Evoqua Water Technologies Corp. (AQUA) on Q3 2021 Results - Earnings Call Transcript
Operator: Hello, and welcome to the Evoqua Water Technologies' Third Quarter 2021 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. After the speakers' opening remarks, there will be a question-and-answer period. As a reminder, this conference call is being recorded, and your participation implies consent to our recording of this call. If you do not agree with these terms, please disconnect at this time. Thank you. Dan Brailer: Thank you, Nicole. Thanks to everyone for joining us for today's call to review our third quarter 2021 financial results. Participating on today's call are Ron Keating, President and Chief Executive Officer; and Ben Stas, Executive Vice President and Chief Financial Officer. After our prepared remarks, we will open the call to questions. This conference call includes forward-looking statements, including our expectations for the fourth quarter and the full-year of fiscal 2021, statements relating to the impact of the COVID-19 pandemic, anticipated inflation and macroeconomic condition, demand outlook in our end markets, growth opportunities, our pipeline, our acquisition strategy, and the impact of the proposed infrastructure legislation. Actual results may differ materially from expectations. For additional information on Evoqua, please refer to the company's SEC filings, including the risk factors described therein. On this conference call, we'll also discuss certain non-GAAP financial measures. Information required by Regulation G of the Exchange Act with respect to such non-GAAP financial measures is included in the appendix of the presentation slides for this call, which can be obtained via Evoqua's Investor Relations Web site. Unless otherwise specified, references on this call to full-year measures or to a year refer to our fiscal year, which ends on September 30. Means to access this conference call via webcast were disclosed in the press release, which was posted on our corporate Web site. Replays of this conference call will be archived and available for the next 14 days. With that, I would now like to turn the call over to Ron. Ron? Ron Keating: Thank you, Dan. Please turn to slide three. We continue to be pleased with the company performance under challenging market dynamics brought about by the pandemic. Our priorities have remained focused on the health and safety of our employees, ensuring business continuity, and improving our balance sheet and the liquidity of the company. The column on the left provides highlights of some achievements since the start of the pandemic. We have grown revenues, increased EBITDA margins, enhanced liquidity, and improved our net leverage ratio. As the economy transitions to a reopening phase, we believe we are well-positioned for profitable growth. Our priorities for cash will focus on driving organic growth, delivering on our M&A strategy, and further enhancing our balance sheet consistent with our priorities prior to the pandemic. We're seeing solid demand for our products and solutions; however, visibility on timing remains somewhat challenged. We're experiencing the same macroeconomic challenges as many of our peers; attraction of skilled talent, inflationary pressures, and material availability. As we have discussed in the past and will continue to highlight, Evoqua has many organic growth drivers as we look to the future. Our organization has done an excellent job of managing through a difficult period. And while market dynamics continue to present a variety of challenges, our organization is getting stronger and more competitive. Ben Stas: Thank you, Ron. Please turn to slide seven. For the third quarter, reported revenues were up 6.3% to approximately $370 million. Organic revenues grew 3.2% with both segments contributing to revenue growth. Segment demand improved, pricing was positive and we saw growth in a variety of end-markets, including chemical processing, food, and Health Sciences, while aquatics declined. We also experienced growth across all major regions. Third quarter adjusted EBITDA increased 3.8% to $66.2 million for an overall margin of 17.9%. Price costs and product mix improved profitability, increased service volume positively benefited margin expansion, but was offset by unfavorable operational variances, higher operating expenses from employee compensation and travel and general inflation. Please turn to slide eight. Applied Product Technologies, third quarter revenues were $130 million up 9.2%. Organic revenues increased $5 million or 4.2% driven by favorable pricing and strong growth across multiple product lines. Foreign currency positively impacted revenues by approximately 5%. Adjusted EBITDA for the third quarter decreased 1.7% to approximately $28 million. Adjusted EBITDA margin decreased 250 basis points to 21.8%, operational variances, including additional warranty reserves, and production variances impacted adjusted EBITDA margins in addition to higher employee expenses. Price costs and product mix was favorably impacted profitability. Ron