AQUA - Earnings call transcript Q2 2021 | Evoqua Water Technologies Corp

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello, and welcome to the Evoqua Water Technologies Second Quarter 2021 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. to of call Investor like Brailer, to now President Vice Relations. would turn over the Dan I Please go ahead.

Daniel Brailer

of for Actual includes XXXX XXXX This execution the the of on pandemic, Thanks, prepared After relating Maria, President results expectations. Executive impact year strategy to the quarter Vice call open market us and remarks, drivers. third quarter legislation, emerging for results. infrastructure drivers, conference and potential and from proposed thanks, our treatment and to expectations forward-looking Chief growth acquisition COVID-XX call our everyone, we review of for Chief the Executive may President statements, to our will contaminants Ben other as Ron full and fiscal our call including the order of our materially end-market are the today's and joining call expectations Officer; today's impact well financial and differ questions. and Keating, digital Participating demand Stas, as strategy, second Officer. the for Financial

Evoqua, which non-GAAP financial comparable we refer most required Regulation EBITDA, information we'll in section on financial respect website. with the this have financial G Investor guidance, is have adjusted presentation recognized. quantitative occurrence a the via non-GAAP included uncertainty predicting obtained call, Relations its inherent call, this because the non-GAAP it efforts respect appendix posted difficulty in the the Evoqua's measures filings, be of GAAP our reconciled to described therein. directly Replays With forward-looking please of risk call historical next of included Information the due this the forecast, to a the With additional disclosed to corporate days. release, presented unreasonable to On which the webcast conference via on year, certain measure over to SEC year presentation were the have of for which also discussion which and would access and references to non-GAAP of conference Exchange year Act such full reconciliation fiscal a periods financial can All ends otherwise Means measure, and XX. turn to in including to financial not the X on slides. our results For is our been refer press measures. the and without certain the company's financial factors of may this to by specified, to will and archived this such slides in now to like to call Unless on for available September was Ron. be impractical or that, I website. call measures be impact call conference of items items

Ronald Keating

Thank Please to X. you, turn Dan. Slide

a foster forward economies expanding markets, spending and Our to focused solutions, sheet, in engagement business has the turn employees, and our safety liquidity uptime, in of to strong look continue growing customer we the team customers strengthen company. robust of on priorities to phases remain on diverse and our improving of broaden execute pipeline, as and as portfolio Please encouraged levels. X. invest varied relationships, growth ensuring customer in of global set opportunity We're COVID-XX of balance of Slide M&A our to continuity, the and geographic our opportunities, our balance the and a end impact across We reach. various pandemic prudent backlog, the sheet The health their be continue customer reopening. our

business results as our pleased performed well with second well. are quarter the We overall

end is strong markets. And outsourced water, set Our of capital X. comprised pipeline, a opportunity book-to-bill of aftermarket, our ratio was and of diverse north across

seen discuss aftermarket growth XXXX. grow in ISS a XX% we'll at and shortly, since As excess our of average we've rate backlog compounded service

ISS with been down costs. by combat revenues and favorable largely grew with chain Second across region, strong solid the Throughout pleased price from year-to-date on performance and APAC slightly our revenues, comps by for slightly aftermarket prior driven delays basis. offset was were Capital lower due year quarter in a microelectronics. supply and recovery site COVID, in primarily service to COVID-XX. APT revenues organic closures slightly quarter to resilience, in but maintaining the the due we're and rising we've discipline was to Price/cost

the of XX customer pleased to supply and cash a are year levels flow by We and driven conversion chain XXX X well net as working report challenges. revenue extended management. the strong margin improved mitigate points to Overall price/cost requirements with order by our by $XX over points due months prior of percentage to XX.X%, improving basis XXX% target. over million, execution Inventory largely have basis XX.X%, adjusted to past a approximately risen EBITDA of operational capital supporting above

increased on focus key as cash year-to-date balance strengthening million, our across to most results continues basis. were $XXX Operating to net a X.Xx. and Our on sequentially Liquidity improved solid recorded metrics. improved flow sheet leverage

to make improvements as the continue Slide X. to We balance and continued opportunities we to pursue acquisitions. sheet growth tuck-in organic Please to invest expect in turn

end a primary for represents set markets broad demand QX. We As order end slide. as diverse on chart our prior Evoqua's serve shown in our in of this markets and represented calls, this expectations for

smallest end rising to each accounting in of top bottom the our on the FY are representing more mid-single than annual page, Our markets for digits, XX% 'XX of low to size the revenue.

