, “We are reaffirming our 2019 guidance with expected revenues to be in the range of $1.38 billion to $1.44 billion and Adjusted EBITDA to be in the range of $220 million to $240 million. As global concerns arise around economic and environment challenges, we are seeing growing demand for our robust portfolio of sustainable solutions that leverages our vast service network, technologies and digital platform.”
Third Quarter Segment Results
For fiscal 2019, Evoqua has two reportable operating segments – Integrated Solutions and Services and Applied Product Technologies. The results of our segments for the third quarter are as follows:
Integrated Solutions and Services
The Integrated Solutions and Services segment provides tailored services and solutions in collaboration with our customers backed by life‑cycle services including on‑demand water, outsourced water, recycle / reuse and emergency response service alternatives to improve operational reliability, performance and environmental compliance. Key offerings within this segment also include equipment systems for industrial needs (influent water, boiler feed water, ultrahigh purity, process water, wastewater treatment and recycle / reuse), full-scale outsourcing of operations and maintenance, and municipal services, including odor and corrosion control services.
Segment revenues increased $16.1 million, or 7.7%, to $225.4 million in the third quarter of fiscal 2019 as compared to $209.3 million in the same period in the prior year. Organic revenues increased approximately 1.5% as compared to the same period in the prior year –
- Service revenues grew $5.8 million, exclusive of acquisitions.
- Aftermarket revenues increased, but were offset by reductions in capital revenues, leading to an overall decline of $2.9 million in product revenues, exclusive of acquisitions, primarily due to the timing of large capital projects in the power generation market.
- Recently acquired businesses of ProAct and Isotope contributed $13.3 million of revenue compared to the same period in the prior year.
Operating profit increased $8.2 million, or 28.1%, to $37.4 million in the third quarter of fiscal 2019 as compared to $29.2 million in the same period of the prior year –
- Segment profitability improved $8.8 million in the period driven by increased organic and acquisition related revenue volume, augmented by improved pricing, and favorable change in mix driven by the higher service volumes.
- Profitability in the current year was also favorably impacted by the non-recurrence of $2.6 million of charges related to the achievement of earn-out targets associated with the Noble and ADI acquisitions that were reflected in the prior year results.
- Negative drivers to segment profitability included $1.7 million of higher depreciation and amortization expense, primarily related to acquisitions and capital investment in service assets, as well as $1.5 million of additional operating expenses, partially derived from higher employment costs.
Segment Adjusted EBITDA increased $7.3 million, or 16.6%, to $51.4 million in the third quarter of fiscal 2019 as compared to $44.1 million in the same period in the prior year. The increase in segment Adjusted EBITDA resulted from the same factors which impacted operating profit, other than the change in depreciation and amortization, and for this segment also excludes –
- Charges in the prior year of $2.6 million related to the achievement of earn-out targets associated with the Noble and ADI acquisitions. There were no comparable charges incurred in the same period of the current year.
Applied Product Technologies
The Applied Product Technologies segment provides a range of highly differentiated and scalable products and technologies specified by global water treatment designers, OEMs, engineering firms and integrators. Key offerings within this segment include filtration and separation, disinfection, wastewater solutions, anode and electrochlorination technology and aquatics technologies and solutions for the global recreational and commercial pool market.
Revenues increased by $1.7 million, or 1.3%, to $134.9 million in the third quarter of fiscal 2019, as compared to $133.2 million for the comparable period in the prior year –
- Overall revenues increased $3.4 million in the period driven by aftermarket revenue growth, partially offset by declines in higher margin capital volume across multiple product lines.
- The impact of foreign currency translation was a reduction to revenue of $3.1 million.
- Recently acquired business ATG UV Technology Limited contributed $1.4 million of increased revenue.
Operating profit decreased $5.6 million, or 19.9%, to $22.5 million for the third quarter of fiscal 2019 from $28.1 million for the same period in the prior year –
- The decrease in profitability was mainly due to a gain on the sale of land for $7.0 million which was recognized in the prior year period, whereas the segment only recognized a gain on the sale of property of $0.4 million in the current year period.
