Evoqua Water Technologies Reports Second Quarter 2022 Results
Evoqua Water Technologies (NYSE:AQUA) announced robust second-quarter results for fiscal 2022, reporting revenue of $426.7 million, a 23.1% year-over-year increase. Organic revenue growth reached 10.6%, fueled by higher product and service volumes. Net income rose 45.1% to $7.4 million, with an adjusted EBITDA of $73.2 million, up 26.2%. The company raised its full-year revenue outlook to between $1.64 billion to $1.70 billion. CEO Ron Keating emphasized strong market demand and successful integration of the Mar Cor acquisition, though noted ongoing supply chain challenges.
- Revenue increased 23.1% to $426.7 million.
- Net income grew 45.1% to $7.4 million.
- Adjusted EBITDA rose 26.2% to $73.2 million.
- Organic revenue growth of 10.6% driven by higher product volumes.
- Full-year revenue outlook raised to $1.64 to $1.70 billion.
- Supply chain challenges limit order conversion visibility.
- Inflationary pressures are temporarily restricting margin expansion.
Second Quarter 2022 Financial Highlights:
-
Revenue of
, an increase of$426.7 million 23.1% compared to the prior year period; organic revenue growth of10.6% -
Net income of
, an increase of$7.4 million 45.1% compared to the prior year period -
Adjusted EBITDA of
, an increase of$73.2 million 26.2% compared to the prior year period
Revenue for the second quarter of fiscal year 2022 was
“We are pleased to report solid second quarter results driven by strong market demand across multiple regions, product lines and end markets. Our book to bill ratio was again above 1.0, and disciplined pricing execution resulted in price realization outpacing cost inflation in the quarter. Managing material and skilled labor availability remains a daily priority across our business segments,” said Mr.
A discussion of segment results can be found in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations” within our Quarterly Report on Form 10-Q for the three months ended
Second Quarter Earnings Call and Webcast
The Company will hold its second quarter fiscal 2022 earnings conference call
Participant Details |
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Dial-In Numbers: |
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Toll Free US: 800-909-7113 |
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International: +1 785-424-1677 |
Conference ID: AQUAQ2 |
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The link to the webcast replay as well as the presentation slides will also be posted on Evoqua’s Investor Relations website. |
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Replay details: |
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Dial-In-Numbers: |
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US Toll Free Phone #: 800-839-2383 |
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International Phone #: 402 220 7202 |
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(Conference ID is not needed to access replay) |
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Replay available: Beginning |
Webcast Audience URL:
https://event.on24.com/wcc/r/3713261/824F073ED003DF7224C95E3E1ED871BA
Dissemination of Company Information
The Company intends to make future announcements regarding developments and financial performance through the Investor Relations section of its website, http://aqua.evoqua.com, as well as through press releases, filings with the
About
Non-GAAP Financial Measures
This press release contains financial measures that are not calculated and presented in accordance with generally accepted accounting principles in
