Cover
Cover - shares | 6 Months Ended | |
Mar. 31, 2021 | Apr. 30, 2021 | |
Cover [Abstract] | ||
Amendment Flag | false | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Entity Incorporation, State or Country Code | DE | |
Document Quarterly Report | true | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-38272 | |
Entity Registrant Name | EVOQUA WATER TECHNOLOGIES CORP. | |
Entity Tax Identification Number | 46-4132761 | |
Entity Address, Address Line One | 210 Sixth Avenue | |
Entity Address, Postal Zip Code | 15222 | |
Entity Address, City or Town | Pittsburgh, | |
Entity Address, State or Province | PA | |
City Area Code | 724 | |
Local Phone Number | 772-0044 | |
Trading Symbol | AQUA | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 119,900,432 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2021 | |
Entity Central Index Key | 0001604643 | |
Current Fiscal Year End Date | --09-30 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2021 | Sep. 30, 2020 |
ASSETS | ||
Current assets | $ 717,132 | $ 695,712 |
Cash and cash equivalents | 222,718 | 193,001 |
Receivables, net | 227,343 | 260,479 |
Inventories, net | 156,787 | 142,379 |
Contract assets | 74,801 | 80,759 |
Prepaid and other current assets | 34,491 | 18,715 |
Income tax receivable | 992 | 379 |
Property, plant, and equipment, net | 371,868 | 364,461 |
Goodwill | 404,393 | 397,205 |
Intangible assets, net | 299,318 | 309,967 |
Deferred income taxes, net of valuation allowance | 1,661 | 3,639 |
Operating lease right-of-use assets, net | 47,591 | 45,965 |
Other non‑current assets | 37,836 | 27,509 |
Total assets | 1,879,799 | 1,844,458 |
LIABILITIES AND EQUITY | ||
Current liabilities | 346,573 | 349,555 |
Accounts payable | 144,613 | 153,890 |
Current portion of debt, net of deferred financing fees | 21,343 | 14,339 |
Contract liabilities | 36,894 | 26,259 |
Product warranties | 6,714 | 6,115 |
Accrued expenses and other liabilities | 134,692 | 143,389 |
Income tax payable | 2,317 | 5,563 |
Non‑current liabilities | 1,008,341 | 1,012,840 |
Long-term debt, net of deferred financing fees | 859,692 | 861,695 |
Product warranties | 1,989 | 1,724 |
Obligation under operating leases | 39,174 | 37,796 |
Other non‑current liabilities | 96,007 | 98,456 |
Deferred income taxes | 11,479 | 13,169 |
Total liabilities | 1,354,914 | 1,362,395 |
Commitments and Contingent Liabilities (Note 19) | ||
Shareholders’ equity | ||
Common stock, par value $0.01: authorized 1,000,000 shares; issued 121,442 shares, outstanding 119,778 at March 31, 2021; issued 119,486 shares, outstanding 117,291 at September 30, 2020 | 1,215 | 1,189 |
Treasury stock: 1,664 shares at March 31, 2021 and 2,195 shares at September 30, 2020 | (2,837) | (2,837) |
Additional paid-in capital | 564,034 | 564,928 |
Retained deficit | (51,195) | (62,664) |
Accumulated other comprehensive income (loss), net of tax | 12,009 | (20,472) |
Total Evoqua Water Technologies Corp. equity | 523,226 | 480,144 |
Non-controlling interest | 1,659 | 1,919 |
Total shareholders’ equity | 524,885 | 482,063 |
Total liabilities and shareholders’ equity | $ 1,879,799 | $ 1,844,458 |
Consolidated Balance Sheets Con
Consolidated Balance Sheets Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2021 | Sep. 30, 2020 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, issued (in shares) | 121,442,000 | 119,486,000 |
Common stock, outstanding (in shares) | 119,778,000 | 117,291,000 |
Treasury stock (in shares) | 1,664,000 | 2,195,000 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Revenues [Abstract] | ||||
Revenue from product sales and services | $ 346,564 | $ 351,663 | $ 668,757 | $ 697,768 |
Cost of Revenue [Abstract] | ||||
Cost of product sales and services | (240,645) | (240,457) | (467,493) | (480,847) |
Gross profit | 105,919 | 111,206 | 201,264 | 216,921 |
Operating Expenses [Abstract] | ||||
General and administrative expense | (52,928) | (62,130) | (95,211) | (107,900) |
Sales and marketing expense | (33,830) | (33,976) | (67,758) | (71,990) |
Research and development expense | (3,393) | (3,189) | (6,516) | (6,873) |
Total operating expenses | (90,151) | (99,295) | (169,485) | (186,763) |
Other operating income | 511 | 9,518 | 991 | 61,238 |
Other operating expense | (101) | (274) | (358) | (549) |
Operating profit (loss) | 16,178 | 21,155 | 32,412 | 90,847 |
Interest expense | (8,395) | (13,252) | (17,068) | (26,835) |
Income before income taxes | 7,783 | 7,903 | 15,344 | 64,012 |
Income tax (expense) benefit | (2,701) | 7 | (3,785) | (2,596) |
Net income | 5,082 | 7,910 | 11,559 | 61,416 |
Net income attributable to non‑controlling interest | 46 | 98 | 459 | |
Net income attributable to Evoqua Water Technologies Corp. | $ 5,036 | $ 7,812 | $ 11,469 | $ 60,957 |
Basic income per common share | $ 0.04 | $ 0.07 | $ 0.10 | $ 0.52 |
Diluted income per common share | $ 0.04 | $ 0.06 | $ 0.09 | $ 0.50 |
Revenue from product sales | ||||
Revenues [Abstract] | ||||
Revenue from product sales and services | $ 202,466 | $ 205,969 | $ 382,481 | $ 402,529 |
Cost of Revenue [Abstract] | ||||
Cost of product sales and services | (144,521) | (144,156) | (275,582) | (284,612) |
Revenue from service | ||||
Revenues [Abstract] | ||||
Revenue from product sales and services | 144,098 | 145,694 | 286,276 | 295,239 |
Cost of Revenue [Abstract] | ||||
Cost of product sales and services | $ (96,124) | $ (96,301) | $ (191,911) | $ (196,235) |
Unaudited Consolidated Statem_2
Unaudited Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Other comprehensive (loss) income | ||||
Net income | $ 5,082 | $ 7,910 | $ 11,559 | $ 61,416 |
Foreign currency translation adjustments | 26,891 | (14,724) | 22,014 | (6,667) |
Unrealized derivative gain (loss) on cash flow hedges, net of tax | 9,091 | (162) | 10,093 | (211) |
Change in pension liability, net of tax | 110 | 235 | 374 | 471 |
Total other comprehensive income (loss) | 36,092 | (14,651) | 32,481 | (6,407) |
Less: Comprehensive income attributable to non‑controlling interest | (46) | (98) | (90) | (459) |
Comprehensive income (loss) attributable to Evoqua Water Technologies Corp. | $ 41,128 | $ (6,839) | $ 43,950 | $ 54,550 |
Unaudited Consolidated Statem_3
Unaudited Consolidated Statements of Changes in Equity - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment [Member] | Common Stock | Treasury Stock | Additional Paid‑in Capital | Retained Deficit | Retained DeficitCumulative Effect, Period of Adoption, Adjustment [Member] | Accumulated Other Comprehensive Loss | Non‑controlling Interest |
Common stock issued at the beginning of the period (shares) at Sep. 30, 2019 | 116,008,000 | ||||||||
Stockholders' equity, balance at the beginning of the period at Sep. 30, 2019 | $ 365,822 | $ (1,337) | $ 1,154 | $ (2,837) | $ 552,422 | $ (174,976) | $ (1,337) | $ (13,004) | $ 3,063 |
Treasury stock, balance at the beginning of the period (in shares) at Sep. 30, 2019 | 1,664,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock (in shares) | 3,062,000 | (531,000) | |||||||
Issuance of common stock, cost | 15,370 | $ 31 | 15,339 | ||||||
Dividends paid to non-controlling interest | (1,450) | (1,450) | |||||||
Equity based compensation expense | 5,984 | 5,984 | |||||||
Divestiture of Lange product line | (16,895) | (16,895) | |||||||
Net income | 61,416 | 60,957 | 459 | ||||||
Other comprehensive income (loss) | (6,407) | (6,407) | |||||||
Common stock issued at the end of the period (shares) at Mar. 31, 2020 | 119,070,000 | ||||||||
Stockholders' equity, balance at the end of the period at Mar. 31, 2020 | 422,503 | $ 1,185 | $ (2,837) | 556,850 | (115,356) | (19,411) | 2,072 | ||
Treasury stock, balance at the end of the period (in shares) at Mar. 31, 2020 | 2,194,000 | ||||||||
Common stock issued at the beginning of the period (shares) at Dec. 31, 2019 | 117,653,000 | ||||||||
Stockholders' equity, balance at the beginning of the period at Dec. 31, 2019 | 415,130 | $ 686 | $ 1,170 | $ (2,837) | 543,237 | (123,854) | $ 686 | (4,760) | 2,174 |
Treasury stock, balance at the beginning of the period (in shares) at Dec. 31, 2019 | 2,083,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock (in shares) | 1,417,000 | 111,000 | |||||||
Issuance of common stock, cost | 11,324 | $ 15 | 11,309 | ||||||
Dividends paid to non-controlling interest | (200) | (200) | |||||||
Equity based compensation expense | 2,304 | 2,304 | |||||||
Net income | 7,910 | 7,812 | 98 | ||||||
Other comprehensive income (loss) | (14,651) | (14,651) | |||||||
Common stock issued at the end of the period (shares) at Mar. 31, 2020 | 119,070,000 | ||||||||
Stockholders' equity, balance at the end of the period at Mar. 31, 2020 | $ 422,503 | $ 1,185 | $ (2,837) | 556,850 | (115,356) | (19,411) | 2,072 | ||
Treasury stock, balance at the end of the period (in shares) at Mar. 31, 2020 | 2,194,000 | ||||||||
Common stock issued at the beginning of the period (shares) at Sep. 30, 2020 | 119,486,000 | 119,486,000 | |||||||
Stockholders' equity, balance at the beginning of the period at Sep. 30, 2020 | $ 482,063 | $ 1,189 | $ (2,837) | 564,928 | (62,664) | (20,472) | 1,919 | ||
Treasury stock, balance at the beginning of the period (in shares) at Sep. 30, 2020 | 2,195,000 | 2,195,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock (in shares) | 1,956,000 | 530,000 | |||||||
Issuance of common stock, cost | $ (7,101) | $ 26 | (7,127) | ||||||
Dividends paid to non-controlling interest | (350) | (350) | |||||||
Equity based compensation expense | 6,233 | 6,233 | |||||||
Net income | 11,559 | 11,469 | 90 | ||||||
Other comprehensive income (loss) | $ 32,481 | ||||||||
Common stock issued at the end of the period (shares) at Mar. 31, 2021 | 121,442,000 | 121,442,000 | |||||||
Stockholders' equity, balance at the end of the period at Mar. 31, 2021 | $ 524,885 | $ 1,215 | $ (2,837) | 564,034 | (51,195) | 12,009 | 1,659 | ||
Treasury stock, balance at the end of the period (in shares) at Mar. 31, 2021 | 1,664,000 | 1,664,000 | |||||||
Common stock issued at the beginning of the period (shares) at Dec. 31, 2020 | 120,750,000 | ||||||||
Stockholders' equity, balance at the beginning of the period at Dec. 31, 2020 | $ 501,961 | $ 1,202 | $ (2,837) | 582,197 | (56,231) | (24,083) | 1,713 | ||
Treasury stock, balance at the beginning of the period (in shares) at Dec. 31, 2020 | 2,196,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock (in shares) | 692,000 | (532,000) | |||||||
Issuance of common stock, cost | (21,364) | $ 13 | (21,377) | ||||||
Dividends paid to non-controlling interest | (100) | (100) | |||||||
Equity based compensation expense | 3,214 | 3,214 | |||||||
Net income | 5,082 | 5,036 | 46 | ||||||
Other comprehensive income (loss) | $ 36,092 | 36,092 | |||||||
Common stock issued at the end of the period (shares) at Mar. 31, 2021 | 121,442,000 | 121,442,000 | |||||||
Stockholders' equity, balance at the end of the period at Mar. 31, 2021 | $ 524,885 | $ 1,215 | $ (2,837) | $ 564,034 | $ (51,195) | $ 12,009 | $ 1,659 | ||
Treasury stock, balance at the end of the period (in shares) at Mar. 31, 2021 | 1,664,000 | 1,664,000 |
Unaudited Consolidated Statem_4
Unaudited Consolidated Statements of Changes in Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Operating activities | ||
Net income | $ 11,559 | $ 61,416 |
Reconciliation of net income to cash flows provided by operating activities: | ||
Depreciation and amortization | 54,607 | 52,514 |
Write off of Deferred Debt Issuance Cost | 0 | 1,795 |
Amortization of deferred financing fees (includes $0 and $1,795 write off of deferred financing fees) | 1,044 | 3,103 |
Deferred income taxes | 476 | (1,209) |
Share-based compensation | 6,233 | 5,984 |
Loss on sale of property, plant and equipment | 807 | 170 |
Loss (gain) on sale of business | (68,051) | |
Foreign currency exchange (gains) losses on intercompany loans and other non-cash items | (3,659) | 1,514 |
Changes in assets and liabilities | ||
Accounts receivable | 36,221 | 7,256 |
Inventories | (14,091) | (17,800) |
Contract assets | 6,553 | (5,377) |
Prepaids and other current assets | (9,921) | (3,715) |
Accounts payable | (9,799) | 6,004 |
Accrued expenses and other liabilities | (9,089) | 60 |
Contract liabilities | 9,829 | (4,920) |
Income taxes | (3,948) | 2,140 |
Other non‑current assets and liabilities | (13,955) | (252) |
Net cash provided by operating activities | 63,058 | 38,837 |
Investing activities | ||
Purchase of property, plant and equipment | (36,297) | (38,759) |
Purchase of intangibles | (539) | (622) |
Proceeds from sale of property, plant and equipment | 640 | 271 |
Proceeds from sale of business, net of cash of $0 and $12,117 | 118,894 | |
Acquisitions | (8,743) | (11,164) |
Net cash (used in) provided by investing activities | (44,042) | 68,620 |
Financing activities | ||
Issuance of debt, net of deferred issuance costs | 13,993 | 8,212 |
Borrowings under credit facility | 0 | 2,597 |
Repayment of debt | (10,036) | (109,333) |
Repayment of finance lease obligation | (6,901) | (6,694) |
Payment of earn-out related to previous acquisitions | 0 | (175) |
Proceeds from issuance of common stock | 13,430 | 8,333 |
Taxes paid related to net share settlements of share-based compensation awards | (1,863) | (9,817) |
Distribution to non‑controlling interest | (350) | (1,450) |
Net cash provided by (used in) financing activities | 8,273 | (108,327) |
Effect of exchange rate changes on cash | 2,428 | (516) |
Change in cash and cash equivalents | 29,717 | (1,386) |
Cash and cash equivalents | ||
Beginning of period | 193,001 | 109,881 |
End of period | 222,718 | 108,495 |
Supplemental disclosure of cash flow information | ||
Cash paid for taxes | 5,457 | 2,133 |
Cash paid for interest | 14,647 | 22,953 |
Non‑cash investing and financing activities | ||
Finance lease transactions | 9,044 | 4,308 |
Operating lease transactions | 7,993 | 10,076 |
Option and Purchase Right | $ 0 | $ 7,167 |
Unaudited Consolidated Statem_5
Unaudited Consolidated Statements of Changes in Cash Flows Unaudited Supplemental Disclosure of Cash Flow Information (Parenthetical) - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Cash Flows [Abstract] | ||
Cash divested with sale of business | $ 0 | $ 12,117 |
Description of the Company and
Description of the Company and Basis of Presentation | 6 Months Ended |
Mar. 31, 2021 | |