Keating: Thanks, Ben. Please start to slide 14. Infrastructure plan negotiations in Washington have continued, and we outlined two important legislative proposals with highlights on clean water. On Thursday, July 30, the White House and Senate published a summary on the bipartisan infrastructure deal. On August 1, the final version of the bill was unveiled and PFAAs and emerging contaminants continue to receive strong bipartisan support. This is unfolding in real time, and we're saying close to it. The original $10 billion suspending proposal by the Biden administration in March remains intact is currently proposed. Operator: Your first question is from Nathan Jones of Stifel. Nathan Jones: Good morning, everyone. Ron Keating: Good morning, Nathan. Ben Stas: Hi, Nathan. Nathan Jones: I'd like to start off with a question on the ISS capital backlog. I think the disclosure this quarter on that backlog, plus the disclosure last quarter, implies to me that the ISS capital backlog was up about 40% quarter-over-quarter. Can you talk about what kinds of things you've been booking, and how we should be thinking about those converting to revenue? Ben Stas: Yes, thanks, Nathan. If you looked at our market outlook, we've sort of highlighted where we're seeing the strength in demand. But specifically, we're seeing across many end markets, particularly microelectronics, that we are seeing strength in orders. Nathan Jones: And how should we think about kind of a, I guess, an average backlog duration, how long does that stuff take to turn into revenue? Ben Stas: This backlog was -- it was varied. But there were some longer -- larger projects within this backlog that will take a bit more time, as much as one to two years. Ron Keating: And, Nathan, as you look at slide 11, where we've called out mobile fleet, service deionization, build-own-operate, kind of operate and balance those into 40%, 40%, 20%, and you can do some math around the calculation . Nathan Jones: Yes, great, thanks. Follow-up question I wanted to ask was on the operational variances in the quarter. You guys called out some increased warranty costs, and some production variances. Can you talk about what's driving that? If there's been countermeasures deployed to try and fix those things, and what the expectations, I guess, especially around warranty costs are going forward, has it been fully reserved or should we be expecting more? Ben Stas: So, the production variances were largely due to product mix. Last year, we had a lot of microelectronics orders running through the plant that absorption. There is also some general inflation in there on indirect materials that was also included; it's a little bit of labor inflation. But that pretty much offsets the levers that you'd normally see on that upside within APT because of that mix. The warranty was approximately $1.5 million and it, we believe, were fully reserved. They were mostly due to supply issues, vendor warranty quality issues. We're certainly going to work with those vendors in terms of recovering that. In an abundance of caution, we want to make sure we took care of our customers first, and we build the appropriate reserves. Nathan Jones: Because there the production variances weren't actually variances in your own production processes, they were other things that led to those variances? Ben Stas: Yes, it's mostly absorption, but there was some general inflation included in that as well. And we're going to offset the inflation with price; we continue to expect to do that. But there is no major issues within our production operations itself. But you can get variances to do the type of products that are running across there. Some have better absorption, some have -- do not have quite as good absorption. And last year, we had larger orders that went through the production associated with microelectronics. Nathan Jones: Okay, that makes sense, and is very helpful. Thank you very much. Ron Keating: Yes. Operator: Your next question is from Deane Dray of RBC Capital Markets. Deane Dray: Thank you. Good morning, everyone. Ron Keating: Hey, Deane, good morning. Ben Stas: Good morning, Deane. Deane Dray: And lots of underlying positives to talk about here, between price cost or the, what I like to call, your traffic light slide, page five, and everything turning green. Ron Keating: Yes. Deane Dray: But actually, Ron, I wanted to start with an update on the state of your outsourcing business. , really nice with Nathan's question, pointing out the growth in the backlog. What's the factor for you in building out this outsourcing business? Has it be temporarily just being able to get onsite access, is it the customers making that decision to flip from CapEx to OpEx, just the start of the outsourcing business today, and what the outlook is over the next several quarters? Ron Keating: Sure. Thanks, Deane. Thanks for the question and the comments. And, first of all, I would agree with you, there's a lot of positives here, certainly as you look at slide five, and we continue to highlight that. Actually, as I commented in the opening