With respect to forward-looking guidance provided in this press release, we have not presented a quantitative reconciliation of the forward-looking non-GAAP financial measures adjusted EBITDA and adjusted free cash flow conversion as a percentage of adjusted net income to their most directly comparable GAAP financial measures, net income and operating cash flow as a percentage of net income, respectively, because it is impractical to forecast certain items without unreasonable efforts due to the uncertainty and inherent difficulty of predicting the occurrence and financial impact of, and the periods in which, such items, including foreign exchange impact and certain expenses for which we adjust, may be recognized. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can generally identify forward-looking statements by our use of forward-looking terminology such as “aim,” “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “might,” “plan,” “progress,” “potential,” “predict,” “projection,” “seek,” “should,” “will,” or “would” or the negative thereof or other variations thereon or comparable terminology. All of these forward-looking statements are based on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements, or could affect our share price. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, among other things, general global economic and business conditions, including the impacts of the COVID-19 pandemic and geopolitical conflicts, such as the conflict between
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts) |
|||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue from product sales and services |
$ |
426,728 |
|
|
$ |
346,564 |
|
|
$ |
792,996 |
|
|
$ |
668,757 |
|
Cost of product sales and services |
|
(297,842 |
) |
|
|
(240,645 |
) |
|
|
(553,602 |
) |
|
|
(467,493 |
) |
Gross profit |
$ |
128,886 |
|
|
$ |
105,919 |
|
|
$ |
239,394 |
|
|
$ |
201,264 |
|
General and administrative expense |
|
(66,976 |
) |
|
|
(52,928 |
) |
|
|
(124,805 |
) |
|
|
(95,211 |
) |
Sales and marketing expense |
|
(39,859 |
) |
|
|
(33,830 |
) |
|
|
(76,308 |
) |
|
|
(67,758 |
) |
Research and development expense |
|
(3,751 |
) |
|
|
(3,393 |
) |
|
|
(7,203 |
) |
|
|
(6,516 |
) |
Total operating expenses |
$ |
(110,586 |
) |
|
$ |
(90,151 |
) |
|
$ |
(208,316 |
) |
|
$ |
(169,485 |
) |
Other operating income, net |
|
1,272 |
|
|
|
410 |
|
|
|
2,782 |
|
|
|
633 |
|
Income before interest expense and income taxes |
$ |
19,572 |
|
|
$ |
16,178 |
|
|
$ |
33,860 |
|
|
$ |
32,412 |
|
Interest expense |
|
(9,950 |
) |
|
|
(8,395 |
) |
|
|
(16,529 |
) |
|
|
(17,068 |
) |
Income before income taxes |
$ |
9,622 |
|
|
$ |
7,783 |
|
|
$ |
17,331 |
|
|
$ |
15,344 |
|
Income tax expense |
|
(2,248 |
) |
|
|
(2,701 |
) |
|
|
(3,869 |
) |
|
|
(3,785 |
) |
Net income |
$ |
7,374 |
|
|
$ |
5,082 |
|
|
$ |
13,462 |
|
|
$ |
11,559 |
|
Net income attributable to non‑controlling interest |
|
44 |
|
|
|
46 |
|
|
|
145 |
|
|
|
90 |
|
Net income attributable to |
$ |
7,330 |
|
|
$ |
5,036 |
|
|
$ |
13,317 |
|
|
$ |
11,469 |
|
Basic income per common share |
$ |
0.06 |
|
|
$ |
0.04 |
|
|
$ |
0.11 |
|
|
$ |
0.10 |
|
Diluted income per common share |
$ |
0.06 |
|
|
$ |
0.04 |
|
|
$ |
0.11 |
|
|
$ |
0.09 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) |
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(Unaudited) |
|
|
||||
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|
|
||||
ASSETS |
|
|
|
||||
Current assets |
$ |
777,532 |
|
|
$ |
678,458 |
|
Cash and cash equivalents |
|
129,500 |
|
|
|
146,244 |
|
Receivables, net |
|
283,092 |
|
|
|
277,995 |
|
Inventories, net |
|
216,933 |
|
|
|
158,503 |
|
Contract assets |
|
99,502 |
|
|
|
72,746 |
|
Other current assets |
|
48,505 |
|
|
|
22,970 |
|
Property, plant, and equipment, net |
|
395,290 |
|
|
|
374,988 |
|
|
|
476,259 |
|
|
|
407,376 |
|
Intangible assets, net |
|
328,024 |
|
|
|
290,075 |
|
Operating lease right-of-use assets, net |
|
49,395 |
|
|
|
45,521 |
|
Other non-current assets |
|
106,061 |
|
|
|
72,473 |
|
Total assets |
$ |
2,132,561 |
|
|
$ |
1,868,891 |
|
LIABILITIES AND EQUITY |
|
|
|
||||
Current liabilities |
$ |
430,839 |
|
|
$ |
405,989 |