We'll Overall, demand order about section. drinking market We Please beginning of to and during treatment opportunities municipal beverage. and happy end drinking serve or PFAS for was performance end pharmaceuticals, well. are food our water varying be municipal continue largely in with to drive be reopen. water has we the the X opportunities in as XX address economies we The back, quarter, Slide Q&A that expected. Looking to second solid outlook questions refining the turn primary aquatics to as as to see drivers third neutral noted care, growing. expected X. health expect markets to and quarter improved also demand specific

business and resilient to our from a presents and sustainable and basis to graph from since revenue XXXX. EBITDA recurring rolling Our revenue This XX-month quarter growth. continues quarter on and been adjusted benefit stable has

while growth Our on to overall combined of for make-up revenues operate have rate EBITDA annual after over Currently, comprises XX-month business at the our our steady grown X% primarily and of adjusted approximately a projects of aftermarket continues divestiture and The than MEMCOR. with business growth. this X% ultimately services adjusting XX% more compound We time. to service growth profitable trajectory a business. and aftermarket drive XX% recurring service our pursue trailing sales, profitable capital and stable, of during

business subject to our of nature the discussed, previously quarterly we is variability. As

uncertain have us continue like revenues from this into well we during services over to high believe to I the However, products Ben. would on model and will basis now serve visibility turn an our annualized our period. and to call

Benedict Stas

to Ron. you, Please Thank X. turn Slide

to Demand refining with care, revenues growth second net in $XXX food, of solid X.X%. end million. divestitures declines power were the in down and impact impact growth exchange the quarter, of approximately For excluding revenues foreign continued in experience Organic by Asia were reported acquisitions, health Regionally, market and we varied and Pacific. aquatics. recent the

and across product X.X% multiple benefits year of EBITDA by especially lines, EMEA up to XX.X%, as $XXX million The quarter $X.X strong consolidation product period. several Product Asia. the growth million, over regions across Slide from was or the customer in adjusted operational up were site challenges. X. evident prior X.X%. adjusted efficiencies controls, Second overall Americas driven XX we Organic ongoing $XX experienced lines Please basis an impact revenues growth. access second quarter pandemic footprint EBITDA Cost increased was in and margin revenues the million turn points contributed Applied to for Technologies

customers increased Foreign basis APT $XX APT by Adjusted quarter EBITDA and market increased quarter enhanced currency Last we expansion. million. the EBITDA regenerative favorable year, filter aquatics across benefited Each positively to product FP operational for revenue mix, almost driving Organic to Please turn market. on points impacted growth, organic Slide that sales we favorably Adjusted this through focused providing highlighted are margin and the profitability. are our globe. Series growth product highlighting quarter, and for media with new Benson's second development XX.X%. is Neptune price innovations the markets to X%. expanding addressable efficiencies product XXX X. solutions XX% international

UV to we light Please nonintrusive Slide The quarter, other to rather aquaculture pharmaceutical, for VX microelectronics, UV reliable to system The markets. configurable across pressure solution. end our highlight beverage, new be developed using XX. chemicals. end acquisition our highly and turn ATG is system May XXXX is This a robust users latest low from disinfection The than UV designed of water product disinfect is product process technology designed ATG. and

year, capital variety offset were new impacted Services timing segment Our X.X%. related revenues, positive. COVID-XX driven by constraints a down products price Aftermarket -- Results decline in revenues end Solutions were Integrated in projects to by realization of projects which revenue stable, a was microelectronics the were prior and the while of quarter second across was by somewhat and service markets. while net

COVID-XX. which activity, monitor to constrained has customer to due continue We been spending

the economic activity. a reopening investment expect capital increased We be to for catalyst

declined customers due particularly primarily period. unfavorable to basis quarter strategy enhance site offset down year controls the continues capital in to turn was as interest to and productivity. delays Ongoing realization Slide for digital digitally volume absorption customer high, our with costs growing capabilities very Adjusted profitability, $XX reductions prior favorable million And pandemic. by restricted Our due by margin Adjusted and the higher in digits. price from EBITDA in spending revenues to partly the enabled cost and service overall points the access from lower EBITDA XX. double our decline. mix, driven lower remains Please to XX%, XX customers

X/X term. revenues water on growth. from profitable, recurring continued which customer comprehensive purchase to Our water needs. an service aftermarket solution water and service comprised of our leads meet capabilities and earning over contracts we sales over and XX% believe profitable customers' treatment typically solution an Currently, X/X demonstrate ISS Evoqua-owned from are the Whether positioned outsourced equipment. the for service, or growing, on to asset, are customer-owned Service of business asset long our from the approximately are we our team with revenues use chooses to comes focus customers' and we outsourced

in average by the seen interest treatment our over years, service solve the and past magnitude the strong water service service backlog the assets as as to carbon grown contracts our well conversion looking assets X are we customers service backlog on for of to shows contracts, The asset deionization; This category. The water as solutions equipment, slide has needs. also and ISS increasingly capital services. comprised graph build X.X outlines relative services by their mobile fleet; include water outsourced customer-owned backlog Over past which revenue and years. which utilize to own operate outsourced municipal range water have outsourced aftermarket is

