Evoqua Water (AQUA) Misses Q2 EPS by 12c, Revenues Miss; Offers FY19 Revenue Mid-Point Guidance Below Consensus

Evoqua Water (NYSE: AQUA) reported Q2 EPS of $0.01, $0.12 worse than the analyst estimate of $0.13. Revenue for the quarter came in at $348.6 million versus the consensus estimate of $352.15 million.

• Consolidated revenues of $348.6 million, an increase of 4.5% over the prior year period, including 2.3% organic growth
• Net income of $1.6 million compared to net income of $13.0 million in the prior year period
• Adjusted EBITDA of $56.7 million, down 1.7% from the prior year period

“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.”

GUIDANCE:

Evoqua Water sees FY2019 revenue of $1.38-1.44 billion, versus the consensus of $1.42 billion.

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

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