Document And Entity Information
Document And Entity Information Statement - shares | 9 Months Ended | |
Jun. 30, 2018 | Jul. 31, 2018 | |
Document Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 | |
Entity Registrant Name | EVOQUA WATER TECHNOLOGIES CORP. | |
Entity Central Index Key | 1,604,643 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding (in shares) | 113,890,779 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2018 | Sep. 30, 2017 |
ASSETS | ||
Current assets | $ 536,835 | $ 512,240 |
Cash and cash equivalents | 57,307 | 59,254 |
Receivables, net | 228,330 | 245,248 |
Inventories, net | 140,467 | 120,047 |
Cost and earnings in excess of billings on uncompleted contracts | 84,900 | 66,814 |
Prepaid and other current assets | 24,888 | 20,046 |
Income tax receivable | 943 | 831 |
Property, plant, and equipment, net | 289,178 | 280,043 |
Goodwill | 324,272 | 321,913 |
Intangible assets, net | 319,276 | 333,746 |
Deferred income taxes | 7,049 | 2,968 |
Other non‑current assets | 22,611 | 22,399 |
Total assets | 1,499,221 | 1,473,309 |
LIABILITIES AND EQUITY | ||
Current liabilities | 278,602 | 291,899 |
Accounts payable | 140,434 | 114,932 |
Current portion of debt | 9,708 | 11,325 |
Billings in excess of costs incurred | 21,259 | 27,124 |
Product warranties | 7,760 | 11,164 |
Accrued expenses and other liabilities | 90,395 | 121,923 |
Income tax payable | 9,046 | 5,431 |
Non‑current liabilities | 857,403 | 964,835 |
Long‑term debt | 780,430 | 878,524 |
Product warranties | 3,545 | 6,110 |
Other non‑current liabilities | 64,837 | 67,673 |
Deferred income taxes | 8,591 | 12,528 |
Total liabilities | 1,136,005 | 1,256,734 |
Commitments and Contingent Liabilities (Note 17) | ||
Shareholders’ equity | ||
Common stock, par value $0.01: authorized 1,000,000 shares; issued 105,359 shares, outstanding 104,949 shares at September 30, 2017; issued 114,771 shares, outstanding 113,811 shares at June 30, 2018 | 1,143 | 1,054 |
Treasury stock: 410 shares at September 30, 2017 and 960 shares at June 30, 2018 | (2,837) | (2,607) |
Additional paid‑in capital | 529,992 | 388,986 |
Retained deficit | (160,421) | (170,006) |
Accumulated other comprehensive loss, net of tax | (8,800) | (5,989) |
Total Evoqua Water Technologies Corp. equity | 359,077 | 211,438 |
Non‑controlling interest | 4,139 | 5,137 |
Total shareholders’ equity | 363,216 | 216,575 |
Total liabilities and shareholders’ equity | $ 1,499,221 | $ 1,473,309 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2018 | Sep. 30, 2017 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common stock authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock issued (in shares) | 114,771,000 | 105,359,000 |
Common stock outstanding (in shares) | 113,811,000 | 104,964,000 |
Treasury stock (in shares) | 960,000 | 410,000 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues [Abstract] | ||||
Revenue from product sales and services | $ 342,475 | $ 311,142 | $ 973,215 | $ 890,916 |
Cost of Revenue [Abstract] | ||||
Cost of product sales and services | (240,468) | (210,715) | (674,832) | (614,088) |
Gross profit | 102,007 | 100,427 | 298,383 | 276,828 |
Operating Expenses [Abstract] | ||||
General and administrative expense | (56,961) | (31,136) | (140,767) | (120,534) |
Sales and marketing expense | (33,888) | (36,946) | (102,459) | (108,729) |
Research and development expense | (3,682) | (5,592) | (12,356) | (15,684) |
Total operating expenses | (94,531) | (73,674) | (255,582) | (244,947) |
Other operating (expense) income | 7,362 | (329) | 7,674 | 981 |
Interest expense | (12,370) | (12,466) | (40,423) | (39,117) |
Income (loss) before income taxes | 2,468 | 13,958 | 10,052 | (6,255) |
Income tax (expense) benefit | (1,433) | (12,202) | 960 | (295) |
Net income (loss) | 1,035 | 1,756 | 11,012 | (6,550) |
Net income attributable to non‑controlling interest | 242 | 253 | 1,427 | 2,348 |
Net income (loss) attributable to Evoqua Water Technologies Corp. | $ 793 | $ 1,503 | $ 9,585 | $ (8,898) |
Basic (loss) earnings per common share (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.08 | $ (0.08) |
Diluted (loss) earnings per common share (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.08 | $ (0.08) |
Unaudited Condensed Consolidat5
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 1,035 | $ 1,756 | $ 11,012 | $ (6,550) |
Other comprehensive (loss) income | ||||
Foreign currency translation adjustments | (2,018) | (3,027) | (2,811) | 2,773 |
Less: Comprehensive income attributable to non‑controlling interest | (242) | (253) | (1,427) | (2,348) |
Comprehensive (loss) income attributable to Evoqua Water Technologies Corp. | $ (1,225) | $ (1,524) | $ 6,774 | $ (6,125) |
Unaudited Condensed Consolidat6
Unaudited Condensed Consolidated Statements of Changes in Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Treasury Stock | Additional Paid‑in Capital | Retained Deficit | Accumulated Other Comprehensive Loss | Non‑controlling Interest |
Common stock issued at the beginning of the period (shares) at Sep. 30, 2016 | 104,495 | ||||||
Stockholders' equity, balance at the beginning of the period at Sep. 30, 2016 | $ 203,935 | $ 1,045 | $ (1,133) | $ 381,223 | $ (172,169) | $ (10,671) | $ 5,640 |
Treasury stock, balance at the beginning of the period (in shares) at Sep. 30, 2016 | 245 | ||||||
Equity based compensation expense | 1,634 | 1,634 | |||||
Issuance of common stock (in shares) | 864 | ||||||
Issuance of common stock | 5,521 | $ 9 | 5,512 | ||||
Stock repurchases (shares) | 124 | ||||||
Stock repurchases | (1,076) | $ (1,076) | |||||
Dividends paid to non‑controlling interest | (4,750) | (4,750) | |||||
Net income (loss) | (6,550) | (8,898) | 2,348 | ||||
Other comprehensive income | 2,773 | 2,773 | |||||
Common stock issued at the end of the period (shares) at Jun. 30, 2017 | 105,359 | ||||||
Stockholders' equity, balance at the end of the period at Jun. 30, 2017 | $ 201,487 | $ 1,054 | $ (2,209) | 388,369 | (181,067) | (7,898) | 3,238 |
Treasury stock, balance at the end of the period (in shares) at Jun. 30, 2017 | 369 | ||||||
Common stock issued at the beginning of the period (shares) at Sep. 30, 2017 | 105,359 | 105,359 | |||||
Stockholders' equity, balance at the beginning of the period at Sep. 30, 2017 | $ 216,575 | $ 1,054 | $ (2,607) | 388,986 | (170,006) | (5,989) | 5,137 |
Treasury stock, balance at the beginning of the period (in shares) at Sep. 30, 2017 | 410 | 410 | |||||
Equity based compensation expense | $ 11,257 | 11,257 | |||||
Issuance of common stock (in shares) | 8,333 | ||||||
Issuance of common stock | 137,605 | $ 83 | 137,522 | ||||
Shares withheld related to net share settlement (including tax withholdings) (shares) | 1,079 | 532 | |||||
Shares withheld related to net share settlement (including tax withholdings) | (7,767) | $ 6 | (7,773) | ||||
Stock repurchases (shares) | 18 | ||||||
Stock repurchases | (230) | $ (230) | |||||
Dividends paid to non‑controlling interest | (2,425) | (2,425) | |||||
Net income (loss) | 11,012 | 9,585 | 1,427 | ||||
Other comprehensive income | $ (2,811) | (2,811) | |||||
Common stock issued at the end of the period (shares) at Jun. 30, 2018 | 114,771 | 114,771 | |||||
Stockholders' equity, balance at the end of the period at Jun. 30, 2018 | $ 363,216 | $ 1,143 | $ (2,837) | $ 529,992 | $ (160,421) | $ (8,800) | $ 4,139 |
Treasury stock, balance at the end of the period (in shares) at Jun. 30, 2018 | 960 | 960 |
Unaudited Condensed Consolidat7
Unaudited Condensed Consolidated Statements of Changes in Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Operating activities | ||
Net loss | $ 11,012 | $ (6,550) |
Reconciliation of net (loss) income to cash flows from operating activities: | ||
Depreciation and amortization | 61,924 | 55,813 |
Amortization of deferred financing costs (includes $2,075 and $2,994 write off of deferred financing fees) | 4,926 | 5,970 |
Deferred income taxes | (8,072) | (107) |
Share-based compensation | 11,257 | 1,634 |
Loss (gain) on sale of property, plant and equipment | (6,507) | 349 |
Foreign currency (gains) losses on intracompany loans | 5,059 | (1,489) |
Changes in assets and liabilities | ||
Accounts receivable | 14,509 | (6,454) |
Inventories | (20,385) | (7,964) |
Cost and earnings in excess of billings on uncompleted contracts | (18,519) | (8,900) |
Prepaids and other current assets | (5,559) | (9,139) |
Accounts payable | 26,910 | (1,009) |
Accrued expenses and other liabilities | (33,548) | (10,678) |
Billings in excess of costs incurred | (5,567) | 249 |
Income taxes | 3,471 | (1,181) |
Other non‑current assets and liabilities | (4,123) | 5,248 |
Net cash provided by operating activities | 36,788 | 15,792 |
Investing activities | ||
Purchase of property, plant and equipment | (54,569) | (40,475) |
Purchase of intangibles | (1,536) | (4,175) |
Proceeds from sale of property, plant and equipment | 13,247 | 5,221 |
Proceeds from sale of business | 430 | 0 |
Acquisitions, net of cash acquired of $0 and $28 | (10,235) | (77,837) |
Net cash used in investing activities | (52,663) | (117,266) |
Financing activities | ||
Issuance of debt | 5,398 | 157,100 |
Capitalized deferred issuance costs related to refinancing | (2,004) | (4,198) |
Borrowings under credit facility | 46,812 | 113,000 |
Repayment of debt | (154,752) | (156,306) |
Payment of earn-out related to previous acquisitions | (1,719) | 0 |
Repayment of capital lease obligation | (5,990) | (4,842) |
Proceeds from issuance of common stock | 137,605 | 5,521 |
Taxes paid related to net share settlements of share-based compensation awards | (7,767) | 0 |
Stock repurchases | (230) | (1,076) |
Distribution to non‑controlling interest | (2,425) | (4,750) |
Net cash provided by financing activities | 14,928 | 104,449 |
Effect of exchange rate changes on cash | (1,000) | 680 |
Change in cash and cash equivalents | (1,947) | 3,655 |
Cash and cash equivalents | ||
Beginning of period | 59,254 | 50,362 |
End of period | 57,307 | 54,017 |
Supplemental disclosure of cash flow information | ||
Cash paid for taxes | 4,020 | 2,335 |
Cash paid for interest | 31,179 | 31,546 |
Non‑cash investing and financing activities | ||
Accrued earn-out related to acquisitions | 1,395 | 4,871 |
Capital lease transactions | 5,275 | 12,686 |
Cloud computing related intangible transaction | $ 0 | $ 5,544 |
Unaudited Condensed Consolidat8
Unaudited Condensed Consolidated Statements of Changes in Cash Flows (Parenthetical) - USD ($) $ in Thousands | 9 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Cash Flows [Abstract] | ||
Deferred finance costs | $ 2,944 | |
Net of cash acquired | $ 28 | $ 0 |
Description of the Company and
Description of the Company and Basis of Presentation | 9 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Company and Basis of Presentation | Description of the Company and Basis of Presentation Background Evoqua Water Technologies Corp. (referred to herein as "the Company" or "EWT") was incorporated on October 7, 2013. On January 15, 2014, Evoqua Water Technologies Corp., acquired through its wholly owned entities, EWT Holdings II Corp. and EWT Holdings III Corp. (a/k/a Evoqua Water Technologies), all of the outstanding shares of Siemens Water Technologies, a group of legal entity businesses formerly owned by Siemens AG (Siemens). The stock purchase closed on January 15, 2014 and was effective January 16, 2014 (the Acquisition). The stock purchase price, net of cash received, was approximately $730,577 . On November 6, 2017, the Company completed its initial public offering (IPO), pursuant to which an aggregate of 27,777 shares of common stock were sold, of which 8,333 were sold by the Company and 19,444 were sold by the selling stockholders, with a par value of $ 0.01 per share. After underwriting discounts and commissions, the Company received net proceeds from the IPO of approximately $137,605 . The Company used a portion of these proceeds to repay $104,936 of indebtedness (including accrued and unpaid interest) under its senior secured First Lien Term Loan facility and the remainder for general corporate purposes. The Company did not receive any proceeds from the sale of shares by the selling stockholders. On November 7, 2017, the selling stockholders sold an additional 4,167 shares of common stock as a result of the exercise in full by the underwriters of an option to purchase additional shares. On March 19, 2018, the Company completed a secondary public offering, pursuant to which 17,500 shares of common stock were sold by certain selling stockholders. On March 21, 2018, the selling stockholders sold an additional 2,625 shares of common stock as a result of the exercise in full by the underwriters of an option to purchase additional shares. The Company did not receive any proceeds from the sale of shares by the selling stockholders. The Business EWT provides a wide range of product brands and advanced water and wastewater treatment systems and technologies, as well as mobile and emergency water supply solutions and service contract options through its segment branch network. Headquartered in Pittsburgh, Pennsylvania, EWT is a multi‑national corporation with operations in the United States, Canada, the United Kingdom, the Netherlands, Germany, Australia, China, and Singapore. The Company is organizationally structured into three reportable segments for the purpose of making operational decisions and assessing financial performance: (i) Industrial, (ii) Municipal and (iii) Products. Basis of Presentation The accompanying Unaudited Condensed Consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). All intracompany transactions have been eliminated. The unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. We believe that the disclosures made are adequate to make the information presented not misleading. We consistently applied the accounting policies described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2017 , as filed with the SEC on December 4, 2017 ( 2017 Annual Report), in preparing these unaudited condensed consolidated financial statements, with the exception of accounting standard updates described in Note 2. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes included in our 2017 Annual Report. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Fiscal Year The Company’s fiscal year ends on September 30. Use of Estimates The unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP and require management to make estimates and assumptions. These assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates and assumptions are used for, but not limited to: (i) revenue recognition; (ii) allowance for doubtful accounts; (iii) inventory valuation, asset valuations, impairment, and recoverability assessments; (iv) depreciable lives of assets; (v) useful lives of intangible assets; (vi) income tax reserves and valuation allowances; and (vii) product warranty and litigation reserves. Estimates are revised as additional information becomes available. Actual results could differ from these estimates. Cash and Cash Equivalents Cash and cash equivalents are liquid investments with an original maturity of three or fewer months when purchased. Accounts Receivable Receivables are primarily comprised of uncollected amounts owed to us from transactions with customers and are presented net of allowances for doubtful accounts. Allowances are estimated based on historical write‑offs and the economic status of customers. The Company considers a receivable delinquent if it is unpaid after the term of the related invoice has expired. Write‑offs are recorded at the time all collection efforts have been exhausted. Inventories Inventories are stated at the lower of cost or market, where cost is generally determined on the basis of an average or first‑in, first‑out (FIFO) method. Production costs comprise direct material and labor and applicable manufacturing overheads, including depreciation charges. The Company regularly reviews inventory quantities on hand and writes off excess or obsolete inventory based on estimated forecasts of product demand and production requirements. Manufacturing operations recognize cost of product sales using standard costing rates with overhead absorption which generally approximates actual cost. Property, Plant, and Equipment Property, plant, and equipment is valued at cost less accumulated depreciation and impairment losses. If the costs of certain components of an item of property, plant, and equipment are significant in relation to the total cost of the item, they are accounted for and depreciated separately. Depreciation expense is recognized using the straight‑line method. Useful lives are reviewed annually and, if expectations differ from previous estimates, adjusted accordingly. Estimated useful lives for major classes of depreciable assets are as follows: Asset Class Estimated Useful Life Machinery and equipment 3 to 20 years Buildings and improvements 10 to 40 years Leasehold improvements are depreciated over the shorter of their estimated useful life or the term of the lease. Costs related to maintenance and repairs that do not extend the assets’ useful life are expensed as incurred. Goodwill and Other Intangible Assets Goodwill represents purchase consideration paid in a business combination that exceeds the value assigned to the net assets of acquired businesses. Other intangible assets consist of customer‑related intangibles, proprietary technology, software, trademarks and other intangible assets. The Company amortizes intangible assets with definite useful lives on a straight‑line basis over their respective estimated economic lives which range from 1 to 26 years. The Company reviews goodwill to determine potential impairment annually during the fourth quarter of our fiscal year, or more frequently if events and circumstances indicate that the asset might be impaired. Impairment testing for goodwill is performed at a reporting unit level. We have determined that we have four reporting units. Our quantitative impairment testing utilizes both a market (guideline public company) and income (discounted cash flows) method for determining fair value. In estimating the fair value of the reporting unit utilizing a discounted cash flow (“DCF”) valuation technique, we incorporate our judgment and estimates of future cash flows, future revenue and gross profit growth rates, terminal value amount, capital expenditures and applicable weighted‑average cost of capital used to discount these estimated cash flows. The estimates and projections used in the estimate of fair value are consistent with our current budget and long‑range plans, including anticipated change in market conditions, industry trend, growth rates and planned capital expenditures, among other considerations. Impairment of Long‑Lived Assets Long‑lived assets, such as property, plant, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of the asset or asset group is measured by comparison of its carrying amount to undiscounted future net cash flows the asset or asset group is expected to generate. If the carrying amount of an asset or asset group is not recoverable, the Company recognizes an impairment loss based on the excess of the carrying amount of the asset or asset group over its respective fair value which is generally determined as the present value of estimated future cash flows or as the appraised value. Debt Issuance Costs and Debt Discounts Debt issuance costs are capitalized and amortized over the contractual term of the underlying debt using the straight line method which approximates the effective interest method. Debt discounts and lender arrangement fees deducted from the proceeds have been included as a component of the carrying value of debt and are being amortized to interest expense using the effective interest method. Amortization of debt issuance costs and debt discounts/premiums included in interest expense were $1,875 and $478 for the three months ended June 30, 2017 and 2018 , respectively and $4,376 and $1,932 for the nine months ended June 30, 2017 and 2018 , respectively. In October 2016, the Company wrote off $ 2,075 of deferred financing fees related to the extinguishment of debt and incurred another $481 of fees related to a tack-on financing the Company completed on October 28, 2016. In November 2017, the Company wrote off $ 1,844 of deferred financing fees related to a $100,000 prepayment of debt, then subsequently wrote off another $ 1,150 of fees in December of 2017 due to refinancing its First Lien Term Loan. The Company incurred another $2,131 of fees as a result of the December refinancing. Revenue Recognition Sales of goods and services are recognized when persuasive evidence of an arrangement exists, the price is fixed or determinable, collectability is reasonably assured and delivery has occurred or services have been rendered. For sales of aftermarket parts or products with a low level of customization and engineering time, the Company recognizes revenues at the time risks and rewards of ownership pass, which is