very capital cycle. As Currently, opportunity backlog build-own-operate orders, see million was pressure particularly service slightly strong, on aftermarket we on capital increases faster is longest Capital with Slide to assets, and for than the quarter. which conversion our backlog, turn some XX. for service over customers have working expect $XX short-term our are backlog the to we related water spending, Please revenue, our for primarily and pipeline projects. to outsourced

mentioned, water given the of closely pandemic. the pipeline the uncertainties combination of outsourced capital previously pipeline, with opportunities. remains monitoring our we a robust We're As and

basis QX of XXX sales, Second quarter. over capital an the points improvement prior quarter net LTM of working year XX.X% was

the as sales projects We accounts Over accounts amounts our given year-over-year are may receivables mid-teens of and through turn as the anticipate payable have preparing has mentioned, higher working order business the long to highlighted and pleased Please pandemic to working we Slide Overall, of range, to Ron requirements net requirements. the varying our model. levels capital were inventory reopening. are while XX. with term, respond capital customers' performance, for we performance some resiliency

are pleased period the was million performance versus as period. year-to-date million in We very with $XX $XX for flow the generation prior our operating cash cash

have we our above Adjusted significantly XXX% flow see be can well operating free cash over flow. goal. continues to the improved past years You conversion X cash

Our down net past which EBITDA, ratio leverage almost at over a X.X is the and down full months. turn finished turn from prior XX year adjusted almost X.Xx the

in Xx We continue mid- range. ratio leverage a target to the

debt of turn cost spread. April -- of rates, as completed to debt maturities, of is points XX. of is we our a liquidity flexible X.X%, year. of position levels prior previous liquidity, cost over facilities. carried on $XXX and balance. On million our Having cash reduction we by using generation, improvement balance Slide of to and increased by our reduced Since which our almost $XXX our XXX reduce of million the basis average and of weighted average have credit QX term structure reduced 'XX, lower credit FY COVID-XX confidence the produced driven the end most weighted The cash market structure, over the cash lower by X, lowered a loan debt term of Our hand. an applied on the our outstanding points, B from basis approximately Please strong XX we approximately XX loan refinancing flow extended capital a

our Ron. now indicated are are of turn like to pleased I balance over results we call have our we strengthening sheet, with We and focused would highly on back to the refinancing. the

Ronald Keating

infrastructure renewable that clean slide trillion administration Ben. The change, outlines the its outlined energy water. proposals, Biden This requirements water. on $X.XX and you, and support current America Thank Plan a provisions includes for climate Jobs clean has proposal with

for advocates wastewater infrastructure. the drinking believe the is positioned member benefit are are treatment future. the proposed as of Continuing into their messaging X investment been continue acquisitions and with value modernization U.S. Water gap. Slide we Alliance PFAS activity Please funding proxy to upgraded acquisitions particularly remediation to the from utilize a water the driver past our aligned water the water so provide close to and an and spending, well and over investments. be in Evoqua infrastructure XX. capital R&D to growth the of systems. growth the active an strong to of campaigns related We important to years have is turn of important should to the this strategy, We increased We and water

continue will gaps, be filling and been our vertical footprint. markets and product to portfolio on have targets geographic focused Our expanding penetrating

market is with and business vertical is tuck-in The fit acquired XX Water in many reach. while M&A and our our to our last positions we vertical footprint months, WCS the intent footprint, companies, expanding including current remains XX our our markets, service health across third over them we've of technology Consulting a April, Since also pharmaceuticals we've and targets, product the region the geographic target pipeline working and leverage focus ratio. expanding great Specialists. service In portfolio, into robust, acquired improve solid on development our our and of indicated Our supporting service to XXXX, X team care. northeast and X

water XXX published we than flowing Earth proud of highlighted the Falls. of water and We're previous the acquisitions, located on Sustainability excellent amount impact Ohio global Industrial fifth model XX. Services, fits daily. our billion gallons report to of in we our and Aquapure where also X turn we Our ISS to Please have over into reach been Day Texas, do, Ultrapure and is Slide sustainability Technologies more service expanding have of our markets to and this core what treat approximately respectively. year, is growing every and Niagara as equivalent day, our X.Xx

was into Michigan. their than X technologies trend, about to treated penetration met returned for we and facilities in a million to world The within and operations. growing as countries in our more handprint, internal are in a goal and XX our summary, verified customers and a we was site driving A assets our established the the macro lab market to continues our XX% treatment safely countries, Slide system. by companies of to we Recycling water sustainable site and reusing our XXX through think We dewatered at recent ways: needed the treatment with which To various sustainability In economies, second, to has emerging become win, a Evoqua that footprint, grown. construction while to are contaminated reuse our table are own mobile segment high municipal geographic our our non-detect. an PFAS the be trend contaminants deployed During PFAS to products in Evoqua water across own expand. more our service highlight best had solutions and sustainable and practices in first, the facilities. of our quarter, it sold become XX. of approximately to the gallons more with mobile and offerings; APT stages place We're third-party our challenges. the Please putting specification and number present and pandemic turn is drawn important reopening working water currently to of enabling

