Document And Entity Information
Document And Entity Information Statement - shares | 3 Months Ended | |
Dec. 31, 2019 | Jan. 31, 2020 | |
Document Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2019 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 | |
Entity Registrant Name | EVOQUA WATER TECHNOLOGIES CORP. | |
Entity Central Index Key | 0001604643 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 115,833,974 | |
Entity Current Reporting Status | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Sep. 30, 2019 |
ASSETS | ||
Current assets | $ 682,218 | $ 637,293 |
Cash and cash equivalents | 194,903 | 109,881 |
Receivables, net | 242,036 | 257,585 |
Inventories, net | 148,784 | 137,164 |
Contract assets | 73,909 | 73,467 |
Prepaid and other current assets | 22,586 | 21,940 |
Assets held for sale | 0 | 37,256 |
Property, plant, and equipment, net | 339,135 | 333,584 |
Goodwill | 397,006 | 392,890 |
Intangible assets, net | 319,665 | 314,767 |
Deferred income taxes, net of valuation allowance | 3,548 | 2,790 |
Operating lease right-of-use assets, net | 42,532 | 0 |
Other non‑current assets | 26,198 | 25,715 |
Non-current assets held for sale | 0 | 30,809 |
Total assets | 1,810,302 | 1,737,848 |
LIABILITIES AND EQUITY | ||
Current liabilities | 405,516 | 322,221 |
Accounts payable | 134,808 | 144,247 |
Current portion of debt | 113,707 | 13,418 |
Contract liabilities | 43,634 | 39,051 |
Product warranties | 5,131 | 4,922 |
Accrued expenses and other liabilities | 101,656 | 101,839 |
Income tax payable | 6,580 | 4,536 |
Liabilities held for sale | 0 | 14,208 |
Non‑current liabilities | 989,656 | 1,049,805 |
Long‑term debt, net of deferred financing fees | 851,570 | 951,599 |
Product warranties | 1,471 | 2,332 |
Obligation under operating leases | 32,871 | 0 |
Other non‑current liabilities | 90,346 | 78,661 |
Deferred income taxes | 13,398 | 13,548 |
Non-current liabilities held for sale | 0 | 3,665 |
Total liabilities | 1,395,172 | 1,372,026 |
Commitments and Contingent Liabilities (Note 20) | ||
Shareholders’ equity | ||
Common stock, par value $0.01: authorized 1,000,000 shares; issued 117,653 shares, outstanding 115,570 at December 31, 2019; issued 116,008, outstanding 114,344 shares at September 30, 2019 | 1,170 | 1,154 |
Treasury stock: 2,083 shares at December 31, 2019 and 1,664 shares at September 30, 2019 | (2,837) | (2,837) |
Additional paid‑in capital | 560,132 | 552,422 |
Retained deficit | (123,854) | (174,976) |
Accumulated other comprehensive loss, net of tax | (21,655) | (13,004) |
Total Evoqua Water Technologies Corp. equity | 412,956 | 362,759 |
Non‑controlling interest | 2,174 | 3,063 |
Total shareholders’ equity | 415,130 | 365,822 |
Total liabilities and shareholders’ equity | $ 1,810,302 | $ 1,737,848 |
Consolidated Balance Sheets Con
Consolidated Balance Sheets Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2019 | Sep. 30, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common stock authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock issued (in shares) | 117,653,000 | 116,008,000 |
Common stock outstanding (in shares) | 115,570,000 | 114,344,000 |
Treasury stock (in shares) | 2,083,000 | 1,664,000 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues [Abstract] | ||
Revenue from product sales and services | $ 346,105 | $ 323,002 |
Cost of Revenue [Abstract] | ||
Cost of product sales and services | (240,390) | (234,272) |
Gross profit | 105,715 | 88,730 |
Operating Expenses [Abstract] | ||
General and administrative expense | (45,770) | (54,831) |
Sales and marketing expense | (38,014) | (36,152) |
Research and development expense | (3,684) | (4,146) |
Total operating expenses | (87,468) | (95,129) |
Other operating income | 51,720 | 228 |
Other operating expense | (275) | (188) |
Operating profit (loss) | 69,692 | (6,359) |
Interest expense | (13,583) | (14,443) |
Income (loss) before income taxes | 56,109 | (20,802) |
Income tax (expense) benefit | (2,603) | 4,514 |
Net income (loss) | 53,506 | (16,288) |
Net income attributable to non‑controlling interest | 361 | 442 |
Net income (loss) attributable to Evoqua Water Technologies Corp. | $ 53,145 | $ (16,730) |
Basic income (loss) per common share | $ 0.46 | $ (0.15) |
Diluted income (loss) per common share | $ 0.44 | $ (0.15) |
Revenue from product sales | ||
Revenues [Abstract] | ||
Revenue from product sales and services | $ 196,560 | $ 180,088 |
Cost of Revenue [Abstract] | ||
Cost of product sales and services | (140,456) | (136,595) |
Revenue from service | ||
Revenues [Abstract] | ||
Revenue from product sales and services | 149,545 | 142,914 |
Cost of Revenue [Abstract] | ||
Cost of product sales and services | $ (99,934) | $ (97,677) |
Unaudited Consolidated Statem_2
Unaudited Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Other comprehensive (loss) income | ||
Net income (loss) | $ 53,506 | $ (16,288) |
Foreign currency translation adjustments | (8,838) | (1,554) |
Unrealized derivative (loss) gain on cash flow hedges, net of tax | (49) | 557 |
Change in pension liability, net of tax | 236 | 96 |
Total other comprehensive loss | (8,651) | (901) |
Less: Comprehensive income attributable to non‑controlling interest | (361) | (442) |
Comprehensive income (loss) attributable to Evoqua Water Technologies Corp. | $ 44,494 | $ (17,631) |
Unaudited Consolidated Statem_3
Unaudited Consolidated Statements of Changes in Equity - USD ($) $ in Thousands | Total | Cost | Cost | Additional Paid‑in Capital | Retained Deficit | Accumulated Other Comprehensive Loss | Non‑controlling Interest |
Cumulative effect of adoption of new accounting standards | $ (1,401) | $ (1,401) | |||||
Common stock issued at the beginning of the period (shares) at Sep. 30, 2018 | 115,016,000 | ||||||
Stockholders' equity, balance at the beginning of the period at Sep. 30, 2018 | 362,016 | $ 1,145 | $ (2,837) | $ 533,435 | (163,871) | $ (9,017) | $ 3,161 |
Treasury stock, balance at the beginning of the period (in shares) at Sep. 30, 2018 | 1,087,000 | ||||||
Equity based compensation expense | 4,525 | 4,525 | |||||
Issuance of common stock (in shares) | 11,000 | ||||||
Issuance of common stock, cost | $ 0 | 68 | |||||
Proceeds from issuance of common stock | 68 | ||||||
Shares withheld related to net share settlement (including tax withholdings) (shares) | 21,000 | 18,000 | |||||
Shares withheld related to net share settlement (including tax withholdings) | (15) | $ 0 | (15) | ||||
Dividends paid to non-controlling interest | (600) | (600) | |||||
Net income (loss) | (16,288) | (16,730) | 442 | ||||
Other comprehensive loss | (901) | ||||||
Common stock issued at the end of the period (shares) at Dec. 31, 2018 | 115,048,000 | ||||||
Stockholders' equity, balance at the end of the period at Dec. 31, 2018 | 347,404 | $ 1,145 | $ (2,837) | 538,013 | (182,002) | (9,918) | 3,003 |
Treasury stock, balance at the end of the period (in shares) at Dec. 31, 2018 | 1,105,000 | ||||||
Other Comprehensive Income (Loss), Net of Tax | (901) | ||||||
Net income attributable to non‑controlling interest | 442 | ||||||
Cumulative effect of adoption of new accounting standards | $ (2,023) | (2,023) | |||||
Common stock issued at the beginning of the period (shares) at Sep. 30, 2019 | 116,008,000 | 116,008,000 | |||||
Stockholders' equity, balance at the beginning of the period at Sep. 30, 2019 | $ 365,822 | $ 1,154 | $ (2,837) | 552,422 | (174,976) | (13,004) | 3,063 |
Treasury stock, balance at the beginning of the period (in shares) at Sep. 30, 2019 | 1,664,000 | 1,664,000 | |||||
Equity based compensation expense | $ 3,680 | 3,680 | |||||
Issuance of common stock (in shares) | 120,000 | ||||||
Issuance of common stock, cost | $ 16 | 4,030 | |||||
Proceeds from issuance of common stock | 4,046 | ||||||
Shares withheld related to net share settlement (including tax withholdings) (shares) | 1,525,000 | 419,000 | |||||
Shares withheld related to net share settlement (including tax withholdings) | 0 | $ 0 | 0 | ||||
Stock repurchases (shares) | 0 | ||||||
Stock repurchases | $ 0 | ||||||
Dividends paid to non-controlling interest | (1,250) | (1,250) | |||||
Net income (loss) | 53,506 | 53,145 | |||||
Other comprehensive loss | $ (8,651) | ||||||
Common stock issued at the end of the period (shares) at Dec. 31, 2019 | 117,653,000 | 117,653,000 | |||||
Stockholders' equity, balance at the end of the period at Dec. 31, 2019 | $ 415,130 | $ 1,170 | $ (2,837) | $ 560,132 | $ (123,854) | $ (21,655) | $ 2,174 |
Treasury stock, balance at the end of the period (in shares) at Dec. 31, 2019 | 2,083,000 | 2,083,000 | |||||
Other Comprehensive Income (Loss), Net of Tax | $ (8,651) | ||||||
Stock repurchases | 0 | ||||||
Net income attributable to non‑controlling interest | $ 361 |
Unaudited Consolidated Statem_4
Unaudited Consolidated Statements of Changes in Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Operating activities | ||
Net income (loss) | $ 53,506 | $ (16,288) |
Reconciliation of net income (loss) to cash flows provided by operating activities: | ||
Depreciation and amortization | 25,143 | 23,090 |
Amortization of debt related costs | 701 | 556 |
Deferred income taxes | (679) | (766) |
Share-based compensation | 3,680 | 4,525 |
Loss (gain) on sale of property, plant and equipment | 173 | (100) |
Gain on sale of business | (58,279) | 0 |
Foreign currency exchange (gains) losses on intercompany loans and other non-cash items | (6,086) | 4,661 |
Changes in assets and liabilities | ||
Accounts receivable | 11,087 | 12,995 |
Inventories | (14,613) | (20,502) |
Contract assets | 3,042 | 7,220 |
Prepaids and other current assets | (631) | 5,988 |
Accounts payable | (11,056) | (9,143) |
Accrued expenses and other liabilities | (9,378) | (15,394) |
Contract liabilities | 4,651 | 12,012 |
Income taxes | 1,388 | (4,503) |
Other non‑current assets and liabilities | 2,083 | (217) |
Net cash provided by operating activities | 4,732 | 4,134 |
Investing activities | ||
Purchase of property, plant and equipment | (17,572) | (17,569) |
Purchase of intangibles | (210) | (341) |
Proceeds from sale of property, plant and equipment | 251 | 237 |
Proceeds from sale of business, net of cash of $12,117 | 108,921 | 0 |
Acquisitions, net of $0 cash received | (11,160) | 0 |
Net cash provided by (used in) investing activities | 80,230 | (17,673) |
Financing activities | ||
Issuance of debt, net of deferred issuance costs | 3,532 | 4,022 |
Borrowings under credit facility | 13 | 15,000 |
Repayment of debt | (3,793) | (17,891) |
Repayment of capital lease obligation | (4,162) | (3,285) |
Payment of earn-out related to previous acquisitions | (175) | 0 |
Proceeds from issuance of common stock | 4,046 | 68 |
Taxes paid related to net share settlements of share-based compensation awards | 0 | (15) |
Cash paid for interest rate cap | 0 | (2,235) |
Distribution to non‑controlling interest | (1,250) | (600) |
Net cash used in financing activities | (1,789) | (4,936) |
Effect of exchange rate changes on cash | 1,849 | (724) |
Change in cash and cash equivalents | 85,022 | (19,199) |
Cash and cash equivalents | ||
Beginning of period | 109,881 | 82,365 |
End of period | 194,903 | 63,166 |
Supplemental disclosure of cash flow information | ||
Cash paid for taxes | 1,382 | 1,037 |
Cash paid for interest | 12,268 | 13,323 |
Non‑cash investing and financing activities | ||
Finance lease transactions | 1,782 | 2,584 |
Operating lease transactions | 4,734 | 0 |
Option and Purchase Right | $ 7,673 | $ 0 |
Unaudited Consolidated Statem_5
Unaudited Consolidated Statements of Changes in Cash Flows Unaudited Supplemental Disclosure of Cash Flow Information (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Cash Flows [Abstract] | ||
Proceeds from sale of business, net of cash of $12,117 | $ 12,117 | $ 0 |
Description of the Company and
Description of the Company and Basis of Presentation | 3 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Company and Basis of Presentation | Description of the Company and Basis of Presentation Background Evoqua Water Technologies Corp. (referred to herein as the “Company” or “EWT”) was incorporated on October 7, 2013. On January 15, 2014, Evoqua Water Technologies Corp., acquired through its wholly owned entities, EWT Holdings II Corp. and EWT Holdings III Corp. (a/k/a Evoqua Water Technologies), all of the outstanding shares of Siemens Water Technologies, a group of legal entity businesses formerly owned by Siemens AG (“Siemens”). The stock purchase closed on January 15, 2014 and was effective January 16, 2014 (the “Acquisition”). The stock purchase price, net of cash received, was approximately $730,577 . On November 6, 2017, the Company completed its initial public offering (“IPO”), pursuant to which an aggregate of 27,777 shares of common stock were sold, of which 8,333 were sold by the Company and 19,444 were sold by the selling shareholders , with a par value of $ 0.01 per share. After underwriting discounts and commissions and other expenses, the Company received net proceeds from the IPO of approximately $137,605 . The Company used a portion of these proceeds to repay $104,936 of indebtedness (including accrued and unpaid interest) under EWT III’s senior secured first lien term loan facility and the remainder for general corporate purposes. The Company did not receive any proceeds from the sale of shares by the selling shareholders . On November 7, 2017, the selling shareholders sold an additional 4,167 shares of common stock as a result of the exercise in full by the underwriters of an option to purchase additional shares. On March 19, 2018, the Company completed a secondary public offering, pursuant to which 17,500 shares of common stock were sold by certain selling shareholders . On March 21, 2018, the selling shareholders sold an additional 2,625 shares of common stock as a result of the exercise in full by the underwriters of an option to purchase additional shares. The Company did not receive any proceeds from the sale of shares by the selling shareholders . The Business EWT provides a wide range of product brands and advanced water and wastewater treatment systems and technologies, as well as mobile and emergency water supply solutions and service contract options through its branch network. Headquartered in Pittsburgh, Pennsylvania, EWT is a multi‑national corporation with operations in the United States (“U.S.”), Canada, the United Kingdom (“UK”), the Netherlands, Germany, Australia, the People’s Republic of China, Singapore, the Republic of Korea and India. The Company is organizationally structured into two reportable operating segments for the purpose of making operational decisions and assessing financial performance: (i) Integrated Solutions and Services and (ii) Applied Product Technologies . Basis of Presentation The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“ GAAP ”). All intercompany transactions have been eliminated. Unless otherwise specified, all dollar amounts in these notes are referred to in thousands. The interim Unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. We believe that the disclosures made are adequate to make the information presented not misleading. We consistently applied the accounting policies described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2019 , as filed with the SEC on November 25, 2019 (“2019 Annual Report”), in preparing these Unaudited Consolidated Financial Statements , with the exception of accounting standard updates described in Note 2 , “Summary of Significant Accounting Policies.” These Unaudited Consolidated Financial Statements should be read in conjunction with the audited financial statements and the notes included in our 2019 Annual Report. Certain prior period amounts have been reclassified to conform to the current period presentation. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Fiscal Year The Company’s fiscal year ends on September 30. Use of Estimates The Unaudited Consolidated Financial Statements have been prepared in conformity with GAAP and require management to make estimates and assumptions. These assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Unaudited Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting period. Estimates are revised as additional information becomes available. Actual results could differ from these estimates. Cash and Cash Equivalents Cash and cash equivalents are liquid investments with an original maturity of three or fewer months when purchased. Accounts Receivable Receivables are primarily comprised of uncollected amounts owed to us from transactions with customers and are presented net of allowances for doubtful accounts. Allowances are estimated based on historical write‑offs and the economic status of customers. The Company considers a receivable delinquent if it is unpaid after the term of the related invoice has expired. Write‑offs are recorded at the time all collection efforts have been exhausted. Inventories Inventories are stated at the lower of cost or market, where cost is generally determined on the basis of an average or first‑in, first‑out (“FIFO”) method. Production costs comprise direct material and labor and applicable manufacturing overheads, including depreciation charges. The Company regularly reviews inventory quantities on hand and writes off excess or obsolete inventory based on estimated forecasts of product demand and production requirements. Manufacturing operations recognize cost of product sales using standard costing rates with overhead absorption which generally approximates actual cost. Property, Plant, and Equipment Property, plant, and equipment is valued at cost less accumulated depreciation. Depreciation expense is recognized using the straight‑line method. Useful lives are reviewed annually and, if expectations differ from previous estimates, adjusted accordingly. Estimated useful lives for major classes of depreciable assets are as follows: Asset Class Estimated Useful Life Machinery and equipment 3 to 20 years Buildings and improvements 10 to 40 years Leasehold improvements are depreciated over the shorter of their estimated useful life or the term of the lease. Costs related to maintenance and repairs that do not extend the assets’ useful life are expensed as incurred. Acquisitions Acquisitions are recorded using the purchase method of accounting. The purchase price of acquisitions is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value at the acquisition date. The excess of the acquisition price over those estimated fair values is recorded as goodwill. Changes to the acquisition date preliminary fair values prior to the expiration of the measurement period, a period not to exceed 12 months from date of acquisition, are recorded as an adjustment to the associated goodwill. Contingent consideration resulting from acquisitions is recorded at its estimated fair value on the acquisition date. These obligations are revalued during each subsequent reporting period and changes in the fair value of the contingent consideration obligations can result from adjustments in the probability of achieving future development steps, sales targets and profitability and are recorded in General and administrative expenses in the Unaudited Consolidated Statements of Operations . Acquisition-related expenses and restructuring costs, if any, are recognized separately from the business combination and are expensed as incurred. Goodwill and Other Intangible Assets Goodwill represents purchase consideration paid in a business combination that exceeds the value assigned to the net assets of acquired businesses. Other intangible assets consist of customer‑related intangibles, proprietary technology, software, trademarks and other intangible assets. The Company amortizes intangible assets with definite useful lives on a straight‑line basis over their respective estimated economic lives which range from 1 to 26 years. The Company reviews goodwill to determine potential impairment annually during the fourth quarter of the fiscal year, or more frequently if events and circumstances indicate that the asset might be impaired. Impairment testing for goodwill is performed at a reporting unit level. The quantitative impairment testing utilizes both a market (guideline public company) and income (discounted cash flows) method for determining fair value. In estimating the fair value of the reporting unit, the Company utilized a discounted cash flow (“DCF”) valuation technique, which incorporates judgments and estimates of future cash flows, future revenue and gross profit growth rates, terminal value amount, capital expenditures and applicable weighted‑average cost of capital used to discount these estimated cash flows. The estimates and projections used in the estimate of fair value are consistent with our current budget and long‑range plans, including anticipated change in market conditions, industry trend, growth rates and planned capital expenditures, among other considerations. Impairment of Long‑Lived Assets Long‑lived assets, such as property, plant, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of the asset or asset group is measured by comparison of its carrying amount to undiscounted future net cash flows the asset or asset group is expected to generate. If the carrying amount of an asset or asset group is not recoverable, the Company recognizes an impairment loss based on the excess of the carrying amount of the asset or asset group over its respective fair value which is generally determined as the present value of estimated future cash flows or as the appraised value. Assets Held for Sale Assets and liabilities (the “disposal group”) are classified as held for sale when all of the following criteria are met: (i) the Company commits to a plan to sell the disposal group; (ii) it is unlikely the disposal plan will be significantly modified or discontinued; (iii) the disposal group is available for immediate sale in its present condition; (iv) actions required to complete the sale of the disposal group have been initiated; (v) the sale of the asset is probable and the completed sale is expected to occur within one year; and (vi) the disposal group is actively being marketed for sale at a price that is reasonable given its current market value. Upon classification as held for sale, such assets are no longer depreciated or depleted, and a measurement for impairment is performed to determine if there is any excess of carrying value over fair value less costs to sell. Subsequent changes to estimated fair value less the cost to sell will impact the measurement of assets held for sale if the fair value is determined to be less than the carrying value of the assets. Debt Issuance Costs and Debt Discounts Debt issuance costs are capitalized and amortized over the contractual term of the underlying debt using the straight line method which approximates the effective interest method. Debt discounts and lender arrangement fees deducted from the proceeds have been included as a component of the carrying value of debt and are being amortized to interest expense using the effective interest method. Beginning in the first quarter of 2019, the Company entered into an interest rate cap to mitigate risks associated with the Company’s variable rate debt. See Note 11 , “Derivative Financial Instruments” for further details. The Company paid $2,235 as a premium for the interest rate cap, which is being amortized to interest expense over its three -year term. The Company recorded $186 and $62 of premium amortization to interest expense during the three months ended December 31, 2019 and 2018 , respectively. Amortization of debt issuance costs and discounts included in interest expense were $515 and $494 for the three months ended December 31, 2019 and 2018 , respectively. Revenue Recognition The Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) on October 1, 2018, and recognizes sales of products and services based on the five-step analysis of transactions as provided in Topic 606 which requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for such goods or services. For sales of aftermarket parts or products with a low level of customization and engineering time, the Company recognizes revenues at the time risks and rewards of ownership pass, which is generally when products are shipped or delivered to the customer as the Company has no obligation for installation. Sales of short‑term service arrangements are recognized as the services are performed, and sales of long‑term service arrangements are typically recognized on a straight‑line basis over the life of the agreement. For certain arrangements where there is significant customization to the product, the Company recognizes revenue either over time or at a point in time. These products include large capital water treatment projects, systems and solutions for municipal and industrial applications. The nature of the contracts is generally fixed price with milestone billings. The Company recognizes revenue over time if the product has no alternative use and the Company has an enforceable right to payment for the performance completed to date, including a normal profit margin, in the event of termination for convenience. If these two criteria are not met, revenues from these contracts will not be recognized until construction is complete. Contract revenues and cost estimates are reviewed and revised quarterly at a minimum and the cumulative effect of such adjustments are recognized in current operations. The amount of such adjustments have not been material. See Note 4 , “Revenue” for further details. Product Warranties Accruals for estimated expenses related to warranties are made at the time products are sold and are recorded as a component of Cost of product sales in the Unaudited Consolidated Statements of Operations . The estimated warranty obligation is based on product warranty terms offered to customers, ongoing product failure rates, material usage and service delivery costs expected to be incurred in correcting a product failure, as well as specific obligations for known failures and other currently available evidence. The Company assesses the adequacy of the recorded warranty liabilities on a regular basis and adjusts amounts as necessary. Leases The Company accounts for leases in accordance with ASC Topic No. 842, Leases , adopted as of October 1, 2019 (Topic 842). Please see the “Accounting Pronouncements Recently Adopted” section below for information regarding this adoption. See Note 19 , “Leases” for further details. Lessee Accounting The Company leases office space, buildings, vehicles, forklifts, computers, copiers and other assets under non-cancelable operating and finance leases. The Company determines whether an arrangement is or contains a lease at the inception of the arrangement based on the terms and conditions in the contract. A contract contains a lease if there is an identified asset and the Company has the right to control the asset. If the arrangement contains a