generally when products are shipped or delivered to the customer as the Company has no obligation for installation. Sales of short‑term service arrangements are recognized as the services are performed, and sales of long‑term service arrangements are typically recognized on a straight‑line basis over the life of the agreement. For certain arrangements where there is significant customization to the product, the Company recognizes revenue under the provisions of Accounting Standards Codification (ASC) 605-35, Revenue Recognition – Construction-Type and Production-Type Contracts. These products include large capital water treatment projects, systems and solutions for municipal and industrial applications. Revenues from construction-type contracts are generally recognized under the percentage-of-completion method, based on the input of costs incurred to date as a percentage of total estimated contract costs. The nature of the contracts is generally fixed price with milestone billings. Approximately $63,148 and $74,824 of revenues from construction-type contracts were recognized on the percentage-of-completion method during the three months ended June 30, 2017 and 2018 , respectively and $168,030 and $204,731 for the nine months ended June 30, 2017 and 2018 , respectively. Contract revenues and cost estimates are reviewed and revised quarterly at a minimum and the cumulative effect of such adjustments are recognized in current operations. The amount of such adjustments have not been material. Cost and earnings in excess of billings under construction‑type arrangements are recorded when contracts have net asset balances where contract costs plus recognized profits less recognized losses exceed progress billings. Billings in excess of costs incurred are recorded when contract progress billings exceed costs and recognized profit less recognized losses. Approximately $6,888 and $6,697 of revenues from construction-type contracts were recognized on a completed contract method, which is typically when the product is delivered and accepted by the customer, during the three months ended June 30, 2017 and 2018 , respectively and $21,353 and $19,897 for the nine months ended June 30, 2017 and 2018 , respectively. The completed contract method is principally used when the contract is short in duration and where results of operations would not vary materially from those resulting from the use of the percentage-of-completion method. Product Warranties Accruals for estimated expenses related to warranties are made at the time products are sold and are recorded as a component of Cost of product sales in the Unaudited Condensed Consolidated Statements of Operations. The estimated warranty obligation is based on product warranty terms offered to customers, ongoing product failure rates, material usage and service delivery costs expected to be incurred in correcting a product failure, as well as specific obligations for known failures and other currently available evidence. The Company assesses the adequacy of the recorded warranty liabilities on a regular basis and adjusts amounts as necessary. Shipping and Handling Cost Shipping and handling costs are included as a component of Cost of product sales. Income Taxes The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are provided against deferred tax assets when it is deemed more likely than not that some portion or all of the deferred tax asset will not be realized within a reasonable time period. We assess tax positions using a two‑step process. A tax position is recognized if it meets a more‑likely‑than‑not threshold, and is measured at the largest amount of benefit that is greater than 50.0% percent of being realized. Uncertain tax positions are reviewed each balance sheet date. Sales Taxes Upon collection of sales tax from revenue, the amount of sales tax is placed into an accrued liability account. This liability is then relieved when the payment is sent to the proper government jurisdiction. Foreign Currency Translation and Transactions The functional currency for the international subsidiaries is the local currency. Assets and liabilities are translated into U.S. Dollars using current rates of exchange, with the resulting translation adjustments recorded in other comprehensive income/loss within shareholders' equity. Revenues and expenses are translated at the weighted‑average exchange rate for the period, with the resulting translation adjustments recorded in the Unaudited Condensed Consolidated Statements of Operations. Foreign currency transaction (gains) losses which aggregated $(6,872) and $9,340 for the three months ended June 30, 2017 and 2018 , respectively, and $(1,663) and $5,652 for the nine months ended June 30, 2017 and 2018 , respectively, are primarily included in General and administrative expenses in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Research and Development Costs Research and development costs are expensed as incurred. The Company recorded $5,592 and $3,682 of costs for the three months ended June 30, 2017 and 2018 , respectively and $15,684 and $12,356 for the nine months ended June 30, 2017 and 2018 , respectively. Equity‑based Compensation The Company measures the cost of awards of equity instruments to employees based on the grant‑date fair value of the award. Prior to the IPO, given the absence of a public trading market for our common stock, the fair value of the common stock underlying our share‑based awards was determined by our board, with input from management, in each case using the income and market valuation approach. Stock options are granted with exercise prices equal to or greater than the estimated fair market value on the date of grant as authorized by our compensation committee. The grant‑date fair value is determined using the Black‑Scholes model. The fair value, net of estimated forfeitures, is amortized as compensation cost on a straight‑line basis over the vesting period primarily as a component of General and administrative expenses. Earnings Per Share Basic earnings per common share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed based on the weighted average number of shares of common stock, plus the effect of diluted common shares outstanding during the period using the treasury stock method. Diluted potential common shares include outstanding stock options. Retirement Benefits The Company applies ASC Topic 715, Compensation—Retirement Benefits , which requires the recognition in pension obligations and accumulated other comprehensive income of actuarial gains or losses, prior service costs or credits and transition assets or obligations that have previously been deferred. The determination of retirement benefit pension obligations and associated costs requires the use of actuarial computations to estimate participant plan benefits to which the employees will be entitled. The significant assumptions primarily relate to discount rates, expected long‑term rates of return on plan assets, rate of future compensation increases, mortality, years of service, and other factors. The Company develops each assumption using relevant experience in conjunction with market‑related data for each individual country in which such plans exist. All actuarial assumptions are reviewed annually with third‑party consultants and adjusted as necessary. For the recognition of net periodic postretirement cost, the calculation of the expected return on plan assets is generally derived by applying the expected long‑term rate of return on the market‑related value of plan assets. The fair value of plan assets is determined based on actual market prices or estimated fair value at the measurement date. Treated Water Outsourcing The following provides a summary of Treated Water Outsourcing (TWO), a joint venture between the Company and Nalco Water, an Ecolab company, in which the Company holds a 50% partnership interest as of September 30, 2017 and June 30, 2018 , respectively. As the Company is obligated to absorb all risk of loss up to 100% of the joint venture partner's equity, TWO is fully consolidated within the Company's consolidated financial statements under ASC 810, Consolidation . The Company has not provided additional financial support to this entity which it is not contractually required to provide, and the Company does not have the ability to use the assets of TWO to settle obligations of the Company’s other subsidiaries. September 30, 2017 June 30, 2018 Current assets (including cash of $1,907 and $2,297) $ 12,006 $ 8,188 Property, plant and equipment 6,107 4,726 Goodwill 2,206 2,206 Other non-current assets 2,735 2,735 Total liabilities (12,781 ) (9,500 ) Three Months Ended June 30, 2017 2018 Total revenues $ 3,570 $ 3,020 Total operating expenses (3,089 ) (2,535 ) Income from operations $ 481 $ 485 Nine Months Ended June 30, 2017 2018 Total revenues $ 11,645 $ 12,586 Total operating expenses (8,857 ) (9,732 ) Income from operations $ 2,788 $ 2,854 Recent Accounting Pronouncements Accounting Pronouncements Not Yet Adopted In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606) . ASU No. 2014-09 clarifies the principles for recognizing revenue when an entity either enters into a contract with customers to transfer goods or services or enters into a contract for the transfer of non-financial assets. ASU 2014-09 may be adopted using either of two acceptable methods: (1) retrospective adoption to each prior period presented with the option to elect certain practical expedients; or (2) adoption with the cumulative effect recognized at the date of initial application and providing certain disclosures. To assess at which time revenue should be recognized, an entity should use the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. The standard is effective for the Company for the quarter ending December 31, 2018. The Company has completed its first phase of adopting this standard, which was to identify the potential differences that will result from applying the new revenue recognition standard to the Company's contracts with its customers, and has begun the second step of reviewing its contracts to determine the impact of adopting the standard. The Company has completed its preliminary assessment of the impact of the new standard compared to the historical accounting policies on a representative sample of contracts. The Company does not anticipate a material change to result from the adoption of the new standard related to its product sales. The Company recognizes revenue for some of its contracts on a percentage-of-completion basis, which represented approximately 21% of its consolidated net sales for the nine months ended June 30, 2018 . The Company expects that for some of these contracts, the new guidance will instead require revenue to be recognized at a point in time. The Company is continuing to assess the ultimate impact that the adoption of this standard will have on its consolidated financial statements and related disclosures. In addition, the Company is evaluating the changes that will be required in its internal controls as a result of the adoption of this new standard. The Company is planning to adopt the provisions of the ASU and its subsequent amendments using the modified retrospective transition method for existing transactions that will likely result in a cumulative effect adjustment as of October 1, 2018. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . ASU No. 2016-02 requires recognition of operating leases as lease assets and liabilities on the balance sheet, and disclosure of key information about leasing arrangements. ASU No. 2016-02 will be effective retrospectively for the Company for the quarter ending December 31, 2019, with early adoption permitted. The Company is currently reviewing its leasing arrangements in order to evaluate the impact this standard will have on the Company's Consolidated financial statements and related disclosures. In October 2016, the FASB issued ASU 2016-17 , Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory . The purpose of this update is to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The ASU requires the tax effects of all intra-entity sales of assets other than inventory to be recognized in the period in which the transaction occurs. The guidance will be effective for the Company for the quarter ending December 31, 2018 with early adoption permitted but only in the first interim period of a fiscal year. The changes are required to be applied by means of a cumulative-effect adjustment recorded in retained earnings as of the beginning of the fiscal year of adoption. The Company is currently evaluating the potential impact of adoption on the Company’s Consolidated financial statements. In February 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . This ASU requires the disaggregation of the service cost component from other components of net periodic benefit cost, clarifies how to present the service cost component and other components of net benefit costs in the Statements of Consolidated Operations and allows only the service cost component of net benefit costs to be eligible for capitalization. This ASU is effective for the Company for the quarter ending December 31, 2018. Adoption will be applied on a retrospective basis for the presentation of all components of net periodic benefit costs and on a prospective basis for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The Company does not expect the impact of adoption on the Company’s Consolidated financial statements to be material. In May 2017, the FASB issued ASU 2017‑09, Scope of Modification Accounting , which amended Accounting Standards Code Topic 718. FASB issued ASU 2017‑09 to reduce the cost and complexity when applying Topic 718 and standardize the practice of applying Topic 718 to financial reporting. The ASU was not developed to fundamentally change the definition of a modification, but instead to provide guidance for what changes would qualify as a modification. ASU No. 2017‑09 will be effective for the Company for the quarter ending December 31, 2018. The Company is currently evaluating the potential impact of adoption on the Company’s Consolidated financial statements. In May 2017, the FASB issued ASU 2017‑12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which expands and refines hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements and also make certain targeted improvements to simplify the application of hedge accounting guidance and ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness. ASU No. 2017‑12 will be effective for the Company for the quarter ending December 31, 2018. The Company does not expect the impact of adoption on the Company’s Consolidated financial statements to be material. In May 2017, the FASB issued ASU 2018‑02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows for a reclassification from Accumulated other comprehensive loss to Retained deficit for stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information to users of financial statements. ASU No. 2017‑09 will be effective for the Company for the quarter ending December 31, 2018. The Company does not expect the impact of adoption on the Company’s Consolidated financial statements to be material. In June 2018, the FASB issued ASU 2018‑07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU No. 2018‑07 will be effective for the Company for the quarter ending December 31, 2019. The Company does not expect the impact of adoption on the Company’s Consolidated financial statements to be material. Accounting Pronouncements Recently Adopted The Company adopted ASU 2016-09, Improvements to Employee Share-Based Payment Accounting , which amends ASC Topic 718, Compensation – Stock Compensation as of October 1, 2017. The ASU includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The adoption of this ASU did not have a significant impact on the Company's Consolidated financial statements. The Company early adopted ASU 2016‑15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) for the year beginning October 1, 2018. This new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The guidance is to be applied retrospectively to all periods presented, however there were no instances in prior periods that were impacted by the adoption of this ASU. This adoption did not have a material impact on the Company's Consolidated financial statements and for the quarter ending June 30, 2018, resulted in the reporting of an earn-out from a prior acquisition for $2,619 to be reported in the Financing section of the Unaudited Condensed Consolidated Statements of Changes in Cash Flows. The Company early adopted ASU 2017‑04, Simplifying the Test for Goodwill Impairment, for the year beginning October 1, 2017. This ASU simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures goodwill impairment loss by comparing the implied value of a reporting unit’s goodwill with the carrying amount of that goodwill. The amendments in this ASU are effective for the Company for the quarter ending December 31, 2020. The adoption of this ASU did not have a material impact on the Company's Consolidated financial statements. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 9 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures Acquisitions support the Company's strategy of delivering a broad solutions portfolio with robust technology across multiple geographies and end markets. The following acquisitions were made during the nine months ended June 30, 2018 . The Company acquired Pure Water Solutions on January 31, 2018, a provider of high-purity water equipment and systems, service deionization and resin regeneration, with service operations in suburban Denver, CO and Santa Fe, NM for $4,699 ; $3,706 cash at closing with a maximum earn-out payment of $993 to be paid out twelve months after the closing. The fair value of earn-out payments at the date of acquisition was $461 . Pure Water Solutions is part of the Industrial Segment, and extends the Company’s service network. On March 9, 2018, the Company acquired Pacific Ozone Technology, Inc, a provider of advanced ozone disinfection systems, testing products and support services for $8,557 ; $6,557 cash at closing; with up to another $2,000 of earn-out payments to be paid out over three years after the closing. The fair value of earn-out payments at the date of acquisition was $934 . Pacific Ozone, based in Benecia, CA, is part of the Products Segment and adds a new technology, ozone disinfection, to the portfolio and further enhances the Company's ability in the industrial water treatment and aquatics market . Pro forma results for acquisitions completed during the nine months ended June 30, 2018 were determined to not be material. The preliminary opening balance sheet for the acquisitions is summarized as follows. Pure Water Pacific Ozone Total Current assets $ 277 $ 1,953 $ 2,230 Property, plant and equipment 175 151 326 Goodwill 2,462 3,757 6,219 Intangible assets 1,488 2,678 4,166 Total assets acquired 4,402 8,539 12,941 Total liabilities assumed (164 ) (916 ) (1,080 ) Net assets acquired $ 4,238 $ 7,623 $ 11,861 On April 9, 2018, the Company completed the sale of 100% of the corporate capital of Evoqua Water Technologies S.r.l., which includes the Company’s former operations in Italy, to Giotto Water S.r.l. (Giotto). The aggregate purchase price paid in cash by Giotto in the transaction was €350 ( $430 ), subject to certain earn-out adjustments to be paid by Giotto in connection with the realization of specified tax benefits relating to previous years, and resulted in a nominal gain which is included in Other operating (expense) income of the Unaudited Condensed Consolidated Statements of Operations. The major classes of assets and liabilities included in this transaction were Accounts receivable of 344 euro, ( $484 ), Cost and earnings in excess of billings on uncompleted contracts 225 euro, ( $277 ), Prepaid and other current asset 283 euro, ( $348 ), Goodwill 118 euro, ( $145 ), Other non-current assets 180 euro, ( $222 ), Accounts payable 33 euro, ( $40 ), current Product warranty 516 , ( $625 ) and Accrued expenses and other liabilities 147 euro, ( $181 ) . |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurements As of September 30, 2017 and June 30, 2018 , the fair values of cash and cash equivalents, accounts receivable and accounts payable approximate carrying values due to the short maturity of these items. The Company measures the fair value of pension plan assets and liabilities, deferred compensation plan assets and liabilities on a recurring basis pursuant to ASC Topic 820. ASC Topic 820 establishes a three‑tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1: Quoted prices for identical instruments in active markets. Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model‑derived valuations whose inputs are observable or whose significant value driver is observable. Level 3: Unobservable inputs in which little or no market data is available, therefore requiring an entity to develop its own assumptions. The following table presents the Company’s financial assets and liabilities at fair value. The fair values related to the pension plan assets are determined using net asset value (NAV) as a practical expedient, or by information categorized in the fair value hierarchy level based on the inputs used to determine fair value. The reported carrying amounts of deferred compensation plan assets and liabilities and debt approximate their fair values. The Company uses interest rates and other relevant information generated by market transactions involving similar instruments to fair value these assets and liabilities, therefore all are classified as Level 2 within the valuation hierarchy. Net Asset Value Quoted Market Significant Other Significant As of September 30, 2017 Assets: Pension plan Cash $ — $ 16,024 $ — $ — Government Securities 3,206 — — — Liability Driven Investment 2,754 — — — Guernsey Unit Trust 932 — — — Global Absolute Return 2,139 — — — Deferred compensation plan assets Trust Assets — 2,146 — — Insurance — — 17,396 — Liabilities: Pension plan — — (34,803 ) — Deferred compensation plan liabilities — — (21,159 ) — Long‑term debt — — (912,471 ) — As of June 30, 2018 Assets: Pension plan Cash $ — $ 15,703 $ — $ — Government Securities 2,938 — — — Liability Driven Investment 3,245 — — — Guernsey Unit Trust 948 — — — Global Absolute Return 2,058 — — — Deferred compensation plan assets Trust Assets — 766 — — Insurance — — 18,029 — Liabilities: Pension plan — — (34,162 ) — Deferred compensation plan liabilities — — (21,267 ) — Long‑term debt — — (798,662 ) — The pension plan assets and liabilities and deferred compensation plan assets and liabilities are included in other non-current assets and other non-current liabilities at September 30, 2017 and June 30, 2018 . |
