As of September 30, 2017, we had over 38,000

cost‑effective. See also Item 1A, “Risk Factors”.

structures globally.

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industrial water treatment in Americas, Europe, Middle East and Africa and Asia Pacific geographies, (ii) our process and drinking water sales channels work with non-exclusivenon‑exclusive OEMs and with our Industrial Segment to build small, "skidded"“skidded” solutions for global industrial customers, to get our modular solutions specified into larger units and projects, (iii) our electrochlorination sales managers typically work with representatives of ship builders, shipyards, ship owners, service providers and manufacturers to have our products, services and solutions specified into commercial and military ships and offshore oil and gas rigs, (iv) our separation technology channel managers and sales representatives work with a large network of third-party manufacturers'third‑party manufacturers’ representatives that are exclusive to specific territories or industries and leverage direct sales in industries not covered by third-partythird‑party representatives and (v) our direct sales force sell our anodes into Americas, Europe and China geographies, and opportunistically cross-sellcross‑sell electrocatalytic products to our anode customers. As of September 30, 2017,2018, we had active relationships with more than 200 OEM partnerships and managed over 300250 channel partners.

Backlog represents the total amount of revenue we expect to receive as a result of contracts and orders awarded to us. However, because many of our contracts and orders are subject to reduction, cancellation or termination at the option of our customer, backlog is not an indication of our future performance. In 2017 we implemented a new methodology to record service orders to improve visibility of backlog and revenues associated with service contracts. Under this new methodology a service contract is recorded as an order when both parties have agreed to the terms and conditions, including contract value and length. The value assigned to the order is based on the fixed portion of the contract for the entire contract term. Utilizing our new methodology, asAs of September 30, 2017,2018, our backlog was approximately $636.3 million.

$607.4 million, which includes service, aftermarket and capital projects. Upon adoption of ASU 606, Revenue from Contracts with Customers, during the first quarter of 2019 we will be disclosing backlog solely based on the expected future revenue for unfulfilled and remaining performance obligations for capital projects where neither Evoqua nor the customer can terminate the contract without penalty.

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the opinion of management, are reasonably likely to have a material effect on our business, financial condition, results of operations or prospects. However, environmental, health and safety laws and regulations applicable to our business, the products we distribute, the services we provide and the business of our customers, and the interpretation or enforcement of these laws

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many new and non-traditionalnon‑traditional competitors, (iii) enhance our products by adding innovative and, where applicable, patented features that differentiate our products from those of our competitors and prevent commoditization of our products, (iv) develop, manufacture, bring to market and drive commercial acceptance of compelling new products quickly and cost-effectively,cost‑effectively, (v) ensure that our products, services and solutions remain cost-competitivecost‑competitive, even when faced with rising commodity costs, and (vi) attract, develop and retain individuals with the requisite technical expertise and understanding of customers'customers’ needs to develop and sell new technologies and products.

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intellectual property protections in various jurisdictions, may render certain of our products, services and solutions obsolete.

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materials, and they are subsequently released or cause harm, or if some other entity conducted such activities and by virtue of an acquisition, under applicable law we are a successor to that entity.

Additionally, our decision to restructure our business into two operating segments could yield unintended consequences such as attrition beyond any planned reduction in workforce, inability to attract or retain key personnel, and reduced employee productivity which could negatively affect our business sales, financial condition and results of operations.

        We will need to continue to develop a roster of qualified talent to support business growth. Without a sufficient number of skilled employees, our operations and manufacturing quality could suffer.

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or substantially reduce the amount of, bid or performance bonds for our work, and could increase our costs associated with collateral. These actions could be taken on short notice. Our inability to obtain adequate bonding or letters of credit to meet bid requirements or enter into

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parties using our products, which could result in material liability. Further, any pandemic or other public health crisis, including those involving non-waterbornenon‑waterborne illnesses, might adversely impact our business by diminishing the public trust in water and wastewater treatment facilities or by causing customers to seek sources of water other than those processed using our systems or products. The potential impact of a contamination of water treated using our products, services or solutions is difficult to predict and could lead to an increased risk of exposure to product liability claims, increased scrutiny by federal and state regulatory agencies and negative publicity. Further, an outbreak of disease in any one of the municipal markets we serve could result in a widespread loss of customers across other such markets.

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to political, fiscal or bureaucratic processes, delays in approving budgets and the government'sgovernment’s right to cancel contracts and purchase orders for its convenience. General political and economic conditions, which we cannot accurately predict, also directly and indirectly affect policies relating to the quantity and allocation of expenditures by government customers. In addition, government contracts may involve long purchase and payment cycles, competitive bidding requirements, qualification requirements, delays or changes in agreed-toagreed‑to funding, budgetary constraints, political agendas, extensive specification development and price negotiations, milestone requirements and the potential unenforceability of limitations on liability or other contractual provisions, any of which may create price pressure and reduce our margins. Because our water treatment projects and solutions for municipal customers often include fixed-pricefixed‑price contracts with milestone billings and liquidated damages for our delay, our performance under such contracts involves risks such as not receiving payments, not receiving payments in a timely manner or incurring significant damages if certain milestones are not met or not met on schedule. As a result, we could experience a material adverse effect on our business, financial condition, results of operations or prospects.