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”) is a holding company and does not conduct any business operations of its own. The Company was incorporated on October 7, 2013. On January 15, 2014, the Company acquired through its wholly owned subsidiaries, EWT Holdings II Corp. (“EWT II”) and EWT Holdings III Corp. (“EWT III”), 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”). On November 6, 2017, the Company completed its initial public offering (“IPO”). On December 4, 2020, the Company completed a secondary public offering, pursuant to which 12,000 shares of common stock were sold by certain selling shareholders. On February 11, 2021, the Company completed an additional secondary public offering, pursuant to which 16,383 shares of common stock were sold by certain selling shareholders. Upon completion of these offerings, AEA Investors LP disposed of all of their shares of the Company’s common stock. The Company did not receive any proceeds from the sale of shares by the selling shareholders in either of these secondary public offerings. 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 multinational 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 and share 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. In our opinion, all adjustments considered necessary for a fair presentation of the financial statements have been included, and all adjustments are of a normal and recurring nature. We consistently applied the accounting policies described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020, as filed with the SEC on November 20, 2020 (“2020 Annual Report”), in preparing these Unaudited Consolidated Financial Statements, with the exception of accounting standard updates described in Note 2, “Recent Accounting Pronouncements.” These Unaudited Consolidated Financial Statements should be read in conjunction with the audited financial statements and the notes included in our 2020 Annual Report. Certain prior period amounts have been reclassified to conform to the current period presentation. Correction of Immaterial Errors During the quarter ending March 31, 2021, the Company identified errors related to the reporting of tax remittances associated with certain equity awards, resulting in a classification error of $18,669 between additional paid in capital and accumulated other comprehensive loss. Management recorded the correction to additional paid in capital and accumulated other comprehensive balances during the quarter ending March 31, 2021. Management considered both the quantitative and qualitative factors within the provisions of SEC Staff Accounting Bulletin No. 99, Materiality , and Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements . Based on evaluation of the errors, management has concluded that the prior period errors were immaterial to the previously issued financial statements. As a result of that classification error, management also identified a second, related immaterial classification error for the understatement of net cash provided by operating cash flows of $18,669 and an overstatement of net cash provided by financing activities of $18,669 for the period from October 1, 2019 to September 30, 2020. The Company has elected to voluntarily correct the identified immaterial classification error in the prior period Unaudited Consolidated Statements of Changes to Cash Flows to enhance comparability. In doing so, balances in the Unaudited Consolidated Statements of Changes to Cash Flows included in this Form 10-Q have been adjusted to reflect the voluntary immaterial classification error correction of $16,854 between financing and operating in the prior period. Future filings that include prior periods will be corrected, as needed, when filed. The correction of the above classification errors did not have any effect on the Unaudited Consolidated Statements of Operations in any of the periods previously presented. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Pronouncements Not Yet Adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which was amended by the subsequent issuance in January 2021 of ASU 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”). ASU 2020-04 became effective immediately and expires on December 21, 2022. ASU 2020-04 allows eligible contracts that are modified to be accounted for as a continuation of those contracts, permits companies to preserve their hedging accounting during the transition period and enables companies to make a one-time election to transfer or sell held-to-maturity debt securities that are affected by rate reform. ASU 2021-01 provides optional expedients and exceptions for contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform, if certain criteria are met. The Company is currently assessing the impact of the adoption of ASU 2020-04 and ASU 2021-01 on the Company’s Unaudited Consolidated Financial Statements and related disclosures. Accounting Pronouncements Recently Adopted The Company adopted ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on October 1, 2020 (“ASU 2016-13”). ASU 2016-13 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. The Company adopted ASU 2016-13 us ing a modified retrospective approach and determined that there was no cumulative-effect adjustment to its beginning Retained deficit on the Consolidated Balance Sheets. The adoption of this standard did not hav e a material impact on the Company’s Unaudited Consolidated Financial Statements. See Note 7, “Accounts Receivable” for further details and related disclosures. The following accounting pronouncements were adopted by the Company on October 1, 2020, and the adoptions did not have a material impact on the Company’s Unaudited Consolidated Financial Statements or disclosures: Accounting Standards Updates ASU 2020-03, Codification Improvements to Financial Instruments ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses ASU 2018-18, Collaborative Arrangements (Topic 808) Clarifying the Interaction between Topic 808 and Topic 606 ASU 2018-13, Fair Value Measurement (Subtopic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement |
Variable Interest Entities
Variable Interest Entities | 6 Months Ended |
Mar. 31, 2021 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Variable Interest Entity Disclosure | Variable Interest Entities 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, and is not contractually required to provide, additional financial support to this entity, 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 March 31, 2021 and September 30, 2020, and summarized financial information for the three and six months ended March 31, 2021 and 2020. March 31, September 30, Current assets (includes cash of $1,552 and $2,088) $ 3,462 $ 4,016 Property, plant and equipment 1,024 1,145 Goodwill 2,206 2,206 Total liabilities (1,168) (1,324) Three Months Ended Six Months Ended 2021 2020 2021 2020 Total revenue $ 834 $ 1,210 $ 1,668 $ 3,852 Total operating expenses (732) (1,086) (1,469) (3,044) Income from operations $ 102 $ 124 $ 199 $ 808 On October 1, 2019, the Company acquired a 60% investment position in San Diego-based Frontier Water Systems, LLC (“Frontier”). The Frontier acquisition is a VIE because it has insufficient equity to finance its activities due to key assets being assigned to the Company upon acquisition. The Company is the primary beneficiary of Frontier because the Company has the power to direct the activities that most significantly affect Frontier’s economic performance. In addition, the Company entered into an agreement to purchase the remaining 40% interest in Frontier on or prior to March 30, 2024. This agreement (a) gave 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 was exercisable 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 recognized a liability for the remaining 40% interest. During the three months ended March 31, 2021, the Minority Owners exercised the Option, and on April 8, 2021 the Company completed the purchase of an additional 8% of the outstanding equity in Frontier for approximately $1,490. This amount was reclassified from Other non‑current liabilities to Accrued expenses and other liabilities on the Consolidated Balance Sheets during the three months ended March 31, 2021. As a result, the Company’s ownership position in Frontier increased to 68%. Additionally, the Company fully consolidates Frontier as a VIE under ASC Topic No. 810, Consolidation . The following provides a summary of Frontier’s balance sheet as of March 31, 2021 and September 30, 2020, and summarized financial information for the three and six months ended March 31, 2021 and 2020. March 31, September 30, Current assets (includes cash of $1,182 and $1,675) $ 5,045 $ 4,024 Property, plant and equipment 3,094 3,159 Goodwill 1,798 1,798 Intangible assets, net 9,092 9,918 Total liabilities (5,095) (3,692) Three Months Ended Six Months Ended 2021 2020 2021 2020 Total revenue $ 2,078 $ 1,078 $ 2,848 $ 2,723 Total operating expenses (2,401) (2,364) (4,139) (4,301) Loss from operations $ (323) $ (1,286) $ (1,291) $ (1,578) |
Acquisitions
Acquisitions | 6 Months Ended |
Mar. 31, 2021 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures 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 December 17, 2020, the Company acquired the industrial water business of Ultrapure & Industrial Services, LLC (“Ultrapure”) for $8,743 cash paid at closing. Ultrapure, based out of Texas, provides customers across multiple end markets with a variety of water treatment products and services, including service deionization, reverse osmosis, UV and ozonation. Ultrapure will strengthen the Company’s service capabilities in the Houston and Dallas markets and is a part of the Integrated Solutions and Services segment. During the six months ended March 31, 2021, the Company incurred approximately $229 in acquisition costs, which are included in General and administrative expense on the Unaudited Consolidated Statements of Operations. 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 Ultrapure is summarized as follows: Current assets $ 2,366 Property, plant and equipment 963 Goodwill 2,545 Intangible assets, net 3,751 Other non-current assets 22 Total assets acquired 9,647 Liabilities assumed (904) Net assets acquired $ 8,743 On March 1, 2021, the Company completed the divestiture of the Lange containment system, geomembrane and geosynthetic liner product line (the “Lange Product Line”) for $897 in cash at closing. The Lange Product Line was a part of the Integrated Solutions and Services segment. During the three months ended March 31, 2021, the Company recognized a loss of $191 on the divestiture. |
Revenue
Revenue | 6 Months Ended |
Mar. 31, 2021 | |
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 ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“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 and six months ended March 31, 2021 was insignificant. For sales of aftermarket parts or products with a low level of customization and engineering time, the Company recognizes revenue 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, revenue from these contracts will not be recognized until construction is complete. Contract revenue 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 has 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, which totaled approximately $207,439 at March 31, 2021. 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 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 March 31, 2021. 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 revenue: Three Months Ended Six Months Ended 2021 2020 2021 2020 Revenue from contracts with customers recognized under Topic 606 $ 297,919 $ 314,994 $ 583,107 $ 623,596 Other (1) 48,645 36,669 85,650 74,172 Total $ 346,564 $ 351,663 $ 668,757 $ 697,768 (1) Other revenue relates to revenue recognized pursuant to ASU 2016-02, Leases (Topic 842) , mainly attributable to long term rentals. Information regarding revenue disaggregated by source of revenue and segment is as follows: Three Months Ended March 31, 2021 2020 Integrated Solutions and Services Applied Product Technologies Total Integrated Solutions and Services Applied Product Technologies Total Revenue from capital projects $ 52,093 $ 90,296 $ 142,389 $ 66,092 $ 75,214 $ 141,306 Revenue from aftermarket 32,501 27,576 60,077 31,901 32,762 64,663 Revenue from service 139,540 4,558 144,098 139,892 5,802 145,694 Total $ 224,134 $ 122,430 $ 346,564 $ 237,885 $ 113,778 $ 351,663 Six Months Ended March 31, 2021 2020 Integrated Solutions and Services Applied Product Technologies Total Integrated Solutions and Services Applied Product Technologies Total Revenue from capital projects $ 102,719 $ 167,185 $ 269,904 $ 120,712 $ 150,140 $ 270,852 Revenue from aftermarket 59,647 52,930 112,577 61,574 70,103 131,677 Revenue from service 276,485 9,791 286,276 283,737 11,502 295,239 Total $ 438,851 $ 229,906 $ 668,757 $ 466,023 $ 231,745 $ 697,768 Information regarding revenue disaggregated by geographic area is as follows: Three Months Ended Six Months Ended 2021 2020 2021 2020 United States $ 274,681 $ 290,273 $ 538,812 $ 567,990 Europe 31,527 30,381 52,812 56,493 Asia 26,976 12,720 49,581 31,462 Canada 10,636 16,319 21,815 33,882 Australia 2,744 1,970 5,737 7,941 Total $ 346,564 $ 351,663 $ 668,757 $ 697,768 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 the Company’s performance under the contract. The tables below provide a roll-forward of contract assets and contract liabilities balances for the periods presented: Six Months Ended Contract assets (a) 2021 2020 Balance at beginning of period $ 80,759 $ 73,467 Recognized in current period 147,593 172,228 Reclassified to accounts receivable (153,964) (166,535) Amounts related to sale of the Memcor product line — 2,710 Foreign currency 413 (621) Balance at end of period $ 74,801 $ 81,249 (a) Excludes receivable balances which are disclosed on the Consolidated Balance Sheets. Six Months Ended Contract Liabilities 2021 2020 Balance at beginning of period $ 26,259 $ 39,051 Recognized in current period 158,452 157,114 Amounts in beginning balance reclassified to revenue (20,703) (37,497) Current period amounts reclassified to revenue (127,684) (124,194) Amounts related to sale of the Memcor product line — (700) Foreign currency 570 (83) Balance at end of period $ 36,894 $ 33,691 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurements As of March 31, 2021 and September 30, 2020, 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 March 31, 2021 Assets: Pension plan Cash $ — $ 655 $ — $ — Global Multi-Asset Fund 14,814 — — — Government Securities 2,293 — — — Liability Driven Investment 5,754 — — — Guernsey Unit Trust 2,241 — — — Global Absolute Return 2,251 — — — Deferred compensation plan assets Cash — 1,340 — — Mutual Funds — 17,790 — — Interest rate swap — — 5,631 — Foreign currency forward contracts — — 49 — Liabilities: Pension plan — — (48,168) — Deferred compensation plan liabilities — — (23,058) — Long‑term debt — — (887,902) — Foreign currency forward contracts — — (166) — Earn-outs related to acquisitions — — — (295) Option and Purchase Right — — — (7,739) As of September 30, 2020 Assets: Pension plan Cash $ — $ 15,061 $ — $ — Government Securities 4,924 — — — Liability Driven Investment 3,604 — — — Guernsey Unit Trust 1,881 — — — Global Absolute Return 2,060 — — — Deferred compensation plan assets Trust Assets — 55 — — Insurance — — 19,804 — Foreign currency forward contracts — — 140 — Liabilities: Pension plan — — (47,389) — Deferred compensation plan liabilities — — (21,439) — Long‑term debt — — (872,441) — Interest rate swap — — (4,669) — Foreign currency forward contracts — — (47) — Earn-outs related to acquisitions — — — (295) Option and Purchase Right — — — (7,739) 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 March 31, 2021 and September 30, 2020. |
Accounts Receivable
Accounts Receivable | 6 Months Ended |
Mar. 31, 2021 | |
Receivables [Abstract] | |
Accounts receivable | Accounts Receivable All trade receivables are reported on the Consolidated Balance Sheets at the outstanding principal amount adjusted for any allowance for credit losses and any charge offs. The Company provides an allowance for credit losses to reduce trade receivables to their estimated net realizable value equal to the amount that is expected to be collected. This allowance is estimated based on historical collection experience, the aging of receivables, specific current and expected future macro-economic and market conditions, and assessments of the current creditworthiness and 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. The Company reviews its allowance for credit losses on a quarterly basis. Accounts receivable are summarized as follows: March 31, September 30, Accounts receivable $ 231,227 $ 264,536 Allowance for credit losses (3,884) (4,057) Receivables, net $ 227,343 $ 260,479 The movement in the allowance for credit losses was as follows for the six months ended March 31, 2021: Balance at September 30, 2020 $ (4,057) Charged to costs and expenses (12) Write-offs 209 Foreign currency and other (24) Balance at March 31, 2021 $ (3,884) |
Inventories
Inventories | 6 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories The major classes of Inventories, net are as follows: March 31, September 30, Raw materials and supplies $ 82,065 $ 78,319 Work in progress 19,497 15,654 Finished goods and products held for resale 61,918 56,435 Costs of unbilled projects 4,143 3,438 Reserves for excess and obsolete (10,836) (11,467) Inventories, net $ 156,787 $ 142,379 |
Property, Plant, and Equipment