- Other drivers of reduction in segment operating profit include the negative impact of foreign currency translation of $0.7 million and $0.3 million of higher depreciation expense.
- Current year profitability was favorably impacted by $2.0 million related to the benefits of lower employment cost, higher volumes, favorable price/cost, and other lower costs considered in Adjusted EBITDA that are specific to the segment.
Segment Adjusted EBITDA decreased $0.6 million, or 2.2%, to $27.3 million in the third quarter of fiscal 2019 as compared to $27.9 million in the same period in the prior year. The decline in segment Adjusted EBITDA was driven by the same factors which impacted segment operating profit, other than the change from depreciation and amortization, and for this segment also excludes –
- The impacts from product rationalization and facility consolidation, restructuring, costs associated with the remediation of a manufacturing defect caused by a third party vendor, and gain on sale of property in an aggregate amount of $0.4 million incurred during the period.
- Similar activity incurred in the same period of the prior year that impacted Adjusted EBITDA for this segment included $1.1 million of restructuring and realignment costs, $1.6 million of costs associated with the manufacturing defect caused by a third party vendor, and a gain of $7.0 million on sale of land at our Windsor, Australia location.
Third Quarter Earnings Call and Webcast
The Company will hold its third quarter earnings conference call Tuesday, August 6, 2019, at 10:00 a.m. E.T. The live audio webcast and presentation slides for the call will be accessible via Evoqua’s Investor Relations website, http://aqua.evoqua.com/. The link to the webcast replay as well as the presentation slides will also be posted on Evoqua’s Investor Relations website.
About Evoqua Water Technologies
Evoqua Water Technologies is a leading provider of mission critical water and wastewater treatment solutions, offering a broad portfolio of products, services and expertise to support industrial, municipal and recreational customers who value water. Evoqua has worked to protect water, the environment and its employees for more than 100 years, earning a reputation for quality, safety and reliability around the world. Headquartered in Pittsburgh, Pennsylvania, the company operates in more than 160 locations across nine countries. Serving more than 38,000 customers and 200,000 installations worldwide, our employees are united by a common purpose: Transforming Water. Enriching Life.
|
EVOQUA WATER TECHNOLOGIES CORP. |
|||||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
|||||||||||||||
|
(In thousands, except per share amounts) |
|||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
|
Revenue |
$ |
360,343 |
|
|
$ |
342,475 |
|
|
$ |
1,031,973 |
|
|
$ |
973,215 |
|
|
Cost of product sales and services |
(249,049 |
) |
|
(240,468 |
) |
|
(736,338 |
) |
|
(674,832 |
) |
||||
|
Gross Profit |
111,294 |
|
|
102,007 |
|
|
295,635 |
|
|
298,383 |
|
||||
|
General and administrative expense |
(49,525 |
) |
|
(56,961 |
) |
|
(152,571 |
) |
|
(140,767 |
) |
||||
|
Sales and marketing expense |
(31,959 |
) |
|
(33,888 |
) |
|
(103,546 |
) |
|
(102,459 |
) |
||||
|
