AQUA - Earnings call transcript Q2 2018 | Evoqua Water Technologies Corp

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Operator

Good morning and welcome to the Evoqua Water Technologies second quarter 2018 earnings conference call. [Operator Instructions] As a reminder, this conference call is being recorded and your participation implies consent to our recording of this call.

If you do not agree with these terms, please disconnect at this time. Thank you. I will now turn the conference over to Dan Brailer, Vice President of Investor Relations. ahead. go Please

Dan Brailer

Good joining Crystal. to and Thank gentlemen. our Thank for morning, Evoqua for results. financial us quarter call Water you second you, XXXX ladies Technologies review conference

Ben conference Ron may and on question me and Officer ask questions President our Officer. keep today’s We follow Chief are includes prepared to will accommodate including one Stas, many outlook Joining call Keating, XXXX. remarks, to This Vice Executive questions. from we call you Chief as fiscal as President Executive possible. our up Financial a After call statements, differ and and forward-looking year open that to expectations. for Actual materially results the

Means like available the conference With references disclosed the access of which slides in and refer website. filings, call, were or over days. was to call will financial Act next risk XX. to press this to non-GAAP For Regulation therein. the release, our via financial of Evoqua’s On now have and ends will presentation All Ron. this website. including non-GAAP call we I financial of the described with in to respect section which appendix webcast on by for G would additional discussion on turn on can in that, company’s the a to obtained measures. please which reconciled information factors call been of the conference corporate the conference such Replays be the Evoqua, via our have otherwise results presentation refer archived also posted a this seven to Exchange slides. full to Unless to be required certain Information September specified, is on SEC year for call call this included non-GAAP the measures included year measures fiscal this year,

Ron Keating

To report XXXX our we Because we begin our to want competitive quarter. serve. profile, pleased the Evoqua’s market and second provide Good we're through today’s Thank our on public our on strategy some markets very results. I new you, morning. the We're information background business company, quarter more a to fourth Dan. call, and differentiators provide will business

Ben in needs XXXX the Following Please with EBITDA, defined XXX,XXX of revenues water business potential, over life, that provider When turn focused people. We enriching will leading through XXXX, provide XXXXX leading quarter history to a our second comprehensive found generating and that, market walk team strong we slide results. trailing and X. transforming adjusted XXX Evoqua installations and great margin. XX.X% of a a customer at treatment simple, servicing and technologies, million of customers’ to purpose, arrived of of a We we We're X.X in our in systems, with clear. water customers solutions North services technologies and XX billion America. tremendous

organic technologies, our a established to pharmaceutical, invested slide processing, turn heavily supported We series RD&E spans or creating We our deploying XXXX, changes our aligned marketing Our markets market technologies. divisions, R&D largest hydrocarbon growth. and range XX all a X. companies industries the initiated and and includes sales priorities base. In and systematic vertical and in installed and aligned approach targeted business diverse of beverage, industries. power M&A and that highest solutions, on mining augments the processing and and spent each the of chemical focused of service ongoing at strategy our our our a by segments in to service by team, food US we Please by

solid businesses profitability slide results. and Please turn the see, you As well, X. improving to sales can and delivering responded year-over-year

billion, value supported systems new and in America. design do valves, EPCs distilled by the treatment, refine pumps $XX delivering companies company which our and long-standing water use focus innovation, not we billion We're most XXX in technology chemical we our global water. and the nor not XX attractive our number the market. market of primarily systems we a with by further for we make in addressable or served best-in-class supply service, is and which meters, market, on water spec innovations down the do one and estimated billion. at of We’re enormous containing major believe that our the of capital to have We transmission treatment which them an or added North provide water relationships We projects and solutions. player advantage but segment we we market The of is

dependent XX% the or two see in each that providing hand end attractive slide, side market diverse turn single growth. any key the you for with more On of not more X. markets, no accounting but less to share across one accounting vertical our can We're operate of slide have customer X%. for a set customer are and growing. upon we room revenue or in than very no significant We're right XX% single of our for typically each, than and market markets market number still than target Please of

processes. shared segments the in common organized manufacturing reportable Our same technologies, offerings by and customer source business is of each leading the three that business investments from base draw and