Property, Plant, and Equipment | 6 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant, and Equipment Property, plant, and equipment consists of the following: March 31, September 30, Machinery and equipment $ 376,831 $ 357,650 Rental equipment 236,469 221,953 Land and buildings 69,541 70,245 Construction in process 53,324 48,325 736,165 698,173 Less: accumulated depreciation (364,297) (333,712) $ 371,868 $ 364,461 The Company entered into secured financing agreements that require providing a security interest in specified equipment. As of March 31, 2021 and September 30, 2020, the gross and net amounts of those assets are as follows: March 31, September 30, Gross Net Gross Net Machinery and equipment $ 68,578 $ 55,023 $ 63,305 $ 52,620 Construction in process 15,140 15,140 8,098 8,098 $ 83,718 $ 70,163 $ 71,403 $ 60,718 Depreciation expense and maintenance and repairs expense for the three and six months ended March 31, 2021 and 2020 were as follows: Three Months Ended Six Months Ended 2021 2020 2021 2020 Depreciation expense $ 18,769 $ 18,185 $ 37,280 $ 35,488 Maintenance and repair expense 4,754 5,249 9,962 11,314 |
Goodwill
Goodwill | 6 Months Ended |
Mar. 31, 2021 | |
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, 2020 $ 224,381 $ 172,824 $ 397,205 Business combinations and divestitures 5,988 — 5,988 Measurement period adjustment (3,485) — (3,485) Foreign currency translation 2,565 2,120 4,685 Balance at March 31, 2021 $ 229,449 $ 174,944 $ 404,393 As of March 31, 2021 and September 30, 2020, $155,704 and $153,004, respectively, of goodwill was deductible for tax purposes. |
Debt
Debt | 6 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt | Debt Long‑term debt consists of the following: March 31, September 30, First Lien Term Loan, due December 20, 2024 (1) $ 814,538 $ 819,276 First Lien Credit Agreement Revolving Credit Facility (1) — — Equipment Financing, due April 30, 2021 to July 5, 2029, interest rates ranging from 3.25% to 8.07% 74,382 63,918 Notes Payable, due July 31, 2023 507 611 Mortgage (2) — 1,665 Total debt 889,427 885,470 Less unamortized deferred financing fees (8,392) (9,436) Total net debt 881,035 876,034 Less current portion (21,343) (14,339) Total long‑term debt $ 859,692 $ 861,695 (1) On April 1, 2021, the Company paid off the outstanding balance of the First Lien Term Loan (as defined below) and entered into the 2021 Credit Agreement (as defined below). See Note 23, “Subsequent Events” for further discussion. (2) In November 2020, the Company paid off the outstanding balance of the mortgage due June 30, 2028. Term Facilities and Revolving Credit Facility On January 15, 2014, EWT III entered into a First Lien Credit Agreement (as modified, amended or supplemented from time to time, the “Credit Agreement”) and a Second Lien Credit Agreement among EWT III, EWT II, the lenders party thereto and Credit Suisse AG as administrative agent and collateral agent. The term loans outstanding under the Second Lien Credit Agreement were prepaid on October 28, 2016. The Credit Agreement also makes available to the Company a revolving credit facility (the “Revolver”) of up to $125,000, with a letter of credit sublimit of up to $45,000. The term loans outstanding under the Credit Agreement (the “First Lien Term Loan”) mature on December 20, 2024, and the Revolver matures on December 20, 2022. The Company makes quarterly principal payments of $2,369. At March 31, 2021, the interest rate on borrowings was 2.61%, comprised of 0.11% LIBOR plus the 2.50% spread. Deferred financing fees related to the First Lien Term Loan were included as a contra liability to debt on the Consolidated Balance Sheets as follows: March 31, September 30, Current portion of deferred financing fees (1) $ (2,147) $ (2,112) Long-term portion of deferred financing fees (2) (6,245) (7,324) Total deferred financing fees $ (8,392) $ (9,436) (1) Included in Current portion of debt, net of deferred financing fees on the Consolidated Balance Sheets. (2) Included in Long-term debt, net of deferred financing fees on the Consolidated Balance Sheets. Amortization of deferred financing fees included in interest expense were $518 and $421 for the three months ended March 31, 2021 and 2020, respectively and $1,044 and $936 for the six months ended March 31, 2021 and 2020, respectively. The following summarizes the Company’s outstanding borrowings under the Revolver and outstanding letters of credit as of March 31, 2021 and September 30, 2020, respectively. March 31, September 30, Borrowing availability under the Revolver $ 125,000 $ 125,000 Outstanding borrowings under the Revolver — — Outstanding letters of credit under the Revolver 11,904 12,963 Unused amounts under the Revolver $ 113,096 $ 112,037 Additional letters of credit under a separate arrangement $ 33 $ 52 The 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 six months ended March 31, 2021, does not anticipate exceeding such ratios during the year ending September 30, 2021, and therefore does not anticipate any additional repayments during the year ending September 30, 2021. Equipment Financings During the six months ended March 31, 2021, the Company completed the following equipment financings: Date Entered Due Fixed Principal Amount March 31, 2021 March 31, 2028 3.85 % $ 3,630 March 31, 2021 April 30, 2021 (1) 3.25 % 2,559 December 31, 2020 April 30, 2021 (1) 3.25 % 3,899 December 30, 2020 December 30, 2027 3.73 % 3,905 $ 13,993 (1) Represents an advance received from the lender in which the Company is making interest only payments. The Company may convert to a term loan financing for eight years at any time through June 30, 2021. Repayment Schedule Aggregate maturities of all long‑term debt, including current portion of long‑term debt and excluding finance lease obligations as of March 31, 2021, are presented below: Fiscal Year Remainder of 2021 $ 14,982 2022 17,293 2023 17,598 2024 797,448 2025 8,081 Thereafter 34,025 Total $ 889,427 |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Mar. 31, 2021 | |
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 the 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, on May 22, 2020, the Company entered into an interest rate swap to mitigate risks associated with variable rate debt. The interest rate swap became effective on June 30, 2020, has a term of five years to hedge the variability of interest payments on the first $500,000 of the Company’s senior secured debt and fixes the LIBOR rate on this portion of the senior secured debt at 0.55%. The interest rate swap has been designated as a cash flow hedge and unrealized gains or losses, net of income tax, are recorded as a component of Accumulated Other Comprehensive Income (“AOCI”) on the Consolidated Balance Sheets. As interest payments are made, the realized gain or loss on the payments is recorded in Interest expense on the Unaudited Consolidated Statements of Operations. 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 March 31, 2021, the notional amount of the forward contracts held to sell foreign currencies was $8,866. 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 fully expects the counterparties to perform under their respective 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 swap 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 March 31, September 30, Interest rate swap Prepaid and other current assets $ 5,631 $ — Foreign currency forward contracts Prepaid and other current assets 35 133 Liability Derivative Balance Sheet Location March 31, September 30, Interest rate swap Accrued expenses and other current liabilities $ — $ 4,669 Foreign currency forward contracts Accrued expenses and other current liabilities 158 47 The following represents the amount of gain (loss) recognized in AOCI (net of tax) during the periods presented: Three Months Ended Six Months Ended 2021 2020 2021 2020 Interest rate swap $ 8,811 $ — $ 9,268 $ — Interest rate cap — 15 — 1 Foreign currency forward contracts (335) (179) (332) (160) The following represents the amount of (loss) gain on foreign currency forward contracts reclassified from AOCI into earnings during the periods presented: Three Months Ended Six Months Ended Location of (Loss) Gain 2021 2020 2021 2020 Cost of product sales and services $ (13) $ (6) $ (13) $ (6) General and administrative expense (40) (24) (72) $ 30 Selling and marketing expense (39) 28 (39) 28 Interest expense (523) — (1,033) — $ (615) $ (2) $ (1,157) $ 52 Based on the fair value amounts of the Company’s cash flow hedges at March 31, 2021, the Company expects that approximately $113 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. 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 Derivatives Balance Sheet Location March 31, September 30, Foreign currency forward contracts Prepaid and other current assets $ 14 $ 7 Liability Derivatives Balance Sheet Location March 31, September 30, Foreign currency forward contracts Accrued expenses and other current liabilities $ 8 $ — |
Product Warranties
Product Warranties | 6 Months Ended |
Mar. 31, 2021 | |
Guarantees and Product Warranties [Abstract] | |
Product warranties | Product Warranties 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 Six Months Ended Six Months Ended 2021 2020 2021 2020 Balance at beginning of the period $ 6,115 $ 4,922 $ 1,724 $ 2,332 Warranty provision for sales 2,188 1,892 714 62 Settlement of warranty claims (1,699) (2,567) (471) (1,248) Amounts related to sale of the Memcor product line — 795 — 135 Foreign currency translation and other 110 65 22 (120) Balance at end of the period $ 6,714 $ 5,107 $ 1,989 $ 1,161 |
Restructuring and Related Charg
Restructuring and Related Charges | 6 Months Ended |
Mar. 31, 2021 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and related charges | Restructuring and Related Charges To better align its resources with its growth strategies and reduce its cost structure, the Company commits to various restructuring plans as necessary. The Company has undertaken various restructuring initiatives, including undertaking activities to reduce the cost structure and rationalize location footprint following the sale of the Memcor product line, transitioning from a three-segment structure to a two-segment operating model designed to better serve the needs of customers worldwide, and various initiatives within the Integrated Solutions and Services segment to drive efficiency and effectiveness in certain divisions. The Company currently expects to incur approximately $2,000 to $3,000 of costs through the remainder of fiscal 2021 related to restructuring charges following the sale of the Memcor product line. The Company currently expects to incur approximately $500 to $700 of cash costs through the remainder of fiscal 2021 as a result of its transition to a two-segment operating model related to other non-employee related business optimizations. The Company currently expects to incur approximately $500 to $1,000 of costs through the remainder of fiscal 2021 related to the restructuring within certain divisions of the Integrated Solutions and Services segment. The table below sets forth the amounts accrued for the restructuring components and related activity: Six Months Ended 2021 2020 Balance at beginning of the period $ 970 $ 655 Restructuring charges following the sale of the Memcor product line 3,808 3,659 Restructuring charges related to two-segment realignment 562 1,233 Restructuring charges related to other initiatives 1,444 780 Release of prior reserves (283) (62) Write off charges (966) — Cash payments (4,359) (5,831) Other adjustments 9 — Balance at end of the period $ 1,185 $ 434 The balances for accrued restructuring liabilities at March 31, 2021 and September 30, 2020, are recorded in Accrued expenses and other liabilities on the Consolidated Balance Sheets. Restructuring charges primarily represent severance charges and other employee costs, fixed asset write-offs and certain relocation expenses. The Company expects to pay the remaining amounts accrued as of March 31, 2021 during the remainder of fiscal 2021. The table below sets forth the location of amounts recorded above on the Unaudited Consolidated Statements of Operations: Six Months Ended 2021 2020 Cost of product sales and services $ 3,428 $ 3,765 General and administrative expense 1,089 1,760 Sales and marketing expense 340 62 Research and development expense (16) 23 Other operating expense, net 690 — $ 5,531 $ 5,610 |
Employee Benefit Plans
Employee Benefit Plans | 6 Months Ended |
Mar. 31, 2021 | |
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 Six Months Ended 2021 2020 2021 2020 Service cost $ 287 $ 259 $ 571 $ 520 Interest cost 80 68 159 136 Expected return on plan assets (87) (29) (174) (59) Amortization of actuarial losses 110 235 374 471 Pension expense for defined benefit plans $ 390 $ 533 $ 930 $ 1,068 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 | 6 Months Ended |
Mar. 31, 2021 | |
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 14.6% and 4.5% as of the six months ended March 31, 2021 and 2020, respectively. For the six months ended March 31, 2021, the PAETR was lower than the U.S federal statutory rate of 21.0% primarily due to the impact of maintaining a U.S. valuation allowance provided on U.S. deferred tax assets and is higher than the prior year’s rate which included the impact of the sale of the Memcor product line, and the impact on deferred tax liabilities related to indefinite lived intangibles, a portion of which was reversed in relation to the sale of the Memcor product line. The Company continues to maintain a full valuation allowance 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 period ending March 31, 2021 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 again in 2020 and is projecting positive pre-tax earnings in 2021, however, the Company generated pre-tax losses in all other years. The Company was in a three-year cumulative loss position at September 30, 2019, but was no longer in a three-year cumulative loss position at September 30, 2020. The Company 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. Current and Prior Period Tax Expense For the three months ended March 31, 2021, the Company recognized income tax expense of $2,701 on pretax income of $7,783. The rate of 34.7% differed from the U.S. statutory rate of 21.0% principally due to the unfavorable impact of discrete items related to an adjustment for prior periods and recording an uncertain tax position related to a tax audit in a foreign jurisdiction which were partially offset by the impact of maintaining a U.S. valuation allowance against U.S. deferred tax assets. For the three months ended March 31, 2020, the Company recognized an income tax benefit of $7 on pretax income of $7,903. The rate of 0.09% 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 six months ended March 31, 2021, the Company recognized income tax expense of $3,785 on pretax income of $15,344. The rate of 24.7% differed from the statutory rate of 21.0% principally due to the unfavorable impact of discrete items related to an adjustment for prior periods and recording an uncertain tax position related to a tax audit in a foreign jurisdiction which were partially offset by the impact of maintaining a U.S. valuation allowance against U.S. deferred tax assets. For the six months ended March 31, 2020, the Company recognized income tax expense of $2,596 on pretax income of $64,012. The rate of 4.06% differed from the 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. |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Mar. 31, 2021 | |