|
Accounts payable |
|
191,122 |
|
|
|
164,535 |
|
Current portion of debt, net of deferred financing fees and discounts |
|
14,219 |
|
|
|
12,775 |
|
Contract liabilities |
|
55,593 |
|
|
|
55,883 |
|
Accrued expenses and other liabilities |
|
158,510 |
|
|
|
160,367 |
|
Other current liabilities |
|
11,395 |
|
|
|
12,429 |
|
Non-current liabilities |
|
1,063,651 |
|
|
|
880,683 |
|
Long-term debt, net of deferred financing fees and discounts |
|
920,343 |
|
|
|
730,430 |
|
Obligation under operating leases |
|
39,995 |
|
|
|
37,935 |
|
Other non-current liabilities |
|
103,313 |
|
|
|
112,318 |
|
Total liabilities |
$ |
1,494,490 |
|
|
$ |
1,286,672 |
|
Shareholders’ equity |
|
|
|
||||
Common stock, par value |
$ |
1,229 |
|
|
$ |
1,223 |
|
|
|
(2,837 |
) |
|
|
(2,837 |
) |
Additional paid-in capital |
|
592,105 |
|
|
|
582,052 |
|
Retained earnings (deficit) |
|
2,135 |
|
|
|
(11,182 |
) |
Accumulated other comprehensive income, net of tax |
|
43,846 |
|
|
|
11,415 |
|
|
$ |
636,478 |
|
|
$ |
580,671 |
|
Non-controlling interest |
|
1,593 |
|
|
|
1,548 |
|
Total shareholders’ equity |
$ |
638,071 |
|
|
$ |
582,219 |
|
Total liabilities and shareholders’ equity |
$ |
2,132,561 |
|
|
$ |
1,868,891 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CASH FLOWS (Unaudited) (In thousands) |
|||||||
|
Six Months Ended |
||||||
|
|
2022 |
|
|
|
2021 |
|
Operating activities |
|
|
|
||||
Net income |
$ |
13,462 |
|
|
$ |
11,559 |
|
Reconciliation of net income to cash flows provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
|
61,156 |
|
|
|
54,607 |
|
Amortization of deferred financing fees (includes |
|
926 |
|
|
|
1,044 |
|
Deferred income taxes |
|
592 |
|
|
|
476 |
|
Share-based compensation |
|
10,589 |
|
|
|
6,233 |
|
(Gain) loss on sale of property, plant and equipment |
|
(61 |
) |
|
|
807 |
|
(Gain) loss on sale of business |
|
(193 |
) |
|
|
191 |
|
Foreign currency exchange losses (gains) on intercompany loans and other non-cash items |
|
3,728 |
|
|
|
(3,659 |
) |
Changes in assets and liabilities |
|
(61,051 |
) |
|
|
(8,200 |
) |
Net cash provided by operating activities |
|
29,148 |
|
|
|
63,058 |
|
Investing activities |
|
|
|
||||
Purchase of property, plant, and equipment |
|
(36,320 |
) |
|
|
(36,297 |
) |
Purchase of intangibles |
|
(1,582 |
) |
|
|
(539 |
) |
Proceeds from sale of property, plant, and equipment |
|
1,940 |
|
|
|
640 |
|
Proceeds from sale of business, net of cash of |
|
356 |
|
|
|
897 |
|
Acquisitions, net of cash received |
|
(194,976 |
) |
|
|
(8,743 |
) |
Net cash used in investing activities |
|
(230,582 |
) |
|
|
(44,042 |
) |
Financing activities |
|
|
|
||||
Issuance of debt, net of deferred issuance costs |
|
223,793 |
|
|
|
13,993 |
|
Repayment of debt |
|
(33,362 |
) |
|
|
(10,036 |
) |
Repayment of finance lease obligation |
|
(6,571 |
) |
|
|
(6,901 |
) |
Proceeds from issuance of common stock |
|
5,274 |
|
|
|
13,430 |
|
Taxes paid related to net share settlements of share-based compensation awards |
|
(5,144 |
) |
|
|
(1,863 |
) |
Distribution to non‑controlling interest |
|
(100 |
) |
|
|
(350 |
) |
Net cash provided by financing activities |
|
183,890 |
|
|
|
8,273 |
|
Effect of exchange rate changes on cash |
|
800 |
|
|
|
2,428 |
|
Change in cash and cash equivalents |
|
(16,744 |
) |
|
|
29,717 |
|
Cash and cash equivalents |
|
|
|
||||
Beginning of period |
|
146,244 |
|
|
|
193,001 |
|
End of period |
$ |
129,500 |
|
|
$ |
222,718 |
|
Use of Non-GAAP Measures
The Company reports its financial results in accordance with GAAP. However, management believes that certain non-GAAP financial measures provide users of the Company's financial information with additional useful information in evaluating operating performance. We use the non-GAAP financial measures EBITDA, adjusted EBITDA, and organic revenue in evaluating the strength and financial performance of our core business.
