Water Stocks News: Evoqua Water Technologies (NYSE: $AQUA) Reports Fiscal 2017 Fourth Quarter and Full Year Results
Fourth Quarter 2017 Highlights (ended September 30, 2017)
- Consolidated Revenues of $356.5 million, up 11.6% year-over-year
- Net income of $13.0 million, up $12.8 million year-over-year;
- Adjusted EBITDA of $71.4 million, up 20.1% year-over-year
Full Year 2017 Highlights
- Consolidated Revenues of $1.25 billion, a 9.7% increase year-over-year
- Net income of $6.4 million, a decline of $6.6 million year-over-year;
- Adjusted EBITDA of $207.7 million, up $47.6 million or 29.7% year-over-year
PITTSBURGH - December 1, 2017 (Investorideas.com Newswire) Evoqua Water Technologies Corp. (NYSE:AQUA) today reported results for its fiscal 2017 fourth quarter and full year ended September 30, 2017 following its successful initial public offering last month.
Evoqua reported revenues for the fourth quarter of 2017 of $356.5 million, an 11.6% increase as compared to the fourth quarter of the prior year. Net income for the quarter was $13.0 million, up $12.8 million year-over-year. The Company delivered Adjusted EBITDA of $71.4 million in the fourth quarter 2017, an increase of 20.1% year-over-year.
For the full year fiscal 2017, Evoqua reported revenues of $1.25 billion, a 9.7% increase year-over-year. Net income for the year was $6.4 million and the Company delivered Adjusted EBITDA of $207.7 million for the full year fiscal 2017, a 29.7% increase over the prior year.
"For both the quarter and full-year Evoqua employees generated record sales, net income and Adjusted EBITDA by focusing on our 38,000 customers across the world," said Ron Keating, Evoqua CEO. "Following our successful initial public offering on November 2, we are well positioned to continue to capture organic and inorganic growth opportunities as we leverage our iconic brands and differentiated technologies to capitalize on favorable industry dynamics, and further strengthen our number one market position in North America."
Fourth Quarter and Full Year Segment Results
The Company has three reportable segments - Industrial, Municipal and Products.
The Industrial segment combines equipment and services to improve operational reliability and environmental compliance for heavy and light industry, commercial and institutional markets. Their customers span industries including hydrocarbon processing, chemical processing, power, food and beverage, life sciences, health services and microelectronics.
Industrial revenues were $182.5 million for the three months ended September 30, 2017, as compared to $160.4 million for the three months ended September 30, 2016, an increase of $22.1 million or 13.8%. The increase in the three month period was driven by capital and service revenues of $9.8 million primarily in the power market. In addition, the acquisitions of ADI Systems, Inc. ("ADI"), Environmental Treatment Systems ("ETS") and Noble Water Technologies ("Noble"), contributed $15.1 million of the increased revenue for the three months ended September 30, 2017. This was offset by a decrease of $1.9 million in revenues that did not reoccur related to the sales at the Company's former Vernon, California, facility because of the disposition of that facility (the "Vernon Disposition") as of September 30, 2016.
Revenues increased $39.2 million, or 6.5%, to $643.4 million in the fiscal year ended September 30, 2017 from $604.2 million in the fiscal year ended September 30, 2016. Throughout the fiscal year, the increase in service and capital revenues was driven by new account penetration in power and hydrocarbon and chemical processing end markets and higher customer production levels in general manufacturing and pharmaceutical and healthcare end markets. In addition, our acquisitions of ETS, ADI and Noble during the year ended September 30, 2017 contributed $19.4 million of revenues, partially offset by a decrease of $7.9 million in revenues that did not reoccur related to the sales at the Company's former Vernon, California, facility because of the Vernon Disposition as of September 30, 2016.
Operating profit in the Industrial segment increased $5.3 million, or 17.6%, to $35.5 million for the three months ended September 30, 2017 as compared to $30.2 million for the three months ended September 30, 2016. EBITDA increased $7.4 million, or 18.4%, to $47.3 million from $39.9 million.
For the fiscal year ended September 30, 2017, operating profit increased $18.6 million, or 20.3%, to $110.0 million from $91.4 million in the fiscal year ended September 30, 2016. EBITDA increased $19.8 million, or 15.3%, to $149.4 million in the fiscal year ended September 30, 2017 from $129.7 million in the fiscal year ended September 30, 2016. The increase in operating profit and EBITDA was primarily related to the increased revenue volume as well as benefits experienced from supply chain initiatives, including lower procurement costs and continued operating efficiencies.