Accounts Receivable
Accounts Receivable | 9 Months Ended |
Jun. 30, 2018 | |
Receivables [Abstract] | |
Accounts receivable | Accounts Receivable Accounts receivable are summarized as follows: September 30, 2017 June 30, 2018 Accounts receivable $ 248,742 $ 232,513 Allowance for doubtful accounts (3,494 ) (4,183 ) Receivables, net $ 245,248 $ 228,330 |
Inventories
Inventories | 9 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories The major classes of Inventories, net are as follows: September 30, 2017 June 30, 2018 Raw materials and supplies $ 64,113 $ 75,000 Work in progress 16,425 22,762 Finished goods and products held for resale 44,402 51,400 Costs of unbilled projects 5,706 2,391 Reserves for excess and obsolete (10,599 ) (11,086 ) Inventories, net $ 120,047 $ 140,467 |
Property, Plant, and Equipment
Property, Plant, and Equipment | 9 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant, and Equipment Property, plant, and equipment consists of the following: September 30, 2017 June 30, 2018 Machinery and equipment $ 338,056 $ 358,603 Land and buildings 84,282 82,406 Construction in process 24,788 48,531 447,126 489,540 Less: accumulated depreciation (167,083 ) (200,362 ) $ 280,043 $ 289,178 Depreciation expense was $13,259 and $14,530 for the three months ended June 30, 2017 and 2018 , respectively. Maintenance and repair expense was $5,395 and $6,238 for the three months ended June 30, 2017 and 2018 , respectively. Depreciation expense was $38,645 and $42,518 for the nine months ended June 30, 2017 and 2018 , respectively. Maintenance and repair expense was $15,905 and $17,620 for the nine months ended June 30, 2017 and 2018 , respectively. |
Goodwill
Goodwill | 9 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill Changes in the carrying amount of goodwill are as follows: Industrial Municipal Products Total Balance at September 30, 2017 $ 128,190 $ 9,865 $ 183,858 $ 321,913 Business combinations and divestitures 2,462 (145 ) 3,757 6,074 Measurement period adjustment (323 ) — (314 ) (637 ) Foreign currency translation (2,972 ) 21 (127 ) (3,078 ) Balance at June 30, 2018 $ 127,357 $ 9,741 $ 187,174 $ 324,272 As of September 30, 2017 and June 30, 2018 , $139,581 and $141,511 , respectively, of goodwill is deductible for tax purposes. The Neptune Benson reporting unit fair value excess was approximately 3.0% above the carrying value as of the date of valuation on July 1, 2017. The Company continues to monitor this reporting unit and noted no events that would cause a revaluation during the three months ending June 30, 2018 . All other reporting units significantly exceeded their carrying value and as such, no further analysis was performed. |
Debt
Debt | 9 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Debt Long‑term debt consists of the following: September 30, 2017 June 30, 2018 First Lien Term Loan Facility, due December 20, 2024 $ 896,574 $ 790,600 Revolving Credit Facility — — Equipment financing, due June 30, 2024 and June 28, 2025 6,930 9,615 Mortgage, due June 30, 2028 — 1,868 Notes Payable, due June 30, 2018 to July 31, 2023 3,287 2,310 Total debt 906,791 804,393 Less unamortized discount and lender fees (16,942 ) (14,255 ) Total net debt 889,849 790,138 Less current portion (11,325 ) (9,708 ) Total long‑term debt $ 878,524 $ 780,430 Term Loan Facilities and Revolving Credit Facility On January 15, 2014, EWT Holdings III Corp. (EWT III), an indirect wholly-owned subsidiary of the Company, entered into a First Lien Credit Agreement and Second Lien Credit Agreement (the Credit Agreements) among EWT III, EWT Holdings II Corp., the lenders party thereto and Credit Suisse AG as administrative agent and collateral agent. The First Lien Credit Agreement provided for a seven -year term loan facility, and the Second Lien Credit Agreement provided for an eight -year term loan facility. The term loan facilities originally consisted of the “First Lien Term Loan” and “Second Lien Term Loan” in aggregate principal amounts of $505,000 and $75,000 , respectively. The First Lien Credit Agreement also made available to the Company a $75,000 revolving credit facility (the Revolver), which provided for a letter of credit sub-facility up to $ 35,000 . During the year ending September 30, 2017 , certain subsidiaries of the Company entered into three amendments to the First Lien Credit Agreement, which provided for, among other things, the payoff and termination of the Second Lien Term Loan, upsizes to the First Lien Term Loan, and the upsize of the Revolver. On December 20, 2017, certain subsidiaries of the Company entered into Amendment No. 5 (the Fifth Amendment), among EWT III, as the borrower, certain other subsidiaries of the Company, and Credit Suisse AG, as administrative agent and collateral agent, relating to the First Lien Credit Agreement (as amended, amended and restated, extended, supplemented or otherwise modified from time to time prior to the effectiveness of the Fifth Amendment, the "Existing Credit Agreement"). Prior to the Fifth Amendment, approximately $ 796,574 was outstanding under the First Lien Term Loan (the Existing Term Loans). Pursuant to the Fifth Amendment, among other things, the Existing Term Loans were refinanced with the proceeds of refinancing Term Loans. Borrowings under the First Lien Term Loan Facility (First Lien Term Loan) bear interest consisting of the Base Rate plus 2.0% , or LIBOR plus 3.0% . At June 30, 2018 , the interest rate on borrowings was 5.30% , comprised of 2.30% LIBOR plus the 3.0% spread. The principal and interest under the First Lien Term Loan is payable in quarterly installments, with quarterly principal payments of $ 1,991 , and the balance is due at maturity on December 20, 2024. Total deferred fees related to the First Lien Term Loan were $16,942 and $14,255 , net of amortization, as of September 30, 2017 and June 30, 2018 , respectively. These fees were included as a contra liability to debt on the Condensed Consolidated Balance Sheets. The Fifth Amendment, among other things, extended the maturity of the Existing Term Loan to December 20, 2024 from January 15, 2021, reduced the interest rate spreads on Term Loan borrowing to to 3.00% from 3.75% , and increased the revolving credit commitment and letter of credit sublimit to $125,000 and $45,000 from $95,000 and $35,000 , respectively. The Fifth Amendment bifurcated the Revolver, with $87,500 of the $125,000 revolver capacity maturing on December 20, 2022 (the 2022 Borrowings), and the remaining $37,500 maturing on January 15, 2019 (the “2019 Borrowings”). Borrowings under the Revolver bear interest at variable rates plus a margin ranging from 200 to 325 basis points, and 150 to 275 basis points for 2019 and 2022 Borrowings, respectively, dependent upon the Company’s leverage ratio and variable rate selected. 2022 Base Rate borrowings under the Revolver would have incurred interest at 6.75% as of June 30, 2018 , calculated as the 175 basis point spread plus the Base Rate of 5.00% . 2019 Base Rate borrowings under the Revolver at September 30, 2017 and June 30, 2018 would have incurred interest at 6.5% and 7.25% , respectively, calculated as the 225 basis point spread plus the Base Rate of 4.25% at September 30, 2017 and 4.75% at June 30, 2018 . The Company had borrowing availability under the Revolver of $95,000 and $125,000 at September 30, 2017 and June 30, 2018 , respectively, reduced for outstanding letter of credit guarantees. Such letter of credit guarantees are subject to a $45,000 sublimit within the Revolver, increased from $35,000 as part of the Fifth Amendment. The Company’s outstanding letter of credit guarantees under this agreement aggregated approximately $6,706 and $13,157 , at September 30, 2017 , and June 30, 2018 , respectively. The Company had no outstanding revolver borrowings as of September 30, 2017 , and June 30, 2018 , and unused amounts, defined as total revolver capacity less outstanding letters of credit and revolver borrowings, of $88,294 and $111,843 , respectively. At September 30, 2017 and June 30, 2018 , the Company had additional letters of credit of $10,568 and $87 issued under a separate arrangement, respectively. The First Lien Credit Agreement contains limitations on incremental borrowings, is subject to leverage ratios and allows for optional prepayments. Under certain circumstances beginning with fiscal 2015 results of operations, the Company may be required to remit excess cash flows as defined based upon exceeding certain leverage ratios. The Company did not exceed such ratios during fiscal 2017 , does not anticipate exceeding such ratios during the fiscal year 2018, and therefore does not anticipate any additional repayments during the fiscal year 2018. On June 26, 2018, the Company reached a contingent agreement under the First Lien Credit Agreement to increase the loan outstanding by $150,000 subject to successfully closing on the announced ProAct Services Corporation acquisition. The terms for this additional borrowing would be consistent with the current terms. In addition, the Company reached an agreement with certain Revolving Credit Lenders to amend their participation from 2019 Revolving Credit Commitments to 2022 Revolving Credit Commitments. On conclusion of these amendments, the entire Revolving Credit of $125,000 will have a maturity in 2022. Equipment Financing On June 30, 2017, the Company completed a Build Own Operate (BOO) financing for $7,100 . The Company incurred $50 of additional financing fees related to this transaction, which have been capitalized and are included as a contra liability on the balance sheet. This financing fully amortizes over the seven -year tenure and incurs interest at a rate of one-month LIBOR plus 300 basis points. This variable rate debt has been fixed at a rate of 5.08% per annum. Principal obligations are $254 per quarter. The Company had $6,930 and $6,085 principal outstanding under this facility at September 30, 2017 and June 30, 2018 , respectively. On June 28, 2018, the Company completed an equipment financing for $3,530 at a fixed interest rate of 6.24% over a 7 -year term. This 7 -year financing amortizes over a 10 -year period, with monthly principal and interest payments of $39 and a balloon payment of $1,330 due at maturity. The Company had $3,530 principal outstanding under this facility at June 30, 2018 . Notes Payable As of September 30, 2017 and June 30, 2018 , the Company had notes payable in an aggregate outstanding amount of $3,287 and $2,310 , respectively, with interest rates ranging from 6.26% to 7.39% , and due dates ranging from August 31, 2018 to July 31, 2023. These notes are related to certain equipment related contracts and are secured by the underlying equipment and assignment of the related contracts. Mortgage On June 29, 2018, the Company subsidiary MAGNETO special anodes B.V. entered into a 10 -year mortgage agreement for 1,600 Euro ( $1,868 ) to finance a facility in the Netherlands, subject to monthly principal payments of 7 Euro ( $8 ) at a blended interest rate of 2.4% with maturity in June 2028. The Company had $1,868 principal outstanding under this facility at June 30, 2018 . Repayment Schedule Aggregate maturities of all long‑term debt, including current portion of long‑term debt and excluding capital lease obligations as of June 30, 2018 , are presented below: Fiscal Year Remainder of 2018 $ 2,534 2019 9,854 2020 9,770 2021 9,816 2022 9,864 Thereafter 762,555 Total $ 804,393 |
Product Warranties
Product Warranties | 9 Months Ended |
Jun. 30, 2018 | |
Guarantees and Product Warranties [Abstract] | |
Product warranties | Product Warranties The Company accrues warranty obligations associated with certain products as revenue is recognized. Provisions for the warranty obligations are based upon historical experience of costs incurred for such obligations, adjusted for site‑specific risk factors, and, as necessary, for current conditions and factors. There are significant uncertainties and judgments involved in estimating warranty obligations, including changing product designs, differences in customer installation processes and future claims experience which may vary from historical claims experience. A reconciliation of the activity related to the accrued warranty, including both the current and long‑term portions, is as follows: Nine Months Ended June 30, 2017 2018 Balance at beginning of the period $ 23,309 $ 17,274 Warranty provision for sales 4,108 2,697 Settlement of warranty claims (9,701) (8,221) Foreign currency translation and other (341) (445) Balance at end of the period $ 17,375 $ 11,305 The decline in accrued warranty over the periods presented is attributable to improved product quality and better project execution, as well as the expiration of warranty periods for certain specific exposures related to discontinued products. |
Restructuring and Related Charg
Restructuring and Related Charges | 9 Months Ended |
Jun. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and related charges | Restructuring and Related Charges To better align its resources with its growth strategies and reduce the cost structure, the Company commits to restructuring plans as necessary. The Company initiated a Voluntary Separation Plan (VSP) during the year ended September 30, 2016 , that continued throughout fiscal year 2017 and concluded during the six months ended March 31, 2018 . The VSP plan includes severance payments to employees as a result of streamlining business operations for efficiency, elimination of redundancies, and reorganizing business processes. In addition, the Company has undertaken various other restructuring initiatives, including the wind down of the Company’s operations in Italy, restructuring of the Company’s operations in Australia, consolidation of functional support structures on a global basis, and consolidation of the Singaporean research and development center. The table below sets forth the amounts accrued for the restructuring components and related activity: Nine Months Ended June 30, 2017 2018 Balance at beginning of the period $ 13,217 $ 3,542 Restructuring charges related to VSP 19,199 312 Charges related to other initiatives 2,896 8,440 Write off charge and other non‑cash activity (374) (479) Cash payments (28,904) (11,395) Other adjustments 124 24 Balance at end of the period $ 6,158 $ 444 The balances for accrued restructuring liabilities at September 30, 2017 and June 30, 2018 are recorded in Accrued expenses and other liabilities. The Company expects to incur another $1,200 of restructuring charges during the remaining of fiscal year 2018 . Restructuring charges primarily represent severance charges and of the amounts incurred above, $9,664 , $5,210 , $6,843 , and $378 were included in Cost of product sales and services, General and administration expense, Sales and marketing expense and Research and development expense, respectively, during the nine months ended June 30, 2017 . During the nine months ended June 30, 2018 , $3,086 , $4,309 , $750 , and $607 were included in Cost of product sales and services, General and administration expense, Sales and marketing expense and Research and development expense, respectively. The Company continues to evaluate restructuring activities that may result in additional charges in the future. |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended |
Jun. 30, 2018 | |
Retirement Benefits [Abstract] | |
Employee benefit plans | Employee Benefit Plans The Company maintains multiple employee benefit plans. Certain of the Company’s employees in the UK were participants in a Siemens defined benefit plan established for employees of a UK-based operation acquired by Siemens in 2004. The plan was frozen with respect to future service credits for active employees, however the benefit formula recognized future compensation increases. The Company agreed to establish a replacement defined benefit plan, with the assets of the Siemens scheme transferring to the new scheme on April 1, 2015. The Company’s employees in Germany also participate in a defined benefit plan. Assets equaling the plan’s accumulated benefit obligation were transferred to a German defined benefit plan sponsored by the Company upon the acquisition of EWT from Siemens. The German entity also sponsors a defined benefit plan for a small group of employees located in France. Pension expense for the German and UK plans were as follows: Three Months Ended June 30, 2017 2018 Service cost $ 267 $ 230 Interest cost 82 116 Expected return on plan assets (40) (30) Amortization of actuarial losses 188 75 Pension expense for defined benefit plans $ 497 $ 391 Nine Months Ended June 30, 2017 2018 Service cost $ 802 $ 705 Interest cost 246 357 Expected return on plan assets (121) (93) Amortization of actuarial losses 563 230 Pension expense for defined benefit plans $ 1,490 $ 1,199 |
Income Taxes