remarks, excluding one very large order in CPI last year, we would have all but one dot that would be green right now, so we feel pretty good about that. The gating factor on outsourced water, because it continues to gain traction for us, is it is a little bit of all of the above that you mentioned. It is side access, which is challenging. It improved over the past three to six months, but we're seeing some customers that are very concerned about it with the new variant coming out, and customers that are actually requesting that we be -- we validate that our service techs and our team members are vaccinated before they can come on site. So, we're all watching what's going to happen with the Delta variant a little cautiously. The other piece is, is customers actually pulling the trigger. We have some very nice projects that are in the pipeline that have been delayed, and customers are delaying decisions because of the availability of their materials to operate as effectively as they would like to be, as well as some of the inflationary challenges that they're concerned about they're dealing with right now, they feel like may subside over the next 12 to 18 months. So, it's still very positive. The pipeline is growing; things look very nice on the outsourced water front. But we do have a little bit of cautiousness from the marketplace overall as they're pulling the trigger on large orders right now. Deane Dray: That's real helpful. And then second question, for Ben. It's just kind of a nice problem or a question to be asked, is your free cash flow conversion is significantly higher year-to-date than what we had been modeling. We were bracing for some of this impact of growth CapEx with the outsourcing business, and it really has not been that significant in terms of weighing on the conversion. So, what does this say about fourth quarter conversion and the setup for next year from a free cash flow standpoint, please? Ben Stas: Yes, so, it'll depend on mix, as capital kicks in that'll put more pressure on free cash flow conversion as we head into next year. But we do expect to stay well above or stay above our 100% goal. And we remain very confident doing that. So, as we head into Q4, we also feel good about Q4 as well to stay within our expectation. So, we've done a lot in this area, particularly with our shared services receivables collections, overall cash conversion cycle reduction across the organization. There could be some pressure on inventory as we continue to manage through some of these supply chain challenges and make sure that we have enough stock to weather any hiccups that we get from suppliers. But we feel very good about collections, and we also feel very good about our payable process as well, to help offset the majority of that. Deane Dray: And just to clarify, are you carrying a higher buffer inventory at this time? Ben Stas: Yes, we are. Deane Dray: Yes, that makes sense. We're seeing that everywhere, so appreciate hearing that. Thank you. Ron Keating: Thanks, Deane. Operator: Your next question is from Mike Halloran of Baird. Mike Halloran: Hey, good morning, everyone. Ron Keating: Hi, Mike. Mike Halloran: So, kind of on a couple of the questions we've already been asked. First, last quarter we would have talked about it fourth quarter implying a really healthy exit rate in the next year. There's some supply chain challenges and things like that happening. Didn't change guidance to the fourth quarter range, the implied range is awfully wide. So I guess the question is just the confidence that you're going to exit this year to really high good momentum kind of run rate, and any thoughts on that or an update on that? Ron Keating: Yes, Mike. Thanks for the question. One thing we want to do on guidance, we continue to maintain being balanced and what we give us guidance. I think you've seen that from us for the last several quarters is just making sure that we are down the middle of the fairway kind of taking the tree tops out, certainly with a lot of the -- some of the uncertainty I would say with the Delta variant coming out. But again, as we highlight on slide five, what's happening in the end-markets. What's happening with our order activity, our book-to-bill ratio to be north of 1.1. In Q3, really shows very strongly for what we expect to enter into the FY '22. Mike Halloran: Yes, so still a high degree of confidence and the momentum that you're going to take exiting the year, correct? Ron Keating: Yes. Mike Halloran: Right. So then, when you think about some of the supply chain challenges, obviously the price cost piece has been very good so far. How are you thinking about the timing of those displays costs stay positive through the fourth quarter, or there's some legs that start materializing. And then as you're looking ahead to the supply chain side, any other kind of internal challenges through your networks? How do you think those flatten down and when do you see normalization? Ron Keating: Yes, so I think I actually made a couple of comments on that during the opening. We do see price cost staying positive all the way