On network largest significant you and environmental application leveraging operational sustainability. America supporting optimizing expertise. with driver can increasing usage, industrial operating and reducing is North segment value water a Service our industrial this process has a and revenue broad proposition the service in compliance segment, reliability cost, the includes left, see major that across that

customers. North service market solutions service integral more provides processes. business $X direct industrial operations The that to an become our technology billion an our and emphasis support customer’s part Our XX,XXX than through approximately their with America. on and serve sell we is agnostic We channels of best-in-class and in

of Fortune majority a portfolio, We XXX substantial industrial serving the have a companies. bluechip customer

history of very municipal our of the center, EBITDA an and Our than business leadership. profitable corporate sticky In estimated more XX%. business segment technological draws serves This billion is market. industrial XXX and $X margins with very years on

group this have We We and over for through and America years. portion focused further improve highest margins wastewater growth channel which market, opportunities. installed of on the XXX our retrofit EBITDA the has the in points basis we've past leading base third primarily the North and three seen a potential sell primarily focused over on network, party are rehab penetrating

approximately traditional a provides right, is differentiated an our X. Last slide process look business products business we technologies of and turn of industrial displace and the of treatment. that standards On EBITDA most to segment. products and provided and our XX%. This global cases range Please profitable scalable also very methods deep quarter, dive a with many in become highly our margin into

we segment followed our quarter, municipal will This by segment the next review in products the quarter.

water cycle users sells set Products differentiated a of and is and end shortest to Our segment specifiers, globally. business technologies diverse treatment integrators our

We also as technologies as solutions or components municipal portfolio broader our our sell and and industrial segments. discrete of products through either offerings

into offerings in include filtration, disinfection, electrodeionization electrochlorination, applying technologies product channel technologies. our Our and product agnostic selling anodes market. separation and the and We're

the aquatics defender and filtration leading include disinfection the our market. line Our commercial media regenerative which in is products of filter offerings

are chemicals without Our IONPURE process. and ultrahigh primary water for purity pharmaceuticals of electrodeionization use to industrial technology. solutions the applications the high Microelectronics, in treatment customers markets this achieve allow purity

solutions and downstream treatment and products the provide water, power gas for electrochlorination water maritime, oil Our ballast markets.

have capabilities solid also cathodic We technologies, extensive in separation. and and protection anode liquid

installed and built technologies, all growing XXXX than a supporting business leading of have large patents, years tremendous by knowhow a We enabled base. technical plus XXX and more

We from have significant and it with visible and business more is of coming outside North America, recurring of global our XX% most than segment revenues segment. products our

Finally, an M&A as organic our supplementing will and are capabilities we we discuss through strategy. shortly, active growth

ten of adoption utilizing Please slide smart increase turn our for the and to technologies more decisions, system water water platforms are as help of the added part strategic reduce driving business been acquisitions Evoqua’s make and Digital water effective businesses goal to many new models. solutions. water have opportunities six such, to of usage treatment drive products smart their our water cost. application, three last water X. efficiency across are There Customers As segment.

the the addition showcases business. markets our In disinfection water our a aquatics typical and is applications costs is for support Evoqua’s analytical and industrial improve across a X. such disinfection and and within to well analytics jewel the our a schematic of monitoring A&D is the This for commercial of water crown. performance. mechanical competitive of smart smart variation Water operational is equipment. be turn significant products to deployed is and the in we to and of our It applications predictive of leader Please another growth filtration pool connectivity business interconnectivity long One Assurance. differentiator. using to recreational products see truly schematic portfolio for markets, as page the illustrates This division’s many our reduce water. our term remote network rule is in service operating and This positioned vertical equipment,