The Municipal segment helps engineers and municipalities meet new demands for plant performance through market-leading equipment, solutions and services backed by trusted brands and over 100 years of applications experience. The segment's customers include waste water and drinking water collection and distribution systems and utility operators. The segment's services include odor and corrosion control services.
Municipal revenues were $79.7 million for the three months ended September 30, 2017, as compared to $78.5 million for the three months ended September 30, 2016, an increase of $1.2 million or 1.5%.
For the fiscal year ended September 30, 2017, revenues increased slightly by $0.6 million, or 0.2%, to $278.6 million from $278.0 million in the fiscal year ended September 30, 2016. Excluding the operations in Italy, which the Company is in the process of closing and which resulted in a decline of $1.6 million in revenues over the same period, the overall business grew by $2.2 million, or 0.8%.
Operating profit increased $3.2 million, or 32.7%, to $13.1 million for the three months ended September 30, 2017 as compared to $9.9 million for the three months ended September 30, 2016. EBTIDA increased $3.1 million, or 26%, to $15.1 million from $12.0 million.
In the fiscal year ended September 30, 2017, operating profit increased for the Municipal segment by $5.4 million, or 17.1%, to $36.6 million from $31.3 million in 2016. EBITDA increased $5.3 million, or 13.5%, to $44.8 million from $39.4 million in the prior fiscal year. The increase in operating profit and EBITDA was primarily due to the continued benefits in both project execution and procurement savings. This was partially offset by increased labor costs.
The Products segment has distinct business operating units, each built on well-known brands and technologies that are sold globally through multiple sales and aftermarket channels. Additionally, the Products segment also offers industrial, municipal and recreational users improved operational reliability and environmental compliance. The segment's customers include original equipment manufacturers, regional and global distributors, engineering, procurement and contracting customers, and end users in the municipal, industrial and commercial industries including hotels, resorts, colleges, universities, waterparks, aquariums and zoos.
Products revenues increased $13.8 million, or 17.1%, to $94.3 million for the three months ended September 30, 2017 from $80.5 million for the three months ended September 30, 2016.
In the fiscal year ended September 30, 2017, revenues increased $70.4 million, or 27.6%, to $325.4 million from $255.0 million in fiscal 2016. The increase in revenues was primarily due to the acquisitions of Neptune-Benson, Valve and Filtration Systems, Ltd ("VAF"), Delta Ultra Violet Corporation ("Delta UV"), Magneto and Olson Irrigation Systems ("Olson"). These acquisitions accounted for an aggregate of $48.7 million of the increased revenues. The Products segment also saw strong results in the Aquatics and Disinfection division, driven by strong demand across its end markets. The segment saw additional growth in the power and microelectronics markets, and higher sales of electrodeionization equipment in China.
Operating profit increased $0.1 million, or 0.5%, to $20.7 million for the three months ended September 30, 2017 from $20.5 million for the three months ended September 30, 2016. EBITDA also increased $0.6 million, or 2.6%, to $23.8 million from $23.2 million.
Operating profit for the fiscal year ended September 30, 2017 increased $17.2 million, or 35.3%, to $65.9 million from $48.7 million in fiscal 2016. EBITDA increased $22.3 million, or 40.5%, to $77.4 million in fiscal 2017 from $55.1 million in fiscal 2016. The increase in operating profit and EBITDA was primarily due to the additional revenue volume and profitability associated with the acquisitions of Neptune-Benson, VAF, Delta UV, Magneto and Olson. Operating profit and EBITDA improved in the Aquatics and Disinfection division, and the electrodeionization equipment division due to the increased revenues in the Asia region. The balance of improved operating profit resulted from other restructuring and cost improvement activities.
Summary and Outlook
"We had a very strong close to the year with fourth quarter revenues and Adjusted EBITDA each up double digits," said Keating. "All three segments performed well and market trends across the industry and our end markets continue to be favorable for continued profitable growth. For 2018, we expect revenues to be in the range of $1.33 billion and $1.36 billion and Adjusted EBITDA to be in the range of $235 million and $255 million."
About Evoqua Water Technologies http://evoqua.com/
Evoqua Water Technologies is a leading provider of mission critical water treatment solutions, offering services, systems and technologies to support its customers' full water lifecycle needs. Evoqua Water Technologies has worked to protect water, the environment and its employees for more than 100 years, earning a reputation for quality, safety and reliability around the world. Headquartered in Pittsburgh, Pennsylvania, Evoqua operates 160 locations in eight countries and, with over 200,000 installations and 87 service branches, holds leading positions in the North American industrial, commercial and municipal water treatment markets, serving more than 38,000 customers worldwide.
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