through the end of the fiscal year. And then we think there'll be some normalization as we start to see cost balance out coming into the FY'22 timeframe and during that fiscal year as well. So, but we've got terrific momentum from the team. We're continuing to look at inflation across many areas not just material cost, but across labor, freight, et cetera. There's a lot of challenges in the marketplace with inflationary impacts on the different services we provide, and we're having to make sure that we get the appropriate price for that as well. Mike Halloran: Thanks, gentlemen. Operator: Your next question is from Eitan Buchbinder of Citi. Eitan Buchbinder: Hi, good morning. Ron Keating: Good morning. Ben Stas: Good morning, Eitan. Eitan Buchbinder: Within the cash flow walk, growth CapEx was about $34 million year-to-date that's already ahead of the full-year 2020, and almost the 2019 levels with one quarter to go. So given customers may be hesitant to spend on CapEx, their own for capital projects. Have you seen the quoting pipeline for build own operating improve, and you'd anticipate that it surpasses 2019 levels? Ben Stas: Yes, the build own operate pipeline. Again, how this works is customers choose whether they want to do capital build own operate, many times they choose that at the end. But the pipeline for these types of projects continues to be robust. So we'll see what -- which way they choose. But historically, they've chosen more in the build own operate area. We've seen more conversion to build own operate. Ron Keating: And one of the big opportunities Eitan is we approach our customer with that as a first option. So it gives us a tremendous opportunity and a competitive advantage where we're going in and bidding on a project to be able to lead with outsource water first. Eitan Buchbinder: That's helpful, thank you. And then the midpoint of your guide implies about 17.1% adjusted EBITDA margin, which would represent a second straight quarter decline and trailing 12 month on adjusted EBITDA margin. So have you seen operational variances or price cost headwinds accelerate, which could lead to Q4 adjusted EBITDA margin down year-over-year. Or is it more conservatism and taking off the true tops? Ron Keating: I would just highlight what I mentioned earlier is we're being very balanced as we go forward. We didn't see a need to move guidance just based on a little bit of the uncertainty we're seeing with COVID and we wanted to make sure we were down the middle of the fairway. Eitan Buchbinder: It sounds good. Thank you very much. Ron Keating: Thanks. Operator: Your next question is from Steve Tusa of JPMorgan. Steve Tusa: Hi, good morning. Ron Keating: Good morning. Ben Stas: Good morning, Steve. Steve Tusa: Just on the -- an early thoughts on '22 and kind of sense of organic growth versus the kind of longer-term targets that you guys talked about? Ron Keating: Yes, Steve, we haven't given any guidance on '22 yet. We certainly anticipate based on the strong order book and the backlog that we've been building that will continue to be in line with our long-term targets that we dealing. Steve Tusa: Okay, I had to try. And then just on the infrastructure bill, anything coming out there that you see that drives growth in the near-term or maybe some people stepping back and delaying and kind of looking for better visibility. On how this is all going to work, just high level questions there? Ron Keating: Look, overall, I think it is very positive for us that we're getting such bipartisan support around clean water. And I think that's the key as we go forward. So it speaks to fantastic secular trends for the industry as a whole for us in the solutions we provide. And the emphasis on emerging contaminants gives us a very positive outlook as to what's going to happen that. The EPA and federal government are starting to really highlight this as something that needs to be addressed and will be addressed is very positive for the long-term outlook. Steve Tusa: Right. Thanks. Appreciate it. Ron Keating: Thank you. Operator: Your next question is from Andrew Buscaglia of Berenberg. Andrew Buscaglia: Good morning, guys. Ron Keating: Good morning. Ben Stas: Good morning, Andrew. Andrew Buscaglia: I was wondering if you comment on some services in after—market. I thought it's growing a bit. But it sounds like Delta variants kind of pushing that out due to fail access issues. Are we setting up for a pretty robust year going forward or maybe quarter going forward if that lifts? And by that I mean, can you talk about the nature of the spend were, is that the way to think of it like people are pushing off these the services and maintenance of the staff and they're going to need a lot of that going forward basically? Ron Keating: Yes, Andrew, I think a little bit of what we've seen and we continue to experiences is there's a bit of about wave that comes as people ramp back up their production. So there's opportunities for us that that will be expanding a little more greatly, then they potentially have in the past, and as people open back up to full