lease, the Company recognizes a right-of-use (“ROU”) asset and an operating lease liability as of the lease commencement date. Operating lease assets and finance lease assets are included in Operating lease right-of-use assets, net and Property, plant, and equipment, net , respectively, on the Consolidated Balance Sheets . The corresponding operating lease liabilities are included in Accrued expenses and other liabilities and Obligation under operating leases on the Consolidated Balance Sheets . The corresponding finance lease liabilities are included in Accrued expenses and other liabilities and Other non‑current liabilities on the Consolidated Balance Sheets . Lessor Accounting The Company generates revenue through the lease of its water treatment equipment and systems to customers. In certain instances, the Company enters into a contract with a customer but must construct the underlying asset prior to its lease. At the time of contract inception, the Company determines if an arrangement is or contains a lease. Customer contracts that contain a lease are generally classified as operating leases and can contain lease and non-lease components, including maintenance and monitoring services of the Company-owned equipment. As part of the Company’s adoption of Topic 842, the Company has elected the practical expedient for all classes of underlying assets to not separate the lease and non-lease components if certain conditions are met, including the lease qualifying as an operating lease and revenue being recognized in the same pattern for both components. If these conditions are met, the Company will account for the contract with a customer as a combined component under the respective authoritative guidance for the predominant component in the contract. Shipping and Handling Cost Shipping and handling costs are included as a component of Cost of product sales. Derivative Financial Instruments The Company’s risk-management strategy uses derivative financial instruments to manage interest rate risk and foreign currency exchange rate risk. The Company’s objective in using interest rate derivatives is to add stability to interest expense and manage its exposure to interest rate movements. To accomplish this objective, in November 2018, the Company entered into an interest rate cap which has been designated as a cash flow hedge. The Company uses foreign currency derivative contracts in order to manage the effect of exchange rate fluctuations on forecasted sales and purchases that are denominated in foreign currencies. To mitigate the impact of foreign exchange rate risk, the Company entered into a series of forward contracts designated as cash flow hedges. The Company does not enter into derivatives for trading or speculative purposes. The Company accounts for derivatives and hedging activities in accordance with ASC Topic No. 815, Derivatives and Hedging (ASC 815). The Company recognizes all derivatives on the balance sheet at fair value. Changes in the fair values of derivatives that are not designated as hedges are recognized in earnings. If the derivative is designated and qualifies as a hedge, depending on the nature of the hedge, changes in the fair value of the derivatives are either offset against the change in the hedged assets or liabilities through earnings or recognized in Accumulated other comprehensive income (loss), net of tax (“AOCI”) until the hedged item is recognized in earnings. Income Taxes The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are provided against deferred tax assets when it is deemed more likely than not that some portion or all of the deferred tax asset will not be realized within a reasonable time period. We assess tax positions using a two‑step process. A tax position is recognized if it meets a more‑likely‑than‑not threshold, and is measured at the largest amount of benefit that is greater than 50% percent of being realized. Uncertain tax positions are reviewed each balance sheet date. Foreign Currency Translation and Transactions The functional currency for the international subsidiaries is the local currency. Assets and liabilities are translated into U.S. dollars using current rates of exchange, with the resulting translation adjustments recorded in AOCI within shareholders’ equity. Revenues and expenses are translated at the weighted‑average exchange rate for the period, with the resulting translation adjustments recorded in the Unaudited Consolidated Statements of Operations . Foreign currency translation (gains) losses, mainly related to intercompany loans, which aggregated $(6,443) and $4,815 for the three months ended December 31, 2019 and 2018 , respectively, are primarily included in General and administrative expenses in the Unaudited Consolidated Statements of Operations . Research and Development Costs Research and development costs are expensed as incurred. The Company recorded $3,684 and $4,146 for the three months ended December 31, 2019 and 2018 , respectively. Equity‑based Compensation The Company measures the cost of awards of equity instruments to employees based on the grant‑date fair value of the award. The grant‑date fair value of a non-qualified stock option is determined using the Black‑Scholes model. The fair value of restricted stock unit awards is determined using the closing price of our common stock on date of grant. Compensation costs resulting from equity-based payment transactions are recognized primarily within General and administrative expenses, at fair value over the requisite vesting period on a straight-line basis. Earnings (Loss) Per Share Basic earnings (loss) per common share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed based on the weighted average number of shares of common stock, plus the effect of diluted common shares outstanding during the period using the treasury stock method. Diluted potential common shares include outstanding stock options. Retirement Benefits The Company applies ASC Topic No. 715, Compensation—Retirement Benefits , which requires the recognition in pension obligations and AOCI of actuarial gains or losses, prior service costs or credits and transition assets or obligations that have previously been deferred. The determination of retirement benefit pension obligations and associated costs requires the use of actuarial computations to estimate participant plan benefits to which the employees will be entitled. The significant assumptions primarily relate to discount rates, expected long‑term rates of return on plan assets, rate of future compensation increases, mortality, years of service, and other factors. The Company develops each assumption using relevant experience in conjunction with market‑related data for each individual country in which such plans exist. All actuarial assumptions are reviewed annually with third‑party consultants and adjusted as necessary. For the recognition of net periodic postretirement cost, the calculation of the expected return on plan assets is generally derived by applying the expected long‑term rate of return on the market‑related value of plan assets. The fair value of plan assets is determined based on actual market prices or estimated fair value at the measurement date. Treated Water Outsourcing Treated Water Outsourcing (“TWO”) is a joint venture between the Company and Nalco Water, an Ecolab company, in which the Company holds a 50% partnership interest. The Company is obligated to absorb all risk of loss up to 100% of the joint venture partner’s equity. As such, the Company fully consolidates TWO as a variable interest entity (“VIE”) under ASC Topic No. 810, Consolidation. The Company has not provided additional financial support to this entity which it is not contractually required to provide, and the Company does not have the ability to use the assets of TWO to settle obligations of the Company’s other subsidiaries. The following provides a summary of TWO’s balance sheet as of December 31, and September 30, 2019 , and summarized financial information for the three months ended December 31, 2019 and 2018 . December 31, September 30, Current assets (includes cash of $2,739 and $3,903) $ 5,256 $ 6,324 Property, plant and equipment 1,442 2,186 Goodwill 2,206 2,206 Other non-current assets 3 3 Total liabilities (2,353 ) (2,388 ) Three Months Ended 2019 2018 Total revenues $ 2,642 $ 3,156 Total operating expenses (1,958 ) (2,230 ) Income from operations $ 684 $ 926 Recent Accounting Pronouncements In November 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses which clarifies that receivables from operating leases are accounted for using the lease guidance and not as financial instruments. ASU 2018-19 will be effective for the Company for the quarter ending December 31, 2020, with early adoptions permitted. The Company is currently assessing the impact of adoption on the Company’s Unaudited Consolidated Financial Statements . In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808) Clarifying the Interaction between Topic 808 and Topic 606 , which clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account. In addition, unit-of-account guidance in Topic 808 was aligned with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606. ASU 2018-18 should be applied retrospectively to the date of initial adoption of Topic 606 and is effective for the Company for the quarter ending December 31, 2020, with early adoption permitted. The Company is currently assessing the impact of adoption on the Company’s Unaudited Consolidated Financial Statements . In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Subtopic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement , which modifies the disclosure requirements on fair value measurements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. ASU 2018-14 will be effective for the Company for the quarter ending December 31, 2020, with early adoption permitted. The Company is currently assessing the impact of adoption on the Company’s disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , amended in November 2019 (ASU 2019-11 and 2019-10), which requires entities to use a new forward-looking “expected loss” model that reflects expected credit losses, including credit losses related to trade receivables, and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates which generally will result in the earlier recognition of allowances for losses. ASU 2016-13 will be effective for the Company for the quarter ending December 31, 2020, with early adoption permitted. The Company does not expect the impact of adoption on the Unaudited Consolidated Financial Statements to be material. Accounting Pronouncements Recently Adopted The Company adopted ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , as of October 1, 2019, which simplifies the accounting for income taxes by removing certain exceptions and by clarifying and amending existing guidance in order to improve consistent application of and simplify GAAP for other areas of Topic 740. This adoption did not have an impact on the Company’s Unaudited Consolidated Financial Statements . The Company adopted ASU 2018‑07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, as of October 1, 2019. ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. This adoption did not have an impact on the Company’s Unaudited Consolidated Financial Statements . The Company adopted ASU 2017‑12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, as of October 1, 2019. ASU 2017-12 expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements and also made certain targeted improvements to simplify the application of hedge accounting guidance and ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness. This adoption did not have a material impact on the Company’s Unaudited Consolidated Financial Statements . The Company adopted ASU 2016-02, Leases (Topic 842), including associated ASUs related to Topic 842, as of October 1, 2019. ASU No. 2016-02 requires recognition of operating leases as lease assets and liabilities on the balance sheet, and disclosure of key information about leasing arrangements. Amendments to the standard were issued by the FASB in January, July and December 2018, and March 2019 including certain practical expedients, an amendment that provides an additional and optional transition method to adopt the standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption and certain narrow-scope improvements for lessors. The Company adopted this standard using a modified retrospective approach, applying the new standard to all leases existing at the date of initial adoption and the Company elected to apply the transition requirements at the October 1, 2019 effective date rather than the beginning of the earliest comparative period presented. As a result, the Company recorded a cumulative effect adjustment in the period of adoption, and prior periods were not restated and continue to be reported in accordance with historic accounting under ASC Topic No. 840. In addition, the Company has elected the package of practical expedients permitted under the transition guidance which does not require reassessment of prior conclusions related to contracts containing a lease, lease classification and initial direct lease costs. As an accounting policy election, the Company elected to exclude short-term leases (term of 12 months or less) from the balance sheet and accounts for non-lease and lease components separately for all asset classes. The following table summarizes the impact of adoption to the Consolidated Balance Sheet as of October 1, 2019: As Reported September 30, 2019 Impact of Adoption of ASU 2016-02 Updated October 1, 2019 Assets Prepaid and other current assets $ 21,940 $ (73 ) $ 21,867 Total current assets 637,293 (73 ) 637,220 Property, plant and equipment, net 333,584 2,126 335,710 Operating lease right-of-use assets, net — 42,073 42,073 Total Assets 1,737,848 44,126 1,781,974 Liabilities Accrued expenses and other liabilities 101,839 13,596 115,435 Total current liabilities 322,221 13,596 335,817 Obligation under operating leases — 29,308 29,308 Other non-current liabilities 78,661 3,245 81,906 Total non-current liabilities 1,049,805 32,553 1,082,358 Total liabilities 1,372,026 46,149 1,418,175 Shareholders' equity Retained deficit (174,976 ) (2,023 ) (176,999 ) Total Evoqua Water Technologies Corp. equity 362,759 (2,023 ) 360,736 Total shareholder's equity 365,822 (2,023 ) 363,799 Total liabilities and shareholders' equity $ 1,737,848 $ 44,126 $ 1,781,974 |
Acquisitions and Divestitures
Acquisitions and Divestitures | 3 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures Acquisitions Acquisitions support the Company’s strategy of delivering a broad solutions portfolio with robust technology across multiple geographies and end markets. The Company continues to evaluate potential strategic acquisitions of businesses, assets and product lines and believes that capex-like, tuck-in acquisitions present a key opportunity within its overall growth strategy. On October 1, 2019, the Company acquired a 60% investment position in San Diego-based Frontier Water Systems, LLC (“Frontier”) for $11,160 cash paid at closing. Frontier is a pioneer in the development of patented, engineered equipment packages for high-rate treatment and removal of selenium, nitrate and other metals from complex water systems. During the three months ended December 31, 2019 , the Company incurred approximately $326 in acquisition costs, which are included in General and administrative expenses. Frontier is part of the Integrated Solutions and Services segment. The Company has entered into an agreement to purchase the remaining 40% interest in Frontier on or prior to March 30, 2024. This agreement (a) gives holders of the remaining 40% interest in Frontier (the “Minority Owners”) the right to sell to Evoqua up to approximately 10% of the outstanding equity in Frontier at a predetermined price, which right may be exercised by the Minority Owners between January 1, 2021 and February 28, 2021 (the “Option”), and (b) obligates the Company to purchase and the Minority Owners to sell all of the Minority Owners’ remaining interest in Frontier at the fair market value at the time of sale on or prior to March 30, 2024 (the “Purchase Right”). The Purchase Right may be exercised early by the Minority Owners. The agreement to purchase the remaining interest was determined to be financing due to the mandatory Purchase Right, as per ASC Topic 480, Distinguishing Liabilities From Equity, and as such, the Company will recognize a liability for the remaining 40% interest. The value of the Option was determined to be $506 using a Black Scholes Merton model, and is included within Accrued expenses and other liabilities on the Consolidated Balance Sheets . The value of the Purchase Right was determined to be $7,167 , and is included within Other non‑current liabilities on the Consolidated Balance Sheets , based upon the enterprise value of Frontier upon the acquisition date as per ASC Topic 480, Distinguishing Liabilities From Equity. Pursuant to ASC Topic 480, the Company determined that this should be recorded as a liability and should be recognized at the fair value at the time of inception, adjusted for any consideration or unstated rights or privileges. The liability will be subsequently measured at an amount that would be paid on the reporting date with any change in value from the previous reporting date recognized as interest cost. The accounting for the acquisition has not yet been completed because the Company has not finalized the valuations of the acquired assets, assumed liabilities and identifiable intangible assets, including goodwill. The preliminary opening balance sheet for Frontier is summarized as follows: Current assets $ 3,084 Property, plant and equipment 3,824 Goodwill 1,403 Intangible assets 11,516 Total assets acquired 19,827 Liabilities related to Option and Purchase Right (7,673 ) Other liabilities assumed (994 ) Net assets acquired $ 11,160 Divestitures On December 31, 2019, the Company completed the previously-announced sale of the Memcor product line to DuPont de Nemours, Inc. (“DuPont”). The aggregate purchase price paid by DuPont in the Transaction was $110.0 million in cash, subject to certain adjustments. Following adjustments for cash and net working capital, gross proceeds paid by DuPont were $121.3 million . The Company recognized a $49.0 million net pre-tax benefit on the sale of the Memcor product line , net of $8.3 million of discretionary compensation payments to employees in connection with the transaction and $1.0 million in transaction costs incurred in the three months ended December 31, 2019 . The Company utilized $100 million of the proceeds from the transaction to repay a portion of the Company’s First Lien Term Loans in January 2020. |
Revenue
Revenue | 3 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contract with Customer [Text Block] | Revenue Revenue Recognition The Company recognizes sales of products and services based on the five-step analysis of transactions as provided in Topic 606. For all contracts with customers, the Company first identifies the contract which usually is established when the customer’s purchase order is accepted or acknowledged. Next the Company identifies the performance obligations in the contract. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The Company then determines the transaction price in the arrangement and allocates the transaction price to each performance obligation identified in the contract. The Company’s allocation of the transaction price to the performance obligations are based on the relative standalone selling prices for the goods and services contained in a particular performance obligation. The transaction price is adjusted for the Company’s estimate of variable consideration which may include discounts if the Company would fail to meet certain performance requirements, volume discounts or early payment discounts. To estimate variable consideration, the Company utilizes historical experience and known terms. Variable consideration in contracts for the three months ended December 31, 2019 was insignificant. For sales of aftermarket parts or products with a low level of customization and engineering time, the Company recognizes revenues at the time risks and rewards of ownership pass, which is generally when products are shipped or delivered to the customer as the Company has no obligation for installation. The Company considers shipping and handling services to be fulfillment activities and as such they do not represent separate performance obligations for revenue recognition. Sales of service arrangements are recognized as the services are performed. For certain arrangements where there is significant customization to the product and for long-term construction-type sales contracts, revenue may be recognized over time. In these instances, revenue is recognized using a measure of progress that applies an input method based on costs incurred in relation to total estimated costs. These arrangements include large capital water treatment projects, systems and solutions for municipal and industrial applications. The nature of the contracts is generally fixed price with milestone billings. In order for revenue to be recognized over a period of time, the product must have no alternative use and the Company must have an enforceable right to payment for the performance completed to date, including a normal profit margin, in the event of termination for convenience. If these two criteria are not met, revenues from these contracts will not be recognized until construction is complete. Instead, revenues from these contracts will be recognized when construction is complete. Contract revenues and cost estimates are reviewed and revised quarterly at a minimum and the cumulative effect of such adjustments are recognized in current operations. The amount of such adjustments have not been material. The Company has made accounting policy elections to exclude all taxes by governmental authorities from the measurement of the transaction price and that long-term construction-type sales contracts, or those contracts for products with significant customization that the total contract price is less than $100 will be recorded at the point in time when the construction is complete. Performance Obligations The Company elects to apply the practical expedient to exclude from this disclosure revenue related to performance obligations if the product has an alternative use and the Company does not have an enforceable right to payment for the performance completed to date, including a normal profit margin, in the event of termination for convenience. The Company maintains a backlog of confirmed orders of approximately $176,693 at December 31, 2019 . This backlog represents the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied as of the end of the reporting period. The Company estimates that the majority of these performance obligations will be satisfied within the next twelve months. The recording of assets recognized from the costs to obtain and fulfill customer contracts primarily relate to the deferral of sales commissions. The Company’s costs incurred to obtain or fulfill a contract with a customer are classified as non-current assets and amortized to expense over the period of benefit of the related revenue. These costs are recorded within Cost of product sales and services . The amount of contract costs was insignificant at December 31, 2019 . The Company offers standard warranties that generally do not represent a separate performance obligation. In certain instances, a warranty is obtained separately from the original equipment sale or the warranty provides incremental services and as such is treated as a separate performance obligation. Disaggregation of Revenue In accordance with Topic 606, the Company disaggregates revenue from contracts with customers into source of revenue, reportable operating segment and geographical regions. The Company determined that disaggregating revenue into these categories meets the disclosure objective in Topic 606 which is to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Information regarding the source of revenues: Three Months Ended 2019 2018 Revenue from contracts with customers recognized under Topic 606 $ 308,602 $ 293,004 Other (1) 37,503 29,998 Total $ 346,105 $ 323,002 (1) Other revenue relates to revenue recognized from Topic 842, Leases, mainly attributable to long term rentals. Information regarding revenues disaggregated by source of revenue and segment is as follows: Three Months Ended December 31, 2019 2018 Integrated Solutions and Services Applied Product Technologies Total Integrated Solutions and Services Applied Product Technologies Total Revenue from capital projects $ 54,620 $ 74,926 $ 129,546 $ 43,009 $ 71,226 $ 114,235 Revenue from aftermarket 29,673 37,341 67,014 30,796 35,057 65,853 Revenue from service 143,845 5,700 149,545 136,693 6,221 142,914 Total $ 228,138 $ 117,967 $ 346,105 $ 210,498 $ 112,504 $ 323,002 Information regarding revenues disaggregated by geographic area is as follows: Three Months Ended 2019 2018 United States $ 277,717 $ 258,718 Europe 26,112 21,417 Asia 18,742 18,908 Canada 17,563 20,303 Australia 5,971 3,656 Total $ 346,105 $ 323,002 Contract Balances The Company performs its obligations under a contract with a customer by transferring products and/or services in exchange for consideration from the customer. The Company receives payments from customers based on a billing schedule as established in its contracts. Contract assets relate to costs incurred to perform in advance of scheduled billings. Contract liabilities relate to payments received in advance of performance under the contracts. Change in contract assets and liabilities are due to our performance under the contract. The tables below provides a roll-forward of contract assets and contract liabilities balances for the periods presented: Three Months Ended Contract assets (a) 2019 2018 Balance at beginning of period $ 73,467 $ 69,147 Cumulative effect of adoption of new accounting standards — (6,106 ) Recognized in current period 84,596 51,567 Reclassified to accounts receivable (87,046 ) (59,305 ) Amounts related to sale of the Memcor product line 2,710 — Foreign currency 182 345 Balance at end of period $ 73,909 $ 55,648 (a) Excludes receivable balances which are disclosed on the Consolidated Balance Sheets . Three Months Ended Contract Liabilities 2019 2018 Balance at beginning of period $ 39,051 $ 17,652 Cumulative effect of adoption of new accounting standards — 1,773 Recognized in current period 88,616 67,852 Amounts in beginning balance reclassified to revenue (37,624 ) (15,825 ) Current period amounts reclassified to revenue (46,083 ) (40,709 ) Amounts related to sale of the Memcor product line (700 ) — Foreign currency 374 346 Balance at end of period $ 43,634 $ 31,089 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurements As of December 31, and September 30, 2019 , the fair values of cash and cash equivalents, accounts receivable and accounts payable approximate carrying values due to the short maturity of these items. The Company measures the fair value of pension plan assets and liabilities, deferred compensation plan assets and liabilities on a recurring basis pursuant to ASC Topic No. 820, Fair Value Measurement . ASC Topic No. 820 establishes a three‑tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1: Quoted prices for identical instruments in active markets. Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model‑derived valuations whose inputs are observable or whose significant value driver is observable. Level 3: Unobservable inputs in which little or no market data is available, therefore requiring an entity to develop its own assumptions. The following table presents the Company’s financial assets and liabilities at fair value. The fair values related to the pension plan assets are determined using net asset value (“NAV”) as a practical expedient, or by information categorized in the fair value hierarchy level based on the inputs used to determine fair value. The reported carrying amounts of deferred compensation plan assets and liabilities and debt approximate their fair values. The Company uses interest rates and other relevant information generated by market transactions involving similar instruments to fair value these assets and liabilities, therefore all are classified as Level 2 within the valuation hierarchy. Net Asset Value Quoted Market Significant Other Significant As of December 31, 2019 Assets: Pension plan Cash $ — $ 15,054 $ — $ — Government Securities 2,034 — — — Liability Driven Investment 5,379 — — — Guernsey Unit Trust 1,072 — — — Global Absolute Return 2,103 — — — Deferred compensation plan assets Trust Assets — 90 — — Insurance — — 19,124 — Interest rate cap — — 5 — Foreign currency forward contracts — — 148 — Liabilities: Pension plan — — (44,667 ) — Deferred compensation plan liabilities — — (21,874 ) — Long‑term debt — — (979,691 ) — Foreign currency forward contracts — — (123 ) — Earn-outs related to acquisitions — — — (91 ) Option and Purchase Right — — — (7,673 ) As of September 30, 2019 Assets: Pension plan Cash $ — $ 14,607 $ — $ — Government Securities 4,703 — — — Liability Driven Investment 3,261 — — — Guernsey Unit Trust 997 — — — Global Absolute Return 1,957 — — — Deferred compensation plan assets Trust Assets — 16 — — Insurance — — 18,684 — Interest rate cap — — 19 — Foreign currency forward contracts — — 278 — Liabilities: Pension plan — — (42,948 ) — Deferred compensation plan liabilities — — (21,318 ) — Long‑term debt — — (979,357 ) — Foreign currency forward contracts — — (154 ) — Earn-outs related to acquisitions — — — (1,545 ) The pension plan assets and liabilities and deferred compensation plan assets and liabilities are included in other non-current assets and other non-current liabilities at December 31, and September 30, 2019 . The Company records contingent consideration arrangements at fair value on a recurring basis and the associated balances presented as of December 31, and September 30, 2019 are earn-outs related to acquisitions. The fair value of earn-outs related to acquisitions is based on significant unobservable inputs including the achievement of certain performance metrics. Significant changes in these inputs would result in corresponding increases or decreases in the fair value of the earn-out each period until the related contingency has been resolved. Changes in the fair value of the contingent consideration obligations can result from adjustments in the probability of achieving future development steps, sales targets and profitability and are recorded in General and administrative expenses in the Unaudited Consolidated Statements of Operations . A roll-forward of the activity in the Company’s fair value of earn-outs related to acquisitions is as follows: Current Portion (1) Long-term Portion (2) Total Balance at September 30, 2019 $ 611 $ 934 $ 1,545 Payments (187 ) — (187 ) Fair value adjustment (333 ) (934 ) (1,267 ) Balance at December 31, 2019 $ 91 $ — $ 91 (1) Included in Accrued expenses and other liabilities on the Consolidated Balance Sheets . (2) Included in Other non‑current liabilities on the Consolidated Balance Sheets . Pursuant to the acquisition of Frontier, the Company recorded a liability for the Option and Purchase Right 40% interest. The fair value of the options is based upon significant unobservable inputs including future earnings and other market factors. Significant changes in these inputs would result in corresponding increases or decreases in the fair value of the options each period until the purchase of the remaining 40% interest has occurred. Changes in the fair value can result from earnings achieved over the passage of time and will be recorded in Interest expense in the Unaudited Consolidated Statements of Operations. As of December 31, 2019, $506 is included in Accrued expenses and other liabilities related to the Option and $7,167 is included in Other non‑current liabilities related to the Purchase Right on the Consolidated Balance Sheets . |
Accounts Receivable
Accounts Receivable | 3 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Accounts receivable | Accounts Receivable Accounts receivable are summarized as follows: December 31, September 30, Accounts receivable $ 247,178 $ 262,491 Allowance for doubtful accounts (5,142 ) (4,906 ) Receivables, net $ 242,036 $ 257,585 |
Inventories
Inventories | 3 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories The major classes of Inventories, net are as follows: December 31, September 30, Raw materials and supplies $ 78,127 $ 75,223 Work in progress 16,712 14,741 Finished goods and products held for resale 64,184 58,223 Costs of unbilled projects 3,655 2,347 Reserves for excess and obsolete (13,894 ) (13,370 ) Inventories, net $ 148,784 $ 137,164 |
Property, Plant, and Equipment
Property, Plant, and Equipment | 3 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant, and Equipment Property, plant, and equipment consists of the following: December 31, September 30, Machinery and equipment $ 332,109 $ 316,390 Rental equipment 178,069 172,534 Land and buildings 64,761 64,165 Construction in process 44,516 40,599 619,455 593,688 Less: accumulated depreciation (280,320 ) (260,104 ) $ 339,135 $ 333,584 The Company entered into secured financing agreements that require providing a security interest in specified equipment. As of December 31, and September 30, 2019 , the gross and net amounts of those assets are as follows: December 31, September 30, Gross Net Gross Net Machinery and equipment $ 52,395 $ 45,333 $ 48,288 $ 42,162 Construction in process 1,494 1,494 2,531 2,531 $ 53,889 $ 46,827 $ 50,819 $ 44,693 Depreciation expense and maintenance and repairs expense for the three months ended December 31, 2019 and 2018 were as follows: Three Months Ended 2019 2018 Depreciation expense $ 17,303 $ 15,209 Maintenance and repair expense 6,065 6,157 |
Goodwill
Goodwill | 3 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill Changes in the carrying amount of goodwill are as follows: Integrated Solutions and Services Applied Product Technologies Total Balance at September 30, 2019 $ 222,013 $ 170,877 $ 392,890 Business combinations and divestitures 1,403 (237 ) 1,166 Measurement period adjustment — 298 298 Foreign currency translation 863 1,789 2,652 Balance at December 31, 2019 $ 224,279 $ 172,727 $ 397,006 As of December 31, and September 30, 2019 , $152,099 and $151,880 , respectively, of goodwill was deductible for tax purposes. |
Debt
Debt | 3 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt Long‑term debt consists of the following: December 31, September 30, First Lien Term Loan, due December 20, 2024 $ 926,384 $ 928,753 Revolving Credit Facility — — Equipment Financing, due June 30, 2024 to July 5, 2029 48,096 45,960 Notes Payable, due July 31, 2023 759 807 Mortgage, due June 30, 2028 1,661 1,635 Total debt 976,900 977,155 Less unamortized discount and lender fees (11,623 ) (12,138 ) Total net debt 965,277 965,017 Less current portion (113,707 ) (13,418 ) Total long‑term debt $ 851,570 $ 951,599 Term Facilities and Revolving Credit Facility On January 15, 2014, EWT Holdings III Corp. (“EWT III”), an indirect wholly-owned subsidiary of the Company, entered into a First Lien Credit Agreement and Second Lien Credit Agreement (the “Credit Agreements” or, after the prepayment and termination of the Second Lien Credit Agreement, the “First Lien Credit Agreement” or “Credit Agreement”) among EWT III, EWT Holdings II Corp., the lenders party thereto and Credit Suisse AG as administrative agent and collateral agent. The First Lien Credit Agreement provided for a seven -year term loan facility, and the Second Lien Credit Agreement provided for an eight -year term loan facility. The term loan facilities originally consisted of the “First Lien Term Loan” and “Second Lien Term Loan” in aggregate principal amounts of $505,000 and $75,000 , respectively. The First Lien Credit Agreement also made available to the Company a $75,000 revolving credit facility (the “Revolver”), which provided for a letter of credit sub-facility up to $35,000 . During fiscal years 2017 and 2018, certain subsidiaries of the Company entered into amendments to the Credit Agreement which provided for, among other things, the refinancing of the term loans, extension of the maturity date to December 20, 2024, the reduction in the interest rate spreads to 3.00% and an additional $150,000 borrowed in incremental term loans. In addition, the revolving credit commitment and letters of credit sublimit was increased to $125,000 and $45,000 , respectively. The Company makes quarterly principal payments of $2,369 . At December 31, 2019 , the interest rate on borrowings was 4.70% , comprised of 1.70% LIBOR plus the 3.00% spread. Total deferred fees related to the First Lien Term Loan were $11,623 and $12,138 , net of amortization, as of December 31, and September 30, 2019 , respectively. These fees were included as a contra liability to debt on the Consolidated Balance Sheets . The following summarizes the Company’s outstanding borrowings under the Revolver and outstanding letters of credit as of December 31, and September 30, 2019 , respectively. December 31, September 30, Borrowing availability under the Revolver $ 125,000 $ 125,000 Outstanding borrowings under the Revolver — — Outstanding letters of credit under the Revolver 13,088 12,956 Unused amounts under the Revolver $ 111,912 $ 112,044 Additional letters of credit under a separate arrangement $ 194 $ 204 The First Lien Credit Agreement contains limitations on incremental borrowings, is subject to leverage ratios and allows for optional prepayments. Under certain circumstances, the Company may be required to remit excess cash flows as defined based upon exceeding certain leverage ratios. The Company did not exceed such ratios during the three months ended December 31, 2019 , does not anticipate exceeding such ratios during the year ending September 30, 2020 , and therefore does not anticipate any additional repayments during the year ending September 30, 2020 . Equipment Financing As of December 31, and September 30, 2019 , the Company had equipment financings in an aggregate outstanding amount of $48,096 and $45,960 , with interest rates ranging from 5.02% to 8.07% , and due dates ranging from June 30, 2024 to July 5, 2029 . Notes Payable As of December 31, and September 30, 2019 , the Company had notes payable in an aggregate outstanding amount of $759 and $807 , with an interest rates of 6.53% , and a due date of July 31, 2023. These notes are related to certain equipment related contracts and are secured by the underlying equipment and assignment of the related contracts. Mortgage On June 29, 2018, the Company's subsidiary MAGNETO special anodes B.V. entered into a 10 -year mortgage agreement for €1,600 ( $1,796 ) to finance a facility in the Netherlands, subject to monthly principal payments of €7 ( $7 ) at a blended interest rate of 2.4% with maturity in June 2028. The Company had $1,661 and $1,635 principal outstanding under this facility at December 31, and September 30, 2019 , respectively. Repayment Schedule Aggregate maturities of all long‑term debt, including current portion of long‑term debt and excluding finance lease obligations as of December 31, 2019 , are presented below: Fiscal Year Remainder of 2020 $ 110,264 2021 13,839 2022 14,057 2023 14,228 2024 14,114 Thereafter 810,398 Total $ 976,900 |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | Derivative Financial Instruments Interest Rate Risk Management The Company is subject to market risk exposure arising from changes in interest rates on our senior secured credit facilities, which bear interest at rates that are indexed against LIBOR. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to mitigate its exposure to rising interest rates. To accomplish these objectives, the Company entered into an interest rate cap, designated as a cash flow hedge, to mitigate risks associated with variable rate debt effective November 28, 2018. The LIBOR interest rate cap covers a notional amount of $600,000 of the Company’s senior secured debt, is effective for a period of three years and has a strike rate of 3.5% . Interest rate caps designated as cash flow hedges involve the receipt of stipulated amounts from a counterparty if interest rates rise above the strike rate defined in the contract. The premium paid for the interest rate cap was $2,235 and is being amortized to interest expense over its three -year term using the caplet method. At December 31, and September 30, 2019 , the unamortized premium was $1,428 and $1,614 , respectively, of which $683 and $869 , respectively, is included in Other non‑current assets and the remaining $745 is included in Prepaid and other current assets . The Company recorded $186 and $62 of premium amortization to interest expense during the three months ended December 31, 2019 and 2018 , respectively. Foreign Currency Risk Management The Company’s functional currency is the U.S. dollar. By operating internationally, the Company is subject to foreign currency risk from transactions denominated in currencies other than the U.S. dollar (“foreign currencies”). To mitigate cross-currency transaction risk, the Company analyzes significant exposures where it has receipts or payments in a currency other than the functional currency of its operations, and from time to time may strategically enter into short-term foreign currency forward contracts to lock in some or all of the cash flows associated with these transactions. The Company is also subject to currency translation risk associated with converting the foreign operations’ financial statements into U.S. dollars. The Company uses foreign currency derivative contracts in order to manage the effect of exchange fluctuations on forecasted sales and purchases that are denominated in foreign currencies. To mitigate the impact of foreign exchange rate risk, the Company entered into a series of forward contracts designated as cash flow hedges. As of December 31, 2019 , the notional amount of the forward contracts held to sell foreign currencies was $9,516 . Credit Risk Management The counterparties to the Company’s derivative contracts are highly rated financial institutions. The Company regularly reviews the creditworthiness of its financial counterparties and does not expect to incur a significant failure of any counterparties to perform under any agreements. The Company is not subject to any obligations to post collateral under derivative instrument contracts. The Company records all derivative instruments on a gross basis in the Consolidated Balance Sheets. Accordingly, there are no offsetting amounts that net assets against liabilities. Derivatives Designated as Cash Flow Hedges The Company accounts for derivatives and hedging activities in accordance with ASC Topic No. 815, “Derivatives and Hedging” (Topic No. 815). As required by Topic No. 815, the Company records all derivatives on the balance sheet at fair value and adjusts to market on a quarterly basis. The Company’s interest rate cap is valued based on readily observable market inputs, such as quotations on interest rates and LIBOR yield curves at the reporting date. The Company’s foreign currency forward contracts are valued based on quoted forward foreign exchange prices and spot rates at the reporting date. For a derivative that is designated as a cash flow hedge, changes in the fair value of the derivative are recognized in AOCI until the hedged item affects earnings. The Company does not use derivative financial instruments for trading or speculative purposes. The following represents the fair value recorded for derivatives designated as cash flow hedges for the periods presented: Asset Derivatives Balance Sheet Location December 31, September 30, Interest rate cap Prepaid and other current assets $ 5 $ 19 Foreign currency forward contracts Prepaid and other current assets 148 269 Liability Derivative Balance Sheet Location December 31, September 30, Foreign currency forward contracts Accrued expenses and other current liabilities $ 68 $ 154 The following represents the amount of (loss) gain recognized in AOCI (net of tax) during the periods presented: Three Months Ended 2019 2018 Interest rate cap $ (14 ) $ 780 Foreign currency forward contracts 19 (334 ) The following represents the amount of (loss) gain reclassified from AOCI into earnings during the periods presented: Three Months Ended Location of (Loss) Gain 2019 2018 Foreign currency forward contracts Cost of product sales and services $ — $ (126 ) Foreign currency forward contracts General and administrative expense 54 — Foreign currency forward contracts Research and development expense — 15 $ 54 $ (111 ) Based on the fair value amounts of the Company’s cash flow hedges at December 31, 2019 , the Company expects that approximately $97 of pre-tax net losses will be reclassified from AOCI into earnings during the next twelve months . The amount ultimately realized, however, will differ as exchange rates vary and the underlying contracts settle. In addition, $745 of caplet amortization will be amortized into interest expense during the next twelve months . Derivatives Not Designated as Cash Flow Hedges The following represents the fair value recorded for derivatives not designated as cash flow hedges for the periods presented: Asset Derivative Balance Sheet Location December 31, September 30, Foreign currency forward contracts Prepaid and other current assets $ — $ 9 Liability Derivative Balance Sheet Location December 31, September 30, Foreign currency forward contracts Accrued expenses and other current liabilities $ 55 $ — |
Product Warranties
Product Warranties | 3 Months Ended |
Dec. 31, 2019 | |
Guarantees and Product Warranties [Abstract] | |
Product warranties | Product Warranties The Company accrues warranty obligations associated with certain products as revenue is recognized. Provisions for the warranty obligations are based upon historical experience of costs incurred for such obligations, adjusted for site‑specific risk factors, and, as necessary, for current conditions and factors. There are significant uncertainties and judgments involved in estimating warranty obligations, including changing product designs, differences in customer installation processes and future claims experience which may vary from historical claims experience. A reconciliation of the activity related to the accrued warranty, including both the current and long‑term portions, is as follows: Current Product Warranties Non-Current Product Warranties Three Months Ended Three Months Ended 2019 2018 2019 2018 Balance at beginning of the period $ 4,922 $ 8,907 $ 2,332 $ 3,360 Warranty provision for sales 1,251 1,373 44 300 Settlement of warranty claims (1,989 ) (1,428 ) (1,076 ) — Amounts related to sale of the Memcor product line 795 — 135 — Foreign currency translation and other 152 124 36 (4 ) Balance at end of the period $ 5,131 $ 8,976 $ 1,471 $ 3,656 |
Restructuring and Related Charg
Restructuring and Related Charges | 3 Months Ended |
Dec. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and related charges | Restructuring and Related Charges To better align its resources with its growth strategies and reduce the cost structure, the Company commits to restructuring plans as necessary. The Company has undertaken various restructuring initiatives, including the wind-down of the Company’s operations in Italy, restructuring of the Company’s operations in Australia, consolidation of functional support structures on a global basis, and consolidation of the Singaporean research and development center. On October 30, 2018, the Company announced a transition from a three -segment structure to a two -segment operating model designed to better serve the needs of customers worldwide. This new structure was effective October 1, 2018 and combined the Municipal services business with the former Industrial segment into a new segment, Integrated Solutions and Services , a group entirely focused on engaging directly with end users. The former Products segment and Municipal products businesses have been combined into a new segment, Applied Product Technologies , which is focused on developing product platforms to be sold primarily through third party channels. The Company expects to incur approximately $3 million of cash costs through fiscal 2020 as a result of this transition related to other non-employee related business optimizations. The table below sets forth the amounts accrued for the restructuring components and related activity: Three Months Ended 2019 2018 Balance at beginning of the period $ 655 $ 710 Restructuring charges related to two-segment realignment 675 1,945 Restructuring charges related to other initiatives 245 989 Write off charge and other non‑cash activity (53 ) (5) Cash payments (1,156) (2,664) Other adjustments (1 ) (16) Balance at end of the period $ 365 $ 959 The balances for accrued restructuring liabilities at December 31, and September 30, 2019 , are recorded in Accrued expenses and other liabilities on the Consolidated Balance Sheets . Restructuring charges primarily represent severance charges. The Company expects to pay the remaining amounts accrued as of December 31, 2019 during the first half of 2020. The table below sets forth the location of amounts recorded above on the Unaudited Consolidated Statements of Operations : Three Months Ended 2019 2018 Cost of product sales and services $ 384 $ 698 General and administrative expense 480 2,028 Sales and marketing expense 3 203 $ 867 $ 2,929 The Company continues to evaluate restructuring activities that may result in additional charges in the future. |
Employee Benefit Plans
Employee Benefit Plans | 3 Months Ended |
Dec. 31, 2019 | |
Retirement Benefits [Abstract] | |
