Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 05, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | AquaVenture Holdings Ltd | |
Entity Central Index Key | 1,422,841 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 26,731,120 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 93,617 | $ 118,090 |
Restricted cash | 2,000 | |
Trade receivables, net of allowances of $782 and $1,045, respectively | 19,497 | 19,593 |
Inventory | 9,703 | 8,228 |
Current portion of long-term receivables | 6,257 | 6,878 |
Prepaid expenses and other current assets | 3,855 | 3,874 |
Total current assets | 134,929 | 156,663 |
Property, plant and equipment, net | 114,969 | 112,771 |
Construction in progress | 9,773 | 10,437 |
Restricted cash | 3,637 | 4,269 |
Long-term receivables | 39,823 | 43,796 |
Other assets | 5,139 | 4,307 |
Deferred tax asset | 3,157 | 38 |
Intangible assets, net | 129,333 | 122,169 |
Goodwill | 108,244 | 99,495 |
Total assets | 549,004 | 553,945 |
Current Liabilities: | ||
Accounts payable | 4,425 | 3,508 |
Accrued liabilities | 12,763 | 12,837 |
Current portion of long-term debt | 6,400 | 6,483 |
Deferred revenue | 3,412 | 2,454 |
Total current liabilities | 27,000 | 25,282 |
Long-term debt | 164,719 | 167,772 |
Deferred tax liability | 5,502 | 5,266 |
Other long-term liabilities | 11,757 | 11,429 |
Total liabilities | 208,978 | 209,749 |
Commitments and contingencies (see Note 9) | ||
Shareholders' Equity | ||
Ordinary shares, no par value, 250,000 shares authorized; 26,600 and 26,482 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively | ||
Additional paid-in capital | 578,506 | 568,593 |
Accumulated other comprehensive income | (101) | (17) |
Accumulated deficit | (238,379) | (224,380) |
Total shareholders' equity | 340,026 | 344,196 |
Total liabilities and shareholders' equity | $ 549,004 | $ 553,945 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Allowances | $ 782 | $ 1,045 |
Common stock par value | $ 0 | $ 0 |
Common stock authorized | 250,000 | 250,000 |
Common stock issued | 26,600 | 26,482 |
Common stock outstanding | 26,600 | 26,482 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Total revenues | $ 36,824 | $ 29,777 | $ 103,783 | $ 88,558 |
Cost of revenues | 17,157 | 13,443 | 48,885 | 41,615 |
Gross Profit | 19,667 | 16,334 | 54,898 | 46,943 |
Selling, general and administrative expenses | 20,826 | 18,430 | 59,689 | 53,040 |
Loss from operations | (1,159) | (2,096) | (4,791) | (6,097) |
Other expense: | ||||
Interest expense, net | (3,396) | (2,942) | (10,000) | (8,303) |
Other expense, net | (228) | (1,453) | (520) | (1,728) |
Loss before income tax expense | (4,783) | (6,491) | (15,311) | (16,128) |
Income tax expense (benefit) | (2,051) | 797 | (1,312) | 2,451 |
Net loss | (2,732) | (7,288) | (13,999) | (18,579) |
Other comprehensive income: | ||||
Foreign currency translation adjustment | 106 | (13) | (84) | (13) |
Comprehensive loss | $ (2,626) | $ (7,301) | $ (14,083) | $ (18,592) |
Loss per share – basic and diluted | $ (0.10) | $ (0.28) | $ (0.53) | $ (0.70) |
Weighted-average shares outstanding – basic and diluted | 26,590 | 26,441 | 26,544 | 26,414 |
Bulk water | ||||
Total revenues | $ 14,626 | $ 12,972 | $ 42,682 | $ 39,551 |
Cost of revenues | 6,771 | 5,975 | 20,021 | 20,415 |
Gross Profit | 7,855 | 6,997 | 22,661 | 19,136 |
Rental | ||||
Total revenues | 16,261 | 13,428 | 45,041 | 39,238 |
Cost of revenues | 7,130 | 6,083 | 20,240 | 17,508 |
Gross Profit | 9,131 | 7,345 | 24,801 | 21,730 |
Financing | ||||
Total revenues | 985 | 1,118 | 3,048 | 3,451 |
Gross Profit | 985 | 1,118 | 3,048 | 3,451 |
Other | ||||
Total revenues | 4,952 | 2,259 | 13,012 | 6,318 |
Cost of revenues | 3,256 | 1,385 | 8,624 | 3,692 |
Gross Profit | $ 1,696 | $ 874 | $ 4,388 | $ 2,626 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (13,999) | $ (18,579) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 24,761 | 21,776 |
Share-based compensation expense | 10,002 | 9,052 |
Provision for bad debts | 695 | 450 |
Deferred income tax provision | (2,882) | 1,736 |
Inventory adjustment | 253 | 153 |
Loss on extinguishment of debt | 1,389 | |
Loss on disposal of assets | 1,506 | 884 |
Amortization of debt financing fees | 712 | 624 |
Other | 38 | 97 |
Change in operating assets and liabilities: | ||
Trade receivables | 236 | (2,312) |
Inventory | (1,407) | (1,766) |
Prepaid expenses and other current assets | 142 | (1,146) |
Long-term receivable | 4,596 | 4,674 |
Other assets | (2,643) | (2,017) |
Current liabilities | (253) | (45) |
Long-term liabilities | 291 | (398) |
Net cash provided by operating activities | 22,048 | 14,572 |
Cash flows from investing activities: | ||
Capital expenditures | (12,930) | (11,245) |
Net cash paid for acquisition of assets or business | (27,097) | (9,921) |
Other | 16 | 22 |
Net cash used in investing activities | (40,011) | (21,144) |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 150,000 | |
Payments of long-term debt | (4,975) | (117,028) |
Payment of debt financing fees | (71) | (3,579) |
Payments related to debt extinguishment | (433) | |
Payment of acquisition contingent consideration | (149) | |
Proceeds from exercise of stock options | 86 | 49 |
Shares withheld to cover minimum tax withholdings on equity awards | (307) | (356) |
Proceeds from the issuance of Employee Stock Purchase Plan shares | 132 | 75 |
Issuance costs from issuance of ordinary shares in IPO | (1,169) | |
Net cash (used in) provided by financing activities | (5,135) | 27,559 |
Effect of exchange rates on cash, cash equivalents and restricted cash | (7) | 1 |
Change in cash, cash equivalents and restricted cash | (23,105) | 20,988 |
Cash, cash equivalents and restricted cash at beginning of period | 122,359 | 101,395 |
Cash, cash equivalents and restricted cash at end of period | $ 99,254 | $ 122,383 |
Description of the Business
Description of the Business | 9 Months Ended |
Sep. 30, 2018 | |
Description of the Business | |
Description of the Business | 1. Description of the Business AquaVenture Holdings Limited is a British Virgin Islands (“BVI”) company, which was formed on June 17, 2016 for the purpose of completing an initial public offering (“IPO”) as the SEC registrant and carrying on the business of AquaVenture Holdings LLC and its subsidiaries. AquaVenture Holdings Limited and its subsidiaries (collectively, “AquaVenture” or the “Company”) provides its customers Water‑as‑a‑Service (“WAAS”) solutions through two operating platforms: Seven Seas Water and Quench. Both operations are critical to AquaVenture, which is headquartered in the BVI. Seven Seas Water offers WAAS solutions by providing outsourced desalination and wastewater treatment services for governmental, municipal, industrial and hospitality customers. These solutions utilize reverse osmosis and other purification technologies to produce potable and high purity industrial process water in high volumes for customers operating in regions with limited access to potable water. Through this outsourced service model, Seven Seas Water assumes responsibility for designing, financing, constructing, operating and maintaining the water treatment facilities. In exchange, Seven Seas Water enters into long‑term agreements to sell to customers agreed‑upon quantities of water that meet specified water quality standards. Seven Seas Water currently operates primarily throughout the Caribbean region and in South America and is pursuing new opportunities in North America, the Caribbean, South America, Africa and other select markets. Seven Seas Water is supported by an operations center in Tampa, Florida, which provides business development, engineering, field service support, procurement and administrative functions. Quench offers WAAS solutions by providing bottleless filtered water coolers and other products that use filtered water as an input, such as ice machines, sparkling water dispensers and coffee brewers, to customers throughout the United States and in Canada. Quench’s point‑of‑use (“POU”) systems purify a customer’s existing water supply. Quench offers solutions to a broad mix of industries, including government, education, medical, manufacturing, retail, and hospitality. Quench installs and maintains its filtered water systems typically under multi‑year contracts that renew automatically. Quench is supported by an operations center in King of Prussia, Pennsylvania, which provides marketing and business development, field service and supply chain support, customer care and administrative functions. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Unless otherwise noted below, there have been no material changes to the accounting policies presented in Note 2—“Summary of Significant Accounting Policies” of the notes to the audited consolidated financial statements, included in Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017. Basis of Presentation The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, certain information and footnotes normally required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017. In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation of the Company’s unaudited condensed consolidated balance sheet as of September 30, 2018, the unaudited condensed consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2018 and 2017 and the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2018 and 2017. The unaudited condensed consolidated balance sheet as of December 31, 2017 was based on the audited consolidated balance sheet as of December 31, 2017, as presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 but restated for adoption of new accounting guidance which is further explained in the “Adoption of New Accounting Pronouncements” section below. The unaudited condensed consolidated financial statements include the accounts of AquaVenture Holdings Limited and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include: accounting for revenue from contracts with customers and the determination of transaction prices and allocation of revenues to remaining performance obligations; accounting for goodwill and identifiable intangible assets and any related impairment; property, plant and equipment and any related impairment; contract costs and any related impairment; share‑based compensation; allowance for doubtful accounts; obligations for asset retirement; and deferred income taxes. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates. Revenue Recognition Through the Seven Seas Water and Quench operating platforms, the Company generates revenue from the following primary sources: (i) bulk water sales and service (excluding service concession arrangements) ; (ii) service concession arrangements; (iii) rental of water filtration and related equipment; (iv) sale of water filtration and related equipment, coffee and consumables and (v) water filtration-related services, including installation and maintenance. The revenue recognition policy for each of the primary sources of revenue are as follows: Bulk Water Sales and Service. Through the Seven Seas Water operating platform, the Company enters into contracts with customers with a single performance obligation to deliver bulk water or a series of performance obligations to perform substantially the same services with the same pattern of transfer, which can include the operations and maintenance (“O&M”) of a customer-owned plant. The Company recognizes revenues from the delivery of bulk water or the performance of bulk water services at the time the water or services are delivered to the customers in accordance with the contractual agreements. Billings to the customer for both bulk water and the bulk water services are typically based on the volume of water supplied to a customer and typically contain a minimum monthly charge provision which allows the Company to invoice the customer for the greater of the water supplied or a minimum monthly charge. The volume of water supplied is based on meter readings performed at or near the end of the month. The transaction price calculated for bulk water sales and service can include, if applicable, contractual minimum monthly charges and the expected amount of variable consideration to the extent it is probable that a significant reversal of the cumulative revenue will not occur. The variable consideration generally includes the amount of water in excess of contractual minimum volumes, if applicable, or the amount of water expected to be supplied at contractually established rates. Estimates of revenue for unbilled water are recorded when meter readings occur at a time other than the end of a period. A contract asset or liability may be recognized in instances where there is a difference between the amount billed to a customer and the revenue recognized for the completed O&M performance obligations during the period. Revenues generated from both the delivery of bulk water and performance of services related to bulk water are recorded as bulk water revenue within the consolidated statements of operations and comprehensive income. Certain contracts with customers which require the construction of facilities to provide bulk water to a specific customer include two performance obligations, including an implicit lease for the bulk water facilities and bulk water services, a non-lease component related to O&M services. The implicit lease performance obligation is generally accounted for as an operating lease as a result of the provisions of the contract. The Company considers the implicit lease and bulk water services a single performance obligation and the calculated transaction price can include, if applicable, contractual minimum monthly charges and the expected amount of variable consideration to the extent it is probable that a significant reversal of the cumulative revenues will not occur. The variable consideration generally includes the amount of water in excess of contractual minimum volumes, if applicable, or the amount of water expected to be supplied and contractually established rates. The revenue recognition pattern for both the lease and non-lease components are the same, with revenues being recognized ratably over the contract period as delivered to the customer. Revenues generated from both the lease and non-lease performance obligations are recorded as bulk water revenue within the consolidated statements of operations and comprehensive income. Service Concession Arrangements. Through the Seven Seas Water operating platform, the Company enters into contracts with customers that are determined to be service concession arrangements. Service concession arrangements are agreements entered into with a public sector entity which controls both (i) the ability to modify or approve the services and prices provided by the operating company and (ii) beneficial entitlement to, or residual interest in, the infrastructure at the end of the term of the agreement. Service concession arrangements typically include more than one performance obligation, including the construction of infrastructure for the customer and an obligation to provide O&M services for the infrastructure constructed for the customer. Billings to the customer for service concession arrangements are typically based on the volume of water supplied to a customer and typically contain a minimum monthly charge provision which allows the Company to invoice the customer for the greater of the water supplied or a minimum monthly charge. The volume of water supplied is based on meter readings performed at or near the end of the month. The transaction price calculated for service concession arrangements includes, if applicable, contractual minimum monthly charges and the expected amount of variable consideration to the extent it is probable that a significant reversal of the cumulative revenues will not occur. The variable consideration generally includes the amount of water in excess of contractual minimum volumes, if applicable, or the amount of water expected to be supplied at contractually established rates. The transaction price is allocated to the identified performance obligations based on the relative standalone selling prices of the identified performance obligations. The transaction price allocated to the construction of infrastructure performance obligation is recognized as construction revenue within the consolidated statements of operations and comprehensive income. Construction revenues are recognized over time, using the input method based on cost incurred, which typically begins at commencement of the construction with revenue being fully recognized upon the completion of the infrastructure as control of the infrastructure is, or is deemed to be, transferred to the customer. In addition, service concession contracts typically include a difference in timing of when control is, or is deemed to be, transferred and the collection of cash receipts, which are collected over the term of the entire arrangement. The timing difference could result in a significant financing component for the construction performance obligations if determined to be a material component of the transaction price. If a significant financing component is identified, the future cash flows included in the transaction price allocated to the construction performance obligations are discounted using a discount rate comparable to a market-based borrowing rate specific to both the customer and terms of the contract. The resulting present value of the allocated future cash flows is recorded as construction revenue with a related long-term receivable as control of the infrastructure is, or is deemed to be, transferred to the customer while the discount amount is considered to be the significant financing component. Future cash flows received from the customer related to the construction performance obligations are bifurcated between principal repayment of the long-term receivable and the related imputed interest income related to the customer financing. The interest income is recorded as financing revenue within the consolidated statements of operations and comprehensive income as providing financing to our customers is a core component of our business model. The transaction price allocated to the O&M performance obligation is recorded as bulk water revenue within the consolidated statements of operations and comprehensive income as the services are provided to the customer. A contract asset or liability may be recognized in instances where there is a difference between the amount billed to a customer and the revenue recognized for the completed O&M performance obligations during the period. Rental of Water Filtration and Related Equipment. Through the Quench operating platform, the Company generates revenues through the rental of its filtered water and related systems to customers. The rental agreements, which include related executory costs, are accounted for as operating leases and are considered a single unit of account. Billings to the customer for the rental of water filtration and related equipment, which generally occur either monthly or quarterly, are based on the rental rate as stated within the rental agreement. The transaction price is based on the minimum lease payment as stated within the rental agreement. Revenues are recognized ratably over the rental agreement term and amounts paid by customers in excess of recognizable revenue are recorded as a contract liability, or deferred revenue, in the consolidated balance sheets. Upon the expiration of the initial rental agreement term, the Company may enter into rental agreement extensions in which revenues are recognized ratably over the extension term. Revenues generated under these contracts are recorded as rental revenue within the consolidated statements of operations and comprehensive income. Sale of Water and Related Filtration Equipment, Coffee and Consumables. Through the Quench operating platform, the Company enters into contracts with customers with a single performance obligation to sell customers water and related filtration equipment, coffee and consumables. The Company recognizes revenues at the time the equipment, coffee or consumables is transferred to the customer, which can be upon either shipment or delivery to the customer. The transaction price is based on the contractual price with the customer. Shipping and handling costs paid by the customer are included in revenues. Billings to the customer for the sale of water and related filtration equipment, coffee and consumables occur at the time the product is transferred to the customer and are based on contract price. Revenues generated under these contracts are recorded as other revenue within the consolidated statements of operations and comprehensive income. Services on Water and Related Filtration Equipment. Through