Income Taxes | 9 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The income tax provision for interim periods is comprised of tax on ordinary income (loss) provided at the most recent estimated annual effective tax rate, adjusted for the tax effect of discrete items. Management estimates the annual effective tax rate each quarter based on the forcasted annual pretax income or (loss) of its U.S. and non-U.S. operations. Items unrelated to current year ordinary income or (loss) are recognized entirely in the period identified as a discrete item of tax. Discrete items generally relate to changes in tax laws, adjustments to prior year’s actual liability determined upon filing tax returns, adjustments to previously recorded reserves for uncertain tax positions, initially recording or fully reversing valuation allowances, and excess stock compensation deductions. Effects of the Tax Cuts and Jobs Act New tax legislation, commonly referred to as the Tax Cuts and Jobs Act (Tax Act), was enacted on December 22, 2017. ASC 740, Accounting for Income Taxes , requires companies to recognize the effect of tax law changes in the period of enactment even though the effective date for most provisions is for tax years beginning after December 31, 2017, or in the case of certain other provisions, January 1, 2018. Though certain key aspects of the new law are effective January 1, 2018 and have an immediate accounting effect, other significant provisions are not yet effective or may not result in accounting effects for September 30 fiscal year companies until October 1, 2018. The SEC issued Staff Accounting Bulletin No. 118 (SAB 118), which allows registrants to record provisional amounts during a one year “measurement period” similar to that used when accounting for business combinations. During the measurement period, impacts of the law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared or analyzed. SAB 118 applies to measuring the impact of tax laws affecting the period of enactment, such as the change in tax rate to 21%, and does not extend to changes as part of the Tax Act that are not effective until after December 31, 2017, such as U.S. taxation of certain global intangible low-taxed income (GILTI). The SAB summarizes a three-step process to be applied at each reporting period to account for and qualitatively disclose: (1) the effects of the change in tax law for which accounting is complete; (2) provisional amounts (or adjustments to provisional amounts) for the effects of the tax law where accounting is not complete, but that a reasonable estimate has been determined; and (3) that a reasonable estimate cannot yet be made and therefore taxes are reflected in accordance with law prior to the enactment of the Tax Cuts and Jobs Act. Amounts recorded where accounting is complete in the nine months ended June 30, 2018 principally relate to the reduction in the U.S. corporate income tax rate to 21% , which resulted in the Company reporting an income tax benefit of $3,641 to remeasure deferred taxes liabilities associated with indefinitely lived intangible assets that will reverse at the new 21% rate. Absent this deferred tax liability, the Company is in a net deferred tax asset position that is offset by a full valuation allowance. Though the impact of the rate change has a net tax effect of zero, the accounting to determine the gross change in the deferred tax position and the offsetting valuation is not yet complete. The new law includes a one-time mandatory repatriation transition tax on the net accumulated earnings and profits of a U.S. taxpayer’s foreign subsidiaries. The Company has performed a preliminary analysis, and as a result of an expected overall accumulated deficit, it is not likely that the Company will have a liability for the transition tax. Therefore, the accounting for this matter is provisional until the accumulated earnings and profits analysis is finalized in fiscal 2018. The Tax Act introduces other new provisions that are effective January 1, 2018 and changes how certain provisions are calculated for fiscal years ending September 30, 2018. These provisions include additional limitations on certain meals and entertainment expenses, and the inclusion of commissions and performance based compensation in determining the excessive compensation limitation applicable to certain employees. We do not expect these new provisions to have a material impact to the Company’s tax expense. Other significant provisions that are not yet effective but may impact income taxes in future years include: an exemption from U.S. tax on dividends of future foreign earnings, a limitation on the current deductibility of net interest expense in excess of 30% of adjusted taxable income, a limitation on the use of net operating losses generated after fiscal 2018 to 80% of taxable income, an incremental tax (base erosion anti-abuse tax or BEAT) on excessive amounts paid to foreign related parties, and an income inclusion for foreign earnings in excess of 10% of the foreign subsidiaries tangible assets (GILTI). The Company is still evaluating whether to make a policy election to treat the GILTI tax as a period expense or to provide U.S. deferred taxes on foreign temporary differences that are expected to generate GILTI income when they reverse in future years. Annual Effective Tax Rate The full year estimated annual effective tax rate, which excludes the impact of discrete items, was 0.1% and 22.8% as of the nine months ended June 30, 2017 and 2018 , respectively, and is reconciled to the U.S. statutory rate as follows. For the nine months ended June 30, 2017 , the estimated annual effective tax rate of 0.1% was lower than the U.S federal statutory rate of 35.0% primarily due to higher forecasted earnings in the U.S. and certain non-U.S. jurisdictions that permitted the realization of net deferred tax assets which were previously impaired with a valuation allowance. For the nine months ended June 30, 2018 , the U.S. federal statutory rate of 24.5% is a blended rate based upon the number of days in fiscal 2018 that the company will be taxed at the former statutory rate of 35.0% and the number of days that it will be taxed at the new rate of 21.0% . The estimated annual effective tax rate of 22.8% differs from this blended U.S. federal statutory rate principally due to higher forecasted earnings in the U.S. and certain non-U.S. jurisdictions that permitted the realization of net deferred tax assets which were previously impaired with a valuation allowance. The reduction in the U.S. statutory rate has lessened the impact of foreign statutory tax rate differences as a significant portion of the Company’s foreign income is in jurisdictions with a similar or slightly higher tax rate than 35.0% . Prior and Current Period Tax Expense For the three months ended June 30, 2017 the Company recognized income tax expense of $12,202 , or 87.4% , on pretax income of $13,958 . This rate was different from the U.S. statutory rate of 35.0% principally due to the income generated in the third quarter and the impact to year-to-date tax expense on a significantly smaller loss as compared to the loss at March 31, 2017. Discrete items for the quarter were not material. For the three months ended June 30, 2018 the Company recognized income tax expense of $1,433 , or 58.1% , on pretax income of $2,468 . This 58.1% is higher than the U.S. statutory rate of 24.5% , principally due to lower forecasted earnings in the U.S. compared to prior quarters, and an increase in unbenefited foreign losses. Discrete items for the quarter were not material. For the nine months ended June 30, 2017 , income tax expense of $295 as a percentage of pretax losses of $6,255 were 4.7% . This is slightly more than the estimated annual effective tax rate of 0.1% as a result of discrete period tax expense to record adjustments to the actual liability upon the filing of certain foreign income tax returns during the period. For the nine months ended June 30, 2018 , the Company recognized an income tax benefit of $960 , which as a percentage of pretax income of $10,052 was 9.6% . This amount differs from the estimated annual effective tax rate of 22.8% as a result of a discrete tax benefit of $3,641 due to the remeasurement of U.S. deferred tax liabilities associated with indefinite lived intangible assets for the reduction in the U.S. statutory rate from 35.0% to 21.0% . Other discrete items were not material. The Company projects to maintain a full valuation on U.S. federal and state net deferred tax assets (excluding the tax effects of deferred tax liabilities associated with indefinite lived intangibles) for the year ending September 30, 2018 as a result of pretax losses incurred since the Company’s inception in early 2014. Though the Company reported positive earnings for the first time in 2017 and is projecting earnings in 2018, management believes it is prudent to retain a valuation allowance until a more consistent pattern of actual earnings is established and net operating loss carryforwards begin to be utilized. There are no amounts of unrecognized tax benefits recorded for the nine months ended June 30, 2017 and 2018 . Management does not reasonably expect any significant changes to unrecognized tax benefits within next twelve months of the reporting date. U.S. federal, state and foreign tax returns remain open to examination for the years ended September 30, 2014 and forward |
Share Based Compensation
Share Based Compensation | 9 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share Based Compensation | Share-Based Compensation In connection with the IPO, the Board adopted and the Company's stockholders approved the Evoqua Water Technologies Corp. 2017 Equity Incentive Plan (or the Equity Incentive Plan), under which equity awards may be made in the respect of 5,100 shares of common stock of the Company. Under the Equity Incentive Plan, awards may be granted in the form of options, restricted stock, restricted stock units, stock appreciation rights, dividend equivalent rights, share awards and performance-based awards (including performance share units and performance-based restricted stock). Share-based compensation expense was $614 and $4,405 during the three months ended June 30, 2017 and 2018 , respectively, and $1,634 and $11,257 during the nine months ended June 30, 2017 and 2018 , respectively. The unrecognized compensation expense related to stock options and restricted stock units was $11,330 and $16,996 , respectively at June 30, 2018 , and is expected to be recognized over a weighted average period of 3.8 years and 1.3 years, respectively. $9 was received from the exercise of stock options during the three months ended June 30, 2018. The remaining stock options exercised during the three months ended June 30, 2018 were effected via a cashless net exercise. Option awards vest ratably at 25% per year, and are exercisable at the time of vesting. The options granted have a ten -year contractual term. A summary of the stock option activity as of June 30, 2018 is presented below (amounts in thousands except per share amounts): Options Weighted Average Exercise Price/Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at September 30, 2017 9,060 $ 5.18 7.5 years $ 11,011 Granted 1,365 20.96 Exercised (1,057 ) 4.77 Forfeited (112 ) 8.29 Expired — — Outstanding at June 30, 2018 9,256 7.52 7.9 years $ 20,503 Options exercisable at June 30, 2018 5,697 $ 4.90 6.3 years $ 6,169 The total intrinsic value of options exercised (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) during the nine months ended June 30, 2018 was $19,577 . A summary of the status of the Company's non-vested stock options as of and for the nine month period ended June 30, 2018 is presented below. Shares Weighted Average Grant Date Fair Value/Share Nonvested at September 30, 2017 4,300 $ 1.36 Granted 1,365 7.94 Vested (1,995 ) 1.16 Forfeited (112 ) 2.25 Nonvested at June 30, 2018 3,558 $ 3.97 The total fair value of options vested during the nine months ended June 30, 2018 , was $2,317 . Restricted Stock Units In addition to the establishment of the Equity Incentive Plan, in connection with the IPO, the Company entered into restricted stock unit (“RSU”) agreements with each of the executive officers and certain other key members of management. Pursuant to the RSU agreements, recipients received, in the aggregate, 1,197 stock-settled RSUs, the aggregate value of which equals $25,000 . The RSUs will vest and settle in full upon the second anniversary of the IPO (the “Vesting Date”). The following is a summary of the RSU activity for the nine months ended June 30, 2018 . Shares Weighted Average Grant Date Fair Value/Share Outstanding at September 30, 2017 — $ — Granted 1,224 20.88 Forfeited (7 ) 20.88 Outstanding at June 30, 2018 1,217 $ 20.88 |
Concentration of Credit Risk
Concentration of Credit Risk | 9 Months Ended |
Jun. 30, 2018 | |
Risks and Uncertainties [Abstract] | |
Concentration of credit risk | Concentration of Credit Risk The Company’s cash and cash equivalents and accounts receivable are potentially subject to concentration of credit risk. Cash and cash equivalents are placed with financial institutions that management believes are of high credit quality. Accounts receivable are derived from revenue earned from customers located in the U.S. and internationally and generally do not require collateral. The Company’s trade receivables do not represent a significant concentration of credit risk at September 30, 2017 and June 30, 2018 due to the wide variety of customers and markets into which products are sold and their dispersion across geographic areas. The Company does perform ongoing credit evaluations of its customers and maintains an allowance for potential credit losses on trade receivables. As of and for the three and nine months ended June 30, 2017 and 2018 , no customer accounted for more than 10% of net sales or net accounts receivable. The Company operates predominantly in eight countries worldwide and provides a wide range of proven product brands and advanced water and wastewater treatment technologies, mobile and emergency water supply solutions and service contract options through its Industrial, Municipal, and Products segments. The Company is a multi-national business but its sales and operations are primarily in the U.S. Sales to unaffiliated customers are based on the Company locations that maintain the customer relationship and transacts the external sale. |
Related_Party Transactions
Related‑Party Transactions | 9 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related‑Party Transactions | Related‑Party Transactions Transactions with Investors The Company paid an advisory fee of $1,000 per quarter to AEA Investors LP (AEA), the private equity firm and ultimate majority shareholder pursuant to a management agreement. Upon the IPO, the management agreement terminated and the Company stopped paying these fees to AEA and as a result, only paid $333 during the three and nine months ended June 30, 2018 . In addition, the Company reimbursed AEA for normal and customary expenses incurred by AEA on behalf of the Company. The Company incurred expenses, excluding advisory fees, of $249 and $43 in the nine months ended June 30, 2017 and 2018 , respectively. The amounts owed to AEA were $38 and $0 at September 30, 2017 and June 30, 2018 , respectively, and were included in Accrued expenses and other liabilities. AEA, through two of its affiliated funds, is one of the lenders in the First Lien Term Loan Facility and had a commitment of $16,218 and $14,301 at September 30, 2017 and June 30, 2018 , respectively. The Company also has a related party relationship with one of its customers, who is also a shareholder of the Company. The Company had sales to this customer of $1,255 and $376 during the three months ended June 30, 2017 and 2018, respectively, and $2,819 and $961 during the nine months ended June 30, 2017 and 2018 , respectively, and was owed $2,354 and $720 from this customer at September 30, 2017 and June 30, 2018 , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases The Company occupies certain facilities and operates certain equipment and vehicles under non‑cancelable lease arrangements. Lease agreements may contain lease escalation clauses and purchase and renewal options. The Company recognizes scheduled lease escalation clauses over the course of the applicable lease term on a straight-line basis in the Consolidated Statements of Operations. Total rent expense was $4,777 and $4,091 for the three months ended June 30, 2017 and 2018 , respectively, and $13,608 and $13,843 for the nine months ended June 30, 2017 and 2018 , respectively. Future minimum aggregate rental payments under non-cancelable operating leases are as follows: Operating Fiscal Year Remainder of 2018 $ 2,985 2019 10,746 2020 9,368 2021 7,410 2022 4,998 Thereafter 10,948 Total $ 46,455 Capital Leases The gross and net carrying values of the equipment under capital leases were $43,727 and $30,302 , respectively, as of September 30, 2017 and were $50,005 and $30,077 , respectively, as of June 30, 2018 and are recorded in Property, plant and equipment, net. The following is a schedule showing the future minimum lease payments under capital leases by years and the present value of the minimum lease payments as of June 30, 2018 . Capital Fiscal Year Remainder of 2018 $ 3,461 2019 10,492 2020 8,633 2021 5,563 2022 3,563 Thereafter 2,342 Total 34,054 Less amount representing interest (at rates ranging from 2.15% to 3.65%) 2,565 Present value of net minimum capital lease payments 31,489 Less current installments of obligations under capital leases 11,885 Obligations under capital leases, excluding current installments $ 19,604 The current installments of obligations under capital leases are included in Accrued expenses and other liabilities. Obligations under capital leases, excluding current installments, are included in Other non-current liabilities. The Company is a lessor to multiple parties. The Company purchases equipment through internal funding or bank debt equal to the fair market value of the equipment. The equipment is then leased to customers for periods ranging from five to twenty years . As of June 30, 2018 , future minimum lease payments receivable under operating leases are as follows: Operating Fiscal year Remainder of 2018 $ 1,372 2019 6,107 2020 7,257 2021 5,547 2022 5,395 Thereafter 63,356 Future minimum lease payments $ 89,034 Guarantees From time to time, the Company is required to provide letters of credit, bank guarantees, or surety bonds in support of its commitments and as part of the terms and conditions on water treatment projects. In addition, the Company is required to provide letters of credit or surety bonds to the Department of Environmental Protection or equivalent in some states in order to maintain its licenses to handle toxic substances at certain of its water treatment facilities. These financial instruments typically expire after all Company commitments have been met, a period typically ranging from twelve months to ten years , or more in some circumstances. The letters of credit, bank guarantees, or surety bonds are arranged through major banks or insurance companies. In the case of surety bonds, the Company generally indemnifies the issuer for all costs incurred if a claim is made against the bond. As of September 30, 2017 and June 30, 2018 , the Company had letters of credit totaling $17,274 and $13,244 , respectively, and surety bonds totaling $87,849 and $100,487 , respectively, outstanding under the Company’s credit arrangements. The longest maturity date of the letters of credit and surety bonds in effect as of June 30, 2018 was March 26, 2029 . Additionally, as of September 30, 2017 and June 30, 2018 , the Company had letters of credit totaling $901 and $867 , respectively, and surety bonds totaling $12,970 and $5,545 , respectively, outstanding under the Company’s prior arrangement with Siemens. Litigation From time to time, the Company is subject to various claims, charges and litigation matters that arise in the ordinary course of business. The Company believes these actions are a normal incident of the nature and kind of business in which the Company is engaged. While it is not feasible to predict the outcome of these matters with certainty, the Company does not believe that any asserted or unasserted legal claims or proceedings, individually or in the aggregate, will have a material adverse effect on its business, financial condition, results of operations or prospects. |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 9 Months Ended |
Jun. 30, 2018 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Liabilities | Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following: September 30, 2017 June 30, 2018 Salaries, wages and other benefits $ 52,116 $ 27,181 Severance payments 3,542 444 Taxes, other than income 9,244 10,113 Obligations under capital leases 9,777 11,885 Third party commissions 6,968 4,300 Insurance liabilities 4,915 4,293 Provisions for litigation 4,715 1,850 Earn-outs related to acquisitions 4,304 7,218 Other 26,342 23,111 $ 121,923 $ 90,395 The reduction in Accrued expenses and other liabilities is primarily due to timing of cash payments for various employee-related liabilities, along with the payment of accrued expenses related to the IPO during the nine months ended June 30, 2018 . |
Business Segments
