falsedesktopAQUA2020-12-31000160464321000009{"tbl_sim": "https://q10k.com/tbl-sim", "search": "https://q10k.com/search"}{"q10k_tbl_0": "(Mark One)\t\n☒\tQuarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934\nFor the quarterly period ended\t\nDecember 31 2020\t\nor\t\n☐\tTransition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934\n\tFor the transition period from _____ to _____\n", "q10k_tbl_1": "Large accelerated filer\t☒\tAccelerated filer\t☐\nNon-accelerated filer\t☐\tSmaller reporting company\t☐\n\t\tEmerging growth company\t☐\n", "q10k_tbl_2": "\t\tPage\t\nPART I - FINANCIAL INFORMATION\t\t\t\nItem 1\tFinancial Statements\t\t3\nItem 2\tManagement's Discussion and Analysis of Financial Condition and Results of Operation\t\t33\nItem 3\tQuantitative and Qualitative Disclosures About Market Risk\t\t55\nItem 4\tControls and Procedures\t\t56\nPART II - OTHER INFORMATION\t\t\t\nItem 1\tLegal Proceedings\t\t57\nItem 1A\tRisk Factors\t\t58\nItem 2\tUnregistered Sales of Equity Securities and Use of Proceeds\t\t58\nItem 3\tDefaults Upon Senior Securities\t\t58\nItem 4\tMine Safety Disclosures\t\t58\nItem 5\tOther Information\t\t58\nItem 6\tExhibits\t\t59\n", "q10k_tbl_3": "Evoqua Water Technologies Corp.\t\nUnaudited Consolidated Financial Statements\t\nConsolidated Balance Sheets as of December 31 2020 (Unaudited) and September 30 2020\t4\nUnaudited Consolidated Statements of Operations for the Three Months Ended December 31 2020 and 2019\t5\nUnaudited Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended December 31 2020 and 2019\t6\nUnaudited Consolidated Statements of Changes in Equity for the Three Months Ended December 31 2020 and 2019\t7\nUnaudited Consolidated Statements of Changes in Cash Flow for the Three Months Ended December 31 2020 and 2019\t8\nUnaudited Supplemental Disclosure of Cash Flow Information for the Three Months Ended December 31 2020 and 2019\t9\nNotes to Unaudited Consolidated Financial Statements\t10\n", "q10k_tbl_4": "\t(Unaudited)\t\n\tDecember 31 2020\tSeptember 30 2020\nASSETS\t\t\nCurrent assets\t679540\t695712\nCash and cash equivalents\t197920\t193001\nReceivables net\t246211\t260479\nInventories net\t155026\t142379\nContract assets\t59825\t80759\nPrepaid and other current assets\t19569\t18715\nIncome tax receivable\t989\t379\nProperty plant and equipment net\t369915\t364461\nGoodwill\t408593\t397205\nIntangible assets net\t302557\t309967\nDeferred income taxes net of valuation allowance\t1650\t3639\nOperating lease right-of-use assets net\t48245\t45965\nOther non‑current assets\t33166\t27509\nTotal assets\t1843666\t1844458\nLIABILITIES AND EQUITY\t\t\nCurrent liabilities\t326126\t349555\nAccounts payable\t141931\t153890\nCurrent portion of debt net of deferred financing fees\t18426\t14339\nContract liabilities\t34445\t26259\nProduct warranties\t5577\t6115\nAccrued expenses and other liabilities\t120668\t143389\nIncome tax payable\t5079\t5563\nNon‑current liabilities\t1015579\t1012840\nLong-term debt net of deferred financing fees\t860215\t861695\nProduct warranties\t1646\t1724\nObligation under operating leases\t39897\t37796\nOther non‑current liabilities\t102517\t98456\nDeferred income taxes\t11304\t13169\nTotal liabilities\t1341705\t1362395\nCommitments and Contingent Liabilities (Note 20)\t\t\nShareholders' equity\t\t\nCommon stock par value $0.01: authorized 1000000 shares; issued 120750 shares outstanding 118554 at December 31 2020; issued 119486 shares outstanding 117291 at September 30 2020\t1202\t1189\nTreasury stock: 2196 shares at December 31 2020 and 2195 shares at September 30 2020\t(2837)\t(2837)\nAdditional paid-in capital\t582197\t564928\nRetained deficit\t(56231)\t(62664)\nAccumulated other comprehensive loss net of tax\t(24083)\t(20472)\nTotal Evoqua Water Technologies Corp. equity\t500248\t480144\nNon-controlling interest\t1713\t1919\nTotal shareholders' equity\t501961\t482063\nTotal liabilities and shareholders' equity\t1843666\t1844458\n", "q10k_tbl_5": "\tThree Months Ended December 31\t\n\t\t2020\t\t\t\t2019\t\t\nRevenue from product sales\t\t180015\t\t\t\t196560\t\t\nRevenue from services\t\t142178\t\t\t\t149545\t\t\nRevenue from product sales and services\t\t322193\t\t\t\t346105\t\t\nCost of product sales\t\t(131061)\t\t\t\t(140456)\t\t\nCost of services\t\t(95787)\t\t\t\t(99934)\t\t\nCost of product sales and services\t\t(226848)\t\t\t\t(240390)\t\t\nGross profit\t\t95345\t\t\t\t105715\t\t\nGeneral and administrative expense\t\t(42283)\t\t\t\t(45770)\t\t\nSales and marketing expense\t\t(33928)\t\t\t\t(38014)\t\t\nResearch and development expense\t\t(3123)\t\t\t\t(3684)\t\t\nTotal operating expenses\t\t(79334)\t\t\t\t(87468)\t\t\nOther operating income\t\t480\t\t\t\t51720\t\t\nOther operating expense\t\t(257)\t\t\t\t(275)\t\t\nIncome before interest expense and income taxes\t\t16234\t\t\t\t69692\t\t\nInterest expense\t\t(8673)\t\t\t\t(13583)\t\t\nIncome before income taxes\t\t7561\t\t\t\t56109\t\t\nIncome tax expense\t\t(1084)\t\t\t\t(2603)\t\t\nNet income\t\t6477\t\t\t\t53506\t\t\nNet income attributable to non‑controlling interest\t\t44\t\t\t\t361\t\t\nNet income attributable to Evoqua Water Technologies Corp.\t\t6433\t\t\t\t53145\t\t\nBasic income per common share\t\t0.05\t\t\t\t0.46\t\t\nDiluted income per common share\t\t0.05\t\t\t\t0.44\t\t\n", "q10k_tbl_6": "\tThree Months Ended December 31\t\n\t\t2020\t\t\t\t2019\t\t\nNet income\t\t6477\t\t\t\t53506\t\t\nOther comprehensive (loss) income\t\t\t\t\t\t\t\t\nForeign currency translation adjustments\t\t(4877)\t\t\t\t8057\t\t\nUnrealized derivative gain (loss) on cash flow hedges net of tax\t\t1002\t\t\t\t(49)\t\t\nChange in pension liability net of tax\t\t264\t\t\t\t236\t\t\nTotal other comprehensive (loss) income\t\t(3611)\t\t\t\t8244\t\t\nLess: Comprehensive income attributable to non‑controlling interest\t\t(44)\t\t\t\t(361)\t\t\nComprehensive income attributable to Evoqua Water Technologies Corp.