Employee benefit plans | Employee Benefit Plans The Company maintains multiple employee benefit plans. Certain of the Company’s employees in the UK were participants in a Siemens defined benefit plan established for employees of a UK-based operation acquired by Siemens in 2004. The plan was frozen with respect to future service credits for active employees, however the benefit formula recognized future compensation increases. The Company agreed to establish a replacement defined benefit plan, with the assets of the Siemens scheme transferring to the new scheme on April 1, 2015. The Company’s employees in Germany also participate in a defined benefit plan. Assets equaling the plan’s accumulated benefit obligation were transferred to a German defined benefit plan sponsored by the Company upon the acquisition of EWT from Siemens. The German entity also sponsors a defined benefit plan for a small group of employees located in France. The components of net periodic benefit cost for the plans were as follows: Three Months Ended 2019 2018 Service cost $ 261 $ 217 Interest cost 68 119 Expected return on plan assets (30 ) (30 ) Amortization of actuarial losses 236 96 Pension expense for defined benefit plans $ 535 $ 402 The components of pension expense, other than the service cost component which is included in General and administrative expense, are included in the line item Other operating expense in the Unaudited Consolidated Statements of Operations . |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The income tax provision for interim periods is comprised of tax on ordinary income (loss) provided at the most recent projected annual effective tax rate (“PAETR”), adjusted for the tax effect of discrete items. Management estimates the PAETR each quarter based on the forecasted annual pretax income or (loss). The Company is required to reduce deferred tax assets by a valuation allowance if, based on all available evidence, it is considered more likely than not that some portion or all of the benefit of the deferred tax assets will not be realized in future periods. The Company also records the income tax impact of certain discrete, unusual or infrequently occurring items including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur. When a company maintains a valuation allowance in a particular jurisdiction, no net deferred income tax expense or (benefit) will typically be provided. Jurisdictions with projected income that maintain a valuation allowance typically will form part of the PAETR calculation discussed above. However, jurisdictions with a projected loss for the year that maintain a valuation allowance are excluded from the PAETR calculation. Instead, the income tax for these jurisdictions is computed separately. The actual year-to-date income tax expense (benefit) is the product of the most current PAETR and the actual year-to-date pretax income (loss) adjusted for any discrete tax items. The income tax expense (benefit) for a particular quarter, except for the first quarter, is the difference between the year-to-date calculation of income tax expense (benefit) and the year-to-date calculation for the prior quarter. Items unrelated to current period ordinary income or (loss) are recognized entirely in the period identified as a discrete item of tax. Discrete items generally relate to changes in tax laws, adjustments to prior period’s actual liability determined upon filing tax returns, and adjustments to previously recorded reserves for uncertain tax positions, initially recording or fully reversing valuation allowances. The inclusion of discrete items in a particular quarter can cause the actual effective rate for that quarter to vary significantly from the PAETR. Therefore, the actual effective income tax rate for a particular quarter can vary significantly based upon the jurisdictional mix and timing of actual earnings compared to projected annual earnings, permanent items, earnings for those jurisdictions that maintain a valuation allowance, tax associated with jurisdictions excluded from the PAETR calculation and discrete items. Annual Effective Tax Rate The PAETR, which excludes the impact of discrete items, was 4.9% and 25.8% as of the three months ended December 31, 2019 and 2018 , respectively. For the three months ended December 31, 2019 , the PAETR of 4.9% was lower than the U.S federal statutory rate of 21.0% primarily due to the gain on the sale of the Memcor product line , the U.S. valuation allowance provided on U.S. deferred tax assets as well as the impact of deferred tax liabilities related to indefinite lived intangibles, a portion of which were reversed in relation to the sale of the Memcor product line . The Company continues to maintain a full valuation on U.S. federal and state net deferred tax assets (excluding the tax effects of deferred tax liabilities associated with indefinite lived intangibles) for the year ending September 30, 2020 as a result of pretax losses incurred since the Company’s inception in early 2014. The Company reported positive pre-tax earnings for the first time in 2017 and is projecting positive pre-tax earnings in 2020, however, the Company generated pre-tax losses in all other years. Management believes it is prudent to retain a valuation allowance until a more consistent pattern of earnings is established and net operating loss carryforwards begin to be utilized. Prior and Current Period Tax Expense For the three months ended December 31, 2019 , the Company recognized income tax expense of $2,603 on pretax income of $56,109 . The rate of 4.6% differed from the U.S. statutory rate of 21.0% principally due to the gain on the sale of the Memcor product line which did not generate significant tax expense due to the combination of the U.S. valuation allowance and favorable foreign tax regimes, as well as the favorable impact of the reversal of a portion of deferred tax liabilities related to indefinite lived intangibles. For the three months ended December 31, 2018 , the Company recognized an income tax benefit of $4,514 on a pretax loss of $20,802 . Discrete items for the quarter were not material. At December 31, 2019 , the Company had gross unrecognized tax benefits of $1,289 . |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Share Based Compensation | Share-Based Compensation The Company designs equity compensation plans to attract and retain employees while also aligning employees’ interests with the interests of the Company’s shareholders . In addition, members of the Company’s Board of Directors (the “Board”) participate in equity compensation plans in connection with their service on the Company’s Board. The Company established the Evoqua Water Technologies Corp. Stock Option Plan (the “ Stock Option Plan ”) shortly after the acquisition date of January 16, 2014 . The plan allows certain management employees and the Board to purchase shares in Evoqua Water Technologies Corp. Under the Stock Option Plan , the number of shares available for award was 11,083 . As of December 31, 2019 , there were approximately 1,704 shares available for future grants, however, the Company does not currently intend to make additional grants under the Stock Option Plan . In connection with the IPO, the Board adopted and the Company’s stockholders approved the Evoqua Water Technologies Corp. 2017 Equity Incentive Plan (or the “Equity Incentive Plan”), under which equity awards may be made in the respect of 5,100 shares of common stock of the Company. Under the Equity Incentive Plan, awards may be granted in the form of options, restricted stock, restricted stock units, stock appreciation rights, dividend equivalent rights, share awards and performance-based awards (including performance share units and performance-based restricted stock). As of December 31, 2019 , there were approximately 2,049 shares available for grants under the Equity Incentive Plan. In addition to the establishment of the Equity Incentive Plan, in connection with the IPO, the Company entered into restricted stock unit (“RSU”) agreements with each of the executive officers and certain other key members of management. Pursuant to the RSU agreements, 1,197 stock-settled RSUs were granted, the aggregate value of which equals $25,000 . The RSUs vested and settled in full upon the second anniversary of the IPO on November 2, 2019, resulting in the issuance of 1,159 shares, 419 of which were deposited into treasury in satisfaction of withholding tax obligations resulting from the vesting of the RSUs. Option awards are granted at various times during the year, vest ratably at 25% per year, and are exercisable at the time of vesting. The options granted have a ten -year contractual term. A summary of the stock option activity as of December 31, 2019 is presented below: (In thousands, except per share amounts) Options Weighted Average Exercise Price/Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at September 30, 2019 8,619 $ 8.15 6.3 years $ 80,826 Granted 5 18.82 Exercised (430 ) 5.22 Cancelled (1 ) 20.88 Forfeited (32 ) 16.52 Expired — — Outstanding at December 31, 2019 8,161 $ 8.28 6.0 years $ 89,300 Options exercisable at December 31, 2019 5,835 $ 5.74 5.1 years $ 77,650 Options vested and expected to vest at December 31, 2019 8,142 $ 8.27 6.0 years $ 89,196 The total intrinsic value of options exercised (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) during the three months ended December 31, 2019 was $6,011 . A summary of the status of the Company's non-vested stock options as of and for the three months ended December 31, 2019 is presented below. (In thousands, except per share amounts) Shares Weighted Average Grant Date Fair Value/Share Nonvested at beginning of period 2,379 $ 4.96 Granted 5 5.33 Vested (25 ) 2.27 Forfeited (32 ) 5.78 Nonvested at end of period 2,327 $ 4.98 The total fair value of options vested during the three months ended December 31, 2019 , was $57 . Restricted Stock Units The following is a summary of the RSU activity for the three months ended December 31, 2019 . (In thousands, except per share amounts) Shares Weighted Average Grant Date Fair Value/Share Outstanding at September 30, 2019 2,002 $ 17.45 Granted 4 18.82 Vested (1,159 ) 20.88 Forfeited (17 ) 12.67 Outstanding at December 31, 2019 830 $ 12.76 Vested and expected to vest at December 31, 2019 818 $ 12.75 Expense Measurement and Recognition Total share-based compensation expense was $3,691 and $4,559 during the three months ended December 31, 2019 and 2018 , respectively, of which $3,680 and $4,525 was non-cash, respectively. The unrecognized compensation expense related to stock options and restricted stock units was $8,009 and $6,141 , respectively at December 31, 2019 , and is expected to be recognized over a weighted average period of 2.2 years and 2.1 years, respectively. The Company received $4,046 from the exercise of stock options during the three months ended December 31, 2019 . The remaining stock options exercised during the three months ended December 31, 2019 were effected via a cashless net exercise. Employee Stock Purchase Plan Effective October 1, 2018, the Company implemented an employee stock purchase plan (“ESPP”) which allows employees to purchase shares of the Company’s stock at 85% of the lower of the fair market value on the first day of the applicable offering period or on the last business day of a six-month purchase period within the offering period. These purchases were offered twice throughout fiscal 2019, and were paid by employees through payroll deductions over the respective six month purchase period, at which point the stock will be transferred to the employees. On December 21, 2018, the Company registered 11,297 shares of common stock, par value $0.01 per share, of which 5,000 are available for future issuance under the ESPP. During the three months ended December 31, 2019 and 2018, the Company incurred compensation expense of $39 and $155 , respectively, in salaries and wages in respect of the ESPP, representing the fair value of the discounted price of the shares. These amounts are included in the total share-based compensation expense above. During the three months ended December 31, 2019 , 56 shares were issued under the ESPP plan. |
Concentration of Credit Risk
Concentration of Credit Risk | 3 Months Ended |
Dec. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
Concentration of credit risk | Concentration of Credit Risk The Company’s cash and cash equivalents and accounts receivable are potentially subject to concentration of credit risk. Cash and cash equivalents are placed with financial institutions that management believes are of high credit quality. Accounts receivable are derived from revenue earned from customers located in the U.S. and internationally and generally do not require collateral. The Company’s trade receivables do not represent a significant concentration of credit risk at December 31, and September 30, 2019 due to the wide variety of customers and markets into which products are sold and their dispersion across geographic areas. The Company does perform ongoing credit evaluations of its customers and maintains an allowance for potential credit losses on trade receivables. As of and for the three months ended December 31, 2019 and 2018 , no customer accounted for more than 10% of net sales or net accounts receivable. The Company operates predominantly in ten countries worldwide and provides a wide range of proven product brands and advanced water and wastewater treatment technologies, mobile and emergency water supply solutions and service contract options through its Integrated Solutions and Services and Applied Product Technologies segments. The Company is a multi-national business but its sales and operations are primarily in the U.S. Sales to unaffiliated customers are based on the Company locations that maintain the customer relationship and transacts the external sale. |
Related_Party Transactions
Related‑Party Transactions | 3 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related‑Party Transactions | Related‑Party Transactions The Company reimbursed AEA Investors LP (“AEA”), the Company’s private equity sponsor, for normal and customary expenses incurred by AEA on behalf of the Company. The Company notes that these related-party transactions have not been significant in the three months ended December 31, 2019 and 2018 . |
Leases
Leases | 3 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Leases | Leases Lessee Accounting As discussed in Note 2 , “Summary of Significant Accounting Policies” the Company adopted ASU 2016-02 on October 1, 2019. ASU 2016-02 requires a lessee to recognize assets and liabilities on the balance sheet for all leases, with the result being the recognition of a right-of-use (“ROU”) asset and a corresponding lease liability. The lease liability is equal to the present value of the minimum lease payments for the term of the lease using the discount rate determined at lease commencement and including any optional renewal periods that were determined to be reasonably certain to be exercised. The ROU asset is equal to the initial measurement of the lease liability plus any lease payments made to the lessor at or before the commencement date and any unamortized initial indirect costs incurred by the lessee, less any unamortized lease incentives received. ROU assets are periodically reviewed for impairment whenever events or changes in circumstances arise. During the three months ended December 31, 2019 , the Company incurred no impairment charges on ROU assets. The discount rate utilized in calculating the lease liability is the rate implicit in the lease, if known, otherwise, the incremental borrowing rate (“IBR”) for the expected lease term is used. Generally, the Company cannot determine the interest rate implicit in the lease. The Company’s IBR approximates the rate the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. The Company occupies certain facilities and operates certain equipment and vehicles under non‑cancelable lease arrangements. Lease agreements may contain lease escalation clauses and purchase and renewal options. At the inception of a contract, the Company determines whether the arrangement is or contains a lease. A lease is determined to exist if there is an identified asset, the Company has the right to obtain substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the asset. Once a lease is determined to exist, the Company determines the lease classification at lease commencement. Leases are classified as operating or finance leases based on specific criteria. Operating lease expense is recognized on a straight-line basis on the Unaudited Consolidated Statements of Operations . Finance lease expense have front-loaded expense recognition that is recognized as depreciation expense and interest expense on the Unaudited Consolidated Statements of Operations . On the Consolidated Statements of Changes in Cash Flows , payments for operating leases are included in operating activities and payments for finance leases are included in financing activity, with the interest component included in operating activities. The Company’s real estate leases often include options to extend the lease term; however, the Company has not included the renewal options in the ROU asset and lease liability because the likelihood of renewal was not reasonably certain. In addition, the Company has leases that include variable lease payments, for items such as maintenance or other operating expenses, which are expensed as incurred as variable lease expense. Adoption of ASU 2016-02, Leases (Topic 842) The Company applied Topic 842 to all existing leases at October 1, 2019 using the modified retrospective approach. As a result, prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historical accounting under Topic 840. The Company has elected the following package of practical expedients which exempts the Company from having to reassess: (i) whether expired or existing contracts contain a lease, (ii) the lease classification for expired or existing leases, and (iii) initial direct costs for existing leases. In addition, the Company elected to separate lease and non-lease components for all asset classes, did not elect to use hindsight to determine the lease term and made an accounting policy election for short-term leases which does not require the capitalization of leases with terms of 12 months or less. As a result of adoption of Topic 842 on October 1, 2019, the Company recognized $42,073 of ROU assets related to operating leases in Operating lease right-of-use assets, net and $42,904 of corresponding lease liabilities, of which $13,596 is included in Accrued expenses and other liabilities and $29,308 is included in Obligation under operating leases on the Consolidated Balance Sheets . The difference is attributable to deferred rent balance as of September 30, 2019 that reduced the ROU asset balance on October 1, 2019, of which $73 was removed from Prepaid and other current assets and the remainder was recognized in Retained deficit on the Consolidated Balance Sheets . In addition, the Company recorded an ROU asset related to finance leases in Property, plant, and equipment, net of $2,126 and $3,245 in corresponding lease liabilities included in Other non‑current liabilities on the Consolidated Balance Sheets , with the difference recognized in Retained deficit . See Note 2 , “Summary of Significant Accounting Policies” for further information on the impact of adoption. The following represents the components of lease cost and other information for both operating and finance leases for the three months ended December 31, 2019 : Lease cost Finance lease cost: Amortization of ROU assets $ 3,420 Interest on lease liabilities 518 Operating lease cost 4,215 Short-term lease cost 837 Variable lease cost — Sublease income (14 ) Total lease cost $ 8,976 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases $ 520 Operating cash flows from operating leases 4,154 Financing cash flows from finance leases 3,346 ROU assets obtained in exchange for new operating lease liabilities 1,782 Weighted average remaining lease term - finance leases 3.9 years Weighted average remaining lease term - operating leases 4.9 years Weighted average discount rate - finance leases 5.00 % Weighted average discount rate - operating leases 4.53 % The following table reconciles future minimum undiscounted rental commitments for operating leases to operating lease liabilities record on the Consolidated Balance Sheet as of December 31, 2019 : Fiscal Year Remainder of 2020 $ 12,269 2021 13,304 2022 8,704 2023 6,266 2024 4,178 Thereafter 8,277 Total undiscounted lease payments $ 52,998 Present value adjustment (5,952 ) Operating lease liabilities 47,046 Less current installments of obligations under operating leases 14,175 Obligations under operating leases, excluding current installments $ 32,871 The gross and net carrying values of the equipment under finance leases as of December 31, and September 30, 2019 was as follows: December 31, September 30, Gross carrying amount $ 80,458 $ 69,760 Net carrying amount 36,871 36,337 The following table reconciles future minimum undiscounted rental commitments for finance leases to the finance lease liabilities recorded on the Consolidated Balance Sheet as of December 31, 2019 : Fiscal Year Remainder of 2020 $ 10,643 2021 11,043 2022 8,416 2023 5,910 2024 3,716 Thereafter 2,443 Total undiscounted lease payments 42,171 Present value adjustment (4,221 ) Finance lease liabilities 37,950 Less current installments of obligations under finance leases 12,006 Obligations under finance leases, excluding current installments $ 25,944 The current installments of obligations under finance leases are included in Accrued expenses and other liabilities. Obligations under finance leases, excluding current installments, are included in Other non-current liabilities. Lessor Accounting The Company is a lessor to multiple parties. The Company purchases equipment through internal funding or bank debt equal to the fair market value of the equipment. The equipment is then leased to customers for periods ranging from five to twenty years. These contracts generally contain both lease and non-lease components, including installation and maintenance services of the Company owned equipment. As part of the Company’s adoption of Topic 842, for contracts entered into after October 1, 2019, the Company elected the practical expedient to not separate lease and non-lease components when certain conditions are met, including the lease qualifying as an operating lease and the same revenue recognition pattern for the lease and non-lease components. The Company accounts for these contacts with the customer as a combined component under the respective authoritative guidance for the predominant component in the contract, the lease or non-lease component. Lease income is included in Revenue from services on the Unaudited Consolidated Statements of Operations . As of December 31, 2019 , future minimum lease payments receivable under operating leases are as follows: Fiscal year Remainder of 2020 $ 75,905 2021 51,107 2022 34,977 2023 24,564 2024 13,329 Thereafter 92,565 Future minimum lease payments $ 292,447 |
Leases | Leases Lessee Accounting As discussed in Note 2 , “Summary of Significant Accounting Policies” the Company adopted ASU 2016-02 on October 1, 2019. ASU 2016-02 requires a lessee to recognize assets and liabilities on the balance sheet for all leases, with the result being the recognition of a right-of-use (“ROU”) asset and a corresponding lease liability. The lease liability is equal to the present value of the minimum lease payments for the term of the lease using the discount rate determined at lease commencement and including any optional renewal periods that were determined to be reasonably certain to be exercised. The ROU asset is equal to the initial measurement of the lease liability plus any lease payments made to the lessor at or before the commencement date and any unamortized initial indirect costs incurred by the lessee, less any unamortized lease incentives received. ROU assets are periodically reviewed for impairment whenever events or changes in circumstances arise. During the three months ended December 31, 2019 , the Company incurred no impairment charges on ROU assets. The discount rate utilized in calculating the lease liability is the rate implicit in the lease, if known, otherwise, the incremental borrowing rate (“IBR”) for the expected lease term is used. Generally, the Company cannot determine the interest rate implicit in the lease. The Company’s IBR approximates the rate the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. The Company occupies certain facilities and operates certain equipment and vehicles under non‑cancelable lease arrangements. Lease agreements may contain lease escalation clauses and purchase and renewal options. At the inception of a contract, the Company determines whether the arrangement is or contains a lease. A lease is determined to exist if there is an identified asset, the Company has the right to obtain substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the asset. Once a lease is determined to exist, the Company determines the lease classification at lease commencement. Leases are classified as operating or finance leases based on specific criteria. Operating lease expense is recognized on a straight-line basis on the Unaudited Consolidated Statements of Operations . Finance lease expense have front-loaded expense recognition that is recognized as depreciation expense and interest expense on the Unaudited Consolidated Statements of Operations . On the Consolidated Statements of Changes in Cash Flows , payments for operating leases are included in operating activities and payments for finance leases are included in financing activity, with the interest component included in operating activities. The Company’s real estate leases often include options to extend the lease term; however, the Company has not included the renewal options in the ROU asset and lease liability because the likelihood of renewal was not reasonably certain. In addition, the Company has leases that include variable lease payments, for items such as maintenance or other operating expenses, which are expensed as incurred as variable lease expense. Adoption of ASU 2016-02, Leases (Topic 842) The Company applied Topic 842 to all existing leases at October 1, 2019 using the modified retrospective approach. As a result, prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historical accounting under Topic 840. The Company has elected the following package of practical expedients which exempts the Company from having to reassess: (i) whether expired or existing contracts contain a lease, (ii) the lease classification for expired or existing leases, and (iii) initial direct costs for existing leases. In addition, the Company elected to separate lease and non-lease components for all asset classes, did not elect to use hindsight to determine the lease term and made an accounting policy election for short-term leases which does not require the capitalization of leases with terms of 12 months or less. As a result of adoption of Topic 842 on October 1, 2019, the Company recognized $42,073 of ROU assets related to operating leases in Operating lease right-of-use assets, net and $42,904 of corresponding lease liabilities, of which $13,596 is included in Accrued expenses and other liabilities and $29,308 is included in Obligation under operating leases on the Consolidated Balance Sheets . The difference is attributable to deferred rent balance as of September 30, 2019 that reduced the ROU asset balance on October 1, 2019, of which $73 was removed from Prepaid and other current assets and the remainder was recognized in Retained deficit on the Consolidated Balance Sheets . In addition, the Company recorded an ROU asset related to finance leases in Property, plant, and equipment, net of $2,126 and $3,245 in corresponding lease liabilities included in Other non‑current liabilities on the Consolidated Balance Sheets , with the difference recognized in Retained deficit . See Note 2 , “Summary of Significant Accounting Policies” for further information on the impact of adoption. The following represents the components of lease cost and other information for both operating and finance leases for the three months ended December 31, 2019 : Lease cost Finance lease cost: Amortization of ROU assets $ 3,420 Interest on lease liabilities 518 Operating lease cost 4,215 Short-term lease cost 837 Variable lease cost — Sublease income (14 ) Total lease cost $ 8,976 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases $ 520 Operating cash flows from operating leases 4,154 Financing cash flows from finance leases 3,346 ROU assets obtained in exchange for new operating lease liabilities 1,782 Weighted average remaining lease term - finance leases 3.9 years Weighted average remaining lease term - operating leases 4.9 years Weighted average discount rate - finance leases 5.00 % Weighted average discount rate - operating leases 4.53 % The following table reconciles future minimum undiscounted rental commitments for operating leases to operating lease liabilities record on the Consolidated Balance Sheet as of December 31, 2019 : Fiscal Year Remainder of 2020 $ 12,269 2021 13,304 2022 8,704 2023 6,266 2024 4,178 Thereafter 8,277 Total undiscounted lease payments $ 52,998 Present value adjustment (5,952 ) Operating lease liabilities 47,046 Less current installments of obligations under operating leases 14,175 Obligations under operating leases, excluding current installments $ 32,871 The gross and net carrying values of the equipment under finance leases as of December 31, and September 30, 2019 was as follows: December 31, September 30, Gross carrying amount $ 80,458 $ 69,760 Net carrying amount 36,871 36,337 The following table reconciles future minimum undiscounted rental commitments for finance leases to the finance lease liabilities recorded on the Consolidated Balance Sheet as of December 31, 2019 : Fiscal Year Remainder of 2020 $ 10,643 2021 11,043 2022 8,416 2023 5,910 2024 3,716 Thereafter 2,443 Total undiscounted lease payments 42,171 Present value adjustment (4,221 ) Finance lease liabilities 37,950 Less current installments of obligations under finance leases 12,006 Obligations under finance leases, excluding current installments $ 25,944 The current installments of obligations under finance leases are included in Accrued expenses and other liabilities. Obligations under finance leases, excluding current installments, are included in Other non-current liabilities. Lessor Accounting The Company is a lessor to multiple parties. The Company purchases equipment through internal funding or bank debt equal to the fair market value of the equipment. The equipment is then leased to customers for periods ranging from five to twenty years. These contracts generally contain both lease and non-lease components, including installation and maintenance services of the Company owned equipment. As part of the Company’s adoption of Topic 842, for contracts entered into after October 1, 2019, the Company elected the practical expedient to not separate lease and non-lease components when certain conditions are met, including the lease qualifying as an operating lease and the same revenue recognition pattern for the lease and non-lease components. The Company accounts for these contacts with the customer as a combined component under the respective authoritative guidance for the predominant component in the contract, the lease or non-lease component. Lease income is included in Revenue from services on the Unaudited Consolidated Statements of Operations . As of December 31, 2019 , future minimum lease payments receivable under operating leases are as follows: Fiscal year Remainder of 2020 $ 75,905 2021 51,107 2022 34,977 2023 24,564 2024 13,329 Thereafter 92,565 Future minimum lease payments $ 292,447 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Guarantees From time to time, the Company is required to provide letters of credit, bank guarantees, or surety bonds in support of its commitments and as part of the terms and conditions on water treatment projects. In addition, the Company is required to provide letters of credit or surety bonds to the Department of Environmental Protection or equivalent in some states in order to maintain its licenses to handle toxic substances at certain of its water treatment facilities. These financial instruments typically expire after all Company commitments have been met, a period typically ranging from twelve months to ten years , or more in some circumstances. The letters of credit, bank guarantees, or surety bonds are arranged through major banks or insurance companies. In the case of surety bonds, the Company generally indemnifies the issuer for all costs incurred if a claim is made against the bond. The following summarizes the Company’s outstanding letters of credit and surety bonds as of December 31, and September 30, 2019 , respectively. December 31, September 30, Revolving credit capacity $ 45,000 $ 45,000 Letters of credit outstanding 13,088 12,956 Remaining revolving credit capacity $ 31,912 $ 32,044 Surety capacity $ 230,000 $ 220,000 Surety issuances 154,094 144,717 Remaining surety available $ 75,906 $ 75,283 The longest maturity date of letters of credit and surety bonds in effect as of December 31, 2019 was March 26, 2029 . Litigation From time to time, the Company is subject to various claims, charges and litigation matters that arise in the ordinary course of business. The Company believes these actions are a normal incident of the nature and kind of business in which the Company is engaged. While it is not feasible to predict the outcome of these matters with certainty, the Company does not believe that any asserted or unasserted legal claims or proceedings, individually or in the aggregate, will have a material adverse effect on its business, financial condition, results of operations or prospects. |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 3 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Liabilities | Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following: December 31, September 30, Salaries, wages and other benefits $ 29,613 $ 35,206 Obligation under operating leases 14,175 — Obligation under finance leases 12,006 17,859 Third party commissions 10,296 11,394 Insurance liabilities 6,264 4,895 Taxes, other than income 4,137 5,215 Provisions for litigation 1,605 1,533 Option and Purchase Right 506 — Severance payments 365 655 Earn-outs related to acquisitions 91 611 Other 22,598 24,471 $ 101,656 $ 101,839 |
