Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 07, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | AquaVenture Holdings Ltd | |
Entity Central Index Key | 1,422,841 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 26,453,039 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and cash equivalents | $ 118,070 | $ 95,334 |
Restricted cash | 166 | 166 |
Trade receivables, net of allowances of $951 and $1,166, respectively | 17,761 | 15,473 |
Inventory | 8,710 | 6,246 |
Prepaid expenses and other current assets | 8,612 | 6,401 |
Total current assets | 153,319 | 123,620 |
Property, plant and equipment, net | 113,908 | 116,092 |
Construction in progress | 10,602 | 9,398 |
Long-term contract costs | 82,061 | 87,512 |
Restricted cash | 4,147 | 5,895 |
Other assets | 41,114 | 44,311 |
Deferred tax asset | 376 | 515 |
Intangible assets, net | 53,919 | 51,330 |
Goodwill | 99,526 | 98,023 |
Total assets | 558,972 | 536,696 |
Current Liabilities: | ||
Accounts payable | 4,533 | 3,880 |
Accrued liabilities | 11,922 | 13,075 |
Current portion of long-term debt | 6,063 | 27,963 |
Deferred revenue | 3,302 | 2,820 |
Total current liabilities | 25,820 | 47,738 |
Long-term debt | 168,983 | 115,753 |
Deferred tax liability | 4,665 | 2,874 |
Other long-term liabilities | 2,414 | 2,825 |
Total liabilities | 201,882 | 169,190 |
Commitments and contingencies (see Note 8) | ||
Shareholders' Equity | ||
Ordinary shares, no par value, 250,000 shares authorized; 26,452 and 26,388 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | ||
Additional paid-in capital | 566,958 | 558,141 |
Accumulated other comprehensive income | (13) | |
Accumulated deficit | (209,855) | (190,635) |
Total shareholders' equity | 357,090 | 367,506 |
Total liabilities and shareholders' equity | $ 558,972 | $ 536,696 |
UNAUDITED CONDENSED CONSOLIDAT3
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Allowances | $ 951 | $ 1,166 |
Common stock par value | $ 0 | $ 0 |
Common stock authorized | 250,000 | 250,000 |
Common stock issued | 26,452 | 26,388 |
Common stock outstanding | 26,452 | 26,388 |
UNAUDITED CONDENSED CONSOLIDAT4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | ||
Revenues: | |||||
Bulk water | $ 14,206 | $ 13,879 | $ 43,238 | $ 40,951 | |
Rental | 13,428 | 12,396 | 39,238 | 36,153 | |
Other | 2,259 | 2,583 | 6,318 | 7,147 | |
Total revenues | 29,893 | 28,858 | 88,794 | 84,251 | |
Cost of revenues: | |||||
Bulk water | 7,904 | 7,683 | 25,903 | 22,976 | |
Rental | 6,083 | 5,256 | 17,508 | 15,989 | |
Other | 1,385 | 1,356 | 3,692 | 3,863 | |
Total cost of revenues | 15,372 | 14,295 | 47,103 | 42,828 | |
Gross profit | 14,521 | 14,563 | 41,691 | 41,423 | |
Selling, general and administrative expenses | 17,734 | 15,112 | 50,964 | 43,264 | |
Loss from operations | (3,213) | (549) | (9,273) | (1,841) | |
Other expense: | |||||
Interest expense, net | (2,055) | (2,802) | (5,574) | (8,231) | |
Other expense, net | (1,453) | (86) | (1,728) | (221) | |
Loss before income tax expense | (6,721) | (3,437) | (16,575) | (10,293) | |
Income tax expense | 846 | 1,275 | 2,645 | 2,633 | |
Net loss | (7,567) | (4,712) | (19,220) | (12,926) | |
Other comprehensive income: | |||||
Foreign currency translation adjustment | (13) | (13) | |||
Comprehensive loss | $ (7,580) | $ (4,712) | $ (19,233) | $ (12,926) | |
Loss per share – basic and diluted | [1] | $ (0.29) | $ (0.73) | ||
Weighted-average shares outstanding – basic and diluted | 26,441 | 26,414 | |||
[1] | Represents loss per share and weighted-average shares outstanding for the period following the Corporate Reorganization and IPO. There were no ordinary shares outstanding prior to October 6, 2016 and, therefore, no loss per share information has been presented for any period prior to that date. |
UNAUDITED CONDENSED CONSOLIDAT5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (Parenthetical) - shares shares in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Oct. 05, 2016 |
Common stock outstanding | 26,452 | 26,388 | |
Ordinary Share Units | |||
Common stock outstanding | 0 |
UNAUDITED CONDENSED CONSOLIDAT6
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (19,220) | $ (12,926) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 23,831 | 22,463 |
Adjustment to asset retirement obligation | 37 | 86 |
Share-based compensation expense | 9,052 | 1,455 |
Provision for bad debts | 450 | 712 |
Deferred income tax provision | 1,930 | 2,216 |
Inventory adjustment | 153 | 142 |
Loss on extinguishment of debt | 1,389 | |
Loss on disposal of assets | 884 | 939 |
Amortization of debt financing fees | 624 | 568 |
Adjustment to acquisition contingent consideration | (51) | |
Accretion of debt | 60 | 271 |
Other | 75 | |
Change in operating assets and liabilities: | ||
Trade receivables | (2,312) | (1,329) |
Inventory | (1,766) | (958) |
Prepaid expenses and other current assets | (1,146) | (1,179) |
Other assets | (2,017) | (1,807) |
Current liabilities | (4) | 359 |
Long-term liabilities | (69) | 855 |
Net cash provided by operating activities | 11,876 | 11,891 |
Cash flows from investing activities: | ||
Capital expenditures | (11,286) | (15,037) |
Long-term contract expenditures | (613) | (1,524) |
Net cash paid for acquisition of assets or business | (9,921) | (100) |
Principal collected on note receivable | 3,350 | |
Other | 22 | 3 |
Net cash used in investing activities | (18,448) | (16,658) |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 150,000 | 23,675 |
Payments of long-term debt | (117,028) | (11,891) |
Payment of debt financing fees | (3,579) | (340) |
Payments related to debt extinguishment | (433) | |
Payment of acquisition contingent consideration | (864) | |
Proceeds from exercise of stock options | 49 | 2 |
Shares withheld to cover minimum tax withholdings on equity awards | (356) | |
Proceeds from the issuance of Employee Stock Purchase Plan shares | 75 | |
Issuance costs from issuance of ordinary shares in IPO | (1,169) | |
Net cash provided by financing activities | 27,559 | 10,582 |
Effect of exchange rates on cash, cash equivalents and restricted cash | 1 | |
Change in cash, cash equivalents and restricted cash | 20,988 | 5,815 |
Cash, cash equivalents and restricted cash at beginning of period | 101,395 | 25,026 |
Cash, cash equivalents and restricted cash at end of period | $ 122,383 | $ 30,841 |
Description of the Business
Description of the Business | 9 Months Ended |
Sep. 30, 2017 | |
Description of the business | |
Description of the business | 1. Description of the Business AquaVenture Holdings Limited is a British Virgin Islands (“BVI”) company, which was formed on June 17, 2016 for the purpose of completing an initial public offering (“IPO”) as the SEC registrant and carrying on the business of AquaVenture Holdings LLC and its subsidiaries. AquaVenture Holdings Limited and its subsidiaries (collectively, “AquaVenture” or the “Company”) provides its customers Water‑as‑a‑Service (“WAAS”) solutions through two operating platforms: Seven Seas Water and Quench. Both operations are critical to AquaVenture, which is headquartered in the BVI. Seven Seas Water offers WAAS solutions by providing outsourced desalination and wastewater treatment services for governmental, municipal, industrial and hospitality customers. These solutions utilize reverse osmosis and other purification technologies to produce potable and high purity industrial process water in high volumes for customers operating in regions with limited access to potable water. Through this outsourced service model, Seven Seas Water assumes responsibility for designing, financing, constructing, operating and maintaining the water treatment facilities. In exchange, Seven Seas Water enters into long‑term agreements to sell to customers agreed‑upon quantities of water that meet specified water quality standards. Seven Seas Water currently operates primarily throughout the Caribbean region and South America and is pursuing new opportunities in North America, South America and other select markets. Seven Seas Water is supported by an operations center in Tampa, Florida, which provides business development, engineering, field service support, procurement and administrative functions. Quench offers WAAS solutions by providing bottleless filtered water coolers and other products that use filtered water as an input, such as ice machines, sparkling water dispensers and coffee brewers, to customers throughout North America. Quench’s point‑of‑use (“POU”) systems purify a customer’s existing water supply. Quench offers solutions to a broad mix of industries, including government, education, medical, manufacturing, retail, and hospitality. Quench installs and maintains its filtered water systems typically under multi‑year contracts that renew automatically. Quench is supported by an operations center in King of Prussia, Pennsylvania, which provides marketing and business development, field service and supply chain support, customer care and administrative functions. Corporate Reorganization Prior to the completion of the IPO on October 12, 2016, the Company and AquaVenture Holdings LLC completed a series of reorganization transactions which are described below: · On July 1, 2016, AquaVenture Holdings LLC contributed all of the stock of its wholly-owned subsidiary, AquaVenture Holdings Curaçao N.V., to AquaVenture Holdings Limited in exchange for 1,000,000 ordinary shares of the Company. · On October 4, 2016, AquaVenture Holdings LLC contributed to AquaVenture Holdings Limited: (i) the stock of Quench USA, Inc. and Seven Seas Water Corporation and (ii) all cash and other remaining assets and liabilities (other than the shares of AquaVenture Holdings Limited it held). Subsequently, AquaVenture Holdings LLC merged with a newly formed subsidiary of AquaVenture Holdings Limited, resulting in each Class A Preferred share, Class B share, Class Q share, Common share, and Management Incentive Plan (“MIP”) share being converted into ordinary shares of AquaVenture Holdings Limited pursuant to the terms of AquaVenture Holdings LLC’s limited liability company agreement. Quench USA Holdings LLC, a member of AquaVenture Holdings LLC, then merged with a separate newly formed subsidiary of AquaVenture Holdings Limited, resulting in the distribution of shares of AquaVenture Holdings Limited to its members pursuant to the terms of Quench USA Holdings LLC’s limited liability company agreement. The reorganization transactions are considered transactions between entities under common control. As a result, the financial statements for periods prior to the IPO and the reorganization transactions are the financial statements of AquaVenture Holdings LLC as the predecessor to the Company for accounting and reporting purposes. Unless otherwise specified, the “Company” refers to the operations of both AquaVenture Holdings Limited and AquaVenture Holdings LLC throughout the remainder of these notes. Initial Public Offering On October 5, 2016, the Company’s IPO was declared effective and on October 12, 2016, the Company completed the IPO of 7,475,000 ordinary shares at a public offering price of $18.00 per share. The Company received net proceeds of $118.8 million, after deducting underwriting discounts and commissions and offering expenses. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Summary of significant accounting policies | |