Research and development expense |
(3,281 |
) |
|
(3,682 |
) |
|
(11,384 |
) |
|
(12,356 |
) |
||||
|
Total operating expenses |
(84,765 |
) |
|
(94,531 |
) |
|
(267,501 |
) |
|
(255,582 |
) |
||||
|
Other operating income (expense), net |
562 |
|
|
7,362 |
|
|
4,066 |
|
|
7,674 |
|
||||
|
Interest expense |
(14,842 |
) |
|
(12,370 |
) |
|
(43,759 |
) |
|
(40,423 |
) |
||||
|
Income (loss) before income taxes |
12,249 |
|
|
2,468 |
|
|
(11,559 |
) |
|
10,052 |
|
||||
|
Income tax (expense) benefit |
(7,959 |
) |
|
(1,433 |
) |
|
1,134 |
|
|
960 |
|
||||
|
Net income (loss) |
4,290 |
|
|
1,035 |
|
|
(10,425 |
) |
|
11,012 |
|
||||
|
Net income attributable to non‑controlling interest |
155 |
|
|
242 |
|
|
786 |
|
|
1,427 |
|
||||
|
Net income (loss) attributable to Evoqua Water Technologies Corp. |
$ |
4,135 |
|
|
$ |
793 |
|
|
$ |
(11,211 |
) |
|
$ |
9,585 |
|
|
Basic income (loss) per common share |
$ |
0.04 |
|
|
$ |
0.01 |
|
|
$ |
(0.10 |
) |
|
$ |
0.08 |
|
|
Diluted income (loss) per common share |
$ |
0.03 |
|
|
$ |
0.01 |
|
|
$ |
(0.10 |
) |
|
$ |
0.08 |
|
|
EVOQUA WATER TECHNOLOGIES CORP. |
|||||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
|
(In thousands, except per share amounts) |
|||||||
|
|
(Unaudited) |
|
|
||||
|
|
June 30, |
|
September 30, |
||||
|
ASSETS |
|
|
|
||||
|
Current assets |
$ |
565,088 |
|
|
$ |
565,560 |
|
|
Cash and cash equivalents |
61,122 |
|
|
82,365 |
|
||
|
Receivables, net |
247,717 |
|
|
254,756 |
|
||
|
Inventories, net |
161,020 |
|
|
134,988 |
|
||
|
Contract assets |
70,018 |
|
|
69,147 |
|
||
|
Other current assets |
25,211 |
|
|
24,304 |
|
||
|
Property, plant, and equipment, net |
341,404 |
|
|
320,023 |
|
||
|
Goodwill |
410,286 |
|
|
411,346 |
|
||
|
Intangible assets, net |
323,321 |
|
|
340,408 |
|
||
|
Other non-current assets |
31,356 |
|
|
26,280 |
|
||
|
Total assets |
$ |
1,671,455 |
|
|
$ |
1,663,617 |
|
|
LIABILITIES AND EQUITY |
|
|
|
||||
|
Current liabilities |
$ |
281,696 |
|
|
$ |
284,719 |
|
|
Accounts payable |
137,480 |
|
|
141,140 |
|
||
|
Current portion of debt |
12,661 |
|
|
11,555 |
|
||
|
Contract liabilities |
32,312 |
|
|
17,652 |
|
||
|
Accrued expenses and other liabilities |
89,273 |
|
|
97,672 |
|
||
|
Other current liabilities |
9,970 |
|
|
16,700 |
|
||
|
Non‑current liabilities |
1,026,168 |
|
|
1,016,882 |
|
||
|
Long‑term debt |
935,507 |
|
|
928,075 |
|
||
|
Other non-current liabilities |
90,661 |
|
|
88,807 |
|
||
|
Total liabilities |
1,307,864 |
|
|
1,301,601 |
|
||
|
Shareholders’ equity |
|
|
|
||||
|
Common stock, par value $0.01: authorized 1,000,000 shares; issued 115,968 shares, outstanding 114,312 shares at June 30, 2019; issued 115,016 shares, outstanding 113,929 shares at September 30, 2018 |
1,154 |
|
|
1,145 |
|
||
|
Treasury stock: 1,656 shares at June 30, 2019 and 1,087 shares at September 30, 2018 |
(2,837 |
) |
|
(2,837 |
) |
||
|
Additional paid‑in capital |
546,767 |
|
|
533,435 |
|
||
|
Retained deficit |
(176,483 |
) |
|
(163,871 |
) |
||
|
Accumulated other comprehensive loss, net of tax |
(8,207 |
) |
|
(9,017 |
) |
||
|
Total Evoqua Water Technologies Corp. equity |
360,394 |
|
|
358,855 |
|
||
|
Non‑controlling interest |
3,197 |
|
|
3,161 |
|
||
|
Total shareholders’ equity |
363,591 |
|
|
362,016 |
|
||