Business Segments
Business Segments | 3 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Business segments | Business Segments The Company’s reportable operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance. The key factors used to identify these reportable operating segments are the organization and alignment of the Company’s internal operations, the nature of the products and services, and customer type. The Company has two reportable operating segments, Integrated Solutions and Services and Applied Product Technologies . The business segments are described as follows: Integrated Solutions and Services is a group entirely focused on engaging directly with end users through direct sales with a market vertical focus. Integrated Solutions and Services provides tailored services and solutions in collaboration with the customers backed by life‑cycle services including on‑demand water, outsourced water, recycle / reuse and emergency response service alternatives to improve operational reliability, performance and environmental compliance. Key offerings within this segment also include equipment systems for industrial needs (influent water, boiler feed water, ultrahigh purity, process water, wastewater treatment and recycle / reuse), full-scale outsourcing of operations and maintenance, and municipal services, including odor and corrosion control services. Applied Product Technologies is focused on developing product platforms to be sold primarily through third party channels. This segment primarily engages in indirect sales through independent sales representatives, distributors and aftermarket channels. Applied Product Technologies provides a range of highly differentiated and scalable products and technologies specified by global water treatment designers, OEMs, engineering firms and integrators. Key offerings within this segment include filtration and separation, disinfection, wastewater solutions, anode and electrochlorination technology and aquatics technologies and solutions for the global recreational and commercial pool market. The Company evaluates its business segments’ operating results based on earnings before interest, taxes, depreciation and amortization, and certain other charges that are specific to the activities of the respective segments. Corporate activities include general corporate expenses, elimination of intersegment transactions, interest income and expense and certain other charges. Certain other charges include restructuring and other business transformation charges that have been undertaken to align and reposition the Company to the current reporting structure, acquisition related costs (including transaction costs, certain integration costs and recognition of backlog intangible assets recorded in purchase accounting) and share-based compensation charges. Since certain administrative and other operating expenses and other items have not been allocated to business segments, the results in the below table are not necessarily a measure computed in accordance with generally accepted accounting principles and may not be comparable to other companies. Three Months Ended 2019 2018 Total sales Integrated Solutions and Services $ 231,800 $ 212,277 Applied Product Technologies 138,529 130,534 Total sales 370,329 342,811 Intersegment sales Integrated Solutions and Services 3,662 1,779 Applied Product Technologies 20,562 18,030 Total intersegment sales 24,224 19,809 Sales to external customers Integrated Solutions and Services 228,138 210,498 Applied Product Technologies 117,967 112,504 Total sales 346,105 323,002 Earnings before interest, taxes, depreciation and amortization (EBITDA) Integrated Solutions and Services 48,775 41,884 Applied Product Technologies 66,716 8,851 Corporate (20,656 ) (34,004 ) Total EBITDA 94,835 16,731 Depreciation and amortization Integrated Solutions and Services 15,621 13,958 Applied Product Technologies 3,574 4,334 Corporate 5,948 4,798 Total depreciation and amortization 25,143 23,090 Operating profit (loss) Integrated Solutions and Services 33,154 27,926 Applied Product Technologies 63,142 4,517 Corporate (26,604 ) (38,802 ) Total operating profit 69,692 (6,359 ) Interest expense (13,583 ) (14,443 ) Income (loss) before income taxes 56,109 (20,802 ) Income tax (expense) benefit (2,603 ) 4,514 Net income (loss) $ 53,506 $ (16,288 ) Capital expenditures Integrated Solutions and Services $ 14,187 $ 13,685 Applied Product Technologies 2,283 2,208 Corporate 1,102 1,676 Total capital expenditures $ 17,572 $ 17,569 December 31, September 30, Assets Integrated Solutions and Services $ 818,051 $ 762,707 Applied Product Technologies 596,003 657,879 Corporate 396,248 317,262 Total assets $ 1,810,302 $ 1,737,848 Goodwill Integrated Solutions and Services $ 224,279 $ 222,013 Applied Product Technologies 172,727 170,877 Total goodwill $ 397,006 $ 392,890 |
Earnings per Share
Earnings per Share | 3 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings per share | Earnings Per Share The following table sets forth the computation of basic and diluted earnings (loss) from continuing operations per common share (in thousands, except per share amounts): Three Months Ended 2019 2018 Numerator: Numerator for basic and diluted earnings (loss) per common share—Net income (loss) attributable to Evoqua Water Technologies Corp. $ 53,145 $ (16,730 ) Denominator: Denominator for basic net income (loss) per common share—weighted average shares 115,465 113,950 Effect of dilutive securities: Share‑based compensation 5,443 — Denominator for diluted net income (loss) per common share—adjusted weighted average shares 120,908 113,950 Basic earnings (loss) attributable to Evoqua Water Technologies Corp. per common share $ 0.46 $ (0.15 ) Diluted earnings (loss) attributable to Evoqua Water Technologies Corp. per common share $ 0.44 $ (0.15 ) Since the Company was in a net loss position for the three months ended December 31, 2018 , there was no difference between the number of shares used to calculate basic and diluted loss per share. Because of their anti-dilutive effect, 4,168 common share equivalents, comprised of employee stock options, have been excluded from the diluted EPS calculation for the three months ended December 31, 2018 . |
Subsequent Events
Subsequent Events | 3 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Subsequent Events In January 2020, the Company utilized $100 million of the proceeds from the sale of the Memcor product line to repay a portion of the Company’s First Lien Term Loans. As a result of this payment, the Company moved $100 million from Long-term debt, net of deferred financing fees to Current portion of debt. |
Description of the Company an_2
Description of the Company and Basis of Presentation (Policies) | 3 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Acquisitions | Acquisitions Acquisitions are recorded using the purchase method of accounting. The purchase price of acquisitions is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value at the acquisition date. The excess of the acquisition price over those estimated fair values is recorded as goodwill. Changes to the acquisition date preliminary fair values prior to the expiration of the measurement period, a period not to exceed 12 months from date of acquisition, are recorded as an adjustment to the associated goodwill. Contingent consideration resulting from acquisitions is recorded at its estimated fair value on the acquisition date. These obligations are revalued during each subsequent reporting period and changes in the fair value of the contingent consideration obligations can result from adjustments in the probability of achieving future development steps, sales targets and profitability and are recorded in General and administrative expenses in the Unaudited Consolidated Statements of Operations . Acquisition-related expenses and restructuring costs, if any, are recognized separately from the business combination and are expensed as incurred. |
Impairment or disposal of long-lived assets | Impairment of Long‑Lived Assets Long‑lived assets, such as property, plant, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of the asset or asset group is measured by comparison of its carrying amount to undiscounted future net cash flows the asset or asset group is expected to generate. If the carrying amount of an asset or asset group is not recoverable, the Company recognizes an impairment loss based on the excess of the carrying amount of the asset or asset group over its respective fair value which is generally determined as the present value of estimated future cash flows or as the appraised value. |
Fiscal year | Fiscal Year The Company’s fiscal year ends on September 30. |
Earnings per share | Earnings (Loss) Per Share Basic earnings (loss) per common share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed based on the weighted average number of shares of common stock, plus the effect of diluted common shares outstanding during the period using the treasury stock method. Diluted potential common shares include outstanding stock options. |
Equity-based compensation | Equity‑based Compensation The Company measures the cost of awards of equity instruments to employees based on the grant‑date fair value of the award. The grant‑date fair value of a non-qualified stock option is determined using the Black‑Scholes model. The fair value of restricted stock unit awards is determined using the closing price of our common stock on date of grant. Compensation costs resulting from equity-based payment transactions are recognized primarily within General and administrative expenses, at fair value over the requisite vesting period on a straight-line basis. |
Research and development cost | Research and Development Costs Research and development costs are expensed as incurred. |
Revenue recognition | Revenue Recognition The Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) on October 1, 2018, and recognizes sales of products and services based on the five-step analysis of transactions as provided in Topic 606 which requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for such goods or services. For sales of aftermarket parts or products with a low level of customization and engineering time, the Company recognizes revenues at the time risks and rewards of ownership pass, which is generally when products are shipped or delivered to the customer as the Company has no obligation for installation. Sales of short‑term service arrangements are recognized as the services are performed, and sales of long‑term service arrangements are typically recognized on a straight‑line basis over the life of the agreement. For certain arrangements where there is significant customization to the product, the Company recognizes revenue either over time or at a point in time. These products include large capital water treatment projects, systems and solutions for municipal and industrial applications. The nature of the contracts is generally fixed price with milestone billings. The Company recognizes revenue over time if the product has no alternative use and the Company has an enforceable right to payment for the performance completed to date, including a normal profit margin, in the event of termination for convenience. If these two criteria are not met, revenues from these contracts will not be recognized until construction is complete. Contract revenues and cost estimates are reviewed and revised quarterly at a minimum and the cumulative effect of such adjustments are recognized in current operations. The amount of such adjustments have not been material. |
Basis of presentation | Basis of Presentation The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“ GAAP ”). All intercompany transactions have been eliminated. Unless otherwise specified, all dollar amounts in these notes are referred to in thousands. The interim Unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. We believe that the disclosures made are adequate to make the information presented not misleading. We consistently applied the accounting policies described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2019 , as filed with the SEC on November 25, 2019 (“2019 Annual Report”), in preparing these Unaudited Consolidated Financial Statements , with the exception of accounting standard updates described in Note 2 , “Summary of Significant Accounting Policies.” These Unaudited Consolidated Financial Statements should be read in conjunction with the audited financial statements and the notes included in our 2019 Annual Report. |
Standard product warranty | Product Warranties Accruals for estimated expenses related to warranties are made at the time products are sold and are recorded as a component of Cost of product sales in the Unaudited Consolidated Statements of Operations . The estimated warranty obligation is based on product warranty terms offered to customers, ongoing product failure rates, material usage and service delivery costs expected to be incurred in correcting a product failure, as well as specific obligations for known failures and other currently available evidence. The Company assesses the adequacy of the recorded warranty liabilities on a regular basis and adjusts amounts as necessary. |
Lessee, Leases [Policy Text Block] | Lessee Accounting The Company leases office space, buildings, vehicles, forklifts, computers, copiers and other assets under non-cancelable operating and finance leases. The Company determines whether an arrangement is or contains a lease at the inception of the arrangement based on the terms and conditions in the contract. A contract contains a lease if there is an identified asset and the Company has the right to control the asset. If the arrangement contains a lease, the Company recognizes a right-of-use (“ROU”) asset and an operating lease liability as of the lease commencement date. Operating lease assets and finance lease assets are included in Operating lease right-of-use assets, net and Property, plant, and equipment, net , respectively, on the Consolidated Balance Sheets . The corresponding operating lease liabilities are included in Accrued expenses and other liabilities and Obligation under operating leases on the Consolidated Balance Sheets . The corresponding finance lease liabilities are included in Accrued expenses and other liabilities and Other non‑current liabilities on the Consolidated Balance Sheets . |
Lessor, Leases [Policy Text Block] | Lessor Accounting The Company generates revenue through the lease of its water treatment equipment and systems to customers. In certain instances, the Company enters into a contract with a customer but must construct the underlying asset prior to its lease. At the time of contract inception, the Company determines if an arrangement is or contains a lease. Customer contracts that contain a lease are generally classified as operating leases and can contain lease and non-lease components, including maintenance and monitoring services of the Company-owned equipment. As part of the Company’s adoption of Topic 842, the Company has elected the practical expedient for all classes of underlying assets to not separate the lease and non-lease components if certain conditions are met, including the lease qualifying as an operating lease and revenue being recognized in the same pattern for both components. If these conditions are met, the Company will account for the contract with a customer as a combined component under the respective authoritative guidance for the predominant component in the contract. |
Shipping and handling cost | Shipping and Handling Cost Shipping and handling costs are included as a component of Cost of product sales |
Derivative Financial Instruments | Derivative Financial Instruments The Company’s risk-management strategy uses derivative financial instruments to manage interest rate risk and foreign currency exchange rate risk. The Company’s objective in using interest rate derivatives is to add stability to interest expense and manage its exposure to interest rate movements. To accomplish this objective, in November 2018, the Company entered into an interest rate cap which has been designated as a cash flow hedge. The Company uses foreign currency derivative contracts in order to manage the effect of exchange rate fluctuations on forecasted sales and purchases that are denominated in foreign currencies. To mitigate the impact of foreign exchange rate risk, the Company entered into a series of forward contracts designated as cash flow hedges. The Company does not enter into derivatives for trading or speculative purposes. The Company accounts for derivatives and hedging activities in accordance with ASC Topic No. 815, Derivatives and Hedging (ASC 815). The Company recognizes all derivatives on the balance sheet at fair value. Changes in the fair values of derivatives that are not designated as hedges are recognized in earnings. If the derivative is designated and qualifies as a hedge, depending on the nature of the hedge, changes in the fair value of the derivatives are either offset against the change in the hedged assets or liabilities through earnings or recognized in Accumulated other comprehensive income (loss), net of tax (“AOCI”) until the hedged item is recognized in earnings. |
Income taxes | Income Taxes The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are provided against deferred tax assets when it is deemed more likely than not that some portion or all of the deferred tax asset will not be realized within a reasonable time period. We assess tax positions using a two‑step process. A tax position is recognized if it meets a more‑likely‑than‑not threshold, and is measured at the largest amount of benefit that is greater than 50% percent of being realized. Uncertain tax positions are reviewed each balance sheet date. |
Foreign currency translations and transactions | Foreign Currency Translation and Transactions The functional currency for the international subsidiaries is the local currency. Assets and liabilities are translated into U.S. dollars using current rates of exchange, with the resulting translation adjustments recorded in AOCI within shareholders’ equity. Revenues and expenses are translated at the weighted‑average exchange rate for the period, with the resulting translation adjustments recorded in the Unaudited Consolidated Statements of Operations . |
Retirement benefits | Retirement Benefits The Company applies ASC Topic No. 715, Compensation—Retirement Benefits , which requires the recognition in pension obligations and AOCI of actuarial gains or losses, prior service costs or credits and transition assets or obligations that have previously been deferred. The determination of retirement benefit pension obligations and associated costs requires the use of actuarial computations to estimate participant plan benefits to which the employees will be entitled. The significant assumptions primarily relate to discount rates, expected long‑term rates of return on plan assets, rate of future compensation increases, mortality, years of service, and other factors. The Company develops each assumption using relevant experience in conjunction with market‑related data for each individual country in which such plans exist. All actuarial assumptions are reviewed annually with third‑party consultants and adjusted as necessary. For the recognition of net periodic postretirement cost, the calculation of the expected return on plan assets is generally derived by applying the expected long‑term rate of return on the market‑related value of plan assets. The fair value of plan assets is determined based on actual market prices or estimated fair value at the measurement date. |
Recent accounting pronouncements | Recent Accounting Pronouncements In November 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses which clarifies that receivables from operating leases are accounted for using the lease guidance and not as financial instruments. ASU 2018-19 will be effective for the Company for the quarter ending December 31, 2020, with early adoptions permitted. The Company is currently assessing the impact of adoption on the Company’s Unaudited Consolidated Financial Statements . In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808) Clarifying the Interaction between Topic 808 and Topic 606 , which clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account. In addition, unit-of-account guidance in Topic 808 was aligned with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606. ASU 2018-18 should be applied retrospectively to the date of initial adoption of Topic 606 and is effective for the Company for the quarter ending December 31, 2020, with early adoption permitted. The Company is currently assessing the impact of adoption on the Company’s Unaudited Consolidated Financial Statements . In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Subtopic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement , which modifies the disclosure requirements on fair value measurements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. ASU 2018-14 will be effective for the Company for the quarter ending December 31, 2020, with early adoption permitted. The Company is currently assessing the impact of adoption on the Company’s disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , amended in November 2019 (ASU 2019-11 and 2019-10), which requires entities to use a new forward-looking “expected loss” model that reflects expected credit losses, including credit losses related to trade receivables, and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates which generally will result in the earlier recognition of allowances for losses. ASU 2016-13 will be effective for the Company for the quarter ending December 31, 2020, with early adoption permitted. The Company does not expect the impact of adoption on the Unaudited Consolidated Financial Statements to be material. Accounting Pronouncements Recently Adopted The Company adopted ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , as of October 1, 2019, which simplifies the accounting for income taxes by removing certain exceptions and by clarifying and amending existing guidance in order to improve consistent application of and simplify GAAP for other areas of Topic 740. This adoption did not have an impact on the Company’s Unaudited Consolidated Financial Statements . The Company adopted ASU 2018‑07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, as of October 1, 2019. ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. This adoption did not have an impact on the Company’s Unaudited Consolidated Financial Statements . The Company adopted ASU 2017‑12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, as of October 1, 2019. ASU 2017-12 expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements and also made certain targeted improvements to simplify the application of hedge accounting guidance and ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness. This adoption did not have a material impact on the Company’s Unaudited Consolidated Financial Statements . The Company adopted ASU 2016-02, Leases (Topic 842), including associated ASUs related to Topic 842, as of October 1, 2019. ASU No. 2016-02 requires recognition of operating leases as lease assets and liabilities on the balance sheet, and disclosure of key information about leasing arrangements. Amendments to the standard were issued by the FASB in January, July and December 2018, and March 2019 including certain practical expedients, an amendment that provides an additional and optional transition method to adopt the standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption and certain narrow-scope improvements for lessors. The Company adopted this standard using a modified retrospective approach, applying the new standard to all leases existing at the date of initial adoption and the Company elected to apply the transition requirements at the October 1, 2019 effective date rather than the beginning of the earliest comparative period presented. As a result, the Company recorded a cumulative effect adjustment in the period of adoption, and prior periods were not restated and continue to be reported in accordance with historic accounting under ASC Topic No. 840. In addition, the Company has elected the package of practical expedients permitted under the transition guidance which does not require reassessment of prior conclusions related to contracts containing a lease, lease classification and initial direct lease costs. As an accounting policy election, the Company elected to exclude short-term leases (term of 12 months or less) from the balance sheet and accounts for non-lease and lease components separately for all asset classes. The following table summarizes the impact of adoption to the Consolidated Balance Sheet as of October 1, 2019: As Reported September 30, 2019 Impact of Adoption of ASU 2016-02 Updated October 1, 2019 Assets Prepaid and other current assets $ 21,940 $ (73 ) $ 21,867 Total current assets 637,293 (73 ) 637,220 Property, plant and equipment, net 333,584 2,126 335,710 Operating lease right-of-use assets, net — 42,073 42,073 Total Assets 1,737,848 44,126 1,781,974 Liabilities Accrued expenses and other liabilities 101,839 13,596 115,435 Total current liabilities 322,221 13,596 335,817 Obligation under operating leases — 29,308 29,308 Other non-current liabilities 78,661 3,245 81,906 Total non-current liabilities 1,049,805 32,553 1,082,358 Total liabilities 1,372,026 46,149 1,418,175 Shareholders' equity Retained deficit (174,976 ) (2,023 ) (176,999 ) Total Evoqua Water Technologies Corp. equity 362,759 (2,023 ) 360,736 Total shareholder's equity 365,822 (2,023 ) 363,799 Total liabilities and shareholders' equity $ 1,737,848 $ 44,126 $ 1,781,974 |