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by failing to perform under the contract. Upon a termination for convenience, we are generally able to recover the purchase price for delivered items and reimbursement of allowable work-in-processwork‑in‑process costs. If the government terminates a contract with us based upon our default, we generally would be denied any recovery for undelivered work, and instead may be liable for excess costs incurred by the government in procuring undelivered items from an alternative source and other damages as authorized by law. We may in the future receive show-causeshow‑cause or cure notices under contracts that, if not addressed to the government'sgovernment’s satisfaction, could give the government the right to terminate those contracts for default or to cease procuring our services under those contracts.

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with these laws, regulations and permits or that we will be able to obtain or renew all required permits. If we violate or fail to comply with these laws, regulations or permits, we could be fined or otherwise sanctioned by regulators and be subject to lawsuits, civil or criminal,

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with local customs and practices. We cannot provide any assurance that our internal control policies and procedures will always protect us from improper conduct of our employees or business partners.

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escalation of any insurrection or armed conflict may occur; governments may seek to nationalize our assets; or governments may impose or increase investment barriers or other restrictions affecting our business. The emerging markets in which we are active, including China, pose other uncertainties, including the difficulty of enforcing agreements, collecting receivables, protecting of our intellectual property and other assets and pricing of our products appropriately, as well as higher business conduct risks, less qualified talent and risks of political instability. We cannot predict the impact such events might have on our business, financial condition, results of operations or prospects.

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our products and services with a significant competitive advantage because our rights may not be sufficiently broad or may be challenged, invalidated, or subject to government march-inmarch‑in or sovereign rights or compulsory licensing, sunshine laws, or be subject to freedom of information requests, or court-orderedcourt‑ordered public disclosure, or be subject to open-sourceopen‑source software licensing, or be circumvented, independently developed or designed-around,designed‑around, misappropriated, disparaged, diluted, or stolen, particularly in countries where intellectual property rights laws are not highly developed, protected or enforced. Our failure to obtain or maintain intellectual property rights that convey competitive advantage, adequately protect our intellectual property or detect or prevent circumvention or unauthorized use of such property and the cost of enforcing our intellectual property rights could materially adversely impact our business, financial condition, results of operations or prospects.

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arising from any ownership change may prevent utilization of our NOLs prior to their expiration. Future ownership changes or regulatory changes could further limit our ability to utilize our NOLs. To the extent we are not able to offset our future income with our NOLs, this could adversely affect our operating results and cash flows if we attain profitability.

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our decision to repatriate non-U.S. earnings for which we have not previously provided for U.S. taxes;



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2018.

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leverage ratio, on a pro forma basis (in each case, as defined in the agreement governing our senior secured credit facilities), to exceed 4.50 to 1.00, plus up to an additional $100.0 million (excluding incremental revolving credit facilities or increases under our revolving credit facility in an aggregate principal amount not to exceed $30.0 million) (all of which remains available as of September 30, 2017)2018). On November 7, 2017, we used a portion of the proceeds of our initial public offering to repay approximately $104.9 million of indebtedness (including accrued and unpaid interest) under the term loan facility. See also Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources." To the extent that we incur additional indebtedness, the risks that we now face related to our substantial indebtedness could increase.

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even though the amount borrowed may remain the same, and our net income and cash flows will correspondingly decrease. Assuming no prepayments of the term loan facility (which had $896.6$938.2 million outstanding as of September 30, 2017)2018) and that our revolving credit facility was fully drawn, each 0.125% change in interest rates would result in an approximate change of $1.3 million in annual interest expense on the indebtedness under our senior secured credit facilities. OnThe Company entered into an interest rate cap to mitigate the risks associated with variable rate debt effective November 7, 2017, we used28, 2018. The LIBOR interest rate cap has a portionnotional value of the proceeds$600 million, is effective for a period of our initial public offering to repay approximately $104.9 millionthree years and has strike price of indebtedness (including accrued and unpaid interest) under the term loan facility. See also Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

3.5%.

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issuable upon exercise of options and warrants vested as of the expiration of the lock-up period will be eligible for sale at that time. Sales of stock by these stockholdersshareholders could have a material adverse effect on the trading price of our common stock.

        As of November 30, 2017, holders

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are required to report, among other things, control deficiencies that constitute a "material weakness"“material weakness” or changes in internal controls that, or that are reasonably likely to, materially affect internal controls over financial reporting. A "material weakness"“material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

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us to file annual, quarterly and current reports with respect to our business and financial condition within specified time periods and to prepare a proxy statement with respect to our annual meeting of stockholders.shareholders. The Sarbanes-OxleySarbanes‑Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. The NYSE requires that we comply with various corporate governance requirements. To maintain and improve the effectiveness of our disclosure controls and procedures and internal controls over financial reporting and comply with the Exchange Act and NYSE requirements, significant resources and management oversight will be required. This may divert management'smanagement’s attention from other business concerns and lead to significant costs associated with compliance, which could have a material

See Item 3, “Legal Proceedings” for a discussion of the status of certain securities litigation related to our share price volatility.

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what our performance would have been had we operated as a separate stand-alonestand‑alone entity during these periods.