EBITDA and Adjusted EBITDA
EBITDA, which is a non-GAAP financial measure, is defined as net income (loss) before interest expense, income tax benefit (expense), and depreciation and amortization. Adjusted EBITDA is defined as net income (loss) before interest expense, income tax benefit (expense), and depreciation and amortization, adjusted for the impact of certain other items, including restructuring and related business transformation costs, share-based compensation, transaction costs, and other gains, losses and expenses that we believe do not directly reflect our underlying business operations.
Adjusted EBITDA is one of the primary metrics used by management to evaluate the financial performance of our business. We present adjusted EBITDA because we believe it is frequently used by analysts, investors and other interested parties to evaluate and compare operating performance and value companies within our industry. Further, we believe it is helpful in highlighting trends in our operating results and provides greater clarity and comparability period over period to management and our investors regarding the operational impact of long-term strategic decisions relating to capital structure, the tax jurisdictions in which we operate and capital investments. In addition, adjusted EBITDA highlights true business performance by removing the impact of certain items that management believes do not directly reflect our underlying operations and provides investors with greater visibility into the ongoing organic drivers of our business performance.
Management uses adjusted EBITDA to supplement GAAP measures of performance as follows:
- to assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance;
- in our management incentive compensation, which is based in part on components of adjusted EBITDA;
- in certain calculations under our senior secured credit facilities, which use components of adjusted EBITDA;
- to evaluate the effectiveness of our business strategies;
- to make budgeting decisions; and
- to compare our performance against that of other peer companies using similar measures.
In addition to the above, our chief operating decision maker uses adjusted EBITDA of each reportable operating segment to evaluate the operating performance of such segments. Adjusted EBITDA on a segment basis is defined as earnings before depreciation and amortization, adjusted for the impact of certain other items that have been reflected at the segment level. Adjusted EBITDA of the reportable operating segments do not include certain charges that are presented within corporate activities. These charges include certain restructuring and other business transformation charges that have been incurred to align and reposition the Company to the current reporting structure, acquisition related costs (including transaction costs and integration costs) and share-based compensation charges.
EBITDA and Adjusted EBITDA should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP. The financial results prepared in accordance with GAAP and the reconciliations from these results included below should be carefully evaluated. You are encouraged to evaluate each adjustment and the reasons we consider it appropriate for supplemental analysis. In addition, in evaluating adjusted EBITDA, you should be aware that in the future, we may incur expenses similar to the adjustments in the presentation of adjusted EBITDA. Our presentation of adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. In addition, adjusted EBITDA may not be comparable to similarly titled measures used by other companies in our industry or across different industries.