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 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 the Company. Under the Stock Option Plan, the number of shares available for award was 11,083. As of March 31, 2021, there were approximately 2,177 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 shareholders approved, the Evoqua Water Technologies Corp. 2017 Equity Incentive Plan (the “Equity Incentive Plan”), under which equity 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). Upon adoption of the Equity Incentive Plan, 5,100 shares of common stock of the Company were reserved for issuance thereunder. On February 18, 2020, the Company’s shareholders approved the amendment and restatement of the Equity Incentive Plan in order to increase the number of shares of common stock reserved for issuance thereunder by 5,000 shares and incorporate other changes. As of March 31, 2021, there were approximately 4,990 shares available for grants under the Equity Incentive Plan. 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 A summary of the stock option activity as of March 31, 2021 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, 2020 7,430 $ 10.30 5.9 years $ 83,152 Granted 611 24.76 Exercised (2,185) 6.04 Forfeited (7) 19.20 Outstanding at March 31, 2021 5,849 $ 13.39 6.4 years $ 75,542 Options exercisable at March 31, 2021 3,857 $ 9.62 5.2 years $ 64,333 Options vested and expected to vest at March 31, 2021 5,774 $ 13.25 6.3 years $ 75,349 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 six months ended March 31, 2021 was $43,564. A summary of the status of the Company's non-vested stock options as of and for the six months ended March 31, 2021 is presented below. (In thousands, except per share amounts) Shares Weighted Average Grant Date Fair Value/Share Nonvested at beginning of period 2,166 $ 5.56 Granted 611 8.98 Vested (778) 5.56 Forfeited (7) 6.47 Nonvested at end of period 1,992 $ 6.60 The total fair value of options vested during the six months ended March 31, 2021, was $4,326. Restricted Stock Units The following is a summary of the RSU activity for the six months ended March 31, 2021. (In thousands, except per share amounts) Shares Weighted Average Grant Date Fair Value/Share Outstanding at September 30, 2020 750 $ 17.86 Granted 494 24.69 Vested (234) 17.64 Forfeited (3) 18.85 Cancelled (7) 21.22 Outstanding at March 31, 2021 1,000 $ 21.26 Expected to vest at March 31, 2021 948 $ 21.11 Expense Measurement and Recognition The Company recognizes share-based compensation for all currently outstanding awards and, in future periods, will recognize compensation costs for the unvested portion of awards based on grant date fair values. Total share-based compensation expense was $3,214 and $2,326 during the three months ended March 31, 2021 and 2020, respectively, of which $3,214 and $2,304 was non-cash, respectively. Total share-based compensation expense was $6,290 and $6,017 during the six months ended March 31, 2021 and 2020, respectively, of which $6,233 and $5,984 was non-cash, respectively. The unrecognized compensation expense related to stock options and RSUs was $11,897 and $19,110, respectively at March 31, 2021, and is expected to be recognized over a weighted average period of 2.5 years and 2.6 years, respectively. The Company received $13,430 from the exercise of stock options during the six months ended March 31, 2021. Employee Stock Purchase Plan Effective October 1, 2018, the Company implemented an employee stock purchase plan (the “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 |
Concentration of Credit Risk
Concentration of Credit Risk | 6 Months Ended |
Mar. 31, 2021 | |
Risks and Uncertainties [Abstract] | |
Concentration of credit risk | Concentration of Credit RiskThe 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 March 31, 2021 and September 30, 2020 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 and six months ended March 31, 2021 and 2020, 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 transact the external sale. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021 and September 30, 2020, respectively. March 31, September 30, Revolving credit capacity $ 45,000 $ 45,000 Letters of credit outstanding 11,904 12,963 Remaining revolving credit capacity $ 33,096 $ 32,037 Surety capacity $ 250,000 $ 230,000 Surety issuances 147,565 152,990 Remaining surety available $ 102,435 $ 77,010 The longest maturity date of letters of credit and surety bonds in effect as of March 31, 2021 was March 20, 2030. Litigation From time to time, as a normal incident of the nature and kind of business in which the Company is engaged, various claims or charges are asserted and litigation is commenced against it arising from or related to: product liability; personal injury; trademarks, trade secrets or other intellectual property; shareholder disputes; labor and employee disputes; commercial or contractual disputes; breach of warranty; or environmental matters. Claimed amounts may be substantial but may not bear any reasonable relationship to the merits of the claim or the extent of any real risk of court or arbitral awards. While it is not feasible to predict the outcome of these matters with certainty, and some lawsuits, claims or proceedings may be disposed or decided unfavorably, the Company does not expect that any asserted or un-asserted legal claims or proceedings, individually or in the aggregate, will have a material adverse effect on its results of operations, or financial condition. |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 6 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Liabilities | Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following: March 31, September 30, Salaries, wages and other benefits $ 59,245 $ 67,766 Obligation under operating leases 13,119 12,767 Obligation under finance leases 11,869 11,362 Third party commissions 9,192 9,270 Taxes, other than income 3,939 5,316 Insurance liabilities 3,760 3,954 Provisions for litigation 2,072 2,580 Frontier Option liability 1,490 — Severance payments 1,185 970 Earn-outs related to acquisitions 295 295 Fair value of liability derivatives 166 4,716 Other 28,360 24,393 $ 134,692 $ 143,389 |
Business Segments
Business Segments | 6 Months Ended |
Mar. 31, 2021 | |
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, original equipment manufacturers (“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. Corporate activities include general corporate expenses, elimination of inter-segment transactions, interest income and expense and certain other charges. Certain other charges may 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 and certain integration costs) 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. Reportable operating segment revenue and operating profit for the three and six months ended March 31, 2021 and 2020 were as follows: Three Months Ended Six Months Ended 2021 2020 2021 2020 Total revenue Integrated Solutions and Services $ 228,203 $ 240,824 $ 444,956 $ 472,624 Applied Product Technologies 146,107 129,424 269,688 267,953 Total revenue 374,310 370,248 714,644 740,577 Intersegment revenue Integrated Solutions and Services 4,069 2,939 6,105 6,601 Applied Product Technologies 23,677 15,646 39,782 36,208 Total intersegment revenue 27,746 18,585 45,887 42,809 Revenue to external customers Integrated Solutions and Services 224,134 237,885 438,851 466,023 Applied Product Technologies 122,430 113,778 229,906 231,745 Total revenue $ 346,564 $ 351,663 $ 668,757 $ 697,768 Operating profit (loss) Integrated Solutions and Services $ 30,784 $ 36,695 $ 57,141 $ 69,849 Applied Product Technologies 18,103 23,750 31,483 86,892 Corporate (32,709) (39,290) (56,212) (65,894) Total operating profit 16,178 21,155 32,412 90,847 Interest expense (8,395) (13,252) (17,068) (26,835) Income before income taxes 7,783 7,903 15,344 64,012 Income tax (expense) benefit (2,701) 7 (3,785) (2,596) Net income $ 5,082 $ 7,910 $ 11,559 $ 61,416 |
Earnings per Share
Earnings per Share | 6 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings per share | Earnings Per Share The following table sets forth the computation of basic and diluted earnings from continuing operations per common share (in thousands, except per share amounts): Three Months Ended Six Months Ended 2021 2020 2021 2020 Numerator: Numerator for basic and diluted earnings per common share—Net income attributable to Evoqua Water Technologies Corp. $ 5,036 $ 7,812 $ 11,469 $ 60,957 Denominator: Denominator for basic net income per common share—weighted average shares 118,882 116,459 118,882 116,459 Effect of dilutive securities: Share‑based compensation 3,041 4,391 3,393 4,892 Denominator for diluted net income per common share—adjusted weighted average shares 121,923 120,850 122,275 121,351 Basic earnings attributable to Evoqua Water Technologies Corp. per common share $ 0.04 $ 0.07 $ 0.10 $ 0.52 Diluted earnings attributable to Evoqua Water Technologies Corp. per common share $ 0.04 $ 0.06 $ 0.09 $ 0.50 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events 2021 Credit Agreement On April 1, 2021, EWT III entered into a Credit Agreement (the “2021 Credit Agreement”) among EWT III, as borrower, EWT II, as parent guarantor, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and ING Capital, LLC, as sustainability coordinator. The 2021 Credit Agreement provides for a multi-currency senior secured revolving credit facility in an aggregate principal amount not to exceed the U.S. dollar equivalent of $350,000 (the “2021 Revolving Credit Facility”) and a discounted senior secured term loan facility relating to a term loan (the “2021 Term Loan”) in the amount of $475,000 (together with the 2021 Revolving Credit Facility, the “Senior Facilities”). The 2021 Credit Agreement also provides for a letter of credit sub-facility not to exceed $60,000. On April 1, 2021, EWT III borrowed the full amount of $475,000 under the 2021 Term Loan and $105,000 under the 2021 Revolving Credit Facility. The Senior Facilities are guaranteed by EWT II and certain existing and future direct or indirect wholly-owned domestic subsidiaries of EWT III (together with EWT III, collectively, the “Loan Parties”), and collateralized by a first lien on substantially all of the assets of the Loan Parties, with certain exceptions. The 2021 Term Loan matures on April 1, 2028 and requires quarterly principal payments of $1,188. Any amount owed under the 2021 Revolving Credit Facility will become due and payable in full on April 1, 2026. The net proceeds of the Senior Facilities, together with the net proceeds of the Receivables Securitization Program (as defined below) and cash on hand, were used to repay all outstanding indebtedness, in an aggregate principal amount of approximately $814,538, under the Credit Agreement. The proceeds of the 2021 Revolving Credit Facility may also be used to finance or refinance the working capital and capital expenditures needs of EWT III and certain of its subsidiaries and for general corporate purposes. As a result of the refinancing, the Company wrote off approximately $1,333 of deferred financing fees related to the First Lien Term Loan. In addition, the Company incurred approximately $4,985 of fees, of which approximately $1,931 were recorded as deferred financing fees on the Consolidated Balance Sheets and approximately $3,054 were expensed. Receivables Securitization Program On April 1, 2021, Evoqua Finance LLC (“Evoqua Finance”), an indirect wholly-owned subsidiary of the Company, entered into an accounts receivable securitization program (the “Receivables Securitization Program”) consisting of, among other agreements, (i) a Receivables Financing Agreement (the “Receivables Financing Agreement”) among Evoqua Finance, as the borrower, the lenders from time to time party thereto (the “Receivables Financing Lenders”), PNC Bank, National Association (“PNC Bank”), as administrative agent, Evoqua Water Technologies LLC (“EWT LLC”), an indirect wholly-owned subsidiary of the Company, as initial servicer, and PNC Capital Markets LLC (“PNC Markets”), as structuring agent, pursuant to which the lenders have made available to Evoqua Finance a receivables finance facility (the “Securitization Facility”) in an amount up to $150,000 and (ii) a Sale and Contribution Agreement (the “Sale Agreement”) among Evoqua Finance, as purchaser, EWT LLC, as initial servicer and as an originator, and Neptune Benson, Inc., an indirectly wholly-owned subsidiary of the Company, as an originator (together with EWT LLC, the “Originators”). Under the Receivables Securitization Program, the Originators, pursuant to the Sale Agreement, are required to sell substantially all of their trade receivables and certain related rights to payment and obligations of the Originators with respect to such receivables (the “Receivables”) to Evoqua Finance, which, in turn, will obtain loans secured by the Receivables from the Receivables Financing Lenders pursuant to the Receivables Financing Agreement. On April 1, 2021, Evoqua Finance borrowed $142,200 under the Securitization Facility. The Receivables Financing Lenders under the Receivables Securitization Program receive interest at LIBOR or LMIR as selected by Evoqua Finance. The Receivables Securitization Program matures on April 1, 2024. The Company incurred approximately $822 of fees related to the Receivables Securitization Program which were recorded as deferred financing fees on the Consolidated Balance Sheets. Acquisition |
Organization, Consolidation and
Organization, Consolidation and Presentation of Financial Statements (Policies) | 6 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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 and share 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. In our opinion, all adjustments considered necessary for a fair presentation of the financial statements have been included, and all adjustments are of a normal and recurring nature. We consistently applied the accounting policies described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020, as filed with the SEC on November 20, 2020 (“2020 Annual Report”), in preparing these Unaudited Consolidated Financial Statements, with the exception of accounting standard updates described in Note 2, “Recent Accounting Pronouncements.” These Unaudited Consolidated Financial Statements should be read in conjunction with the audited financial statements and the notes included in our 2020 Annual Report. Certain prior period amounts have been reclassified to conform to the current period presentation. |
Accounting Policies (Policies)
Accounting Policies (Policies) | 6 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Recent accounting pronouncements | Recent Accounting Pronouncements Accounting Pronouncements Not Yet Adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which was amended by the subsequent issuance in January 2021 of ASU 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”). ASU 2020-04 became effective immediately and expires on December 21, 2022. ASU 2020-04 allows eligible contracts that are modified to be accounted for as a continuation of those contracts, permits companies to preserve their hedging accounting during the transition period and enables companies to make a one-time election to transfer or sell held-to-maturity debt securities that are affected by rate reform. ASU 2021-01 provides optional expedients and exceptions for contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform, if certain criteria are met. The Company is currently assessing the impact of the adoption of ASU 2020-04 and ASU 2021-01 on the Company’s Unaudited Consolidated Financial Statements and related disclosures. Accounting Pronouncements Recently Adopted The Company adopted ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on October 1, 2020 (“ASU 2016-13”). ASU 2016-13 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. The Company adopted ASU 2016-13 us ing a modified retrospective approach and determined that there was no cumulative-effect adjustment to its beginning Retained deficit on the Consolidated Balance Sheets. The adoption of this standard did not hav e a material impact on the Company’s Unaudited Consolidated Financial Statements. See Note 7, “Accounts Receivable” for further details and related disclosures. The following accounting pronouncements were adopted by the Company on October 1, 2020, and the adoptions did not have a material impact on the Company’s Unaudited Consolidated Financial Statements or disclosures: Accounting Standards Updates ASU 2020-03, Codification Improvements to Financial Instruments ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses ASU 2018-18, Collaborative Arrangements (Topic 808) Clarifying the Interaction between Topic 808 and Topic 606 ASU 2018-13, Fair Value Measurement (Subtopic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Mar. 31, 2021 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The preliminary opening balance sheet for Ultrapure is summarized as follows: Current assets $ 2,366 Property, plant and equipment 963 Goodwill 2,545 Intangible assets, net 3,751 Other non-current assets 22 Total assets acquired 9,647 Liabilities assumed (904) Net assets acquired $ 8,743 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Information regarding the source of revenue: Three Months Ended Six Months Ended 2021 2020 2021 2020 Revenue from contracts with customers recognized under Topic 606 $ 297,919 $ 314,994 $ 583,107 $ 623,596 Other (1) 48,645 36,669 85,650 74,172 Total $ 346,564 $ 351,663 $ 668,757 $ 697,768 (1) Other revenue relates to revenue recognized pursuant to ASU 2016-02, Leases (Topic 842) , mainly attributable to long term rentals. Information regarding revenue disaggregated by source of revenue and segment is as follows: Three Months Ended March 31, 2021 2020 Integrated Solutions and Services Applied Product Technologies Total Integrated Solutions and Services Applied Product Technologies Total Revenue from capital projects $ 52,093 $ 90,296 $ 142,389 $ 66,092 $ 75,214 $ 141,306 Revenue from aftermarket 32,501 27,576 60,077 31,901 32,762 64,663 Revenue from service 139,540 4,558 144,098 139,892 5,802 145,694 Total $ 224,134 $ 122,430 $ 346,564 $ 237,885 $ 113,778 $ 351,663 Six Months Ended March 31, 2021 2020 Integrated Solutions and Services Applied Product Technologies Total Integrated Solutions and Services Applied Product Technologies Total Revenue from capital projects $ 102,719 $ 167,185 $ 269,904 $ 120,712 $ 150,140 $ 270,852 Revenue from aftermarket 59,647 52,930 112,577 61,574 70,103 131,677 Revenue from service 276,485 9,791 286,276 283,737 11,502 295,239 Total $ 438,851 $ 229,906 $ 668,757 $ 466,023 $ 231,745 $ 697,768 Information regarding revenue disaggregated by geographic area is as follows: Three Months Ended Six Months Ended 2021 2020 2021 2020 United States $ 274,681 $ 290,273 $ 538,812 $ 567,990 Europe 31,527 30,381 52,812 56,493 Asia 26,976 12,720 49,581 31,462 Canada 10,636 16,319 21,815 33,882 Australia 2,744 1,970 5,737 7,941 Total $ 346,564 $ 351,663 $ 668,757 $ 697,768 |