Business Segments | 9 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Business segments | Business Segments The Company has three reportable segments – Industrial, Municipal and Products. Segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance. The key factors used to identify these reportable segments are the organization and alignment of the Company’s internal operations, the nature of the products and services, and customer type. The business segments are described as follows: Industrial combines equipment and services to improve operational reliability and environmental compliance for heavy and light industry, commercial and institutional markets. Their customers span industries including hydrocarbon refineries, chemical processing, power, food and beverage, life sciences, health services and microelectronics. Municipal helps engineers and municipalities meet new demands for plant performance through leading equipment, solutions and services backed by trusted brands and over 100 plus years of applications experience. Their customers include waste water and drinking water collection and distribution systems, and utility operators. Their services include odor control services. Products has distinct business operating units. Each has a unique standard product built on well-known brands and technologies that are sold globally through multiple sales and aftermarket channels. Additionally, Products also offers industrial, municipal and water recreational users with well-known brands that improve operational reliability and environmental compliance. Their customers include original equipment manufacturers, regional and global distributors, engineering, procurement and contracting customers, and end users in the municipal, industrial and commercial industries, including hotels, resorts, colleges, universities, waterparks, aquariums and zoos. The Company evaluates its business segments’ operating results based on earnings before interest, taxes, depreciation and amortization, and certain other charges that are specific to the activities of the respective segments. Corporate activities include general corporate expenses, elimination of intersegment transactions, interest income and expense and certain other charges. Certain other charges include restructuring and other business transformation charges that have been undertaken to align and reposition the Company to the current reporting structure, acquisition related costs (including transaction costs, certain integration costs and recognition of backlog intangible assets recorded in purchase accounting) and share-based compensation charges. Since certain administrative and other operating expenses and other items have not been allocated to business segments, the results in the below table are not necessarily a measure computed in accordance with generally accepted accounting principles and may not be comparable to other companies. Three Months Ended June 30, Nine Months Ended June 30, 2017 2018 2017 2018 Total sales Industrial $ 155,904 $ 184,133 $ 464,414 $ 536,351 Municipal 79,817 75,927 217,897 215,768 Products 93,257 104,013 258,181 280,496 Total sales 328,978 364,073 940,492 1,032,615 Intersegment sales Industrial 1,206 1,810 3,553 7,575 Municipal 7,075 7,428 18,970 21,079 Products 9,555 12,360 27,053 30,746 Total intersegment sales 17,836 21,598 49,576 59,400 Sales to external customers Industrial 154,698 182,323 460,861 528,776 Municipal 72,742 68,499 198,927 194,689 Products 83,702 91,653 231,128 249,750 Total sales 311,142 342,475 890,916 973,215 Earnings before interest, taxes, depreciation and amortization (EBITDA) Industrial 34,758 35,805 102,133 117,646 Municipal 12,556 14,434 29,644 30,784 Products 21,196 23,989 53,070 57,635 Corporate (23,794 ) (37,828 ) (96,172 ) (93,667 ) Total EBITDA 44,716 36,400 88,675 112,398 Depreciation and amortization Industrial 9,191 11,390 27,632 32,244 Municipal 1,994 1,736 6,119 5,312 Products 2,084 3,269 8,722 9,345 Corporate 5,024 5,167 13,340 15,023 Total depreciation and amortization 18,293 21,562 55,813 61,924 Operating profit (loss) Industrial 25,567 24,415 74,501 85,402 Municipal 10,562 12,698 23,525 25,472 Products 19,112 20,720 44,348 48,290 Corporate (28,817 ) (42,995 ) (109,512 ) (108,689 ) Total operating profit 26,424 14,838 32,862 50,475 Interest expense (12,466 ) (12,370 ) (39,117 ) (40,423 ) Income (loss) before income taxes 13,958 2,468 (6,255 ) 10,052 Income tax (expense) benefit (12,202 ) (1,433 ) (295 ) 960 Net income (loss) $ 1,756 $ 1,035 $ (6,550 ) $ 11,012 Capital expenditures Industrial $ 9,256 $ 14,364 $ 31,019 $ 34,866 Products 1,658 2,817 4,239 5,138 Municipal 561 3,182 1,577 6,154 Corporate 1,772 2,536 3,640 8,411 Total capital expenditures $ 13,247 $ 22,899 $ 40,475 $ 54,569 September 30, June 30, Assets Industrial $ 461,471 $ 492,875 Municipal 155,698 171,438 Products 513,941 538,430 Corporate 342,199 296,478 Total assets $ 1,473,309 $ 1,499,221 Goodwill Industrial $ 128,190 $ 127,357 Municipal 9,865 9,741 Products 183,858 187,174 Total goodwill $ 321,913 $ 324,272 |
Earnings per share
Earnings per share | 9 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings per share | Earnings Per Share The following table sets forth the computation of basic and diluted income (loss) from continuing operations per common share (in thousands, except per share amounts): Three Months Ended June 30, Nine Months Ended June 30, 2017 2018 2017 2018 Numerator: Numerator for basic and diluted income (loss) per common share—Net income (loss) attributable to Evoqua Water Technologies Corp. $ 1,503 $ 793 $ (8,898 ) $ 9,585 Denominator: Denominator for basic net income (loss) per common share—weighted average shares 104,821 113,842 104,821 113,842 Effect of dilutive securities: Share‑based compensation 3,164 5,205 — 6,094 Denominator for diluted net income (loss) per common share—adjusted weighted average shares 107,985 119,047 104,821 119,936 Basic income (loss) attributable to Evoqua Water Technologies Corp. per common share $ 0.01 $ 0.01 $ (0.08 ) $ 0.08 Diluted income (loss) attributable to Evoqua Water Technologies Corp. per common share $ 0.01 $ 0.01 $ (0.08 ) $ 0.08 Since the Company was in a net loss position for the nine months ended June 30, 2017 , there was no difference between the number of shares used to calculate basic and diluted loss per share. Because of their anti-dilutive effect, 8,824 common share equivalents, comprised of employee stock options, have been excluded from the diluted EPS calculation for the nine months ended June 30, 2017 . |
Subsequent Events
Subsequent Events | 9 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company completed the acquisition of ProAct Services Corporation (ProAct) on July 26, 2018, through the Company's wholly owned subsidiary, EWT Holdings III Corp., for $133,772 paid in cash at closing. ProAct is a leading provider of on-site treatment services of contaminated water in all 50 states. ProAct will operate as a separate division within Evoqua’s Industrial Segment and will continue to be based in Ludington, Michigan with a nationwide service footprint and facilities in California, Florida, Michigan, Minnesota, New Jersey, Virginia and Texas. In connection with the closing of the ProAct acquisition on July 26, 2018, EWT Holdings III Corp. entered into Amendment 6 to the First Lien Credit Agreement dated January 15, 2014 (as amended, amended and restated, extended, supplemented or otherwise modified from time to time prior to the effectiveness of Amendment 6, the Existing Credit Agreement). Pursuant to Amendment 6, among other things, EWT Holdings III Corp. borrowed an additional $150,000 in incremental term loans, and all of the revolving credit lenders whose revolving credit loans were scheduled to mature on January 15, 2019 agreed to convert 100% of these commitments into revolving credit loans that will mature on December 20, 2022. The other terms of the Existing Credit Agreement, including rates, remain generally the same. |
Description of the Company an30
Description of the Company and Basis of Presentation - (Policies) | 9 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | Basis of Presentation The accompanying Unaudited Condensed Consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). All intracompany transactions have been eliminated. The unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. We believe that the disclosures made are adequate to make the information presented not misleading. We consistently applied the accounting policies described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2017 , as filed with the SEC on December 4, 2017 ( 2017 Annual Report), in preparing these unaudited condensed consolidated financial statements, with the exception of accounting standard updates described in Note 2. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes included in our 2017 Annual Report. |
Fiscal Year | Fiscal Year The Company’s fiscal year ends on September 30. |
Use of estimates | Use of Estimates The unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP and require management to make estimates and assumptions. These assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates and assumptions are used for, but not limited to: (i) revenue recognition; (ii) allowance for doubtful accounts; (iii) inventory valuation, asset valuations, impairment, and recoverability assessments; (iv) depreciable lives of assets; (v) useful lives of intangible assets; (vi) income tax reserves and valuation allowances; and (vii) product warranty and litigation reserves. Estimates are revised as additional information becomes available. Actual results could differ from these estimates. |
Cash and cash equivalents | Cash and Cash Equivalents Cash and cash equivalents are liquid investments with an original maturity of three or fewer months when purchased. |
Accounts receivable | Accounts Receivable Receivables are primarily comprised of uncollected amounts owed to us from transactions with customers and are presented net of allowances for doubtful accounts. Allowances are estimated based on historical write‑offs and the economic status of customers. The Company considers a receivable delinquent if it is unpaid after the term of the related invoice has expired. Write‑offs are recorded at the time all collection efforts have been exhausted. |
Inventories | Inventories Inventories are stated at the lower of cost or market, where cost is generally determined on the basis of an average or first‑in, first‑out (FIFO) method. Production costs comprise direct material and labor and applicable manufacturing overheads, including depreciation charges. The Company regularly reviews inventory quantities on hand and writes off excess or obsolete inventory based on estimated forecasts of product demand and production requirements. Manufacturing operations recognize cost of product sales using standard costing rates with overhead absorption which generally approximates actual cost. |
Property, plant and equipment | Property, Plant, and Equipment Property, plant, and equipment is valued at cost less accumulated depreciation and impairment losses. If the costs of certain components of an item of property, plant, and equipment are significant in relation to the total cost of the item, they are accounted for and depreciated separately. Depreciation expense is recognized using the straight‑line method. Useful lives are reviewed annually and, if expectations differ from previous estimates, adjusted accordingly. Estimated useful lives for major classes of depreciable assets are as follows: Asset Class Estimated Useful Life Machinery and equipment 3 to 20 years Buildings and improvements 10 to 40 years Leasehold improvements are depreciated over the shorter of their estimated useful life or the term of the lease. Costs related to maintenance and repairs that do not extend the assets’ useful life are expensed as incurred. |
Goodwill and other intangible assets | Goodwill and Other Intangible Assets Goodwill represents purchase consideration paid in a business combination that exceeds the value assigned to the net assets of acquired businesses. Other intangible assets consist of customer‑related intangibles, proprietary technology, software, trademarks and other intangible assets. The Company amortizes intangible assets with definite useful lives on a straight‑line basis over their respective estimated economic lives which range from 1 to 26 years. The Company reviews goodwill to determine potential impairment annually during the fourth quarter of our fiscal year, or more frequently if events and circumstances indicate that the asset might be impaired. Impairment testing for goodwill is performed at a reporting unit level. We have determined that we have four reporting units. Our quantitative impairment testing utilizes both a market (guideline public company) and income (discounted cash flows) method for determining fair value. In estimating the fair value of the reporting unit utilizing a discounted cash flow (“DCF”) valuation technique, we incorporate our judgment and estimates of future cash flows, future revenue and gross profit growth rates, terminal value amount, capital expenditures and applicable weighted‑average cost of capital used to discount these estimated cash flows. The estimates and projections used in the estimate of fair value are consistent with our current budget and long‑range plans, including anticipated change in market conditions, industry trend, growth rates and planned capital expenditures, among other considerations. |
Impairment of long-lived assets | Impairment of Long‑Lived Assets Long‑lived assets, such as property, plant, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of the asset or asset group is measured by comparison of its carrying amount to undiscounted future net cash flows the asset or asset group is expected to generate. If the carrying amount of an asset or asset group is not recoverable, the Company recognizes an impairment loss based on the excess of the carrying amount of the asset or asset group over its respective fair value which is generally determined as the present value of estimated future cash flows or as the appraised value. |
Debt Issuance Costs And Debt Discounts | Debt Issuance Costs and Debt Discounts Debt issuance costs are capitalized and amortized over the contractual term of the underlying debt using the straight line method which approximates the effective interest method. Debt discounts and lender arrangement fees deducted from the proceeds have been included as a component of the carrying value of debt and are being amortized to interest expense using the effective interest method. |
Revenue Recognition | Revenue Recognition Sales of goods and services are recognized when persuasive evidence of an arrangement exists, the price is fixed or determinable, collectability is reasonably assured and delivery has occurred or services have been rendered. For sales of aftermarket parts or products with a low level of customization and engineering time, the Company recognizes revenues at the time risks and rewards of ownership pass, which is generally when products are shipped or delivered to the customer as the Company has no obligation for installation. Sales of short‑term service arrangements are recognized as the services are performed, and sales of long‑term service arrangements are typically recognized on a straight‑line basis over the life of the agreement. For certain arrangements where there is significant customization to the product, the Company recognizes revenue under the provisions of Accounting Standards Codification (ASC) 605-35, Revenue Recognition – Construction-Type and Production-Type Contracts. These products include large capital water treatment projects, systems and solutions for municipal and industrial applications. Revenues from construction-type contracts are generally recognized under the percentage-of-completion method, based on the input of costs incurred to date as a percentage of total estimated contract costs. The nature of the contracts is generally fixed price with milestone billings. Approximately $63,148 and $74,824 of revenues from construction-type contracts were recognized on the percentage-of-completion method during the three months ended June 30, 2017 and 2018 , respectively and $168,030 and $204,731 for the nine months ended June 30, 2017 and 2018 , respectively. Contract revenues and cost estimates are reviewed and revised quarterly at a minimum and the cumulative effect of such adjustments are recognized in current operations. The amount of such adjustments have not been material. Cost and earnings in excess of billings under construction‑type arrangements are recorded when contracts have net asset balances where contract costs plus recognized profits less recognized losses exceed progress billings. Billings in excess of costs incurred are recorded when contract progress billings exceed costs and recognized profit less recognized losses. Approximately $6,888 and $6,697 of revenues from construction-type contracts were recognized on a completed contract method, which is typically when the product is delivered and accepted by the customer, during the three months ended June 30, 2017 and 2018 , respectively and $21,353 and $19,897 for the nine months ended June 30, 2017 and 2018 , respectively. The completed contract method is principally used when the contract is short in duration and where results of operations would not vary materially from those resulting from the use of the percentage-of-completion method. |
Product warranties | Product Warranties Accruals for estimated expenses related to warranties are made at the time products are sold and are recorded as a component of Cost of product sales in the Unaudited Condensed Consolidated Statements of Operations. The estimated warranty obligation is based on product warranty terms offered to customers, ongoing product failure rates, material usage and service delivery costs expected to be incurred in correcting a product failure, as well as specific obligations for known failures and other currently available evidence. The Company assesses the adequacy of the recorded warranty liabilities on a regular basis and adjusts amounts as necessary. |
Shipping and handling cost | Shipping and Handling Cost Shipping and handling costs are included as a component of Cost of product sales |
Income Taxes | Income Taxes The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are provided against deferred tax assets when it is deemed more likely than not that some portion or all of the deferred tax asset will not be realized within a reasonable time period. We assess tax positions using a two‑step process. A tax position is recognized if it meets a more‑likely‑than‑not threshold, and is measured at the largest amount of benefit that is greater than 50.0% percent of being realized. Uncertain tax positions are reviewed each balance sheet date. |
Sales Taxes | Sales Taxes Upon collection of sales tax from revenue, the amount of sales tax is placed into an accrued liability account. This liability is then relieved when the payment is sent to the proper government jurisdiction. |
Foreign currency translations and transactions | Foreign Currency Translation and Transactions The functional currency for the international subsidiaries is the local currency. Assets and liabilities are translated into U.S. Dollars using current rates of exchange, with the resulting translation adjustments recorded in other comprehensive income/loss within shareholders' equity. Revenues and expenses are translated at the weighted‑average exchange rate for the period, with the resulting translation adjustments recorded in the Unaudited Condensed Consolidated Statements of Operations. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. |
Equity-based compensation | Equity‑based Compensation The Company measures the cost of awards of equity instruments to employees based on the grant‑date fair value of the award. Prior to the IPO, given the absence of a public trading market for our common stock, the fair value of the common stock underlying our share‑based awards was determined by our board, with input from management, in each case using the income and market valuation approach. Stock options are granted with exercise prices equal to or greater than the estimated fair market value on the date of grant as authorized by our compensation committee. The grant‑date fair value is determined using the Black‑Scholes model. The fair value, net of estimated forfeitures, is amortized as compensation cost on a straight‑line basis over the vesting period primarily as a component of General and administrative expenses. |
Earnings per share | Earnings Per Share Basic earnings per common share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed based on the weighted average number of shares of common stock, plus the effect of diluted common shares outstanding during the period using the treasury stock method. Diluted potential common shares include outstanding stock options. |