the Quench operating platform, the Company enters into contracts with customers with a single performance obligation to provide services, including maintenance, on customer-owned water and related filtration equipment. Billings to the customer for services, which generally occur either monthly or quarterly, are based on the service rate as stated within the service agreement. The transaction price is based on service rate as stated within the service agreement. The Company recognizes revenues as the services are provided to the customer. Amounts paid by customers in excess of recognizable revenue are recorded as a contract liability, or deferred revenue, on the consolidated balance sheets. Revenues generated under these service contracts are recorded as other revenue within the consolidated statements of operations and comprehensive income. Contract Costs Contract costs includes contract acquisition costs, deferred lease costs and contract fulfillment costs which are all recorded within other assets in the consolidated balance sheets. Contract acquisition costs consist of incremental costs incurred by the Company to originate contracts with customers. Contract acquisition costs, which generally include commissions and other costs that are only incurred as a result of obtaining a contract, are capitalized when the incremental costs are expected to be recovered over the contract period. All other costs incurred regardless of obtaining a contract are expensed as incurred. Contract acquisition costs are amortized over the period the costs are expected to contribute directly or indirectly to future cash flows, which is generally over the contract term, on a basis consistent with the transfer of goods or services to the customer to which the costs relate. There were no contract acquisition costs as of September 30, 2018 and December 31, 2017. Deferred lease costs consist of initial direct costs incurred by the Company to originate leases, which generally include water filtration and related equipment by the Quench operating platform. The costs capitalized are directly related to the negotiation and execution of leases and primarily consist of internal compensation and benefits as lease origination activities are performed internally by the Company. Deferred lease costs are amortized on a straight‑line basis over the lease term. Deferred lease costs, net as of September 30, 2018 and December 31, 2017 were $3.6 million and $3.2 million, respectively and are recorded in other assets in the consolidated balance sheets. Contract fulfillment costs consist of costs incurred by the Company to fulfill a contract with a customer and are capitalized when the costs generate or enhance resources that will be used in satisfying future performance obligations of the contract and the costs are expected to be recovered. Contract fulfillment costs capitalized generally include contracted services, direct labor, materials, and allocable overhead directly related to resources required to fulfill the contract. Contract fulfillment costs are amortized over the period the costs are expected to contribute directly or indirectly to future cash flows, which is generally over the contract term, on a basis consistent with the transfer of good or services to the customer to which the costs relate. Contract fulfillment costs, net as of September 30, 2018 and December 31, 2017 were $1.3 million and $0.8 million, respectively, and are recorded in other assets in the consolidated balance sheets. Contract costs are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company had no impairment charges related to contract costs during the three and nine months ended September 30, 2018. Goodwill and Other Intangible Assets Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a business combination. Goodwill is reviewed for impairment at least annually during the fourth quarter and more frequently if a change in circumstances or the occurrence of events indicates that potential impairment exists. The Company first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is determined to be more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs the quantitative analysis of the goodwill impairment test. Otherwise, the quantitative test is optional. Under the quantitative analysis, the recoverability of goodwill is measured at each of the Seven Seas Water and Quench reporting unit levels, which the Company has determined to be consistent with its operating segments, by comparing the reporting unit’s carrying amount, including goodwill, to the fair market value of the reporting unit. The Company determines the fair value of its reporting units based on a weighting of the present value of projected future cash flows (the “Income Approach”) and a comparative market approach under both the guideline company method and guideline transaction method (collectively, the “Market Approach”). Fair value using the Income Approach is based on the Company’s estimated future cash flows on a discounted basis. The Market Approach compares each of the Company’s reporting units to other comparable companies based on valuation multiples derived from operational and transactional data to arrive at a fair value. Factors requiring significant judgment include, among others, the determination of comparable companies, assumptions related to forecasted operating results, discount rates, long‑term growth rates, and market multiples. Changes in economic or operating conditions, or changes in the Company’s business strategies, that occur after the annual impairment analysis and which impact these assumptions, may result in a future goodwill impairment charges, which could be material to the Company’s consolidated financial statements. Other intangible assets consist of certain trade names, customer relationships, contract intangibles and non‑compete agreements. Contract intangibles includes the fair value of future cash flows from contracts with customers in excess of the fair value for the remaining performance obligations under such contracts. Trade names and non‑compete agreements which have a finite life are amortized over their estimated useful lives on a straight‑line basis. Customer relationships and contract intangibles which have a finite life are amortized on an accelerated basis based on the projected economic value of the asset over its useful life. Intangible assets with a finite life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Indefinite‑lived intangible assets, which consist of certain trade names, are not amortized but are tested for impairment at least annually or more frequently if events or circumstances indicate the asset may be impaired. Adoption of New Accounting Pronouncements In October 2016, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that requires the recognition of income tax consequences of intercompany asset transfers other than inventory at the transaction date. This guidance will be effective for annual reporting periods beginning on or after December 15, 2017, including interim periods within those annual periods, and early adoption is permitted as of the beginning of an annual period. The Company adopted this guidance on January 1, 2018 on a modified retrospective basis. There was no impact to the consolidated financial statements as a result of this adoption. In May 2014, the FASB issued authoritative guidance regarding revenue from contracts with customers which specifies that revenue should be recognized when promised goods or services are transferred to customers in an amount that reflects the consideration which the company expects to be entitled in exchange for those goods or services. This guidance is effective for annual reporting periods beginning on or after December 15, 2017 and interim periods within those annual periods and will require enhanced disclosures. In addition, the FASB issued authoritative guidance in March 2017 related to the determination of the customer in a service concession arrangement, which is effective for annual reporting periods beginning on or after December 15, 2017 and interim periods within those annual periods. The Company adopted the guidance regarding both revenue from contracts with customers and the determination of the customer in a service concession contract (together referred to as the “Adopted Revenue Guidance”) on a full retrospective basis on January 1, 2018 by applying the guidance to all contracts that were not completed as of January 1, 2016. Results for periods beginning after January 1, 2016 have been adjusted to conform to the Adopted Revenue Guidance while periods prior to January 1, 2016 continue to be reported under the accounting standards in effect for the prior periods. Several of the Company’s contracts were impacted primarily due to the identification of multiple performance obligations within a single contract. However, the Adopted Revenue Guidance has had no cash impact and, therefore, does not affect the economics of our underlying customer contracts. As a result of the adoption, the Company recorded a cumulative net increase of $8.4 million to accumulated deficit as of January 1, 2016. For periods prior to January 1, 2018, the Company restated both the consolidated financial statements and the materially impacted notes to the consolidated financial statements for the Adopted Revenue Guidance. The impacts to the previously reported results are as follows (in thousands, except per share amounts): December 31, 2017 Consolidated balance sheets As Reported As Adjusted Current portion of long-term receivables $ — $ 6,878 Prepaid expenses and other current assets 8,789 3,874 Long-term contract costs 80,865 — Deferred tax asset — 38 Long-term receivables — 43,796 Other assets 39,815 4,307 Intangible assets, net 52,298 122,169 Deferred tax liability 5,700 5,266 Other long-term liabilities 3,749 11,429 Accumulated deficit (216,429) (224,380) Shareholders' equity 352,147 344,196 Three Months Ended September 30, 2017 Consolidated statements of operations and comprehensive income As Reported As Adjusted Revenues $ 29,893 $ 29,777 Cost of revenues 15,372 13,443 Gross profit 14,521 16,334 Selling, general and administrative expenses 17,734 18,430 Loss from operations (3,213) (2,096) Other expense: Interest expense, net (2,055) (2,942) Other expense, net (1,453) (1,453) Loss before income tax expense (6,721) (6,491) Income tax expense 846 797 Net loss $ (7,567) $ (7,288) Loss per share - basic and diluted $ (0.29) $ (0.28) Nine Months Ended September 30, 2017 Consolidated statements of operations and comprehensive income As Reported As Adjusted Revenues $ 88,794 $ 88,558 Cost of revenues 47,103 41,615 Gross profit 41,691 46,943 Selling, general and administrative expenses 50,964 53,040 Loss from operations (9,273) (6,097) Other expense: Interest expense, net (5,574) (8,303) Other expense, net (1,728) (1,728) Loss before income tax expense (16,575) (16,128) Income tax expense 2,645 2,451 Net loss $ (19,220) $ (18,579) Loss per share - basic and diluted $ (0.73) $ (0.70) In addition, the impacts to the consolidated statements of cash flows for the nine months ended September 30, 2017 included a reduction to net cash provided by operating activities of $0.7 million and an increase to net cash used in investing activities of $0.7 million. New Accounting Pronouncements to be Adopted In August 2018, the FASB issued authoritative guidance regarding implementation costs incurred in a cloud computing arrangement that is a service contract. This guidance will be effective for annual reporting periods beginning on or after December 15, 2019, including interim periods within those annual periods, and early adoption is permitted. The Company is currently evaluating the potential impact of the accounting and disclosure requirements on the consolidated financial statements. In February 2016, the FASB issued authoritative guidance regarding leases that requires lessees to recognize a lease liability and right‑of‑use asset for operating leases, with the exception of short‑term leases. In addition, lessor accounting was modified to align, where necessary, with lessee accounting modifications and the authoritative guidance regarding revenue from contracts with customers. Throughout 2018, the FASB has issued additional authoritative guidance which, among other things, provided an option to apply transition provisions under the standard at adoption date rather than the earliest comparative period presented as well as added a practical expedient that would permit lessors to not separate non-lease components from the associated lease components if certain conditions are met. These amendments will be effective, in conjunction with the new lease standard, for annual reporting periods beginning on or after December 15, 2018, including interim periods within those annual periods, and early adoption is permitted. During the fourth quarter of 2017, the Company decided to forego early adoption and has decided to adopt the standard on January 1, 2019. The Company will adopt on a modified retrospective basis, with the cumulative effect of transition as of the effective date of adoption. The Company concluded that it will elect the package of practical expedients provided for within the authoritative guidance which exempts the Company from having to reassess: (i) whether expired or existing contracts contain leases, (ii) the lease classification for expired or existing leases, and (iii) initial direct costs for existing leases. In addition, the Company concluded that it will elect the practical expedient that permits lessors to not separate non-lease components from the associated lease components if certain conditions are met. Lastly, the Company will utilize the short-term exemption for lessees and establish an accounting policy to not recognize a right-of-use asset or lease liability for any lease with a term of less than 12 months. Although the Company is still performing its evaluation, it does not expect to elect any of the other practical expedients. Lessee accounting - The Company expects the adoption will have a material impact on the consolidated balance sheet, including an increase to both assets and liabilities, as a result of the recognition of a right-of-use asset and corresponding lease liability for operating leases. As the Company will make a policy election for the short-term lease exemption, a right-of-use asset and corresponding lease liability will only be recorded for leases with expected terms of more than 12 months. The Company does not expect the adoption will have a material impact on the consolidated statements of operations and comprehensive income for situations which the Company is a lessee. While the Company is nearing the completion of its assessment of the adoption of the authoritative guidance for lessees, it is still assessing the inputs to the right-of-use asset and corresponding lease liability calculations. As a result, the Company has not yet quantified the cumulative effect adjustment to be recorded on January 1, 2019. The Company expects to finalize its assessment and provide the expected impact during the fourth quarter of 2018. Lessor accounting - As the Company has elected the transitional practical expedients for leases, the Company does not expect any material impacts to the consolidated financial statements for leases in situations which the Company is a lessor and the lease commenced prior to January 1, 2019. The Company is still assessing the impacts of the authoritative guidance and establishing its policies for costs incurred for the acquisition and fulfillment of the lease contracts, including commissions and installation costs. While the Company is nearing the completion of its assessment of the adoption of the authoritative guidance for lessors, it has not yet quantified the cumulative effect adjustment to be recorded on January 1, 2019. The Company expects to finalize its assessment and provide the expected impact during the fourth quarter of 2018. Reclassification The Company has historically classified the receipt of principal on long-term receivables as a cash inflow from investing activities in the consolidated statements of cash flows. During the first quarter of 2018, the Company reclassified the receipt of principal on long-term receivables as a cash inflow from operating activities in the consolidated statements of cash flows. The Company believes the change in classification is preferable as the presentation of the collection of principal on long-term receivables as a cash inflow from operating activities more clearly reflects cash received from the Company’s core operating activities as long-term receivables. In addition, the reclassification is expected to improve transparency of cash flows generated from existing operations. This reclassification, which has been applied retrospectively to all periods prior to January 1, 2018, did not result in a change to the consolidated balance sheets, or the consolidated statements of operations and comprehensive income, or any component therein, including loss from operations, comprehensive income, current assets, total assets or shareholders’ equity. In the consolidated statements of cash flows for the nine months ended September 30, 2017, the Company reclassified $3.4 million of principal collected on long-term receivables from cash flows from investing activities to cash flows from operating activities. Inclusive of both the impacts for the Adopted Revenue Guidance noted previously and the reclassification of the principal collected on long-term receivables, net cash provided from operating activities for the nine months ended September 30, 2017 was adjusted to $14.6 million from $11.9 million and net cash used in investing activities for the nine months ended September 30, 2017 was adjusted to $(21.1) million from $(18.4) million. Cash equivalents and restricted cash at September 30, 2017 remained unchanged. |
Business Combinations and Asset
Business Combinations and Asset Acquisitions | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations and Asset Acquisitions | |