Contract with Customer, Asset and Liability | The tables below provide a roll-forward of contract assets and contract liabilities balances for the periods presented: Six Months Ended Contract assets (a) 2021 2020 Balance at beginning of period $ 80,759 $ 73,467 Recognized in current period 147,593 172,228 Reclassified to accounts receivable (153,964) (166,535) Amounts related to sale of the Memcor product line — 2,710 Foreign currency 413 (621) Balance at end of period $ 74,801 $ 81,249 (a) Excludes receivable balances which are disclosed on the Consolidated Balance Sheets. Six Months Ended Contract Liabilities 2021 2020 Balance at beginning of period $ 26,259 $ 39,051 Recognized in current period 158,452 157,114 Amounts in beginning balance reclassified to revenue (20,703) (37,497) Current period amounts reclassified to revenue (127,684) (124,194) Amounts related to sale of the Memcor product line — (700) Foreign currency 570 (83) Balance at end of period $ 36,894 $ 33,691 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
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 March 31, 2021 Assets: Pension plan Cash $ — $ 655 $ — $ — Global Multi-Asset Fund 14,814 — — — Government Securities 2,293 — — — Liability Driven Investment 5,754 — — — Guernsey Unit Trust 2,241 — — — Global Absolute Return 2,251 — — — Deferred compensation plan assets Cash — 1,340 — — Mutual Funds — 17,790 — — Interest rate swap — — 5,631 — Foreign currency forward contracts — — 49 — Liabilities: Pension plan — — (48,168) — Deferred compensation plan liabilities — — (23,058) — Long‑term debt — — (887,902) — Foreign currency forward contracts — — (166) — Earn-outs related to acquisitions — — — (295) Option and Purchase Right — — — (7,739) As of September 30, 2020 Assets: Pension plan Cash $ — $ 15,061 $ — $ — Government Securities 4,924 — — — Liability Driven Investment 3,604 — — — Guernsey Unit Trust 1,881 — — — Global Absolute Return 2,060 — — — Deferred compensation plan assets Trust Assets — 55 — — Insurance — — 19,804 — Foreign currency forward contracts — — 140 — Liabilities: Pension plan — — (47,389) — Deferred compensation plan liabilities — — (21,439) — Long‑term debt — — (872,441) — Interest rate swap — — (4,669) — Foreign currency forward contracts — — (47) — Earn-outs related to acquisitions — — — (295) Option and Purchase Right — — — (7,739) |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 6 Months Ended |
Mar. 31, 2021 | |
Receivables [Abstract] | |
Schedule of accounts receivable | Accounts receivable are summarized as follows: March 31, September 30, Accounts receivable $ 231,227 $ 264,536 Allowance for credit losses (3,884) (4,057) Receivables, net $ 227,343 $ 260,479 |
Accounts Receivable, Allowance for Credit Loss | The movement in the allowance for credit losses was as follows for the six months ended March 31, 2021: Balance at September 30, 2020 $ (4,057) Charged to costs and expenses (12) Write-offs 209 Foreign currency and other (24) Balance at March 31, 2021 $ (3,884) |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | The major classes of Inventories, net are as follows: March 31, September 30, Raw materials and supplies $ 82,065 $ 78,319 Work in progress 19,497 15,654 Finished goods and products held for resale 61,918 56,435 Costs of unbilled projects 4,143 3,438 Reserves for excess and obsolete (10,836) (11,467) Inventories, net $ 156,787 $ 142,379 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 6 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property, plant, and equipment consists of the following: March 31, September 30, Machinery and equipment $ 376,831 $ 357,650 Rental equipment 236,469 221,953 Land and buildings 69,541 70,245 Construction in process 53,324 48,325 736,165 698,173 Less: accumulated depreciation (364,297) (333,712) $ 371,868 $ 364,461 Depreciation expense and maintenance and repairs expense for the three and six months ended March 31, 2021 and 2020 were as follows: Three Months Ended Six Months Ended 2021 2020 2021 2020 Depreciation expense $ 18,769 $ 18,185 $ 37,280 $ 35,488 Maintenance and repair expense 4,754 5,249 9,962 11,314 |
Schedule of Financial Instruments Owned and Pledged as Collateral | March 31, September 30, Gross Net Gross Net Machinery and equipment $ 68,578 $ 55,023 $ 63,305 $ 52,620 Construction in process 15,140 15,140 8,098 8,098 $ 83,718 $ 70,163 $ 71,403 $ 60,718 |
Goodwill (Tables)
Goodwill (Tables) | 6 Months Ended |
Mar. 31, 2021 | |
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, 2020 $ 224,381 $ 172,824 $ 397,205 Business combinations and divestitures 5,988 — 5,988 Measurement period adjustment (3,485) — (3,485) Foreign currency translation 2,565 2,120 4,685 Balance at March 31, 2021 $ 229,449 $ 174,944 $ 404,393 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long‑term debt consists of the following: March 31, September 30, First Lien Term Loan, due December 20, 2024 (1) $ 814,538 $ 819,276 First Lien Credit Agreement Revolving Credit Facility (1) — — Equipment Financing, due April 30, 2021 to July 5, 2029, interest rates ranging from 3.25% to 8.07% 74,382 63,918 Notes Payable, due July 31, 2023 507 611 Mortgage (2) — 1,665 Total debt 889,427 885,470 Less unamortized deferred financing fees (8,392) (9,436) Total net debt 881,035 876,034 Less current portion (21,343) (14,339) Total long‑term debt $ 859,692 $ 861,695 (1) On April 1, 2021, the Company paid off the outstanding balance of the First Lien Term Loan (as defined below) and entered into the 2021 Credit Agreement (as defined below). See Note 23, “Subsequent Events” for further discussion. (2) In November 2020, the Company paid off the outstanding balance of the mortgage due June 30, 2028. Deferred financing fees related to the First Lien Term Loan were included as a contra liability to debt on the Consolidated Balance Sheets as follows: March 31, September 30, Current portion of deferred financing fees (1) $ (2,147) $ (2,112) Long-term portion of deferred financing fees (2) (6,245) (7,324) Total deferred financing fees $ (8,392) $ (9,436) (1) Included in Current portion of debt, net of deferred financing fees on the Consolidated Balance Sheets. (2) Included in Long-term debt, net of deferred financing fees on the Consolidated Balance Sheets. |
Schedule of Line of Credit Facilities | The following summarizes the Company’s outstanding borrowings under the Revolver and outstanding letters of credit as of March 31, 2021 and September 30, 2020, respectively. March 31, September 30, Borrowing availability under the Revolver $ 125,000 $ 125,000 Outstanding borrowings under the Revolver — — Outstanding letters of credit under the Revolver 11,904 12,963 Unused amounts under the Revolver $ 113,096 $ 112,037 Additional letters of credit under a separate arrangement $ 33 $ 52 The following summarizes the Company’s outstanding letters of credit and surety bonds as of March 31, 2021 and September 30, 2020, respectively. March 31, September 30, Revolving credit capacity $ 45,000 $ 45,000 Letters of credit outstanding 11,904 12,963 Remaining revolving credit capacity $ 33,096 $ 32,037 Surety capacity $ 250,000 $ 230,000 Surety issuances 147,565 152,990 Remaining surety available $ 102,435 $ 77,010 |
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 March 31, 2021, are presented below: Fiscal Year Remainder of 2021 $ 14,982 2022 17,293 2023 17,598 2024 797,448 2025 8,081 Thereafter 34,025 Total $ 889,427 |
Schedule of Equipment Financing | During the six months ended March 31, 2021, the Company completed the following equipment financings: Date Entered Due Fixed Principal Amount March 31, 2021 March 31, 2028 3.85 % $ 3,630 March 31, 2021 April 30, 2021 (1) 3.25 % 2,559 December 31, 2020 April 30, 2021 (1) 3.25 % 3,899 December 30, 2020 December 30, 2027 3.73 % 3,905 $ 13,993 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 6 Months Ended |
Mar. 31, 2021 | |
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 gain (loss) recognized in AOCI (net of tax) during the periods presented: Three Months Ended Six Months Ended 2021 2020 2021 2020 Interest rate swap $ 8,811 $ — $ 9,268 $ — Interest rate cap — 15 — 1 Foreign currency forward contracts (335) (179) (332) (160) |
Derivative Instruments, Gain (Loss) [Table Text Block] | The following represents the amount of (loss) gain on foreign currency forward contracts reclassified from AOCI into earnings during the periods presented: Three Months Ended Six Months Ended Location of (Loss) Gain 2021 2020 2021 2020 Cost of product sales and services $ (13) $ (6) $ (13) $ (6) General and administrative expense (40) (24) (72) $ 30 Selling and marketing expense (39) 28 (39) 28 Interest expense (523) — (1,033) — $ (615) $ (2) $ (1,157) $ 52 |
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 March 31, September 30, Interest rate swap Prepaid and other current assets $ 5,631 $ — Foreign currency forward contracts Prepaid and other current assets 35 133 Liability Derivative Balance Sheet Location March 31, September 30, Interest rate swap Accrued expenses and other current liabilities $ — $ 4,669 Foreign currency forward contracts Accrued expenses and other current liabilities 158 47 |
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 Derivatives Balance Sheet Location March 31, September 30, Foreign currency forward contracts Prepaid and other current assets $ 14 $ 7 Liability Derivatives Balance Sheet Location March 31, September 30, Foreign currency forward contracts Accrued expenses and other current liabilities $ 8 $ — |
Product Warranties (Tables)
Product Warranties (Tables) | 6 Months Ended |
Mar. 31, 2021 | |
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 Six Months Ended Six Months Ended 2021 2020 2021 2020 Balance at beginning of the period $ 6,115 $ 4,922 $ 1,724 $ 2,332 Warranty provision for sales 2,188 1,892 714 62 Settlement of warranty claims (1,699) (2,567) (471) (1,248) Amounts related to sale of the Memcor product line — 795 — 135 Foreign currency translation and other 110 65 22 (120) Balance at end of the period $ 6,714 $ 5,107 $ 1,989 $ 1,161 |
Restructuring and Related Cha_2
Restructuring and Related Charges (Tables) | 6 Months Ended |
Mar. 31, 2021 | |
Restructuring and Related Activities [Abstract] | |
Schedule of restructuring components | Six Months Ended 2021 2020 Balance at beginning of the period $ 970 $ 655 Restructuring charges following the sale of the Memcor product line 3,808 3,659 Restructuring charges related to two-segment realignment 562 1,233 Restructuring charges related to other initiatives 1,444 780 Release of prior reserves (283) (62) Write off charges (966) — Cash payments (4,359) (5,831) Other adjustments 9 — Balance at end of the period $ 1,185 $ 434 The table below sets forth the location of amounts recorded above on the Unaudited Consolidated Statements of Operations: Six Months Ended 2021 2020 Cost of product sales and services $ 3,428 $ 3,765 General and administrative expense 1,089 1,760 Sales and marketing expense 340 62 Research and development expense (16) 23 Other operating expense, net 690 — $ 5,531 $ 5,610 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 6 Months Ended |
Mar. 31, 2021 | |
Retirement Benefits [Abstract] | |
Schedule of net benefit costs | The components of net periodic benefit cost for the plans were as follows: Three Months Ended Six Months Ended 2021 2020 2021 2020 Service cost $ 287 $ 259 $ 571 $ 520 Interest cost 80 68 159 136 Expected return on plan assets (87) (29) (174) (59) Amortization of actuarial losses 110 235 374 471 Pension expense for defined benefit plans $ 390 $ 533 $ 930 $ 1,068 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock options, activity | A summary of the stock option activity as of March 31, 2021 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, 2020 7,430 $ 10.30 5.9 years $ 83,152 Granted 611 24.76 Exercised (2,185) 6.04 Forfeited (7) 19.20 Outstanding at March 31, 2021 5,849 $ 13.39 6.4 years $ 75,542 Options exercisable at March 31, 2021 3,857 $ 9.62 5.2 years $ 64,333 Options vested and expected to vest at March 31, 2021 5,774 $ 13.25 6.3 years $ 75,349 |
Schedule of Nonvested Share Activity | A summary of the status of the Company's non-vested stock options as of and for the six months ended March 31, 2021 is presented below. (In thousands, except per share amounts) Shares Weighted Average Grant Date Fair Value/Share Nonvested at beginning of period 2,166 $ 5.56 Granted 611 8.98 Vested (778) 5.56 Forfeited (7) 6.47 Nonvested at end of period 1,992 $ 6.60 The total fair value of options vested during the six months ended March 31, 2021, was $4,326. |
Schedule of Share-based Compensation, Restricted Stock Units Award Activity | The following is a summary of the RSU activity for the six months ended March 31, 2021. (In thousands, except per share amounts) Shares Weighted Average Grant Date Fair Value/Share Outstanding at September 30, 2020 750 $ 17.86 Granted 494 24.69 Vested (234) 17.64 Forfeited (3) 18.85 Cancelled (7) 21.22 Outstanding at March 31, 2021 1,000 $ 21.26 Expected to vest at March 31, 2021 948 $ 21.11 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Line of Credit Facilities | The following summarizes the Company’s outstanding borrowings under the Revolver and outstanding letters of credit as of March 31, 2021 and September 30, 2020, respectively. March 31, September 30, Borrowing availability under the Revolver $ 125,000 $ 125,000 Outstanding borrowings under the Revolver — — Outstanding letters of credit under the Revolver 11,904 12,963 Unused amounts under the Revolver $ 113,096 $ 112,037 Additional letters of credit under a separate arrangement $ 33 $ 52 The following summarizes the Company’s outstanding letters of credit and surety bonds as of March 31, 2021 and September 30, 2020, respectively. March 31, September 30, Revolving credit capacity $ 45,000 $ 45,000 Letters of credit outstanding 11,904 12,963 Remaining revolving credit capacity $ 33,096 $ 32,037 Surety capacity $ 250,000 $ 230,000 Surety issuances 147,565 152,990 Remaining surety available $ 102,435 $ 77,010 |
Accrued Expenses and Other Li_2
Accrued Expenses and Other Liabilities (Tables) | 6 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | Accrued expenses and other liabilities consisted of the following: March 31, September 30, Salaries, wages and other benefits $ 59,245 $ 67,766 Obligation under operating leases 13,119 12,767 Obligation under finance leases 11,869 11,362 Third party commissions 9,192 9,270 Taxes, other than income 3,939 5,316 Insurance liabilities 3,760 3,954 Provisions for litigation 2,072 2,580 Frontier Option liability 1,490 — Severance payments 1,185 970 Earn-outs related to acquisitions 295 295 Fair value of liability derivatives 166 4,716 Other 28,360 24,393 $ 134,692 $ 143,389 |
