Business Segments

The Company’s reportable operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance. The key factors used to identify these reportable operating segments are the organization and alignment of the Company’s internal operations, the nature of the products and services, and customer type.

During the first quarter of 2019, the Company implemented changes to its organizational and management structure that resulted in changes to our reportable operating segments for financial reporting purposes. Through the fiscal year ended September 30, 2018, the Company had three reportable operating segments: Industrial, Municipal and Products. Changes in the management reporting structure during the first quarter of 2019 required an assessment to be conducted in accordance with ASC Topic 280, Segment Reporting, to determine the Company’s reportable operating segments.

As a result of this assessment, the Company now has two reportable operating segments, Integrated Solutions and Services and Applied Product Technologies. Prior period information has been revised to reflect this new segment structure. The business segments are described as follows:

Integrated Solutions and Services is a group entirely focused on engaging directly with end users through direct sales with a market vertical focus. Integrated Solutions and Services provides tailored services and solutions in collaboration with the 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.

Applied Product Technologies is focused on developing product platforms to be sold primarily through third party channels. This segment primarily engages in indirect sales through independent sales representatives, distributors and aftermarket channels. Applied Product Technologies 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.

The Company evaluates its business segments’ operating results based on revenue, earnings before interest, taxes, depreciation and amortization, and certain other charges that are specific to the activities of the respective segments. Corporate activities include general corporate expenses, elimination of intersegment transactions, interest income and expense and certain other charges. Certain other charges include restructuring and other business transformation charges that have been undertaken to align and reposition the Company to the current reporting structure, acquisition related costs (including transaction costs, certain integration costs and recognition of backlog intangible assets recorded in purchase accounting) and share-based compensation charges.

Since certain administrative costs and other operating expenses have not been allocated to business segments, the results in the below table are not necessarily a measure computed in accordance with generally accepted accounting principles and may not be comparable to other companies.

The tables below provide segment information for the periods presented and a reconciliation to total consolidated information:



	Year Ended September 30,
	2019			2018			2017
Total sales
Integrated Solutions and Services	$	919,985		$	844,851		$	753,858
Applied Product Technologies	631,332			579,291			567,820
Total sales	1,551,317			1,424,142			1,321,678
Intersegment sales
Integrated Solutions and Services	9,151			9,217			8,524
Applied Product Technologies	97,725			75,384			65,730
Total intersegment sales	106,876			84,601			74,254
Sales to external customers
Integrated Solutions and Services	910,834			835,634			745,334
Applied Product Technologies	533,607			503,907			502,090
Total sales	1,444,441			1,339,541			1,247,424
Earnings before interest, taxes, depreciation and amortization (EBITDA)
Integrated Solutions and Services	205,810			186,824			168,182
Applied Product Technologies	87,052			88,682			100,634
Corporate	(134,954		)	(122,800		)	(121,726		)
Total EBITDA	157,908			152,706			147,090
Depreciation and amortization
Integrated Solutions and Services	57,217			48,781			43,583
Applied Product Technologies	17,675			16,734			16,007
Corporate	23,344			20,345			18,296
Total depreciation and amortization	98,236			85,860			77,886
Income (loss) from operations
Integrated Solutions and Services	148,593			138,043			124,599
Applied Product Technologies	69,377			71,948			84,627
Corporate	(158,298		)	(143,145		)	(140,022		)
Total income from operations	59,672			66,846			69,204
Interest expense	(58,556		)	(57,580		)	(55,377		)
Income before income taxes	1,116			9,266			13,827
Income tax expense	(9,587		)	(1,382		)	(7,417		)
Net (loss) income	$	(8,471	)	$	7,884		$	6,410
Capital expenditures
Integrated Solutions and Services	73,656			$	58,464		$	45,611
Applied Product Technologies	7,589			11,501			5,282
Corporate	7,624			10,748			6,882
Total Capital expenditures	$	88,869		$	80,713		$	57,775



	September 30, 2019		September 30, 2018
Assets
Integrated Solutions and Services	$	762,707	$	711,622
Applied Product Technologies	657,879		677,993
Corporate	317,262		274,002
Total assets	1,737,848		1,663,617
Goodwill
Integrated Solutions and Services	222,013		224,370
Applied Product Technologies	170,877		186,976
Total goodwill	$	392,890	$	411,346