Our of branch service customer a within of a closest and radius have network times our two four than is we our competitor larger XX% hour base.

are demand Water One Our maintenance, operating Assurance. core on preventive offerings services, and services

our business revenue. service XX% sticky, attractive approximately makes is generates highly – of visible and approximately business up This up makes business Our our margins. very

of us an XX% their for customer’s renewal the needs. a of have are makes part and we that in call integral business this our We all rate water processes first

business our our a where approximately base. due and consistent streams to Our of year. at focus of rate are service and large and The on installed aftermarket creates upcoming each XX% revenue model and visible year's beginning the businesses support are service renewal our recurring contract highly our

year. we and of comes that the in as our revenue projects generated business generated capital is our and service projects are from Our products ship fiscal large And well beginning our business repeatable as book from projects that are capital primarily at relationships specified. each backlog highly that shorter already book cycle bill where is small is from to from larger

continue through favorably we our organically capabilities and M&A, to are impacting build business. that our resulting opportunities engagement in As increased, customer pipeline has more organizational

increasing internal pursuing cross-selling in the complexity. size, been and scale strategy. are we've projects capital time, At Our actively same an

these have We increased selling combined XX. of utilizing have costs service recent will but have projects that with learning transitioned partners. our aftermarket also methods combination increasing to from created four time. chain outside page cross Establishing an an capital experience to lower Please provided improve short operational we over margin and demand and supply will internal turn had and demand are The pressures, which attractive have term or supply strategy internal projects in chain vendors capital leave tail. large and three profitability profitable and

growth M&A organic and Our come initiatives will sales from through process. systematic both future

to very penetrate market to only an utilize reach. and have is Our still expand we fill vertical XX% leader, the portfolio, M&A segments desirable while our approximate gaps in industry geographic We fragmented industry our we market product are to or share.

transactions performance R&D have and and a accretive product M&A nature pipeline in by the risk of tuck-in into with acquisitions for to the pleased believe larger businesses agnostic at believe and we're development multiples. integrate expect attractive of Overall, Our our outstanding low and our been seamlessly we We there one year we're new we organization. very between are is opportunities acquisitions.

our to accelerate and and our reach, We M&A rates expect expand growth service profitability enhance technological capabilities our process. disciplined our through sales

As in March. recently we Ozone of the completed Pacific acquisition announced,

business. applications. and the Pacific We and a bottled to to are The markets, more industrial systems, water, a will page over ozone of processing very addition manufacturer Pacific larger Evoqua it water than have of filled beverage, food and leadership global in integrated the part Pacific a industrial XX. with countries. is end Ozone more us process including join XX Please family. to portfolio of team team multiple Pacific targeting high installations help gap The disinfection pleased build Evoqua XXXX turn ozone the brings as

transactions was markets suite see offerings. allowing portfolio our customer since new to deals and Most our put into XXXX. gaps, solution in expand and program have you a listing place Here ten accelerate fulfilled to existing the us past of acquisition the of of into the penetration

leadership platform base transaction to XXXX As in this and market. provided the a the acquisition grow a slide, a role that market in noted Benson from the broader aquatics products Neptune was on

that support Following acquisition, Pacific we our now expand acquired tuck-in that businesses, filtration business in Delta, advanced four VAF, disinfection. and and Olson and

EBITDA quarter we than announce with coming candidates Please expect quarters. primarily by We pipeline growth quarter. was qualified industrial were the growth segments and second We're for more results. of from our and to growth pleased slide the for have XX. very acquired products double-digit that quarter year-over-year up and to double driven reported in companies. turn transactions segments all a strong the Revenue more our pleased XXX digits, three very We

progress believe place are customers. in we're Our making market each growth and share We solid compelling in taking and solutions our delivering segment. initiatives to we're profitability and

half very and are We now profitable organically with first walk continued the review well like and through the to the growth to our over year for to to call I pleased our financial M&A the would positioned year. turn performance through of through see outlook. and we the results XXXX are Ben full