\t\t2822\t\t\t\t61389\t\t\n", "q10k_tbl_7": "\tThree Months Ended December 31 2020\t\t\t\t\t\t\t\t\n\tCommon Stock\t\tTreasury Stock\t\tAdditional Paid‑in Capital\tRetained Deficit\tAccumulated Other Comprehensive Loss\tNon‑controlling Interest\tTotal\n\tShares\tCost\tShares\tCost\t\t\nBalance at September 30 2020\t119486\t1189\t2195\t(2837)\t564928\t(62664)\t(20472)\t1919\t482063\nEquity based compensation expense\t0\t0\t0\t0\t3019\t0\t0\t0\t3019\nIssuance of common stock net\t1264\t13\t1\t0\t14250\t0\t0\t0\t14263\nDividends paid to non-controlling interest\t0\t0\t0\t0\t0\t0\t0\t(250)\t(250)\nNet income\t0\t0\t0\t0\t0\t6433\t0\t44\t6477\nOther comprehensive loss\t0\t0\t0\t0\t0\t0\t(3611)\t0\t(3611)\nBalance at December 31 2020\t120750\t1202\t2196\t(2837)\t582197\t(56231)\t(24083)\t1713\t501961\n", "q10k_tbl_8": "\tThree Months Ended December 31 2019\t\t\t\t\t\t\t\t\n\tCommon Stock\t\tTreasury Stock\t\tAdditional Paid‑in Capital\tRetained Deficit\tAccumulated Other Comprehensive Loss\tNon‑controlling Interest\tTotal\n\tShares\tCost\tShares\tCost\t\t\nBalance at September 30 2019\t116008\t1154\t1664\t(2837)\t552422\t(174976)\t(13004)\t3063\t365822\nCumulative effect of adoption of new accounting standards\t0\t0\t0\t0\t0\t(2023)\t0\t0\t(2023)\nEquity based compensation expense\t0\t0\t0\t0\t3680\t0\t0\t0\t3680\nIssuance of common stock net\t1645\t16\t419\t0\t4030\t0\t0\t0\t4046\nDividends paid to non-controlling interest\t0\t0\t0\t0\t0\t0\t0\t(1250)\t(1250)\nDivestiture of Memcor product line\t0\t0\t0\t0\t(16895)\t0\t0\t0\t(16895)\nNet income\t0\t0\t0\t0\t0\t53145\t0\t361\t53506\nOther comprehensive income\t0\t0\t0\t0\t0\t0\t8244\t0\t8244\nBalance at December 31 2019\t117653\t1170\t2083\t(2837)\t543237\t(123854)\t(4760)\t2174\t415130\n", "q10k_tbl_9": "\tThree Months Ended December 31\t\n\t2020\t2019\nOperating activities\t\t\nNet income\t6477\t53506\nReconciliation of net income to cash flows provided by operating activities:\t\t\nDepreciation and amortization\t27391\t25143\nAmortization of deferred financing fees\t526\t701\nDeferred income taxes\t258\t(679)\nShare-based compensation\t3019\t3680\nLoss on sale of property plant and equipment\t19\t173\nGain on sale of business\t0\t(58279)\nForeign currency exchange gains on intercompany loans and other non-cash items\t(6459)\t(6086)\nChanges in assets and liabilities\t\t\nAccounts receivable\t18083\t11087\nInventories\t(11551)\t(14613)\nContract assets\t21458\t3042\nPrepaids and other current assets\t(465)\t(631)\nAccounts payable\t(12652)\t(11056)\nAccrued expenses and other liabilities\t(32356)\t(9378)\nContract liabilities\t8010\t4651\nIncome taxes\t(1271)\t1388\nOther non‑current assets and liabilities\t(4873)\t2083\nNet cash provided by operating activities\t15614\t4732\nInvesting activities\t\t\nPurchase of property plant and equipment\t(17260)\t(17572)\nPurchase of intangibles\t(81)\t(210)\nProceeds from sale of property plant and equipment\t127\t251\nProceeds from sale of business net of cash of $0 and $12117\t0\t108921\nAcquisitions\t(8743)\t(11160)\nNet cash (used in) provided by investing activities\t(25957)\t80230\nFinancing activities\t\t\nIssuance of debt net of deferred issuance costs\t7805\t3532\nBorrowings under credit facility\t0\t13\nRepayment of debt\t(5723)\t(3793)\nRepayment of finance lease obligation\t(3821)\t(4162)\nPayment of earn-out related to previous acquisitions\t0\t(175)\nProceeds from issuance of common stock\t14263\t4046\nDistribution to non‑controlling interest\t(250)\t(1250)\nNet cash provided by (used in) financing activities\t12274\t(1789)\nEffect of exchange rate changes on cash\t2988\t1849\nChange in cash and cash equivalents\t4919\t85022\nCash and cash equivalents\t\t\nBeginning of period\t193001\t109881\nEnd of period\t197920\t194903\n", "q10k_tbl_10": "\tThree Months Ended December 31\t\n\t2020\t2019\nSupplemental disclosure of cash flow information\t\t\nCash paid for taxes\t1334\t1382\nCash paid for interest\t7624\t12268\nNon‑cash investing and financing activities\t\t\nFinance lease transactions\t5484\t1782\nOperating lease transactions\t5954\t4734\nOption and Purchase Right\t0\t7673\n", "q10k_tbl_11": "Accounting Standards Updates\nASU 2020-03 Codification Improvements to Financial Instruments\nASU 2018-19 Codification Improvements to Topic 326 Financial Instruments-Credit Losses\nASU 2018-18 Collaborative Arrangements (Topic 808) Clarifying the Interaction between Topic 808 and Topic 606\nASU 2018-13 Fair Value Measurement (Subtopic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement\n", "q10k_tbl_12": "\tDecember 31 2020\tSeptember 30 2020\nCurrent assets (includes cash of $1743 and $2088)\t3560\t4016\nProperty plant and equipment\t1084\t1145\nGoodwill\t2206\t2206\nTotal liabilities\t(1219)\t(1324)\n", "q10k_tbl_13": "\tThree Months Ended December 31\t\n\t\t2020\t\t\t\t2019\t\t\nTotal revenues\t\t834\t\t\t\t2642\t\t\nTotal operating expenses\t\t(737)\t\t\t\t(1958)\t\t\nIncome from operations\t\t97\t\t\t\t684\t\t\n", "q10k_tbl_14": "\tDecember 31 2020\tSeptember 30 2020\nCurrent assets (includes cash of $2143 and $1675)\t3528\t4024\nProperty plant and equipment\t3210\t3159\nGoodwill\t1798\t1798\nIntangible assets net\t9505\t9918\nTotal liabilities\t(3798)\t(3692)\n", "q10k_tbl_15": "\tThree Months Ended December 31\t\n\t2020\t2019\t\t\t\t\t\t\nTotal revenues\t770\t1645\t\t\t\t\t\t\nTotal operating expenses\t(1738)\t(1937)\t\t\t\t\t\t\nLoss from operations\t(968)\t(292)\t\t\t\t\t\t\n", "q10k_tbl_16": "Current assets\t2039\nProperty plant and equipment\t900\nGoodwill\t6088\nOther non-current assets\t22\nTotal assets acquired\t9049\nLiabilities assumed\t(306)\nNet assets acquired\t8743\n", "q10k_tbl_17": "\tThree Months Ended December 31\t\n\t\t2020\t\t\t\t2019\t\t\nRevenue from contracts with customers recognized under Topic 606\t\t285188\t\t\t\t308602\t\t\nOther (1)\t\t37005\t\t\t\t37503\t\t\nTotal\t\t322193\t\t\t\t346105\t\t\n", "q10k_tbl_18": "\tThree Months Ended December 31\t\t\t\t\t\n\t2020\t\t\t2019\t\t\n\tIntegrated Solutions and Services\tApplied Product Technologies\tTotal\tIntegrated Solutions and Services\tApplied Product Technologies\tTotal\nRevenue from capital projects\t50626\t76889\t127515\t54620\t74926\t129546\nRevenue from aftermarket\t27146\t25354\t52500\t29673\t37341\t67014\nRevenue from service\t136945\t5233\t142178\t143845\t5700\t149545\nTotal\t214717\t107476\t322193\t228138\t117967\t346105\n", "q10k_tbl_19": "\tThree Months Ended