Summary of significant accounting policies | 2. Summary of Significant Accounting Policies Unless otherwise noted below, there have been no material changes to the accounting policies presented in Note 2—“Summary of Significant Accounting Policies” of the notes to the audited consolidated financial statements, included in Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016. Basis of Presentation The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, certain information and footnotes normally required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016. In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation of the Company’s unaudited condensed consolidated balance sheet as of September 30, 2017, the unaudited condensed consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2017 and 2016 and the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2017 and 2016. The unaudited condensed consolidated balance sheet as of December 31, 2016 was derived from the audited consolidated balance sheet as of December 31, 2016, as presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016. The unaudited condensed consolidated financial statements include the accounts of AquaVenture Holdings Limited and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include: accounting for goodwill and identifiable intangible assets and any related impairment; property, plant and equipment and any related impairment; long‑term contract costs and any related impairment; share‑based compensation; allowance for doubtful accounts; obligations for asset retirement; and deferred income taxes. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates. Adoption of New Accounting Pronouncements In November 2016, the FASB issued authoritative guidance that requires inclusion of cash and cash equivalents that have restrictions on withdrawal or use in total cash and cash equivalents on the statement of cash flows. This guidance will be effective for annual reporting periods beginning on or after December 15, 2017, including interim periods within those annual periods, and early adoption is permitted. The Company has adopted this guidance on January 1, 2017. The Company now presents the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows and no longer presents transfers between cash and cash equivalents and restricted cash and restricted cash investments in the statement of cash flows. Cash, cash equivalents and restricted cash stated in the consolidated unaudited statement of cash flows represent the addition of cash and cash equivalents, restricted cash classified as current and restricted cash classified as non-current line items in the unaudited condensed consolidated balance sheet. The adoption was on a retrospective basis and the unaudited condensed consolidated statement of cash flows for the nine months ended September 30, 2016 has been adjusted to reflect the adoption. The adoption does not have any impact on the unaudited condensed consolidated balance sheet or statement of operations. New Accounting Pronouncements In October 2016, the FASB issued authoritative guidance that requires the recognition of income tax consequences of intercompany asset transfers other than inventory at the transaction date. This guidance will be effective for annual reporting periods beginning on or after December 15, 2017, including interim periods within those annual periods, and early adoption is permitted. The Company is currently evaluating the potential impact of the accounting and disclosure requirements on the consolidated financial statements. The Company expects to finalize its assessment during 2017. In January 2017, the FASB issued authoritative guidance that simplifies the test for goodwill impairment. This guidance will be effective for annual reporting periods beginning on or after December 15, 2019, including interim periods within those annual periods. Early adoption is permitted upon interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company will early adopt this guidance in the fourth quarter of 2017 in conjunction with its annual goodwill impairment testing for 2017. In May 2014, the FASB issued authoritative guidance regarding revenue from contracts with customers that specifies that revenue should be recognized when promised goods or services are transferred to customers in an amount that reflects the consideration which the company expects to be entitled in exchange for those goods or services. This guidance is effective for annual reporting periods beginning on or after December 15, 2017 and interim periods within those annual periods and will require enhanced disclosures. For contracts determined to be service concession contracts, the Company has concluded the revenue recognition for assets constructed under the contract to occur at the time control transfers to the customer for accounting purposes. This revenue recognition pattern varies from the revenue recognition pattern under the current authoritative guidance. While the Company has not quantified the impact of this change as of the date of filing, the adoption may significantly affect the financial results as reported under the current authoritative guidance. The Company does not anticipate any other material changes to the timing of revenue recognition for other contracts with customers except in circumstances where more than one performance obligation exists. For contracts where more than one performance obligation exists, the Company is currently evaluating the potential impact of the accounting and disclosure requirements on the consolidated financial statements. The Company expects to finalize its assessment during the fourth quarter of 2017. The Company will adopt the guidance on a retrospective basis on January 1, 2018. In conjunction with this adoption, the Company will also adopt the authoritative guidance issued in March 2017 regarding the determination of the customer in a service concession arrangement. In February 2016, the FASB issued authoritative guidance regarding leases that requires lessees to recognize a lease liability and right‑of‑use asset for operating leases, with the exception of short‑term leases. In addition, lessor accounting was modified to align, where necessary, with lessee accounting modifications and the authoritative guidance regarding revenue from contracts with customers. This guidance will be effective for annual reporting periods beginning on or after December 15, 2018, including interim periods within those annual periods, and early adoption is permitted. The Company has developed its assessment approach and has begun evaluating the potential impact of the accounting and disclosure requirements on the consolidated financial statements. The Company expects to elect the practical expedients provided for within the authoritative guidance which exempts the Company from having to reassess: (i) whether expired or existing contracts contain leases, (ii) the lease classification for expired or existing leases, and (iii) initial direct costs for existing leases. For lessor accounting, as a result of electing the practical expedients provided, the Company does not anticipate material changes to the accounting for operating leases or sales-type leases that existed at the adoption date. For lessee accounting, the Company expects to recognize a lease liability and right-of-use asset for operating leases with a term of more than 12 months. The Company is |
Business Combinations and Asset
Business Combinations and Asset Acquisitions | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations and Asset Acquisitions | |
Business Combinations and Asset Acquisitions | 3. Business Combinations and Asset Acquisitions Business Combinations Wellsys USA Corporation On September 8, 2017, Quench USA, Inc., a wholly-owned subsidiary of AquaVenture Holdings Limited, acquired substantially all of the assets and assumed certain liabilities of Wellsys USA Corporation (“Wellsys”) pursuant to an asset purchase agreement for an aggregate purchase price of $6.9 million in cash, including a final working capital adjustment of $165 thousand (“Wellsys Acquisition”) which is expected to be received from the escrow agent during the three months ended December 31, 2017. Wellsys is a supplier of high quality branded and private-labeled POU water coolers and purifications systems. Headquartered in the greater Phoenix, Arizona area, Wellsys sells its products to a network of dealers throughout the United States, Canada, Mexico and South Africa. Transaction-related costs incurred by the Company during the three and nine months ended September 30, 2017 were $21 thousand, which were expensed as incurred within selling, general and administrative (“SG&A”) expenses in the unaudited condensed consolidated statements of operations and comprehensive income. The Quench business completed the Wellsys Acquisition to be able to participate more broadly in the global POU market through the Wellsys distribution network. In addition, the acquisition provides an opportunity to develop, source and distribute Quench-exclusive innovative coolers and purification offerings, and to develop relationships with Wellsys dealers that could ultimately lead to potential acquisitions. The following table summarizes the preliminary purchase price allocated to the fair value of assets acquired, including intangibles recorded in conjunction with the business combination, and liabilities assumed (in thousands): Assets acquired: Trade receivables $ 321 Inventory 884 Intangible assets 4,300 Goodwill 1,503 Total assets acquired 7,008 Liabilities assumed: Customer deposits (153) Total liabilities assumed (153) Total purchase price $ 6,855 Due primarily to the timing of