Business Combinations and Asset Acquisitions | 3. Business Combinations and Asset Acquisitions Business Combinations Alpine Water Systems, LLC On August 6, 2018, Quench acquired substantially all the assets and assumed certain liabilities of Alpine Water Systems, LLC (“Alpine”), a POU water filtration company based in Las Vegas, Nevada, pursuant to an asset purchase agreement (“Alpine Acquisition”). The aggregate purchase price, subject to working capital adjustments, of the Alpine Acquisition was $15.2 million, including $14.6 million in cash, $0.4 million payable on August 6, 2020, and $0.2 million of acquisition contingent consideration. The acquisition contingent consideration is recorded at its estimated fair value with the ultimate payout based upon the future performance of the acquired assets. The undiscounted range of outcomes for the acquisition contingent consideration is $0 to $0.3 million. In addition, the asset purchase agreement includes contingent payments with the ultimate payout based upon the future performance of the acquired assets. The contingent payments are automatically forfeited if the employment of certain selling shareholders terminates. The Company has determined that the contingent payments will be postcombination compensation expense, which will be accreted to their estimated payout amount of $0.6 million throughout the substantive service period. The undiscounted range of outcomes for the postcombination compensation payout amount is $0 to $1.1 million. The assets acquired consist primarily of in-place lease agreements and the related POU systems in the United States and Canada. Related transaction costs incurred by the Company during both the three and nine months ended September 30, 2018 were $0.2 million, which were expensed as incurred within selling, general and administrative (“SG&A”) expenses in the consolidated statements of operations and comprehensive income. The Quench business completed the asset acquisition to expand its installed base of POU systems. The following table summarizes the preliminary purchase price allocated to the fair value of assets acquired, including intangibles recorded in conjunction with the business combination, and liabilities assumed (in thousands): Assets acquired: Trade receivables $ 506 Inventory 141 Property, plant and equipment 1,779 Identified intangible assets 7,240 Goodwill 6,538 Total assets acquired 16,204 Liabilities assumed: Accounts payable and accrued liabilities (479) Deferred revenue (565) Total liabilities assumed (1,044) Total purchase price $ 15,160 Due primarily to the timing of the acquisition and the complexities involved with determining fair value of the intangible assets acquired, the Company has not yet completed the valuations of the identified intangibles. The preliminary purchase price allocation has been developed based on preliminary estimates of fair values using the historical financial statements of Alpine prior to the acquisition along with assumptions made by management. Although the Company does not expect the final allocation to vary significantly, there may be adjustments made to the purchase price allocation that could result in changes to the preliminary fair values allocated, assigned useful lives and associated amortization recorded. Goodwill is composed of synergies not valued, is deductible for tax purposes and is recorded within the Quench reporting unit. The results of the operations of the acquired Alpine assets are included in the Quench reportable segment from the date of acquisition. The resulting amount of revenues and net loss included in the consolidated statements of operations and comprehensive income since acquisition were approximately $0.9 million and $0.1 million, respectively. Wa-2 Water Company Ltd. On March 1, 2018, Quench Canada, Inc., a wholly-owned subsidiary of the Company, acquired substantially all of the water filtration assets and assumed certain liabilities of Wa-2 Water Company Ltd. (“Wa-2”), pursuant to an asset purchase agreement for an aggregate purchase price of $5.1 million in cash, including a final working capital adjustment of approximately $5 thousand which was paid in June 2018 (the “Wa-2 Acquisition”). Approximately $0.3 million of the aggregate purchase price, subject to adjustment, is held in escrow for a period of one year by a third party for seller indemnifications. Wa-2 is a POU water filtration company based in Vancouver, British Columbia. The assets acquired consist primarily of in-place lease agreements and the related POU systems. Related transaction costs incurred by the Company during the three and nine months ended September 30, 2018 were $0 and $0.1 million, respectively, which were expensed as incurred within SG&A expenses in the consolidated statements of operations and comprehensive income. The Quench business completed the Wa-2 Acquisition to expand its installed base of POU systems in Canada. The following table summarizes the preliminary purchase price allocated to the fair value of assets acquired, including intangibles recorded in conjunction with the business combination, and liabilities assumed (in thousands): Assets acquired: Trade receivables $ 134 Inventory 158 Prepaid expenses and other current assets 6 Property, plant and equipment 424 Customer relationships 1,561 Trade names 700 Non-compete agreements 298 Goodwill 2,239 Total assets acquired 5,520 Liabilities assumed: Accounts payable and accrued liabilities (86) Deferred revenue (328) Total liabilities assumed (414) Total purchase price $ 5,106 As of September 30, 2018, the purchase price allocated to the fair value of assets acquired, including intangibles recorded in conjunction with the business combination, and liabilities assumed remains preliminary. During the second quarter of 2018, the Company updated its allocation of the purchase price to the assets acquired and liabilities assumed. The assets and liabilities in the purchase price allocation are stated at fair value based on estimates of fair value using available information and making assumptions management believes are reasonable. Intangibles identified and valued related to the transaction include customer relationships, trade names and non-compete agreements. The fair value of the customer relationships was determined using the multi-period excess earnings method which is based on the present value of expected cash flows generated by the revenues under the contract with the customer using a discount rate of 12.9%. The fair value of the trade names was determined using the relief from royalty method which is based on the present value of royalty fees derived from projected revenues using a discount rate of 12.9%. The fair value of the non-compete agreements was determined using the comparative business valuation method which is based on the present value of potential revenue loss using a discount rate of 12.9%. The Company determined the weighted average useful life at the date of valuation for the customer relationships, trade names and non-compete agreements to be 20 years, 12 years, and 5 years, respectively. There was not a material impact on the amortization expense recorded during the three and nine months ended September 30, 2018 as a result of the updates made to the purchase price allocation. Goodwill is composed of synergies not valued, is deductible for tax purposes and is recorded within the Quench reporting unit. The results of the operations of the acquired Wa-2 assets are included in the Quench reportable segment after the date of acquisition. The resulting amount of revenues and net income included in the consolidated statements of operations and comprehensive income since acquisition were $1.3 million and $0.1 million, respectively. Wellsys USA Corporation On September 8, 2017, Quench USA, Inc. (“Quench”), a wholly-owned subsidiary of AquaVenture Holdings Limited, acquired substantially all of the assets and assumed certain liabilities of Wellsys USA Corporation (“Wellsys”) pursuant to an asset purchase agreement for an aggregate purchase price of $6.9 million in cash, including a final working capital adjustment of $165 thousand (the “Wellsys Acquisition”) which was received from the escrow agent in October 2017. Wellsys is a supplier of high quality branded and private-labeled POU water coolers and purification systems. Headquartered in the greater Phoenix, Arizona area, Wellsys sells its products to a network of dealers throughout the United States, Canada, Mexico and South Africa. There were no related transaction costs incurred by the Company during the three and nine months ended September 30, 2018. Related transaction costs incurred by the Company during the three and nine months ended September 30, 2017 were $21 thousand, which were expensed as incurred within SG&A expenses in the consolidated statements of operations and comprehensive income. The Quench business completed the Wellsys Acquisition to be able to participate more broadly in the global POU market through the Wellsys distribution network. In addition, the acquisition provides an opportunity to develop, source and distribute Quench-exclusive innovative coolers and purification offerings, and to develop relationships with Wellsys dealers that could ultimately lead to potential acquisitions. The following table summarizes the purchase price allocated to the fair value of assets acquired, including intangibles recorded in conjunction with the business combination, and liabilities assumed (in thousands): Assets acquired: Trade receivables $ 321 Inventory 883 Customer relationships 2,801 Trade names 945 Non-compete agreements 392 Vendor agreement 193 Goodwill 1,472 Total assets acquired 7,007 Liabilities assumed: Customer deposits (153) Total liabilities assumed (153) Total purchase price $ 6,854 Pro Forma Financial Information The following unaudited pro forma financial information (in thousands, except for per share amounts) for the Company gives effect to the acquisitions of Alpine, Wa-2 and Wellsys, which occurred on August 6, 2018, March 1, 2018 and September 8, 2017, respectively, as if they had occurred on January 1, 2017. These unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations that actually would have resulted had the acquisitions occurred on the date indicated, or that may result in the future. Three months ended Nine months ended September 30, September 30, 2018 2017 2018 2017 Revenues $ 37,273 $ 31,584 $ 107,318 $ 95,060 Net loss $ (2,802) $ (7,046) $ (14,461) $ (17,758) Loss per share $ (0.11) $ (0.27) $ (0.54) $ (0.67) Asset Acquisitions The following acquisitions did not meet the definition of a business combination, so the Company accounted for these transactions as asset acquisitions. In an asset acquisition, goodwill is not recognized, but rather any excess consideration transferred over the fair value of the net assets acquired is allocated on a relative fair value basis to the identifiable net assets. In addition, related transaction expenses are capitalized and allocated to the net assets acquired on a relative fair value basis. La Ferla Group LLC On June 4, 2018, Quench acquired substantially all of the assets and assumed certain liabilities of La Ferla Group LLC, d/b/a Avalon Water (“Avalon”), a POU water filtration company based in Atlanta, Georgia, pursuant to an asset purchase agreement. The assets acquired consist primarily of in-place lease agreements and the related POU systems. The purchase price for this acquisition was approximately $5.4 million, including $5.2 million in cash and $0.2 million payable on the one-year anniversary of the transaction that is subject to adjustment. The revenues and related expenses from the acquired in-place lease agreements are included in the Quench reportable segment from the date of acquisition. The Quench business completed the Avalon asset acquisition to expand its installed base of POU systems in the United States. Related transaction costs incurred by the Company in connection with this acquisition during the three and nine months ended September 30, 2018 were $0 and $14 thousand, respectively. The following table summarizes the preliminary amounts for the Avalon acquisition which were allocated to the fair value of aggregated net assets acquired (in thousands): Trade receivables $ 108 Property, plant and equipment 704 Inventory 13 Customer relationships 4,349 Non-compete agreements 413 Deferred revenue (153) Net assets acquired $ 5,434 During the third quarter of 2018, the Company updated its allocation of the purchase price to the assets acquired and liabilities assumed. The assets and liabilities in the purchase price allocation are stated at fair value based on estimates of fair value using available information and making assumptions management believes are reasonable. Intangibles identified and valued related to the transaction include customer relationships and non-compete agreements. The fair value of the customer relationships was determined using the multi-period excess earnings method which is based on the present value of expected cash flows generated by the revenues under the contract with the customer using a discount rate of 12.1%. The fair value of the non-compete agreements was determined using the comparative business valuation method which is based on the present value of potential revenue loss using a discount rate of 12.1%. The Company determined the weighted average useful life at the date of valuation for the customer relationships and non-compete agreements to be 17 years and 5 years, respectively. There was not a material impact on the amortization expense recorded during the three and nine months ended September 30, 2018 as a result of the updates made to the purchase price allocation. Clarus Services, Inc., Watermark USA LLC, and JMS Group, Inc. On January 15, 2018, Quench separately acquired substantially all the assets and assumed certain liabilities of Clarus Services Inc. (“Clarus”), a POU water filtration company based in Richmond, Virginia, and Watermark USA LLC (“Watermark”), a POU water filtration company based outside of Philadelphia, Pennsylvania, pursuant to asset purchase agreements. The assets acquired consist primarily of in-place lease agreements and the related POU systems. On April 2, 2018, Quench acquired substantially all of the assets and assumed certain liabilities of JMS Group, Inc., d/b/a Aqua Coolers (“Aqua Coolers”), a POU water filtration company based in Chicago, Illinois, pursuant to an asset purchase agreement. The assets acquired consist primarily of in-place lease agreements and the related POU systems. The aggregate purchase price for these three acquisitions was approximately $2.2 million, including $2.1 million in cash and $0.1 million payable on the one-year anniversary of the transactions that is subject to adjustment. The revenues and related expenses from the acquired in-place lease agreements are included in the Quench reportable segment from the date of acquisition. Related transaction costs incurred by the Company in connection with these acquisitions during the three and nine months ended September 30, 2018 were $0 and $41 thousand, respectively. The following table summarizes the aggregate amounts for the Clarus, Watermark and Aqua Coolers acquisitions which were allocated to the fair value of aggregated net assets acquired (in thousands): Trade receivables $ 92 Property, plant and equipment 182 Inventory 12 Customer relationships 1,952 Deferred revenue (47) Net assets acquired $ 2,191 The assets in the purchase price allocations are stated at fair value based on estimates of fair value using available information and making assumptions management believes are reasonable. The customer relationships were valued using an excess earnings approach, which is based on the present value of expected cash flows generated by the revenues under the contract with the customer. The weighted average useful life of the acquired customer relationships is approximately 12 years from the date of acquisition. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2018 | |
Revenue | |
Revenues | 4. Revenue Disaggregation of Revenue The following table represents a disaggregation of revenue for the three and nine months ended September 30, 2018 and 2017, along with the reportable segment for each category (in thousands): Three months ended Nine months ended September 30, September 30, Segment 2018 2017 2018 2017 Bulk water Water delivery Seven Seas Water $ 9,242 $ 8,301 $ 26,773 $ 25,276 Operating and maintenance Seven Seas Water 5,384 4,671 15,909 14,275 Total Bulk water 14,626 12,972 42,682 39,551 Rental Quench 16,261 13,428 45,041 39,238 Financing Seven Seas Water 985 1,118 3,048 3,451 Other Sale of water and related filtration equipment, coffee and consumables Quench 4,773 2,099 12,647 5,914 Services on water and related filtration equipment Quench 179 160 365 404 Total Other 4,952 2,259 13,012 6,318 Total revenues $ 36,824 $ 29,777 $ 103,783 $ 88,558 Total Seven Seas Water revenues $ 15,611 $ 14,090 $ 45,730 $ 43,002 Total Quench revenues $ 21,213 $ 15,687 $ 58,053 $ 45,556 Contract Assets and Liabilities Contract assets include amounts related to our contractual right to consideration for completed performance obligations not yet invoiced. Contract liabilities include payments received in advance of performance under the contract or for differences between the amount billed to a customer and the revenue recognized for the completed performance obligation. The following table provides information about contract assets and contract liabilities from contracts with customers (in thousands) at September 30, 2018 and December 31, 2017: September 30, December 31, 2018 2017 Contract assets Trade receivables, net $ 19,497 $ 19,593 Current portion of long-term receivables 6,257 6,878 Long-term receivables 39,823 43,796 Total contract assets $ 65,577 $ 70,267 Contract liabilities Deferred revenue, current $ 3,412 $ 2,454 Deferred revenue, non-current 10,642 10,351 Total contract liabilities $ 14,054 $ 12,805 Significant changes in the contract asset and the contract liability balances during the period are as follows (in thousands): Three months ended Nine months ended September 30, 2018 September 30, 2018 Contract assets Contract liabilities Contract assets Contract liabilities Revenue recognized that was included in the contract liability balance at January 1, 2018 $ — $ 323 $ — $ 3,360 Deferred revenue acquired during the period $ — $ (714) $ — $ (1,093) The Company had no asset impairment charges related to contract assets during the three and nine months ended September 30, 2018. Transaction Price Allocated to the Remaining Performance Obligation The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period (in thousands). The estimated revenue does not include amounts of variable consideration, including revenues based on changes to consumer price indices, that are constrained. In addition, the estimated revenue is based on current contracts with customers and does not take into consideration contract terms not legally enforceable with the customer. Remainder of 2018 $ 24,653 2019 $ 82,255 2020 $ 59,963 2021 $ 50,473 2022 $ 46,312 Thereafter $ 347,973 The amounts presented in the table above primarily consist of bulk water sales and service, service concession arrangements, the rental of water filtration and related equipment and services on water and related filtration equipment. The transaction price for bulk water sales and service and service concession arrangements are based on contractual minimum monthly charges and the expected amount of variable consideration related to the amount of water in excess of contractual minimum volumes, if applicable, or the amount of water expected to be supplied and the contractual rates. The remaining performance obligations to be performed generally include the delivery of bulk water or performance of O&M services with revenues being recognized as the remaining performance obligations are delivered to the customer. The transaction price for rental of water filtration and related equipment and services on water and related filtration equipment are based on the rental or service rates as stated within the agreements. The remaining performance obligations to be performed generally include the continued rental of the water filtration and related equipment or the performance of services with revenues being recognized as the remaining performance obligations are delivered to the customer. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | 5. Fair Value Measurements At September 30, 2018 and December 31, 2017, the Company had the following assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets: · U.S. Treasury securities are measured on a recurring basis and are recorded at fair value based on quoted market value in an active market, which is considered a Level 1 input. · Money market funds are measured on a recurring basis and are recorded at fair value based on each fund’s quoted market value per share in an active market, which is considered a Level 1 input. · Acquisition contingent consideration is measured on a recurring basis and is recorded at fair value based on a probability‑weighted discounted cash flow model which utilizes unobservable inputs such as the forecasted achievement of performance targets throughout the earn‑out period, which is considered a Level 3 input. There were no transfers into or out of Level 1, 2 or 3 assets during the three and nine months ended September 30, 2018. Transfers between levels are deemed to have occurred if the lowest level of input were to change. The Company’s fair value measurements as of September 30, 2018 and December 31, 2017 were as follows (in thousands): Quoted Prices in Significant Active Markets Other Significant Asset/ for Identical Observable Unobservable Assets/Liabilities Measured at Fair Value (Liability) Assets (Level 1) Inputs (Level 2) Inputs (Level 3) As of September 30, 2018 Recurring basis: Money market funds $ 22,508 $ 22,508 $ — $ — U.S. Treasury securities $ 45,749 $ 45,749 $ — $ — Acquisition contingent consideration $ (149) $ — $ — $ (149) As of December 31, 2017 Recurring basis: Money market funds $ 11,333 $ 11,333 $ — $ — U.S. Treasury securities $ 83,999 $ 83,999 $ — $ — See Note 9—“Commitments and Contingencies” for changes in the estimated fair value and additional information on the acquisition contingent consideration. |
Other Intangible Assets
Other Intangible Assets | 9 Months Ended |
Sep. 30, 2018 | |
Other Intangible Assets | |