|
Total liabilities and shareholders’ equity |
$ |
1,671,455 |
|
|
$ |
1,663,617 |
|
|
EVOQUA WATER TECHNOLOGIES CORP. |
|||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CASH FLOWS (Unaudited) |
|||||||
|
(In thousands) |
|||||||
|
|
Nine Months Ended |
||||||
|
|
2019 |
|
2018 |
||||
|
Operating activities |
|
|
|
||||
|
Net (loss) income |
$ |
(10,425 |
) |
|
$ |
11,012 |
|
|
Reconciliation of net (loss) income to cash flows provided by operating activities: |
|
|
|
||||
|
Depreciation and amortization |
71,397 |
|
|
61,924 |
|
||
|
Amortization of debt related costs (includes $0 and $2,994 write off of deferred financing fees) |
1,916 |
|
|
4,926 |
|
||
|
Deferred income taxes |
(4,115 |
) |
|
(8,072 |
) |
||
|
Share-based compensation |
14,248 |
|
|
11,257 |
|
||
|
Gain on sale of property, plant and equipment |
(588 |
) |
|
(6,507 |
) |
||
|
Foreign currency exchange losses (gains) on intercompany loans and other non-cash items |
4,002 |
|
|
5,059 |
|
||
|
Changes in assets and liabilities |
(22,078 |
) |
|
(42,811 |
) |
||
|
Net cash provided by operating activities |
54,357 |
|
|
36,788 |
|
||
|
Investing activities |
|
|
|
||||
|
Purchase of property, plant and equipment |
(63,948 |
) |
|
(54,569 |
) |
||
|
Purchase of intangibles |
(4,775 |
) |
|
(1,536 |
) |
||
|
Proceeds from sale of property, plant and equipment |
2,860 |
|
|
13,247 |
|
||
|
Proceeds from sale of business |
— |
|
|
430 |
|
||
|
Acquisitions, net of cash received of $2,073 and $28 |
(2,811 |
) |
|
(10,235 |
) |
||
|
Net cash used in investing activities |
(68,674 |
) |
|
(52,663 |
) |
||
|
Financing activities |
|
|
|
||||
|
Issuance of debt, net of deferred issuance costs |
15,965 |
|
|
3,394 |
|
||
|
Borrowings under credit facility |
230,000 |
|
|
46,812 |
|
||
|
Repayment of debt |
(238,908 |
) |
|
(154,752 |
) |
||
|
Repayment of capital lease obligation |
(9,273 |
) |
|
(5,990 |
) |
||
|
Payment of earn-out related to previous acquisitions |
(461 |
) |
|
(1,719 |
) |
||
|
Proceeds from issuance of common stock |
341 |
|
|
137,605 |
|
||
|
Taxes paid related to net share settlements of share-based compensation awards |
(1,248 |
) |
|
(7,767 |
) |
||
|
Stock repurchases |
— |
|
|
(230 |
) |
||
|
Cash paid for interest rate cap |
(2,235 |
) |
|
— |
|
||
|
Distribution to non‑controlling interest |
(750 |
) |
|
(2,425 |
) |
||
|
Net cash (used in) provided by financing activities |
(6,569 |
) |
|
14,928 |
|
||
|
Effect of exchange rate changes on cash |
(357 |
) |
|
(1,000 |
) |
||
|
Change in cash and cash equivalents |
(21,243 |
) |
|
(1,947 |
) |
||
|
Cash and cash equivalents |
|
|
|
||||
|
Beginning of period |
82,365 |
|
|
59,254 |
|
||
|
End of period |
$ |
61,122 |
|
|
$ |
57,307 |
|
Use of Non-GAAP Measures
Adjusted EBITDA
We use the non-GAAP financial measure “Adjusted EBITDA” in evaluating our past performance and future prospects. Adjusted EBITDA is defined as net income (loss) before interest expense, income tax benefit (expense) and depreciation and amortization, adjusted for the impact of certain other items, including restructuring and related business transformation costs, purchase accounting adjustment costs, non-cash share-based compensation, sponsor fees, transaction costs and other gains, losses and expenses.
