Evoqua Water Technologies Corp. (NYSE:AQUA) has reported results for its second quarter of fiscal 2019.
Revenues for the second quarter of fiscal 2019 were $348.6 million, an increase of $14.9 million, or 4.5%, from $333.7 million in the prior year period.
Revenue growth for the second quarter was primarily led by increased volume in service revenues from organic and recently acquired businesses, as well as continued strong performance in aftermarket revenue channels.
Net income for the second quarter of fiscal 2019 was $1.6 million, compared to net income of $13.0 million in the prior year period, resulting in diluted earnings per share (“EPS”) of $0.01 compared to $0.10 in the prior year period.
Net income for the quarter includes $0.3 million of non-cash foreign currency loss from intercompany loans, versus a prior year period non-cash foreign currency gain of $2.1 million.
Additional contributing factors to the period over period change include other non-cash charges of $9.2 million, including product rationalization and facility consolidation charges associated with the two-segment realignment, higher depreciation costs associated with capital investment and acquisitions, as well as higher share-based compensation charges.
Adjusted EBITDA was $56.7 million in the second quarter of fiscal 2019, a decrease of $1.0 million, or 1.7%, from the prior year period. The reduction in Adjusted EBITDA for the second quarter of fiscal 2019 as compared to the prior year period was driven by factors in our Applied Product Technologies segment, including product mix in the quarter as well as the impact of benefits recognized in the prior year period related to warranty reductions based on improved warranty experience.
“Strong sales growth from Integrated Solutions and Services and double-digit overall year-to-date order growth highlighted the quarter’s results, which were in-line with our expectations,” said Ron Keating, Evoqua’s CEO.
“Integrated Solutions and Services second quarter sales grew 10.9%, and 5.9% organically, over the prior year. Applied Product Technologies sales were down 5.7% versus last year with growth in aftermarket offset by a decline in higher margin capital sales. We are pleased with the strong order book, which reflects continued strength in our end markets, and we expect it to provide sales growth opportunities in the latter part of this year and into 2020.”
Mr. Keating stated, “We began our two-segment realignment in October with the objective of optimizing our ability to quickly serve customers and channel partners with our broad portfolio of solutions. The realignment is on-track, and we are seeing the expected benefits of the two-segment structure in our order rates.”
Mr. Keating continued, “For fiscal 2019, we reaffirm our expected revenues to be in the range of $1.38 billion to $1.44 billion and Adjusted EBITDA to be in the range of $220 million to $240 million. We expect to see improved results in the second half driven by higher volumes, cost benefits associated with our two-segment realignment and the impact of favorable pricing actions. While we have visibility on an annual basis given the recurring nature of much of the business, the Company is subject to quarterly variability that may result from product mix and customer schedules changing between periods. As a result, we expect third quarter Adjusted EBITDA to be approximately flat to up 8% sequentially over the second quarter 2019 Adjusted EBITDA."
Mr. Keating commented, “Overall demand trends continue to be favorable as customers recognize the increasing complexities in managing their water requirements. We believe Evoqua’s broad portfolio of technologies, integrated solutions and services positions us for continued growth.”