December 31\t\n\t\t2020\t\t\t\t2019\t\t\nUnited States\t\t264131\t\t\t\t277717\t\t\nAsia\t\t22605\t\t\t\t18742\t\t\nEurope\t\t21285\t\t\t\t26112\t\t\nCanada\t\t11179\t\t\t\t17563\t\t\nAustralia\t\t2993\t\t\t\t5971\t\t\nTotal\t\t322193\t\t\t\t346105\t\t\n", "q10k_tbl_20": "\tThree Months Ended December 31\t\nContract assets (a)\t2020\t2019\nBalance at beginning of period\t80759\t73467\nRecognized in current period\t66885\t84596\nReclassified to accounts receivable\t(88560)\t(87046)\nAmounts related to sale of the Memcor product line\t0\t2710\nForeign currency\t741\t182\nBalance at end of period\t59825\t73909\n", "q10k_tbl_21": "\tThree Months Ended December 31\t\nContract Liabilities\t2020\t2019\nBalance at beginning of period\t26259\t39051\nRecognized in current period\t96230\t88616\nAmounts in beginning balance reclassified to revenue\t(24895)\t(37624)\nCurrent period amounts reclassified to revenue\t(62730)\t(46083)\nAmounts related to sale of the Memcor product line\t0\t(700)\nForeign currency\t(419)\t374\nBalance at end of period\t34445\t43634\n", "q10k_tbl_22": "\tNet Asset Value\tQuoted Market Prices in Active Markets (Level 1)\tSignificant Other Observable Inputs (Level 2)\tSignificant Unobservable Inputs (Level 3)\nAs of December 31 2020\t\t\t\t\nAssets:\t\t\t\t\nPension plan\t\t\t\t\nCash\t0\t769\t0\t0\nGlobal Multi-Asset Fund\t14895\t0\t0\t0\nGovernment Securities\t3034\t0\t0\t0\nLiability Driven Investment\t6126\t0\t0\t0\nGuernsey Unit Trust\t2100\t0\t0\t0\nGlobal Absolute Return\t2223\t0\t0\t0\nDeferred compensation plan assets\t\t\t\t\nInsurance\t0\t0\t20777\t0\nForeign currency forward contracts\t0\t0\t173\t0\nLiabilities:\t\t\t\t\nPension plan\t0\t0\t(49599)\t0\nDeferred compensation plan liabilities\t0\t0\t(22833)\t0\nLong‑term debt\t0\t0\t(885971)\t0\nInterest rate swap\t0\t0\t(3703)\t0\nForeign currency forward contracts\t0\t0\t(53)\t0\nEarn-outs related to acquisitions\t0\t0\t0\t(295)\nOption and Purchase Right\t0\t0\t0\t(7739)\nAs of September 30 2020\t\t\t\t\nAssets:\t\t\t\t\nPension plan\t\t\t\t\nCash\t0\t15061\t0\t0\nGovernment Securities\t4924\t0\t0\t0\nLiability Driven Investment\t3604\t0\t0\t0\nGuernsey Unit Trust\t1881\t0\t0\t0\nGlobal Absolute Return\t2060\t0\t0\t0\nDeferred compensation plan assets\t\t\t\t\nTrust Assets\t0\t55\t0\t0\nInsurance\t0\t0\t19804\t0\nForeign currency forward contracts\t0\t0\t140\t0\nLiabilities:\t\t\t\t\nPension plan\t0\t0\t(47389)\t0\nDeferred compensation plan liabilities\t0\t0\t(21439)\t0\nLong‑term debt\t0\t0\t(872441)\t0\nInterest rate swap\t0\t0\t(4669)\t0\nForeign currency forward contracts\t0\t0\t(47)\t0\nEarn-outs related to acquisitions\t0\t0\t0\t(295)\nOption and Purchase Right\t0\t0\t0\t(7739)\n", "q10k_tbl_23": "\tDecember 31 2020\tSeptember 30 2020\nAccounts receivable\t250534\t264536\nAllowance for credit losses\t(4323)\t(4057)\nReceivables net\t246211\t260479\n", "q10k_tbl_24": "Balance at September 30 2020\t(4057)\nCharged to costs and expenses\t(405)\nWrite-offs\t179\nForeign currency and other\t(40)\nBalance at December 31 2020\t(4323)\n", "q10k_tbl_25": "\tDecember 31 2020\tSeptember 30 2020\nRaw materials and supplies\t81917\t78319\nWork in progress\t16956\t15654\nFinished goods and products held for resale\t63339\t56435\nCosts of unbilled projects\t3860\t3438\nReserves for excess and obsolete\t(11046)\t(11467)\nInventories net\t155026\t142379\n", "q10k_tbl_26": "\tDecember 31 2020\tSeptember 30 2020\nMachinery and equipment\t363338\t357650\nRental equipment\t230027\t221953\nLand and buildings\t70709\t70245\nConstruction in process\t51923\t48325\n\t715997\t698173\nLess: accumulated depreciation\t(346082)\t(333712)\n\t369915\t364461\n", "q10k_tbl_27": "\tDecember 31 2020\t\tSeptember 30 2020\t\n\tGross\tNet\tGross\tNet\nMachinery and equipment\t65285\t53214\t63305\t52620\nConstruction in process\t13978\t13978\t8098\t8098\n\t79263\t67192\t71403\t60718\n", "q10k_tbl_28": "\tThree Months Ended December 31\t\n\t\t2020\t\t\t\t2019\t\t\nDepreciation expense\t\t18511\t\t\t\t17303\t\t\nMaintenance and repair expense\t\t5208\t\t\t\t6065\t\t\n", "q10k_tbl_29": "\tIntegrated Solutions and Services\tApplied Product Technologies\tTotal\nBalance at September 30 2020\t224381\t172824\t397205\nBusiness combinations\t6088\t0\t6088\nMeasurement period adjustment\t72\t0\t72\nForeign currency translation\t1990\t3238\t5228\nBalance at December 31 2020\t232531\t176062\t408593\n", "q10k_tbl_30": "\tDecember 31 2020\tSeptember 30 2020\nFirst Lien Term Loan due December 20 2024\t816907\t819276\nRevolving Credit Facility\t0\t0\nEquipment Financing due February 28 2021 to July 5 2029 interest rates ranging from 3.25% to 8.07% (1)\t70085\t63918\nNotes Payable due July 31 2023\t560\t611\nMortgage (2)\t0\t1665\nTotal debt\t887552\t885470\nLess unamortized deferred financing fees\t(8911)\t(9436)\nTotal net debt\t878641\t876034\nLess current portion\t(18426)\t(14339)\nTotal long‑term debt\t860215\t861695\n", "q10k_tbl_31": "\tDecember 31 2020\tSeptember 30 2020\nCurrent portion of deferred financing fees (1)\t(2130)\t(2112)\nLong-term portion of deferred financing fees (2)\t(6781)\t(7324)\nTotal deferred financing fees\t(8911)\t(9436)\n", "q10k_tbl_32": "\tDecember 31 2020\tSeptember 30 2020\nBorrowing availability under the Revolver\t125000\t125000\nOutstanding borrowings under the Revolver\t0\t0\nOutstanding letters of credit under the Revolver\t11824\t12963\nUnused amounts under the Revolver\t113176\t112037\nAdditional letters of credit under a separate arrangement\t33\t52\n", "q10k_tbl_33": "Fiscal Year\t\nRemainder of 2021\t16440\n2022\t17002\n2023\t17295\n2024\t797133\n2025\t7754\nThereafter\t31928\nTotal\t887552\n", "q10k_tbl_34": "\t\tLiability Derivative\t\n\tBalance Sheet Location\tDecember 31 2020\tSeptember 30 2020\nInterest rate swap\tAccrued expenses and other current liabilities\t3703\t4669\nForeign currency forward contracts\tAccrued expenses and other current liabilities\t52\t47\n", "q10k_tbl_35": "\tThree Months Ended December 31\t\nLocation of (Loss) Gain\t\t2020\t\t\t\t2019\t\t\nGeneral and administrative expense\t\t(32)\t\t\t\t54\t\t\nInterest expense\t\t(510)\t\t\t\t0\t\t\n\t\t(542)\t\t\t\t54\t\t\n", "q10k_tbl_36": "\t\tAsset