the acquisition and the complexities involved with determining fair value of the intangible assets acquired, the Company has not yet completed the valuations of the identified intangibles. The preliminary purchase price allocation has been developed based on preliminary estimates of fair values using the historical financial statements of Wellsys prior to the acquisition along with assumptions made by management. Although the Company does not expect the final allocation to vary significantly, there may be adjustments made to the purchase price allocation that could result in changes to the preliminary fair values allocated, assigned useful lives and associated amortization recorded. Goodwill is composed of synergies not valued, is deductible for tax purposes and is recorded within the Quench reporting unit. The operations of Wellsys are included in the Quench reportable segment after the date of acquisition. The amount of revenues and net income of Wellsys included in the unaudited condensed consolidated statements of operations and comprehensive income since acquisition was $0.4 million and $12 thousand, respectively. Aguas De Bayovar S.A.C. On October 31, 2016, AquaVenture Holdings Peru S.A.C. ("AVH Peru"), a Peruvian company and an indirect wholly-owned subsidiary of AquaVenture Holdings Limited, acquired 100% of the outstanding shares of Aguas de Bayovar S.A.C. (‘‘ADB’’) and all of the rights and obligations under a design and construction contract for a desalination plant and related infrastructure located in Peru for an aggregate purchase price of $46.5 million in cash, including a working capital adjustment of $186 thousand (the “Peru Acquisition”) which was paid in February 2017. The desalination plant and related infrastructure, which was completed in 2010, has a design capacity of 2.7 million gallons per day, and ADB operates and maintains the desalination plant and related infrastructure constructed under the design and construction agreement to produce water for a contracted fee on a take-or-pay basis for a phosphate mining company pursuant to an operating and maintenance contract, which expires in 2037. The rights to the design and construction contract are accounted for as a note receivable that requires monthly installment payments from the customer for the construction of the desalination plant and related infrastructure, which continue until 2024. The operations of ADB are included in the Seven Seas Water reportable segment for the periods after the date of acquisition. Transaction-related costs incurred by the Company during the three and nine months ended September 30, 2016 were $0.4 million and $0.9 million, respectively, and were expensed as incurred within SG&A expenses in the unaudited condensed consolidated statements of operations and comprehensive income. The Seven Seas Water business completed the Peru Acquisition to expand its installed base of seawater reverse osmosis desalination facilities used to provide WAAS, its presence in South America and the industries served. As of September 30, 2017, the purchase price allocated to the fair value of assets acquired, including intangibles recorded in conjunction with the business combination, and liabilities assumed remains preliminary. During the nine months ended September 30, 2017, the Company made certain adjustments to the purchase price allocation for certain liabilities, including tax, that existed prior to October 31, 2016. The Company believes the liabilities are fully indemnified p ursuant to the purchase and sale agreement for the Peru Acquisition. As a result, the Company updated the purchase price allocation as of September 30, 2017 to record a liability in the amount of $0.9 million which was recorded in accrued liabilities and an indemnification receivable in the amount of $0.9 million, which was recorded in prepaids and other assets in the unaudited condensed consolidated balance sheet as of September 30, 2017. Pro Forma Financial Information The following unaudited pro forma financial information (in thousands, except for per share amounts) for the Company gives effect to the acquisitions of ADB and Wellsys, which occurred on October 31, 2016 and September 8, 2017, respectively, as if they had occurred on January 1, 2016. These unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations that actually would have resulted had the acquisitions occurred on the date indicated, or that may result in the future. Three months ended Nine months ended September 30, September 30, 2017 2016 2017 2016 Revenues $ 31,077 $ 31,300 $ 93,530 $ 90,848 Net loss $ (7,410) $ (3,502) $ (18,593) $ (9,282) Loss per share(1) $ (0.28) $ (0.70) (1) Represents loss per share for the period following the Corporate Reorganization and IPO. There were no ordinary shares outstanding prior to October 6, 2016 and, therefore, no loss per share information has been presented for any period prior to that date. Asset Acquisitions Pure Water Innovations, Inc. On June 1, 2017, Quench USA, Inc., a wholly-owned subsidiary of AquaVenture Holdings Limited, acquired substantially all of the assets of Pure Water Innovations, Inc. (“PWI”) pursuant to an asset purchase agreement. The revenues and related expenses from the acquired in-place lease agreements will be included in the Quench reportable segment after the date of acquisition. As the acquisition of PWI did not meet the definition of a business combination, the Company accounted for the transaction as an asset acquisition. In an asset acquisition, goodwill is not recognized, but rather any excess consideration transferred over the fair value of the net assets acquired is allocated on a relative fair value basis to the identifiable net assets. In addition, transaction-related expenses are capitalized and allocated to the net assets acquired on a relative fair value basis. The following table summarizes the amounts allocated to the fair value of net assets acquired (in thousands): Trade receivables $ 31 Property, plant and equipment 325 Customer relationships 1,690 Deferred revenue (28) Accrued liabilities (12) Net assets acquired $ 2,006 The assets in the initial purchase price allocation are stated at fair value based on estimates of fair value using available information and making assumptions management believes are reasonable. The customer relationships were valued using an excess earnings approach which is based on the present value of expected cash flows generated by the revenues under the contract with the customer. The weighted average useful life of the acquired customer relationships is approximately 12 years from the date of acquisition. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Measurements | |
Fair Value Measurements | 4. Fair Value Measurements At September 30, 2017 and December 31, 2016, the Company had the following assets and liabilities measured at fair value on a recurring basis in the unaudited condensed consolidated balance sheets: · U.S. Treasury securities are measured on a recurring basis and are recorded at fair value based on quoted market value in an active market, which is considered a Level 1 input. · Money market funds are measured on a recurring basis and are recorded at fair value based on each fund’s quoted market value per share in an active market, which is considered a Level 1 input. There were no transfers into or out of Level 1, 2 or 3 assets during the three or nine months ended September 30, 2017. Transfers between levels are deemed to have occurred if the lowest level of input were to change. The Company’s fair value measurements as of September 30, 2017 and December 31, 2016 were as follows (in thousands): Quoted Prices in Significant Active Markets Other Significant Asset/ for Identical Observable Unobservable Assets/Liabilities Measured at Fair Value (Liability) Assets (Level 1) Inputs (Level 2) Inputs (Level 3) As of September 30, 2017 Recurring basis: Money market funds $ 13,571 $ 13,571 $ — $ — U.S. Treasury securities $ 83,791 $ 83,791 $ — $ — As of December 31, 2016 Recurring basis: Money market funds $ 29,523 $ 29,523 $ — $ — U.S. Treasury securities $ 24,777 $ 24,777 $ — $ — |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2017 | |
Long-term Debt | |
Long-Term Debt | 5. Long-Term Debt As of September 30, 2017 and December 31, 2016, long‑term debt included the following (in thousands): September 30, December 31, 2017 2016 Corporate Credit Agreement $ 150,000 $ — BVI Loan Agreement 27,076 31,432 Vehicle financing 1,513 1,783 Trinidad Credit Agreement — 24,071 USVI Credit Agreement — 12,923 Quench Loan Agreement — 40,000 Curaçao Credit Facility — 35,000 Total face value of long-term debt $ 178,589 $ 145,209 Face value of long-term debt, current $ 6,063 $ 27,963 Less: Current portion of unamortized debt discounts and deferred financing fees — — Current portion of long-term debt, net of debt discounts and deferred financing fees $ 6,063 $ 27,963 Face value of long-term debt, non-current $ 172,526 $ 117,246 Less: Non-current portion of unamortized debt discounts and deferred financing fees (3,543) (1,493) Long-term debt, net of debt discounts and deferred financing fees $ 168,983 $ 115,753 Corporate Credit Agreement The Corporate Credit Agreement is guaranteed by the Company along with certain subsidiaries and contains financial and nonfinancial covenants. The financial covenants include minimum interest coverage ratio and maximum leverage ratio requirements as defined in the Corporate Credit Agreement, and are calculated using consolidated Company financial information excluding the results of AquaVenture (BVI) Holdings Limited and its subsidiary Seven Seas Water (BVI) Limited. In addition, the Corporate Credit Agreement contains customary negative covenants limiting, among other things, indebtedness, investments, liens, dispositions of assets, restricted payments (including dividends), transactions with affiliates, prepayments of indebtedness, capital expenditures, changes in nature of business and amendments to documents. The Company was in compliance with, or received waivers for breaches of, all such covenants as of September 30, 2017. The Company may prepay, in whole or in part, the outstanding principal and accrued unpaid interest under the Corporate Credit Agreement. A prepayment fee is due upon repayment if it occurs prior to August 4, 2018. The Corporate Credit Agreement is collateralized by certain of the assets of the Borrowers and stated guarantors. On August 4, 2017, the Company utilized approximately $100 million of the