capacity, and things start operating. But the other thing that I want to highlight through this is, as we see capital projects come through, and we've discussed this in several other calls for $1 in capital that we sell. So if we go out and sell a $20 million capital system, typically between 18 months and 24 months later you see about $22.5 of service that flows from that capital sale. And so, it's a little bit slower to get that. That services growth that is tied on to the capital projects that we highlighted when we speak up, and there's a very nice benefit, as you see that ISS backlog growing that indicates we'll see the services that are stable and recurring revenue that will follow suit. Andrew Buscaglia: Got it. And maybe one on capital allocation, any update and thoughts on M&A, and then, if M&A is not likely, what about focusing on continuing to pay down that debt? Ron Keating: Well, I'll speak to the M&A piece. And we've got a very nice pipeline coming and Ben can talk about paying down debts, we're going to continue to do that. But on the M&A side, we have a robust pipeline of opportunities that we anticipate we'll be able to continue to execute on our bolt-on strategy that we've highlighted in the past. Ben you want to talk about the debt paid off. Ben Stas: Yes, sure. M&A and organic growth are clearly priorities, especially in this environment, but we do -- are focusing on reducing debt. We're currently at 2.8. We've stated a goal of 2.5 to 3 times, so we're within the range, but we still got room to get to 2.5. So we're going to continue to focus on that that reduction as well. Andrew Buscaglia: All right. Thanks, guys. Operator: Your next question is from John Walsh of Credit Suisse. John Walsh: Hi, good morning. Ron Keating: Good morning, John. Ben Stas: Good morning, John. John Walsh: Wonder if we could talk a little bit more about the pricing actions you're taking and just thinking about on the other side of this. We get some deflation in these input costs. It's kind of hard to go back and look at history because of the way you've kind of transitioned the business model here. So how should we think about price, stickiness and the ability to kind of naturally push through price with a 90% plus renewal rate? Ron Keating: Yes. I mean, as you look at that, John, obviously, we are -- it's a little harder when you have longer term contracts to get the price immediately, but that also leads to a benefit on the backside when you have longer term contracts of the price being much more stable and much more sticky. So we've had to go out with some surcharges, just given the immediate nature on some of the inflationary pressures that we've seen surcharges go on. And they typically will bleed off as we see deflationary moves. But as we go to annual contracts and we renew annual contracts from surcharges. We typically roll those more into the contract, new contract pricing, which allows it to last longer than typically of what. John Walsh: Great, thanks for that. And then maybe just one more around capital allocation, obviously you've articulated your strategy of bolt-ons, but just curious what you're seeing or what your thoughts are on maybe larger industry consolidation. We've certainly seen a pickup and acquisition activity, but just love to get your thoughts there on potentially larger industry consolidation moves. Ron Keating: I think that there are certainly some potential industry moves that are out there. They are few and far between and much more difficult to action. And so, our focus continues to be on the strategy we've articulated around a creative tuck-in or bolt-on acquisitions and we'll continue to focus on that. John Walsh: Great. Thanks for taking the questions. Ron Keating: Thank you. Operator: Your next question is from Pavel Molchanov of Raymond James. Pavel Molchanov: Thanks for taking the question. Two international things that I wanted to ask about first on the supply side of the equation, after you sold the Memcor business in Australia, a few years ago do you have any exposure to the Australian market at this point. And of course, I'm asking in the context of the Sydney and Brisbane lockdowns. Ron Keating: We do have access to it. We still have a team on the ground that is providing, systems and services as well as product technologies into that market. We sell through other integrators in Australia as well that we deploy our products and technologies, Australia, New Zealand. And but it's, it's not a large portion of our business, Pavel. It's much smaller since we sold the Memcor business all. Pavel Molchanov: Okay, understood. And then few people asked about the US infrastructure package and water treatment modernization? On the other side of the Atlantic, very similar conversation also involving PFAS in places like Northern Italy, Belgium, Southern England. How do you assess that opportunity? Ron Keating: We think the opportunity, certainly is there for integrators and service providers in those markets to deploy our technologies, our best technologies that we have in the APT portfolio. And a lot of that's