The following is a reconciliation of our net income to EBITDA and adjusted EBITDA (unaudited):
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Three Months Ended
|
|
Six Months Ended
|
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(In millions) |
2022 |
|
2021 |
|
% Variance |
|
2022 |
|
2021 |
|
% Variance |
||||||
Net income |
$ |
7.4 |
|
$ |
5.1 |
|
45.1 |
% |
|
$ |
13.5 |
|
$ |
11.6 |
|
16.4 |
% |
Income tax expense |
|
2.2 |
|
|
2.7 |
|
(18.5 |
) % |
|
|
3.9 |
|
|
3.7 |
|
5.4 |
% |
Interest expense |
|
10.0 |
|
|
8.4 |
|
19.0 |
% |
|
|
16.5 |
|
|
17.1 |
|
(3.5 |
) % |
Operating profit |
$ |
19.6 |
|
$ |
16.2 |
|
21.0 |
% |
|
$ |
33.9 |
|
$ |
32.4 |
|
4.6 |
% |
Depreciation and amortization |
|
32.6 |
|
|
27.1 |
|
20.3 |
% |
|
|
61.2 |
|
|
54.6 |
|
12.1 |
% |
EBITDA |
$ |
52.2 |
|
$ |
43.3 |
|
20.6 |
% |
|
$ |
95.1 |
|
$ |
87.0 |
|
9.3 |
% |
Restructuring and related business transformation costs(a) |
|
1.8 |
|
|
5.4 |
|
(66.7 |
) % |
|
|
3.2 |
|
|
7.2 |
|
(55.6 |
) % |
Purchase accounting adjustment costs(b) |
|
2.6 |
|
|
— |
|
n/a |
|
|
|
2.6 |
|
|
— |
|
n/a |
|
Share-based compensation(c) |
|
6.1 |
|
|
3.2 |
|
90.6 |
% |
|
|
11.4 |
|
|
6.3 |
|
81.0 |
% |
Transaction costs(d) |
|
4.0 |
|
|
0.7 |
|
471.4 |
% |
|
|
4.9 |
|
|
1.3 |
|
276.9 |
% |
Other losses (gains) and expenses(e) |
|
6.5 |
|
|
5.4 |
|
20.4 |
% |
|
|
10.3 |
|
|
1.0 |
|
930.0 |
% |
Adjusted EBITDA |
$ |
73.2 |
|
$ |
58.0 |
|
26.2 |
% |
|
$ |
127.5 |
|
$ |
102.8 |
|
24.0 |
% |
(a) |
Restructuring and related business transformation costs |
||
|
Adjusted EBITDA is calculated prior to considering certain restructuring or business transformation events. These events may occur over extended periods of time, and in some cases it is reasonably possible that they could reoccur in future periods based on reorganizations of the business, cost reduction or productivity improvement needs, or in response to economic conditions. For the periods presented such events include the following: |
||
|
(i) |
Certain costs and expenses in connection with various restructuring initiatives, including severance and other employee-related costs, relocation and facility consolidation costs and third-party consultant costs to assist with these initiatives. This includes: |
|
|
(A) |
amounts related to the Company’s restructuring initiatives to reduce the cost structure and rationalize location footprint following the sale of the Memcor product line; |
|
|
(B) |
amounts related to the Company’s transition from a three-segment structure to a two-segment operating model designed to better serve the needs of customers worldwide; and |
|
|
|
(C) |
amounts related to various other initiatives implemented to restructure and reorganize our business with the appropriate management team and cost structure. |
Three Months Ended
|
|
Six Months Ended
|
|||||||||
(In millions) |
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
Post Memcor divestiture restructuring |
$ |
0.6 |
|
$ |
3.0 |
|
$ |
0.8 |
|
$ |
3.9 |
Cost of product sales and services ("Cost of sales") |
|
0.1 |
|
|
2.3 |
|
|
0.1 |
|
|
3.1 |
Sales and marketing expense (“S&M expense”) |
|
— |
|
|
— |
|
|
— |
|
|
0.2 |
General and administrative expense (“G&A expense”) |
|
0.5 |
|
|
0.3 |
|
|
0.7 |
|
|
0.3 |
Other operating (income) expense |
|
— |
|
|
0.4 |
|
|
— |
|
|
0.3 |