Other Intangible Assets | 6. Other Intangible Assets The gross and net carrying values of other intangible assets by major intangible asset class as of September 30, 2018 and December 31, 2017 were as follows (in thousands): September 30, 2018 Gross Carrying Accumulated Carrying Amount Amortization Value Definite-lived intangible assets Customer relationships $ 122,034 $ (31,938) $ 90,096 Off-market contract intangibles 39,800 (8,473) 31,327 Trade names 6,783 (1,073) 5,710 Non-compete agreements 2,125 (350) 1,775 Other 240 (88) 152 Indefinite-lived intangible assets Trade names 273 — 273 Total $ 171,255 $ (41,922) $ 129,333 December 31, 2017 Gross Carrying Accumulated Carrying Amount Amortization Value Definite-lived intangible assets Customer relationships $ 107,798 $ (25,054) $ 82,744 Off-market contract intangibles 39,800 (6,544) 33,256 Trade names 6,093 (818) 5,275 Non-compete agreements 582 (175) 407 Other 242 (28) 214 Indefinite-lived intangible assets Trade names 273 — 273 Total $ 154,788 $ (32,619) $ 122,169 Amortization expense for these intangible assets for the three months ended September 30, 2018 and 2017 was 3.3 million and $1.4 million, respectively, of which $0.6 million and $0.6 million, respectively, was recorded as contra-revenue within the consolidated statements of operations and comprehensive income. Amortization expense for these intangible assets for the nine months ended September 30, 2018 and 2017 was $9.3 million and $7.9 million, respectively, of which $1.9 million and $1.9 million, respectively, was recorded as contra-revenue within the consolidated statements of operations and comprehensive income. Amortization expense for these intangible assets for the remainder of 2018, 2019, 2020, 2021 and 2022 is expected to be $3.4 million, $13.3 million, $12.7 million, $12.1 million and $11.6 million, respectively. There was no impairment expense related to other intangible assets recorded during the three and nine months ended September 30, 2018 and 2017. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Share-based Compensation | |
Share-Based Compensation | 7. Share‑Based Compensation AquaVenture Equity Awards The AquaVenture Holdings Limited 2016 Share Option and Incentive Plan (the “2016 Plan”), allows for the issuance of incentive share options, non-qualified share options, share appreciation rights, restricted share units, restricted share awards, unrestricted share awards, cash-based awards, performance share awards and dividend equivalent rights to officers, employees, managers, directors and other key persons, including consultants to the Company. The aggregate number of ordinary shares initially authorized for issuance, subject to adjustment upon a change in capitalization, under the 2016 Plan was 5.0 million shares. The shares authorized for issuance increase annually by 4% of the number of ordinary shares issued and outstanding on the immediately preceding December 31. As of September 30, 2018, the number of ordinary shares authorized for issuance under the 2016 Plan was 7.1 million shares. On October 4, 2016, the outstanding equity awards of the AquaVenture Holdings LLC Amended and Restated Equity Incentive Plans were converted to equity awards of AquaVenture Holdings Limited, with the underlying security being ordinary shares of the AquaVenture Holdings Limited. In addition, the Quench USA Holdings LLC 2014 Equity Incentive Plan and Quench USA, Inc. 2008 Stock Plan (“Quench Equity Plans”) were assumed by AquaVenture Holdings Limited on October 4, 2016. All outstanding awards of the Quench Equity Plans were also converted to equity awards of AquaVenture Holdings Limited, with the underlying security being ordinary shares of the AquaVenture Holdings Limited. The authority to grant additional equity awards under the AquaVenture Holdings LLC Amended and Restated Equity Incentive Plan, Quench USA Holdings LLC 2014 Equity Incentive Plan and Quench USA, Inc. 2008 Stock Plan ceased effective October 5, 2016 at the time of the initial public offering. As a result, no additional equity award grants may be made under these plans. During the nine months ended September 30, 2018, the Company granted 0.4 million restricted share units. Substantially all of the granted restricted share units have a time-based vesting schedule of four years, primarily with 25% vesting on the first anniversary of the date of grant and the remaining 75% vesting quarterly over the remaining three years. The fair market value of restricted share units is determined based on the closing share price of the Company’s ordinary shares on the date of grant and is amortized on a straight-line basis over the requisite service period. The aggregate grant date fair value of the awards granted during the nine months ended September 30, 2018 was $6.3 million. Employee Stock Purchase Plan Under the 2016 Employee Stock Purchase Plan (“2016 ESPP”), the Company offers eligible employee participants the right to purchase the Company’s ordinary shares at a price equal to the lesser of 85 percent of the closing market price on the first or last day of an established offering period. Under the 2016 ESPP, 10 thousand shares were sold to eligible employees during the nine months ended September 30, 2018. Share-based compensation expense is recognized based on the fair value of the employees’ purchase rights under the 2016 ESPP and is amortized on a straight-line basis over the offering period. As of September 30, 2018, the number of ordinary shares authorized for issuance under the 2016 ESPP was 0.7 million. Independent Directors’ Deferred Compensation Program Under the Independent Directors' Deferred Compensation Program (the “Deferred Compensation Program”), which was established under the 2016 Plan, eligible members of the Company’s board of directors (“Eligible Directors”) are able to defer all or a portion of the cash compensation or equity awards which they are due in the form of phantom share units. Each phantom share unit is the economic equivalent of one ordinary share of the Company. The number of phantom share units credited to the Eligible Director’s deferred account is equal to 120% of the aggregate deferred cash fees that would otherwise be payable on such date divided by the closing price of the Company’s ordinary shares on the award date. No other premium is given to the directors for deferral of their equity awards. Phantom share units shall be settled in ordinary shares upon the earlier of the Eligible Director’s death, disability, separation from the board, sale event, or end of the first full fiscal year after the grant date. The phantom share units issued in lieu of the cash retainers have no vesting period and cannot be forfeited. The phantom share units issued in lieu of the restricted units will have a stated vesting period but will then have a deferred delivery once vested. Share-based compensation expense for the phantom share units issued in lieu of the cash retainers is recognized on the date of grant, while share-based compensation expense for the phantom share units issued in lieu of the restricted units is recognized over the requisite service period, which is typically 12 months. During the nine months ended September 30, 2018, the Company granted approximately 46 thousand phantom shares to Eligible Directors, including 37 thousand phantom shares subject to a 12 month vesting period and 9 thousand phantom shares that are immediately vested. The aggregate grant date fair value of the awards granted during the nine months ended September 30, 2018 was $0.6 million. At September 30, 2018, approximately 51 thousand phantom shares remained outstanding. Share‑Based Compensation Expense Total share‑based compensation expense recognized for all equity awards during the three months ended September 30, 2018 and 2017 was $3.4 million and $3.1 million, respectively. For the three months ended September 30, 2018, $3.3 million and $0.1 million were recorded in SG&A and cost of revenues, respectively, within the consolidated statements of operations and comprehensive income. For the three months ended September 30, 2017, $3.0 million and $0.1 million were recorded in SG&A and cost of revenues, respectively, within the consolidated statements of operations and comprehensive income. Total share-based compensation expense recognized for all equity awards during the nine months ended September 30, 2018 and 2017 was $10.0 million and $9.1 million, respectively. For the nine months ended September 30, 2018, $9.8 million and $0.2 million were recorded in SG&A and cost of revenues, respectively, within the consolidated statements of operations and comprehensive income. For the nine months ended September 30, 2017, $8.8 million and $0.3 million were recorded in SG&A and cost of revenues, respectively, within the consolidated statements of operations and comprehensive income. There was no related tax benefit for the three or nine months ended September 30, 2018 and 2017. |
Loss per Share
Loss per Share | 9 Months Ended |
Sep. 30, 2018 | |
Loss per Share | |
Loss per Share | 8. Loss per Share Basic earnings (loss) per share is computed by dividing net earnings (loss) attributable to ordinary shareholders for the period by the weighted-average number of ordinary shares outstanding during the same period. Basic weighted-average shares outstanding excludes unvested shares of restricted share awards, restricted share units and phantom share units. Diluted earnings (loss) per share is computed by dividing net earnings (loss) attributable to ordinary shareholders for the period by the weighted-average number of ordinary shares outstanding adjusted to give effect to potentially dilutive securities using the treasury stock method, except where the effect of including the effect of such securities would be anti-dilutive. The following table provides information for calculating net loss applicable to ordinary shareholders (in thousands, except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Numerator: Net loss $ (2,732) $ (7,288) $ (13,999) $ (18,579) Denominator: Weighted-average ordinary shares outstanding - basic and diluted 26,590 26,441 26,544 26,414 Loss per share - basic and diluted $ (0.10) $ (0.28) $ (0.53) $ (0.70) Given that the Company had a net loss for the three and nine months ended September 30, 2018 and 2017, the calculation of diluted loss per share is computed using basic weighted average ordinary shares outstanding. Approximately 4.1 million weighted-average outstanding share awards for both the three and nine months ended September 30, 2018, respectively, were excluded from the calculation of diluted earnings per share because their effect was antidilutive. Approximately 3.9 million weighted-average outstanding share awards for both the three and nine months ended September 30, 2017 were excluded from the calculation of diluted earnings per share because their effect was antidilutive. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure | |
Commitments and Contingencies | 9. Commitments and Contingencies Asset Retirement Obligations Asset retirement obligation (“ARO”) liabilities, which arise from contractual requirements to perform certain asset retirement activities and is generally recorded when the asset is constructed, is based on the Company’s engineering estimates of future costs to dismantle and remove equipment from a customer’s plant site and to restore the site to a specified condition at the conclusion of a contract. As appropriate, the Company revises certain of its liabilities based on changes in the projected costs for future removal and shipping activities. These revisions, along with accretion expense, are included in cost of revenues in the consolidated statements of operations and comprehensive income. During the three months ended September 30, 2018 and 2017, the Company recorded accretion expense of $13 thousand and $13 thousand, respectively. During the nine months ended September 30, 2018 and 2017, the Company recorded accretion expense of $38 thousand and $37 thousand, respectively. No valuation adjustments were recorded during the three or nine months ended September 30, 2018 and 2017. At both September 30, 2018 and December 31, 2017, the current portion of the ARO liabilities was $26 thousand and was recorded in accrued liabilities in the consolidated balance sheets. At both September 30, 2018 and December 31, 2017, the long‑term portion of the ARO liabilities was $1.1 million and was recorded in other long‑term liabilities in the consolidated balance sheets. Acquisition Contingent Consideration Acquisition contingent consideration represents the additional purchase price that is contingent on the future performance of an acquired business. The acquisition contingent consideration was derived in connection with the Alpine Acquisition. A reconciliation of the beginning and ending amounts of the acquisition contingent consideration is as follows (in thousands): Nine Months Ended September 30, 2018 Acquisition contingent consideration at beginning of year $ — Acquired during the period 149 Acquisition contingent consideration at end of year $ 149 At September 30, 2018, the entire $149 thousand was deemed current and was recorded in accrued liabilities in the consolidated balance sheets. The acquisition contingent consideration liabilities were recorded at fair value as of September 30, 2018 based on a Monte Carlo Simulation which utilizes unobservable inputs, including forecasted revenues. Any change in the valuation of the acquisition contingent consideration will be recorded as a valuation adjustment within SG&A expenses in the consolidated statements of operations and comprehensive income. There was no change in fair value for the three and nine months ended September 30, 2018. Litigation, Claims and Administrative Matters The Company, may, from time to time, be a party to legal proceedings, claims, and administrative matters that arise in the normal course of business. The Company has made accruals with respect to certain of these matters, where appropriate, that are reflected in the consolidated financial statements but are not, individually or in the aggregate, considered material. For other matters for which an accrual has not been made, the Company has not yet determined that a loss is probable or the amount of loss cannot be reasonably estimated. While the ultimate outcome of the matters cannot be determined, the Company currently does not expect that these proceedings and claims, individually or in the aggregate, will have a material effect on its consolidated financial position, results of operations, or cash flows. The outcome of any litigation is inherently uncertain, however, and if decided adversely to the Company, or if the Company determines that settlement of particular litigation is appropriate, the Company may be subject to liability that could have a material adverse effect on its consolidated financial position, results of operations, or cash flows. The Company maintains liability insurance in such amounts and with such coverage and deductibles as management believes is reasonable. The principal liability risks that the Company insures against are customer lawsuits caused by damage or nonperformance, workers’ compensation, personal injury, bodily injury, property damage, directors’ and officers’ liability, errors and omissions, employment practices liability and fidelity losses. There can be no assurance that the Company’s liability insurance will cover any or all events or that the limits of coverage will be sufficient to fully cover all liabilities. As of September 30, 2018, the Company determined there are no matters for which a material loss is reasonably possible or the Company has either determined that the range of loss is not reasonably estimable or that any reasonably estimable range of loss is not material to the consolidated financial statements. |
Cash Flow Information
Cash Flow Information | 9 Months Ended |
Sep. 30, 2018 | |
Cash Flow Information | |
Cash Flow Information | 10. Cash Flow Information Supplemental cash flow information is as follows (in thousands): Nine Months Ended September 30, 2018 2017 Cash paid during the period: Income taxes, net $ 1,631 $ 1,138 Interest, net $ 9,325 $ 8,381 Non-Cash Transaction Information: Non-cash capital expenditures $ 1,331 $ 606 Unpaid debt financing costs $ — $ 111 The components of total ending cash for the periods presented in the consolidated statement of cash flows are as follows (in thousands): As of September 30, 2018 2017 Cash and cash equivalents $ 93,617 $ 118,070 Restricted cash, current 2,000 166 Restricted cash, non-current 3,637 4,147 Cash, cash equivalents and restricted cash $ 99,254 $ 122,383 |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting | |
Segment Reporting | 11. Segment Reporting The Company has two operating and reportable segments, Seven Seas Water and Quench. This determination is supported by, among other factors, the existence of individuals responsible for the operations of each segment and who also report directly to the Company’s chief operating decision maker (“CODM”), the nature of the segment’s operations and information presented to the Company’s CODM. Seven Seas Water provides outsourced desalination solutions and wastewater treatment for governmental, municipal, industrial and hospitality customers internationally under long-term contracts. Quench provides bottleless filtered water coolers and other products that use filtered water as an input, such as ice machines, sparkling water dispensers and coffee brewers, to customers throughout the United States and in Canada, typically under multi‑year contracts. Revenues reported under the Seven Seas Water reportable segment primarily represent bulk water sales and service, including revenues generated from service concession arrangements, whereas revenues reported under the Quench reportable segment primarily represent rental of filtered water and related systems. Prior to January 1, 2017, the Company included the majority of certain general and administrative costs, primarily professional service fees and other expenses to support the activities of the registrant holding company, within the Seven Seas reportable segment. Beginning January 1, 2017, the Company began separating “Corporate and Other” for the CODM and for segment reporting purposes. The Corporate and Other administration function is not treated as a segment but includes certain general and administrative costs that are not allocated to either of the reportable segments. These costs include, but are not limited to, professional service fees and other expenses to support the activities of the registrant holding company. Corporate and Other does not include any labor allocations from the Seven Seas Water and Quench segments. The Company believes this presentation more accurately portrays the results of the core operations of each of the operating and reportable segments to the CODM. As part of the segment reconciliation below, intercompany interest expense and the associated intercompany interest income are included but are eliminated in consolidation. The following table provides information by reportable segment and a reconciliation to the consolidated results for the three months ended September 30, 2018 and 2017 (in thousands): Three Months Ended September 30, 2018 Three Months Ended September 30, 2017 Seven Seas Corporate Seven Seas Corporate Water Quench & Other Consolidated Water Quench & Other Consolidated Revenues: Bulk water $ 14,626 $ — $ — $ 14,626 $ 12,972 $ — $ — $ 12,972 Rental — 16,261 — 16,261 — 13,428 — 13,428 Financing 985 — — 985 1,118 — — 1,118 Other — 4,952 — 4,952 — 2,259 — 2,259 Total revenues 15,611 21,213 — 36,824 14,090 15,687 — 29,777 Gross profit: Bulk water 7,855 — — 7,855 6,997 — — 6,997 Rental — 9,131 — 9,131 — 7,345 — 7,345 Financing 985 — — 985 1,118 — — 1,118 Other — 1,696 — 1,696 — 874 — 874 Total gross profit 8,840 10,827 — 19,667 8,115 8,219 — 16,334 Selling, general and administrative expenses 7,616 12,194 1,016 20,826 7,303 9,828 1,299 18,430 Income (loss) from operations 1,224 (1,367) (1,016) (1,159) 812 (1,609) (1,299) (2,096) Other expense, net (3,624) (4,395) Loss before income tax expense (4,783) (6,491) Income tax expense (benefit) (2,051) 797 Net loss $ (2,732) $ (7,288) Other information: Depreciation and amortization $ 3,672 $ 5,038 $ — $ 8,710 $ 3,589 $ 3,856 $ — $ 7,445 Loss on extinguishment of debt $ — $ — $ — $ — $ 820 $ 569 $ — $ 1,389 Expenditures for long-lived assets $ 396 $ 5,319 $ — $ 5,715 $ 922 $ 3,135 $ — $ 4,057 Amortization of deferred financing fees $ 64 $ 51 $ 122 $ 237 $ 93 $ 37 $ 79 $ 209 The following table provides information by reportable segment and a reconciliation to the consolidated results for the nine months ended September 30, 2018 and 2017 (in thousands): Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Seven Seas Corporate Seven Seas Corporate Water Quench & Other Consolidated Water Quench & Other Consolidated Revenues: Bulk water $ 42,682 $ — $ — $ 42,682 $ 39,551 $ — $ — $ 39,551 Rental — 45,041 — 45,041 — 39,238 — 39,238 Financing 3,048 — — 3,048 3,451 — — 3,451 Other — 13,012 — 13,012 — 6,318 — 6,318 Total revenues 45,730 58,053 — 103,783 43,002 45,556 — 88,558 Gross profit: Bulk water 22,661 — — 22,661 19,136 — — 19,136 Rental — 24,801 — 24,801 — 21,730 — 21,730 Financing 3,048 — — 3,048 3,451 — — 3,451 Other — 4,388 — 4,388 — 2,626 — 2,626 Total gross profit 25,709 29,189 — 54,898 22,587 24,356 — 46,943 Selling, general and administrative expenses 22,361 34,101 3,227 59,689 20,768 28,988 3,284 53,040 Income (loss) from operations 3,348 (4,912) (3,227) (4,791) 1,819 (4,632) (3,284) (6,097) Other expense, net (10,520) (10,031) Loss before income tax expense (15,311) (16,128) Income tax expense (benefit) (1,312) 2,451 Net loss $ (13,999) $ (18,579) Other information: Depreciation and amortization $ 10,911 $ 13,850 $ — $ 24,761 $ 10,716 $ 11,060 $ — $ 21,776 Loss on extinguishment of debt $ — $ — $ — $ — $ 820 $ 569 $ — $ 1,389 Expenditures for long-lived assets $ 1,261 $ 11,669 $ — $ 12,930 $ 2,156 $ 9,089 $ — $ 11,245 Amortization of deferred financing fees $ 194 $ 152 $ 366 $ 712 $ 363 $ 182 $ 79 $ 624 The following table provides information by reportable segment and a reconciliation to the consolidated results as of September 30, 2018 and December 31, 2017 (in thousands): September 30, 2018 December 31, 2017 Seven Seas Corporate Seven Seas Corporate Water Quench & Other Consolidated Water Quench & Other Consolidated Total assets $ 248,519 $ 233,976 $ 66,509 $ 549,004 $ 254,202 $ 202,456 $ 97,287 $ 553,945 |