proceeds from the Corporate Credit Agreement to repay in full the outstanding principal on the following debt obligations: o An Amended and Restated Credit Agreement, dated April 18, 2016 (as amended, restated, or modified or supplemented from time to time), between a bank and Seven Seas Water (Trinidad) Unlimited, an indirect wholly-owned subsidiary of the Company (“Trinidad Credit Agreement”); o A Credit Agreement, dated March 27, 2013 (as amended, restated, amended and restated, or modified or supplemented from time to time), among two banks and Seven Seas Water (USVI), an indirect wholly-owned subsidiary of the Company (“USVI Credit Agreement”); o A Loan and Security agreement, dated October 7, 2011 (as amended, restated, amended and restated, or modified or supplemented from time to time), between a lender and Quench USA, Inc. (“Quench Loan Agreement”); and o A Credit Agreement, dated June 18, 2015 (as amended, restated, amended and restated, or modified or supplemented from time to time), among a bank, the Company, Aqua Venture Holdings Curaçao N.V., a wholly-owned subsidiary of the Company, Seven Seas Water Corporation, a wholly-owned subsidiary of the Company and AquaVenture Capital Limited, an indirect wholly-owned subsidiary of the Company (“Curaçao Credit Facility”). The Company recorded a loss on debt extinguishment of $1.4 million during the three months ended September 30, 2017 related to prepayment fees, breakage costs and accelerated amortization of debt financing fees, which was recorded in other expense within the unaudited consolidated statement of operations and comprehensive income. BVI Loan Agreement On August 4, 2017, Seven Seas Water (BVI) Ltd., an indirect wholly owned subsidiary of the Company, amended the credit facility between Seven Seas Water (BVI) Ltd. and a bank (“BVI Loan Agreement”) to extend the amortization to May 2022 and reduce the spread applied to the LIBOR base rate used in the calculation of interest by 50 basis points to LIBOR plus 3.0% per annum. The United Kingdom Export Finance also extended its participation in the project to match the extended term of the amended BVI Loan Agreement. All other material terms of the original loan agreement remained unchanged. As of September 30, 2017, the weighted‑average interest rate was 4.3%. Maturities of Long ‑ Term Debt Maturities of long ‑ term debt were as follows as of September 30, 2017 (in thousands): Amount Due Remainder of 2017 $ 1,217 2018 6,409 2019 6,018 2020 6,073 2021 156,037 2022 and thereafter 2,835 Total face value of long-term debt $ 178,589 |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Share-based Compensation | |
Share-Based Compensation | 6. Share‑Based Compensation AquaVenture Equity Awards As described in Note 1—“Description of the Business”, the Company completed a reorganization on October 4, 2016, which resulted in the conversion, pursuant to the terms of AquaVenture Holdings LLC’s limited liability agreement, of all outstanding equity awards of AquaVenture Holdings LLC to equity awards of AquaVenture Holdings Limited, with the underlying security being ordinary shares of AquaVenture Holdings Limited. The conversion retained the same economics of each of the outstanding equity awards. All other terms, including vesting, remained unchanged. The Quench USA Holdings LLC 2014 Equity Incentive Plan and Quench USA, Inc. 2008 Stock Plan (collectively, the “Quench Equity Plans”) were assumed by AquaVenture Holdings Limited on October 4, 2016. All outstanding awards of the Quench Equity Plans were converted to equity awards of AquaVenture Holdings Limited, with the underlying security being ordinary shares of AquaVenture Holdings Limited. Consistent with the effects of the conversion on the AquaVenture Holding LLC equity awards, economics for each outstanding award were retained and all terms, including vesting, remained unchanged. I ssuances of securities under the AquaVenture Holdings LLC Amended and Restated Equity Incentive Plan and the Quench Equity Plans ceased at the time of the effectiveness of the IPO on October 5, 2016. As a result, no securities remain available for issuance under these plans . On September 22, 2016, the Company approved and adopted the AquaVenture Holdings Limited 2016 Share Option and Incentive Plan (the “2016 Plan”), which allows for the issuance of incentive share options, non-qualified share options, share appreciation rights, restricted share units, restricted share awards, unrestricted share awards, cash-based awards, performance share awards and dividend equivalent rights to officers, employees, managers, directors and other key persons, including consultants to the Company. The aggregate number of ordinary shares initially available for issuance, subject to adjustment upon a change in capitalization, under the 2016 Plan was 5.0 million shares. The shares available for issuance will increase annually by 4% of the number of ordinary shares issued and outstanding on the immediately preceding December 31. As of January 1, 2017, the number of ordinary shares available for issuance under the 2016 Plan is 6.1 million shares. During the nine months ended September 30, 2017, the Company granted options to purchase 62 thousand ordinary shares to eligible recipients at a weighted average exercise price of $16.48 per share. The options to purchase ordinary shares have a time-based vesting schedule of four years with 25% on the first anniversary and the remaining 75% vesting quarterly over the remaining three years. In addition, the Company granted 57 thousand restricted share units during the nine months ended September 30, 2017. Certain of the restricted share units were granted to the Company’s board of directors and have time-based vesting schedule of one year from the date of grant. All other restricted share units have a time-based vesting schedule of four years with 25% on the first anniversary and the remaining 75% vesting quarterly over the remaining three years. The fair market value of restricted share units is determined based on the closing share price of the Company’s ordinary shares on the date of grant, and is amortized on a straight-line basis over the requisite service period. Employee Stock Purchase Plan Under the 2016 Employee Stock Purchase Plan (“2016 ESPP”), the Company offers eligible employee participants to purchase the Company’s ordinary shares at a price equal to the lesser of 85 percent of the closing market price on the first or last day of an established offering period. Under the 2016 ESPP, 6 thousand shares were sold to eligible employees during the three and nine months ended September 30, 2017. Share-based compensation expense is recognized based on the fair value of the employees’ purchase rights under the 2016 ESPP and is amortized on a straight-line basis over the offering period. At September 30, 2017, 0.4 million ordinary shares were available for future issuance under the 2016 ESPP. Independent Directors’ Deferred Compensation Program Under the Independent Directors' Deferred Compensation Program (the "Deferred Compensation Program") which was established under the Issuer's 2016 Plan, eligible members of the Company’s board of directors (“Eligible Directors”) are able to defer all or a portion of the cash compensation or equity awards which they are due in the form of phantom share units. Each phantom share unit is the economic equivalent of one ordinary share of the Company. The number of phantom share units credited to the Eligible Director’s deferred account is equal to 120% of the aggregate deferred cash fees that would otherwise be payable on such date divided by the closing price of the Company’s ordinary shares on the award date. No other premium is given to the directors for deferral of their equity awards. Phantom share units shall be settled in ordinary shares upon the earlier of the Eligible Director’s death, disability, separation from the board, sale event, or end of the first full fiscal year after the grant date. The phantom share units issued in lieu of the cash retainers have no vesting period and cannot be forfeited. The phantom share units issued in lieu of the restricted units will have a stated vesting period but will then have a deferred delivery once vested. Share-based compensation expense for the phantom share units issued in lieu of the cash retainers will be recognized on the date of grant, while share-based compensation expense for the phantom share units issued in lieu of the restricted units will be recognized over the requisite service period. During the nine months ended September 30, 2017, the Company granted 3 thousand phantom shares to Eligible Directors. At September 30, 2017, 3 thousand phantom shares remained outstanding. Share‑Based Compensation Expense Total share‑based compensation expense recognized during the three months ended September 30, 2017 and 2016 was $3.1 million and $0.4 million, respectively. For the three months ended September 30, 2017, $3.0 million and $0.1 million were recorded in SG&A and cost of revenues, respectively, within the unaudited condensed consolidated statements of operations and comprehensive income. For the three months ended September 30, 2016, $0.4 million and $0 were recorded in SG&A and cost of revenues, respectively, within the unaudited condensed consolidated statements of operations and comprehensive income. Total share‑based compensation expense recognized during the nine months ended September 30, 2017 and 2016 was $9.1 million and $1.5 million, respectively. For the nine months ended September 30, 2017, $8.8 million and $0.3 million were recorded in SG&A and cost of revenues, respectively, within the unaudited condensed consolidated statements of operations and comprehensive income. For the nine months ended September 30, 2016, $1.5 million and $0 were recorded in SG&A and cost of revenues, respectively, within the unaudited condensed consolidated statements of operations and comprehensive income. There was no related tax benefit for the three or nine months ended September 30, 2017 and 2016 as a full deferred tax asset valuation allowance was recorded in the United States for domestic operations. |
Loss per Share
Loss per Share | 9 Months Ended |
Sep. 30, 2017 | |
Loss per Share | |