Two-segment restructuring |
$ |
0.1 |
|
$ |
0.4 |
|
$ |
0.3 |
|
$ |
0.6 |
Cost of sales |
|
— |
|
|
0.2 |
|
|
0.1 |
|
|
0.2 |
G&A expense |
|
0.1 |
|
|
0.2 |
|
|
0.2 |
|
|
0.4 |
Various other initiatives |
$ |
1.0 |
|
$ |
1.5 |
|
$ |
1.7 |
|
$ |
1.5 |
Cost of sales |
|
0.5 |
|
|
0.5 |
|
|
0.7 |
|
|
0.5 |
S&M expense |
|
— |
|
|
0.1 |
|
|
— |
|
|
0.1 |
G&A expense |
|
0.3 |
|
|
0.4 |
|
|
0.8 |
|
|
0.4 |
Other operating (income) expense |
|
0.2 |
|
|
0.5 |
|
|
0.2 |
|
|
0.5 |
Total(1) |
$ |
1.7 |
|
$ |
4.9 |
|
$ |
2.8 |
|
$ |
6.0 |
|
(1) |
Of which |
||
|
|
|||
(ii) |
Legal settlement costs and intellectual property related fees, including fees and settlement costs associated with legacy matters related to product warranty litigation on MEMCOR®(1) products and certain discontinued products. This includes: |
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
(In millions) |
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
Cost of sales |
$ |
0.1 |
|
$ |
0.2 |
|
$ |
0.2 |
|
$ |
0.2 |
G&A expense |
|
— |
|
|
0.1 |
|
|
0.2 |
|
|
0.2 |
Total |
$ |
0.1 |
|
$ |
0.3 |
|
$ |
0.4 |
|
$ |
0.4 |
(1) |
Memcor ® is a trademark of |
|||
|
|
|||
(iii) |
Expenses associated with our information technology and functional infrastructure transformation, including activities to optimize information technology systems and functional infrastructure processes. This includes: |
|
Three Months Ended
|
|
Six Months Ended
|
|||||||||
(In millions) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|||||
Cost of sales |
$ |
— |
|
$ |
0.1 |
|
|
$ |
— |
|
$ |
0.1 |
G&A expense |
|
— |
|
|
(0.1 |
) |
|
|
— |
|
|
0.1 |
Total |
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
$ |
0.2 |
(iv) |
Costs associated with the secondary public offering of common stock held by certain shareholders of the Company, as well as costs incurred by us in connection with establishment of our public company compliance structure and processes, including consultant costs. This includes: |
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
(In millions) |
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
G&A expense |
$ |
— |
|
$ |
0.2 |
|
$ |
— |
|
$ |
0.6 |
Total |
$ |
— |
|
$ |
0.2 |
|
$ |
— |
|
$ |
0.6 |
(b) |
Purchase accounting adjustment costs |
|
|
|
Adjusted EBITDA is calculated prior to considering adjustments for the effect of the purchase accounting step-up in the value of inventory to fair value recognized in cost of goods sold as a result of the acquisition of the Mar Cor Business. See Note 4, “Acquisitions,” to our Unaudited Consolidated Financial Statements included in our Quarterly Report on Form 10-Q for the three and six months ended |
|
|
(c) |
Share-based compensation |
|
|
|
Adjusted EBITDA is calculated prior to considering share-based compensation expenses related to equity awards. See Note 17, “Share-Based Compensation,” to our Unaudited Consolidated Financial Statements included in our Quarterly Report on Form 10-Q for the three and six months ended |
|
|
(d) |
Transaction related costs |
|
|
|
Adjusted EBITDA is calculated prior to considering transaction, integration and restructuring costs associated with business combinations because these costs are unique to each transaction and represent costs that were incurred as a result of the transaction decision. Integration and restructuring costs associated with a business combination may occur over several years and include, but are not limited to, consulting fees, legal fees, certain employee-related costs, facility consolidation and product rationalization costs and fair value changes associated with contingent consideration. This includes: |