Significant Concentrations, Ris
Significant Concentrations, Risks and Uncertainties | 9 Months Ended |
Sep. 30, 2018 | |
Significant Concentrations, Risks and Uncertainties | |
Significant Concentrations, Risks and Uncertainties | 12. Significant Concentrations, Risks and Uncertainties The Company is exposed to interest rate risk resulting from its variable rate loans outstanding that adjust with movements in LIBOR. For the three and nine months ended September 30, 2018, a significant portion of the Company’s revenues were derived from territories and countries in the Caribbean region. Demand for water in the Caribbean region is impacted by, among other things, levels of rainfall, natural disaster or other catastrophic events, the tourism industry and demand from our industrial clients. Destruction caused by tropical storms and hurricanes, high levels of rainfall, downturn in the level of tourism and demand for real estate could all adversely impact the future performance of the Company as well as cause delays in collections from the Company’s customers. At September 30, 2018, a significant portion of the Company’s property, plant and equipment is located in the Caribbean region. The Caribbean islands are situated in a geography where tropical storms and hurricanes occur with regularity, especially during certain times of the year. The Company designs its plant facilities to withstand such conditions; however, a major storm could result in plant damage or periods of reduced consumption or unavailability of electricity or source seawater needed to produce water in one or more of our locations. It is the Company’s policy to maintain adequate levels of property and casualty insurance; however, the Company only insures certain of its plants for wind. The operation of desalination plants requires significant amounts of electricity which typically is provided by the local utility of the jurisdiction in which the plant is located. A shortage of electricity supply caused by force majeure or material increases in electricity costs could adversely impact the Company’s operating results. To mitigate the risk of electricity cost increases, the Company has generally contracted with major customers for those cost increases to be borne by the customers and has invested in energy efficient technology. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events | |
Subsequent Events | 13. Subsequent Events The Company has evaluated subsequent events through the date of issuance of the unaudited condensed consolidated financial statements for the nine months ended September 30, 2018. The subsequent events included the following: · On October 2, 2018, effective October 1, 2018, Quench sold substantially all of the assets and assigned certain liabilities of its Atlas High Purity Solutions business unit (“Atlas HP”), to a buyer pursuant to an asset purchase agreement. The estimated aggregate sale price, subject to working capital adjustments, was $3.0 million, including $2.7 million in cash and a receivable from the buyer of $0.3 million. As of September 30, 2018, the assets and liabilities were not classified as held-for-sale as the approval of the transaction by the Board of Directors of AquaVenture Holdings Limited, or management having the authority to approve the action, occurred on October 1, 2018. As of October 1, 2018, the current assets, long-term assets, current liabilities and long-term liabilities classified as held-for-sale and ultimately disposed had an estimated balance of $1.8 million, $0.8, million $1.0 million and $0.1 million, respectively. The preliminary gain on the sale of Atlas HP is estimated at $0.1 million, net of transaction expenses. The operations of Atlas HP did not qualify for presentation as discontinued operations upon disposition. · On November 1, 2018, AquaVenture Holdings Inc., a wholly owned subsidiary of AquaVenture, acquired all of the issued and outstanding membership interests of AUC Acquisition Holdings (“AUC”), a provider of wastewater treatment and water reuse solutions based in Houston, Texas, pursuant to a membership interest purchase agreement. The aggregate purchase price was approximately $130 million, including $128 million cash and approximately 122 thousand ordinary shares of AquaVenture, or $2 million. The estimated aggregate purchase price is subject to adjustments as provided in the purchase agreement including payment of up to $2 million contingent upon the collection of certain assumed receivables. The Company completed the acquisition to expand its WAAS offerings in the wastewater and water reuse businesses and broaden the Company’s existing portfolio in the United States. Due primarily to the timing of the acquisition, the Company has not yet completed the allocation of the purchase price to the net assets acquired. · On November 1, 2018, the Company entered into the third amendment to its corporate credit agreement (the “Amended Corporate Credit Agreement”) with a syndicate of lenders to, among other things: (i) increase its net borrowings by $110.0 million to an aggregate principal amount of $260.0 million, (ii) reduce the interest rate for the original $150.0 million borrowings by 50 basis points on both the variable and fixed interest portions and (iii) amend certain financial covenant requirements. Of the incremental net borrowing of $110.0 million, $70.0 million bears interest at a variable rate of LIBOR plus 5.5% with a LIBOR floor of 1.0%, and the remaining $40.0 million bears interest at a fixed rate of 8.7%. In the aggregate, including the aforementioned interest rate reduction, $145.0 million of borrowings bear interest at a variable rate of LIBOR plus 5.5% with a LIBOR floor of 1.0% and the remaining $115.0 million of borrowings bear interest at a weighted average fixed rate of 8.0%. A declining prepayment fee on the incremental borrowing is due upon repayment if it occurs prior to November 1, 2019. All other material terms of the Amended Corporate Credit Agreement remained substantially unchanged. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, certain information and footnotes normally required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017. In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation of the Company’s unaudited condensed consolidated balance sheet as of September 30, 2018, the unaudited condensed consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2018 and 2017 and the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2018 and 2017. The unaudited condensed consolidated balance sheet as of December 31, 2017 was based on the audited consolidated balance sheet as of December 31, 2017, as presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 but restated for adoption of new accounting guidance which is further explained in the “Adoption of New Accounting Pronouncements” section below. The unaudited condensed consolidated financial statements include the accounts of AquaVenture Holdings Limited and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include: accounting for revenue from contracts with customers and the determination of transaction prices and allocation of revenues to remaining performance obligations; accounting for goodwill and identifiable intangible assets and any related impairment; property, plant and equipment and any related impairment; contract costs and any related impairment; share‑based compensation; allowance for doubtful accounts; obligations for asset retirement; and deferred income taxes. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates. |
Revenue Recognition | Revenue Recognition Through the Seven Seas Water and Quench operating platforms, the Company generates revenue from the following primary sources: (i) bulk water sales and service (excluding service concession arrangements) ; (ii) service concession arrangements; (iii) rental of water filtration and related equipment; (iv) sale of water filtration and related equipment, coffee and consumables and (v) water filtration-related services, including installation and maintenance. The revenue recognition policy for each of the primary sources of revenue are as follows: Bulk Water Sales and Service. Through the Seven Seas Water operating platform, the Company enters into contracts with customers with a single performance obligation to deliver bulk water or a series of performance obligations to perform substantially the same services with the same pattern of transfer, which can include the operations and maintenance (“O&M”) of a customer-owned plant. The Company recognizes revenues from the delivery of bulk water or the performance of bulk water services at the time the water or services are delivered to the customers in accordance with the contractual agreements. Billings to the customer for both bulk water and the bulk water services are typically based on the volume of water supplied to a customer and typically contain a minimum monthly charge provision which allows the Company to invoice the customer for the greater of the water supplied or a minimum monthly charge. The volume of water supplied is based on meter readings performed at or near the end of the month. The transaction price calculated for bulk water sales and service can include, if applicable, contractual minimum monthly charges and the expected amount of variable consideration to the extent it is probable that a significant reversal of the cumulative revenue will not occur. The variable consideration generally includes the amount of water in excess of contractual minimum volumes, if applicable, or the amount of water expected to be supplied at contractually established rates. Estimates of revenue for unbilled water are recorded when meter readings occur at a time other than the end of a period. A contract asset or liability may be recognized in instances where there is a difference between the amount billed to a customer and the revenue recognized for the completed O&M performance obligations during the period. Revenues generated from both the delivery of bulk water and performance of services related to bulk water are recorded as bulk water revenue within the consolidated statements of operations and comprehensive income. Certain contracts with customers which require the construction of facilities to provide bulk water to a specific customer include two performance obligations, including an implicit lease for the bulk water facilities and bulk water services, a non-lease component related to O&M services. The implicit lease performance obligation is generally accounted for as an operating lease as a result of the provisions of the contract. The Company considers the implicit lease and bulk water services a single performance obligation and the calculated transaction price can include, if applicable, contractual minimum monthly charges and the expected amount of variable consideration to the extent it is probable that a significant reversal of the cumulative revenues will not occur. The variable consideration generally includes the amount of water in excess of contractual minimum volumes, if applicable, or the amount of water expected to be supplied and contractually established rates. The revenue recognition pattern for both the lease and non-lease components are the same, with revenues being recognized ratably over the contract period as delivered to the customer. Revenues generated from both the lease and non-lease performance obligations are recorded as bulk water revenue within the consolidated statements of operations and comprehensive income. Service Concession Arrangements. Through the Seven Seas Water operating platform, the Company enters into contracts with customers that are determined to be service concession arrangements. Service concession arrangements are agreements entered into with a public sector entity which controls both (i) the ability to modify or approve the services and prices provided by the operating company and (ii) beneficial entitlement to, or residual interest in, the infrastructure at the end of the term of the agreement. Service concession arrangements typically include more than one performance obligation, including the construction of infrastructure for the customer and an obligation to provide O&M services for the infrastructure constructed for the customer. Billings to the customer for service concession arrangements are typically based on the volume of water supplied to a customer and typically contain a minimum monthly charge provision which allows the Company to invoice the customer for the greater of the water supplied or a minimum monthly charge. The volume of water supplied is based on meter readings performed at or near the end of the month. The transaction price calculated for service concession arrangements includes, if applicable, contractual minimum monthly charges and the expected amount of variable consideration to the extent it is probable that a significant reversal of the cumulative revenues will not occur. The variable consideration generally includes the amount of water in excess of contractual minimum volumes, if applicable, or the amount of water expected to be supplied at contractually established rates. The transaction price is allocated to the identified performance obligations based on the relative standalone selling prices of the identified performance obligations. The transaction price allocated to the construction of infrastructure performance obligation is recognized as construction revenue within the consolidated statements of operations and comprehensive income. Construction revenues are recognized over time, using the input method based on cost incurred, which typically begins at commencement of the construction with revenue being fully recognized upon the completion of the infrastructure as control of the infrastructure is, or is deemed to be, transferred to the customer. In addition, service concession contracts typically include a difference in timing of when control is, or is deemed to be, transferred and the collection of cash receipts, which are collected over the term of the entire arrangement. The timing difference could result in a significant financing component for the construction performance obligations if determined to be a material component of the transaction price. If a significant financing component is identified, the future cash flows included in the transaction price allocated to the construction performance obligations are discounted using a discount rate comparable to a market-based borrowing rate specific to both the customer and terms of the contract. The resulting present value of the allocated future cash flows is recorded as construction revenue with a related long-term receivable as control of the infrastructure is, or is deemed to be, transferred to the customer while the discount amount is considered to be the significant financing component. Future cash flows received from the customer related to the construction performance obligations are bifurcated between principal repayment of the long-term receivable and the related imputed interest income related to the customer financing. The interest income is recorded as financing revenue within the consolidated statements of operations and comprehensive income as providing financing to our customers is a core component of our business model. The transaction price allocated to the O&M performance obligation is recorded as bulk water revenue within the consolidated statements of operations and comprehensive income as the services are provided to the customer. A contract asset or liability may be recognized in instances where there is a difference between the amount billed to a customer and the revenue recognized for the completed O&M performance obligations during the period. Rental of Water Filtration and Related Equipment. Through the Quench operating platform, the Company generates revenues through the rental of its filtered water and related systems to customers. The rental agreements, which include related executory costs, are accounted for as operating leases and are considered a single unit of account. Billings to the customer for the rental of water filtration and related equipment, which generally occur either monthly or quarterly, are based on the rental rate as stated within the rental agreement. The transaction price is based on the minimum lease payment as stated within the rental agreement. Revenues are recognized ratably over the rental agreement term and amounts paid by customers in excess of recognizable revenue are recorded as a contract liability, or deferred revenue, in the consolidated balance sheets. Upon the expiration of the initial rental agreement term, the Company may enter into rental agreement extensions in which revenues are recognized ratably over the extension term. Revenues generated under these contracts are recorded as rental revenue within the consolidated statements of operations and comprehensive income. Sale of Water and Related Filtration Equipment, Coffee and Consumables. Through the Quench operating platform, the Company enters into contracts with customers with a single performance obligation to sell customers water and related filtration equipment, coffee and consumables. The Company recognizes revenues at the time the equipment, coffee or consumables is transferred to the customer, which can be upon either shipment or delivery to the customer. The transaction price is based on the contractual price with the customer. Shipping and handling costs paid by the customer are included in revenues. Billings to the customer for the sale of water and related filtration equipment, coffee and consumables occur at the time the product is transferred to the customer and are based on contract price. Revenues generated under these contracts are recorded as other revenue within the consolidated statements of operations and comprehensive income. Services on Water and Related Filtration Equipment. Through the Quench operating platform, the Company enters into contracts with customers with a single performance obligation to provide services, including maintenance, on customer-owned water and related filtration equipment. Billings to the customer for services, which generally occur either monthly or quarterly, are based on the service rate as stated within the service agreement. The transaction price is based on service rate as stated within the service agreement. The Company recognizes revenues as the services are provided to the customer. Amounts paid by customers in excess of recognizable revenue are recorded as a contract liability, or deferred revenue, on the consolidated balance sheets. Revenues generated under these service contracts are recorded as other revenue within the consolidated statements of operations and comprehensive income. |