Loss per Share | 7. Loss per Share Basic earnings (loss) per share is computed by dividing net earnings (loss) attributable to ordinary shareholders for the period by the weighted-average number of ordinary shares outstanding during the same period. Basic weighted-average shares outstanding excludes unvested shares of restricted share awards. Diluted earnings (loss) per share is computed by dividing net earnings (loss) attributable to ordinary shareholders for the period by the weighted-average number of ordinary shares outstanding adjusted to give effect to potentially dilutive securities using the treasury stock method, except where the effect of including the effect of such securities would be anti-dilutive. There were no ordinary shares outstanding prior to October 6, 2016, therefore no loss per share information has been presented for any period prior to that date. The following table provides information for calculating net loss applicable to ordinary shareholders (in thousands, except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2017 2017 Numerator: Net loss $ (7,567) $ (19,220) Denominator: Weighted-average ordinary shares outstanding - basic and diluted 26,441 26,414 Loss per share - basic and diluted $ (0.29) $ (0.73) Given that the Company had a net loss for the three and nine months ended September 30, 2017, the calculation of diluted loss per share is computed using basic weighted average ordinary shares outstanding. Approximately 3.9 million weighted-average outstanding share awards for both the three and nine months ended September 30, 2017 were excluded from the calculation of diluted earnings per share because their effect was antidilutive. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure | |
Commitments and Contingencies | 8. Commitments and Contingencies Asset Retirement Obligations Asset retirement obligation (“ARO”) liabilities, which arise from contractual requirements to perform certain asset retirement activities and is generally recorded when the asset is constructed, is based on the Company’s engineering estimates of future costs to dismantle and remove equipment from a customer’s plant site and to restore the site to a specified condition at the conclusion of a contract. As appropriate, the Company revises certain of its liabilities based on changes in the projected costs for future removal and shipping activities. These revisions, along with accretion expense, are included in cost of revenues in the unaudited condensed consolidated statement of operations. During the three months ended September 30, 2017 and 2016, the Company recorded accretion expense of $13 thousand and $12 thousand, respectively. During the nine months ended September 30, 2017 and 2016, the Company recorded accretion expense of $37 thousand and $31 thousand, respectively. No valuation adjustments were recorded during the three or nine months ended September 30, 2017. During the three months ended September 30, 2016, certain of the Company’s existing contracts were extended. As a result, the Company recorded a gain of $55 thousand during both the three and nine months ended September 30, 2016 for the revaluation of the ARO based on changes in the projected costs for future removal and shipping activities. At September 30, 2017 and December 31, 2016, the current portion of the ARO liabilities was $26 thousand and $0, respectively, and was recorded in accrued liabilities in the unaudited condensed consolidated balance sheets. At September 30, 2017 and December 31, 2016, the long‑term portion of the ARO liabilities was $1.1 million and $1.1 million, respectively, and was recorded in other long‑term liabilities in the unaudited condensed consolidated balance sheets. Litigation, Claims and Administrative Matters The Company, may, from time to time, be a party to legal proceedings, claims, and administrative matters that arise in the normal course of business. The Company has made accruals with respect to certain of these matters, where appropriate, that are reflected in the unaudited condensed consolidated financial statements but are not, individually or in the aggregate, considered material. For other matters for which an accrual has not been made, the Company has not yet determined that a loss is probable or the amount of loss cannot be reasonably estimated. While the ultimate outcome of the matters cannot be determined, the Company currently does not expect that these proceedings and claims, individually or in the aggregate, will have a material effect on the unaudited condensed consolidated financial position, results of operations, or cash flows. The outcome of any litigation is inherently uncertain, however, and if decided adversely to the Company, or if the Company determines that settlement of particular litigation is appropriate, the Company may be subject to liability that could have a material adverse effect on the unaudited condensed consolidated financial position, results of operations, or cash flows. The Company maintains liability insurance in such amounts and with such coverage and deductibles as management believes is reasonable. The principal liability risks that the Company insures against are customer lawsuits caused by damage or nonperformance, workers’ compensation, personal injury, bodily injury, property damage, directors’ and officers’ liability, cybersecurity and cyber incidents, errors and omissions, employment practices liability and fidelity losses. There can be no assurance that the Company’s liability insurance will cover all events or that the limits of coverage will be sufficient to fully cover all liabilities. As of September 30, 2017, the Company has determined there are no matters for which a material loss is reasonably possible or the Company has either determined that the range of loss is not reasonably estimable or that any reasonably estimable range of loss is not material to the unaudited condensed consolidated financial statements. |
Cash Flow Information
Cash Flow Information | 9 Months Ended |
Sep. 30, 2017 | |
Cash Flow Information | |
Cash Flow Information | 9. Cash Flow Information Supplemental cash flow information is as follows (in thousands): Nine Months Ended September 30, 2017 2016 Cash paid during the period: Income taxes, net $ 1,138 $ 71 Interest, net $ 8,381 $ 7,500 Non-Cash Transaction Information: Non-cash capital expenditures $ 611 $ 1,078 Unpaid offering costs $ — $ 1,113 Unpaid debt financing costs $ 111 $ — The components of total ending cash for the periods presented in the unaudited condensed consolidated statement of cash flows are as follows (in thousands): As of September 30, 2017 2016 Cash and cash equivalents $ 118,070 $ 25,000 Restricted cash, current 166 283 Restricted cash, non-current 4,147 5,558 $ 122,383 $ 30,841 |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting | |
Segment Reporting | 10. Segment Reporting The Company has two operating and reportable segments, Seven Seas Water and Quench. This determination is supported by, among other factors, the existence of individuals responsible for the operations of each segment and who also report directly to the Company’s chief operating decision maker (“CODM”), the nature of the segment’s operations and information presented to the Company’s CODM. Seven Seas Water provides outsourced desalination solutions and wastewater treatment for governmental, municipal, industrial and hospitality customers internationally under long‑term contracts. Quench provides bottleless filtered water coolers and other products that use filtered water as an input, such as ice machines, sparkling water dispensers and coffee brewers, to customers throughout North America, typically under multi‑year contracts. Revenues reported under the Seven Seas Water reportable segment primarily represent bulk water sales and service, including revenues generated from service concession arrangements, whereas revenues reported under the Quench reportable segment primarily represent rental of filtered water and related systems. Prior to January 1, 2017, the Company included the majority of certain general and administrative costs, primarily professional service and other expenses to support the activities of the registrant holding company, within the Seven Seas reportable segment. Beginning January 1, 2017, the Company began separating “Corporate and Other” for the CODM and for segment reporting purposes. The Corporate and Other administration function is not treated as a segment but includes certain general and administrative costs that are not allocated to either of the reportable segments. These costs include, but are not limited to, professional service and other expenses to support the activities of the registrant holding company. Corporate and Other does not include any labor allocations from the Seven Seas Water and Quench segments. The Company believes this presentation more accurately portrays the results of the core operations of each of the operating and reportable segments to the CODM. As a result of this change, the Company has restated prior periods for segment reporting purposes. As part of the segment reconciliation below, intercompany interest expense and the associated intercompany interest income are included but are eliminated in consolidation. The following table provides information by reportable segment and a reconciliation to the consolidated results for the three months ended September 30, 2017 and 2016 (in thousands): Three Months Ended September 30, 2017 Three Months Ended September 30, 2016 Seven Seas Corporate Seven Seas Corporate Water Quench & Other Total Water Quench & Other Total Revenues: Bulk water $ 14,206 $ — $ — $ 14,206 $ 13,879 $ — $ — $ 13,879 Rental — 13,428 — 13,428 — 12,396 — 12,396 Other — 2,259 — 2,259 — 2,583 — 2,583 Total revenues 14,206 15,687 — 29,893 13,879 14,979 — 28,858 Gross profit: Bulk water 6,302 — — 6,302 6,196 — — 6,196 Rental — 7,345 — 7,345 — 7,140 — 7,140 Other — 874 — 874 — 1,227 — 1,227 Total gross profit 6,302 8,219 — 14,521 6,196 8,367 — 14,563 Selling, general and administrative expenses 6,607 9,828 1,299 17,734 4,962 9,602 548 15,112 Income (loss) from operations (305) (1,609) (1,299) (3,213) 1,234 (1,235) (548) (549) Other (expense) income, net (1,764) (1,359) (385) (3,508) (1,896) (1,027) 35 (2,888) Loss before income tax expense (2,069) (2,968) (1,684) (6,721) (662) (2,262) (513) (3,437) Income tax expense 790 56 — 846 1,275 — — 1,275 Net loss $ (2,859) $ (3,024) $ (1,684) $ (7,567) $ (1,937) $ (2,262) $ (513) $ (4,712) Other information: Depreciation and amortization expense $ 4,278 $ 3,856 $ — $ 8,134 $ 4,183 $ 3,519 $ — $ 7,702 Interest expense (income), net $ 880 $ 790 $ 385 $ 2,055 $ 1,806 $ 1,027 $ (31) $ 2,802 Loss on extinguishment of debt $ 820 $ 569 $ — $ 1,389 $ — $ — $ — $ — Expenditures