Evoqua Water (AQUA) Reports Q4 Loss of $0.03, Revenues Beat

Evoqua Water (NYSE: AQUA) reported Q4 EPS of ($0.03), versus $0.15 reported last year. Revenue for the quarter came in at $366.3 million versus the consensus estimate of $362.62 million.

“We experienced challenges primarily in the Product Segment’s Aquatics business and Municipal Segment, offsetting continued strength in the Industrial Segment,” said Ron Keating, Evoqua’s CEO. “The overall results, while clearly disappointing, were primarily impacted by isolated items related to an acquisition ERP system integration, supply chain disruptions influenced by tariffs, and an extended delay on a large aquatics project. We continue to have strong confidence in the business and we look to continue to build on our market leading position. We are taking the appropriate actions to improve our performance and we are pleased that Neptune Benson was migrated onto our ERP system in November.”

Ron Keating continued, “We will continue to execute our strategy into fiscal 2019, but with an increased focus on profitable growth, operational excellence, cost management and free cash flow generation. Our efforts to improve cash flow are expected to come from working capital management, managing growth capital expenditures to the highest return investments, and focusing M&A activity on smaller tuck in transactions. We were pleased to see strong cash flow in the fourth quarter. Additionally, we have incorporated a free cash flow metric into management’s 2019 incentive compensation program. To mitigate the risk of rising interest rates, in November we entered into an interest rate hedge arrangement representing approximately $600 million of our total outstanding debt.

“Our planned two-segment restructuring is progressing, and allows divisions with similar business models to be aligned and in some instances combined. By aligning the complementary go-to-market strategies, we expect to improve technology deployment and provide more comprehensive customer solutions while lowering our cost structure. We expect to incur $17 million to $22 million of restructuring charges over the next two fiscal years and expect to benefit from cost savings of $15 million to $20 million on an annualized basis upon the conclusion of the restructuring actions.”

For earnings history and earnings-related data on Evoqua Water (AQUA) click here.

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