Use of estimates | Use of Estimates The Unaudited Consolidated Financial Statements have been prepared in conformity with GAAP and require management to make estimates and assumptions. These assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Unaudited Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting period. Estimates are revised as additional information becomes available. Actual results could differ from these estimates. |
Cash and cash equivalents | Cash and Cash Equivalents Cash and cash equivalents are liquid investments with an original maturity of three or fewer months when purchased. |
Receivables | Accounts Receivable Receivables are primarily comprised of uncollected amounts owed to us from transactions with customers and are presented net of allowances for doubtful accounts. Allowances are estimated based on historical write‑offs and the economic status of customers. The Company considers a receivable delinquent if it is unpaid after the term of the related invoice has expired. Write‑offs are recorded at the time all collection efforts have been exhausted. |
Inventories | Inventories Inventories are stated at the lower of cost or market, where cost is generally determined on the basis of an average or first‑in, first‑out (“FIFO”) method. Production costs comprise direct material and labor and applicable manufacturing overheads, including depreciation charges. The Company regularly reviews inventory quantities on hand and writes off excess or obsolete inventory based on estimated forecasts of product demand and production requirements. Manufacturing operations recognize cost of product sales using standard costing rates with overhead absorption which generally approximates actual cost. |
Property, plant and equipment | Property, Plant, and Equipment Property, plant, and equipment is valued at cost less accumulated depreciation. Depreciation expense is recognized using the straight‑line method. Useful lives are reviewed annually and, if expectations differ from previous estimates, adjusted accordingly. Estimated useful lives for major classes of depreciable assets are as follows: Asset Class Estimated Useful Life Machinery and equipment 3 to 20 years Buildings and improvements 10 to 40 years Leasehold improvements are depreciated over the shorter of their estimated useful life or the term of the lease. Costs related to maintenance and repairs that do not extend the assets’ useful life are expensed as incurred. |
Goodwill and other intangible assets | Goodwill and Other Intangible Assets Goodwill represents purchase consideration paid in a business combination that exceeds the value assigned to the net assets of acquired businesses. Other intangible assets consist of customer‑related intangibles, proprietary technology, software, trademarks and other intangible assets. The Company amortizes intangible assets with definite useful lives on a straight‑line basis over their respective estimated economic lives which range from 1 to 26 years. The Company reviews goodwill to determine potential impairment annually during the fourth quarter of the fiscal year, or more frequently if events and circumstances indicate that the asset might be impaired. Impairment testing for goodwill is performed at a reporting unit level. The quantitative impairment testing utilizes both a market (guideline public company) and income (discounted cash flows) method for determining fair value. In estimating the fair value of the reporting unit, the Company utilized a discounted cash flow (“DCF”) valuation technique, which incorporates judgments and estimates of future cash flows, future revenue and gross profit growth rates, terminal value amount, capital expenditures and applicable weighted‑average cost of capital used to discount these estimated cash flows. The estimates and projections used in the estimate of fair value are consistent with our current budget and long‑range plans, including anticipated change in market conditions, industry trend, growth rates and planned capital expenditures, among other considerations. |
Debt issuance costs | Debt Issuance Costs and Debt Discounts Debt issuance costs are capitalized and amortized over the contractual term of the underlying debt using the straight line method which approximates the effective interest method. Debt discounts and lender arrangement fees deducted from the proceeds have been included as a component of the carrying value of debt and are being amortized to interest expense using the effective interest method. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] | The following table summarizes the impact of adoption to the Consolidated Balance Sheet as of October 1, 2019: As Reported September 30, 2019 Impact of Adoption of ASU 2016-02 Updated October 1, 2019 Assets Prepaid and other current assets $ 21,940 $ (73 ) $ 21,867 Total current assets 637,293 (73 ) 637,220 Property, plant and equipment, net 333,584 2,126 335,710 Operating lease right-of-use assets, net — 42,073 42,073 Total Assets 1,737,848 44,126 1,781,974 Liabilities Accrued expenses and other liabilities 101,839 13,596 115,435 Total current liabilities 322,221 13,596 335,817 Obligation under operating leases — 29,308 29,308 Other non-current liabilities 78,661 3,245 81,906 Total non-current liabilities 1,049,805 32,553 1,082,358 Total liabilities 1,372,026 46,149 1,418,175 Shareholders' equity Retained deficit (174,976 ) (2,023 ) (176,999 ) Total Evoqua Water Technologies Corp. equity 362,759 (2,023 ) 360,736 Total shareholder's equity 365,822 (2,023 ) 363,799 Total liabilities and shareholders' equity $ 1,737,848 $ 44,126 $ 1,781,974 |
Schedule of Variable Interest Entities [Table Text Block] | The following provides a summary of TWO’s balance sheet as of December 31, and September 30, 2019 , and summarized financial information for the three months ended December 31, 2019 and 2018 . December 31, September 30, Current assets (includes cash of $2,739 and $3,903) $ 5,256 $ 6,324 Property, plant and equipment 1,442 2,186 Goodwill 2,206 2,206 Other non-current assets 3 3 Total liabilities (2,353 ) (2,388 ) Three Months Ended 2019 2018 Total revenues $ 2,642 $ 3,156 Total operating expenses (1,958 ) (2,230 ) Income from operations $ 684 $ 926 |
Schedule Of Estimated Useful Lives For Major Classes Of Depreciable Assets | Estimated useful lives for major classes of depreciable assets are as follows: Asset Class Estimated Useful Life Machinery and equipment 3 to 20 years Buildings and improvements 10 to 40 years Property, plant, and equipment consists of the following: December 31, September 30, Machinery and equipment $ 332,109 $ 316,390 Rental equipment 178,069 172,534 Land and buildings 64,761 64,165 Construction in process 44,516 40,599 619,455 593,688 Less: accumulated depreciation (280,320 ) (260,104 ) $ 339,135 $ 333,584 Depreciation expense and maintenance and repairs expense for the three months ended December 31, 2019 and 2018 were as follows: Three Months Ended 2019 2018 Depreciation expense $ 17,303 $ 15,209 Maintenance and repair expense 6,065 6,157 |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The preliminary opening balance sheet for Frontier is summarized as follows: Current assets $ 3,084 Property, plant and equipment 3,824 Goodwill 1,403 Intangible assets 11,516 Total assets acquired 19,827 Liabilities related to Option and Purchase Right (7,673 ) Other liabilities assumed (994 ) Net assets acquired $ 11,160 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Information regarding the source of revenues: Three Months Ended 2019 2018 Revenue from contracts with customers recognized under Topic 606 $ 308,602 $ 293,004 Other (1) 37,503 29,998 Total $ 346,105 $ 323,002 (1) Other revenue relates to revenue recognized from Topic 842, Leases, mainly attributable to long term rentals. Information regarding revenues disaggregated by source of revenue and segment is as follows: Three Months Ended December 31, 2019 2018 Integrated Solutions and Services Applied Product Technologies Total Integrated Solutions and Services Applied Product Technologies Total Revenue from capital projects $ 54,620 $ 74,926 $ 129,546 $ 43,009 $ 71,226 $ 114,235 Revenue from aftermarket 29,673 37,341 67,014 30,796 35,057 65,853 Revenue from service 143,845 5,700 149,545 136,693 6,221 142,914 Total $ 228,138 $ 117,967 $ 346,105 $ 210,498 $ 112,504 $ 323,002 Information regarding revenues disaggregated by geographic area is as follows: Three Months Ended 2019 2018 United States $ 277,717 $ 258,718 Europe 26,112 21,417 Asia 18,742 18,908 Canada 17,563 20,303 Australia 5,971 3,656 Total $ 346,105 $ 323,002 |
Contract with Customer, Asset and Liability | The tables below provides a roll-forward of contract assets and contract liabilities balances for the periods presented: Three Months Ended Contract assets (a) 2019 2018 Balance at beginning of period $ 73,467 $ 69,147 Cumulative effect of adoption of new accounting standards — (6,106 ) Recognized in current period 84,596 51,567 Reclassified to accounts receivable (87,046 ) (59,305 ) Amounts related to sale of the Memcor product line 2,710 — Foreign currency 182 345 Balance at end of period $ 73,909 $ 55,648 (a) Excludes receivable balances which are disclosed on the Consolidated Balance Sheets . Three Months Ended Contract Liabilities 2019 2018 Balance at beginning of period $ 39,051 $ 17,652 Cumulative effect of adoption of new accounting standards — 1,773 Recognized in current period 88,616 67,852 Amounts in beginning balance reclassified to revenue (37,624 ) (15,825 ) Current period amounts reclassified to revenue (46,083 ) (40,709 ) Amounts related to sale of the Memcor product line (700 ) — Foreign currency 374 346 Balance at end of period $ 43,634 $ 31,089 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | A roll-forward of the activity in the Company’s fair value of earn-outs related to acquisitions is as follows: Current Portion (1) Long-term Portion (2) Total Balance at September 30, 2019 $ 611 $ 934 $ 1,545 Payments (187 ) — (187 ) Fair value adjustment (333 ) (934 ) (1,267 ) Balance at December 31, 2019 $ 91 $ — $ 91 (1) Included in Accrued expenses and other liabilities on the Consolidated Balance Sheets . (2) Included in Other non‑current liabilities on the Consolidated Balance Sheets . |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table presents the Company’s financial assets and liabilities at fair value. The fair values related to the pension plan assets are determined using net asset value (“NAV”) as a practical expedient, or by information categorized in the fair value hierarchy level based on the inputs used to determine fair value. The reported carrying amounts of deferred compensation plan assets and liabilities and debt approximate their fair values. The Company uses interest rates and other relevant information generated by market transactions involving similar instruments to fair value these assets and liabilities, therefore all are classified as Level 2 within the valuation hierarchy. Net Asset Value Quoted Market Significant Other Significant As of December 31, 2019 Assets: Pension plan Cash $ — $ 15,054 $ — $ — Government Securities 2,034 — — — Liability Driven Investment 5,379 — — — Guernsey Unit Trust 1,072 — — — Global Absolute Return 2,103 — — — Deferred compensation plan assets Trust Assets — 90 — — Insurance — — 19,124 — Interest rate cap — — 5 — Foreign currency forward contracts — — 148 — Liabilities: Pension plan — — (44,667 ) — Deferred compensation plan liabilities — — (21,874 ) — Long‑term debt — — (979,691 ) — Foreign currency forward contracts — — (123 ) — Earn-outs related to acquisitions — — — (91 ) Option and Purchase Right — — — (7,673 ) As of September 30, 2019 Assets: Pension plan Cash $ — $ 14,607 $ — $ — Government Securities 4,703 — — — Liability Driven Investment 3,261 — — — Guernsey Unit Trust 997 — — — Global Absolute Return 1,957 — — — Deferred compensation plan assets Trust Assets — 16 — — Insurance — — 18,684 — Interest rate cap — — 19 — Foreign currency forward contracts — — 278 — Liabilities: Pension plan — — (42,948 ) — Deferred compensation plan liabilities — — (21,318 ) — Long‑term debt — — (979,357 ) — Foreign currency forward contracts — — (154 ) — Earn-outs related to acquisitions — — — (1,545 ) |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Schedule of accounts receivable | Accounts receivable are summarized as follows: December 31, September 30, Accounts receivable $ 247,178 $ 262,491 Allowance for doubtful accounts (5,142 ) (4,906 ) Receivables, net $ 242,036 $ 257,585 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | The major classes of Inventories, net are as follows: December 31, September 30, Raw materials and supplies $ 78,127 $ 75,223 Work in progress 16,712 14,741 Finished goods and products held for resale 64,184 58,223 Costs of unbilled projects 3,655 2,347 Reserves for excess and obsolete (13,894 ) (13,370 ) Inventories, net $ 148,784 $ 137,164 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Estimated useful lives for major classes of depreciable assets are as follows: Asset Class Estimated Useful Life Machinery and equipment 3 to 20 years Buildings and improvements 10 to 40 years Property, plant, and equipment consists of the following: December 31, September 30, Machinery and equipment $ 332,109 $ 316,390 Rental equipment 178,069 172,534 Land and buildings 64,761 64,165 Construction in process 44,516 40,599 619,455 593,688 Less: accumulated depreciation (280,320 ) (260,104 ) $ 339,135 $ 333,584 Depreciation expense and maintenance and repairs expense for the three months ended December 31, 2019 and 2018 were as follows: Three Months Ended 2019 2018 Depreciation expense $ 17,303 $ 15,209 Maintenance and repair expense 6,065 6,157 |
Schedule of Financial Instruments Owned and Pledged as Collateral | December 31, September 30, Gross Net Gross Net Machinery and equipment $ 52,395 $ 45,333 $ 48,288 $ 42,162 Construction in process 1,494 1,494 2,531 2,531 $ 53,889 $ 46,827 $ 50,819 $ 44,693 |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Changes in the carrying amount of goodwill are as follows: Integrated Solutions and Services Applied Product Technologies Total Balance at September 30, 2019 $ 222,013 $ 170,877 $ 392,890 Business combinations and divestitures 1,403 (237 ) 1,166 Measurement period adjustment — 298 298 Foreign currency translation 863 1,789 2,652 Balance at December 31, 2019 $ 224,279 $ 172,727 $ 397,006 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Line of Credit Facilities [Table Text Block] | The following summarizes the Company’s outstanding borrowings under the Revolver and outstanding letters of credit as of December 31, and September 30, 2019 , respectively. December 31, September 30, Borrowing availability under the Revolver $ 125,000 $ 125,000 Outstanding borrowings under the Revolver — — Outstanding letters of credit under the Revolver 13,088 12,956 Unused amounts under the Revolver $ 111,912 $ 112,044 Additional letters of credit under a separate arrangement $ 194 $ 204 The following summarizes the Company’s outstanding letters of credit and surety bonds as of December 31, and September 30, 2019 , respectively. December 31, September 30, Revolving credit capacity $ 45,000 $ 45,000 Letters of credit outstanding 13,088 12,956 Remaining revolving credit capacity $ 31,912 $ 32,044 Surety capacity $ 230,000 $ 220,000 Surety issuances 154,094 144,717 Remaining surety available $ 75,906 $ 75,283 |
Schedule of Long-term Debt Instruments | Long‑term debt consists of the following: December 31, September 30, First Lien Term Loan, due December 20, 2024 $ 926,384 $ 928,753 Revolving Credit Facility — — Equipment Financing, due June 30, 2024 to July 5, 2029 48,096 45,960 Notes Payable, due July 31, 2023 759 807 Mortgage, due June 30, 2028 1,661 1,635 Total debt 976,900 977,155 Less unamortized discount and lender fees (11,623 ) (12,138 ) Total net debt 965,277 965,017 Less current portion (113,707 ) (13,418 ) Total long‑term debt $ 851,570 $ 951,599 |
Schedule of Aggregate Maturities of Long-term Debt | Aggregate maturities of all long‑term debt, including current portion of long‑term debt and excluding finance lease obligations as of December 31, 2019 , are presented below: Fiscal Year Remainder of 2020 $ 110,264 2021 13,839 2022 14,057 2023 14,228 2024 14,114 Thereafter 810,398 Total $ 976,900 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) [Table Text Block] | The following represents the amount of (loss) gain recognized in AOCI (net of tax) during the periods presented: Three Months Ended 2019 2018 Interest rate cap $ (14 ) $ 780 Foreign currency forward contracts 19 (334 ) |
Derivative Instruments, Gain (Loss) [Table Text Block] | The following represents the amount of (loss) gain reclassified from AOCI into earnings during the periods presented: Three Months Ended Location of (Loss) Gain 2019 2018 Foreign currency forward contracts Cost of product sales and services $ — $ (126 ) Foreign currency forward contracts General and administrative expense 54 — Foreign currency forward contracts Research and development expense — 15 $ 54 $ (111 ) |
Designated as Hedging Instrument | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | The following represents the fair value recorded for derivatives designated as cash flow hedges for the periods presented: Asset Derivatives Balance Sheet Location December 31, September 30, Interest rate cap Prepaid and other current assets $ 5 $ 19 Foreign currency forward contracts Prepaid and other current assets 148 269 Liability Derivative Balance Sheet Location December 31, September 30, Foreign currency forward contracts Accrued expenses and other current liabilities $ 68 $ 154 |
Not Designated as Hedging Instrument | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | The following represents the fair value recorded for derivatives not designated as cash flow hedges for the periods presented: Asset Derivative Balance Sheet Location December 31, September 30, Foreign currency forward contracts Prepaid and other current assets $ — $ 9 Liability Derivative Balance Sheet Location December 31, September 30, Foreign currency forward contracts Accrued expenses and other current liabilities $ 55 $ — |
Product Warranties (Tables)
Product Warranties (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Guarantees and Product Warranties [Abstract] | |
Schedule of product warranty liability | A reconciliation of the activity related to the accrued warranty, including both the current and long‑term portions, is as follows: Current Product Warranties Non-Current Product Warranties Three Months Ended Three Months Ended 2019 2018 2019 2018 Balance at beginning of the period $ 4,922 $ 8,907 $ 2,332 $ 3,360 Warranty provision for sales 1,251 1,373 44 300 Settlement of warranty claims (1,989 ) (1,428 ) (1,076 ) — Amounts related to sale of the Memcor product line 795 — 135 — Foreign currency translation and other 152 124 36 (4 ) Balance at end of the period $ 5,131 $ 8,976 $ 1,471 $ 3,656 |
Restructuring and Related Cha_2
Restructuring and Related Charges (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Schedule of restructuring components | Three Months Ended 2019 2018 Balance at beginning of the period $ 655 $ 710 Restructuring charges related to two-segment realignment 675 1,945 Restructuring charges related to other initiatives 245 989 Write off charge and other non‑cash activity (53 ) (5) Cash payments (1,156) (2,664) Other adjustments (1 ) (16) Balance at end of the period $ 365 $ 959 The table below sets forth the location of amounts recorded above on the Unaudited Consolidated Statements of Operations : Three Months Ended 2019 2018 Cost of product sales and services $ 384 $ 698 General and administrative expense 480 2,028 Sales and marketing expense 3 203 $ 867 $ 2,929 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Retirement Benefits [Abstract] | |
Schedule of net benefit costs | for the plans were as follows: Three Months Ended 2019 2018 Service cost $ 261 $ 217 Interest cost 68 119 Expected return on plan assets (30 ) (30 ) Amortization of actuarial losses 236 96 Pension expense for defined benefit plans $ 535 $ 402 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock options, activity | A summary of the stock option activity as of December 31, 2019 is presented below: (In thousands, except per share amounts) Options Weighted Average Exercise Price/Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at September 30, 2019 8,619 $ 8.15 6.3 years $ 80,826 Granted 5 18.82 Exercised (430 ) 5.22 Cancelled (1 ) 20.88 Forfeited (32 ) 16.52 Expired — — Outstanding at December 31, 2019 8,161 $ 8.28 6.0 years $ 89,300 Options exercisable at December 31, 2019 5,835 $ 5.74 5.1 years $ 77,650 Options vested and expected to vest at December 31, 2019 8,142 $ 8.27 6.0 years $ 89,196 |
Schedule of Nonvested Share Activity | A summary of the status of the Company's non-vested stock options as of and for the three months ended December 31, 2019 is presented below. (In thousands, except per share amounts) Shares Weighted Average Grant Date Fair Value/Share Nonvested at beginning of period 2,379 $ 4.96 Granted 5 5.33 Vested (25 ) 2.27 Forfeited (32 ) 5.78 Nonvested at end of period 2,327 $ 4.98 The total fair value of options vested during the three months ended December 31, 2019 , was $57 . |
Schedule of Share-based Compensation, Restricted Stock Units Award Activity | The following is a summary of the RSU activity for the three months ended December 31, 2019 . (In thousands, except per share amounts) Shares Weighted Average Grant Date Fair Value/Share Outstanding at September 30, 2019 2,002 $ 17.45 Granted 4 18.82 Vested (1,159 ) 20.88 Forfeited (17 ) 12.67 Outstanding at December 31, 2019 830 $ 12.76 Vested and expected to vest at December 31, 2019 818 $ 12.75 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | The following table reconciles future minimum undiscounted rental commitments for operating leases to operating lease liabilities record on the Consolidated Balance Sheet as of December 31, 2019 : Fiscal Year Remainder of 2020 $ 12,269 2021 13,304 2022 8,704 2023 6,266 2024 4,178 Thereafter 8,277 Total undiscounted lease payments $ 52,998 Present value adjustment (5,952 ) Operating lease liabilities 47,046 Less current installments of obligations under operating leases 14,175 Obligations under operating leases, excluding current installments $ 32,871 |
Schedule Of Finance Lease, Right-of-Use Asset | The gross and net carrying values of the equipment under finance leases as of December 31, and September 30, 2019 was as follows: December 31, September 30, Gross carrying amount $ 80,458 $ 69,760 Net carrying amount 36,871 36,337 |
Schedule of lease cost | Lease cost Finance lease cost: Amortization of ROU assets $ 3,420 Interest on lease liabilities 518 Operating lease cost 4,215 Short-term lease cost 837 Variable lease cost — Sublease income (14 ) Total lease cost $ 8,976 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases $ 520 Operating cash flows from operating leases 4,154 Financing cash flows from finance leases 3,346 ROU assets obtained in exchange for new operating lease liabilities 1,782 Weighted average remaining lease term - finance leases 3.9 years Weighted average remaining lease term - operating leases 4.9 years Weighted average discount rate - finance leases 5.00 % Weighted average discount rate - operating leases 4.53 % |
Finance Lease, Liability, Maturity | The following table reconciles future minimum undiscounted rental commitments for finance leases to the finance lease liabilities recorded on the Consolidated Balance Sheet as of December 31, 2019 : Fiscal Year Remainder of 2020 $ 10,643 2021 11,043 2022 8,416 2023 5,910 2024 3,716 Thereafter 2,443 Total undiscounted lease payments 42,171 Present value adjustment (4,221 ) Finance lease liabilities 37,950 Less current installments of obligations under finance leases 12,006 Obligations under finance leases, excluding current installments $ 25,944 |