for long-lived assets $ 1,108 $ 3,135 $ — $ 4,243 $ 1,810 $ 3,104 $ — $ 4,914 Amortization of deferred financing fees $ 93 $ 37 $ 79 $ 209 $ 150 $ 47 $ — $ 197 The following table provides information by reportable segment and a reconciliation to the consolidated results for the nine months ended September 30, 2017 and 2016 (in thousands): Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016 Seven Seas Corporate Seven Seas Corporate Water Quench & Other Total Water Quench & Other Total Revenues: Bulk water $ 43,238 $ — $ — $ 43,238 $ 40,951 $ — $ — $ 40,951 Rental — 39,238 — 39,238 — 36,153 — 36,153 Other — 6,318 — 6,318 — 7,147 — 7,147 Total revenues 43,238 45,556 — 88,794 40,951 43,300 — 84,251 Gross profit: Bulk water 17,335 — — 17,335 17,975 — — 17,975 Rental — 21,730 — 21,730 — 20,164 — 20,164 Other — 2,626 — 2,626 — 3,284 — 3,284 Total gross profit 17,335 24,356 — 41,691 17,975 23,448 — 41,423 Selling, general and administrative expenses 18,692 28,988 3,284 50,964 14,003 27,718 1,543 43,264 Income (loss) from operations (1,357) (4,632) (3,284) (9,273) 3,972 (4,270) (1,543) (1,841) Other (expense) income, net (4,139) (3,395) 232 (7,302) (5,428) (3,065) 41 (8,452) Loss before income tax expense (5,496) (8,027) (3,052) (16,575) (1,456) (7,335) (1,502) (10,293) Income tax expense 2,424 221 — 2,645 2,633 — — 2,633 Net loss $ (7,920) $ (8,248) $ (3,052) $ (19,220) $ (4,089) $ (7,335) $ (1,502) $ (12,926) Other information: Depreciation and amortization expense $ 12,771 $ 11,060 $ — $ 23,831 $ 12,271 $ 10,192 $ — $ 22,463 Interest expense (income), net $ 2,980 $ 2,826 $ (232) $ 5,574 $ 5,197 $ 3,065 $ (31) $ 8,231 Loss on extinguishment of debt $ 820 $ 569 $ — $ 1,389 $ — $ — $ — $ — Expenditures for long-lived assets $ 2,810 $ 9,089 $ — $ 11,899 $ 7,697 $ 8,864 $ — $ 16,561 Amortization of deferred financing fees $ 363 $ 182 $ 79 $ 624 $ 455 $ 113 $ — $ 568 As of September 30, 2017, total assets for the Seven Seas Water and Quench reportable segments were $259.0 million and $204.4 million, respectively. As of December 31, 2016, total assets for the Seven Seas Water and Quench reportable segments were $274.2 million and $193.4 million, respectively. As of September 30, 2017 and December 31, 2016, total assets for Corporate and Other were $95.6 million and $69.0 million, respectively. |
Significant Concentrations, Ris
Significant Concentrations, Risks and Uncertainties | 9 Months Ended |
Sep. 30, 2017 | |
Significant Concentrations, Risks and Uncertainties | |
Significant Concentrations, Risks and Uncertainties | 11. Significant Concentrations, Risks and Uncertainties The Company is exposed to interest rate risk resulting from its variable rate loans outstanding that adjust with movements in LIBOR or the lending bank’s prime lending rate. For the three and nine months ended September 30, 2017, a significant portion of the Company’s revenues were derived from territories and countries in the Caribbean region. Demand for water in the Caribbean region is impacted by, among other things, levels of rainfall, natural disasters or other catastrophic events, tourism industry and demand from our industrial clients. Destruction caused by tropical storms and hurricanes, high levels of rainfall, downturn in the level of tourism and demand for real estate could all adversely impact the future performance of the Company as well as cause delays in collections from the Company’s customers. At September 30, 2017, a significant portion of the Company’s property, plant and equipment is located in the Caribbean region. The Caribbean islands are situated in a geography where tropical storms and hurricanes occur with regularity, especially during certain times of the year. The Company designs its plant facilities to withstand such conditions; however, a major storm could result in plant damage or periods of reduced consumption or unavailability of electricity or source seawater needed to produce water in one or more of our locations. It is the Company’s policy to maintain adequate levels of property and casualty insurance; however, the Company only insures one plant for wind. The operation of desalination plants requires significant amounts of electricity which typically is provided by the local utility of the jurisdiction in which the plant is located. A shortage of electricity supply caused by force majeure or material increases in electricity costs could adversely impact the Company’s operating results. To mitigate the risk of electricity cost increases, the Company has generally contracted with major customers for those cost increases to be borne by the customers and has invested in energy efficient technology. Management believes that rising energy costs and availability of its supply of electricity would not have a material adverse effect on its future performance. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Summary of significant accounting policies | |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, certain information and footnotes normally required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016. In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation of the Company’s unaudited condensed consolidated balance sheet as of September 30, 2017, the unaudited condensed consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2017 and 2016 and the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2017 and 2016. The unaudited condensed consolidated balance sheet as of December 31, 2016 was derived from the audited consolidated balance sheet as of December 31, 2016, as presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016. The unaudited condensed consolidated financial statements include the accounts of AquaVenture Holdings Limited and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include: accounting for goodwill and identifiable intangible assets and any related impairment; property, plant and equipment and any related impairment; long‑term contract costs and any related impairment; share‑based compensation; allowance for doubtful accounts; obligations for asset retirement; and deferred income taxes. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates. |
Business Combinations and Ass19
Business Combinations and Asset Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Business Combination, Separately Recognized Transactions [Line Items] | |
Pro Forma Financial Information | Three months ended Nine months ended September 30, September 30, 2017 2016 2017 2016 Revenues $ 31,077 $ 31,300 $ 93,530 $ 90,848 Net loss $ (7,410) $ (3,502) $ (18,593) $ (9,282) Loss per share(1) $ (0.28) $ (0.70) |
Wellsys | |
Business Combination, Separately Recognized Transactions [Line Items] | |
Schedule of business combination preliminary purchase price allocation | The following table summarizes the preliminary purchase price allocated to the fair value of assets acquired, including intangibles recorded in conjunction with the business combination, and liabilities assumed (in thousands): Assets acquired: Trade receivables $ 321 Inventory 884 Intangible assets 4,300 Goodwill 1,503 Total assets acquired 7,008 Liabilities assumed: Customer deposits (153) Total liabilities assumed (153) Total purchase price $ 6,855 |
Quench USA Holdings LLC | |
Business Combination, Separately Recognized Transactions [Line Items] | |
Schedule of business combination preliminary purchase price allocation | The following table summarizes the amounts allocated to the fair value of net assets acquired (in thousands): Trade receivables $ 31 Property, plant and equipment 325 Customer relationships 1,690 Deferred revenue (28) Accrued liabilities (12) Net assets acquired $ 2,006 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Measurements | |
Schedule of fair value measurements | The Company’s fair value measurements as of September 30, 2017 and December 31, 2016 were as follows (in thousands): Quoted Prices in Significant Active Markets Other Significant Asset/ for Identical Observable Unobservable Assets/Liabilities Measured at Fair Value (Liability) Assets (Level 1) Inputs (Level 2) Inputs (Level 3) As of September 30, 2017 Recurring basis: Money market funds $ 13,571 $ 13,571 $ — $ — U.S. Treasury securities $ 83,791 $ 83,791 $ — $ — As of December 31, 2016 Recurring basis: Money market funds $ 29,523 $ 29,523 $ — $ — U.S. Treasury securities $ 24,777 $ 24,777 $ — $ — |
Long-term Debt (Tables)
Long-term Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Long-term Debt | |
Schedule of long-term debt | September 30, December 31, 2017 2016 Corporate Credit Agreement $ 150,000 $ — BVI Loan Agreement 27,076 31,432 Vehicle financing 1,513 1,783 Trinidad Credit Agreement — 24,071 USVI Credit Agreement — 12,923 Quench Loan Agreement — 40,000 Curaçao Credit Facility — 35,000 Total face value of long-term debt $ 178,589 $ 145,209 Face value of long-term debt, current $ 6,063 $ 27,963 Less: Current portion of unamortized debt discounts and deferred financing fees — — Current portion of long-term debt, net of debt discounts and deferred financing fees $ 6,063 $ 27,963 Face value of long-term debt, non-current $ 172,526 $ 117,246 Less: Non-current portion of unamortized debt discounts and deferred financing fees (3,543) (1,493) Long-term debt, net of debt discounts and deferred financing fees $ 168,983 $ 115,753 |
Schedule of maturities of long-term debt | Maturities of long ‑ term debt were as follows as of September 30, 2017 (in thousands): Amount Due Remainder of 2017 $ 1,217 2018 6,409 2019 6,018 2020 6,073 2021 156,037 2022 and thereafter 2,835 Total face value of long-term debt $ 178,589 |
Loss per Share (Tables)
Loss per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Loss per Share | |
Schedule of net loss per share | The following table provides information for calculating net loss applicable to ordinary shareholders (in thousands, except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2017 2017 Numerator: Net loss $ (7,567) $ (19,220) Denominator: Weighted-average ordinary shares outstanding - basic and diluted 26,441 26,414 Loss per share - basic and diluted $ (0.29) $ (0.73) |
Cash Flow Information (Tables)
Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Cash Flow Information | |