our customers preserve protect We our our to strength. service are employees, maintaining priorities and financial our

results. business Our its by is resiliency our demonstrating QX evidenced strong as

our We're pipeline signs journey, our water. have Our early opportunity markets the in on material reopen. our order of And beginning report. of a and we and book published pleased impact seeing is economies positive are while to robust to sustainability making as XXXX is clean growing, availability we're very committed we're to

employees As due emerging we EBITDA flat our and Specialists contaminants Evoqua, become we to welcome to the sheet here year M&A We're structure. and adjusted Beginning increasingly balance continue of a and from risk a is and call. Consulting outlook for strong versus and to opportunities water positive important. recent treatment be to flexible a becomes to our full from organic revenue capital particularly our Water supplement Having of -- answer to Evoqua's will more slightly pursuit 'XX, had complex, that FY growth. FY services tuck-in We 'XX. solidified technologies the rising refinancing priority,

we're our and making With second and better, pipeline outlook opportunity visibility begin to markets robust This movement for half reflects strong upward backlog, reopen. increased a the as behind us optimism revision. first the getting our half to

provided ranges to for X in adjusted and $XX respectively. QX $XXX We've expected low expected increased EBITDA up range by $XXX of with We and revenues million. be the will call and end. million and questions. to million conversion to year high be for the range the billion have in to $X.XX million and; $XXX The to between provided. the also are notable the of maintained million quantifying should outlook the EBITDA $XX important to timing and updated of factors your ranges adjusted million, now end pipeline opportunities to billion revenue We've our order obtained full performance $X.XX relative $XXX the be I open our outlook

Operator

Instructions]. [Operator

first Our line Jones from question of of Stifel. comes the Nathan

Nathan Jones

Slide Maybe XX just this spend the composition disclosure I walking bit on just I guys could you wonder if here. some backlog ISS time we could with that chart, additional appreciate start more. a and through

investors I recognition, you recognition think revenue for the start growth to the out for little in recognition, expect bit, important it's little bit how revenue growth to current future flatten of impacts can a just converge? to revenue understand this the backlog. you this to duration when about start to and talk and a backlog that Maybe order

Benedict Stas

expect to do to half into Nathan, We robust occurs, Well, see, as are we the will as more year. the choosing customers customers. in pipeline. with to based that seems enter think on proposition received start more conversion outsourced to continue That become to we to the by more well continuing well water second water. future capital, outsourced is reopening pipeline, be likely what of But based on this seeing trends associated the the our we're into value the

So...

increasing. we during to the our past. capital pandemic the that activity for a pipeline in as capital discussed reasons has However, future, look and is bit the the many And we've been muted

of conversion, return the driven convergence, as end growth of orders that And business converting the expect as future. that into the line to be The to capital second the will as to do half. as we in by well increase head improvement in in well. expecting the ISS part start revenue, into service to we we're So the the

Ronald Keating

continue. We trend anticipate, Nathan, will that the

As are flow. wanting more core the provide And let and outsourced is emerging and their just or water is challenges water of Ben prevalent frankly selections And will which producing competency is to talked Ultrapure trend with as we going product customers customers service, treatment increasing, I that to after think do, which certainly continue do, water. about, a us more becoming they them what do are that do what contaminants.

Benedict Stas

Just is now one page, backlog our Nathan, fact other of outlined that's backlog look is total ISS be might at as in we've company on larger than which that really backlog interest, today our XXXX. this backlog internally. the key under we contract, was And

a area. that and can has you so grown, service of And is that business in the really really, see lot that

Nathan Jones

is second My question the on guidance. margin

despite Your the X.X% margins were fiscal down of organically. 'XX points, first in having half up revenue basis XXX

to cost think, margin of the into for a you growth? about goes second I the actually or despite flip a in the would talk compression bit what guidance Yet to of Maybe conservatism, point half else, growth You're implies, XX decline midpoint something basis that in there that that? looking the see you revenue to price about mix year. returning Is the year-over-year. or suggest second half of maybe can little

Benedict Stas

is of mix as Well, turns part that always capital we want to a the on. key especially account, in back the take variable business

we cautious. a wanted little So be to

our putting regards positive as to are We head head expect year. not with do in to we inflationary impacts. the the price/cost through also stay sand on We

tried So all the factors, expectations. uncertainty be company terms -- with we reopening, of our to the in measured these of

but did occur economy for the shows as more we as reopens. as optimistic reopening open economy. end provide get I things of we the we'll well, we upper the view But how uncertainty think of as through the see the the guide --