Business Segments (Tables)
Business Segments (Tables) | 6 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information, by segment | Three Months Ended Six Months Ended 2021 2020 2021 2020 Total revenue Integrated Solutions and Services $ 228,203 $ 240,824 $ 444,956 $ 472,624 Applied Product Technologies 146,107 129,424 269,688 267,953 Total revenue 374,310 370,248 714,644 740,577 Intersegment revenue Integrated Solutions and Services 4,069 2,939 6,105 6,601 Applied Product Technologies 23,677 15,646 39,782 36,208 Total intersegment revenue 27,746 18,585 45,887 42,809 Revenue to external customers Integrated Solutions and Services 224,134 237,885 438,851 466,023 Applied Product Technologies 122,430 113,778 229,906 231,745 Total revenue $ 346,564 $ 351,663 $ 668,757 $ 697,768 Operating profit (loss) Integrated Solutions and Services $ 30,784 $ 36,695 $ 57,141 $ 69,849 Applied Product Technologies 18,103 23,750 31,483 86,892 Corporate (32,709) (39,290) (56,212) (65,894) Total operating profit 16,178 21,155 32,412 90,847 Interest expense (8,395) (13,252) (17,068) (26,835) Income before income taxes 7,783 7,903 15,344 64,012 Income tax (expense) benefit (2,701) 7 (3,785) (2,596) Net income $ 5,082 $ 7,910 $ 11,559 $ 61,416 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share, basic and diluted | The following table sets forth the computation of basic and diluted earnings from continuing operations per common share (in thousands, except per share amounts): Three Months Ended Six Months Ended 2021 2020 2021 2020 Numerator: Numerator for basic and diluted earnings per common share—Net income attributable to Evoqua Water Technologies Corp. $ 5,036 $ 7,812 $ 11,469 $ 60,957 Denominator: Denominator for basic net income per common share—weighted average shares 118,882 116,459 118,882 116,459 Effect of dilutive securities: Share‑based compensation 3,041 4,391 3,393 4,892 Denominator for diluted net income per common share—adjusted weighted average shares 121,923 120,850 122,275 121,351 Basic earnings attributable to Evoqua Water Technologies Corp. per common share $ 0.04 $ 0.07 $ 0.10 $ 0.52 Diluted earnings attributable to Evoqua Water Technologies Corp. per common share $ 0.04 $ 0.06 $ 0.09 $ 0.50 |
Description of the Company an_2
Description of the Company and Basis of Presentation (Details) shares in Thousands, $ in Thousands | Feb. 11, 2021shares | Dec. 04, 2020shares | Oct. 29, 2018segment | Mar. 31, 2021segment | Mar. 31, 2021USD ($)segment | Mar. 31, 2020USD ($) |
Subsidiary, Sale of Stock [Line Items] | ||||||
Number of reportable segments | segment | 3 | 2 | 2 | |||
Net cash provided by operating activities | $ 63,058 | $ 38,837 | ||||
Net cash provided by financing activities | 8,273 | $ (108,327) | ||||
Reporting Of Tax Remittances For Certain Equity Awards | Classification Error | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Classification error, amount | 18,669 | |||||
Reporting Of Tax Remittances For Certain Equity Awards | Understatement | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Net cash provided by operating activities | 18,669 | |||||
Reporting Of Tax Remittances For Certain Equity Awards | Overstatement | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Net cash provided by financing activities | 18,669 | |||||
Reporting Of Tax Remittances For Certain Equity Awards | Revision of Prior Period, Error Correction, Adjustment | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Classification error, amount | $ 16,854 | |||||
Additional Secondary Public Offering [Member] | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Number of shares issued in transaction (in shares) | shares | 16,383 | 12,000 |
Investments, Equity Method and
Investments, Equity Method and Joint Ventures (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Apr. 08, 2021 | Feb. 28, 2021 | Sep. 30, 2020 | Oct. 01, 2019 | |
Schedule of Equity Method Investments [Line Items] | ||||||||
Obligation to absorb risk of loss, percentage of partner's equity | 100.00% | 100.00% | ||||||
Current assets | $ 717,132 | $ 717,132 | $ 695,712 | |||||
Property, plant, and equipment, net | 371,868 | 371,868 | 364,461 | |||||
Goodwill | 404,393 | 404,393 | 397,205 | |||||
Other non‑current assets | 37,836 | 37,836 | 27,509 | |||||
Liabilities | (1,354,914) | (1,354,914) | (1,362,395) | |||||
Operating Expenses | (90,151) | $ (99,295) | (169,485) | $ (186,763) | ||||
Operating profit (loss) | 16,178 | 21,155 | 32,412 | 90,847 | ||||
Open Option Contracts Written, at Fair Value | (1,490) | (1,490) | 0 | |||||
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Open Option Contracts Written, at Fair Value | (7,739) | (7,739) | (7,739) | |||||
Other Current Liabilities | Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Open Option Contracts Written, at Fair Value | $ 1,490 | $ 1,490 | 0 | |||||
Frontier | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Percentage of voting interests acquired | 8.00% | 8.00% | 60.00% | |||||
Remaining percentage to be acquired | 40.00% | |||||||
Frontier | Subsequent Event | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Percentage of voting interests acquired | 68.00% | |||||||
Frontier | Maximum | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Remaining percentage to be acquired | 10.00% | |||||||
Treated Water Outsourcing [Member] | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Partnership interest | 50.00% | |||||||
Current assets | $ 3,462 | $ 3,462 | 4,016 | |||||
Property, plant, and equipment, net | 1,024 | 1,024 | 1,145 | |||||
Goodwill | 2,206 | 2,206 | 2,206 | |||||
Liabilities | (1,168) | (1,168) | (1,324) | |||||
Cash | 1,552 | 1,552 | 2,088 | |||||
Revenues | 834 | 1,210 | 1,668 | 3,852 | ||||
Operating Expenses | (732) | (1,086) | (1,469) | (3,044) | ||||
Operating profit (loss) | 102 | 124 | 199 | 808 | ||||
Frontier | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Current assets | 5,045 | 5,045 | 4,024 | |||||
Property, plant, and equipment, net | 3,094 | 3,094 | 3,159 | |||||
Goodwill | 1,798 | 1,798 | 1,798 | |||||
Other non‑current assets | 9,092 | 9,092 | 9,918 | |||||
Liabilities | (5,095) | (5,095) | (3,692) | |||||
Cash | 1,182 | 1,182 | $ 1,675 | |||||
Revenues | 2,078 | 1,078 | 2,848 | 2,723 | ||||
Operating Expenses | (2,401) | (2,364) | (4,139) | (4,301) | ||||
Operating profit (loss) | $ (323) | $ (1,286) | $ (1,291) | $ (1,578) |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Thousands | Mar. 01, 2021 | Mar. 31, 2021 | Mar. 31, 2020 |
Business Acquisition [Line Items] | |||
Proceeds from divestiture of business | $ 897 | $ 118,894 | |
Loss on divestiture | $ 191 | $ (68,051) | |
Ultrapure | |||
Business Acquisition [Line Items] | |||
Acquisition costs | 229 | ||
Cash paid at closing | $ 8,743 |
Acquisitions Opening Balance Sh
Acquisitions Opening Balance Sheet (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Sep. 30, 2020 |
Business Acquisition [Line Items] | ||
Goodwill | $ 404,393 | $ 397,205 |
Ultrapure | ||
Business Acquisition [Line Items] | ||
Current assets | 2,366 | |
Property, plant and equipment | 963 | |
Goodwill | 2,545 | |
Intangible assets | 3,751 | |
Other non-current assets | 22 | |
Total assets acquired | 9,647 | |
Total liabilities assumed | (904) | |
Net assets acquired | $ 8,743 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from product sales and services | $ 346,564 | $ 351,663 | $ 668,757 | $ 697,768 |
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 | Mar. 31, 2021USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Amount | $ 207,439 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period: 2021-01-01 | Minimum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period: 2021-01-01 | Maximum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 24 months |
Revenue (Disaggregation of Reve
Revenue (Disaggregation of Revenue) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | ||
Disaggregation of Revenue [Line Items] | |||||
Revenue from product sales and services | $ 346,564 | $ 351,663 | $ 668,757 | $ 697,768 | |
Operating Leases, Income Statement, Lease Revenue | [1] | 48,645 | 36,669 | 85,650 | 74,172 |
United States | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from product sales and services | 274,681 | 290,273 | 538,812 | 567,990 | |
Europe | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from product sales and services | 31,527 | 30,381 | 52,812 | 56,493 | |
Asia | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from product sales and services | 26,976 | 12,720 | 49,581 | 31,462 | |
Canada | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from product sales and services | 10,636 | 16,319 | 21,815 | 33,882 | |
Australia | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from product sales and services | 2,744 | 1,970 | 5,737 | 7,941 | |
Integrated Solutions and Services | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from product sales and services | 224,134 | 237,885 | 438,851 | 466,023 | |
Applied Product Technologies | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from product sales and services | 122,430 | 113,778 | 229,906 | 231,745 | |
Revenue from aftermarket | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from product sales and services | 60,077 | 64,663 | 112,577 | 131,677 | |
Revenue from aftermarket | Integrated Solutions and Services | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from product sales and services | 32,501 | 31,901 | 59,647 | 61,574 | |
Revenue from aftermarket | Applied Product Technologies | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from product sales and services | 27,576 | 32,762 | 52,930 | 70,103 | |
Revenue from service | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from product sales and services | 144,098 | 145,694 | 286,276 | 295,239 | |
Revenue from service | Integrated Solutions and Services | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from product sales and services | 139,540 | 139,892 | 276,485 | 283,737 | |
Revenue from service | Applied Product Technologies | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from product sales and services | 4,558 | 5,802 | 9,791 | 11,502 | |
Revenue from capital projects | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from product sales and services | 142,389 | 141,306 | 269,904 | 270,852 | |
Revenue from capital projects | Integrated Solutions and Services | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from product sales and services | 52,093 | 66,092 | 102,719 | 120,712 | |
Revenue from capital projects | Applied Product Technologies | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from product sales and services | 90,296 | 75,214 | 167,185 | 150,140 | |
Accounting Standards Update 2014-09 [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from product sales and services | $ 297,919 | $ 314,994 | $ 583,107 | $ 623,596 | |
[1] | Other revenue relates to revenue recognized pursuant to ASU 2016-02, Leases (Topic 842) , mainly attributable to long term rentals. |
Revenue (Contract Assets and Li
Revenue (Contract Assets and Liabilities) (Details) - USD ($) $ in Thousands | 6 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | ||||
Contract liabilities | $ 36,894 | $ 33,691 | $ 26,259 | $ 39,051 |
Change in Contract with Customer, Asset [Roll Forward] | ||||
beginning of period | 80,759 | 73,467 | ||
Recognized in current period | 147,593 | 172,228 | ||
Reclassified to accounts receivable | 153,964 | 166,535 | ||
Amounts related to sale of the Memcor product line | 0 | 2,710 | ||
Foreign currency | 413 | (621) | ||
end of period | 74,801 | 81,249 | ||
Change in Contract with Customer, Liability [Roll Forward] | ||||
Recognized in current period | 158,452 | 157,114 | ||
Amounts in beginning balance reclassified to revenue | (20,703) | (37,497) | ||
Current period amounts reclassified to revenue | (127,684) | (124,194) | ||
Amounts related to sale of the Memcor product line | 0 | (700) | ||
Foreign currency | $ 570 | $ (83) |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Sep. 30, 2020 |
Assets: | ||
Mutual Funds | $ 17,790 | |
Liabilities: | ||
Option and purchase right | (1,490) | $ 0 |
Fair Value, Measurements, Recurring | Quoted Market Prices in Active Markets (Level 1) | ||
Assets: | ||
Cash | 1,340 | |
Deferred compensation plan assets | ||
Cash | 55 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ||
Assets: | ||
Foreign currency forward contracts | 49 | 140 |
Deferred compensation plan assets | ||
Mutual Funds | 19,804 | |
Liabilities: | ||
Pension plan | (48,168) | (47,389) |
Deferred compensation plan liabilities | (23,058) | (21,439) |
Long‑term debt | (887,902) | (872,441) |
Interest Rate Derivative Liabilities, at Fair Value | (4,669) | |
Foreign currency forward contracts | (166) | (47) |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Other Current Liabilities | Designated as Hedging Instrument | ||
Deferred compensation plan assets | ||
Interest rate cap | 5,631 | 0 |
Liabilities: | ||
Interest Rate Derivative Liabilities, at Fair Value | 0 | (4,669) |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | ||
Liabilities: | ||
Earn-outs related to acquisitions | (295) | (295) |
Option and purchase right | (7,739) | (7,739) |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | Other Current Liabilities | ||
Liabilities: | ||
Earn-outs related to acquisitions | (295) | (295) |
Option and purchase right | 1,490 | 0 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | Other Noncurrent Liabilities | ||
Liabilities: | ||
Option and purchase right | 6,249 | 7,739 |
Fair Value, Measurements, Recurring | Cash | Quoted Market Prices in Active Markets (Level 1) | ||
Assets: | ||
Defined benefit plan, fair value of plan assets | 655 | 15,061 |
Fair Value, Measurements, Recurring | US Government Agencies Debt Securities | ||
Assets: | ||
Plan assets at net asset value | 2,293 | 4,924 |
Fair Value, Measurements, Recurring | Liability Driven Investment | ||
Assets: | ||
Plan assets at net asset value | 5,754 | 3,604 |
Fair Value, Measurements, Recurring | Guernsey Unit Trust | ||
Assets: | ||
Plan assets at net asset value | 2,241 | 1,881 |
Fair Value, Measurements, Recurring | Global Absolute Return | ||
Assets: | ||
Plan assets at net asset value | 2,251 | $ 2,060 |
Fair Value, Measurements, Recurring | Hedge Funds, Multi-strategy | ||
Assets: | ||
Plan assets at net asset value | $ 14,814 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Sep. 30, 2020 | Oct. 01, 2019 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Option and purchase right | $ 1,490 | $ 0 | |
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Option and purchase right | 7,739 | 7,739 | |
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring | Other Current Liabilities | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Option and purchase right | (1,490) | 0 | |
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring | Other Noncurrent Liabilities | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Option and purchase right | $ (6,249) | $ (7,739) | |
Frontier | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Remaining percentage to be acquired | 40.00% | ||
Percentage of voting interests acquired | 8.00% | 60.00% |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2021 | Sep. 30, 2020 | |
Receivables [Abstract] | ||
Accounts receivable | $ 231,227 | $ 264,536 |
Allowance for credit losses | (3,884) | (4,057) |
Accounts receivable, net | 227,343 | $ 260,479 |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at September 30, 2020 | (4,057) | |
Charged to costs and expenses | (12) | |
Write-offs | 209 | |
Foreign currency and other | (24) | |
Balance at December 31, 2020 | $ (3,884) |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Sep. 30, 2020 |
Inventory Disclosure [Abstract] | ||
Raw materials and supplies | $ 82,065 | $ 78,319 |
Work in progress | 19,497 | 15,654 |
Finished goods and products held for resale | 61,918 | 56,435 |