Retirement benefits | Retirement Benefits The Company applies ASC Topic 715, Compensation—Retirement Benefits , which requires the recognition in pension obligations and accumulated other comprehensive income of actuarial gains or losses, prior service costs or credits and transition assets or obligations that have previously been deferred. The determination of retirement benefit pension obligations and associated costs requires the use of actuarial computations to estimate participant plan benefits to which the employees will be entitled. The significant assumptions primarily relate to discount rates, expected long‑term rates of return on plan assets, rate of future compensation increases, mortality, years of service, and other factors. The Company develops each assumption using relevant experience in conjunction with market‑related data for each individual country in which such plans exist. All actuarial assumptions are reviewed annually with third‑party consultants and adjusted as necessary. For the recognition of net periodic postretirement cost, the calculation of the expected return on plan assets is generally derived by applying the expected long‑term rate of return on the market‑related value of plan assets. The fair value of plan assets is determined based on actual market prices or estimated fair value at the measurement date. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Pronouncements Not Yet Adopted In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606) . ASU No. 2014-09 clarifies the principles for recognizing revenue when an entity either enters into a contract with customers to transfer goods or services or enters into a contract for the transfer of non-financial assets. ASU 2014-09 may be adopted using either of two acceptable methods: (1) retrospective adoption to each prior period presented with the option to elect certain practical expedients; or (2) adoption with the cumulative effect recognized at the date of initial application and providing certain disclosures. To assess at which time revenue should be recognized, an entity should use the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. The standard is effective for the Company for the quarter ending December 31, 2018. The Company has completed its first phase of adopting this standard, which was to identify the potential differences that will result from applying the new revenue recognition standard to the Company's contracts with its customers, and has begun the second step of reviewing its contracts to determine the impact of adopting the standard. The Company has completed its preliminary assessment of the impact of the new standard compared to the historical accounting policies on a representative sample of contracts. The Company does not anticipate a material change to result from the adoption of the new standard related to its product sales. The Company recognizes revenue for some of its contracts on a percentage-of-completion basis, which represented approximately 21% of its consolidated net sales for the nine months ended June 30, 2018 . The Company expects that for some of these contracts, the new guidance will instead require revenue to be recognized at a point in time. The Company is continuing to assess the ultimate impact that the adoption of this standard will have on its consolidated financial statements and related disclosures. In addition, the Company is evaluating the changes that will be required in its internal controls as a result of the adoption of this new standard. The Company is planning to adopt the provisions of the ASU and its subsequent amendments using the modified retrospective transition method for existing transactions that will likely result in a cumulative effect adjustment as of October 1, 2018. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . ASU No. 2016-02 requires recognition of operating leases as lease assets and liabilities on the balance sheet, and disclosure of key information about leasing arrangements. ASU No. 2016-02 will be effective retrospectively for the Company for the quarter ending December 31, 2019, with early adoption permitted. The Company is currently reviewing its leasing arrangements in order to evaluate the impact this standard will have on the Company's Consolidated financial statements and related disclosures. In October 2016, the FASB issued ASU 2016-17 , Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory . The purpose of this update is to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The ASU requires the tax effects of all intra-entity sales of assets other than inventory to be recognized in the period in which the transaction occurs. The guidance will be effective for the Company for the quarter ending December 31, 2018 with early adoption permitted but only in the first interim period of a fiscal year. The changes are required to be applied by means of a cumulative-effect adjustment recorded in retained earnings as of the beginning of the fiscal year of adoption. The Company is currently evaluating the potential impact of adoption on the Company’s Consolidated financial statements. In February 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . This ASU requires the disaggregation of the service cost component from other components of net periodic benefit cost, clarifies how to present the service cost component and other components of net benefit costs in the Statements of Consolidated Operations and allows only the service cost component of net benefit costs to be eligible for capitalization. This ASU is effective for the Company for the quarter ending December 31, 2018. Adoption will be applied on a retrospective basis for the presentation of all components of net periodic benefit costs and on a prospective basis for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The Company does not expect the impact of adoption on the Company’s Consolidated financial statements to be material. In May 2017, the FASB issued ASU 2017‑09, Scope of Modification Accounting , which amended Accounting Standards Code Topic 718. FASB issued ASU 2017‑09 to reduce the cost and complexity when applying Topic 718 and standardize the practice of applying Topic 718 to financial reporting. The ASU was not developed to fundamentally change the definition of a modification, but instead to provide guidance for what changes would qualify as a modification. ASU No. 2017‑09 will be effective for the Company for the quarter ending December 31, 2018. The Company is currently evaluating the potential impact of adoption on the Company’s Consolidated financial statements. In May 2017, the FASB issued ASU 2017‑12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which expands and refines hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements and also make certain targeted improvements to simplify the application of hedge accounting guidance and ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness. ASU No. 2017‑12 will be effective for the Company for the quarter ending December 31, 2018. The Company does not expect the impact of adoption on the Company’s Consolidated financial statements to be material. In May 2017, the FASB issued ASU 2018‑02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows for a reclassification from Accumulated other comprehensive loss to Retained deficit for stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information to users of financial statements. ASU No. 2017‑09 will be effective for the Company for the quarter ending December 31, 2018. The Company does not expect the impact of adoption on the Company’s Consolidated financial statements to be material. In June 2018, the FASB issued ASU 2018‑07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU No. 2018‑07 will be effective for the Company for the quarter ending December 31, 2019. The Company does not expect the impact of adoption on the Company’s Consolidated financial statements to be material. Accounting Pronouncements Recently Adopted The Company adopted ASU 2016-09, Improvements to Employee Share-Based Payment Accounting , which amends ASC Topic 718, Compensation – Stock Compensation as of October 1, 2017. The ASU includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The adoption of this ASU did not have a significant impact on the Company's Consolidated financial statements. The Company early adopted ASU 2016‑15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) for the year beginning October 1, 2018. This new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The guidance is to be applied retrospectively to all periods presented, however there were no instances in prior periods that were impacted by the adoption of this ASU. This adoption did not have a material impact on the Company's Consolidated financial statements and for the quarter ending June 30, 2018, resulted in the reporting of an earn-out from a prior acquisition for $2,619 to be reported in the Financing section of the Unaudited Condensed Consolidated Statements of Changes in Cash Flows. The Company early adopted ASU 2017‑04, Simplifying the Test for Goodwill Impairment, for the year beginning October 1, 2017. This ASU simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures goodwill impairment loss by comparing the implied value of a reporting unit’s goodwill with the carrying amount of that goodwill. The amendments in this ASU are effective for the Company for the quarter ending December 31, 2020. The adoption of this ASU did not have a material impact on the Company's Consolidated financial statements. |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule Of Estimated Useful Lives For Major Classes Of Depreciable Assets | Estimated useful lives for major classes of depreciable assets are as follows: Asset Class Estimated Useful Life Machinery and equipment 3 to 20 years Buildings and improvements 10 to 40 years Property, plant, and equipment consists of the following: September 30, 2017 June 30, 2018 Machinery and equipment $ 338,056 $ 358,603 Land and buildings 84,282 82,406 Construction in process 24,788 48,531 447,126 489,540 Less: accumulated depreciation (167,083 ) (200,362 ) $ 280,043 $ 289,178 |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net | September 30, 2017 June 30, 2018 Current assets (including cash of $1,907 and $2,297) $ 12,006 $ 8,188 Property, plant and equipment 6,107 4,726 Goodwill 2,206 2,206 Other non-current assets 2,735 2,735 Total liabilities (12,781 ) (9,500 ) Three Months Ended June 30, 2017 2018 Total revenues $ 3,570 $ 3,020 Total operating expenses (3,089 ) (2,535 ) Income from operations $ 481 $ 485 Nine Months Ended June 30, 2017 2018 Total revenues $ 11,645 $ 12,586 Total operating expenses (8,857 ) (9,732 ) Income from operations $ 2,788 $ 2,854 |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) | 9 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The preliminary opening balance sheet for the acquisitions is summarized as follows. Pure Water Pacific Ozone Total Current assets $ 277 $ 1,953 $ 2,230 Property, plant and equipment 175 151 326 Goodwill 2,462 3,757 6,219 Intangible assets 1,488 2,678 4,166 Total assets acquired 4,402 8,539 12,941 Total liabilities assumed (164 ) (916 ) (1,080 ) Net assets acquired $ 4,238 $ 7,623 $ 11,861 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table presents the Company’s financial assets and liabilities at fair value. The fair values related to the pension plan assets are determined using net asset value (NAV) as a practical expedient, or by information categorized in the fair value hierarchy level based on the inputs used to determine fair value. The reported carrying amounts of deferred compensation plan assets and liabilities and debt approximate their fair values. The Company uses interest rates and other relevant information generated by market transactions involving similar instruments to fair value these assets and liabilities, therefore all are classified as Level 2 within the valuation hierarchy. Net Asset Value Quoted Market Significant Other Significant As of September 30, 2017 Assets: Pension plan Cash $ — $ 16,024 $ — $ — Government Securities 3,206 — — — Liability Driven Investment 2,754 — — — Guernsey Unit Trust 932 — — — Global Absolute Return 2,139 — — — Deferred compensation plan assets Trust Assets — 2,146 — — Insurance — — 17,396 — Liabilities: Pension plan — — (34,803 ) — Deferred compensation plan liabilities — — (21,159 ) — Long‑term debt — — (912,471 ) — As of June 30, 2018 Assets: Pension plan Cash $ — $ 15,703 $ — $ — Government Securities 2,938 — — — Liability Driven Investment 3,245 — — — Guernsey Unit Trust 948 — — — Global Absolute Return 2,058 — — — Deferred compensation plan assets Trust Assets — 766 — — Insurance — — 18,029 — Liabilities: Pension plan — — (34,162 ) — Deferred compensation plan liabilities — — (21,267 ) — Long‑term debt — — (798,662 ) — |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 9 Months Ended |
Jun. 30, 2018 | |
Receivables [Abstract] | |
Schedule of accounts receivable | Accounts receivable are summarized as follows: September 30, 2017 June 30, 2018 Accounts receivable $ 248,742 $ 232,513 Allowance for doubtful accounts (3,494 ) (4,183 ) Receivables, net $ 245,248 $ 228,330 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | The major classes of Inventories, net are as follows: September 30, 2017 June 30, 2018 Raw materials and supplies $ 64,113 $ 75,000 Work in progress 16,425 22,762 Finished goods and products held for resale 44,402 51,400 Costs of unbilled projects 5,706 2,391 Reserves for excess and obsolete (10,599 ) (11,086 ) Inventories, net $ 120,047 $ 140,467 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 9 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Estimated useful lives for major classes of depreciable assets are as follows: Asset Class Estimated Useful Life Machinery and equipment 3 to 20 years Buildings and improvements 10 to 40 years Property, plant, and equipment consists of the following: September 30, 2017 June 30, 2018 Machinery and equipment $ 338,056 $ 358,603 Land and buildings 84,282 82,406 Construction in process 24,788 48,531 447,126 489,540 Less: accumulated depreciation (167,083 ) (200,362 ) $ 280,043 $ 289,178 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Changes in the carrying amount of goodwill are as follows: Industrial Municipal Products Total Balance at September 30, 2017 $ 128,190 $ 9,865 $ 183,858 $ 321,913 Business combinations and divestitures 2,462 (145 ) 3,757 6,074 Measurement period adjustment (323 ) — (314 ) (637 ) Foreign currency translation (2,972 ) 21 (127 ) (3,078 ) Balance at June 30, 2018 $ 127,357 $ 9,741 $ 187,174 $ 324,272 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long‑term debt consists of the following: September 30, 2017 June 30, 2018 First Lien Term Loan Facility, due December 20, 2024 $ 896,574 $ 790,600 Revolving Credit Facility — — Equipment financing, due June 30, 2024 and June 28, 2025 6,930 9,615 Mortgage, due June 30, 2028 — 1,868 Notes Payable, due June 30, 2018 to July 31, 2023 3,287 2,310 Total debt 906,791 804,393 Less unamortized discount and lender fees (16,942 ) (14,255 ) Total net debt 889,849 790,138 Less current portion (11,325 ) (9,708 ) Total long‑term debt $ 878,524 $ 780,430 |
Schedule of Aggregate Maturities of Long-term Debt | Aggregate maturities of all long‑term debt, including current portion of long‑term debt and excluding capital lease obligations as of June 30, 2018 , are presented below: Fiscal Year Remainder of 2018 $ 2,534 2019 9,854 2020 9,770 2021 9,816 2022 9,864 Thereafter 762,555 Total $ 804,393 |
Product Warranties (Tables)
Product Warranties (Tables) | 9 Months Ended |
Jun. 30, 2018 | |
Guarantees and Product Warranties [Abstract] | |
Schedule of product warranty liability | A reconciliation of the activity related to the accrued warranty, including both the current and long‑term portions, is as follows: Nine Months Ended June 30, 2017 2018 Balance at beginning of the period $ 23,309 $ 17,274 Warranty provision for sales 4,108 2,697 Settlement of warranty claims (9,701) (8,221) Foreign currency translation and other (341) (445) Balance at end of the period $ 17,375 $ 11,305 |
Restructuring and Related Cha40
Restructuring and Related Charges (Tables) | 9 Months Ended |
Jun. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Schedule of restructuring components | The table below sets forth the amounts accrued for the restructuring components and related activity: Nine Months Ended June 30, 2017 2018 Balance at beginning of the period $ 13,217 $ 3,542 Restructuring charges related to VSP 19,199 312 Charges related to other initiatives 2,896 8,440 Write off charge and other non‑cash activity (374) (479) Cash payments (28,904) (11,395) Other adjustments 124 24 Balance at end of the period $ 6,158 $ 444 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 9 Months Ended |
Jun. 30, 2018 | |
Retirement Benefits [Abstract] | |
Schedule of net benefit costs | Pension expense for the German and UK plans were as follows: Three Months Ended June 30, 2017 2018 Service cost $ 267 $ 230 Interest cost 82 116 Expected return on plan assets (40) (30) Amortization of actuarial losses 188 75 Pension expense for defined benefit plans $ 497 $ 391 Nine Months Ended June 30, 2017 2018 Service cost $ 802 $ 705 Interest cost 246 357 Expected return on plan assets (121) (93) Amortization of actuarial losses 563 230 Pension expense for defined benefit plans $ 1,490 $ 1,199 |
Share Based Compensation (Table
Share Based Compensation (Tables) | 9 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock options, activity | A summary of the stock option activity as of June 30, 2018 is presented below (amounts in thousands except per share amounts): Options Weighted Average Exercise Price/Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at September 30, 2017 9,060 $ 5.18 7.5 years $ 11,011 Granted 1,365 20.96 Exercised (1,057 ) 4.77 Forfeited (112 ) 8.29 Expired — — Outstanding at June 30, 2018 9,256 7.52 7.9 years $ 20,503 Options exercisable at June 30, 2018 5,697 $ 4.90 6.3 years $ 6,169 |
Schedule of Nonvested Share Activity | A summary of the status of the Company's non-vested stock options as of and for the nine month period ended June 30, 2018 is presented below. Shares Weighted Average Grant Date Fair Value/Share Nonvested at September 30, 2017 4,300 $ 1.36 Granted 1,365 7.94 Vested (1,995 ) 1.16 Forfeited (112 ) 2.25 Nonvested at June 30, 2018 3,558 $ 3.97 The total fair value of options vested during the nine months ended June 30, 2018 , was $2,317 . |
Schedule of Share-based Compensation, Restricted Stock Units Award Activity | The following is a summary of the RSU activity for the nine months ended June 30, 2018 . Shares Weighted Average Grant Date Fair Value/Share Outstanding at September 30, 2017 — $ — Granted 1,224 20.88 Forfeited (7 ) 20.88 Outstanding at June 30, 2018 1,217 $ 20.88 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Aggregate Future Minimum Rental Payments for Operating Leases | Future minimum aggregate rental payments under non-cancelable operating leases are as follows: Operating Fiscal Year Remainder of 2018 $ 2,985 2019 10,746 2020 9,368 2021 7,410 2022 4,998 Thereafter 10,948 Total $ 46,455 |
Schedule of Future Minimum Lease Payments for Capital Leases | The following is a schedule showing the future minimum lease payments under capital leases by years and the present value of the minimum lease payments as of June 30, 2018 . Capital Fiscal Year Remainder of 2018 $ 3,461 2019 10,492 2020 8,633 2021 5,563 2022 3,563 Thereafter 2,342 Total 34,054 Less amount representing interest (at rates ranging from 2.15% to 3.65%) 2,565 Present value of net minimum capital lease payments 31,489 Less current installments of obligations under capital leases 11,885 Obligations under capital leases, excluding current installments $ 19,604 |
Schedule of Future Minimum Lease Payments Receivable under Operating Leases | As of June 30, 2018 , future minimum lease payments receivable under operating leases are as follows: Operating Fiscal year Remainder of 2018 $ 1,372 2019 6,107 2020 7,257 2021 5,547 2022 5,395 Thereafter 63,356 Future minimum lease payments $ 89,034 |
Accrued Expenses and Other Li44
Accrued Expenses and Other Liabilities (Tables) | 9 Months Ended |
Jun. 30, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | Accrued expenses and other liabilities consisted of the following: September 30, 2017 June 30, 2018 Salaries, wages and other benefits $ 52,116 $ 27,181 Severance payments 3,542 444 Taxes, other than income 9,244 10,113 Obligations under capital leases 9,777 11,885 Third party commissions 6,968 4,300 Insurance liabilities 4,915 4,293 Provisions for litigation 4,715 1,850 Earn-outs related to acquisitions 4,304 7,218 Other 26,342 23,111 $ 121,923 $ 90,395 |
Business Segments (Tables)
Business Segments (Tables) | 9 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information, by segment | Three Months Ended June 30, Nine Months Ended June 30, 2017 2018 2017 2018 Total sales Industrial $ 155,904 $ 184,133 $ 464,414 $ 536,351 Municipal 79,817 75,927 217,897 215,768 Products 93,257 104,013 258,181 280,496 Total sales 328,978 364,073 940,492 1,032,615 Intersegment sales Industrial 1,206 1,810 3,553 7,575 Municipal 7,075 7,428 18,970 21,079 Products 9,555 12,360 27,053 30,746 Total intersegment sales 17,836 21,598 49,576 59,400 Sales to external customers Industrial 154,698 182,323 460,861 528,776 Municipal 72,742 68,499 198,927 194,689 Products 83,702 91,653 231,128 249,750 Total sales 311,142 342,475 890,916 973,215 Earnings before interest, taxes, depreciation and amortization (EBITDA) Industrial 34,758 35,805 102,133 117,646 Municipal 12,556 14,434 29,644 30,784 Products 21,196 23,989 53,070 57,635 Corporate (23,794 ) (37,828 ) (96,172 ) (93,667 ) Total EBITDA 44,716 36,400 88,675 112,398 Depreciation and amortization Industrial 9,191 11,390 27,632 32,244 Municipal 1,994 1,736 6,119 5,312 Products 2,084 3,269 8,722 9,345 Corporate 5,024 5,167 13,340 15,023 Total depreciation and amortization 18,293 21,562 55,813 61,924 Operating profit (loss) Industrial 25,567 24,415 74,501 85,402 Municipal 10,562 12,698 23,525 25,472 Products 19,112 20,720 44,348 48,290 Corporate (28,817 ) (42,995 ) (109,512 ) (108,689 ) Total operating profit 26,424 14,838 32,862 50,475 Interest expense (12,466 ) (12,370 ) (39,117 ) (40,423 ) Income (loss) before income taxes 13,958 2,468 (6,255 ) 10,052 Income tax (expense) benefit (12,202 ) (1,433 ) (295 ) 960 Net income (loss) $ 1,756 $ 1,035 $ (6,550 ) $ 11,012 Capital expenditures Industrial $ 9,256 $ 14,364 $ 31,019 $ 34,866 Products 1,658 2,817 4,239 5,138 Municipal 561 3,182 1,577 6,154 Corporate 1,772 2,536 3,640 8,411 Total capital expenditures $ 13,247 $ 22,899 $ 40,475 $ 54,569 September 30, June 30, Assets Industrial $ 461,471 $ 492,875 Municipal 155,698 171,438 Products 513,941 538,430 Corporate 342,199 296,478 Total assets $ 1,473,309 $ 1,499,221 Goodwill Industrial $ 128,190 $ 127,357 Municipal 9,865 9,741 Products 183,858 187,174 Total goodwill $ 321,913 $ 324,272 |