Derivatives\t\n\tBalance Sheet Location\tDecember 31 2020\tSeptember 30 2020\nForeign currency forward contracts\tPrepaid and other current assets\t0\t7\n\t\tLiability Derivatives\t\n\tBalance Sheet Location\tDecember 31 2020\tSeptember 30 2020\nForeign currency forward contracts\tAccrued expenses and other current liabilities\t1\t0\n", "q10k_tbl_37": "\tCurrent Product Warranties\t\tNon-Current Product Warranties\t\n\tThree Months Ended December 31\t\tThree Months Ended December 31\t\n\t2020\t2019\t2020\t2019\nBalance at beginning of the period\t6115\t4922\t1724\t2332\nWarranty provision for sales\t371\t1251\t252\t44\nSettlement of warranty claims\t(978)\t(1989)\t(374)\t(1076)\nAmounts related to sale of the Memcor product line\t0\t795\t0\t135\nForeign currency translation and other\t69\t152\t44\t36\nBalance at end of the period\t5577\t5131\t1646\t1471\n", "q10k_tbl_38": "\tThree Months Ended December 31\t\n\t2020\t2019\nBalance at beginning of the period\t970\t655\nRestructuring charges following the sale of the Memcor product line\t908\t0\nRestructuring charges related to two-segment realignment\t238\t675\nRestructuring charges related to other initiatives\t29\t245\nRelease of prior reserves\t(9)\t(53)\nWrite off charges\t(121)\t0\nCash payments\t(986)\t(1156)\nOther adjustments\t92\t(1)\nBalance at end of the period\t1121\t365\n", "q10k_tbl_39": "\tThree Months Ended December 31\t\n\t2020\t2019\nCost of product sales and services\t826\t384\nGeneral and administrative expense\t138\t480\nSales and marketing expense\t218\t3\nResearch and development expense\t(16)\t0\n\t1166\t867\n", "q10k_tbl_40": "\tThree Months Ended December 31\t\n\t\t2020\t\t\t\t2019\t\t\nService cost\t\t284\t\t\t\t261\t\t\nInterest cost\t\t79\t\t\t\t68\t\t\nExpected return on plan assets\t\t(87)\t\t\t\t(30)\t\t\nAmortization of actuarial losses\t\t264\t\t\t\t236\t\t\nPension expense for defined benefit plans\t\t540\t\t\t\t535\t\t\n", "q10k_tbl_41": "(In thousands except per share amounts)\tOptions\tWeighted Average Exercise Price/Share\tWeighted Average Remaining Contractual Term\tAggregate Intrinsic Value\nOutstanding at September 30 2020\t7430\t10.30\t5.9 years\t83152\nGranted\t1\t23.18\t\t\nExercised\t(1112)\t5.75\t\t\nForfeited\t(4)\t19.00\t\t\nOutstanding at December 31 2020\t6315\t11.09\t5.9 years\t100326\nOptions exercisable at December 31 2020\t4177\t7.28\t4.8 years\t82285\nOptions vested and expected to vest at December 31 2020\t6301\t11.07\t5.9 years\t100226\n", "q10k_tbl_42": "(In thousands except per share amounts)\tShares\tWeighted Average Grant Date Fair Value/Share\nNonvested at beginning of period\t2166\t5.56\nGranted\t1\t8.12\nVested\t(25)\t2.27\nForfeited\t(4)\t6.47\nNonvested at end of period\t2138\t5.60\n", "q10k_tbl_43": "(In thousands except per share amounts)\tShares\tWeighted Average Grant Date Fair Value/Share\nOutstanding at September 30 2020\t750\t17.86\nGranted\t114\t24.51\nVested\t(1)\t24.25\nForfeited\t(2)\t16.31\nCancelled\t(7)\t21.22\nOutstanding at December 31 2020\t854\t18.71\nVested and expected to vest at December 31 2020\t836\t18.63\n", "q10k_tbl_44": "\tDecember 31 2020\tSeptember 30 2020\nRevolving credit capacity\t45000\t45000\nLetters of credit outstanding\t11824\t12963\nRemaining revolving credit capacity\t33176\t32037\nSurety capacity\t230000\t230000\nSurety issuances\t144647\t152990\nRemaining surety available\t85353\t77010\n", "q10k_tbl_45": "\tDecember 31 2020\tSeptember 30 2020\nSalaries wages and other benefits\t45716\t67766\nObligation under operating leases\t12890\t12767\nObligation under finance leases\t11611\t11362\nThird party commissions\t8490\t9270\nInsurance liabilities\t3773\t3954\nFair value of liability derivatives\t3756\t4716\nTaxes other than income\t3425\t5316\nProvisions for litigation\t2071\t2580\nSeverance payments\t1121\t970\nEarn-outs related to acquisitions\t295\t295\nOther\t27520\t24393\n\t120668\t143389\n", "q10k_tbl_46": "\tThree Months Ended December 31\t\n\t\t2020\t\t\t\t2019\t\t\nTotal sales\t\t\t\t\t\t\t\t\nIntegrated Solutions and Services\t\t216753\t\t\t\t231800\t\t\nApplied Product Technologies\t\t123581\t\t\t\t138529\t\t\nTotal sales\t\t340334\t\t\t\t370329\t\t\nIntersegment sales\t\t\t\t\t\t\t\t\nIntegrated Solutions and Services\t\t2036\t\t\t\t3662\t\t\nApplied Product Technologies\t\t16105\t\t\t\t20562\t\t\nTotal intersegment sales\t\t18141\t\t\t\t24224\t\t\nSales to external customers\t\t\t\t\t\t\t\t\nIntegrated Solutions and Services\t\t214717\t\t\t\t228138\t\t\nApplied Product Technologies\t\t107476\t\t\t\t117967\t\t\nTotal sales\t\t322193\t\t\t\t346105\t\t\nOperating profit (loss)\t\t\t\t\t\t\t\t\nIntegrated Solutions and Services\t\t26357\t\t\t\t33154\t\t\nApplied Product Technologies\t\t13380\t\t\t\t63142\t\t\nCorporate\t\t(23503)\t\t\t\t(26604)\t\t\nTotal operating profit\t\t16234\t\t\t\t69692\t\t\nInterest expense\t\t(8673)\t\t\t\t(13583)\t\t\nIncome before income taxes\t\t7561\t\t\t\t56109\t\t\nIncome tax expense\t\t(1084)\t\t\t\t(2603)\t\t\nNet income\t\t6477\t\t\t\t53506\t\t\n", "q10k_tbl_47": "\tDecember 31 2020\tSeptember 30 2020\nAssets\t\t\nIntegrated Solutions and Services\t846707\t835307\nApplied Product Technologies\t599543\t598701\nCorporate\t397416\t410450\nTotal assets\t1843666\t1844458\n", "q10k_tbl_48": "\tThree Months Ended December 31\t\n\t\t2020\t\t\t\t2019\t\t\nNumerator:\t\t\t\t\t\t\t\t\nNumerator for basic and diluted earnings per common share-Net income attributable to Evoqua Water Technologies Corp.