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
(In millions) |
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
Cost of sales |
$ |
0.5 |
|
$ |
0.1 |
|
$ |
0.5 |
|
$ |
0.2 |
G&A expense |
|
3.5 |
|
|
0.6 |
|
|
4.4 |
|
|
1.1 |
Total |
$ |
4.0 |
|
$ |
0.7 |
|
$ |
4.9 |
|
$ |
1.3 |
(e) |
Other losses, (gains) and expenses |
|||
|
Adjusted EBITDA is calculated prior to considering certain other significant losses, (gains) and expenses. For the periods presented such events include the following: |
|||
|
|
(i) |
impact of foreign exchange gains and losses; |
|
(ii) |
charges incurred by the Company related to product rationalization in its electro-chlorination business; |
|||
|
|
(iii) |
amounts related to the sale of the Memcor product line; |
|
|
(iv) |
expenses incurred by the Company as a result of the COVID-19 pandemic, including additional charges for personal protective equipment, increased costs for facility sanitization and one-time payments to certain employees; |
||
|
(v) |
legal fees incurred in excess of amounts covered by the Company’s insurance related to the Securities Litigation and |
||
|
|
(vi) |
loss on divestiture of the Lange product line. |
Other losses, (gains) and expenses include the following for the periods presented below:
Three Months Ended |
|
||||||||||||||||||||
|
Other Adjustments |
|
|||||||||||||||||||
(In millions) |
(i) |
|
(ii) |
|
(iii) |
|
(iv) |
|
(v) |
|
(vi) |
Total |
|||||||||
Cost of sales |
$ |
(0.1 |
) |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
$ |
(0.1 |
) |
G&A expense |
|
2.1 |
|
|
|
— |
|
|
— |
|
|
0.1 |
|
|
4.4 |
|
|
— |
|
6.6 |
|
Total |
$ |
2.0 |
|
|
$ |
— |
|
$ |
— |
|
$ |
0.1 |
|
$ |
4.4 |
|
$ |
— |
$ |
6.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Three Months Ended |
|||||||||||||||||||||
|
Other Adjustments |
||||||||||||||||||||
(In millions) |
(i) |
|
(ii) |
|
(iii) |
|
(iv) |
|
(v) |
|
(vi) |
Total |
|||||||||
Cost of sales |
$ |
— |
|
|
$ |
0.7 |
|
$ |
— |
|
$ |
0.1 |
|
$ |
— |
|
$ |
— |
$ |
0.8 |
|
G&A expense |
|
2.9 |
|
|
|
— |
|
|
— |
|
|
0.1 |
|
|
1.4 |
|
|
— |
|
4.4 |
|
Other operating (income) expense |
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.2 |
|
0.2 |
|
Total |
$ |
2.9 |
|
|
$ |
0.7 |
|
$ |
— |
|
$ |
0.2 |
|
$ |
1.4 |
|
$ |
0.2 |
$ |
5.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Six Months Ended |
|||||||||||||||||||||
|
Other Adjustments |
||||||||||||||||||||
(In millions) |
(i) |
|
(ii) |
|
(iii) |
|
(iv) |
|
(v) |
|
(vi) |
Total |
|||||||||
G&A expense |
$ |
3.3 |
|
|
$ |
— |
|
$ |
— |
|
$ |
0.1 |
|
$ |
6.9 |
|
$ |
— |
$ |
10.3 |
|
Total |
$ |
3.3 |
|
|
$ |
— |
|
$ |
— |
|
$ |
0.1 |
|
$ |
6.9 |
|
$ |
— |
$ |
10.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Six Months Ended |
|||||||||||||||||||||
|
Other Adjustments |
||||||||||||||||||||
(In millions) |
(i) |
|
(ii) |
|
(iii) |
|
(iv) |
|
(v) |
|
(vi) |
Total |
|||||||||
Cost of sales |
$ |
— |
|
|
$ |
0.9 |
|
$ |
0.2 |
|
$ |
0.1 |
|
$ |
— |
|
$ |
— |
$ |
1.2 |
|
G&A expense |
|
(3.9 |
) |
|
|
— |
|
|
— |
|
|
0.2 |
|
|
3.3 |