Supplemental cash flow information | Supplemental cash flow information is as follows (in thousands): Nine Months Ended September 30, 2017 2016 Cash paid during the period: Income taxes, net $ 1,138 $ 71 Interest, net $ 8,381 $ 7,500 Non-Cash Transaction Information: Non-cash capital expenditures $ 611 $ 1,078 Unpaid offering costs $ — $ 1,113 Unpaid debt financing costs $ 111 $ — The components of total ending cash for the periods presented in the unaudited condensed consolidated statement of cash flows are as follows (in thousands): As of September 30, 2017 2016 Cash and cash equivalents $ 118,070 $ 25,000 Restricted cash, current 166 283 Restricted cash, non-current 4,147 5,558 $ 122,383 $ 30,841 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting | |
Schedule of information by reportable segment | The following table provides information by reportable segment and a reconciliation to the consolidated results for the three months ended September 30, 2017 and 2016 (in thousands): Three Months Ended September 30, 2017 Three Months Ended September 30, 2016 Seven Seas Corporate Seven Seas Corporate Water Quench & Other Total Water Quench & Other Total Revenues: Bulk water $ 14,206 $ — $ — $ 14,206 $ 13,879 $ — $ — $ 13,879 Rental — 13,428 — 13,428 — 12,396 — 12,396 Other — 2,259 — 2,259 — 2,583 — 2,583 Total revenues 14,206 15,687 — 29,893 13,879 14,979 — 28,858 Gross profit: Bulk water 6,302 — — 6,302 6,196 — — 6,196 Rental — 7,345 — 7,345 — 7,140 — 7,140 Other — 874 — 874 — 1,227 — 1,227 Total gross profit 6,302 8,219 — 14,521 6,196 8,367 — 14,563 Selling, general and administrative expenses 6,607 9,828 1,299 17,734 4,962 9,602 548 15,112 Income (loss) from operations (305) (1,609) (1,299) (3,213) 1,234 (1,235) (548) (549) Other (expense) income, net (1,764) (1,359) (385) (3,508) (1,896) (1,027) 35 (2,888) Loss before income tax expense (2,069) (2,968) (1,684) (6,721) (662) (2,262) (513) (3,437) Income tax expense 790 56 — 846 1,275 — — 1,275 Net loss $ (2,859) $ (3,024) $ (1,684) $ (7,567) $ (1,937) $ (2,262) $ (513) $ (4,712) Other information: Depreciation and amortization expense $ 4,278 $ 3,856 $ — $ 8,134 $ 4,183 $ 3,519 $ — $ 7,702 Interest expense (income), net $ 880 $ 790 $ 385 $ 2,055 $ 1,806 $ 1,027 $ (31) $ 2,802 Loss on extinguishment of debt $ 820 $ 569 $ — $ 1,389 $ — $ — $ — $ — Expenditures for long-lived assets $ 1,108 $ 3,135 $ — $ 4,243 $ 1,810 $ 3,104 $ — $ 4,914 Amortization of deferred financing fees $ 93 $ 37 $ 79 $ 209 $ 150 $ 47 $ — $ 197 The following table provides information by reportable segment and a reconciliation to the consolidated results for the nine months ended September 30, 2017 and 2016 (in thousands): Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016 Seven Seas Corporate Seven Seas Corporate Water Quench & Other Total Water Quench & Other Total Revenues: Bulk water $ 43,238 $ — $ — $ 43,238 $ 40,951 $ — $ — $ 40,951 Rental — 39,238 — 39,238 — 36,153 — 36,153 Other — 6,318 — 6,318 — 7,147 — 7,147 Total revenues 43,238 45,556 — 88,794 40,951 43,300 — 84,251 Gross profit: Bulk water 17,335 — — 17,335 17,975 — — 17,975 Rental — 21,730 — 21,730 — 20,164 — 20,164 Other — 2,626 — 2,626 — 3,284 — 3,284 Total gross profit 17,335 24,356 — 41,691 17,975 23,448 — 41,423 Selling, general and administrative expenses 18,692 28,988 3,284 50,964 14,003 27,718 1,543 43,264 Income (loss) from operations (1,357) (4,632) (3,284) (9,273) 3,972 (4,270) (1,543) (1,841) Other (expense) income, net (4,139) (3,395) 232 (7,302) (5,428) (3,065) 41 (8,452) Loss before income tax expense (5,496) (8,027) (3,052) (16,575) (1,456) (7,335) (1,502) (10,293) Income tax expense 2,424 221 — 2,645 2,633 — — 2,633 Net loss $ (7,920) $ (8,248) $ (3,052) $ (19,220) $ (4,089) $ (7,335) $ (1,502) $ (12,926) Other information: Depreciation and amortization expense $ 12,771 $ 11,060 $ — $ 23,831 $ 12,271 $ 10,192 $ — $ 22,463 Interest expense (income), net $ 2,980 $ 2,826 $ (232) $ 5,574 $ 5,197 $ 3,065 $ (31) $ 8,231 Loss on extinguishment of debt $ 820 $ 569 $ — $ 1,389 $ — $ — $ — $ — Expenditures for long-lived assets $ 2,810 $ 9,089 $ — $ 11,899 $ 7,697 $ 8,864 $ — $ 16,561 Amortization of deferred financing fees $ 363 $ 182 $ 79 $ 624 $ 455 $ 113 $ — $ 568 |
Description of the Business - C
Description of the Business - Corporate Reorganization (Details) | Jul. 01, 2016shares | Sep. 30, 2017segment |
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | ||
Number of operating platforms | segment | 2 | |
AquaVenture Holdings Curacao | AquaVenture Holdings LLC | Transaction Between Entities Under Common Control | Ordinary shares | ||
Business Acquisition [Line Items] | ||
Shares issued to acquire predecessor during reorganization | shares | 1,000,000 |
Description of the Business - I
Description of the Business - Initial Public Offering (Details) - IPO $ / shares in Units, $ in Millions | Oct. 12, 2016USD ($)$ / sharesshares |
Subsidiary, Sale of Stock [Line Items] | |
Ordinary shares issued | shares | 7,475,000 |
Public offering price (in dollars per share) | $ / shares | $ 18 |
Proceeds from IPO, net | $ | $ 118.8 |
Business Combinations and Ass27
Business Combinations and Asset Acquisitions - Wellsys (Details) - USD ($) $ in Thousands | Sep. 08, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Assets acquired: | |||||
Goodwill | $ 99,526 | $ 99,526 | $ 99,526 | $ 98,023 | |
Wellsys | |||||
Business Acquisition [Line Items] | |||||
Working capital adjustment | $ 165 | ||||
Assets acquired: | |||||
Trade receivables | 321 | ||||
Inventory | 884 | ||||
Intangible assets | 4,300 | ||||
Goodwill | 1,503 | ||||
Total assets acquired | 7,008 | ||||
Liabilities assumed: | |||||
Customer deposits | (153) | ||||
Total liabilities assumed | (153) | ||||
Net assets acquired | $ 6,855 | ||||
Quench USA Holdings LLC | Wellsys | |||||
Liabilities assumed: | |||||
Revenue | 400 | ||||
Net income | $ 12 | ||||
Selling, General and Administrative Expenses | Wellsys | |||||
Business Acquisition [Line Items] | |||||
Transaction related costs | $ 21 | $ 21 |
Business Combinations and Ass28
Business Combinations and Asset Acquisitions - ADB (Details) $ in Thousands, gal in Millions | Sep. 08, 2017USD ($) | Oct. 31, 2016USD ($)gal | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) |
Wellsys | ||||||
Business Acquisition [Line Items] | ||||||
Working capital adjustment | $ 165 | |||||
AVH Peru | ADB | ||||||
Business Acquisition [Line Items] | ||||||
Percentage acquired | 100.00% | |||||
Purchase price | $ 46,500 | |||||
Working capital adjustment | $ 186 | |||||
Desalination infrastructure capacity (in gallons) | gal | 2.7 | |||||
AVH Peru | ADB | Accrued liabilities | ||||||
Business Acquisition [Line Items] | ||||||
Purchase price allocation adjustment liability | $ 900 | |||||
AVH Peru | ADB | Prepaids and other assets | ||||||
Business Acquisition [Line Items] | ||||||
Purchase price allocation adjustment asset | 900 | |||||
Selling, General and Administrative Expenses | Wellsys | ||||||
Business Acquisition [Line Items] | ||||||
Transaction related costs | $ 21 | $ 21 | ||||
Selling, General and Administrative Expenses | AVH Peru | ADB | ||||||
Business Acquisition [Line Items] | ||||||
Transaction related costs | $ 400 | $ 900 |
Business Combinations and Ass29
Business Combinations and Asset Acquisitions - Proforma financial information (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 4 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Oct. 05, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Business Acquisition, Pro Forma Information [Abstract] | |||||
Weighted-average shares outstanding | 0 | ||||
ADB | AquaVenture Water Corporation | |||||
Business Acquisition, Pro Forma Information [Abstract] | |||||
Revenues | $ 31,077 | $ 31,300 | $ 93,530 | $ 90,848 | |
Net loss | $ (7,410) | $ (3,502) | $ (18,593) | $ (9,282) | |
Loss per share | $ (0.28) | $ (0.70) |
Business Combinations and Ass30
Business Combinations and Asset Acquisitions - Pure Water Innovations Inc (Details) - Quench Usa Inc - Pure Water Innovations Inc - USD ($) $ in Thousands | Jun. 01, 2017 | Sep. 30, 2017 |
Business Acquisition [Line Items] | ||
Purchase price | $ 2,000 | |
Acquisition contingent consideration | 50 | |
Assets acquired: | ||
Trade receivables | 31 | |
Property, plant and equipment | 325 | |
Deferred revenue | (28) | |
Accrued liabilities | (12) | |
Net assets acquired | 2,006 | |
Customer Relationships | ||
Assets acquired: | ||
Customer relationships | $ 1,690 | |
Weighted average useful life of acquired customer relationships | 12 years |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Asset transfers out of Level 1 into Level 2 | $ 0 | $ 0 | |
Assets transfers out of Level 2 into Level 1 | 0 | 0 | |
Asset transfers into (out of) Level 3 | 0 | 0 | |
Fair Value, Measurements, Recurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Money market funds | 13,571 | 13,571 | $ 29,523 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Money market funds | 13,571 | 13,571 | 29,523 |
Fair Value, Measurements, Recurring | US Treasury securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Held-to-maturity securities | 83,791 | 83,791 | 24,777 |
Fair Value, Measurements, Recurring | US Treasury securities | Fair Value, Inputs, Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Held-to-maturity securities | $ 83,791 | $ 83,791 | $ 24,777 |
Long-Term Debt - Long-Term Debt
Long-Term Debt - Long-Term Debt - Table (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Total carrying value of long-term debt | $ 178,589 | $ 145,209 |
Face value of long-term debt, current | 6,063 | 27,963 |
Current portion of long-term debt, net of debt discounts and deferred financing fees | 6,063 | 27,963 |
Face value of long-term debt, non-current | 172,526 | 117,246 |
Less: Non-current portion of unamortized debt discounts and deferred financing fees | (3,543) | (1,493) |
Long-term debt, net of debt discounts and deferred financing fees | 168,983 | 115,753 |
Corporate Credit Agreement | ||
Debt Instrument [Line Items] | ||
Total carrying value of long-term debt | 150,000 | |
BVI Loan Agreement | ||
Debt Instrument [Line Items] | ||
Total carrying value of long-term debt | 27,076 | 31,432 |
Vehicle Financing | ||
Debt Instrument [Line Items] | ||
Total carrying value of long-term debt | $ 1,513 | 1,783 |
Trinidad Credit Facility | ||
Debt Instrument [Line Items] | ||
Total carrying value of long-term debt | 24,071 | |
USVI Credit Agreement | ||
Debt Instrument [Line Items] | ||
Total carrying value of long-term debt | 12,923 | |
Quench Loan Agreement | ||
Debt Instrument [Line Items] | ||
Total carrying value of long-term debt | 40,000 | |
Curacao Credit Facility | ||
Debt Instrument [Line Items] | ||
Total carrying value of long-term debt | $ 35,000 |
Long-Term Debt - Corporate Cred