Contract Costs | Contract Costs Contract costs includes contract acquisition costs, deferred lease costs and contract fulfillment costs which are all recorded within other assets in the consolidated balance sheets. Contract acquisition costs consist of incremental costs incurred by the Company to originate contracts with customers. Contract acquisition costs, which generally include commissions and other costs that are only incurred as a result of obtaining a contract, are capitalized when the incremental costs are expected to be recovered over the contract period. All other costs incurred regardless of obtaining a contract are expensed as incurred. Contract acquisition costs are amortized over the period the costs are expected to contribute directly or indirectly to future cash flows, which is generally over the contract term, on a basis consistent with the transfer of goods or services to the customer to which the costs relate. There were no contract acquisition costs as of September 30, 2018 and December 31, 2017. Deferred lease costs consist of initial direct costs incurred by the Company to originate leases, which generally include water filtration and related equipment by the Quench operating platform. The costs capitalized are directly related to the negotiation and execution of leases and primarily consist of internal compensation and benefits as lease origination activities are performed internally by the Company. Deferred lease costs are amortized on a straight‑line basis over the lease term. Deferred lease costs, net as of September 30, 2018 and December 31, 2017 were $3.6 million and $3.2 million, respectively and are recorded in other assets in the consolidated balance sheets. Contract fulfillment costs consist of costs incurred by the Company to fulfill a contract with a customer and are capitalized when the costs generate or enhance resources that will be used in satisfying future performance obligations of the contract and the costs are expected to be recovered. Contract fulfillment costs capitalized generally include contracted services, direct labor, materials, and allocable overhead directly related to resources required to fulfill the contract. Contract fulfillment costs are amortized over the period the costs are expected to contribute directly or indirectly to future cash flows, which is generally over the contract term, on a basis consistent with the transfer of good or services to the customer to which the costs relate. Contract fulfillment costs, net as of September 30, 2018 and December 31, 2017 were $1.3 million and $0.8 million, respectively, and are recorded in other assets in the consolidated balance sheets. Contract costs are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company had no impairment charges related to contract costs during the three and nine months ended September 30, 2018. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a business combination. Goodwill is reviewed for impairment at least annually during the fourth quarter and more frequently if a change in circumstances or the occurrence of events indicates that potential impairment exists. The Company first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is determined to be more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs the quantitative analysis of the goodwill impairment test. Otherwise, the quantitative test is optional. Under the quantitative analysis, the recoverability of goodwill is measured at each of the Seven Seas Water and Quench reporting unit levels, which the Company has determined to be consistent with its operating segments, by comparing the reporting unit’s carrying amount, including goodwill, to the fair market value of the reporting unit. The Company determines the fair value of its reporting units based on a weighting of the present value of projected future cash flows (the “Income Approach”) and a comparative market approach under both the guideline company method and guideline transaction method (collectively, the “Market Approach”). Fair value using the Income Approach is based on the Company’s estimated future cash flows on a discounted basis. The Market Approach compares each of the Company’s reporting units to other comparable companies based on valuation multiples derived from operational and transactional data to arrive at a fair value. Factors requiring significant judgment include, among others, the determination of comparable companies, assumptions related to forecasted operating results, discount rates, long‑term growth rates, and market multiples. Changes in economic or operating conditions, or changes in the Company’s business strategies, that occur after the annual impairment analysis and which impact these assumptions, may result in a future goodwill impairment charges, which could be material to the Company’s consolidated financial statements. Other intangible assets consist of certain trade names, customer relationships, contract intangibles and non‑compete agreements. Contract intangibles includes the fair value of future cash flows from contracts with customers in excess of the fair value for the remaining performance obligations under such contracts. Trade names and non‑compete agreements which have a finite life are amortized over their estimated useful lives on a straight‑line basis. Customer relationships and contract intangibles which have a finite life are amortized on an accelerated basis based on the projected economic value of the asset over its useful life. Intangible assets with a finite life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Indefinite‑lived intangible assets, which consist of certain trade names, are not amortized but are tested for impairment at least annually or more frequently if events or circumstances indicate the asset may be impaired. |
Adoption of New Accounting Pronouncements | Adoption of New Accounting Pronouncements In October 2016, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that requires the recognition of income tax consequences of intercompany asset transfers other than inventory at the transaction date. This guidance will be effective for annual reporting periods beginning on or after December 15, 2017, including interim periods within those annual periods, and early adoption is permitted as of the beginning of an annual period. The Company adopted this guidance on January 1, 2018 on a modified retrospective basis. There was no impact to the consolidated financial statements as a result of this adoption. In May 2014, the FASB issued authoritative guidance regarding revenue from contracts with customers which specifies that revenue should be recognized when promised goods or services are transferred to customers in an amount that reflects the consideration which the company expects to be entitled in exchange for those goods or services. This guidance is effective for annual reporting periods beginning on or after December 15, 2017 and interim periods within those annual periods and will require enhanced disclosures. In addition, the FASB issued authoritative guidance in March 2017 related to the determination of the customer in a service concession arrangement, which is effective for annual reporting periods beginning on or after December 15, 2017 and interim periods within those annual periods. The Company adopted the guidance regarding both revenue from contracts with customers and the determination of the customer in a service concession contract (together referred to as the “Adopted Revenue Guidance”) on a full retrospective basis on January 1, 2018 by applying the guidance to all contracts that were not completed as of January 1, 2016. Results for periods beginning after January 1, 2016 have been adjusted to conform to the Adopted Revenue Guidance while periods prior to January 1, 2016 continue to be reported under the accounting standards in effect for the prior periods. Several of the Company’s contracts were impacted primarily due to the identification of multiple performance obligations within a single contract. However, the Adopted Revenue Guidance has had no cash impact and, therefore, does not affect the economics of our underlying customer contracts. As a result of the adoption, the Company recorded a cumulative net increase of $8.4 million to accumulated deficit as of January 1, 2016. For periods prior to January 1, 2018, the Company restated both the consolidated financial statements and the materially impacted notes to the consolidated financial statements for the Adopted Revenue Guidance. The impacts to the previously reported results are as follows (in thousands, except per share amounts): December 31, 2017 Consolidated balance sheets As Reported As Adjusted Current portion of long-term receivables $ — $ 6,878 Prepaid expenses and other current assets 8,789 3,874 Long-term contract costs 80,865 — Deferred tax asset — 38 Long-term receivables — 43,796 Other assets 39,815 4,307 Intangible assets, net 52,298 122,169 Deferred tax liability 5,700 5,266 Other long-term liabilities 3,749 11,429 Accumulated deficit (216,429) (224,380) Shareholders' equity 352,147 344,196 Three Months Ended September 30, 2017 Consolidated statements of operations and comprehensive income As Reported As Adjusted Revenues $ 29,893 $ 29,777 Cost of revenues 15,372 13,443 Gross profit 14,521 16,334 Selling, general and administrative expenses 17,734 18,430 Loss from operations (3,213) (2,096) Other expense: Interest expense, net (2,055) (2,942) Other expense, net (1,453) (1,453) Loss before income tax expense (6,721) (6,491) Income tax expense 846 797 Net loss $ (7,567) $ (7,288) Loss per share - basic and diluted $ (0.29) $ (0.28) Nine Months Ended September 30, 2017 Consolidated statements of operations and comprehensive income As Reported As Adjusted Revenues $ 88,794 $ 88,558 Cost of revenues 47,103 41,615 Gross profit 41,691 46,943 Selling, general and administrative expenses 50,964 53,040 Loss from operations (9,273) (6,097) Other expense: Interest expense, net (5,574) (8,303) Other expense, net (1,728) (1,728) Loss before income tax expense (16,575) (16,128) Income tax expense 2,645 2,451 Net loss $ (19,220) $ (18,579) Loss per share - basic and diluted $ (0.73) $ (0.70) In addition, the impacts to the consolidated statements of cash flows for the nine months ended September 30, 2017 included a reduction to net cash provided by operating activities of $0.7 million and an increase to net cash used in investing activities of $0.7 million. New Accounting Pronouncements to be Adopted In August 2018, the FASB issued authoritative guidance regarding implementation costs incurred in a cloud computing arrangement that is a service contract. This guidance will be effective for annual reporting periods beginning on or after December 15, 2019, including interim periods within those annual periods, and early adoption is permitted. The Company is currently evaluating the potential impact of the accounting and disclosure requirements on the consolidated financial statements. In February 2016, the FASB issued authoritative guidance regarding leases that requires lessees to recognize a lease liability and right‑of‑use asset for operating leases, with the exception of short‑term leases. In addition, lessor accounting was modified to align, where necessary, with lessee accounting modifications and the authoritative guidance regarding revenue from contracts with customers. Throughout 2018, the FASB has issued additional authoritative guidance which, among other things, provided an option to apply transition provisions under the standard at adoption date rather than the earliest comparative period presented as well as added a practical expedient that would permit lessors to not separate non-lease components from the associated lease components if certain conditions are met. These amendments will be effective, in conjunction with the new lease standard, for annual reporting periods beginning on or after December 15, 2018, including interim periods within those annual periods, and early adoption is permitted. During the fourth quarter of 2017, the Company decided to forego early adoption and has decided to adopt the standard on January 1, 2019. The Company will adopt on a modified retrospective basis, with the cumulative effect of transition as of the effective date of adoption. The Company concluded that it will elect the package of practical expedients provided for within the authoritative guidance which exempts the Company from having to reassess: (i) whether expired or existing contracts contain leases, (ii) the lease classification for expired or existing leases, and (iii) initial direct costs for existing leases. In addition, the Company concluded that it will elect the practical expedient that permits lessors to not separate non-lease components from the associated lease components if certain conditions are met. Lastly, the Company will utilize the short-term exemption for lessees and establish an accounting policy to not recognize a right-of-use asset or lease liability for any lease with a term of less than 12 months. Although the Company is still performing its evaluation, it does not expect to elect any of the other practical expedients. Lessee accounting - The Company expects the adoption will have a material impact on the consolidated balance sheet, including an increase to both assets and liabilities, as a result of the recognition of a right-of-use asset and corresponding lease liability for operating leases. As the Company will make a policy election for the short-term lease exemption, a right-of-use asset and corresponding lease liability will only be recorded for leases with expected terms of more than 12 months. The Company does not expect the adoption will have a material impact on the consolidated statements of operations and comprehensive income for situations which the Company is a lessee. While the Company is nearing the completion of its assessment of the adoption of the authoritative guidance for lessees, it is still assessing the inputs to the right-of-use asset and corresponding lease liability calculations. As a result, the Company has not yet quantified the cumulative effect adjustment to be recorded on January 1, 2019. The Company expects to finalize its assessment and provide the expected impact during the fourth quarter of 2018. Lessor accounting - As the Company has elected the transitional practical expedients for leases, the Company does not expect any material impacts to the consolidated financial statements for leases in situations which the Company is a lessor and the lease commenced prior to January 1, 2019. The Company is still assessing the impacts of the authoritative guidance and establishing its policies for costs incurred for the acquisition and fulfillment of the lease contracts, including commissions and installation costs. While the Company is nearing the completion of its assessment of the adoption of the authoritative guidance for lessors, it has not yet quantified the cumulative effect adjustment to be recorded on January 1, 2019. The Company expects to finalize its assessment and provide the expected impact during the fourth quarter of 2018. |
Reclassification | Reclassification The Company has historically classified the receipt of principal on long-term receivables as a cash inflow from investing activities in the consolidated statements of cash flows. During the first quarter of 2018, the Company reclassified the receipt of principal on long-term receivables as a cash inflow from operating activities in the consolidated statements of cash flows. The Company believes the change in classification is preferable as the presentation of the collection of principal on long-term receivables as a cash inflow from operating activities more clearly reflects cash received from the Company’s core operating activities as long-term receivables. In addition, the reclassification is expected to improve transparency of cash flows generated from existing operations. This reclassification, which has been applied retrospectively to all periods prior to January 1, 2018, did not result in a change to the consolidated balance sheets, or the consolidated statements of operations and comprehensive income, or any component therein, including loss from operations, comprehensive income, current assets, total assets or shareholders’ equity. In the consolidated statements of cash flows for the nine months ended September 30, 2017, the Company reclassified $3.4 million of principal collected on long-term receivables from cash flows from investing activities to cash flows from operating activities. Inclusive of both the impacts for the Adopted Revenue Guidance noted previously and the reclassification of the principal collected on long-term receivables, net cash provided from operating activities for the nine months ended September 30, 2017 was adjusted to $14.6 million from $11.9 million and net cash used in investing activities for the nine months ended September 30, 2017 was adjusted to $(21.1) million from $(18.4) million. Cash equivalents and restricted cash at September 30, 2017 remained unchanged. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
ASU 2014-09 | |
Schedule of new accounting pronouncements adoption | The impacts to the previously reported results are as follows (in thousands, except per share amounts): December 31, 2017 Consolidated balance sheets As Reported As Adjusted Current portion of long-term receivables $ — $ 6,878 Prepaid expenses and other current assets 8,789 3,874 Long-term contract costs 80,865 — Deferred tax asset — 38 Long-term receivables — 43,796 Other assets 39,815 4,307 Intangible assets, net 52,298 122,169 Deferred tax liability 5,700 5,266 Other long-term liabilities 3,749 11,429 Accumulated deficit (216,429) (224,380) Shareholders' equity 352,147 344,196 Three Months Ended September 30, 2017 Consolidated statements of operations and comprehensive income As Reported As Adjusted Revenues $ 29,893 $ 29,777 Cost of revenues 15,372 13,443 Gross profit 14,521 16,334 Selling, general and administrative expenses 17,734 18,430 Loss from operations (3,213) (2,096) Other expense: Interest expense, net (2,055) (2,942) Other expense, net (1,453) (1,453) Loss before income tax expense (6,721) (6,491) Income tax expense 846 797 Net loss $ (7,567) $ (7,288) Loss per share - basic and diluted $ (0.29) $ (0.28) Nine Months Ended September 30, 2017 Consolidated statements of operations and comprehensive income As Reported As Adjusted Revenues $ 88,794 $ 88,558 Cost of revenues 47,103 41,615 Gross profit 41,691 46,943 Selling, general and administrative expenses 50,964 53,040 Loss from operations (9,273) (6,097) Other expense: Interest expense, net (5,574) (8,303) Other expense, net (1,728) (1,728) Loss before income tax expense (16,575) (16,128) Income tax expense 2,645 2,451 Net loss $ (19,220) $ (18,579) Loss per share - basic and diluted $ (0.73) $ (0.70) |
Business Combinations and Ass_2
Business Combinations and Asset Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business Combination, Separately Recognized Transactions [Line Items] | |
Pro Forma Financial Information | Three months ended Nine months ended September 30, September 30, 2018 2017 2018 2017 Revenues $ 37,273 $ 31,584 $ 107,318 $ 95,060 Net loss $ (2,802) $ (7,046) $ (14,461) $ (17,758) Loss per share $ (0.11) $ (0.27) $ (0.54) $ (0.67) |
Alpine Water System, LLC | |
Business Combination, Separately Recognized Transactions [Line Items] | |
Schedule of business combination purchase price allocation | The following table summarizes the preliminary purchase price allocated to the fair value of assets acquired, including intangibles recorded in conjunction with the business combination, and liabilities assumed (in thousands): Assets acquired: Trade receivables $ 506 Inventory 141 Property, plant and equipment 1,779 Identified intangible assets 7,240 Goodwill 6,538 Total assets acquired 16,204 Liabilities assumed: Accounts payable and accrued liabilities (479) Deferred revenue (565) Total liabilities assumed (1,044) Total purchase price $ 15,160 |
Wa-2 Water Company Ltd | |
Business Combination, Separately Recognized Transactions [Line Items] | |
Schedule of business combination purchase price allocation | The following table summarizes the preliminary purchase price allocated to the fair value of assets acquired, including intangibles recorded in conjunction with the business combination, and liabilities assumed (in thousands): Assets acquired: Trade receivables $ 134 Inventory 158 Prepaid expenses and other current assets 6 Property, plant and equipment 424 Customer relationships 1,561 Trade names 700 Non-compete agreements 298 Goodwill 2,239 Total assets acquired 5,520 Liabilities assumed: Accounts payable and accrued liabilities (86) Deferred revenue (328) Total liabilities assumed (414) Total purchase price $ 5,106 |
Wellsys | |
Business Combination, Separately Recognized Transactions [Line Items] | |
Schedule of business combination purchase price allocation | The following table summarizes the purchase price allocated to the fair value of assets acquired, including intangibles recorded in conjunction with the business combination, and liabilities assumed (in thousands): Assets acquired: Trade receivables $ 321 Inventory 883 Customer relationships 2,801 Trade names 945 Non-compete agreements 392 Vendor agreement 193 Goodwill 1,472 Total assets acquired 7,007 Liabilities assumed: Customer deposits (153) Total liabilities assumed (153) Total purchase price $ 6,854 |
La Ferla Group LLC | |
Business Combination, Separately Recognized Transactions [Line Items] | |