Earnings per share (Tables)
Earnings per share (Tables) | 9 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share, basic and diluted | The following table sets forth the computation of basic and diluted income (loss) from continuing operations per common share (in thousands, except per share amounts): Three Months Ended June 30, Nine Months Ended June 30, 2017 2018 2017 2018 Numerator: Numerator for basic and diluted income (loss) per common share—Net income (loss) attributable to Evoqua Water Technologies Corp. $ 1,503 $ 793 $ (8,898 ) $ 9,585 Denominator: Denominator for basic net income (loss) per common share—weighted average shares 104,821 113,842 104,821 113,842 Effect of dilutive securities: Share‑based compensation 3,164 5,205 — 6,094 Denominator for diluted net income (loss) per common share—adjusted weighted average shares 107,985 119,047 104,821 119,936 Basic income (loss) attributable to Evoqua Water Technologies Corp. per common share $ 0.01 $ 0.01 $ (0.08 ) $ 0.08 Diluted income (loss) attributable to Evoqua Water Technologies Corp. per common share $ 0.01 $ 0.01 $ (0.08 ) $ 0.08 |
Description of the Company an47
Description of the Company and Basis of Presentation (Details) $ / shares in Units, shares in Thousands, $ in Thousands | Mar. 21, 2018shares | Mar. 19, 2018shares | Nov. 07, 2017shares | Nov. 06, 2017$ / sharesshares | Jan. 16, 2014USD ($) | Jun. 30, 2018$ / shares | Jun. 30, 2018segment$ / shares | Jun. 30, 2018USD ($)$ / shares | Sep. 30, 2017$ / shares |
Subsidiary, Sale of Stock [Line Items] | |||||||||
Common stock, par value (in USD per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |||||
Repayments of debt | $ | $ 104,936 | ||||||||
Number of reportable segments | 3 | 3 | |||||||
IPO [Member] | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Number of shares issued in transaction (in shares) | 27,777 | ||||||||
Common stock, par value (in USD per share) | $ / shares | $ 0.01 | ||||||||
Proceeds from issuance of common stock | $ | $ 137,605 | ||||||||
Initial Public Offering - Shares from Existing Shareholders [Member] | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Number of shares issued in transaction (in shares) | 2,625 | 17,500 | 19,444 | ||||||
Initial Public Offering - Shares from The Company [Member] | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Number of shares issued in transaction (in shares) | 8,333 | ||||||||
Over-Allotment Option [Member] | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Number of shares issued in transaction (in shares) | 4,167 | ||||||||
EWT Holdings II Corp and EWT Holdings III Corp [Member] | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Stock purchase price, net of cash received | $ | $ 730,577 |
Summary of Significant Accoun48
Summary of Significant Accounting Policies (Details) - USD ($) shares in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Dec. 31, 2017 | Nov. 30, 2017 | Oct. 31, 2016 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Oct. 28, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||||||||
Amortization of debt issuance costs and discounts | $ 478 | $ 1,875 | $ 1,932 | $ 4,376 | ||||
Write off of deferred debt issuance cost | $ 1,150 | $ 1,844 | $ 2,075 | 2,075 | 2,944 | |||
Prepayment of debt | $ 100,000 | |||||||
Revenues, percentage of completion method | 74,824 | 63,148 | 204,731 | 168,030 | ||||
Revenues, completed contract method | 6,697 | 6,888 | 19,897 | 21,353 | ||||
Foreign currency losses (gains) on intracompany loans | 9,340 | (6,872) | 5,652 | (1,663) | ||||
Research and development costs | 3,682 | $ 5,592 | $ 12,356 | $ 15,684 | ||||
Minimum [Member] | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Finite-lived intangible asset, useful life | 1 year | |||||||
Maximum [Member] | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Finite-lived intangible asset, useful life | 26 years | |||||||
Machinery and equipment | Minimum [Member] | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Property, plant and equipment, useful life | 3 years | |||||||
Machinery and equipment | Maximum [Member] | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Property, plant and equipment, useful life | 20 years | |||||||
Building and Building Improvements [Member] | Minimum [Member] | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Property, plant and equipment, useful life | 10 years | |||||||
Building and Building Improvements [Member] | Maximum [Member] | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Property, plant and equipment, useful life | 40 years | |||||||
Restricted Stock Units (RSUs) [Member] | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Stock granted during period, employee stock ownership plan (shares) | 1,224 | |||||||
Tack-On Financing Completed October 28, 2016 [Member] | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Debt instrument, fee amount | $ 481 | |||||||
December Refinancing [Member] | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Debt instrument, fee amount | $ 2,131 | $ 2,131 | ||||||
Sales Revenue, Net [Member] | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Concentration risk, percentage | 21.00% |
Summary of Significant Accoun49
Summary of Significant Accounting Policies - Treated Water Outsourcing (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Sep. 30, 2017 | |
Subsidiary or Equity Method Investee [Line Items] | |||||
Current assets (including cash of $1,907 and $2,297) | $ 536,835 | $ 536,835 | $ 512,240 | ||
Cash | 2,297 | 2,297 | 1,907 | ||
Property, plant and equipment | 289,178 | 289,178 | 280,043 | ||
Goodwill | 324,272 | 324,272 | 321,913 | ||
Other non-current assets | 22,611 | 22,611 | 22,399 | ||
Total liabilities | (1,136,005) | (1,136,005) | (1,256,734) | ||
Total revenues | 342,475 | $ 311,142 | 973,215 | $ 890,916 | |
Total operating expenses | (94,531) | (73,674) | (255,582) | (244,947) | |
Income from operations | 36,400 | 44,716 | 112,398 | 88,675 | |
Treated Water Outsourcing [Member] | |||||
Subsidiary or Equity Method Investee [Line Items] | |||||
Current assets (including cash of $1,907 and $2,297) | 8,188 | 8,188 | 12,006 | ||
Property, plant and equipment | 4,726 | 4,726 | 6,107 | ||
Goodwill | 2,206 | 2,206 | 2,206 | ||
Other non-current assets | 2,735 | 2,735 | 2,735 | ||
Total liabilities | (9,500) | (9,500) | $ (12,781) | ||
Total revenues | 3,020 | 3,570 | 12,586 | 11,645 | |
Total operating expenses | (2,535) | (3,089) | (9,732) | (8,857) | |
Income from operations | $ 485 | $ 481 | $ 2,854 | $ 2,788 |
Acquisitions and Divestitures -
Acquisitions and Divestitures - Narrative (Details) € in Thousands, $ in Thousands | Apr. 09, 2018EUR (€) | Apr. 09, 2018USD ($) | Mar. 09, 2018USD ($) | Jan. 31, 2018USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Apr. 09, 2018USD ($) |
Business Acquisition [Line Items] | |||||||
Proceeds from sale of business | $ 430 | $ 0 | |||||
Pure Water Solutions [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Consideration transferred, liabilities incurred | $ 4,699 | ||||||
Payments to acquire businesses, gross | 3,706 | ||||||
Stock purchase price, net of cash received | 993 | ||||||
Accrued earnout related to acquisitions | $ 461 | ||||||
Pacific Ozone [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Consideration transferred, liabilities incurred | $ 8,557 | ||||||
Payments to acquire businesses, gross | 6,557 | ||||||
Stock purchase price, net of cash received | $ 2,000 | ||||||
Earn out payment, period | 3 years | ||||||
Accrued earnout related to acquisitions | $ 934 | ||||||
Evoqua Water Technologies S.r.l. [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Proceeds from sale of business | € 350 | $ 430 | |||||
Evoqua Water Technologies S.r.l. [Member] | Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Disposal group, including discontinued operation, accounts receivable, net | 344 | $ 484 | |||||
Disposal group, including discounted operation, cost and earnings in excess of billings on uncompleted contracts | 225 | 277 | |||||
Disposal Group, including discontinued operation, prepaid and other assets, current | 283 | 348 | |||||
Disposal group, including discontinued operation, goodwill | 118 | 145 | |||||
Disposal group, including discontinued operation, other assets, noncurrent | 180 | 222 | |||||
Disposal group, including discontinued operation, accounts payable | 33 | 40 | |||||
Disposal group, including discontinued operation, product warranty, current | 516 | 625 | |||||
Disposal group, including discontinued operation, other liabilities | € 147 | $ 181 |
Acquisitions and Divestitures51
Acquisitions and Divestitures - Balance Sheet for Acquisitions (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Sep. 30, 2017 |
Business Acquisition [Line Items] | ||
Goodwill | $ 324,272 | $ 321,913 |
Pure Water Solutions [Member] | ||
Business Acquisition [Line Items] | ||
Current assets | 277 | |
Property, plant and equipment | 175 | |
Goodwill | 2,462 | |
Intangible assets | 1,488 | |
Total assets acquired | 4,402 | |
Total liabilities assumed | (164) | |
Net assets acquired | 4,238 | |
Pacific Ozone [Member] | ||
Business Acquisition [Line Items] | ||
Current assets | 1,953 | |
Property, plant and equipment | 151 | |
Goodwill | 3,757 | |
Intangible assets | 2,678 | |
Total assets acquired | 8,539 | |
Total liabilities assumed | (916) | |
Net assets acquired | 7,623 | |
2018 Acquisitions [Member] | ||
Business Acquisition [Line Items] | ||
Current assets | 2,230 | |
Property, plant and equipment | 326 | |
Goodwill | 6,219 | |
Intangible assets | 4,166 | |
Total assets acquired | 12,941 | |
Total liabilities assumed | (1,080) | |
Net assets acquired | $ 11,861 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands | Jun. 30, 2018 | Sep. 30, 2017 |
Quoted Market Prices in Active Markets (Level 1) [Member] | ||
Deferred compensation plan assets | ||
Trust Assets | $ 766 | $ 2,146 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Deferred compensation plan assets | ||
Insurance | 18,029 | 17,396 |
Liabilities: | ||
Pension plan | (34,162) | (34,803) |
Deferred compensation plan liabilities | (21,267) | (21,159) |
Long‑term debt | (798,662) | (912,471) |
Cash [Member] | Quoted Market Prices in Active Markets (Level 1) [Member] | ||
Assets: | ||
Defined benefit plan, fair value of plan assets | 15,703 | 16,024 |
US Government Agencies Debt Securities [Member] | ||
Assets: | ||
Plan assets at net asset value | 2,938 | 3,206 |
Liability Driven Investment [Member] | ||
Assets: | ||
Plan assets at net asset value | 3,245 | 2,754 |
Guernsey Unit Trust [Member] | ||
Assets: | ||
Plan assets at net asset value | 948 | 932 |
Global Absolute Return [Member] | ||
Assets: | ||
Plan assets at net asset value | $ 2,058 | $ 2,139 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Sep. 30, 2017 |
Receivables [Abstract] | ||
Accounts receivable | $ 232,513 | $ 248,742 |
Allowance for doubtful accounts | (4,183) | (3,494) |
Accounts receivable, net | $ 228,330 | $ 245,248 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Sep. 30, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials and supplies | $ 75,000 | $ 64,113 |
Work in progress | 22,762 | 16,425 |
Finished goods and products held for resale | 51,400 | 44,402 |
Costs of unbilled projects | 2,391 | 5,706 |
Reserves for excess and obsolete | (11,086) | (10,599) |
Inventory, Net | $ 140,467 | $ 120,047 |
Property, Plant, and Equipmen55
Property, Plant, and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |||||
Depreciation and amortization | $ 14,530 | $ 13,259 | $ 42,518 | $ 38,645 | |
Maintenance and repair expense | 6,238 | $ 5,395 | 17,620 | $ 15,905 | |
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | 489,540 | 489,540 | $ 447,126 | ||
Less: accumulated depreciation | (200,362) | (200,362) | (167,083) | ||
Property, plant and equipment, net | 289,178 | 289,178 | 280,043 | ||
Machinery and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | 358,603 | 358,603 | 338,056 | ||
Land and buildings | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | 82,406 | 82,406 | 84,282 | ||
Construction in process | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | $ 48,531 | $ 48,531 | $ 24,788 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Sep. 30, 2017 | Jul. 01, 2017 |
Segment Reporting Information [Line Items] | |||
Goodwill deductible for tax purposes | $ 141,511 | $ 139,581 | |
Neptune Benson Reporting Unit [Member] | |||
Segment Reporting Information [Line Items] | |||
Reporting unit, percentage of fair value in excess of carrying amount | 3.00% |
Goodwill Schedule of Goodwill (
Goodwill Schedule of Goodwill (Details) $ in Thousands | 9 Months Ended |
Jun. 30, 2018USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning of the period | $ 321,913 |
Business combinations and divestitures | 6,074 |
Measurement period adjustment | (637) |
Foreign currency translation | (3,078) |
Goodwill, end of the period | 324,272 |
Operating Segments [Member] | Industrial [Member] | |
Goodwill [Roll Forward] | |
Goodwill, beginning of the period | 128,190 |
Business combinations and divestitures | 2,462 |
Measurement period adjustment | (323) |
Foreign currency translation | (2,972) |
Goodwill, end of the period | 127,357 |
Operating Segments [Member] | Municipal [Member] | |
Goodwill [Roll Forward] | |
Goodwill, beginning of the period | 9,865 |
Business combinations and divestitures | (145) |
Measurement period adjustment | 0 |
Foreign currency translation | 21 |
Goodwill, end of the period | 9,741 |
Operating Segments [Member] | Product [Member] | |
Goodwill [Roll Forward] | |
Goodwill, beginning of the period | 183,858 |
Business combinations and divestitures | 3,757 |
Measurement period adjustment | (314) |
Foreign currency translation | (127) |
Goodwill, end of the period | $ 187,174 |
Debt (Details)
Debt (Details) € in Thousands | Jun. 29, 2018EUR (€) | Jun. 29, 2018USD ($) | Jun. 28, 2018USD ($) | Jun. 26, 2018USD ($) | Jan. 15, 2014USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Jun. 29, 2018USD ($) | Dec. 19, 2017USD ($) | Jun. 30, 2017USD ($) |
Line of Credit Facility [Line Items] | |||||||||||
Debt instrument, periodic payment, principal | $ 1,991,000 | ||||||||||
Unamortized discount (premium) and debt issuance costs, net | $ 14,255,000 | 14,255,000 | $ 16,942,000 | ||||||||
Long-term debt, gross | 804,393,000 | 804,393,000 | 906,791,000 | ||||||||
Letters of credit outstanding, amount | 13,244,000 | 13,244,000 | 17,274,000 | ||||||||
Notes payable | 2,310,000 | 2,310,000 | 3,287,000 | ||||||||
Term Loan [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Line of credit facility, outstanding amount | $ 796,574,000 | ||||||||||
Revolving Credit Facility [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Line of credit facility, maximum borrowing capacity | 125,000,000 | 125,000,000 | |||||||||
Line of credit facility, remaining borrowing capacity | 125,000,000 | 125,000,000 | 95,000,000 | ||||||||
Debt instrument, unused borrowing capacity, amount | 111,843,000 | 111,843,000 | 88,294,000 | ||||||||
Letter of Credit [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Line of credit facility, maximum borrowing capacity | 35,000,000 | ||||||||||
Letters of credit outstanding, amount | $ 13,157,000 | $ 13,157,000 | 6,706,000 | ||||||||
Minimum [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Debt instrument, interest rate, stated percentage | 6.26% | 6.26% | |||||||||
Maximum [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Debt instrument, interest rate, stated percentage | 7.39% | 7.39% | |||||||||
First Lien Term Facility, due December 20, 2024 [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Debt instrument, term | 7 years | ||||||||||
Unamortized discount (premium) and debt issuance costs, net | $ 14,255,000 | $ 14,255,000 | $ 16,942,000 | ||||||||
First Lien Term Facility, due December 20, 2024 [Member] | Term Loan [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Line of credit facility, maximum borrowing capacity | $ 505,000,000 | ||||||||||
Debt instrument, interest rate, stated percentage | 5.30% | 5.30% | |||||||||
Line of credit facility, increase (decrease), net | $ 150,000,000 | ||||||||||
First Lien Term Facility, due December 20, 2024 [Member] | Revolving Credit Facility [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Line of credit facility, maximum borrowing capacity | 75,000,000 | ||||||||||
First Lien Term Facility, due December 20, 2024 [Member] | Letter of Credit [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Line of credit facility, maximum borrowing capacity | $ 35,000,000 | ||||||||||
Second Lien Term Facility [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Debt instrument, term | 8 years | ||||||||||
Second Lien Term Facility [Member] | Term Loan [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Line of credit facility, maximum borrowing capacity | $ 75,000,000 | ||||||||||
2022 Borrowings [Member] | Revolving Credit Facility [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Line of credit facility, maximum borrowing capacity | $ 87,500,000 | $ 87,500,000 | |||||||||
Variable rate basis interest rate at period end | 5.00% | 5.00% | |||||||||
Line of credit facility, remaining borrowing capacity | $ 125,000,000 | ||||||||||
Line of credit facility, interest rate at period end | 6.75% | 6.75% | |||||||||
2019 Borrowings [Member] | Revolving Credit Facility [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Line of credit facility, maximum borrowing capacity | $ 37,500,000 | $ 37,500,000 | |||||||||
Variable rate basis interest rate at period end | 4.75% | 4.75% | 4.25% | ||||||||
Line of credit facility, interest rate at period end | 7.25% | 7.25% | 6.50% | ||||||||
Base Rate [Member] | First Lien Term Facility, due December 20, 2024 [Member] | Term Loan [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Variable rate basis interest rate at period end | 2.00% | 2.00% | |||||||||
Base Rate [Member] | 2022 Borrowings [Member] | Minimum [Member] | Revolving Credit Facility [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Debt instrument, basis spread on variable rate | 1.50% | ||||||||||
Base Rate [Member] | 2022 Borrowings [Member] | Maximum [Member] | Revolving Credit Facility [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Debt instrument, basis spread on variable rate | 2.75% | ||||||||||
Base Rate [Member] | 2019 Borrowings [Member] | Minimum [Member] | Revolving Credit Facility [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Debt instrument, basis spread on variable rate | 2.00% | ||||||||||
Base Rate [Member] | 2019 Borrowings [Member] | Maximum [Member] | Revolving Credit Facility [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Debt instrument, basis spread on variable rate | 3.25% | ||||||||||
Prime Rate [Member] | 2022 Borrowings [Member] | Revolving Credit Facility [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Debt instrument, basis spread on variable rate | 1.75% | ||||||||||
Prime Rate [Member] | 2019 Borrowings [Member] | Revolving Credit Facility [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Debt instrument, basis spread on variable rate | 2.25% | ||||||||||
London Interbank Offered Rate (LIBOR) [Member] | First Lien Term Facility, due December 20, 2024 [Member] | Term Loan [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Variable rate basis interest rate at period end | 3.00% | 3.00% | |||||||||
Debt instrument, interest rate, stated percentage | 2.30% | 2.30% | |||||||||
Debt instrument, basis spread on variable rate | 3.00% | ||||||||||
London Interbank Offered Rate (LIBOR) [Member] | Build Own Operate Financing, due June 30, 2024 [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Debt instrument, basis spread on variable rate | 3.00% | ||||||||||
Line of Credit [Member] | Letter of Credit [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Line of credit facility, maximum borrowing capacity | $ 45,000,000 | $ 45,000,000 | $ 35,000,000 | ||||||||
Letters of credit outstanding, amount | $ 87,000 | $ 87,000 | 10,568,000 | ||||||||
Loans Payable [Member] | Build Own Operate Financing, due June 30, 2024 [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Debt instrument, term | 7 years | ||||||||||
Debt instrument, interest rate, stated percentage | 5.08% | 5.08% | |||||||||
Debt instrument, periodic payment, principal | $ 254,000 | ||||||||||
Debt instrument, fee amount | $ 50,000 | ||||||||||
Debt instrument, face amount | $ 7,100,000 | ||||||||||
Long-term debt, gross | 6,085,000 | $ 6,085,000 | |||||||||
Loans Payable [Member] | Equipment Financing [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Debt instrument, term | 7 years | ||||||||||
Debt instrument, amortization period | 10 years | ||||||||||
Debt instrument, interest rate, stated percentage | 6.24% | ||||||||||