Long-Term Debt - Corporate Credit Agreement (Details) $ in Thousands | Aug. 04, 2017USD ($)item | Sep. 30, 2017USD ($) | Sep. 30, 2017USD ($) |
Debt Instrument [Line Items] | |||
Loss on extinguishment of debt | $ (1,389) | $ (1,389) | |
Corporate Credit Agreement | |||
Debt Instrument [Line Items] | |||
Credit facility maximum borrowing capacity | $ 150,000 | ||
Weighted average interest rate | 7.30% | 7.30% | |
Proceeds from credit facility | $ 100,000 | ||
Corporate Credit Agreement | LIBOR | |||
Debt Instrument [Line Items] | |||
Variable rate spread (as a percent) | 6.00% | ||
Corporate Credit Agreement | Minimum | LIBOR | |||
Debt Instrument [Line Items] | |||
Variable rate spread (as a percent) | 1.00% | ||
USVI Credit Agreement | |||
Debt Instrument [Line Items] | |||
Number of Banks | item | 2 |
Long-Term Debt - BVI Loan Agree
Long-Term Debt - BVI Loan Agreement (Details) - BVI Loan Agreement - Seven Seas Water | Aug. 04, 2017 | Sep. 30, 2017 |
Debt Instrument [Line Items] | ||
Weighted average interest rate | 4.30% | |
LIBOR | ||
Debt Instrument [Line Items] | ||
Variable rate spread (as a percent) | 3.00% | |
Variable rate basis spread reduction | 50.00% |
Long-Term Debt - Maturities of
Long-Term Debt - Maturities of Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Long-term Debt | ||
Remainder of 2017 | $ 1,217 | |
2,018 | 6,409 | |
2,019 | 6,018 | |
2,020 | 6,073 | |
2,021 | 156,037 | |
2022 and thereafter | 2,835 | |
Total face value of long-term debt | $ 178,589 | $ 145,209 |
Share-Based Compensation - Acti
Share-Based Compensation - Activity of options to purchase Ordinary shares (Details) shares in Thousands | Jan. 01, 2017shares | Sep. 30, 2017$ / sharesshares | Sep. 22, 2016shares |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Vesting Period | 0 years | ||
Ordinary Share Units | 2016 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Aggregate number of shares by class authorized for grant under the Equity Incentive Plan | 6,100 | 5,000 | |
Annual percentage increase in shares available for issuance | 4 | ||
Participants Stock Options | Ordinary Share Units | 2016 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Granted | 62 | ||
Granted (in dollars per share) | $ / shares | $ 16.48 | ||
First Anniversary | Participants Stock Options | Ordinary Share Units | 2016 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Vesting Period | 4 years | ||
Vesting Percentage | 25.00% | ||
Thereafter | Participants Stock Options | Ordinary Share Units | 2016 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Vesting Period | 3 years | ||
Vesting Percentage | 75.00% |
Share-Based Compensation - Rest
Share-Based Compensation - Restricted Awards Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Vesting Period | 0 years | |||
Allocated Share-based Compensation Expense | $ 3,100 | $ 400 | $ 9,100 | $ 1,500 |
Tax benefit | $ 0 | 0 | $ 0 | 0 |
Restricted share units | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Granted in period | 57,000 | |||
Vesting Period | 1 year | |||
First Anniversary | All other restricted share units | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Vesting Period | 4 years | |||
Vesting Percentage | 25.00% | |||
Thereafter | All other restricted share units | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Vesting Period | 3 years | |||
Vesting Percentage | 75.00% | |||
2016 ESPP | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Number of ordinary shares issued | 6,000 | 6,000 | ||
Ordinary shares issued | $ 400 | |||
2016 ESPP | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Percentage of purchase price of ordinary shares | 85.00% | |||
Independent Directors Deferred Compensation Program | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Phantom shares awarded percentage | 120.00% | |||
Number of ordinary shares issued | 1 | |||
Independent Directors Deferred Compensation Program | Phantom Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Outstanding ending balance | 3,000 | 3,000 | ||
Number of ordinary shares issued | 3,000 | |||
Selling, General and Administrative Expenses | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Allocated Share-based Compensation Expense | $ 3,000 | 400 | $ 8,800 | 1,500 |
Cost of revenues | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Allocated Share-based Compensation Expense | $ 100 | $ 0 | $ 300 | $ 0 |
Loss per Share (Details)
Loss per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Oct. 05, 2016 | |
Common stock outstanding | 26,452 | 26,452 | 26,388 | |||
Numerator: | ||||||
Net loss | $ (7,567) | $ (4,712) | $ (19,220) | $ (12,926) | ||
Denominator: | ||||||
Weighted-average ordinary shares outstanding - basic and diluted | 26,441 | 26,414 | ||||
Loss per share - basic and diluted | $ (0.29) | $ (0.73) | ||||
Ordinary Share Units | ||||||
Common stock outstanding | 0 | |||||
Denominator: | ||||||
Weighted average outstanding share awards excluded from the calculation of diluted earnings per share | 3,900 | 3,900 |
Commitments and Contingencies -
Commitments and Contingencies - Asset Retirement Obligations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |||||
Accretion of obligation | $ 13 | $ 12 | $ 37 | $ 31 | |
One contract extension | 0 | 0 | |||
Gain on revaluation of ARO | $ 55 | $ 55 | |||
Accrued Liabilities | |||||
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |||||
Current portion of the ARO liabilities | 26 | 26 | $ 0 | ||
Other Noncurrent Liabilities | |||||
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |||||
Long-term portion of the ARO liabilities | $ 1,100 | $ 1,100 | $ 1,100 |
Cash Flow Information (Details)
Cash Flow Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash paid during the period: | ||||
Income taxes, net | $ 1,138 | $ 71 | ||
Interest, net | 8,381 | 7,500 | ||
Non-Cash Transaction Information: | ||||
Non-cash capital expenditures | 611 | 1,078 | ||
Unpaid offering costs | 1,113 | |||
Unpaid debt financing costs | 111 | |||
Components of Total Ending Cash | ||||
Cash and cash equivalents | 118,070 | 25,000 | $ 95,334 | |
Restricted cash, current | 166 | 283 | 166 | |
Restricted cash, non-current | 4,147 | 5,558 | 5,895 | |
Cash, cash equivalents and restricted cash | $ 122,383 | $ 30,841 | $ 101,395 | $ 25,026 |
Segment Reporting - Information
Segment Reporting - Information by Reportable Segment (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)segment | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Reportable segment and reconciliation | |||||
Number of operating segments | segment | 2 | ||||
Number of reportable segments | segment | 2 | ||||
Bulk water | $ 14,206 | $ 13,879 | $ 43,238 | $ 40,951 | |
Rental | 13,428 | 12,396 | 39,238 | 36,153 | |
Other | 2,259 | 2,583 | 6,318 | 7,147 | |
Total revenues | 29,893 | 28,858 | 88,794 | 84,251 | |
Bulk water | 6,302 | 6,196 | 17,335 | 17,975 | |
Rental | 7,345 | 7,140 | 21,730 | 20,164 | |
Other | 874 | 1,227 | 2,626 | 3,284 | |
Total gross profit | 14,521 | 14,563 | 41,691 | 41,423 | |
Selling, general and administrative expenses | 17,734 | 15,112 | 50,964 | 43,264 | |
Loss from operations | (3,213) | (549) | (9,273) | (1,841) | |
Other (expense) income, net | (3,508) | (2,888) | (7,302) | (8,452) | |
Loss before income tax expense | (6,721) | (3,437) | (16,575) | (10,293) | |
Income tax expense | 846 | 1,275 | 2,645 | 2,633 | |
Net loss | (7,567) | (4,712) | (19,220) | (12,926) | |
Other information | |||||
Depreciation and amortization | 8,134 | 7,702 | 23,831 | 22,463 | |
Interest expense (income), net | 2,055 | 2,802 | 5,574 | 8,231 | |
Loss on extinguishment of debt | 1,389 | 1,389 | |||
Expenditures for long-lived assets | 4,243 | 4,914 | 11,899 | 16,561 | |
Amortization of deferred financing fees | 209 | 197 | 624 | 568 | |
Assets | 558,972 | 558,972 | $ 536,696 | ||
Seven Seas Water | |||||
Reportable segment and reconciliation | |||||
Bulk water | 14,206 | 13,879 | 43,238 | 40,951 | |
Total revenues | 14,206 | 13,879 | 43,238 | 40,951 | |
Bulk water | 6,302 | 6,196 | 17,335 | 17,975 | |
Total gross profit | 6,302 | 6,196 | 17,335 | 17,975 | |
Selling, general and administrative expenses | 6,607 | 4,962 | 18,692 | 14,003 | |
Loss from operations | (305) | 1,234 | (1,357) | 3,972 | |
Other (expense) income, net | (1,764) | (1,896) | (4,139) | (5,428) | |
Loss before income tax expense | (2,069) | (662) | (5,496) | (1,456) | |
Income tax expense | 790 | 1,275 | 2,424 | 2,633 | |
Net loss | (2,859) | (1,937) | (7,920) | (4,089) | |
Other information | |||||
Depreciation and amortization | 4,278 | 4,183 | 12,771 | 12,271 | |
Interest expense (income), net | 880 | 1,806 | 2,980 | 5,197 | |
Loss on extinguishment of debt | 820 | 820 | |||
Expenditures for long-lived assets | 1,108 | 1,810 | 2,810 | 7,697 | |
Amortization of deferred financing fees | 93 | 150 | 363 | 455 | |
Assets | 259,000 | 259,000 | 274,200 | ||
Quench USA Holdings LLC | |||||
Reportable segment and reconciliation | |||||
Rental | 13,428 | 12,396 | 39,238 | 36,153 | |
Other | 2,259 | 2,583 | 6,318 | 7,147 | |
Total revenues | 15,687 | 14,979 | 45,556 | 43,300 | |
Rental | 7,345 | 7,140 | 21,730 | 20,164 | |
Other | 874 | 1,227 | 2,626 | 3,284 | |
Total gross profit | 8,219 | 8,367 | 24,356 | 23,448 | |
Selling, general and administrative expenses | 9,828 | 9,602 | 28,988 | 27,718 | |
Loss from operations | (1,609) | (1,235) | (4,632) | (4,270) | |
Other (expense) income, net | (1,359) | (1,027) | (3,395) | (3,065) | |
Loss before income tax expense | (2,968) | (2,262) | (8,027) | (7,335) | |
Income tax expense | 56 | 221 | |||
Net loss | (3,024) | (2,262) | (8,248) | (7,335) | |
Other information | |||||
Depreciation and amortization | 3,856 | 3,519 | 11,060 | 10,192 | |
Interest expense (income), net | 790 | 1,027 | 2,826 | 3,065 | |
Loss on extinguishment of debt | 569 | 569 | |||
Expenditures for long-lived assets | 3,135 | 3,104 | 9,089 | 8,864 | |
Amortization of deferred financing fees | 37 | 47 | 182 | 113 | |
Assets | 204,400 | 204,400 | 193,400 | ||
Corporate & Other | |||||
Reportable segment and reconciliation | |||||
Selling, general and administrative expenses | 1,299 | 548 | 3,284 | 1,543 | |
Loss from operations | (1,299) | (548) | (3,284) | (1,543) | |
Other (expense) income, net | (385) | 35 | 232 | 41 | |
Loss before income tax expense | (1,684) | (513) | (3,052) | (1,502) | |
Net loss | (1,684) | (513) | (3,052) | (1,502) | |
Other information | |||||
Interest expense (income), net | 385 | $ (31) | (232) | $ (31) | |
Amortization of deferred financing fees | 79 | 79 | |||
Assets | $ 95,600 | $ 95,600 | $ 69,000 |