\t\t6433\t\t\t\t53145\t\t\nDenominator:\t\t\t\t\t\t\t\t\nDenominator for basic net income per common share-weighted average shares\t\t117768\t\t\t\t115586\t\t\nEffect of dilutive securities:\t\t\t\t\t\t\t\t\nShare‑based compensation\t\t3790\t\t\t\t5443\t\t\nDenominator for diluted net income per common share-adjusted weighted average shares\t\t121558\t\t\t\t121029\t\t\nBasic earnings attributable to Evoqua Water Technologies Corp. per common share\t\t0.05\t\t\t\t0.46\t\t\nDiluted earnings attributable to Evoqua Water Technologies Corp. per common share\t\t0.05\t\t\t\t0.44\t\t\n", "q10k_tbl_49": "\tThree Months Ended December 31\t\t\n(In millions)\t\t2020\t2019\t\t\t\t% Variance\t\t\nNet income\t\t6.5\t53.5\t\t\t\t(87.9)%\t\t\nIncome tax expense\t\t1.1\t2.6\t\t\t\t(57.7)%\t\t\nInterest expense\t\t8.7\t13.6\t\t\t\t(36.0)%\t\t\nOperating profit\t\t16.3\t69.7\t\t\t\t(76.6)%\t\t\nDepreciation and amortization\t\t27.4\t25.1\t\t\t\t9.2%\t\t\nEBITDA\t\t43.7\t94.8\t\t\t\t(53.9)%\t\t\nRestructuring and related business transformation costs (a)\t\t1.8\t1.7\t\t\t\t5.9%\t\t\nShare-based compensation (b)\t\t3.1\t3.7\t\t\t\t(16.2)%\t\t\nTransaction costs (c)\t\t0.6\t0.2\t\t\t\t200.0%\t\t\nOther (gains) losses and expenses (d)\t\t(4.4)\t(56.8)\t\t\t\t(92.3)%\t\t\nAdjusted EBITDA\t\t44.8\t43.6\t\t\t\t2.8%\t\t\n", "q10k_tbl_50": "\tThree Months Ended December 31\t\n(In millions)\t\t2020\t\t\t\t2019\t\t\nPost Memcor divestiture restructuring(1)\t\t0.9\t\t\t\t0\t\t\nCost of product sales and services (\"Cost of sales\")\t\t0.8\t\t\t\t0\t\t\nS&M expense\t\t0.2\t\t\t\t0\t\t\nOther operating (income) expense\t\t(0.1)\t\t\t\t0\t\t\nTwo-segment restructuring(2)\t\t0.2\t\t\t\t1.0\t\t\nCost of sales\t\t0\t\t\t\t0.3\t\t\nG&A expense\t\t0.2\t\t\t\t0.3\t\t\nOther operating (income) expense\t\t0\t\t\t\t0.4\t\t\nVarious other initiatives(3)\t\t0\t\t\t\t0.2\t\t\nCost of sales\t\t0\t\t\t\t0.1\t\t\nG&A expense\t\t0\t\t\t\t0.1\t\t\nTotal\t\t1.1\t\t\t\t1.2\t\t\n", "q10k_tbl_51": "\tThree Months Ended December 31\t\n(In millions)\t\t2020\t\t\t\t2019\t\t\nCost of sales\t\t0\t\t\t\t0.1\t\t\nG&A expense\t\t0.2\t\t\t\t0.3\t\t\nTotal\t\t0.2\t\t\t\t0.4\t\t\n", "q10k_tbl_52": "\tThree Months Ended December 31\t\n(In millions)\t\t2020\t\t\t\t2019\t\t\nCost of sales\t\t0.1\t\t\t\t0.1\t\t\nG&A expense\t\t0.5\t\t\t\t0.4\t\t\nOther operating (income) expense\t\t0\t\t\t\t(0.3)\t\t\nTotal\t\t0.6\t\t\t\t0.2\t\t\n", "q10k_tbl_53": "Three Months Ended December 31 2020\t\t\t\t\t\t\n\tOther Adjustments\t\t\t\t\t\n(In millions)\t(i)\t(ii)\t(iii)\t(iv)\t(v)\t(vi)\t\t\t\t(vii)\t\t\t\t\t\tTotal\t\t\nCost of sales\t0\t0\t0\t0.2\t0.2\t0\t\t\t\t0\t\t\t\t\t\t0.4\t\t\nG&A expense\t(6.8)\t0\t0\t0\t0\t0.1\t\t\t\t1.9\t\t\t\t\t\t(4.8)\t\t\nTotal\t(6.8)\t0\t0\t0.2\t0.2\t0.1\t\t\t\t1.9\t\t\t\t\t\t(4.4)\t\t\n", "q10k_tbl_54": "Three Months Ended December 31 2019\t\t\t\t\t\t\n\tOther Adjustments\t\t\t\t\t\n(In millions)\t(i)\t(ii)\t(iii)\t(iv)\t(v)\t(vi)\t\t\t\t(vii)\t\t\t\t\t\tTotal\t\t\nCost of sales\t(0.4)\t0\t0.2\t0.1\t0.1\t0\t\t\t\t0\t\t\t\t\t\t0\t\t\nG&A expense\t(6.2)\t0.1\t0\t0\t0.9\t0\t\t\t\t0\t\t\t\t\t\t(5.2)\t\t\nOther operating (income) expense\t0\t0\t(1.6)\t0\t(50.0)\t0\t\t\t\t0\t\t\t\t\t\t(51.6)\t\t\nTotal\t(6.6)\t0.1\t(1.4)\t0.1\t(49.0)\t0\t\t\t\t0\t\t\t\t\t\t(56.8)\t\t\n", "q10k_tbl_55": "\tThree Months Ended December 31\t\t\n\t\t2020\t2019\t\t\t\t\t\t\t\t\t\t\t\t\n(In millions except per share amounts)\t\t\t\t\t\t\t% of Revenue\t\t\t\t\t\t\t\t\t\t\t\t% of Revenue\t\t\t\t\t\t% Variance\t\t\nRevenue from product sales and services\t\t\t322.2\t\t\t\t100.0%\t\t\t\t\t\t346.1\t\t\t\t\t\t100.0%\t\t\t\t\t\t(6.9)%\t\t\nCost of product sales and services\t\t\t(226.9)\t\t\t\t(70.4)%\t\t\t\t\t\t(240.4)\t\t\t\t\t\t(69.5)%\t\t\t\t\t\t(5.6)%\t\t\nGross profit\t\t\t95.3\t\t\t\t29.6%\t\t\t\t\t\t105.7\t\t\t\t\t\t30.5%\t\t\t\t\t\t(9.8)%\t\t\nGeneral and administrative expense\t\t\t(42.3)\t\t\t\t(13.1)%\t\t\t\t\t\t(45.8)\t\t\t\t\t\t(13.2)%\t\t\t\t\t\t(7.6)%\t\t\nSales and marketing expense\t\t\t(33.9)\t\t\t\t(10.5)%\t\t\t\t\t\t(38.0)\t\t\t\t\t\t(11.0)%\t\t\t\t\t\t(10.8)%\t\t\nResearch and development expense\t\t\t(3.1)\t\t\t\t(1.0)%\t\t\t\t\t\t(3.7)\t\t\t\t\t\t(1.1)%\t\t\t\t\t\t(16.2)%\t\t\nOther operating income net\t\t\t0.3\t\t\t\t0.1%\t\t\t\t\t\t51.5\t\t\t\t\t\t14.9%\t\t\t\t\t\t(99.4)%\t\t\nInterest expense\t\t\t(8.7)\t\t\t\t(2.7)%\t\t\t\t\t\t(13.6)\t\t\t\t\t\t(3.9)%\t\t\t\t\t\t(36.0)%\t\t\nIncome before income taxes\t\t\t7.6\t\t\t\t2.4%\t\t\t\t\t\t56.1\t\t\t\t\t\t16.2%\t\t\t\t\t\t86.5%\t\t\nIncome tax expense\t\t\t(1.1)\t\t\t\t(0.3)%\t\t\t\t\t\t(2.6)\t\t\t\t\t\t(0.8)%\t\t\t\t\t\t(57.7)%\t\t\nNet income\t\t\t6.5\t\t\t\t2.0%\t\t\t\t\t\t53.5\t\t\t\t\t\t15.5%\t\t\t\t\t\t87.9%\t\t\nNet income attributable to non‑controlling interest\t\t\t0.1\t\t\t\t-%\t\t\t\t\t\t0.4\t\t\t\t\t\t0.1%\t\t\t\t\t\t(75.0)%\t\t\nNet income attributable to Evoqua Water Technologies Corp.\t\t\t6.4\t\t\t\t2.0%\t\t\t\t\t\t53.1\t\t\t\t\t\t15.3%\t\t\t\t\t\t87.9%\t\t\nWeighted average shares outstanding\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\nBasic\t\t\t117.8\t\t\t\t\t\t\t\t\t\t115.6\t\t\t\t\t\t\t\t\t\t\t\t\t\t\nDiluted\t\t\t121.6\t\t\t\t\t\t\t\t\t\t121.0\t\t\t\t\t\t\t\t\t\t\t\t\t\t\nEarnings per share\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\nBasic\t\t\t0.05\t\t\t\t\t\t\t\t\t\t0.46\t\t\t\t\t\t\t\t\t\t\t\t\t\t\nDiluted\t\t\t0.05\t\t\t\t\t\t\t\t\t\t0.44\t\t\t\t\t\t\t\t\t\t\t\t\t\t\nOther financial data:\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\nAdjusted EBITDA(1)\t\t\t44.8\t\t\t\t13.9%\t\t\t\t\t\t43.6\t\t\t\t\t\t12.6%\t\t\t\t\t\t2.8%\t\t\n", "q10k_tbl_56": "\tThree Months Ended December 31\t\t\n\t\t2020\t2019\t\t\t\t\t\t\t\t\t\t% Variance\t\t\n(In millions)\t\t\t\t\t\t\t% of Revenue\t\t\t\t\t\t\t\t\t\t\t\t% of Revenue\t\t\t\t\t\t\t\t\nRevenue from product sales\t\t\t180.0\t\t\t\t55.9%\t\t\t\t\t\t196.6\t\t\t\t\t\t56.8%\t\t\t\t\t\t(8.4)%\t\t\nRevenue from services\t\t\t142.2\t\t\t\t44.1%\t\t\t\t\t\t149.5\t\t\t\t\t\t43.2%\t\t\t\t\t\t(4.9)%\t\t\n\t\t\t322.2\t\t\t\t100.0%\t\t\t\t\t\t346.1\t\t\t\t\t\t100.0%\t\t\t\t\t\t(6.9)%\t\t\n", "q10k_tbl_57": "\tThree Months Ended December 31\t\t\n\t\t2020\t2019\t\t\t\t\t\t\n(In millions)\t\t\t\t\t\t\tGross Margin %\t\t\t\t\t\t\t\t\t\t\t\tGross Margin %\t\t\nCost of product sales\t\t\t(131.1)\t\t\t\t27.2%\t\t\t\t\t\t(140.5)\t\t\t\t\t\t28.5%\t\t\nCost of services\t\t\t(95.8)\t\t\t\t32.6%\t\t\t\t\t\t(99.9)\t\t\t\t\t\t33.2%\t\t\n\t\t\t(226.9)\t\t\t\t29.6%\t\t\t\t\t\t(240.4)\t\t\t\t\t\t30.5%\t\t\n", "q10k_tbl_58": "\tThree Months Ended December 31\t\t\n\t\t2020\t2019\t\t\t\t\t\t\t\t\t\t% Variance\t\t\n(In millions)\t\t\t\t\t\t\t% of Revenue\t\t\t\t\t\t\t\t\t\t\t\t% of Revenue\t\t\t\t\t\t\t\t\nRevenues\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\nIntegrated Solutions and Services\t\t\t214.7\t\t\t\t66.6%\t\t\t\t\t\t228.1\t\t\t\t\t\t65.9%\t\t\t\t\t\t(5.9)%\t\t\nApplied Product