Operator

question Markets. comes of Capital next Our from Deane Dray RBC

Deane Dray

Nathan's This bit question. of line of a to follow-up a is

give this other think the I of a contracts in side. bracing The everyone's free cash side is the of cash been outsourced a up flow for water; free in growth on yet. And that up flow performance, strong as we've to conversion. you flow some your free we projects, CapEx haven't cash over XXX% use but of really year-to-date Instead, seen these fund seen growth bit

problem, this expecting bit that in could and take but context. if in seen cash please. high-quality tempering it's a high that still we of you question show -- flow quality us a put haven't we're It's Note, for the just a be year? free of asked. a Just high a XXX% those through So to are dynamics, to above able balance If yet, growth, you kind

Benedict Stas

that. we the cash Yes, XXX% to a flow between and There term long or Indeed, and working trade-off Deane. a a the to outsourced conversion our the chooses it. purchasing bit we've CapEx cycle. in maintaining outsourced capital shortens as talked water Thanks, are helps in past, free capital very the if of is committed customer project a much water versus

when up outsourced So they up capital it, in in shows shows that more water in purchase CapEx. working versus

little of we -- So continue a see. flow term. It we And board the free the head future. depends there's depend a points bit the do trade-off we there. some as into positive can expect on We'll have think of business. all more we on very overall, to lot capital it But cash to long to put a see

done improve our current. both We and in as current set quarter our lot to payables have a services keeping as a collections our receivables. receivables of also well shared in terms this record we're And

by paid as So our we're well. customers faster getting

optimistic still can So cash when you add overall flow. we all continue this free up, feel we our improve to

Ronald Keating

And of of you'll well is the Deane, CapEx. one that Typically, talk is to about X% as still note revenue slide only X% this we on things maintenance. of as X%

into of and that deliver forecasted flow we kind is water. with kind focused outsourced other this on continue of And investment going growth. The cash to returns

Deane Dray

is not X I real talk where customer you're about closures, monitoring site sites quick And about That's clarification, access would water when digitally, a and you're think -- when these helpful. you to we site any you water and X in customers? access Because not systems. difficulty to come the whole when having you getting only absolutely recharge need upgrade that's that you're presume appeal, the

Ronald Keating

and go not year, go COVID water into when only to we're on And of fact of need we install sure based where America about is we that X it running and site X we what to going recall, and a kind they're talked of systems. a we the X continuing that the and and And customers had to But we water access if operate stay shutdown. really hit North preemptively and issue bit were the March an actually back deployment demand with go by last up water in The in. you'll making maintained. on-site in with pent-up does

So out coming quarter same we've lapped of we're starting month this last it COVID the up, quarter. quarter -- was more get but finally this impacted by to I'm sites really to sorry, one access year, by and year one only

So a bit the has -- it but been up, it quarter through we it's was opening restrictive as little saw.

Deane Dray

right. That's All really helpful.

means, Just last me, just putting in in in for our from monitoring the Ron, thought Biden PFAS question with and help, billion us the put perspective, $XX here And remediation. to plan it the if puts and just earmarking plan insight into that what billion the just some context anyone can And spotlighting and that the there's $XX it debate. PFAS in national you into can. spotlight give

more spotlight be on just your put perspective that is it start to develops So able of the number? I And do how was you give it? a how hoping you here? of from it Is us meaningful just kind think to

Ronald Keating

around on mean a that this, more EPA to one would action the get limits a to much along construction we the it grow. and awareness example focused that you we put I out talking are as PFAS opportunities about very I saw I with more is to is from administration Biden spotlight the of cleanup start mean say even site. it removal setting on with actually continuing happening. sustainability on slide bring These is it. trying called a something the

becoming because of at at want Biden being our putting go we're to on assets after, that drive And is areas the on that iceberg more win deployed on. this. make emphasis of we're least going to we ones actually increasing, the help on we administration are Our to is an different selective sure tip are that the the the market action focused rate it inside effectively. But

Operator

Baird. the comes question next from of Mike line Our Halloran of

Michael Halloran

point, follow to on want the happy really some and agreed, as service continue, talk that that you're expecting going revenue continue at to the and Obviously, you outsourced just to Nathan's to up But that some XX guys grows. normalization you're you're trend happens. how first Slide Just question, between normalization piece water expecting put there. about Maybe to see in grows grow.

returns? what What should does mean mean for that As thinking does how about materializes, And for that that profitability? that? we be

Benedict Stas

So are Mike, outsourced water capital margin. our higher service outsourced our than margins as past, margin. are typical in water talked we've the our higher than And our margins

on overall, how that is story XX% the EBITDA. drive to part going So of the we're

question margin our recurring cash revenue improve our free going nature profile. of there's our improve that's no and So to flow the business,

Michael Halloran

there side. Makes sense. slides on And deployment then capital the obviously had in some you

done a tuck-ins look side couple beyond expansions? that like the And the opportunity does And point? You've look at these regional technology What regional is kind there some this of of here. how does of funnel on nice pipeline currently?