Schedule of business combination purchase price allocation | The following table summarizes the preliminary amounts for the Avalon acquisition which were allocated to the fair value of aggregated net assets acquired (in thousands): Trade receivables $ 108 Property, plant and equipment 704 Inventory 13 Customer relationships 4,349 Non-compete agreements 413 Deferred revenue (153) Net assets acquired $ 5,434 |
Clarus Services, Inc. Watermark USA LLC and JMS Group, Inc. | |
Business Combination, Separately Recognized Transactions [Line Items] | |
Schedule of business combination purchase price allocation | The following table summarizes the aggregate amounts for the Clarus, Watermark and Aqua Coolers acquisitions which were allocated to the fair value of aggregated net assets acquired (in thousands): Trade receivables $ 92 Property, plant and equipment 182 Inventory 12 Customer relationships 1,952 Deferred revenue (47) Net assets acquired $ 2,191 |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue | |
Schedule of disaggregation of revenues | The following table represents a disaggregation of revenue for the three and nine months ended September 30, 2018 and 2017, along with the reportable segment for each category (in thousands): Three months ended Nine months ended September 30, September 30, Segment 2018 2017 2018 2017 Bulk water Water delivery Seven Seas Water $ 9,242 $ 8,301 $ 26,773 $ 25,276 Operating and maintenance Seven Seas Water 5,384 4,671 15,909 14,275 Total Bulk water 14,626 12,972 42,682 39,551 Rental Quench 16,261 13,428 45,041 39,238 Financing Seven Seas Water 985 1,118 3,048 3,451 Other Sale of water and related filtration equipment, coffee and consumables Quench 4,773 2,099 12,647 5,914 Services on water and related filtration equipment Quench 179 160 365 404 Total Other 4,952 2,259 13,012 6,318 Total revenues $ 36,824 $ 29,777 $ 103,783 $ 88,558 Total Seven Seas Water revenues $ 15,611 $ 14,090 $ 45,730 $ 43,002 Total Quench revenues $ 21,213 $ 15,687 $ 58,053 $ 45,556 |
Schedule of information and changes to contract assets and contract liabilities | The following table provides information about contract assets and contract liabilities from contracts with customers (in thousands) at September 30, 2018 and December 31, 2017: September 30, December 31, 2018 2017 Contract assets Trade receivables, net $ 19,497 $ 19,593 Current portion of long-term receivables 6,257 6,878 Long-term receivables 39,823 43,796 Total contract assets $ 65,577 $ 70,267 Contract liabilities Deferred revenue, current $ 3,412 $ 2,454 Deferred revenue, non-current 10,642 10,351 Total contract liabilities $ 14,054 $ 12,805 Significant changes in the contract asset and the contract liability balances during the period are as follows (in thousands): Three months ended Nine months ended September 30, 2018 September 30, 2018 Contract assets Contract liabilities Contract assets Contract liabilities Revenue recognized that was included in the contract liability balance at January 1, 2018 $ — $ 323 $ — $ 3,360 Deferred revenue acquired during the period $ — $ (714) $ — $ (1,093) |
Schedule of the expected timing of satisfaction of the remaining performance obligations | The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period (in thousands). The estimated revenue does not include amounts of variable consideration, including revenues based on changes to consumer price indices, that are constrained. In addition, the estimated revenue is based on current contracts with customers and does not take into consideration contract terms not legally enforceable with the customer. Remainder of 2018 $ 24,653 2019 $ 82,255 2020 $ 59,963 2021 $ 50,473 2022 $ 46,312 Thereafter $ 347,973 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurements | |
Schedule of fair value measurements | The Company’s fair value measurements as of September 30, 2018 and December 31, 2017 were as follows (in thousands): Quoted Prices in Significant Active Markets Other Significant Asset/ for Identical Observable Unobservable Assets/Liabilities Measured at Fair Value (Liability) Assets (Level 1) Inputs (Level 2) Inputs (Level 3) As of September 30, 2018 Recurring basis: Money market funds $ 22,508 $ 22,508 $ — $ — U.S. Treasury securities $ 45,749 $ 45,749 $ — $ — Acquisition contingent consideration $ (149) $ — $ — $ (149) As of December 31, 2017 Recurring basis: Money market funds $ 11,333 $ 11,333 $ — $ — U.S. Treasury securities $ 83,999 $ 83,999 $ — $ — |
Other Intangible Assets (Tables
Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Other Intangible Assets | |
Schedule of other intangible assets | The gross and net carrying values of other intangible assets by major intangible asset class as of September 30, 2018 and December 31, 2017 were as follows (in thousands): September 30, 2018 Gross Carrying Accumulated Carrying Amount Amortization Value Definite-lived intangible assets Customer relationships $ 122,034 $ (31,938) $ 90,096 Off-market contract intangibles 39,800 (8,473) 31,327 Trade names 6,783 (1,073) 5,710 Non-compete agreements 2,125 (350) 1,775 Other 240 (88) 152 Indefinite-lived intangible assets Trade names 273 — 273 Total $ 171,255 $ (41,922) $ 129,333 December 31, 2017 Gross Carrying Accumulated Carrying Amount Amortization Value Definite-lived intangible assets Customer relationships $ 107,798 $ (25,054) $ 82,744 Off-market contract intangibles 39,800 (6,544) 33,256 Trade names 6,093 (818) 5,275 Non-compete agreements 582 (175) 407 Other 242 (28) 214 Indefinite-lived intangible assets Trade names 273 — 273 Total $ 154,788 $ (32,619) $ 122,169 |
Loss per Share (Tables)
Loss per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Loss per Share | |
Schedule of net loss per share | The following table provides information for calculating net loss applicable to ordinary shareholders (in thousands, except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Numerator: Net loss $ (2,732) $ (7,288) $ (13,999) $ (18,579) Denominator: Weighted-average ordinary shares outstanding - basic and diluted 26,590 26,441 26,544 26,414 Loss per share - basic and diluted $ (0.10) $ (0.28) $ (0.53) $ (0.70) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure | |
Schedule of changes in acquisition contingent consideration | A reconciliation of the beginning and ending amounts of the acquisition contingent consideration is as follows (in thousands): Nine Months Ended September 30, 2018 Acquisition contingent consideration at beginning of year $ — Acquired during the period 149 Acquisition contingent consideration at end of year $ 149 |
Cash Flow Information (Tables)
Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Cash Flow Information | |
Supplemental cash flow information | Supplemental cash flow information is as follows (in thousands): Nine Months Ended September 30, 2018 2017 Cash paid during the period: Income taxes, net $ 1,631 $ 1,138 Interest, net $ 9,325 $ 8,381 Non-Cash Transaction Information: Non-cash capital expenditures $ 1,331 $ 606 Unpaid debt financing costs $ — $ 111 The components of total ending cash for the periods presented in the consolidated statement of cash flows are as follows (in thousands): As of September 30, 2018 2017 Cash and cash equivalents $ 93,617 $ 118,070 Restricted cash, current 2,000 166 Restricted cash, non-current 3,637 4,147 Cash, cash equivalents and restricted cash $ 99,254 $ 122,383 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting | |
Schedule of information by reportable segment | The following table provides information by reportable segment and a reconciliation to the consolidated results for the three months ended September 30, 2018 and 2017 (in thousands): Three Months Ended September 30, 2018 Three Months Ended September 30, 2017 Seven Seas Corporate Seven Seas Corporate Water Quench & Other Consolidated Water Quench & Other Consolidated Revenues: Bulk water $ 14,626 $ — $ — $ 14,626 $ 12,972 $ — $ — $ 12,972 Rental — 16,261 — 16,261 — 13,428 — 13,428 Financing 985 — — 985 1,118 — — 1,118 Other — 4,952 — 4,952 — 2,259 — 2,259 Total revenues 15,611 21,213 — 36,824 14,090 15,687 — 29,777 Gross profit: Bulk water 7,855 — — 7,855 6,997 — — 6,997 Rental — 9,131 — 9,131 — 7,345 — 7,345 Financing 985 — — 985 1,118 — — 1,118 Other — 1,696 — 1,696 — 874 — 874 Total gross profit 8,840 10,827 — 19,667 8,115 8,219 — 16,334 Selling, general and administrative expenses 7,616 12,194 1,016 20,826 7,303 9,828 1,299 18,430 Income (loss) from operations 1,224 (1,367) (1,016) (1,159) 812 (1,609) (1,299) (2,096) Other expense, net (3,624) (4,395) Loss before income tax expense (4,783) (6,491) Income tax expense (benefit) (2,051) 797 Net loss $ (2,732) $ (7,288) Other information: Depreciation and amortization $ 3,672 $ 5,038 $ — $ 8,710 $ 3,589 $ 3,856 $ — $ 7,445 Loss on extinguishment of debt $ — $ — $ — $ — $ 820 $ 569 $ — $ 1,389 Expenditures for long-lived assets $ 396 $ 5,319 $ — $ 5,715 $ 922 $ 3,135 $ — $ 4,057 Amortization of deferred financing fees $ 64 $ 51 $ 122 $ 237 $ 93 $ 37 $ 79 $ 209 The following table provides information by reportable segment and a reconciliation to the consolidated results for the nine months ended September 30, 2018 and 2017 (in thousands): Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Seven Seas Corporate Seven Seas Corporate Water Quench & Other Consolidated Water Quench & Other Consolidated Revenues: Bulk water $ 42,682 $ — $ — $ 42,682 $ 39,551 $ — $ — $ 39,551 Rental — 45,041 — 45,041 — 39,238 — 39,238 Financing 3,048 — — 3,048 3,451 — — 3,451 Other — 13,012 — 13,012 — 6,318 — 6,318 Total revenues 45,730 58,053 — 103,783 43,002 45,556 — 88,558 Gross profit: Bulk water 22,661 — — 22,661 19,136 — — 19,136 Rental — 24,801 — 24,801 — 21,730 — 21,730 Financing 3,048 — — 3,048 3,451 — — 3,451 Other — 4,388 — 4,388 — 2,626 — 2,626 Total gross profit 25,709 29,189 — 54,898 22,587 24,356 — 46,943 Selling, general and administrative expenses 22,361 34,101 3,227 59,689 20,768 28,988 3,284 53,040 Income (loss) from operations 3,348 (4,912) (3,227) (4,791) 1,819 (4,632) (3,284) (6,097) Other expense, net (10,520) (10,031) Loss before income tax expense (15,311) (16,128) Income tax expense (benefit) (1,312) 2,451 Net loss $ (13,999) $ (18,579) Other information: Depreciation and amortization $ 10,911 $ 13,850 $ — $ 24,761 $ 10,716 $ 11,060 $ — $ 21,776 Loss on extinguishment of debt $ — $ — $ — $ — $ 820 $ 569 $ — $ 1,389 Expenditures for long-lived assets $ 1,261 $ 11,669 $ — $ 12,930 $ 2,156 $ 9,089 $ — $ 11,245 Amortization of deferred financing fees $ 194 $ 152 $ 366 $ 712 $ 363 $ 182 $ 79 $ 624 The following table provides information by reportable segment and a reconciliation to the consolidated results as of September 30, 2018 and December 31, 2017 (in thousands): September 30, 2018 December 31, 2017 Seven Seas Corporate Seven Seas Corporate Water Quench & Other Consolidated Water Quench & Other Consolidated Total assets $ 248,519 $ 233,976 $ 66,509 $ 549,004 $ 254,202 $ 202,456 $ 97,287 $ 553,945 |
Description of the Business - C
Description of the Business - Corporate Reorganization (Details) | 9 Months Ended |
Sep. 30, 2018segment | |
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |
Number of operating platforms | 2 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Contract Costs (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($)item | Dec. 31, 2017USD ($) | |
Capitalized Contract Cost [Line Items] | |||
Number of performance obligations | item | 2 | ||
Contract assets impairment | $ 0 | $ 0 | |
Contract Acquisition Costs | |||
Capitalized Contract Cost [Line Items] | |||
Contract costs | 0 | 0 | $ 0 |
Deferred Lease Costs | |||
Capitalized Contract Cost [Line Items] | |||
Contract costs | 3,600 | 3,600 | 3,200 |
Contract Fulfillment Costs | |||
Capitalized Contract Cost [Line Items] | |||
Contract costs | $ 1,300 | $ 1,300 | $ 800 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - New Accounting Pronouncements and Reclassification (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Jan. 01, 2016 | |
Significant Accounting Policies [Line Items] | ||||||
Current portion of long-term receivables | $ 6,257 | $ 6,257 | $ 6,878 | |||
Prepaid expenses and other current assets | 3,855 | 3,855 | 3,874 | |||
Deferred tax asset | 3,157 | 3,157 | 38 | |||
Long-term receivables | 39,823 | 39,823 | 43,796 | |||
Other assets | 5,139 | 5,139 | 4,307 | |||
Intangible assets, net | 129,333 | 129,333 | 122,169 | |||
Deferred tax liability | 5,502 | 5,502 | 5,266 | |||
Other long-term liabilities | 11,757 | 11,757 | 11,429 | |||
Accumulated deficit | (238,379) | (238,379) | (224,380) | |||
Shareholders' equity | 340,026 | 340,026 | 344,196 | |||
Revenues | 36,824 | $ 29,777 | 103,783 | $ 88,558 | ||
Cost of revenues | 17,157 | 13,443 | 48,885 | 41,615 | ||
Gross profit | 19,667 | 16,334 | 54,898 | 46,943 | ||
Selling, general and administrative expenses | 20,826 | 18,430 | 59,689 | 53,040 | ||
Loss from operations | (1,159) | (2,096) | (4,791) | (6,097) | ||
Other expense: | ||||||
Interest expense, net | (3,396) | (2,942) | (10,000) | (8,303) | ||
Other expense, net | (228) | (1,453) | (520) | (1,728) | ||
Loss before income tax expense | (4,783) | (6,491) | (15,311) | (16,128) | ||
Income tax expense (benefit) | (2,051) | 797 | (1,312) | 2,451 | ||
Net loss | $ (2,732) | $ (7,288) | $ (13,999) | $ (18,579) | ||
Loss per share – basic and diluted | $ (0.10) | $ (0.28) | $ (0.53) | $ (0.70) | ||
Cash flows from operating activities | $ 22,048 | $ 14,572 | ||||
Cash flows from investing activities | $ (40,011) | (21,144) | ||||
As reported | ||||||
Other expense: | ||||||
Cash flows from operating activities | 11,900 | |||||
Cash flows from investing activities | (18,400) | |||||
Adjustment | ||||||
Other expense: | ||||||
Cash flows from operating activities | 3,400 | |||||
Cash flows from investing activities | (3,400) | |||||
ASU 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | ||||||
Significant Accounting Policies [Line Items] | ||||||
Accumulated deficit | $ (8,400) | |||||
Other expense: | ||||||
Cash flows from operating activities | (700) | |||||
Cash flows from investing activities | 700 | |||||
ASU 2014-09 | Calculated under Revenue Guidance in Effect before Topic 606 | ||||||
Significant Accounting Policies [Line Items] | ||||||
Prepaid expenses and other current assets | 8,789 | |||||
Long-term contract costs | 80,865 | |||||
Other assets | 39,815 | |||||
Intangible assets, net | 52,298 | |||||
Deferred tax liability | 5,700 | |||||
Other long-term liabilities | 3,749 | |||||
Accumulated deficit | (216,429) | |||||
Shareholders' equity | $ 352,147 | |||||
Revenues | $ 29,893 | 88,794 | ||||
Cost of revenues | 15,372 | 47,103 | ||||
Gross profit | 14,521 | 41,691 | ||||
Selling, general and administrative expenses | 17,734 | 50,964 | ||||
Loss from operations | (3,213) | (9,273) | ||||
Other expense: | ||||||
Interest expense, net | (2,055) | (5,574) | ||||
Other expense, net | (1,453) | (1,728) | ||||
Loss before income tax expense | (6,721) | (16,575) | ||||
Income tax expense (benefit) | 846 | 2,645 | ||||
Net loss | $ (7,567) | $ (19,220) | ||||
Loss per share – basic and diluted | $ (0.29) | $ (0.73) |
Business Combinations and Ass_3
Business Combinations and Asset Acquisitions - Alpine Water System, LLC (Details) - USD ($) $ in Thousands | Aug. 06, 2018 | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | |||||
Contingent consideration | $ 149 | $ 149 | $ 149 | ||
Assets acquired: | |||||
Goodwill | 108,244 | 108,244 | 108,244 | $ 99,495 | |
Quench | Alpine Water System, LLC | |||||
Business Acquisition [Line Items] | |||||
Contingent consideration range of outcomes minimum | 0 | 0 | 0 | ||
Contingent consideration range of outcomes maximum | 300 | 300 | 300 | ||
Contingent consideration ultimate payout | 600 | 600 | 600 | ||
Quench | Alpine Water System, LLC | Minimum | |||||
Business Acquisition [Line Items] | |||||
Undiscounted range of outcomes for the postcombination compensation payout | 0 | 0 | 0 | ||
Quench | Alpine Water System, LLC | Maximum | |||||
Business Acquisition [Line Items] | |||||
Undiscounted range of outcomes for the postcombination compensation payout | 1,100 | 1,100 | 1,100 | ||
Quench Usa Inc | Alpine Water System, LLC | |||||
Business Acquisition [Line Items] | |||||
Purchase price | $ 15,200 | ||||
Cash paid for acquisition | 14,600 | ||||
Notes payable | 400 | ||||
Contingent consideration | 200 | ||||
Assets acquired: | |||||
Trade receivables | 506 | ||||
Inventory | 141 | ||||
Intangible assets | 7,240 | ||||
Property, plant and equipment | 1,779 | ||||
Goodwill | 6,538 | ||||
Total assets acquired | 16,204 | ||||
Liabilities assumed: | |||||
Accounts payable and accrued liabilities | (479) | ||||
Deferred revenue | (565) | ||||
Total liabilities assumed | (1,044) | ||||
Net assets acquired | $ 15,160 | ||||
Quench Usa Inc | Alpine Water System, LLC | Selling, General and Administrative Expenses | |||||
Business Acquisition [Line Items] | |||||
Transaction related costs | $ 200 | $ 200 | |||
Quench Usa Inc | Quench | Alpine Water System, LLC | |||||
Liabilities assumed: | |||||
Revenue | 900 | ||||
Net income | $ (100) |
Business Combinations and Ass_4
Business Combinations and Asset Acquisitions - Wa-2 Water Company Ltd (Details) - USD ($) $ in Thousands | Mar. 01, 2018 | Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
Assets acquired: | ||||
Goodwill | $ 108,244 | $ 108,244 | $ 99,495 | |
Quench Canada, Inc. | ||||
Business Acquisition [Line Items] | ||||
Amount held in escrow by third party | $ 300 | |||
Quench Canada, Inc. | Customer Relationships | ||||
Liabilities assumed: | ||||
Discounted rate | 12.90% | |||
Weighted average useful life of intangible assets | 20 years | |||
Quench Canada, Inc. | Trade Names | ||||
Liabilities assumed: | ||||
Discounted rate | 12.90% | |||
Weighted average useful life of intangible assets | 12 years | |||
Quench Canada, Inc. | Non-compete agreements | ||||
Liabilities assumed: | ||||
Discounted rate | 12.90% | |||
Weighted average useful life of intangible assets | 5 years | |||
Quench Canada, Inc. | Wa-2 Water Company Ltd | ||||
Business Acquisition [Line Items] | ||||
Purchase price | $ 5,100 | |||
Escrow deposit period | 1 year | |||
Working capital adjustment | $ 5,000 | |||
Assets acquired: | ||||
Trade receivables | 134 | |||
Inventory | 158 | |||
Prepaid expenses and other current assets | 6 | |||
Property, plant and equipment | 424 | |||
Goodwill | 2,239 | |||
Total assets acquired | 5,520 | |||
Liabilities assumed: | ||||
Accounts payable and accrued liabilities | (86) | |||
Deferred revenue | (328) | |||
Total liabilities assumed | (414) | |||
Net assets acquired | 5,106 | |||
Quench Canada, Inc. | Wa-2 Water Company Ltd | Customer Relationships | ||||
Assets acquired: | ||||
Intangible assets | 1,561 | |||
Quench Canada, Inc. | Wa-2 Water Company Ltd | Trade Names | ||||
Assets acquired: | ||||
Intangible assets | 700 | |||
Quench Canada, Inc. | Wa-2 Water Company Ltd | Non-compete agreements | ||||
Assets acquired: | ||||
Intangible assets | $ 298 | |||
Quench | Quench Canada, Inc. | Wa-2 Water Company Ltd | ||||
Liabilities assumed: | ||||
Revenue | 1,300 | |||
Net income | 100 | |||
Selling, General and Administrative Expenses | Quench Canada, Inc. | Wa-2 Water Company Ltd | ||||
Business Acquisition [Line Items] | ||||
Transaction related costs | $ 0 | $ 100 |
Business Combinations and Ass_5
Business Combinations and Asset Acquisitions - Wellsys (Details) - USD ($) $ in Thousands | Sep. 08, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 |
Assets acquired: | ||||||
Goodwill | $ 108,244 | $ 108,244 | $ 99,495 | |||
Quench Usa Inc | Wellsys | ||||||
Business Acquisition [Line Items] | ||||||
Purchase price | $ 6,900 | |||||
Working capital adjustment | 165 | |||||
Assets acquired: | ||||||
Trade receivables | 321 | |||||
Inventory | 883 | |||||
Goodwill | 1,472 | |||||
Total assets acquired | 7,007 | |||||
Liabilities assumed: | ||||||
Customer deposits | (153) | |||||
Total liabilities assumed | (153) | |||||
Net assets acquired | 6,854 | |||||
Quench Usa Inc | Wellsys | Customer Relationships | ||||||
Assets acquired: | ||||||
Intangible assets | 2,801 | |||||
Quench Usa Inc | Wellsys | Trade Names | ||||||
Assets acquired: | ||||||
Intangible assets | 945 | |||||
Quench Usa Inc | Wellsys | Non-compete agreements | ||||||
Assets acquired: | ||||||
Intangible assets | 392 | |||||
Quench Usa Inc | Wellsys | Vendor agreement | ||||||
Assets acquired: | ||||||
Intangible assets | $ 193 | |||||
Selling, General and Administrative Expenses | Quench Usa Inc | Wellsys | ||||||
Business Acquisition [Line Items] | ||||||
Transaction related costs | $ 0 | $ 21 | $ 0 | $ 21 |
Business Combinations and Ass_6
Business Combinations and Asset Acquisitions - Proforma financial information (Details) - Alpine, Wa2 And Wellsys - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Business Acquisition, Pro Forma Information [Abstract] | ||||