Ben Stas

Please Thank XX. to turn slide you, Ron.

in quarter, the reported For were forma acquisitions products project than for mostly service growth by the industrial XX% more and and and million, second segments. to revenues over contributed revenues during acquisitions industrial Capital outpaced X%, municipal growth were normalizing segment up pro almost revenues in up quarter, XXX the driven the X%.

in provide solid highly pressure, but mixed growth As base service businesses. profitable mentioned, aftermarket and Ron future some has our this will for created a

adjusted million, XX.X% cost margins. to We and versus sales, XXX the pressures grew mix. in weather and EBITDA during due point XX% by prior XX a productivity capital expansion quarter Second challenge to experienced approximately quarter of basis year the EBITDA inflationary a

robust slide growth investments and We for to to to to also productivity continued challenges. cost inflation, Volume margin pipeline. future offsetting contributed and management expansion, Please leverage support growth our invest XX. turn

general HPI as For the the XX% to to and mix. leverage, capital growth acquisition point major improvement The recycle volume offset markets growth most growth the to pro margins year. sales, revenue while service across XXX up forma EBITDA as year-over-year over XX% X%. sales with and the over well CPI by revenues margin industrial from term. revenue cost in segment medium aftermarket drivers growth profitable Capital waste more improvement markets. had applications second industrial synergies, quarter, approximately strength expanded end XXX grew organic expected to revenue of resulted XX% driven a The for of million our water basis reused capital power, prior partly approximately is long EBITDA by to and initiatives and lead of was

Assurance One is pilot prepare later Water for as rollout Boston national Our beginning a this we in summer. nearing completion

for Boston quarter, technology Water service awarded term differentiated competitively been new be Evoqua Please During using high NexSys we a long our The slide a XX. and biotechnology expect has that One contract the were return turn offering. very pilot global will we a successful company. Assurance to

million, prior XX For the the second were warranty quality quarter, X% approximately and in basis Strong in driven improvements of a and EBITDA million grew over improved to driver delays XX% our backlog. combined membrane XX sales, management. projects resulting with a waste municipal some segment year. of were were membrane sales costs, margins XX.X% quarter, EBITDA from margins. up revenues the over water of XXX in benefits lower by partly The project point offset by expansion

capacity. slide our capital XX. project During the technology quarter, customers’ equipment be increased pleased awarded obsolete plant and we to a replace BioMag turn Please will that with were also our to

portfolio. digit grew growth key segment inclusive of Pro EBITDA sales, excellent to points. products segment product versus XXX driven XX% forma ongoing acquisitions increase initiatives expected Pacific synergies, an Volume most XX million, of double addition increased year. revenues XX% in million basis and The contributed XX accretive XX% reduction product acquisition be profitability. XX% mix, Ozone the an by is to year-over-year to prior increased of of of cost to to is and higher divisions. Our leverage,

processes. ultra-pure and flow During Electrodeionization was we in better by X slide their microelectronics that be critical Free for a large improved XX year. pure component project than XX. water also million sequentially the customer cash turn quarter, to to prior million were the awarded manufacturing Please our pleased Asian requires significant

conversion to expect We through continue as we focused adjusted our flow targeted to of free cash year free proceed fiscal XXX% for income on improve net we remain the of flow the year. and cash

term in is the long Our leverage range times. of X.X target

due to to approximately from X increased million projects. XXX past the water down the turn in quarters, three million in spending return million year, investing debt Capital EBITDA leverage slide are outsourced proceeds in as high the reduced we XX. November. the versus approximately IPO to and quarter of over last have primarily We pay increasing XX customer Please

in QX spending capital and high both return maintenance for from Working capital growth efficiency Our taken million Actions cycle. to with targeted to our XXX sales, is line CapEx. working improvement inversion declined of sequentially our in resulted percentage X.X million. cash in improve

as percentage the as year. through a We in expect the mid-teens to proceed remain Please XX. capital, to working sales, turn slide we of