Costs of unbilled projects | 4,143 | 3,438 |
Reserves for excess and obsolete | (10,836) | (11,467) |
Inventory, Net | $ 156,787 | $ 142,379 |
Property, Plant, and Equipmen_2
Property, Plant, and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Sep. 30, 2020 | |
Property, Plant and Equipment [Line Items] | |||||
Property, Plant and Equipment, Gross | $ 736,165 | $ 736,165 | $ 698,173 | ||
Less: accumulated depreciation | (364,297) | (364,297) | (333,712) | ||
Property, plant, and equipment, net | 371,868 | 371,868 | 364,461 | ||
Depreciation and amortization | 18,769 | $ 18,185 | 37,280 | $ 35,488 | |
Maintenance and repair expense | 4,754 | $ 5,249 | 9,962 | $ 11,314 | |
Machinery and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, Plant and Equipment, Gross | 376,831 | 376,831 | 357,650 | ||
Land and buildings | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, Plant and Equipment, Gross | 69,541 | 69,541 | 70,245 | ||
Construction in process | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, Plant and Equipment, Gross | 53,324 | 53,324 | 48,325 | ||
Rental equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, Plant and Equipment, Gross | $ 236,469 | $ 236,469 | $ 221,953 |
Property, Plant, and Equipmen_3
Property, Plant, and Equipment Property, Plant and Equipment (Secured Financing Agreements) (Details) - Equipment Financings - USD ($) $ in Thousands | Mar. 31, 2021 | Sep. 30, 2020 |
Property, plant and equipment gross [Member] | ||
Debt Instrument [Line Items] | ||
Pledged Assets, Not Separately Reported, Other | $ 83,718 | $ 71,403 |
Property, plant and equipment gross [Member] | Machinery and equipment | ||
Debt Instrument [Line Items] | ||
Pledged Assets, Not Separately Reported, Other | 68,578 | 63,305 |
Property, plant and equipment gross [Member] | Construction in process | ||
Debt Instrument [Line Items] | ||
Pledged Assets, Not Separately Reported, Other | 15,140 | 8,098 |
Property, plant and equipment net [Member] | ||
Debt Instrument [Line Items] | ||
Pledged Assets, Not Separately Reported, Other | 70,163 | 60,718 |
Property, plant and equipment net [Member] | Machinery and equipment | ||
Debt Instrument [Line Items] | ||
Pledged Assets, Not Separately Reported, Other | 55,023 | 52,620 |
Property, plant and equipment net [Member] | Construction in process | ||
Debt Instrument [Line Items] | ||
Pledged Assets, Not Separately Reported, Other | $ 15,140 | $ 8,098 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Sep. 30, 2020 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Business acquisition, goodwill, expected tax deductible, amount | $ 155,704 | $ 153,004 |
Goodwill (Schedule of Goodwill)
Goodwill (Schedule of Goodwill) (Details) $ in Thousands | 6 Months Ended |
Mar. 31, 2021USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning of the period | $ 397,205 |
Business combinations and divestitures | 5,988 |
Measurement period adjustment | (3,485) |
Foreign currency translation | 4,685 |
Goodwill, end of the period | 404,393 |
Operating Segments | Integrated Solutions and Services | |
Goodwill [Roll Forward] | |
Goodwill, beginning of the period | 224,381 |
Business combinations and divestitures | 5,988 |
Measurement period adjustment | (3,485) |
Foreign currency translation | 2,565 |
Goodwill, end of the period | 229,449 |
Operating Segments | Applied Product Technologies | |
Goodwill [Roll Forward] | |
Goodwill, beginning of the period | 172,824 |
Measurement period adjustment | 0 |
Foreign currency translation | 2,120 |
Goodwill, end of the period | 174,944 |
Goodwill, Written off Related to Sale of Business Unit | $ 0 |
Debt (Term Facility and Revolvi
Debt (Term Facility and Revolving Credit Facility) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Sep. 30, 2020 | ||||
Line of Credit Facility [Line Items] | ||||||||
Unamortized discount (premium) and debt issuance costs, net | $ 8,392 | $ 8,392 | $ 9,436 | |||||
Total debt | 889,427 | 889,427 | 885,470 | |||||
Amortization of debt issuance costs and discounts | 518 | $ 421 | 1,044 | $ 936 | ||||
Line of credit facility, remaining borrowing capacity | 45,000 | 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 | |||||
First Lien Term Facility, due December 20, 2024 | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Unamortized discount (premium) and debt issuance costs, net | (8,392) | (8,392) | (9,436) | |||||
First Lien Term Facility, due December 20, 2024 | Other Current Liabilities | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Unamortized discount (premium) and debt issuance costs, net | [1] | (2,147) | (2,147) | (2,112) | ||||
First Lien Term Facility, due December 20, 2024 | Other Noncurrent Liabilities | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Unamortized discount (premium) and debt issuance costs, net | [2] | $ (6,245) | $ (6,245) | (7,324) | ||||
First Lien Term Facility, due December 20, 2024 | Term Loan | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Debt instrument, interest rate, stated percentage | 2.61% | 2.61% | ||||||
Debt instrument, periodic payment, principal | $ 2,369 | |||||||
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 | 2.50% | 2.50% | ||||||
Debt instrument, basis spread on variable rate | 0.11% | |||||||
Revolving Credit Facility | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Total debt | $ 0 | [3] | $ 0 | [3] | 0 | |||
First Lien Term Facility, due December 20, 2024 | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Total debt | $ 814,538 | $ 814,538 | $ 819,276 | |||||
[1] | Included in Current portion of debt, net of deferred financing fees on the Consolidated Balance Sheets. | |||||||
[2] | Included in Long-term debt, net of deferred financing fees on the Consolidated Balance Sheets. | |||||||
[3] | On April 1, 2021, the Company paid off the outstanding balance of the First Lien Term Loan (as defined below) and entered into the 2021 Credit Agreement (as defined below). See Note 23, “Subsequent Events” for further discussion. |
Debt (Schedule of Long-term Deb
Debt (Schedule of Long-term Debt) (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Dec. 30, 2020 | Sep. 30, 2020 | |
Debt Instrument [Line Items] | |||||
Total debt | $ 889,427 | $ 885,470 | |||
Less unamortized deferred financing fees | (8,392) | (9,436) | |||
Total net debt | 881,035 | 876,034 | |||
Current portion of debt | (21,343) | (14,339) | |||
Total long‑term debt | 859,692 | 861,695 | |||
First Lien Term Facility, due December 20, 2024 | |||||
Debt Instrument [Line Items] | |||||
Total debt | 814,538 | 819,276 | |||
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Total debt | 0 | [1] | 0 | ||
Notes Payable, due July 31, 2023 | |||||
Debt Instrument [Line Items] | |||||
Total debt | 507 | 611 | |||
Equipment Financings | Equipment Financing, due April 30, 2021 to July 5, 2029, interest rates ranging from 3.25% to 8.07% | |||||
Debt Instrument [Line Items] | |||||
Total debt | 74,382 | 63,918 | |||
December 31 Equipment Financing [Member] | Equipment Financing, due April 30, 2021 to July 5, 2029, interest rates ranging from 3.25% to 8.07% | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, interest rate, stated percentage | 0.0325% | ||||
Dec 30 Equipment Financing [Member] | Equipment Financing, due April 30, 2021 to July 5, 2029, interest rates ranging from 3.25% to 8.07% | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, interest rate, stated percentage | 0.0373% | ||||
MAGENTO | Facility Financing | Mortgage (2) | |||||
Debt Instrument [Line Items] | |||||
Total debt | $ 0 | [2] | $ 1,665 | ||
Minimum | Equipment Financings | Equipment Financing, due April 30, 2021 to July 5, 2029, interest rates ranging from 3.25% to 8.07% | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, interest rate, stated percentage | 3.25% | ||||
Maximum | Equipment Financings | Equipment Financing, due April 30, 2021 to July 5, 2029, interest rates ranging from 3.25% to 8.07% | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, interest rate, stated percentage | 8.07% | ||||
[1] | On April 1, 2021, the Company paid off the outstanding balance of the First Lien Term Loan (as defined below) and entered into the 2021 Credit Agreement (as defined below). See Note 23, “Subsequent Events” for further discussion. | ||||
[2] | In November 2020, the Company paid off the outstanding balance of the mortgage due June 30, 2028. |
Debt (Schedule of Line of Credi
Debt (Schedule of Line of Credit Facilities) (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Sep. 30, 2020 | |
Line of Credit Facility [Line Items] | |||
Line of credit facility, remaining borrowing capacity | $ 45,000 | $ 45,000 | |
Total debt | 889,427 | 885,470 | |
Debt instrument, unused borrowing capacity, amount | 33,096 | 32,037 | |
Letter of Credit | |||
Line of Credit Facility [Line Items] | |||
Letters of credit outstanding, amount | 11,904 | 12,963 | |
Debt instrument, unused borrowing capacity, amount | 113,096 | 112,037 | |
Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Line of credit facility, remaining borrowing capacity | 125,000 | 125,000 | |
Line of Credit | Letter of Credit | |||
Line of Credit Facility [Line Items] | |||
Letters of credit outstanding, amount | 33 | 52 | |
Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Total debt | $ 0 | [1] | $ 0 |
[1] | On April 1, 2021, the Company paid off the outstanding balance of the First Lien Term Loan (as defined below) and entered into the 2021 Credit Agreement (as defined below). See Note 23, “Subsequent Events” for further discussion. |
Debt (Long-term Debt Maturities
Debt (Long-term Debt Maturities) (Details) $ in Thousands | Mar. 31, 2021USD ($) |
Debt Disclosure [Abstract] | |
Remainder of 2020 | $ 14,982 |
2021 | 17,293 |
2022 | 17,598 |
2023 | 797,448 |
2024 | 8,081 |
Thereafter | 34,025 |
Long-term Debt | $ 889,427 |
Debt (Schedule of Equipment Fin
Debt (Schedule of Equipment Financings) (Details) - Loans Payable - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Dec. 30, 2020 |
Equipment Financing Due March 31 2028 | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate, stated percentage | 0.0385% | ||
Total debt | $ 3,630 | ||
2021 Equipment Financing Due April 30 2021 | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate, stated percentage | 0.0325% | ||
Total debt | $ 2,559 | ||
2020 Equipment Financing Due April 30, 2021 | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate, stated percentage | 0.0325% | ||
Total debt | $ 3,899 | ||
Equipment Financing Due December, 2027 | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate, stated percentage | 0.0373% | ||
Total debt | $ 3,905 | ||
Equipment Financings | |||
Debt Instrument [Line Items] | |||
Total debt | $ 13,993 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Details) - USD ($) $ in Thousands | May 22, 2020 | Mar. 31, 2021 |
Derivative [Line Items] | ||
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimated Net Amount to be Transferred | $ (113) | |
Description of Reclassification of Cash Flow Hedge Gain (Loss) | twelve months | |
Foreign Exchange Forward | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | $ 8,866 | |
Designated as Hedging Instrument | Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Derivative, Term of Contract | 5 years | |
Derivative, Notional Amount | $ 500,000 | |
Derivative, Fixed Interest Rate | 0.55% |
Derivative Financial Instrume_4
Derivative Financial Instruments (Fair Values) (Details) - Fair Value, Inputs, Level 2 - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Mar. 31, 2021 | Sep. 30, 2020 |
Derivatives, Fair Value [Line Items] | ||
Interest Rate Derivative Liabilities, at Fair Value | $ 4,669 | |
Designated as Hedging Instrument | Other Current Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Interest Rate Derivative Liabilities, at Fair Value | $ 0 | 4,669 |
Foreign Currency Cash Flow Hedge Liability at Fair Value | 158 | 47 |
Interest rate cap | 5,631 | 0 |
Designated as Hedging Instrument | Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Foreign Currency Cash Flow Hedge Asset at Fair Value | $ 35 | $ 133 |
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 | 6 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Interest Rate Swap [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Net of Tax | $ 8,811 | $ 0 | $ 9,268 | $ 0 |
Interest Rate Cap | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Net of Tax | 0 | 15 | 0 | 1 |
Foreign Exchange Forward | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Net of Tax | $ (335) | $ (179) | $ (332) | $ (160) |
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 | Mar. 31, 2021 | Sep. 30, 2020 |
Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Foreign Currency Cash Flow Hedge Liability at Fair Value | $ 14 | $ 7 |
Other Current Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Foreign Currency Cash Flow Hedge Liability at Fair Value | $ 8 | $ 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 | 6 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||||
Foreign Currency Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net | $ (615) | $ (2) | $ (1,157) | $ 52 |
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 | (13) | (6) | (13) | (6) |
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 | (40) | (24) | (72) | 30 |
Sales and Marketing Expense | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||||
Foreign Currency Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net | (39) | 28 | (39) | 28 |
Interest Expense [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||||
Foreign Currency Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net | $ (523) | $ 0 | $ (1,033) | $ 0 |
Product Warranties (Details)
Product Warranties (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | ||
Balance at beginning of the period | $ 6,115 | |
Balance at beginning of the period | 1,724 | |
Balance at end of the period | 6,714 | |
Balance at end of the period | 1,989 | |
Other Current Liabilities | ||
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | ||
Balance at beginning of the period | 6,115 | $ 4,922 |
Warranty provision for sales | 2,188 | 1,892 |
Settlement of warranty claims | (1,699) | (2,567) |
Amounts related to sale of the Memcor product line | 0 | (795) |
Foreign currency translation and other | 110 | 65 |
Balance at end of the period | 6,714 | 5,107 |
Other Noncurrent Liabilities | ||
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | ||
Balance at beginning of the period | 1,724 | 2,332 |
Warranty provision for sales | 714 | 62 |
Settlement of warranty claims | (471) | (1,248) |
Amounts related to sale of the Memcor product line | 0 | (135) |
Foreign currency translation and other | 22 | (120) |
Balance at end of the period | $ 1,989 | $ 1,161 |
Restructuring and Related Cha_3
Restructuring and Related Charges (Details) $ in Thousands | Oct. 29, 2018segment | Mar. 31, 2021USD ($)segment | Mar. 31, 2021USD ($)segment | Mar. 31, 2020USD ($) |
Restructuring Cost and Reserve [Line Items] | ||||
Number of reportable segments | segment | 3 | 2 | 2 | |
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning of the period | $ 970 | $ 655 | ||
Restructuring charges | 5,531 | 5,610 | ||
Cash payments | (4,359) | (5,831) | ||
Restructuring Reserve, Translation and Other Adjustment | 9 | 0 | ||
Other adjustments | 283 | 62 | ||
Restructuring reserve, end of the period | $ 1,185 | 1,185 | 434 | |
Write off charges | (966) | 0 | ||
Cost of Product Sales and Services | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring charges | 3,428 | 3,765 | ||
General and Administrative Expense | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring charges | 1,089 | 1,760 | ||
Sales and Marketing Expense | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring charges | 340 | 62 | ||
Research and Development Expense | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring charges | (16) | 23 | ||
Other Operating Income (Expense) | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring charges | 690 | 0 | ||
Two-segment realignment | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring charges | 562 | 1,233 | ||
Post Memcor product line sale restructuring [Member] | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring charges | 3,808 | 3,659 | ||