Lessor, Operating Lease, Payments to be Received, Maturity\ | As of December 31, 2019 , future minimum lease payments receivable under operating leases are as follows: Fiscal year Remainder of 2020 $ 75,905 2021 51,107 2022 34,977 2023 24,564 2024 13,329 Thereafter 92,565 Future minimum lease payments $ 292,447 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Line of Credit Facilities [Table Text Block] | The following summarizes the Company’s outstanding borrowings under the Revolver and outstanding letters of credit as of December 31, and September 30, 2019 , respectively. December 31, September 30, Borrowing availability under the Revolver $ 125,000 $ 125,000 Outstanding borrowings under the Revolver — — Outstanding letters of credit under the Revolver 13,088 12,956 Unused amounts under the Revolver $ 111,912 $ 112,044 Additional letters of credit under a separate arrangement $ 194 $ 204 The following summarizes the Company’s outstanding letters of credit and surety bonds as of December 31, and September 30, 2019 , respectively. December 31, September 30, Revolving credit capacity $ 45,000 $ 45,000 Letters of credit outstanding 13,088 12,956 Remaining revolving credit capacity $ 31,912 $ 32,044 Surety capacity $ 230,000 $ 220,000 Surety issuances 154,094 144,717 Remaining surety available $ 75,906 $ 75,283 |
Accrued Expenses and Other Li_2
Accrued Expenses and Other Liabilities (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | Accrued expenses and other liabilities consisted of the following: December 31, September 30, Salaries, wages and other benefits $ 29,613 $ 35,206 Obligation under operating leases 14,175 — Obligation under finance leases 12,006 17,859 Third party commissions 10,296 11,394 Insurance liabilities 6,264 4,895 Taxes, other than income 4,137 5,215 Provisions for litigation 1,605 1,533 Option and Purchase Right 506 — Severance payments 365 655 Earn-outs related to acquisitions 91 611 Other 22,598 24,471 $ 101,656 $ 101,839 |
Business Segments (Tables)
Business Segments (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information, by segment | Three Months Ended 2019 2018 Total sales Integrated Solutions and Services $ 231,800 $ 212,277 Applied Product Technologies 138,529 130,534 Total sales 370,329 342,811 Intersegment sales Integrated Solutions and Services 3,662 1,779 Applied Product Technologies 20,562 18,030 Total intersegment sales 24,224 19,809 Sales to external customers Integrated Solutions and Services 228,138 210,498 Applied Product Technologies 117,967 112,504 Total sales 346,105 323,002 Earnings before interest, taxes, depreciation and amortization (EBITDA) Integrated Solutions and Services 48,775 41,884 Applied Product Technologies 66,716 8,851 Corporate (20,656 ) (34,004 ) Total EBITDA 94,835 16,731 Depreciation and amortization Integrated Solutions and Services 15,621 13,958 Applied Product Technologies 3,574 4,334 Corporate 5,948 4,798 Total depreciation and amortization 25,143 23,090 Operating profit (loss) Integrated Solutions and Services 33,154 27,926 Applied Product Technologies 63,142 4,517 Corporate (26,604 ) (38,802 ) Total operating profit 69,692 (6,359 ) Interest expense (13,583 ) (14,443 ) Income (loss) before income taxes 56,109 (20,802 ) Income tax (expense) benefit (2,603 ) 4,514 Net income (loss) $ 53,506 $ (16,288 ) Capital expenditures Integrated Solutions and Services $ 14,187 $ 13,685 Applied Product Technologies 2,283 2,208 Corporate 1,102 1,676 Total capital expenditures $ 17,572 $ 17,569 December 31, September 30, Assets Integrated Solutions and Services $ 818,051 $ 762,707 Applied Product Technologies 596,003 657,879 Corporate 396,248 317,262 Total assets $ 1,810,302 $ 1,737,848 Goodwill Integrated Solutions and Services $ 224,279 $ 222,013 Applied Product Technologies 172,727 170,877 Total goodwill $ 397,006 $ 392,890 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share, basic and diluted | The following table sets forth the computation of basic and diluted earnings (loss) from continuing operations per common share (in thousands, except per share amounts): Three Months Ended 2019 2018 Numerator: Numerator for basic and diluted earnings (loss) per common share—Net income (loss) attributable to Evoqua Water Technologies Corp. $ 53,145 $ (16,730 ) Denominator: Denominator for basic net income (loss) per common share—weighted average shares 115,465 113,950 Effect of dilutive securities: Share‑based compensation 5,443 — Denominator for diluted net income (loss) per common share—adjusted weighted average shares 120,908 113,950 Basic earnings (loss) attributable to Evoqua Water Technologies Corp. per common share $ 0.46 $ (0.15 ) Diluted earnings (loss) attributable to Evoqua Water Technologies Corp. per common share $ 0.44 $ (0.15 ) |
Description of the Company an_3
Description of the Company and Basis of Presentation (Details) $ / shares in Units, shares in Thousands, $ in Thousands | Oct. 29, 2018segment | Mar. 21, 2018shares | Mar. 19, 2018shares | Nov. 07, 2017shares | Nov. 06, 2017$ / sharesshares | Jan. 16, 2014USD ($) | Dec. 31, 2019segment$ / shares | Dec. 31, 2017USD ($) | Sep. 30, 2019$ / shares |
Subsidiary, Sale of Stock [Line Items] | |||||||||
Common stock, par value (in USD per share) | $ / shares | $ 0.01 | $ 0.01 | |||||||
Repayments of debt | $ | $ 104,936 | ||||||||
Number of reportable segments | segment | 3 | 2 | |||||||
IPO | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Number of shares issued in transaction (in shares) | 27,777 | ||||||||
Common stock, par value (in USD per share) | $ / shares | $ 0.01 | ||||||||
Proceeds from issuance of common stock | $ | $ 137,605 | ||||||||
Initial Public Offering - Shares from Existing Shareholders | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Number of shares issued in transaction (in shares) | 2,625 | 17,500 | 8,333 | ||||||
Initial Public Offering - Shares from The Company | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Number of shares issued in transaction (in shares) | 19,444 | ||||||||
Over-Allotment Option | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Number of shares issued in transaction (in shares) | 4,167 | ||||||||
EWT Holdings II Corp and EWT Holdings III Corp | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Stock purchase price, net of cash received | $ | $ 730,577 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Nov. 28, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of debt issuance costs and discounts | $ 515 | $ 494 | |
Foreign currency losses (gains) on intracompany loans | (6,443) | 4,815 | |
Research and development costs | $ 3,684 | 4,146 | |
Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible asset, useful life | 1 year | ||
Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible asset, useful life | 26 years | ||
Machinery and equipment | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Property, plant and equipment, useful life | 3 years | ||
Machinery and equipment | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Property, plant and equipment, useful life | 20 years | ||
Building and Building Improvements | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Property, plant and equipment, useful life | 10 years | ||
Building and Building Improvements | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Property, plant and equipment, useful life | 40 years | ||
Interest Rate Cap | |||
Finite-Lived Intangible Assets [Line Items] | |||
Cash paid for interest rate cap | $ 2,235 | ||
Derivative, Term of Contract | 3 years | ||
Amortization | $ 186 | $ 62 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Treated Water Outsourcing) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Oct. 01, 2019 | Sep. 30, 2019 | |
Variable Interest Entity [Line Items] | ||||
Total current assets | $ 682,218 | $ 637,220 | $ 637,293 | |
Operating Expenses | (87,468) | $ (95,129) | ||
Income from operations | 69,692 | (6,359) | ||
Property, plant, and equipment, net | 339,135 | 335,710 | 333,584 | |
Goodwill | 397,006 | 392,890 | ||
Other non‑current assets | 26,198 | 25,715 | ||
Liabilities | (1,395,172) | $ (1,418,175) | (1,372,026) | |
Treated Water Outsourcing | ||||
Variable Interest Entity [Line Items] | ||||
Cash | 2,739 | 3,903 | ||
Total current assets | 5,256 | 6,324 | ||
Revenues | 2,642 | 3,156 | ||
Operating Expenses | (1,958) | (2,230) | ||
Income from operations | 684 | $ 926 | ||
Property, plant, and equipment, net | 1,442 | 2,186 | ||
Goodwill | 2,206 | 2,206 | ||
Other non‑current assets | 3 | 3 | ||
Liabilities | $ (2,353) | $ (2,388) |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Impact of ASC Topic 842 Adoption) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Oct. 01, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Prepaid and other current assets | $ 22,586 | $ 21,867 | $ 21,940 | ||
Total current assets | 682,218 | 637,220 | 637,293 | ||
Property, plant, and equipment, net | 339,135 | 335,710 | 333,584 | ||
Operating lease right-of-use assets, net | 42,532 | 42,073 | 0 | ||
Assets | 1,810,302 | 1,781,974 | 1,737,848 | ||
Accrued expenses and other liabilities | 101,656 | 115,435 | 101,839 | ||
Total current liabilities | 405,516 | 335,817 | 322,221 | ||
Obligation under operating leases | 32,871 | 29,308 | 0 | ||
Other non‑current liabilities | 90,346 | 81,906 | 78,661 | ||
Total non-current liabilities | 989,656 | 1,082,358 | 1,049,805 | ||
Total liabilities | 1,395,172 | 1,418,175 | 1,372,026 | ||
Retained deficit | (123,854) | (176,999) | (174,976) | ||
Total Evoqua Water Technologies Corp. equity | 412,956 | 360,736 | 362,759 | ||
Total shareholder's equity | 415,130 | 363,799 | 365,822 | $ 347,404 | $ 362,016 |
Total liabilities and shareholders' equity | $ 1,810,302 | 1,781,974 | $ 1,737,848 | ||
Accounting Standards Update 2016-02 [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Prepaid and other current assets | (73) | ||||
Total current assets | (73) | ||||
Property, plant, and equipment, net | 2,126 | ||||
Operating lease right-of-use assets, net | 42,073 | ||||
Assets | 44,126 | ||||
Accrued expenses and other liabilities | 13,596 | ||||
Total current liabilities | 13,596 | ||||
Obligation under operating leases | 29,308 | ||||
Other non‑current liabilities | 3,245 | ||||
Total non-current liabilities | 32,553 | ||||
Total liabilities | 46,149 | ||||
Retained deficit | (2,023) | ||||
Total Evoqua Water Technologies Corp. equity | (2,023) | ||||
Total shareholder's equity | (2,023) | ||||
Total liabilities and shareholders' equity | $ 44,126 |
Acquisitions and Divestitures N
Acquisitions and Divestitures Narrative (Details) - USD ($) $ in Thousands | Jan. 17, 2020 | Dec. 31, 2019 | Oct. 01, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2019 |
Business Acquisition [Line Items] | |||||||
Option and purchase right | $ 506 | $ 506 | $ 0 | ||||
Gain on sale of business | 58,279 | $ 0 | |||||
Repayments of debt | $ 104,936 | ||||||
Frontier [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Percentage of voting interests acquired | 60.00% | ||||||
Payments to acquire businesses | $ 11,160 | ||||||
Acquisition costs | 326 | 326 | |||||
Remaining percentage to be acquired | 40.00% | ||||||
Maximum percentage of voting interest to be acquired with predetermined price | 10.00% | ||||||
Other Current Liabilities | Frontier [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Option and purchase right | 506 | 506 | |||||
Other Noncurrent Liabilities | Frontier [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Option and purchase right | $ 7,167 | ||||||
Memcor [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Acquisition costs | 1,000 | $ 1,000 | |||||
Proceeds from divestiture of businesses | 110,000 | ||||||
Gross proceeds from businesses and interest in affiliates | 121,300 | ||||||
Gain on sale of business | 49,000 | ||||||
Payments to employees | $ 8,300 | ||||||
Subsequent Event | Memcor [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Repayments of debt | $ 100,000 |
Acquisitions and Divestitures O
Acquisitions and Divestitures Opening Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Oct. 01, 2019 | Sep. 30, 2019 |
Business Acquisition [Line Items] | |||
Goodwill | $ 397,006 | $ 392,890 | |
Frontier [Member] | |||
Business Acquisition [Line Items] | |||
Current assets | $ 3,084 | ||
Property, plant and equipment | 3,824 | ||
Goodwill | 1,403 | ||
Intangible assets | 11,516 | ||
Total assets acquired | 19,827 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Financial Liabilities | (7,673) | ||
Total liabilities assumed | (994) | ||
Net assets acquired | $ 11,160 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Revenue from product sales and services | $ 346,105 | $ 323,002 |
Minimum | Transferred at Point in Time | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Revenue from product sales and services | $ 100 |
Revenue (Performance Obligation
Revenue (Performance Obligation) (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Revenue, Performance Obligation [Abstract] | |
Revenue, Remaining Performance Obligation, Amount | $ 176,693 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months |
Revenue (Disaggregation of Reve
Revenue (Disaggregation of Revenue) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | ||
Disaggregation of Revenue [Line Items] | |||
Revenue from product sales and services | $ 346,105 | $ 323,002 | |
Operating Leases, Income Statement, Lease Revenue | [1] | 37,503 | 29,998 |
United States | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from product sales and services | 277,717 | 258,718 | |
Europe | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from product sales and services | 26,112 | 21,417 | |
Asia | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from product sales and services | 18,742 | 18,908 | |
Canada | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from product sales and services | 17,563 | 20,303 | |
Australia | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from product sales and services | 5,971 | 3,656 | |
Integrated Solutions and Services | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from product sales and services | 228,138 | 210,498 | |
Applied Product Technologies | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from product sales and services | 117,967 | 112,504 | |
Revenue from aftermarket | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from product sales and services | 67,014 | 65,853 | |
Revenue from aftermarket | Integrated Solutions and Services | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from product sales and services | 29,673 | 30,796 | |
Revenue from aftermarket | Applied Product Technologies | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from product sales and services | 37,341 | 35,057 | |
Revenue from service | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from product sales and services | 149,545 | 142,914 | |
Revenue from service | Integrated Solutions and Services | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from product sales and services | 143,845 | 136,693 | |
Revenue from service | Applied Product Technologies | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from product sales and services | 5,700 | 6,221 | |
Revenue from capital projects | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from product sales and services | 129,546 | 114,235 | |
Revenue from capital projects | Integrated Solutions and Services | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from product sales and services | 54,620 | 43,009 | |
Revenue from capital projects | Applied Product Technologies | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from product sales and services | 74,926 | 71,226 | |
Accounting Standards Update 2014-09 [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from product sales and services | $ 308,602 | $ 293,004 | |
[1] | Other revenue relates to revenue recognized from Topic 842, Leases, mainly attributable to long term rentals. |
Revenue (Contract Assets and Li
Revenue (Contract Assets and Liabilities) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | ||||
Contract liabilities | $ 43,634 | $ 31,089 | $ 39,051 | $ 17,652 |
Change in Contract with Customer, Asset [Roll Forward] | ||||
beginning of period | 73,467 | 69,147 | ||
Cumulative effect of adoption of new accounting standards | 0 | (6,106) | ||
Recognized in current period | 84,596 | 51,567 | ||
Reclassified to accounts receivable | 87,046 | (59,305) | ||
Amounts related to sale of the Memcor product line | 2,710 | 0 | ||
Foreign currency | 182 | 345 | ||
end of period | 73,909 | 55,648 | ||
Change in Contract with Customer, Liability [Roll Forward] | ||||
Cumulative effect of adoption of new accounting standards | 0 | 1,773 | ||
Recognized in current period | 88,616 | 67,852 | ||
Amounts in beginning balance reclassified to revenue | (37,624) | (15,825) | ||
Current period amounts reclassified to revenue | (46,083) | (40,709) | ||
Amounts related to sale of the Memcor product line | (700) | 0 | ||
Foreign currency | $ 374 | $ 346 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Oct. 01, 2019 | Sep. 30, 2019 | |
Liabilities: | ||||
Option and purchase right | $ 506 | $ 0 | ||
Fair Value, Measurements, Recurring | Quoted Market Prices in Active Markets (Level 1) | ||||
Deferred compensation plan assets | ||||
Trust Assets | 90 | 16 | ||
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ||||
Assets: | ||||
Foreign currency forward contracts | 148 | 278 | ||
Deferred compensation plan assets | ||||
Insurance | 19,124 | 18,684 | ||
Liabilities: | ||||
Pension plan | (44,667) | (42,948) | ||
Deferred compensation plan liabilities | (21,874) | (21,318) | ||
Foreign currency forward contracts | (123) | (154) | ||
Long‑term debt | (979,691) | (979,357) | ||
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | ||||
Liabilities: | ||||
Earn-outs related to acquisitions | (91) | (1,545) | ||
Option and purchase right | (7,673) | |||
Fair Value, Measurements, Recurring | Cash | Quoted Market Prices in Active Markets (Level 1) | ||||
Assets: | ||||
Defined benefit plan, fair value of plan assets | 15,054 | 14,607 | ||
Fair Value, Measurements, Recurring | US Government Agencies Debt Securities | ||||
Assets: | ||||
Plan assets at net asset value | 2,034 | 4,703 | ||
Fair Value, Measurements, Recurring | Liability Driven Investment | ||||
Assets: | ||||
Plan assets at net asset value | 5,379 | 3,261 | ||
Fair Value, Measurements, Recurring | Guernsey Unit Trust | ||||
Assets: | ||||
Plan assets at net asset value | 1,072 | 997 | ||
Fair Value, Measurements, Recurring | Global Absolute Return | ||||
Assets: | ||||
Plan assets at net asset value | 2,103 | 1,957 | ||
Other Noncurrent Liabilities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | ||||
Liabilities: | ||||
Earn-outs related to acquisitions | [1] | $ 0 | $ (934) | |
Frontier [Member] | Other Noncurrent Liabilities | ||||
Liabilities: | ||||
Option and purchase right | $ 7,167 | |||
[1] | Included in Other non‑current liabilities on the Consolidated Balance Sheets. |
Fair Value Measurements (Rollfo
Fair Value Measurements (Rollforward of Earn-outs) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Dec. 31, 2019 | Oct. 01, 2019 | Sep. 30, 2019 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Option and purchase right | $ 506 | $ 0 | ||
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Payments | (187) | |||
Earn-outs related to acquisitions | 91 | 1,545 | ||
Fair value increase | (1,267) | |||
Option and purchase right | (7,673) | |||
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring | Other Current Liabilities | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Payments | (187) | |||
Earn-outs related to acquisitions | [1] | 91 | 611 | |
Fair value increase | [1] | (333) | ||
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring | Other Noncurrent Liabilities | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Payments | 0 | |||
Earn-outs related to acquisitions | [2] | 0 | $ 934 | |
Fair value increase | [2] | (934) | ||
Frontier [Member] | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Remaining percentage to be acquired | 40.00% | |||
Frontier [Member] | Other Current Liabilities | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Option and purchase right | $ 506 | |||
Frontier [Member] | Other Noncurrent Liabilities | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Option and purchase right | $ 7,167 | |||
[1] | Included in Accrued expenses and other liabilities on the Consolidated Balance Sheets. | |||
[2] | Included in Other non‑current liabilities on the Consolidated Balance Sheets. |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Sep. 30, 2019 |
Receivables [Abstract] | ||
Accounts receivable | $ 247,178 | $ 262,491 |
Allowance for doubtful accounts | (5,142) | (4,906) |
Accounts receivable, net | $ 242,036 | $ 257,585 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Sep. 30, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials and supplies | $ 78,127 | $ 75,223 |
Work in progress | 16,712 | 14,741 |
Finished goods and products held for resale | 64,184 | 58,223 |
Costs of unbilled projects | 3,655 | 2,347 |
Reserves for excess and obsolete | (13,894) | (13,370) |
Inventory, Net | $ 148,784 | $ 137,164 |
Property, Plant, and Equipmen_2
Property, Plant, and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Oct. 01, 2019 | Sep. 30, 2019 | |
Property, Plant and Equipment [Line Items] | ||||
Property, Plant and Equipment, Gross | $ 619,455 | $ 593,688 | ||
Less: accumulated depreciation | (280,320) | (260,104) | ||
Property, plant, and equipment, net | 339,135 | $ 335,710 | 333,584 | |
Depreciation and amortization | 17,303 | $ 15,209 | ||
Maintenance and repair expense | 6,065 | $ 6,157 | ||
Machinery and equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, Plant and Equipment, Gross | 332,109 | 316,390 | ||
Rental equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, Plant and Equipment, Gross | 178,069 | 172,534 | ||
Land and buildings | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, Plant and Equipment, Gross | 64,761 | 64,165 | ||
Construction in process | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, Plant and Equipment, Gross | $ 44,516 | $ 40,599 |
Property, Plant, and Equipmen_3
Property, Plant, and Equipment Property, Plant and Equipment (Secured Financing Agreements) (Details) - Equipment Financings - USD ($) $ in Thousands | Dec. 31, 2019 | Sep. 30, 2019 |
Property, plant and equipment gross [Member] | ||
Debt Instrument [Line Items] | ||
Pledged Assets, Not Separately Reported, Other | $ 53,889 | $ 50,819 |
Property, plant and equipment gross [Member] | Machinery and equipment | ||
Debt Instrument [Line Items] | ||
Pledged Assets, Not Separately Reported, Other | 52,395 | 48,288 |
Property, plant and equipment gross [Member] | Construction in process | ||
Debt Instrument [Line Items] | ||
Pledged Assets, Not Separately Reported, Other | 1,494 | 2,531 |
Property, plant and equipment net [Member] | ||
Debt Instrument [Line Items] | ||
Pledged Assets, Not Separately Reported, Other | 46,827 | 44,693 |
Property, plant and equipment net [Member] | Machinery and equipment | ||
Debt Instrument [Line Items] | ||
Pledged Assets, Not Separately Reported, Other | 45,333 | 42,162 |
Property, plant and equipment net [Member] | Construction in process | ||
Debt Instrument [Line Items] | ||
Pledged Assets, Not Separately Reported, Other | $ 1,494 | $ 2,531 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Sep. 30, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Business acquisition, goodwill, expected tax deductible, amount | $ 152,099 | $ 151,880 |
Goodwill (Schedule of Goodwill)
Goodwill (Schedule of Goodwill) (Details) $ in Thousands | 3 Months Ended |
Dec. 31, 2019USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning of the period | $ 392,890 |
Business combinations and divestitures | 1,166 |
Measurement period adjustment | 298 |
Foreign currency translation | 2,652 |
Goodwill, end of the period | 397,006 |
Operating Segments | Integrated Solutions and Services | |
Goodwill [Roll Forward] | |
Goodwill, beginning of the period | 222,013 |
Business combinations and divestitures | 1,403 |
Measurement period adjustment | 0 |
Foreign currency translation | 863 |
Goodwill, end of the period | 224,279 |
Operating Segments | Applied Product Technologies | |
Goodwill [Roll Forward] | |
Goodwill, beginning of the period | 170,877 |
Business combinations and divestitures | (237) |
Measurement period adjustment | 298 |
Foreign currency translation | 1,789 |
Goodwill, end of the period | $ 172,727 |
Debt (Term Facility and Revolvi
Debt (Term Facility and Revolving Credit Facility) (Details) - USD ($) $ in Thousands | Jan. 15, 2014 | Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2019 | Jul. 26, 2018 | Dec. 20, 2017 |
Line of Credit Facility [Line Items] | ||||||
Unamortized discount (premium) and debt issuance costs, net | $ 11,623 | $ 12,138 | ||||
Line of credit facility, remaining borrowing capacity | 45,000 | 45,000 | ||||
Revolving Credit Facility | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit facility, remaining borrowing capacity | $ 125,000 | 125,000 | $ 125,000 | |||
Letter of Credit | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | $ 35,000 | |||||
Minimum | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt instrument, interest rate, stated percentage | 6.53% | |||||
First Lien Term Facility, due December 20, 2024 | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt instrument, term | 7 years | |||||
Unamortized discount (premium) and debt issuance costs, net | $ 11,623 | $ 12,138 | ||||
First Lien Term Facility, due December 20, 2024 | Term Loan | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | $ 505,000 | |||||
Debt instrument, interest rate, stated percentage | 4.70% | |||||
Debt instrument, periodic payment, principal | $ 2,369 | |||||
Line of credit facility, remaining borrowing capacity | $ 150,000 | |||||
First Lien Term Facility, due December 20, 2024 | Revolving Credit Facility | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | $ 75,000 | |||||
Second Lien Term Facility | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt instrument, term | 8 years | |||||
Second Lien Term Facility | Term Loan | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | $ 75,000 | |||||
London Interbank Offered Rate (LIBOR) | First Lien Term Facility, due December 20, 2024 | Term Loan | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt instrument, interest rate, stated percentage | 1.70% | |||||
Debt instrument, basis spread on variable rate | 3.00% | |||||
Line of Credit | Letter of Credit | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | $ 45,000 | |||||
Other than Ratings Condition Period | London Interbank Offered Rate (LIBOR) | Minimum | Term Loan | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt instrument, basis spread on variable rate | 3.00% |
Debt (Schedule of Long-term Deb
Debt (Schedule of Long-term Debt) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Sep. 30, 2019 |
Debt Instrument [Line Items] | ||
Total debt | $ 976,900 | $ 977,155 |
Less unamortized discount and lender fees | (11,623) | (12,138) |