Adjusted EBITDA is one of the primary metrics used by management to evaluate the financial performance of our business. We present Adjusted EBITDA, which is not a recognized financial measure under GAAP, because we believe it is frequently used by analysts, investors and other interested parties to evaluate companies in our industry. Further, we believe it is helpful in highlighting trends in our operating results, because it excludes, among other things, certain results of decisions that are outside the control of management, while other measures can differ significantly depending on long term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Management uses Adjusted EBITDA to supplement GAAP measures of performance as follows:
- to assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance;
- in our management incentive compensation which is based in part on components of Adjusted EBITDA;
- in certain calculations under our senior secured credit facilities, which use components of Adjusted EBITDA;
- to evaluate the effectiveness of our business strategies;
- to make budgeting decisions; and
- to compare our performance against that of other peer companies using similar measures.
In addition to the above, our chief operating decision maker uses EBITDA and Adjusted EBITDA of each reportable operating segment to evaluate the operating performance of such segments. EBITDA and Adjusted EBITDA of the reportable operating segments does not include certain charges that are presented within corporate activities. These charges include certain restructuring and other business transformation charges that have been incurred to align and reposition the Company to the current reporting structure, acquisition related costs (including transaction costs, integration costs and recognition of backlog intangible assets recorded in purchase accounting) and share-based compensation charges.
You are encouraged to evaluate each adjustment and the reasons we consider it appropriate for supplemental analysis. In addition, in evaluating Adjusted EBITDA, you should be aware that in the future, we may incur expenses similar to the adjustments in the presentation of Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. In addition, Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in our industry or across different industries.
The following is a reconciliation of our Net income (loss) to Adjusted EBITDA (unaudited):
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
(In millions) |
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
|
Net income (loss) |
$ |
4.3 |
|
|
$ |
1.0 |
|
|
$ |
(10.4 |
) |
|
$ |
11.0 |
|
|
Income tax expense (benefit) |
7.9 |
|
|
|
1.4 |
|
|
(1.2 |
) |
|
(1.0 |
) |
|||
|
Interest expense |
14.9 |
|
|
|
12.4 |
|
|
43.8 |
|
|
40.4 |
|
|||
|
Operating profit |
27.1 |
|
|
14.8 |
|
|
32.2 |
|
|
50.4 |
|
||||
|
Depreciation and amortization |
24.1 |
|
|
21.6 |
|
|
71.4 |
|
|
62.0 |
|
||||
|
EBITDA |
51.2 |
|
|
36.4 |
|
|
103.6 |
|
|
112.4 |
|
||||
|
Restructuring and related business transformation costs (a) |
4.5 |
|
|
8.9 |
|
|
18.5 |
|
|
25.3 |
|
||||
|
Share-based compensation (b) |
5.0 |
|
|
4.4 |
|
|
14.3 |
|
|
11.3 |
|
||||
|
Sponsor fees (c) |
— |
|
|
— |
|
|
— |
|
|
0.3 |
|
||||
|
Transaction costs (d) |
1.0 |
|
|
4.7 |
|
|
5.5 |
|
|
6.0 |
|
||||
|
Other (gains) losses and expenses (e) |
(1.1 |
) |
|
3.6 |
|
|
13.8 |
|
|
0.4 |
|
||||
|
Adjusted EBITDA |
$ |
60.6 |
|
|
$ |
58.0 |
|
|
$ |
155.7 |
|
|
$ |
155.7 |
|
|
(a) |
Represents: |
|||||
|
|
(i) |
|
costs and expenses in connection with various restructuring initiatives since our acquisition, through our wholly-owned entities, EWT Holdings II Corp. and EWT Holdings III Corp., of all of the outstanding shares of Siemens Water Technologies, a group of legal entity businesses formerly owned by Siemens Aktiengesellschaft, on January 15, 2014 (the “AEA Acquisition”), including severance costs, relocation costs, recruiting expenses, write-offs of inventory and fixed assets and third‑party consultant costs to assist with these initiatives. This includes: |
|||
|
|
|
|
(A) |
|
$0.3 million for the nine months ended June 30, 2018, (all of which is reflected as a component of Restructuring charges in Note 13, “Restructuring and Related Charges” to our Unaudited Consolidated Financial Statements to be included in our Quarterly Report on Form 10-Q for the three months ended June 30, 2019 (the “Restructuring Footnote”)) related to our voluntary separation plan pursuant to which approximately 220 employees accepted separation packages; |
|
|
|
|
|
(B) |
|