around UV opportunities, different types of concentration up and with RO and ion exchange systems and where we can deploy some of our product technologies. We're very supportive of that. But we are not there as a system provider in those markets. We are simply providing technologies. Pavel Molchanov: Okay. Thank you very much. Thank you. Operator: Your next question is from Joe Giordano of Cowen. Joe Giordano: Hi, guys, morning. Ron Keating: Good morning, Joe. Ben Stas: Hi, Joe. Joe Giordano: Do you have a sense of like the inflection in your business on revenue, on the capital side, just given the backlog timing like the visibility you have there. Ron Keating: Joe, to me inflection, are you just talking about conversion of backlog to revenue? Joe Giordano: You had the service and service business in the aftermarket often a quarter of capital down. I feel, I think that's been a couple of quarters like that, just given the nature of the, you have a sense of when that flips the positive for capital? Ron Keating: If you look at the backlog chart for ISS, you saw that that tipped up. And we did point to the fact that general strength in orders within capital and including microelectronics. So some of those orders are longer in duration, so they're going to take some time to convert because they're larger microelectronics types of orders but on average it depends on the size of the order. But it can be three months to two years, depending on the size of the order. Ron Keating: But I think, Joe, as you see, it says capital averages nine to 12 months on that slide. So that would give an indication inflection would occur within the next 12 months. Joe Giordano: Fair enough. And then your comments on the networking capital that it could be like mid-teens? Is that like, something that you see happening kind of now as a matter of course, or like what are the conditions that would need to be in place to move that higher to that level? Ron Keating: It depends on mix and it depends on end-markets where that capital occurs. Just as a reminder, a lot of the longer capital that was kind of negative in terms of CIE, BIE was in the Municipal segment, we've reduced our exposure with the sell of Memcor. We feel good about staying in the lower end of that range. But it's possible that larger types of projects could come through that put pressure and capillary on working capital short-term. But again, they should correct itself relatively soon, we do think that the lower teams is where we should sit long-term. Joe Giordano: Thanks. Operator: Your final question is from Brian Lee of Goldman Sachs. Brian Lee: Hey guys, good morning. Thanks for squeezing me. Ron Keating: Hey, Brian. Good morning. Brian Lee: Maybe just on all the backlog and order strength in that context, can you kind of give us an update on whether or not you're seeing increased activity around the PFOS pipeline, I think the last time you guys updated us it was you're still talking about $100 million visibility on the pipeline for PFOS related items. Just wondering if there was anything related to that specific in terms of the updates around backlog in order trends? Ron Keating: Yes, so Brian, I would say that that's remaining fairly stable with what we see, a lot of what's going on in the federal government is causing people just are water districts to continue to address their immediate need, but not to advance the ball on really expanding it until they see what's going to happen with the EPA and with the federal government. So it's staying pretty steady, our win rate is staying very steady as well. And so we continue to see a piece of our business that has great promise, but is not contributing greatly to the overall picture here. Brian Lee: Okay, fair enough. And then maybe a second question for Ben, just kind of around the model and margin trends here. And speaking of inflections, I think this is the first time in fiscal '21, APT saw margins decline year-on-year and then ISS went positive. So we kind of turn in a corner here in ISS where we should be expecting year-on-year margin trends to remain positive into Q4 and heading into fiscal '22. And then I wasn't clear on some of the residual impact of the warranties and operational factors, is that going to weigh on APT in the near-term where we continue to sort of see that negative on a year-on-year basis? Thanks, guys. Ben Stas: Sure. So, for ISS, again margin trends, we're expecting to continue to be favorable, as volumes improve and increase in the tough microelectronics comps are in our rearview mirror, this quarter, fourth quarter, we still have one more tough comp left, but just want to remind you that but then the comps get better as we head into next year. Service volume within ISS is certainly helping margins. And on the other hand, we still got to keep our eye on inflation. And I want to remind you, price cost even though were positive can put pressure on margins if you don't maintain your margins on the price. But just from a thought process, we can be positive and recover all our costs plus have additional price. But if that