Total net debt | 965,277 | 965,017 |
Current portion of debt | (113,707) | (13,418) |
Total long‑term debt | 851,570 | 951,599 |
First Lien Term Facility, due December 20, 2024 | ||
Debt Instrument [Line Items] | ||
Total debt | 926,384 | 928,753 |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Total debt | 0 | 0 |
Notes Payable, due July 31, 2023 | ||
Debt Instrument [Line Items] | ||
Total debt | 759 | 807 |
Equipment Financings | Equipment Financing, due June 30, 2024 to July 5, 2029 | ||
Debt Instrument [Line Items] | ||
Total debt | 48,096 | 45,960 |
MAGENTO | Facility Financing | Mortgage, due June 30, 2028 | ||
Debt Instrument [Line Items] | ||
Total debt | $ 1,661 | $ 1,635 |
Debt (Long-term Debt Maturities
Debt (Long-term Debt Maturities) (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Debt Disclosure [Abstract] | |
Remainder of 2020 | $ 110,264 |
2021 | 13,839 |
2022 | 14,057 |
2023 | 14,228 |
2024 | 14,114 |
Thereafter | 810,398 |
Long-term Debt | $ 976,900 |
Debt (Equipment Financing) (Det
Debt (Equipment Financing) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Sep. 30, 2019 |
Debt Instrument [Line Items] | ||
Total debt | $ 976,900 | $ 977,155 |
Equipment Financing, due June 30, 2024 to July 5, 2029 | Equipment Financings | ||
Debt Instrument [Line Items] | ||
Total debt | $ 48,096 | $ 45,960 |
Minimum | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate, stated percentage | 6.53% | |
Minimum | Equipment Financing, due June 30, 2024 to July 5, 2029 | Equipment Financings | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate, stated percentage | 5.02% | |
Maximum | Equipment Financing, due June 30, 2024 to July 5, 2029 | Equipment Financings | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate, stated percentage | 8.07% |
Debt (Notes Payable) (Details)
Debt (Notes Payable) (Details) - USD ($) | Dec. 31, 2019 | Sep. 30, 2019 |
Debt Instrument [Line Items] | ||
Notes Payable | $ 759,000 | $ 807,000 |
Minimum | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate, stated percentage | 6.53% |
Debt (Mortgage) (Details)
Debt (Mortgage) (Details) € in Thousands, $ in Thousands | Jun. 29, 2018EUR (€) | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) |
Debt Instrument [Line Items] | |||
Total debt | $ 976,900 | $ 977,155 | |
MAGENTO | Mortgage, due June 30, 2028 | Facility Financing | |||
Debt Instrument [Line Items] | |||
Debt instrument, term | 10 years | ||
Debt Instrument, Face Amount | € 1,600 | 1,796 | |
Debt instrument, periodic payment, principal | € 7 | 7 | |
Debt instrument, interest rate, stated percentage | 2.40% | ||
Total debt | $ 1,661 | $ 1,635 |
Debt (Schedule of Line of Credi
Debt (Schedule of Line of Credit Facilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 20, 2017 |
Line of Credit Facility [Line Items] | |||
Line of credit facility, remaining borrowing capacity | $ 45,000 | $ 45,000 | |
Total debt | 976,900 | 977,155 | |
Debt instrument, unused borrowing capacity, amount | 31,912 | 32,044 | |
Letter of Credit | |||
Line of Credit Facility [Line Items] | |||
Letters of credit outstanding, amount | 13,088 | 12,956 | |
Debt instrument, unused borrowing capacity, amount | 111,912 | 112,044 | |
Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Line of credit facility, remaining borrowing capacity | 125,000 | 125,000 | $ 125,000 |
Line of Credit | Letter of Credit | |||
Line of Credit Facility [Line Items] | |||
Letters of credit outstanding, amount | 194 | 204 | |
Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Total debt | $ 0 | $ 0 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Details) - USD ($) $ in Thousands | Nov. 28, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2019 |
Derivative [Line Items] | ||||
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimated Net Amount to be Transferred | $ (97) | |||
Interest rate cap amortization to be recognized in earnings within twelve months | $ (745) | |||
Description of Reclassification of Cash Flow Hedge Gain (Loss) | twelve months | |||
Interest Rate Cap | ||||
Derivative [Line Items] | ||||
Derivative, Term of Contract | 3 years | |||
Derivative, Cap Interest Rate | 3.50% | |||
Cash paid for interest rate cap | $ 2,235 | |||
Unamortized Premium, Interest Rate Cap | $ 1,428 | $ 1,614 | ||
Amortization | 186 | $ 62 | ||
Foreign Exchange Forward | ||||
Derivative [Line Items] | ||||
Derivative, Notional Amount | 9,516 | |||
Designated as Hedging Instrument | Interest Rate Cap | ||||
Derivative [Line Items] | ||||
Derivative, Notional Amount | $ 600,000 | |||
Prepaid Expenses and Other Current Assets | Interest Rate Cap | ||||
Derivative [Line Items] | ||||
Unamortized Premium, Interest Rate Cap | 745 | |||
Other Noncurrent Assets [Member] | Interest Rate Cap | ||||
Derivative [Line Items] | ||||
Unamortized Premium, Interest Rate Cap | $ 683 | $ 869 |
Derivative Financial Instrume_4
Derivative Financial Instruments (Fair Values) (Details) - Fair Value, Inputs, Level 2 - Fair Value, Measurements, Recurring - Designated as Hedging Instrument - USD ($) $ in Thousands | Dec. 31, 2019 | Sep. 30, 2019 |
Other Current Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Foreign Currency Cash Flow Hedge Liability at Fair Value | $ 68 | $ 154 |
Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Interest rate cap | 5 | 19 |
Foreign Currency Cash Flow Hedge Asset at Fair Value | $ 148 | $ 269 |
Derivative Financial Instrume_5
Derivative Financial Instruments (Amounts Recognized in AOCI) (Details) - Other Comprehensive Income (Loss) - Designated as Hedging Instrument - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Interest Rate Cap | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Net of Tax | $ (14) | $ 780 |
Foreign Exchange Forward | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Net of Tax | $ 19 | $ (334) |
Derivative Financial Instrume_6
Derivative Financial Instruments (Derivatives Not Designated as Cash Flow Hedges) (Details) - Fair Value, Inputs, Level 2 - Fair Value, Measurements, Recurring - Not Designated as Hedging Instrument - USD ($) $ in Thousands | Dec. 31, 2019 | Sep. 30, 2019 |
Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Foreign Currency Cash Flow Hedge Liability at Fair Value | $ 0 | $ 9 |
Other Current Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Foreign Currency Cash Flow Hedge Liability at Fair Value | $ 55 | $ 0 |
Derivative Financial Instrume_7
Derivative Financial Instruments (Amounts Reclassified out of AOCI) (Details) - Reclassification out of Accumulated Other Comprehensive Income [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Foreign Currency Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net | $ 54 | $ (111) |
Cost of Product Sales and Services | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Foreign Currency Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net | 0 | (126) |
General and Administrative Expense | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Foreign Currency Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net | 54 | 0 |
Research and Development Expense | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Foreign Currency Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net | $ 0 | $ 15 |
Product Warranties (Details)
Product Warranties (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | ||
Balance at beginning of the period | $ 4,922 | |
Balance at beginning of the period | 2,332 | |
Balance at end of the period | 5,131 | |
Balance at end of the period | 1,471 | |
Other Current Liabilities | ||
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | ||
Balance at beginning of the period | 4,922 | $ 8,907 |
Warranty provision for sales | 1,251 | 1,373 |
Settlement of warranty claims | (1,989) | (1,428) |
Amounts related to sale of the Memcor product line | 795 | 0 |
Foreign currency translation and other | 152 | 124 |
Balance at end of the period | 5,131 | 8,976 |
Other Noncurrent Liabilities | ||
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | ||
Balance at beginning of the period | 2,332 | 3,360 |
Warranty provision for sales | 44 | 300 |
Settlement of warranty claims | (1,076) | 0 |
Amounts related to sale of the Memcor product line | 135 | 0 |
Foreign currency translation and other | 36 | (4) |
Balance at end of the period | $ 1,471 | $ 3,656 |
Restructuring and Related Cha_3
Restructuring and Related Charges (Details) $ in Thousands | Oct. 29, 2018segment | Dec. 31, 2019USD ($)segment | Dec. 31, 2018USD ($) |
Restructuring Cost and Reserve [Line Items] | |||
Number of reportable segments | segment | 3 | 2 | |
Restructuring Reserve [Roll Forward] | |||
Restructuring reserve, beginning of the period | $ 655 | $ 710 | |
Restructuring charges | 867 | 2,929 | |
Restructuring charges related to other initiatives | 245 | 989 | |
Write off charge and other non‑cash activity | (53) | (5) | |
Cash payments | (1,156) | (2,664) | |
Other adjustments | (1) | (16) | |
Restructuring reserve, end of the period | 365 | 959 | |
Cost of Product Sales and Services | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring charges | 384 | 698 | |
General and Administrative Expense | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring charges | 480 | 2,028 | |
Sales and Marketing Expense | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring charges | 3 | 203 | |
Two-segment realignment | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring charges | 675 | $ 1,945 | |
Other Restructuring [Member] | Two-segment realignment | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and related cost, expected cost | $ 3,000 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Retirement Benefits [Abstract] | ||
Service cost | $ 261 | $ 217 |
Interest cost | 68 | 119 |
Expected return on plan assets | (30) | (30) |
Amortization of actuarial losses | 236 | 96 |
Pension expense for defined benefit plans | $ 535 | $ 402 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Estimated Annual Effective Tax Rate Used to Calculate Income Tax Expense (Benefit) | 4.90% | 25.80% |
Federal statutory income tax rate, percent | 21.00% | |
Effective income tax rate reconciliation, percent | 4.60% | |
Income tax (expense) benefit | $ (2,603) | $ 4,514 |
Income (loss) before income taxes | 56,109 | $ (20,802) |
Unrecognized Tax Benefits | $ 1,289 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) | Nov. 02, 2019 | Dec. 21, 2018 | Nov. 02, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Intrinsic value, exercises in period | $ 6,011,000 | |||||
Employee Stock Ownership Plan (ESOP), Shares in ESOP | 11,297,000 | |||||
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 | ||||
Non-cash share-based compensation | $ 3,680,000 | $ 4,525,000 | ||||
Share-based Compensation expense | 3,691,000 | 4,559,000 | ||||
Compensation cost not yet recognized, period for recognition | 6,141,000 | |||||
Fair value of options vested | 57,000 | |||||
Proceeds from issuance of common stock | $ 4,046,000 | 68,000 | ||||
Employee Stock | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Equity incentive plan, number of shares authorized (shares) | 5,100,000 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 2,049,000 | |||||
Employee Stock Option | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Equity incentive plan, number of shares authorized (shares) | 11,083,000 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 1,704,000 | |||||
Compensation cost not yet recognized, period for recognition | $ 8,009,000 | |||||
Period for recognition for unrecognized compensation expense | 2 years 2 months | |||||
Restricted Stock Units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Period for recognition for unrecognized compensation expense | 2 years 1 month | |||||
Aggregate value | $ 25,000 | |||||
Vested in period (shares) | 1,159,000 | 1,197,000 | 1,159,000 | |||
Employee Stock Purchase Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Employee Stock Ownership Plan (ESOP), Shares in ESOP | 5,000,000 | |||||
Common stock, par value (in USD per share) | $ 0.01 | |||||
Employee Stock Ownership Plan (ESOP), Compensation Expense | $ 39,000 | $ 155,000 | ||||
Shares issued under ESPP | 56,000 | |||||
Evoqua Water Technologies Corp. Stock Option Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock awards vesting percentage | 25.00% | |||||
Expiration period | 10 years | |||||
Treasury Stock [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares withheld related to net share settlement (including tax withholdings) (shares) | 419,000 | 419,000 | 18,000 |
Share-Based Compensation (Stock
Share-Based Compensation (Stock Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |||
Intrinsic value, exercises in period | $ 6,011 | ||
Options | |||
Outstanding at beginning of the period (shares) | 8,619,000 | ||
Granted (shares) | 5,000 | ||
Exercised (shares) | (430,000) | ||
Cancelled (shares) | (1,000) | ||
Forfeited (shares) | (32,000) | ||
Expired (shares) | 0 | ||
Outstanding at end of the period (shares) | 8,161,000 | ||
Options exercisable (shares) | 5,835,000 | ||
Options vested and expected to vest (shares) | 8,142,000 | ||
Weighted Average Exercise Price/Share | |||
Weighted average exercise price, outstanding, beginning balance (in dollars per share) | $ 8.15 | ||
Weighted average exercise price, granted (in dollars per share) | 18.82 | ||
Weighted average exercise price, exercised (in dollars per share) | 5.22 | ||
Weighted average exercise price, cancelled (in dollars per share) | 20.88 | ||
Weighted average exercise price, forfeited (in dollars per share) | 16.52 | ||
Weighted average exercise price, expired (in dollars per share) | 0 | ||
Weighted average exercise price, outstanding, ending balance (in dollars per share) | 8.28 | ||
Weighted average exercise price, exercisable (in dollars per share) | 5.74 | ||
Weighted average exercise price, options vested and expected to vest (in dollars per share) | $ 8.27 | ||
Weighted Average Remaining Contractual Term | |||
Weighted average remaining contractual term, outstanding | 6 years | 6 years 3 months | |
Weighted average contractual term, exercisable | 5 years 1 month | ||
Weighted average remaining contractual term, options vested and expected to vest | 6 years | ||
Intrinsic value, outstanding | $ 89,300 | $ 80,826 | |
Intrinsic value, exercisable | 77,650 | ||
Intrinsic value, options vested and expected to vest | $ 89,196 |
Share-Based Compensation (Nonve
Share-Based Compensation (Nonvested Share Activity) (Details) | 3 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Shares | |
Nonvested at beginning of period | shares | 2,379,000 |
Granted (shares) | shares | 5,000 |
Vested (shares) | shares | (25,000) |
Forfeited (shares) | shares | (32,000) |
Nonvested at end of period | shares | 2,327,000 |
Weighted Average Grant Date Fair Value/Share | |
Weighted average grant date fair value, nonvested, beginning balance (in dollars per share) | $ / shares | $ 4.96 |
Weighted average grant date fair value, granted (in dollars per share) | $ / shares | 5.33 |
Weighted average grant date fair value, vested (in dollars per share) | $ / shares | 2.27 |
Weighted average grant date fair value, forfeited (in dollars per share) | $ / shares | 5.78 |
Weighted average grant date fair value, nonvested, ending balance (in dollars per share) | $ / shares | $ 4.98 |
Share-Based Compensation (RSU A
Share-Based Compensation (RSU Activity) (Details) - $ / shares shares in Thousands | Nov. 02, 2019 | Nov. 02, 2017 | Dec. 31, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options exercisable (shares) | 5,835 | ||
Shares | |||
Forfeited | 32 | ||
Weighted Average Grant Date Fair Value/Share | |||
Weighted average grant date fair value, forfeited (in dollars per share) | $ 5.78 | ||
Weighted average exercise price, options vested and expected to vest (in dollars per share) | $ 8.27 | ||
Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options exercisable (shares) | 818 | ||
Shares | |||
Outstanding at beginning of the period (shares) | 2,002 | ||
Granted | 4 | ||
Vested in period (shares) | (1,159) | (1,197) | (1,159) |
Forfeited | 17 | ||
Outstanding at beginning of the period | 830 | ||
Weighted Average Grant Date Fair Value/Share | |||
Weighted average grant date fair value, nonvested, equity instruments other than options, beginning of the period (in dollar per share) | $ 17.45 | ||
Weighted average grant date fair value, granted (in dollars per share) | 18.82 | ||
Weighted average grant date fair value, vested (in dollars per share) | 20.88 | ||
Weighted average grant date fair value, forfeited (in dollars per share) | 12.67 | ||
Weighted average grant date fair value, nonvested, equity instruments other than options, end of the period (in dollar per share) | 12.76 | ||
Weighted average exercise price, options vested and expected to vest (in dollars per share) | $ 12.75 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) - country | 3 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Risks and Uncertainties [Abstract] | ||
Concentration Risk, Customer | 0 | no |
Concentration Risk, Percentage | 10.00% | 10.00% |
Number of countries in which entity operates | 10 |
Leases (Adoption of ASU 2016-02
Leases (Adoption of ASU 2016-02) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Oct. 01, 2019 | Sep. 30, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease right-of-use assets, net | $ 42,532 | $ 42,073 | $ 0 |
Operating lease liabilities | 47,046 | ||
Accrued expenses and other liabilities | 101,656 | 115,435 | 101,839 |
Obligation under operating leases | 32,871 | 29,308 | 0 |
Prepaid and other current assets | 22,586 | 21,867 | 21,940 |
Property, plant, and equipment, net | 339,135 | 335,710 | $ 333,584 |
Obligations under finance leases, excluding current installments | $ 25,944 | ||
Accounting Standards Update 2016-02 [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease right-of-use assets, net | 42,073 | ||
Operating lease liabilities | 42,904 | ||
Accrued expenses and other liabilities | 13,596 | ||
Obligation under operating leases | 29,308 | ||
Prepaid and other current assets | (73) | ||
Property, plant, and equipment, net | 2,126 | ||
Obligations under finance leases, excluding current installments | $ 3,245 |
Leases (Leases, Lessee Disclosu
Leases (Leases, Lessee Disclosures) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Leases [Abstract] | ||
Amortization of ROU assets | $ 3,420 | |
Interest on lease liabilities | 518 | |
Operating lease cost | 4,215 | |
Short-term lease cost | 837 | |
Variable lease cost | 0 | |
Sublease income | (14) | |
Total lease cost | 8,976 | |
Operating cash flows from finance leases | 520 | |
Operating cash flows from operating leases | 4,154 | |
Financing cash flows from finance leases | 3,346 | |
ROU assets obtained in exchange for new operating lease liabilities | $ 1,782 | $ 2,584 |
Weighted average remaining lease term - finance leases | 3 years 11 months | |
Weighted average remaining lease term - operating leases | 4 years 11 months | |
Weighted average discount rate - finance leases | 5.00% | |
Weighted average discount rate - operating leases | 4.53% |
Leases (Operating Leases Future
Leases (Operating Leases Future Payments) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Oct. 01, 2019 | Sep. 30, 2019 |
Leases [Abstract] | |||
Remainder of 2020 | $ 12,269 | ||
2021 | 13,304 | ||
2022 | 8,704 | ||
2023 | 6,266 | ||
2024 | 4,178 | ||
Thereafter | 8,277 | ||
Total undiscounted lease payments | 52,998 | ||
Present value adjustment | (5,952) | ||
Operating lease liabilities | 47,046 | ||
Obligation under operating leases | 14,175 | $ 0 | |
Obligation under operating leases | $ 32,871 | $ 29,308 | $ 0 |
Leases (Finance Lease Assets) (
Leases (Finance Lease Assets) (Details) - Equipment - USD ($) $ in Thousands | Dec. 31, 2019 | Sep. 30, 2019 |
Lessee, Lease, Description [Line Items] | ||
Gross carrying amount | $ 80,458 | $ 69,760 |
Net carrying amount | $ 36,871 | $ 36,337 |
Leases (Finance Lease Maturitie
Leases (Finance Lease Maturities) (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Leases [Abstract] | |
Remainder of 2020 | $ 10,643 |
2021 | 11,043 |
2022 | 8,416 |
2023 | 5,910 |
2024 | 3,716 |
Thereafter | 2,443 |
Total undiscounted lease payments | 42,171 |
Present value adjustment | (4,221) |
Finance lease liabilities | 37,950 |
Less current installments of obligations under finance leases | 12,006 |
Obligations under finance leases, excluding current installments | $ 25,944 |
Leases (Lessor Operating Lease
Leases (Lessor Operating Lease Future Receivables) (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Leases [Abstract] | |
Remainder of 2020 | $ 75,905 |
2021 | 51,107 |
2022 | 34,977 |
2023 | 24,564 |
2024 | 13,329 |
Thereafter | 92,565 |
Future minimum lease payments | $ 292,447 |
Commitments and Contingencies_2
Commitments and Contingencies (Schedule of Letters of Credit and Surety Bonds) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2019 | Sep. 30, 2019 | |
Other Commitments [Line Items] | ||
Debt instrument, unused borrowing capacity, amount | $ 31,912 | $ 32,044 |
Line of credit facility, remaining borrowing capacity | 45,000 | 45,000 |
Surety Bond [Member] | ||
Other Commitments [Line Items] | ||
Guarantor Obligations, Maximum Exposure, Undiscounted | 230,000 | 220,000 |
Guarantor Obligations, Current Carrying Value | 154,094 | 144,717 |
Guarantor Obligations, Remaining Surety Bonds Available | $ 75,906 | 75,283 |
Minimum | Surety Bond [Member] | ||
Other Commitments [Line Items] | ||
Letter of Credit, Guarantee, Bond Commitments, Expiration Period | 12 months | |
Maximum | Surety Bond [Member] | ||
Other Commitments [Line Items] | ||
Letter of Credit, Guarantee, Bond Commitments, Expiration Period | 10 years | |
Letter of Credit | ||
Other Commitments [Line Items] | ||
Letters of credit outstanding, amount | $ 13,088 | 12,956 |
Debt instrument, unused borrowing capacity, amount | $ 111,912 | $ 112,044 |
Accrued Expenses and Other Li_3
Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Oct. 01, 2019 | Sep. 30, 2019 |
Payables and Accruals [Abstract] | |||
Salaries, wages and other benefits | $ 29,613 | $ 35,206 | |
Obligation under operating leases | 14,175 | 0 | |
Obligation under finance leases | 12,006 | 17,859 | |
Third party commissions | 10,296 | 11,394 | |
Insurance liabilities | 6,264 | 4,895 | |
Taxes, other than income | 4,137 | 5,215 | |
Provisions for litigation | 1,605 | 1,533 | |
Option and Purchase Right | 506 | 0 | |
Severance payments | 365 | 655 | |
Earn-outs related to acquisitions | 91 | 611 | |
Other | 22,598 | 24,471 | |
Accrued expenses and other liabilities | $ 101,656 | $ 115,435 | $ 101,839 |
Business Segments (Details)
Business Segments (Details) $ in Thousands | Oct. 29, 2018segment | Dec. 31, 2019USD ($)segment | Dec. 31, 2018USD ($) | Oct. 01, 2019USD ($) | Sep. 30, 2019USD ($) |
Segment Reporting [Abstract] | |||||
Number of reportable segments | segment | 3 | 2 | |||
Segment Reporting Information [Line Items] | |||||
Revenue from product sales and services | $ 346,105 | $ 323,002 | |||
Earnings before interest, taxes, depreciation and amortization (EBITDA) | 94,835 | 16,731 | |||
Depreciation and amortization | 25,143 | 23,090 | |||
Operating profit (loss) | 69,692 | (6,359) | |||
Interest expense | (13,583) | (14,443) | |||
Income (loss) before income taxes | 56,109 | (20,802) | |||
Income tax (expense) benefit | (2,603) | 4,514 | |||
Net income (loss) | 53,506 | (16,288) | |||
Capital expenditures | 17,572 | 17,569 | |||
Assets | 1,810,302 | $ 1,781,974 | $ 1,737,848 | ||
Goodwill | 397,006 | 392,890 | |||
Integrated Solutions and Services | |||||
Segment Reporting Information [Line Items] | |||||
Revenue from product sales and services | 228,138 | 210,498 | |||
Capital expenditures | 14,187 | 13,685 | |||
Applied Product Technologies | |||||
Segment Reporting Information [Line Items] | |||||
Revenue from product sales and services | 117,967 | 112,504 | |||
Capital expenditures | 2,283 | 2,208 | |||
Intersegment Eliminations | |||||
Segment Reporting Information [Line Items] | |||||
Revenue from product sales and services | 24,224 | 19,809 | |||
Intersegment Eliminations | Integrated Solutions and Services | |||||
Segment Reporting Information [Line Items] | |||||
Revenue from product sales and services | 3,662 | 1,779 | |||
Intersegment Eliminations | Applied Product Technologies | |||||
Segment Reporting Information [Line Items] | |||||
Revenue from product sales and services | 20,562 | 18,030 | |||
Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Total sales | 370,329 | 342,811 | |||
Operating Segments | Integrated Solutions and Services | |||||
Segment Reporting Information [Line Items] | |||||
Total sales | 231,800 | 212,277 | |||
Revenue from product sales and services | 228,138 | ||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) | 48,775 | 41,884 | |||
Depreciation and amortization | 15,621 | 13,958 | |||
Operating profit (loss) | 33,154 | 27,926 | |||
Assets | 818,051 | 762,707 | |||
Goodwill | 224,279 | 222,013 | |||
Operating Segments | Applied Product Technologies | |||||
Segment Reporting Information [Line Items] | |||||
Total sales | 138,529 | 130,534 | |||
Revenue from product sales and services | 117,967 | ||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) | 66,716 | 8,851 | |||
Depreciation and amortization | 3,574 | 4,334 | |||
Operating profit (loss) | 63,142 | 4,517 | |||
Assets | 596,003 | 657,879 | |||
Goodwill | 172,727 | 170,877 | |||
Corporate, Non-Segment | |||||
Segment Reporting Information [Line Items] | |||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) | (20,656) | (34,004) | |||
Depreciation and amortization | 5,948 | 4,798 | |||
Operating profit (loss) | (26,604) | (38,802) | |||
Capital expenditures | 1,102 | $ 1,676 | |||
Assets | $ 396,248 | $ 317,262 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Numerator: | ||
Numerator for basic and diluted earnings (loss) per common share—Net income (loss) attributable to Evoqua Water Technologies Corp. | $ 53,145 | $ (16,730) |
Denominator: | ||
Denominator for basic net income (loss) per common share—weighted average shares | 115,465 | 113,950 |
Effect of dilutive securities: | ||
Share‑based compensation | 5,443 | 0 |
Denominator for diluted net income (loss) per common share—adjusted weighted average shares | 120,908 | 113,950 |
Basic income (loss) per common share | $ 0.46 | $ (0.15) |
Diluted income (loss) per common share | $ 0.44 | $ (0.15) |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (shares) | 4,168 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | Jan. 17, 2020 | Dec. 31, 2017 | Dec. 31, 2019 | Sep. 30, 2019 |
Subsequent Event [Line Items] | ||||
Repayments of debt | $ 104,936 | |||
Current portion of debt | $ 113,707 | $ 13,418 | ||
Memcor [Member] | ||||
Subsequent Event [Line Items] | ||||
Current portion of debt | $ 100,000 | |||
Memcor [Member] | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Repayments of debt | $ 100,000 |