Revenues | $ 37,273 | $ 31,584 | $ 107,318 | $ 95,060 |
Net loss | $ (2,802) | $ (7,046) | $ (14,461) | $ (17,758) |
Loss per share | $ (0.11) | $ (0.27) | $ (0.54) | $ (0.67) |
Business Combinations and Ass_7
Business Combinations and Asset Acquisitions - La Ferla Group LLC (Details) - Quench Usa Inc - La Ferla Group LLC - USD ($) $ in Thousands | Jun. 04, 2018 | Sep. 30, 2018 | Sep. 30, 2018 |
Business Acquisition [Line Items] | |||
Purchase price | $ 5,400 | ||
Cash paid for acquisition | 5,200 | ||
Notes payable | 200 | ||
Transaction related costs | $ 0 | $ 14 | |
Assets acquired: | |||
Trade receivables | 108 | ||
Property, plant and equipment | 704 | ||
Inventory | 13 | ||
Deferred revenue | (153) | ||
Net assets acquired | 5,434 | ||
Customer Relationships | |||
Assets acquired: | |||
Intangible assets | 4,349 | ||
Discounted rate | 12.10% | ||
Weighted average useful life of intangible assets | 17 years | ||
Non-compete agreements | |||
Assets acquired: | |||
Intangible assets | $ 413 | ||
Discounted rate | 12.10% | ||
Weighted average useful life of intangible assets | 5 years |
Business Combinations and Ass_8
Business Combinations and Asset Acquisitions - Clarus Services, Inc., Watermark USA LLC and JMS Group, Inc. (Details) - Quench Usa Inc - Clarus Services, Inc. Watermark USA LLC and JMS Group, Inc. - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Apr. 02, 2018 | Sep. 30, 2018 | Jan. 15, 2018 | |
Business Acquisition [Line Items] | ||||
Purchase price | $ 2,200 | |||
Cash paid for acquisition | 2,100 | |||
Notes payable | $ 100 | |||
Transaction related costs | $ 0 | $ 41 | ||
Assets acquired: | ||||
Trade receivables | $ 92 | |||
Property, plant and equipment | 182 | |||
Inventory | 12 | |||
Deferred revenue | (47) | |||
Net assets acquired | 2,191 | |||
Customer Relationships | ||||
Assets acquired: | ||||
Customer relationships | $ 1,952 | |||
Weighted average useful life of intangible assets | 12 years |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 36,824 | $ 29,777 | $ 103,783 | $ 88,558 |
Bulk water | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 14,626 | 12,972 | 42,682 | 39,551 |
Rental | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 16,261 | 13,428 | 45,041 | 39,238 |
Financing | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 985 | 1,118 | 3,048 | 3,451 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 4,952 | 2,259 | 13,012 | 6,318 |
Seven Seas Water | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 15,611 | 14,090 | 45,730 | 43,002 |
Seven Seas Water | Bulk water | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 14,626 | 12,972 | 42,682 | 39,551 |
Seven Seas Water | Water Delivery | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 9,242 | 8,301 | 26,773 | 25,276 |
Seven Seas Water | Operating and maintenance | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 5,384 | 4,671 | 15,909 | 14,275 |
Seven Seas Water | Financing | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 985 | 1,118 | 3,048 | 3,451 |
Quench | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 21,213 | 15,687 | 58,053 | 45,556 |
Quench | Rental | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 16,261 | 13,428 | 45,041 | 39,238 |
Quench | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 4,952 | 2,259 | 13,012 | 6,318 |
Quench | Water And Related Equipment, Coffee and Consumables | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 4,773 | 2,099 | 12,647 | 5,914 |
Quench | Services on water and related filtration equipment | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 179 | $ 160 | $ 365 | $ 404 |
Revenue - Contract Assets And L
Revenue - Contract Assets And Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
Contract assets | |||
Trade receivables | $ 19,497 | $ 19,497 | $ 19,593 |
Current portion of long-term receivables | 6,257 | 6,257 | 6,878 |
Long-term receivables | 39,823 | 39,823 | 43,796 |
Total contract assets | 65,577 | 65,577 | 70,267 |
Contract liabilities | |||
Deferred revenue, current | 3,412 | 3,412 | 2,454 |
Deferred revenue, non-current | 10,642 | 10,642 | 10,351 |
Total contract liabilities | 14,054 | 14,054 | $ 12,805 |
Changes in contract assets and liabilities | |||
Revenue recognized that was included in the contract liability balance at January 1, 2018 | 323 | 3,360 | |
Deferred revenue acquired during the period | (714) | (1,093) | |
Contract assets impairment | $ 0 | $ 0 |
Revenue - Performance Obligatio
Revenue - Performance Obligations (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation expected timing of satisfaction period | 3 months |
Revenue, remaining performance obligation | $ 24,653 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation expected timing of satisfaction period | 1 year |
Revenue, remaining performance obligation | $ 82,255 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation expected timing of satisfaction period | 1 year |
Revenue, remaining performance obligation | $ 59,963 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation expected timing of satisfaction period | 1 year |
Revenue, remaining performance obligation | $ 50,473 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation expected timing of satisfaction period | 1 year |
Revenue, remaining performance obligation | $ 46,312 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation expected timing of satisfaction period | |
Revenue, remaining performance obligation | $ 347,973 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Measurements (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||
Asset transfers out of Level 1 into Level 2 | $ 0 | |
Assets transfers out of Level 2 into Level 1 | 0 | |
Asset transfers into (out of) Level 3 | 0 | |
Acquisition contingent consideration | (149) | |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||
Money market funds | 22,508 | $ 11,333 |
Acquisition contingent consideration | (149) | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||
Money market funds | 22,508 | 11,333 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||
Acquisition contingent consideration | (149) | |
Fair Value, Measurements, Recurring | US Treasury securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||
Held-to-maturity securities | 45,749 | 83,999 |
Fair Value, Measurements, Recurring | US Treasury securities | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||
Held-to-maturity securities | $ 45,749 | $ 83,999 |
Other Intangible Assets - Other
Other Intangible Assets - Other Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Definite - lived intangible assets | ||
Accumulated Amortization | $ (41,922) | $ (32,619) |
Other Intangible Assets | ||
Gross Carrying Amount | 171,255 | 154,788 |
Accumulated Amortization | (41,922) | (32,619) |
Carrying Value | 129,333 | 122,169 |
Trade Names | ||
Indefinite - lived intangible assets | ||
Carrying Value | 273 | 273 |
Customer Relationships | ||
Definite - lived intangible assets | ||
Gross Carrying Amount | 122,034 | 107,798 |
Accumulated Amortization | (31,938) | (25,054) |
Carrying Value | 90,096 | 82,744 |
Other Intangible Assets | ||
Accumulated Amortization | (31,938) | (25,054) |
Off-market contract intangibles | ||
Definite - lived intangible assets | ||
Gross Carrying Amount | 39,800 | 582 |
Accumulated Amortization | (8,473) | (175) |
Carrying Value | 31,327 | 407 |
Other Intangible Assets | ||
Accumulated Amortization | (8,473) | (175) |
Trade Names | ||
Definite - lived intangible assets | ||
Gross Carrying Amount | 6,783 | 6,093 |
Accumulated Amortization | (1,073) | (818) |
Carrying Value | 5,710 | 5,275 |
Other Intangible Assets | ||
Accumulated Amortization | (1,073) | (818) |
Non-compete agreements | ||
Definite - lived intangible assets | ||
Gross Carrying Amount | 2,125 | 39,800 |
Accumulated Amortization | (350) | (6,544) |
Carrying Value | 1,775 | 33,256 |
Other Intangible Assets | ||
Accumulated Amortization | (350) | (6,544) |
Other | ||
Definite - lived intangible assets | ||
Gross Carrying Amount | 240 | 242 |
Accumulated Amortization | (88) | (28) |
Carrying Value | 152 | 214 |
Other Intangible Assets | ||
Accumulated Amortization | $ (88) | $ (28) |
Other Intangible Assets - Amort
Other Intangible Assets - Amortization expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Other Intangible Assets | ||||
Amortization expense | $ 3.3 | $ 1.4 | $ 9.3 | $ 7.9 |
Contra-revenue | 0.6 | 0.6 | 1.9 | 1.9 |
Future amortization expense | ||||
Remainder of 2018 | 3.4 | 3.4 | ||
2,019 | 13.3 | 13.3 | ||
2,020 | 12.7 | 12.7 | ||
2,021 | 12.1 | 12.1 | ||
2,022 | 11.6 | 11.6 | ||
Impairment expense | ||||
Impairment expense related to other intangible assets | $ 0 | $ 0 | $ 0 | $ 0 |
Share-based Compensation - Acti
Share-based Compensation - Activity of options to purchase Ordinary shares (Details) - Ordinary Share Units - 2016 Plan shares in Millions | Jan. 01, 2018 | Sep. 30, 2018shares | Sep. 22, 2016shares |
Weighted Average Exercise Price Per Share | |||
Aggregate number of shares by class authorized for grant under the Equity Incentive Plan | 7.1 | 5 | |
Annual percentage increase in shares available for issuance | 4 |
Share-Based Compensation - Rest
Share-Based Compensation - Restricted Awards Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 22, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||||
Vesting Period | 0 years | ||||
Allocated Share-based Compensation Expense | $ 3,400 | $ 3,100 | $ 10,000 | $ 9,100 | |
Tax benefit | $ 0 | 0 | $ 0 | 0 | |
Restricted share units | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||||
Granted | 400,000 | ||||
Tranche 1 | All other restricted share units | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||||
Vesting Period | 4 years | ||||
Vesting Percentage | 25.00% | ||||
Tranche 2 | All other restricted share units | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||||
Vesting Period | 3 years | ||||
Vesting Percentage | 75.00% | ||||
Aggregate fair value | $ 6,300 | ||||
2016 ESPP | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||||
Number of ordinary shares issued | 10,000 | ||||
Number of ordinary shares authorized for issuance | 700,000 | 700,000 | |||
2016 ESPP | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||||
Percentage of purchase price of ordinary shares | 85.00% | ||||
Independent Directors Deferred Compensation Program | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||||
Phantom shares awarded percentage | 120.00% | ||||
Phantom shares in equivalent ordinary shares | 1 | ||||
Independent Directors Deferred Compensation Program | Phantom Shares | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||||
Granted | 46,000 | ||||
Requisite service period | 12 years | ||||
Aggregate fair value | $ 600 | ||||
Number of shares outstanding | 51,000 | 51,000 | |||
Independent Directors Deferred Compensation Program | Tranche 1 | Phantom Shares | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||||
Granted | 37,000 | ||||
Vesting Period | 12 years | ||||
Independent Directors Deferred Compensation Program | Tranche 2 | Phantom Shares | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||||
Granted | 9,000 | ||||
Selling, General and Administrative Expenses | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||||
Allocated Share-based Compensation Expense | $ 3,300 | 3,000 | $ 9,800 | 8,800 | |
Cost of revenues | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||||
Allocated Share-based Compensation Expense | $ 100 | $ 100 | $ 200 | $ 300 | |
Ordinary Share Units | 2016 Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||||
Number of ordinary shares authorized for issuance | 7,100,000 | 7,100,000 | 5,000,000 |
Loss per Share (Details)
Loss per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Common stock outstanding | 26,600 | 26,600 | 26,482 | ||
Numerator: | |||||
Net loss | $ (2,732) | $ (7,288) | $ (13,999) | $ (18,579) | |
Denominator: | |||||
Weighted-average ordinary shares outstanding - basic and diluted | 26,590 | 26,441 | 26,544 | 26,414 | |
Loss per share - basic and diluted | $ (0.10) | $ (0.28) | $ (0.53) | $ (0.70) | |
Weighted average outstanding share awards excluded from the calculation of diluted earnings per share | 3,900 | 3,900 | |||
Ordinary Share Units | |||||
Denominator: | |||||
Weighted average outstanding share awards excluded from the calculation of diluted earnings per share | 4,100 | 4,100 |
Commitments and Contingencies -
Commitments and Contingencies - Asset Retirement Obligations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |||||
Accretion of obligation | $ 13 | $ 13 | $ 38 | $ 37 | |
Valuation adjustments | 0 | $ 0 | 0 | $ 0 | |
Accrued Liabilities | |||||
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |||||
Current portion of the ARO liabilities | 26 | 26 | $ 26 | ||
Other Noncurrent Liabilities | |||||
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |||||
Long-term portion of the ARO liabilities | $ 1,100 | $ 1,100 | $ 1,100 |
Commitments and Contingencies-
Commitments and Contingencies- Acquisition Contingent Consideration (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Business Acquisition, Contingent Consideration [Line Items] | |
Acquired during the period | $ 149 |
Acquisition contingent consideration at end of year | 149 |
Accrued Liabilities. | |
Business Acquisition, Contingent Consideration [Line Items] | |
Remaining balance of the acquisition contingent consideration | $ 149 |
Cash Flow Information (Details)
Cash Flow Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash paid during the period: | ||||
Income taxes, net | $ 1,631 | $ 1,138 | ||
Interest, net | 9,325 | 8,381 | ||
Non-Cash Transaction Information: | ||||
Non-cash capital expenditures | 1,331 | 606 | ||
Unpaid debt financing costs | 111 | |||
Components of Total Ending Cash | ||||
Cash and cash equivalents | 93,617 | 118,070 | $ 118,090 | |
Restricted cash, current | 2,000 | 166 | ||
Restricted cash, non-current | 3,637 | 4,147 | 4,269 | |
Cash, cash equivalents and restricted cash | $ 99,254 | $ 122,383 | $ 122,359 | $ 101,395 |
Segment Reporting - Information
Segment Reporting - Information by Reportable Segment (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)segment | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Reportable segment and reconciliation | |||||
Number of operating segments | segment | 2 | ||||
Number of reportable segments | segment | 2 | ||||
Total revenues | $ 36,824 | $ 29,777 | $ 103,783 | $ 88,558 | |
Cost of Revenue. | 17,157 | 13,443 | 48,885 | 41,615 | |
Total gross profit | 19,667 | 16,334 | 54,898 | 46,943 | |
Selling, general and administrative expenses | 20,826 | 18,430 | 59,689 | 53,040 | |
Loss from operations | (1,159) | (2,096) | (4,791) | (6,097) | |
Other expense, net | (3,624) | (4,395) | (10,520) | (10,031) | |
Loss before income tax expense | (4,783) | (6,491) | (15,311) | (16,128) | |
Income tax expense (benefit) | (2,051) | 797 | (1,312) | 2,451 | |
Net loss | (2,732) | (7,288) | (13,999) | (18,579) | |
Other information: | |||||
Depreciation and amortization | 8,710 | 7,445 | 24,761 | 21,776 | |
Interest expense, net | 3,396 | 2,942 | 10,000 | 8,303 | |
Loss on extinguishment of debt | 1,389 | 1,389 | |||
Expenditures for long-lived assets | 5,715 | 4,057 | 12,930 | 11,245 | |
Amortization of deferred financing fees | 237 | 209 | 712 | 624 | |
Total assets | 549,004 | 549,004 | $ 553,945 | ||
Seven Seas Water | |||||
Reportable segment and reconciliation | |||||
Total revenues | 15,611 | 14,090 | 45,730 | 43,002 | |
Total gross profit | 8,840 | 8,115 | 25,709 | 22,587 | |
Selling, general and administrative expenses | 7,616 | 7,303 | 22,361 | 20,768 | |
Loss from operations | 1,224 | 812 | 3,348 | 1,819 | |
Other information: | |||||
Depreciation and amortization | 3,672 | 3,589 | 10,911 | 10,716 | |
Loss on extinguishment of debt | 820 | 820 | |||
Expenditures for long-lived assets | 396 | 922 | 1,261 | 2,156 | |
Amortization of deferred financing fees | 64 | 93 | 194 | 363 | |
Total assets | 248,519 | 248,519 | 254,202 | ||
Quench | |||||
Reportable segment and reconciliation | |||||
Total revenues | 21,213 | 15,687 | 58,053 | 45,556 | |
Total gross profit | 10,827 | 8,219 | 29,189 | 24,356 | |
Selling, general and administrative expenses | 12,194 | 9,828 | 34,101 | 28,988 | |
Loss from operations | (1,367) | (1,609) | (4,912) | (4,632) | |
Other information: | |||||
Depreciation and amortization | 5,038 | 3,856 | 13,850 | 11,060 | |
Loss on extinguishment of debt | 569 | 569 | |||
Expenditures for long-lived assets | 5,319 | 3,135 | 11,669 | 9,089 | |
Amortization of deferred financing fees | 51 | 37 | 152 | 182 | |
Total assets | 233,976 | 233,976 | 202,456 | ||
Corporate & Other | |||||
Reportable segment and reconciliation | |||||
Selling, general and administrative expenses | 1,016 | 1,299 | 3,227 | 3,284 | |
Loss from operations | (1,016) | (1,299) | (3,227) | (3,284) | |
Other information: | |||||
Amortization of deferred financing fees | 122 | 79 | 366 | 79 | |
Total assets | 66,509 | 66,509 | $ 97,287 | ||
Bulk water | |||||
Reportable segment and reconciliation | |||||
Total revenues | 14,626 | 12,972 | 42,682 | 39,551 | |
Cost of Revenue. | 6,771 | 5,975 | 20,021 | 20,415 | |
Total gross profit | 7,855 | 6,997 | 22,661 | 19,136 | |
Bulk water | Seven Seas Water | |||||
Reportable segment and reconciliation | |||||
Total revenues | 14,626 | 12,972 | 42,682 | 39,551 | |
Total gross profit | 7,855 | 6,997 | 22,661 | 19,136 | |
Rental | |||||
Reportable segment and reconciliation | |||||
Total revenues | 16,261 | 13,428 | 45,041 | 39,238 | |
Cost of Revenue. | 7,130 | 6,083 | 20,240 | 17,508 | |
Total gross profit | 9,131 | 7,345 | 24,801 | 21,730 | |
Rental | Quench | |||||
Reportable segment and reconciliation | |||||
Total revenues | 16,261 | 13,428 | 45,041 | 39,238 | |
Total gross profit | 9,131 | 7,345 | 24,801 | 21,730 | |
Financing | |||||
Reportable segment and reconciliation | |||||
Total revenues | 985 | 1,118 | 3,048 | 3,451 | |
Total gross profit | 985 | 1,118 | 3,048 | 3,451 | |
Financing | Seven Seas Water | |||||
Reportable segment and reconciliation | |||||
Total revenues | 985 | 1,118 | 3,048 | 3,451 | |
Total gross profit | 985 | 1,118 | 3,048 | 3,451 | |
Other | |||||
Reportable segment and reconciliation | |||||
Total revenues | 4,952 | 2,259 | 13,012 | 6,318 | |
Cost of Revenue. | 3,256 | 1,385 | 8,624 | 3,692 | |
Total gross profit | 1,696 | 874 | 4,388 | 2,626 | |
Other | Quench | |||||
Reportable segment and reconciliation | |||||
Total revenues | 4,952 | 2,259 | 13,012 | 6,318 | |
Total gross profit | $ 1,696 | $ 874 | $ 4,388 | $ 2,626 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) shares in Thousands, $ in Thousands | Nov. 01, 2018 | Oct. 02, 2018 | Oct. 01, 2018 | Sep. 30, 2018 |
Contingent consideration | $ 149 | |||
Corporate Credit Agreement | ||||
Credit facility maximum borrowing capacity | $ 150,000 | |||
Subsequent Event | Corporate Credit Agreement | ||||
Amount of increase in borrowings | $ 110,000 | |||
Credit facility maximum borrowing capacity | $ 260,000 | |||
Variable rate basis spread reduction | 0.50% | |||
Portion of debt with variable interest rate | $ 145,000 | |||
Portion of debt with weighted average fixed interest rate | $ 115,000 | |||
Weighted average fixed rate (as a percent) | 8.00% | |||
Subsequent Event | Corporate Credit Agreement | LIBOR | ||||
Variable rate basis spread | 5.50% | |||
Subsequent Event | Corporate Credit Agreement | LIBOR | Minimum | ||||
Variable rate basis spread | 1.00% | |||
Subsequent Event | Corporate Credit Agreement Tranche One | ||||
Amount of increase in borrowings | $ 70,000 | |||
Subsequent Event | Corporate Credit Agreement Tranche One | LIBOR | ||||
Variable rate basis spread | 5.50% | |||
Subsequent Event | Corporate Credit Agreement Tranche One | LIBOR | Minimum | ||||
Variable rate basis spread | 1.00% | |||
Subsequent Event | Corporate Credit Agreement Tranche Two | ||||
Amount of increase in borrowings | $ 40,000 | |||
Stated interest rate | 8.70% | |||
Subsequent Event | Atlas HP | Sale | ||||
Estimated aggregate sale price | $ 3,000 | |||
Cash proceeds from sale of business | 2,700 | |||
Receivable | 300 | |||
Current assets of disposal group | $ 1,800 | |||
Long-term assets of disposal group | 800 | |||
Current liabilities of disposal group | 1,000 | |||
Long-term liabilities of disposal group | $ 100 | |||
Gain on sale of disposition | $ 100 | |||
Subsequent Event | AquaVenture Holdings, Inc. | AUC Acquisition Holdings | ||||
Estimated aggregate purchase price | $ 130,000 | |||
Cash paid for acquisition | $ 128,000 | |||
Number of shares issued in acquisition | 122 | |||
Value of shares issued in acquisition | $ 2,000 | |||
Contingent consideration | $ 2,000 |