Debt instrument, face amount | $ 3,530,000 | 3,530,000 | 3,530,000 | ||||||||
Long-term debt, gross | 9,615,000 | $ 9,615,000 | 6,930,000 | ||||||||
Debt instrument, periodic payment | 39,000 | ||||||||||
Debt instrument, ballon payment | $ 1,330,000 | ||||||||||
Mortgages [Member] | Facility Financing [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Long-term debt, gross | $ 0 | ||||||||||
Ratings Condition Period [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member] | Term Loan [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Debt instrument, basis spread on variable rate | 3.75% | ||||||||||
Other than Ratings Condition Period [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member] | Term Loan [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Debt instrument, basis spread on variable rate | 3.00% | ||||||||||
MAGENTO [Member] | Mortgages [Member] | Facility Financing [Member] | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Debt instrument, term | 10 years | 10 years | |||||||||
Debt instrument, interest rate, stated percentage | 2.40% | 2.40% | |||||||||
Debt instrument, periodic payment, principal | € 7 | $ 8,000 | |||||||||
Debt instrument, face amount | € 1,600 | $ 1,868,000 | |||||||||
Long-term debt, gross | $ 1,868,000 | $ 1,868,000 |
Debt Schedule of Long-term Debt
Debt Schedule of Long-term Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Sep. 30, 2017 |
Debt Instrument [Line Items] | ||
Total debt | $ 804,393 | $ 906,791 |
Less unamortized discount and lender fees | (14,255) | (16,942) |
Total net debt | 790,138 | 889,849 |
Current portion of debt | (9,708) | (11,325) |
Total long‑term debt | 780,430 | 878,524 |
First Lien Term Facility, due December 20, 2024 [Member] | ||
Debt Instrument [Line Items] | ||
Total debt | 790,600 | 896,574 |
Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Total debt | 0 | 0 |
Notes Payable, due June 30, 2018 to July 31, 2023 [Member] | ||
Debt Instrument [Line Items] | ||
Total debt | 2,310 | 3,287 |
Equipment Financing [Member] | Loans Payable [Member] | ||
Debt Instrument [Line Items] | ||
Total debt | $ 9,615 | 6,930 |
Facility Financing [Member] | Mortgages [Member] | ||
Debt Instrument [Line Items] | ||
Total debt | $ 0 |
Debt Long-term Debt Maturities
Debt Long-term Debt Maturities (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Debt Disclosure [Abstract] | |
Remainder of 2018 | $ 2,534 |
2,019 | 9,854 |
2,020 | 9,770 |
2,021 | 9,816 |
2,022 | 9,864 |
Thereafter | 762,555 |
Long-term Debt | $ 804,393 |
Product Warranties (Details)
Product Warranties (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance at beginning of the period | $ 17,274 | $ 23,309 |
Warranty provision for sales | 2,697 | 4,108 |
Settlement of warranty claims | (8,221) | (9,701) |
Foreign currency translation and other | (445) | (341) |
Balance at end of the period | $ 11,305 | $ 17,375 |
Restructuring and Related Cha62
Restructuring and Related Charges (Details) - USD ($) | 9 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and related cost, expected cost | $ 1,200 | |
Restructuring Reserve [Roll Forward] | ||
Restructuring reserve, beginning of the period | 3,542,000 | $ 13,217,000 |
Restructuring charges related to VSP | 312,000 | 19,199,000 |
Charges related to other initiatives | 8,440,000 | 2,896,000 |
Write off charge and other non‑cash activity | (479,000) | (374,000) |
Cash payments | (11,395,000) | (28,904,000) |
Other adjustments | 24,000 | 124,000 |
Restructuring reserve, end of the period | 444,000 | 6,158,000 |
Cost of Product Sales and Services [Member] | ||
Restructuring Reserve [Roll Forward] | ||
Restructuring charges related to VSP | 3,086,000 | 9,664,000 |
General and Administrative Expense [Member] | ||
Restructuring Reserve [Roll Forward] | ||
Restructuring charges related to VSP | 4,309,000 | 5,210,000 |
Sales and Marketing Expense [Member] | ||
Restructuring Reserve [Roll Forward] | ||
Restructuring charges related to VSP | 750,000 | 6,843,000 |
Research and Development Expense [Member] | ||
Restructuring Reserve [Roll Forward] | ||
Restructuring charges related to VSP | $ 607,000 | $ 378,000 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Retirement Benefits [Abstract] | ||||
Service cost | $ 230 | $ 267 | $ 705 | $ 802 |
Interest cost | 116 | 82 | 357 | 246 |
Expected return on plan assets | (30) | (40) | (93) | (121) |
Amortization of actuarial losses | 75 | 188 | 230 | 563 |
Pension expense for defined benefit plans | $ 391 | $ 497 | $ 1,199 | $ 1,490 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Tax cuts and jobs act of 2017, provisional income tax (expense) benefit | $ 3,641 | |||
Estimated annual effective tax rate used to calculate income tax expense (benefit) | 22.80% | 0.10% | ||
Federal statutory income tax rate, percent | 24.50% | 35.00% | ||
Effective income tax rate reconciliation, percent | (58.10%) | (87.40%) | 9.60% | 4.70% |
Income tax (benefit) expense | $ (1,433) | $ (12,202) | $ 960 | $ (295) |
Loss before income taxes | $ 2,468 | $ 13,958 | $ 10,052 | $ (6,255) |
Share Based Compensation - Narr
Share Based Compensation - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | $ 4,405,000 | $ 614,000 | $ 11,257,000 | $ 1,634,000 |
Compensation cost not yet recognized, period for recognition | $ 16,996,000 | 16,996,000 | ||
Fair value of options vested | $ 2,317 | |||
Granted (shares) | 1,365,000 | |||
Employee Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity incentive plan, number of shares authorized (shares) | 5,100,000 | 5,100,000 | ||
Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation cost not yet recognized, period for recognition | $ 11,330,000 | $ 11,330,000 | ||
Period for recognition for unrecognized compensation expense | 3 years 9 months | |||
Proceeds from stock options exercised | 9,000 | |||
Restricted Stock Units (RSUs) [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Period for recognition for unrecognized compensation expense | 1 year 3 months | |||
Evoqua Water Technologies Corp. Stock Option Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock awards vesting percentage | 25.00% | |||
Expiration period | 10 years | |||
Management | Restricted Stock Units (RSUs) [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (shares) | 1,197,000 | |||
Aggregate value | $ 25,000,000 | $ 25,000,000 |
Share Based Compensation - Stoc
Share Based Compensation - Stock Option Activity (Details) - USD ($) | Jun. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2018 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Intrinsic value, exercises in period | $ 19,577 | ||
Options | |||
Outstanding at beginning of the period (shares) | 9,060,000 | ||
Granted (shares) | 1,365,000 | ||
Exercised (shares) | (1,057,000) | ||
Forfeited (shares) | (112,000) | ||
Expired (shares) | 0 | ||
Outstanding at end of the period (shares) | 9,256,000 | 9,060,000 | 9,256,000 |
Options exercisable (shares) | 5,697,000 | 5,697,000 | |
Weighted Average Exercise Price/Share | |||
Weighted average exercise price, outstanding, beginning balance (in dollars per share) | $ 5.18 | ||
Weighted average exercise price, granted (in dollars per share) | 20.96 | ||
Weighted average exercise price, exercised (in dollars per share) | 4.77 | ||
Weighted average exercise price, forfeited (in dollars per share) | 8.29 | ||
Weighted average exercise price, expired (in dollars per share) | 0 | ||
Weighted average exercise price, outstanding, ending balance (in dollars per share) | $ 7.52 | $ 5.18 | 7.52 |
Weighted average exercise price, exercisable (in dollars per share) | $ 4.90 | $ 4.90 | |
Weighted Average Remaining Contractual Term | |||
Weighted average remaining contractual term, outstanding | 7 years 10 months 24 days | 7 years 6 months | |
Weighted average contractual term, exercisable | 6 years 3 months 18 days | ||
Intrinsic value, outstanding | $ 20,503,000 | $ 11,011,000 | $ 20,503,000 |
Intrinsic value, exercisable | $ 6,169,000 | $ 6,169,000 |
Share Based Compensation - Nonv
Share Based Compensation - Nonvested Share Activity (Details) | 9 Months Ended |
Jun. 30, 2018USD ($)$ / sharesshares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Fair value of options vested | $ | $ 2,317 |
Shares | |
Nonvested at September 30, 2017 | shares | 4,300,000 |
Granted (shares) | shares | 1,365,000 |
Vested (shares) | shares | (1,995,000) |
Forfeited (shares) | shares | (112,000) |
Nonvested at June 30, 2018 | shares | 3,558,000 |
Weighted Average Grant Date Fair Value/Share | |
Weighted average grant date fair value, nonvested, beginning balance (in dollars per share) | $ / shares | $ 1.36 |
Weighted average grant date fair value, granted (in dollars per share) | $ / shares | 7.94 |
Weighted average grant date fair value, vested (in dollars per share) | $ / shares | 1.16 |
Weighted average grant date fair value, forfeited (in dollars per share) | $ / shares | 2.25 |
Weighted average grant date fair value, nonvested, ending balance (in dollars per share) | $ / shares | $ 3.97 |
Share Based Compensation - RSU
Share Based Compensation - RSU Activity (Details) - Restricted Stock Units (RSUs) [Member] shares in Thousands | 9 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Shares | |
Outstanding at beginning of the period (shares) | shares | 0 |
Stock granted during period, employee stock ownership plan (shares) | shares | 1,224 |
Forfeited in period (shares) | shares | (7) |
Outstanding at beginning of the period | shares | 1,217 |
Weighted Average Grant Date Fair Value/Share | |
Weighted average grant date fair value, nonvested, equity instruments other than options, beginning of the period (in dollar per share) | $ / shares | $ 0 |
Weighted average grant date fair value, granted (in dollars per share) | $ / shares | 20.88 |
Weighted average grant date fair value, forfeited (in dollars per share) | $ / shares | 20.88 |
Weighted average grant date fair value, nonvested, equity instruments other than options, end of the period (in dollar per share) | $ / shares | $ 20.88 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) | Jun. 30, 2018country |
Risks and Uncertainties [Abstract] | |
Number of countries in which entity operates | 8 |
Related_Party Transactions (Det
Related‑Party Transactions (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Sep. 30, 2017USD ($) | |
Related Party Transaction [Line Items] | ||||||
Number of affiliates | 2 | |||||
Line of credit facility, lender | 1 | |||||
AEA Investors LP [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Due to related parties | $ 38 | $ 38 | $ 0 | |||
Related party commitment | 14,301 | 14,301 | 16,218 | |||
Advisory Fees [Member] | AEA Investors LP [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Fees paid to related party | 333 | $ 1,000 | 333 | |||
Customer [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Revenue from related parties | 376 | $ 1,255 | 961 | $ 2,819 | ||
Accounts receivable, related parties | $ 720 | 720 | $ 2,354 | |||
Expenses Excluding Advisory Fees [Member] | AEA Investors LP [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses from transactions with related party | $ 43 | $ 249 |
Commitments and Contingencies71
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Sep. 30, 2017 | |
Operating Leased Assets [Line Items] | |||||
Rent expense | $ 4,091 | $ 4,777 | $ 13,843 | $ 13,608 | |
Letters of credit outstanding, amount | 13,244 | 13,244 | $ 17,274 | ||
Equipment [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Capital leased assets, gross | 50,005 | 50,005 | 43,727 | ||
Capital leases, carrying value | 30,077 | 30,077 | 30,302 | ||
Letter of Credit [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Letters of credit outstanding, amount | 13,157 | 13,157 | 6,706 | ||
Surety Bond [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Surety bonds | 100,487 | 100,487 | 87,849 | ||
Siemens [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Letters of credit outstanding, amount | 867 | 867 | 901 | ||
Siemens [Member] | Surety Bond [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Surety bonds | $ 5,545 | $ 5,545 | $ 12,970 | ||
Minimum [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Lessor, operating lease, term of contract | 5 years | ||||
Minimum [Member] | Surety Bond [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Financial instruments, commitments, expiration period | 12 months | ||||
Maximum [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Lessor, operating lease, term of contract | 20 years | ||||
Maximum [Member] | Surety Bond [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Financial instruments, commitments, expiration period | 10 years |
Commitments and Contingencies F
Commitments and Contingencies Future Minimum Rental Payments for Operating Leases (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2018 | $ 2,985 |
2,019 | 10,746 |
2,020 | 9,368 |
2,021 | 7,410 |
2,022 | 4,998 |
Thereafter | 10,948 |
Total | $ 46,455 |
Commitments and Contingencies73
Commitments and Contingencies Future Minimum Rental Payments under Capital Lease (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Sep. 30, 2017 |
Capital Leased Assets [Line Items] | ||
Remainder of 2018 | $ 3,461 | |
2,019 | 10,492 | |
2,020 | 8,633 | |
2,021 | 5,563 | |
2,022 | 3,563 | |
Thereafter | 2,342 | |
Total | 34,054 | |
Capital Leases, Future Minimum Payments, Interest Included in Payments | 2,565 | |
Present value of net minimum capital lease payments | 31,489 | |
Obligations under capital leases | 11,885 | $ 9,777 |
Obligations under capital leases, excluding current installments | $ 19,604 | |
Capital lease obligations | Minimum [Member] | ||
Capital Leased Assets [Line Items] | ||
Capital leases of lessee, basis spread on variable rate | 2.15% | |
Capital lease obligations | Maximum [Member] | ||
Capital Leased Assets [Line Items] | ||
Capital leases of lessee, basis spread on variable rate | 3.65% |
Commitments and Contingencies74
Commitments and Contingencies Future Minimum Lease Payments Receivable under Operating Leases (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2018 | $ 1,372 |
2,019 | 6,107 |
2,020 | 7,257 |
2,021 | 5,547 |
2,022 | 5,395 |
Thereafter | 63,356 |
Future minimum lease payments | $ 89,034 |
Accrued Expenses and Other Li75
Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Sep. 30, 2017 |
Payables and Accruals [Abstract] | ||
Salaries, wages and other benefits | $ 27,181 | $ 52,116 |
Severance payments | 444 | 3,542 |
Taxes, other than income | 10,113 | 9,244 |
Obligations under capital leases | 11,885 | 9,777 |
Third party commissions | 4,300 | 6,968 |
Insurance liabilities | 4,293 | 4,915 |
Provisions for litigation | 1,850 | 4,715 |
Earn-outs related to acquisitions | 7,218 | 4,304 |
Other | 23,111 | 26,342 |
Accrued expenses and other liabilities | $ 90,395 | $ 121,923 |
Business Segments (Details)
Business Segments (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2018USD ($)segment | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Sep. 30, 2017USD ($) | |
Segment Reporting [Abstract] | |||||||
Number of reportable segments | 3 | 3 | |||||
Segment Reporting Information [Line Items] | |||||||
Revenue from product sales and services | $ 342,475 | $ 311,142 | $ 973,215 | $ 890,916 | |||
Sales to external customers | 342,475 | 311,142 | 973,215 | 890,916 | |||
Earnings before interest, taxes, depreciation and amortization (EBITDA) | 36,400 | 44,716 | 112,398 | 88,675 | |||
Depreciation and amortization | 21,562 | 18,293 | 61,924 | 55,813 | |||
Operating profit (loss) | 14,838 | 26,424 | 50,475 | 32,862 | |||
Interest expense | (12,370) | (12,466) | (40,423) | (39,117) | |||
Income (loss) before income taxes | 2,468 | 13,958 | 10,052 | (6,255) | |||
Income tax (expense) benefit | (1,433) | (12,202) | 960 | (295) | |||
Net income (loss) | 1,035 | 1,756 | 11,012 | (6,550) | |||
Capital expenditures | 22,899 | 13,247 | 54,569 | 40,475 | |||
Assets | 1,499,221 | $ 1,499,221 | $ 1,499,221 | 1,499,221 | $ 1,473,309 | ||
Goodwill | 324,272 | 324,272 | 324,272 | 324,272 | 321,913 | ||
Industrial [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Capital expenditures | 14,364 | 9,256 | 34,866 | 31,019 | |||
Municipal [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Capital expenditures | 3,182 | 561 | 6,154 | 1,577 | |||
Product [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Capital expenditures | 2,817 | 1,658 | 5,138 | 4,239 | |||
Intersegment Eliminations [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue from product sales and services | 21,598 | 17,836 | 59,400 | 49,576 | |||
Intersegment Eliminations [Member] | Industrial [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue from product sales and services | 1,810 | 1,206 | 7,575 | 3,553 | |||
Intersegment Eliminations [Member] | Municipal [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue from product sales and services | 7,428 | 7,075 | 21,079 | 18,970 | |||
Intersegment Eliminations [Member] | Product [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue from product sales and services | 12,360 | 9,555 | 30,746 | 27,053 | |||
Operating Segments [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue from product sales and services | 364,073 | 328,978 | 1,032,615 | 940,492 | |||
Operating Segments [Member] | Industrial [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue from product sales and services | 184,133 | 155,904 | 536,351 | 464,414 | |||
Sales to external customers | 182,323 | 154,698 | 528,776 | 460,861 | |||
Earnings before interest, taxes, depreciation and amortization (EBITDA) | 35,805 | 34,758 | 117,646 | 102,133 | |||
Depreciation and amortization | 11,390 | 9,191 | 32,244 | 27,632 | |||
Operating profit (loss) | 24,415 | 25,567 | 85,402 | 74,501 | |||
Assets | 492,875 | 492,875 | 492,875 | 492,875 | 461,471 | ||
Goodwill | 127,357 | 127,357 | 127,357 | 127,357 | 128,190 | ||
Operating Segments [Member] | Municipal [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue from product sales and services | 75,927 | 79,817 | 215,768 | 217,897 | |||
Sales to external customers | 68,499 | 72,742 | 194,689 | 198,927 | |||
Earnings before interest, taxes, depreciation and amortization (EBITDA) | 14,434 | 12,556 | 30,784 | 29,644 | |||
Depreciation and amortization | 1,736 | 1,994 | 5,312 | 6,119 | |||
Operating profit (loss) | 12,698 | 10,562 | 25,472 | 23,525 | |||
Assets | 171,438 | 171,438 | 171,438 | 171,438 | 155,698 | ||
Goodwill | 9,741 | 9,741 | 9,741 | 9,741 | 9,865 | ||
Operating Segments [Member] | Product [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue from product sales and services | 104,013 | 93,257 | 280,496 | 258,181 | |||
Sales to external customers | 91,653 | 83,702 | 249,750 | 231,128 | |||
Earnings before interest, taxes, depreciation and amortization (EBITDA) | 23,989 | 21,196 | 57,635 | 53,070 | |||
Depreciation and amortization | 3,269 | 2,084 | 9,345 | 8,722 | |||
Operating profit (loss) | 20,720 | 19,112 | 48,290 | 44,348 | |||
Assets | 538,430 | 538,430 | 538,430 | 538,430 | 513,941 | ||
Goodwill | 187,174 | 187,174 | 187,174 | 187,174 | 183,858 | ||
Corporate, Non-Segment [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) | (37,828) | (23,794) | (93,667) | (96,172) | |||
Depreciation and amortization | 5,167 | 5,024 | 15,023 | 13,340 | |||
Operating profit (loss) | (42,995) | (28,817) | (108,689) | (109,512) | |||
Capital expenditures | 2,536 | $ 1,772 | 8,411 | $ 3,640 | |||
Assets | $ 296,478 | $ 296,478 | $ 296,478 | $ 296,478 | $ 342,199 |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Numerator: | ||||
Numerator for basic and diluted income (loss) per common share—Net income (loss) attributable to Evoqua Water Technologies Corp. | $ 793 | $ 1,503 | $ 9,585 | $ (8,898) |
Denominator: | ||||
Denominator for basic net income (loss) per common share—weighted average shares | 113,842 | 104,821 | 113,842 | 104,821 |
Effect of dilutive securities: | ||||
Share‑based compensation | 5,205 | 3,164 | 6,094 | 0 |
Denominator for diluted net income (loss) per common share—adjusted weighted average shares | 119,047 | 107,985 | 119,936 | 104,821 |
Basic (loss) earnings per common share (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.08 | $ (0.08) |
Diluted (loss) earnings per common share (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.08 | $ (0.08) |
Employee Stock Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (shares) | 8,824 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | Jul. 26, 2018 | Jun. 26, 2018 |
Subsequent Event [Member] | ProAct Services Corporation [Member] | ||
Subsequent Event [Line Items] | ||
Payments to acquire businesses, gross | $ 133,772 | |
First Lien Term Facility, due December 20, 2024 [Member] | Term Loan [Member] | ||
Subsequent Event [Line Items] | ||
Line of credit facility, increase (decrease), net | $ 150,000 | |
First Lien Term Facility, due December 20, 2024 [Member] | Term Loan [Member] | Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Line of credit facility, increase (decrease), net | $ 150,000 |