We and term are long pleased performance for our profitable growth. our position with

three the half factors look noteworthy that of year full are to As outlook. we the year, there second to are our

experiencing basis, forward from installations favorably divisions that but profitability mix solutions. shift will are penetration across in We're capital for full These solid our outlook. and have integrated service demand capital projects. due our lower, increased are capital to segments year impacting long overall customer installations are raising to we go a and revenue equipment capital with a revenue First, reflect upfront larger tails on original the current outlook the margins timing installation and and

Second, the and we short higher are are putting experiencing inflationary cost that pricing aggregate term pressure in on business. commodity costs

accelerating actions to expected in cost. are productivity the inflationary actively We and offset initiatives engaged pricing

in purely products fourth quarter. revenue is Third, to was shipped our now anticipated that previously quarter a in of in be be This our shipped experience we segment that projected timing matter business. the portion to a third is the occasionally

are has overall as as the common not increases, and timing industry shipment experiencing Our fundamentally throughout we on mix impacts. well business however, changed, the XXXX cost outlook unanticipated

to X% prior approximately quarter, third in range over year. adjusted grow EBITDA the we XX% expect of the For to the

be million we low the ends X.XX Adjusted billion X.XX growth to and of XXX reported the to XX high of while year, the far Consistent are to in an completed end in over so results the the XXXX XX of original range. and this the million, rate to is material total is expected acquisitions to our and to range representing reduction now approximately end full be revenues between of high the range be XX%. and XXX year. increase tax important million billion, range a overall and comments, EBITDA of the to with financial our expect not our the XX% Pure of prior previous XX% X% to For the Ozone, in The strategically to or two outlook. quarter statutory million expected included Water first year, blended Pacific

XXXX our XX% annual our expect discrete remain items. XX%, Consistent We end markets we our healthy assumptions, rate realization effective continue to to be approximately will tax and and stable to the of outlook. expect support with excluding our

the now will call open questions. We to your

Operator

[Operator comes of our RBC with Instructions] Markets. first Deane the from question And line Capital Dray

Deane Dray

and factor Hey, to the just capital then in change like the to on a your increase timing start and originally? sense were problem that pulled of going the a in to the guidance in get base very increase we aftermarket. on specifically, issue installed first always view get of in these here give not the quality guidance forward what the the projects and as you're on in high just were and revenue us they budget, the part stream not that access they a But these they projects,

Ron Keating

bit got going installs Yeah. actually does for but like a so create very us. to shift your we've consider quality a of mix that We good point, high fact out, Deane, the capital problem. a we it it

there, pipeline revenues aftermarket larger have we We’ve as lower the is seeing backlog behind. revenue installation is revenue. to because typically having a a news benefit with that strong the increase installation service but we that will and tail out and little very look that we're guidance for we raised go see are that very great from aftermarket comes is good that and margin So a continue the upfront tail, the a few going the what in happened, there you at and service is in that projects

Deane Dray

us higher cost got on and Got through you the for costs, just whole material much the through other quarter price can in you price dynamic us the factor how it. And and Can then what you Ben. the walk the inflation for was size cost maybe inflation?

Ben Stas

So are expected. yet, will head coming we but than little haven't as of and a be price the year, Those actions did seen into underway half Deane. much the get more second we we we cost

QX the look in wasn't to when Q, we expecting X half amount were we’re but late X headwinds the through saw the we in and actions of QX million forward price in to the start We’ll have to of second million it net range the quarter the coming into QX, we and million additional QX additional as huge the a based in it As expecting costs costs. quarter, for the year. commodity in X year, of for on we're seeing an the of head

Deane Dray

million X reflected current additional that in the guidance? And is

Ben Stas

It is.

Deane Dray

if factors just then question the And one the I line. other expense in could, can last you discuss corporate expense

Ben Stas

expense corporate other The line?