Ronald Keating

Yes, as reviewing. the out we in once we've you're continues robust. seeing approximately time, to pipeline tuck-ins, we've in businesses very companies. technology in. Mike, of margins frankly, growth the be continue. that the technology that And plays some space, at And typically, integrated any look small building that but the there anticipate well. mean APT And we service APT we that portfolio. are acquired have those those those XX and of XX to seeing were Majority we're acquisitions XXX I at M&A that we of are as our we're highlighted,

it's ISS. one where size not on after tuck-ins service going we're So fits all strictly

as we go segment. we be view portfolio to R&D for on a technology around that our M&A in focused after continue APT the technology expansion. We proxy very And

Operator

the Our of Kaplowitz comes question Citi. of line Andrew from next

Eitan Buchbinder

service About Buchbinder on XX% This and your for aftermarket. is of Eitan are sales Randy.

basis. You visibility have tend revenue XX% of on to a rolling about to XX-month good

spending, service appears you capital to improving what in upcoming mix where for Given potentially would ongoing months? and visibility delays the is say XX be customer the backlog and ISS an

Ronald Keating

in. space visibility, to visibility customers customers same back seeing would I in reopening that of online. our our continues the getting with be it coming better say doing, we've been what the We're are economies,

say measured were. of into it's might around expenditures have with rounding we some XX% much a And cycle coming cut But is are just getting little that that it's longer POs it on customer XX-month And as seeing last to we're because again. customers been But in certainly this so a outlook, visibility to actually very standard, entered the been good into pipeline delays than capital starting projects still XX% back, to -- we're which into degree outlook. there's I cornerback we're year. entering muted the historically much pretty they visibility sometimes, and COVID have through capital COVID, where our more would that

Benedict Stas

I Eitan, guidance. reason so that quantified is that think that with Yes. improved provide visibility. we in the quantified we That's did guidance, line

reopening of think a been I uncertainties. a reopening we range And reflects pandemic. through haven't the

the quantified to wider But little we make like? we provide think So what's reflect a to return the would you fact in guidance potential a range optimism normally to uncertainties. those than and tried that look is I see that And so the reflected that.

Eitan Buchbinder

in prior And revenue highlighted capital-related helpful. that was year follow-up, That's as down project. ISS you due a to microelectronics

end the market? improve global are has the that seeing Given fiscal And strength in that 'XX in orders end microelectronic outlook for we're semiconductor quarter? how markets, your for

Ronald Keating

reflect upon year-over-year showed were was because time, comps you has. had order red, what absolutely happening in I been mean being I it quarter Last this we if microelectronics, Slide that it X neutral. the Yes, we believe quarter. have we

spending neutral so of a looking is see the think third back in the the more forward half normalized I year. and are the And investment now some to quarter of into we out, coming through return that which

Operator

Our Berenberg. the of of Buscaglia comes next Andrew line from question

Andrew Buscaglia

want up So on I follow the commentary. Biden just infrastructure PFAS and to

hearing are and front? the greater secondly -- risk for regulation, Your now, proposal sense you that that anything to potential And precursor you around is there with sort to on this companies the poses regulation it seeing of for customers considering like funding to secondly, sort your funding comply? proposal of Are what conversations are customers is regulations. then the

Ronald Keating

across I different would a we're their great own precursor bit different Andrew. guess it's not think Yes, systems that trying I water set, be a to frankly, some set like so limits a feel say ready and question, for regulation. little And to all we is is do limits everybody and this states. to

I And see of for to feels like if company. need or inside to your the where operating frankly, systems are treat the it this think be. customers the they need our operations of you they of prepared it everyone feel inside actually

that's the Deane this of highlighting administration aware to are when going getting drumbeat the question, So bill, it. so think of the of again I the it are as I it. believe, forward. They starting mentioned people coming trend Biden inside regulatory to around I I think is And the tip They're drive the that on asked is what's happen. iceberg

Andrew Buscaglia

question. And ask another wanted the to helpful. one That's I Okay. microelectronics on

starting shortage It's or somewhat that I you'll on understanding on interesting it's you how guys lap chips in And I guess tough facing then affecting you're those positive that indirectly? comps business QX, is believe? microelectronics. You're the also, my one.

Ronald Keating

Yes.

why we are to that. That's lapping So went we blue.

and you'll the spending pipeline investment. I the on beginning We are get the as opportunities appetite go there, us next fourth toward seeing latter think of to of year the year. we half larger of quarter and a real in we see for see and increased projects green

Operator

Jefferies. Our next comes the line from Saree question of of Boroditsky

Saree Boroditsky

little adverse demand bit any the about in you you the quarter in the related Texas just a saw weather Could talk impact to from and that?

