PITTSBURGH--(BUSINESS WIRE)--Evoqua Water Technologies (NYSE:AQUA), an industry leader in mission-critical water treatment solutions, today reported results for its fourth quarter and fiscal year ended September 30, 2019.

Revenues for the fourth quarter of fiscal 2019 were $412.5 million, an increase of 12.6% as compared to the prior year period. The revenue increase was driven primarily by organic revenue growth of 11.5%, along with an increase of 2.0% from acquisitions, offset slightly by negative currency translation. Net income for the fourth quarter of fiscal 2019 was $1.9 million, an improvement of $5.0 million as compared to the prior year period, resulting in diluted earnings per share (“EPS”) of $0.01, which includes non-cash foreign currency translation losses of $6.7 million. Adjusted EBITDA for the fourth quarter of fiscal 2019 was $79.3 million, an increase of $18.1 million, or 29.6% versus the prior year period.

For fiscal 2019, revenues were $1.44 billion, 7.8% higher year-over-year. The fiscal year 2019 net loss was $8.5 million, resulting in negative EPS of ($0.08). The net loss for the full year includes $10.5 million of non-cash foreign currency translation losses. For fiscal 2019, Adjusted EBITDA was $235.0 million, an increase of $18.1 million or 8.3% from the prior year. The increase in Adjusted EBITDA for fiscal 2019 as compared to the prior year was driven primarily by higher revenue volumes and improved operational efficiencies. Adjusted EBITDA growth and strong cash generation also improved the net debt leverage ratio to 3.8x Adjusted EBITDA.

“We are pleased to report revenues and Adjusted EBITDA results at the upper end of our fiscal 2019 guidance range,” stated Ron Keating, Evoqua’s CEO. “Our fourth quarter results were strong across all key metrics driven by double-digit organic revenue growth. Our APT segment’s organic revenue results were particularly robust, increasing more than 20% year-over-year. Our order book continues to be strong, again growing by double-digits, supported by both capital and services, including outsourced water opportunities that are expected to convert into revenues over multiple years. Our total service revenues grew nearly 8% in the fourth quarter and were up over 10% for the full year.”

Mr. Keating continued, “We are making excellent progress positioning the business for long-term profitable growth. Our investment in Frontier Water Systems and the announced divestiture of the Memcor product line represent ongoing portfolio actions consistent with our strategy. We continue to expand our portfolio of solutions and services, providing sustainable and digitally connected solutions that deliver recurring revenue growth, ultimately improving our balance sheet flexibility.”

“Our fiscal 2020 outlook is positive, and we expect to build on 2019’s momentum. Customer interest in our broad portfolio of solutions is strong, and we are investing to meet that demand. We are also closely monitoring uncertainties related to global economic conditions and geopolitical risks as we move into the new fiscal year. For the full-year, we expect revenues to be in the range of $1.40 billion and $1.46 billion and adjusted EBITDA to be in the range of $230 million to $240 million. This guidance includes the loss of Memcor’s 2019 revenues of $60 million and Adjusted EBITDA of $8 million.”

Fourth Quarter Segment Results

Evoqua has two reportable operating segments - Integrated Solutions and Services and Applied Product Technologies. The results of our segments for the fourth quarter are as follows:

Integrated Solutions and Services

The Integrated Solutions and Services (ISS) segment provides tailored services and solutions in collaboration with our customers backed by life?cycle services including on?demand water, outsourced water, recycle / reuse and emergency response service alternatives to improve operational reliability, performance and environmental compliance. Key offerings within this segment also include equipment systems for industrial needs (influent water, boiler feed water, ultrahigh purity, process water, wastewater treatment and recycle / reuse), full-scale outsourcing of operations and maintenance, and municipal services, including odor and corrosion control services.

Segment revenues increased $18.1 million, or 7.9%, to $248.0 million in the fourth quarter of fiscal 2019. Organic revenues increased approximately 6.4% as compared to the same period in the prior year -

• Service and capital revenues grew $8.3 million and $6.9 million, respectively, exclusive of acquisitions. Aftermarket revenues were down slightly in the period by $0.4 million.
• Recently acquired businesses of ProAct and Isotope contributed $3.3 million of revenue compared to the same period in the prior year.

Operating profit increased $6.2 million, or 15.5%, to $46.3 million in the fourth quarter of fiscal 2019 as compared to the prior year period -

• Segment profitability improved $8.6 million in the period driven by increased organic and acquisition related revenue volume, augmented by improved pricing.
• Negative drivers to segment profitability included $1.1 million of higher depreciation and amortization expense, primarily related to acquisitions and capital investment in service assets, as well as $1.3 million of additional operating expenses, mostly derived from higher employment costs.

Segment Adjusted EBITDA increased $7.4 million, or 13.7%, to $61.3 million in the fourth quarter of fiscal 2019 as compared to the prior year period. The increase in segment Adjusted EBITDA resulted from the same factors which impacted operating profit, other than the change in depreciation and amortization, and for this segment also excludes -

• Restructuring charges in the current year of $0.1 million. There were no comparable charges incurred in the same period of the prior year.

Applied Product Technologies

The Applied Product Technologies (APT) segment provides a range of highly differentiated and scalable products and technologies specified by global water treatment designers, OEMs, engineering firms and integrators. Key offerings within this segment include filtration and separation, disinfection, wastewater solutions, anode and electrochlorination technology and aquatics technologies and solutions for the global recreational and commercial pool market.

Revenues increased by $28.1 million, or 20.6%, to $164.5 million in the fourth quarter of fiscal 2019 as compared to the same period in the prior year -

• Overall revenues increased $27.6 million in the period driven by increased volumes across multiple businesses.
• Recently acquired business ATG UV Technology Limited contributed $3.7 million of increased revenue.
• The impact of foreign currency translation was a reduction to revenue of $3.2 million.

Operating profit increased $19.5 million, or 169.6%, to $31.0 million for the fourth quarter of fiscal 2019 as compared to the prior year period -

• $11.6 million of increased profit was driven by strong volume and mix performance, augmented by improved pricing.
• The recently acquired ATG UV Technology Limited contributed $1.1 million of profit.
• Other improvements in segment profitability of $7.4 million were driven by a variety of factors including the benefits of favorable plant productivity, lower employment cost, and other lower costs.
• Segment operating profit also includes the negative impact of foreign currency translation of $0.8 million and the positive impact of $0.2 million of lower depreciation expense.

Segment Adjusted EBITDA increased $13.4 million, or 56.1%, to $37.3 million in the fourth quarter of fiscal 2019 as compared to $23.9 million in the same period of the prior year. The increase in segment Adjusted EBITDA was driven by the same factors which impacted segment operating profit, other than the change from depreciation and amortization, and for this segment also excludes -

• The impacts from product rationalization and facility consolidation, restructuring, legacy warranty matters, and costs associated with the remediation of a manufacturing defect caused by a third party vendor that aggregate to an amount of $1.8 million during the period.
• Similar activity incurred in the same period of the prior year that impacted Adjusted EBITDA for this segment aggregated to an amount of $7.7 million.

About Evoqua Water Technologies

Evoqua Water Technologies is a leading provider of mission critical water and wastewater treatment solutions, offering a broad portfolio of products, services and expertise to support industrial, municipal and recreational customers who value water. Evoqua 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, the company operates in more than 160 locations across ten countries. Serving more than 38,000 customers and 200,000 installations worldwide, our employees are united by a common purpose: Transforming Water. Enriching Life.