Technologies\t\t\t107.5\t\t\t\t33.4%\t\t\t\t\t\t118.0\t\t\t\t\t\t34.1%\t\t\t\t\t\t(8.9)%\t\t\nTotal Consolidated\t\t\t322.2\t\t\t\t100.0%\t\t\t\t\t\t346.1\t\t\t\t\t\t100.0%\t\t\t\t\t\t(6.9)%\t\t\nOperating profit (loss)\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\nIntegrated Solutions and Services\t\t\t26.4\t\t\t\t8.2%\t\t\t\t\t\t33.2\t\t\t\t\t\t9.6%\t\t\t\t\t\t(20.5)%\t\t\nApplied Product Technologies\t\t\t13.4\t\t\t\t4.2%\t\t\t\t\t\t63.1\t\t\t\t\t\t18.2%\t\t\t\t\t\t(78.8)%\t\t\nCorporate\t\t\t(23.5)\t\t\t\t(7.3)%\t\t\t\t\t\t(26.6)\t\t\t\t\t\t(7.7)%\t\t\t\t\t\t(11.7)%\t\t\nTotal Consolidated\t\t\t16.3\t\t\t\t5.1%\t\t\t\t\t\t69.7\t\t\t\t\t\t20.1%\t\t\t\t\t\t(76.6)%\t\t\nEBITDA\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\nIntegrated Solutions and Services\t\t\t43.2\t\t\t\t13.4%\t\t\t\t\t\t48.8\t\t\t\t\t\t14.1%\t\t\t\t\t\t(11.5)%\t\t\nApplied Product Technologies\t\t\t17.0\t\t\t\t5.3%\t\t\t\t\t\t66.7\t\t\t\t\t\t19.3%\t\t\t\t\t\t(74.5)%\t\t\nCorporate and unallocated costs\t\t\t(16.5)\t\t\t\t(5.1)%\t\t\t\t\t\t(20.7)\t\t\t\t\t\t(6.0)%\t\t\t\t\t\t(20.3)%\t\t\nTotal Consolidated\t\t\t43.7\t\t\t\t13.6%\t\t\t\t\t\t94.8\t\t\t\t\t\t27.4%\t\t\t\t\t\t(53.9)%\t\t\n", "q10k_tbl_59": "\tThree Months Ended December 31\t\t\n\t\t2020\t2019\t\t\t\t\t\t\n(In millions)\t\t\tIntegrated Solutions and Services\t\t\t\tApplied Product Technologies\t\t\t\t\t\tIntegrated Solutions and Services\t\t\t\t\t\tApplied Product Technologies\t\t\nOperating Profit\t\t\t26.4\t\t\t\t13.4\t\t\t\t\t\t33.2\t\t\t\t\t\t63.1\t\t\nDepreciation and amortization\t\t\t16.8\t\t\t\t3.6\t\t\t\t\t\t15.6\t\t\t\t\t\t3.6\t\t\nEBITDA\t\t\t43.2\t\t\t\t17.0\t\t\t\t\t\t48.8\t\t\t\t\t\t66.7\t\t\nRestructuring and related business transformation costs (a)\t\t\t0\t\t\t\t1.6\t\t\t\t\t\t0\t\t\t\t\t\t0.7\t\t\nTransaction costs (b)\t\t\t0\t\t\t\t0\t\t\t\t\t\t0\t\t\t\t\t\t(1.3)\t\t\nOther losses (gains) and expenses (c)\t\t\t0\t\t\t\t0.4\t\t\t\t\t\t0\t\t\t\t\t\t(50.3)\t\t\nAdjusted EBITDA (d)\t\t\t43.2\t\t\t\t19.0\t\t\t\t\t\t48.8\t\t\t\t\t\t15.8\t\t\n", "q10k_tbl_60": "\tThree Months Ended December 31\t\t\n\t\t2020\t2019\t\t\t\t\t\t\n(In millions)\t\t\tIntegrated Solutions and Services\t\t\t\tApplied Product Technologies\t\t\t\t\t\tIntegrated Solutions and Services\t\t\t\t\t\tApplied Product Technologies\t\t\nTrailing costs from the sale of the Memcor product line\t\t\t0\t\t\t\t0.2\t\t\t\t\t\t0\t\t\t\t\t\t0\t\t\nNet pre-tax benefit on sale of the Memcor product line\t\t\t0\t\t\t\t0\t\t\t\t\t\t0\t\t\t\t\t\t(49.0)\t\t\nRemediation of manufacturing defects\t\t\t0\t\t\t\t0\t\t\t\t\t\t0\t\t\t\t\t\t(1.4)\t\t\nProduct rationalization in electro-chlorination business\t\t\t0\t\t\t\t0.2\t\t\t\t\t\t0\t\t\t\t\t\t0.1\t\t\nTotal\t\t\t0\t\t\t\t0.4\t\t\t\t\t\t0\t\t\t\t\t\t(50.3)\t\t\n", "q10k_tbl_61": "\tThree Months Ended December 31\t\n(In millions)\t2020\t2019\nStatement of Cash Flows Data\t\t\nNet cash provided by operating activities\t15.6\t4.7\nNet cash (used in) provided by investing activities\t(26.0)\t80.2\nNet cash provided by (used in) financing activities\t12.3\t(1.8)\nEffect of exchange rate changes on cash\t3.0\t1.9\nChange in cash and cash equivalents\t4.9\t85.0\n", "q10k_tbl_62": "(In millions)\tDecember 31 2020\tSeptember 30 2020\nLetters of credit\t11.9\t13.0\nSurety bonds\t144.6\t153.0\n", "q10k_tbl_63": "Exhibit No.\tExhibit Description\n10.1\tAmendment No. 2 to the Second Amended and Restated Registration Rights Agreement among Evoqua Water Technologies Corp. AEA Investors Fund V LP AEA Investors Fund V-A LP AEA Investors Fund V-B LP AEA Investors Participant Fund V LP AEA Investors QP Participant Fund V LP and the 2020 Amending Investors dated November 25 2020 (incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed on November 25 2020 (File No. 001-38272)).\n31.1*\tCertification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934 as amended.\n31.2*\tCertification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934 as amended.\n32.1**\tCertification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.\n32.2**\tCertification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.\n101.INS*\tInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.\n101.SCH*\tInline XBRL Taxonomy Extension Schema Document.\n101.CAL*\tInline XBRL Taxonomy Extension Calculation Linkbase Document.\n101.DEF*\tInline XBRL Taxonomy Extension Definition Linkbase Document.\n101.LAB*\tInline XBRL Taxonomy Extension Label Linkbase Document.\n101.PRE*\tInline XBRL Taxonomy Extension Presentation Linkbase Document.\n104\tCover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)\n"}{"bs": "q10k_tbl_4", "is": "q10k_tbl_5", "cf": "q10k_tbl_9"}None
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended
December 31, 2020
or
☐
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _____ to _____
Commission File Number: 001-38272
EVOQUA WATER TECHNOLOGIES CORP.
(Exact name of registrant as specified in its charter)
Delaware
46-4132761
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
210 Sixth Avenue
15222
Pittsburgh,
Pennsylvania
(Address of principal executive offices)
(Zip Code)
(724) 772-0044
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
AQUA
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
There were 119,650,959 shares of the registrant’s common stock, par value $0.01 per share, outstanding as of January 31, 2021.
This Quarterly Report on Form 10-Q (this “Report”) contains forward‑looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). You can generally identify forward‑looking statements by our use of forward‑looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “projection,” “seek,” “should,” “will” or “would,” or the negative thereof, or other variations thereon or comparable terminology. In particular, statements about the markets in which we operate, including growth of our various markets, our expectations, beliefs, plans, strategies, objectives, prospects, assumptions, or future events or performance, statements regarding our restructuring actions and expected restructuring charges and cost savings for fiscal 2021 and beyond, and statements related to the COVID-19 pandemic and its impact on our business contained in this Report are forward‑looking statements.