$0.6 million and $1.3 million for the three and nine months ended June 30, 2019, respectively, reflected as components of Cost of product sales and services (“Cost of sales”) ($0.2 million and $0.7 million for the three and nine month periods, respectively) and G&A expense ($0.4 million and $0.6 million for the three and nine month periods, respectively) (all of which is reflected in the Restructuring Footnote); and $1.7 million and $7.1 million for the three and nine months ended June 30, 2018, respectively, reflected as components of Cost of sales ($0.6 million and $2.2 million for the three and nine month periods, respectively), R&D expense ($0.1 million and $0.6 million for the three and nine month periods, respectively), S&M expense ($0.5 million for the nine month period) and G&A expense ($1.0 million and $3.8 million for the three and nine month periods, respectively) (all of which is reflected in the Restructuring Footnote) related to various other initiatives implemented to restructure and reorganize our business with the appropriate management team and cost structure); and |
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(C) |
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$2.9 million and $9.9 million for the three and nine months ended June 30, 2019, respectively, (of which $9.3 million for the nine month period is reflected in the Restructuring Footnote), reflected as components of Cost of sales ($1.4 million and $4.1 million for the three and nine month periods, respectively), S&M expense ($0.3 million and $0.9 million for the three and nine month periods, respectively) and G&A expense ($1.2 million and $4.8 million for the three and nine month periods, respectively) related to the Company’s transition from a three-segment structure to a two-segment operating model designed to better serve the needs of customers worldwide; |
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(ii) |
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legal settlement costs and intellectual property related fees associated with legacy matters prior to the AEA Acquisition, including fees and settlement costs related to product warranty litigation on MEMCOR® products and certain discontinued products ($0.3 million and $0.9 million for the three and nine months ended June 30, 2019, respectively, reflected as components of Cost of sales ($0.1 million and $0.2 million for the three and nine month periods, respectively) and G&A expense ($0.3 million and $0.8 million for the three and nine month periods, respectively); and $1.0 million and $2.0 million for the three and nine months ended June 30, 2018, respectively, reflected as components of Cost of sales ($0.7 million and $1.1 million for the three and nine month periods, respectively) and G&A expense ($0.3 million and $0.9 million for the three and nine month periods, respectively); |
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(iii) |
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expenses associated with our information technology and functional infrastructure transformation, including activities to optimize information technology systems and functional infrastructure processes ($1.2 million and $6.3 million for the three and nine months ended June 30, 2019, respectively, primarily reflected as components of Cost of sales ($0.3 million and $0.4 million for the three and nine month periods, respectively) and G&A expense ($0.9 million and $5.9 million for the three and nine month periods, respectively); and $5.5 million and $10.2 million for the three and nine months ended June 30, 2018, respectively, primarily reflected as components of Cost of sales ($1.0 million and $3.3 million for the three and nine month periods, respectively), G&A expense ($4.1 million and $6.5 million for the three and nine month periods, respectively) and Other operating expense ($0.4 million for both the three and nine month periods, respectively)); and |
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(iv) |
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costs associated with our IPO and secondary offering as well as costs incurred by us in connection with establishment of our public company compliance structure and processes, including consultant costs, ($0.3 million expense reduction and $0.2 million expense for the three and nine months ended June 30, 2019, respectively, all reflected as a component of G&A expense; and $0.6 million and $5.6 million for the three and nine months ended June 30, 2018, respectively, all reflected as a component of G&A expense). |
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(b) |
Represents non‑cash share‑based compensation expenses related to equity awards. See “Note 16. Share-Based Compensation” to our Unaudited Consolidated Financial Statements to be included in our Quarterly Report on Form 10-Q for the three months ended June 30, 2019. |
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(c) |