|
|
— |
|
(0.4 |
) |
Other operating (income) expense |
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.2 |
|
0.2 |
|
Total |
$ |
(3.9 |
) |
|
$ |
0.9 |
|
$ |
0.2 |
|
$ |
0.3 |
|
$ |
3.3 |
|
$ |
0.2 |
$ |
1.0 |
|
Organic Revenue
Organic revenue is another metric used by management to evaluate the performance of our business. Organic revenue is defined as revenue excluding the impact of foreign currency translation and inorganic revenue. Inorganic revenue represents the impact from acquisitions and divestitures during the first 12 months following the closing of the acquisition or divestiture. Divestitures include sales of insignificant portions of our business that did not meet the criteria for classification as a discontinued operation. Management believes that reporting organic revenue provides useful information to investors by helping identify underlying growth trends in our core business and facilitating easier comparisons of our revenue performance with prior and future periods and to our peers. We exclude the effect of foreign currency translation from organic sales because foreign currency translation is not under management’s control, is subject to volatility and can obscure underlying business trends. We exclude the effect of acquisitions and divestitures during the first 12 months following the closing of the acquisition or divestiture because they can obscure underlying business trends and make comparisons of long-term performance difficult between the Company and its peers due to the varying nature, size and number of transactions from period to period.
The following is a reconciliation of total revenue to organic revenue for the three and six months ended
|
Total Revenue |
|
Foreign Currency |
|
Inorganic Revenue(1) |
|
Organic Revenue |
||||||||
|
Three Months
|
% Variance |
|
Three Months
|
% Variance |
|
Three Months
|
% Variance |
|
Three Months
|
% Variance |
||||
(In millions) |
2021 |
2022 |
|
2021 |
2022 |
|
2021 |
2022 |
|
2021 |
2022 |
||||
|
|
|
23.1 % |
|
n/a |
|
(0.5) % |
|
|
|
13.0 % |
|
|
|
10.6 % |
Integrated Solutions & Services |
|
|
31.5 % |
|
n/a |
|
— % |
|
|
|
20.1 % |
|
|
|
11.4 % |
Applied Product Technologies |
|
|
7.8 % |
|
n/a |
|
(1.3) % |
|
$— |
$— |
— % |
|
|
|
9.1 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenue |
|
Foreign Currency |
|
Inorganic Revenue(2) |
|
Organic Revenue |
||||||||
|
Six Months
|
% Variance |
|
Six Months
|
% Variance |
|
Six Months
|
% Variance |
|
Six Months
|
% Variance |
||||
(In millions) |
2021 |
2022 |
|
2021 |
2022 |
|
2021 |
2022 |
|
2021 |
2022 |
||||
|
|
|
18.6 % |
|
n/a |
|
(0.1) % |
|
|
|
7.0 % |
|
|
|
11.7 % |
Integrated Solutions & Services |
|
|
23.0 % |
|
n/a |
|
— % |
|
|
|
10.7 % |
|
|
|
12.3 % |
Applied Product Technologies |
|
|
10.1 % |
|
n/a |
|
(0.6) % |
|
$— |
$— |
— % |
|
|
|
10.7 % |
(1) |
Includes divestiture of the Lange Product Line on |
|
(2) |
Includes divestiture of the Lange Product Line on |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220503005273/en/
Investors
Vice President, Investor Relations
Telephone: 724-720-1605
Email: dan.brailer@evoqua.com
Media
Director of Corporate Communications
Telephone: 506-454-5495
Email: sarah.brown@evoqua.com
Source:
FAQ
What were Evoqua Water Technologies' Q2 2022 revenue figures?
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