Deane Dray

corporate higher like modeling out? than we the it would particular it Just what you factors for, was were expense, any call looks

Ben Stas

expenses. some Yeah. had follow-on first We

get on first will were but the them fingertips, other in and the have some We at expenses don't there that. details refi the to related you I follow-on. there offline my

Operator

the Stifel. Your line from next question of Nathan Jones comes from

Nathan Jones

adjusted top It the maybe the of by costs, EBITDA Just before guidance guidance? XX did of higher million. the on factors of single down the of some you are into that with the the low top end that that that sounded of change gone you price. following end a material take couple to other reduction in get by What up guidance explained digit offset like, have raw that

Ron Keating

follow-on and coming for the top a aftermarket behind. we've us coming revenue to the Nathan, portion had guidance very Yeah. got us now a we're again because a as earlier, longer a is and as through, a raised for give news strong the had we we've us that the as mix. mix seeing question reason of got Deane one it’s that’s It's planned, what service well that that than backlog higher good it’s what does the originally but revenue tremendous speaking we -- capital strong pipeline and term,

Nathan Jones

high get problem is, if if mix I it though, still Deane said, be projects, the overall heavier a think It same EBITDA a rich revenue service you that the that. imply is should accretive have at I capital Does is problem. paper of level. mean, to I

is little be So you in may lower originally a ‘XX revenue service here than thought? there the that any implication

Ron Keating

No.

I think again follow-on. being projects the the service and when it's and timing on out in half timing second we're capital the the are installed and seeing the going

commodity mix it the move is So that’s staying really move and then not the not pretty the steady. side making a quickly, change. as it’s service It’s growing

Nathan Jones

And revenue out, projects then you installations moving the color with of the aftermarket give those into maybe increased service new of capital an level going some can timing generation? on and us

Ron Keating

Yes.

basically, us service So, and aftermarket installed turning service of in about dollars that coming generates $X.XX and over be months, -- think of those to basis. will XX for revenue X and goes typically start and and next got you the can an on we've around about dollar will annual aftermarket any capital

very a long it's and So, tail.

a positive these to our outcome. is really we're we're share projects confident more be providing winning and it We're customers. taking So very and pleased to

Nathan Jones

much and There's much of pretty that? projects lag generating And immediately aftermarket revenue? service to a not start

Ron Keating

I say, aftermarket service a and would starts of around typically much lag is immediately Not months. X then at all. the

Operator

Goldman Brian Our next comes with from Lee Sachs. question

Brian Lee

here pieces for guess are you you talk can dynamics? first here to you with and then contribution level respect out guess off, anticipating in about what’s to embedded cost mix the for of that your that the past? liability the Ben would XXXX, it’s moving outlook And that margin think about XXXX I targets price how I couple you the laid still in then and

Ben Stas

impacts change. to and are product high Those the challenge, do which utilization. and bit it’s but keep, and that timing we utilization There's the going about, contribution be a Our have We go really but impact talked a factors timing we again, are it’s again long QX. QX. are not and impact shipment to will does three described some are I term impacts create temporary. that price third it's we're the in go impacts, that timing a which inflationary some going is little inflationary types to shift, Ron expect mix the in as due short-term other that factor executing commodity, shipments to the that margins on And profit mostly also of price then recovered follow will is is capital of

about I -- It's traditional in know the should mix differently price think and don't this that in our different incrementals just our realization to time. temporary at level. as we So it's kicks a timing normalizes point as

Brian Lee

And front, past peers about talked increases done a have of the a then third having their on your space pricing and price just price on or that on second, being number already the implementing so maybe year. increase

of that of and engaged the a of more that you some I lag nature your of parse sort your projects that to said been yet. has of you’re due in the project in speak guys terms through and as but your issue as speak, out is can capital maybe products you quicker pricing timing peers having sort – know just others. apples-to-apples, are to we booking of So actions not of know nothing or but falling some should actions. effect getting implement Is actually been we to of how the we across prices activity why the and I may some differences pricing between have model wondering and

Ron Keating

Yeah.