Ronald Keating

Yes.

we in impact sent years certainly But in team latter We February. was deployed. did down half not shut had customers an had have XX shut had that So that the We operations. of of our assets Texas, through down. down, actually

a had where came So the rebound quarter of very we running. assets they're soft of and will back this basically, bringing a through frozen up we mobile then investing, deployed and Coast rebounding certainly was where started lot And and systems and March, operating into and Gulf part not their February, region there. back

from we members country. around that the we'd So had sent there team

call, investments customer moving operate value service Texas of in and a our time. wide response Evoqua brightly people southeast the and assets team thank answering and to And frankly, support in help to us broad north lived that the for through proposition our base. to over emergency the want who our lot I difficult our absolutely and shone fact, the and and In of mobile

Saree Boroditsky

if how implemented is, Biden opportunity as would When that? is it investments? another infrastructure revenue plan slide, follow-up on just you? turn then actual on to the the And would What the be the delay would you for about think

Ronald Keating

time. over numerous to going It's over Obviously, is plan the administration years. Biden happen

XX And would the anticipate, that flow plan happen projects months we post meaningful being announced. as start, would so seeing

Operator

of Our the next Molchanov line Pavel question from of comes James. Raymond

Pavel Molchanov

to the plans? about their infrastructure in and PFAS EU about lot your what market, I'd part exposure talk been the Atlantic. overview to cleanup in the Europe Washington, conversations the European as like infrastructure in Can other You you of side proposal pointing talked and have of the of your a to just an give

Ronald Keating

Yes.

On is Atlantic, the do selling of what are and side OEMs. historically other integrators we the products and typically we other through

technologies actually people around selling we're do on our we're So that tremendous regularity the product AOP opportunity on, We one and see a what systems. of do selling of technologies to the It's that working types we different PFAS issue. into companies parties through do. things third development there different are product with address that around

that we highlighted trial I we've the think a that actually with I've we're on boron-doped couple working calls of have diamond in system breaks that molecules even out had -- on. a testing using

advanced pond well. the technologies around excitement developing capability the as there across our for opportunities and So are deploying treatment

Pavel Molchanov

asset noticed you multiples as meaningful to months? flip side sellers is then more the any improvement that in Have valuations, in last I go And tend potential helpful. valuations X maybe suppose are economic of tech up water the that demanding, That's the on well. corporate one change M&A., over

Ronald Keating

you actually are Yes. auctioned, seeing being you're see larger I that think where being accretions. that assets multiple are Actually, --

viewing historically pretty negotiations, either So are around a the or we've or certainly highlighted a focused M&A. bilateral, significantly. on M&A, calls, spending spending after. a expansion Pavel, capital and the or the technology a on going that as it's We're up as this market we multiples acquisition kind going R&D discussed are What or where of we're geography generally tuck-in we for on one-to-one is focused vertical are very much

And continue recent to at. historic X to are even our we're in X historically buying We've Xx. the that with to -- And range that acquisitions. synergy, the post so on down acquiring we're keep the X Xx. we pre-synergy in to seeing able it's And been highlighted multiples we've most that

Operator

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

Joseph Giordano

you question guys. replace on wanted the cyclones? there mobile an have stuff selling benefit want there. got APT could to Texas about to clarify clarify what actual assets a Texas. down I was were I I net maybe mean be lost the that to teams product impact you just or net this. would down because for thought from Was headwind I sending you guys, of just talking a to and

Benedict Stas

up positive, mobile business, hurt Joe. get like that, the also you something pick in fleet. Slightly you but by particularly DI Overall

net-net the positive. but for So was it -- slightly quarter,

Joseph Giordano

then be forward you ahead side, on stock-outs placing customers are because would like maybe And orders pulling orders Okay. of more again now that? some just broadly follow-up, of second that a and of seeing product years as half the calendar things in have maybe year, maybe and

Ronald Keating

small very Very, amount.

some the of inside of metal share lines. a is would in our it's North of typically lion's those But got be little and of our some I say small, heavily where seeing revenue. America, would we've precious international we exposure bit that which We're very see product that not So operations.

Benedict Stas

Joe, at benefit million, at a we a we in been $X quarter, of have the got in some that mentioned. of stab It from were it, looking that as that Ron could took There Yes, about APT. okay? in EBITDA

Operator

Sachs. Lee Our next question Brian Goldman from comes the line of of

Brian Lee

but Most with I quarter as of for last know the consistent the it you answered, you just if price/cost sounds expecting the what said slightly of well. That's balance to on have said be up I -- topic. mine could you're earlier on like been Ben, it maybe follow positive year.

any do seeing general wondering year? the part here as for greater-than-expected if with thoughts sort own you've of expecting pricing And normal your chain, just you're positive And tightness? or that to inflationary then the any supply to gone out around So market any price/cost increases pressures? whether your cycle of

Benedict Stas

Yes.