does not maintain the margin that can little put some short-term pressure on margins. Within APT, the warranty we believe is fully reserved for, we don't expect additional issues as we head into the future. In an abundance of caution, we wanted to make sure we were aggressive with our customers. So they don't feel any impact of these issues. We're certainly going to work with our suppliers to resolve these issues. But we don't see any hangover from that effect. And the other point within APT margins is they were also a little bit of a victim of tough comps because a lot of micro electronics in the prior-year have large orders that produce great absorption within the segment in the prior-year. So they had some tough comps as well. So again, we don't see a lot of hangover from this APT margin challenge that we had this quarter on a quarter-over-quarter basis. Brian Lee: All right, I appreciate the color. Thanks, guys. Ben Stas: Yes, thanks. Ron Keating: Thank you. Operator: Thank you. That concludes our question-and-answer period. I would now like to turn the call back over to Ron Keating for his closing remarks. Ron Keating: So, first of all, I'd like to thank our dedicated team at Evoqua for continuing to deliver continuous operations and continuous support to our customers in somewhat challenging times, and certainly for providing the tremendously strong technology and sustainable solutions that we deliver to market. Thank you all for participating in the earnings call today. We hope to be safe, and we appreciate your interest in Evoqua. Operator: Thank you. That concludes today's Evoqua Water Technologies' third quarter 2021 earnings conference call. You may now disconnect your lines. And thank you for your interest in Evoqua.AQUA Ratings Summary
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Evoqua Water Technologies Acquires STERIS’ Renal Business
Evoqua Water Technologies Corp. (NYSE:AQUA) made an announcement, according to which it has entered into an agreement to acquire the assets of STERIS’ renal business operated by Mar Cor Purification and Cantel Medical for $196.3 million. The business is estimated to generate around $180 million in annual sales and adjusted EBITDA of around $27 million.
Analysts at Berenberg Bank estimate the deal to add around 8% and 4% to the company’s 2022 and 2023 total sales, respectively. Once integrated, the analysts expect the company to grow its sales at a double-digit rate over the next two years making it one of the fastest-growing companies in the water technology sector.
Overall, Berenberg Bank thinks this is an excellent bolt-on deal for Evoqua Water Technologies, which adds meaningfully to the company’s financials at a very accretive valuation.
Evoqua Water Technologies Acquires STERIS’ Renal Business
Evoqua Water Technologies Corp. (NYSE:AQUA) made an announcement, according to which it has entered into an agreement to acquire the assets of STERIS’ renal business operated by Mar Cor Purification and Cantel Medical for $196.3 million. The business is estimated to generate around $180 million in annual sales and adjusted EBITDA of around $27 million.
Analysts at Berenberg Bank estimate the deal to add around 8% and 4% to the company’s 2022 and 2023 total sales, respectively. Once integrated, the analysts expect the company to grow its sales at a double-digit rate over the next two years making it one of the fastest-growing companies in the water technology sector.
Overall, Berenberg Bank thinks this is an excellent bolt-on deal for Evoqua Water Technologies, which adds meaningfully to the company’s financials at a very accretive valuation.
Evoqua Water Technologies Shares Up 9% Following Q4 Results
Evoqua Water Technologies Corp. (NYSE:AQUA) shares closed 9% higher yesterday, following the company’s Q4 results that beat the consensus estimates and generally in-line 2022 guidance.
The company reiterated confidence in the secular growth opportunities afforded by the intensifying challenges related to water quality/availability. Notably, Q4 book-to-bill remained strong and ISS backlog was stable sequentially (+17% year-over-year, establishing firm momentum into FY22).
Alongside its print, the company also announced new sustainability goals. The team is targeting recycling/reusage of water to exceed withdrawals by 2035 and net-zero greenhouse gas emissions by 2050.
Evoqua Water Technologies Shares Up 9% Following Q4 Results
Evoqua Water Technologies Corp. (NYSE:AQUA) shares closed 9% higher yesterday, following the company’s Q4 results that beat the consensus estimates and generally in-line 2022 guidance.
The company reiterated confidence in the secular growth opportunities afforded by the intensifying challenges related to water quality/availability. Notably, Q4 book-to-bill remained strong and ISS backlog was stable sequentially (+17% year-over-year, establishing firm momentum into FY22).
Alongside its print, the company also announced new sustainability goals. The team is targeting recycling/reusage of water to exceed withdrawals by 2035 and net-zero greenhouse gas emissions by 2050.