if capital ones historically. about that – little are and cycle, would longer projects have bid a they are that you we think So Brian, and so the

annual that going And we are on increases on getting new bidding and now, they we contracts, are contracts. So are those. then price the are that projects service our typically on our

a the will have on to increase those, prices those come which able the next So time, through year. renewal we’re as to in flow

cycle on So those price annualized flow increases for it’s contracts. longer to a little through

Brian Lee

in the muni to on just will back all The on. you can is it what pass XQ? waste delays had I water in you. Thank the quarter, impact it projects, speak that

Ben Stas

it Most has is the impact in in that yeah, as water well. have your an with but of back in municipal in it but a waste impact timing that will within QX be is QX, division recovery in likely quarter did QX. timing area, an as purely It the

Operator

with comes of question next from the Our Tusa Steve line JP Morgan.

Steve Tusa

Can second with XXX% And half? you fourth talk about the flow still about look free quarter cash is like. ramp, You’re sticking going conversion I in to what and maybe just year. guess greater the than the that third for or

Ben Stas

and we're guidance, have we're but So for XXX% current year will to outlook. XXX% sticking quarterly us to for that the ramp for going year not our give that we in get the the

Steve Tusa

linearity in there half no that that, should, number. the So second of kind is you on in linearity seasonality,

Ben Stas

fourth and will quarter is strongest. be There the

Steve Tusa

then of third at quarter million EBITDA guess implied ballpark? XX right the I the kind is kind the that around midpoint, And of is

Ben Stas

That's right zip Yes. code.

Operator

comes of next Andrew Citigroup. the with Our from question Kaplowitz line

Unidentified Analyst

on for [indiscernible] It’s Andy.

some level capital give see going you opportunities capital, it's been for few year, So know working and about past this over keep target of I taking us the down just potential can talked there I around working so you continue the after think, out XX% up on more quarters you're do below maybe to a how thinking but year stable you to the mid-teens capital about the color and on working capital working rest year-over-year, of beyond level.

Ben Stas

it's depends business, on we're because stress higher the of cash cycle. I puts on lot capital more mid-teens now. Sure. A of longer capital, mean, the targeting working that mix right a conversion

working be aftermarket also drive better, we do we and cycle, initiatives DSO so in to conversion our should as services DPO. capital cash and further particularly As kick mix to a have improvements, in changes, quicker able place but it's in,

Unidentified Analyst

minute pretty into And forma here, XX% products a comp. maybe then like strong digging there. growth It the a for on seems tough number just a segment pro

talk lumpiness you of there? overseas you of can in I but rate the about there's visibility, some and sort the your your in talk especially overall products some business, about, can underlying So growth know, markets in

Ron Keating

Yes. The growing very for products business. is us done. pleased business they've a what strong We're with really

As we've performing numerous to digit articulated the high it’s products such. and we single as business times, expect be growth

outlook. year, the business quarter really exceeding the you XX%, we’re recent about most China half a fact, in and It’s the XX% so business, In pleased with it’s grown first if by think global that. the our has of

methods long traditional there and into doing through what creating of a treatment. is getting And We’re us pull providing solutions platform displacing very on more the in for nice term. are products that’s that

Operator

comes next James. line the with of [indiscernible] Our question from Raymond

Unidentified Analyst

the taking question. for Thanks

Is course. say to the on of year-to-date, technology, all I becoming that industry of those the buy in have competitive of years has I've wide gotten field the it in as counting than deals landscape fair I've up it think like M&A tougher, of something side guys tougher been front, water and more to you done of these more past? and two on XX, competitive it the the First buyouts

Ron Keating

that depends generally we're interesting really entrepreneur get an tuck-ins. ones reach. geographical the it, These with the or we’re them portfolio vertical owner going are articulated that guys target into It’s are bilateral you of we the we’ve after. it ours. negotiations on to in size their bringing we that acquisition as are an primarily Typically done to doing We're product acquiring

acquisitions as we’ve on going we’re So it after really for competitive the not has difficulty been targeting. created a front the us