Other Restructuring [Member] | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring charges | 1,444 | $ 780 | ||
Other Restructuring [Member] | Two-segment realignment | Maximum | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and related cost, expected cost | 700 | 700 | ||
Other Restructuring [Member] | Two-segment realignment | Minimum | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and related cost, expected cost | 500 | 500 | ||
Other Restructuring [Member] | Post Memcor product line sale restructuring [Member] | Maximum | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and related cost, expected cost | 3,000 | 3,000 | ||
Other Restructuring [Member] | Post Memcor product line sale restructuring [Member] | Minimum | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and related cost, expected cost | 2,000 | 2,000 | ||
Other Restructuring [Member] | ISS restructuring [Member] | Maximum | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and related cost, expected cost | 1,000 | 1,000 | ||
Other Restructuring [Member] | ISS restructuring [Member] | Minimum | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and related cost, expected cost | $ 500 | $ 500 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Retirement Benefits [Abstract] | ||||
Service cost | $ 287 | $ 259 | $ 571 | $ 520 |
Interest cost | 80 | 68 | 159 | 136 |
Expected return on plan assets | (87) | (29) | (174) | (59) |
Amortization of actuarial losses | 110 | 235 | 374 | 471 |
Pension expense for defined benefit plans | $ 390 | $ 533 | $ 930 | $ 1,068 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||||
Estimated Annual Effective Tax Rate Used to Calculate Income Tax Expense (Benefit) | 14.60% | 4.50% | ||
Federal statutory income tax rate, percent | 21.00% | 21.00% | ||
Effective income tax rate reconciliation, percent | 34.70% | 0.09% | 24.70% | 4.06% |
Income tax (expense) benefit | $ (2,701) | $ 7 | $ (3,785) | $ (2,596) |
Income before income taxes | 7,783 | 7,903 | 15,344 | 64,012 |
Unrecognized Tax Benefits | $ 1,752 | $ 1,309 | $ 1,752 | $ 1,309 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Apr. 01, 2021 | Oct. 01, 2020 | Dec. 21, 2018 | Oct. 01, 2018 | Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Sep. 30, 2020 | Feb. 18, 2020 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Intrinsic value, exercises in period | $ 43,564 | |||||||||
Employee Stock Ownership Plan (ESOP), Shares in ESOP | 11,297 | |||||||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | |||||||
Non-cash share-based compensation | $ 3,214 | $ 2,304 | $ 6,233 | $ 5,984 | ||||||
Share-based Compensation expense | 3,214 | 2,326 | 6,290 | 6,017 | ||||||
Compensation cost not yet recognized, period for recognition | $ 19,110 | 19,110 | ||||||||
Fair value of options vested | 4,326 | |||||||||
Proceeds from issuance of common stock | $ 13,430 | 8,333 | ||||||||
Employee Stock | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Employee Stock Ownership Plan (ESOP), Shares in ESOP | 5,000 | |||||||||
Equity incentive plan, number of shares authorized (shares) | 5,100 | 5,100 | 5,000 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 4,990 | 4,990 | ||||||||
Purchase price of stock, percentage | 85.00% | |||||||||
Purchase period | 6 months | |||||||||
Employee Stock Ownership Plan (ESOP), Compensation Expense | $ 187 | $ 35 | $ 403 | $ 74 | ||||||
Shares issued under ESPP | 62 | 120 | ||||||||
Employee Stock Option | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Equity incentive plan, number of shares authorized (shares) | 11,083 | 11,083 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 2,177 | 2,177 | ||||||||
Compensation cost not yet recognized, period for recognition | $ 11,897 | $ 11,897 | ||||||||
Period for recognition for unrecognized compensation expense | 2 years 6 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 7 months 6 days | |||||||||
Vested in period (shares) | 234 | |||||||||
Employee Stock Purchase Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Common stock, par value (in dollars per share) | $ 0.01 | |||||||||
Evoqua Water Technologies Corp. Stock Option Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Contractual term of options | 10 years | |||||||||
Stock awards vesting percentage | 25.00% |
Share-Based Compensation (Stock
Share-Based Compensation (Stock Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |||
Intrinsic value, exercises in period | $ 43,564 | ||
Options | |||
Outstanding at beginning of the period (shares) | 7,430,000 | ||
Granted (shares) | 611,000 | ||
Exercised (shares) | (2,185,000) | ||
Forfeited (shares) | (7,000) | ||
Outstanding at end of the period (shares) | 5,849,000 | ||
Options exercisable (shares) | 3,857,000 | ||
Options vested and expected to vest (shares) | 5,774,000 | ||
Weighted Average Exercise Price/Share | |||
Weighted average exercise price, outstanding, beginning balance (in dollars per share) | $ 10.30 | ||
Weighted average exercise price, granted (in dollars per share) | 24.76 | ||
Weighted average exercise price, exercised (in dollars per share) | 6.04 | ||
Weighted average exercise price, forfeited (in dollars per share) | 19.20 | ||
Weighted average exercise price, outstanding, ending balance (in dollars per share) | 13.39 | ||
Weighted average exercise price, exercisable (in dollars per share) | 9.62 | ||
Weighted average exercise price, options vested and expected to vest (in dollars per share) | $ 13.25 | ||
Weighted Average Remaining Contractual Term | |||
Weighted average remaining contractual term, outstanding | 6 years 4 months 24 days | 5 years 10 months 24 days | |
Weighted average contractual term, exercisable | 5 years 2 months 12 days | ||
Weighted average remaining contractual term, options vested and expected to vest | 6 years 3 months 18 days | ||
Intrinsic value, outstanding | $ 75,542 | $ 83,152 | |
Intrinsic value, exercisable | 64,333 | ||
Intrinsic value, options vested and expected to vest | $ 75,349 |
Share-Based Compensation (Nonve
Share-Based Compensation (Nonvested Share Activity) (Details) | 6 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Shares | |
Nonvested at beginning of period | shares | 2,166,000 |
Granted (shares) | shares | 611,000 |
Vested (shares) | shares | (778,000) |
Forfeited (shares) | shares | (7,000) |
Nonvested at end of period | shares | 1,992,000 |
Weighted Average Grant Date Fair Value/Share | |
Weighted average grant date fair value, nonvested, beginning balance (in dollars per share) | $ / shares | $ 5.56 |
Weighted average grant date fair value, granted (in dollars per share) | $ / shares | 8.98 |
Weighted average grant date fair value, vested (in dollars per share) | $ / shares | 5.56 |
Weighted average grant date fair value, forfeited (in dollars per share) | $ / shares | 6.47 |
Weighted average grant date fair value, nonvested, ending balance (in dollars per share) | $ / shares | $ 6.60 |
Share-Based Compensation (RSU A
Share-Based Compensation (RSU Activity) (Details) shares in Thousands | 6 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options exercisable (shares) | shares | 3,857 |
Shares | |
Forfeited | shares | 7 |
Weighted Average Grant Date Fair Value/Share | |
Weighted average grant date fair value, forfeited (in dollars per share) | $ / shares | $ 6.47 |
Weighted average exercise price, options vested and expected to vest (in dollars per share) | $ / shares | $ 13.25 |
Restricted Stock Units (RSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options exercisable (shares) | shares | 948 |
Shares | |
Outstanding at beginning of the period (shares) | shares | 750 |
Granted | shares | 494 |
Vested in period (shares) | shares | (234) |
Forfeited | shares | 3 |
Outstanding at beginning of the period | shares | 1,000 |
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) | $ / shares | $ 17.86 |
Weighted average grant date fair value, granted (in dollars per share) | $ / shares | 24.69 |
Weighted average grant date fair value, vested (in dollars per share) | $ / shares | 17.64 |
Weighted average grant date fair value, forfeited (in dollars per share) | $ / shares | 18.85 |
Weighted average grant date fair value, nonvested, equity instruments other than options, end of the period (in dollar per share) | $ / shares | 21.26 |
Weighted average exercise price, options vested and expected to vest (in dollars per share) | $ / shares | $ 21.11 |
Cancelled (shares) | shares | (7) |
Weighted average exercise price, cancelled (in dollars per share) | $ / shares | $ 21.22 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) | Mar. 31, 2021country |
Risks and Uncertainties [Abstract] | |
Number of countries in which entity operates | 10 |
Commitments and Contingencies_2
Commitments and Contingencies (Schedule of Letters of Credit and Surety Bonds) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Sep. 30, 2020 | |
Other Commitments [Line Items] | ||
Debt instrument, unused borrowing capacity, amount | $ 33,096 | $ 32,037 |
Line of credit facility, remaining borrowing capacity | 45,000 | 45,000 |
Surety Bond [Member] | ||
Other Commitments [Line Items] | ||
Guarantor Obligations, Maximum Exposure, Undiscounted | 250,000 | 230,000 |
Guarantor Obligations, Current Carrying Value | 147,565 | 152,990 |
Guarantor Obligations, Remaining Surety Bonds Available | $ 102,435 | 77,010 |
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 | $ 11,904 | 12,963 |
Debt instrument, unused borrowing capacity, amount | $ 113,096 | $ 112,037 |
Accrued Expenses and Other Li_3
Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Sep. 30, 2020 |
Payables and Accruals [Abstract] | ||
Salaries, wages and other benefits | $ 59,245 | $ 67,766 |
Obligation under operating leases | 13,119 | 12,767 |
Obligation under finance leases | 11,869 | 11,362 |
Third party commissions | 9,192 | 9,270 |
Insurance liabilities | 3,760 | 3,954 |
Fair value of liability derivatives | 166 | 4,716 |
Taxes, other than income | 3,939 | 5,316 |
Provisions for litigation | 2,072 | 2,580 |
Severance payments | 1,185 | 970 |
Earn-outs related to acquisitions | 295 | 295 |
Other | 28,360 | 24,393 |
Accrued expenses and other liabilities | $ 134,692 | $ 143,389 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued expenses and other liabilities | Accrued expenses and other liabilities |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued expenses and other liabilities | |
Option and Purchase Right | $ 1,490 | $ 0 |
Business Segments (Details)
Business Segments (Details) $ in Thousands | Oct. 29, 2018segment | Mar. 31, 2021USD ($)segment | Mar. 31, 2020USD ($) | Mar. 31, 2021USD ($)segment | Mar. 31, 2020USD ($) | Sep. 30, 2020USD ($) |
Segment Reporting [Abstract] | ||||||
Number of reportable segments | segment | 3 | 2 | 2 | |||
Segment Reporting Information [Line Items] | ||||||
Revenue from product sales and services | $ 346,564 | $ 351,663 | $ 668,757 | $ 697,768 | ||
Operating profit (loss) | 16,178 | 21,155 | 32,412 | 90,847 | ||
Interest expense | (8,395) | (13,252) | (17,068) | (26,835) | ||
Income (loss) before income taxes | 7,783 | 7,903 | 15,344 | 64,012 | ||
Income tax (expense) benefit | (2,701) | 7 | (3,785) | (2,596) | ||
Net income | 5,082 | 7,910 | 11,559 | 61,416 | ||
Depreciation and amortization | 54,607 | 52,514 | ||||
Capital expenditures | 36,297 | 38,759 | ||||
Assets | 1,879,799 | 1,879,799 | $ 1,844,458 | |||
Goodwill | 404,393 | 404,393 | 397,205 | |||
Integrated Solutions and Services | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue from product sales and services | 224,134 | 237,885 | 438,851 | 466,023 | ||
Applied Product Technologies | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue from product sales and services | 122,430 | 113,778 | 229,906 | 231,745 | ||
Intersegment Eliminations | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue from product sales and services | 27,746 | 18,585 | 45,887 | 42,809 | ||
Intersegment Eliminations | Integrated Solutions and Services | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue from product sales and services | 4,069 | 2,939 | 6,105 | 6,601 | ||
Intersegment Eliminations | Applied Product Technologies | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue from product sales and services | 23,677 | 15,646 | 39,782 | 36,208 | ||
Operating Segments | ||||||
Segment Reporting Information [Line Items] | ||||||
Total revenue | 374,310 | 370,248 | 714,644 | 740,577 | ||
Operating Segments | Integrated Solutions and Services | ||||||
Segment Reporting Information [Line Items] | ||||||
Total revenue | 228,203 | 240,824 | 444,956 | 472,624 | ||
Revenue from product sales and services | 224,134 | 237,885 | 438,851 | |||
Operating profit (loss) | 30,784 | 36,695 | 57,141 | 69,849 | ||
Assets | 831,558 | 831,558 | 835,307 | |||
Goodwill | 229,449 | 229,449 | 224,381 | |||
Operating Segments | Applied Product Technologies | ||||||
Segment Reporting Information [Line Items] | ||||||
Total revenue | 146,107 | 129,424 | 269,688 | 267,953 | ||
Revenue from product sales and services | 122,430 | 113,778 | 229,906 | |||
Operating profit (loss) | 18,103 | 23,750 | 31,483 | 86,892 | ||
Assets | 612,320 | 612,320 | 598,701 | |||
Goodwill | 174,944 | 174,944 | 172,824 | |||
Corporate, Non-Segment | ||||||
Segment Reporting Information [Line Items] | ||||||
Operating profit (loss) | (32,709) | $ (39,290) | (56,212) | $ (65,894) | ||
Assets | $ 435,921 | $ 435,921 | $ 410,450 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Numerator: | ||||
Numerator for basic and diluted earnings per common share—Net income attributable to Evoqua Water Technologies Corp. | $ 5,036 | $ 7,812 | $ 11,469 | $ 60,957 |
Denominator: | ||||
Denominator for basic net income per common share—weighted average shares | 118,882 | 116,459 | 118,882 | 116,459 |
Effect of dilutive securities: | ||||
Share‑based compensation | 3,041 | 4,391 | 3,393 | 4,892 |
Denominator for diluted net income per common share—adjusted weighted average shares | 121,923 | 120,850 | 122,275 | 121,351 |
Basic income per common share | $ 0.04 | $ 0.07 | $ 0.10 | $ 0.52 |
Diluted income per common share | $ 0.04 | $ 0.06 | $ 0.09 | $ 0.50 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Apr. 01, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | Sep. 30, 2020 |
Subsequent Event [Line Items] | ||||
Borrowings under credit facility | $ 0 | $ 2,597,000 | ||
Total debt | 889,427,000 | $ 885,470,000 | ||
Write off of Deferred Debt Issuance Cost | 0 | $ 1,795,000 | ||
First Lien Term Facility, due December 20, 2024 | ||||
Subsequent Event [Line Items] | ||||
Total debt | $ 814,538,000 | $ 819,276,000 | ||
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Unamortized Debt Issuance Expense | $ 822,000 | |||
Accounts Receivable from Securitization | 142,200,000 | |||
Subsequent Event | water consulting specialists, inc | ||||
Subsequent Event [Line Items] | ||||
Cash paid at closing | 12,025,000 | |||
Subsequent Event | Maximum | ||||
Subsequent Event [Line Items] | ||||
Accounts Receivable from Securitization | 150,000,000 | |||
Subsequent Event | Term Loan | ||||
Subsequent Event [Line Items] | ||||
Borrowings under term loan | 475,000,000 | |||
Debt instrument, periodic payment, principal | 1,188,000 | |||
Unamortized Debt Issuance Expense | 1,931,000 | |||
Payments of Financing Costs | 4,985,000 | |||
Subsequent Event | Term Loan | 2021 Credit Agreement | ||||
Subsequent Event [Line Items] | ||||
Amount of loan | 475,000,000 | |||
Subsequent Event | Term Loan | Interest Expense [Member] | ||||
Subsequent Event [Line Items] | ||||
Debt Issuance Costs, Gross | 3,054,000 | |||
Subsequent Event | First Lien Term Facility, due December 20, 2024 | ||||
Subsequent Event [Line Items] | ||||
Write off of Deferred Debt Issuance Cost | 1,333,000 | |||
Revolving Credit Facility | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Borrowings under credit facility | 105,000,000 | |||
Revolving Credit Facility | Subsequent Event | 2021 Credit Agreement | ||||
Subsequent Event [Line Items] | ||||
Credit facility borrowing capacity | 350,000,000 | |||
Letter of Credit | Subsequent Event | 2021 Credit Agreement | ||||
Subsequent Event [Line Items] | ||||
Credit facility borrowing capacity | $ 60,000,000 |