We have based these forward‑looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward‑looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended September 30, 2020, as filed with the Securities and Exchange Commission (“SEC”) on November 20, 2020, and Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operation” of this Report may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward‑looking statements or could affect our share price. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward‑looking statements include, among other things:
•general global economic and business conditions, including the impacts of the COVID-19 pandemic and disruptions in global oil markets;
•our ability to compete successfully in our markets;
•our ability to execute projects on budget and on schedule;
•the potential for us to incur liabilities to customers as a result of warranty claims or failure to meet performance guarantees;
•our ability to meet our customers’ safety standards or the potential for adverse publicity affecting our reputation as a result of incidents such as workplace accidents, mechanical failures, spills, uncontrolled discharges, damage to customer or third‑party property or the transmission of contaminants or diseases;
•our ability to continue to develop or acquire new products, services and solutions and adapt our business to meet the demands of our customers, comply with changes to government regulations and achieve market acceptance with acceptable margins;
•our ability to implement our growth strategy, including acquisitions, and our ability to identify suitable acquisition targets;
•our ability to operate or integrate any acquired businesses, assets or product lines profitably or otherwise successfully implement our growth strategy;
•our ability to achieve the expected benefits of our restructuring actions, including restructuring our business into two segments;
•material and other cost inflation and our ability to mitigate the impact of inflation by increasing selling prices and improving our productivity efficiencies;
•our ability to accurately predict the timing of contract awards;
•delays in enactment or repeals of environmental laws and regulations;
1
•the potential for us to become subject to claims relating to handling, storage, release or disposal of hazardous materials;
•our ability to retain our senior management and other key personnel;
•our increasing dependence on the continuous and reliable operation of our information technology systems;
•risks associated with product defects and unanticipated or improper use of our products;
•litigation, regulatory or enforcement actions and reputational risk as a result of the nature of our business or our participation in large‑scale projects;
•seasonality of sales and weather conditions;
•risks related to government customers, including potential challenges to our government contracts or our eligibility to serve government customers;
•the potential for our contracts with federal, state and local governments to be terminated or adversely modified prior to completion;
•risks related to foreign, federal, state and local environmental, health and safety laws and regulations and the costs associated therewith;
•risks associated with international sales and operations, including our operations in China;
•our ability to adequately protect our intellectual property from third‑party infringement;
•risks related to our substantial indebtedness;
•our need for a significant amount of cash, which depends on many factors beyond our control;
•risks related to AEA Investors LP’s (together with certain of its affiliates, collectively, “AEA”) ownership interest in us; and
•other risks and uncertainties, including those listed under Part I, Item 1A. “Risk Factors” 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, and in other filings we may make from time to time with the SEC.
Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward‑looking statements. The forward‑looking statements contained in this Report are not guarantees of future performance and our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, may differ materially from the forward‑looking statements contained in this Report. In addition, even if our results of operations, financial condition and liquidity, and events in the industry in which we operate, are consistent with the forward‑looking statements contained in this Report, they may not be predictive of results or developments in future periods.
Any forward‑looking statement that we make in this Report speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward‑looking statements, whether as a result of new information, future events or otherwise, after the date of this Report.
2
Part I - Financial Information
Item 1. Financial Statements
INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Current portion of debt, net of deferred financing fees
18,426
14,339
Contract liabilities
34,445
26,259
Product warranties
5,577
6,115
Accrued expenses and other liabilities
120,668
143,389
Income tax payable
5,079
5,563
Non‑current liabilities
1,015,579
1,012,840
Long-term debt, net of deferred financing fees
860,215
861,695
Product warranties
1,646
1,724
Obligation under operating leases
39,897
37,796
Other non‑current liabilities
102,517
98,456
Deferred income taxes
11,304
13,169
Total liabilities
1,341,705
1,362,395
Commitments and Contingent Liabilities (Note 20)
Shareholders’ equity
Common stock, par value $0.01: authorized 1,000,000 shares; issued 120,750 shares, outstanding 118,554 at December 31, 2020; issued 119,486 shares, outstanding 117,291 at September 30, 2020
1,202
1,189
Treasury stock: 2,196 shares at December 31, 2020 and 2,195 shares at September 30, 2020
(2,837)
(2,837)
Additional paid-in capital
582,197
564,928
Retained deficit
(56,231)
(62,664)
Accumulated other comprehensive loss, net of tax
(24,083)
(20,472)
Total Evoqua Water Technologies Corp. equity
500,248
480,144
Non-controlling interest
1,713
1,919
Total shareholders’ equity
501,961
482,063
Total liabilities and shareholders’ equity
$
1,843,666
$
1,844,458
See accompanying notes to these Unaudited Consolidated Financial Statements
4
Evoqua Water Technologies Corp.
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended December 31,
2020
2019
Revenue from product sales
$
180,015
$
196,560
Revenue from services
142,178
149,545
Revenue from product sales and services
322,193
346,105
Cost of product sales
(131,061)
(140,456)
Cost of services
(95,787)
(99,934)
Cost of product sales and services
(226,848)
(240,390)
Gross profit
95,345
105,715
General and administrative expense
(42,283)
(45,770)
Sales and marketing expense
(33,928)
(38,014)
Research and development expense
(3,123)
(3,684)
Total operating expenses
(79,334)
(87,468)
Other operating income
480
51,720
Other operating expense
(257)
(275)
Income before interest expense and income taxes
16,234
69,692
Interest expense
(8,673)
(13,583)
Income before income taxes
7,561
56,109
Income tax expense
(1,084)
(2,603)
Net income
6,477
53,506
Net income attributable to non‑controlling interest
44
361
Net income attributable to Evoqua Water Technologies Corp.
$
6,433
$
53,145
Basic income per common share
$
0.05
$
0.46
Diluted income per common share
$
0.05
$
0.44
See accompanying notes to these Unaudited Consolidated Financial Statements
5
Evoqua Water Technologies Corp.
Unaudited Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
Three Months Ended December 31,
2020
2019
Net income
$
6,477
$
53,506
Other comprehensive (loss) income
Foreign currency translation adjustments
(4,877)
8,057
Unrealized derivative gain (loss) on cash flow hedges, net of tax
1,002
(49)
Change in pension liability, net of tax
264
236
Total other comprehensive (loss) income
(3,611)
8,244
Less: Comprehensive income attributable to non‑controlling interest
(44)
(361)
Comprehensive income attributable to Evoqua Water Technologies Corp.
$
2,822
$
61,389
See accompanying notes to these Unaudited Consolidated Financial Statements
6
Evoqua Water Technologies Corp.
Unaudited Consolidated Statements of Changes in Equity
(In thousands)
Three Months Ended December 31, 2020
Common Stock
Treasury Stock
Additional Paid‑in Capital
Retained Deficit
Accumulated Other Comprehensive Loss
Non‑controlling Interest
Total
Shares
Cost
Shares
Cost
Balance at September 30, 2020
119,486
$
1,189
2,195
$
(2,837)
$
564,928
$
(62,664)
$
(20,472)
$
1,919
$
482,063
Equity based compensation expense
—
—
—
—
3,019
—
—
—
$
3,019
Issuance of common stock, net
1,264
13
1
—
14,250
—
—
—
$
14,263
Dividends paid to non-controlling interest
—
—
—
—
—
—
—
(250)
$
(250)
Net income
—
—
—
—
—
6,433
—
44
$
6,477
Other comprehensive loss
—
—
—
—
—
—
(3,611)
—
$
(3,611)
Balance at December 31, 2020
120,750
$
1,202
2,196
$
(2,837)
$
582,197
$
(56,231)
$
(24,083)
$
1,713
$
501,961
Three Months Ended December 31, 2019
Common Stock
Treasury Stock
Additional Paid‑in Capital
Retained Deficit
Accumulated Other Comprehensive Loss
Non‑controlling Interest
Total
Shares
Cost
Shares
Cost
Balance at September 30, 2019
116,008
$
1,154
1,664
$
(2,837)
$
552,422
$
(174,976)
$
(13,004)
$
3,063
$
365,822
Cumulative effect of adoption of new accounting standards
—
—
—
—
—
(2,023)
—
—
$
(2,023)
Equity based compensation expense
—
—
—
—
3,680
—
—
—
$
3,680
Issuance of common stock, net
1,645
16
419
—
4,030
—
—
—
$
4,046
Dividends paid to non-controlling interest
—
—
—
—
—
—
—
(1,250)
$
(1,250)
Divestiture of Memcor product line
—
—
—
—
(16,895)
—
—
—
$
(16,895)
Net income
—
—
—
—
—
53,145
—
361
$
53,506
Other comprehensive income
—
—
—
—
—
—
8,244
—
$
8,244
Balance at December 31, 2019
117,653
$
1,170
2,083
$
(2,837)
$
543,237
$
(123,854)
$
(4,760)
$
2,174
$
415,130
See accompanying notes to these Unaudited Consolidated Financial Statements
7
Evoqua Water Technologies Corp.