Unidentified Analyst

bit year over Municipal a little line, EBITDA. Interesting. top not the year segment, on down

I flat the think going turn it to the to to quarter, it is will or kind was a segment? down of realistic comp before end of expect Last positive also down. be that it continue the quarter, is to This year

Ron Keating

we year. at is No. the we looking project still over year have the and anticipate the track. Ben a quarter articulated of quarter end single the we early some municipal digit larger up rollout, but projects, It we're before spoke this we're to, prior turn will we Again as growth of were positive as same on X% low some the that in backlog, actually actually business same there timing and on for

Operator

the Cowen. Joe with comes line from question Giordano of next Our

Joe Giordano

Assurance, dynamics on with One towards and through like about Water go offering. cost capital free cash talk can upfront you you transition maybe capital the needs are that implications you, what the as changes my on kind if how you you're taking As working of that for flow

Ben Stas

of really going capital, the would is CapEx. about Assurance. working huge talking capital there's used working we're So to really in terms a the be really Water on One the really on the cash is Assurance on Again, CapEx. growth, be but Water receivables that impact not That's investment One program

Joe Giordano

CapEx What on Ben? magnitude kind of the

Ben Stas

the to XX over invest Program. three million years to next going the we’re So rollout

Joe Giordano

XXX like talking cove of million will the about, you to. that And that base rollout full talking were like installed that trying you’re

Ron Keating

in What was that, XX%. Joe Yeah. targeting we’re

model. built into have the we what is that So

Now, as a larger second is our rate what pilot in is higher Boston a we’re on we’re seeing which much seeing much take pilot, you know.

We’re take right up. the proving second the the across we then picking being take nation of with XX similar a that rollout, coverage. would that analytics have out the would pilot a and see to the lot again through CapEx rate rate, million now, rollout XX% type we take this expect up, the on But we with

Joe Giordano

businesses business, how looks kind numbers? question looked on just just of And be than Great. the to I acquired can the margins industrial pipeline relative of feel, give then is, color on core the the side, substantially you kind and like any seem to a those the higher of that future it

Ben Stas

we helping as that projects talked We got margins. remember those selling winning businesses, divisional result a are acquired we well directly solution the businesses across where businesses about more those are selling is in also marketplace. having of those cross and now a these include acquisitions to good some of some seeing synergies Ron that are also that’s the these comprehensive we're of some earlier Again,

of that the this the for accretive. news been leads businesses all have businesses acquired So good future, but again, are nice to

Operator

line [Operator Instructions] Nish of It with Baird. the comes Damodara from

Nish Damodara

you’re acquisition of kind contribution what one, Pacific quick from a Just expecting Ozone?

Ben Stas

insignificant. impact much relatively more It an of next year. will get It’s

Operator

I to question-and-answer his would now you. for over closing turn Mr. period. Keating That Thank like Ron the remarks. concludes call our to back

Ron Keating

today. you in all Thank earnings participating our call Crystal. for you, Thank

of in water uniquely the provider As solutions we for choice we're to we call, be very positioned feel industry. highlighted the the

service channeled, Our able truly our partner makes to and with technologies us customers. are extensive footprint

recently team the these to the seen pleased them customers’ Sullivan, the class You intelligence around members Frost and that by goals water by the may very the speaking really have the of providing a as year exceeding recognitions, named receive best our both making technology water and of sure we're our all company we’re the expectations in & Evoqua to solutions. Company of again Water globe was of with of Year Evoqua

again. of very speaking Thank results sustainable forward for legacy optimistic future delivering about very all the to we the look We’re have and and you. proud with I you

Operator

XXXX Water quarter Thank Evoqua call. you. That concludes earnings second Technologies today’s conference

lines may at You disconnect time now this and your have a wonderful day.

Evoqua Water Technologies (AQUA) 8 May 182018 Q2 Earnings call transcript