So slightly positive Brian, quarter. we basically We're as this quarter, first we're talked flat. before,

this, $XXX,XXX suggests really go a under second suggests I we in and that. like going but out good We will we doing that out right we're Just as of But now, it the do go is lot our through on a that the there's of modeling parts favorability, it's half. million year, through price/cost shape, that it's exact. be to pricing ahead lot get to plan our of that there's moving $X volatile we think news there. we very as But and of situation there uncertain. mean a -- better be

those So we're we it's optimistic of it, but very areas ahead stay that cautious very, closely. can one we and are monitoring of that

Steel but lot as Some not another areas key types iridium, in of lot and already at of metals, is APT point certain activity. plastics chemicals, is business. the potential seeing our well. you're in Ron increases, there we're that for area that a the that but precious a the impacts cost And this seeing, that mentioned, particularly of that area as

Brian Lee

visibility build the into That's Okay. Just helpful. it, just PFAS about million-plus wondering missed if a orders pipeline might the Have PFAS, through you or you you're Fair halfway have PFAS have 'XX? but enough. on halfway through in And the the that quarter XXXX think quarter any side seen now you to for PFAS close pipeline. I any $XXX talked well? as maybe I one then quick incremental on last

Ronald Keating

up. say I would is it ramping question. great a that That's Yes,

highlighting that making And level. rapid pipeline So do is million we're administration for be, continues regulation and very as to going the see rapidly. PFAS but The exactly is do in do initiative and we're And it's that we solution sure be this, it We the is stay marketplace. after. on needed in $XXX that very we we going what the very projects we're the removal down to proper the we that ramping highlighted that up that what's high water that while one proper for these and PFAS had the they're that win to is as table that consistent, non-detect Biden certainly deploy Evoqua expand. to into to deploying we've locations able will reasons determine are assets positive highlighted that can of will to the we mobile response, think XXXX, with going cleanup an the continue come, the PFAS

Operator

of Our of next Patrick JPMorgan. question Baumann the comes line from

Patrick Baumann

a call. there that? earlier. are year have for don't Or to the beginning specific anything it, growth I type it. double-digit if maybe the the revenue one, sure missed growth kind at The this guidance in First the you I'm missed know you talked into have to pickup I quarter about range. seems that? something. of fourth the driving projects may Can missed might that if of Or the imply mentioned you've visibility not I talk I about

Ronald Keating

color some comment, and I'll quarters. X let well. add next have as Pat. Sure, into visibility we Ben I'll But better do the

well look our as that's are to online the talked strong where go we being we pretty quarter. as as pipeline. outlook very that projects about, we come get capital revenue fourth we approximately of XX% into against with steady. operate service projects at Outside that that, give of aftermarket, because build as Just visibility an our in and that's that the we And are going and generally

and guidance we isn't pipeline when the on we take them projects guiding cut what customers would noted, towards had guarantees. that we've implication with It around been their in we've goes to -- anticipate communications Or the the as doesn't even So and POs. for see certainly Ben have range towards their given tighter.

Benedict Stas

Yes, Ron, exactly.

service the revenue converting earlier, So we well. Pat, we it's talked ISS projects of see to really as about and as expected those the revenue when and as of to the rollout timing well as, some conversion

And that when convert revenue, look that suggest strong visibility to to so our would a we based and expect QX. in the on current

Patrick Baumann

really strong our timing-related it. that seemed quarter. quarter, relative a result Got the the second to Just whether the you through of in kind that? I was anything was versus at thought supported how flow to helpful Or free walk year? that Did That's good then cash there for pretty like the think about color. And least expectations.

Benedict Stas

Yes.

water, you're So again, of fact outsourced the you're talked cycle that seeing the the water; current benefit benefits well. the the outsourced conversion of all-time those record of benefit as earlier seeing we receivables, about of

have. onetime, nothing as of far typical normal there collections the of out in we that there's As that's

working capital shows in reminder, bit balances. capital. a choose up that customers that, our little offset on, between a potentially Because and Just as as the the an capital there's of as CapEx CIB turns business

potential percentage cash higher sales a flow, little we free continue as working to capital still through of as continue to expect So for generate a the there go to is reopening. year. bit and expect we the delever But we to operating strong throughout the

Operator

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

Ronald Keating

have with in now we for and interest customers didn't for you the today. you on thank I executing forward following quarter's safely, for quarter. our And if I the to delivering operating our time strategies, interest on the look you and in remiss thank Maria. operating your would around that we I you, Thank team globe be conference our the Evoqua take sustainable to your Thank on in again that require solutions marketplace for. And call. next look up Evoqua. chatting throughout I forward thank much. to look you the very

Operator

concludes Water Call. today's Evoqua Earnings Technologies' XXXX Thank you. Conference Quarter That Second

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

Evoqua Water Technologies (AQUA) 9 May 212021 Q2 Earnings call transcript