Represents management fees paid to AEA pursuant to the management agreement. Pursuant to the management agreement, AEA provided advisory and consulting services to us in connection with the AEA Acquisition, including investment banking, due diligence, financial advisory and valuation services. AEA also provided ongoing advisory and consulting services to us pursuant to the management agreement. In connection with the IPO, the management agreement was terminated. See “Note 18. Related-Party Transactions” to our Unaudited Consolidated Financial Statements to be included in our Quarterly Report on Form 10-Q for the three months ended June 30, 2019 for further detail. |
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(d) |
Represents expenses associated with acquisition and divestiture related activities and post‑acquisition integration costs and accounting, tax, consulting, legal and other fees and expenses associated with acquisition transactions ($1.0 million and $5.5 million for the three and nine months ended June 30, 2019, primarily reflected as components of Cost of sales ($0.1 million and $1.4 million for the three and nine month periods, respectively) and G&A expense ($0.9 million and $4.1 million for the three and nine month periods, respectively) and $4.6 million and $6.0 million for the three and nine months ended June 30, 2018, respectively, primarily reflected as components of G&A expense). |
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(e) |
Represents: |
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(i) |
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impact of foreign exchange gains and losses ($1.2 million gain and $3.8 million loss for the three and nine months ended June 30, 2019, respectively, and $8.8 million loss and $5.2 million loss for the three and nine months ended June 30, 2018, respectively); |
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(ii) |
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foreign exchange impact related to headquarter allocations ($0.3 million gain for the nine months ended June 30, 2018); |
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(iii) |
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expenses on disposal related to maintaining non-operational business locations ($0.1 million expense reduction and $0.5 million expense for the three and nine months ended June 30, 2019, respectively and $0.5 million and $1.2 million for the three and nine months ended June 30, 2018, respectively); |
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(iv) |
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expenses incurred by the Company related to the remediation of manufacturing defects caused by a third party vendor for which the Company is seeking restitution ($0.4 million and $1.7 million for the three and nine months ended June 30, 2019, respectively, all reflected as a component of Cost of sales and $1.6 million for both the three and nine months ended June 30, 2018, respectively, all reflected as a component of Cost of sales); |
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(v) |
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charges incurred by the Company related to product rationalization in its electro-chlorination business ($0.3 million and $3.2 million for the three and nine months ended June 30, 2019, respectively, all reflected as a component of Cost of sales); |
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(vi) |
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gain on the sale of property ($0.4 million for both the three and nine months ended June 30, 2019, respectively, all reflected as a component of Other operating income) and gain on the sale of assets related to the disposition of land at our Windsor, Australia location ($7.0 million for both the three and nine months ended June 30, 2018, respectively, all reflected as a component of Other operating income); and |
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(vii) |
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expenses incurred by the Company related to the write-off of inventory in its aquatics business associated with product rationalization and facility consolidation ($0.1 million expense reduction and $5.0 million expense for the three and nine months ended June 30, 2019, respectively, all reflected as a component of Cost of sales). |
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(f) |
Immaterial rounding differences may be present in the data above. |
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Contacts
Investors
Dan Brailer
Vice President, Investor Relations
Evoqua Water Technologies
Telephone: 724-720-1605
Email: [email protected]
Media
Lisa Marchewka
Vice President, Brand and Strategy
Evoqua Water Technologies
Telephone: 978-614-7219
Email: [email protected]