Unaudited Consolidated Statements of Changes in Cash Flows
(In thousands)
Three Months Ended December 31,
2020
2019
Operating activities
Net income
$
6,477
$
53,506
Reconciliation of net income to cash flows provided by operating activities:
Depreciation and amortization
27,391
25,143
Amortization of deferred financing fees
526
701
Deferred income taxes
258
(679)
Share-based compensation
3,019
3,680
Loss on sale of property, plant and equipment
19
173
Gain on sale of business
—
(58,279)
Foreign currency exchange gains on intercompany loans and other non-cash items
(6,459)
(6,086)
Changes in assets and liabilities
Accounts receivable
18,083
11,087
Inventories
(11,551)
(14,613)
Contract assets
21,458
3,042
Prepaids and other current assets
(465)
(631)
Accounts payable
(12,652)
(11,056)
Accrued expenses and other liabilities
(32,356)
(9,378)
Contract liabilities
8,010
4,651
Income taxes
(1,271)
1,388
Other non‑current assets and liabilities
(4,873)
2,083
Net cash provided by operating activities
15,614
4,732
Investing activities
Purchase of property, plant and equipment
(17,260)
(17,572)
Purchase of intangibles
(81)
(210)
Proceeds from sale of property, plant and equipment
127
251
Proceeds from sale of business, net of cash of $0 and $12,117
—
108,921
Acquisitions
(8,743)
(11,160)
Net cash (used in) provided by investing activities
(25,957)
80,230
Financing activities
Issuance of debt, net of deferred issuance costs
7,805
3,532
Borrowings under credit facility
—
13
Repayment of debt
(5,723)
(3,793)
Repayment of finance lease obligation
(3,821)
(4,162)
Payment of earn-out related to previous acquisitions
—
(175)
Proceeds from issuance of common stock
14,263
4,046
Distribution to non‑controlling interest
(250)
(1,250)
Net cash provided by (used in) financing activities
12,274
(1,789)
Effect of exchange rate changes on cash
2,988
1,849
Change in cash and cash equivalents
4,919
85,022
Cash and cash equivalents
Beginning of period
193,001
109,881
End of period
$
197,920
$
194,903
See accompanying notes to these Unaudited Consolidated Financial Statements
8
Evoqua Water Technologies Corp.
Unaudited Supplemental Disclosure of Cash Flow Information
(In thousands)
Three Months Ended December 31,
2020
2019
Supplemental disclosure of cash flow information
Cash paid for taxes
$
1,334
$
1,382
Cash paid for interest
$
7,624
$
12,268
Non‑cash investing and financing activities
Finance lease transactions
$
5,484
$
1,782
Operating lease transactions
$
5,954
$
4,734
Option and Purchase Right
$
—
$
7,673
See accompanying notes to these Unaudited Consolidated Financial Statements
9
Evoqua Water Technologies Corp.
Notes to Unaudited Consolidated Financial Statements
(In thousands, except per share data)
1. 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 entities, EWT Holdings II Corp. 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. The Company did not receive any proceeds from the sale of shares by the selling shareholders in this secondary public offering.
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.
2. 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
10
Reporting, as amended in January 2021 (“ASU 2021-01”), which 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. 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. The Company is currently assessing the impact of the adoption of ASU 2020-04 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 using 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 have 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 during the three months ended December 31, 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
3. 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 Accounting Standards Codification (“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 December 31, 2020 and September 30, 2020, and summarized financial information for the three months ended December 31, 2020 and 2019.
December 31, 2020
September 30, 2020
Current assets (includes cash of $1,743 and $2,088)
$
3,560
$
4,016
Property, plant and equipment
1,084
1,145
Goodwill
2,206
2,206
Total liabilities
(1,219)
(1,324)
11
Three Months Ended December 31,
2020
2019
Total revenues
$
834
$
2,642
Total operating expenses
(737)
(1,958)
Income from operations
$
97
$
684
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. As 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, the Company recognized a liability for the remaining 40% interest. 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 December 31, 2020 and September 30, 2020, and summarized financial information for the three months ended December 31, 2020 and 2019.
December 31, 2020
September 30, 2020
Current assets (includes cash of $2,143 and $1,675)
$
3,528
$
4,024
Property, plant and equipment
3,210
3,159
Goodwill
1,798
1,798
Intangible assets, net
9,505
9,918
Total liabilities
(3,798)
(3,692)
Three Months Ended December 31,
2020
2019
Total revenues
$
770
$
1,645
Total operating expenses
(1,738)
(1,937)
Loss from operations
$
(968)
$
(292)
4. Acquisitions
Acquisitions support the Company’s strategy of delivering a broad solutions portfolio with robust technology across multiple geographies and end markets. The Company continues to evaluate potential strategic acquisitions of businesses, assets and product lines and believes that capex-like, tuck-in acquisitions present a key opportunity within its overall growth strategy.
On 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 three months ended December 31, 2020, the Company incurred approximately $216 in acquisition costs, which are included in General and administrative expenses.
12
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
$
2,039
Property, plant and equipment
900
Goodwill
6,088
Other non-current assets
22
Total assets acquired
9,049
Liabilities assumed
(306)
Net assets acquired
$
8,743
5. 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 months ended December 31, 2020 was insignificant.
For sales of aftermarket parts or products with a low level of customization and engineering time, the Company recognizes revenues at the time risks and rewards of ownership pass, which is generally when products are shipped or delivered to the customer as the Company has no obligation for installation. The Company considers shipping and handling services to be fulfillment activities and as such they do not represent separate performance obligations for revenue recognition. Sales of service arrangements are recognized as the services are performed.
For certain arrangements where there is significant customization to the product and for long-term construction-type sales contracts, revenue may be recognized over time. In these instances, revenue is recognized using a measure of progress that applies an input method based on costs incurred in relation to total estimated costs. These arrangements include large capital water treatment projects, systems and solutions for municipal and industrial applications. The nature of the contracts is generally fixed price with milestone billings. In order for revenue to be recognized over a period of time, the product must have no alternative use and the Company must have an enforceable right to payment for the performance completed to date, including a normal profit margin, in the event of termination for convenience. If these two criteria are not met, revenues from these contracts will not be recognized until construction is complete. Contract revenues and cost estimates are reviewed and revised quarterly at a minimum and the cumulative effect of such adjustments are recognized in current operations. The amount of such adjustments 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.
13
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 $154,029 at December 31, 2020. This backlog represents the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied as of the end of the reporting period. The Company estimates that the majority of these performance obligations will be satisfied within the next twelve months.
The recording of assets recognized from the costs to obtain and fulfill customer contracts primarily relate to the deferral of sales commissions. The Company’s costs incurred to obtain or fulfill a contract with a customer are classified as non-current assets and amortized to expense over the period of benefit of the related revenue. These costs are recorded within Cost of product sales and services. The amount of contract costs was insignificant at December 31, 2020.
The Company offers standard warranties that generally do not represent a separate performance obligation. In certain instances, a warranty is obtained separately from the original equipment sale or the warranty provides incremental services and as such is treated as a separate performance obligation.
Disaggregation of Revenue
In accordance with Topic 606, the Company disaggregates revenue from contracts with customers into source of revenue, reportable operating segment and geographical regions. The Company determined that disaggregating revenue into these categories meets the disclosure objective in Topic 606, which is to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
Information regarding the source of revenues:
Three Months Ended December 31,
2020
2019
Revenue from contracts with customers recognized under Topic 606
$
285,188
$
308,602
Other (1)
37,005
37,503
Total
$
322,193
$
346,105
(1) Other revenue relates to revenue recognized pursuant to ASU 2016-02, Leases (Topic 842), mainly attributable to long term rentals.
Information regarding revenues disaggregated by source of revenue and segment is as follows:
Three Months Ended December 31,
2020
2019
Integrated Solutions and Services
Applied Product Technologies
Total
Integrated Solutions and Services
Applied Product Technologies
Total
Revenue from capital projects
$
50,626
$
76,889
$
127,515
$
54,620
$
74,926
$
129,546
Revenue from aftermarket
27,146
25,354
52,500
29,673
37,341
67,014
Revenue from service
136,945
5,233
142,178
143,845
5,700
149,545
Total
$
214,717
$
107,476
$
322,193
$
228,138
$
117,967
$
346,105
14
Information regarding revenues disaggregated by geographic area is as follows:
Three Months Ended December 31,
2020
2019
United States
$
264,131
$
277,717
Asia
22,605
18,742
Europe
21,285
26,112
Canada
11,179
17,563
Australia
2,993
5,971
Total
$
322,193
$
346,105
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:
Three Months Ended December 31,
Contract assets (a)
2020
2019
Balance at beginning of period
$
80,759
$
73,467
Recognized in current period
66,885
84,596
Reclassified to accounts receivable
(88,560)
(87,046)
Amounts related to sale of the Memcor product line
—
2,710
Foreign currency
741
182
Balance at end of period
$
59,825
$
73,909
(a) Excludes receivable balances which are disclosed on the Consolidated Balance Sheets.
Three Months Ended December 31,
Contract Liabilities
2020
2019
Balance at beginning of period
$
26,259
$
39,051
Recognized in current period
96,230
88,616
Amounts in beginning balance reclassified to revenue
(24,895)
(37,624)
Current period amounts reclassified to revenue
(62,730)
(46,083)
Amounts related to sale of the Memcor product line
—
(700)
Foreign currency
(419)
374
Balance at end of period
$
34,445
$
43,634
15
6. Fair Value Measurements
As of December 31, 2020 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.